Sam and Shaan revive their “Sara’s List” segment — named after Sam’s wife Sarah, who became a self-made millionaire by joining Airbnb with a stock package rather than founding a company. They review how their 2021 picks performed, then each present five 2024 picks (OpenAI, Retool, Mercury, Cursor, Epis, Wiz, Neuralink, Perplexity, Traba, and Replit) with bull and bear cases, building on the thesis that your job choice is an investment decision.
Speakers: Sam Parr (host, co-founder The Hustle), Shaan Puri (host, founder Milk Road)
Introduction: Sara’s List and the Concept [00:00:00]
Shaan: All right, today is everybody’s favorite episode. It is the Sara’s List episode. So we’re talking about 10 companies that you can become wealthy with — without having started it, invested in it, or joined early. It’s called Sara’s List, and I got a little presentation for you. If you’re on audio, get over to YouTube right now, because I have slides that are going to be fun.
So it’s called Sara’s List. This is Sam’s wife Sarah. She is hilarious. She is on the cover of My First Million, and the reason why is because she has an unlikely story — a story that I hadn’t really heard, and when I heard it for the first time it kind of shocked me.
When I heard this, she was about 30 years old at the time. She was a self-made millionaire. But she didn’t start a company. She wasn’t killing herself working 100 hours a week like we were. She wasn’t paying herself scraps. She was getting paid a nice salary with nice benefits. She worked at a great company that had good culture. She didn’t have to make risky angel investments and get lucky. She was not a high-profile exec that just got some huge pay package. And she wasn’t lucky like the Facebook graffiti guy that just got a bunch of stock from Facebook and made $70 million.
Her story was almost incredibly boring. It was incredibly simple, and I just couldn’t believe it. I was like, I’m trying so hard to make a million bucks here — that was such a better path.
So just to recap: self-made millionaire, didn’t start the business, didn’t have to do risky angel investing, wasn’t a high-profile exec, wasn’t the graffiti guy. What she did was she joined Airbnb.
The Airbnb Example and the Sara’s List Framework [00:03:00]
Shaan: If you look at this chart — this is Airbnb’s valuation over time — there was a period when Airbnb started that was the high-risk period. That’s the flat part of the curve. To join Airbnb then, you would have had to see something that was not obvious. You had to believe something that took a huge leap of faith. You had to work like crazy in a tiny apartment. There’s a fun video of them taking midday dance breaks — everyone stands up from their desk and they’re dancing. You had to do weird startup stuff. But that’s not what we’re talking about, right?
She joined after it had crossed a $10 billion — even $20 billion — valuation.
Sam: Yeah, and if I remember correctly, they already had that huge office. Do you remember that huge office at 888 Brannan? I imagine there were like a thousand people plus working there. It wasn’t small. You and I were living in San Francisco at the time, and it was stupidly obvious. You could have slapped me in the face and said “what’s a company that’s a winner?” and I would have been like, Airbnb is a winner. It was obvious. I had friends at Uber — same thing. Uber was obviously a winner at the time. They were already multi-billion-dollar companies, but because of the space they were in and how dominant they were, it was clear they still had room to run.
Shaan: What we call Sara’s List is basically a function of using your time as your investment. Most people don’t think of their job as an investment decision. But your time, your talent — where you’re going to spend four years working — is an investment decision. You should be thinking about it like a venture capitalist. Especially if you’re working in the tech scene.
So these are all venture-backed tech companies. The criteria for Sara’s List: a company that has product-market fit. It’s a clear, obvious, successful company. Doesn’t mean it can’t fail, but it’s not in the scrappy “figure it out” phase. It’s funded, it’s growing, and you’d get a nice salary and benefits — they got oat milk in the fridge.
And if you joined and got a $200,000 stock package — so like $50 grand a year of stock, maybe $150,000 salary and $50,000 of stock — that could become worth a million plus in five years. Can it 5x in 5 years? We’re not looking for max upside. We’re looking for lowish downside and enough upside where you can turn a $200,000 stock package into one, two, three million.
Reviewing the 2021 Picks [00:07:30]
Shaan: We did this once in 2021, three years ago. Before we tell you what we picked and how we did, we’ve got to time travel back real quick.
So back in 2021: that NFT sold for $69 million — those were the good old days. Tom Brady was a football player. SBF was a hero. People cared about whoever those people were.
Sam: It was a simpler time.
Shaan: The stock market was running up — it was on a 10-plus-year bull run, peaked in 2021. For the listeners, “those people” was Prince Harry and his wife.
Sam: Yeah, see — I don’t even know who it is. Point proven. Thank you, I rest my case.
Shaan: By the way, did you know Sesame Street and 7-Eleven launched VC funds during this time? Everybody was getting in on the game. But nothing lasts forever.
Since then, about 36% of startups that raised money have raised at a lower valuation — and that’s not counting companies that died or are avoiding raising because they don’t want to raise down rounds. A third of transactions that cleared did so at a lower price. It’s even worse for late-stage startups — Series C, Series D companies are down between 30 and 60% on average.
Sad news: two-thirds of employees right now who are working at these companies are working for options that are actually worth zero — and they probably don’t even realize it yet. They got a stock option at a $24 strike price and that stock is currently trading on secondary for $8. All of their shares are underwater. Currently only 33% of the shares are “in the money,” as they say.
