Andrew Wilkinson, founder of Tiny and MetaLab, joins Sam and Shaan to discuss how he bootstrapped a small agency into a billion-dollar holding company over 17 years. The conversation covers the pros and cons of bootstrapping vs. raising money, how to structure operator incentives, the “hire one to hire ten” framework, and the craft of compelling writing and pitching. They also get into bad actors in business, the local news opportunity, and the pattern of how success starts clicking after years of grinding.
Speakers: Sam Parr (host), Shaan Puri (host), Andrew Wilkinson (guest, founder of Tiny/MetaLab)
The Warren Buffett Compounding Lesson [00:00:00]
Andrew: I don’t know if you know this, but Warren Buffett made like 97% of his wealth after the age of 55. So it all happens very slowly. He started in his 20s, wasn’t really well-known until the 90s. And the same thing happened with us — we didn’t really talk about what we did. People would meet us and they’d be like, “Oh, you’re some schmoes from Victoria who own some digital agency. You seem to own all these really boring businesses.” You know, whatever.
And so it requires being kind of underestimated and dismissed, and playing a very boring game while watching everyone else go and make tens of millions, billions of dollars taking risk in startups. Meanwhile we’re just going: how do we take a hundred grand and make 10, 15, 20K a year on that money and just keep compounding?
So basically the mental model was: take 70% of our profits and constantly reinvest, take the other 30%, live a nice life. That number went down over time. And yeah, you do that for 17 years and it turns into a big number.
Bootstrapping vs. Raising Money [00:02:00]
Shaan: Something that you wanted to talk about today was whether it’s better to own 100% of something and bootstrap it, or to give up equity to partners — whether that’s for sweat equity or money.
Sam: We were talking about that, and I asked my audience about companies that were bootstrapped and quite big. There’s a few that are doing billions a year in revenue, and I noticed two commonalities. One: a lot of the things that were bootstrapped to be really big were things that were easy to take loans against — so a lot of restaurant stuff, loans against equipment or a building they owned. The second thing: there’s a lot of agencies that were bootstrapped and became pretty substantial. Agencies or service-based businesses — recruiting companies, IT services — things where you basically bill out people’s time for 100 and charge 300.
Andrew: Think about it: you don’t need much, especially if you’re young and you’ve got enough money to live for a year. You can go start an agency. At the end of the day, you go and sell, you win a contract, and as soon as you win the contract you go find a developer or do the work yourself. Before you know it, you’re cash-flowing. You’re always able to hire people just in time for the work. There’s really no burn — it’s very capital efficient. You don’t even need an office anymore. We almost never had an office.
And the big mistake a lot of these big agencies make is they start building these fancy, humongous five-million-dollar offices in New York and San Francisco and Spain.
Sam: How many people work at MetaLab now?
Andrew: I think it’s about 170.
Sam: How often do you say to yourself, is the headache of having 170 employees always worth it?
Andrew: It’s very abstracted for me at this point. I haven’t been in the business for five or six years. The way we run Tiny now is we meet with the CEO once a year, and otherwise they check in whenever they need help.
When I was running it, at first it’s exhilarating. Running an agency is awesome when you’re starting out — you get a seat at the table in all these places you don’t deserve to be. I was like a 22-year-old pip-squeak meeting the founders of Pinterest and Slack and all these amazing places, and they were asking me for my opinion. It was crazy.
But at a certain point you get so exhausted. You’re making a good amount of money, you don’t want to get on a plane to San Francisco every second day to go sell. At that point it starts to become a much more intensive business, and for me personally I don’t enjoy running businesses after about 15 or 20 people. Once I hit that point I knew I needed to transition to a CEO.
The Pros and Cons of Owning 100% [00:07:00]
Sam: In the document you say the pros and cons of bootstrapping and owning 100% — what do you have under those?
Andrew: I mean, I think I’ve changed my opinion a lot on this. When I first started I was like a Jason Fried / David Heinemeier Hansson acolyte — like, 100%, every business should be bootstrapped. I now think that’s crazy and stupid. There are certain businesses where it’s insane not to raise money.
