Sam breaks down how Plunge went from $0 to $100M+ in revenue in four years — including their raw ad spend numbers and insane ROAS — and pitches the opportunity to build a new-age Consumer Reports for supplements. Shaan covers Real Short, a Chinese short-form scripted soap opera app outperforming Quibi, and both hosts reflect on lessons from Jess Ma’s episode about hiring tutors, embracing being a beginner, and understanding reinvestment runway in business.
Speakers: Sam Parr (host, co-founder of The Hustle), Shaan Puri (host, founder of Milk Road)
Intro: Plunge, Supplements, and Jess Ma [00:00:00]
Shaan: All right, today we’re talking about an app that is taking off that I think might be the next TikTok. It’s a Chinese app that you’ve probably never heard of. Sam got all the numbers behind a cold plunge business that’s doing over $100 million a year — including their ad numbers, which is rare; you almost never get to see that. And lastly, we talk about lessons that we learned from Jess Ma, a founder who has built a business up to $900 million, and she shared one or two golden nuggets that we wanted to talk about. Enjoy the episode.
Plunge’s Origin Story: From Float Tanks to $100M [00:00:30]
Sam: All right, let me give you an update on something. I take a lot of pride in the fact that we’ve had some people on here right before their fame arc really took off. We had Brian Johnson on here — you said he mentioned that yeah, you guys were one of his first. Another one: Andrew Huberman. We talked to Andrew Huberman. I remember he was like in this hallway at Stanford doing an interview with us. During the pod, I told him cold plunging was interesting to me, and after the pod he goes, “Hey, I want to send you a cold plunge.” I was like, “That’s very kind of you, I would love that.” So he introduced me to this guy named Ryan — Ryan Dewey. Ryan sent me a cold plunge, and the company — what’s the URL? Is it plunge.com? It’s just called Plunge.
He sent me this thing and I started using it and I loved it. And by the way, this sounds like an ad — this is not an ad. I have nothing to do with these guys. But Ryan, I will take a free plunge. I said no earlier, I changed my mind.
Shaan: Did you say no when he offered you one?
Sam: I said no the first time. That’s crazy. I was wrong. I’m man enough to admit it. I was wrong. I would like a plunge, thank you.
Shaan: Yeah, they’re awesome.
Sam: But here’s the deal — when he was selling them at the time, I think they were like $3,500. Now I think they’re like $5,500. I didn’t know if I liked doing it so I was like, yeah, that’s a lot of money to spend just to test something out.
So I got an update on these guys. I think they only launched in 2020. In preparation for this pod, I went and talked to him and got a bunch of numbers.
The way it started: Ryan and his partner Michael each separately owned brick-and-mortar businesses. Ryan owned this thing called a float therapy center — it’s like a deprivation tank. I used to do it in San Francisco every once in a while. You sit in this like tanning bed filled with salt water, you basically float, it’s completely dark, no noise. You feel funky. It’s kind of cool.
His other partner owned like a sauna you could go to in LA. But COVID happens, so both of those businesses get screwed. They’re like, “Man, we got to figure something out.” They noticed that at their places, people were asking for cold plunges. They also saw that online, at the time it was like $15,000 to get a cold plunge — as opposed to what a lot of people do, which is get a big trash can, go to 7-Eleven, buy ice, fill your bucket with hose water. That takes forever, whatever. They were like, “All right, let’s create our own.”
Sam: So here are the numbers. 2020, they did $270,000 in revenue. 2021, they did $8 million. 2022, they did $33 million. This year — 2023 — they’re doing around $10 million a month and they’re going to surpass $100 million in revenue off cold plunges. It’s wild.
The Influencer Launch Strategy [00:05:00]
Sam: The way he told me they got started was they basically DMed Aubrey Marcus — this health guy on Instagram who owns Onnit — and were like, “Hey, we’ll come to your house and set up a cold plunge for free.” So they get a U-Haul, fill it up with this little homemade thing they cobbled together from Home Depot parts, bring it to his place, set it up. Then they ask, “Is there anyone else you think we should talk to?” He’s like, “Yeah — Huberman. Talk to this guy.”
So they get a U-Haul, fill it up with five more, and start delivering to these guys. And I guess that’s how I got mine. They would fill up four or five, go on a “plunge tour,” and Instagram while they were doing it. So people on IG would see it and be like, “Damn, this must be like some super successful company” — because they’re only delivering to people I know, like influencers. Even though there were no other customers. It was only those customers.
Shaan: Yeah, there were like three of them. They threw this thing together.
Sam: And I guess that’s when Andrew was like — they gave one to me, they gave one to Sill, and so far they’ve given away hundreds of these things, and they’re killing it. They’ve given away over a thousand plunges.
Shaan: That’s insane. That means influencer marketing was so important to them at the beginning.
The Ad Numbers: A Magic Box [00:07:30]
Sam: You got to talk about the ad spend — this is your wheelhouse.