Shaan: All right, so what did we pick? We picked about 11 companies. Here’s how we did — and look, all the stuff I just told you is basically our big fat excuses as to why it wasn’t great. We both had two hits — two things that did go up in a step-change way, sort of 3-4x so far in three years. I had two that were down in valuation from before. You had three that were down. And then there were some pushes — a push basically means it has the same valuation as before, which is actually sort of a win because you beat the market.
Sam: You’re wrong about Next Health. Next Health is wrong on here.
Shaan: Oh, is it actually up?
Sam: Well, the word “Next” — there’s two companies. One is Next, one is Nexxt. I think there was a little confusion, but someone in the research department’s getting fired.
Shaan: They’re just missing a T. And OpenStore is down — it’s unclear, but I mark it as down. It’s a little intellectual honesty. I don’t think it has achieved the status to be called up. I gave it a less generous interpretation of down, just to make my own grading harsher. It’s not about them, it’s about me grading my own picks more harshly.
Sam: And you think Figma’s down too?
Shaan: Well, Figma tried to sell for $20 billion — that transaction didn’t go through, so that would have been a 2x. The last round of funding — and by the way, this is not all very obvious. Companies don’t always announce their valuations. There are leaked valuations to the media that aren’t always true, and valuations that come with a bunch of strings attached. Maybe you got a good number but there are all these caveats, liquidation preferences. A lot of this — we asked people who own secondary stock marketplaces: what is this company trading at right now? So it’s incomplete information. We’re doing the best we can with private stock information.
Sam: By the way, Sarah — my wife, who this is about — had a job offer at Figma like three months before their acquisition offer. If that had gone through, I believe it would have been a 2x return. We almost had a mini hit again, but not quite.
Shaan: All right, let’s get to the 2024 picks. We’re going to try to do better. The good news is, anything from the 2021 vintage got shellacked. Everything got corrected. But now I think we’re at a less hyped period of time, and so this cohort of picks should be better.
Not financial advice — neither Sam nor I are actually trying to get jobs. This is what we would do if we were going to get a job. Sam did this with Sarah when she was looking for jobs. This is for fun.
Sam: I bet you there’s going to be at least two overlaps.
Shaan: And a good hit rate on this — six out of ten can have a step-up where five years later there’s a 4 or 5x in valuation. If six out of ten did that, that would be great. Three out of ten would be the lowest bar I’d accept.
Pick #1 — OpenAI [00:13:00]
Shaan: All right, I’m going to go first. I’ll start with an obvious one — it’s probably one that you have too. OpenAI. And by the way, there are no bonus points for difficulty in business. The fact that everybody knows OpenAI — I’m not trying to give you a secret company or a secret stock tip you’ve never heard of. The point of this is often that the companies that are going to be big juggernauts are hidden in plain sight.
So OpenAI is currently valued at $103 billion. It’s doing about three and a half billion a year in revenue already.
The bull case — what do you need to believe if you’re going to join this company? It’s the first credible Google competitor in about 20 years. It’s something that could actually displace search. It’s the fastest-growing company ever — took them two or three months to reach 100 million users, five times faster than the next fastest product ever. It reached $3 billion in revenue in about three years. And it’s unique because it’s an enterprise company, a consumer company, and a dev tools company all at the same time. That gives it a lot of upside.
What you’d be worried about: it’s probably the most competitive market on Earth right now. You’re getting competition from the most well-funded startups and the most brilliant people, as well as the biggest tech companies in the world — Facebook, Google, Amazon, everybody is coming after this market. Will OpenAI retain their lead?
Sam: The problem with OpenAI — can you even get a job there? Not only is it the most competitive space, but I imagine they have one of the more competitive applicant pools.
Shaan: I read some crazy stat that Tesla has something like 50,000 people a day applying, and I’d imagine OpenAI is somewhat similar.
Sam: Well, we’re talking about our listeners — the cream of the crop here. Of course they can get a job wherever they want.
Shaan: Would OpenAI 5x the current valuation?
Sam: Yeah, I think so. I agree.
Pick #2 — Retool [00:16:30]
Shaan: All right, I’ve got one called Retool. Do you know what Retool is?
Sam: I know Retool. I use Retool, and I wish I had invested in it. I tried to invest early on and missed it. I’m not a user of it, so it would be best from a user to explain what it is.
Shaan: Every technology company has the same situation they’d all love a solution for: you need a backend admin panel. I’m sure you have this with Hampton — “we need to add or remove a member,” or “this person changed companies, can we update their thing?”, or “can we change their membership status from active to suspended?” Some admin function you need to do. And it doesn’t come out of the box with whatever ten tools you’re using to run your business.
Retool is a simple way to make the admin system for your company where anybody — not just developers — can go in and add, remove, and make changes to essentially the database. It’s basically a backend tool for any business that you can customize, and your developers build it once so anybody on the team can use it.
Here’s a crazy stat: 50 to 60% of all software in the world is internal-facing tools. That’s a one-chart business right there. Not a lot of people focus on that because you focus on things you see and use, versus things on the backend you don’t really touch.
The business has crushed it. They launched in 2017. Their latest valuation is $3.7 billion. They’ve raised $150 million from Sequoia and other great companies. Listen to this growth: first nine months, $500,000 in revenue. In 2018, they hit $2 million in ARR. In 2024, they hit around $100 million in recurring revenue. One of the faster-growing businesses out there.
