Shaan sits down with longtime friend and “deal doula” Suli Ali, who advised on both the Bebo and Milk Road acquisitions. They break down the psychology and tactics of selling a company — from disclosing skeletons upfront to signaling interest without desperation — then riff on business ideas ranging from niche agencies to Robin Hood for real estate to buying Squarespace. The episode closes with a wide-ranging conversation about startup investing, life stages, and the surprising freedom of opting out of the rat race.
Speakers: Shaan Puri (host), Suli Ali (guest, serial entrepreneur and deal advisor)
Introduction and Suli’s Background [00:00:00]
Shaan: Every time I’ve had a company sale — when we sold Bebo to Twitch, when we just sold the Milk Road — you have been our “deal doula.” You help us go through that labor process and come out the other side with the happy ending.
Suli, welcome to My First Million. You’re subbing in for Sam Parr today, and like every substitute teacher, it’s always the best when they’re there. We’re going to do a bunch of things — talk about some of the companies you’ve started, companies you’ve invested in, ideas you have. You were the first ever episode of the podcast, so if people want to hear your life story that’s the place to go — episode number one. We’ve come a long way from there. Did you think this is what would happen?
Suli: I always knew the podcast was going to be big. I think from the very beginning you were like, “Let’s do Barstool except for business.” And that’s what it’s become — it’s huge. I actually think it’s going to be way bigger in a year than it is today. Like three times the size a year from now.
Shaan: Yeah, I hope so. That’s the goal. We did the Barstool thing except without hiring anybody — it was like, okay, we will just be the jackasses and let it go from there.
All right, you sent me this doc, which is great because there’s a bunch of topics on here that I want to jump into. I’ll give you a very short life story so people understand who you are.
You worked at Microsoft, quit, decided to start your own company — right when the Facebook app platform came out. So you started building silly Facebook apps that went viral. Things like Superlatives, which was like “which of your friends is most likely to do X?” It would invite those friends to do it too, and it grew like crazy. But it was a silly Facebook app, so you didn’t know what to do with it — but you ended up selling it. That was your kind of My First Million moment. You sold it — how old were you at that time? 24, 25?
Suli: 26.
Shaan: 26. Take that, and you go on the next big wave — mobile apps. You were creating games, first on Facebook and then on the iPhone when the App Store came out. You were like, “Oh, this is going to be big.” You create a company called TinyCo. You raise money from Andreessen Horowitz, you’re living the dream, things go south as the economics of that business change, and then you go all in on this Hail Mary strategy — and again, episode one for the whole story — you somehow get the rights to the Family Guy license to make the Family Guy mobile game. You did it for Harry Potter and a couple of other big IPs. You sell that company.
I met you after that — kind of when you were selling that thing. We met at a dinner that Sam was throwing because you were speaking at HustleCon, and immediately we hit it off. We were like, you know, you were talking about Tony Robbins and I was like, “Oh, I’m a Tony Robbins guy.” You were like, “Really? Tell me more.” I started gushing about my experience. And I was like, “Yeah, we should do that here in San Francisco. Let’s do it tomorrow morning. Let’s have our own power session with people like us who are electric.”
Suli: Yeah, we were like, “Tony Robbins is amazing, nobody is doing this in this modern way. Let’s put up some Facebook ads today and tomorrow let’s have 50 people in here and try our hand at being Tony Robbins for a day.”
Shaan: We did the thing where you spend 20 minutes being like, “This is great, this is a great idea, this is a slam dunk, we’re going to do it.” We used all these terms — never did it. Ten years later we’ve still never done it. But we became good friends along the way.
Suli: I still think it’s a great idea and it would be the most fun weekend ever.
Shaan: I still think we should do it. But then from there you did a couple of things — your brother started Native Deodorant and you helped him with that, you started another company, I was starting my e-commerce brand and you’ve helped me out a lot with that, you’re kind of a shareholder in that business.
And every time I’ve had a company sale — when we sold Bebo to Twitch, when we just sold the Milk Road — you have been our deal doula. You help us go through that labor process and come out the other side with the happy ending. So that’s kind of how our business-side interactions have been, and then we’ve become great friends since then.
Did I miss anything?
Suli: I love being the deal doula, by the way. When we sold TinyCo we had this banker named Dick Filipini. He ran the transaction for us and I told him I loved what he did so much that I just wanted to work for him for free for six months after so I could see all the deals he was doing. He did not accept my offer.
Shaan: Dick is great. He helped us for free because the Bebo deal was going to be too small — he does bigger deals, like $100 million-plus. But he got on the phone with me several times during the process and talked me off a ledge multiple times when I was like, “I’m just going to say this.” He was like, “No, you should probably just wait and see what they say.” His advice was basically: don’t f*** this up, son. And he was totally right.
I still feel the guilt that I didn’t send him a gift after. I think I texted you like a year later: “What’s Dick’s address? I need to send him a gift.” And here I am, still four years later, have not sent that gift. Dick, I’m so sorry. You were so helpful and I will still send you this gift.
Suli: The deal — another deal that Dick did that I thought was super interesting — he sold AppLovin to a Chinese company for a billion dollars and the Trump administration blocked the deal. And instead of being a billion-dollar sale, the Chinese company invested $100 million into AppLovin. Then a couple years later the company goes public and at some point it was worth $30 billion as a publicly traded company. So an amazing transaction to not have closed.
Shaan: They got the best of both because — whatever the company was putting in, I think 1.4 or 1.6 billion was the original purchase price — they were going to put in a few hundred million to own 70 or 80% of it. Then instead, a year went by, nothing happens, and with that anxiety came this big payoff because the business grew like crazy in that time. They got liquid but only had to give up a tiny fraction, and then they went public for way more. That turned out pretty much as good as it could go. Just had to wait a year.
Milk Road Acquisition Debrief [00:08:00]
Shaan: Speaking of acquisitions, I have a Milk Road-related question for you first, which is — you saw both of the acquisitions I did from sort of start to end. I shared everything with you. It was like in high school when it’s like, “The boy texted me this — should I reply? What should I say? No, no, that looks too needy, say this. Change the period to a comma, cut that last line.” That level of help you were doing with me. What’s your takeaway? What are some nuggets you’d share from watching that go down?