Shaan: Basically what they did — Ryan, I’ve met him, he’s one of these guys who was doing biohacking before biohacking was cool. When I went and hung out with him he had his toenails painted — there’s something around that, I don’t exactly know what it is. He’s eccentric. I don’t think he probably knew anything about Google Ads or Facebook Ads. He said he hired a guy on Upwork to help run Google Ads for them. That’s how they started.
Sam: And he even sent me a screenshot — it shows their revenue, their ad spend, broken down across Google, Facebook, and even Bing a little bit. Looking at their total paid media — wait, is this monthly?
Shaan: I think this is last month’s snapshot.
Sam: One month — $860,000 in ad spend. And their ROAS on that — return on ad spend — was 7.1x. To put this in perspective: nobody gets seven or eight times ROAS. They said they’ve had that basically from the beginning. They used to get over 10x, now it’s between seven and ten.
A 7x ROAS means: you have a machine. They put a box in this guy’s house and it’s a magic box. The box says if you put $1 in, you get $7 out. So they have this box they’re able to put $800,000 into each month and get back $6 million. And they’re just doing that month after month.
Sam: On Google, their ROAS is about 5.8. On Facebook it’s 10.7. I don’t know why they’re sharing this, by the way. I would never reveal this information if I found a magic box like this. But they said to do it, so, here you go.
Shaan: I think maybe they think they’re far ahead of the competition. But I don’t know — these numbers are uncopyable? That’s going to be the question.
Sam: Why did they agree to share this? I just said I’m going to talk about you in the pod, like let me interview you, and I said whatever we talk about is on the record. I guess if they change their mind they’ll let me know.
Shaan: I mean, it’s cool that they get a big feature. But also — this is crazy. Props to them, these numbers are insane.
Unit Economics: The CAC and the Valuation Question [00:11:00]
Sam: So basically they own the whole thing — they bootstrapped, they haven’t taken any funding. On Facebook, the CAC — cost to acquire a customer — is $387. They’re selling this thing for $5,000. So you’re paying just under $400 to get somebody to pay you $5,000. Amazing trade. You can see why this thing is scaling so crazy — $8 million, $33 million, now over $100 million — and they bootstrapped it. It’s profitable. They didn’t raise any outside money. And now they’re expanding into saunas and other stuff too.
What do you think this company could sell for? Let’s say they get to $100 million — I have no idea what the profit is.
Shaan: Definitely, definitely. If you’re getting like — just to put this in perspective — let’s say they’re doing $120 million in revenue, the minimum they should be selling for is 1x revenue. So $120 million. But because of their growth rate and the insane profitability on their ads, this company has to be worth at least $250-$300 million right now.
Normally, most people in e-commerce are break-even or slightly losing money on first order — a ROAS of like one to two. These guys are doing six or seven times better than that. So this company should be worth $250, $300 million right now.
Sam: Man, if I’m these guys, I might take that sale. To make that amount of money in three or four years — I would sell like $30 million of secondary at even a $100 million valuation, dilute 30%, put $15 million in the bank, and you can keep going if you really want to. You get to bank a huge life-changing sum.
Because these e-commerce companies — let’s say ad flips, competition flips, whatever — they don’t retain that much value. You basically get no credit for past sales because it’s not recurring revenue, it’s not a network-effect-style business. So you’re really only as good as your next year in e-commerce. I would definitely take some money off the table.
Sam: It’s crazy, by the way. I still use my plunge three days a week. I’ve had it for two or three years. I’m into it.
Shaan: It’s clinically proven to make you post on social media at least three times more. That’s one proven effect.
Sam: There was this one TikTok where these guys were joking — they were like, “You know, it’s crazy to think about, but for the first 20 minutes after the Titanic sank, the passengers were actually healthier.” They’re like, “They were increasing their lifespan by 20% during that first cold plunge — until they suddenly died.” They’re like, “Too bad Wim Hof wasn’t there to teach them how to breathe.”
Shaan: He should rebrand to the Titanic method.
Sam: Yeah, he’s like, “You would have lived, even if you were on the Titanic, if you learned this.” There was about 15 minutes where they were in peak physical shape.
Anyway, that’s the update on Plunge. I finally got an update on them. I’m shocked at how they’re doing. I guess I’m not that shocked — it’s a $5,000 product. I guess I’m shocked at how many people would buy into this. Never in a million years would I have thought this many people would want to get in cold water however many times a week.
The Supplement Testing Opportunity [00:16:30]
Sam: I got one thing I want to jump right into. It’s something that’s been on my mind, been grinding my gears. And that is supplement testing.
Shaan: So you’re a big supplements guy. It sounds like you’re setting up an ad.
Sam: We have to say this is not an ad. This is just me being corny. So I’ve been thinking about this idea because I’ve been buying a ton of supplements. I don’t know about you, but people are like, “Oh, you take that?” I’m like, “Yeah.” They’re like, “How do you know if it’s working?” I’m like, “How the hell would I know? It’s a supplement.” You never know if a supplement is working, right?
Shaan: I feel that way. I don’t know if I’m just not in tune with my body. When you take stuff, do you have a clear sense of “this is helping me” versus “this is not”?