The analogy I always use: if you own a bakery and there’s a line out the door and you have a single oven, and you need to buy three more ovens but you don’t have the money — it’s crazy not to raise money or go get debt.
I was never in that position, but I think owning a hundred percent or owning majority in your business is like a dictatorship. Dictatorships can be very good — like Lee Kuan Yew from Singapore — or they can go terribly, like Kim Jong-un. The question is: what’s your personality and what’s going to work for you?
You can move insanely fast. There’s no board, no committee, you don’t owe anyone anything, you don’t have to IPO, you don’t have to sell. When Chris and I buy a business we can look people in the eye and be like, “We’re cutting a check — this is us.”
On the cons: you’re on an island. You don’t have anyone who’s aligned and cares and can tell you you’re being an idiot. You can really drive your business off the rails. And you also think in a limited way. I know so many entrepreneurs who could 10x their business but they’re so addicted to their dividends that they don’t.
Shaan: I raised money for our podcasting software company Supercast. I’m going to raise money for our news business. There are situations where it’s logical.
Equity for Employees [00:11:00]
Sam: What about that conversation where employees say they want equity and you don’t give it?
Andrew: There are certain businesses where we do and certain ones where we don’t. The big question — what I always say to an employee — is: equal risk, equal reward. If the business is going to sell at some point, or we think it can IPO, great, we’d love to talk about equity. But there’s a cost to it. If you want to make $300K a year and you don’t want to give up any of that in order to get stock options or buy equity, then it doesn’t matter.
I love giving people the option: you can either give up some of your comp or upside, and we’ll give you stock options, or you can get the big salary and prioritize cash. A lot of people prioritize comfort and cash, at least outside the Bay Area.
Sam: By the way, Andrew — you mentioned the guy from Singapore. Sam, do you know this guy, Lee Kuan Yew?
Sam: I know a little bit about him. I didn’t realize he was a dictator — I thought they called him like the CEO or something.
Andrew: No, he’s literally a dictator — a good dictator. Can you give us like the two-minute summary of who this guy is and why he’s awesome?
Shaan: So effectively he took over Singapore — it’s like a tropical island state in Asia, and at the time it was rice paddies, poverty, a bog. He took it over, had an autocracy, had total control, and basically thought like a businessperson. How do we make this the most business-friendly place? How do we optimize taxes? How do we ensure hyper-competent government? How do we pay government really well? How do we incentivize the whole world to manufacture and export their products from here?
And basically built it into Asia’s central banking and finance hub — outside of Hong Kong. Pretty incredible story. His background is math and computer science, right? He doesn’t come from a political background, and I think that’s why you got different ideas from him.
Andrew: Totally.
Hire One to Hire Ten [00:16:00]
Sam: You also had this thing you tweeted out that’s related to how you run the business at Tiny — this “hire one, hire ten” framework. What is that?
Andrew: Our CEOs get super annoyed because I say this all the time. It’s probably the number one thing I say, and it’s probably the biggest hack that enabled us to build Tiny over the last eight years.
Think about it like this: if you had an army general commanding a thousand troops but he’s still telling individual soldiers what to do, personally restocking their ammunition, shuffling people around — you’d be like, what the hell is this guy doing? But I think a lot of people operate their business like this. I certainly did in the early days. I would swoop and poop. Instead of hiring a VP of marketing, I would hire a whole bunch of marketing people and just kind of become the VP of marketing. Or I’d bypass people and tell people what to do.
What I realized is: you should never hire the ten people. Always focus on hiring the one person. That could be a CEO who will then go out and hire all the executives, or hiring an executive who will hire an entire team. It’s just such a hack — 80/20. How do I do 20% of the work for 80% of the result?
It took me ages to figure this out. I feel like I’ve only cracked this in the last five years, and I still make this mistake. Chris will still catch me: “Hire one to hire ten.”
