Andrew Wilkinson, founder of Tiny (a public holding company worth ~$600M), joins Sam and Shaan to talk about how boring lever-pull businesses beat sexy ones, the Profit First methodology and how to structure cash in a company, and how he turned a $20,000 investment in Shopify themes into a $260M IPO. He also shares his approach to networking with billionaires, the story of how he met Sam by sending him a private jet, and his life philosophy around incentives, people not changing, and spending aggressively on longevity.
Speakers: Sam Parr (host), Shaan Puri (host), Andrew Wilkinson (guest, founder of Tiny)
Introduction [00:00:00]
Sam: All right, what’s going on? This is Sam. We’ve got an awesome episode today — we have Andrew Wilkinson on the pod. Andrew is one of our good buddies. Andrew owns this company called Tiny. Tiny basically started as an agency that made a bunch of profit, and he took those profits and bought like 18 or 20 different companies. He took Tiny public, and I think today it’s trading at a $600 million market cap.
He’s got a really good perspective on what’s going on in business and in life. During this episode — I think it’s like with 20 minutes left — he actually says something that I’m sitting here taking notes on. It’s going to change my business. It’s about this thing called the Profit First mentality, and he goes in depth on how much money he leaves in each business and how the CEOs are able to operate. Really insightful stuff that I haven’t heard him talk about before.
Andrew is also interesting to me because he’s my close friend but he’s very wealthy, and I get to ask him all types of behind-the-scenes questions on how he spends his money. He talks about how he’s now a patient of Peter Attia, who’s this famous doctor, and how much he’s spending on that and the outcomes. He talks about shooting his shot with his hero — he’s done business with guys like Bill Ackman, who’s worth 10 or 12 billion and runs a hedge fund. He talks about how he met Charlie Munger. Really interesting insights on how he lives his life and how he got in those doors when he was still coming up. So this is the episode with Andrew Wilkinson — let me know what you guys think.
Sexy vs. Non-Sexy Businesses [00:02:00]
Sam: All right, we’ve got the man here — Andrew Wilkinson, fan favorite guest of the pod. Welcome, Andrew. How’s it going?
Andrew: Hey guys, I’m good.
Sam: So you gave us a list of ideas and things you’re kind of messing with, and you have this thing about sexy versus non-sexy businesses. You said the things that everyone loves on the outside are actually the hardest ways to make a living. And I didn’t know this — you said you own a deli and a bakery. Is that two separate things or one thing?
Andrew: No, that’s combined. It’s one thing. And it’s a total pain in the ass.
So I’ve been thinking about this a lot lately. When you talk to young entrepreneurs, they always want to do something sexy. I was like that too. I was a product CEO, and you think every CEO has their thing — for me it was making great products. When I was running software companies I’d always think, “When we release this new feature that’s when everything will take off” or “when we get this partnership.” I think flashy.
But one of the things I’ve realized after running a company for 20 years is it’s really not the sexy stuff that pays off. For example, we have a bunch of companies — one increased prices 30% after not raising prices for five years, and they massively grew profits. That took 10 minutes and a little bit of planning. Another significantly reduced shipping cost by sizing down packaging. Another realized they had insane SEO on certain keywords and started driving affiliate revenue. One had a bunch of customer gift card deposits and realized they could invest them in T-bills and make 5% — that’s $500K a year in pure profit.
I love these boring things. I grew up wanting to be the next Steve Jobs or James Dyson, but the things I’m actually good at are these really boring “lever pulls” — you go in, pull a lever, and revenue or earnings grow by X percent.
Sam: The good thing about that is the older you get, the more appealing those become. I used to think I wanted to pull off some awesome feat of creativity and hard work. I still want that sometimes, but most of the time I’m like, “What’s the simplest thing I can do to make this work better?”
And you were the king of that — you owned a video streaming startup that was either going to the moon or nowhere, and you spent four or five years building crazy computer vision features before AI was really big. Meanwhile you had this other business called Birthday Alarm.
Andrew: Birthday Alarm was a reminder service — it’s your friend’s birthday, here’s a cheesy e-card for nine bucks a year. That business had been printing cash, millions of dollars every year, for 15-plus years. It started in 2001 and I was working on it around 2016 to 2018 — so like 18 years later.
We finally got our senses and thought, why don’t we make Birthday Alarm a little bit better? It pays all the bills, let’s just improve it. And even then, the team was like, “Let’s rewrite the whole thing in JavaScript — it’s written in this old language because that’s what was hot in 2001.” They spent mockup after mockup redesigning it to be cleaner and more minimalist.
I’ll tell you what — after a year of doing all that, there were really only two things that made a difference. Number one, we raised prices. The prices hadn’t gone up in 15 years.
Sam: You just delete the zero — change $20 a year to $25 a year.
Andrew: Exactly. And number two, we implemented Stripe instead of the old payments platform. Stripe has a feature where if somebody’s credit card expires and they get a new one, Stripe will update it automatically for 25 cents, without the user having to retype anything. That one feature was a seven-figure feature. We just checked a box on Stripe saying we want that, we’ll pay the quarter every time, and we made an extra million dollars a year in profit from that one thing.
