Shaan opens with lessons from the Fight Inc. documentary on Dana White, arguing that the UFC required an extraordinary founder to exist — and using that as a launching pad to explore what separates great founders: extreme force of will, bias for action, and the willingness to question default timelines. Sam then walks through his own shift from growth-mode to EBITDA-mode in his ecommerce business, and Shaan caps the episode with his “painted chicken” essay — a framework for building company values that actually mean something.
Speakers: Shaan Puri (host), Sam Parr (host)
Inevitable vs. Non-Inevitable Companies [00:00:00]
Shaan: You know, I’m on this business-entertainment kick where I’m looking for content that’s about business but made to be entertaining — not just an informational video or blog post. There’s a new show called Fight Inc. that I watched and thought was really good. Did you see it?
Sam: I saw the commercials for it. How do you get it?
Shaan: It’s on Roku. But you don’t have Roku — you just Google “Watch Fight Inc.” Roku lets you watch it on their website without signing up. You just click and watch.
So it’s very cool. They basically follow Dana White behind the scenes — the machine behind the show. The UFC, just to put this in perspective, has no off-season. It’s 52 weeks a year. Every Saturday has to be an epic show. It’s a live event with pay-per-view, fighters who get injured and pull out or get arrested, all kinds of things that can and will go wrong. It’s the actual epitome of “the show must go on.”
I wanted to share a couple of my thoughts watching this from a founder’s point of view.
The first thing — and as silly as this sounds — I do think Dana White is on my Mount Rushmore of startup founders. I know he didn’t technically found the UFC, but he basically did. He created the goddamn thing. He’s a madman. He is a workhorse. He is a machine. I really don’t think the UFC happens without Dana White.
This got me thinking: there are some companies I’d call “inevitable.” An inevitable company is one whose time had just come. YouTube today is a giant company, but YouTube’s time had come. If it wasn’t YouTube, if Chad and Steve had not created it, somebody else would have created the equivalent. The idea of hosting video online was going to happen. Internet speeds going up, being fast enough to upload and download videos — it was pointing to that. We had Flickr for photos; we were going to have a version of that for videos.
I’d say Google was inevitable too. The more popular the internet got, people already needed search engines and portals. Google happened to be the winner, but there was going to be a way to search the internet — that was going to happen.
Then there are companies that, honestly, I don’t think would have happened, or would not have happened for fifty more years, if not for the force of will of the founder. My examples: Elon’s companies. I think Tesla and SpaceX would not have happened — at least not for another fifty years — had he not made them happen. It required a level of insanity, self-funding, technical brilliance, and determination to keep going against the odds.
The UFC is in that non-inevitable bucket. If the UFC had just died — and it was about to go bankrupt before Dana bought it for $2 million — I don’t think something like it necessarily would have happened.
Sam: I totally agree. It wasn’t a thing we knew we wanted. It was one of those products we didn’t know we wanted. And at first it was a freak show. I don’t know if you remember — one of the more famous early fighters would use one boxing glove and one free hand. He fought against some 300-pound guy who looked like a character from a video game. There was a Hawaiian guy, a sumo wrestler type, who fought the one-boxing-arm dude. It was weird.
It was a freak show at first, and then it took like ten years, athletes started doing it, and it got condemned. John McCain — famously, in Congress or the Senate — asked every state to outlaw the UFC. He called it human cockfighting. “This is terrible, we need to end this.” John McCain, the American war hero, was saying this is disgusting.
So Dana had to find venues that would support him. That’s why Dana and Trump are so close now, by the way — Trump would allow Dana to host fights at his properties in Atlantic City. Dana had to fight and scrap state by state, city by city, event by event, almost going out of business many times. They went $40 million in the hole before turning this thing around and turning it into a billion-dollar company.
Dana had this great story — during the “human cockfighting” backlash, someone asked, “What do these athletes think? They must be miserable going through all that pain.” And he goes, “Let me tell you what they think. They’re killers. They want to go out and do something active. They need to get this energy out. They live their life like they’re in heaven. And they look at your life — you go to work at nine, come home at five, sit in a cubicle. These guys are free. This is what they were born to do.” I thought that was a pretty good spin on it.
Force of Will: The Dana White Story [00:11:00]
Shaan: So one of the cool things about this show — let me give you the big takeaway and then some of the smaller ones.
