We Study Billionaires - The Investor’s Podcast Network - TIP379: Into The Metaverse w/ Greg Isenberg

Starting point is 00:00:00 You're listening to TIP. Metaverse, Web 3, unbundling Reddit? If any of these phrases are foreign to you, as they were for me, you are really going to enjoy today's episode where I sit down with Greg Eisenberg. Greg has had an impressive career in building and selling startups, such as Wall Street Survivor, Five Buy and Islands, the last of which was acquired by WeWork. Greg is also a growth advisor to TikTok as well as a venture partner at Indicator Ventures.

Starting point is 00:00:28 On today's episode, we discussed tools for building financial literacy, how you can use community platforms like Reddit to create products and build businesses, what on earth is happening with Web 1, Web 2, and now Web 3, what exactly is the metaverse and how commerce might look in the future? This new era of community-based economics is growing at a rapid pace, and I think it's important as investors to take note and watch closely. So without further ado, please enjoy this fascinating discussion with Greg Eisenberg. to The Investors Podcast, where we study the financial markets and read the books that influence

Starting point is 00:01:05 self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to The Investors Podcast. I'm your host, Trey Lockerbie, and today I'm speaking with Greg Eisenberg. Greg, welcome to the show. Thank you, Trey. Great to be here. You have had quite an interesting career, and it has primarily revolved around building

Starting point is 00:01:36 community social consumer platforms. I'm not sure if I'm getting the vernacular correct, but you certainly have an expertise in building communities and businesses on top of them. But I wanted to kind of kick off the conversation with one of your, some of your earlier work, should we say, a company called Wall Street Survivor, because I think our audience would really benefit from maybe learning more about this tool that you helped build and then ultimately sell. So you talk to us about your experience with Wall Street Survivor. Absolutely. First of all, Trey, no one asked me that. So I'm happy. I'm happy that you did.

Starting point is 00:02:08 Picture this. It's 2008. Economy's crashing. Half of your net worth disappears, and you don't know why. Because people, you know, a lot of people didn't understand what was happening. You know, they hear, what do you mean? The stock market's supposed to go up 7% of people. And then when they get their Charles Schwab or Vanguard statements, whatever,

Starting point is 00:02:28 and they see like their net worths are going down by 30, 40, 50, 60% overnight. That's when they went to Google and were like, what do I do? So I met a guy who had recently just bought a stock market simulator. And we talked about how can we use this real-time simulator and create almost like a game around learning about the stock market. So what we did is we gave people $100,000 of virtual cash. They're able to trade options, buy stocks. And as they're buying, we're giving them tips. And we really did make it feel like a game.

Starting point is 00:03:00 So Wall Street Survivor was that. It was a community centered around demystifying. yeah, de-mystifying investing. And I remember when we started building it, people told us like, people don't care about education. It's not sticky. They need things like Instagram, Facebook, whatever. Turns out actually people do care. I mean, why do you listen to this podcast?

Starting point is 00:03:18 You listen to this podcast you're trying to be better. So that was Wall Street Survivor. And it became the number one stock market game on the internet. Basically overnight, millions of students used it as a part of their finance curriculum to learn about investing. 85% of the top U.S. business schools use it as a part of a finance curriculum. And yeah, I was in my early 20s. This is in, or even earlier, at 21, 20, 22. And that's the story of Wall Street Survivor, which we ended up selling.

Starting point is 00:03:47 Amazing. So you can't actually invest real money. It's simply just a tool for learning how to trade or invest using paper money. Exactly. And I think the business model, you know, we built it really just out of the need, to be honest. And then we're kind of like, oh, my God, we have a million people. using this or whatever, how do we generate money? And the first thing we started doing is putting on ads. That's what everyone used to do at the time. And then we were like, you know, why are we selling

Starting point is 00:04:10 ads to TD Ameritrade when we realized that these people would spend three, four, five, six, seven hundred dollars for an acquired customer? So then we started basically doing deals with some of these bigger fun, bigger sort of advertisers. And the lesson there was pay attention to who's advertising on your website and try to like strike out sort of direct deal. But yeah, the business model was very strong around. We were basically top of the funnel for a lot of these financial firms. Now, was your appeal with this business and this tool based on your own personal learning? I imagine like what you just described at the beginning, losing a lot of net worth for

Starting point is 00:04:48 not understanding why. Is this sort of what drove you or intrigued you about the tool? And then I'm curious to know if you used it yourself to kind of build your own investing education. So I'm fascinated by businesses that have community at the core. And I'm also a nerd. So I'm a nerd in the sense that like I just bought a Volvo. I'm like hanging out the Volvo subreddit. And I'm like geeking out about the smallest details about balbo's. I'll get really into a particular Colombian coffee bean and I'll go find those people on a Facebook group and like go to a meetup for this, you know, particular thing. That's really my nature. So when you combine the lack of

