Sam and Shaan break down how the UFC went from a $2M bankruptcy acquisition to a $21B Endeavor-owned juggernaut, examining Dana White’s unconventional leadership and why fighters only see 20% of revenue. The episode opens with Rose Namajunas’s viral “I’m the best” moment as a case study in self-talk, and closes with business ideas including property-tax protest services, no-loss lotteries built on crypto, and a masterclass in startup storytelling from Tim Urban’s Wait But Why.
Speakers: Sam Parr (host), Shaan Puri (host)
Introduction and Episode Setup [00:00:00]
Sam: Hey, what’s going on everyone. We’ve got a good episode, but before we get to it — we’ve been releasing these new episodes called Greatest Hits. They’re actually not new to the world, but they might be new to you. Basically, before we started doing the podcast as it is now, it was just Shaan interviewing a bunch of people, and he got 20 or 30 of them in. They were really good, but they were about two years ago when we launched them, and a lot of those people have done some really interesting things since. So we’ve actually been re-releasing them where I give an intro — there’s also Shaan’s intro — where I’ll give an update on the folks. Anyway, give it a listen, and when you do, make sure you click Subscribe if you’re on iTunes. Click that follow button on Spotify.
Sam: We’re finishing a conversation we were having about what we have to do. Yeah, we’ve got to select a new — I’ve got 89 drawings or art clips that we’ve got to select. And I’m having an Abreu interview — did we announce in the podcast about Abraham? No, we didn’t. A Breeze, leave it unfortunately. This was kind of part of the plan, but it sucks.
Employee Retention and The Alliance [00:01:00]
Sam: So anyway, we’ve got 50 people that we’ve got to — Sam, have you had this before at The Hustle, where people want to leave to go do their own startup? Specifically not “I got another job” but…
Shaan: Yeah, yeah, most people. Yes. I have. I always tell them — and I think Abreu is different because he wasn’t a full-time employee — but I’m like, just so you know, this feels like a startup now, and it is a startup. But just so you know, even the nice stuff we have at the moment, don’t expect any of that for a little while. I always try to get them used to it. I’m like, just so you know, it’s gonna be really bad for a little while. Wait until you start your own thing.
Sam: Yeah, so yeah, that’s happened a lot. Although Abreu, I think, actually understands that. He’s been saving money, been living at home, stashing money, so I think he’ll do good.
Shaan: There’s this thing that Reid Hoffman wrote — his book called The Alliance. He talks about how back in the day people used to expect an employee to stay with you for 20 years. That was people at the same company from start to retirement. Then that became less and less common, and now I think in tech the average tenure of an employee is like two years or even less. I think at Facebook it’s even less.
Shaan: So Reid Hoffman, who was the CEO and founder of LinkedIn, wrote this book that was basically like: look, you can’t just close your eyes and pretend that’s not happening. You can’t get upset every time somebody leaves — that’s actually the norm. So what’s the right way to manage in this scenario? He calls it the alliance, which is a mutual understanding between the person working with you and you as the manager.
Sam: I actually am very curious. I want to know about this — the alliance, people leaving, whatever. I haven’t read this book.
Shaan: Oh, great way to start off.
Sam: Well, I know of the book, I understand the premise. I didn’t — honestly, 90% of books I’m a fan of, I haven’t actually read. This is one of them.
Shaan: So what he says is you need to have an understanding with the person who’s working for you — or working with you — that they’re gonna be there as long as this is mutually beneficial. The expectation is that after some number of years — two, three, four, whatever that number is, probably not much more than that — they may leave. They may go do their own thing. And when that time comes, you’re gonna support them. He’s a big believer in networks and network effects. He’s like, that person when they leave your company, they’re not just dead to your company. They should be your champion and your advocate outside. You’ll cross paths again. You’ll either invest in their company, they may come back and work for you later, they may refer somebody in. So he describes how to thrive given the constraint that people are going to leave early.
Sam: And I still like the problem that I’m gonna solve for whenever I start a company again — how do you build a company where someone wants to work there for 10 years? Even in this world where the average person only works somewhere two to four years, I think it’s quite possible.
Shaan: My problem is that I like working with and recruiting entrepreneurial types of people. That’s why I get along with them. That’s who works really, really hard in these bursts. But those are like the worst people for retention because they want to go start their own company. That’s why they’re entrepreneurial — they’re not going to be long-term employees, sort of by definition. So I’ve always sucked at the retention side of things. But I’m cool with it. I think I can just continually recruit more people who want that experience.
