Episode of My First Million with Sam Parr and Shaan Puri.
Transcript
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Kind: captions Language: en guys like a satoshi nakamoto of boring businesses so cool um what’s up how are you man oh yeah your video went blank for a second I’m great um I upgraded my internet hopefully it looks better called Comcast now paid 60 bucks a month and just called them and with a click of a button I paid them more money and my internet was supposed to improve we’ll see if it happens like mad great great business to be in I’m excited to talk to you I feel like it’s been a little while I got a bunch of random topics to talk about I don’t know how about you do you have anything that was top of mind for you yeah well I know about all this stuff that you or a lot of the stuff that you have in here right like I know it to the point of I wasn’t sure if I wrote it or you wrote it that’s for the best ok great ok so I’m gonna start with let’s pick one that’s that’s interesting okay so how about how about we start with this one so somebody was somebody tweeted this and I saw it and I was like this is pretty smart so a lot of people right now we’re talking about coronavirus how does the world gonna change and lots of speculation I think everybody sort of agrees ok handshakes you know might go out the window for a bit live sports you know it’s gonna be a little tough so there’s there’s some things that we know we’re gonna change and there’s some things that you can’t really predict they’re sort of second order effects and so somebody reached out and they have put together this they had like a group of people had put together this thing called a second order effects of coke kovin I thought it was great I’m gonna find the PDF and I’m gonna link it in the description here I know one of the creators was this guy that I’ve met one time super super smart guy he created are you a Harry Potter fan no but I know I mean I’m not not a fan but I don’t buy the stuff seem to move so he created this site back in the day called muggle net which was oh yeah I know that guy he also created a oh my god pop or what was it he’s a viral convey about what’s not a ng pop but he’s yeah yeah yeah I know all about him tell me his name I’m trying to find out I can’t believe I forgot it every wife know some sparks so they start of sports media yeah and yeah yeah I know I know about him well I think his business is the one you’re thinking about that’s right so he started a chain of viral websites and they got really popular but like everything in that era I bet it just crapped like and but if I met this guy once and I was like oh my god if I could just bet on this guy’s like lifetime earnings I would bet right away like this guy’s really really sharp yeah he’s he’s kind of like a little genius yeah I like when you say because it means like kind of hard to talk to like he’s a little GGC but when I read about him like dude why are you doing these viral sites like you’d do anything yeah and I bet he will I bet he’s gonna be one of those people that transitions from like yeah I first created these you know the Harry Potter fan site that would be him number one then I created this viral Twitter account and these viral mean websites oh and then I like solve climate change like that’s what this guy’s career should look like right all goes well he’s cool so he anyway what about him in a group of people created this thing that was like second-order effects they were basically like okay you know for example what’s a second-order effect so everyone knows a first-order effect is coronavirus they you know is is wild first-order effect you shelter-in-place okay but the second-order effect of that is like our people can have more babies our divorce is gonna go up because you’re at home is grocery delivery gonna take off because of that and then there’s a good third order effect okay if the grocery delivery takes off they need to Hut you know instacart hiring hundreds of thousands of delivery people okay what happens when all those people go to that job now they need a healthcare system for a gig worker becomes more important so there’s like these these knock-on effects and so for a business person you want to think about okay oftentimes the biggest impact - the biggest opportunities are in the second and third order effects because you can start doing work now and then as this plays out those things those markets are growing rapidly but you can kind of predict them so a classic example of this was you probably know this better than I do there’s some story like the highway system was built for for something like it was built for I don’t know what it was like military purposes or something like that but the second-order effect was that like Walmart basically it was like oh people are gonna exit and want to get you know buy stuff get little you know get food get drinks blah so the whole retailers got fast there yeah cars get faster the retail system takes because now there’s a highway interconnect system blah blah blah so there’s a second-order effects so one of them that I just thought was kind of interesting was this idea of drive-thru and drive-in so now that you know movie theaters are like short of going bankrupt because all their chairs are so close to each other that people like people are going to go back to the movies movies are already kind of struggling and this might be the knockout blow and so people are talking about drive-in theaters is that gonna be a thing I could see it I could see you know sort of rising on top of that you have drive-through so how do you use or minimize contact well drive-through caffeine so there’s some coffee shops that are like the photos I saw on Twitter you know the line is out the door I’ve never seen a line this long except for chick-fil-a and so like what’s this for and it’s basically just drive-through caffeine and so I’m pretty bullish on this if somebody was you know right now they had like nine franchises but they were doing well and they were a drive-through coffee concept I would you know be very very bullish on this thing expanding and going from nine to 200 locations over the next two years because I think the need for this is gonna go up what do you think about that okay so what do I think do I first of all are people gonna change their behavior forever let’s let’s talk about that right like are shaking hands got to go away um certainly now like I don’t want to do a lot of that stuff but is that going to change your behavior forever I don’t know um what’s it what’s in an out like what can we compare this to like World War two I mean September 11th like when I see when I hear low planes I get scared so like no no no TSA clearance right so like you used to be able to just walk into an airport take a ticket that didn’t even have your name on it and board any plane and it took you five minutes to get from the you know check-in desk to to the gate and now it’s like yes you know security buffer in an hour you have to have your ID it’s gotta have your name on it if your name sounds a little sketchy hope you’re gonna come to this special room and get checked that the world changed forever from that sure but we’re also talking