Starting point is 00:05:27 community that exists for financial communities with a Black Swan event like the 2008 financial crisis. What excites me is like there's an opportunity not only to give people utility in terms of teaching them literacy ultimately, financial literacy, and also combine them with people that they can meet that can really unlock potential. Like to me, that's so exciting. Like I love those types of businesses. You really are making the world a better place. And you're also creating a place for, I call it like freaks like me or geeks like me. And that's what intrigued me about it. Awesome. Well, I totally agree that the financial literacy piece is lacking in traditional education. And it's just really unbelievable how lacking we are in that department in most

Starting point is 00:06:12 universities, even high schools. And people crave it. And I think like, why do you think Wall Street bets has gotten so big? Why do you think personal finance, you two, has gotten so big. You got, you know, Graham Stephan. I don't know if you follow him, but he's went from like 100,000 subscribers to a couple million over the last 12 months. And it's like, people are craving this and there's not enough places for them to talk about these things because money is taboo. So going back to your own investing career, you posted about a bunch of mistakes, what Warren Buffett would call, you know, mistakes of omission. Talk to us about the lessons you've learned from your own investing career. Yeah, I mean, having lived in San Francisco for many years,

Starting point is 00:06:53 being in the startup game, you end up meeting a lot of people. And those people end up starting very successful companies. So I've, you know, the post I think you're referring to, I think I talked about some mistakes that cost me, you know, 75 million. It's actually more than $75 million, way more than $75 million. So I had an opportunity to invest in multiple seed-based companies that became unicorns. And not because I was particularly special, but just because of like, These are the people I meet at, like, I'd see them at, like, Phil's coffee shop in San Francisco. So the first thing I just want to say is that, like, if you're going to be serious in tech, like, you're going to come across these deals and it's going to suck.

Starting point is 00:07:35 You're going to learn the same mistakes that I made. So I can talk about a few of them. The first is everyone told me that there was this a narrative, well, if you can't go for a beer with the founder, don't invest in the startup. And, like, it makes sense to you. And it makes sense to me, at least. It's like, yeah, you want to be in business. with people you like. But it turns out there's like some brilliant people or some people that

Starting point is 00:07:55 you might not be, might have very different views about the world or you might like tennis and they might like soccer or whatever. And it doesn't mean you can't invest in their business. It's actually foolish to only invest in your friends. And also it creates this virtuous cycle of you're only investing in these people that you want to that are like you. I actually think we should go against that. So that's one of the biggest mistakes that I made. And curious your thoughts on that. Like do you agree? Do you disagree? If you're coming at it from like a venture mindset, let's just take the stock market. First of all, not often are you even meeting with these founders if you're investing in the stock market.

Starting point is 00:08:30 So plenty of people do well in the stock market without ever meeting a founder. And if you look at it from the venture side, there's not often, from my experience, a scenario where you're meeting with your venture team all that often anyways. Unless they're on your board perhaps and you're meeting once a quarter, you know, it reminds me of when I interviewed Bing Gordon. He did sort of touch on this idea of liking the people because he said you should like like the people you're having beers with because you're paying a lot for it. But at the same time, it was more important that those people had ideas for you. So if you are investing in people that you think you can add a lot of value and you can bring up five good ideas in your meetings

Starting point is 00:09:05 with them, I think that's more important than whether you both like soccer. Right. I actually think that's another thing I didn't put on the list, which is you need to be a value add investor to be a great investor and you actually don't. Like some of my best companies, I invest and like, they don't have any questions. They're just like kind of executing really, really well. And like, they might have a question once a year or whatever. But I also think that's another thing, which is you don't need to be in the trenches every single day with your portfolio. If you're an angel investor, you could just be there when people need it. The second mistake I made was, or big mistake I made is invest in founders with pedigree. Because when I first moved to San Francisco,

Starting point is 00:09:45 I went on San Hill Road where all the VCs are. And I asked for their advice. I said like, I want to do more angel investing. What kind of advice you give to me? And they all said, VCs about pattern recognition. You need to invest in people that you think that fits a certain pattern. And I was like, okay, tell me more about the pattern. Oh, you know, they went to work at Facebook. They graduated Stanford.

Starting point is 00:10:07 They graduated Harvard. And based on that, you will do well as a VC. And what does that do? That's a very exclusionary, non-inclusive way in frame of mind. And you end up missing, you know, huge, huge opportunities. An example of a company that I invested in a year ago or so at this point is Yasser, which is Uber for French-speaking Africa. With using that methodology of just like patterns, like, no, you wouldn't do that.

Starting point is 00:10:36 Like you would be investing in, you know, just Uber. And I think there's a ton of businesses, global businesses, global entrepreneurs who didn't graduate Stanford, who didn't work at Facebook, who didn't go to Harvard, who are going to be the world's best, biggest entrepreneurs, and I want to back those people. Yeah, I think that one's particularly interesting. When you bring a pedigree, I'm also reminded of investing in quote unquote proven founders and how that can be somewhat of a mistake because a lot of times you might have a founder that exited already, but they're not as hungry.

Starting point is 00:11:05 A lot of times these people go out, they raise a ton of money because they've been there, done that. But then they're out golfing while they implant some other CEO or somebody else to actually run the business. And they just don't have the same kind of drive. And a lot of times that drive is what really matters. Yeah, I think you hit upon a really good point, which is if you're a founder and you want to build a really big business, you need to have some chip on your shoulder.

