Sam and Shaan discuss how successful startups got their first thousand customers by doing things that don’t scale — from Ryan Hoover hand-building Product Hunt’s community to Uber outsourcing its first app to a Mexican dev shop. They share personal stories including Scott Belsky’s $15K investments in Pinterest and Uber that turned into fortunes, Shaan turning down a Discord acquisition, and a musician named Karalanka who built a brilliant personalized marketing funnel on Instagram. The episode ends with Sam and Shaan both committing to Rob Dyrdek’s habit of writing a daily handwritten note to their wives.
Speakers: Sam Parr (host, co-founder of The Hustle), Shaan Puri (host, founder of Milk Road)
Ryan Hoover and the Human Invite System [00:00:00]
Shaan: What he was doing was every day he would wake up at like five or six in the morning and he would go to Phil’s Coffee and sit down with his laptop. First he’d tweet out that he was at Phil’s every single day, and then he would start just literally emailing and tweeting at people that they should be posting their product on Product Hunt. Or: “Hey, I posted it for you, would love to hear your comment.” Or: “Hey, I noticed this product that’s a lot like yours — I wonder if you know, or like, that’s in your industry, you should check this out.” All he was doing was manually being the human notification system for Product Hunt. He was the human invite system, the notification system, the retention system. He was all of it.
Opening — Caleb Presley and Barstool [00:01:00]
Sam: I have a feeling you’re coming with fire today. You seem fiery.
Shaan: I got some good stuff. Also, I just watched — do you ever watch Barstool’s interviews with people?
Sam: Are you talking about the Caleb Presley one?
Shaan: I don’t know who that is. Maybe that’s his name. It’s the one where they interviewed Aaron Rodgers. I watched it today.
Sam: Dude, his name’s Caleb. Have you seen it? It’s called — what’s it called? Like “Conversations” and basically like ice cream? Yeah, it’s this chubby guy named Glenny Balls sitting in the background, and then there’s Caleb who’s like a bro, but he’s actually really funny. He’s hilarious. He’s quite smart, and he interviews these people. He asks the best questions. He’s so good.
Shaan: Have you seen the past ones?
Sam: I’ve seen a few of them. This one is the first one I’ve watched the whole thing, and god he’s good, man. That is amazing.
Shaan: So I watched that, and sometimes that’s all it takes. You just see someone being great at their thing and you’re like, I’m gonna be great today. That’s it. I’m gonna be great today. I saw great, now I need to be great.
Sam: He makes me self-conscious. Caleb Presley is very, very good at these funny, awesome interviews. He’s great on the spot. He’s very good.
Shaan: Yeah, he delivers.
Karalanka: The Greatest Marketing Funnel for a Musician [00:02:30]
Sam: All right, can I tell you something? This is kind of amazing. This is gonna be a little hard to share on here, but I put this in the doc so you can click the links. Ben, if you can, let’s screen share some of this stuff. I saw this ad on Instagram and this is the most amazing marketing funnel I’ve ever seen — maybe ever, but definitely for a musician.
So check this out. It says: “Stop scrolling. You have 24 hours. We’re Karalanka, an independent hip hop group. Last year we had the honor of being placed on Brock Hampton’s official community playlist and we were also shouted out by Kenny Beats. Kira Lanco, go off. We bet you can do it. This year we’re trying to grow our fan base, so for the first 15 people who DM us on Instagram in the next 24 hours, we’re going to send you a special gift. Swipe up and DM us now.”
The beginning of the audio didn’t play there, but he goes: “Do you recognize these people?” And it’s like Biggie, Pac, whoever — just a bunch of famous rappers. It goes: “Stop scrolling.” Then he basically does this little thing. Ben sent me this and I was like, what is this amazingness? I must swipe up. I must know what this free gift is. So I do it.
Shaan: What does it lead you to?
Sam: It opens up Facebook Messenger with a direct message already ready for their team. It automatically sends them a message from you saying “Send me the free gift.” So that happens, and then they respond “yo, what’s good” immediately. So you’re like, okay, I don’t know what’s happening here but I’m intrigued.
The next thing that happens — I have screenshots below — they go: “Yo, Shaan, what’s good?” They use your name, they pull it from Facebook. Then it says: “Give us a little bit, we’ll get back to you ASAP with your gift and some more details. Thanks for your patience.” One day later I get a message. It’s an audio note from the guys in the rap group, basically introducing themselves. It’s kind of mass produced but it works. They go: “Yo, here’s our story, here’s what we’re doing.” And then they said: “For your gift, we wrote you a custom song. We personalized the lyrics just for you.”
It links to their SoundCloud and it says: “Shaan, King of the First Million” — that’s the name of the song. So then they don’t message us, they invest your funds with the fiat, get it done.
Shaan: They sent the song.
Sam: And I’m like, okay, I don’t know what’s happening right now, but this has never happened before. You go from seeing an Instagram ad about a band you’ve never heard of, you swipe up, they send you an audio note and a personalized message, then the following day they send you a song with your name in it. Then they followed up again: “Yo, I don’t know if you’re in New York — we’re doing a show, here’s a link to tickets.” And then they send this automated graphic made in Canva — you can see it there — it’s like me crowd surfing.
I don’t know what is going on, but this band is kind of genius. They’re called Karalanka. They’re still small. But when I saw this I was like, they may or may not be the best musicians, but they probably have the highest overlap of marketing genius for a young band. There are a lot of marketing geniuses out there who don’t make music. There are a lot of musicians who don’t know anything about marketing. These guys know enough about both to be very dangerous. I thought this was amazing.