Sam: When you hire that one person — let’s say your business is doing $10 million in revenue, $2 million in actual cash flow — you hire that one person and pay them a lot, $250K. Do you only hire that $250K person when you know for a fact you’ve got budget for two more people?
Andrew: Yeah, that’s my approach. Here’s an example: we hired the CEO of Aeropress, and he asked me questions — “Oh, what do you think about this hire, that hire?” And I just said, “That’s your hire. I hired you, I trust you 100%, you make those hires.” So it’s complete delegation.
When I buy a business, I make two decisions: who runs it, and how are they incentivized. Unless they do something dirty or horrible, or the business goes to hell, I just leave them to it.
Incentive Structures for Operators [00:21:00]
Sam: What’s the trick on the “how are they incentivized” part? How do you think about that when you buy a business — the business is here, I think it’s going to get to there, and I’m bringing on this person to get it above that inflection point. How do you structure the incentive?
Andrew: It’s so different. Everyone’s incentivized differently. There are certain people where they need to be able to say they’re a partner and have equity. There are other people who don’t care about that and just want targets to hit.
We’ve done everything from: “Let’s say the business makes a hundred million dollars and it’s growing at 15% — anything you do over 15% growth, you get 5% of that.” In its simplest form. We’ve also done things like, “Hey, when the stock price hits X you get a payment.”
I got to have dinner with Charlie Munger a couple years ago, and I asked what’s the perfect incentive structure. He just said, “I’ve done hundreds, and everyone is different. I still don’t know what works.” I think it’s really an art, not a science.
Sam: There’s usually a common losing formula, though. What is the common losing formula for incentives?
Andrew: Not being aligned on risk. For example, if they’re able to use my money and I keep injecting money into the business, but in no way does it hurt them — they don’t get diluted, they don’t have to pay a high interest rate, and if it goes bankrupt they don’t lose anything — that’s a huge problem.
What I try to do now is: if somebody wants equity, I always make them write a check. Or I loan them money — a personal loan, guaranteed by their house or something. I don’t want it to be so much money it’s going to ruin them, but if someone wants equity I’m like, “Okay, you’ve got to put something up.” Because if the business fails or goes down, you’ve got to have a sense of loss.
People feel loss more than they feel gain. When you put your own furniture, your own art on the walls of this place — they get to live there, but they have to know it’s your house. And we have done it. I obviously never want to do that, and it’s always structured in a way where we’re not going to take their car or something. But I just want there to be some downside.
Sam: You’re going to take their car. It’s like a punch. I get to punch you just because — if you lose my money, I’m going to punch you.
Andrew: Yeah, I love this game.
Hiring Early and Taking Risk on People [00:27:00]
Sam: You also hire people really early. Like the ghost kitchen thing — you tinkered with this thing where you hired a baker and you were making stuff to sell on DoorDash and Uber Eats. Can you tell that story?
Andrew: I’m pretty interested in health and stuff, and I was trying to get off sugar. So I went to a baker friend and I said, “Can you try and make sugar-free cookies using modern ingredients?” You guys have heard of Magic Spoon — it uses allulose, stevia, monk fruit and stuff. So he started making these, and I was like, okay, these are not as good as a chocolate chip cookie, but they’re like 90% there. And I bet a lot of people would be into this as a replacement. Think about Halo Top — it doesn’t taste as good as ice cream but you can eat a ton of it and it’s not bad for you in the same way.
So we started making all these treats, cooking out of our office, which is not technically legal. And what happened was I got a call from Island Health — the local health authority — and they said, “Hey, you’re using an ingredient that’s not approved in Canada. Allulose is not approved in Canada, so you can’t legally serve food with it.” Even though it’s generally regarded as safe.
I’m still going to do it at some point, but I just legally can’t right now. And it’s insane to me as an internet entrepreneur to hit these regulatory issues. Like, imagine being a real estate developer and you have this amazing vision and then city council just says nope.