Starting point is 00:11:27 You need to prove something to someone somehow. If you've proven everything and you just, you know, I just don't, I don't know if it's going to give you the extra gas in the tank, which you need. So I totally agree with you on that point. This one, platform dependency kills startups. That's what everyone was telling me. I get it. I get why being built on top of Airbnb or Facebook or Twitter could completely crush your business

Starting point is 00:11:51 because Twitter could shut down the API axis and all of a sudden, you know, your business is worthless. I remember meeting a company called Sonder. It was called Flatbook at the time, the founders. They're actually going to be spacking. I think I read $2.8 billion. And they had this business where they're like, hey, listen, Greg, Airbnb is awesome, but you like it's really inconsistent. So we're going to create a network of spaces across the world and it's going to be consistent. There's going to be like a coffee maker there and it's going to like have Starbucks coffee and we're going to put in everyone and the Wi-Fi is going to be good and we're going to,

Starting point is 00:12:28 and we're just going to list on Airbnb. And I was like, yeah, that makes a lot of sense. Like as a consumer, I get it. And I asked some other VCs or other friends about it and they're like, oh, dude, like, forget about it. It just takes, you know, one button from a product manager at Airbnb to be like, no, we don't want this on our platform, forget about it. So my lesson there is, yes, like, although you have to be careful of who you build on top of, it could lift you up.

Starting point is 00:12:55 If you're built on someone's shoulders, a shoulder of a giant, it could lift you up. And there's tons of opportunities of how do you build zero to one businesses that are scaled on top of giants. You just have to be conscious that they can turn off points at any moment. So that was a huge lesson for me there. I mean, I think I looked at that deal at a $4 million evaluation, something around then, something like that. So I don't know, do the math, you know, 25K. You know, we're talking about like, what is that, like a thousand times return or something like that. It's a lot of all those. There's one mistake on here that resonated with me, actually, that you listed, which was this idea that I'm a founder and so therefore I don't have the time

Starting point is 00:13:35 or energy to invest in another business. And I've had a couple, you know, things come across my desk that I've had that exact thought on. So what have you learned from that one. Yeah. So that's another one, which is like the narrative is that the best founders are focused. Therefore, you should only be focused on your business. I mean, that's true. You should be focused on your business. But as a founder, you kind of get access to this exclusive club of other founders. Like, you end up meeting other founders and another founder would be like, oh, like, it's like the expression, real recognizes real. Another founder will recognize you. And he or she's going to tell you or they are going to tell you about how their business is actually

Starting point is 00:14:13 doing in a certain type of way that you wouldn't give to, you know, for example, a VC. And what I should have done was write really small checks into these companies, $1,000, $5,000, $10,000. A lot of times other founders will take small checks like that because they, it's another founder. They know, you know, it's tough. They know the struggle. And I think, like, if I can give advice to my 22-year-old self is instead of investing, or whatever, take 25 grand per year, take 20 grand per year, take 20 grand per year, take

Starting point is 00:14:43 15 grand, take 40K per year, and just put small bets into people you meet along the way. And I think you'd be surprised with the results. I love it. Well, let's talk about where you've been, quote unquote, unbundling businesses, which is not a term I was very familiar with before discovering you and your work. But it seems to involve a lot of time on Reddit. And so we mentioned Wall Street bets earlier and some of these other communities that are built on Reddit and other platforms. and you've been spending a lot of time on it. I'm curious, what fascinates you the most about Reddit? Reddit is a gold line. When you break down Reddit, like, what is it? You have hundreds of thousands of what they call subreddits, which are communities, like a Facebook group, in particular niches where everything is public. And people are

Starting point is 00:15:30 synonymous, meaning completely anonymous, but they don't have their real identity. It's somewhere in between. They take a username, but you get this like the real rawness out of people. You know, on Facebook, say, or Instagram, if it says Greg Isberg, I might act a bit differently on that platform than I would if I'm a particular username and I'm kind of in this subreddit, in this culture, and I'm giving my personal opinion. Think about like the fire, are you familiar with the fire community? Financial independence retire early? No, I've sadly not spent hardly any time on Reddit. I'm not as familiar. Let's just say, you know, fat, fire out, which is, you know, F-A-T-F-I-R-E, on Reddit. And it's basically a community of people who subscribe to this lifestyle of, hey, I want to

Starting point is 00:16:18 retire early, but I don't, and I, you know, there's that 4% rule. But I don't want to like retire off, let's say 30 grand year or 40 grand year. I want to be making 200 grand, 400 grand, 500 grand, a million dollars a year with these passive investments. And it's people just like asking questions, learning about how to do it, sharing their experiences. And it's beautiful. It's beautiful because it's people, going back to what we talked about with Wall Street Survivor, it's people who have a shared mission, shared identity, shared culture, and real progress is being made every single day.