Shaan: Is this effective, you think? So they’re basically doing all this to get you to buy tickets to their New York show, is that right?
Sam: It’s not just that. It’s not just to buy tickets to a specific show. The way I think about it is every business has to find a way to get their first hundred or first thousand customers who love you. That’s a really specific thing. For this podcast, we needed a thousand people to listen who actually really loved the show. Every business has this, so the question is: how do you actually do that?
At YC they have this thing: do things that don’t scale. They talked about the early Airbnb guys — how they used to go call all the hosts of their New York Airbnbs, go to their houses, take professional-looking photos so the listings looked better. People were always laughing like, that’s not going to scale. And they’re like, well, first of all, it doesn’t even matter if it scales. Right now I don’t need scale. I just need something that’s going to get a thousand people to really love us.
That’s what these guys are doing. It’s an amazing example of actually betting on that strategy: you need a small group of people to really love you and go to bat for you. Not a bunch of people who just kind of sort of like you. Those views — do they matter? What are those views worth versus somebody who has a story to tell, somebody who’s really impressed by you, who feels invested in your story and goes deeper down your funnel?
I think these guys are showing they’re brute-forcing that thousand fans who really care about them.
Do Things That Don’t Scale — How Far Can You Push It? [00:08:30]
Shaan: Dude, I always hated the “it doesn’t scale” conversation, for a few reasons. Number one, most people aren’t going to make it to the point where they ever have to worry about that. Number two, you can brute force it and manually do things to a pretty large number. Mr. Beast’s operation is worth hundreds of millions of dollars and it’s a fairly brute-force operation — not very sophisticated from what I understand. When I talked to NerdWallet, it was at the time making like $30 million in revenue, $15 million in profit. I saw a little bit behind the scenes: super unsophisticated. What were some other things? It was basically just them blogging.
What are some other examples of things that look like a tech or internet-based company on the outside, but behind the scenes are pretty rudimentary — they haven’t even thought “we need to automate or scale”?
Sam: Our buddy Ryan Hoover built Product Hunt. He’s been on the pod and told the story. I was there kind of front-row when he was building that thing — I think I’m user number 17 in Product Hunt history. Very, very early, first dozen or so people on the platform. And for some of us he was sending updates on literally what he was doing to build it.
He was sending out hundreds of personal welcome emails a day, maybe 100 personalized tweets per day. By six or seven p.m. he’d close up his laptop, go to the gym — he’s a very structured guy — go home, hit the bed early, not going out and socializing. Then wake up the next day and do the same thing.
That community that we were part of — the first group he sent it to was like maybe 25 people. It didn’t even have its own website. He was using this thing called Linky Dink at the time, a third-party tool. Every day he would send out a morning email digest of the cool stuff people posted, and he would tag each person individually: “Oh, Shaan, I know you guys had once looked at building a product like this — what do you think about this?” He was asking in such a nice, personalized way that you’d go ahead and reply. That generated all the activity for that early community.
Why did Product Hunt work? Why did it sell for $20 million? Because at the beginning he got the right people from Silicon Valley to actually participate, and the way he did that was like watching someone build a fire. First they’re just hitting the flint, rubbing two sticks together just to get the spark. When it’s there they’re covering it, blowing on it gently, adding just the next few pieces of sticks. They know it could go out at any moment.
How Sam Built the Trends.co Community [00:13:00]
Shaan: I saw you do the same thing with Trends, basically. When you wanted to launch that, it was by no means going to be a slam dunk. I think most of us in Trends would say the research reports you guys sent out — the product — were cool. But the real reason anybody liked Trends, I think, was the Facebook group. And all it was was a Facebook group. There was nothing you built. You just literally went in and typed a title and hit enter. But what made the Facebook group good was you hand-picked who could get in, and every day I felt like you were sharing some super high quality stuff to get a conversation started. Was that intentional?
Sam: 100% it was intentional. Trends right now is making many millions of dollars in subscription revenue. Pretty simple, only about five people work on it, so it’s a pretty profitable thing.
I would do a few things. The first thing I would do is even people who didn’t pay — people I thought were impressive, like you or some of our other friends — I’d be like, “Hey, I’m adding you to this group.” I’d manually add them and then make a post: “Oh, look who just joined — it’s Shaan. Shaan has done all these impressive things. Funny seeing you here. If you have any questions for Shaan, just ask him right here in the comments.” I would do that all the time.
Shaan: That worked, by the way. Because I was like, oh, this group has cool people. And in reality you added 300 paid members I’d never heard of and then added one interesting person — but you made that intro post baller. You’re like: “You ever seen a plane fly? Yeah, that’s because of this guy.” It was always the most ridiculous intro. Like: “Did you know they didn’t have hundred dollar bills until this guy came around.”
Sam: I did that all the time. And the other thing I would do is write out these long posts about interesting things I was thinking about, then tag certain people who either had accomplished something like that and would talk about it, or I would write comments for smart people and message them: “Hey, do me a favor, post this.” I would write posts for other people and make them comment.
One time, when HubSpot was looking to buy us, I saw that Brian Halligan — the founder and then-CEO — had joined. I messaged about 80 people and said: “Hey, reply to Brian. Here’s the message to say to him.” So many people commented. He checked in like eight hours later and was like: “Oh my god, I’ve been overwhelmed with replies. I can’t believe how thriving this community is.” And I remember thinking: got him. Got him. That feeling is what you want all community members to feel.