Big lesson learned: the link between effort and result is so much more disconnected than you think. The more mature you get, the more you realize you should work backwards from what’s actually going to work, not what’s the cool or difficult thing to do.
Sam: These things are so often one day of work. We had a similar thing — we had this invoicing software called Ballpark about 10 years ago, and we realized we were processing about $100 million of payment volume through credit card processing. People could pay invoices on credit card and we’d mark it up. I think that was worth hundreds of thousands of dollars to us, and it was like 10 minutes of work — I went through Stripe, found a setting, checked a box, and suddenly we made way more money.
Andrew: Exactly. Just to give an example — Sam mentioned I own a deli and a bakery. When I was a kid, there was a bakery at the end of my street. I’d go on weekends, get a croissant, have a coffee, listen to a podcast. I knew the owner, my brother worked there. About eight years ago, the owner comes to me and says, “I’m going to sell — I want to make sure it goes into good hands, will you buy it?”
Sam: And you want to be a big shot. You want someone to come hang out at your place.
Andrew: There’s always a pride of ownership thing. If I tell someone I own Dribbble, the giant social network for graphic designers, eyes glaze over. But if I say I own Otavio, the local bakery that everybody goes to with their kids, they’re like, “Whoa, that’s so cool.”
But there are 30 or 40 employees. You need a baker who wakes up at 2 in the morning. A million things have to go right to serve a customer. The business swings from making money one month to losing money for six months. One person quits and everything is messed up. Super complicated to operate. And if we’re lucky, at the end of all of that we’ll maybe make $150K a year.
Now on the flip side — we bought a business about 10 years ago called WeWorkRemotely.com. Very simple. It’s a job board, people pay money to post a blue link, like Craigslist. When we bought it, the guys from Basecamp were running it and charging $199. They weren’t doing any marketing, any SEO.
We buy it for three or four times earnings, take the price immediately from $199 to $99 because that’s what other job boards were charging, hire an SEO consultant, start doing email marketing — and that business went from $400K of profit to I think a couple years ago it did $4 million of EBITDA. With two employees and one or two part-time contractors. The entire team could go pens-down for six months and it would still print cash.
Business on hard mode versus business on easy mode. But the inexperienced entrepreneur looks at the bakery and goes, “Ooh, sexy.” Online businesses can be bakeries too. E-commerce businesses are bakeries in my opinion.
Tiny as a Public Company [00:14:00]
Sam: How much of — so for those who don’t know, Andrew took his holding company public. I think today it’s trading at many hundreds of millions, maybe $500 or $600 million. What were your earnings that you reported last quarter? What’s the public record for annual earnings?
Andrew: I think it was between 30 and 40 — that’s like the public number.
Sam: And WeWorkRemotely would have accounted for something like 10 or 15% of earnings for a company worth hundreds of millions of dollars. That’s pretty wild.
Andrew: A lot of people forget that small things can get big. We took WeWorkRemotely from $400K and basically 10x’d it. We bought it for about $1.5 million. That’s how powerful this stuff can be when a business is myopic and not doing best practices — often because they have other priorities. The Basecamp guys had a hundred-million-dollar ARR SaaS business. The last thing they were thinking about was this little remote job board. Buying from someone like that is a great opportunity.
Profit First: How to Leave Money in the Business [00:16:30]
Sam: I was talking to one of your company CEOs last night and they mentioned the Profit First book. Shaan, do you know about this?
Shaan: Everyone is talking about it. Andrew told me about it months ago and since then I’ve seen eight or nine friends bring it up. I don’t know what it’s about though.
Sam: I’ll give you my take and then Andrew can fill in the gaps. In a normal business, you get revenue at the top line, you subtract what it cost to produce and sell, you get gross profit, then all your other expenses, and what’s left at the end is profit. Profit is at the end. That’s probably how you ran The Hustle.
Andrew: Yeah, or you take no distributions because you’re just paranoid.
Sam: Exactly — that’s how I run my e-commerce business. What Profit First says is: take the gross profit and sweep it into a separate bank account. You move it out of the company. Then when the company gets a bill from a vendor or software, you have to go back and pull money out of that pocket to pay it.
There’s something psychological about it. When you just accept the waterfall of expenses, you leave the fat in the company. But if I paid you out everything first and then said, “Hey, it’s going to be eight grand to use this software” — you have to take $8,000 out of your pocket and pay for it. You start questioning a bunch of those expenses. It forces you to get lean, even though nothing changed except the order of operations.
But does that ruin growth? Does that ruin it when you see an opportunity and want to pounce?
Andrew: No, because you would just take that money and invest it back into the company. Andrew, did I bastardize it or was that accurate?
Andrew: You nailed it. The way to think about it: there are psychological experiments where they give people food on different sizes of plates, and the bigger the plate the more they eat. The idea here is smaller plate. If you make $100 you immediately take away 30, and people are just forced to eat off the smaller plate. They’re more thoughtful about expenses.
Sam: How do you figure out how much cash to leave in the bank?
Andrew: You’d say, your business historically has run with a 30% net profit margin — always scrape out 30%. Over time, if there’s excess cash and they’re more profitable, you keep increasing the threshold, because you want to run as optimal as possible.