The big takeaway: I said “force of will” and I used that phrase very specifically. I think it describes a certain trait of a founder. I try to have this, and I think the best founders all have it. And by the way, it comes with some trade-offs. When you have force of will, it is as brute-forcey as it sounds. It’s uncomfortable to be around sometimes. You’re pushing people, holding a higher standard, demanding that things be done a certain way or at a certain speed that doesn’t feel good to people who are used to other environments.
So here’s the story. One of the big fights of the year is coming up in 18 days. They’ve done everything — prepped all the marketing, painted the billboards at night, made the marketing videos, done all the promotion, sold tickets. 18 days out, Dana gets a call: the fighter got hurt in his last sparring session, he was sparring without headgear, got a cut on his eye, can’t fight. The main event that they’ve sold all the tickets for, that they’ve built up for six months, falls through.
It’s basically him and his guy Hunter Campbell sitting in a room. And this is business as usual for Dana. He talks about this — “Give me all the stress, I eat that up. I can take it all.” You could see he’s built up this resilience, this tolerance.
I mean, imagine the UFC — a live events fighting business, stadiums full of people — when COVID happened. Dana not only survived, the sport was the first one back. He created Fight Island. He created a bubble, tested everybody coming in, nobody in or out, found an island in the Middle East, branded it. They were the first sport back. Incredible.
So Dana is used to this. He’s in the room going, “What if we do this fight, what if we do this fight?” The guys in the room are like, “Yeah, we could call, he’ll get back to us.” Somebody walks by and says, “His manager’s in the lunchroom right now.”
Dana, within 0.1 seconds, hops out of his chair. Nobody else does. Dana hops out. The camera follows him to the cafeteria. He’s not even at the table yet and he starts talking. “Usman versus — Hamza, let’s do it.” The manager’s eating a salad. “What?” Dana’s already pitching: “Who’s one? Hamza versus whoever — who do you want to fight him?” The manager goes, “No, man, he’s not ready.” Dana goes, “What does that do for you?” And basically in four seconds he cuts the deal. Khabib was even there and went, “No, I think Dana’s right, this is what he should do for his career.”
And the agent — a super agent, represents all these fighters, practically a Ari Emanuel type — says in the documentary, “This is why I don’t talk to Dana anymore. He’s too intimidating. Too forceful about what he wants to do.”
Shaan: I saw that and I said: most people will watch that scene and not even notice what just happened. Which is that the greatest founders, the greatest CEOs in the world, cut through the nonsense.
Elon and the Sacramento Server Story [00:20:00]
Shaan: There’s another video I saw recently — Walter Isaacson, the guy who did the Elon bio, is on someone’s podcast telling a story. Elon is talking to the Twitter team: “We need to shut down the Sacramento server farm.”
His engineers: “Okay, going to be tricky. Those servers are used for all of our infrastructure. We could make a plan and get it done in six months.”
“Six months? We need to do this faster.”
“It’s going to take six months, Elon. This infrastructure is so interwoven into everything we do, we’ll experience big issues.”
“Six weeks.”
“We can’t do this in six weeks — we would have to do A, B, C—”
“It could be done in six days. Let’s do it in six days.”
Now these guys are reeling: “Elon, it can’t be done in six weeks, let alone six days.”
He leaves the meeting. He’s flying to Texas for Christmas. His two cousins are on the plane brainstorming. Someone has the idea: “Why don’t we just go to Sacramento right now and rip the servers out ourselves?” One of the cousins had worked at SolarCity, they could use some servers. And the underlying idea was: if we just take the servers offline, they’re going to have to figure out how to fix it — and they’ll fix it faster than six weeks, I promise you that.
So on Christmas Eve, midway through the flight to Texas, Elon tells the pilot to turn around. “We’re going to Sacramento.” Pilot: “Okay.” Then Elon asks, “Do you have a pocket knife?” The bodyguard pulls one out.
They land in Sacramento. The data center is closed — it’s Christmas Eve. “Hey, we’re closed, dude.” Elon: “These are my servers. Open this door right now. I don’t need you to do anything. Just open the door. I’m going in.” Gets in, takes down the servers.
Same thing. Extreme force of will. Extreme bias for action. And a questioning of the default speeds for everybody in the company. When you know your default speed is going to be questioned, it changes everything.
Being on the Receiving End at Twitch [00:26:00]
Shaan: I’ve been on the other side of this. When I was at Twitch, Emmett was somebody I’ve always said his oven burns a little hotter — he’s smarter than the average bear. And I felt that if you were in a room with Emmett and you presented a plan that to nine out of ten people would sound okay, they wouldn’t challenge your assumptions. Emmett would always challenge: Why are we doing this? How much is it going to cost? Why does it have to take that long? If your logic was not bulletproof, if you were not already maxed out in your thinking of what was possible, you were going to get shredded in front of eighteen people. Not in a mean way, but your logic was going to get shredded. You were going to get verbally undressed.
