Patrick Campbell, founder of ProfitWell (sold for $200M), returns to walk through his systematic approach to ideation — including a “Bezos Number” framework that tracks fast-growing trends using industry reports, academic papers, and Google Scholar. He also shares a product remix framework for DTC differentiation, his most important pricing lessons from 50,000 subscription companies, and candid reflections on post-exit psychology, a $50K happiness study he commissioned, and what financial freedom actually means.
Speakers: Sam Parr (host), Shaan Puri (host), Patrick Campbell (guest, founder of ProfitWell, sold for $200M)
Cold Open and Introducing Patrick Campbell [00:00:00]
Shaan: Look at what I have on my head. There we go.
Sam: Oh, look at that. Look at this guy. Wow, you went from dad to cool dad in one episode with that hat.
Shaan: I’m hip, I’m hip.
Sam: You had the shirt too. Did you buy like a full uniform, or are you actually just working there now or what?
Shaan: Jonathan got the hookup. He got a swag bag from them and came over to my house the other day and gave it to me.
Sam: Have you gotten any compliments? Does anybody under the age of 25 recognize you now or something?
Shaan: A few. One young person called me “cool guy.” That’s all the affirmation I’m looking for now as a dad.
Sam: “Get away from me, cool guy. Hey, why are you staring at me, cool guy? Did you need something?” That’s how it was.
Shaan: You want to kick us off? Who do we got?
Sam: All right, we got Patrick in the house. Patrick’s been on before, so the OG listeners know all about Patrick Campbell — PC, as he’s in my phone. He created a company called ProfitWell, sold it for $200 million. He’s got the background that we always talk about where I’m like, “I noticed that people who have this background tend to be winners more often than not.” He was a competitive debater — some would call him a master debater. He was in the NSA, the intelligence world. The last time you were on you were telling us about all the crazy stuff you did to gather intelligence in the startup world — how do you learn about what your competitors are doing and whatnot.
And now today he’s back with a bunch of ideas. I want to know what you’ve been doing, because you sold your company for $200 million and then you had a bunch of time on your hands, and that’s a deadly combo. You sent us something — I want to start with this thing you texted us about the Bezos Number, and I don’t know too much about it, so I want you to explain.
The Bezos Number Framework [00:01:30]
Patrick: I’ve been searching for my Bezos Number. Here’s where this started, from a premise: I sold the company, I’m basically working at Paddle and also thinking about what the next thing looks like — and what I found in the ideation process is that I haven’t come up with ideas in like ten years. I’ve helped companies come up with ideas, but it’s one of those interesting aspects of the entrepreneurship journey.
My big belief is your job as an operator is to basically know your customer and know your space better than anyone else, and you need to do this before you start building. Because a lot of entrepreneurs fall into this trap where we’re really good at willing stuff into existence — that’s our job — except it’s relatively easy to do that today. This means basic ideas are cheap, mostly indefensible, and worse, they waste a lot of our time.
So the first step in my ideation process is using this Bezos Number framework. Basically, when Jeff Bezos started Amazon, he noticed this crazy stat — this new thing called the internet was growing 2,300% per year. He knew he had to build something on it but didn’t know what, so he was starting from the trend. When you go where the water’s flowing and ride a wave, you don’t need to be a genius to figure out what a really cool business looks like.
So I have this doc — I’m happy to share it with the audience — where myself and a researcher basically cull through industry reports, trend and stat websites. And the hack that probably no one uses but should is we use Google Scholar and other academic publishing sites to find these trends, because in academia you have a lot of undergrads and grad students writing papers like “here’s what’s going on in the space, here are all these numbers going up or down.”
Then I put this into a spreadsheet and label a couple of different categories — one in particular is the doubling time of a specific trend, how fast it’s going, what the causes are, what the effects are. The basic idea is I can find: hey, the world needs something in this space, or the world’s going in this direction. And I can figure out if this is something I could get paid for, kind of in that ikigai framework.
Sam: Let’s describe this sheet. So basically it’s like categories — social issues, healthcare, energy — those are the big categories. Then within each one you have a trend?
Patrick: Exactly. So a trend would be something like: “Top college admissions rates are dropping.” And then it says Stanford admissions went from 4.8% to 3.9% in the last five years, Harvard dropped from 6% to 4% in the last five years. So then it says direction: decreasing. And then the doubling time — how many years would it take for today’s rate to double? Here are the sources, possible causes, possible effects. I’ve got probably a hundred of these in here.
Sam: Let’s read a couple out. I want you to riff on a few. What does it mean when it’s in blue — does that mean you like that one?
Patrick: Those are just some interesting trends we’ve gone deeper on.
Riffing on Trends: Coral Bleaching, School Shootings, Teen Sex [00:05:00]
Sam: All right, let’s do this random one. I want you to talk about this: “Number of coral bleaching events.” I don’t even know what that means. What is a coral bleaching event and why does that matter?
Patrick: Basically, coral is dying out. When there are stressful conditions, coral ends up bleaching. This particular idea — I don’t know what a business looks like here, and that’s not necessarily the point of the Bezos Number. I’m not trying to find one particular business; I’m trying to find an overall trend. Some downstream effects could be there’s more government money, through regulation, going into protecting national and international waters — all different things.
