Jeremy Giffin, first employee at Tiny (which turned $5M of equity into ~$500M of business value), returns for part two to share where he sees the best business opportunities today. Topics span audience co-founder businesses, compliance software, the “boy vs. the guy” apprenticeship dynamic, distressed venture cap tables, and why net worth is a meaningless metric compared to cash flow.
Speakers: Sam Parr (host), Shaan Puri (host), Jeremy Giffin (guest, first employee at Tiny)
Intro — Opportunities That Expand Your Circle [00:00:00]
Shaan: All right, this is part two of the episode with Jeremy Giffin. He is the first employee at Tiny. He was there from the beginning when they turned $5 million of equity into roughly $500 million of business value and took the company public just by buying businesses.
Shaan: Last time we asked him about those early days — the first business they bought, the mistakes they made, the lessons they learned. This episode is different. Now we’re asking him: if I was doing Tiny today, how would I do it? How can I do the same thing they did? What businesses would I buy? What trends and opportunities does he see? And he tells us the single best investment opportunity he sees today and why he’s putting his money behind it. Fascinating episode — part two with Jeremy Giffin. Enjoy.
Sam: So I want to ask you about opportunities. What business opportunities, trends, or ideas do you have that people who are listening can use to expand their scope? I remember when I was trying to be an entrepreneur, one of the biggest problems I had was I only thought the world was this big tiny little circle. I was only looking for opportunities inside my tiny circle. It was only when I listened to podcasts — and I kind of wish MFM was the podcast I wish existed at the time — or when I would hang out at dinner and hear some idea that was not something I’d ever considered. My circle got bigger and bigger, and the more it got bigger the more opportunities I saw. So I want to go through a couple of trends or opportunities. What are the juiciest opportunities you see right now that somebody could go after?
Opportunity 1: Audience Co-Founder Businesses [00:02:00]
Jeremy: The second most interesting opportunity — what I’d be doing if I wasn’t raising a fund to do buyouts — would be finding people with audiences and either buying businesses for them or building businesses for them.
Jeremy: I think it’s kind of like an anomaly, like the business is in its toddler stage. The way most people with audiences monetize is through ad reads or sponsorships. I think it’s kind of like Hollywood when you were a big star and you’d get paid to hold up a glass of Coca-Cola or something. I think every person with an audience will eventually find that the money they make from equity in a business they own will massively dwarf the money they make from ad rates or sponsorship reads.
Jeremy: But the big problem is that generally if you’re a great podcaster or content creator, the last thing you want to do is buy a business — that’s risking capital, that’s hard — or even start and run a business. And so I think there’s a big opportunity to basically build a business around someone with an audience and come to them and say, “Look, I will be the CEO of this thing. I think this is the perfect product for your audience to organically use and talk about for a long time, and I will run it and we’ll split the equity.” Joe Rogan did this with Onnit and sold that company for a lot of money, and there are other examples — Doug DeMuro with Cars and Bids. People are starting to do this, but it’s still very early.
Jeremy: If I was just going to start a business de novo, I would say: okay, who are content creators that I really like, and what is the perfect product for them, and then just make it easy. It’s a pretty low-risk proposition for them. But if you do it right, even with an audience of your size, you can have nine-figure exits over four or five years, and that’ll obviously dwarf all the money you make from advertising.
Sam: If anyone wants to do this — Shaan, shaanpuri.com — feel free to hit me up, by the way.
Jeremy: This is how Tiny is doing it. Matina — the drink they’re doing with Huberman — they bought a yerba mate company. He loves mate, he’s been drinking it for a long time, it’s the perfect product. So they did that for him. If Huberman was like, “Now I’m going to take a break from my science stuff to go become a searcher and do a PE deal” — that’d be crazy. But Tiny doing it makes sense. They also did it with James Clear — they built Habits app. So another equity-vs-ad-read play. I think they’re executing it well.
Shaan: This is also how Congo Brands built Prime. They did Alani Nu first and then they were like, “Okay, we’re going to do Prime.” They went and pitched Logan Paul and KSI and said, “You guys are going to be the promotion engine, you get significant equity, and we’re going to be the operational back end.” In their case, that’s probably going to be a billion-dollar-plus company off that brand.
Jeremy: Yeah, it’s definitely starting. The Turn Group has been very good at it with Doug DeMuro and Stephen Rinella with the hunting stuff. It’s definitely starting to happen. But I think — and this is a little exaggerated — most people in a YC batch could find a podcaster and say, “You’re going to be the audience co-founder for this thing and we’re going to give you 30% and work with you, and it’s going to be a product that you can sell very organically.” The broad thesis is that these audiences are still super underpriced — the equity you’re giving up will more than be compensated for. And I think that’ll last for quite a long time. The long tail is really good too. You could do it with a very niche YouTuber and still sell a more expensive product, or do it multiple times. I basically just think everyone with an audience will eventually have some really tightly integrated organic product to sell.