so the September 11th was definitely like a lot of like force change like TSA but then what we’re discussing is like unforced when you and I see each other are we gonna hug are we gonna high-five or we got a are we gonna bow like you know it’s like yeah so like how far away are we gonna say so I would imagine that some of these consumer behaviors are a little bit more analogous analogous right to that I don’t know man um will we change I think so I think that at least for three years something is gonna change the question is what’s gonna change and how long is it gonna change or is it gonna be sort of a temporary precaution that goes away well so look you how long did you live in China for two years maybe not long enough to maybe maybe long enough to when when they went through they’ve had not I don’t know if they’ve had pandemics but they’ve had a variety of outbreaks of things like this has their behavior yeah like the masks is a great example so like masks quite common in Asia to be you know something you just generally wear out and nobody even bats eye or seasonally like when it’s flu season yeah everyone masked up I’m not trying to get the flu and you know you don’t see that here but will you maybe you will I got I would I would expect I did I go to crowded movie theaters they do yeah there’s crowds everywhere in China you I can’t avoid a crowd but you know yeah like a billion people in a small city so it’s very you know there’s crowds everywhere in China but people do behave quite differently than they do here gloves you know gloves are very sort of common there that that people here don’t wear gloves just on the day to day life right so yes I do agree I think things gonna change I think specifically big cities are gonna I mean I’m biased because it’s directly impacts me I think cities are gonna our cities are different right I do think that work is going to be different we we’re getting rid of our office yeah exactly so you know there’s all these sort of second order third order effects example of a second order effect of the TSA so first order effect is TSA second order effect is people selling toothpaste in three ounce bottles because that’s what you need now to get through that all right that became a market whatever before who wants this tiny little bottle and so you know from I’m just trying to keep it from a business perspective because you know from a medical scientific and cultural perspective you know don’t listen to me with some other people but from this perspective I think that there are it is worth you know taking a pen go into a whiteboard and starting to map out okay if this then that and then if that then what and the what is where your business opportunity lies and if you’re looking for that it’s just a good way to guess and check even if you’re not gonna go do those things the only way to get your gut to be good is to predict a bunch of times and be wrong or right and we’ll go revisit those and so I often do this role predicting also let’s talk about some talk about some of these predictions here I pulled it up so some of these predictions here are so gyms are gonna go away or significantly go away and which means innovation and home exercise obviously that’s like at the dock that’s not real quick that’s like just yeah that’s I mean that’s not even a question right well I don’t think gyms are gonna go away necessarily but yeah people are going to whatever the home exercise market was versus gyms it’s gonna eat more share are you exercising at home yeah but it’s you know I exercise at home as much as I do at the gym which is like weak on both fronts have you oh that’s interesting funerals I don’t know cities will become less popular that’s one of his predictions suburbs and rural become more popular like oh girl we came out today and was like you know camping and RVing is gonna go on the rise because people still want to travel but they’re not gonna want to travel you know in dense areas staying and you know maybe maybe staying in hotels or uncleaned Airbnb news yeah I just rented an RV so I’m gonna do a three week cross-country trip for my birthday in June so uh yeah I’m I love that I completely agree I’ve never understood that the first place anyway Americans are kind of interesting whenever they like want to do a gap year or like travel for a honeymoon or ever they always want to go outside my country I’m like dog like let’s you should explore here it’s way easier and we have everything that’s what’s interesting about America is nobody up every time I think we’re the only country that has every geography or every climate so anyway another thing that he talked about is virtual tours and virtual museums so on trends we had talked about a company that was crushing it with virtual museums and we also talked about a company that was doing a blow as they called the VR thing and I remember the name of it but I know what you’re talking about sandy our or is that was it sandbox and I yeah so I I think it’s great you’re struggling with this right because sandbox er you have to go to a physical place where headset that somebody else wore an hour before and you know this in person and and they place their locations in malls and they’re supposed to be foot traffic from the malls so foot traffic is dead nobody wants to wear a device that somebody else just wore and you know in general this is like sort of a fringe behavior anyways and so I talked to yeah I heard from them that you know they had to be really conscious about how they’re gonna do this I think they did some layoffs and whatnot but they you know they have to figure out how are we gonna survive and what does the new world look like and so unfortunately some great ideas and great businesses you know some markets got punted back a year or two four years of whatever it is and some markets got pulled forward like it’s my friend Chris from first base and they do remote work set up so you you know everybody now at home but this wasn’t the case when I started advising him when I started advising it was like hey I think companies are going to be going remote more and if you have a remote employee they need a desk and a chair and they need a webcam and they need a microphone so they can work effectively remotely maybe companies will pay to give them a home desk and I was like I don’t know maybe they’ll pay maybe they wall and then boom this thing happened and like his wait list has exploded thousands of companies signing up and he can’t handle the demand and now every company has to have a person like you know at the head of HR or whatever that is planning how are we gonna have so many employees remote and also hey this is extra this remote thing actually kind of works why are we paying so much for our office let’s just do this this is way cheaper and so you know the world has changed for him then his market got accelerated by four years yeah I that’s incredibly fascinating I what I think we should do is we should just link to this this document is dance there’s no way that we can yeah but I think it’s cool I think it’s cool that so do this and that they just published it as a Google Doc that anybody can access I think that’s just like a cool way of going about things and