Sam and Shaan open with a listener success story — a guy who quit his banking job, bought vending machines, and now makes $10K/month. They then riff through a stack of business ideas and observations: a virtual study hall startup, B2B newsletter empires like Industry Dive, Scott Galloway’s $5M speaking fees, the Aunt Flow tampon dispenser business, and online gambling’s astronomical economics. The back half is a deep conversation on product-market fit — what it actually feels like, the “boulder rolling downhill” metaphor, and war stories from Founders Dojo, Instagram, Amazon, and Zynga about what real PMF looks like from the inside.
Speakers: Sam Parr (host, co-founder of The Hustle), Shaan Puri (host, founder of Milk Road)
Cold Open: Listener Success Story [00:00:00]
Shaan: I’m a 25-year-old. I used to work in banking at M&A. I made like low six figures and it was a cool job, but I recently quit after listening to you guys. And now I own a bunch of vending machines and it’s allowed me to make ten grand a month and do a bunch of running. He said, quote, “do memorable things,” which is what you guys talked about at the end of the pod. This is pretty amazing.
Sam: All right, I think we’re good. We good, dude?
Shaan: Shaan, thanks for dressing up. You look nice.
Sam: All right. So for those who can’t see the YouTube video right now, Sam is in some kind of — I don’t even know where he’s at — he’s in some kind of LA Playboy Mansion podcast studio. I don’t even know what’s going on. Not a single wall is normal. One of them’s like a 3D texture, one of them’s got like a plant from the Amazon jungle. He’s got like five people there, he’s got like a movie crew, somebody just came and powdered his nose. I don’t know what’s going on. I’m still in my bedroom and I recently woke up. So, you know, we got a little yin and yang going.
Sam: All right, explain what you’re wearing, Shaan.
Shaan: I’ll say a sleeveless hoodie.
Sam: No — what Sam calls shirtless. If Sam sees a shoulder, he has like a minor panic attack.
Shaan: It just — you know, we can’t all dress like Arthur. So I was hoping that if I came here — I came here the other day to record a podcast with this guy named Danny, and I called Ben right when I was there on FaceTime. I go, “Ben, book this for like three days from now. This is where we’re going to record from now on.” I was like, if we do this here, maybe it would inspire Shaan to record with more than just one AirPod in his iPhone and a plant in the background. Maybe we can make something happen. So hopefully I’m going to rub off on you, and you’ll do it right on your end — I think we’ll get more views on YouTube.
Shaan: The last time I felt this much peer pressure, I ended up on shrooms. So hopefully this just ends better. But I do feel the pressure. I will — you know, I don’t even know. What is this place you’re at? Give them a shout-out. What’s it called?
Sam: WTF Media.
Shaan: WTF Media. I can’t — that guy Danny, you were on his thing too? He’s been emailing me. Used to work for me, actually.
Sam: Oh really? Okay, cool. Well, I came on his thing and I came here and it was awesome. I think we paid a couple hundred bucks to be here. And I think this is actually the same studio that Andrew Schulz and Charlamagne record their thing. And it’s pretty easy — I just rode my scooter here and did it. Just like Charlamagne the God does.
Listener Email: Vending Machines, 50-Mile Races, and Living Adventurously [00:02:30]
Shaan: All right, let’s jump into some stuff. You have some topics, I got some topics. Where do you want to start? We got a bunch of different ways we can go.
Sam: Wait — we got to do this. Did you see this email I got from a listener?
Shaan: No, where?
Sam: I forwarded it to you. So basically we were talking about living an adventurous life last time, and this guy emailed me. Let me pull it up. He said: “You guys talked about living an adventurous life. I wanted to write you and fill you in on what’s going on. I used to be 230 pounds and pretty overweight, but then I started running and I started listening to you guys the whole time while I ran. In fact, I did a 50-mile race and I only listened to MFM the entire time. I’ve lost a ton of weight, and next week I’m doing a 100-mile race and I intend to listen to you guys the whole time. I’m a 25-year-old. I used to work in banking at M&A. I made like low six figures and it was a cool job, but I recently quit after listening to you guys. Now I own a bunch of vending machines and it’s allowed me to make ten grand a month and do a bunch of running.” And he said, “do memorable things” — which is what you guys talked about at the end of the pod. This is pretty amazing. I forwarded it to you. That’s a good story, right?
