This Week in Startups - Jay Trading: $NFLX Q2 earnings, The Blueprint E2: when to quit your job, + more | E1513

Episode Date: July 21, 2022

Yesterday, Netflix released its Q2 earnings, and this prompted Jason to make some Jay Trades (2:53).  Then, we have our second installment of "The Blueprint," where Jason breaks down when you should quit your job (45:14). Finally, we wrap with our Startup of the Day: BeReal (1:06:48). (0:00) Jason and Molly tee up today’s show! (2:53) Jay Trading: Jason does some Jay Trading in relation to the Netflix Q2 results (10:27) BairesDev - Go to https://www.baires.dev/twist (11:50) Netflix reported Q2 earnings yesterday, they were meh (14:38) What’s the problem at Netflix? (24:27) OpenPhone - Get an extra 20% off any plan for your first 6 months at https://openphone.com/twist (25:42) Prediction: Disney+ will exceed Netflix (28:01) Jay Trading: Disney (30:20) What would make you buy Netflix? (37:00) Two other ideas for Netflix (44:18) Visa - Learn more about Visa’s online Small Business Hub at Visa.com/smallbusinesshub. (45:14) The Blueprint E2: when should you quit your job? (1:06:48) Startup of the Day: BeReal (1:17:39) Coming up this week

Hey, everybody, hey everybody, welcome to Wednesday on this week in startups. I am going to make two J-trades. I'm going to do two live trades of stocks on today's program. It is so fun. See an expert weighed into an arena where he's not quite an expert. Not yet. But it also just gives us a new way to talk about companies and their metrics. And on that note, actually, we're going to break down Netflix's Q2 earnings

and talk about that whole. arena. There may or may not be a J-Trade involved. Okay. Very interesting. And then we do our startup of the day. My guy, Uri Milner, a friend of mine. I mean, we're not Bessie's or anything, but, you know, I know Yuri Milner, the famous investor who did Facebook, is reportedly going to invest a large amount of many at a huge valuation in Be Real, the social app. So that's our startup of the day. And we talk about the viral hooks and how you as a founder should think about, engagement and hooks and why these companies become so valuable, but also why they're kind of binary. They're zeros or ones. And then everybody's new favorite thing, another edition of the

blueprint. People are loving the blueprint. Yes, yes, the blueprint. This is my new series where I try to tell you how to be successful in your life. And this is for founders, investors, just people generally, how to be successful in life based on what I've seen, what I've experienced and what I've seeing other people do to become successful. Today's topic, when to quit your job. Oh, really? Who's spicy? When to quit your job is highly relevant to the world right now, apparently.

Molly quit her job. Molly quit her job. She's quit her couple of jobs, yeah. You got to know when to fold them. Exactly. It's going to be a great show. Stick with us. This week in startups is brought to you by

Byrace Dev. Hiring a team of experienced developers doesn't need to be hard, slow, expensive, or risky. Go to buyrace.dev slash twist and schedule a 20-minute chat to get a development team you'll love and get $10,000 off when you sign your first contract. Open Phone As a startup founder, a lot of mistakes are easy to roll back, but using your personal cell phone number as your company number isn't one of them. Open Phone makes it easy to get business phone numbers for you and your team right on top of your existing.

existing devices. Visit openphone.com slash twist to get 20% off your first six months. And Visa. Are you a small business owner? Did you know that Visa's online small business hub has tools, discounts, and resources to help you run your business? Learn more at visa.com slash small business hub. Okay, everybody, welcome to the show. First up, I'm going to talk about some J trading in relation to the Netflix quarterly results. Their Q2 results came in. But before we start, let me just give a disclaimer, Molly. I am J trading.

J-A-Y trading used to hashtag J-Trading. What disclaimers do I need to give here, Molly? This is personal trading only. That's why it's called J-trading. It is personalized to Jason. Got it. Nothing contained in this segment is to be taken as investment advice. You should control your own financial professional

and make your own decisions. This is just for fun. Okay. And you're following my trades, just to be clear. Absolutely. I'm doing everything that you say. I'm not telling anybody to follow my trades. But I am smart and crafty.

And what I'm trying to do here is get better at public market trading. I have never been a public market trader. So if you're following my J-trades, it's not financial advice. I'm looking for financial advice. He's like, help me. It's the opposite. I have never day-traded. And to be honest, it's not day trading.

It's J trading. What are the rules of J trading? We're going to make a rule set. There'll be the 10 commandments of J trading. Rule number one is by companies that you want to own 10 and 20 years from now. Buy companies that you believe in enough that you will want to own them 10 or 20 years from now. That's my number one rule. Because I don't want to sit here and day trade.

I want to build positions in companies that I think are great and own them for 10 years from now. Now, there'll be other rules of J-trading that we'll get to when I figure them out. But this is a learning and public process. We have one of the 10 commandments, nine to go. Nine to go. We look forward to your advice. I do think, like, this is pretty interesting and fun that this is not something that you've done. And like Francis and the Nodigang is saying, I also never bought an individual public market equity before.

It's like this sort of like, it's a division of expertise that I find really fascinating. Okay. So that's, I think, a great point to bring up when we talk about J-trading. I am an expert at private market investing in startups, right? Every week now two times a week we're doing two 90-minute investment meetings with the team. You get to come to those. You see how quickly I can assess a startup. Yesterday, I was doing back of the envelope math and then you pulled up.

I was like, well, this works if it was like, 800. $824 a month and you're like, oh, here's the part in my notes where they say they charge $800 a month and you'd just like, the ruby, be ruby, exactly. So you can kind of get, now that doesn't ensure that we're going to win. It just means we have a good process. So you can't, my belief is the thing you can work on is your process. And I think the process has to change constantly and improve constantly.

And it's kind of fun to work on process, right? Like the process of doing this podcast, how can we make it better each week, each day, each month? private market investing and public market investing. I think we're in a unique position right now. The last two times the market crashed, I knew exactly what to buy. I didn't. This is the third time in my life it's happening. I know, I think I know exactly what to buy because the last two times I was talking

with my spouse about what I should buy and what would be great and other people made trades and people have made trades based on what I've said on this show and I just never got to experience making their trades. I always put my money in index funds like Vanguard, low fee, and I believe that's the best way to invest. I believe the best way of invest is used like wealth fund and to do index funds if you don't have time.

But I'm going through these with you and expert as well on markets every day. So I feel like we will make this more interesting on the pod if I place a bet. They're going to make it more interesting if you place a small bet too.

I'm not pressuring you to make small bets, but you could drop a zero off my bets. I mean, I will say as zero. Sure. No, no, drop a zero. I didn't say it's zero. No, no, no. I'm saying, I'm laughing at a.

to work. You can put a hundred thousand to work. Ironically, I do own individual equities. Like, interestingly, I have a duel, thanks to my financial advisor. Like, we have a three-legged strategy, which is like there's, you know, it's mostly index funds. Got it. There are individual equities.

And we're all about cash. Got it. You know, cash reserves, basically. But so, like, I think it's sort of funny because, like, we talk a lot about. individual stocks in my world with my guy. Perfect. So this will be great to keep this conversation going. I'm excited to compare as you, like, for example, I own one of the things that you bought today.

Great. That's good. We have a good discussion about it. So I think it would be cool. Yeah, if we discuss those. And I'm looking for the audience. So if you're listening to the pod, you know, I'm Jason at calicanus.com for life. That's my email. You can email me what you think of my trades. Please tell me if I'm making a stupid trade because I can reverse it. That's the nice thing about this, is I could sell the shares. And I'm not going to be a bachelor about this. And I'm going to publish on a notion or code a page or whatever each trade. And so we'll have that.

So we're going to make this very public. So we all learn. I bought 1,500 shares. The first J-trade, J-trade number one, was Stitch Fix. I bought my Stitch Fix. And here is my Stitch Fix position. I saw Bill Gurley, had done an, insider trade because I think he's on the board of Stitch Fix.

And he bought like a million chairs at five bucks in change. So I, too, bought 1,500 chairs at $5.69. And today I'm up almost 6% and my return for the week since the first J trade is 15.8%. This could have easily been minus 50%. I mean, we know the markets are volatile right now. But I want to announce my first J trade today, which is, I put that little bet in last week,

and today I put another bet in, which we can pull up the trade. I'm doing the trades right now on Robin Hood, but I'm open to a sponsorship here. If somebody has a great platform, I would like to make this a sponsored part of the show. So anybody who's in that space who wants to support the show and sponsor,

I will give them a shout out. I mean, I'm just saying, NASAC, your stock exchange, e-trade, I don't care my is. I already have a Mug. So, like, let's go. Well, secure in the bag. This is also a hedge.