The founder’s name is David — a baby genius. He started this when he was like 21 at the University of Cambridge. Before Retool he had a payments app that did okay. When you see a 19-year-old do that, you’re like — okay, something’s interesting here. He gets into YC, comes up with this idea.
At a valuation of $3.7 billion, I think there’s room to run. There’s five or ten times potential here. The market is just massive, and I like the CEO. That’s something we’re going to see in a bunch of these — the CEOs seem remarkable. If you’re going to make a bet on a private company, you want to be at one with one of these all-star CEOs.
Sam: Two lessons learned here. One: invest in your P&L. We were always trying to build these things internally, the devs never wanted to work on it because it’s an “internal tool,” so who cares. When we got Retool — this is a no-brainer. The best place to invest is in your P&L. Look at your expenses and figure out which of those companies other people like you wouldn’t want to cancel. Retool was one of those.
Second thing: at Twitch, I was in a meeting and Emmet — who was a YC partner — came to meet me running a little late. He said, “Sorry, I was doing office hours with this YC company that just hit an inflection point.” You know that thing where you go through YC, then after YC you’re just like a normal struggling company, and sometimes you hit this inflection point and things really start to work? He goes, “Yeah, this company Retool — things are really starting to work.”
When a really smart friend tells you something is hitting an inflection point, drop everything and go hunt that down. I remember thinking I should have invested. I saw David in the cafeteria — he’d just met with Emmet, wearing his Retool shirt — and I went up to him and said “Nice shirt, love Retool.” That was it. I missed my chance.
Shaan: Retool, I like the pick. Valuation is high — 4-5x from there to become a $15 billion company is tough — but it’s a really good company.
Pick #3 — Mercury [00:22:30]
Shaan: All right, my next one — Mercury. You’re nodding.
Sam: It was on my list and then I removed it because I thought you were going to pick it.
Shaan: I did pick Mercury. It’s a company I use — not one, not two, but like six of my companies now. It’s an amazing product.
So what is Mercury? It’s basically a bank built for small businesses. Easier and simpler to use — just a normal bank, but if you’re a startup and you need a bank account, rather than using Bank of America where it’ll feel like a bunch of 50-year-olds hired a web shop to outsource a second-class tool, Mercury feels like: a founder made this.
Imad, the founder, was a founder of multiple startups before he made Mercury. Now it’s the best product for startups.
The valuation is $1.6 billion — still in a sweet spot range. Here’s the bull case: it has a rare combination — it’s growing fast and it’s profitable. A lot of companies that get written down are burning so much cash that if growth slows, you get a huge discount in valuation. The fact that Mercury is profitable means there’s a margin of safety.
Silicon Valley Bank used to be the bank of choice for Silicon Valley startups. It was a $34 billion company with $7 billion in revenue two years ago, and it imploded because they mismanaged risk. Nobody has really replaced them. Mercury is the best positioned to fill those shoes — potentially a $30-plus billion company. They’re the category leader.
I saw this great quote from a Sequoia partner: the category leader in any category tends to get 75% of the revenue and 50% of all profits in a market. Directionally correct. The winners of every category take the lion’s share. And Mercury has a great brand getting them customers for free, plus a regulatory moat — this is not a simple thing anyone can go start.
Sam: One thing to caveat — we called them a bank, but technically they’re a neo-bank. They use an underlying bank like Choice Bank or Evolve Bank underneath.
Shaan: The bear case: can they grow with their startups? Some products are great because you get them while they’re young and you grow with them. Other products — as soon as customers become really valuable, they take their business elsewhere. I think Mercury will be able to grow with startups, but that’s the risk. I honestly didn’t find much of a bear case.
Sam: I’ve got a bear case. I’ve almost always banked with Chase because I’ve been afraid about accessing my money. That happened recently — a lot of people using various services couldn’t get their payments or payroll out because of bank issues. Silicon Valley Bank was one of them. The reason I bank with Chase is because if Chase were to go out of business, America would basically go under. Too big to fail. Chase is used by something like 5% of Americans. That’s a pretty big deal.
Shaan: I don’t think that’s necessarily a bear case, because first of all they have like $5 million in FDIC insurance now — they offer 20 times more FDIC protection than the average bank. And the proof is in the pudding: Mercury is growing so fast that obviously people are already making the choice to go to Mercury. Something must be working. That choice exists today and people are making it. So I’m not sure why it would change later.
Sam: Look, last weekend Chase gave me box seats to the US Open and it totally worked. I’m going to bank with Chase as long as they’ll have me. The moment Mercury starts giving me these perks — I want a fruit basket. You don’t get my business without a gift basket.
Shaan: You’d take a 20-piece nuggets from Chick-fil-A?
Sam: I’m a simple man. I don’t need the US Open. But it worked — I fell for the trap.
Shaan: Mercury’s a great business. The founder is pretty badass. That one’s good.
Pick #4 — Cursor [00:29:30]
Sam: All right, so I said I’d look at where I spend my time. A tool I’m playing with is called Cursor, and I think it’s pretty amazing.
There was this little girl — she’s eight years old — and her father tweeted out: “I’m trying to teach my little girl how to code and we’re using Cursor.” He posted a screen recording of her learning, and within 12 minutes she’d built a website.