Shaan: Yeah, dude. That’s my version of torture though — having to run 50 miles while listening to my voice in my head. That would be worse than waterboarding for me personally. But props to this guy. This is amazing. Fitness — got influenced by the pod. Vending machine side hustle that we talked about — got to 10K a month, now has the freedom. He’s thinking about doing short-term rentals. I think this might be your best friend. I think you might have just found an adult best friend.
Sam: Yeah, this is my little brother, man. I like this guy. His name’s Jack. I saw that email and I was like, we got to bring that up. That’s a good one. But he ended it with hashtag “do things.” And I like that. I like “do things.” That’s the serious version of “no small boy stuff,” which is the official motto of My First Million.
Shaan: Very cool. I like that. All right, good job, Jack. Good job, Jack.
Sam: Good job, Jack. All right, where do you want to go?
Virtual Study Rooms: Lo-Fi Beats, StudyVerse, and a Big Emerging Niche [00:05:00]
Shaan: I want to tell you about an idea I saw recently that I think I’m going to invest in. It’s kind of just one of these really low-key, doesn’t even seem like a business things, but I think it’s going to be kind of big.
Have you ever been on YouTube and seen this thumbnail of like an anime character wearing headphones that says “lo-fi chill beats — study music”? Have you ever seen that? They kill it. They run it on YouTube Live and there’ll be hundreds of thousands of people on it. The other day it got paused for like a few minutes, and it was in the news — it got banned, then unbanned after 133,000 people signed a petition to get it back. That’s crazy.
So lo-fi basically — the channel has 10 million subscribers. It’s one of the longest watch-time things on YouTube because people will just sit there for hours studying, just having this as background music. They have a Discord of 700,000 people. It’s just people that are chilling, people that want to study, people that want to focus, and they just want to be in a group of other people doing the same thing. It’s like a virtual study hall.
Sam: So this is kind of like emergent behavior — it’s just a thing that started happening. It’s not what YouTube was trying to do. It’s just something people wanted. Like, in college my buddy would be the one with the aux — good music for us to just chill and not get distracted. He would kind of be the DJ.
Shaan: So this is like a thing now. But it’s still kind of informal — it’s on YouTube, it’s not easy to use in that sense. You don’t know who these other people are, you can’t do a private room, that sort of stuff.
So there’s a startup called StudyVerse that’s trying to do this properly. What they did was turn this into its own experience. Me and Ben use it now when we work. You go in, there’s like a jukebox where you can put on lo-fi hip-hop style music or chill electronic style music, and both people are hearing the same thing at the same time. You can turn your camera on or off, microphone on or off. You can put your to-do list there, other people can see it, and as you knock things off it makes a little sound. There’s a little chat. You can set the background — like, what if we were by the beach, or in space, wherever you want.
It’s just a cool little product. They’re going after this use case of virtual study halls — people getting together to study, hang out, or work. And this is a big deal. There are millions of students every day who do this, and they do it with strangers. A lot of people just want to feel like they’re not alone when they study. Just having other people’s screen names and profile pictures there makes them feel less alone while they’re doing it.
Sam: How’s it make money?
Shaan: The lo-fi YouTube channel — I think they just run ads, and their music is their own. They have lo-fi records, so it’s all copyright-free. For StudyVerse, I think they’ll probably have some premium version or upsell. I don’t know exactly what their monetization will look like, but the main thing right now is can they get to a million students a day? At that point, it’s pretty valuable to be the hub.
Sam: They raise money?
Shaan: Yeah, I’m investing in them. Not a ton, but — yeah. This gives me heavy Twitch vibes in a way where I’m like, it’s kind of a behavior that doesn’t really make sense until you start to think about the use case. I just Googled it — there’s a lot of these, actually.
Sam: What, like virtual study halls?
Shaan: Yeah. I don’t think there’s thousands, but there’s one serious competitor that’s been around for a little while. I think it’s called Study Together. They have close to a million people in their community, and these guys are trying to build a better user experience.
On Study Together right now it says there are 34,000 people concurrently online.
Sam: At the Hustle we were getting two to three million monthly uniques, and at any given point we would have maybe 2,000 people online — occasionally 3,000 or 4,000. The fact that this has 33,000 is pretty insane.
Shaan: And I don’t even think school is in session for most people right now. It’s still summer. If you’re in high school, you can’t be doing this while you’re in school. This is only college or summer school. I bet this number could be three times as high during peak season.