Sam: When it comes to actual supplements, there are basically only one or two I’ve ever taken where I’m like, “This is working.” I take either melatonin or magnesium at night — those are the only two where I’m like, all right, it helps me go to sleep faster. Besides that, protein. But protein is a nutrient, so when I eat more protein — whether through a powder or not — I notice my muscles get bigger.
Shaan: Besides that, I don’t think I’ve noticed a difference in mostly anything. Even protein for me — it’s not even like I feel my muscles getting bigger, I just feel more full. Like, okay, that did something. Kind of like a meal replacement.
Sam: Even creatine — I started taking creatine and I thought creatine was going to be the hard stuff. I was like, “Oh okay, here we go. I’ve crossed the line. It’s just going to be a little unfair, these gains I’m about to have.” Can’t feel anything.
Shaan: No, I don’t feel anything. When I was taking testosterone, I felt that. But I don’t know if that would be under the heading of “supplements.” Basically, if it’s illegal or banned in sports, I’ve noticed a difference. If I can buy it at Target, I don’t know if I’ve noticed a difference.
Sam: If you’re not having to text a guy to get it, you’re not going to feel it.
So I feel like with supplements, there’s an opportunity. The opportunity is to be the most trusted source when it comes to supplements.
For you, where do you go when you want to find out which brand you should be taking, which brand to avoid, what’s the most effective, the cleanest, the healthiest?
Shaan: I use examine.com to figure out which supplements the science has shown actually work. But examine.com — in order to stay neutral, they don’t promote any brands. So I go to Amazon, I talk to friends. It’s pretty challenging.
It’s also challenging because — do you remember the mattress review websites? The top one ended up being owned by Casper. So it was incredibly challenging to find, like, which mattress — because some protein brands will say “25 grams of protein per scoop,” and then you go research it and it’s like, no, this one actually only has 18. Or this one has some certification which means they had to jump through this hoop. It’s actually quite challenging to figure out who’s clean and who to trust.
Sam: Yeah, I think it was Casper — or was it Purple? — that owned a bunch of the top mattress blogs. They were like a normal blog for 15 years and then they bottomed out and started promoting their own stuff. Same thing with supplements. Rule number one if you create a protein brand: you go buy your brand name domain and then you buy “the truth about” your domain too. In order to promote your own stuff.
It’s really hard. The reality is supplements, health and wellness are on the way up. It’s becoming more and more normal to take a wider variety of things. There are more and more brands because now you have DTC brands — anyone can create a brand, you don’t need to fight for shelf space, you can just be on the internet. The infinite shelf.
I think the need has become bigger than ever for somebody to become the trusted person around supplement testing.
Flave City and the “Eat This Not That” Format [00:21:00]
Sam: Have you seen this guy Flave City?
Shaan: No. How do you spell it?
Sam: F-L-A-V, then City. So Flave City is this guy that my mom will always send me. His stick is genius in terms of content creation. This is such a good niche and it is so perfect.
What he does: he goes to a grocery store — like Costco — and the thumbnail is him holding up, say, parmesan cheese. He’ll be like, “Don’t buy this.” And he turns it around: “See, it has artificial flavors. We don’t like artificial flavors because they’re going to be bad for X.” Then he holds up another one and says, “This one doesn’t have artificial flavors. It’s the best one you can find at Costco.”
He’s doing it right now on Instagram for veggie straws — those potato chips that are supposedly made out of vegetables. He goes, “This is bad for this reason. Here are some better ones for you — Lesser Evil, Power Curls, Siete Puffs, Jackson’s Sweet Potato Chips.” And he looks at the back of the veggie straws and tells you what’s wrong with it.
I’m giving veggie straws to my kids, right? “Veggie straws — oh, that’s better than chips, it’s vegetables.” And it’s like — so he just debunks a lot of things. He’s very high energy, he does mainstream products you’d find in shopping stores. He’ll be like, “Bobby approved.” He’s basically Doug DeMuro but for packaged goods instead of cars.
He has 2.5 million followers. That post about veggie straws I just described has 25,000 likes. It’s shareable because as soon as he says something and you know somebody who eats that, you share it with them. And then he becomes a trusted source. He’s not selling you anything. He’s just telling you better and worse.
I think this is genius. I think more people should copy him. There’s room for more. You could differentiate by being a mom who’s trusted by moms and doing more mom products. Or a meathead doing more gym-bro protein content — that’s kind of what More Plates More Dates is doing. But I think this format is beautiful.
Consumer Reports: The $300M Nonprofit You’ve Never Thought About [00:25:00]
Sam: So here’s the opportunity. Do you know Consumer Reports?
Shaan: I do.
Sam: They test every product — ellipticals, coffee machines, whatever. Do you know their revenue per year?
Shaan: Give me your real guess. Don’t guess low just to make me feel good.
Sam: $289 million a year. And it’s all subscription revenue. They’re a nonprofit. You have to pay $60 a year to get access to their articles. And it’s old as hell — when you go there, literally the website looks old, like when you see videos of people from the ’90s. The haircuts are old, the fashion is old. When I saw this I was like, it’s time for a new Consumer Reports.