If I can get somebody to sponsor this and I lose 10%, I can probably be break even if the sponsor does it. So if you want me to screenshot your app, I'm already a shareholder in Robin Hood, so I'm going to do that. But you can buy me here. And I'll make my trades on your platform or do my research on your platform. It's so fun to be here and not on Marketplace.

I am a super capitalist. You know what we say in our business, Molly? No conflict, no interest. No interest. Now, my second J trade is in the same company. I decided. I decided I doubled down. I like Stitch Fix, you know, and so I bought another 3,500 shares of S-Fix at $6.52.

So I am going to ride my winners. So here we go. Hooray. This is the Robin Hood app, which I have shares in and I was an angel investor in. So I just bought 3,500 more. So now I have 5,000 shares of Stitch Fix and my average blended average is probably like six bucks or something. So we'll be tracking. That's the second one.

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All right. And also for Robin Hood, I don't know why I can only deposit 50K a day. It's not baller. Can you make this like so I can deposit a half million dollars or $250,000? Yeah. I mean, you need to make like a J trade exception there, guys. Yeah, come on. I think what you need to do is.

Oh, producer Nick, who is a gambler. Okay. You got to talk to your big kid bank and they'll let you deposit whatever. I mean, it's actually really true. Morgan Stanley or whatever. Yeah. Yeah. Yeah.

I just, I like the... You know who Robin Hood? Robin Hood. I like the interface at Robin Hood. I like when the confetti flies when I make a train. Sorry. I mean, that is pretty... But I think...

You gotta put your big boy pants on. I think E-Trade, from what I understand, like, a lot of the people who are day trading are using E-trade, maybe too. So I don't know which has more features would be better for me, but I'm going to go with my guys at Robin Hood for now. All right. I just need to make it a little more baller, please. Okay, well, on a related note...

Yes. Let's talk about public market stock. Great. Netflix reported Q2 earnings yesterday. And they were okay, is my understanding. But I can give you the numbers up front. Q2 cash and short-term investments, $5.8 billion. So, you know, money and cash.

They were meh. Thank you, producer, Nick. Yeah. Results were meh. The stock was up a few percent, but nothing, I mean, not a disaster. Yeah, the broader market's been up, right? So this concept of bouncing along the bottom. Yeah, exactly.

The results are a little troubling in terms of subscribers, but okay, in terms of revenue. So this is what we have to understand here. We've got to figure this out. All right. So we have, so let's talk about subscribers first because I think that's sort of the number that everybody was looking for because they had predicted in Q1 that they were going to lose two million subscribers in Q2. They were like, just prepare yourselves and buckle up everybody. They announced, though, that they lost 970,000 subscribers quarter over quarter. That's still like a pretty terrible number if you're a subscriber-based company,

but it's, you know, obviously less than half what they predicted that they were losing. And then they said that in Q3 they expect to increase subscriber count by a million. How do they know this, Molly? How do they know in Q1 that they're going to lose subscribers in Q2, but then gain them in Q3? Yeah, I don't know. It's not based on a tent pole film. So this is a J-trading question for anybody. if they have an idea of how Netflix can predict this,

because if you can predict it, can't you, like, mitigate it or change it? Right. But here's the thing. Q2 revenue is up year over year by 8.6%. So that's a slower growth company, right? We're not talking about a high growth company anymore based on the revenue and based on the total subscribers. So something bad is happening at Netflix.

What do we think is the problem at Netflix, Molly? What do you think the problem at Netflix is? I have my own theories, but I'll, I'll, I'll volley it to you. What's one thing they're doing wrong or two things they're doing wrong? I would say there's one thing that they're not doing wrong. It's not their fault exactly, but that's competition. They just have a ton of competition and the competition is good.

And then I think the second thing they're doing is that they're just not, I mean, although they announce that they're going to do this lower priced ad-supported tier, I just don't think the content is premium enough to justify the price. And if they lost almost a million subscribers as they released Stranger Things, then, you know, the current season of Stranger Things just came out. It's all anybody can talk about is probably why they lost 970,000 instead of 2 million. But like, I just went and looked at my Netflix plan the other day because I'm in a cost-cutting mood. And I was like, oh, God, I'm paying to 1999 for this ultra-HD, blah, blah, blah, which like, no, dropped it down to the middle tier,

which is HD. You got off the 4K or 2K and you just went to HD 1080. I just went to HD HD and that still is 15 bucks a month. And I was like, I don't know, man. 60 bucks a year just going to what would look like HDTV versus. Just regular, exactly, like 1080P, which is fine. I don't need, you know, I don't need 4K. I don't need F Boy Island to be in 4K on Netflix.

Okay. Like, what are they? That's an actual show on Netflix. All right. So there is the problem. Yeah. Okay. So here we go.

Number one, competition, correct. Serious competition. Number two, that Netflix is blowing. Their content stinks. It sucks. Content is not as good and not as unique, especially compared to other choices out there. I'm going to unpack that a bit.

So competition, bad content decisions. Okay, number three, not exactly their fault. Number three, pricing. They decided they would ram and jam, and raise the prices. So right now there's three plans. $10 for $4.80, $15.50 for $10. $10.80.

And $20 for $4.000 for $4.8. Can I go back for a second? $4.80 for $10 a month? Suck it. Like, just bowing. I literally just read that. I didn't know that their cheapest tier is $4.80p. Are you kidding me?

Because that's what I would have dropped down to. And then I had an absolute f*** and almost canceled the whole thing when I saw the 480P. Okay. You got to be kidding me. This is dumb. Who's paying for 480, number one? Number two, is this how you segment your users? Why are we segmenting users like this?

This sounds dumb. This sounds like the creatives and the product people have lost control of the company to the CFO and some wonky, you know, spreadsheet jockey who is now saying, if we want to optimize, you know, if we just boil the frog and we upgrade everybody to $20, that's 200 photos a year, and we're going to lose like 3 million subscribers, so we'll lose 1%, but we'll raise the prices 5%. Because they just raise the prices. So here's what happens when you have this many subscribers, Molly, and this is what happens in a big company.

Reed Hasting starts having like two people, two factions inside the company. One factions are the artists and the product people, the creatives of the world. And then there's the freaking bean counters. And I think what's happening is Reed Hasting is getting steered off course. by the being counters. Because these moves are being counter moves, not visionary moves. And Reed Hastings needs to come into the office today

and say, enough of the Mushugina, too much nonsense, how did we win? How did we get here? Great content. Let's stop playing games with the customer base. Let's have fair pricing and simple pricing. But no, these bean counters,

oh, you know, so this is the, as Antonio Gracia said at the Allens Summit, the over financialization of the P&L. Every company gets to this point and they're just manipulating stuff to optimize us and you know what? We're consumers, we're smart.

Molly doesn't, it doesn't matter to Molly. I know her salary, I negotiated it. I know her net worth. I know her future possibilities. I can tell you for Mollywood, 240 versus 20 month or 50 makes no difference, but nobody likes to be abused. Exactly.

It makes me mad. use. So Netflix, you're not making the great content. You got serious competition that's got better offerings at better prices. Wake up. The beginning and end of this is killer content and not price manipulation. So Netflix has got some serious but solvable problems. There is also this fourth thing I'll bring up, which is the natural audience size.

There is a natural audience size to any service. And then when you hit it, it's very hard to add the incremental subscribers. So what we might be seeing here is Netflix with all this competition hitting what I'll call a natural audience, a ceiling. Now, this is where I think the advertising business, I'm warming up to it, could be a great business. I need to know what do other streaming services make in revenue per user? So there is a free version of Hulu, correct? Like you can use Hulu for free, I believe. I pay for it.

I paid to get the ads off of it. I still see freaking ads. But I believe you can get it. There's a free tier. of Hulu. Somebody let me know. But Disney's Arpoo is about... There's a free Hulu? I don't know if there is.

So anyway, we don't want the subscription revenue. What we need to understand is what is this new Netflix tier going to be? Is it going to be like five bucks a month with ads or free with ads? Advertisers do want to reach the Netflix audience, but they're not going to reach these tiers that already subscribers.

