The Tier List Setup [00:00:00]
Shaan: Today we’re doing a tier list. S, A, B, C, D, F. We have a bunch of business types and we’re going to rate them. Andrew, you’ve built more than 30 businesses. You own an agency, you own SaaS companies, you own marketplaces. You’re probably the most qualified person we could have for this.
Andrew: I’m happy to do it. Fair warning: I have strong opinions and I’m wrong about most things. Let’s go.
Sam: First one: MLM.
Andrew: F. Easy F. They’re not real businesses. They’re recruitment schemes. The product is secondary. The people who get rich are getting rich off the people below them, not the end customer. F tier, done.
Sam: MLM: F. Everyone agrees. Next: freelancer.
Freelancer, Agency, SaaS [00:04:00]
Andrew: Freelancer is a D. The ceiling is your time. You’re selling hours. You can’t scale it. You can’t sell it. You can never go on vacation. It’s a job you created for yourself with no HR department protecting you from your client.
Shaan: But it’s the best on-ramp. You start as a freelancer and learn the game.
Andrew: True. It’s a great training ground. But as a business model — D.
Sam: Agency?
Andrew: Agency is a C, but it’s the most dangerous C. The reason it’s dangerous: agencies feel like real businesses. You have employees, revenue, an office. But fundamentally you’re still selling time at a markup. The unit is always a person. You can’t grow without hiring. Every new client is also a new problem you have to staff.
The thing that saves an agency is if you use it as a launching pad. We built Metalab — a design and product agency. Did hundreds of millions in profit off the agency. But what made it great wasn’t the agency itself, it was using the cash to buy equity stakes and invest in companies. The agency bankrolled the real business.
Shaan: How much did Metalab make?
Andrew: A lot. Hundreds of millions over time. But we also designed Slack and took cash instead of equity. That’s a mistake I think about regularly.
Sam: That’s famously one of the great missed opportunities.
Andrew: They offered us stock. We took cash because we needed the cash at the time and Slack seemed like one of many promising startups. Turned out to be worth tens of billions. You win some, you lose some. The lesson I took: if a company is doing something you think is genuinely new — where you can’t easily see how it fails — take the equity.
Sam: SaaS?
Andrew: SaaS is a B. It’s a genuinely good business model. Recurring revenue. Scales with software not people. Can be sold for high multiples. The problem: it’s crowded. Everyone knows it’s a good business, so competition is intense and the multiples you pay to acquire them are now high. You need a real moat — usually distribution or a network effect or being deeply embedded in a workflow that’s painful to switch out of.
The best SaaS businesses I’ve seen have a hardware component or a data moat. DJ software is a great example — Serato. Your library is stored in the app. All your cue points, your history. To switch to a competitor you’d have to re-cue every track you own. Nobody does that. That’s a moat built from inconvenience.
Restaurant, Marketplace, Short-Term Rentals [00:18:00]
Sam: Restaurant.
Andrew: E. Almost F. Restaurants are brutal. Low margins. High fixed costs. Labor intensive. Dependent on a specific physical location. One bad Yelp review can kill you. One bad health inspection. One bad month. I’ve never met a happy restaurant owner who didn’t also happen to really love restaurants as a form of self-expression. If you love the craft, fine. As an investment — E.
Sam: Marketplace?
Andrew: Marketplace is a wide range. C to A depending on the size and the niche. Early stage: brutal. You have the two-sided problem — need buyers and sellers simultaneously. Pre-liquidity it’s not a business, it’s a prayer. But once you hit liquidity, it’s one of the best businesses that exists. Take rates on transactions, no inventory, the platform gets better as it gets bigger.
The A marketplaces are the ones that hit liquidity in a defensible niche. If you’re the only place buyers and sellers for some specific thing go — industrial equipment, collectibles, commercial real estate in a specific city — you’re essentially a monopoly with a take rate. That’s extremely valuable.
Sam: Short-term rentals — Airbnb hosts, VRBO?
Andrew: D. I have one. The returns look okay until you account for everything: management, maintenance, regulatory risk, vacancy. And the regulatory risk is the killer. A city can just decide tomorrow that short-term rentals are illegal in your neighborhood and you’re left with an asset that was optimized for the wrong use. You’re holding a house in a market that may not support long-term rates. It’s real estate plus regulatory lottery. D.
Content Creator, Real Estate, Investment Management [00:28:00]
Sam: Content creator.