JD Power does this for cars. What is it — JD Power and Associates — $240 million a year in revenue. So I think there’s an opportunity to create the new-age Consumer Reports / JD Power around supplements specifically.
And I would do it in the TikTok format — what Flave City is doing. Test every single product in a scientific way. “You claim you have this many grams of protein per scoop. Let’s find out. Truth or dare. I dare you to have the amount of protein you say.” Then you do a little 15- to 30-second video about each product.
Sam: The beauty of short-form video — Mr. Beast said this to me and I never really thought about it before. He said, “For the first time ever, short-form video is the only content format that can be posted on every social network at the same time.”
Instagram is a single filtered photo — cool, you can post it on Facebook, kind of on Twitter, but you can’t do that natively on Snapchat. But with short-form video you can literally get on TikTok, YouTube, Instagram, Facebook, Snapchat — every single social network is compatible with short-form video. Which means short-form video is now the dominant content format to be creating.
So if you do this, you can go across all of them.
Monetization: Affiliate vs. Subscription vs. Your Own Brand [00:29:00]
Sam: There are basically two main ways to monetize this. There’s affiliate — like Wirecutter.com. I know a guy named Dennis who started BestReviews.com. He sold it for $110 million to a company called Tronc — which is the worst named company on earth, basically the company that owns the LA Times.
Shaan: Tronc should definitely be like a women’s jeans brand. All about your butt.
Sam: It’s a horrible name. It’s one of those names that sounds like a noise. He sold it after about four years, and they monetized through affiliate. Wirecutter is one of the few — along with NerdWallet — where I still trust them even though I know they’re getting paid per click.
Shaan: I think it’s two things. One is good design and copywriting — it feels like a person is talking to you, it feels clean. Same with The Points Guy. And what they do is instead of saying “here’s our favorite,” they say: “Best on a budget — this one. Best if price is no object — this one. Most popular option — this one.” Instead of saying one is better than the other, they’re saying one is better in this situation. And I think that changes the trust calculus even though yeah, we’re making affiliate on all of them.
Sam: I know the founders of NerdWallet. If I remember correctly, their whole strategy was to make nerdwallet.com/best-credit-card rank number one on Google. For a long time, that one page was making like $40 million of their $45 million a year in sales. Then they were like, “All right, now we need: best credit card for students, best credit card for fixed income, best credit card for first-timers.” They diversified because that one page was getting all their sales.
Their whole company strategy was: write articles that get linked back from USA Today, Business Insider, whatever — get high quality links — and then in those articles link back to “best credit card.” It was a pretty wild strategy and it worked.
Shaan: You basically want to write articles that get linked so your overall domain authority goes up. But then you’ve got one or two money-maker pages, and those are the pages you need to be the number one result for. The way you do it is by creating all this goodwill around the other pages — this sort of SEO goodwill.
Sam: So I think you would assume short-form video is hard to monetize. But that’s not what you’re monetizing. You’re monetizing the trust.
Today, who is both the most trusted voice in science and supplements and the man most likely to be in Sam’s fantasies?
Shaan: My husband, Andrew Huberman. Exactly.
Sam: Huberman makes money through his ads and his podcast. But remember when Rob Dyrdek was on the pod, talking about Momentous protein? He said, “Momentous was kind of dead in the water — we thought we had made the best, cleanest protein but it really wasn’t going anywhere. Then we did a deal with Andrew Huberman.” And we were like, “How much did you pay him?” And he goes, “I don’t know, but whatever it was — it wasn’t enough.” He was just laughing at how crazy it was.
So the business model here: you build trust for a couple years, and then you come out with your own branded supplement.
Shaan: But doesn’t that ruin your whole premise of being the most trusted voice?
Sam: No, no, no. You’re the most trusted. You build trust by being honest, and then finally you say, “I’ve had it with these companies. I am just going to make the one I wish existed — the one that is truly clean, the one that will hold the utmost standard.” Derek from More Plates More Dates — that’s exactly what he did. Somebody like Jessica Alba with the Honest Company did the same thing. She built up fame and trust, then came out with a product and said, “This is going to be the brand I want to give to my kids.”
By the way, I buy Momentous protein in part because I trust Rob and Rob was involved. I buy BPN — Nick Bear, the Jack guy who runs fast. I was like, “These guys both seem trustworthy.” So I spend all my money with them. Because what else do you have to go on? This packaging or that packaging? You have nothing else to go on besides the words of somebody you trust.
So I think ultimately you build your own supplement franchise. But first, for a couple years, you are just becoming the most viral, trusted source when it comes to the truth about X. And you’ve got to pick things that are going to be very shareable.
We’ve talked about the “Eat This Not That” category. I loved it. I remember buying it at Barnes and Noble when I was like in fourth grade — they’d show a picture of Doritos and then show an alternative. It was a massive hit book series. And we said, this is fine for a book but it has to be beyond that.
