Episode of My First Million with Sam Parr and Shaan Puri.
Transcript
Note: This transcript was auto-generated from YouTube captions. It may contain errors and lacks speaker identification. A full Gemini audio transcript will replace this.
Kind: captions Language: en all the work we do at TPB is oriented around how do we change systems of production on planet Earth so that um we can make things using less energy less land less natural resources um I I’m a big believer that sustainability in the 21st century does not arise from convincing consumers to consume less I think sustainability arises from Building Technology based solutions that let consumers consume more and dropping the price and dropping the environmental impact and that’s what technology allows us to do so if you go back to the industrial revolutions you know of the 19th and 20th Century we built factories right we we put all this technology in a big machine and a big facility and we used it to make stuff over and over again and that dropped the price for consumers because we automated in a big Factory turns out that the technology of that factory as all technology does shrinks gets faster gets cheaper gets [Music] better let me brag about for a second cuz you’re not a very you’re a very humble guy you’re not a very brag worthy guy when I first started hearing you talk um which is not on the all-in podcast I went on YouTube and I heard you give a talk back when you were doing Climate Corporation and I remember thinking this guy’s pretty smart um you giving a talk at some school I don’t know what it was and I started Googling you then and saw wow this guy’s actually he did that and then he did some impressive stuff since then so let me just brag on you for a second so you were at Google 2004 2006 some some range like that so fairly early at Google like I think that’s like around the IPO time that’s just post IPO is that right uh I joined probably 7 months before the IPO so yeah we were we were working on the IPO or just started working on the IPO when I joined and then uh then you do Climate Corporation sell that for like a billion dollars to Monsanto you do Metro mile which is a pretty cool insurance company that backed and then I think ultimately ended up selling for a little bit less than it’s back for to let and then um then you have this thing called TPB so the the production board and in that you’re basically what do you call it a studio or uh what do you call kind of well yeah we’re we’re technically a holding company and our you know and we’re a Foundry so we spend time kind of doing R&D and and research and and founding or building businesses so we kind of call it a Foundry and I feel like people know you we we do some investing as well but really our focus is on Foundry work um I want to start with this you are known for you know being a sort of a scientist or a science guy but I looked at your LinkedIn and your first job was investment banker so where did how did you go from investment banker to uh as you’re called on the Allin pod the sulan of science well I went to school at UC Berkeley my major was astrophysics I spent some time as an intern at the Lawrence Berkeley National Lab uh which is a department of energy physics lab up the hill from from UC Berkeley and I spent um you know a lot of time doing math mathematical modeling of stuff in a basement and generally found it to be kind of pretty disparaging in the sense that like you could spend years working on a project that never sees the light of day at the same time that I was at school the dot bubble was kind of you know blowing up all around me I mean there was even a kid in my dorm who started a company selling DVDs online and sold the business for a million bucks and that was such an amazing thing to happen you know I was mostly making money by playing poker and working you know jobs around school and getting paid for my internship and stuff so you know it was extraordinary kind of seeing just in the Bay Area the world changing because of the internet and so I got really kind of inclined and interested in um not going to grad school and and really going to go work in Silicon Valley so I you know I applied for a bunch of investment banking jobs that was kind of the the hot job to get out of school where I could focus on the tech industry and learn about it and um you know I guess I had never taken a finance accounting business class and so I guess my poker experience paid off because that’s how I I put that on my resume I got a bunch of interviews and you kind of ended up getting a job working in a technology Investment Bank so focused on the tech industry and so I got to work with lots of tech companies for a two-year analyst program while I was there and learn about business and finance and so on um so so that that was kind of my first foray um you know into the world of business I tried to start a business when I was in college um never really talked about this publicly raised some money from some family family members some friends of the family but never really did anything with it um never really got off the ground it was um the idea was to let you buy all of your telecommunication services on a website so your you know everything from your cell phone bill to your you know your longdistance provider which was kind of important at the time and so on what uh what did you get wrong with that because that’s actually not a bad idea especially during that time uh was I don’t think it was probably the idea you just did you not know I still have I still have the business plan I keep it in my office I printed it up like 1999 or 2000 as a as a reminder or what yeah as a reminder it was uh originally called telebom dcom got bombed and then I renamed it in phone services and I registered it I set up a Wells Fargo account um there was a whole uh experience of starting a business um and yeah I mean ultimately I kind of got caught up in trying to get a job out of school and um and you know transition to to focus on on you know what’s next in my life and then you know before I joined Google I started another business which was kind of like a research Q&A site online called Kanga k a d n konga.com so I basically taught myself like um PHP and JavaScript and HTML and CSS and I programmed the whole site myself and um and uh MySQL and I basically uh set up my own server and registered the domain and set up bank accounts and it actually made money um and so you know I advertised on AdWords and I got users to come to the website and ask questions and get answers and they’d pay for the the answers um and so that actually helped me ultimately get my job at Google because I had all this experience you know I was coding on my own till like 5: in the morning and then go to work at 7:00 a.m. and so like building this service and and building this whole site it actually Google had a service at the time called like Google research or something forgot what it was called but it is very similar to this and so I got the job at Google I think in part because of that experience so when you were doing that you were uh like okay listen today I think you’ve built companies I’m just going to use round numbers uh you know you can correct me if I’m way off but you’ve built