So I predict if they do a free tier, they're going to lose a bunch of subscribers. So this just seems like chaos at this business. I do like the boldness. of doing the Microsoft deal. And if it was free, I do, I don't think they can launch a free service, right? Molly, if they launched a free service, completely ad-supported, who's going to pay?

Right. They're going to just hemorrhage cash. So that's not a good idea. No, it's got to be like five or six bucks. And then I'm sorry, but that $10, $4.80 tier, you can have it in countries where there isn't a lot of TV penetration. Like somebody pointed out that the international market, but then you need to offer it internationally for $5.

$10 a month for $480P is insulting. So dump that. I mean, that's got to go. It's been, it's so interesting because it has been really a stagnation in not only content, but in innovation. Because one of the other things that got Netflix to where it was is to where it was is yes, first mover advantage. But also remember, like, they saw the streaming thing so early, right? There was a recognition of this streaming trend, which is why it was called Netflix, even though it was DVD rentals. And they pushed for streaming.

And remember, they had that misstep where they and tried to spin off a. different streaming service from the DVD service. It had that weird name. Quicky, Quibi. No, Quibi was different. Quibi was the other thing. Yeah. The heck was the name of the remember when they tried it and it was like,

Quickstar? Flicks blam. I don't know. It was awful. It was so terrible. Okay, so anyway. Netflix has not innovated since then. They have not put out good.

You either have to put out banger content nonstop HBO style. Yep. Or you have to have a really cool innovation like shared viewing or social networking or all of the things that we have thrown at Netflix. this whole time. So my feeling on Netflix is this company's a bit lost and the founder is, I don't think Reed Hastings is doing a good job. I'm just going to be honest.

I think Reed Hastings obviously brilliant. But maybe he made too much money or maybe he's got people pulling him in different directions. I think optimization probably was the name of the game the whole time because actually now I'm thinking about what you said about optimizing for the financials. If you think about what we know about Netflix's culture, which is always about optimizing for the best performers and they've created this like very like murder culture that I wonder if that is kind of... That got them here.

It's not going to get them there. Yeah. No. Because you kill innovation. You kill risk when you make people like suffer for any performance misstep because sometimes you have to fail in order to take a risk. And what you see with their fire hose of crappy content is no risk taking. I think that they built a culture with some risk taking.

based on what I know of the culture, but I do think there's something here about this cut-throw culture of performance. Maybe it bled over into how they run the business and how they deal with consumers, and maybe consumers don't want to be optimized like this. I think we want it to be simple. And I think we're all looking at Disney Plus and HBO Max.

And these two services and Hulu, right now, if I had to rank my four or five services, they also got Paramount, I think Netflix is fourth or fifth. I know that Disney and HBO Max and Hulu are like in a really crazy first, second, and third. And Paramount, I'm liking because I like Star Trek. And so I think the IP wars, everybody knows how to leverage IP. And I think that puts Netflix in the worst position.

And then I didn't even bring up Amazon, but I like the boys. And I'm into James Bond, so I'm interested to see what they do with that. And then they have the Lord of the Rings coming. So I kind of feel like Amazon's got me hooked, and it's included in prime. right? I don't even have to pay for it. I have Amazon Prime, so I get it. The only reason I didn't cancel Netflix the other day is because I started watching this dumb show called The Lincoln Lawyer and I'm going to finish that season. And after that I'm like, I think I'm out. Quickster, by the way, was the name of the DVD service. They were going to like have Netflix and

Quickster with a Q. Q-W-I-K-S-T-E-R. Listen, lots of founders are Lucy Goosey with their personal numbers. They put them in company documents. They use them for sales calls, all this stuff. And to make matters even more messy. When you do that, you don't know who's calling. Is it a sales prospect? Is it somebody you're trying to hire? Or is it somebody from your kid's school? I don't know. It could be anybody. It could be an old flame. You don't want to get random calls during your summer barbecue. That's where Open Phone comes in. They let you create business phone numbers. You just go to their website, openphone.com slash twist. You can create a phone number and account in under a minute. I kid you not. And you give everybody on your team a phone number. Then they download an app and you're done.

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Openphone.com slash twist. What is HBO max cost? That's the other thing I'm curious about. So I'm almost talking myself into Molly right now, shorting Netflix. Which I don't even want to bring shorting into J-trading because that's not my vibe. But I'm literally feeling like there is,

you know, sub-humorous going on here with Netflix. And I just want to pull up one charge. and this is what I said on CNBC before Disney Plus even existed. I said Disney Plus is going to catch up and then exceed the number of subscribers as Netflix. I believe that's still going to happen.

And here's the chart that proves it. Here we are. You know, like from a cold start to now Disney Plus is 140. Oh my God, 140 million. Like they're literally, Disney Plus is the T-Rex chasing the Jeep in

Netflix's Jeep in Jurassic Park. Like, this object, you know, appears closer. May it be a closer, whatever that mirror thing is. It's closer than it may appear. Yeah, like, that T-Rex is about to absolutely stomp on Netflix's Jeep. Netflix is screwed. Netflix is 220 million. Okay.

So if they just keep going. Yeah. So, I mean, you had 10 million, you know, subs a quarter. Netflix is losing one million a quarter, whatever. The flip's going to happen. And I think Disney is just getting started. Yeah. That's my thesis.

Also, the NOTES are making a couple of good points. One, never short. Don't short at the bottom of the overall market. Okay, that's a fair point, right? But you could do a put option, says Allie Bear, to take advantage of any downside. We're getting high-level J trading here. But also that people are leaving Netflix for YouTube. And we haven't really even included YouTube in our kind of premium subscription category,

but you already pay for YouTube premium. If we start to see more specials going there or big creators or big talent doing YouTube specials, I mean, this is actually, this is time for YouTube to pounce. Well, that's interesting you bring that up because then there's also TikTok taking people's share of screen. So I think the headwinds against Netflix are tremendous. I think the management is doing a terrible job. so Netflix is not my J trade.

Yeah. But my second J trade of the day is Disney. So we can pull up my Disney trade today. Mm-hmm. Now, I am making not a fundamental bet here, because I know that Disney historically has not performed great and everybody loves the stock because they love the product. But I think we're at a unique moment in time here.

I'm going to make my claim that in 10 to 20 years, I could see Disney having, wait for it, the first streaming company in history to hit one billion global subs. Now, that seems absurd, right? Five times what Netflix has right now and seven times what they have right now. I know it sounds crazy, but I do think over time, Disney can charge a very low price and just get everybody on the planet to buy this thing. And I'm talking not just about the developed world. I'm talking about emerging markets. and then eventually frontier markets

where they could have advertising on it. So Disney is incredibly advertising friendly. Their content expands all categories. And, yeah, ESPN, Hulu, everything put together is just amazing. If you put together Disney's total combined subs, it's at 205 million, just so people know,

Disney hones Hulu, which has 45.6 million in ESPN, which has 20, ESPN plus, which has 22.3. I think it would be amazing if Disney kept buying stuff like if they owned CNN or they had their own news network CNN Plus could be 20, 30

I could see them just continuing to buy subscription based services I could see them buying likecom.com and then adding a couple of million subs. Disney is going to become the global sub leader. And I think they're going to have five, six, seven of these subscription services and then super mega bundles and everything.

So here's my next trade. Pull it up, Nick. I bought, before we got on air, 250 shares of Disney at $103. Boom. And I am going to continue to increase positions, possibly as more good news comes out, or trim positions.

But I always wanted to own Disney. I always wanted to build a position in it. And there's my other skin-in-a-game trade. I would never buy Netflix at this point. I think Netflix is like a complete disaster right now. Simplify this and make better content. Yeah. What would make you buy Netflix?

What would make me buy Netflix? On a product basis. All right. If they had an entirely innovative new storytelling format that they embraced, that made it less likely for me to churn. What would those be? We've talked about it before here. I think podcasting would be number one for me,

and casual games would be number two. If they made an IP purchase that I thought would be accretive, like if they had bought James Bond and, whatever the studio was. GM. MGM. So, or if they had bought Lord of the Rings, like Bezos did for a billion and, you know, spend a billion dollars on it.