also one that I like on here one more that I like is Church so like you know Church was one of the super spreader type of places where everybody congregates people often hug or shake hands or touch and it can spread throughout a community rapidly if you if you have churches open and so how are people gonna do this right history can go away no are people gonna go in 6 feet 6 feet apart maybe I don’t know and so I’m of the opinion that Church like live streaming for churches is going to be a very big deal I’ve been in the live sharing space for wild so maybe it’s one of those situations where you know to a hammer everything’s a nail and for me everything can be live-streamed but no I you know right Church is one of those things that’s every Sunday so people can build a habit and you know the experience of a livestream sermon it’s pretty much just as good as being there it’s not that much worse in fact in many ways the more convenient and you have all the sort of community features like chat or donations I mean that’s like what the twitch product is for example and I researched and there’s a platform called Church online now or something like that Church online platform so some horrible name like that Anoop like a pastor who weren’t programming in his spare time and like you know sat in the pews and and coded this thing up like it is so you know unbranded it backwards in a way but he said they have 7 million members or something crazy and you know I guarantee that’s not the best thing that’s out there so for me you know digital faith is a big thing whether that’s sort of like a next door for churches I don’t know what that means but it sounds provocative I like it is it is it twitch for churches is it you know what is it and so I would be if I was if that meant something to me if religion meant something to me I’d be like now is my time I need to combine technology with community building and religion and I need to bring these these real world institutions online I I’m very good to see what happens with all that stuff um speaking of this Korona stuff you have on our sheet that you want to talk about outdoorsy I would love that as well I don’t really know [ ] about it I just put it on there because I’m like interesting and I didn’t do any research so you tell me about it okay let me uh the good thing about us doing this remotely is my computers right in front of us okay so outdoorsy it’s a it’s a peer-to-peer market but this is the exact description peer-to-peer marketplace to disrupt the thirty two billion dollar recreational vehicle industry okay so they’ve raised seventy five million dollars they’ve raised a lot of money this what you notice to rent your or see clearly you said you just rented RP no because I I think I’m gonna drive from San Francisco to New York and then maybe fly back I have to I have to figure it out I technically haven’t rent it I have a lot of outgoing quote so I’ve got people are gonna be sending me back quote so I think for outdoorsy it’s kind of like Airbnb where you submit it sometimes you gotta get approved and so anyway outdoors he’s interesting if you want to learn about this industry there’s actually um what’s that guy’s name who’s on that TV show called profit Marcus Marcus something yeah mark is the profit I’ve watched like eight episodes Leonys yeah or no Lamanna something like that well anyway a lot of people don’t know this but Marcus is actually I don’t know if he’s the founder I think he like aggregate a budget or brought a bunch of companies together so he’s the CEO and chairman of Camping World Good Sam enterprises Gander outdoors and the house board shop basically all of this or is around RV and camping and you can actually go and read about this company and a lot of their information is public so you can kind of see huge business many many hundreds of millions of dollars in revenue maybe even hundreds of millions of dollars in income and so what outdoorsy is doing is baking is basically kind of screwing up that model and I love it I don’t know right do you know what the revenue is um I don’t know outdoors use revenue I think it’s quite high if I remember correctly it’s over 100 million let me just do a quick check let’s see yeah we hundred twenty five million in 2019 Jesus Christ okay it’s meant there’s a difference between revenue and is that their revenue or the growth bookings that might be there GE let’s assume for a second is there G MV because marketplaces love to do that so let’s say you you take 10% of that exactly 32 million is there cake maybe yeah so they’re just exploding right now eh yeah this is I mean this is a great business and you know we talked about before hey market places are great what are the fringe or niche market places and this is one of them right renting RVs you know and now now is the time and so they’re you know I think they’re gonna ride a wave of interest as people sort of crave being outdoors crave travel but need to be away from others how about hit camp are you familiar with head camp yeah they’re like the same idea right there like a turnkey glamping is that right camping camping experiences camping in the way that I don’t do it where I’m like alright do I want to learn how to camp and like go get at REI membership and buy like hundreds of dollars of stuff and then be like wet all night like now I’m not into that but this is like hey you know sleeping this instagram-worthy tent is what I remember of it yeah it can be as easy as that or it can be as difficult or you can make it as difficult soft or hard as you want right yeah so you could just like go and rent like a cabin which isn’t probably camping but or you could just like get a plotter like an area and like land and apparently they’re booming as well so they’ve raised about 50 million dollars and what’s interesting is if you told me about hip hip camp about two years ago I’d be like this is not interesting but it is kind of interesting and there’s a I don’t know if this is a company but okay so like I am like I’m like a a habit I keep referring to this type of stuff but I what I always like to do is I like to look at comparables and I like to look at public information so do you know what koa is never heard of it okay so koa I don’t know what it stands for actually but what it is is it’s a it’s a it’s a non-profit and they have campgrounds throughout the country and if you go to like in Colorado they’re all over the place you’ll be on the highway and you’ll see in the same place you see signs for food you’ll see a koa sign and what that means is if you’re a member you can for I think it’s like 20 a years super cheap you can camp there either for free or for 5 bucks a night right it's really cheap and I used to use it all the time when I was traveling and so according to some analysts sir I think the privately-owned they're not nonprofit they do about 40 million dollars a year in sales and they charge like five bucks right it's like dirt cheap and so if you want to learn about that business look up koa that's probably the best comparable it's a I can't believe Sean you've never heard of koa never like okay now it looks great seems like an obvious idea fantastic but the what's interesting to me what I love