And that changes things. Once you know that’s on the line, you come in a little differently. You sit a little straighter. You walk a little faster. You dot your i’s and cross your t’s.
He only had to do it once. For the next eighteen months, I was ready for every meeting with Emmett.
Sam: Was Emmett a courteous person?
Shaan: Emmett sort of has that autistic forgiveness where you’re like — he’s not being mean, he’s not being nice, he’s being very direct. You’re like, “He’s always like this. That’s just how he is.” He’s not trying to be mean. He’s just trying to get to the truth, and he needs you to get out of the way so the truth can appear. He doesn’t care about your feelings in the search for truth. And the more you try to get in the way of the truth, the more he’s like, “What are you doing? Get out of the way. We’re trying to find the truth here.”
That’s how it felt from my point of view. I was rarely on the receiving end, but I saw it happen many a time, and I took note very quickly — you’ve got to come correct here.
Sam: I don’t like people who are needlessly rude. I used to behave that way and I regret it. Dana would fall into that category because he loves to fight, he loves to battle. He told a story just last week — “I’m going to war right now with Caesars Palace. For the last six months I’ve been playing baccarat with them. I’m up $17 million on them right now. I wake up in the morning and think: how am I going to win this war today? When my kids are asleep I go back to the casino. I want my back against the wall. I want to go to war.”
Sam: Okay, I’m going to address this because I’m someone who cares a lot about gambling. This only applies to maybe 1% of the audience, so I apologize to the 99%. But Dana’s gambling story has some holes I’d like explained.
He admits he loses — like, he’ll tell you he got too drunk one time and lost six million. But in that interview he says he’s up $17 million year-to-date at Caesars. His rule is: if he makes a million, he walks; if he loses, he’s willing to lose up to six million. He says he’s only lost twice this year and we’re halfway through the year. The math doesn’t math on that one.
Also, he presents himself as a skilled gambler who beats the house. He’s playing baccarat — which is basically a 50/50 push game — and blackjack, where you’re down 49 to 51. There is no skill. The biggest loser in the world is a professional blackjack player. I’ll say that again. A professional blackjack player is a professional at something that is stacked against you. By definition it’s a losing game. You’re probably smart, could’ve done many things with your life, and chose to play a game that is stacked against you as your professional career. And you’re delusional, because there’s no such thing as a professional blackjack player.
Shaan: Dana can be a degenerate gambler and also a great businessman. Jordan was both. Many others are.
Sam: Absolutely. Okay, what else did you learn from the show?
The 29029 Business Model [00:35:00]
Shaan: Force of will, bias to action, speed, cutting through the BS — tremendous. His head of PR said, “Work starts at 8:30, it’s 6:30, I’m doing my workout. Dana just texted me: are you at the office yet? I told him not yet.” And she was like, “You know, Dana’s going to do this press conference — once he decides he’s going to do something, he’s like a rhino. He’s going to bulldoze through. You’re either with him or you should get out of the way.” She’s always with him. You’ll see them do press conferences after a fight at 2am New York time, then he’s in France on Monday for another one. They work their asses off.
Sam: 100%. Let me tell you something. We’ve talked about a company on here a bunch of times, but I just met the founder, so I want to do a repeat.
Remember how we talked about 29029 — the Everesting thing, the outdoor race where you run up and down a hill as many times as it takes to climb the equivalent of Mount Everest?
Shaan: The one started by Jesse Itzler and others?
Sam: Yeah. Everest is 29,000 feet, hence the name. The founder coincidentally just joined Hampton, so I called him this morning and talked through it because I’ve been fascinated. We talked about Hyrox and a bunch of these niche sporting events, and I actually think they’re better businesses than I previously thought.
So if you go to 29029eventing.com — they do seven events a year. Each event has only 300 people. This year they sold out the entire year in four minutes, all events. He’s purposely keeping it small. That’s $13 million in ticket sales. He told me they want to own all the accommodations, so it’s turnkey — you pay $6,500, you show up, you can stay at a Fairmont or do glamping, go to Whistler or these beautiful places.
The reason they keep it at 300 people is so you can meet everyone. You get to know all your people and you keep coming back year after year.