Sam: Love it. So that’s a great opportunity: go find a content creator with a great audience and high trust, and basically buy or build the perfect business for them, and have them be your audience co-founder. It’s a really unfair distribution advantage you can generate for yourself.
Opportunity 2: The “Don’t Kill You” Product Curator [00:10:00]
Jeremy: One other trend I’m really bullish on is basically the idea that everything in the modern world is like poison and toxic. I live in New York — the air is making me dumber, the water is ruining my hormones, all the food at any restaurant is full of seed oils, and everything I eat is some combination of soy, corn, and wheat, and the wheat is all sprayed with glyphosate. Just everything is really bad for you.
Jeremy: I’m kind of a freak about it — I have water filters, air filters, I buy all the specific food and stuff. But it’s really mentally taxing. I think it could even just take the form of like The Wirecutter, but for products that are not going to kill you. And the thing is, it’s such a nefarious problem that it runs the gamut — clothes that aren’t made out of polyester, bedding that isn’t bad for you, cleaning products — you could do every single category in the house. I would love to have a Wirecutter-type thing that’s just: this is the version of this thing that is not going to kill you.
Sam: Dude, check this out. Go to live-oasis.com. I found this website — my co-workers sent it to me. They say, “Do you know what’s in your water? 90% of water sources contain toxins, microplastics, and other contaminants.” And they rank which water — the cities, but also which water brands have the best water. I see one I used to drink and it’s very bad — out of 100, it says “Very Bad.”
Jeremy: That’s the thing, right? You try, you think you’ve done it, and then it turns out the thing you bought doesn’t even work. It’s very complicated.
Sam: I go to this site and I’m scared because I also see the thing I have and it says “Bad.” And then you click it and they make you pay $5 — which is definitely a thing I purchased. I just want: okay, I need a shampoo — what is the one that Huberman and Rhonda Patrick all agree on and I’ll just buy that one.
Jeremy: Yeah, and I think that can exist for almost every single thing in your house.
Shaan: Ask Sam why he’s drinking that water.
Sam: Yeah, we hosted this Camp MFM event at Mr. Beast’s house — we’re in remote North Carolina somewhere — and this billionaire shows up with his security guard. And I’m watching, like, how does this guy travel? He flew private, he’s got a security guard, but then the thing that really stood out is his security guard was carrying this case of waters. We had Fiji bottles of water, which is plastic — I thought I was being fancy, I wanted to make a good impression. But instead he’s got his own Acqua Panna glass bottles, and he was always drinking from those. He didn’t say anything, but when he saw me drinking out of that Fiji bottle he made a face.
Shaan: I switched to Acqua Panna for my drinking water for my family. I bought an Aquasana showerhead filter, because the other thing is you’re drinking one thing but then you’re going to shower and bathe your naked body in tap water with like a 30-year-old showerhead. So I bought a showerhead from there that filters the water. I’m just one by one replacing different parts of my house to try to get rid of some of the bad stuff.
Sam: Traveling with a crate of mineral water — that’s a good way to spend money. I like that. All right, two good opportunities so far. The Wirecutter for products that won’t kill you — and I think that’s just a value-based model but health-based. It’s such a simple model that somebody could do it. It’s probably like 10 years of awesome execution and real love and care — only the right person should start this business. Examine did it really well for supplements, so it certainly can be done. I would use it every day.
Opportunity 3: Regulatory Compliance Software [00:20:00]
Sam: Let’s do a couple more. You mentioned — when we were hanging out yesterday — a regulation and compliance type of category. Can you explain that one?
Jeremy: Yeah, for sure. Anytime a government anywhere introduces some kind of arcane rule you have to follow — where if you don’t follow it you go to jail — it’s the ultimate motivation to buy. Sometimes it can really be difficult.
Jeremy: We looked at a bunch of examples. One was a great software company in Italy that just handled banking regulation for all the banks, making sure they’re compliant with all these things. That’s an amazing business, because first of all you’re going long on Italian regulation, which is probably a great trade in itself — in the future Italy is going to have more rules than it does today. And aside from that, a bank is not going to rip that out ever. It hits that golden criteria: relatively cheap but mission-critical.
Jeremy: There’s a bunch of these. For buying a house, for vetting tenants, for KYC and AML. If you start looking for it day to day you see it a lot. I just rented a car and there’s a process where they check my license against some database — I’m sure that’s a piece of software. Those are great because it’s low-lift, the downside of not having it is super high, and you don’t really want to mess with it once you’ve got it working.