Sam: Why is coral bleaching bad?
Patrick: Let’s go back to your high school biology class. I didn’t know that’s what I’d be teaching today, but the basic idea is you’re killing off ecosystems in the ocean. That’s probably the most basic way I can say it. There are a lot of downstream effects when an entire ecosystem falls apart, and coral is a major part.
Sam: Don’t act like I should know this, man. Ninety, ninety-five percent of people listening to this do not know. Coral — it’s beautiful, it’s alive, it’s part of the underwater ecosystem.
Shaan: It’s like the butterfly effect. You take away a big part of the ecosystem and it has all these secondary effects on the fish. Do you care about fish, Sam, or do we need to explain why fish matter?
Sam: I do not care about fish.
Shaan: Look, the point is we’re looking for major trends. And like you said, Sam — you ran a trend service website, you understand the nature of trends. What I’m looking for in a particular idea is a really, really fast-growing trend in one direction or another, because that’s where the water is going. If I can ride a particular wave, I’m essentially hedging all these business decisions I might be making downstream from it.
Sam: Got it. Pick another one on this sheet, Patrick, that you find interesting and have noodled on a little bit.
Patrick: Some of the less obvious ones might be around social issues. A really sad one to talk about: school shootings. I don’t know if you’ve looked into this particular market — not obviously increasing school shootings, but there’s an entire market that’s been created around this because of the rise of that happening. You can get into the government dynamics of gun control, but the fact is that schools are looking to make their students feel safer and their parents feel safer. There are things like bookcases that fly in front of doors, clear backpacks — an entire market that’s propped up against this. When you see this particular trend, you can think through the second and third order effects to figure out: is this something that can help the actual trend go down but also make a good business?
Sam: I have a random question. Why don’t they just put a certain thing in the gun that can be detected? We have metal detectors — we’re trying to find a gun — but there might be other metal. There should just be a thing in every gun that’s a detectable compound, intentionally put into every gun that’s sold, so we can easily identify “hey, a gun just walked through this door.”
Shaan: Is that basically a metal detector?
Sam: Not metal. Metal catches all kinds of metal. I’m saying they should put something unique in every gun, in the mold of the gun, so it can be detected easier than looking for all metals and slowing everybody down for keys in your pocket.
Shaan: Your California is showing.
Sam: I thought you were going to say something like they can remotely turn off all guns when something happens.
Patrick: Hey, it might even be a status symbol. It beeps — “hell yeah, I’m packing.”
Sam: I’m not judging, I’m just saying. So we’re covering environmental/global warming debates and guns — that’s what makes My First Million.
Sam: I was just flying and went through TSA three times, went through Disneyland security. I’ve just been thinking about how to make that faster because it’s a very slow process.
Shaan: Imaging is actually getting really, really good.
Teenagers Not Having Sex and Population Collapse [00:10:30]
Sam: You have another thing on here that Scott Galloway talked about — I hadn’t seen the stat until now: teenagers not having sex. You said it’s doubling every nine years. It rose from 11% to 21% of teens who haven’t had sex in the last year. That’s kind of interesting. Japan has suffered from this — isn’t there an idea that in the next ten or twenty years Japan’s population is really going to hurt from lack of procreation?
Patrick: There are a lot of countries where that’s going to happen. Even China — they’re talking about a pretty big collapse. There are a lot of causes for where this is at, and I’m not an expert on population design or anything like that, but I do think this is really big, not only among teens in general but also among young men who are kind of checking out of the ecosystem. It’s a pretty big problem for the economy in general, let alone procreation and fertility.
This is one of those trends worth going deeper on to see what’s going on and where business can be. At least in America we’re not going to do what China has been rumored to be doing with the reverse of a two-child policy.
Sam: This “cost of cybercrime” one — that’s one of your fastest-growing ones. What’s that?
Patrick: The amount of damages from cybercrime — not only things like targeting old people for fraud, but also things like DDoS attacks on websites and companies. Cybercrime is exploding and it’s probably going to accelerate even further with AI beyond this 7x, five-year magnitude I have in the spreadsheet.
Yeah, that’s really interesting because you don’t have great solutions. You have everything from Aura and some of these VPN/identity protection products, but on the corporate side there’s been a lot of money poured in. It’s changed dramatically with the birth of AI and all the kind of FUD that’s happening with that market.
Sports Betting, the Affiliate Flipper, and Riding Waves [00:13:30]
Sam: There’s a couple on here that we’ve seen people come on this podcast and talk about specific businesses they created off these trends. For example, you have “sports betting revenue” — and the doubling time you have here is less than one year. You said it was legalized in 2018, it’s already $4.3 billion in the US right now — that’s a five-year span to get to about $5 billion in US legal sports betting revenue. And it’s still only legal in what — a couple of states, right?
Patrick: There are more states, I believe, that have legal marijuana than legal sports betting. But it’s getting a little bit easier. The rumor is there’ll be a lot more states that come with this before other states legalize marijuana. Those are both markets that are really interesting — they get into all the vice-market dynamics you see with those types of companies.