Shaan: That was Steph’s idea, right? Two years ago?
Sam: Yeah. I think this is a clear content niche that can turn into a pretty monster business. And there’s a bunch of different angles depending on who you are — Derek for More Plates More Dates obviously hits the gym-bro market. Flave City hits the mom-shopping-at-Costco market. There are a lot more niches beyond that.
Why We Trust Gurus (And Why That’s Not Stupid) [00:36:30]
Sam: The New York Times did this article a few weeks ago — “My Guru Is Better Than Your Guru.” They talked about how you and I are team Huberman, but then there’s another group who’s team Peter Attia. Then there’s this other one — my father-in-law loves this guy named Mark, Mark Hyman or something like that. And it’s like, “Well, my guru said this,” and it’s crazy how we find these guys we stick to, and whatever they say, we don’t entirely know why, but we trust them and we go to bat for it.
Shaan: Have you ever heard the evolutionary explanation for why gossip exists?
Sam: No.
Shaan: It’s sort of nerdy but fascinating. Everything has evolutionary value — even what we consider negative emotions. Fear: if you’re a hunter-gatherer and there’s a lion, fear and paranoia are very useful survival tools. But that applies to everything.
Gossip — if you talk to most people, it’s a negative thing. Shouldn’t do it. Poor form. Lowly. But actually gossip is extremely useful. Humans live in tribes. It’s impossible for me to know one-by-one, through firsthand experience, about each person’s character and reputation. So how does a tribe function? Gossip is actually necessary. I should know that a person is untrustworthy because rumors should spread so that the tribe as a whole becomes immune to this charlatan — through gossip — without me having to go have a firsthand bad experience.
In that way, gossip has saved me from getting my hand burned on the stove many times.
I feel like the same thing exists here. It’s sort of silly, in a way, to just trust these online gurus — don’t you know they’re just trying to sell you something? Well, yeah, there’s some of that. But what am I going to do, go test all my supplements myself? Am I going to read all the white papers on clinical studies? No. We’re all going to outsource that task to somebody and trust them until they burn our trust, and then we’ll move on to the next one. Almost as a tribe, it is the efficient way to do things. Even though it’s seen as a low-IQ move, it’s actually not. It is the game-theory-optimal move to trust people in situations where you’re not going to do the firsthand work yourself.
Sam: Look, if George Foreman tells me what grill is best for my bratwurst, I listen to George. He looks like he eats a lot of bratwurst.
Shaan: I get it. Where did you — did you just go read a book on gossiping?
Sam: I heard this a long time ago and my brain was just connecting the dots right now.
Real Short: The Chinese “Quibi That Works” [00:41:30]
Sam: I want to tell you about another health company related to all this. But before you do —
Shaan: Wait, let me go first. I got one thing. It’s been on my mind. Did you see Trung tweeted this out? This Chinese Quibi?
Sam: Is it working?
Shaan: Yeah, I think it is — which is the funny part. Is it Chinese as in made in China, or for Chinese-Americans?
Sam: It’s Chinese like TikTok is Chinese. Made by a Chinese company, but it’s at the top of the US charts. It’s called Real Short.
So basically, here’s what Trung says. It’s bite-sized English scripted video content. It’s like Quibi, but instead of paying for Hollywood hitters, it’s cheesy soap operas and Hallmark-style films. The shows are all about affairs, scandals, marital intrigue, and absurd plots. For example: “Son-in-Law’s Revenge,” “I’m Getting Married Without You,” “Never Divorce a Secret Billionaire.”
Sam: Let me just pause here. I’m in on Real Short. Okay, that was all I needed to hear.
Shaan: I like this concept — short scripted video versus just people’s TikToks. It’s junk food content. It’s like Hallmark. It’s stuff that just makes people turn their head.
A show is typically 50 episodes, each episode is only 90 to 120 seconds. They started by adapting Chinese romance soap operas for Western audiences. It’s free to watch, but you watch ads to unlock more episodes, or you can pay coins to unlock them faster. TechCrunch estimates this app has been downloaded 11 million times across iOS and Android and generated over $22 million in revenue since August 2022. $22 million in year one — not bad.
It’s owned by a Chinese company, COL Group. And they’re expanding their audience because the shows were so addictive and kind of bad that they got banned in China. So where do you go? America — the Las Vegas of the world, where anything goes.
Sam: What do you think of this concept?
Shaan: It’s insane to me. So the actors and actresses — they’re white people, right? This is aimed at Americans?
Sam: It’s like everything else made in China — made for Americans.
Shaan: So who’s watching? You know Hallmark — the cards, the channel — that company still does about $5 billion in revenue. I think it’s a family-owned business. The Hallmark Channel is a big line of their business. Worldwide, Hallmark has 27,000 employees. It’s still a huge company.
Sam: Okay, so Hallmark’s great. You’re in — just tell me you’re in.