Jeremy: The other interesting thing is that this exists for every country — at least every Western country. So you can find the software that does that for Europe or one specific country and there’s going to be multiple versions of those. Canada has different rules than America, so it’s either two different software products or two different companies. And they’re fairly AI-resistant, I think, because it’s really high-downside stuff — like medical. You don’t want to trust it to AI and then find out you weren’t in compliance and you’re going to get a huge fine or go to prison.
Sam: I made a bet recently in the regulatory compliance space. We have this thing on the Pod — one-chart businesses — which is a business where you don’t need a full business plan, you could just put one chart up on the screen and say, “That’s why I’m doing this.” And in this case the chart was basically: regulation only goes in one direction. It only goes up and to the right. Nobody ever rolls back any of these requirements. It’s only going to increase.
Sam: If you could become the go-to provider or a key piece of software in a space like that — that is just a bet you want to make. Regulation only goes up, compliance requirements don’t just go away. This is never going to happen. It only goes in one direction. And like you said, you do it or you don’t get customers or you go to jail — it’s a pretty strong motivator. You can also front-run these things. You can see what’s about to pass, what just passed, and be the first provider for that — and have a huge leg up, especially if it’s fairly niche. You could very well be the only option for a couple of years.
Sam: Why don’t you just start these things instead of just investing in them?
Jeremy: I don’t like operating businesses. I don’t think I’m very good at it and it’s not what I enjoy doing. I think everyone should stay in their zone of genius as much as they can. I’d rather allocate capital to the person who needs capital and is really excited about building something.
The Boy vs. The Guy — Apprenticeship Model [00:30:00]
Sam: All right, two more things. The first — I actually don’t have context on this, but I’m very interested just because of the title: “the boy versus the guy.”
Jeremy: It could go a bunch of ways — there are a lot of different readings, especially depending on what coast you’re on.
Jeremy: Basically it’s the idea of being a lieutenant or a protégé, effectively. Generally, there’s the trusted lieutenant who is just the solid number two — their whole identity is being a lieutenant to the number one person. And then there’s this other genre, which on the West Coast takes shape a lot as a chief of staff — you’re this young rising superstar, there’s the sense that you’re really gunning for number one.
Jeremy: What made me notice this originally was that especially in the Valley, every billionaire has one or two really young smart guys who kind of float around them. There’s this implicit agreement: you come work for me for two or three years, you shadow me, you’re my apprentice, and then I will back you and open doors for you. In social situations, it’s kind of like flying under the flag of a lord — everyone is going on the private jets of these principals, and they themselves are probably broke, but they live this lifestyle because they’re under the protection of a lord.
Jeremy: There’s another piece I’ve figured out about this: it’s also an age-gap thing. If you’re within 20 years of the founder or the number one person, you’re almost always going to be in the “guy” role. If you think about all the great firms or companies where someone has become the new number one, there’s almost always at least a 20-year gap between people, because otherwise you’re too close.
Jeremy: So there are two things: the principal really sees something in this young person and wants to accelerate them — “give me two or three years and I can really accelerate things for you.” And I think this pairs really nicely with cold email. Generally I think if you want to start a company you should just start a company, but I think this might be the sole exception — it can really open doors for investment, vouching, or connections.
Jeremy: There are lots of examples: Ben Casnocha wrote very publicly about being Reid Hoffman’s chief of staff, Blake Masters with Peter Thiel, Sam Altman was this to Paul Graham.
Shaan: I just recorded an episode with Joe Lonsdale, who was this for Peter Thiel — basically Peter’s protégé — and has started more billion-dollar companies than almost anyone else in the country. When he was 18, 19, 20 he was an intern at PayPal, then he was at Peter’s family office, then he started Palantir with him, and eventually went on to do his own thing. One of my close friends was his chief of staff, and it’s an amazing launching pad.
Sam: If anyone out there is looking for a boy — I never thought I’d say that, but under this context I am. I’ve had four people I hired when they were between 16 and 20 who have gone on to become millionaires and successful content creators and podcasters. That’s happened four times already, so I’m looking for my fifth.
Jeremy: Apprenticing is really underrated. You think about it in the context of being a blacksmith or a carpenter, but for a lot of these things it’s the single best way to learn.
Philosophy Majors and Frameworks [00:38:00]
Shaan: Hey, I’ve got a question. I noticed you studied philosophy at Columbia?
Jeremy: Yeah.