We used to do that all the time. Ryan Hoover is a good example of people who have grown without really caring about scaling. We should do a segment another time where we actually think about the most duct-tape operations we’ve seen that got quite large.
Airbnb’s Unscalable Thing That Scaled [00:17:30]
Shaan: Let me give you another angle here. There’s the brute-force “do things that don’t scale” approach, and they do them even past the point where you shouldn’t be able to keep it up. Airbnb still does that photographer thing, by the way. They took that unscalable thing — going to people’s apartments, taking photos for them, improving their listings — and now they just have a fleet of photographers around the country that’ll come do this for your listing. They turned it into a scalable thing.
When people talk about “that’s not scalable,” like an ad agency — what do you mean, of course it’s scalable. You just hire 5,000 employees. That’s scalable. Maybe not what you want to do, but virtually everything is scalable. You just have to add a ton of people. Most things can scale past what most people think.
This also happens in engineering. You work with engineers and they’re like, “We need to build it right before we launch” or “This won’t work when it scales.” And then you hear stories like: yeah, Facebook was written in PHP. Why? That’s just the language he knew at the time. And it was still running years later, way past where it was supposed to.
Uber’s Narrative Violations [00:20:00]
Shaan: I’ve got friends who were early at Uber and friends who are still at Uber. A lot of people don’t know this, but the first or second employee was this Mexican guy who, at the time, was living in Mexico. So the early versions of Uber were written with a ton of Spanish in the code. My friends who were there early told me — I forget his name, do you know who I’m talking about?
Sam: I remember reading about him but I don’t know his name.
Shaan: He was Mexican, and his friends in Mexico were like, “I know a good agency, we’ll have them do it.” And it was kind of thrown together and kind of janky. My friends who still work there say every once in a while they’ll find Spanish in the early codebase — Spanish notes in the code. That was the early version of Uber.
Think about how many rules of startups Uber violated. The Uber founders, Travis and Garrett, didn’t work on it full-time. Uber was not a project they were willing to do. They just literally tweeted out: “Hey, we need a general manager.” Some random guy named Ryan Graves said: “I’m a hustler, I’ll do it.” And they’re like: “All right, cool.” They literally delegated the CEO job.
Did they have a strong technical co-founder who could write the code in-house? Nope. They used a third-party dev shop to build the first version of the app. If you’re a product guy and you go into investors and say “I’m gonna use an agency to write the code for the app” — yeah, no.
Then they literally broke the actual laws. They were running and got a cease and desist from San Francisco saying: “For every day you’re operational you owe us five thousand dollars per day.” And they just kept going.
Then: “bits not atoms” was like a common phrase in Silicon Valley at the time — you want to do software startups because they can scale, have profit margins, all that. Real world cars and homes and stuff like that, super hard to scale, super low margin. And okay, some people say Uber’s not that profitable. But the reality is the founders and investors did fantastically well. Today if you said, “I’m the founder of this thing, I’m not working on it full-time, I found a guy on Twitter to be the CEO, and we’re using an agency in Mexico to build the app” — that doesn’t fly. And guess what? It worked.
Scott Belsky’s $15K Bets on Pinterest and Uber [00:25:00]
Sam: Dude, we’ve got to go on a quick story tangent. There’s this guy named Scott Belsky. I’m friends with him — or used to be. Actually I’ve talked to him twice. He invested in my company and I’ve hung out with him once or twice. He doesn’t know this, but he’s kind of like my secret admirer from my side. He’s like this good-looking, handsome dude who dresses nice and seems really wealthy. If I see him I’m like, “Dude, you are the best.” So like, if you have $10 million and a jawline, guess who’s all in?
Shaan: Sam is all in.
Sam: All in. So I love this guy. He’s great. Right now he’s like an executive at Adobe — not just an executive, I’m pretty sure he’s in line to be CEO. Adobe is one of the 30 largest companies in the world. Their market cap is like three or four hundred billion dollars.
I cold-emailed him to invest in The Hustle, and that’s how I became friends with him. We met one time and he goes: “So when I was 26 years old I was starting my company called Behance.” Behance and Dribbble are like the two companies where designers can host their portfolio and talk to one another.
He was like: “I left Goldman making $90k a year. When I left I had like $50 or $60 thousand saved. I started Behance, it didn’t go very well, we bootstrapped it, and I was doing consulting on the side to pay the bills.”
He said: “I noticed that with Behance we were getting a lot of traffic from two websites. The first was called StumbleUpon — designers would post cool designs and we’d get traffic. The second was a small company called Pinterest.” He emailed both guys, this was 2010 or 2011. He goes: “I emailed these guys. You guys are sending us hundreds of people a day, which for us at the time was a lot. What are these websites?”
This guy Ben told him about Pinterest. And Ben was like: “Hey, I’m going to raise a little bit of money, do you want to invest? It’s a $3 million valuation.” Scott was like: “Dude, I only have $50k. I don’t want to look like a noob to this guy. Whatever, I’ll invest $15,000. That’s a big deal to me.”
And then Garrett was like: “Hey, my friend and I are starting this other thing. None of us are gonna work there because I’m too busy running StumbleUpon, but it’s basically like a car service.” Scott was like: “I don’t want to invest in a limo company. There’s no way a limo company is going to take off. But like, I don’t want to look like an idiot — this guy’s been sending me traffic and I kind of want to look like a big shot.” So he gave him $15,000 at a $3.5 million valuation.
He did both of these in the span of about two weeks. He had like $50 or $60k in his checking account. His startup was bootstrapped, not making much profit, and he was consulting on the side. His wife was angry at him.