Starting point is 00:16:54 Now, I look at that community, going back to your question, it's like, why am I fascinated with Reddit? Well, I'm fascinated with Reddit because where else can I teleport into this world and see the writing on the wall and be able to distill those. insights to create products and businesses around, not many places. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo

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Starting point is 00:21:14 That's Shopify.com slash WSB. All right. Back to the show. So you're speaking to a sense of authenticity, the pseudonyms or the monikers people are using, it's kind of taking down this barrier and making them feel like they can be as authentic as possible. So therefore, you're getting really transparent dialogue. So maybe give us an example of how that has driven you to build a product or seen a product that you've visualized for this group of people. So I'll give you an example. So one of the things I like to do on Reddit

Starting point is 00:21:49 when I'm unbundling a subreddit, and we'll use Fafire as an example, is look at, on Reddit, there's these things called flares. And flares is just a category. It basically is the moderator of that community saying, how are people using this subreddit and how can I make it easier for people to filter through different posts? And what I like about looking at flares is it gives me a sense, a bird's eye view, of like how people are using this community.

Starting point is 00:22:12 One of the most popular flares on Fafire is path to Fafire, meaning of the whatever, 200,000, I think it's like 175,000, 200,000, and subscribers to this group, a large chunk of those people are not actually fired, as they call it. That meaning they don't have a net worth of more than three or four or five million dollars, but they have this desire to get there. And those are some of the most active people in the group. Now, when you look at that, you can look at it and be like, cool, that's interesting. Or you can be like me and be like, okay, let's take a step back.

Starting point is 00:22:48 Is there a product to be built here? Is there a paid community? Maybe there's a $29.99 a month product that we can create specifically to unbundle the Fafire community, specifically to unbundle the path to Fafire part portion of it into its own product. So we're just riffing right now. But I like the framework of thinking like, what does it come for the tool, stay for the network? I'm sure you might have heard that before. And what is a tool that we can be building for that particular community?

Starting point is 00:23:20 and then layer around that tool, a actual community. So going back to the Wall Street Survivor example, the tool was this stock market simulator. It was coming for like, hey, get $100,000 of virtual cash. But then the community was, or the network was, oh, hey, like Johnny from, you know, Des Moines, Illinois. Like, you seem really cool and you're around my age and like, I want to follow your stock picks and I want to have a conversation with you.

Starting point is 00:23:45 And there's so many opportunities to build network and community around it. And that's how, yeah, just giving me an example of how I think about it. So this is particularly interesting maybe to our entrepreneurial audience because a lot of times you can find yourself developing a solution without a problem. And it sounds like not only are you finding maybe problems that you can create a solution around, but you're even going above and beyond that and alluding to this, what I've heard called something like the community economy. I mean, this new era, it seems like we're entering into where it's not even just the products.

Starting point is 00:24:19 this diverse, dynamic community that builds even maybe upon your product. Yeah, I mean, the biggest businesses that will be created over the next 10 years are going to have community at its root. And that includes B2B businesses. I know that some of you might be like, oh, he's just, you know, yeah, it makes sense for like a keto diet community to have a, or a keto diet product to have a community around it. But how does that make sense for my, you know, SaaS business? But community. is a big part of that too. We're seeing it happen. I mean, it's happening right now with crypto. We're seeing things like board apes, a billion dollars of NFT transactions in 2021.

Starting point is 00:25:00 You know, and it was $40 million last, you know, last year. And just like, if you don't believe me, think about the brands that, you know, you use every day. Think about brands that aren't just a product, but are a lifestyle about building community and stuff like that. I think, especially the younger you go, Gen Z, younger millennials, they don't just want to buy a Procter and Gamble product. They want to be buying, experience the product, but being a part of something bigger than themselves. And that's really where I believe everything is going. So there are a few terms I'm seeing thrown around. And I don't know if they're exactly crypto-related, but I'm hoping you can help us dive into these terms and help us understand

Starting point is 00:25:41 what they mean. So particularly I'm talking about Web 2 and Web 3, it kind of reminded me of like, you know, when the iPhone came out with iPhone 8 and 10. I'm hearing about Web 3. What was Web 2? I don't even know. So what is Web 1? You know, so these are all questions I have. There's a lot of hype or excitement around it. But maybe let's take a step back. If you can, just give us an overview of what each of these are and what they kind of mean for what we're talking about. Yeah, let's do it. I think it's worth diving into. Crypto, I think, is today more than a $2 trillion industry. So it's worth it's worth sort of Crypto and Web 3 is big, so it's worth diving into.

Starting point is 00:26:18 So I'm happy you brought it up. So Web 1, we're talking 95 to 2004, commercialization of the internet, that was about information. It was about your People magazine, you created People.com, and you just took your magazine, you basically threw it on the internet. It was just about taking analog things and putting information. The hallmark of Web 1.0 was information, putting it online. And that was very big.

Starting point is 00:26:44 Web 2.0, Web 2, was all about people. So this is Facebook. It's no longer about just having this one-way interaction with information, but being able to read information and write information. So you could see a photo, but you can also post a photo, and you can comment on it. And it was this two-way social networking, mobile phase of the internet. And that was like 2005, 2004, let's say, to 20, 17.