Shaan: I remembered seeing this stat that the majority of people who score really high on the LSAT — most of them studied philosophy as their undergraduate degree. And then I saw you studied philosophy and went on to raise this massive 100-million-plus fund. What did you learn in philosophy that makes you a good business person?
Jeremy: There’s a big club — I know every philosophy major. Reed Hoffman, Peter Thiel, Peter Fenton, Stuart Butterfield — it’s this weirdly over-represented thing. My favorite stat about philosophy majors is that in the top 10% of earners, they’re the highest earners of all majors. If you take the top 10% of each major, philosophy majors are the highest earning.
Jeremy: I can speak to my own experience. It’s just that if you’re going to spend four years thinking about questions, thinking about the most fundamental questions is really appealing. I don’t think I really learned anything that’s super directly applicable — it’s funny, as a Canadian I had to get a visa, and a big thing with visas is whether what you studied is relevant to what you’re working on. For philosophy, as far as the US government is concerned, the answer is no. But I’m always like, well, no — it’s relevant to everything. How should I live? What should I hope for? What can I know? These are relevant to every field.
Jeremy: Maybe the other cut at it is: being interested in the most fundamental and most abstract versus something more applied just draws these very curious, intellectual people — and I don’t really mean that in a complimentary way, just people who like to think a lot. There’s also a big difference between people who study philosophy in undergrad and move on, and people who study it for their whole lives. Those people really said, “I want to think about what a good way to live is for the rest of my life.” At some point you want to go, okay, I’ve explored this, now it’s time to move on.
Take on Holding Companies [00:44:00]
Shaan: I wanted to ask you about holding companies, which seem to be the new trend — people buying businesses. A lot of them take inspiration from Tiny. What’s your take on the holding company trend, or influencers out there who are like, “I own 500 businesses”?
Jeremy: Bragging about how many businesses you own is really weird and probably a contra-signal for how good you are. Anyone who owns a lot of businesses will tell you — Andrew would certainly say — that if Tiny could have gotten the same results from one business, that would be way better. It’s always a weird thing to say, “I’ve acquired 100 businesses,” unless you’re like a Constellation or Shore Capital where the whole point is that you buy a million businesses. Because it’s always better if you could get the results from one company.
Jeremy: That leads to the main thing people don’t understand about holding companies. There are two real reasons you’d start a holding company versus a fund or some other structure. One is because you want to hold everything forever, and I think that’s a fairly flawed premise. People generally look at two places when they think about the merits of holding forever: Buffett or venture capitalists. You don’t want to be the person who sold Google at the IPO. And Buffett famously owns everything — although that’s not actually true; Buffett sells stuff all the time.
Jeremy: Both of those groups are a bad comparison. Buffett is talking about railroads, insurance companies, energy companies — companies that will ostensibly exist for 50 or 100 years. Venture capitalists are specifically looking for the one-in-a-thousand company that will be a 50-year company. But most companies are not 50-year companies, especially not $5 million software companies. It’s kind of crazy to buy a Chrome plugin and say, “I need to own this thing for 40 years.” You’re not buying one of two railroads in Canada. So just thinking you need to hold everything forever is a bit flawed, and if you get the chance to sell it for a great price, that’s probably how you maximize returns.
Jeremy: The other thing is that when more investor-types start holding companies, they really don’t appreciate that a holding company is part holdings and part company — you’re actually running a big operating business. Tiny has north of 1,000 employees across the portfolio. That’s a big business you’re running. For most investors, that is a completely contra skill. If you’re a good investor, the last thing you should be doing when you meet a great investor is thinking, “Oh, you’d be great as the CEO of a 1,200-person company.” Those are very far apart. So what can end up happening is you spend a ton of your time actually just operating a business and you’re not able to invest — which is the thing you’re probably best at.
Sam: And you also said: most Harvard guys who are trying to buy a plumbing business shouldn’t buy a plumbing business — they should just go start a plumbing business.
Jeremy: This one always cracks me up. Your resume is Harvard, Goldman Sachs, Harvard Business School, Bridgewater, and then it’s… Ohio Plumbing Company. I get it — the math works, it can be lucrative, whatever. But I always think: imagine if you had just moved to Ohio when you were 18 and started a plumbing company — you’d probably control all the plumbing in the state. You’d just wipe the floor with them. It’s always weird that people want to go through all these loops. I think a lot of it is just to make themselves feel fancy — like, “I set up this deal, this acquisition, these investors.” But a lot of these businesses, if you just started them, you could really wipe the floor with the existing competition.
Pre-Fall vs. Post-Fall [00:53:00]
Sam: You have one more thing you’re known for: pre and post-fall. Somebody texted me, “You’ve got to ask him about pre and post-fall.” Can you explain this?