Sam: That is insane to me. And that’s what I was going to ask — with your local news business, you hired a CEO for that. You hire people pretty early. Hiring someone is a huge risk for me. In my head, if this guy has a kid, his kid is kind of my kid too. And it’s a huge thing to convince someone in their 30s or 40s to leave their fancy gig at Salesforce to come to my company. That stresses me out.
But you seem to overcome that pretty easily. You hire people relatively early and you’re like, “Yeah, no big deal.” What are you thinking when you do that?
Andrew: I’ve lost on that a lot. You know my story about losing $10 million building project management software — that was a perfect example. I got ahead of myself, the business didn’t make sense, I threw a bunch of spaghetti at the wall, none of it stuck, and I had to let a whole bunch of people go. It was really horrible and sad. It was like a 10-year slow death.
So I’ve been through that. Now with the amount of scar tissue I have, I have enough signal where I can be like, “Okay, I’m going to try this.” With the bakery I was just contracting a friend — that was an experiment. With the news business, I actually ran it for three years before I partnered with Farhan and he took over as CEO. By that point the signal was slapping me in the face — this is a big opportunity.
If I hire a CEO, I’m pretty high-conviction that there’s something there, or there’s already a business that has cash flow. What I would never do is say, “Hey, I have an idea for this, I’ll just go hire a CEO.”
When Success Starts Clicking [00:34:00]
Shaan: Andrew, I feel like you’ve reached this point — and I used to be like, how did these people do this? I remember doing a startup, it was so hard to get my one thing to work. And then I would meet people who were like, “Oh yeah, so I have that past success, and here’s my current success, and here’s my three side successes. I just started doing it and then the line was out the door. And this other one, I kind of accidentally wrote this app, it was amazing, it went viral.”
And I just remember thinking: what do they know that I don’t? Is there just an extreme luck component?
I felt that way for five or six years straight, pushing the boulder up the hill with my startup. And now I have experienced exactly the thing I was most jealous of — and I have no idea what switched. The last five things I’ve tried have all worked, and all worked pretty much immediately. Whether it’s the podcast, the course, my e-commerce business, the Milk Road newsletter — each of these just worked straight away, in a bigger way than anything I’d ever done before, with less work and less stress.
Sam, do you know what I’m talking about? What do you think?
Sam: I know exactly what you’re talking about. You’re on a roll right now. What’s your inkling?
Shaan: My inkling is that I switched up my situation. I was in one situation for a very long time — a nice situation, but I was going to this office every day, working with these people, in this hierarchy, with this boundary box of what projects we could work on and what success might look like. As soon as I got out of that and it was just me — I was like, oh, okay. Now that it’s just me I have to look out for, I could just do a podcast. I didn’t need to have this big venture billion-dollar outcome. I had no engineers, so I just did what I could do with no engineers: I’ll do a podcast, I’ll do a course, I’ll just try to get big on Twitter, let’s see what happens.
Five tweets go viral, boom, 200K followers. There are things I just wasn’t doing before, because before I had this really set thing of like, here’s the only way to win. And I had almost too much ammo — too many people at my disposal, too much funding. Because of that, I had a very narrow window of what could work.
Once I got into “I just kind of want to try this” mode, and I didn’t have to worry about what other people thought or manage anyone — all the talents and skills I’d been building up over the past 10 years finally got to just do their thing.
Andrew: Don’t you think it’s like dating? You date a couple of crazy people and it’s really exhilarating, and then over time you’re like, wow, that was horrible. And there’s pattern matching — you go, okay, when I go to a restaurant and someone is rude to the waiter, that’s a no. In the same way with business: I used to think I wanted to build all these kinds of businesses, but those were ten-foot hurdles. I don’t want to jump ten-foot hurdles, I want to jump one-foot hurdles.
All the stuff you’re doing is in your circle of competence. It’s relatively simple to execute. It doesn’t require a lot of people, doesn’t require funding. Learning that is like a 15-year overnight success — it just suddenly clicks.