You know, whether they sell little emotes like Discord did — Discord makes millions and millions off their super-emoji. You pay $6 a month for Discord Nitro and basically all it gives you is your own emoji and access to premium emoji. Same thing with Twitch — people subscribe for five or six bucks a month to a Twitch channel when they could watch for free. They do it to get a little badge that says “I’m a paid patron” and to use the custom emoji.
So yeah, I think you could get pretty big with something like this. It’s one of those under-the-radar niches most people don’t even really recognize as a niche. I’m excited to see how it does.
Scott Galloway: $5 Million a Year in Speaking Fees [00:13:00]
Sam: All right, let me run something by you. You know who Scott Galloway is?
Shaan: Of course. Prof G.
Sam: Yeah. For those who don’t know — there’s this dude named Scott Galloway, popular on Twitter for making all these tech takes. He gets made fun of for being wrong a lot, but he takes a lot of swings so he’s going to be wrong a lot. He’s like really successful already — he started this company called L2 which he sold for like $200 million. He’s got this new thing called Section Four which is basically courses.
But check this out. The New York Times said: “Mr. Galloway, who is already wealthy from selling two companies and taking a third public, also makes more than $5 million a year from speaking gigs — largely from corporations and industry groups that pay him $50,000 for a virtual event and $250,000 for an international event.”
He joked, “I should be broken up” — which is pretty funny. But that’s a ridiculous amount of money for speaking.
Shaan: That is huge. How does that work? Because I know you were talking about how it has to all work from book sales, like being a New York Times bestseller.
Sam: I think it’s a combination — you’re in people’s face enough. You sound polished because you have a podcast. He’s got his blog, which is pretty famous. He’s been doing this for like 10 to 15 years.
Shaan: He’s not some new guy. He’s really good. I was in Germany when he spoke, and he was very good. I’ve hung out with him — he’s a really nice guy. His stick online — I don’t always agree with a lot of his takes, and sometimes he’s unnecessarily a hater — but he’s without a doubt incredibly entertaining. He’s got a little bit of a comedy stick, he makes hilarious jokes about being old and bald.
But that’s so much money. $5 million a year from speaking is the equivalent of having like $50 million. That is an astronomical number. It’s like you’re a pretty good NBA player. But you’re just giving a presentation using PowerPoint, and often it’s the same presentation. You can do it for 15 years. It’s basically in your free time.
Sam: Prof G is basically like hiring a magician for your conference. “Here’s the entertainment — we all know and love this guy Scott Galloway.” He comes on, does his little routine, entertains you. That’s what he’s getting paid for — to be a name people recognize, add legitimacy to the event, provide entertainment that’s not completely off-the-wall. And his pod gets twice the downloads we do. We get around 100,000 per episode; he’s at 250,000.
Shaan: I’ll take a third of that. I’ll undercut Sam.
Sam: How often do you get asked to speak?
Shaan: I don’t get asked that often. The number is always good whenever I do get asked, but I don’t get asked that often. And also I’m not really that interested because you’ve got to travel a bunch. And taking my kids on a trip to Kansas City — yeah, that’s just not something I want to do right now. But later in life, yeah, that’d be great.
Sam: By the way — funny you mentioned Scott Galloway. A couple things people should know. Number one, he’s very entertaining, great at content. Number two, his business takes are pretty awful. He’s been famously wrong many times. In fact, somebody created the anti-Professor Galloway index — a website that tracks: anytime he says to buy or sell something, if you did the exact opposite, here’s how you’d be doing.
Shaan: What does it say? What’s the score?
Sam: His worst prediction was that Macy’s was going to outperform Amazon. And he also said Tesla was a bad bet. Since October 2019, tech companies that the professor predicted would fail have seen a 61% return — outperforming the S&P.
Shaan: Whoever did that — I appreciate it. And then the last thing on Section Four: I was talking to a guy yesterday who’s in that same niche. He goes, “I think Section Four does like $14 million a year in revenue. They’ve raised like $37 million. They just did some layoffs.” He was saying it’s an average of $1,000 a year per learner — so maybe 14,000 learners or so.
He also mentioned Reforge — the marketing school. He thinks Reforge is in the $18 to $20 million range for revenue. And Reforge has raised $81 million total. Which is just kind of absurd for what they’re doing, but maybe they raised a bunch of money to acquire something with established revenue.