Andrew: D on average. The problem is distribution dependence. You’re one algorithm change away from irrelevance. And the content treadmill is punishing — you have to keep producing.
That said, the best content creators build something that transcends the content. Huberman is an A. He built a lab, a supplement line, a brand that’s bigger than any individual piece of content. He used the content to build distribution, then monetized the distribution in a way that isn’t dependent on continued content output at the same pace.
The D-tier content creator is the one who’s making good money but will make nothing in ten years when the platform changes or their energy fades. The A-tier content creator is building an asset, not performing a job.
Shaan: What about us?
Andrew: I’ll say B and leave it there. You’ve built a real audience. You have a brand that is bigger than any single episode. You have optionality. Whether you turn it into a B or an A depends on what you do with the platform.
Sam: Real estate?
Andrew: C. It’s the default for a reason — physical asset, inflation hedge, leverage available. But it’s operationally intensive and illiquid. And you’re making a concentrated bet on a geography. I own real estate but I think of it as the boring part of the portfolio, not the interesting part.
Sam: Investment management — running a fund?
Andrew: This is the widest range of anything on the list. The S-tier version is Buffett or Ackman — permanent capital. You raise money once, it compounds forever, you don’t have to return it to investors on a schedule. That’s the dream. The business generates income proportional to how good you are at your actual craft.
The B-tier is a conventional hedge fund or PE fund — you raise money, you have to return it, you’re constantly fundraising, you’re managing LP relationships as a second full-time job. Still a great business if you’re good at investing, but the overhead is significant.
Sam: Angel investing?
Andrew: E. Illiquid. Long time horizons. You’re mostly wrong. When you’re right it can be spectacular — but the economics are lottery-like. You need hundreds of bets to get the math to work, which means you need to write a lot of checks, which means you need to see a lot of deals, which means it becomes your whole job. If it’s your whole job and you’re Sequoia, sure. If it’s your side thing — E.
Local Businesses and Sweaty Startups [00:38:00]
Sam: What about local businesses — Cody Sanchez, “sweaty startups,” buying a laundromat?
Andrew: C. Underrated C. The pitch is right: these businesses are boring, cash-flowing, and usually owned by people who want to retire. You can acquire them at reasonable multiples. If you add a little systems thinking and decent marketing, you can often improve them meaningfully.
The downside: they require you to be local. You can’t manage a chain of laundromats remotely, not at the start. You have to be in the market, managing staff, dealing with equipment failures. It’s not passive. But for someone who wants to run something tangible and own real cash flow — C is good. C is underrated.
Shaan: What’s your S tier? What’s the best business?
Andrew: Investment management with permanent capital. Or a software business with a genuine moat and a massive market. The problem is those are rare. Most people can’t build Berkshire Hathaway. Most software businesses don’t have a genuine moat. So in practice I spend most of my time in the C and B range and try to make up for it through volume and diversification.
The Tiny Stock Chart [00:46:00]
Sam: Tell us about Tiny. What does the stock chart look like?
Andrew: We went public through a reverse merger — Tiny merged with a public shell company in January 2021. Which, I’ll be honest, was the absolute peak of everything. Tech multiples were at all-time highs. We were getting credit in the market for things that weren’t real yet.
Since then the stock has come back down to earth. But the underlying business has kept compounding. We have over 30 businesses now, over $300 million in revenue across the portfolio. The stock is roughly where it was when we merged, which means the business has grown while the multiple has compressed. I think that’s actually a good setup.
Shaan: What are the multiples you pay?
Andrew: We buy boring, cash-flowing businesses at 3-5x EBITDA. We’ve been compounding at roughly 25% per year since 2013 if you go back to the beginning. The stock chart doesn’t fully reflect that because the public company started in 2021 at an inflated valuation.
Sam: What’s the biggest business in the portfolio?
Andrew: Metalab is still the anchor. But we have meaningful SaaS businesses, a couple of significant media properties, some services businesses. The portfolio is deliberately diversified — we don’t want any single business to be more than 20-25% of value.
The Book: Courage to Be Disliked [00:54:00]
Shaan: You mentioned a book that changed how you think. What is it?
Andrew: “The Courage to Be Disliked” — it’s an Adlerian psychology book written as a Socratic dialogue. The core thesis is that all your problems are interpersonal. You’re not anxious because of past trauma. You’re anxious because of what you’ve decided to believe about your relationship to other people.