Here’s the history: they started in 2017. Jesse Itzler was Mark’s partner on this — the whole “influencer partnering” thing. Jesse only had 5,000 Instagram followers when they started. Not a big deal. Yet in their first year they made $500,000 in revenue. Year two, a million. By 2020 they were doing really well, then COVID wiped the business out. 2021-22 they had to start over.
He says it’s a great business — negative working capital, people pay upfront, he uses that money to pay for all the accommodations and expenses.
Shaan: What’s the downside?
Sam: First thing that sucks: it’s potentially a fad. Tough Mudder was doing $100 million in revenue and then filed for bankruptcy a couple years ago. You have to figure out how to keep people coming back.
I asked him: what are the keys to making this work? He said four things. One, you need a story — you need something exciting to tell your friends, something more than “I ran a marathon.” Two, it’s got to be challenging. Do you know how many people who start a marathon finish it?
Shaan: 70%?
Sam: 99%. Not so hard. He says for his events, roughly 70% finish, 30% fail. Three, you have to acquire a new skill or build a new fitness capability to accomplish it. Four, it needs to be somewhere beautiful that looks great in photos.
Ridiculous Fitness Business Ideas [00:43:00]
Shaan: So I was thinking — let me give you three ideas for ridiculous fitness events that could work. You ready?
Sam: Hit me.
Shaan: First one: The Burly Beer Mile. You dress up like Paul Bunyan, go to a track in the mountains, run one lap, chug a beer, run another lap, chug a beer. Four times. Four beers, one mile. What do you think?
Sam: Look, if you give people any excuse to drink, you already have 80% of a good business. That’s why Top Golf is popular. That’s why people still go to baseball games — it’s not because they’re wondering what happens in the top of the sixth. It’s because they want to eat hot dogs and drink beer outside. If you layer on top of that the contrast of “it’s fitness and beer” — I’m already in. I’m not sure about the Paul Bunyan aesthetic, but workshop this a little and you might have something.
Shaan: My mind’s still on the beer one. The beer marathon — a half marathon and you drink thirteen beers. Or a quarter marathon — six beers and six miles. That has legs.
Sam: I did a Beer Mile in college. You chug a beer, run a lap, four beers, four laps, one mile. I threw up, and if you throw up you have to run a fifth lap. Took me fifteen minutes. It was horrible.
Shaan: That’s the Victory Lap.
Sam: “Oh, you had to do a Victory Lap? Why?” “I threw up.” Oh man. Okay, second idea?
Shaan: The Paddle Prison Break. A paddleboat race from Alcatraz to the coast of San Francisco.
Sam: Oh I like this one! Is there a lane setup or are we just losing people in the ocean? What’s happening? I have some liability concerns here.
Shaan: We’re not going to let details get in the way of a good idea. There’s definitely something to a prison break out of Alcatraz — there’s already a swim race every year. And for Prison Break, you have to start in handcuffs.
Sam: Great for the photo.
Shaan: Adds story, adds challenge. You have to help each other get out of the cuffs. Somebody in the race who can pick locks will start picking other people free. And you have to have at least a minor criminal record to get invited. Small gold patch on your shoulder if you have a felony or a misdemeanor.
Sam: We’ll just call you out.
Shaan: And the last horrible idea: the Skyline Scramble. A race through NYC but you can’t touch the ground — you go building to building, a parkour challenge.
Sam: The only person who survives wins.
Shaan: These are all horrible ideas. But I think this segment is fascinating. The experiential business model is more interesting than I thought.
Sam: Dude, I could see myself doing one of these one day. I ran a conference and it wasn’t the same thing, but having a thing you work toward and then all the people come to it — it was fulfilling. You get to meet your customers. It felt nice versus just being on the internet all the time.
Growth vs. EBITDA vs. Cash Flow [00:51:00]
Shaan: You have on the doc “the difference between running a business for growth versus EBITDA versus cash flow.” You’ve got my attention.
Sam: This is a CEO School tactical session. When you were running The Hustle — all three are good, you want growth, you want EBITDA, you want cash flow. The problem is when you want three things equally you usually get none. Generally in any business at any point in time there tends to be an order of priority. When you were at The Hustle, which did you focus on?
Shaan: I didn’t run the business long enough — we sold at four and a half years in — to make the shift. But for the longest time it was revenue first, then cash flow, then profit. I wanted to double revenue every year. I think we went from around $500K in revenue to $2.2M to $5M to $12M, something like that. We didn’t make a lot of profit along the way. The year we sold we did maybe a million in profit. But our cash flow was high — I was able to add like $2 million to our bank account.