One of the weirdest things I’ve noticed in business is that all CEOs seem to say, “25% profit margin — that’s good, let’s manage to that.” What I’ve seen is that some of our businesses can historically operate with 80 or 90% net profit margins. But if you’ve got a dreamer CEO — like me from 20 years ago, or Shaan from 20 years ago — they’d be going, “Oh, let’s innovate, let’s do all these new things,” and they’d burn through all that cash.
So it’s a way of creating discipline. We haven’t actually fully implemented this across the board — I’ve asked all the CEOs to read it and some have got excited and done it — but I think it’s a really interesting framework especially for smaller companies.
Shaan: Our buddy does this. I was asking how much I should leave in our e-commerce bank account versus distributing out, and he was like, “I just distributed it all out.” I said all of it? Like what about three months of working capital? He said, “Okay, you can leave a month or two, but people act like you can’t just put money back in the bank account. You can always put money back. You have way better discipline when there’s not a huge balance sitting there.”
There’s no penalty for sending the money back into the account when it’s needed. But you will question: is this really needed? Why is this needed? What happened last month that’s leading us to inject capital back in?
Sam: Shaan has yelled at me over text about this many times. I’m super conservative. But I’ve changed — starting January 1 I’m taking a lot of the money out and putting it into T-bills in a different account. I haven’t paid myself anything from Hampton yet, but maybe we’ll start doing that too. I still need to figure out how much capital to keep in the business. What’s the equation?
Andrew: Chris and I used to leave two weeks of expenses in the business.
Sam: No way. Really?
Andrew: If it meant they don’t collect their AR, they go off a cliff. What they don’t know is that they’re not going to go off a cliff, because Tiny is the bank — we’ll just inject more capital. But it creates a sense of urgency to do collections and run the business very efficiently.
The math is basically: if you’re doing $12.5 million in revenue with $10 million in profit, you’re only leaving about $500K in the bank. Payroll plus expenses for two to four weeks, max.
Sam: That’s wild. That’s stressful.
Andrew: It’s not though, because — especially in a recurring revenue business — it’s very predictable. If you always do $300K MRR, we’ll give you two weeks of cash. Once in a while, maybe once a year, they’ll say, “Can you inject $100K for R&D?” But to go back to Shaan’s point, they have to validate the R&D. Whereas if the money is just there, they’ll take it and do the R&D.
Shaan: I’m going to change this because I’m guilty of exactly this. When I heard this it was like, “I’ve heard a truth I can’t unhear.” For bootstrap companies specifically — it’s so easy to accept all your expenses as necessary. What’s the difference between this much net profit and this much? I’m not taking it out anyway. But if my paycheck is less, I’m like, where’s the rest of it? And then I have to go answer that question. This is such a great forcing function. I was ready to poo-poo this book, and then as soon as I heard it, it flipped my opinion.
Andrew: There’s a really good quote. I was talking to a friend who runs a SaaS company — 65% net margins, 20-plus years, growing 20-30% bootstrapped every year, amazing business. I was telling him about how we hadn’t done this and some CEOs had misallocated cash. He looks at me and goes, “If you ask the dinner guests what’s for dinner, they will always say steak.”
It’s like: why wouldn’t they? It’s not their money. Yes, a CEO is incentivized by a bonus, but a CEO can spend $300K of your money and that might only be worth $10K or $20K in their bonus. They don’t care as much. Every dollar counts when you’re the owner-operator.
Incentive Alignment and Getting the Best Deal [00:27:00]
Andrew: I did the same thing when I was selling my house. We were selling for let’s say $2.1 million. I thought we could get $2.2 and the agent was like, “Maybe it’s 2.1.” I realized: if it’s $2.2 he gets an extra $3K, I get an extra $97K. This guy doesn’t give a damn about that $3K — he’s getting 3% of $2M anyway. That $3K is not worth the time and hassle and risk of pushing a negotiation.
So I incentivized him differently. I said: for every dollar you get me above $2.1 million, you’re keeping 15% of it. And I also added a penalty — if you don’t sell it for at least $2.1 million, you have to buy my wife this bag. I made it a goofy gift, like expensive slippers that are clearly a waste of money. He was like… okay.
We got an offer around $2.12 million and honestly I was ready to take it. But he said, “I really don’t want to buy that bag. Let me push one more time.” He pushed, we got a better deal. Such a simple lesson about really understanding incentives — not just the on-paper incentives, but is this enough to actually move the needle for this person?
Shaan: Everything comes down to incentives. If you just think about the incentive, you’ll see the exact behavior they’re going to have.
Sam: I did the same thing selling a house. Chris was making stink bids — he’d go look at a million-dollar house and bid $650K or $700K, do that 10 or 20 times. The realtor was always pushing back: “They’ll never accept that, there’s no point.” Because think about it — the realtor has to spend 30 to 40 minutes writing the offer. For Chris it’s totally worth it, but not for the realtor — they’re only getting one commission. So Chris started saying, “For every offer you send I’m going to pay you $1,000 immediately.” The guy was totally down to do the stink bids after that.
Shaan: We’ve got a buddy — I don’t know if this is public so I’ll have to verify — but if you’re with them in LA or New York you’ll say, “What are you doing today?” And they’ll say, “Oh I’m going to go see these three houses.” You’re like, you’re thinking about moving? “No, I just tour houses constantly and put lowball offers on all of them. Every once in a while someone takes the bait and I get a screaming deal.”