Sam: These little like marketing schools — these can be kind of big. We should have done this if we wanted to monetize MFM. Me and you creating our own marketing school, with our audience, with what we’ve actually done — we’ve actually grown businesses, owned and exited multiple companies, brought businesses to seven-eight figure revenue. If anybody should be doing this, it should be us. But, you know, who wants to go do that?
B2B Newsletter Empires: Aging Media, Industry Dive, and the Blueprint [00:19:30]
Shaan: Let me tell you about something where I question whether I actually want to go do it, but I hear the numbers and they’re amazing.
B2B media — media companies that make content for other businesses. I was talking to this guy the other day. He’s got a company called Aging Media. They make newsletters for nursing homes — people who own nursing homes and hospice care businesses. It’s only three or four years old. He told me that this year they’ll do around $10 million in revenue and like $3-4 million in EBITDA, completely bootstrapped, 40 employees.
If you go to their website, it is so simple. It’s such a straightforward business. And I see this and I’m like, man, I could totally do this for X, Y, and Z.
That’s a small example. Here’s a bigger one: there’s a company called Industry Dive that was just acquired — I think a week or two ago — for $500 million. They were doing $110 million in revenue with 30% profit, 380 employees, 53 newsletters, 2.5 million subscribers. And their content is pretty straightforward — basically bullet points of what’s happening in, like, the restaurant industry or whatever. Not complicated.
Sam: And the bar to be good is so low for B2B media because most of it just sucks. They think you have to write a certain way. But the way they monetize is so much better than consumer media. If you’re selling software to a hospice care owner, you have only a couple places to go to advertise, and one sale gets you hundreds of thousands or millions in revenue. So these guys run ads, do webinars with a sponsor — 15 people sign up for the webinar, they give those emails to the sponsor, the sponsor goes and emails them. It’s like $20,000-$40,000 per webinar for getting 30-50 leads.
Shaan: The bar is so low. Industry Dive has these verticals: Marketing Dive — 510,000 subscribers. BioPharma Dive — 275,000. Construction Dive — 300,000. HR Dive — 450,000. Restaurant Dive, Retail Dive — that’s their biggest with 700,000 subscribers. Utility Dive, Waste Dive. It’s pretty crazy.
This is not really a media company in the traditional sense. The game isn’t “are you good at making content?” The game is “are you really good at acquiring subscribers?” And if you’re a DTC person who’s used to acquiring users for $2 to make $8, you’re probably already more skilled at this — you’re just choosing a less lucrative game.
The guy who started Industry Dive — his name’s Sean — he previously was the president of a company called Fierce Markets, which did this exact same thing starting in like 2002-2005. Literally the same model but in slightly different industries. 1.2 million subscribers, sold for hundreds of millions. He basically just ran the same playbook again.
Sam: It’s like having a dartboard of boring industries and just throwing darts. Let’s do that one. Let’s do that one. I’m oversimplifying, obviously, but it’s incredibly fascinating because the bar is so low.
Shaan: One thing I’ll say though — I agree this is a really good blueprint. Doesn’t take genius, doesn’t take a ton of luck. But the downside is, I think that window is closing. The same thing happened in DTC, happened in dropshipping — anytime the blueprint is easy and a company sells for $500 million doing something, you get 15 new aggressive people who hear about it, study the blueprint, and now all go do the same thing. It’s 10 times harder than it was 10 years ago in my opinion.
Sam: But there’s so many more people starting DTC deodorant and jewelry brands than doing this boring stuff. If I’m in the waste management industry, how many of these newsletters am I going to read every week? Probably one or two. Industry Dive has already taken 20 or 30 of these niches themselves. Other people are fighting over what’s left.
Shaan: You’re giving people too much credit. I don’t think that many people are going to get into this. It’s just so much cooler when you’re 22 to start something like Tabs Chocolate — the one that makes you horny. That’s so much more fascinating to everyone in LA than any of this.
Sam: Do you get some of that included when you rent the podcast studio?
Aunt Flow: The Tesla of Tampon Dispensers [00:27:00]
Shaan: All right, let’s do another one. I have a boring idea hidden in plain sight. Have you heard of Aunt Flow?
Sam: Wait — is it “aunt” or “aunt”?