Jeremy: I define “the fall” as a period in your life where you’ve really been brought to your knees — by whatever it could be: a death, a breakup, a health scare, bankruptcy. Things that truly humble you. Not in the way most people say “humbled” — like, “I just got on the cover of Forbes, I’m so humbled.” It’s actually the exact opposite. Truly humbled.
Jeremy: I really think that changes someone for the rest of their life. I think it happens to everyone, at totally random times — it could be early in life or late in life. The extreme example would be a veteran who’s been in a lot of combat. Nothing is really going to shake someone who’s been in a bunch of firefights. And I think that applies too: if you’ve been through really hard, really dark experiences, you can just see it. A lot of entrepreneurs have their fall while building a business — it can get really difficult and hard and lonely.
Jeremy: The best way to describe it is: when someone’s post-fall, you can see it in their eyes that they’ve been through worse, and so they’re not going to be shaken that much. Versus someone who’s pre-fall. You can become very successful and be late in life, but if nothing bad has ever really happened to you, I view that as a kind of liability — as a partner or someone you work with. If something goes off the rails, this might be a really big blowup. Because if you’re a broke kid it’s one thing, but if you’re a high-flying person, the way in which you can blow up is far more spectacular.
Distressed Venture Deals — Special Situations [01:00:00]
Sam: Do you want to talk about the special situations, distressed venture stuff?
Jeremy: Yeah. This really combines a lot of the factors I love. There’s this whole class of venture-backed companies where they raised too much money — especially in 2020 and 2021. So you get this strange phenomenon where you have a business that’s doing $10 million a year in revenue and growing 30% a year, but it raised $50 million, such that the founder is probably not going to make any money because the preference stack is so high, and the investor is really not going to make any money in the sense that they want to — a venture investor wants a good investment to return the fund.
Jeremy: So it’s this weird thing where you have this great asset — if you guys owned a business doing $10 million in revenue growing 30% a year, you’d be very happy — but because it’s owned by a venture investor and run by a founder with this pref stack, it’s actually a worthless asset for everyone.
Jeremy: We’ve done these deals at Tiny before, and what I’m really interested in is doing a lot more of them personally. I’ve been talking to a lot of founders and a lot of GPs about this, and there’s just this huge opportunity. The opportunity is to take a business that — because of its cap table — is just broken and not working for anyone, and turn it into a business that works. Say the founder owns 10% and the pref stack is $50 million. Turn it into a business where they own 30%, can run it profitably, and it can be a great business. A question I always ask founders is: what would you do if you just bootstrapped this thing, or if you owned the whole thing? That’s generally a different answer than their current situation.
Jeremy: It’s a service for the venture investors too, because they have to be responsible for these things — go on the board, audit them, think about them. A lot of these companies take up a lot of their time, and they’re not the ones that are going to drive returns. It’s just this weird vestige of the fact that venture returns have been so high that there’s all this waste — these $10, $20, $30 million revenue companies that aren’t really making money for anyone.
Sam: There’s nothing wrong with the business, but you can get them cheaper than you otherwise would because of this weird second- and third-order incentive misalignment?
Jeremy: Exactly. The cap table is broken. The goals of the investors don’t align with the realities of the business.
Shaan: That’s what you’re going to do with the fund?
Jeremy: Yeah. I love special situations. When Tiny started, bootstrap businesses were kind of a special situation, and now it’s way more popular. I view this as a really nice special situation. I mean, “special situations” has a nicer ring to it than “distressed assets.”
Sam: It’s like this idea of: all these people want different things, and if you can just arrange the bricks so everyone gets what they want, you can unlock the puzzle. And with what you’re doing, everyone is better off — the VCs are happy, the founders are happy. And I love those situations when you can do them. It’s also very specific, so you’re going to come to me because you know that’s what I do, and I’m going to get stuff that other people don’t get because I’m doing this very specific thing. For my particular form of laziness, I love it when people just know what I offer and come to me — it makes things so much easier than having to go to them and convince them.
Shaan: It seems like you’re like Sam — which I love — but it’s also rare. You remind me of myself. The opposite of what most people come on the podcast and say. Most people say you’ve got to work super hard, hard work is everything. And both me and you are like, “We ask a different question: how can I be lazy and win the most?”
Jeremy: Yeah, totally. Another archetype I have of this: you can divide the world into the Arnold Schwarzenegger type and the Sam Altman type. Not to say Schwarzenegger isn’t smart or Altman doesn’t work hard — they both do. But Schwarzenegger, it’s literally in the biography: laying more bricks, lifting more days, more hours, just grinding. When he becomes an actor it’s more auditions, more movies, more practice. Versus someone like Altman who found this big opportunity early, was really clever about how he set it up — more about making smart moves. I find there’s a certain elegance in doing things with the least amount of moves.