I think they're, they're not making bold bets that make me excited. I also think a third thing that would make me excited about Netflix would be if they had a way to incentivize creatives, to be with them for decades at a time. How would they do that? If they went to Quentin Tarantino and said, I know you're going to do 10 movies,

we want you to do five more. not only are we going to pay you this amount of cash, we're going to give you this amount of equity. And we want you to do Quentin Tarantino Presents, a 20-part film series that you produce and have control over at $30 million budget for the films. And we want to do 10 Quentin Tarantino presents films. You can write them, you could direct them,

you could act in them, whatever you want, QT. But we're going to make a bold bet on artists, on orateurs who have a vision that will pull in people and that would be risk-taking. I don't want to see F-boys. I don't want to see, you know, this other nonsense. I think if they took a Robert Evans, you know, 1970s approach, you know, Katzenberg, who worked at Paramount with Robert Evans, like these folks made crazy, interesting bets. So who's an orateur, who you could get into the fold, and then change the incentive. Because remember, when Netflix started, the creatives wanted to go there for.

for creative freedom and because they paid twice as much now they didn't get a back end. I think Netflix should come up with a backend system for artists. And they should come over the top because you get somebody like Favro, you know,

doing all the Star Wars stuff. Right. Disney is, you know, he's secured major bags over there. So you lost Favro, who is, you know, just a modern genius at creating content.

How could they have gotten Favro? How could they, you know, these things, you know, these serious ones? So those are my three. and I don't know what order I would put them in change the business model with creative so you are the number one place

so let's say they get some residuals right so we're just going to give you some sort of back end so now people are like you know because remember the Simpsons like my friend Jim Brooks co-created the Simpsons like he owns the rights to the Simpsons and you see he gets paid

and all the Simpsons people get paid over and over again the Seinfeld people get paid over and over again those deals are over I was just doing my reality TV deal which kind of fell apart. Oh. Yesterday. Well, it's okay. I just negotiated very hard

of what I wanted. And they were like, I think the gap's too big. Like, the last time you did a reality show, like these terms you're asking for existed, I don't think they exist anymore. So we'll see if we restarted or not.

But it was with like one of the, it was with the top reality company. But they're like, this doesn't exist anymore, Jake Al. We don't want to insult you. And I was like, all right, let me think about it.

Interesting. I don't know if it's a negotiating tactic or not. But, yeah, go ahead. Just to summarize. The better, business model for creatives and better verticals like podcasting games or something,

you know, maybe signing some crazy or tours to some really crazy ambitious deals. Like, you know, you got Dave Chappelle in the fold. What if they did a Dave Chappelle Presents? And they just said, Dave, we just want you to pick 10 comedians and give them $3 million specials. 10 specials, Dave Chappelle presents. You come on stage, you introduce them, you do a 10 minute set,

and then you have them go. Boom. or you whatever. It just Dave Chappelle presents. Like, do something innovative like that. Yes, to all of that. And there's a... Simplify pricing, maybe?

I mean, 100% simplify pricing. Like, get rid of that stupid. Like, just have like one price. I mean, seriously. Sports deal? It's not like Disney Plus is like, oh, do you want the ultra HD or the da, da, da, that? It costs 15 bucks a month.

The end. Like, do, you know, and I mean, you could have tears if you wanted, if you want to stick with tears, then yes, have live sports, have news, have something like that. What I was thinking, about is that the, the, like,

Hollywood creator industry is kind of a mess right now, and I'm not just talking about the oturism, the talent. I mean, like, writers, right?

Writers and editors are in disarray in Hollywood. They're super underpaid. They keep going on strike because they're just, like, completely disrespected. Like,

I could imagine a universe where Netflix becomes the shop for the creative industry. Don't start playing what, I had a news tab open that started playing like a video

after five minutes. I mean, I think that's interesting too. But I think there's like, you could be creating great content with phenomenal writers and editors by like just bringing them on and paying them,

I don't know, five to 10% more than they're getting paid and giving them decent contracts. Like I think, you know, I'm not trying to like. The back end is where I would do it. Or sure,

give them equity. Like change the way that editing and writers get paid. Right now, I was an investor in my friend's film and I'm a, talking a very small amount of money. A group of my friends got together. They created a little SPV in LLC. We each put like, I think, 25 grand in it or something small. And we backed

our friends independent film. His first one, sure to profit is second one, had Arnie Hammer in it before his career blew up. And so it didn't do as well. But long story short, it's the, the equity structures in film kind of cap how much you're going to make. You wind up selling it. The person owns all the rights to it. You never see any back end. I think coming up with an innovative way to do back end, hey, if we have this, whatever our revenue is, we're putting a 10% pool of our revenue together and whatever the top performing, you know, things in the archive are, we're going to, you know, splashy, cashy everybody on the project. Totally. And do that up and down the creative stack and all of a sudden you have changed the industry and everybody wants to work for you.

The only other people, Todd Phillips, you know, my guy Todd Phillips, who I played cards with sometimes, really smart guy. He had, he bet on himself with the hangover, make you people, put it, it may have put his own money into Joker or he gave his fees away and he, you know, he got a lot of money for Joker. So he's, he's figured this out too. And so yeah, get Todd Phillips and just secure the bag with him. Um, here's two other ideas. You guys, uh, might have seen the Saudis created their own golf league. They backed up the Brinkstraught. They got a sick plane. And they're like, yeah, we're going to, you know, whatever, uh, human rights wash. I don't know what the word for human rights wash, but we're going to, you know,

re-washing kind of thing. Yeah. Yeah, it's just like, we're going to, we're going to wash our human rights abuses by getting all the golfers you love and giving them tens of millions of dollars when they're kind of on the tail end of their careers. But it's going to be fun to watch.

And these golfers are having the time of their life because they gave them a jet that's like been retrofitted with a cocktail lounge and poker tables and all this of the craziness. This is a crazy idea. If I'm running Netflix right now, I'm going to put $20 billion dollars aside. And I'm going to start two leagues. One is going to be an esports league. I'm going to

start the Netflix e-sports league. And I'm going to put up serious fricking prize money. And I'm going to have it live on Netflix and ad supported. And I'm going to get all these young people to watch Starcraft, you know, League of Legends, whatever your jam is on there. And I'm going to put serious prizes like a million dollars a week, $50 million a year. And then at the end, another $50 million a year. And I'm going to get all of those crazy video game people to be on Netflix gaming or Netflix e-sports. And then I'm going to allow anybody who's whitelisted and approved in the e-gaming to stream live. And I'm going to go stick it right to Twitch. Because now I'm an ad-supported business. Yep. So I'm going to earmark $10 billion for that. Number two, I'm going to take the other $10 billion.

And I'm going to look at the NBA, right? NBA is as good as it gets. and NBA goes from, you know, the urban market to middle America and people who like the Pacers to urban markets where people like the Knicks and the Lakers and then all the rich people who want to be sidelined in their courtside seats. It transcends all categories. I'm going to take out all the stops and I'm going to create a league for NBA players. Now, we have that big three league or whatever, maybe you buy that or maybe you start your own tournament. and it's in the summer

and it's an open tournament and anybody can play in it and it's got a serious purse like you show up with five you show up with a team of seven or eight people you can only play eight people do something really innovative

it's you know X number of minutes it's got gambling built into it wagering built into it and boom you just pay those people like some serious amount of money to come you put them up you do a six week tournament or four week tournament it's really exciting

and you know all these players who are retired or maybe out of the league can play in it or I don't know if the NBA players would be allowed to plan it or not but you could get all the global players and you just may, it would be amazing and they would get huge, huge, yeah, July madness. July madness, I love it.

I mean, it might be soccer might be the better one to do. I don't know what would be better, but I would strategically, you remarked those two things. And then put wagering in. So this is the kind of bold bets that founder can make. What I'm talking about are founder bold bets,

not wonks. These wonks are killing Netflix. The accounting department needs to shut the frick up. You have nothing to say anymore. Enough with the bean counters. Whatever MBA is presenting nonsense to how they can optimize the revenue and squeak out a little bit here. Stop squeaking out. And do the march to a billion.

That's the race. The march to a billion subs. And forget about this like optimizing for this quarter. Optimize for 2032. That's what I want to see. Long bets. Because I want a 10x my money. I want to 5x my money.

I want to be. the market. I don't want to just eat this shit out, you know? Enough with these nerd bean counters. They're not invited to the meetings anymore. That's it. They got us into this mess. I don't want them in the meetings. I want five creative people in the meetings with big ideas. That, you ask me what I would, why I would bet on Netflix. Big ideas is why I wouldn't bet. And they don't have big ideas. They got small ideas. The other thing I want to talk about potential J trade. So I'm fade, would it be fading? I'm fading the, I'm fading the Netflix trade. I might even be short Netflix. I don't know how to short stocks really.