Rose Namajunas and the Self-Talk Moment [00:07:30]
Sam: Before we get into some ideas for this episode, can I tell you something I saw recently? We’re going to bring this topic up — we’re going to talk about UFC — but did you watch the Rose Namajunas fight?
Shaan: No. Is it “Rose Nah-mah-YOU-niss”?
Sam: Yep. So there’s a UFC fighter named Thug Rose. She is a darling — not in terms of like physical stuff — “darling” is just the best word to describe her, although she could like kill you. The story is interesting. She’s five-foot-three, very petite. Have you seen her with long hair?
Shaan: Yeah, she was like a beautiful girl.
Sam: And at the beginning, the UFC was marketing their female fighters with their sex appeal, basically. They made her do a bikini weigh-in, which is just stupid. Some girls leaned into it — like Paige VanZant, she got a boob job, she’s very mediocre as a fighter but she’s famous and gets paid well because she has appeal, people want to watch her. There’s a karate fighter called “Karate Hottie” — that’s her nickname — because she’s playing on that.
Sam: Rose went the other way. She’s a beautiful girl and they were like, “Do you want to go do Dancing with the Stars? We can make you into a star.” And she was like, forget that, shaved her head, and was like, “I don’t want this. The whole beauty thing is a distraction. I’m actually trying to be a martial artist.” And that makes her great.
Sam: I think there’s only a few sports in the world where the women are equally or more popular than the men — maybe tennis, maybe the national soccer team. But in the UFC, if you look at the top 10 most popular pay-per-views of all time, it’s like Conor McGregor and Ronda Rousey making up collectively like eight of the top ten. Whenever I think of an Amanda Nunes fight, I’m not thinking “great women’s fight” — I’m just thinking “this is awesome, I’m going to watch this.” I think the whole bikini thing was offensive, by the way.
Shaan: Dana White was once stopped by TMZ and they were like, “Dana, when will we see women fighting in the UFC?” And he was like, “Never, dude. Nobody wants to see girls fighting in a cage.” And then he did a complete 180 when Ronda Rousey came around. To his credit, he changed his mind and was like, “Okay, she’s a star, I can build this whole side of the sport around this woman.” And he totally did. Now, you know, when there’s a great women’s fight, it’s just as good if not better.
Sam: So there was this fight — it was two weekends ago — and this woman named Rose Namajunas, she’s awesome. There’s this clip I’ll share. Basically she’s in the cage — first of all, you’re in your underwear, you’re getting watched by potentially a million-plus people, and you’re fighting to the death. Even though someone’s gonna stop you, the likelihood that you can die — that exists. So you’re going into a life-or-death situation in your underwear in front of all your friends and family and the world. And if you fail, you fall back to the bottom of the totem pole and you have to climb back up fighting a bunch of monsters along the way.
Sam: It’s not even called “playing” a fight. You don’t “play” fighting. It’s just fighting. And you’re definitely going to get hurt — that’s not an aberration. Fighters say, “I left a piece of me in that ring.” What they really mean is, “I know I just took six months off my life.”
Shaan: It’s weird. It’s odd. But I love it.
Sam: In this fight, the cameras are zooming in — she’s fighting Weili Zhang, this woman from China who’s just like a terminator. Physically unbelievably strong. And again, Rose doesn’t look like that. She doesn’t have bulging muscles. She looks like — if you’ve ever watched Stranger Things — she looks like that character. They zoom in on her face and she’s saying, “I’m the best. I’m the best. I’m the best,” over and over and over again.
Sam: She was the underdog. She was supposed to get her ass kicked. I would have bet she was gonna get knocked out. And within two minutes she did a front leg kick — which is already kind of weird — and knocked Weili out. The crowd went wild. I remember watching it live, I was in tears, I was so happy. I have chills right now just remembering it.
Sam: Rose kicks this woman in the head, a minute and a half in, knocks her out. We all go crazy. At the end, her husband — who is her trainer — gets down to her level because he’s like six-five and she’s probably five-four, and he looks at her face and goes, “We’ve been saying it for years. You’re the best. No one can touch you. Who’s the best?” And she goes, “I’m the best.” Then in the interview with Joe Rogan, he goes, “You kept saying ‘I’m the best,’” and puts the mic to her and she goes, “Because I am the best.” And I’m kind of getting emotional just remembering it.