doing is I love looking at these older things like koa like Boy Scouts and it's like show me the demand and that kind of gives me an idea and then if you just like add add-ons and operate it in a in a way where you prioritize revenue and profit then things get super interesting and so koa is a really cool one to look at it's yeah it's it's it's it's an interesting group and I also think that in terms of RV I would look at a Marcus Leona Leo mice's companies right and you can allow that information is out there I love it I love hearing about businesses that I've never heard of that are successful I feel like there's a my brain I feel like is organized like there's a set of hangers and every hanger I can just hang another like business or business model onto and then that's just mapped in my brain and then when I see something new I'm like oh is this a new hanger or do I just attach this to one that already exists and I start to see a pattern of like oh yeah there's five things that are just like this and so that's what I see when I love hearing about new things just another thing to hang into my brain have you um updated your home at all while you've been at your house I had built a home office right before Kovac because I was planning to work remotely anyways for the month of March which has happened to be like kovat so that's been like the only home upgrade and then [ __ ] started breaking my dishwasher broke and my dryer broke cuz I'm like that's not an upgrade yeah that's it I started go to the park every single day and I bought these little like tiny fold-out Park chairs and I have actually seen several friends buying this same product called click CLI Q it's a it's like you know whatever a park chair like you go to a soccer game you want to you just want to unfold but the key is how small and discreet can you make the the fold in versus like oh [ __ ] I'm carrying a chair all the way to the park and I don't know it's gonna arrive soon but I've seen like I've seen three different people I know mention this thing and I bought it myself too before that I have began spending so I I think I'm saving like Matt I haven't I actually ever since the the stock market crash I have refused to log into my accounts everything right yeah I sold though so like my philosophy was I was like man there's gonna be like dead bodies in the streets of New York and that's gonna scare Wall Street and that someone's gonna take a picture of like a body and in the like a in the like an open van with bodies and it's gonna flip people out and they're gonna like say so so so and that happened there was like videos or like these like ice trucks with like bodies in there and nothing happened and that day I saw that picture I was like I'm out right and it took off a week after and so I'm still sitting on a lot of cash and I've lost a lot of money and I hope well I don't hope this proven right if it goes down and I yeah if it goes down and I get back in so anyway I haven't logged in I usually use I use personal capital and I log in all the time to check my finances I've not logged in so I don't entirely know what's going on but I the other day I went and bought like eight or maybe 1,000 worth of artwork because I’m like I haven’t bought anything in forever I’m just gonna buy exactly I want because I’m normally pretty cheap and I just haven’t been buying [ ] have you been buying like crazy dude because I shop online and now I lost track of like time and space so I’m just buying things and then there’s stuff arriving and it’s like if you can’t go anywhere the next most interesting thing is like someone comes at your door and leaves a mystery box at the front you’re like oh [ ] what did I order nine days ago I don’t know I’m excited to go see what it is it’s like this moment of fun so I keep giving myself that gift but yeah buying a lot of stuff also all the delivery stuff is like super expensive so I’m like post and insta carding and it’s like you know 400 for groceries or something crazy so I don't know if that's just an SF thing or I don't know what's going on can we alright I want to talk about this mark Leonard guy who you have but before we get to that have a good segue which is I I'm gonna get rid of these map I have okay so little people listening I have a background and I got maps and which apparently is like a super basic thing to do I didn't know that yeah it's like basic with the capital B st. Louis Nashville or no st. Louis New York San Francisco me my wife are from those areas and I'm gonna switch it up so I have a a wall of people who I like being inspired by so yeah so let me tell you who I have I have Steve Prefontaine you know who that is ever heard of who's that there's a movie about him that's really great you don't to be a runner to like it but he was a he was a runner at Oregon he was the first person to wear Nike so Bill Bowerman was the coach of Oregon tracker filled his pupil his his athlete was Phil Knight together they partnered and made shoes together Steve Prefontaine was probably the first person at Wharram he was or one of and he was definitely the first sponsored athlete and he was kind of a badass runner where he was like he was like kind of like a full clip so he would say [ __ ] like to give anything less than your best as a sacrifice your gift he said all this inspiration stuff but he died when he was 20 26 and he was just kind of a rebel too cause then I have we hold on behind anyway he was drinking and driving and flipped over and crashed his car and suffocated okay so pretty try very very tragic but he lived fast died young and he it was real tragic because he got fourth at the Olympics when he was a favorite even though he was only 23 anyway it was a big deal he's also like really good-looking so it's like easy to like admire him props to you for admitting that that's part of the appeal all right great yeah he's like it's like you know romantic kind of that type of thing like you kind of look good that I have eazy-e in dr. Dre okay they're interesting to me because when eazy-e was only 23 24 25 something like that he created ruthless records which went on to become a huge business like hundreds of millions of dollars a year in sales and he was like a kid from Compton who knew nothing didn't deserve to be there or did you know like on paper like what do you here anyway they achieved it dr. Dre [ __ ] changed culture in in a variety of ways then I have Felix Dennis and Ted Turner Ted Turner started a CNN I like him Felix Dennis he started a media company and he was like Richard Branson but more vulgar google him and then I have got three more I've got Mike Tyson I love Mike Tyson he screwed up so many times in his life he's done a good job of being ferocious and kind of coming back and then I've got to Pok and then I think that's it that's amazing great oh maybe yes maybe all right so you have live love Nate yeah you have like the Intimidators road dude like it's a the majority of your people fight for a living or like should fight not Intimidators rope but I'm incredibly fascinated with people who are bald people who on paper should have done nothing and they did a really good at having bald ideas but then also we're having fun along the