Sam: Explain how you have a million dollars of profit but $2 million of cash flow.
Shaan: Easy example. We had Trends, $300 a year. Let’s say $1,200 a year. Customer pays on June 1st — my cash flow is $1,200, that’s what comes into my bank account. But under GAAP, generally accepted accounting principles, that $1,200 is really only $100 in June, $100 in July, $100 each month. So my revenue is only $100 per month that they stay with me even though I collected $1,200. Thus my profit — let’s say it costs $75 to produce the content — is $100 minus $75, or $25. But my cash flow was $1,200 day one.
Sam: So I’m in a situation right now with my ecommerce business. I’ve been running it about four years, it’s doing really well. I was only growth-focused — wanted to double or more every year. The reason: typically it’s harder to grow revenue, but once revenue is grown, it’s easier to become profitable. I think that’s the right order of operations.
Actually, there’s one step even before growth: product-market fit. Have I made something people want? Is there a market pull? Once that’s verified — great, now grow.
Year one we did six or seven million. Year two, basically twelve. Year three, bigger. Year four, bigger. Somewhere between 50 and 100% growth every year for four years. But I’ve pulled out exactly zero from this business. I’ve reinvested everything.
Shaan: Wait, really?
Sam: I’ve taken nothing out in four years. It’s not that I could have taken a ton out — one year we basically had no profit. We did eight figures in revenue and were basically break-even. I was like, what are we doing here?
Shaan: Did the bank account ever go up?
Sam: In ecommerce you have inventory as another variable. Cash has been pretty steady, but the inventory assets are going up. Inventory that might take a while to move. And I don’t want my cash tied up in inventory that isn’t turning — that’s a problem, not a feature.
So I’ve been going through this process of shifting from growth mode to EBITDA mode. That required a certain set of skills. Let me share some of the lessons from making that shift, because we’ve successfully done it now.
Shaan: EBITDA being earnings before interest, taxes, depreciation, and amortization.
Sam: Right. Step one: figure out what the right EBITDA target is. I went and talked to people in the same space — what’s the low end of what’s possible, what’s the high end? I ended up shooting for around the 60th percentile. For ecommerce, the best operators are at 25% margins, but when you dig under the hood it’s like, “Oh, you don’t do any marketing.” That’s not going to work for me. Getting to 17-18% margin — that would be really great. The low end is around 10%.
Step two: create an EBITDA budget. For every $100 of revenue coming in, what percentage goes to each category — overhead, cost of goods sold, opex, advertising and marketing, etc. You do a last-12-months lookback: on average, we’re spending 5% of revenue on overhead, 12% on shipping and fulfillment, whatever. Then you say: in order to hit my margin, I need to find eight more points of profit somewhere. Where does it come from? You pull calories from different departments. “Marketing, give me two points. Shipping, find a way to cut one point.” You find the eight points.
That part is not hard to do in a spreadsheet. What’s really hard is tracking it on a weekly and monthly basis.
Step three: communicate the plan relentlessly. Go to the leaders of the company. “Forget everything I said before — now this is what matters. We still want to grow, but it’s secondary. First priority is EBITDA. Here’s where we are, here’s where we need to be, here’s how we get there, here’s the cadence.” Then put the onus on them: “You need to find one or two points of margin in your department. Come back in two days with a plan. And create a report that tracks this every week.”
Step four: tie their incentives to it. I go to my CMO: “Last year your bonus was based on revenue. This year it’s based on EBITDA. And I’ll actually increase your bonus — we’ll remove the cap, you can get a bigger bonus if you hit even bigger EBITDA. But if we don’t hit EBITDA targets, you get no bonus.” Now incentives are aligned.
Step five — and somebody gave me great advice here — they said: you’re in EBITDA mode, so do “spring cleaning.” Go find all the low-hanging fruit. Cancel the SaaS subscriptions you’re not using, renegotiate the agency you’re overpaying. Schedule a calendar reminder in 30 days to do the exact same thing again.
Shaan: You’ll feel like, “We already cleaned it out.”
Sam: But it’s like cleaning a house. First you get the surface-level mess. Once that’s gone, you realize — oh wait, we never dusted this corner. That closet is stuffed. Let’s unpack it. I’ve done three or four of these spring cleanings this year, and it’s only been six months. Each time we unearth more stuff. You can’t do it every day — that’s not the right focus. But every month or two, go back and ask, “Where’s more fat?” Inevitably you’ll find more things.