Sam: I bet you’re more like the people who work really hard, grind it out, put in the hours. I know you love Shackleton — I think Shackleton’s a lot like this: just out-work everyone else. You’re acting like you don’t agree, but you are like that. You’re like: hard equals good, because hard means I’m hard. Whereas I’m like: easy equals good, because it means I’m clever. You admire a different attribute.
Shaan: Yeah, I mean, there’s value in sweating sometimes. I think because a thing is hard, therefore it is good for you — I definitely believe that. But I only work like 40 hours a week, I work a normal work week. I fall a little in the middle. I do think just doing a hard thing for the sake of it being hard has some kind of divine goodness in it.
Jeremy: You’ve got to do both. For the lazy person there are periods of really hard work, and vice versa. But when people say they don’t work hard and they still achieve greatness, I think they’re full of it.
Sam: Shaan, you say you’re lazy, but you’ll text me a paragraph — like a full book — at 10 p.m. You’re still doing stuff. You’re just laying on the couch while your wife’s watching TV and you’re on your phone.
Shaan: I view laziness as: not that you don’t do anything, it’s that you don’t do things you don’t want to do. I do all the things I want to do at full force, because I like them. I just don’t do a lot of things I don’t want to do. I’m very cheap about how much effort I’m willing to put into things I don’t actually want to do. Work is the stuff you don’t want to do voluntarily. Play is the stuff you do want to do voluntarily. I just opt into a lot more play than most people do. I have a lower tolerance for work I don’t want to do than the average successful person.
Sam: The reason I like Jeremy coming on is it’s cool to see examples of a different play style. We’ve seen a lot of the other play style — the David Goggins approach. I get it. That’s a cool play style. It’s just not what everybody wants to do. I like hearing other play styles.
Jeremy: Sam, you’re definitely right that I work a lot harder than other people, because it just feels innate. Another way to look at it: there’s certainly a type of person who soothes themselves by putting in more hours — working on that diminishing marginal return, “just put in a few more hours on this.” And other people, the way you soothe yourself is by figuring out the exact right thing to do. What is the exact right move? You spend all your time thinking about that.
Laziness, Grinding, and Running [01:12:00]
Shaan: You guys want to do a 50-mile race with me in August? I’ve been training for this thing. I had to run 10 miles on Sunday and I hadn’t run that far in forever — I was just depleted. You want to come work hard? Come join this race.
Jeremy: That’s probably a good one — everyone who loves super endurance stuff is probably a grinder at heart, because it’s just: if I do so much of this it’ll be better than everyone else.
Shaan: When we were in Austin last week we were hanging out with Isaiah Photo — do you know who that is, Sam?
Sam: No.
Shaan: He’s a YouTuber in Austin with probably 10 million subscribers. If you go look at his popular videos, he’d do stuff like these grind challenge videos — counting to 100,000, licking a jawbreaker as many times as it takes until it disappears, holding a lighter on and seeing how long until it goes out. Like 100 million views on some of these. People love it. To his credit he found what people wanted and he gives it to them. But I’d shoot myself if I had to do that. And then you ask him: what do you do for fun outside of YouTubing? He’s like, “Oh, I love running. I want to start a run club.” If someone told me you’ve got to run today… there are just so many successful people who love running and there’s a really high correlation there.
Shaan: On the other hand, I did a podcast with Mohnish Pabrai — do you know him, Jeremy?
Jeremy: Yeah, Andrew told me about him. He was my first value investing man crush.
Shaan: He was like, “Yeah, I take a nap every day. A good year is one or two investments” — which is literally just clicking a button to buy a public stock. Not day trading, not analyzing everything. One or two good investments in a year would be a fantastic year. He reads and he chills. And I was like, man — both of those guys are winning. Having 10 million YouTube subscribers is phenomenal, and being a phenomenal value investor is phenomenal. But the lifestyle and the things they value are so different. One guy has to have the stomach to lose $75 million of net worth in a day and be cool with that. The other guy has to have the stomach to wake up tomorrow and think, “How do I come up with the next crazy video?” It was really remarkable to see. You sort of pick your prison.
Jeremy: Guys like Mohnish are what I call the “nap room guys.” There’s a whole set of value investors who have a literal nap room. He showed me his. He opened it up — I was like, this is amazing.
Shaan: Is that a thing, nap room guys?
Jeremy: Yeah, I’ve met at least three or four different value investors like that who have a place to nap.