Suli: I love the deal structure that Milk Road ended up with — a bunch of cash up front and then a bunch of equity in the new company where those two guys want to grind it out for years and build a giant business. In my head, some percentage of the work they do is just creating value for you and Ben. I love that deal structure.
Kind of having been through this a couple times, I feel like a lot of the nuance of words that you care about when you’re trying to sell your business, the buyer doesn’t care about that much. It’s more of an emotional thing than a practical thing. Practically, the buyer is like, “I want to buy this business because of the strategic reason and the revenue and the profit.” A lot of the things you can be squeamish about or uncomfortable saying — I think a lot of that stuff doesn’t matter.
One of the things I learned when I was trying to sell TinyCo: we ran a sales process, talked to a bunch of acquirers, got pretty far along with one, the deal didn’t happen, and then a year later we sold the company successfully. There was a bunch of stuff I was trying to keep close to the chest — like, “Oh, people aren’t going to want to hear this.” What was great about Dick was he was like, “No, this isn’t a big deal, just tell these guys. They’re not going to care about that.”
Shaan: Sam did something for me in this process. As we were selling the Milk Road I was like, “Any tips or advice from when you sold to HubSpot?” He goes, “On that same note — just tell them up front all the shitty things about your business that might scare them away. Because guess what? They’re going to find those anyway when it comes to due diligence, and you’re going to be four or six weeks in, emotionally invested, and it’s going to get ugly later. They’re going to feel like they found some big wart on the deal at that point.”
He goes, “Just tell them all the skeletons in your closet now. Be like, ‘Here’s all the reasons you shouldn’t buy this company. If these bother you, you now know them, and you can decide if that’s a deal breaker.’”
This wasn’t the very first meeting, but shortly after — we went to a dinner, everybody was interested, we hadn’t even fully negotiated the deal. I just said, “You know, I want to make sure you fully understand this business. I’ve been through this a couple times and I know it’s better to be fully transparent.” I said, “Here’s all the skeletons in our closet. You can look at these today and decide if this is too concerning. Let’s talk through them now.”
We did it. And later, after the deal was closed, we did a debrief. They basically said — and this is how you know they’re smart — they were like, “What could we have done better in the acquisition process?” And we asked the same of them. They said, “You said something at that dinner where you were just like, ‘Here’s all the ugly parts of our business, let’s talk through them.’ That built so much trust because we didn’t know you very well, and immediately we were like, ‘Okay, we felt at ease. We could trust you guys going forward.’” That turned out to be a big win.
That’s the exact opposite of the entrepreneur’s instinct, which is: hide it. Put it behind your back. If they ask, you show them, but don’t scare them away. In fact, what you want to do is find out as quickly as possible if there’s a real match here or not — and use that as a tool to build trust rather than build distrust by not disclosing it up front.
Suli: The other thing I’ve seen entrepreneurs do that I think is also the wrong common sense: when you ask an entrepreneur if they want to sell their business, entrepreneurs are told to say, “No, I do not want to sell my business.” They expect the buyer to come over the top and say, “Even if you don’t want to sell, we’re super interested, we’ll do anything.” In practice, that’s not at all how it works. A buyer is often looking at a bunch of different businesses at that point. They’ll reach out to ten different businesses, five will say no, and they’ll say, “Okay, great — we’re knocking those five off, we’re going to focus on the five that said yes.”
Shaan: So what’s the way to say yes without seeming desperate or too eager?
Suli: When I was ready to sell a business, I would find somebody I knew was interested but wouldn’t have a good offer, get them to make an offer, and then say, “Cool.” That enables you to reach out to other people and say, “Hey, we have an offer to sell the business and we’re thinking about whether or not to do that. You’re somebody we think there’s a great strategic fit with, so we wanted to talk to you before we did something else.”
If they come inbound, it’s sort of like: “We’ve had interest, and nothing felt right — we really like our business. But we respect you guys. If that’s something you want to talk about, we’re open to listening. We owe ourselves that, right?” So you just say, “We like our business, we had interest, it didn’t go very far because we weren’t very keen, but we really like you. If you want to talk, we’re open.”
Shaan: Yeah, I think that’s a good setup. Buyers who are experienced can kind of read between the lines pretty quickly. What you just said is: “I’m wide open. Somebody please ask me out for a date, I’ll be a cheap date, sign me up.” But it’s the signal that you’re interested without begging.
Suli: Exactly. It’s like looking at somebody across the bar and catching their eyes for one second, then smiling and looking away.
Shaan: There was another meeting — we won’t name the name — but you were part of a few of the meetings as we talked to different potential buyers for Milk Road. It was the first meeting with one of the buyers and you immediately called me afterward and said, “Wow,” and then you said, “A fool and his money are easily parted.” You immediately sniffed out that this person was sort of an idiot and would make a big offer — and sure enough, they made the by far the largest offer. What tipped that off for you?
Suli: There are a lot of charlatans nowadays and they’ll often lead with a lot of flattery and not substance. It’s very easy for me to tell when somebody is just honest about their resume — like, “I started this company, sold it, started this one, it didn’t work out.” Honest. Versus when somebody leads with a lot of puffery that with a Google search you can see isn’t true.
And then: “You’ve said a lot of words but you haven’t said anything yet.” That’s either I’m not understanding what you’re trying to say, or you have nothing to say. They don’t lead with numbers and information — they lead with flowery language that doesn’t go anywhere.
Business Ideas: Agency, Real Estate, and Content [00:22:00]
Shaan: I’m curious — what are some business ideas you think somebody could start that would be successful? Either a clear business that’ll make a few million bucks, or a big idea that somebody willing to grind should go do.
Suli: The big idea I like the most right now is Robin Hood for real estate. Robin Hood makes it easy to invest in the stock market. I’ve got a ton of friends in their 20s who work at Facebook or Google, make a ton of money, and they just stick it in their bank account or a savings account or a CD. Sometimes they’ll invest in the stock market. I think it’s so hard to invest in real estate, and if there was a turnkey way through a mobile app to invest in real estate, I think that would be huge.
You did this investment and I followed you in a company called Jar in India — they make it super easy to invest in gold. You can invest with a dollar, fifty dollars, five thousand dollars. It’s a one-click thing: how much money do I want to invest today? And they set up a subscription so every month you’re buying $200 of gold, and ten years from now it’s worth millions of dollars.