Shaan: We sold the Milk Road to two guys, and one of them had a fascinating backstory. They bought it with their own money — not a company, didn’t raise money. So we were like, where are you getting the funds? And one of the guys had been an affiliate marketer. He made content sites for online poker. Online poker was legal for a while, then “Black Friday” came, and online poker was no longer legal in the United States. His business died overnight.
He was in a really competitive space because it was an absolute cash cow to be a poker affiliate — somebody would immediately go deposit money and you’d get your fee. When they killed it in the United States, out of a hundred competitors, ninety-nine said, “Well, I guess we’ll opt for international traffic now.” He took a different approach.
He sat there and looked at it: “Well, it’s illegal right now in the States — but is it going to be illegal forever? Probably not.” He just was patient. He saw a little trend pick up — New Jersey was rumored to be the first state to legalize it again, or to legalize online gambling for residents. There were local casinos that could have online portals for you to gamble on.
When everybody else went international, he thought, “I will now be the New Jersey betting affiliate.” He created a website, something like bettinginnewjersey.com — very hyper-targeted. Sounded almost like a step down. But he realized: if one state’s going to do it, and then a second state gets rumored to do it, this is a trend I can surf. I’m going to start now and make all the content for the states that are rumored, and I’ll be best positioned as this accelerates.
He sells the New Jersey one for, I think, $42 or $46 million to a bigger gaming company. Then he’s like, “Oh cool, Minnesota’s coming next.” Does the exact same thing. Sells that one for another $40-something million to the same company. Within like a two-year span.
Then the company was smart — they’re like, “Hey, you can’t just keep flipping these to us for $50 million a pop.” So he basically made like $100 million selling the same business, just by looking at the data and the trend and the news and realizing, “Okay, this is going to happen, it’s just a matter of timing.” He was the only one really paying attention to that, him and one other guy. They then merged and owned all the supply — so they could jack up the rates as an affiliate. Normally affiliates get pricing pressure, but because they were the only show in town, they could demand whatever rate they wanted.
Patrick: That’s a really great example because it just shows like: okay, here’s someone who actually benefited off of this particular trend. It just goes to show — if you start from here’s what’s happening in the world, versus here’s some cool idea I had, you’re going to make a lot more and better decisions.
French Bulldogs, Wiener Dog Ramps, and Ramone’s Story [00:18:30]
Patrick: The other one I have on here is the popularity of French bulldogs. It doubled in five years — French bulldogs are now the number one breed in the AKC, the American Kennel Club, which is like a published database.
Shaan: Our friend Ramone kind of did this with wiener dogs. He was like, “Oh, look at how popular these groups are, how fast they’re growing on Facebook of people who own wiener dogs.” What’s a problem in the wiener dog space? He found this company making ramps for wiener dogs to get on and off beds and couches. Because he saw the popularity of those groups, how avid the owners were, how fast those groups were growing, he knew there was a market for wiener dog ramps. Which, if you walked into Harvard Business School with that idea, they’d laugh you out of the room. But that business was doing like $20 million a year because he correctly identified the right trend. He scaled it from $300,000 a year to like $17 million a year in about 20 months.
Patrick: Exactly. This is why ideation is treated a little bit more like a science than just listening to podcasts and having a notebook. There are a lot of these ideas where I couldn’t tell you what a good business is in them, but if I start thinking about it further and further, that’s where really good ideas come from. With French bulldogs — I don’t know what the pain points are, but similar to Ramone’s story, there’s something very interesting there either directly or sitting around that particular idea.
Crypto Signing for AI-Generated Content [00:21:00]
Patrick: So we’ve all seen that with AI people can now generate an image or create a video from just a prompt, or deep fake a video really easily. Crypto gets a lot of grief for having no use case, even though money is the main one. But blockchain has this really interesting property: you have a private key, you have your own address that only you own and control. What they normally do is you sign it to do a transaction — you authorize by signing with your private key.
What these guys realized is: there’s going to be so much video out there, and there’s going to be a big question of “is this photoshopped, is this deep-faked, is this real?” People need a way to authenticate or sign a piece of content and say, “This was real, I made this, this is actually me,” versus putting the burden on the viewer to figure out if it’s real or fake. Misinformation is going to spread.
So now there’ll be like a watermark — the creator, the original owner, can use their private key to sign and say, “Yep, that was real, that was me, that was my video.” And it will become true very soon that if there’s a piece of content that’s unsigned, it’ll be like: “I don’t know where this came from, I don’t trust this.” Like unsigned organic produce — you don’t know what this is.
I think that’s going to be one of the consequences of the rise in generative AI. You see the trend, you say “people are going to create all kinds of content,” but then you realize that means we’re not going to know what’s real and what was AI-generated. We need a solution for that. I think those guys are going to do pretty well.
Bezos Quote and Selling the Research Process [00:23:30]
Shaan: What’s interesting about this is not just the trends, but the fact that you’re doing this. I think the exact Bezos quote was something like: “I saw the internet was growing at 2,300% a year and I realized nothing outside of a petri dish grows that fast. I just thought: what can I sell? Well, let’s start with books because they’re easy to ship and there are a lot of them, and I think people will buy that.”
A lot of people think they have to start a company because they have some passion or some mission — when actually your passion can develop once you start working on something and it starts succeeding.