Shaan: A few years ago, my friend Ramone and I ran a test. We created this book called “Captivating Clara.” Ramone ran a soap opera website and had a guy on staff who loved to write short stories — erotic short stories. What we did was we created a WordPress blog called something like shortbutromantic.com. On Friday night, the WordPress blog was made. It was basically just one page with a story, and at the very bottom it said, “We hope you enjoyed this first iteration of Captivating Clara from Short But Romantic. If you want to see Part 2, here’s a PayPal link — $10 a month.”
We used Fiverr to get a narrator. The whole project cost $400. We drove traffic the next day — on Saturday we had like $300 in sales.
Sam: You were making money on this?
Shaan: And we were like, “Holy crap.” If you look at the comment section from that blog, these people were obsessed. They were like, “Oh my God, Clara did this, I can’t wait to read Part 2.” It was mind-boggling. Then on Sunday, we were like, “We don’t really want to be in this business. This doesn’t really fit our interests.”
Sam: You should have done it.
Shaan: Ramone was going to. He was really dead set on it. And then one of his other businesses took off — the dog ramps business. But he was like, really dead set on this, and I was like, I don’t know, this could be pretty great. And Real Short is proof that that idea was onto something.
Real Short’s YouTube Numbers: 3.7M Views on Vertical Soap Operas [00:47:30]
Shaan: I was amazed at what young women wanted to buy. You and I — undoubtedly we’re trying hard with this channel. We have YouTube, it’s growing, we’re doing great. In about a year we got to about 350,000 subscribers. When we really knock it out of the park we might get a few hundred thousand views.
Well, just go look at Real Short on YouTube. Somebody started uploading the Real Short episodes — episodes 1 through 20 together. Real Short Romance — 330,000 subscribers. They posted a video about two months ago: “The Double Life of My Billionaire Husband” — 3.7 million views. Go look at the comments.
“Christine Joy says: I hope there will be more videos from these two, the chemistry they have” — heart emoji, prayer emoji. And another person: “I watched this on Facebook Reels, I got hooked by it, I love the story and the cast, good job, I can’t wait for the next episodes.”
Thousands of comments like: “I can’t wait for the next episode.” “I love the storyline.” “This is better than Hollywood.” “Oh my God, I’m hooked.”
And they’re not even optimized — there’s a Real Short watermark on them. They’re vertical video. And it’s working.
Quibi vs. Real Short: The Right Idea, Wrong Execution [00:50:00]
Shaan: So my takes here. Number one: interesting business I’d never heard of. Good job, Trung — glad he put this on my radar.
Number two: the difference between a good idea and a bad idea is just a few small decisions. Quibi gets made fun of as a classic Silicon Valley idiotic startup. “Remember Quibi? It’s the butt of a joke.” I think Quibi was the right idea — small micro-content, TV shows shrunk down. I think that can be really successful. The problem was they raised $2 billion and spent it all on really high production quality stuff that wasn’t that juicy and never got people hooked. Whereas Real Short is basically starting with getting people hooked, then figuring out the rest as it goes.
Sam: The third thing is: why do I have so much faith in the Chinese? When I even started to read his tweet, I was like, “Oh, a Chinese company is trying to do Quibi but better — probably gonna work.” I would bet more on this random Chinese company I’ve never heard of than on Jeffrey Katzenberg, the guy who created Quibi — who was the creator of DreamWorks. Why is that?
Maybe it’s because through my e-com brand I do business with Chinese companies, and the way they run their businesses — that’s my real MBA. When I talk to the factory owner in China about how he’s running his business and watch how he moves — he came out here to meet us, and just the way they conduct themselves, the way they work, the level of complexity they can handle. It used to be just with manufacturing. And then TikTok came and was a total narrative violation — “Oh, you think they can just make cheap plastic toys? Watch this. We’ll make the hit social app, all about cool and culture, we’ll appeal to the US teen better than any American startup could.”
Shaan: I think it’s a lack of ego. Quibi was this cool LA company. I think they even reached out to you and me — like, “You guys want to make content for the platform?”
Sam: Yeah, they reached out. They were going after “cool” people — big-time celebrities and stuff. And I think a lot of people in Silicon Valley and LA do the same thing. They spend most of their money on branding — some overpriced agency with lowercase letters in Brooklyn — and forget that there’s this whole contingency of 150 million people at home who just want to goof around and watch something like this.
Their ego prevents them from creating something that’s quote-unquote “low quality.” You would see Real Short and be like, “This is stupid, no one will watch this.” Whereas someone else who just wants to win, who follows the numbers — they’ll make this.
Shaan: Supply and demand. What is the demand, and how do we be the supply? Versus: we hired people who wear non-prescription glasses. You’re not going to make it because you just have too much hipster in you that’s actually going to focus on what people should want rather than what they actually do want.
Sam: Someone tagged us in this picture of a Thai restaurant and it was called “Thai Food Near Me.” They clearly named the restaurant to rank high on Yelp — like a tow truck locksmith named “Tow Truck Near Me.” And that immigrant hustle — I appreciate and respect it. These guys aren’t playing by ego rules. Real Short looked at the numbers and said, “Looks like people buy a lot of this — looks like we’re in this business.”