Cursor is a really cool tool. It’s got a lot of hype right now. The easiest way to describe it: it’s sort of like Squarespace or Wix, but it uses AI. You talk to it almost like a person and it makes editing code really easy.
Pros: I think it’s amazing. I’ve been playing with it. It’s super good. Their latest valuation is $400 million — that’s not insane, there’s opportunity there.
The con, and this is a big one: website-building tools have terrible PE multiples. You look at Squarespace, Wix, Weebly — they don’t trade that well. They can do billions in revenue but their multiples are bad.
Shaan: I don’t think it’s in that category. I think it’s more in the GitHub Copilot, Replit category — a coding environment where a programmer can become an AI-assisted programmer. However good you were, however efficient, you can now be some multiple more productive. Maybe 1.5x, maybe 10x as the AI improves.
Wix and Weebly — those are like “my sister needs a website for her preschool.” She’s not going to Cursor for that. And those tools could never do what Cursor can do — build full applications.
Sam: I feel you. I use Bubble — it’s like an app builder, a little bit of a competitor. And in my head, as an investor and potentially as a user, I think it comes into the same churn as a small website builder. You spend $10 a month and there’s not always a massive reason to stay versus all the other competitors. It’s pretty easy to just try different ones. For that reason I think it’s a little similar in terms of valuation.
I looked at Cursor very closely. It was on my first draft of companies to include, but then as I did more research I went with another company you’ll see at the end of this.
Shaan: What do you think about Cursor at a $450 million valuation?
Sam: High upside, high downside. That valuation isn’t based on revenue — it’s based on the vision of what the future might look like. I think Cursor’s awesome right now. If I could invest in Cursor I’d totally invest. But I think it’s more risky than some of the other ones we’ve talked about. They’re at around a $10 million run rate, which is tiny compared to the valuation.
Pick #5 — Epis and the Defense Tech Basket [00:34:30]
Sam: My next one — I don’t even know if you’ve heard of this company. Epis. Do you know this company?
Shaan: No.
Sam: It’s a Joe Lonsdale company. It’s a weapons company, a defense company. It’s very secretive and very private — I don’t know enough about Epis specifically to tell you this is the pick. What I actually did was put this here as a placeholder for a general strategy.
If you’re interested in this concept of finding a company you can join where your stock package is going to appreciate rapidly — where you might get a 5x in 5 years — I think that in the same way Anduril hit for us last time, there are now like ten more Anduril-type companies inspired by Anduril. Anduril itself might still be a contender, by the way.
Epis is basically a long-range defense weapon. If you go to the website — EpisInc — it basically looks like some kind of electromagnetic thing that shoots radio waves into the sky and brings down drones and planes. That’s exactly what it does. It’s an EMP pulse that disables a drone or a missile without being a bomb. You don’t have to bomb something, you can just disable it.
Shaan: There’s a great story from David Bla, the CEO. He told the story of how you sell to three-letter agencies. He’s like, “It’s very hard. There are decades-long relationships with the traditional companies.” He said: “We always try to get to a bake-off. We have to get to a point where they’re willing to do a contest of our product versus their product, because we can win on product. We have better product engineering, but we don’t have the good ol’ boy relationships.”
So they did a bake-off. Everybody goes to a field, and he’s handing out binoculars. The evaluators are like, what are these for? He’s like, “You’re going to need these to see how far away we’re going to disable that drone.” They won the bake-off, won the contract.
Sam: I don’t know about Epis specifically, but I would go interview at the top ten defense companies, talk to all of them, and use your judgment on which is the winner. I know in that basket there are definitely multiple winners.
But how do you even get someone like a CIA buyer to show up in a field in Texas? Who do you even call?
Shaan: A couple of data points: first, there are RFPs you can participate in — the government has a procurement process. Second: when we were at Joe’s house after we recorded the podcast with him, walking out there were like ten senators there for lunch. That’s how you build your network.
Sam: Did he bring you out the back door?
Shaan: Well, because Elon was coming over and he’s like, “Hey, it might be easier for you if you go this way.” And we were like — easier for who? Maybe both of us. I was literally in my basketball shorts.
Sam: Did he hand you twenty bucks and call you an Uber?
Shaan: It’s truly how it felt. And by the way, I couldn’t have been happier with the arrangement. I did not want to be a fish out of water.
There’s also a great story about Palantir — Peter Thiel told them early on that going in saying “you guys are dumb, we’re smart” is not the answer. Alex Karp, the CEO, was just very good with relationship building and networking. They recruited ex-government people to be warm handshakes to get in the room. That’s how they got started.
Sam: I want to do an entire podcast just on the New York Times article on Alex Karp. Very funny. Very good. Very interesting.
Working at Epis or any of these defense companies is sort of like — most of the work is normal, boring, just a regular job. But then you see the output and it’s heavy.
Shaan: In this case, Epis’s tool is a non-death tool — it’s disabling things without bombing anything. But yeah, some of the others — the output is you go to bed with a heavy heart even if you’re doing everything right.
Pick #6 — Wiz [00:42:00]
Sam: Have you heard of this company called Wiz?
Shaan: I’ve heard of Wiz. I don’t know what Wiz does. I looked at it and was like, I don’t understand this enough.
Sam: Wiz is a cybersecurity company for enterprise customers. If you’re using large cloud tools, Wiz scans your setup and flags potential cybersecurity threats.
It’s the fastest company ever to get to $100 million in annual revenue — took them 18 months.