I've never done that in my life. Fating would be taking the opposite of someone else's pick. Right. So theoretically, yeah, there is no real equivalent for fading from gambling to stock market, but it would be shorting. Yeah. So, but I'm not going to short it at this point. But I will say, I'm also looking, I'm considering Microsoft right now.

And that might be a trade I make later this week. Microsoft won that deal with Netflix. And I think that is a good trade because I think that's going to bring a lot of advertisers. last quarter had three, last quarter Microsoft reported three billion in revenue in advertising. LinkedIn has surpassed 10 billion

in ad revenue over the past 12 months. Yeah. So that's a big portion of it. They report those stats a little weird. In the quarterly report, they don't actually tell you the exact amount that LinkedIn has. They just say over the last 12, trailing 12 months, it was over 10 billion.

And then last quarter, they reported over three billion of ad revenue. And just to look at the charts for Netflix, here's their price to sales ratio. We talk about that a lot. on the show, their price to sales ratio is very low. It was over 14x in 2018 when it was a darling, and every quarter they were adding millions of subscribers.

And now you see absolutely plummeting down to 2.7 times with the broader market. But if you're not growing, you're dying. That's how it works in our industry. If you're not growing, you're dying. And we want to invest in things that are growing and have big vision. It's so interesting because even the ad, even creating an ad supported tier, is to your point, more tweaking and financialization and optimizing.

Like, it really is. It's not getting in there. It's more like, it's innovator's dilemma stuff. It's definitely innovator's dilemma. I like when they, sorry to cut you off, I liked when they were like, we just don't believe in ads, we believe in storytelling, it's worth paying for.

But I think if you do enough storytelling. I'm trying to think if you were in that position, I were in the position, and we were making the decision, if we felt that the subscribers were hitting the natural ceiling of people willing to pay for any online service, and it wasn't us. It was just the nature of some people will pay for TV and some people don't want to pay for TV. Then I would say it's a good pivot, right? It's not financial optimization. It's a recognition of hitting that ceiling

and needing to extend and get that audience on the platform, right? So, you know, if it was combined with sports and it was combined with my e-sports, then I could see it being really good. Maybe they're planning that. Like what it feels like is a growth pivot, not an innovation pivot. Yeah. If it were combined with any of your ideas, any one of those, then it would feel like an innovation pivot instead of a growth pivot. Because a growth pivot feels like smart, but maybe can only take you so far.

You're just going to hit another plateau eventually, right? I agree. I own Microsoft and I own Disney. Great. Awesome. You've owned them for a while or? Not that long. Oh, okay.

Because, you know, journalism. Journalism. Oh, right. It's very exciting, actually. I was totally like, yeah. Well, I mean, I, I, you've owned. do we see a world where they're not going to be, you know, important companies? Okay, everybody, after the break, we're going to do episode two of the blueprint.

Stick with us. Are you a small business owner? Did you know that Visa's online small business hub has tools, discounts, and resources to help you run your business? So, whether you're a business beginner or an entrepreneurial expert, find the solutions tools and tips you need to take your business to the next level. Plus, if you have a Visa business credit card or debit card, debit card, you can get access to cardholder benefits like Visa Savings Edge, a savings

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This is my series where I teach you how as an executive to maximize your career opportunities, basically how you can become successful. And it's not just based on what I've done in my career. It's based on me investing in 350 plus companies, interviewing thousands of founders on this very podcast, this week in startups, and being friends with the most successful people in the world. So, today's is a very simple one, which is when should you quit your job? This is a question I get all the time when people want to start companies or they feel like they're in a dead end. You want to quit your job when you're not learning anymore or you have other opportunities. For me,

that's the general framework. Are you getting more responsibilities and learning and is your income going up? And what should your income go up every year? Well, that's a very personal question. and those two things you can look at as a matrix. If you're learning a ton and your salary is going up a modest amount, that's fine because you're learning a ton, you're investing in yourself. So this is what working at a startup really on this matrix means. So if you were to make a matrix on one side was how much you're learning, zero or 10, 10 being you're learning everything you can't, you can't believe how much you're learning.

You're sitting next to Bob Iger or Jeff Bezos or whoever it is and you're just a sponge learning everything and building your network. Great. That's a 10. Most jobs, you're probably learning three, four, right? You're on a three or four setting. Eh, you know, every couple of weeks, you might run into some new software, or you might meet somebody interesting, or your boss gives you a new project. Some places have incredible comp, like you're a salesperson. So let's say you're a sales executive, you're selling SaaS software. You're not learning anything. You're a great sales executive. You're on like a one. But you're on a 10 in terms of making money because the company's booming. You're selling Salesforce, you know, in the boom years or Oracle when it was

growing or Slack when it was going gangbusters. Man, and just every year you make 20% more money, 30% more money. It's just you can't believe it because you build the book of business. Okay. You put yourself on that matrix. If you're on the top right, you're growing money. Your salary is growing 7, 8, 9, 10, and you're learning 7, 8, 9, 10. You're not going anywhere. You're at Google during the boom years. You're at Facebook or Uber working for Travis, Larry, Sergey, Zuck, and your stock options are becoming worth more money. Your salary is going up some amount or some combination of those two things and you're learning, don't get off the rocket ship. Now, if you're at Facebook and it's, you know, 2020 and the company's got headwinds and you're

not really learning anything, but they're paying you extra money. Sure, you could stay for the bag, but I wouldn't do it because life is precious and you have to make those decisions. So let's say you do make the decision, hey, you're quitting. Let's say you've made that decision. Your salary is going up, you know, whatever, three or four percent a year. You're not getting any carry share that's growing. you're not getting any equity that's growing. It's flatlined. And you're not learning. They pigeonholed you.

You're good at one thing. They told you keep doing your thing. Stay in your lane. It's time to leave. You've made that decision. On the matrix, you're a three and a three. Okay, it's time to go. You want to do it correctly.

Now, there's a couple of things. You just want to go to this checklist and make sure. If you were thinking about developing a new product or service, you got to make sure, and you should know this now, that any IP that you make while working for another company, they can have a claim on, especially if you use their equipment or you do it during their time. And this has happened many times in history where somebody was working at Google and they didn't get an IP carve out.

This could be a podcast. This could be a piece of software. It could be a conference. You did that while you're working for another company. They could have a claim on it. So that's why you go to your boss and say, hey, I'm doing a side hustle project on the weekends. I started a podcast. Can I get an exemption from my IP assignment that you don't own this?

And then you have a really, you know, honest talk with you. your boss. If your boss is a jerk, they might be like, I don't want you doing that. And then you have to make a decision if you're going to leave or not. Or the boss might be like, hey, I would like that to be part of what we're doing here at inside or launch. Or they might say, yeah, we don't care. That's not competing with our business. So you have to make sure your IP is clean if you're considering doing some IP stuff later. You also probably need to have runway and cash if you're going to step away and start a company. So these are two very important checkboxes if you're quitting and starting a company. You may have kids in school. You may have a more, you

you want to lower your burn rate to the lowest possible burn if you're going to go start a company or you're going to be entrepreneurial. How do you do that? Sell your house, rent a cheap place or own a place that you own outright. That's incredibly affordable. Have six months, 12 months of runway. If you got six months of runway, cut your burn in half and get to 12. I'm talking about your personal burn here. So some people, they might be spending 15K a month because they got kids in school. They have three car leases. Get rid of a couple car leases. Buy an e-bike. downgrade, you know, get rid of your car, own a Prius, whatever it's going to be to lower your cash burn during this period. If you have a spouse or a partner, make sure you have this conversation with them. Hey, I want to lower our personal burn rate because my income from working at Google is going to go away. So we need to lower our cost structure. This is why moving to a really cheap place and having your team live 30 minutes outside of Austin or 30 minutes outside of, you know, Miami, you can still be in a great city. but you're 30 minutes out.

You can still do your meetings in the city, but you have to commute, but you're going to be working home anyway. So just think that through. Hey, maybe go to Tulsa and get them free money they're going to give you in your babysitting. Make sure you have the skills online already that you're going to need in your startup.