Shaan: Chills right now.
Sam: I think even if you don’t watch UFC, you should go watch this clip. This woman — she’s had emotional issues where she’s broken down from stress, which is totally understandable. A lot of UFC fighters are all bravado — always talking about how they’re the best, nobody can touch me, I’m on another level. She’s not one of those people. She’s ultra quiet, humble. A lot of people perceive her as mentally weak because she’s had some issues and she doesn’t come out with that bravado. So that’s why it was very atypical to see this gentle giant standing in the cage facing her opponent, just muttering to herself — you could see she was telling herself “I’m the best.” It wasn’t trash talk. It wasn’t bravado. It was self-talk. Very different thing.
Self-Talk: Sam and Shaan’s Personal Practices [00:16:00]
Shaan: It’s interesting because as it brings back to business and launching stuff, you have that same doubt. Granted, you might lose money and get embarrassed — thankfully you’re probably not going to get your ass kicked or killed — but you still need that self-talk. That minute-and-a-half clip is like the best example of self-talk for normal people. Do you do self-talk yourself?
Sam: Yeah, definitely. It’s a trick question in a way because everybody has an internal monologue. Everybody’s doing self-talk in their head. But do you strategically do it? Because a lot of people think this is cheesy, lame, affirmations in the mirror — “you’re beautiful, you’re beautiful.” No, dude. It’s necessary. Whenever I’m launching anything, or whenever I have fear — even when I bought my home, I have a pretty unhealthy relationship with money, I don’t like spending it because I was poor and I know what it’s like to be broke — I told myself, “This is normal. This is incredibly normal to feel this emotion. Do it anyway.” I do that all the time. I try to normalize it. I say, “This is what I’m supposed to feel. I am supposed to do it anyway.”
Shaan: I don’t do that, but I have two routines that are like this that I’ve probably never told anybody about.
Sam: All right.
Shaan: So this first one is fairly new. You know I’ve had that moment where I was like, all right, what do I care about? I’ve always been a self-improvement guy. Tony Robbins has been a big influence on me. So I have this thing on my wall, and it’s basically — most people write goals like what they want to achieve, what they want to have, when I have a mansion, or I want to hit this dollar amount. For me, I wrote on it “Who am I becoming?”
Shaan: The way I do it is: I think about myself like every year is a software update. I just turned 33 — what’s version 33 of Shaan look like? I literally write this out beforehand, like the release notes. “I used to have this bug where I got jealous about people — that’s fixed. I added this new feature: now I can play guitar.” I treat myself like a whole new version upgrade. All those little bug fixes and features add up to something. What am I trying to become?
Shaan: It’s a root philosophy: life is not about what you achieve or what you have, it’s about who you become. So I wrote these four things. I want to become a person who is fit through healthy habits. I want to become a teacher — the favorite teacher of millions of people. I want to be a great family man who lives in a house full of love. And a fourth one.
Shaan: I do this in the morning as part of my routine. Before I go and start doing a bunch of work and tasks and dealing with all the emails and stuff that comes my way, I just walk in a circle in my office — it’s a tiny eight-by-eight-foot office — and every circle I’m basically talking to myself, like my own coach, about those four things. I’ll say, “I’m becoming a teacher. I am a teacher. I’m a teacher that millions of people love what I create, they learn from me, they’re inspired by me. I’m a teacher — that means I gotta learn every day so I have something to teach.” I just say it in the present tense. Not “I’m trying to become this.” I’ve been doing that for about a year now, and I love it.
Sam: You sound like Muhammad Ali. He said he was the greatest before he was.
Shaan: Exactly. So that’s the first kind of self-talk I do. The second is what I call revision. I fall off the horse a lot, like most people. I’m trying to eat healthy and then there’s a bag of chips there and I ate the bag of chips. Or I say I’m gonna be a patient dad but then I lose it because she wouldn’t let me change her diaper.