Have you thought about selling your research process? That’s actually what I did with Trends, and I made a bunch of mistakes. I should have charged more — maybe I shouldn’t have done it in the first place, but that’s where I screwed up. Have you thought about turning this into a business? And second question: what is your outcome with your second business now that you have financial security? Do you have a legacy plan, a number you’re working back from?
Patrick: On the first question: research companies have a fatal flaw where they give people a dopamine rush of understanding something, but people are pretty bad at then using that information. Retention of the value doesn’t end up being great unless you turn it into a McKinsey-style “we trusted them to come in and do this research and kind of take it from there.”
Even the competitive intel stuff — I know how to use that because I’ve developed it, but people really like the dopamine of “oh, I can see exactly what’s going on” but they don’t know how to get to the next step. So if I were to do it, it would be some sort of “almost do it for you” — not only the research but then connecting it to some outcome where they can just hook it up and it targets their ads or something. Take the thought process out of my customer’s evaluation.
In terms of the second question — I’m a cliche second-time founder now. I’m either going to go into cash-flowing lifestyle-style-points type businesses, or I’m going to go into big-ass innovation-type businesses. The Bezos Number piece is really powerful for the latter because you’re looking at some really big trends that have social and cultural implications, and you’re also trying to build a particularly big business, which is what my intention is. I’ve done a lot of work over the past year to come to that realization with coaches and therapists and all that fun stuff.
What I look at is: don’t try to necessarily innovate. For most people, a 10x better product is almost impossible in this environment. Ten to fifteen years ago you could do that because you were the one with the special relationship with the supplier in Yemen, or you were the only one who could build this particular feature. But now everyone can spin up a website. Features are no longer defensible. Unless you have something patentable, some scientific breakthrough, or regulatory protection, your best bet is a 2x or 3x better product.
So Innovation isn’t something you should be targeting unless you’re really going big.
Why Cash Flow Still Matters: The Post-Exit Paradox [00:27:00]
Sam: Why do you care about the cash flow thing? Because a lot of our friends — yours, Shaan’s, mine — are quite wealthy, many tens of millions or hundreds of millions, and they’re like, “But I would love to have $5 million a year of income.”
Patrick: For me — and this is very personal, it’s not for everybody — I discovered in going through this wave of massive wealth really quickly that when the money hit the bank account, I felt nothing. I was obviously happy for the team, but the thing that went into the back of my head — and I didn’t know how to express it at the time — was: “Well, if I did it, it must not have been that hard.” Which goes into childhood, goes into a bunch of different things.
So when I’m thinking about the next business, I look at those two paths. There’s the more cash-flowing business, own your own destiny, lifestyle-style-points type things. And then there’s spending your time going after something that’s harder, going after innovation.
The perfect antithesis of how I view the world now is Nick Huber — Nick is like, “Why would you ever try to innovate? That’s so much harder.” We’ve had many long night conversations about that. For me, I want to go after that bigger and bigger thing. It took a long time to realize that because I kept chasing quick hits.
Sam: You bought 19 gas stations.
Patrick: I did buy 19 gas stations, but that’s Jenny — that’s the wife. She handles the real estate portfolio. And I’m not saying I’m not going to do stuff, but my primary focus is going to be one big thing. I don’t want to be an investor, I don’t want to come up with a bunch of cash-flowing studio-style businesses. I respect all of those things — it’s just not for me. At least that’s where I got to.
The Gas Station Story [00:29:00]
Sam: Could you tell us the gas station thing real quick?
Patrick: So I bought 19 gas stations in North and South Carolina. There was a patriarch of a family who had built up a portfolio of about 120. He passed away, and the trust or estate was selling them off in blocks — they didn’t want to sell one at a time because there was a tax bill coming up from the inheritance.
This started with Nick Huber and Mitchell Baldridge from the CEG world, because they started talking to me about the tax implications. If your spouse is a real estate professional, your passive losses on real estate become active losses and they offset active gains. So I had a big pile of gains from the sale of the company, and all of a sudden I could offset those with depreciation of the gas stations, including bonus depreciation in one year.
To use round numbers: if I buy $10 million of gas stations, I can essentially take $8 million of depreciation, and that can offset some of those gains. In September/October, Nick starts telling me about this, I start talking to Mitchell, I start talking to tax lawyers, and all of a sudden we got introduced to someone who saw this deal of the 120 stations. Jenny has been in the real estate game for ten years, so we weren’t starting from zero. We closed, I think, around December 23rd — right at the edge of the year — to get a good deal and have the tax implications put it over the top.
Sam: Has it been smooth sailing or is it “oh my God I have 19 pain-in-the-asses”?
Patrick: They’re triple-net leases, so we don’t manage or handle any operations. They’re owned by a big flag company — they’re corporate-backed. We have a partner on the deal who handled all the analysis. It’s been pretty smooth sailing. No issues so far — knock on wood.
Sam: Can you give any numbers?
Patrick: It’s $30 million in gas stations. I believe the cap rates are at like five and a half. We’re not getting an immense amount of income, but we are getting income. And the leases were written in the early 2000s with rent increases based on CPI — so with all the inflation data, those rent increases going into effect have been pretty significant. That’s what made the deal really, really good.
We’re cash flowing — I don’t know the exact number, but it’s definitely over a million a year. I feel good about it because I trust my wife to figure it out.