I think the same should happen with real estate. There’s a bunch of companies out there — Cadre, Fundrise, CrowdStreet — but they’re targeted toward people like me who like investing in real estate and want to know what the cap rate is and the location and the year of construction. There should be a one-click way to buy equity in rental properties that generate income, marketed to people in their 20s. You basically log in and it’s like: “Cool, you want to invest in real estate? How much do you want to invest every month? $200? Great.” And it auto-drafts from your account and reinvests the income in more real estate.
Shaan: Boom. Okay, love it. Give me more. What else?
Suli: I get asked a lot — not “what’s a big idea?” but “what’s the easiest way to get to a million dollars?” And I always think the easiest way, if I need to get there right now, is: create an agency targeting a really specific part of a business that already makes money and just figure out how to make more of it. For example, email marketing for e-commerce brands, or conversion rate optimization for companies — “Visitors are coming to your site, we help you convert more of that traffic into sales.”
The play: create content that says, “Here’s the before and here’s the after. I changed these three things using my hot-cold-hot method and we boosted revenue by 32%. If you want someone to boost your revenue by 32%, work with me.”
This is a bootstrap way to get to $100K a month in revenue. Get ten clients paying you $10K a month. It’s not hard to get ten customers to pay you $10K a month when it’s a part of their business that’s already producing hundreds of thousands or millions in revenue and you’re taking the headache off their plate — but doing it better than they can because you’ve become a thought leader by putting out ten of these case studies.
You could do this with site speed, Facebook pixel setup, anything. You could even start without any clients — you say, “If I was this brand, here’s what I would do. Look, when they do this, it sucks. They should steal this good idea from this other company.” You put together case studies without even having clients.
This is for anybody stuck at a job making $100K who wants to get to $750K or $900K a year. All it takes is hustle. And those businesses can be sold — you can’t sell your job. If you get a business like this to $900K with a 60% profit margin, you could sell it for two or three times EBITDA after a couple years.
Shaan: I totally agree. There’s a bunch of other examples — just setting up a Facebook pixel in a way that’s actually optimized and following all the Facebook guidelines. That’s super hard and there should be somebody who’s like, “I’m the expert at this.” You could do this for e-commerce brands, but also for every legal practice, every dentist — “I make websites for dentists in Minneapolis.”
Suli: Exactly. And just through cold email, LinkedIn, referrals — you can get ten customers to pay $10K a month. You could pick any of the big sectors of the economy: accounting, law, medicine, dental, senior living.
Shaan: Our friend Nick Huber does this thing where he has a playbook to make a self-storage unit run better. He buys properties knowing he can run them 30 to 40% more efficiently. But you could also just take that playbook and say to a self-storage owner: “I’ll do this risk-free — you pay me nothing unless I deliver. If I increase your net profit by 30%, I get to keep half the value for the first year, then it drops to 10%.” You could do this for senior living, self-storage, any business that has established best practices.
This is what Alex Hormozi did with his Gym Launch thing — he used to own his own gym, developed best practices, and then realized the value was not in his gym but in taking that playbook and selling it to all gym owners.
Suli: What do you think about niche content creators? Like somebody making content about eco-friendly sustainable products?
Shaan: I don’t like those as much. I think it’s a good thing to do because good things come of it — but empirically, if you look at the numbers, of the two million Twitch streamers and ten million YouTubers, who’s making over $10K a year? The number is astronomically small. Everybody wants to do that and there’s not a clear way to get the value out. It is good because you’ll learn, become good at content, meet cool people — it’ll lead you to the thing. But it’s not usually directly the thing.
When it’s consumer-facing, I don’t love it. When it’s business-facing, I think it’s pretty easy to say, “Yeah, I’m marketing to the owners of self-storage units.” That’s what Nick Shackelmann did — he wrote the best newsletter for e-commerce store owners. Not for consumers, for business owners. Case studies, deals, information. That’s not consumer-facing, it’s for the business owner. He created what should be a $5 to $10 million business doing just that. You could do that for owners of any business — construction, doctors, lawyers, whoever.
Suli: The consumer-facing one, I agree — the numbers would show they don’t make very much money.
Shaan: I have this problem too where it’s like — what’s the most competitive thing? Being a content creator. Even a 12-year-old can do it and they’re better and faster and have more time and have nothing to lose and are willing to do way crazier stuff. That might be the wrong game to compete in. I’m still trying to square that for myself.
I could have said that about podcasting in general too. Some of the best things I’ve done have been in that category and it worked out fine. But it does feel a little strange — it’s against my own business advice to “don’t compete in the thing that everybody is trying to do.”
Suli: The way I’ve seen it done well: there’s this guy who’s a realtor in LA, small-time realtor, and he started making YouTube videos walking through mansions.
Shaan: I watch that guy — he’s great.
Suli: He made ten of them, thought it was fun, got access to more and more places, just made really high-end video walkthroughs of LA mansions. His job was already to be a realtor, so he was doing this as a way to get new clients. Then as he did it more it became a business of its own — he stopped being a realtor and now he’ll fly around the world because people want him to make a video of their house. A million people will watch it in three days. So where you’re combining it with a profession you already have, it probably is a good fit.
Shaan: There’s also some guy who’s an SMB acquisition attorney on Twitter. It’s just a great way for him to get leads from new customers.
I also think — I don’t know if this is a good thing or bad thing — but there’s that 30s age thing where I used to look at a business and only see: “Wow, the skyscrapers are huge in this field. I, too, am going to build a skyscraper.” Now I’m like, “Cool, before I do that, let me look at the graveyard of people who’ve tried this.” When I was in my 20s there was no graveyard in my head. “Music startup? Love it. Everybody loves music, what could go wrong?”
Suli: When you’re in your 30s you’re like, “Don’t touch meal-delivery startup. Don’t touch social networks.” I did social networks for six or seven years in my 20s because the skyscraper was so attractive.
There is some beauty in just doing it anyway and not paying attention to the graveyard. I think the people who win will just do that. But as I got older I was like, “What’s more fun than trying to build a social network? Winning is really fun. So let me make sure whatever I’m doing has odds that aren’t 99.9% against me.” If I’m going to do it anyway — okay, I’ll go in eyes wide open.