Shaan: So the other self-talk I do is revision at the end of the night. I imagine that same scenario that happened — it only takes me 30 seconds. I think back to that moment I’m not proud of and I reimagine it with me acting in a way I’m proud of. That’s it. I don’t decide I’m gonna do things differently, I don’t write it down, I don’t pledge to myself I’ll never do this again. I just imagine it going the right way, and then I go to sleep. That act of reimagining things the way you want to see it is a form of self-talk. It’s just like Rose saying “I’m the best” and imagining herself knocking out the other girl.
Sam: The takeaway should be: if someone’s crazy enough to look up to Shaan or look up to me, at least now they know that someone they look up to has doubts and has to do that self-talk. The cool position you and I are in is that we know people who are — at least in terms of financial success — some of the most financially successful people in the world. We talk to them, and we know firsthand that they’re like, “I’m so depressed, I can’t do X, Y, and Z.” And in our case, we look up to a lot of these UFC fighters. Seeing Thug Rose doing the same thing — this isn’t hokey-pokey. This is everyone. Go look up that Thug Rose video. That’s badass.
Shaan: One other thing I’ll add: my trainer was big on visualization. He was always like, “You’re too analytical, you’re trying to think your way through everything. Just imagine it. Don’t worry about how it’s gonna happen — think about what you want to have happen.” In my head I was always like, “Yeah, but somebody’s got to figure out how it’s going to happen, and that’s gonna have to be me. Just imagining it is not going to do it.” So I was resistant up front.
Shaan: But I came around when I realized: everybody in their head is already imagining some outcome. If you’re ever stressed or worried or doubting, what is that? That’s your head imagining the thing not going right. So if you’re willing to imagine things going well — yeah, it sounds like a hippy-dippy thing to do — but the other side is imagining things not going well, and everybody’s doing that all day anyway. Anyone who’s ever had stress or fear or doubts: break down what that is. That’s imagining a future where this doesn’t work.
Shaan: So if you’re already doing that, you might as well start imagining things going well also. And if you’re already having doubts or impostor syndrome, that’s you doing self-talk in your head that you’re not the best, you’re not good enough. Replace that with “I am the best.” There is self-talk happening no matter what. It’s either going to be negative or positive. I might as well actively make it positive. And if it is cheesy, who gives a damn. If that gives me just a slight edge, I’ll take it, because I need everything I can get.
Death Row Records: Michael “Harry-O” Harris [00:25:00]
Sam: All right, we should join — real quick before we get into ideas — Michael Harris. Do you know who that is?
Shaan: No. Who is that?
Sam: Michael Harris — his nickname is “Harry-O.” He founded Death Row Records. I believe he was a cocaine dealer and he went to prison — I think it was San Quentin, for 25 years. But prior to prison he made close to like $100 million from selling cocaine, and he funded Death Row Records. He’s a co-founder of Death Row Records, owned all the originals, the masters of everything. Anyway, he’s out of prison now. He’s a good friend of a good friend of mine, Chris. He wants to come on the pod. You want him?
Shaan: Amazing. Yes.
Sam: Death Row — who’s Death Row? So it was Tupac, it was Dre’s early stuff, Snoop. Basically a lot of modern rap originated because of Death Row Records. This whole “F*** the police,” gangster era — they kind of invented that.
Shaan: Okay, great. That’s gonna be awesome.
The UFC Business: Endeavor, Revenue, and Financials [00:27:00]
Sam: All right, you want to talk about UFC again? Or do you want to talk about something else?
Shaan: Let’s talk about UFC — this time the business of it.
Sam: Real quick: the parent company that owns the UFC is called Endeavor. When it went public, it was the first time the UFC’s financials kind of saw the light of day. They’d been shrouded in mystery. Fighters were always wanting to know the numbers because they want to get paid more — they feel like they’re super underpaid. Dana kind of talks about numbers, but nobody could ever verify how many pay-per-view buys there were, what not. So I thought it was kind of interesting.
Sam: So yeah, Endeavor — go ahead.
Shaan: The two guys in charge are Ari Emanuel and Patrick Whitesell. Ari — if you ever watch Entourage, the character Ari Gold is based on Ari Emanuel. He’s a power player in Hollywood. He had his own talent agency that sort of took over WME. So they have three parts of their business: one is agencies, like WME, managing Hollywood talent, musical talent. Then they have sports businesses where they own sports assets — notably they bought the UFC, but they also own EuroLeague basketball, they own the PBR, bull racing. And then they have a third arm, which is their events business: they have the Miss Universe pageant, New York Fashion Week, they bought the company that hosts the Super Bowl experience on location. Three arms of the business. They also do publishing, they do all types of things. Frankly, how that company even operates I don’t understand, because there’s some cohesiveness but also a lot of not.