Andrew Wilkinson — Moving Fast and Hanging Around the Hoop [01:21:00]
Shaan: I want to ask you about that same idea — doing things fast versus grinding — but in a different context. I’m going to give you my observation and I want to know if you have any specific stories that line up with this.
Shaan: My observation: we talked about whether Andrew grinds. He comes on here, he acts super Zen, super calm, super philosophical — wants to be like Warren Buffett, playing bridge half the day, reading. But once or twice a year he just blesses us with a beautiful investment. What I have seen Andrew do is: he may not work super hard, but he works very fast. He is incredible at sniffing out opportunities, incredible at fast follow-ups, moves really quickly when he’s excited about something.
Shaan: The second thing I noticed: not only does he move really fast when he’s excited about an opportunity, he’ll just keep texting you about it, or he’ll keep prodding until he finds out more information — he’ll fly to meet you right away. But he also will be persistent. With some businesses, he was like, “Yeah, I love that business, so I emailed them every month for like five years, and then finally one month they were like, ‘Yeah, I’m willing to sell.’” That was the case for Letterboxd or Dribbble — he was just emailing the founder continuously. Aeropress, same thing — emailing the guy, “Hey, have you thought about selling this month?” Some version of that question, hanging around the hoop.
Shaan: In fact, when we sold the Milk Road — same thing happened. We tried to sell the business, we walked away from them at the last minute. If I’m them, I’m thinking, “Hate those guys.” But instead they were super professional about it. “Okay, no problem, sounds like you want to go a different direction.” They hung around the hoop. A month later he says, “Hey, I didn’t see any announcement, like no deal went through?” We said, “No, we decided not to.” He goes, “Well, we’re still interested.” And I was like, wow, that was so different than how I would have done that.
Shaan: So we made it a practice: whenever we’re buying businesses, A — don’t get personally offended when it happens, and B — schedule an automated reminder a month or three months later to just follow back up. “Hey, is there still an opportunity here? We still like the business, we liked it then, we like it more now.”
Shaan: Any other stories on Andrew moving fast or being persistent?
Jeremy: On the fast thing — it’s annoying but it’s true — the most successful people in the world respond instantly. I cannot believe how true it is. When you email the billionaire CEO it’s a 30-second response. When you email his vice president it can be a week.
Jeremy: I really try and force myself to respond fast. I wrote a little script for Gmail that archives my email every 24 hours, so I have to respond or it just disappears. It’s a really good nudge to just send the simpler text-message-length response.
Jeremy: Andrew is super high-paced, really energetic. The thing that comes to mind: when you’re at lunch with him, if he thinks of someone you should meet, he will pull out his phone and send the intro email before you’ve even finished the sentence. It’s good and bad — sometimes you’re like, “Wait, I don’t want to meet that person” — but it’s also this idea of, in terms of iterations, so many more iterations of just making something happen. Movement, especially when you’re an operator, creates information. You learn more by doing more things. And then on the following up — Andrew used to call it being Dennis the Menace. Just being a little more willing to poke your head in, even when it might feel a bit forward.
Sam: That Dennis the Menace bit — that’s a good one. He’s willing to be the Menace more than most people. He will just menace — people do say, “You’re menacing me, stop it.” But it also really pays off. Because if you think about it: okay, fine, who’s that guy who emails me every three months? Maybe you had a bad day or you’re done with the business, and you’re like, “All right, I guess I’ll see what that guy has to say.”
Jeremy: Yeah, it’s incredibly powerful and more people should do it. Just generally be less afraid. I learned this doing cold email for sales — if you send out a thousand cold emails, you’re going to get one or two responses from someone going ballistic, “If you email me again I’ll sue you” or whatever. But the other 998 are either positive, no response, or neutral. It’s basically all upside.
Spicy Hot Takes [01:31:00]
Sam: All right, I want to shift gears to what I call the Spicy Hot Take section. Here’s the first prompt: Mr. Beast shouldn’t be selling chocolate bars. What should Mr. Beast be doing instead?
Jeremy: I mean, I think it’s a testament to how valuable audiences are that all the most valuable businesses that have been created off audiences are some of the worst businesses — chocolate bars, supplements, merch. These are really bad businesses. I always think: okay, what happens if Feastables is the most successful Creator brand? What happens when that brand is a bank or a great software tool?
Sam: Explain why chocolate bars or Prime from Logan Paul are bad businesses. Somebody might say, “They’re doing hundreds of millions of revenue” or “they’ll sell for a billion dollars.”
Jeremy: You can still be very successful selling chocolate bars — Hugh Kitchen is one of my favorite companies, and Jason Karp is very successful. But there are just levels of difficulty. A chocolate bar: low margin, not a repeat customer, not a mission-critical product. Versus something really low on the stack, like home insurance or property insurance, or Visa or Mastercard — something you need every day. There are just better qualities of businesses.