Shaan: There’s this guy Bobby Kotick who’s the CEO of Activision, and he’s like, “I could be CEO of a toilet company or CEO of Campbell Soup. What matters to me is success and momentum.” So many people are like, “You’re the CEO of a games company — my entire life would be made.” And he’s just like, “Success is what matters more than anything else.” I’m kind of closer to that as I’ve gotten older.
Suli: The thing you’ve done really well, Shaan, is you’ve seen friends who have a successful business and you’re like, “Let me just clone this business in a different category.” You did that with Sam and The Hustle with Milk Road, and then you saw an e-commerce business with Ramone and you were like, “I can do this too.” That’s really underrated and most people don’t do it. They see someone successful and don’t just go execute the same playbook in a different sector.
Shaan: I call it having a blueprint. If I don’t see a blueprint of success in a category that is replicatable — I can look at how Snapchat started, but I can’t replicate that. But when I saw the newsletter business I thought, “Okay, this is simple enough for my dumb brain to understand. What does it cost? Where does the revenue come from? Where does the growth come from? Got it.”
Now with new things I just look for that first. I’m going to talk to people until I find a blueprint, and then figure out: do I believe I could replicate that in my own way, in my own sector, my own style? If there’s no blueprint I don’t really get that excited anymore. Or if I’m going to do it without one, that’s cool, but I’m going in eyes wide open and making that trade knowingly.
Rapid Fire: Mental Models, Waves, and Investment Lessons [00:43:00]
Shaan: I want to finish with some rapid fire. This first category is things you’ve told me that I thought were funny. I want you to just react or elaborate.
First: “I don’t know what the hell mental models are. I used to think I was dumb for not knowing what mental models are. Now I think everybody else is dumb for thinking about mental models.”
Suli: That’s right. In Silicon Valley it’s so in vogue to be like, “Oh, I’m applying this cognitive bias theorem to this situation.” Everyone who’s smart talks like that. And I just thought I was an idiot because when I see a problem, I don’t see it in that framework. I always solve things from scratch, tabula rasa, like it’s the first time I’ve seen it. I just like that way of doing it. So I gave up trying to find mental models.
Shaan: Another one: you started your first two businesses on a wave. The Facebook app platform launched the same day you’d quit your job. You saw the announcement and were like, “I’ll just do that.” Same thing with the iPhone App Store — you were one of the first big iPhone games. What are the waves today? What would 22-year-old Suli be doing now?
Suli: Probably something in genetics or AI. Probably one of those two.
Shaan: Seven years ago we were at dinner and I asked you, “You’re so smart, you’re so great — why haven’t you already built a billion-dollar company?” And you said, “I don’t think I understood what a billion-dollar company was before.” What did that mean?
Suli: You need a moat. You need a big market, a clear way of getting customers that makes economic sense, and a really good product. Even today I feel like I have a very clear path to build $100 or $200 million businesses, but I haven’t quite figured out how to build a billion-dollar business outside of rolling up five or ten of those. I think there’s a different code to build a billion-dollar business than a hundred-million-dollar one.
Shaan: What would you do if you were Mr. Beast?
Suli: I’d start a Y Combinator for creators — find the next Kim Kardashian, the next Mr. Beast, support them, own a piece of them. Be a kingmaker making other kings.
Shaan: You’ve done a lot of startup investing and I think you’ve pulled back some. Give me the bullet-point version of your take on startup investing.
Suli: I hate competing for deals. I find it demeaning trying to convince somebody to let me invest $50,000 in their round. A friend of mine was raising money, got a term sheet from Andreessen Horowitz and Bill Gurley at Benchmark, went with Andreessen Horowitz — and Bill Gurley was so mad that he called the founder up and yelled at them for two hours and sent fifteen angry emails. Bill Gurley is one of the most successful people in the industry, and the fact that he still has to do that made me think: this is an industry with no moat. I don’t want to beg or twist people’s arms to let me invest.
The other thing: trying to turn a $50,000 investment into $2 million over ten years doesn’t do anything for me anymore. My first startup investment was $100K in a company called Chartboost in 2011 or 2012. The company sold in 2021 and I made $2 million. That was a ten-year timespan. Having to wait ten years to get cash out is really annoying.
Valuations have also gone crazy and companies are so much more competitive. I’ve evolved from being interested in these $50K checks to trying to buy a majority or 30–40% interest in businesses that have revenue and profit or a clear path to profit. I’ll see money back sooner and be able to take that money and reinvest in other businesses.
Shaan: Biggest investment miss and biggest hit?
Suli: Biggest miss was Coinbase. At TinyCo we had a guy who worked for me named Adam, who was roommates with Fred, the Coinbase co-founder. Brian Armstrong and Fred were fundraising for their Series A — they got a term sheet from Andreessen Horowitz and Benchmark, and they called me and said, “Should we go with Benchmark or Andreessen Horowitz?” I was like, “Go with Andreessen Horowitz, here’s what’s awesome about them.” And on that call, if I had said, “Hey, by the way, can I put in $25K into this round?” — I feel like they would have said yes. That $25K at their IPO was worth $200 million, I think.
Shaan: Did you not ask because you didn’t believe, or because you didn’t think about it?
Suli: Didn’t ask because I didn’t believe. “Crypto, Bitcoin — these guys are building PayPal for crypto. That’s silly, that’s just PayPal.”
Shaan: That’s the honest answer.
Suli: Biggest hit — let me tell you what I did that was really stupid, which I’m still embarrassed about. I signed a contract to buy some Facebook stock, like $150,000 worth. The stock price in the private market went down 50% and I called my father and was like, “Oh, this happened to me.” He was like, “Don’t worry about it, just buy it, it’ll go back up.” Instead, I didn’t buy it. They — I think they might have sued me — said, “You signed a contract to buy this.” So I paid them $75,000 to not buy it.
Then I was going to buy some from somebody else who was selling it, and they backed out. And while I was trying to do that, somebody else came to me and was like, “Hey, I’ve got Facebook stock to sell too.” So I hooked up a friend of mine with that Facebook stock. He bought $50K worth of stock and that $50K ended up being worth about $8 million for him.