Jess Ma’s Golden Questions [00:56:00]
Sam: So you weren’t there for this one, but I did an episode with Jess Ma. Have you heard it yet?
Shaan: I started watching it this morning. I love Jess Ma. Had you met her before the episode?
Sam: I knew her as like the prodigy. She was on the cover of magazines at 19 or 20 for starting Indinero — an accounting software. She was the “it” person for a minute. The month before me on Inc. was Elizabeth Holmes, and so she was like the IT person for a minute. But then over the last six years she’s gone silent, which in my head either means you’ve done something bad or you’re just quietly killing it and don’t want to talk about it. And it sounds like it was definitely the second one. Indinero has been crushing it and she’s been taking profits and doing more things. Is that right?
Shaan: Yeah, pretty much exactly. She was like, “Indinero is a good business, it’s not going to be a monster business.” She had this crazy life experience where her boyfriend died suddenly and she was just depressed, didn’t want to even go into work. She was like, “All right, what do I want to do with my life? Life is short, nothing is guaranteed.” She didn’t say how big Indinero was though, did she?
Sam: It’s over nine figures and it’s profitable. Over $100 million in revenue and profitable. So she was like, “I don’t want to run this company anymore, I’m hiring somebody to run that, and I’m going to do whatever’s most interesting to me.” She had a couple of things in the episode I think are going to get lost in there. But the big thing I took away — after every episode I send a voice memo to Ben with my three notes from the episode. The thing I wrote was that she had three or four golden questions.
One was: “What would I do if I wasn’t afraid to fail?” Another was: “If I had $500 million in the bank, what would I do with my time?” And she had another one: “How will I deal with being an absolute beginner?” Because if I’m going to go do something new, by definition I’m going to be a beginner and suck at it. I’m scared of that feeling, especially now that I have a little ego — I’ve been on the cover of magazines, people think highly of me. How will I deal with being at the bottom again? Just asking that question acknowledges it and takes the power away from the insecurity.
Shaan: She had some golden questions. And one thing she said — she’s building these biotech companies and sharing these technologies I can barely understand. I asked her, “Is this your background? Are you a science genius?” And she was like, “No, I was a C student in biology. And now I have a biology company valued over $100 million. There’s some irony there.”
So what is it — are you just faking it until you make it, or did you get really good really fast? She said, “Well, I partnered with people who are experts and I do the stuff they’re not experts at — commercializing it. But also I just started as a beginner. I literally hired a biology tutor. I started watching podcasts and TED talks. I’d go meet people and ask them a thousand questions, go do research after they answered, then ask ten more. I just kept doing that until I felt like I had a handle on things.” And I was like, “Oh, well, it’s simple when you say it like that.”
Hiring Tutors as Adults: AI and Finance [01:02:00]
Shaan: Similarly — every day I go on Twitter and I see AI magic in my feed. AI is the best magic trick I’ve ever seen in my life. Just an endless supply of awesome 10-second demos. I don’t know if those will all become big companies, but they’re amazing demos.
She did a tutor thing, so I did a tutor thing. I was like, either I’m going to drop everything and learn about AI as a beginner, or I’m just going to sit this one out because it’s this fast-moving thing the kids are doing and I’ll catch up later. That doesn’t feel right either. So I put out a tweet — if you’re somebody who plays around with all these tools and knows how to use them, I will pay you $500-plus an hour to sit with me a couple times a week and show me. To save me the 10 hours of fumbling around I’d be doing myself.
Sam: How many replies did you get?
Shaan: Over a hundred replies from really interesting people. So it’s going to be hard to pick — I might pick a couple instead of just one. I’m thinking about creating a side channel, just like “Shaan’s Playground” — a little YouTube channel where I actually publish the calls. So even if somebody’s not paying $500 an hour, they can just get the benefit.
I want to say it out loud because there are probably a lot of things like this. Like you’re taking a finance course right now — that’s the same version of this. Don’t be afraid to go be a beginner. You’re supposed to be Sam Parr — business podcast, sold a business — you’re supposed to be the guy who knows a bunch of stuff. And you came out and you’re like, “I feel like an idiot when it comes to corporate finance. I just really don’t know what the hell I’m doing. What’s the best course?” And I think you spent like five grand on a course.
Sam: Yeah, it’s called the 4-Day MBA with Keith Cunningham. I’m trying to learn how to do all this stuff. Coincidentally, some billionaire did a video saying “Don’t get an MBA, just go take this course.” Huge endorsement. I saw it when you said it and the website looked terrible and I was like, “Why did Sam do this?” And then I heard that clip and was like, “Okay, that’s two people who said this is awesome. I’ll go do it.” It’s a great course.
Shaan: Once I got a little bit of success, I got way less nervous about hiring people to teach me how to do things. Having people teach me how to do stuff has kind of changed my life. And this course is awesome — I have nothing to do with it, I just think it’s cool. Going back to school, having people teach me things.
I think it’s going to be really smart for you to do it this way. And I think if you promote it, it’ll pay for itself.