Fast forward: they both went public around the same time. Fast forward those $15,000 checks — I’m pretty sure each turned into around $50 to $100 million each. And Behance sold for $175 million. He told me he owned around 70% of it. So this guy has just knocked it out of the park over and over again — and a lot of it came because of Uber and Pinterest early on. He was like: “I don’t think these are that good of ideas, but I just don’t want to look silly.”
Shaan: That’s an amazing story.
The 120-Million-Download DM Sam Never Replied To [00:31:00]
Sam: It reminds me — I just got a DM from this guy. This is nowhere near related, I’m not trying to compare apples to apples here.
About six months or nine months ago I was getting interested in the AI art stuff — AI that can create art and things like that. I said something offhand on the pod. Somebody reached out: “Hey, heard you’re interested in this. I’m trying to make apps that do this. We just released our first one, would love to see what you think about it. We’re raising a little bit of money, would love to see if you wanted to invest.” Never replied.
Then I see somebody mention this app, click on the founder, and I see that DM. Oh, this guy DM’d me a while back saying I invest. So I go: “Hey, how’s the biz going?”
And he goes: “Good, man. Good. Yeah, that app I really ended up releasing — it’s been downloaded 120 million times. And then I released another one and it’s also been downloaded like 100 million times. It’s going really well, man. How are you?”
I was like: well, I’m currently walking off a cliff, because I never responded to that initial DM.
Shaan: “I recently switched from Trader Joe’s to Whole Foods. I’ve been tinkering with that. I just did my 401k match. Yes — fascinating. Not much, you?”
Learning from Three Groups: Mentors, Peers, and the Young [00:33:30]
Sam: I want to share one other story that’s kind of related to “do things that don’t scale.” I’m a big fan of this idea that you have to find a way to learn from three groups of people. People that have done it before — that’s the mentor type. People that are in the game alongside you — that’s how we got to know each other, we were in a peer group, a mastermind. And lastly, people who are just starting out, fresh, who don’t know any better.
There is a certain tactic to spend time with each of those three groups and be humble enough to know how to ask the right question from each. Because if you ask the same question to all three you’re not gonna get valid information. The question you’d ask someone who’s been through it before is different from the one you’d ask your buddy going through it right now, and different again from the 19-year-old who just graduated.
So I’ll tell you something the 21-year-old might teach you. Dylan and Henry were fans of the pod. They flew out and offered to come help us with our video setups. Before that they were just fans who’d chop up clips for us and share them on social media, and a lot of their videos were beautiful. They just brute-forced their way to having a relationship with us. That became a full-on agency. They did it for us, for the All-In podcast, for a bunch of others. People know them now. But at the time nobody knew who they were — they’d just graduated from college and had their own podcast, which had basically no views.
They flew out to my house and were installing the studio setup in my garage. I went out and said: “You guys need some water? You guys eating anything?” Kind of like parenting them. I started shooting the shit with them: “What’s your strategy? What are you trying to do? Why are you trying to do it? Explain it to me like I was your buddy.”
They said: “We like podcasting, it’s fun, so that’s why we do it. The second thing is we just think making content is our only chance — we don’t have money to advertise, we don’t have connections to knock on a door and get distribution. Content is our only chance. The best way to get good is just do it a bunch.”
Sam: I said: but nobody’s watching your stuff, right? So is it even working?
Shaan: He goes: “I’m just willing to wait. Nobody watches it today. But someday if we start to get people to watch, there is now a library.” He goes: “We call it our binge bank. It’s a place where you can go and binge Dylan and Henry. If anybody ever gets interested — today nobody’s interested — but if people ever get interested, I want to have this bank of content they can go binge. After 45 minutes down this rabbit hole, you’re gonna walk out like: I think I love these guys. I feel like I know these guys and I want to hang out or work with them.”
Sam: I heard that and I was like, that’s really smart. That’s the way to think about content.
The Binge Bank Concept [00:39:00]
Sam: Because most content doesn’t just immediately blow up. You want to have this library. I thought about it: there are several people who I’ve gone down the rabbit hole with and come out with the same exact conclusion after a 45-minute dig. You do this all the time — you discover somebody, you go read everything there is about them, you read their old blog, you watch their old talks, and you come out like: this guy is awesome, this girl is amazing. They had to create that personal library.
Like the guy Macklemore — the famous rapper. Maybe ten years ago, me and my buddy Trevor found one of his songs. We were like: oh, this guy’s cool, who is this? He had a binge bank. He had these vlogs on YouTube of him trying to make it as a rapper. Like: “We’re doing this show at this small college in Wichita. We’re waking up at this time every day, trying to record in the studio because we suck and we’re just trying to train ourselves.” Just sharing along the way.
We watched this stuff and became super fans. Why? Because it’s fun to be early. We liked what he was about, and the quality of content felt higher than the view count. Those videos had less than 1,000 views at the time — like 700 views. Now they each have close to a million.
Shaan: People say that in our comments too. Like: “I’m surprised this isn’t bigger.” Or: “I’m happy to be here.”
Sam: Yeah, “I’m happy we’re catching it early.” That gives me encouragement. Little do they know our podcast has like ten times more downloads than YouTube views. They’re like: “Oh, this little podcast only has 10,000 views.” And I’m like: “Yeah. Share. Please share.”
I’m a big fan of this binge bank concept. Once they said that, it clicked. I also started thinking: there could actually be a product here. Like, YouTube is structured this way, but I kind of wish you could just have a curated thing — your greatest hits. Like: “If you’re kind of interested in me, here’s the curated rabbit hole.” This tweet that went viral, this video, the first thing I ever made, this blog post I wrote back in the day.