way right so that's what I like like Ted Turner I think you know he was a southerner he stick out and but he had a bold idea and he laughed along the way so I'm always fascinated by that I went to sue Lee's house where our friend silly and he had this on his walls like I was like who are these people but why these pictures there's not your family and I was like because if the first one I saw was Hillary Clinton I was like why do you configure Clinton on your wall he's like oh these are people I admire and he had seven photos and I only knew like three of the people told me the other before in a story and it was like Hillary I don't I was like whoever you know Malcolm X or Martin Luther King or something like that another cool idea it was like you know I guess that's cool like you know you walk out of your bedroom every day and you go to your office or wherever you're going what does he admire about Hillary Clinton Hillary Clinton sue Lee don't see me like Anton I have no idea why you just think she's also said am i right okay I guess I mean not even get say like that she's not awesome but I didn't think that she was wonderful enough that exactly what I'm indeed entrepreneur I was like I don't want to sit here and hate on Hillary I don't hate Hillary but I am so surprised she made it to your wall like that doesn't make any sense I definitely disagree with that one yeah so yeah it's just like mediocre maybe so let's talk about this guy constellation so I know a bit about them Shawn put this on here as Billy of the week his name's mark Leonard you wanna we sometimes do this billionaire of the week so the Billy of the week is mark Leonard constellation software so I had heard about this from a few people because they do something that you know we had Andrew Wilkinson on here and he buys internet businesses and sort of has this conglomerate of small internet business that he's collected that are now you know let's call it a hundred million dollars worth or maybe a little more a little less and that's a fantastic success so this guy mark Leonard did that like he's Andrews daddy you know like his company's worth thirty 1 billion dollars what they do is they buy software companies and they roll them up sort of and they're they try to be a perpetual owner so they're not like they're not private equity where they're doing a leveraged buyout and trying to flip you know kind of skin it and flip it or whatever they tried to just own the thing for a long period of time and had the cash flows and so what I like about this guy what I thought was cool was this guy's like a Satoshi Nakamoto of boring businesses so he nobody knows [ __ ] about this guy you can't find a photo wait what's that reference the Bitcoin guy yeah you just don't know a lot about I guess so so this guy you can't find photos of them he doesn't do public appearances he doesn't really talk he writes his annual letter and you know but so I was reading like kind of the definitive thing about him because I wanted to learn and it's like all we know is this guy's born in 1956 maybe in South Africa maybe in England I was like what the [ __ ] we don't even know where this guy's from and you know he's wrote on his bio he's like it was a VC but before that he said I was a banker evaluator a Mason a gravedigger a dog handler a bouncer a sapper and and wind energy researcher I particularly enjoyed the bouncing but an early retirement was necessary so I love it that I don't know anything about this guy but we came and I think half those are like a joke but here's their business so they buy in the early on they buy they bought businesses that were you know two to four million dollar acquisition target so very small acquisition which is which is on paper you would say that's asinine my own yeah chump change you know okay well you know small ball but small ball is turn into sort of big league returns and so you know this data is out of date now because when the article I was reading was like hey this guy has you know done really well they did last year they had 1.2 billion in sales 20% margins they're doing 10 to 20 acquisitions a year and at that time the market camp was 5 billion I looked at it while I was reading the article it's now 31 billion and so if you're just invested in ok guys it they have a thirty 1 billion dollar valuation and only 1.2 and that was the old one when they were at five billion market cap now they're at 31 billion market cap so you know if the ratio sort of held held the same it'd be whatever six seven billion in sales we can see we can see what it is now but I love that this guy's mysterious I love dude it's only it's only it's three billion their sales were only three billion dollars so a lot of money but that's not a got a good little I wonder I wonder why doing on such the run up because you can see the stock chart is like you know it's going up like crazy and then they can use that money for for acquisitions and this guy he writes these annual letters that are actually pretty interesting so like if you're like me you I like to read Bezos his annual letter I like to read Warren Buffett's annual letters this guy is a new one I'm adding to the sort of arsenal of annual letters and he has a lots of really interesting sort of views on business and then of which are like totally groundbreaking but he does something that I think most people fail to do which is the same thing Warren Buffett does which is take a very simple principle that everybody would nod their head and agree with and then like actually stick to it and do it for like 40 years and that's like a winning formula most people you know nod their head and then go do some other [ __ ] and they get there under lack of discipline than lack of focus and so I also like you know trying to read a little bit more about the company and you know they have sort of a focus on what they call vertical software so they'll go for like within one vertical are sorry they looked at they said hey some companies are horizontal like a slack every company can use slack as a messaging service and slack will be a multi-billion dollar company but what about all these vertical things that are like better software specifically tailored software for uh you know what if you're a golf club you need to manage bookings T times memberships and whatever else every golf club you will pretty much use whatever the best software is and they'll pay for it everybody every month reliable you'll never churn so they'll buy like that Clubhouse software they'll buy healthcare software public transit software law software and that's been their focus I don't know if that's change over time but when I was reading about them they try to consolidate vertical market software which I thought was a pretty interesting approach what do you think of this guy I love it I'm reading about what you have here so I love doing these things and I love that what he's doing and I actually I'm gonna bring up a different point and I don't want to address it yet but I want to ask your opinion of it in a second but more so what I'm interested in is tonight I don't want to refer to like things I tweeted that sounds super lame but I was tweeting earlier about how I hired an operator so