Sam: There’s a third component: confidence. I understand now that if I invest a dollar here, I think I can make at least three dollars over the next two years. Just understanding how money-making machines work. And also, Sean, because we hang out with each other, we hang out with Andrew, we hang out with our circle of friends — succeeding has become far more normal than not succeeding, actually. Not succeeding is just like, yeah, it’s going to happen, you just move on, you do the next thing, and inevitably it works. So it’s not if, it’s when.
With real estate, it’s so predictable — putting a hundred thousand dollars down on a house feels like a lot. But it’s going to make 12%. Well, I don’t know that. And I’m like, yeah, I know but it’s going to do that. So you actually want to invest more. That confidence of knowing the emotions and the routine and process has helped a lot.
Shaan: The other thing — which is what you guys just said but framed differently — is I was taking a ton of market risk before, and now I basically take almost no market risk. I just take execution risk. Before, even when I felt like I executed great, the market risk was too high. It was like inventing a new science on new land.
Now I’m just doing things where I know this works and I just need to do it well. E-commerce is nothing new. Milk Road is the Hustle but in the crypto lane — I just took your blueprint for the Hustle and copy-pasted it over.
Sam: I saw that! You literally copy-pasted the Twitter handle description. I sent you some old resources from the Hustle, and your description is literally “your smart, good-looking friend who tells you everything you need to know” — you just deleted “business” and put “crypto.”
Shaan: And honestly, you know why I did that? I remember seven or eight years ago when you first said that to me. You said, “People our age don’t watch MSNBC and CNN for information — I just want to be like your smart, no-BS friend who explains what’s going on.” It clicked with me eight years ago. So when it came time to do this, I was like, that’s the exact description.
Andrew’s Success Pattern: Compounding for 17 Years [00:44:00]
Sam: One more thing, Andrew — I used to look at you and financial success is a big, but not the only, measure of success. By that measure you are way out there. For a while, you were kind of mystical to me. How is he doing this?
Now it’s changed. I acknowledge you definitely have talent and skills that make you special. But a lot of it is also — I don’t know what percentage is each, let’s say a third, a third, a third — just that you’ve been doing it for 15 years. You took the risk of building the business, then raised a little bit of money for the fund. It’s not a matter of “how is he doing this,” it’s just, well, if I want that life, I could probably do it. I’d just have to dedicate 15 or 20 years and go through the same motions.
Andrew: And that may or may not fit what you want. The interesting thing is: I don’t know if you know this, but Warren Buffett made like 97% of his wealth after the age of 55. So it all happens very slowly.
The same thing happened with us. We didn’t really talk about what we did. People would meet us and be like, “Oh, you’re some schmoes from Victoria who own some digital agency.” And so it requires being kind of underestimated and dismissed, playing a very boring game while watching everyone else go make billions of dollars taking risk in startups.
Take 70% of profits, constantly reinvest, take the other 30%, live a nice life. Do that for 17 years and it turns into a big number.
Ironically, I still feel just as at risk and terrified as I did 15 years ago.
Sam: Are you? Because you have liquidity now.
Andrew: It’s maybe different — because if you told me 10 years ago how much cash we have or what our cash flow is, it would blow my mind. I’d say, “How could you ever feel at risk?” The problem is the stakes are bigger. We have almost a thousand employees now. There’s a lot more that can go wrong.
Do I feel like I’ve built a castle with a whole bunch of moats? Yeah, absolutely. I’m better diversified than I was 10 years ago. But there’s still that dust bowl farmer mentality.
I started chopping wood just because I was anxious, 15 years ago in my backyard. My neighbor pokes his head over the fence: “Hey, can you chop some wood for me? I’ll give you 20 bucks.” I’m like, amazing, I didn’t know this was a business. And then before I know it, I’ve hired three or four buddies, we’re all chopping wood in the backyard, we’re a merry band, selling to the whole neighborhood, it’s awesome. And then one day, 15 years later, I wake up and I’m in a sawmill and I own 15 sawmills and all I do all day is file papers. But there’s still this part of me that beats myself up for not chopping wood. There’s still this mindset even though all the machines do all the labor.