Shaan: I have two tools I use regularly as a paid subscriber. First — do you read biographies?
Sam: No. None.
Shaan: I read a ton of biographies. Any biography about a person who is pre-internet era, I use newspapers.com. They’ve aggregated basically every newspaper ever. I was reading something about Dan Gilbert, the founder of Rocket Mortgage, who owns the Cleveland Cavaliers — he’s essentially got everything. His company got popular in the ’90s. So I just go to newspapers.com, set the date range to 1985 to 1992 or so, and read all these articles about him before he was really well known. It’s my favorite tool.
The second one, for anything internet-related, is the Wayback Machine. Whenever I talk to anyone who’s popular on the internet, I go look back at when they started. I like to look at their old websites and see the trend, see the trajectory. It teaches me about patterns. And it also makes me feel like: it’s okay to be shitty even at this size. It’s okay to be only okay around this size.
Sam: Go look at early startup landing pages — there’s actually a blog post I have about this. Like ten throwback landing pages. Go look at the first version of Airbnb, Uber, Snapchat. Then you’ll be like: why are we trying to perfect this before launch? If they could start there and end up where they are, I can start wherever the hell I am and make it better over time.
Rahul’s 2014 Tech Job Offers — What They’re Worth Today [00:45:30]
Sam: There’s this guy — can I find his YouTube video? So in 2014 this guy graduated from Stanford and got five job offers. In his video he goes: “Here’s the offers I got in 2014, and here’s what happened.”
His name is Rahul — Rahul Pandey. You can Google that or search “Rahul tech jobs” and I bet it comes up. So basically, here are the offers he got: Twitter, a combination of stock and salary, $190,000 a year. Facebook: $200,000. Microsoft: around $200,000. Square: around $160,000. And Google: $250,000. All a combination of stock, equity, and sign-on bonus.
Fast forward eight years. What would that stock plus cash be worth? The cash is mostly stagnant — he added about 8% annual growth. The stock he looked at based on what each company grew since then.
Twitter comp: would almost be the same because their stock hasn’t grown. Facebook: would have gone a lot higher, but right now Facebook stock is down, so his first-year comp went from $200k to $220k. Microsoft: started at $200k, now worth around $300,000 a year. Square: first year comp was $160k — fast forward, the stock is now worth $580,000. And Google: was worth $250,000 a year, now worth almost $700,000 a year.
Here’s a few takeaways. First, he said something funny in the video: “Square offered me something I didn’t think was any good because the recruiter said, ‘If Square one day becomes a seven-billion-dollar company, the stock we’re offering you could be worth $400,000 over four years.’ And I was really doubtful that Square would ever be a seven-billion-dollar company.” Now it’s worth $50 billion — at its peak it was $70 billion.
The thing that is really hard to understand is that everything at the time seems expensive. The reason is that exponential growth is incredibly challenging to understand. If something grows at 30% a year, it doubles every two or three years. Exponential growth is really hard to grasp.
Another thing: leveraging offers and negotiating is very possible even if you’re 22, 23, 24. You always do better when you have another offer in hand and play them off one another.
And finally: employees at tech companies can get meaningfully rich, and people don’t talk about that enough. It’s a fairly safe way to build wealth. The bar is high to get in, but there are still a million-plus jobs across FAANG. If you can get a job at a growing tech company — at least a thousand employees, growing quickly — it is such a good way to build wealth in a low-risk way. And now’s the time, because public company valuations have reset. Square, Facebook, Coinbase, HubSpot — those valuations are pretty low right now. You could get offers with $100–300k in equity that could be worth eight figures in ten years.
Shaan’s Bebo Acquisition — The Discord, Facebook, and Twitch Offers [00:53:00]
Shaan: When we were selling Bebo, we had a bunch of conversations. At the end we had three offers: Facebook, Twitch, and a not-papered-but-interested Discord offer that we turned down early.
I did an exercise recently where I looked back at what I was thinking then — because I wrote it all down — and compared it to how things actually played out. And I’ll be damned if I wasn’t wrong on every single thing I believed.
Let’s go through each one. Start with the one relevant to what you’re talking about — the stock. Discord was like: “Look, we like you guys, but there’s no way we could come up with much cash. It would need to be mostly stock. But we think our stock is great.”
Let’s say you walked away with a million dollars of Discord stock back then. At the time Discord was valued at one billion. I talked to one of their investors and he said: “It’s real simple. Today Discord is valued at about two billion. You’re basically just betting that Discord could be worth five billion. If it gets to five, this is the best offer. If it doesn’t, this is the worst offer.”
In my head I was like: I do like Discord. Jason, the CEO — of all the meetings we took, I thought he was actually the most impressive. He cut straight to the chase: “Yeah, I’ll do this. The cash is going to be small, maybe one or two million dollars, and the rest will be stock.” And at the time I was like: no, because that sounds really speculative and illiquid. The total number seemed way lower.
Fast forward: Discord is worth about $15 billion now. If they gave you a million dollars of stock at the private valuation, that would be worth $15 million now in four years. And we were getting more than a million dollars of stock if we had done that deal. Caveat: it was vested, so I’d also have to spend three or four years earning it, which I probably wouldn’t have.
Sam: You probably would have been fired way before that.
Shaan: Yeah, the odds I was going to capture all that — I don’t know. But it just shows how our brain isn’t really set up for this. The idea of Discord becoming worth $15 billion seemed not very likely, but in actuality the odds were probably in its favor. All these different ways multiply together to arrive at the private market valuation.