Shaan: Why EBITDA and not cash flow?
Sam: Cash flow also works, but it required a second big project. After I did the EBITDA cleanup, I was like: great, EBITDA is great every month, but my bank balance isn’t going up proportionately. Because the cash is going into inventory. So separately we did a whole inventory right-sizing project — which is its own discipline entirely.
It’s a three-legged stool. You need all three legs for an amazing business. You need a growth leg because if you’re not growing, the business isn’t worth much. You need profit. And you need that profit to result in free cash. Once the EBITDA was in order, then we tackled the inventory-to-cash conversion.
Shaan: And you just so happened to be in an industry where EBITDA and cash flow are really hard to get right.
Sam: My major takeaway is: ecommerce is a terrible business to be in. And here’s how you know it’s bad — when you’re winning and you still think it’s a bad category, that’s the tell. Most people lose and blame the category. I’m winning and I still think: note to self, not this category next time.
That said — playing a game on hard mode has one big benefit. If you ever get to play an easier game, you will dominate. I was playing pickleball with a guy who was amazing at it for his first time. I asked him why. He said, “I played college tennis.” He played a harder game and won. So pickleball’s not hard for him.
Andrew and Chris from Tiny said the same thing. They ran agencies — low margin, grindy, hard to scale — and then went into easier businesses and cleaned up. They’d buy a software business running at 10% margins and get it to 40%, because that operator wasn’t ruthless with pricing, wasn’t negotiating with vendors, wasn’t doing all the little things that Tiny had to do to survive in harder categories.
Shaan: Who’s winning in ecommerce right now?
Sam: The retailers taking advantage of the TikTok flywheel are cleaning up. Either you create content as a brand, or better yet, you use an army of affiliates and UGC creators. Whether it’s TikTok Shop or just getting heard about so much on TikTok that people Google your brand and find your Amazon or your DTC shop — that flywheel is pretty unreal right now. But only for certain categories.
Shaan: Is it only for things young people are into?
Sam: Nope. Anyway, I’ve said too much. Let’s move on.
Dream House: San Francisco on the Ocean [01:06:00]
Shaan: I want to talk about something you had on the doc that is way out of character for you — your dream house. Or do you want to do painted chickens?
Sam: I don’t have much to say about the dream house except: look at this sick house. Someone on my team sent this to me and I can’t believe it. It’s the most beautiful house I’ve ever seen in San Francisco. 11,000 square feet, estimated market value $23 million, and it’s on the ocean in San Francisco.
Every view is the Golden Gate Bridge, you’re right on the water. If you don’t want to go in the ocean, you have an infinity pool in the back spilling into the Pacific. There’s a wine cellar that’s bigger than my childhood bedroom. A huge home theater. And then — the photo I sent you — a half-court basketball court with floor-to-ceiling glass windows looking out at the Golden Gate Bridge. Twenty-five-foot ceilings, all glass, light pours in, you can see the bridge, there’s a glass door open, you can hear the breeze, and inside is this beautiful basketball court with light wood. Oh my God.
Shaan: This house is unreal.
Sam: I must buy this house. It’s not for sale — that’s problem one. Besides that, I now have a target. I thought I had enough money. Now I have a desire: I need to be able to drop $30 million on this house.
Shaan: Check this out — do you know who owned it? A dentist. A dentist owned this house.
Sam: What the hell?
Shaan: In order to buy a $30 million home, how much money do you need?
Sam: I’d say $28 million and borrow $2 million.
Shaan: I think you need $100 million to buy a $30 million house. The maintenance, the taxes on a house like this — property taxes in San Francisco on this place alone are going to be $250,000 to $300,000 a year. Maintenance, insurance, cleaning, all of it — at least another quarter million. So you’re at half a million bucks a year just in carrying costs.
Sam: That’s insane. Sick house though. The last thing I wanted to ask about — you said you wrote some essays?
Painted Chickens: Company Values That Actually Mean Something [01:12:00]
Shaan: Yeah, your boy’s getting his Paul Graham on. I started writing essays. I’m just in a creative season, I wanted to do different things. I like writing and I realized: what do I want to write about? I want to write about stuff I’m curious about, or whenever I feel like I have a golden insight — something that feels genuinely insightful to me.
Sam: Why do you care about publishing it?