Andrew: Has any of those stink bids ever worked?
Shaan: Yeah, I mean — it’s like bargain shopping at Ross, trying to find the Hidden Gem in the basket. Some people go to garage sales. If you’re a little richer, you do the same thing with houses.
They’ve picked up a couple of assets that way. We have a mutual friend who buys companies and he told me his funnel: they own 18 companies, they looked at 1,000 companies, met with hundreds, did LOIs for like 200 of them, and only 15 or 18 closed.
Sam: I didn’t realize, Andrew, how sales-oriented what you’re doing really is. I think of it as, “Oh I just sit back and everyone does the work.” But buying companies is a sales job. You are hitting the phones, you are creating a funnel, and that funnel has like a 3% conversion rate. In order to buy three companies you’ve got to talk to 100 people.
Andrew: I wouldn’t say it is, not for us anymore. In the early days it was for sure. But we’ve realized that cold outreach is not the way. We’d rather have a public presence, a reputation, and have people seek us out. I don’t want to be some random private equity firm doing dog and pony shows. I want them coming to me saying, “I want to sell you my company.”
Sam: So instead of doing sales, you’re doing marketing. The funnel still exists.
Andrew: Totally. And I did not realize that.
Shaan: Yeah — we just started this process about a year ago, very much inspired by you, Andrew. You have to sort through so many to find something worth buying, and even when you find something worth buying it doesn’t mean the deal is going to happen, and even when you think the deal is going to happen it doesn’t mean it closes. You end up with this tiny funnel and you have to be okay with maybe doing one deal this year, or no deals this year.
It’s so different from entrepreneurship, where it’s all about action, features, more customers, more more more. Actually less is the name of the game when it comes to being very selective.
Andrew: The hard part is a lot of people over-invest in the early conversations. I want to send a first offer via email and have them say, “Yes, that’s interesting” — then I’ll spend time. What I used to do was spend all this time getting to know people and unpacking the business, only to realize their expectations were insane and we wasted a ton of time.
Just like bidding on real estate, we throw out LOIs constantly. There’s something about a formal document laying it all out — “On April 30th you will get $2 million in this exact structure” — people take it more seriously than an email. So we send them out all the time.
How Sam and Andrew Met (The Private Jet Story) [00:37:00]
Sam: I’ve never told this story publicly. Four or six years ago, The Hustle was two or three years old. I was down in the dumps, feeling really bad about myself and the business, and I told someone I wasn’t feeling great. They said, “Have you thought about selling? I’d be really interested in buying it.”
This guy said, “Let’s just hang out and meet — fly up here.” I said okay, maybe. He goes, “Yeah, I’m going to send the jet.” I was like, “What do you mean, a jet?” And he goes, “I’m going to fly you private.”
So I take this — this is right when TikTok came out, one of my first TikToks was me on this jet. I go to the private executive airport, my first time ever doing that. I get on the plane. Wall Street Journal sitting there. They offer me champagne. I’m in heaven.
I meet with the guy, I’m totally wooed, I’m floored by this, I’m days away from saying yeah I’m willing to do something. Then thankfully I snap out of the mood and realize I can keep going.
That, my friends, is how I met Andrew Wilkinson in real life. He sent me a jet. He totally wined and dined me.
Andrew: I was such a redneck about it though. He goes, “I lived in San Francisco” — I’m in Vancouver — he goes, “Oh I’ve got to go to New York, I don’t want to fly to Vancouver, can you send the jet and I’ll just bolt right up?” And he thought Vancouver was next to New York. He didn’t know where it was.
Sam: He goes, “Dude, Vancouver is right by San Francisco. It’s only two or three hours.”
Andrew: He flew up and I took him to my bakery and we totally tried to wine and dine him.
Sam: It worked. I was head over heels just because of the jet.
Andrew: That’s actually the only time I’ve ever done that, I think. I’ve picked up friends and we’ve done that kind of stuff before — if we’re having an event we’ve flown people in — but I’ve only ever done that for you. I think it was because you said you were afraid of flying, so you wouldn’t fly commercial if only there was some other option.
Sam: I was thinking about newspapers at the time, thinking oh Sam has built the modern version of the newspaper. Your deal with HubSpot was probably better than what we would have paid though.
Andrew: We got to the numbers and we would have been cheaper than HubSpot, but I think there was like a two-year difference in timing.
Sam: I even — I was supposed to get married that Saturday, and you wanted to meet me on a Tuesday, and I was like, “Sarah, do you think I could swing this? This guy’s going to fly me private.” She was like… and I missed one of the pre-wedding events to do this.
Andrew’s Approach to Networking [00:42:00]
Sam: One of the things I’ve learned from you, Andrew, is that you are a master networker. Normally “networking” is like a compliment you don’t want to get, but you’re actually great at it. I’ve seen you throw your weight around in that area — you’ll want to meet somebody really interesting and you’ll find a good excuse to connect with them. Even how we met — you listened to the podcast, reached out, took the time to do a call you didn’t have to do, and that led to hanging out. I’ve seen you do this with pretty influential people. I’ve seen you bring people up to Canada where you’ve got the home court advantage.