basically Adam Ryan works at the company and he kind of handles a lot of the operational stuff and I work sometimes down in the weeds sometimes high up revisions up and it's hard finding someone who's competent to run a business and so if this if this guy it's if he might have I would just say I'm in companies he has it could be like 200 right so I don't know if their model is really keep the existing management or if they replace them I'm not I'm not one percent sure what they do I'm sure there's some some mix and blend there one thing I saw that was interesting was so they like Berkshire Hathaway the execs of the companies do not get share options as their compensation which basically you know incentivizes you just boost the share prices as you as much as you can which is often somewhat short-term so instead they take you know 75% of their after-tax bonus and they can buy shares on the open market and then those shares are held in escrow for four years so if the shares if the stock is overvalued because they are sort of temporarily pumping you know enthusiasm energy or doing buybacks or whatever they're buying overvalued stock and so I don't know if this is perfect cuz maybe the other thing happens where they actually you know when they're about to buy they sort of oh you know bad news dips the state share price temporarily they could buy it on the discount so I'm not sure if any incentive system is perfect but I thought it was interesting that they've thought through how should we compensate everybody and and not sort of follow the traditional playbook so I want to dig in more I've just scratched the surface of this guy I think there's a lot to learn here but I wanted to bring it up because I think it's very interesting and I like that he's a sort of mysterious character I think that adds to it so here's an interesting take away and in this what I'm about to say actually kind of changed my business game and I'm gonna name-drop here but when Tim Ferriss invested in us he told me he goes one thing that I've learned from I don't know who we learned it from but he goes there's this thing that I like to use called um did he I think he called it inverse incentives or but basically the idea is if you when you incentivize employees to do something you need to actually have an opposite incentive that makes sure it's balanced so for example if you're gonna tell your sales team you have a quota of this number and it's huge you also have to have an incentive it's kind of like revenue collections which means you only go after quality people who can pay bills or RAM retention which is you only get paid if you sell people and you're you treat them well and they want to come back to basically and so yeah a counter incentives I think that's what they called it uh and that actually changed the game for me a lot because what I've noticed is with people if you give driven people incentives the right type of person will kill to get that done and you want those input you you want those people but you actually really need like that second incentive in order to make sure that it's quality and quantity and so I love this incentive but what I want to know is how on earth did they recruit all these people who are talented enough to run a business I've hired CEOs for a handful of small businesses that I've had most all except for one or two have been horrible yeah and which maybe I'm hiring but I think it was also it's really hard to find these types of people and so in my mind this company constellation they're more like a recruiting company than an innovative software company yeah you know I think that is sort of the make-or-break I think you also invested in in our friends who are doing enduring ventures and so these guys are basically starting a modern-day version of constellation or what Andrew is doing or whatever where they're flying companies to hold forever that have strong cash flows and they want to own great businesses and you know they've already closed they bought the first business they bought was a business up Council ironically I believe this was sort of outside the model which is you know my point earlier of say a simple thing nod your head and agree and then go [ __ ] do it I think that they did not do that with up council because up council was not a great business it was a it's a potentially great business but it was currently sort of in a rotten rocky waters but they got that it's such a great deal and they structured the deal in such a smart way that I think they'll still end up making a lot of money from it but anyways you know they're doing the same same sort of thing and their biggest challenges is is how do you find operators so when they bought up council you know the CEO that they placed was you know you know somebody the Savior had worked with and knew knew very very well anyway they brought in a team of operators but you know they're pulling from their personal networks that's what Andrew said he did as well which was he pulled from people he knew or you had worked with before in the past but I think that is the the largest challenge with this business model is being able to maintain a keep a great business a great business by having good operators in place because when you buy out the owner sometimes you may lose that great operations and if this interests you I think that there's a few giants that you can look up and one of them is AltaVista or Navi so that's a not that visa equity it's owned by this guy named Robert Moore I believe he's the richest black man in America he is the guy who's famous for what he's well he's the guy who's famous for paying the tuition of everyone at Morehouse when he gave a an address he said by the way all your guys does debt paid off so he's he's cool but that's what he does he does the same thing as does trilogy software so look up Joe Lamont who we've talked about all right you want to talk about oh here's what I'm gonna talk about ok so there's these companies like Tesla and basically a lot of stuff that Elon does which is like this like super sexy stuff I mean I'm not interested in in it but it is quite sexy to say you're gonna send a you're gonna go to Mars or you're creating these cars that are neat and fun and that whenever I think about these companies they're like the coolest companies where you create a hype video at the end of the year and you see everything they've done and you're like oh my god that's so sick like when they created like a video of Elon celebrating the one of his rockets taking off I was like and so anyway constellations not that he doesn't do a video of him like looking at his golf club software right and it's pretty boring but it's still fascinating because like a fun puzzle how do you Shawn about like where are your aspirations like do you say like I want to do something that's full of excitement or do you find excitement in the boring so I used to be a pretty hardcore about this where I was like dude the only thing worth doing like if I'm gonna spend my time and I used to be really like dismissive of people who were wasting their time doing things that were not sort of the peak of the peak so I was like okay I'm gonna do why would I do a job when I can own my own business