Shaan: The bigger reason is the feedback loop. Once you have to deliver something, you start looking for it. When we started this podcast and every week we have to have three interesting business things to say — your brain now goes out to find them. You ask more questions, write more notes, pay more attention. A wonderful feedback loop builds where you get smarter about business because you have this outlet where you have to go put it.
In the same way, I love learning new things. By having a place to write, I’m now hunting for more insightful things. Reading more, talking to people more, making more connections between disconnected ideas.
I haven’t published it yet, but I’ll throw it up on shaan.com after this. It’s called “Painted Chickens.”
Sam: Why painted chickens?
Shaan: Have you been inside a Subway?
Sam: When I was a kid, yeah. I like Subway, I’ll admit it. Though the quality has gone way down.
Shaan: You know how I know? You know all the controversy with Chipotle right now?
Sam: No, what’s going on?
Shaan: Gen Z hates Chipotle. It started trending on TikTok — “Chipotle used to be bomb, now it sucks.” People had different reasons. A big one was skimping on portions. The CEO came out and said, “Look, if you go to Chipotle and want a little more, our guys are great — just give them the look.” And he does this stupid face. Now there are all these memes of people going to Chipotle and giving the look, and the employees are completely deadpan.
So Chipotle is under the microscope. They all like Cava now. I just went — it’s awesome.
Sam: Someone — an ex-CEO or a founder — came out and said two things. One: “It’s insane people think we’d tell our staff to skimp on portions. That’s terrible for business. We’ve tested this — if you want to grow revenue and profit, give bigger portions. It makes people love the place, they come back, sales go up, and waste also goes down because you’re selling through all your food.” If you want to reduce food waste, you do it through more customers, not by skimping and driving them away.
Two: after the E. coli scares, Chipotle had to change their whole supply chain. Remember — a couple years ago, E. coli, E. coli again, sorry about that. They changed their operating procedures. They used to prep vegetables in-store; now it all comes pre-bagged and sealed from a central facility. Food safety — great. But the result is it tastes less fresh. And they cut down suppliers, moved away from local farms toward fewer mass-production vendors shipping longer distances. The taste actually did go down, not just the perception.
Shaan: Bring back E. coli?
Sam: Roll the dice. Live a little. Anyway, what was your essay actually about?
Shaan: My essay is about “painted chicken” as an analogy. If you go to Subway — “Eat Fresh” is the motto — and you watch them open a bag of chicken, the chicken has perfect uniform grill marks. You think, hm, how are all the grill marks so uniform? If you look it up: those grill marks are painted on. They don’t grill the chicken. The marks are literally painted on.
I love this analogy because in every business there’s always lip service. Every business has stupid things they say. Go read BP’s website — “We care about communities and the environment.” They’re spilling oil into the ocean. Everybody has their version of “Eat Fresh.”
So what I wanted to explore: what are the examples where a company has values they actually live by? Because I think anyone would agree a real value system is very important. My first business mentor told me: you’re asking the wrong question. Instead of “which packaging should we use, eco-friendly or cheap,” the question is: what do you value more? The environment or convenience and affordability? There’s no right answer. But once you know your value system, everything becomes obvious. All your decisions flow from that.
Shaan: So I started asking: what are company values I actually remember that meant something, not just to me but to people who worked there? The first that comes to mind is Facebook’s “Move fast and break things.”
Sam: Classic.
Shaan: I said — okay, is that memorable just because Facebook was popular? Theory one. So I tested it: Sam, what’s Microsoft’s core value? What’s Twitter’s? Lyft’s? Uber’s?
Sam: No idea.
Shaan: None of us know any of them. The only other one I could remember at that level was Google: “Don’t be evil.” But then it got silly because maybe they did a little evil.
So what’s the lesson? First thing: maybe these are memorable because they’re catchy. “Don’t be evil” is more provocative than “Integrity.” If Google had just said “Be good,” none of us would remember it. Lesson one: make it provocative, make it memorable, and people might actually use it.
Lesson two: why does “Move fast and break things” have more weight than just a catchy phrase? Because you have to pay the price for it. You gotta pay the cost to be the boss.
Here’s what I thought was interesting: if I went to 100 Fortune 500 CEOs and said, “We think speed is an important value for your team,” 100 out of 100 would nod: “Absolutely, we value speed.” Then I say: “When you move fast, sometimes things go wrong, things get broken. So let’s agree the value is ‘move fast and break things.’” Now how many out of 100 agree? The reality is 99 would be chicken and say, “Well, no, no, we’re not trying to break things here. Speed without breaking things.” And once you go to “speed without breaking things,” you’re now Subway. “Eat fresh.” Painted chicken. It’s a useless value. It might be something you put on your website, but it’ll never have any weight.