The part that hit me hardest: the book talks about people who define their identity through their limitations. Someone says “I have social anxiety, therefore I can’t go to parties.” But Adler would say: you’ve decided to have social anxiety because it serves a purpose — it excuses you from situations where you might fail or be judged. The anxiety isn’t something that happens to you. It’s something you’re choosing.
Sam: That sounds harsh.
Andrew: It is harsh. But liberating. Because if you’re choosing it, you can unchoose it. The book basically argues that you can rewrite your self-concept at any point. You’re not your history. You’re not your diagnosis. You’re just a person making choices about who to be.
I spent years defining myself as “not a numbers person,” “not an operator,” “not good at details.” The book made me realize I was using those labels to stay comfortable. They were permission slips for not trying things that might expose me.
Jealous of Inputs, Not Outputs [01:02:00]
Shaan: You’ve talked before about being jealous of inputs rather than outputs. What does that mean?
Andrew: The mistake most people make — myself included for a long time — is being jealous of outcomes. You see someone who’s famous, rich, has a great family, seems happy. You want that. But outcomes aren’t the goal; they’re the residue of inputs.
The frame shift is: what inputs are you jealous of? If you see someone like Bill Simmons — he gets to spend his days watching sports, thinking about sports, writing about sports, building relationships with athletes. His inputs are things you’d actually want. The outcomes — the money, the fame, the empire — came later and are nice, but they’re not the point.
If you look at someone’s life and you wouldn’t want their inputs — the day-to-day work, the sacrifices, the lifestyle — then you don’t actually want their life. You want a fantasy version of their outcomes with your current inputs. That’s not jealousy. That’s wishful thinking.
Sam: How do you apply that to your own life?
Andrew: I ask myself: would I want to do what this person does every day? Not — would I want what they have? For a long time I was jealous of Elon Musk-type success. Then I actually thought about what Elon does every day. The pressure. The public scrutiny. The managing-everything. No. I don’t want that. I want to read, think, talk to interesting people, build things slowly. Those are my inputs. I try to optimize for those.
Be a Human Router [01:10:00]
Sam: You’ve used the phrase “human router.” What does that mean?
Andrew: The best version of me is a matchmaker. I’m in the middle of a large network — businesses, investors, founders, operators. I have pretty good judgment about what works and what doesn’t. My superpower isn’t building or operating. It’s recognizing good things and connecting them to the right people.
A router, in networking, takes a signal and sends it to the right place. That’s what I try to do. Someone pitches me a deal that isn’t right for me but is perfect for someone else — I route it. Someone needs a hire I know — I route it. Someone’s struggling with a business problem I’ve seen before — I route them to who solved it.
The mistake I made for years was trying to be the operator, the builder, the person who does the thing. I’m not that. When I accepted what I’m actually good at, I stopped fighting myself and started spending most of my time in my zone of genius.
Shaan: The Bill Simmons model.
Andrew: Exactly. Simmons is a human router for sports culture. He takes in enormous amounts of information — games, players, history, media — and synthesizes it in a way that creates value for other people. He’s not playing basketball. He’s routing basketball through himself and out to an audience. That’s the model.
Missed Opportunities and What’s Next [01:18:00]
Sam: What’s the biggest mistake you’ve made?
Andrew: Slack equity is the one that’s most obvious. But honestly, more than that: taking cash when I should have taken equity in general. We were in the business of working with early-stage companies and we consistently chose certainty — cash — over optionality — equity. The math on optionality is really hard to internalize emotionally. When you’re running a business and you need cash flow, taking equity feels like gambling. But over a 20-year career, the equity you decline adds up to a staggering number.
Shaan: What are you excited about now?
Andrew: I’m genuinely excited about AI as a business transformation. Not in a hype way — in a “this actually changes the cost structure of things I own” way. The businesses I own that are labor-intensive are going to be able to do the same work with fewer people. That’s a margin story. The businesses that are knowledge-intensive are going to be able to move faster with AI. That’s a growth story.
I’m also excited about the continued existence of boring businesses. Everyone wants to build the next AI company. Meanwhile, there are HVAC companies and accounting firms and medical practices that have been around for 30 years and will be around for 30 more. AI makes them slightly more efficient but doesn’t replace them. I can still buy those at 3-4x EBITDA. The boring stuff remains underpriced.
Sam: That’s a great place to end it.
Shaan: Andrew Wilkinson, Tiny Capital. Go buy the stock.
Andrew: That’s not financial advice.