then I was like why would I own a small business when I can own a big business they're both gonna take up all my energy my time and as I can I'm gonna do a big business why would I do a boring thing might as well do an exciting thing and that train of logic made sense to me and I did that so at Monkey inferno it was we are here to try to create the next hit consumer thing we're like we don't give a [ __ ] that that's low odds of success we want to create you know Michael had created Bebo and which was like sort of like almost Facebook yeah it's like come with in sort of inches of creating a Facebook but instead ended up in the myspace pile and you know did well financially but he didn't change culture and so we were like dude we can do this we could change culture and so we tried every you know messaging apps live-streaming we tried all these different consumer things and failed like crazy and you know even things that like kind of worked they ultimately were not successful because there was they were so homerun driven they were grand-slam driven so I backed off that and I backed off that maybe because I'm just burnt dude I just want to get wins like I don't need to change culture like I didn't need to change my bank account and my lifestyle like so I don't know to what extent I'm it's it's like I can frame it either way am i more mature because I'm like look I don't I have I'm not as attracted to the sexiness of it I just want to build you know great things great businesses or am I just fearful and burnt out from failure it's hard to say for me right but my view definitely has changed where now I'm like oh that you on path I don't know that sounds like a lot of effort why don't I just do this simple thing that's gonna like work yeah and part of me is like okay I agree and I agree and I am the same and then the other part is like yeah dude but you're just kind of being like a puss like what would the twelve-year-old in you like think is awesome and every once in a while you gotta listen to that and so I don't know how I feel like because the other day I was thinking about making a purchase and I I sound like a like a kind of entitled rich dude right now which I'm not implying I am either of those things but I was gonna buy like a car like a cool car and it wasn't expensive it was like a ten thousand dollar car and it was not practical and I was like weighing the like pros and cons of it and then I was like yeah but here's this Pro which is like this is fun and cool and I want it right right and I'm like what did I could become such an old man like where I'm not just doing [ __ ] just because it's exciting and I do think that like you we have to give in to those urges a little bit more you laundries anyway about this I think on was but he was I was talking about he was like yeah like Warren Buffett like he's like I'm not a huge fan of the guy not the biggest fan but he didn't say he disliked him but he was like you know what he does he's a capital allocator like he spends his time trying to figure out do I buy dope whirring today he's like yeah he's like put ten billion dollars into Pepsi or coke he's like yeah like that's boring to me like I want to change the world and you know I'm gonna make cars electric so we don't have to depend on fossil fuels and I'm gonna get us to Mars so we're interplanetary species and I'm gonna do neural link so that our brain can control you know you know a brain can download information and upload information like we're a computer in the brain and I'm gonna do boring company cuz I [ __ ] hate traffic and I want to get you know from place to place and you know fifteen minutes rather than two hours and I'm like okay you know respect like when you hear that you're like yeah that does seem like the maximum of winning but you know I guess my view is my views have broadened but I'm like you wear when I hear myself say it I'm like don't be a [ __ ] dude just like come on go for it don't do what you would do at the beginning you know like don't don't lose that sort of dream just because of practicality so I'm a fan of motorsports and motorcycles and I like like some of these adrenaline stuff I like old Porsches and all these exciting things and I see these guys on YouTube like ken black and he's got this like compound or I'll see like travis Pastrana and he's got this compound it's just like grown-up playground and I'm like oh one day that would be cool and then I'm like no no no no now like why why can't I just do that [ __ ] now and I so I constantly have to battle that in my head and so it sounds like yeah it is about I have what's prudent like prudent versus like excitement and the balance between the two okay let's let's leave with one or two little ideas real quick all right so I have one idea so are you familiar with kin duo duo okay no this is one of the largest companies in China I think like a 30 billion dollar company that grew in the last four years or so all those numbers could be wrong but you get the idea big-ass Chinese company so what the hell is pin do it do it pin do is like Groupon but it's with your friends so what happens is you go on pin do a duo and there's like an item the number one selling item tissue boxes number two selling item is like a vacuum or some [ __ ] but it'll be like tissue boxes here's these two boxes you can get them for let's say you know 20 you can get these tissue boxes but if you buy with your friends you can all get them for eight and it’s like create a team to buy and so you see the item you want you create a team the way you create a team is it just gives you a link and you share that link through WeChat or whatever your messaging apps are and if your friends are like yeah cool I’ll join the group I’ll buy an eight like I’ll pitch I will contribute to the cause helping you get a lower price and I get a lower price too there’s these team buys basically so this thing has become really really popular in China and I don’t think it’s become popular really anywhere else I know there’s a couple of companies trying to do this in India as well and like you know God knows Indians love a good discount so I do think this will work in India as well but I was thinking about this so I was like okay you know if I was an entrepreneur you know just sitting on my you know my desk and there was nothing on my desk I would just write the word pen duo duo for X and I would just figure out what the hell X is I would spend a day on that brainstorm and so so bright I love it can I give you sure you don’t I know I like listening to it while you’re talking I’m like it might have my brain it wasn’t so you know tilt comm tilt got tilt fault it was a joker it was called up tilt so James tried to watch this he raised a lot of money it crashed and burned was crowd talk was not a discount it was just hey we need 15 for a customer to come purchase from them if they want another customer they got to go pay another 85 for this you can do monthly payments for nine dollars and that increase the checkout rate because people can pal at nine dollars a month better than they they can do 80 but if you get five friends to buy you all get it for 60 you’re you all get it for 50 or whatever it is some discount there