The founder’s name is Assaf. He’s Israeli, ex-Israeli military. I read this article about him and the opening line was: “Don’t mistake Assaf’s gentleness for someone who’s willing to play by the rules.”
Shaan: That’s like a Tinder bio. I’m interested.
Sam: Previously, he had another company he scaled and sold to Microsoft — also a cybersecurity cloud company — for a billion dollars. His warm-up company. He’s only 38. Gets through his non-compete, spends his time at Microsoft, then starts Wiz.
They’ve raised $2 billion total, a billion of that in one round when the company was only 18 months old. They’ve done $350 million in ARR in just three years. About 80% of the Fortune 100 companies are already using the tool.
Their last valuation was $12 billion, but there was a rumor Google was going to buy them for $23 billion. So he sends an email to the entire company: “Let me cut to the chase — our next milestones are a billion dollars in ARR and an IPO.” He explains how they aren’t accepting this offer because they want to make it big on their own.
I think he is one of the coolest, most interesting CEOs out there right now.
Shaan: Interesting pick. I think the high valuation means you’re really betting this becomes a mega-cap tech company. That’s okay — fair enough.
The thing that scares me is anything that grows this fast — when something is a slow compounder you actually trust it more than an explosive growth story without a long track record.
Sam: But that’s the goal of this thing — things that could 5x in five years. That’s fast growth.
Shaan: True. It might be priced in already. But let me tell you something interesting.
Have you heard about this guy named Gilly Raanan associated with Wiz?
Sam: No, I’m in.
Shaan: Gilly Raanan — ex-Israeli military intelligence guy. He invented CAPTCHA and web application firewalls, did a bunch of other stuff in cybersecurity, was a partner at Sequoia. He started a VC firm called CyberStarts and is the first investor in Wiz.
Here are the numbers for CyberStarts: 22 companies with a combined value of $35 billion. Five of the 22 are unicorns — a higher hit rate than YC. First and foremost is Wiz, which is breaking all records. Four were sold in the last 12 months for a total of $1.5 billion. The fund shows an IRR of more than 100%. Not a single company has failed. Currently ranked in the top five of all VC funds in the world.
So what’s actually working? The “Gilly Raanan Model.” He has a network of CISOs — chief security officers — at all these enterprise companies. He makes them LP partners in his fund. In exchange, they give initial revenues of $2 million a year to his portfolio startups in their first year. That’s usually their first year of revenue — intended to boost them above competitors and help them get the next round of funding.
Sam: So it’s basically a bribery network.
Shaan: Not what they call it, but — the first sales come from the loyal CISOs who are in the fund. It might be considered small money, but getting from $2 to $10 million gives you escape velocity for the next round. Companies immediately jump to valuations of $100 to $200 million, raise more money, and have more resources to compete later.
He emails them: “The points you have accumulated in the fund so far are valued at X dollars. You can expect additional allocations in the coming years.” It’s a you-scratch-my-back-I’ll-scratch-yours model.
Sam: I just thought this guy was awesome because he wrote cool emails. Turns out there’s a good reason backing him.
Shaan: A lot of them are from Unit 8200 — it’s like the NSA of Israel. You look at some of the largest security companies — Palo Alto Networks and others — they all came from that unit.
Sam: Neither you nor I actually know anything about this, but it sounds like a movie and we’re pretty fascinated. That’s what’s happening here.
Shaan: A big dummy like me came to the great conclusion: this is smart.
Pick #7 — Neuralink [00:50:00]
Sam: All right, my next one is a quick one. Neuralink. Currently valued at $5 billion. Pretty much no revenue.
Here’s the case: Elon. They put a chip in a guy’s head and he’s playing video games on a Twitch stream now. The first patient — he’s a quadriplegic, can’t move his arms or his legs — and now with his brain he’s just playing chess and using a computer. Just by thinking.
I cannot believe more people are not talking about this. I’m going to do a whole deep dive on Neuralink because I’m blown away by the videos I’ve seen and the rabbit holes I’ve been down.
To me, this is a question of when, not if. The next platform shift is probably glasses, but the one after that — or the big one — is just put the computer in the brain. That will happen. Maybe it’s 10 years, maybe it’s 100 years.
Even if this doesn’t 5x in 5 years, you’re going to be helping a lot of people. All their initial customers are severely disabled, and they’re going to make them see, hear, or use computers. It’s really incredible. You’re probably working with really smart people on a mission that matters.
The bear case: revenue is a question mark. They have basically one customer right now. Long path to success. They’re kind of at the stage where Tesla made the first Roadster.
Shaan: But you’re missing the whole point of this list. These companies need the personality hire. They need the guy bringing smoothies to the office, the guy who’s a good time to be around, the guy willing to do the dirty work.
Sam: You think Elon has personality hires?
Shaan: I think he does. I think he’s got literally meme lords that work for him.
Sam: I know some dummies that work at Tesla, let me put it that way. “My cousin works at Tesla” — and you meet the cousin and it’s like, does he work in the tire shop? Who is this guy?
Shaan: But Neuralink’s not that. How many employees do you think they have?
Sam: I’d guess like 100, plus or minus 50. I have no clue.
Shaan: That’s too small to hide. You’re assuming Sara’s List is the chill life. It’s not the “vest, rest, and invest” life.
Sam: Maybe we have a misunderstanding. Maybe Sarah wasn’t doing as much work as I thought.