Then the Facebook offer. Facebook’s offer is higher in cash, higher in stock. But we don’t know which stock’s going to perform better, and so it came down to intangible factors. We ruled out Facebook for some somewhat silly reasons.
The first was: Twitch was the leader in game streaming and Facebook was like nobody watching game streaming on Facebook at the time. I was like: “This is going to be like another startup. They’re called Facebook but in this niche they’re at zero and they’re hoping we can help them win.” I just wanted to go join the Warriors.
Sam: And your mentor said that’s a stupid way to think about it?
Shaan: He was like: “You’re going to walk into Facebook and they’re gonna be like, ‘Cool, game streaming’s over here,’ and you’re just gonna go wander around — go to AI, go to VR, go to the news division. They’ll forget you even exist after they hire you. You have no idea what your daily life is going to be like there.” He was absolutely right.
Sam: Have you ever been to the Facebook campus?
Shaan: Yeah. It’s basically like a better college. The way I describe it is: it’s like a mall where everything’s free. They have a food court with many pizza places. My wife worked there and I would go and I’m like: this is the best thing ever. Restaurants, a sushi restaurant — everything’s free. They’ve got an ice cream place — free. A woodworking shop — free. A laundry place, a barber, a dentist.
Sam: The barber. That’s the biggest one. Food I expected, but when I just saw you walk over to this guy and get a haircut I was like, damn.
Shaan: “It’s free. I just walk in and get a haircut.” That’s kind of amazing.
Sam: They’re like: “It’s free. All you have to give us is your life.” Deal.
Shaan: So the million in Facebook stock back four years ago would be worth — I think it went up about 30% since then, so a million would be about $1.3 million. At its peak it would have been double.
And so in that one we made the mistake of optimizing for really intangible things. One that seemed tangible was: they weren’t going to take our whole team. I was like, I don’t want to stand at the celebration party and be like, “But not you four — they didn’t hire you guys. I’ve been awesome and the rest of us are gonna go, and guys, you won’t believe the recommendation letter I’m gonna write you.” That wasn’t gonna feel good.
As soon as we rejected them, they were like: “Why?” And I said the team thing. They’re like: “Dude, we would have hired them a few months later. We just didn’t have the head count yet.” And the commute — he’s like: “Dude, we have an SF office. We could have put you there.” I was like: awesome.
Shaan: The commute — they have a bus that basically has a restaurant, cafe, toilet, internet, TV. It’s not even a real commute.
Sam: People on the bus complained about the pedicure line being too long. I don’t know what you’re complaining about.
Shaan: So we made the decision, it ended up fine, but my point is: it’s really hard to forecast and predict these things. Especially hard to predict what stock is going to be worth down the road.
Demand Prediction as a Business Opportunity [01:05:30]
Sam: All right, quick — two quick ideas. One is around predictions.
There’s this company called PreciTaste — horrible name. If you go to precitaste.com, it’s some kind of prediction engine. Basically what it’s doing is using data — cameras, historical trends, whatever — and trying to tell the person in the back of a restaurant how many burgers to put on the stove, how many fries to take out of the freezer. How can we help you predict demand?
Setting that company aside, I actually think there’s a lot of different ways where this is really valuable. For example, we own an e-commerce store and we’re always trying to predict how much inventory to order — we’re ordering six to nine months in advance sometimes. It’s so hard to forecast what the world’s gonna be like six months from now. Oh yeah, turns out there was a pandemic, a war, stimulus checks that caused everything to go up, then everything that could go down went down, and shipping broke. Every better prediction saves us money.
There are a whole bunch of business problems entrepreneurs could go after that basically just help you predict demand. For an e-com store it’d be nice to know how other stores in your category are trending year-over-year. For a restaurant: what’s the foot traffic at this time of year, in this weather pattern? How many people should I expect today — that tells me staffing and food needs.
If you can cut waste by 10 to 15 percent in these types of businesses, that’s probably going to add up to tens or hundreds of billions of dollars per year of money saved. The whole demand prediction industry is very interesting to me.
WGSN: The $130M Color Prediction Business [01:09:00]
Shaan: Dude, I’ve done a ton of research in the trends prediction business — obviously we have Trends. Before launching that I was like: what should we do here? Have you heard of this company called WGSN?
Sam: Yeah, they’re the ones who say like the color of the year is lavender and the smell of the year is lily or whatever.
Shaan: Okay, listen to this — they’re publicly traded so these numbers are facts. 2021 revenue was 91 million pounds. I don’t know the conversion of monopoly money to real money, but that’s around $130 million. Their EBITDA was 41 million. So basically for every dollar they made, about 45 cents was net income. And what they do is tell you which colors are going to be popular. They only have 6,500 customers, so those customers are paying like $25,000 a year. And the product is basically a quarterly PDF telling you what colors they think will be popular.
I’m almost positive the way they get this is they put tablets at fashion schools and just ask students what they’re feeling, what they’re liking. They’re asking the people at the leading edge — the 18-year-old with 100,000 TikTok followers who thinks something’s cool — because whatever they think is cool, normies will start wearing ten months later.
A real-life use case: Starbucks is gonna make a hundred thousand uniforms. Millennial pink is the new color. So it’s a no-brainer to spend $25,000 to get a quarterly PDF — plus the ability to DM someone at WGSN and ask: “Which shade of green should we be using?”