and you basically are saying rather than paying 15 per customer and Facebook Ads I will pay you know 15 I'll pay 10 dollars right now to discount this item for you because you're gonna go acquire five customers for me right so like if I reduced it and I'm you know I'm basically producing like my cost by are my my revenue by 20 20 bucks per customer I'm able to sort of acquire customers through a new channel besides Facebook Ads which is sort of steadily price rising over time and also the way that if you get introduced to a product through a friend I think you sort of have a better relationship with the product and better experience better retention than if you are only being advertised through by the company so I would try fit I think this is I think this is the best it's very hard very hard because you have to you're building something from scratch here and it's all about like this is this is definitely a all-or-nothing type of thing in my mind where you have to get the positioning really really right and but I think if you do you're onto something right you know it's it's kind of its kind of like a live streaming thing it's like live streaming isn't like hard to make I mean there's so many of them but you really got to find that angle that like it gets people this is more big business than small certain success big business most likely to fail the other thing that I think is interesting here I think that's thing about Shopify and I was like okay what other buttons would I put at checkout that I could basically offer that's a great that's a great framework so like for example in mobile games they do this all the time you run out of lives and it's like hey you could buy another life you can share this with a friend and get in our life or you can watch this 30-second ad and get in our life so the mobile games are like you know it's like a little you know wizard sitting inside a slot machine just trying to figure out how to take your money your time or attention and they've optimized the [ __ ] out of this and so what can you learn from that so maybe if you're at Shopify or you have a Shopify store maybe there's a plug-in that you can add to your checkout which says hey if you want an extra you know dollar off or 2 off just click this button and like us on Instagram and boom now my Instagram is growing with every customer that joints or whatever yeah there’s a bunch of there’s definitely a bunch of tools that allow you to do that but I entered the most popular one is email like give us your email and you get a you get a 15% off or whatever and I think that’s cool that’s like level one but like this idea of team buying of sharing to your Instagram liking us on Instagram I think there’s just more things that you could do at the checkout page that would say how do I get your time money or in some way that you’re not currently giving me and so I don’t know if there’s there’s a lot there because Shopify so big now that if you build something that works on Shopify you can build a you know 10 million 20 million dollar business pretty quickly because every store will just adopt these like best practices fairly quickly I think that first thing your time up group buying is incredibly interesting I’ve always thought that group hon I love Groupon I think that their valuation is [ ] and I’m like that there’s gotta be a better way to make that happen and I love coupon I love group Hana I’m also familiar with appSumo which does group discounting for software and then social stack I think it’s called great comedies where else could you do group buying is there any other like sort of space like absolute was a great example where they’re like okay cool sort of software are there like I don’t know you well so a lot of this stuff has been tried and it doesn’t always work but you definitely could do it I mean this is what Kickstarter is right you did it with brand end of brand their land kept a tilt we have to cross this threshold and I don’t know what it could work for I’d have to really think about it I just I feel so ignorant on what works or not the thing about it is it works better when the thing cost the maker nothing then when it costs to make or something right so software is great because every incremental sale of a piece of software cost the maker zero vs. like if it’s a physical item and like well now I’m every TV if the more people that buy this the more people more TVs I have to sell out at loss and so I think digital works better than physical that’s one like premise I would make I would I would hold what when it comes to this and I mean the other one is like where maybe I don’t know if it works better for low price probably higher priced items because a the discount matters and B maybe there’s just more margin you know to be captured even after discount verses and low price item so maybe you would be looking for sort of high price digital digital services software yeah I mean I think that you could definitely what about using it so what I would want to use it for what businesses buy so like for example I want to buy pitch book but it’s 20 grand a year and I’m not gonna use it that much but I would love to split it with someone so I think that’s incredibly interesting one weird idea is I think that I would want to figure out a way to use it for lawyers so instead of having a legal firm be my lawyer I split a lawyer with you and five other people and that that by that’s a great name split it or split it would be a great name for a company that was trying to do this it’s like hey you can do this but or you want you want to split it with four others and hey you all save you have to have a ton of volume to make this work the way you could make then is if you make it to that cool let’s say the price is a hundred bucks and if I’m gonna split it with five people I think what ends up happening is that everybody gives it for less than 100 but the total adds up to more than 100 right like like they’re totally I end up making more than I would have off of a single customer paying full price by by letting you great it looks good at first for 70 and now I get 140 and you get hundred right it’s like how personal trainer does group training they’re like if you want one-on-one it’s a hundred dollars an hour if there’s two of you guys you each pay 70 bucks an hour and it’s like I now make more per L it’s a great idea that’s a great idea I love split it I’m never gonna create this because that it seems way too hard but I understand the need in the problem and I would love to be involved and as a customer or some capacity great all right split your brain some rain we’ll be back in a couple days with another brain storm people said you can’t keep up this pace how can you keep coming up with new ideas every week twice a week are you crazy but they don’t understand they don’t know how this brain works did if you spend enough time doing it which we definitely don’t always do but a lot of times we do it is not and if you lower the bar on what you call an interesting or good idea so I know things you lower the expectations and practice that is the that is a criteria it’s that easy leave us review tell us what you think tweet at us or whatever we’re talking about [Music]