Sam: I think it’s really just a rollup under one theme: sports and media entertainment. They roll in all these companies together, they have a brand licensing thing where they have the brand for Harvard and the NFL and they’ll go license it out and give revenue back to Harvard and the NFL.
Shaan: So they went public. It’s worth $18 billion now — actually $21.3 billion right now. It went up just in the time of my research here. I should have bought.
Sam: They do about $4-5 billion a year. Specifically with the UFC — I thought this was kind of interesting. I didn’t know how much revenue the UFC does and I was a little bit surprised. Can I guess?
Shaan: Yeah.
Sam: I’d say $800 million in revenue, $200 million in profit.
Shaan: Very close on the revenue side. So: $700 million, $875 million, and then $900 million last year. Very close on revenue, but their margins are a lot better than you think. You were saying $200 million profit?
Sam: Yeah.
Shaan: Their margins are about 36%. Their EBITDA is about 30% on their product, which is very good. Fighters only get 20% of revenue. Every other major sport — NFL, NBA — it’s closer to 50/50. So the fighters are sort of right when they say they’re underpaid.
Shaan: Their business is interesting because of media rights. The Fox deal was $168 million a year. Then it moved to ESPN, which is $300 million a year. So of their $900 million in revenue, $300 million comes from media rights. The rest comes from merchandise, events, pay-per-view, ticket sales, all that.
Sam: Pretty good business overall. Much more profitable than I would have expected, given all the different moving pieces. And kind of an incredible business because they bought the UFC for $2 million like 25 years ago.
Shaan: Yeah, they bought it out of bankruptcy. Dana White, who’s the president of the UFC, convinced his two childhood friends — the Fertitta brothers — who basically own a casino: they own Red Rock Casino. So Dana convinced Frank and Lorenzo, “Let’s go buy the UFC.” They bought it for $2 million, then ended up selling it — and when they bought it they pretty much just got the cage, which was probably a $20,000 piece of equipment. And the name. They were like, “We paid $2 million but we didn’t really get anything. But for some reason we did it.”
Sam: The easy story is “bought it for $2 million, sold it for $5 billion,” which is obviously amazing. But there were multiple years of just pouring money in and losing money before this thing turned around — because they couldn’t get regulated in a bunch of places. John McCain called it “human cockfighting.” They couldn’t get licensed, couldn’t get the business model, wouldn’t get put on TV.
Shaan: They put a lot into it and it failed and failed and failed. And then by like year six, they convinced Spike TV to air The Ultimate Fighter. And there was this big fight — Forrest Griffin and I forget the other guy’s name.
Sam: I remember that fight as a kid. These guys were going at it. It was the first time we thought, “Wow, these are athletes. They’re not thugs or meatheads — these guys are athletes who are fighting.” And right when that episode aired, their ratings went up and they went, “Boom, we just saved the whole company.”
Shaan: The thing with that show is they show them in a house — it’s like a reality show. You see them living in a house, training, and competing. So it wasn’t just brutal fighting. You got to know the guys. You see their backstory. You see them lying in their bed looking at a picture of their family right before a training session, being like “this is what I’m doing it for.” People got emotionally invested. Same thing the Kardashians did — they used reality TV to build a brand that ended up being a commercial brand. Because you form an emotional connection through their reality, and then you’re more likely to be a buyer.
Dana White as CEO: Unorthodox Leadership [00:39:00]
Sam: Kind of an amazing outcome for them. I would say — if you don’t follow the UFC — there is one cool business lesson, which is Dana White. Dana White is the most unorthodox president of a company I think I’ve ever seen. People think Elon is out there and he’ll tweet random stuff. Dana makes Elon look like an honor roll student. Dana will go in the Instagram comments where somebody’s hating on something and just be like, “Go f*** yourself.” In the press conferences he’s as much a character as any of the fighters. Same way Vince McMahon did that in WWE — but that’s fake, that’s scripted. Dana does it in the unscripted format.