The Five Phases of Selling Your Company [00:34:30]
Sam: You also said you went through this wandering phase for like a year. You said there are five phases. What are the five phases of “I just sold my company for a bunch of money”?
Patrick: Yeah, it’s like the champagne problem cycle. It’s a crazy roller coaster. I don’t know if you guys went through this, but for me: I was pretty even-keeled emotionally before the actual sale. Something bad would happen to the business, I’d be like, “Oh, that sucks, okay, let’s figure it out.” Something good happened, I’d be like, “Oh great, but we have all these other problems.”
When the sale goes through — especially if it’s announced — everyone kind of starts treating you like a god for a hot second. And then that leads you to go, “Wait, am I a god?” You have this reverse imposter syndrome situation. I had good friends around me who were like, “Yeah, your stuff still stinks,” but it was one of those funny things where you’re just like, “Oh my God, I can do anything.”
Then you go through Phase Two, which is: “Oh my God, I fear death. I’m going to screw this up. I don’t know how to rich correctly. I’m going to lose it all.” This is when you’re like: tax lawyers, accountants, other lawyers, how do I evaluate whether they’re good or not, what is a wealth manager? Every single one of them tells you to just put it in index funds, and then you ask, “Well, what’s your job?” and they’re like, “Oh, we just advise you.” And you’re like, “What does that mean?” and they can’t answer.
Phase Three — or part of Phase Three — is what I call the delusional peak of cocaine energy. You have all this energy and you’re like, “I’m going to do everything.” I was going to hire seventeen people to do research, to look into things, to look at this deal and that deal, build this and build that — all this energy and optionality.
And that leads to a full-blown identity crisis. So I hired a couple of therapists to help because it was a major change in my life — figuring out who you are, what you want, starting to realize “oh, I don’t have to do these things, I can do these things — what do I actually want?”
Then you kind of even out and go back to the grind. That was my last year: up, down, even further down, and then kind of back up to figuring out what I actually want.
The $50K Happiness Study [00:38:00]
Sam: You even did this cool study where you surveyed a bunch of wealthy people and asked them about happiness.
Patrick: Yeah, this is how I cope with things — research, as you can clearly see. I spent $50K on a study, basically running it. One of our products at ProfitWell was running research studies. I spent $50K trying to get in front of as many wealthy people as humanly possible, doing qualitative conversations with a number of billionaires, a bunch of centimillionaires, and trying to figure out: what makes them happy, what makes them unhappy, so I can use some of those lessons personally.
Sam: What were the lessons?
Patrick: One of the biggest lessons — and I don’t know if everyone’s going to be able to internalize it — is when you look at how money can actually bring happiness:
People who spend money on stuff are happier than people who don’t spend money on stuff, but they’re not as happy as people who spend money on a particular hobby or narrow interest. So buying a Birkin bag does bring some joy — it’s not completely joyless — but if you’re really into F1 and you buy your own car that you go race on a track, that brings more happiness.
One layer above that is experiences. We’ve all heard this: buying experiences does bring more happiness.
Above experiences was giving money away in a targeted way — not just giving to a general organization or nonprofit, but giving to a cause you really care about.
But the top one was fascinating. The things that built the most happiness were what I labeled “freedom-inducing events” or “freedom-inducing items.” Things like a private jet — it’s not the nature of the jet, it’s that it brings you so much freedom. Things like getting a personal assistant, getting someone to take care of stuff at the home. Unless you really love buying groceries or doing something specific, those things actually bring a lot more happiness because of the freedom they provide.
Shaan: Sam, you’ve been a little hesitant to go the personal assistant route.
Patrick: The other big thing that was really interesting: the happiness scales you see in online studies for both income and net worth are basically flawed — or at least limited. They’ll say, “Oh, at $75,000 your happiness doesn’t increase,” and then another study found it increasing up to about $500K. I took it all the way to I think $3-4 million a year, and the happiness just continues to increase. It’s not at the same rate, but more income and more net worth does bring more happiness. I’m not sure where it levels off.
But the one really interesting finding: no matter the net worth, particularly for folks with more than $5-10 million — and even qualitatively with billionaires — if net worth went up, they got happier. If it stayed the same, they were a little bit happier. But if it went down even just a minuscule amount, the reduction in happiness was considerable. When you get wealthy, it’s all about protect, protect, protect — from both obvious mathematical reasons and from a happiness perspective, that’s where a lot of the anxiety was coming from in wealthier folks.
Patrick: A couple more things: lists were a big thing. Almost every wealthy person had some sort of system — some had “I get one big thing done each day,” others had a hardcore to-do list app — but that was really consistent. Everyone’s still in the game — still building a business, still trying to build wealth. And everyone worked out or had some sort of regular fitness. Folks out of the game started to fall off on fitness, but about 90% of the wealthier folks were doing at least something consistently every single week.
How Do You Measure Happiness? [00:44:00]
Sam: I have a nerdy question about the happiness thing. How do you actually know how happy somebody is? Are you just saying, “How happy are you, did you get happier when you got more money?” Is it a self-reported 1-to-10 thing?