Shaan: No, it’s like a 40-hour work week. I don’t know if Neuralink is a 40-hour work week.
Sam: If it is, I’m on board.
Pick #8 — Perplexity [00:54:00]
Sam: All right, I had OpenAI. Now I want to vote with my attention a little bit. I use OpenAI every day, but you know what else I use a ton? Perplexity.
Shaan: Me too. Yeah, I use Perplexity as well.
Sam: How do I explain the difference? Perplexity is when you need the answer to be right. ChatGPT is when you have a variety of random things and accuracy isn’t as critical. If I’m doing research for the pod and I need a number that’s not going to be wrong, Perplexity is a better bet than ChatGPT.
Perplexity’s latest valuation was $3 billion. They’ve raised $415 million. It’s already very big, but the market’s huge. And I love interesting stories about the founders.
The CEO of Perplexity — his name is Arvin — grew up in the same area as the Google CEO. He grew up vegetarian and his mom wouldn’t let him eat eggs. He needed more protein. Then he sees a YouTube video of Sundar Pichai saying, “Yeah, I introduced eggs to my diet to get more protein.” And the mother says, “Okay, you may have eggs.”
Shaan: That’s not where I thought you were going with that story.
Sam: He goes on to have this whole story where his household was like: “If Sundar does this, you must do this.” So imagine being raised in an environment where you are either him or you are a failure. So far he’s doing pretty good. That’s a strong motivation.
Shaan: No, I think the company is going to get significantly larger. Like that Always Sunny episode where Charlie’s dating — “Charlie, she’s great! She’s got a good job, she’s nice, she’s smart.” He’s like, “She doesn’t like milk.” What are your criteria, Charlie? Your logic is ridiculous, but you’re somehow landing at the same conclusions as the geniuses. The way you get there is unique, I would say.
Sam: I picked it because I use it. I also think it could be a great acquisition target — if Perplexity keeps executing, you’re a better version of the core product of one of these large companies like Google. You’re a very good acquisition target. The downside is it seems like no tech company can do big M&A anymore, so maybe that path isn’t as realistic. But I don’t think it’s a bad pick.
Pick #9 — Traba [00:58:30]
Sam: My last one is Traba. Have you heard about Traba?
Shaan: I’ve heard a lot about Traba because there’s like a Traba PR mafia out there. I am not part of that mafia because I do not want to work there. I think it sounds miserable. But there are a bunch of freaks who do want to work there, and if you are one of those freaks, this is a place to let your freak flag fly.
Sam: Can you explain?
Shaan: Most tech companies are like: “We value diversity and balance and well-rounded people.” Traba is like: “Yo, we’re doing China in America. We’re working 996. We’re here to create a trillion-dollar company and we’re going to compete ruthlessly to get there.”
Sam: Let me explain what it is. Traba is software plus actually getting people to show up. If you’re a big factory or a manufacturer — somewhere that needs 100 new workers in a week — they make it really easy to find those people and get them to actually show up on time. Industrial staffing. Their tagline is something like “Traba at work.”
Founders Fund — who I respect — says this is probably their highest-potential startup. They’ve shown up at the office at 1 p.m. and the office is still buzzing with people. It feels like the golden days of PayPal.
Their values: “Dream big, have an Olympian’s work ethic” — inspired by China’s 996 mentality. Working 9 a.m. to 9 p.m., six days a week. And there are interviews with employees who say, “I Googled where I can find that type of work culture and you guys had it on your website.”
Shaan: Every day there’s a sucker born. “I Googled where I can work the most hours and found you guys.”
Sam: They have like 150 employees. The valuation — I was trying to triangulate from old articles and don’t have exact current numbers. But people say it’s growing 5x per year, which is huge. And a lot of smart people — Keith Rabois, Founders Fund — are behind the company.
Shaan: I like the pick, I like the pick. The people behind this company are pretty remarkable — they do seem like the Olympians of founders.
The market opportunity is tricky here, because there are a lot of companies valued as tech companies that are actually something else. WeWork was valued as a tech company but it’s a real estate company. DTC companies were valued like tech startups but they were selling suitcases and shoes. Those corrections do come. The question here is: is this a tech company or is it a staffing company that uses tech and was started by tech people?
Also, you hypocritically told me two of my picks were too hard to work at, and then you picked literally the one whose whole thing is “we’re the hardest to work at.”
Sam: Yeah, yeah. Moving on.
Pick #10 — Replit [01:03:00]
Shaan: All right, my top pick, my finale — and I don’t want a drumroll because it’s going to seem anticlimactic. It’s the same company I picked last time. Which was not a winner in the last one, meaning it didn’t 5x. It’s Replit.
I think I am more bullish on Replit than any other tech company right now.
Sam: So bullish that if you could bet all your money into it you would?
Shaan: No, I’m not foolish. But I did invest in the company, and on top of my fund investment I wrote a personal check on top of that — probably the only time I’ve done that. My actions do line up with this.
Here’s my case. Three years ago when we did this episode, Replit was at about a $1 billion valuation. It had 5 million developers at the time. It really had no AI story or tailwind. Revenue was small to non-existent.
Now everything has changed except the price. The 5 million developers has become 20 million developers. The no-AI tailwind has become a huge AI tailwind. And small revenue has become scaling revenue. Amjad came out and said 2024 is their commercial year — revenue is scaling rapidly.