Shaan: I’m not gonna lie, the first 30 seconds while you were explaining that, I thought you literally took up wood-chopping as a hobby. I was like, oh that’s cool, must be cathartic. And then I realized I was inside of a Warren Buffett parable.
Bad Guys Usually Win [00:52:00]
Andrew: You have this thing on here: “Bad guys usually win.” As a bad guy myself, I would love to hear — what do you mean by this?
Shaan: Do you think you’re a bad guy?
Andrew: I’ve got a story. I don’t think I’m a bad guy. I call myself a bad guy rather than calling myself a good guy and having all the comments on YouTube tell me I’m a bad guy. It’s easier just to call myself a bad guy and have people tell me the opposite. Bad meaning — not bad meaning bad, but bad meaning good.
I’m sure you guys have had this experience. I’ll anonymize this story. This happened to me almost 10 years ago. I was really overwhelmed, running about five businesses. I got introduced to this older woman who had just sold her business for $20 million — super successful — and she kind of said, “Hey, I’ll mentor you, I’ll help you out.” So she comes over to my office, we start whiteboarding, and I’m just like, holy crap, this person is a genius.
First she’s an advisor and mentor, and then eventually she’s like, “Hey, how about I come in and help you with marketing and sales.” I inject her into the business, she starts killing it, business takes off, everything going great. But I did zero diligence. She legitimized herself by being this super successful person, and because she was so successful I was just grateful to have her.
Then the cracks started appearing. People started saying she was lying, she was spending money in weird ways, expenses out of control, staying in crazy hotels. It turned out she was lying and falsifying documents. She hadn’t sold her business, she wasn’t rich or successful. When I called people she’d worked with in the past, a bunch of them had had terrible experiences.
So we fired her. And then I’m in this very odd spot — ethically, I want to shoot up a flare and say everybody watch out. But legally, in Canada, when someone calls you for a reference you’re quite limited. You can basically just say, “I wouldn’t work with them again — do your diligence.” And I usually just say, “I’m not allowed to talk about it,” and they get the hint.
Sam: That’s smart.
Andrew: Almost always, those people go on to work with them anyway. Because these people are just incredibly charming, and the new employer always assumes you’re the bitter ex. They’ve obviously buttered up the new people and told some story.
So this woman — I see her on LinkedIn, she’s still succeeding. Every year she’s somewhere new. People like this, they don’t get super rich — they’re so short-term. If they only knew how much money you could make by not being a crook, they’d probably be ethical. But my sense of justice was saying I’ve got to put a stop to this, and you just realize, no, you have to let go. Never wrestle a pig: you’ll both get dirty and the pig will enjoy it.
Unless they’re Elizabeth Holmes and they get in the Wall Street Journal — these people are fine.
Sam: I want to know who the person is.
Andrew: I will never say.
Shaan: You had another example — a guy at a famous company, some fraud or honesty issues. Remember you told me about that?
Andrew: I mean, you guys talked about the Navi and Jane thing on a podcast maybe 10 episodes ago — there’s a perfect example. There’s this guy who basically did an alleged pump and dump. These people go on unless they’re criminally indicted. And even people who are criminally indicted — look at Michael Milken. He was literally front-running his own investors, committing tons of outright fraud, went to jail, and now he’s lauded as a philanthropist.
There’s this other guy — I think his name is Gurbaksh. People call him “G.” Indian American, started a company called Gravity Four, then started one called Radium One. He got arrested. He was on Oprah as this $150 million under-30 guy, the most available bachelor. He got in trouble two or three different times — basically locked his girlfriend in their apartment, there was a camera there, being just horrible. Got arrested, spent months in jail, got out, raised money again, started the same company. Now he’s overseas because he’s burned all his bridges in San Francisco.