So if you're working for me, let's say you're a producer here at this weekend startups, but you want to start a company. Well, if you think you need to learn no code, like don't quit and then learn no code. Take your Saturdays. Your Saturdays are now five hours of doing no code. You can go out at night,

you can sleep in in the morning, but 12 to 5 every Saturday, you're going to focus on teaching yourself that skill. When you do leave and you start your company, you have enough runway. This next one is very important to leaders. So if you're a leader of a company, you have employees, you should tell them this when they come in. Don't burn bridges at your current employer. If you're in a senior position or a medium position, you want to go to your employer and say, hey, I'm considering or I've made the decision that I want to start a company. I know that I'm a key employee here. I want to make sure that I don't leave you, you know, with any problem. So I will, I've written a job spec of everything I'm responsible for.

I have all my best practices written. And I will help you interview my replacement and find my replacement. It's probably going to take four or five, six weeks. If you want me to stay for two weeks, leave today or stay for six weeks. I'll do whatever you want. I really appreciate the opportunity to work here. When I get presented with that, I feel so good about the person. And I feel no animosity towards them going and pursuing their dream.

But when somebody says, I'm leaving today, which, you know, some of these millennials will just be like, today's my last day. I'm out. That kind of bullshit. My God, you know, that is a way to burn bridges forever. Because now you're a boss has to scramble and then everybody else gets inconvenience and it just sucks. And the more senior you are, the more this can hurt. Now, if you're a junior person, you can just say, listen, I'm going to give two weeks notice.

Do you need a third or fourth? I can do that. And you just say to your current employer, because the current employer might be putting pressure on you. We need you to start in two weeks. You just say to that a current employer, listen. And I'm going to give my current employer four weeks because I know you would want that opportunity as well. I don't want to leave them in chaos. But I'll tell them I would prefer to leave in two weeks, but I'll give you up to four if you need it.

And you know what? Any new employer who doesn't understand your rationale is somebody you don't want to go work for. So make sure a point number four that you give enough warning and you don't burn bridges. Know where you are in terms of the important stack of the company. If you're in a senior leadership position, you might give a couple of months. If you're just a manager or director level, you might give six weeks and hire the replacement. And what's great about doing that is, and then if you're like, you know, rank and file, you've been there for a year, you know, low man on the totem pole, so to speak. You might say, hey, I'd like to give two weeks notice, but I could give up to four.

It's up to you. And it just makes you look gracious. And then finally, you should backstop your decision. Like I'm, especially if you have a partner in kids and you're on a budget. I'm going to give it a shot. If I hit these milestones, great, I'll keep going. but if I don't hit them in 12 months, 18 months, 24 months, it's probably more like 18 or 24 months,

then I'm going to go back to work. So that's your five bullet points there, just to make sure your transition goes smoothly for you, your kids if you have them, and you're blessed with great kids, or even if you got some entitled horrible kids, still got to take care of them. That's how it works,

and it's your fault if they're entitled anyway. So keep that in mind. Those are your five bullet points just in terms of when you're going to quit. All right, I want to do my freelancer versus full-time test. This is how you can figure out if you're being properly compensated. Freelancers exist in a marketplace. The marketplace is the person who hires a freelancer, let's say a designer or they are a social media manager.

That person can be hired full-time with benefits, with five weeks off a year between sick days and holidays and everything else. Or you can hire them freelance. If you're freelance, you get a lot of flexibility. If you're full-time, you know, for the person who's buying the search, If you hire somebody full-time, well, now you have to pay unemployment, you have to pay benefits. So you better need them. And you have to go through a full-time hiring process, which is harder than hiring a freelancer. So the freelance market creates a dynamic pricing system. And full-time does, but it's a little bit slower, right? So let's take what you work every year as a full-time

employee. You're going to work 47 weeks a year. You're going to put in 40, 50 hours. Let's just round it to 2,000 hours a year. You know, maybe 2100 hours a year, something in that range. But 20% of that's going to be meetings and distractions, right? So maybe you're down to working 1,600 actual hours, right? That's what you're actually doing the job you were hired to do. You have to be in meetings, you got to fill out TPS reports, you know, all the musugana and wasted time that happens. Let's say you have a 70K based salary. Now, you're costing the company about 15 to 20% more. People put a 10% to 20% multiplier on full-time stuff. Why do they do that? Benefits, obviously. So you're maybe $70,000 salary is costing the company, 80,000. Now, you do you.

divide that by 1,600 hours, you get $50 per hour fully baked. That's what you cost your company. Great. That's how your boss might look at your work. And if you are a boss and you hire somebody to be, let's say, a social media manager, you're looking at it saying, okay, I'm fully baked, this costs me $50 an hour. Plus, this person's part of the culture, plus they're learning, plus I have 100% of their time. And so I have this nice continuity, right? I have decided I have a startup company and I'm, or, you know, I have a retail company. I need those 1,600. hours because I want to put out content every freaking day because social media is what's going to drive what we're doing. That's how your boss is going to look at the cost. Now, if you were freelance,

maybe you could sell your services for $60 an hour, maybe even 75 if you're really good at that. Now, if you tried to charge 100 or 150, somebody might say, well, I'll do that myself. I'm not paying somebody a hundred bucks an hour to do a TikTok. I could just have my daughter or my son or I'll just have the, you know, a waiter or the bus boy that one of the servers recorded. me cooking food in my restaurant because I'm paying them 35 bucks an hour. And so I'll just teach them how to do it. Right. And that's what the freelance market does. At a certain point, if something is too expensive, you do it yourself. So if you were to hire somebody to clean your house or do your laundry and they said it's 200 bucks an hour, you're like, you know what, I'll clean my own bathroom for that amount.

I don't make that much at work. And that's why the freelance market finds an equilibrium because of competition. That's what's great about capitalism. Okay. But let's say you choose to be a freelancer and you think you can get 60, 75 an hour. Well, now you have to prospect and get clients. And you have to manage clients. Let's say it took 25 hours to get each of 10 clients. That would be realistic. You got to go pitch 10 people to get one to sign on. So you pitch each one, it takes two or three hours to pitch each one and you get one out of 10. That means you're spending 250 hours a year finding and managing your customers. You may have to spend, let's say, two hours a week running your small business. You got to check your email, you got to check your

accounting, all that stuff. That's another 100 hours a year just to run your small business. So if you're working 2100 hours a year, as we said before, you're going to take, as a freelancer, you're taking 350 hours off the top to manage all of your people, and then maybe that leaves you with 1,700 billable hours a year, 1750, whatever it is, right? Now, if you can bill that at $60 an hour, you've got 105,000 potential billable hours, okay. But how many of those hours are you actually going to fill with client work? And this is where the rub comes in. Maybe you're going to fill 60% of them, 70% of 80%. Who knows what your optimization is?

Sometimes you're a great freelance. You've got too many customers, right? You're turning them down. In which case, that $105,000 number might be true in year two or three of you as a freelancer, but now you've got to pay your benefits and, you know, you spend $10,000, $20,000 a year on that. And now you're back at 75K a year, almost exactly what you're getting paid to be a full-time employee. So here's what you want to do.

You need to run this test and see if realistically you think your salary and what you can make as a freelancer is worth doing and worth going through all the pain and suffering of having to manage customers and clients. And so, you know, if you have people begging you for your services and it's, I would say, three times more than your hourly rate as I did the formula here, if it was three or four times the hourly rate, you might be able to make a go at being a freelancer and have to deal with customers and them arguing with you about the bill and asking you to take two hours off, which, by the way, is what lawyers do. And so lawyers, who work and they bill out at, you know, $800 an hour, $2,000, $2,000 a year. You know, it seems

like it's a lot of money. It could be, but then sometimes you just want, you know, a job that's easier when you're in-house counseling. You don't have to put in 2400 hours a year, et cetera. So for managers, you know, you should do this regularly and look at should you hire people freelance or should you hire them full-time. Because maybe you hire somebody full-time, you don't need the 1,600 hours of actual work they're going to do. They're filling up a full-time slot, and maybe they're not competitive. So maybe you'd be better off having four of these social media managers giving them each 400 hours a year of work, you know, and they each get whatever it is, six, seven hours a week of work with your company. And then you drop the weakest one and give

their hours to the top one, right? You can have a more dynamic competition and more redundancy and more swings at bat in terms of, you know, how good they are. And this is why people, will outsource their legal work. They might have somebody who does really great IP work, somebody else does great corporate work, somebody does litigation, and you use a mix of freelances, depending on what you need at that time.