Shaan: I had an investor tell me once — we were talking about esports, and a lot of people think it’s interesting because the viewership is really high but the business is still nascent. People are wondering: is there a UFC-like opportunity there? Could you buy something today for $2 million that’s going to end up being worth $45 billion? What this investor told me is so spot on: esports needs its Dana White. It needs its person who’s gonna take this sport from underground and brick by brick build it into a mainstream brand, take no prisoners, organize the whole thing along the way.
Sam: Let me ask you this — Dana White, when the deal when he sold the company, he made $400 million. I think he owned like 4% or 10% of the company. Then he’s probably been getting paid $50 million a year minimum. So let’s be conservative and say he’s worth $600-700 million. All the celebrities think he’s cool, famous people think he’s cool. He’s got money, he’s got power. Would you trade spots with him?
Shaan: No. His lifestyle is brutal. Absolutely never. He looks like he’s still fit, kind of, but he looks exhausted. His face is red. He’s gained weight since starting this thing. He’s doing an event every weekend basically. He has to manage headquarters plus go to the event, do the press conferences, watch ringside, talk to the fighters afterwards, deal with the weigh-ins, “this guy can’t make it, this guy got hurt, we got to find a replacement.” He does that 52 weeks a year. And there’s a reason Dana’s not happily married at home with kids and a great dad and unstressed. There’s a reason he’s got bags under his eyes — he chose that life, and he nailed it. I would not choose that life. It’s not for me.
Sam: Not a chance I would either. But I respect the hell out of it. I always say — cornrows and neck tattoos — I’m happy they exist, I don’t want them.
Shaan: I just think as someone who’s a fan of the sport, the business side of it is just as interesting as the actual sport itself. The UFC is mainstream popular now. It’s my Monday Night Football — I follow it as much as a hardcore football fan. I make my wife watch it with me. She’s actually finally into it because she understands the story behind it. Because it’s basically just WWE wrestling — it’s like fake drama, which I love.
Business Idea: Property Tax Protests (Proper.lot) [00:47:00]
Sam: A couple episodes back we talked about business models that save you money and just take a percentage of savings. We said taxes was good, software savings, car savings, a bunch of stuff. I hung out with this guy who lives a few doors down from me. He started this company called Student Loan Hero — basically helps you consolidate debt, refinance your student debt at a lower rate. They save you money and the new lender pays them a fee for the loan they originated. He sold that company, bootstrapped it, for $60 million. His new company is called Proper.lot — properlot.com.
Sam: His goal: he thinks he can make this into millions of dollars in revenue with him being the only employee. That’s interesting in itself. The actual business is property taxes.
Shaan: How do they save you money on property taxes?
Sam: In Austin — where I now live — they assess your property value up every year or every two years, and then you’re taxed 2% of your property value. Because there’s no income tax, that’s how they get their money. I bought my house for about $1 million. It went up like 20% in the first 60 days of owning it — which is great for me eventually but bad right now — and now I owe 2% of like $1.2 million a year in taxes. Let’s say that’s $22,000 a year in taxes. What Proper.lot does is you tell them your address, they look at the assessed value of your neighbors, and they tell the government, “Hey, this isn’t fair. You charged us $1.2 million — our value should actually be $1.1 million.” All in all, it saves me about $1,000 a year and they take $300 of that fee.
Sam: There are a few companies in the space. One’s called Ownwell — the URL is ownwell.com — they do about $100 million a year in revenue with 200 people. Another one is called Five Stone, local to Austin. They filed 24,000 protests last year and made about $4 million. The average revenue per customer is $50-300 and it usually lowers your appraised value by 2-5%. They have a 70% success rate. So for 70% of users who sign up, they reduce you by 2-5%. Kind of interesting business model.
Shaan: That’s pretty cool. I like that a lot. Do you have to sign up as a customer and request it, or can they proactively do it and then leave a flyer at your door, “Hey, we did this for you — would you like these savings? Just claim your account”?
Sam: You have to sign up, but that would actually be a great marketing scheme.
Shaan: That would be a crazy growth hack if they could do it.
Sam: Yeah, no — you have to sign up. But that actually would be great marketing.
Shaan: I like this idea a lot. Did you have anything you wanted to riff on?
Sam: No, I just thought it was cool.
Business Idea: No-Loss Lottery (Pool Together) [00:53:00]
Shaan: Speaking of, I have a cool thing. Have you heard the term “no-loss lotteries”?
Sam: No.