Jeremy: And the other way to think about it: what would the enduring enterprise value of the business be without the person? Feastables is going to have a way harder time without Mr. Beast than if he’d built a bank. If the bank had hundreds of thousands of customers, he could go away from it and the business is still a great business. So I actually view it as very bullish for the creators — it’s very bullish for the space — because you’re making it work on hard mode. I wonder what it looks like on easy mode.
Net Worth Is a Silly Metric [01:37:00]
Sam: Next one: net worth is a silly metric. Why is it silly and what’s a better metric?
Jeremy: So my other line on this is: “billionaire is a state of mind,” because the amount of billionaires — first of all, unless it’s cash or shares in a public company, it’s always a complete matter of taste. “My company would be worth a billion if it were to sell.” And even in public companies, it’s not even real, because most of the time if you own a ton of a public company and you were to dump it all, it would massively drop the price.
Jeremy: I really think it’s more like a mimetic label. Once you get labeled a billionaire it just sticks. I see this a lot — people use it as a way to describe someone who’s in a certain class. It really has nothing to do with whether you actually have a billion dollars or own something worth a billion dollars. It’s more of a class marker.
Jeremy: And cash — liquidity — is so crazy. The amount of “billionaires” where, if you’re like, “Could you wire me $100,000 tomorrow?” the answer is no. I’ve been shocked by this over and over. Like, in a party seed round, I’m always shocked by who doesn’t wire the money, or who you have to chase down, or who has to wire it in tranches. Cash flow is so far from net worth.
Sam: We were at a lunch with somebody and I was asking, “What level of money made a real difference — what’s the next level of unlock?” And he said a number, and I’m kind of framing it as a net worth number. And he was like, “Yeah, that was a good number. When I was doing that every year —” And I was like, wait — annual? You mean annual cash flow? And it was very clear that if you had that much in annual cash flow you essentially had infinite money.
Jeremy: Yeah. When you have a net worth — say you sell your business and you just have a bunch of cash — even psychologically, the idea that you’re living off a fixed or finite amount just really changes how you view things, even if it’s a ton of money. Versus the idea of: I make whatever, $100,000 a month, and it just comes in. Me and Shaan have this good friend who sold a business and walked away with $60 million, and I said, “That feels awesome!” And he said, “It feels horrible, man.” I said, “Why?” He said, “I’m a brown immigrant. I need cash flow. If I don’t have cash flow I feel broke. I need money coming in every month. I can’t just spend this lump sum.”
Jeremy: Part of thinking about this is that I’ve probably talked to three or four thousand bootstrapped entrepreneurs, and the vibes they give off are very different from a handful of billion-dollar net worth founders. Something about how free they feel when they have that cash flow coming in. Because there are two things: one, the net worth may never actually translate into cash. A very funny thing is that all the Silicon Valley guys — behind closed doors — are actually really envious of the New York hedge fund guys, because they’re so liquid. They might not be as rich per se, but they make so much cash that it’s like a whole different thing.
Sam: How much do hedge fund guys make in New York?
Jeremy: This is another hot take. When I started getting interested in making money, the most common thing you hear is: you cannot get rich on a salary, you’ve got to own equity, you’ve got to own a business. But in New York there are lots of guys making $5 or $10 million, and there are people making $100 million. I’ve met one guy at a big hedge fund who makes a billion dollars in annual compensation.
Sam: What’s normal? Like if you’re hanging out with your New York Finance friends?
Jeremy: It varies a lot, but in a good year an analyst at a big hedge fund will make $3 to $5 million. In a really good year it can be a lot more, because usually it’s a percentage. Being a senior person at a big fund — you make a lot of money and in some very real sense you take no risk. That was certainly surprising to me.
Jeremy: And yeah, to come back to the cash flow thing — Andrew was always such a cash flow person, and in Canada at the time there was just no funding, so you had to live or die off cash flow. I think it’s more instructive to think about money in terms of cash flow. Because when you have a net worth — say you sell your business and you just have a bunch of cash — even if it’s a ton of money, psychologically the idea that you’re living off a finite amount changes how you view things. Versus: I make $100,000 a month and it just comes in.
Wrap-Up [01:49:00]
Sam: I think we should wrap it up. Jeremy, where should people find you if they want to follow you?
Jeremy: Twitter — Jeremy Giffin. My DMs are open. That’s the best place.
Sam: Awesome. Thanks for doing it, man. Really fun hanging.
Shaan: That’s the pod. Come on.