Starting point is 00:27:18 Where we are today is this new era called Web 3. Web 3 is all about execution. And when I say execution, I mean things like smart contracts, which are contracts that are executed by code versus people. So imagine I bought a house a year ago and that house, I had to go to, it was in Canada, I had to go to like a notary. The notary had to like draw some documents and had to go to the bank. The bank had to like drop some documents.

Starting point is 00:27:50 I had to like believe this like paper that I saw that like here's that, you know, the backyard is one acre and this is someone's impeding on my lawn. And like there's this, I had to believe a lot of the title. I had to like, there's a lot of like trust that I had to have in like all these systems. And then it happens like pretty manually. Like someone wires the money. someone signs this, but we live in a world of code. Web 3 is about removing that human trust that you have and being able to buy products, services, experiences that are executed smartly by code.

Starting point is 00:28:27 So I think that's a hallmark of the Web 3 is the sole smart contracts thing. The other thing is money and creating internet native money. So I'm sure everyone here has heard of Bitcoin and Ethereum. These are internet native money, and I think that's a hallmark of it. And the third thing, the other hallmark of Web3 is probably ownership, just ownership in general. And we can talk more about NFTs, but I think NFT is a good example of that, non-fundable tokens, which basically is a piece of content that exists on the internet, that I could say that you, Trey, own this photo, not anyone else. similar to how in the house example, you have a title that exists.

Starting point is 00:29:07 That says, Greg Eisenberg owns this house on 1, 2, 3, Main Street. This is on the internet. It lives on the internet. So the way to summarize how I think about Web 1, 2, and 3, I think of Web 1 as read, web 2 as read, write, and web 3 as read, write, and execute. Very interesting. So with Web 3, I'm getting a sense that what you're, you're speaking about is involving a lot of decentralization perhaps as well. Is that part of

Starting point is 00:29:38 the equation here with Web 3? Yeah, exactly. So the decentralization piece of it is all about trust. So instead of having, instead of me trusting TD Ameritrade or instead of me trusting this institution or this person or this or Facebook, we live in a world where people are trusting a lot of these organizations less and less. And that's why decentralization is so powerful as a concept. And I think it's probably one of the biggest, probably the greatest inventions of all time because, you know, we're seeing this all across the world. People are trusting governments less and companies less. And they need a way to execute on day-to-day operations. And they want to do it in a way that they can trust. And they want to do it in an internet native way. And a lot of these people

Starting point is 00:30:29 are in their 20s or even younger. Well, when I look at this space as an investor, what intrigues me the most about it is I'm getting this sense. And I don't know if this is misplaced or not, but with this whole Web 3 phenomenon or development or evolution, whatever you want to call it, I'm remembering back to, you know, when Bill Gates was like on Letterman, telling Letterman what the internet was. And at that time, you had companies and then you had Internet companies. I sure would have loved to invest in those Internet companies at time.

Starting point is 00:30:59 And so what I'm seeing right now is if I'm an investor, I want to be very mindful of companies that are jumping on this potentially or on the cutting edge of this because it seems like this could be a whole new era of a certain kind of economy or the way that consumers interact. And I want to be looking at companies that are tapping into this as early as possible, potentially. Is that how you're looking at it as well? Web 3 changes everything. It's going to be as big as that shift from company to internet company.

Starting point is 00:31:29 except that it's going to go from company to internet company to within the Web3 terminology. It's called a Dow decentralized autonomous organization, which is basically a company that's governed by smart contracts. The world has changed and is never going back. Once the internet happened in 95, 96, 97, it was commercialized. We couldn't go back. The genie is out of the bottle with Web3. And just as how there was millions, billions, trillions that were made in, web 1.0, there was a lot lost. There was tons lost. Yes, Amazon is a, what is Amazon,

Starting point is 00:32:06 a $2 trillion company, something like that, around there. You know, if you would have invested in 95, 97, 98, you would have done really well. But there's obviously the pets.coms of the world where you would have lost. But I do think from an investor perspective, if you're not, you know, everyone should allocate, you know, 1%, 2%, 3%, 4% of their net worth into Web 3, come up with a portfolio approach, you're sitting there. It's 1994, it's 1995, right? It's all over again. Now is your chin. And you can look at it and be like, what do you, oh, Bitcoin's overvalued. It's worth a trillion dollars or whatever. And you know, you could have made those same arguments with, oh, Amazon's overvalued. They sell books. And how many people actually use the internet.

Starting point is 00:32:50 So when you talk about allocating part of your portfolio to Web 3, are we talking just crypto? Are we talking NFTs? Are we talking businesses that are developing marketing strategies around NFTs? I mean, talk to us a little bit about what that allocation might look like. I would say, you know, this isn't financial advice, but, you know, here's what I would do, you know, myself. And everyone's different. But here's what I'll say. You know, take a percentage that you're comfortable with. Call it 4% of your liquid network and put a, you know, a third of it to BTC Ethereum. This is the blue chip.

Starting point is 00:33:29 This is the Amazon of the era. It has staying power. That's where the biggest communities live. It makes sense to have some exposure there. The second is put a third to five or ten upcoming projects that you really believe in and do the research. So every crypto project has a white paper. And a white paper just describes like what they're doing. And you might not understand 97% of what's in the white paper.