Sam: That’s an interesting business. I talked to someone at a fashion company and they were like: “Lemons are in this year.” And I was like, what? I thought they were talking about the fruit. They’re like: “No, as a print, a pattern, a color.” And I was like: it sounds like you’re just making things up. They pulled up their dashboard and were like: “No, look at the difference between lemon and pineapple.”
Shaan: Pineapples were everywhere recently, weren’t they?
Sam: It’s like: are apples hot right now? “No, apples are out, lemons are so in.” I was like: there’s no way. And they’re like: this is the bible to us.
Shaan: I don’t know if that’s the exact one, but whoever it is — knowing which colors, which scents, which styles — dude, that sounds exhausting. If I’m going to be in the fashion business, I’m going to be in the men’s tuxedo business. That hasn’t changed for a hundred years. Have you seen Jack in Titanic? Same thing.
Sam: I’m going straight big and tall for men because the only criteria is: do you fit? If you fit, you’re in. If you don’t fit, you’re out. That’s your only criteria. I like a simple yes or no.
Shaan: Fashion is exhausting. Although I do think some brands crush it — like Louis Vuitton. The same logo, the same colors, for 150 years. Just timeless.
Sam: There’s a little arbitrage going on with Louis Vuitton. A few months ago somebody pointed out: because the dollar and the euro reached parity, the luxury stores hadn’t changed their prices. So a Louis Vuitton bag in Paris, you could buy it in euros at a price that, when converted to dollars that same day, was selling for more in the US. And in Paris you’d also get the VAT refund. So you were basically getting something like 30 to 35 percent under US market price. That’s your spread.
And so there are whole businesses around this kind of travel arbitrage. You can pay someone who’s already flying from Europe to the US to bring a bag over for you. There’s a startup called Grabr — G-R-A-B-R dot io — and their whole thing is connecting you with people traveling overseas who’ll buy stuff for you. It’s like a marketplace for that.
Shaan: That is the startup equivalent of a drug mule.
Sam: I’ve got a stupid example of that. There’s this thing called a Wicked Laser — because I’m a grown up — it’s a laser pointer so strong they made it illegal in America. If you shine it at a piece of paper, it catches fire. It reaches jets in the air. It’s a Chinese company and obviously I saw this laser and wanted it. It’s $300, but you can only ship it to Canada. I’m like: I want a laser that can light things on fire. That will go perfect in my collection of tasers and a BB gun. So I had to find someone who would buy it in China and get it from Canada to America.
Shaan: You should go work at Grabr. Just sponsor every incel subreddit. “Tired of not getting your laser? Tired of driving to Canada for your favorite lasers? Use Grabr. We grab it for you.”
Sam: I saw a TikTok of a laser pointer where someone was in their bed, pointing it at their light switch — and they just held it on the switch, and it applied just enough pressure to turn it off. The comments were like: “Bro, it’s not real.” But imagine not having to get out of bed to turn off your light at night. Just grab your laser pointer off the nightstand.
Shaan: Just imagine getting an Instagram where someone goes “watch this,” shines something across the room, and it lights it on fire. That’s what I’d get caught with.
Sam: Wait — how’d the light switch go down?
Shaan: I never got to the bottom of it. I liked and followed to find out for part two. They got me.
The Private Security Industry [01:22:00]
Sam: I want to tell you about another thing that’s kind of interesting. You know Strip Mall Guy on Twitter?
Shaan: Yeah. I know him — he’s the same guy. I’m one of those few people.
Sam: Well, there’s Strip Mall Guy — whose real name is maybe Trent — and maybe they’re two different guys. One of them, I forget which, tweeted about private security and it caught my eye. He goes: “Man, private security is booming right now. I know so many cops who retired and are just doing this because it’s better money.” And I was like: okay, tell me more.
So basically, very briefly — do you know much about this private security industry?
Shaan: I know we used to hire them for events because the insurance required it. And we had a buddy who started a security business — like an Uber for bodyguards. Did it work?
Sam: He tried. It failed. He tried to make it sexy. He just needed to do it, not make it sexy.
So there are some big players. Securitas, Allied Universal Security — both multi-billion dollar companies. They do everything from mall cops to airports to events. Then it gets smaller and more niche as you go down. Corporate security: I remember when I was working at a company, I saw on the CEO’s calendar a meeting with the private security detail. I was like, you have private security? He’s like: “Yeah, we’re worth a lot to this company.” So the company literally pays for private security for the executives.
I find this interesting. It makes sense to me that there’s a private world out there for retired military and police that’s higher paying and maybe an easier job than what they’re doing today.
Shaan: Zuckerberg and Bezos release their security budget each year. I think Bezos was $6 million — which to me is not a lot of money for someone like that. For Facebook: last year $26 million was spent on Zuckerberg and his family, which was six percent higher than 2020. That’s kind of crazy. $26 million just on his personal security.
Do you know how many people work for the Secret Service?
Sam: No.
Shaan: 6,000. Do you know how many people they protect?
Sam: 25?
Shaan: 25. Spoken like a man who owns a taser and a laser.
Sam: Dude, I met a Secret Service agent at a wedding this weekend and I just asked him everything. And he basically just read me the Wikipedia page. He’s like: “Big fan of the pod, happy to — ” they just couldn’t tell me anything real.
Shaan: That’s a pretty shitty Secret Service agent, going around saying he’s a Secret Service agent.
Sam: It was pretty interesting though. Speaking of TikTok, there was a TikTok of a guy who saw Jeff Bezos on a corner in Seattle, just waiting to cross the street. He’s like: “Hey Jeff, how’s it going?” Bezos is going: “Fantastic.” Ready to walk across the street. And somebody in the comments goes: “Check out the hand of the security guy.” And you look, and he had basically a prosthetic hand — his real hand is in his pocket, probably holding a weapon — and just a kind of fake hand out. I saw that and I was like: that is awesome.