Patrick: I’m going to try to avoid teaching stats here. Think of it like measuring temperature. We can get very accurate readings on how cold it is in your house right now. We can also get a temperature measurement by measuring the outside temperature and subtracting what we think the insulation is — less accurate, but still more accurate than if I asked you what you thought the temperature was. And there are different ways to ask even that question: if I straight-up ask “what’s the temperature?” that’s hard for you to answer, but “do you think it’s more than 68 degrees?” — a little easier.
That’s the metaphor for happiness measurement. We’re not measuring it like we measure temperature in a lab. Happiness is relative, there are lots of factors. But that doesn’t mean we can’t measure it rigorously in a relative sense.
What I did: there’s a happiness research center and different methodologies. I actually did my first undergrad research on how tax rates impact happiness in the economics department. For this study, there was a composite scoring system — a bunch of different ways of asking, “this happened, how does that affect your happiness?” — and I combined those into a comparative happiness level, kept it consistent across the board. It’s a little closer to “what do you think your temperature is?” than an actual thermometer, but it’s more than nothing.
Shaan: I think Sam hit the nail on the head where he said these things are interesting, but what’s more interesting is that you did this. You were describing how people spend on stuff but are more happy if they spend on a targeted set of stuff. That’s you spending $50K on a study about wealth. You don’t have a model train hobby, you have a research hobby. And I’m sure it wasn’t the takeaways from the study that made you happier — it was doing the study that felt like a good use of your time.
The Freedom Number: It’s a Mindset, Not a Number [00:47:00]
Shaan: I’ll also say — a lot of people listening will probably make this mistake, so I’ll say it out loud because I made it. I thought my goal was “I don’t want to be rich, I want to be free.” That’s a common thing people say to make themselves feel better than just chasing money. And it’s true — it is better to chase freedom than money. But I thought there was a number.
I remember when I was maybe 26 or 27, I was like, $6 million is my freedom number. I even had it in my passwords. I passed that number and I was like — well, was my math wrong or is this concept of a freedom number wrong?
I had a very simple realization: being financially free doesn’t mean you have a certain amount of money in your bank account. It means you are now free from money owning you. And that is a decision you make. The simple test: how much of what you do is because of money? Somebody who’s truly financially free does not make a choice based on money. That could be they shop at an expensive grocery store — “why?” Because I’m not making my decision based on money. Or a job: “why are you working on this?” Because I think it’s going to have a big payoff or the salary is too good to pass up — well, you’re making a decision based on money.
True financial freedom isn’t a number. It’s when you stop making choices based on money, which is at least 50% mindset, if not 80% mindset. Maybe the remainder is an actual financial reality of how much money you have.
Patrick: I would edit that very slightly, and it’s almost semantic. It’s more a function of force rather than choice. There are a lot of people, myself included, who are still making decisions with money in mind — because I have certain goals that are probably going to change as I get nearer to them, not just for a number’s sake.
I’m not one of those people who just wants the number to keep going up. I want ever-increasing waves of freedom, the ability to do stuff. Money unlocks that ability. So I still make decisions based off it, but I don’t have to.
I was talking to a billionaire about this over coffee. He sounds just like us — “I’m going to go do this, I’m going to go do that.” The stakes and numbers are different. I asked him: “You don’t need to do any of this — so why do you want to make this decision that nets the most money in this particular situation?” His answer was basically: “Well, if I get another billion, I can go do this thing” — and his thing was a nonprofit he wanted to do.
Patrick: I can buy 19 gas stations. I’d like to buy a skyscraper next. Do I need a skyscraper? No. Do I want one? Not really. But I like the idea that I could.
Toppling a Dictatorship and the Power Game [00:51:30]
Patrick: One of my goals — and this is going to sound crazy, this is the perfect audience to say this — I get so jacked up about the idea of toppling a dictatorship one day. I’m not even kidding.
Sam: You’ve done research on this. You have spreadsheets.
Patrick: One hundred percent. I think there are certain countries where $300-400 million could really make a dent, and it wouldn’t involve doing anything crazy legally. Countries breathe with their GDP — the money coming in, the money going out. When you look at that as an axis you can attack, there’s so much you can do — and that doesn’t even get into what you can do with social media, with actual people on the ground.
Sam: You’re the second successful entrepreneur I’ve met who has seriously researched this. They haven’t acted on it yet because they’re not there, but they’re like, “I think I could take over Bangladesh.”
Patrick: I don’t want to take it over. I’m not going to install myself as a leader. I genuinely want to help. Look at Cuba — it’s been a problematic state for a long time. Part of that’s our fault as the United States; another part is just the people who governed it. But I think it’d be really cool to basically free that place.
Shaan: People can’t even free the city of San Francisco right now. They’re trying to get the mayor to enforce punishment on crimes. I think it’s a lot tougher than you think. But it’s surprising how many people end up in the power game once you go from wealth to status to power.
Patrick: I want to be clear — it’s more of a social entrepreneurship thing than anything else.
Shaan: I don’t think that’s entirely true.
Patrick: I’ve done the introspection. It’s basically like: if you’re Marc Benioff and you create the Benioff hospital in San Francisco, what ratio is because you want the “Marc Benioff Hospital” versus because you want to cure cancer? And I don’t think it’s wrong that it skews toward wanting your name on it.