Starting point is 00:33:55 paper. And I think that's a good, that's actually a good thing. I think it's a good thing for you to actually go through and put the work and try to, and try to understand all these white papers and do the research. Once you've done the research, allocate some, uh, some liquid net worth to some of these up-and-coming projects. And some of them could even be like the seventh biggest coin, the ninth biggest coin. It could be projects like Solana. It could be projects like chainling. It could be projects like Pocod. And you can find it. If you go to coin marketcap.org, I believe, you can see a list of the top coins by market cap and just see what you like and see what speaks to you. It's basically like the NASDAQ for points.

Starting point is 00:34:34 And then the third is putting a third to an Ft project. And should you buy something like a crypto punk, which is the number one by market cap NFT project, which is these pixelated punks, you know, should you buy some of that? Should you buy a board ape? And just thinking about, it's basically collecting crypto characters and crypto, you know, crypto assets, I would say there I would probably put half in like blue chip projects and then half in up and coming cool stuff. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:38:28 So, you know, my background investing is very much of the Warren Buffett, Benjamin Graham, value investing style. So it's very hard for me to even consider. or something like an NFT because it does feel so much like gambling, but then you look at it and the market, I mean, $3 billion traded on OpenC just last month in August. This is an incredibly real marketplace now. And, you know, you mentioned the Board 8 Yacht Club. But all of a sudden, there's something called loot, you know, out of the blue.

Starting point is 00:38:58 So all of a sudden, it seems to me like BoardApe was so last week. I mean, this is how fast things are moving. Is that a concern to you at all as far as like just the general pace of, you? this development? My concern would be not allocating. Even if you're of the Warren Buffett mindset, which is awesome, and I'm also like, I believe, I know, I believe in that as well, I still believe that taking a very small amount of your net worth to experience Web 3, even if it could go to zero, the amount of

Starting point is 00:39:31 lessons that you're going to learn is going to drive your business forward, is going to make you more cutting edge when you're investing in the public stock market, is going to help you become a better company employee. It's worth it. And best case scenario, it, Ethereum was like, you know, people are talking this week. Like, we're talking right now in September 8th. I think Ethereum went down like 25% this week. It's a lot. Ten times in the last 12 months. This is huge alpha that's worth paying attention to. So yes, do you have to keep up with new projects? Yes, absolutely. Does it move quick? Absolutely. But it still means that I think that you, you know, it's important that you get involved because this is where everything is going. A good analogy or maybe a good

Starting point is 00:40:19 analog to what you just said about where things are going. I want you to share with us about your experience watching Travis Scott perform on Fortnite and what your realizations were for. from this event. And then we'll kind of go into, I think, this projection of sorts of where our economy is ultimately going and how it's going to become more engaging and entertaining. Yeah. So Travis Scott did a concert in Fortnite where he was this thousand foot tall Fortnite character, and he was moving around and you were flying around him.

Starting point is 00:40:53 And there was millions of other people there with you. And it was this massive cultural moment where we were during the pandemic, having an experience, seeing someone, interacting with them. And it felt like, it felt really magical. It felt a lot similar to like, I love going to concerts growing up. And it felt similar to that where you feel like you're a part of something bigger than yourself. This is what they call the metaverse. And this is something that, you know, authors have been talking a lot about for years.

Starting point is 00:41:22 And there's been movies about a ready player one is a very popular one where you put in your VR headset and you just get transported to this environment. and you're able to interact with other people. And I know a lot of you are probably thinking and you're like, wow, that Greg Ismerk guy is at this point, he's crazy. He's talking about there's going to be smart contracts. We can't trust banks. We can't trust governments.

Starting point is 00:41:41 We're going to transport into these like metaverses where there's going to be like 100 foot tall, you know, rappers, you know, instead of like in-person events. And I think this is just, I think metaverses and having places in virtual places that we can go and hang out of. in are going to be a greater and greater part of how people experience culture. And this is a really scary thing to say because we're used to experiencing culture by think of like how people grew up. Think about how we've evolved like around a bonfire with other people and tribes. And it's just the evolution of people as the internet becomes a greater,

Starting point is 00:42:26 a greater part of our day-to-day life. And what this means from an investor standpoint is paying attention to who owns these virtual worlds. Roblox is huge. It's a great company. Minecraft is massive. It allows people to create their own worlds. It's massive. There's a new ETF that came out.

Starting point is 00:42:46 I think it's called something like the Metaverse, I believe, by a guy named Matthew Ball. I think, let me pull it up here. I think it's called Meta, yeah. Roundhill, Ball, Metaverse, ETF. It's literally an ETF just about metaverse-based companies. Huge opportunities. Yeah, I've heard you describe it almost like apparently your parents had a shopping mall store. And now we are going back into the shopping mall world, except this time it's virtual.

Starting point is 00:43:15 And it's, I mean, your imagination can run wild. It could be anything you want. Are we coming full circle to some extent where we've moved on from shopping malls to Amazon and now shopping malls again except just on your VR set? Or is it something much greater than that? I think, yeah, my family ran kind of like a William Sonoma type store, but in Quebec where I'm from. And they were primarily in shopping malls.