Shaan: You know what’s even weirder? There was a fight backstage at a UFC event amongst the fighters, and security got involved. And I kept wondering: who is doing UFC security? To keep UFC fighters from fighting each other? What kind of job is that? You just see something happening and — what are you going to do?
Sam: Well, you saw the woman Dana White hired — the Best Buy lady. She was at Best Buy and someone was trying to rob the place. She got down low in an O-line stance and just kept blocking this person from getting out. He’s desperately trying to escape and she just ends up tackling him into a bunch of boxes. She got fired from Best Buy for liability — “You attacked somebody in our store” — and she’s like: “I’m a security guard, what did you want me to do?” Dana White went on Instagram: “Who is this woman? I want to hire her.” And now she works for him as personal security.
Shaan: Dude, I always see those guys at events and I’m like: who — I mean, you need an Israeli-trained secret service agent. Who are you gonna have protect a UFC fighter?
Sam: Jerry Springer security guards. Years of experience breaking this up.
Random Tangents — The Jerry Springer to DMX Thread [01:30:00]
Shaan: This episode is really good off a tangent. Do you remember Steve, the security guard from Jerry Springer? He’s probably like the top earner on Cameo right now.
Sam: Nah, probably Kevin from The Office. Or Gilbert Gottfried — oh shoot, I think Gilbert actually died. RIP.
Shaan: Did you know that DMX died?
Sam: Yeah, dude.
Shaan: I saw that. You tweeted out — why didn’t you tell me? You withheld that information. That reminds me of what Chappelle was talking about, how celebrities get treated differently during tragedies. He said: “Just imagine 9/11 and Ja Rule was being interviewed. We need Ja Rule right now to make sense of this tragedy. Where is he? Someone go get me Ja Rule.” That’s what that’s like — you wondering why no one told you DMX had passed.
Rob Dyrdek’s Daily Note to His Wife [01:32:30]
Shaan: By the way, did you see this blog post? We’ll close on this. This guy listened to the episode we did with Rob Dyrdek — which is probably one of the most popular episodes we’ve done. People love that one. Turns out the fun-loving skater guy from MTV is like an absolute nut when it comes to personal productivity and efficiency. His quote was: “I am human optimization.” And one of the things he said was that he writes his wife a handwritten note every day.
So this guy wrote a blog post — it was the top post on Hacker News over the weekend — called “Write a Note to Your Spouse Every Day” — subtitle: “A Note a Day Keeps the Divorce Attorney Away.”
He said: “I was listening to My First Million and Rob Dyrdek was on there. He says he writes a note to his wife every day because sometimes she would otherwise be the last person to hear from him at the end of the day about what he was working on, how he was feeling. He was usually tired by then and wasn’t really giving her his best. So for the last six months I’ve written a note to my wife every day.” Then he goes: “All right, that’s a lie — I did it most days, but here’s how it went.”
And it’s amazing. They’re on the same page about what’s going on in their lives — kids, finances, how they’re spending their time. They talk more than ever. More trust. Less stressed. Less aggravated with each other. Better parents because they’re more in communication.
He also goes: “Here’s why writing is thinking. Writing helped me clear my mind. It wasn’t just me dumping thoughts onto her. It was me getting my own mind clear.”
And he gives this outline of what he writes: first, gratitude — something about her, for how hard she works, her looks, whatever. Then what he’s working on today, his goals or deadlines. Anything he’s excited about. Anything that’s bothering him. Any random ideas — parenting, fixing stuff around the house. Transactional stuff: “We need to remember to do this, don’t forget that.” Questions: “Hey, are we going to that thing? Did we ever book that?” And lastly, again — gratitude for the life they have, the time they have, the kids they have.
Not all sections every day, but those are the general categories. Takes about 30 minutes if he’s not distracted.
Sam: Is it a physical note or an email?
Shaan: I think it’s a physical note. Not 100% sure. I guess I should start doing this. Sounds pretty cool, right?
Sam: Yeah, this is awesome. I just DM’d him while you were talking. This is a really good headline: “Write a Note to Your Spouse Every Day — A Note a Day Keeps the Divorce Attorney Away.” Beautiful find.
Shaan: I think I’ll start doing this.
Sam: Maybe I’ll start by talking to her first. No, that seems like a no-brainer. I’m reading this like: all upside, pretty much no downside. Why am I not doing this?
Shaan: Yeah, the calculations are going in my head: huh. You seem like a good husband. Do you already do this?
Sam: No, not at all. As I was reading it I was thinking the same thing — why would I not do this? It seems really obvious. But apparently no one does it.
Shaan: My First Million: improving husbands one episode at a time. I feel like we had to leave them with something useful because we definitely went off on a tangent’s tangent during this episode.
Sam: It worked for Rob, and Rob is very successful. Have you seen his wife?
Shaan: She’s very beautiful. I’m pretty sure she was a Playboy model or something. She’s amazing.
Sam: I’m definitely doing this now. Here’s one of the ways I knew Rob was crazy rich: if you Google “Rob Dyrdek home” there are like 13 different articles, each about a different $10 million house.
Shaan: Did you mean homes? Did you mean mansions?
Sam: Yeah, and he buys all these houses. He seems happy. He’s got his act together. I’m on board.
Shaan: All right. Fine. I’ll do this.