Shaan: Wow. This was in 2008 during the financial crisis — everyone was running away from everything and Facebook was valued at $2 billion in the private market, hadn’t IPO’d, was unclear when it would. I actually Googled you when we first met and I saw some article where you’d sold your Facebook app, and you said, “Actually, I think Facebook is the good investment now, not my app. I’m going to buy millions of dollars of Facebook stock if I can.” I thought: wow, this guy is super aggressive and interesting. In hindsight…
Suli: I met this guy in New York City and was like, “Hey, I’m trying to buy this stock.” He’s like, “That’s a brilliant idea.” I said, “Yeah, I’m trying to get the best price possible.” He goes, “You idiot, don’t worry about what price you’re getting. Just buy from everyone who’s selling. Because this price is so cheap, it doesn’t matter — don’t worry about whether it’s two billion or three billion or four billion. Just go buy buy it all.” And I just kind of screwed it up.
Shaan: Easier said than done. Those moments are happening right now in crypto. I know so many people who were like, “I wish I got in.” It crashes back down, Bitcoin was at $16,000 a month ago, and it’s like, “Hey, if you did want to buy, now would be a pretty good time.” And they’re like, “I mean, who knows…” They’re the same people who three years from now are going to be like, “I wish I had bought.” They’re just never going to buy — they’ll constantly sit on the side and wish they were buying.
Suli: That’s me right now. I’ve got like $40 to $50 million in US T-bills that mature every 30 days. I’m keeping them in short-term T-bills because I’m like, “I’m going to find some other investment.” A couple months ago the S&P 500 was at like 3,600 and that was my trigger to go buy it. I was like, “Ah, it’s going to go to 3,500, I’ll wait.” It never hit 3,500. I’m still sitting on those T-bills, did not buy the S&P 500.
Shaan: Very hard to do this sort of thing. My father is really good at it. In 2008 I sold my first startup and made a million bucks. He lived in Florida and was like, “All the real estate prices here are at 25 cents on the dollar, I’m going to go buy it.” I sent him the million dollars, he went and bought a house for $150,000. Two weeks later that same house was selling for $75,000. If it was me, literally what I would have done: I would have freaked out and said, “I don’t know what I’m doing, I’m going to stop.” Instead he bought another house for $75,000. He just kept buying houses all the way down as real estate prices bottomed out and even on the way back up.
As a result, he owns — we as a family now own — something like 100 single-family rentals in Florida.
Suli: What’s the line between degenerate gambler and genius? Maybe there is no line, maybe it’s just how the result turns out.
Shaan: I think it’s the result, but also the psychology going in. He was like, “I know this is going to go down, I don’t care, because I can wait five or ten years and it will go back up. And this is below replacement cost — if you were to build a new home right next door that was the same home, it would cost you four times what I’m paying right now.”
Justin Yoshimura and CSC Generation [00:57:00]
Shaan: You have a very honest LinkedIn. I saw a guy who I think one-ups you — I actually want to tell you about this business in a second. Google this guy: Justin Yoshimura, J-U-S-T-I-N Y-O-S-H-I-M-U-R-A.
I want to read you this guy’s LinkedIn. He goes: “I’m currently the founder, chairman, and CEO of CSC Holdings — one of the dime-a-dozen, quote unquote, unicorn startups.” Already I’m like — he’s calling unicorn startups dime-a-dozen, and I’ve been trying for fifteen years to make a unicorn.
Then he goes: “After being told that nobody would ever hire me, I quit the bureaucracy and negativity of Palos Verdes High School to start a marketplace for unlocked cell phones.” Anybody who sells cell phones, ringtones, any of that stuff — they’re the best hustlers. He’s got two points: one, making fun of the fact that he owns a unicorn, and two, he dropped out of high school and sold unlocked cell phones.
“Which was acquired by a family office when I was 19 years old.” Then he started 500 Friends, a marketing loyalty thing, they merged with whoever, eventually acquired by whatever. Then he goes: “I angel invest $50K to $1 million in interesting companies run by interesting people.” And when he names the companies, he names the round he invested in — “I invested in X in the seed round, I invested in this one at late stage.” That’s what only real investors and honest people do. Versus what most people do, which is buy Airbnb shares in the public market and call themselves an investor in Airbnb.
Suli: I’ve seen big venture funds do that too — they’ll buy a couple million bucks of secondary in the Series D just to be able to put it on their website. Buying a logo basically.
Shaan: Then he goes: “Besides business and things I shouldn’t be discussing on LinkedIn, I love animals — dogs, many cats, especially Persian Himalayans, dolphins, whales…” He names like ten animals, including manatees and turtles. Then he goes: “Despite this, I’m not a vegetarian, mainly because I lack self-discipline. However, I do want to clarify: I don’t eat any of the animals above and I would judge you for doing so, especially considering the prevailing belief is that eating wild animals at wet markets is what caused COVID.” And then: “I’ve been included in many vanity lists such as Forbes 30 Under 30, Inc 500, 40 Under 40, but thankfully I stopped advertising these on my LinkedIn headline when I was 19 after I realized I was being a douchebag. For a formal bio go to my Wikipedia.”
Do you know CSC Generation?
Suli: No, what’s the business?
Shaan: What he did was start buying up all these antiquated furniture companies. He owns Z Gallerie, One Kings Lane, Sur La Table — he bought Sur La Table for $89 million, Z Gallerie for $20 million, One Kings Lane. He’s been pretty much under the radar doing this but he started making these wild public offers. He’s 32 years old and has built basically a billion-dollar company rolling these up.
What he’s doing is making them more e-commerce and digitally savvy. He’ll close down the retail locations that aren’t performing, build up the e-commerce side, take all the customer data they have. These companies have years of customer purchasing data but it’s in a machine that’s like 20 years old — they can’t extract it into an email database or put it into Facebook ads. He’s built a system for this.
He’s trying to build what Constellation Software did for small SaaS companies but for large furniture companies. Constellation built an amazing intake engine to buy like 30 software companies a year and unlock more value from them. He’s trying to do the same with furniture.
And the reason he’s on people’s radar now: he started making public offers at these old-school furniture companies. He’d go to them privately — they’re in Nebraska, they’re 65 years old, the father’s father built this furniture store — and they’re like, “No, we don’t want your kind here.” So he just started releasing press releases saying: “I’d like to buy this company for 20 to 30% over the public share price. You’ve not responded to my private offer. Your shareholders deserve this.”