Shaan: Either way — it’s the slang for that time of the month. So what they’re doing is going to schools and companies and saying, “Hey, your restrooms need to be a little more female-friendly. Let us install a little case that’s going to dispense tampons and other menstrual cycle products. We’re going to install this dispenser and your place is going to be more welcoming for women attending your space.”
They just made it sexy. These hygiene product dispensers already exist in bathrooms, but they’re all that boring silver box that looks like you’re not sure if you’re going to get tools or a circuit breaker out of it. Aunt Flow just made it look good — really nice packaging and design. It’s like the Tesla of bathroom dispensers.
And they’re doing great. They have 900 organizations working with them. You pay $300 to install the thing, then $1,300 a year for tampon or pad refills. So that’s like $99,000 for a school with 20 bathrooms. And there are like 15,000 high schools in the US — just high schools. Then colleges. Then companies.
They also made it like a sexy DTC product — the logo looks cool, the box looks cool. And now states are requiring it: California, Colorado, Michigan all require certain schools to offer these products. And they do the “for every 10 we sell, we donate one” thing. They have a whole mission around it.
Sam: I was pitched like three different versions of this when we did the vending machine episode. A lot of them were either tampons or hygiene things, or healthy food. I looked at all the numbers and most of them were horrible. The ones that crushed it just sold Coke and M&Ms. America just wants Coke and M&Ms.
Shaan: What are the numbers on this one?
Sam: On track for $10 million in revenue in 2022. They tripled from last year. Now they have Princeton University, every Apple retail store, Google, Netflix, Disney, Twitter, Quicken Loans — and a four-year contract for all K through 12 girls’ bathrooms in Utah.
Why am I not investing in this? This is such a defensible business. Once you get the contract, they’re not going to have two of these in the bathroom. If you’re the brand that looks good and can sprint into market, something like this could get to $30, $40, $50 million in revenue. Are they raising money?
Shaan: Yeah, I need to chase this down.
Online Gambling Economics: Stake.com, Roobet, and “Not For Me” [00:31:00]
Sam: You ever seen those pill things at the counter at 7-Eleven? Like some herbal supplement that’s basically like Viagra? Have you ever thought about who makes those and what their business meetings are like?
Shaan: I definitely don’t walk into 7-Eleven. I don’t leave the house.
Sam: This is way better than that. Anyway — I’ve been thinking a lot about what I’ll call this category. We talked about Nelk Boys and Full Send. A lot of people reached out after that and said they make money because they’re sponsored by this crypto poker thing — Roobet, I think it’s called.
Shaan: Yeah, I’ve heard of Roobet.
Sam: And I saw this video where they were talking about it, and it does like tens of millions a month in sales. Just astronomical. I was thinking, that’s pretty cool, but gambling — it’s like what I always say: cornrows and sleeve tattoos. It’s cool that other people have it, not for me.
Actually, that’s catching on — I did a meeting with somebody and they quoted that back to me. Like, “yeah, you know what Sam says — cornrows and sleeve tattoos, it’s not for him, but he’s glad some people have them.” I respect its right to exist, but it ain’t for me.
These businesses — like, gambling — it’s most likely a little bit shady. It’s definitely not legal in America. It’s related to shadiness. I wouldn’t be proud doing that on a daily basis.
Shaan: As somebody who spends a lot of time gambling — did I ever tell you in college how we used to drive from North Carolina three hours down to South Carolina, board a riverboat casino that would sail into international waters, turn off the engines, and let us gamble for four hours? That’s what I was doing as a 20-year-old.
I was playing poker once and the guy next to me either fell asleep or died. I was like, what am I doing here? He looked like someone whose nails had grown so long they started to corkscrew. I was like, this guy hasn’t moved off this boat in a century. I shouldn’t be here. But I couldn’t resist. I just left the table. Like Schrödinger’s box — cat dead or not, I didn’t want to know.
Sam: Yeah, lost a bunch of money doing that. But these gambling businesses — like, I don’t want to start things where the end is me in a Netflix documentary. What’s the percent chance I have to be on the run at some point? I’m not trying to flee the country, find out there’s money laundering on my app. I’m not here for that stress.
Shaan: These guys are printing cash though. The Stake.com guys — I heard they did an $800 million dividend to their owners because they can’t sell the business.
Sam: Wait — $800 million?
Shaan: I’ve heard that, and I don’t think it’s wrong by more than 30%. There was that guy — 26 years old, bought a $36 million home, and people were like, how did you afford this? He’s like, I own stake.com.