Do you have a system? Because by the way, the CEO of one of your companies said the same thing — “Nobody’s better than Andrew when it comes to building a network.”
Who did you meet with, by the way?
Sam: Zach. He lives like a minute away from me.
Andrew: So here’s an example. In 2016 I was reading a profile on Dan Gilbert — the Quicken Loans, Rocket Mortgage guy. It was all about how he’d taken his entire fortune and was trying to rebuild the city of Detroit. He’s buying skyscrapers, starting businesses, not just putting money into mutual funds. I thought that was incredibly cool.
So I just emailed him. I cold-emailed him at like 1 in the morning. I thought about what he was interested in — I mentioned I own a bakery, I’m passionate about my city, I bootstrapped my business. Found a few points of similarity. Said I would love to meet you anytime, anywhere, even if you’re in Delaware I’ll fly to you. Got a response back 20 minutes later: “Sure.” We ended up meeting in Detroit, he gave me a tour of the city, I got to know people on his team. It was awesome.
So I will shoot shots like that when I see someone interesting. But some people are inaccessible. I wanted to meet Bill Ackman — I’d been reading about him for years, watching every YouTube video, every interview.
First I was like, maybe we could redesign the Chipotle website — he’s an investor in Chipotle, and I own all these agencies. So I email him and say, “Hey, I’m a shareholder in your public company, I’ve got this amazing design agency, I’d love to help in any way I can.” He intros me to one of the board members.
Sam: Damn it.
Andrew: But he replied to the email. I was like, okay, I know his email, something will happen here. I just have to wait.
Then I saw his charity lunch come up. Every year he auctions off a lunch. This was a year where he was having a terrible time — he got divorced, he had the Herbalife stuff, he invested in Valeant Pharmaceutical, everyone was kind of crapping on him. So there weren’t as many bids as usual.
I ended up bidding $57,000 to have lunch with him. My bet was: I had no expectation there’d be any business to do — he’s a hedge fund manager, I’m a tech investor — but I knew he’d be an interesting person to meet. We ended up connecting, and at the end of the lunch he pulled me aside and said, “Hey, I like you. If you ever want to do a deal together, let me know.” Years later we ended up buying a business and he invested with us.
Sam: You basically handed him a piece of paper that said, “Do you like me back, yes or no.”
Andrew: Basically. You do the same thing with Charlie Munger and Buffett — you bought the charity lunch?
Sam: No, no, that was through a friend. My friend Andrew Marx knew Charlie personally and said, “Hey, I’m putting together a dinner.” Through that I started sending Charlie letters.
Andrew: I knew that Charlie is not someone you communicate with verbally — he likes to talk, but you have to write him letters. So Chris and I started writing him letters.
Sam: What are you saying in the letters?
Andrew: Before the dinner, I said, “Hey, here’s who we are, here’s what we do.” So during the dinner he already knew who we were. Then we started asking for his opinions and talking about different ways we could help. The fundamental principle is be of value to other people, and say yes to interesting people.
Sam: Did he reply to the letters?
Andrew: He would just call us. He’d communicate verbally, but you have to write to him first if you want him to remember you.
Sam: It’s like a book — you save all the letters and the back and forth.
Shaan: I think there are two takeaways. One: you check your ego really well. You’re humble about wanting to meet these people, you’re not above just shooting your shot and saying, “Hey, I think you’re great, here’s what I do, here’s how it might be relevant — would love to connect.” And two: you’re willing to spend money. You’ll hop on the flight, buy the charity lunch, be part of their program. Everybody understands that having a valuable network is valuable, but very few people are willing to invest because it’s not a clear dollars-in dollars-out thing.
Andrew: You’ve got to be careful about it though. About 12 or 13 years ago I would watch TED Talks — back when they were early and it was Jeff Bezos, Bill Gates, all these amazing people — and I’d think, “I want to be in this room.” So I started going to TED Global, starting with the junior event I could get into. I slowly worked my way into the main event because I met Chris Anderson who ran TED and pitched him on doing a TED app. I designed the TED app, used that to get into the main event, met all these interesting people.
That was an example where I belonged. I was the baby — people would ruffle my hair, “Isn’t that cute, this 23-year-old with a cracking voice runs a company” — but I kind of belonged. That’s a great strategy.
But this year I went to the Oscars and the Vanity Fair Afterparty, and that was an example of somewhere I should not have been. Tell me if you want that story.
The Vanity Fair Afterparty Story [00:50:00]
Sam: Tell that story.
Andrew: So it’s really random. I was at a conference about a year ago and sat across from this guy. Usually at these conferences people are like, “Oh I own a B2B HR software company.” But this guy said something that caught my attention: “I run a startup that helps people convert money into an interesting life.”
His company is called Myria — M-Y-R-I-A. The idea is they deep dive with you on what you care about, what you’re excited about, what you want your life to look like. They paint out a blueprint — in two years, who do you want to be hanging out with, what are your passions, what do you want to do with your money? Then they help you figure it out.
So I signed up, they interviewed me, I said I love movies. They said, “Do you want to go to the Oscars?” I’d never contemplated that, but I was like, sure, spending money on funny experiences is worth it.