Suli: That’s genius. I love it because there’s just so much unlocked value in these businesses, and he’s focused on a specific vertical. Just that focus will allow him to take the same product and sell it across a lot of different retailers, get crazy improvements in margin by combining the scale, and going after publicly traded companies that are undervalued — so good.
Shaan: He said they’re doing over a little over a billion in revenue now. He’s targeting furniture because they lag — they benefit the most from a digital glow up. A lot of these companies have a ton of customer data on an old physical server in their warehouse. The software is 30 to 40 years old. The company that made the software is out of business. He goes: “I’m trying to get it to be modern. We’ve built a platform and a process to unlock the value of this customer data.”
He goes: “I have no desire to have my own brand. Constellation Software has no brand — they’re just a $40 billion company. Their stock was $100 ten years ago, it’s $2,000 now. They created a platform to buy these companies and unlock value. I don’t think anybody’s done that in retail. That’s what we want to become.”
I love the tone — the humility, just: “This is what we’re doing, it’s simple, there’s no magic to it. It’s obvious why someone should do this, why isn’t somebody else? Nobody is. We’ll do it.”
It reminds me of you. Your LinkedIn is the same way — “I invested in this company, it was kind of like a Yelp for this, I don’t know, these guys can explain it better.” Or: “I kind of got acqui-hired, good outcome for the guys, okay for me.” Very honest about your portfolio. No investor writes on LinkedIn like that.
You also — when I started my e-commerce business — you sent me this one-line email. You said: “With my last business, we realized we just had to do this one fundamental thing differently than everybody else and it would work. We didn’t need magic, we didn’t need ten genius things, we just needed this one thing. What’s the one thing you’re going to do that’s going to make this work?”
Suli: I don’t remember sending that.
Shaan: That question — I was spinning for like a week. I was like, “I don’t know. I don’t have a good answer to this question. Does this mean my business is going to fail?” But it’s a great question and I stashed it in my great questions list. I need to find that for every business going forward: what is the one fundamental thing that needs to be true?
Partner Fallouts and Second Chances [01:07:00]
Suli: That reminds me of my first company. I started it with a friend from college, sold it, and after we sold it we got into a fight. He sent me an email that was “50 reasons this company succeeded despite your existence.” I was like — ouch. And I went and read it. He got to like 25 good reasons and then 26 he was like, “You get the gist.”
For a little while I read that email every day for like the first year that I got it. Then after that I read it once a year, just to be like: what did he say, and what was the truth in it? There was some truth to it enough where I could be like, “Cool, let me take this feedback and action it in the future.”
The irony is — he kind of gave up the startup game shortly after that.
Shaan: You really broke him as a partner.
Suli: He actually tried other startups and got into YC and did a YC-funded startup. But the startup game is hard, and he was just like, “This game isn’t for me.”
The other crazy thing: I started TinyCo and we were raising our Series A from Andreessen Horowitz. He found out and sent them an email saying, “You shouldn’t invest in this guy — call me.” So they called him, and he basically read them that list of 50 things. It almost killed the deal because they were like, “Yeah, we’re worried about investing because of this.”
It’s funny — there are so many things people will admonish privately but celebrate publicly. Travis from Uber, when he heard that some VC fund was investing in Lyft, stopped what he was doing, drove down to that VC firm, and said, “Here are all the reasons you shouldn’t invest in Lyft.” Mark Pincus at Zynga did the same thing. So it was just a funny experience.
What’s funny now is that somehow, ten years later, we’re great friends again. He got married and I was the best man at his wedding.
Shaan: Happy ending.
The Squarespace Acquisition Thesis [01:14:00]
Shaan: You’ve also been talking about this buy-a-public-company idea. I’m like, “What’s next for you, what’s the next big swing?” And you’ve been talking about this. Let’s go into it — because I don’t think most people in the startup game think or talk about going and buying a public company or doing a hostile takeover. What’s the idea?
Suli: I’ve been trying to figure out what to do next. After TinyCo I was like, “Wow, startups are hard, I’m going to take it easy.” Now I’ve gotten to a place where I’m like, “Let’s do something big again.” Starting a new company from scratch is really hard, so I’ve been wondering: is there a public company I can acquire, where I don’t go through that zero-to-one phase that everybody loves but is really difficult? Something already at a five or ten, and I can take it from there?
To me, the perfect business to acquire right now is a company that was worth $10 billion in the private market and is currently a $3 billion public company. That company is Squarespace.
Shaan: Squarespace? The only time I ever hear Squarespace is in their ads.
Suli: Squarespace spends so much money on podcast ads. You hear about them everywhere on podcasts — but I never see them on Facebook. I always hear about them on podcasts, which I think is weird.
The stock is down about 50% since the IPO. They’re at a $900 million revenue run rate. It’s a subscription business with more than four million subscribers. I’d love to buy it because I think it’s a great company that’s super undervalued. It’s not being run to maximize profits — it’s being run in a way that keeps it at break even. I think you could run it to maximize profits. Get rid of those podcast ads, focus on direct response Facebook ads to get new customers.
They do $300 or $400 million in marketing spend. That could be made way more efficient. And I think they’ve got a ton more people than they need — headcount costs are like $225 million a year, headquarters is in New York City. You could cut that team materially and get rid of the New York headquarters.
Shaan: Sam was ranting about this back in the early days of the podcast — about Casper. He was like, “I knew Casper was going to fail. They had 150 employees in New York. Why are you hiring all these people there? Your customer support should be sitting in South Carolina or Omaha, people making reasonable salaries.” And he was so adamant about it — at a time when Casper was still seen as a rising star. And sure enough, Casper’s taken a beating in the market. I think they might have gone private again.
Suli: There’s this great Carl Icahn story where he buys a business that makes subway cars. They’ve got a huge team in New York — three floors in some fancy Midtown building — and a team somewhere in Middle America. He goes to the New York team, they show him presentations for two days, and he’s like, “Okay, I saw the presentation, so what do you guys do?” They’re like, “We just told you.” He goes to visit the guy in Middle America who actually makes the railroad cars, hangs out with him all day, and at the end says, “Those guys in New York — do you need them?” The guy says, “No, those guys don’t do anything. I’ve got four guys that are just there to manage the questions those guys bother us with.” The next day Icahn goes back to New York and fires three floors of people.