Sam: Basically it’s an online casino. You take one of the best business models in the world — a casino — and strip away the biggest costs: the building, all the labor. All the games are digital. All you have left is the marketing cost to acquire customers, and you can acquire customers from around the globe in their bedroom. They don’t have to fly to Vegas. It’s obviously why it’s huge. But yeah — not for everybody.
Product-Market Fit: What It Actually Feels Like [00:37:00]
Sam: All right, I got a framework. Actually, I got two frameworks — a quick one and a long one. Let me do the quick one first.
Brian Armstrong, founder of Coinbase, went on Lex Fridman’s podcast. Lex asked the classic startup advice question. Brian broke it down like this: there are basically two separate eras — pre-product-market fit and post. The things life looks like pre and post are really different.
But defining product-market fit is kind of hard. For the Hustle — you went from events to flashy blog posts to the newsletter.
Shaan: You don’t think the newsletter had it? I mean, 2.5 million people a day reading it — there’s definitely something there. But when my friends talk about it, they’re like, “Man, it just started working.” It never felt that way. It felt like a slog the whole time.
Sam: Do you feel that way with Milk Road? It seems like it’s working — growing 200 to 300% a year. But it wasn’t like “I can’t keep up.”
Shaan: Right. So I’ll tell you the frameworks I’ve heard. One is from Emmett — the founder of Twitch. He said: in a startup there’s a big period where it feels like you’re pushing a giant boulder up a hill. You’re pushing and pushing and pushing. And then there’s a point, if it works, where all of a sudden you’re not pushing anymore — the boulder starts to roll down the other side of the hill, and now you have the opposite problem. You’re running, trying to catch up because it’s rolling faster than you can keep up.
Your customers are demanding more than you can supply. It’s flying off the shelves. The market is pulling you rather than you pushing it.
Sam: I’ve experienced a little of that with our e-commerce brand. Getting the product made, getting it to market, getting people to first hear about us — that was pushing the boulder up. But then it went viral in a Facebook group. Enthusiasts started sharing it. I remember the third day we did $3,000 in sales without spending anything on marketing. I was like, where did that come from? And by our second month we ran out of inventory.
But to grow even more, well — the magic slowed down. People were still telling their friends, but I wanted to hit a bigger goal, so I had to push again. Starts and stops.
Shaan: With Milk Road I feel like the growth is pushing the boulder up a hill. But then I look at numbers like the percentage of organic referrals — a really healthy percentage. The feedback we get isn’t just “that was a good one today.” It’s like they’re using our own language and sense of humor. They want to be friends with us. They’ll write: “The milk was so hot this morning it turned into butter.” Like, who goes into a product, uses it that day, and comes up with a funny review just because they kind of want to be boys with the people making it? We get hundreds of those a day. So that shows me it’s working. But still, to grow and fill the revenue slots — that feels like a slog.
Founders Dojo: Porn, Product-Market Fit, and Romanian Gangsters [00:44:00]
Shaan: I’ve seen product-market fit firsthand with two different people. The first was at this shared office called Founders Dojo — me and Dave Girouard and a bunch of others when I was starting companies. There were these two guys who were the most stereotypical Silicon Valley nerds: a skinny Indian dude and this white guy who looked like a good-looking jock but was the dorkiest dude ever. They were partners.
They created this technology that would crawl the internet, find the most shared HD GIFs that day, and make the search so fast — if you typed in one letter, it would autofill instantly. Like if you typed “c” it would autofill “cats” and the search results would just pop up. They’d spend hours just staring at the screen going, “Look how much faster it is.”
They launched this thing and it did okay. Then one day we get into the office and they’ve stayed there all night — slept under their desks. Their website was called The Worst Drug. Basically some guys had gotten hold of it, disabled the safe-for-work filter, and it turns out the most shared GIFs on the web are almost all porn.
We get to the office and they’ve got this huge monitor, and it’s the highest-def porn any of us had ever seen. You click space and it reloads another one instantaneously. It was like TikTok before TikTok.
So there are eight of us gathered around this computer, initially shocked — hardcore shocking porn — but then we got past it and were like, “Wow, that’s really high def. Look how fast it loads. Click space again — look at that.” And at that exact moment Tim Westergren, the founder of Pandora, and his assistant walked into the office. I was supposed to interview them because they were speaking at Hustle Con.