Sam: What does Replit do?
Shaan: Okay, here’s the Replit story — it’s kind of amazing.
Amjad grew up in Jordan. He loved programming but didn’t have his own computer. He’d go to internet cafes, borrow a computer, and code. But every time you go to a different computer, nothing’s saved from last time. If you’ve ever learned to code, one of the first things you do is set up your environment — install packages for the language you’re using, save and host files somewhere. There’s a lot of friction.
He had this unique problem: he wanted to code but he was so disenfranchised that he was doing it at internet cafes for a while. Then after that, he worked at Yahoo briefly, then at Facebook on the infrastructure team — with the guy who created React. And as a side project, he built this thing called Repl.it. The idea: can I make a cloud-based programming environment? Instead of it being local to my computer, have it be in the cloud.
He saw Google Docs and was like: “Oh my God. Instead of having Microsoft Office on my computer, I can just go to any computer, go to a doc, and the whole editor is built into the website. Multiple people can edit the same doc at the same time. Can I do that for coding?” That’s where he started.
He built it as a side project for years — at Yahoo, at Facebook. It got around 100,000 users. Codecademy discovered it: their customers who were coming to learn to code could just code in the browser using Replit, without needing their own setup. He wants to make it a main project. He applies to YC three times. Gets rejected three times.
After the third rejection, he’s discouraged. But developers thought this was technically cool — he had to write his own compilers to make it work in the browser, and it supported any language.
Then Atlassian created a competitor called Glitch. Huge PR move, raised a bunch of money. But Glitch was all JavaScript. Amjad had made the technical choice to support any language. Python started getting really popular on Replit. Python became the language of choice for machine learning, for backend development. Glitch ends up dying. Atlassian fails on it. He just keeps chugging along.
He had indie support — used by a lot of students, teachers, and coding bootcamps. But that was looked at as a toy. “Oh, that’s cute, but those are just beginners.”
Then Paul Graham — who had retired from YC — reads about Replit on Hacker News and thinks it’s awesome. He tells Sam Altman, who’s running YC at the time: “You’ve got to talk to this company Replit.”
So Amjad goes to meet Sam at what was then a hybrid office of OpenAI and Neuralink — back when OpenAI was just a research nonprofit. Sam says, “I don’t know much about you, but Paul really likes your thing. You should talk to Paul.” He gives him Paul’s email.
Amjad and Paul trade long emails — he said he should turn it into a book someday — about the philosophical foundation of Replit: what if you could enable 10 times more programmers in the world? How do you decrease all the friction for someone who doesn’t have their own computer, doesn’t know how to get their environment set up?
And even in his initial plan, he was talking about having AI that would help you code — your programming assistant. This was back in 2014, before AI was even a thing. It’s in his original slide deck. Let me show you this — this was his master plan from the seed deck: “We’re going to grow by building tools, signing up teachers and students. We’re going to build a simple network and an AI-assisted interface that blurs the distinction between learning and building. And eventually we’ll become a platform where people come to learn how to code, explore, and host their code.”
This is exactly what they’ve done. It’s like the Tesla master plan — ten years later, they’ve done exactly this.
Sam: The company’s ten-plus years old now.
Shaan: His first investor was Christina — the founder of Vanta, another company I was going to put on this list. She wrote the first check as a scout. He emails her: “Got rejected again. Hard to raise money right now. I might just YOLO, move somewhere low cost, and just start building.” Look at this chart — Replit developers year-over-year, it’s literally a perfect hockey stick. Paul Graham posted this and noted: what’s impressive is that all these users are developers — meaning they’re going to build things that have their own user base. That’s crazy.
Back when we did this in 2021, we were here on that chart. Now we’re here. 5 million to 20 million developers.
Sam: How many developers does GitHub have?
Shaan: About 100 million. GitHub is used by 90% of the Fortune 500 — probably the most enterprise penetration of anything besides Microsoft Office. Salesforce is at 80%, GitHub is at 90%. GitHub sold in 2018 for $7.5 billion when they were doing about $250 to $300 million in revenue. GitHub now is at about a $2 billion run rate. And the fastest-growing feature — 40% of GitHub’s revenue growth — is Copilot, the AI-assisted coder. A few hundred million a year in revenue after just a couple years. The most successful AI implementation in any company so far.
Here’s the “kiss of death” they got, which I actually include in my bull case. Some guy says: “This is another company I felt would implode. They don’t do anything interesting or proprietary. The CEO is an ass and everybody knows it. He acts as if a browser-based Replit is going to change the world. I have no idea how their valuation is so lofty but the core technology is so easily duplicated.”
Classic. Go read the launch comments on Dropbox and Airbnb — there’s always one of these at the top.
Sam: So what’s the AI growth story?
Shaan: The criticism of Replit was: “Great, you’re getting a bunch of developers but they’re all young. How are you going to make money off students and teachers?” That’s the misunderstood part. A low valuation is just another way of saying misunderstood and mispriced.
What you need to believe is that this is a leapfrog technology. Like in Africa — landline adoption was really low, bank account adoption was really low. But then cell phones and mobile payments became huge. Africa has a higher rate of mobile payments than America did at the time. It was easier to adopt the newer thing than the old thing.