Me and my girlfriend go down. Personal stylist, ridiculously expensive clothes, tuxedos, a $500 haircut. We’re in the actual Oscar event, seeing famous people everywhere, great people watching.
Then we go to the Vanity Fair Afterparty. If you don’t know, Vanity Fair is this super exclusive event where literally everybody is famous — if there are five people there, four of them are A-list or B-list celebrities, and the one you don’t recognize is probably a super famous director or producer.
I’m standing at the bar and to my right, Jon Hamm is chatting with Jeff Bezos. I see this guy checking out my girlfriend and realize it’s Andrew Garfield. I can hear Seth Rogen laughing behind me. Rihanna struts in. It’s just the weirdest thing in the world.
And then there’s me and my girlfriend. Over and over again, every person who walks by looks at us, gets a little excited, looks us up and down, realizes we’re not famous, and immediately turns on their heel. We just kept getting screened out.
I start making conversation with people. As soon as I said I’m not in the film industry, I’m in tech, people would just immediately glaze over and start looking over my shoulder. Did not care.
Eventually I kind of gave up and was like, let’s just people watch. But I realized: I’m used to being in rooms where I have respect. Even at a dental conference I can probably chat with someone — “You’re the business guy at the dental clinic? Let’s talk business.” At the Vanity Fair party I had no shared language for these people. It’s just not fun. You want to be in a room where you actually have value.
Shaan: You had a great phrase: “You want to earn the room that you’re in.”
Andrew: Totally. You don’t want to buy your way into a room, you want to earn your way in. Ironically, since we went to the Oscars, we ended up buying Letterboxd, which is the largest social network for film buffs. If I go back to that same party now, I’m sure people would be like, “Oh cool.” You’ve got to wait until you’re actually interesting to someone before you try to get in the room.
Myria and the Business of “No” [00:56:00]
Shaan: I like the copy on the Myria site. It says, “Parker, Wayne, Kent, Stark — why should they have all the fun? Myria membership gives you and your team special powers to make your life more enjoyable and the world a better place.” Very well done.
Andrew: I think it’s a really cool idea. Do you ever go to a city and wish you had planned better? Me and my girlfriend went to Tokyo last minute, ended up eating bad food, didn’t see the best of the city, just hadn’t planned it. I wish I had something like this — the key to the city where you say, hey I’m in Tokyo, curate something for me based on my tastes.
Or like Chris wanted to go to F1 and doesn’t know anyone there. He wanted to go last minute, these guys got him in the pit, I think he met Lewis Hamilton. That’s pretty cool. We actually invested in their angel round immediately because I thought it was such a great idea.
They went through Y Combinator a couple episodes back too, I think. The competitor I looked at charges you $80,000 a month minimum to make it worth it — so about a million dollars a year. Myria I think is $25K and they take a cut of everything you do.
Shaan: There’s another service I just got invited to — last minute super high-end reservations at any restaurant in New York, London, and Miami. The thing is: if you don’t use the invite within 30 days, I lose my access and the person who invited me loses access. Genius, right?
Andrew: I’ve noticed a whole trend around this. As people get more successful, the number of times they hear “no” in their life goes way down. And there’s a whole business in just the business of “no” for people who no longer hear no.
These guys with Myria have created a business around eliminating the last few nos in your life. With the restaurant thing — giving people something to lose, because they never hear no anymore and never get rejected. Give them some rejection, some risk, because it makes them feel like something matters when everything else is in easy mode.
Peter Attia and Longevity Spending [01:01:00]
Andrew: I’ve been on the wait list to see Peter Attia. Do you guys know who he is? Super famous doctor. I’ve been on the wait list for his private practice for like three years.
Sam: His private practice — he only has 50 patients, right? It’s like getting Huberman to be your doctor.
Andrew: Super expensive. They psychologically test you before they allow you to become a patient. So I go through the test and Peter calls me and says, “Andrew, there was something concerning in your personality test. I’m worried you won’t have good follow-through. Will you do what I say? Will you execute on the plan?”
I’m like, “Peter, no — you’ve got it all wrong. I pay attention to my diet, I track everything, I wear a glucose monitor.” He says, “Okay, cool.”
Last month I pull him aside and say, “Peter, be honest with me — did I actually flag something in the psychological test?” He goes, “You did.” I said, “Is that even a real test?” He goes, “Yes, it’s real.”
So I actually did flag something. But what a great strategy — because now I’m the dream patient. I’m terrified of getting booted out. Pushing someone away creates this desire to be a good customer.
Sam: Has it been worth it? Having him as your doctor?
Andrew: I think so. It’s a lot of money — it’s hundreds of thousands of dollars. But think about it this way: if you’re gaining five or ten years of life, what is that worth?
They have a neurologist, a cardiologist, an exercise physiologist — a whole team. They caught a bunch of issues with cholesterol and other things I may not have caught otherwise. For me, I think it’s worth it. But for a normal person? That’s a crazy use of money.
Sam: You had to go to your primary doctor and say, “Doc, I love you, it’s been a great 20 years. We have to talk — I met Angelina Jolie and we have a thing going. We’re now in an open doctor relationship.”