They walked in and there’s eight of us gathered around a screen staring intensely at this porn. Someone’s saying, “Good job, Raj. Look at that autofill — it’s so fast.” And Westergren’s like, “Oh hey, what’s going on?” And someone goes, “Oh — you guys want to see something? Check out this technology.”
They had millions of people a day coming to the website overnight. Raj and his partner slept at the office for weeks, working on the server just to keep up with traffic. Eventually they got an offer from someone in Romania who wanted to buy it. They flew over. Turned out the buyer was connected to gangsters — they all had guns. So they came back and it was a whole ordeal. But that’s the one time I really saw product-market fit in person.
Instagram, Amazon, and the Real Signs of PMF [00:52:00]
Sam: When Instagram launched, it was kind of the same thing. They put it out, the first hour was pretty slow, the guys go to sleep — or it was late at night — and early in the morning in Japan the app had started going viral. They woke up and there were all these pictures of tea. People in Japan were having tea in the morning and taking Instagram pictures of it. They had 25,000 downloads in the first day or two, servers basically melting.
Pretty quickly the only problem became: how do we get more server capacity? You stop thinking about features, you stop thinking about the logo, you stop thinking about hiring — all you think about is, how do I add more servers?
Shaan: So I started to realize there’s the simplest test for product-market fit. There’s a kind of famous Silicon Valley one — the survey test — where you ask users: “If our product went away, how would you feel? Very disappointed, somewhat disappointed, or not disappointed?” The idea was if 40% or more say “very disappointed,” you have product-market fit.
Sounds good in theory. But Marc Andreessen said this thing: “Product-market fit is like sex — if you’re asking if you have it, you’re not having it.” I think that’s more real. You can’t survey your way to finding out. You’ll know because it hits you like a punch in the face.
What I’ve seen is that the people who really have it only care about two things. If it’s a tech product: hiring more servers. If it’s any kind of product: hiring customer support people. Anytime I meet a founder who’s like, “Hey, do you know any good customer support people?” or “Can you help me get AWS credits? I’m running up a crazy bill” — I’m like, let me invest first, and then yes, let me help with that. Because when that happens, it’s almost the truest sign of product-market fit.
Sam: I asked Michael Birch, my former boss and then investor, about this. He basically sold Bebo for $850 million. He had struggled for three and a half years to make something work before that. So I asked him what it felt like before, and when the turning point happened.
He said: before Bebo, we had two kids and a third on the way, we had mortgaged our house, I had told my wife “give me six months” and now three years in I still hadn’t figured out anything that worked. That was hard. Pushing the boulder up the hill.
Then with Bebo, he said: I finally put together all the pieces. I knew social networking was going to be big — this was before Facebook. I knew how to grow it — viral, fill-in-your-profile quizzes, share with friends. So he launched it, and in nine days he hit a million users. Back then, a million users was enormous on the internet.
Nine days later, none of them came back — he had a retention problem. But he knew he had something that could light fire. So he turned it off, worked on retention, and knew it was going to work.
Shaan: And when it finally worked — he said he didn’t feel immense joy, like “Yes! I finally overcame it!” He said he felt even more pressure. Like, “Don’t mess this up. This can actually be valuable.” A whole new level of burden. And I think after they sold — four years in or so — he had major heart surgery five months later. Because he had been working so hard and under so much stress the whole time.
When he described that, I was like — I’ve never felt any of what you just described. Which means I’ve never felt the violent version of product-market fit. Never felt what a billion-dollar company feels like.
Sam: So Brian Armstrong’s answer was more general — you’re making something people want, there’s true demand. But he added something practical: he said his lucky thing was that he wasn’t a big analyzer. He was just: action produces information. So he would do a thing, it would produce information — people want this, or they don’t, or they want it but there’s something wrong with it. Then do another round.
Actual produces information. As a founder, just focus on the action part — smart action, meaning you take action and then accurately assess what’s working and what’s not.
Coinbase, Amazon, and Scaling War Stories [00:59:00]
Sam: Have you ever thought about the logistics of what actually happens when you hit product-market fit? There was this article about Coinbase from around 2018-2019 — they’d torn down walls at their office because they didn’t have enough space. They were taking meetings in the park near where you and I lived in San Francisco, because there was literally not enough room.