He tells the story with such a smile, and he says: “This was pretty early in my career, so it took me a couple months to do this. If it was now, I would buy the company and fire them the next week.”
Shaan: So how does somebody actually go buy a $3 billion company? You’re rich, but you’re not “$3 billion to spend on a company” rich.
Suli: I think the three-billion-dollar thing is probably too much for my personal balance sheet. But the way you’d go about it is just like CSC Generation — make a public offer. Same way Elon Musk did it. You first make a private offer, then you make a public offer, and you make sure all your financing is lined up when you do. The way US stock market law works is that the board has to respond to that offer and they have to have a really good reason not to take it if it’s at a material premium to the current stock price — otherwise they’re going to get sued by shareholders.
The Dental Practice Rollup [01:24:00]
Shaan: Let’s do some of the smaller ideas. You were telling me about something — you helped your friend sell their dental practice. Tell me about that.
Suli: This was a chance for me to be a deal doula. A friend of mine called me and said, “Hey, quick question — I started this dental practice ten years ago and somebody came in to make an offer. Should I take it?” I thought it was going to be one phone call. It ended up being like 60 hours of work — a bunch of phone calls with him and with the buyers.
So he has a dental practice that’s massively profitable. He runs it in a way where he’s optimizing for his lifestyle. He does seven figures in EBITDA, has a 50% net margin, all while working three days a week. And now he’s got so much time that he keeps making up new hobbies. I hung out with him recently and he was like, “Let’s go fishing.” I said, “When did you take up fishing?” He said, “I’ve got so much time.” He’ll find a new hobby, buy all the gear, find somebody in town who’s good at it, and go learn from them.
He’s not optimizing the business for EBITDA. He has a big waiting list of patients who want to become patients but he doesn’t have the time to see them. None of that is being run in a way that maximizes revenue or profit — just optimizing for quality of life.
Then this private equity firm doing a rollup of all the dentists in that area came in. The company has a CEO who’s a dentist, super nice guy, super well known and admired by all the other dentists in the area — the good cop. Then they’ve got a COO who’s this hardened guy who’s bought tons of businesses and worked for a bunch of PE firms — the bad cop. Good cop does all the charming and says, “Look at how this turned out for me.” Bad cop does all the numbers and negotiating.
Shaan: Classic structure.
Suli: They bought his business with a simple premise: 7x EBITDA multiple. And the plan is: go buy all the dentists in this area, then sell at a 15x EBITDA multiple, because at scale — $20 or $30 million in EBITDA — it’s just valuation arbitrage. Small EBITDA businesses like a million or two will sell for 7x, but if you had $20 million of EBITDA, a larger institution will pay 15x for that. So all you have to do is accumulate and roll up to get to the next stage of buyer.
Then the other aspect is, they were like, “Here’s all the things we can do to increase revenue.” One: add another dentist, eliminate the waiting list. Two: add another dental hygienist chair — the chair costs like $10,000 and he just hadn’t bought one. And they even told him there’s a specific instrument — whenever you’re doing a cleaning, just pick it up, you don’t even have to put it in the patient’s mouth, just pick it up and put it back down, and you can claim a higher insurance code.
He called me and was like, “Is this moral or immoral? Can I go back to them and say I don’t want to do this?” He said that — as he was holding the tool up for 45 minutes just to see what happens.
Shaan: Right.
Suli: And then, because they’ve bought all these other dental practices in the area, they can now do internal referrals. He used to refer to third parties for braces, root canals, oral surgery — now you refer to people already owned by the private equity firm.
Shaan: Nice. So what was your big takeaway from that experience?
Suli: It was amazing to see the rollup strategy and how good it was for the PE firm. But I also got to see it from his perspective — and for him, it was also a huge win. Easy transaction, didn’t shop it around, a way for him to retire and become the richest person he knows. He owned the real estate of the dental practice so he got to keep that, and now the acquirer pays him rent every month for it. And now he gets to take month-long vacations to Europe or Africa with his whole family.
Shaan: I also like the “I’m the richest guy I know” thing. That actually does happen in smaller towns and niche things. If you make $8 million or something, you’re done. You feel like there’s a beauty in that. In Silicon Valley you could build a billion-dollar business and might not get invited to the big-boy table because everybody knows fifty people who are more successful, younger, smarter, and more ambitious. So there’s this never-ending race. That’s just not true in other places.
Suli: The only way to win the rat race is to opt out. And he has. It’s so funny to compare my life to his. I spend so much more time working, I’ve made a bunch of money — I could not work as hard or at all — and yet I continue to work. And he’s just chilling.
One of my goals for 2023 is to take it a lot easier work-wise and spend a lot more time doing fun things. I’m in LA right now. They have this Porsche Driving Experience — you go with a bunch of friends, they’ve got Porsches on a racetrack and you just drive as fast as you can without killing yourself.
Life Stages and Seasons [01:38:00]
Shaan: When we got back from our weekend getaway I gave a debrief and I talked about this one observation I had. At that thing, there were people of four or five different life phases. There were like Victor and Judy — basically 12-year-olds in their mindset. They literally woke us up with a boom box playing music just like, “Come on, the pool’s already warm, we can go to the sauna, we can play golf, play wiffleball.” From the moment they woke up to the moment they went to sleep: “Let’s play.”
Then there were the 20-year-olds we met who were building the NFT projects or doing the TikTok DTC brand that was just taking off. Young stallions, full of exuberance, didn’t understand where the limitations were yet — and that’s okay. They’ll run head first into that wall when it comes. But they were just like: “I think I’ve got it all figured out.” They don’t, but they don’t realize it yet, and that lets them do some cool stuff.
Then there was me and Ben — like, the 30-year-olds. “I still have enough energy to do things but I’m not dumb enough to do them blindly.” The whole time I was trying to think through our next project, sit down, map it out, pros and cons, all this stuff.
And then there was you guys — in your 40s. Ramone’s throwing out his back playing pickleball, and you were just some combination of like: “Let’s go surfing, let’s play sports, seize the day — I don’t know how much longer I’m going to be able to do all this stuff.” For the 30-year-olds and 20-year-olds it was like, “Winning at business is a lot cooler than life.” But for you guys it was: “Life is a lot cooler than business.” I kept trying to be like, “Hey guys, should we whiteboard for a minute?” And you were all like, “The sun is out, let’s go outdoors. But let’s wear our sunscreen because we don’t want to die.”