Andrew: It’s really — I used to think you could only have one lawyer. I had one lawyer and I’d feel like I was cheating on my lawyer if I used other lawyers. Then I realized, no, you have lawyers for different things. Now I’ve got a polyamorous doctor relationship.
Barnacle on a Whale [01:06:00]
Shaan: Let’s do the barnacle on a whale idea. What does that mean?
Andrew: If you think about one of the biggest costs in most businesses, it’s marketing — 15 to 30% of most businesses is just getting people to know you exist. If you can own a business that doesn’t have to market itself, you’re golden. You can run a super profitable business.
Say with marketing you run at 15% — cut marketing and you could run at 45%, 50%, 60%.
Think about a fitness influencer like Derek from More Plates More Dates. He sells supplements, energy drinks, shampoo for hair loss. As an e-commerce business, if he was paying to acquire customers it’d be a crappy business. But he’s got free marketing — he just talks about his products on his podcast, YouTube, and Instagram.
Most of us don’t have access to that. We’re not influencers. But anyone can do something like this by being a barnacle on a whale.
Here’s the story of how I stumbled into it. About 12 years ago at a conference, I met Harley and Toby from Shopify. Shopify was a tiny bootstrapped startup, like 15 people. They said, “We really like your design work. Would you design some themes for us? But there’s a catch — this won’t be client work, we’re not going to pay you. We want you to list them in our Marketplace.” When people signed up for Shopify they could select a theme and pay $49 to $250.
I started making $5,000 a month, then $10,000 a month as these themes sold. I was like, this is really cool — I’m not having to promote it, no marketing, no SEO, people just find them in the Shopify Marketplace.
So we started building more and more themes. What I didn’t realize was that in the theme Marketplace there were only so many slots, and it took time to build themes and get them approved. So I started owning more and more of those slots. In the early days, if you were choosing a theme there was a 50% chance it was one of ours.
Then as Shopify grew — you guys know what happened, they go public and pour hundreds of millions into marketing — I get free marketing. The little barnacle on the whale keeps growing. That business got big enough that we ended up taking it public at a $260 million valuation.
It’s an incredible strategy. Shopify is hard now because you’re late — the marketplace already exists, it takes a long time to get approved. But Discord, Adapar, any software ecosystem that’s not super saturated — if you can go be a barnacle on a whale, you can make a ton of money.
Shaan: I totally agree. I have a business cooking up like this. I’ll tell you offline — I can’t announce it yet — but I agree this strategy is amazing.
The $20K to $260M Story: Selling, Regretting, Buying Back [01:14:00]
Sam: How much did it take to get going? It sounds like it was some free labor to design the themes — but like, how much capital?
Andrew: $20,000, maybe.
Sam: That’s incredible. And didn’t you sell that business and then buy it back? There’s a story where you sold it for like $7 million and bought it back for more?
Andrew: Yeah. Started it for $20K, sold it for about $7 million. Then I ended up buying it back from the guys who bought it for $25 million. And then about a year later we took it public for $260 million.
Sam: Talk about that. Did you regret selling it? Why sell it in the first place? And then psychologically, how did you get yourself to buy it back for three times as much?
Andrew: I was in an existential crisis. Super burnt out. I had that business, I had Metalab, two SaaS companies, an e-commerce business — running around like a chicken with my head cut off. Finally I hit a wall and was feeling really depressed. A friend said, “Hey, why don’t you sell one?”
Were you financially secure at that point?
Andrew: No. We had a lot of cash flow but I was borrowing from Peter to pay Paul — a highly profitable business over here, a startup burning all the profits over there. I didn’t have a nice house. I was okay but I always felt like I was going to go broke. Getting that cash influx was amazing.
So I sell the business, and suddenly I’m sitting on millions of dollars feeling very secure. The first thing I do is pick up a book about Warren Buffett and start reading about competitive advantage and moats and what a good business looks like. As I’m reading, I’m going, “Oh my God. I just sold the business that has all of these qualities. What the hell was I thinking?”
But I was still on the board, so I helped them choose a CEO — this amazing guy named Ben Moa. I just kept watching. Eventually the guys who bought it were fatigued, they’d transitioned to doing something different, and they wanted to sell.
So I stepped on their foot: “Hey, if you guys want to sell, we’ll do a deal.” And we did. Then we did some M&A, packaged it up, and took it public.
Shaan: That’s insane. So the $20K was the initial amount — but then you bought it back for $25 million and did about $10 million of M&A?
Andrew: Our total investment looking at it that way was about $36 million. Started for $20K, sold for $7 million, bought back for $25 million, did $10 million or so of M&A, then took it public and grew it quite a bit in that year.
Sam: God, that’s a great story. I remember seeing the press release for Pixel Union and you talking about it, but I didn’t know you had to buy it back for more than you sold it for.
Andrew: 5x, basically.
Tiny’s Culture: People Suffer in Silence [01:21:00]
Shaan: Okay, let’s do the life philosophy. You said “people always suffer in silence” — what does that mean?
Andrew: It’s something Chris and I have noticed. We have a real culture of autonomy at Tiny. When we hire a CEO, we leave them alone.