I found this quote from Zuck. Let me read it: “The values actually — my theory on values is that most organizations have a lot of values that don’t mean very much. They’re just table stakes. If you say ‘just be honest,’ of course you’re going to be honest, everybody agrees with that, it means nothing, it’s not an option to not be honest. I think the defining principle for a company is that your A-plus strength should be something more interesting that has a trade-off. Move fast is interesting for us because we had to give something up to get it. Values are not free.”
Sam: That’s insane. What an insightful person. That’s really good.
Shaan: Nike’s “Just do it” — it’s more of a slogan, but think about the phrasing. Is it as powerful if it just said “Do it”? The word “just” changes everything. “Just” implies there’s a cost. Just do it — don’t hit the snooze button, don’t shy away, it’s going to hurt, it’s going to be uncomfortable, but just do it.
So my essay was basically: if you want your culture and values to mean something, here’s the three-step formula. One: choose one thing, not ten. For Facebook it was moving fast. For Apple it’s thinking differently. For Nike it’s action. Two: make it real by acknowledging the cost or trade-off. Three: make it catchy, make it provocative — phrase it in a way that turns heads.
That’s my essay. “Painted chicken.”
Sam: First, that’s awesome. Second — while you’re on this values-driven company quest, have you heard of Brunello Cucinelli?
Brunello Cucinelli and Congruent Branding [01:24:00]
Shaan: No.
Sam: It’s this Italian company that makes really expensive cashmere clothing. Most famous for sweaters.
Shaan: I’m wearing a free t-shirt made out of 100% polyester from a YouTuber.
Sam: That’s why I knew it wasn’t your stick. But it’s kind of becoming mine. The founder started it because he was an expert in cashmere and said, “My dad worked his ass off seven days a week. I wanted to create a humane workplace.” So they make these amazing sweaters, hand-stitched, done beautifully, very high-end. Whatever, the clothing is great. But what’s more interesting is the founder himself.
Someone shared a photo of his daily schedule. 6am: wakes up at his countryside home, slowly gets centered. Goes to the office at 8:30. At 1pm he walks home for lunch. Takes a 30-minute siesta. 3pm back to work. 5:30pm the whole company stops and takes the late afternoon walk — because they believe rest is important to being soulful and personal study is important. Light supper at 8pm. From 9pm he heads to the cafe to meet friends, where they discuss politics, philosophy, and religion late into the night.
I thought: is this guy for real? He is. Brunello Cucinelli is a publicly traded company with a market cap of around $4 billion. He’s building his company to create a great workplace and great products, not to make money first. And just because of that, I want to give him more money.
Shaan: I’m on the website right now. From a swipe-file perspective, there are so many little things they do in their brand and marketing that are completely congruent with everything you just said. One of the great marketing lessons I learned was: “Every point of contact.” EPOC. Once you decide what you’re all about, every single touchpoint has to reflect it. If you’re all about luxury but your customer service is some janky web form, that’s not every point of contact.
I’m looking at one of the product pages. There’s a guy — a model — and he’s peeling an orange, pops an orange slice in his mouth, he’s wandering slightly aimlessly near the water, just chilling, not trying too hard, just enjoying himself.
You know what normally happens: you have a founder with real beliefs, then you have the revenue team adding pop-ups and trying to jack up conversion, and the creative director who’s not even invited to those meetings trying to do something completely different. It’s not congruent. And people — whether they can consciously see it or not — they feel it. You can feel when something is congruent. That’s the same reason the Apple Store looks the way it does, and the iPhone, and the packaging, and the commercials. When it’s done well as a brand, every part of it is congruent. It’s very rare.
Sam: These guys are on top of it. I don’t know if I want to spend $1,500 on a polo yet. But I’m thinking about a $2,000 sweater.
Shaan: He wants to attract a good customer. He has successfully repelled me. I would not be a good customer of Brunello Cucinelli.
Sam: But you know what’s cool — his schedule. “Light supper.” I don’t think I’ve ever had a light supper. I’m eating heavy dinners over here. But if I just changed the words — “Okay, what am I going to have for my light supper tonight?” — I bet that would fix my diet. You change your words, you change your life. “Light supper” wasn’t even in my vocabulary until just now. Thank you. I’ll be taking that.
Shaan: Is that it? Is that the pod?
Sam: That’s it.