Starting point is 00:43:41 And so as a result, I kind of grew up in shopping walls. And having spent a lot of time there, just looking around, it was a place where a lot of stuff would happen. People would fall in love. People would, you know, meet friends. People would go and have this like slot machine type experience where they're just like, I wonder what I'll see at the mall. I was kind of close, you know, and I think what ended up happening is when Amazon came

Starting point is 00:44:05 out and Amazon Prime came out, we ended up just being like, okay, I'll just get it on Amazon. Well, let me just get on Amazon. Oh, I'll get it on Amazon. Let me just reorder it. And e-commerce became extremely transactional. And the way the internet works and the way the world works is, It's a pendulum swinging, you know. We start over here and then we end over here.

Starting point is 00:44:28 All that's new is old. And we're kind of moving back to the shopping mall type where you, instead of going to an e-commerce place, like I believe that where e-commerce is going at least is you're going to go to a place like a Fortnite event, like the Travis Scott event. And not only you're going to come and experience it, but you might buy virtual shoes. You might buy a virtual beer for a friend. You might buy a beer that just shows up at that person's door in 10 minutes. Gifts, virtual gifts, real gifts, all these sorts of things, you're going to transact.

Starting point is 00:45:10 In these virtual worlds, that's where it's going. That is wild. So a company like Roblox, is that a company that's actually built? building the platform for these types of experiences? What's happening there? Roblox is very much, you know, is a platform. We'll see where it goes. Like, we'll see who wins this metaverse world.

Starting point is 00:45:34 Like I can't tell you today, like, is it going to be Minecraft versus Roblox versus Epic, the makers of Fortnite? I think what ends up happening is it's not a winner take all. and it ends up becoming a winner-take most, maybe, but a lot of opportunity for different types of spaces for different use cases. So I think what ends up happening in the Metaverse land is actually going to be different than what happened in Web 2.0,

Starting point is 00:46:00 which was a massive, massive consolidation and concentration, I should say, a power between the Holy Trinity of Facebook and Google and even Snap from a social perspective, where you know, you're kind of just spending, if you're in social, if you're using social, you know, in 2017, like you're on WhatsApp, you're on Instagram, you're on Facebook, you're on Snapchat. That's where you're spending your time. Metaverse land, I think what would happen is you'll have a handful of those places that you'll go to. Some might end up being work-related places, meaning like what does co-working look like

Starting point is 00:46:35 from a virtual first perspective? Some will be, you know, Minecraft, which might be for, you know, 8 to 14 year olds. You're just going to have these different use cases for different demographics and different use cases, which honestly is better for the ecosystem, I think, to have multiple products versus just one or two or three central companies. Well, given your experience that WeWork, for example, you just touched on co-working spaces and taking that to the virtual world. I imagine you've given this a lot of thoughts.

Starting point is 00:47:07 So what does the WeWork look like in the Metaverse? Is anyone doing that? No, but someone probably should. Facebook's trying. I think Mark Zuckerberg just did a demo of what a virtual boardroom could look like. And it's like you put on your Oculus VR set and you can talk to people and converse with people. But there's opportunities beyond. Like I think Facebook might win a portion of that, but I think there's tons of opportunities for startups to go and create.

Starting point is 00:47:37 What is working in a metaverse look like? I'll tell you right now, it certainly doesn't look like Zoom today. It certainly doesn't look like Hollywood squares, basically, in boxes. This doesn't feel like this is the end all and be all of working in the 21st century. So, tons of opportunity. So your latest venture is called Late Checkout. So talk to us a little bit about what you're working on through Late Checkout. Totally.

Starting point is 00:48:05 So Late Checkout has a thesis. Now that you know me now, the thesis is community-based products, outperform non-community-based products. Shocker, obviously, that's what I'm working on. And it's a holding company that almost like the Berkshire Hathaway of community and community-based products. And we've got three business units to go after this mission. One is a product studio where we incubate our own startups, zero to one.

Starting point is 00:48:32 So we might say like, hey, let's go build a co-working type or work for first. Metaverse and we'll go and fund it ourselves and build it. We've got also a product design agency, which is the leading product design agency for community-based products and community-first products. We work with some of the biggest brands in the world to go and help them figure this out and transition to this new economy, the community economy, as you mentioned. And the third is we have a fund, which we just invest. We invest in community-based products and we do about 15 to 20 investments per year and also looking to acquire one community-based company per year as well. So we're building this ecosystem. That's why I like using the Berkshire analogy is building this

Starting point is 00:49:16 ecosystem around investing, owning in this future. I think I've even heard you say that VC itself might be even a little outdated, whereas a studio element on VC is going to be more and more important moving forward. You know, I believe that startup studios, which is really a factory, a startup factory is going to be a huge part of startup creation going forward. And what does that mean? Like, what is a startup studio? It basically means you're launching multiple per year. You're launching them as experiments. You have some shared technology or infrastructure that you're launching for all of these things. You're sharing learnings across teams. And like why? Why do I think studios are going to be more and more prevalent. Well, I think the cost of creating a startup today is so much less than