And then we hung out with this 70-year-old guy who was just sort of: “I want some action. I’m bored. I want to contribute. I want to give back.”
Is that accurate?
Suli: Super accurate. Ramone and I were like, “It’s Saturday night and we have a bunch of entrepreneurs just trying to sell us on their business, get themselves excited, network.” And Ramone and I were like, “It’s 9 PM, I think it’s time to go to bed.” And these guys are like, “No, let’s stay up till 2 AM, let’s talk about business ideas.” And then you and Ben were like: “Let’s talk about new business ideas! What about this? What about that?” And Ramone and I were like, “How about we jump in the pool? How about an ice bath?”
It is funny to see these different seasons of life. I’m trying to adjust to this new season. On Saturdays and Sundays I try not to touch my laptop at all and just be outdoors and with friends as much as possible.
Shaan: It’s hard to make that shift. I mean, even at the beginning of this podcast you were like, “I’m going to buy a public company and take it to the moon,” and then it’s like, “Actually, I’m going to enjoy life and do family things.” It’s hard to even be congruent in a one-hour podcast.
I’ve observed this among many people. I’ll be like, “Oh I love this content podcast thing, I think I could be the best at this.” And then I get all this positive feedback, it’s growing, people like it, and then I’m like, “Yeah, but should I start a business doing this?” And then what happened to the whole “I want to do this content thing”? It’s very easy to get distracted and get off mission when you’re used to doing one thing — you can always go back to that well — and there’s this new thing that you think might be right for you but is unfamiliar.
Suli: I met this guy who started a company called Solo Stove and sold it — it later went public — named Spencer. He was like: “I started this company, I worked really hard, I sold it. Now I’m financially independent. I don’t invest in any startups, any private equity funds, any VC funds.” When people are like, “Do you want to invest in this or that?” he’s like, “No, I’m good.” He takes all his money and puts it in the Vanguard S&P 500 index fund, doesn’t think about it at all.
He says that everyone who’s an entrepreneur, starts a company, makes it, and then goes back to start another company — they’re only starting another company because that’s the only thing they know. And he’s like: “They just keep building a new prison for themselves that’s bigger and brighter, but it’s still a prison.”
I had a call with him and for a week after I was just walking in circles muttering to myself: “What am I doing with my life? Why am I starting new businesses? What is all of this?”
Shaan: I remember at some park in San Francisco you were telling me about your new thing and it was working great. I was like, “That’s amazing. I admire that you do this with such ease — it’s like watching Steph Curry shoot three-pointers. You just start a business and it works. What happened to all the hard gritty stuff?” But then I also told you: “I feel like you’re playing the same level of the video game again, and you kind of beat this level. Shouldn’t you go to the next level?”
I felt like a real dick afterwards. I was like, that was a stupid thing to say. I first felt really bad — that probably didn’t feel good to hear. But I was like, “Do I believe it? Would I want a friend to tell me that if they felt that about something I was doing?” And I was like: yeah, I think I would.
Suli: I’ve felt that, and I’ve seen it now in many people. The same: build a prison of your own making. And like you said, the only people who win are the ones who opt out of the rat race. And it’s really jarring when you see that. You’re like, “Wait — you’re leaving? But we’re still here!” And they’re like, “Yeah, that’s great. I’m going to go wander over here.” And you’re like, “Oh my God, you can leave this room? I didn’t know that was possible.”
Shaan: It is honestly very jarring when you meet the one-out-of-a-hundred people in Silicon Valley who do that. What they choose to do with their time is so interesting. You were telling me about that Braintree guy who’s like, “I’m trying to maximize my life, trying to reverse my biological age.” He’s changed his diet, got a team of doctors, nutritionists, physical therapists, trainers — reversing his biological age. That’s what he’s doing with his time and energy and money.
Life Is Limited by Imagination [01:54:00]
Suli: I have this thought: my life is actually limited by my imagination. Growing up I always assumed it was limited by money or resources. Now I realize it’s just limited by my imagination.
One thing that’s made me think about this: I’m trying to hire a Chief Fun Officer. My definition of fun is often like, “Let’s work, let’s grind it out.” I’m trying to hire somebody who’s the exact opposite of me — who’ll be like, “No, that’s lame. Here are five more fun things you could be doing right now.” And I will literally close my laptop and go do one of those five things.
Shaan: That thing you just said — “my life is limited by my imagination” — that’s a golden nugget right there. That’s something I’m going to think about a lot. Say more about that.
Suli: I’m living with my brother right now. The two of us wake up on Monday morning like, “Let’s go, let’s grind it out, let’s win the ball game.” And then yesterday we played padel tennis for four hours until our limbs fell off, and that was way more fun than whatever work we were going to do.
What’s happened for me as I’ve seen more businesses and gotten older: I feel like Neo in The Matrix. You show me a business and I can see through it — see the fundamentals, have an opinion about whether it’s a good business, see the opportunity. “There’s a $100 million business here and it’s just a matter of doing the work.” So I spend so much of my brain power thinking about that and very little thinking about how to have fun, other cool things people do in life. I spend tons of time reading the Wall Street Journal and talking to entrepreneurs, but very little time talking to people who are just balling out and having a great life.
I want to spend more of my time and energy imagining fun things. Like, I love magic. I would love to have a magician show up randomly in my week — while I’m at a restaurant, a magician shows up and is like, “Hey everybody, I got a magic trick for you.” A friend of mine told me that him and a bunch of guy friends would go to Vegas every year and one year the guy planning it hired like five little people in tuxedos to follow them around all weekend, plus some Brazilian Carnival dancers. Everywhere they went, everyone was like, “Who are these guys?” They got into every club, got free drinks, had people coming up to them — they had a dope weekend. Lots of people just go to Vegas and gamble. These guys through their imagination had a way better time.
Shaan: Amazing. All right, this has been good. Where do people find you? You’ve started tweeting — shout out your handle and we can wrap it up.
Suli: My goal is to get to 100,000 Twitter followers by the end of the year, so I’m going to be tweeting a lot more. My Twitter handle is my full name: S-U-L-M-N-A-L-I.
Shaan: All right, great. Thanks for coming on, man.
Suli: You bet. Thanks, Shaan.