If I did a pie chart: there’s the challenge and intellectual stimulation — that’s definitely one. There’s the impact and wanting to do good in the world — that’s two. There’s the bragging rights/power game of “yeah, I did that, that’s what I did with my time, my talents, my money.” Whatever combination it is, I don’t think it’s zero on all the other things.
I’m as close to nihilist as I think one can get without being full-blown, because from the way my brain’s wired — if I were a nihilist I’d just be like, “Well, I don’t know if I’ll be a net positive, therefore nothing matters.” But you get to design the game you want.
When I look at putting your name on something, it feels like a waste. But what does get me excited is: can I be the person who did X? That is interesting. It’s not a cynical view, it’s not a dick-measuring contest — it’s just, some of the worst days working on something globally are still better than some of the other stuff happening in the world. Looking globally is really, really fascinating.
Patrick: After this podcast, I’m probably adding a third therapist to the payroll.
The Remix Framework for DTC Products [00:57:00]
Sam: You had this remix framework you kind of talked about earlier, but I want to double down on it. We should put the slide up on YouTube because it’s hard to describe. Basically you’re saying: look, Innovation with a capital I — maybe you’re not going full innovation, but you’re also not Nick Huber. Your goal is to take a product and remix it. That’s one way to come up with a novel business opportunity. And you had these remixes: make it cheaper through better supply chain, align it with a celebrity, align it with a lifestyle like keto or Christian or hunting. Does this only work for consumer products, or does it work across the board?
Patrick: Here’s where this comes from. We had 50,000 companies using our financial analytics — B2B SaaS, subscription, nonprofits, DTC was one of our big segments. I started to notice that for just under 10,000 of these DTC brands, the playbook was almost the same over and over again. It wasn’t like there was innovation in creating mattresses. It was literally: “We’ll be cheaper through better supply chain, we’ll help the environment, maybe we donate money to people who don’t have beds.” Just over and over again.
So I wanted to create a unified theory of creating products. There are only ten things these brands differentiate on — and the point is, don’t try to necessarily innovate. Maybe don’t even try to raise money for any of these consumer ideas. All you really need to do is take a particular product and remix it with some of these differentiators.
Black Rifle Coffee is basically aligning with an identity — guns, right-wing, veterans. Identity-based products increase willingness to pay by about 20 to 40%. If I just had regular coffee and then I had coffee built particularly for that community, all of a sudden that coffee is worth 20 to 40% more because you’re niching down into that group. And retention is typically much, much higher when you do this.
Sam: Does this work across the board or just consumer products?
Patrick: It works broader, but consumer’s the easiest to talk about. I had a friend who’s involved in the LGBT community — we talked about a kombucha specifically for the gay community, calling it “Bubbles for Bottoms.” Kind of a fun name.
Sam: You have here: “Health Plus Lifestyle — athletic greens for dogs.”
Patrick: And then you have things like condoms plus organic materials.
Sam: Organic condoms? They’re just going to sell you a package with nothing in it. That’s the organic condom — all natural.
Shaan: I didn’t think of that. That’s good.
Sam: Made out of air. I like that. I bet you could sell that. That’s Liquid Death, right? Liquid Death is water in a mean-looking can. I think you could probably sell an all-natural condom that’s just nothing. The natural way.
Patrick: Long story short: it doesn’t have to be complicated. The effort and execution is really hard, but the ideation doesn’t have to be.
Pricing Strategy: The Most Underrated Growth Lever [01:02:00]
Sam: Did you make this chart? This is really good. Where did this come from?
Patrick: This is based on probably hundreds of thousands of willingness-to-pay data points, because we did pricing. I don’t know if you guys even know that — pricing was my core thing, what I was most well known for in the SaaS community. We did pricing for Blue Bottle Coffee, for Lyft, a bunch of other B2B-style companies.
Sam: If you had to summarize your learnings with pricing — two or three bullet points where you’re like, just do these three things and you’re 90% there?
Patrick: A few things.
You should be changing something about your price every three months. That does not mean raise your price every three months, but it means changing your packaging, going up-market or down-market, changing up an add-on, changing your discounting strategy. It’s a forgotten growth lever in most businesses. You acquire customers, you monetize them, you retain them. We focus probably 60% of most budgets on acquiring customers, a little bit on retention, and almost no time on pricing.
The most underrated, underutilized aspect of all pricing — consumer, B2B, enterprise — is add-ons. They boost lifetime value by about 20 to 50%. “They bought your fitness shirt — add a white T-shirt for $10.” “They bought your SaaS app — add priority support for 10% of the list price.” Most high-growth subscription companies have twelve or more add-ons. The customer never sees all twelve, but they’ll see one or two, and one will convert.
And then localization. Internationalizing your pricing — the Nordics are still willing to pay about 30% higher than the US for the exact same product when you account for exchange rates. Folks in Southeast Asia, it’s about 40% less. That’s a really quick thing that can boost revenue per customer by about 15-20% just by changing what the pricing looks like depending on where they come in.
Sam: You also said: how do you know if a pricing change is good or bad? What metric do you choose?
Patrick: Revenue per customer. In your business, if you’re doing pricing properly, that number should be going up and to the right. ARPU, ACV, whatever you’re measuring — that should be going up. It’s not going up as fast as your sales or some of your other numbers, but if you’re changing something about your pricing every three months, you should see that number go up every single year, if not every six months.