Amjad said: “People say you’re not going to get experienced 20-year-veteran developers to switch to Replit. But the better question is — I have 20 million coders earlier in their career right now. This is where they can get started with no friction. They can build in any language. They have an AI copilot built in. They can host without knowing how to set up servers. There’s a community. Why would they ever switch back?” You’re not going to make your life harder.
Sam: What valuation did you invest at?
Shaan: Like $900 million.
Sam: How’d you meet him?
Shaan: I’ve never met him in person. I used Replit, admired the company, read about it, and it immediately ticked my boxes.
Here’s an interesting comparison: JetBrains — probably the most popular coding environment for Java developers — is a bootstrapped company. $270 million in revenue, $100 million in profit, $134 million in free cash flow, 6 million users. Zero dollars raised since they started in 2000. So Replit’s revenue potential is a lot bigger than that, because Replit has multiple things going for it.
What do I think they’re worth today? Their last valuation was $1.1 billion. But if they were to raise again, you’d have to pay a $50 billion valuation to take my stock right now. I’d rather just hold and see where it goes.
Sam: Really?
Shaan: In tech investing you’re ultimately looking for giant winners. A VC once told me — first people talk about unicorns, but he wants Godzillas. A $50-to-100-billion-plus company. Those are the ones that make your career.
What does Replit have? Network effects — it’s a network of developers. It’s growing like a staph infection at spring break. Since the last Sara’s List it’s grown 4x in the number of developers. I think it’s mispriced and misunderstood. It gets discounted for being “just something for beginner coders,” when actually it’s like Snapchat — it’s the generation you want, the people who are going to be using this thing for the next 20 to 30 years.
It’s riding a huge tech wave, perfectly positioned for AI-assisted programming. Sergey Brin was at the All-In Conference and he said, “Yeah, I got back into coding using AI. I just kind of tell the AI what to do and it writes the code.” He then showed it to his team at Google AI and said, “More of you need to be using this” — talking to the top programmers at Google.
Sam: This is awesome. You’ve convinced me. What’s the downside?
Shaan: They might not make as much revenue as you think. People might graduate off Replit. And they’re not remote — they moved from SF to Foster City to build their own culture. Amjad was like, “Why wouldn’t we move 40 minutes out and be the kings of this little area? Best environment, without San Francisco’s problems, but still close enough to the talent density.”
Sam: You used all this great logic and all these numbers, but you should have just told me he wanted to build a commune in Foster City. I would have been on board. Does he deadlift?
Shaan: He’s a powerlifter. Yeah.
Sam: Power gains. Makes sense.
Closing Thoughts: What Makes a Great Founder [01:17:00]
Shaan: I wrote two words in his slide deck that I would almost never write: “mission driven” and “visionary.” For Replit and Amjad. Those are so cringe — you’re not really allowed to say those — unless there’s an exception. Which is this dude from Jordan who genuinely wanted to increase access for kids like him. Built this as a side project when there was no money on the line for years. Just kept tinkering, building, building. And in his master plan from ten years ago in the seed deck, he was already talking about an AI assistant in your coding terminal. He did exactly what he wrote ten-plus years ago.
Sam: Mission driven and visionary is only cringe when it’s not true. When it’s true, it’s awesome. It gets abused — there’s no earning the badge, you just get to use it if you want, which bastardizes it. But when you look at something like Neuralink — you’ve got to give credit to these people. There are videos of Elon from decades ago talking about the four or five most important things to do: the advent of the internet, creating sustainable energy, creating AGI safely. He’s been saying these things for so long.
You don’t need to be mission-driven on world-changing things for it to be intoxicating. If I meet someone who’s into something relatively trivial and they’re passionate about it, I still get turned on by that.
Shaan: The Nick Gray episode — his rocket to Mars is the two-hour cocktail party. Helping strangers make friends for two hours. He is more into that than anybody. He wrote a book about it. And even though I would hate hosting one of those things, I love being around Nick because that energy is so intoxicating.
Sam: When I see someone like the Replit founder, I don’t really care about any of that stuff intellectually, but I care that he called his shot and I’m into it.
During COVID, I got to hear Brian Chesky give these weekly meetings from his bedroom. He looked terrible — because his business, at the top of the world, was suddenly on the verge of going under. 3,000 employees, travel was paused. And I remember watching and thinking: I want to fight for this guy. If I was on his team, he’s got me bought in.
Mission-driven and visionary attitude is actually really important when it comes to how valuable a startup can get. When you take your time and talent and bet on one company — a super-concentrated portfolio of your career — you might as well bet on the most talented, most driven, most visionary founder. Because it’s their decisions that trickle down.
Shaan: I made an investment in Ethereum — probably one of the best I ever made — more on the Sam criteria. I was like, “This gangly ultra-nerd is saying words I barely understand. I’m in.” At 16 or 18 he was writing articles for Bitcoin Magazine, getting paid in Bitcoin when it was $12 per article. He was there before it was time to get rich.
And when Ethereum hit an all-time high and everybody on Twitter was posting Lambos and yachts, Vitalik posted a thread: “Hey, this is great, but how many of the unbanked have we banked? How much of the mission are we actually doing?” When hype is high, the best founders bring you back to reality. When morale is low, they bring you up. And that is — Vitalik is here for the right reasons. He was there to help humanity and build a free economic system.
Sam: All right, that’s the pod. That was good.
Shaan: Thank you, Sean. Thank you, Ari. Thank you to everyone listening.