Sam: Yeah, the ROI is already baked in. But I want to say it because I wouldn’t have thought to do this without Jess Ma. She said in passing, “I hired a biology tutor,” and in my mind I was like — tutors are something that ends when you’re 20 years old. There’s no more tutoring after that. But why is that the case? There’s no rule about that.
There’s probably other people out there who could benefit from doing something similar. Do you know what I actually wanted? I wanted to take one of those two-week MBA courses at Columbia or Stanford. That’s my goal for next year. I went and looked at the list of topics and I was like, “I don’t even know what those topics mean.” So I got to take this online one just to prepare for the in-person one.
Shaan: One warning, though. I took a similar finance thing last year — a Maven finance course. It was a really good course. There was nothing wrong with it. But there’s one thing I’ll say: before you go drop thousands of dollars because Sam Parr said this course is great, make sure that you have a hook to hang these learnings on. The analogy is: these are all clothes on a hanger, but you need a hook. The hook would be a business you’re currently running, or a place you can go apply these learnings. Otherwise it’s kind of fancy procrastination.
You have to have enough battle scars or a place to apply these things. Otherwise it’s very easy to sit there intellectually and be like, “Yeah, cool, I hope I keep that in mind one day when this becomes relevant.” You’re better off building the business and then learning just in time what you need to know — when you need to know it.
Sam: The reason I’m doing it is because when I was selling The Hustle, at the end there was this whole thing called net working capital and I was like, “I just don’t know what this means.” I optimized my business one way but I didn’t know this term, and there were many things I could have done differently. I felt so emasculated and stupid when these people were talking to me about net working capital and I couldn’t figure it out when they explained it to me.
I also get my balance sheet, income statement, and cash flow statements every month from my accountant but I don’t know if this is good. Accountants typically tell you facts, but I’m like, “I don’t know how to interpret this. I need to know how to spot strengths and weaknesses.” When I was selling my company, I knew how to make money but I didn’t know how to optimize any of these equations. I felt stupid, and it was so challenging.
Reinvestment Runway: The Finance Concept Sam Needed [01:10:00]
Shaan: Can I tell you one lesson I learned from that course? One thing I remember that I didn’t know going in.
The course is called something like “Good Business, Bad Business.” And one of the things it’s talking about — when you differentiate between a good and bad business financially — is reinvestment runway.
Here’s the idea. Let’s say $100 comes in and you get $20 out the bottom line — $20 net profit. What do you do with that net profit? Idiots like us, I think you probably ran your business the same way I did: it just sits in the bank account. I don’t even think about it really. “It’s there, I hope one day to take this out.”
And then you start to realize: the best businesses can either reinvest into the business itself — so when a dollar of profit comes out, you can reinvest it back to the top and get more than another dollar out. He broke down some of Warren Buffett’s businesses that had no reinvestment potential. Basically profit comes out, and that’s why Buffett would take it to headquarters — the holdco. The best optimization he could do was: when he bought a business, he’d say, “You’re reinvesting capital poorly. I’ll take that money. I’ll reinvest it in a whole different business. You will be a little cash cow, but I’m not going to keep investing back into you for more organic growth.”
In our case, that would be like this podcast. The podcast grows mostly organically. We don’t need to spend more money in order to grow. Spending more money is not going to create more money. The best thing we can do is take the profits from this and invest it in a better business that actually has that reinvestment runway.
Shaan: And what he talks about is: every business, over time, you start out being able to reinvest, but there’s a certain dollar threshold where you can’t reinvest more than that into this business at an efficient rate. You have to identify that point. Know it. Judge the business based on that.
The best businesses — Constellation Software, Berkshire — they’re famous for taking profits from one normal cash-cow business and using it to buy another one of those. And investing that to buy another one. That’s the whole point.
Similarly — Andrew recommended I read Profit First this weekend. It’s the same idea: take money out of the business, put it into a different bank account, then redeploy it into your faster-growing business if it warrants it. Or, if you have a business that can take the reinvestment, then that business is actually even better than it looks on paper, because it has this extra capability.
Sam: All of this is pretty beginner for anyone in private equity. But we didn’t come from there. We’re basically dorks on the internet who started internet companies, tried to get rich off internet companies, and now we’re starting to wrap our heads around a lot of the 101 concepts. Which I actually think is the better route. I think it’s harder to start things from scratch and then learn to optimize. Versus you’re a great optimizer but you don’t know how to start things from scratch — creating the widget someone wants. I think that’s more challenging.
Shaan: YC did the same thing. YC’s core bet was: it’s going to be easier to take badass engineers and teach them the basics of fundraising, hiring, and firing than to take an MBA who knows everything about fundraising, hiring, firing but can’t build anything. We can teach them that. The other way is impossible.
Sam: Completely agree. And yeah, it makes me feel better that that’s true. So therefore it is true.
In summary, we’re the best.
Shaan: We bragged a lot in this episode. Maybe we’ll have another episode where we just make fun of each other.
Sam: The comments will do that for us. All right, that’s a pod.