There are certain people who really love that — often founders who sell their company to us and keep running it. They sold because they wanted to buy out a co-founder or their VCs. They’re saying, “I’ve got a great business, I know what I’m doing, I want an investor who’s going to leave me alone.” So we say great, talk to us if you need anything, sail off into the sunset. That works fine.
But often when we hire a CEO — if they’re used to having an active board, or they came from a big corporation where someone was constantly checking in — they associate check-ins with “everything is okay.” And we don’t do that. We literally throw people in the pool and say swim.
With 40 companies in Tiny, there’s always someone we forgot about, not checking in on. We look at their numbers, they seem okay, we assume everything is fine and leave them alone. But often those people will fester in silence. They assume: here I am doing this great job and they won’t even pick up the phone to check in.
About 10 years ago I was complaining — I’d sent someone an emotional email and they didn’t respond for days. A friend said, “Do you know what Hanlon’s Razor is?” The idea is: never attribute to malice what can be explained by ignorance or stupidity. Never assume negative intent. But everybody assumes negative intent. We all know what it’s like to send an important email and wait three or four days for a response — you assume they’re icing you out. In reality they’re busy, they’ve got kids, they’re behind on email.
So I’ve observed: people will always assume that silence equals malice.
People Don’t Change [01:26:00]
Andrew: Then you have this other one: people don’t change.
Shaan: You’re getting a little pessimistic on the worldview. But I agree with you.
Andrew: There’s this author called Robert Greene — 48 Laws of Power, and this other book called The Laws of Human Nature. The premise is: why study human nature? Because very rarely do people change. It’s the same stuff over and over. And when you look at someone’s individual habits — whatever they’ve done in the past, just assume it’s going to keep happening in the future.
I’ve just seen this over and over. If I love to hire for scrappiness — will they figure things out, will they learn, do they have high pace? I’ve never hired someone who doesn’t have high pace and then coached them into having it. Either people do or they don’t.
The only place I’ve seen people change is like addiction — you kind of have to hit rock bottom. If you’re an asshole, you interrupt people all the time, you always talk about yourself — maybe you stop having any friends, your friends do an intervention, and at that point you go, “I need to change.” But most people generally continue on their track.
I see this all the time with people I work with. A CEO comes to me and says, “I think the best way for us to grow is SEO.” I say, “Let’s think about that — what about PPC marketing, what about changing the product?” They will actually double down when I challenge their idea. They defend it, they commit to it — commitment and consistency bias kicks in. Trying to change people is impossible.
We’re all like elephants and you’re just the rider, going wherever the elephant’s going to go.
Sam: You see a poor guy on the side of the street begging for change and you just say: change comes from within, my brother.
I completely agree. At 22 or 24 I had this moment — like, this is rock bottom — and there was a distinct moment where I thought, “I’m going to change this trajectory just a few degrees.” If I just kept going that would compound into something massive. But that’s happened maybe twice in my life. Everything else rarely changes.
Shaan: I would tweak the phrasing slightly. Instead of “people don’t change” I’d say “assume people don’t change” — as a reminder to yourself. The problem is if you assume people are going to change because you’re being hopeful, you make a bunch of bad decisions. You’re baking change into your planning when change is quite rare. It’s not that they don’t change, it’s that you should not be assuming that they will.
It’s like when you get married — “don’t try and change the person that you’re with.” Be pleasantly surprised. It has happened, for sure. But it’s a fool’s errand to go out and try to change a person.
Also it’s like ads — people say ads don’t work on them. Everyone thinks they’re not average. And I think we think other people don’t change, but if you separately asked you, “Hey, are you the same guy you were 20 years ago?” No — I’ve learned so much, I’ve evolved, I’ve matured, I’ve changed so much. But we think other people don’t change.
My sister has a funny phrase: “People say people don’t change. They do — they get worse.” That’s the protect-your-downside mentality — assume they’re not going to change or they’re going to dig in even further. But of course there are so many outliers that you can only make it an assumption, not a rule.
Closing [01:34:00]
Sam: Andrew, it was awesome catching up with you. I’m happy things are going well. You said a few things here — I hope the listener does this, but I actually have a notepad where I take down notes on everything. This Profit First thing, how much money to leave in the bank — I have a note here, I’ve got to go actually do that.
And this is another one of those episodes where you’ve given me things I actually need to go run and tell my company right now.
Andrew: Everybody loves that CEO who comes in with a whole new life philosophy every three days because they listened to a podcast. If I was in that company I’d be like, “Dude, you’re not allowed to listen to podcasts anymore or go to these dinners — every time you come back, everything’s changing.”
Sam: There’s a good way to deliver it though. It’s amazing how just a lack of awareness can change the results of a business. As soon as I stopped obsessively looking at my credit card statement — because I got too busy — I started spending so much on stupid SaaS crap. Just building those processes into your company can make such a big difference.
It literally is like, Sam, you described taking off from New York and changing course three degrees — the difference between ending up in Seattle versus Tijuana. The same thing is true in a company.
Andrew: And I think this Profit First thing might change the trajectory of a bunch of things I’m doing.
Sam: Thanks for doing this. We appreciate it.
Andrew: Thanks for having me.
Shaan: Yeah, that was awesome guys.
Sam: All right, that’s the pod.