Sam: If someone is truly unethical, they’re either a psychopath or a narcissist. And they’re very, very charming. They’re fun to hang out with, fascinating, great to listen to. It’s hard not to like them.
Andrew: One heuristic I developed after that experience: I had a company I looked at investing in, and I liked the CEO so much and he was so compelling that I didn’t invest — because it made me suspicious. I left the meeting and I was like, I would buy anything from this guy and I just want to give him all my money right now. And I stopped myself and said, this is that feeling. Don’t invest.
Sam: I’m the same way. I’m willing to throw out the good with the bad just to steer clear of the bad, because I know how intoxicating that type of person is.
Shaan: I’ve actually done some air-gapping on decision making for investments — like, Andrew, you sent out an email to me and a couple others about a business you’re raising money for, and it’s a really great email. Truly great. I wanted to ask Sam: what goes into writing an email like that?
It wasn’t the sentence structure — it was the thinking, the way of framing the business and the opportunity, telling how you stumbled into it. Your analogy to Chipotle — you did a really good job of framing this business. It was so good that I said, “I am not going to reply to this for at least 48 hours.” Because if I read it I’m going to say, give this person my money instantly.
When I look back at businesses I invest in that go on to do well, it’s usually actually a nine-out-of-ten business opportunity with a five-out-of-ten pitch. Midway through the conversation, I’m like, “Oh wait, so you basically have X.” And they’re like, “Yeah.” And I’m like, well, why didn’t you just say that? “Oh, I did kind of.” And I was like, dude, you have no idea how to pitch your own business.
But that to me is the signal — I underweighted the opportunity because the pitch was so bad, versus overweighting because the pitch was so good. So now I watch for: beware the 10-out-of-10 pitch. Beware the 10-out-of-10 charm person.
The biggest one I’ve seen: you get this uber-charming pitch, then you say “okay, what could go wrong?” and they say “nothing.” And you’re just like — this is insane. I’ve had five or six different pitches where that was the one signal, and it went to zero or bankrupt or criminal.
The Local News Business [01:03:00]
Sam: How’s the news business going?
Andrew: It’s really good, actually. We just hit profit in my hometown in Victoria — our first market. We’re now in eight different cities. Super stoked about it.
Sam: How quickly did that email come together for you?
Andrew: I mean, it’s something I’ve been thinking about and talking about publicly for two or three years, so I had all the analogies formed. I wrote it in like an hour or two, Sam helped me touch it up, and then my typical writing structure is I’ll write a first draft and sit with it for two weeks. So I sat with it for a week and then finally sent it out.
Shaan: What drives me insane is I get all these emails from people raising money and it’s literally just a template. The formatting is wrong, it’s generic, not properly addressed to me. What I was trying to do with that email is: I wanted the first sentence to hook you. I think the first sentence was, “In 2019, I was pissed off.” Line one, you’re like, what’s he pissed off about? There’s a hook. Nobody knows how to use those copywriting tools to pitch in written form.
Andrew: Well, not only that — but being able to communicate why this has a competitive advantage. In the email I kind of go through the history of the news business, local news, why local news has a better moat. You think: why would that be interesting? 50,000 to 300,000 person cities seems like a small market. But in reality it’s the stuff nobody wants. You’re fishing where the fish are, off the beaten path. And you can dominate a local market.
The Craft of Compelling Writing [01:08:00]
Sam: I actually read your email when you sent it to me in Google Drive and I was like, this is really good. I went and read all your stuff on Medium — I think there’s 10 or 12 things on there — and you follow the same format over and over again. You’re clearly influenced by Warren Buffett and by traditional storytelling techniques. But if you go to your Medium, you’re actually pitching your business on Medium constantly — there’s just no call to action.
Like, there’s a headline called something like “Joe Rogan Got Ripped Off” — and you explain that he signed for $120 million but could have done way better. Emotion: shock, which always works. The reader goes, wait, you’re saying that $100 million is low? And you see it’s actually nonsense, you see how Howard Stern does this, Rogan could have done this. It just so happens you have a company that does that.