Sam: Is that assuming you have a free/paid mix? Because for an ecommerce store, I could quadruple my prices, make more money per customer, but have fewer customers overall. For ecommerce we use revenue per visitor — how much do we make per average site visit.
Patrick: I would look at lifetime dollars per customer going up, because that means you’re monetizing better. If revenue per customer goes up but you have no other customers, that’s obviously not great — but it’s one of those things where most people just don’t think about it.
The average time people take between price increases is like three years. I’ve seen so many companies leave money on the table because they’re scared.
Sam: Is that like 80% of the issue — they’re just scared?
Patrick: Yeah. We tried to fill this gap with our pricing product — it just gives them confidence. We’d say, “All right, here’s data that says you sat in a room when you founded the company and said ‘Basecamp does $50, let’s just do $50,’ and you never revisited that. We have data that says you can charge this customer $500 and this customer $100, and we’re going to roll it out for new customers first.” All of a sudden your conversion goes up, your revenue per customer goes up, you get excited, and then you’re confident enough to do it for existing customers too.
I’ve been in so many exec team meetings with the smartest people I’ve ever met. Give them any other problem in their business and they’ll go attack it. Give them pricing and they all go: “I don’t know, what do you think? What do you think?” Because it touches every area of the business and they lack the confidence. Starting with an add-on is typically the gateway — once they see it works, they’re willing to localize prices, raise prices, and go from there.
I have an email template I’ve cultivated over the past decade for communicating price increases. I’m happy to share it — I’ll throw it on Twitter. T-Mobile actually stole it from the website and used it, which was kind of fun to see. The TL;DR: don’t make it about you, make it about them. They don’t care about your costs — they care about their costs. That’s the biggest mistake most people make.
Weight Loss, Body Tutor, and Accountability [01:11:00]
Sam: You’re very insightful. You approach things in a really cool way — good amount of self-deprecating humor but also academic rigor. You’re a fascinating person.
Patrick: Are we going to do the skin-to-skin bonding now or is that later in the podcast?
Sam: I’m losing weight so I don’t feel uncomfortable taking my shirt off. You’ve lost 40 pounds, right?
Patrick: Yeah, I’m down like probably 90 total but 40 since I saw you guys. As Gucci Mane once said, money makes you handsome. Like all cliche post-exit founders, I have to get healthier and take it seriously.
Sam: What’s been the number one driver — just eating less, or what?
Patrick: I use My Body Tutor. I know you’re a big fan of that. Shaan, are you still using it?
Shaan: Yeah, I went back to it. I’m having such a good time. The key was doing the daily call.
Sam: Let me tell people what it is. My Body Tutor — the simplest thing ever. We don’t get paid for this. It’s $650 a month and they call you daily — a five-minute call where they ask why you ate what you ate. The person who called you is too fit, so let the fat guys talk for a second.
Shaan: I didn’t want to say anything.
Sam: Nobody wants to hear the shredded guy talk about this. Yeah, I’m down to 2% body fat, still experimenting with it, whatever.
If you’re in a spot where you feel a little bad about yourself, you know you’re overweight, you’ve tried everything — keto, paleo, all of it — and none of it’s working, or it all kind of worked but the problem was never the plan, it was you: what My Body Tutor did was smart. They realized it’s not the diet that’s the problem, it’s you sticking to the diet. And they help you with that root cause.
They hold you accountable. They give you some strategy along the way, some helpful ways to think about things. Haley was like: when you eat, take note — on a scale of 1 to 5, where 1 is totally satisfied and 5 is ravenously hungry, where are you when you sit down? If you’re eating at a 5, the problem is we spaced the meals wrong. We want to be eating at a 3 and leaving the meal at about a 2-3 — you’re just fueling up, not going into a feeding frenzy.
Little mindset tips. But more than anything: you get a call in the morning, she asks what’s the plan for today eating-wise, and suddenly you actually have to answer that question.
Patrick: The only thing I’d add is: health is in your control. Unless you have an obvious disability, health is very much in your control. What I love about My Body Tutor is it cuts through the BS. I ask Haley about all these esoteric things like the cold plunging movement and she’s just like: “Fitness. Strength training.”
Sam: Which country should I take over?
Patrick: Haley and I don’t have that relationship yet. But I think that’s the thing — we’re bombarded with a lot of either quick-fix or very marginal stuff. A lot of the biohacking stuff, unless you have the basics in place, doesn’t matter. Haley has kept me accountable. It’s not even anything she says — it’s just saying the thing out loud. You realize: actually, what am I talking about?
Patrick: For me it started with breaking all these conventions and not being able to BS myself, because I’m going to have to talk to Haley tomorrow about it. She’s not going to be sympathetic — she’s going to be like, “Why’d you do that?” And I’m like, “Yeah, I know.” “Cool, let’s not do it tomorrow.”
Shaan: We appreciate you coming on, man. You’re super insightful and always fun to talk to. I feel like this episode definitely kicked its ass.
Patrick: That’s my goal in life. I’m not some fancy person — I got to bring the noise. All right, go follow him on Twitter, he’s at @pchampagne. We appreciate you.
Sam: That’s the pod.