Think about Coinbase at 4,000 employees — they’ve probably hired six or seven thousand if you count for turnover. That’s basically adding 10 to 20 people a day, every day, for three years. Pretty wild.
Shaan: And Brian said in the interview — he said, “I think I was personally involved in the hiring of the first maybe 300 or 500, but to hire those 300-500, I had to talk to maybe three to five thousand people.” So he’s done a lot of interviewing. And then you just think about the logistics: how do we get everyone a laptop? How do we make sure everything works? Everything breaks.
Sam: Have you ever experienced that firsthand?
Shaan: Not that, but I’ve heard the stories, and that’s how I know I didn’t have product-market fit even when I thought I did. The one time I actually felt it was with Blab — when our servers kept melting down during a period where we went from zero to two million users in a six-month period. Our vendor’s servers were going down, Cloudflare was going down. We were also getting DDoS attacked. But basically, yeah — that’s the only time I sort of felt it. And it was only a brief window.
Sam: There’s this guy Dan Rose — do you follow him on Twitter? He was very early at Amazon, like first 50 or 100 people, around the dot-com bust era of ‘99-2001. Then he went to Facebook and ended up being like the number three guy behind Zuck and Sheryl.
He shares these war stories. He said at Amazon, they used to just do meetings in the stairwell because they’d run out of desk space. They’d started putting two people at every desk and that didn’t even work. So he just took his laptop, sat on the top stair, and if somebody needed to talk, they’d just walk down the stairs together. “Hey, for that thing we’re launching tomorrow —” and they’d just walk and talk. His Twitter is a good follow.
Zynga’s Office and the Airbnb Cafeteria [01:05:00]
Shaan: Did I ever tell you about the Airbnb cafeteria?
Sam: No.
Shaan: My wife Sarah works there, and I used to go to the office for dinner constantly because my office was right next door. They had this beautiful office — every meeting room is designed to look like a popular Airbnb listing. Brian and Joe are designers, so everything looks incredible. And their cafeteria could seat and feed maybe 3,000 people.
Their whole thing was: every single item was made there at the office. The “Red Bull” was Airbnb Bull. The ketchup, the mayonnaise, the trail mix — all made right there. You couldn’t get a Coke. No Doritos. If you consumed it, they made it. Except for the beer — I think that was the only thing they didn’t make in-house.
I remember thinking, this company just — that alone is an amazing feat, and that’s not even close to being their thing.
Sam: That’s their version of a lunch-table culture play. How on earth do you pull that off? Like five years before I saw that, I had interviewed there and it was 200 people and a pretty okay office. But seeing that — this is absolutely ridiculous.
Shaan: I had the same experience at Zynga’s office back when Zynga was still Zynga — I think Airbnb used to share a building with them. First you walk in and there’s this LED tunnel entrance — you feel like you’re walking into a spaceship or out into a stadium. Then there are just dogs everywhere. I was like, do people have allergies? How is this allowed? Just free land, apparently.
We met the chef — Matt, Matthew, sounds like a chef name. He said, “Let me give you a tour.” I figured it’d take two minutes, and the kitchen tour took an hour. He goes, “See that? Everything you eat here is made on premise.” I said I’ll take a sparkling water. He goes, “It’s on tap” — they made their own seltzers, ciders, beers. He points at the salad: “This arugula is from our micro farm on the roof. It’s a circular system.” I said, what about protein? He opens the walk-in fridge and there are full cows hanging upside down. Full cows.
He says, “Yeah, we break down the entire carcass and use every bit of it.” I’m like, “You and what army?” He goes, “We have 45 people. I’m the executive chef.”
I was like — I don’t have 45 people in my company. You have 45 people on the lunch team.
The arms race for pampering tech workers, building this culture of “you’re working on something special” — it was kind of amazing to be honest. I was blown away.
Sam: I have cows at my Airbnb ranch property — about 18 of them. They butcher them every year, send away four or five. I thought it’d be cool to get a freezer out there where you pay $20 and get a steak. Like, this cow is the mother of the one you can see right now from the porch.
Shaan: That’s too sad for me.
Sam: Anyway. This studio is great, right? I’m going to record here all the time. You should do the same on your end.
Shaan: Yeah, I’ll think about it. My wife works out of our home office too, so we’d have to figure out the logistics. But I’m open to it. The door’s open — ring the doorbell.
Sam: All right, well I guess that’s a pod. We’ll see if this actually changes anything.