And if you decide you don't need any freelances for six months, you're not paying them, which is what happens with full-time employees. You have to pay them no matter what happens. If market conditions go down, your only choice is to fire them, pay severance, and, you know, have to deal with that, basically, you know, a mini-divorce.

This is why I think it's important for you as the manager as well to run these. We are doing seven podcasts a week, six episodes of this week in startups and a seventh episode of All In. And we're launching two more podcasts, which will add two more a week, which will be nine. Now, should I use freelancers?

Oh my God, that's just not possible when you have this amount of content. In fact, I need like three or four full-time people, but I do like to have freelancers in the mix. And if you have some freelancers in the mix who will edit a podcast for $250 or whatever, that if somebody takes a week off, you can have them come in

and do a little bit of work. So sometimes you want to, if somebody leaves your company, say, hey, would you like to freelance for us sometimes? And that keeps them in the mix. You keep the relationship. And then you could also have

one of my favorite things in the world, which I call boomerang employees. I've had many times a great salesperson, a great video editor, whatever it is. They decide they want to go freelance. Then they decide, you know what? I kind of liked working at the company and being part of the culture

and not being, you know, a ronin out there alone. you know, fighting battles. And so if somebody's great and they leave your company and they do that nice smooth transition when they tell you, hey, JCal, I'll hire my replacement. I wrote everything down on this beautiful notion page and I outlined it perfectly for you. This person can hit the ground running. Here's where the bodies are buried. Here's the things that I'm worried about for you. Here are the things I'm doing that you could probably outsource or retire that I didn't need to be doing or this person can probably take on this 25% of my role and then you could just figure out maybe outsource this 75% of my

That kind of thoughtful leaving of a company set you up for the boomerang. And it basically gives you this great safety net. Hey, I'm leaving. I want to try something else, but I really loved working here. I really did a great transition out and I would love to stay in touch. That's really the high order. Chef's Kiss. That's the way to do it.

And you know what? When I'm an investor and something doesn't go well, I literally this week talked to three founders who I previously invested in and said, hey, what's next? That's my playbook. Okay. So there it is. I try to keep these under 20 minutes. I try to keep them really tight.

You really got two swings at bat here in terms of the freelancer test and, you know, how to leave your company. And we've recorded this live at YouTube.com slash this weekend. And when I recorded it live, I got some questions from the audience. And I'll answer a couple of those. Nima asks, how important is it to find a co-founder before you leave? The Solo Dolo route, advisable question mark. If you have a great idea, having a co-founder is awesome because you can split the load

and it's less lonely. but I would not wait for a co-founder to show up. That's just me. I would rather see you start and then start hiring people or start doing meetings with people and then eventually find a founding team. So I really, really, really would like to see you just start and not wait.

That's my best advice. A couple of people are asking me to recap when to quit points. So let me go through those really, really quick. If you've chosen to quit, these are your five bullet points. Number one, make sure you own any IP if you're stepping away to do another project. make sure you have the cash in runway personally. Make sure you have your skills already dialed in.

These are preparing so you don't have, you know, potholes or you flip the car on the first turn out of the gate. You have to own your IP, make sure that's all taken care of. You don't want to have a downstream lawsuit. Two, you want to make sure you have tons of runway so you can intelligently build. Three, you want to have your skills dialed in. So make sure you do that skill work and sharpen your blade. You don't want to go into battle with a dull blade that you don't know how to use. number four, make sure you give your employer and your teammates plenty of runway so you don't burn your bridges so you could potentially become a boomerang employee

or have them as a customer down the road. And finally, you know, maybe set a backstop, an ultimatum. Maybe if you have a partner, you need to do this or maybe just to be intellectually honest yourself. If I can, if I get into an accelerator in the first 18 months, if I get an angel round or I get 10 paying customers, then I'm going to keep going. If I don't, I'm going to shut this idea down

and get back to work. a company where I can, you know, then build up my chip stack again, rinse and repeat, come up with another great idea on the weekends, refine my skills and then go back at it 18 months from now. So if you look at your life in these 18 months cycles, you work 18 months, you sharpen your skills, 24 months maybe, let's say 24 months sounds a little more realistic. 24 months, you work at a company, you build up your skills, you build up your chip stack, you have a great idea, you go decide to do it. You spend 24 months on it. It doesn't work. You didn't hit your milestones. You go back to work. Now you're more valuable.

Boom. You get a better salary, get more responsibility, you sharpen your blade, then you take a second swing at it. This will give you the ability to kind of manage your own psychology and your own burnout, because the startup will be burnout. And here is a simple matrix. If you're learning and you're growing your salary. You know, if you look at the top right hand corner, man, you're learning a lot and you're getting paid well. That blue zone, boom, perfect. Stay there. Don't go anywhere. The yellow zone, the top left quadrant quadrant, man, you're learning a lot and you got modest pay. Stay there. It doesn't matter. You're learning. If you're not learning and you're not getting paid well, and your pay's not growing, well, why you're there? The bottom left is obvious, quit. The top left is obvious. Stay. And then the other two is really your station in life. The worst station is that red zone, modest pay, not learning. The best place, great pay, learning a lot. That's your ideal

situation. Now the green zone, hey, listen, you're not learning, but you're banking a ton of money. You're that sales exec or whatever, or, you know, you're doing accounting, but you happen to to be the accountant at Google and you were the first ones or your stock options are going up. Secure the bag, right? Do it for your family, do it for you, build your chip stack. You're not learning, that's fine.

Do stuff on the weekend to learn, to supplement, to keep yourself intellectually engaged. And then in the top left, this is a startup zone. You're not going to get paid a lot, but you're going to learn a lot. I like people being in any of these three zones depending on what your goals are. And then the amount of time.

I think you stay in the yellow zone, two or three years, the green zone, two or three years, the blue zone, five, six, seven years. You know, if you can get on a Google and stay there, man, when you get that second equity grant, you know, in your first four years, and that could be really a creative, and your learning could be amazing, you could have great position. So there it is.

That's the learning versus compensation matrix. Okay, that's it for episode two of the blueprint. Stay tuned for part three next week. We're not going to cover how to build and leverage your network, which is my speciality. Okay. That's it for episode two of the blueprint. Stay tuned for part three. next week.

We're not going to cover how to build and leverage your network, which is my speciality. Okay, let's get to our startup of the day. Who's our startup

of the day today? Startup of the day, I think is so interesting because we've been talking about this app for a long time and then all of a sudden everybody stopped talking about this app and now this app is back.

Be real. The photo sharing app, Be Real, which was like all the rage for a minute. And then I stopped. I think Rachel might have stopped. However,

it's back on Monday. Be Real became the number one free app in the iOS App Store. According to the research firm, Apptopia, it's been installed 20 million times with 330,000 downloads on Sunday alone. And evidently, is raising a series B? That's the big news today, is that Yuri Milner,

who famously invested in Facebook when everybody else thought it was worth $6,7,8 billion, Yuri Milner came in and he said, hey, I think it's worth $10 billion because he had seen all of the international growth of social networks like local ones in Russia and other places. And he came over the top. And what he had actually done was he offered the common shares employees. This is when Facebook was in the dumps and, you know, the market was a little troubled.

He offered like, I don't know, a six or seven billion dollar valuation for common shares. And then he offered a higher valuation and beat all the venture capitalists in Silicon Valley who thought the valuation was too high. They didn't know that he had done a blended deal. It's like one of the greatest trades in the history of Silicon Valley. So he said, I'll offer, everybody offers offering, like, I'm just going to make a number up here, but this is kind of the range it was in. Everybody else is offering $6,7 or $8 billion valuation for Facebook to buy primary stock, preferred shares, the top class of shares. I'm going to offer the employee's $6.5 billion. I'm going to offer Facebook Zuckerberg $10 billion.

So he gets the headline number of the higher one. But I'm going to buy more of the common than of the preferred and then I'll blend my, position and I'll actually be paying the seven or eight billion that the other VCs are willing to pay, but I'll beat them in the deal. Huh. And that's something that Masha Yoshi San also did when he bought SoftBank, when SoftBank Vision Fund bought Uber shares. They bought some primary shares from Uber at one price that I think was pretty high.

And then they offered us not like that dramatic, but maybe it was 10% less, I think, for the common shares of Uber, which I took advantage. So that that was the trade. And so he made his money, you know, I think well over $10 billion if he held his shares in Facebook because he owned a couple, like 3%, maybe or something like that. I think Uri Milner had gotten 2 or 3%. So this is back to his playbook. Rachel, by the way, would like to know she most certainly did not stop using. Yeah. Be real. She's still there.