If you wanted a full AIDA formula, you could have added: “PS — of course, legally you can’t do this, but we’re raising money for our company.”
Andrew: This is it — you’ve always said the most valuable skill is copywriting.
Sam: I chalk up the only reason MetaLab worked was because we would pick fights. We’d write these controversial articles, and I knew how to take a boring topic, find a wedge, and get people going on it. That always results in people knowing of you, passing your name around, you become a topic of conversation. It led to lots of client work and other stuff. Everyone needs to read the book Made to Stick. That was the book that really clicked for me — Chip Heath out of Stanford.
Shaan: Your writing is so similar to 37signals’ that I can tell they were a major influence. And one thing they do amazingly well is: they pick a fight while simultaneously taking the moral high ground.
What I mean is: you say “Joe Rogan got ripped off,” but you’re not criticizing Joe Rogan. You’re actually saying, “Joe, you sold yourself short. An artist and creator like you should not sell yourself short to some company that’s going to take advantage of you.” You’re taking the moral high ground while going against the grain. Most callouts are just someone sniping from the crowd, angry at the target. But what you do — and what 37signals does — is say, “Facebook is overvalued” and then “we’re sorry, we’re just the kind of guys who like businesses with actual revenues and profits, but oh, call us crazy.”
They were famously saying Facebook should be valued at way less. I would argue those guys would not be where they are today without copywriting. And I think that’s the sawdust from their sawmill — when they got messed with on the App Store, they turned it into the biggest marketing opportunity ever. They were on every talk show, their names were everywhere.
Andrew: That’s 100% where I learned it. I worship those guys for years.
Sam: I call it the Malcolm Gladwell effect. You read his books and you have to remember that a lot of what he’s saying is just theory — there’s some proof, but it’s not proven. But he’s such a good storyteller that you think what he’s saying is just fact.
Have you heard his take on David and Goliath? He argues it wasn’t that hard of a contest, because it turns out Goliath had gigantism, he was basically blind, he couldn’t see well. And David was a shepherd — shepherds are so good at throwing rocks they can take a bird out of the sky. So it’s basically taking a big dumb blind giant and shooting him in the head. Is he right? I don’t know. Is David and Goliath even real? We don’t know. But you hear this story and it changes you.
The problem I have with Basecamp and other good writers — and something I work on all the time — is that I can be such a good storyteller that I can get you to think something’s real even though I’ll tell you there’s no proof. But I’ll write it in such a way that it comes across as truth.
Andrew: Base camp does this all the time. They’ll write something and you’re like, oh, this is the truth, this is how the world is. Well — no, let’s not forget this is an opinion. There’s lots of nuance. Going back to what we’re talking about with bootstrapping: I read all their stuff, I drank the Kool-Aid. But you can’t just have that perspective. There are so many situations where it is logical to raise money. If you talked to DHH 10 years ago, he’d say Salesforce and Facebook will be bankrupt in 10 years. And I love these guys — I know them both, they’re awesome, I wouldn’t have built my business without them. But they do present everything in a very black-and-white way, which benefits them because it makes them more compelling. No one wants to hear nuance.
Wrapping Up [01:18:00]
Shaan: This has been a good pod.
Sam: Yeah, it was good. There’s a couple others we wanted to do but we’re way over — we should wrap and do another one soon.
Shaan: I know. We have like 20 topics we didn’t get to. Like “the five pillars of happiness” — do I want to be happy? I should probably ask about that one. And the James Dyson thing — you wanted to come on because you read this book about Dyson and we didn’t even talk about it.
Andrew: Oh man, I’m so excited to talk about him. He’s incredible.
Sam: All right, well let’s do another one. Let’s do Dyson — and maybe others.
Andrew: I gotta roll, I’ve got a lunch in 12 minutes.
Sam: All right, man. Good stuff.
Andrew: Okay, see you guys. That was fun.