Starting point is 00:50:04 it was. You know, you can go and create a startup today, 50 grand, 100 grand, 10 grand, a thousand dollars. Like if you were put me in the back of the, you know, put me in the corner and say, hey, what would be a startup for a thousand dollars that you can create? That could be for the fat, fire community. You know, we probably launched something by the end of the day. And you can do that now because it's so quick to create and so cheap to create. The hard part is distilling the insights, right? It's like going to those places on Reddit, going to those places on Facebook groups, going to those YouTube comments, and trying to distill the insights, coming up with the product ideas, shaping that minimal viable products, it's simple,

Starting point is 00:50:41 and then using all the infrastructure that exists that's given away for free often through platforms like Google, et cetera. They're giving you these, like, you know, these no code tools or these infrastructure that you can go and build so cheaply. And that's why I think studios is a really compelling model for a lot of entrepreneurs. So one element of what you just mentioned, you said, was cheap to create. I'm also wondering if that means cheap to acquire. So you look at companies like microacquire, doing this where it seems like they're just snatching up small SaaS companies.

Starting point is 00:51:12 And I think it makes a lot of sense because the VC model is so much built on 10x, 100x returns, you know, billion dollar exits. But that's not necessarily what every founder needs or even wants. And so sometimes the incentives are not a lot. I'm wondering if you're viewing this as a form of, again, building that Berkshire conglomerate, but at an earlier price point. Yeah, so full disclosure, first of all, I'm an investor in Microacquire or late checkouts an investor in Microquire, which is a marketplace to buy and sell small companies.

Starting point is 00:51:46 And I think that's, like, the reason we invested was because of exactly what you said. Like, we believe that there's a lot of entrepreneurs who are going to create something, who create it maybe quickly or get some level of scale that are at like 500K, AR, a million dollars, AR, and they don't want to raise venture capital and like scale it and go through that process. And there's just an opportunity there for someone like us to be like, hey, like, you built this amazing community. We know how to take it from, you know, X to Y.

Starting point is 00:52:18 you want to get paid for your work, which is totally fair. Let's go and go after that. And I'm excited about that because it gives opportunity to studios like ours who can get and help scale some of these communities and businesses. And it also gives optionality for founders who no longer have to go out and raise venture capital and swing for the fences if they don't want it. There's nothing to be, there's nothing wrong about starting a bootstrap business, getting it to and just, you know, if you're passionate about saying you want to create this business,

Starting point is 00:52:51 like there's nothing wrong with that. And I think that we need to remove that stigma of like raising venture capital is good and bootstrapping is bad. And actually the founder of Microfire is a great Twitter follow. If you don't follow him already, Andrew Gazdecki. And he just launched, I think it's, what is it, bootstrap.com. It's like a competitor to tech crunch and they only talk about bootstrap companies because he was tired of people celebrating the venture round. Oh, This company raised $2 million. This company raised $4 million. No, no, no.

Starting point is 00:53:20 This is about four bootrappers, five bootstrappers. That's an exciting trend. Lower barrier to entry, lower barrier to exit. It's really, really exciting. And I could almost see this as a means of how folks can compete with things like inflation and other things. You know, when they've just working their day jobs without much wage potential, there's always this option on the side, get after a project bootstrap it and build real wealth and

Starting point is 00:53:47 in a whole new way, which is really exciting. Greg, before I let you go, I definitely want to give you the opportunity to hand off to our audience where they can learn more about you, more about late checkout, any other endeavors you want to pass along. Absolutely. So I spend a lot of time on Twitter. I love that platform. So you can find me on Twitter, just my name at Greg Eisenberg, G-R-E-G-I-S-E-N-B-E-R-G. And then in my Twitter bio, you'll see a link to Late Checkout Twitter and my check out's website and my newsletter. So go check that out. Have some fun. DMs are open. Well, given the pace of these developments, I would love to have this chat again maybe a year from now and just see all the craziness that's unfolded. So this has been really awesome.

Starting point is 00:54:33 Thanks a lot for coming on the show. I mean, it's been an absolute pleasure. I hope I didn't scare too many people with painting the future. We got to get uncomfortable to grow, right? Exactly. If you're listening, this could be finally your wake-up call to get involved in Web3 and community-based businesses. I hope you're as excited as I am. It's certainly an enticing future. Thanks a lot, Greg. Thanks. All right, if you're loving the show, please don't forget to follow us on your favorite podcast app so you get these episodes in the app automatically. The guest today and I originally connected on Twitter. So if you want to reach out, you can always grab me at Trey Lockerbee. And lastly, if you're trying to learn the intrinsic value of a company, look no further than the TIP finance tool.

Starting point is 00:55:17 Just simply Google TIP finance and it should pop right up. And with that, we'll see you again next time. Thank you for listening to TIP. Make sure to subscribe to millennial investing by the Investors Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any. decision consultant professional. This show is copyrighted by the Investors Podcast Network.

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We Study Billionaires - The Investor’s Podcast Network - TIP379: Into The Metaverse w/ Greg Isenberg

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