Got it. So they're saying that DST Global, which is Uri Milner, and he's a great investor, they're saying the valuation will be 600 million. In June, A16 Excel led B-Real's $30 million-dollar round value in the company at 150. And it was launched in 2020. So in two years, this company has become worth $600 million. This is what happens when you catch lightning in a bottle in the social networking space. Yeah.

And there's two reasons why these companies get valued this way. There's two billion per reasons. Right. Yeah. No, I got it. What would be the two reasons? I think. valued so ridiculously.

Assume because they have growth. Virality. Virality. Right. When you hit virality, it is unstoppable. And so I think Uri Milner has determined

that this company has hit virality and it's going to go straight to you know, 100 million users or something crazy like that because you've seen that movie before. Virality is number one. There's a very specific number two. Because they say so?

Two is because these companies get bought and go public because of that virality. So if you look, you had a business to business company that was viral, Slack got bought, went public and got bought.

You have Snap, when public, you have Twitter, you have Instagram, got bought, was going to go public, you got WhatsApp, got bought. When things go viral like this, a LinkedIn went public and then got bought. I think that was those order of events, right? Because it was a public company

when it got bought. So you have these companies because they're high growth, Just like we were talking about Netflix being low growth now, you know, 8% growth year over year and subscribers going down. Markets like both VC, private and public markets love growth. They love growth. And so that means even if you pay a little bit more here,

because it's doubling every year or tripling every year in user base, quadrupling every year, which these things can do, it's a pretty great bet. So growth cures everything and that's what these things do. Maybe you could explain to people how it works. I know. I'm literally looking up like why it's popping again right now. Well, virality. And got a little distracted by it.

Okay. So, but it's interesting that it's viral at all. So the way that Be Real works is that you get a notification, you know, at a certain time every day, not the same time every day. You get a random notification that's like, it's time to be real. And the theory is you're just supposed to stop what you're doing. Take a picture in that moment of your real life, like what you're doing. You can't see any of your friends.

posts unless you post. Right. And that's it. It's pay to play. You have to participate in order to get the benefit of seeing your friend's stuff. And the front and back is really interesting. So it's a little more authentic, right? You get this.

Yeah, exactly. It activates both cameras at the same time. So you can sort of flip them if you want. But the way you might manipulate it is to choose to have the front facing be primary. But yes, you get a photo of like what's behind you and what you're looking. You know, your face and what you're looking at. So more reality. I will be honest and say, then part of what happened is I was like,

every single picture is just me and my computer screen. And it got a little like, you know, but it's pretty. It's nice when you're out in the real world, I'll say, because, you know, I like to take a picture of my food. Like if you're one of those food photographers, so now you get yourself and your salad or you're taking a picture of the mountain, you're skiing or your mountain biking. Now you get a picture of you and the other what's going on in the mountain.

Or if you work for me, you've got a picture of your desk. and you're frowning because I've just put 20 things on your punch list. Like, it's always that. I'm kidding. But yeah, it's always just me being like, damn it, database. You know, it's like the same. Yeah, I don't know. I mean, I really liked it for a while.

I'm very curious to see. Apparently people have sort of, I think enough people have caught on that what's one of the things that's making more viral is now people are making memes about it. So they're taking like historical photos. Like there's one. Oh, that's hilarious. You know, and so they're saying like, sir, it's time to be real here. I'll drop them.

There's a couple of them in this, uh, verge article. Like they've got, um, that's hilarious. A post at the end of call me by your name. Like, it's time to be real.

And then it's like front, I didn't watch it, but it's, you know, front facing camera version, kid crying and then some stuff on fire. Like, so they're turning it into or like during sex.

Oh my God, babe, it's time to be real. Oh. So, oops. There are memes that are making like be real content more interesting than it actually is.

And I think that's big people want to download it. Like, it's pretty funny. I love the historical ones. Like, you could take a picture of some famous historical figure, Joan of Arc or something. Yeah.

And it would just be like, sir, it's a clever idea. I will give you a warning here. As fast as these things can go up, exactly. They can go down. So much like restaurants or clubs, some restaurants and clubs become perennials.

Every year, people still flock to them. So if you go to New York, you go to the Odeon, it was hip when I was, you know, just going to Manhattan at 18 years old, that in 1988,

1990, people were going, I guess, to the Odeon, and it was super cool, bright lights, big city. And then, you know, I go to Manhattan now and sometimes I'll stop by

for a drink and meet people there. It's the same place, same vibe. It's timeless, right? Yeah. And so you hope to hit one of those, like Facebook or Instagram or Twitter, where it becomes timeless

and it locks in a certain audience forever for their lives. They never want to give it up. And if it does go away, it's, like, tragic. But more often than not, Remember Dispo? That dip-a-David-dobrick?

Remember that dummy from YouTube? Now, to be fair, maybe that could have been an app that a bunch of people used if he had not turned out to be like, the worst. Yeah, I mean, just... There was a couple of brand equity issues there.

I don't want to double click on it, but... But no, I mean... Yeah, lots of bit stuff. That's what I think is so interesting about the fact that this app is having a resurgence is like, on my theory, that content is king.

The content on Be Real is only okay for only so long. So yeah, I mean, would I and and you know, one of our very smart notice was like, how does be real make money? It doesn't. Not yet. And it has no stated path to monetization. So we have no idea.

And it's very clear as heck. What I'll say is like, would I make this investment? Yeah. I mean, if there are a certain group of people who love to make these investments because they're very binary, either it becomes huge and you make 50, 100 times your money or you lose it all. if you lose all your money investing, you know exactly what you're going to lose.

So if you put in $20 million, you lose $20. But if you win and you win $50, $100, $200, $500 times your money, my God, it's just, you know, unbelievable what can happen. There was that paparazzi one, benchmark led that one. Lockett was one, which then put every, Locket put all your photos on, it put your, locket's device was it put all the photos on a widget on your

home screen. And then you remember the David Dobrick one, Dispo, which was actually clever. You take a bunch of pictures with like this disposable camera interface and then the next day, I guess you get a role of them.

So you have that experience of opening them up. You know, these like little devices are kind of fun, you know? And that's really what you're looking for in one of these social networks is you come up with a new content format or a device that drives virality and engagement.

It really is an engagement kind of trick. And so, you know, filters were one engagement trick. Remember the streaks on Snapchat. Some people were just using Snapchat because of streaks. I have this like a thousand-day streak where I chat with my friends. That was another one of them. So for founders who are listening, you know, it's great to study these things. And then it should inspire you to come up with a really amazing device.

And so like J-trading is like a little device here for this podcast. Like if you're into trading now, maybe I get some portion of the trading audience to come here. Like I would really like some trading people to explain to be shorting and puts and calls, you know, eventually when I get 10, 20 trades and explain to me how I would do one of those. So, because I've never done them, and I'd like to learn that. So are we done? Are we done here? Well, it also kept showing up. Yeah. I think we're good. We have a bunch of stories we didn't get to today. So just for, you know, the rest of the week's docket, we are going to talk, talk about pitch books, US venture monitor, Q2 data, so the Q2 data is out. I also think crunch base's data is out.

I think they're like both competing to get us to cover their data. So maybe we'll compare them CrunchPace just had a raise too. Oh, did they really? Oh, that's very good. Yeah. And then Google Glass, which launched, I think, eight years ago and got people beat up in bars for obnoxiously taking pictures of people without their knowledge on dance floors. They're going to, according to the information, start testing new AR sort of glasses. So we'll get the details on that out to you tomorrow. And we have Lon Harris coming on. We'll talk a little time more about the streaming.

And we've got to pick a show. but we need your help picking a show because I tried West World. I'm sorry, it's unwatchable. Oh, were you a West World watcher up till now? I watched the first two seasons. I didn't even realize there was a whole third season and then you had to get to the fourth one

and then I'm trying to catch up and it's terrible. We should just talk about winning time. I think winning time might be the one to do because I think it's... It's a great streaming show. It's an entrepreneur show. It's an entrepreneur show. So I think maybe winning time would be good because I'm three episodes into that

and I think probably most people have not watched it. So it'd be a fun thing to just talk about. Maybe we do it in like, how many episodes was it six seven episodes eight okay maybe we do it in two chunks or something that might be good okay love it