Shaan: Okay, so this is pretty cool. I met this guy Leighton who’s behind this thing called Pool Together. If you go to pooltogether.com, it’s a savings account — and this is in the crypto world — but this exists everywhere. It’s a savings account where instead of just getting 0.001% interest, they pooled together everybody’s tiny interest and then gave all that money away to one person as lottery winnings. A lottery where you don’t have to buy tickets, you don’t put anything up at risk, but you can win very large.
Shaan: This model — “prize-based savings” — has existed for a while. It’s very popular in the UK. They call it premium bonds. There are something like 20 million people who do this. There’s like $100 billion saved in these prize-based saving accounts. You put your money in, every week or every month there’s a drawing, and you can win anywhere from $25 ranging up to a million bucks. It’s a great model — it encourages people to save. The more savings you do, the more like tickets you have in the raffle.
Shaan: These guys ported this concept to crypto. One great thing about crypto is everything’s on the blockchain — it’s like you can see their Google Analytics, everything’s open. I can see these guys have $200 million in assets under management, about 9,000-10,000 active users. Small number of users, but for crypto, 10,000 active users means you’re one of the top decentralized applications. It’s amazing how much money they have there. The way it works: they have $200 million in assets under management, so their lottery is going to be of a certain size. And they roll over some of the savings into the next week’s jackpot — so they always have a bigger and bigger jackpot by rolling over a percentage from this week into the next.
Shaan: If you want to see their stats, go to Dune Analytics — duneanalytics.com — and look up Pool Together.
Sam: Okay, so I’m trying to get out of this thing where I hear something in crypto and I act like a grumpy old man. I’m 30, I’m trying not to do that. So I’m defaulting to optimism. But my question: when you explain this to me, I think, “Is this a gimmick or is this real? Is it cool like the app Yo is cool, or is it cool like this could last 10-plus years?”
Shaan: That’s totally the right question with crypto stuff. Is there any value to this beyond speculation? And if there is value, is it lasting value or is this a quick fad? In this case, what I think is interesting is that there’s this whole parallel financial system being built in crypto. I have my wallet, I have my real bank account, and then I have my Coinbase account. I participate in two financial systems, the same way that social networking split it up — I had my real-life friends in my neighborhood, school, and then I had my online friends, with some overlap.
Shaan: The same thing is happening now with finance. What does that mean? That means there are millions of people out there who are participating in crypto, and crypto keeps going up in price, and now they have substantial holdings. When you have substantial holdings you have two choices: do you just hold it and earn nothing off of it? Do you sell it? Or do you put it to work? What’s happening is all the people who’ve won in the first couple waves of crypto are choosing to reinvest. Why would I sell? I’m even more bullish on crypto now. Why would I take a big tax hit for selling and be out of the game?
Shaan: So they’re not going to sell, and they’re not going to hold and do nothing with it. Let’s say you have six, seven, eight figures worth of crypto — why don’t you earn 5% a year on that money? You can through crypto lending products and things like that. The point is: all the existing financial infrastructure is going to get rebuilt over here in crypto land. And then some new things that didn’t exist in the real world will get built there too. For that reason, I think if it works in the UK and 20 million people do it, there’s a good shot this is going to exist in the crypto world.
Sam: It’s just hard for me to understand. Would you do it? Like, if you have Ethereum or Bitcoin, would you put it in one of these no-loss lottery savings accounts?
Shaan: Yeah, yeah. Just set it and forget it. You don’t have to actively do anything once you decide. Yes, I would do that. And like all the stuff that I would call silly — I would also do that. Like when I buy an NFT that costs a grand. To me it’s like spending a grand on that is the same fun as going to play blackjack for a grand. I can have $1,000 worth of fun over five hours. But yes, I would use this.
Wait But Why: The Art of a Great Startup Pitch [01:05:00]
Sam: One other idea I want to throw at you. Did you see this thing that was posted on Wait But Why — the blog Wait But Why? He talked about his wife’s startup.
Shaan: No.
Sam: Okay, you should check this out. Go to his blog post. I want you to go there for two reasons. One is I think the idea is kind of interesting, we can talk about that. But the second is the way Tim Urban tells the story and lays out the case for this product, this startup — it’s so good. It’s better than 99% of startup pitches you and I hear. This guy is a master storyteller. If you want to think about how you should explain your startup or pitch your business, go read this blog post.