companies now that I think in aggregate have are worth more than 4 million and they connected it to the internet and they set it up so that advertisers could remotely create Dynamic content and fill in the unsold ad spots on that server every night at midnight and so they were buying what’s called Remnant inventory and making money on it and so it was brilliant but for the 100 million so they thought it was worth a billion I mean the whole thing was crazy how we negotiated the deal so it ended up being like effectively a 72 million upfront cash payment a 1.2 billion in earn outs based on the advertising revenue generated from all these stations and so that earnout structure was the only way I could really bridge the gap on the deal I had to go talk to Google’s board about it we eventually got them to sign off on it and the whole thing ended up being like a really ugly uh negotiation and I didn’t want to do the deal and I told Eric Schmidt I’m like look I don’t think we should do this deal I don’t think these guys are going to work out for us I think it’s going to be ugly and Eric said we have to be in radio it’s a 25 million acquisition so it turned into a great product I mean I don’t know any web pages that don’t have you know Google analytics on them you’re like where’s my bonus it was all good the um yeah I mean if you could if you can show that all right I’m buying a visitor it takes me it cost me a dollar to get the click but now that I can improve my funnel so that that customer is worth more to me I can convert more of those customers and I’ll spend more right like that makes a lot of sense and the customer is happier because people are going to a web page that gets them what they want as opposed to going to a web page and getting lost in the content not clicking through and buying dead end so and my last Google question you know when we got acquired I got acquired by twitch uh which is like a kind of part of Amazon and I remember like the first or second meeting where it was like you know all the kind of exacts in a room and as a startup founder I remember always feeling a little bit not like impostor syndrome but sort of always curious like this is how I lead the company I have no idea how anyone else does it right even my founder friends I don’t actually get to see them in meetings so I really had no idea what they were doing in my first meeting at twitch I remember looking at EMT who’s somebody I really respect uh who was kind of my boss he’s the original founder and he was sitting there and and like there’s whatever 20 people in the room and somebody presents like this six-page paper and I remember uh he was like done reading it in like half the time of anybody else and then he had like scribbled down some questions on it and then the first question he asked like cut straight to the heart of the thing and I remember just thinking oh this this is what it would be like if my brain was twice the size like oh I could read twice as fast I could get to the heart of the issue you know twice as fast and I was just so impressed by him you know I think that great great leaders in some ways almost feel like aliens uh they sort of can they have some superpowers that that others don’t and um what was it like with the Google Founders do you like were they just normal people to you or did you notice any special traits or sort of abilities that impressed you at the time or made an impression on you no I mean look um you know the culture is set at the top and um the team that Larry and Sergey built around them uh you know remain some of the most important and impactful people in Silicon Valley um you know Susan Wii solar kongar um ERS Hotel ERS is still SVP of engineering there he built all of the data center infrastructure which by the way I don’t think a lot of people realize um is probably the core advantage of Google um or was originally like tell me about this my my co-founder who’s super technical of my past company he used to say that he goes people don’t ever talk about this but it was Google’s server architecture or their choices that like allowed them to win what did that mean I never got to answer yeah so so so if you go back to 1999 1998 right um in order to search the web you had to have what are called Web crawlers so these are servers that are going out and scanning all the web pages on the internet and then indexing servers and then your web servers which are you know your indexing servers take all that data and classify and organize it and figure out what you know what what’s the search term that each web page can represent and then F and and what’s the ranking that would that would show up and then finally is these web servers which is the the website you know service um servers so when you go to google.com and do a search and so you know in order to search the web extensively and to have a high refresh rate so how much of the web can you search you have to have more servers in order to search it more frequently you have to have more servers so at the time everyone was using kind of Oracle servers that cost like 3,000 bucks and they had a pretty case and they had purple on them and they used a lot of power and they looked really nice and they would last forever you know all those kind of nonsense claims and so Google set out to basically build a really cheap webs server or really cheap web crawling server and indexing server so they built their own servers by taking commodity hardware and basically breadboarding this thing so taking super cheap Ram super cheap hard drives jamming them all on not even putting a case or a cover on them using super cheap power supplies and then they said they said look if no purple no casing and they made them redundant and they’re like look we’ll make lots of these we’ll be able to search more of the web we’ll be able to have a higher refresh rate and we’ll be able to index stuff better and have a bigger index than anyone else because we’re making it so cheap to do this and so their cost was like 200 instead of 99 you can reserve a fully refundable 4.99 for the device and 5 million to do that you got to go make formulate it you got to make packaging you got to make a logo you got to box it then you got to go convince retail stores to carry it I mean the whole process is like an insurmountable process generally speaking you have to be huge like the rock to get that and you know there’s probably 90,000 times more people in that middle that are really influential have a lot of followers aren’t as big as George cloney and the Rock and so they could make a brand that doesn’t require any investment that doesn’t require any Capital they don’t have to take any risk um and look if it it’s it’s permissionless right so if it works great like they’ve got um a nice Revenue stream and you give a a share so let’s say I don’t know what what do you think the average drink is going to sell for like a dollar or less than a dollar so it ranges from you know two 29 cents for like a sparkling water like a flavored water like a lacroy competitor yeah um up to um 1.99 um generally the price will be about 25 to 50% less than the store right so let’s say I’m selling my my 30 Cent uh lucky water what is the is there a standard out of the box like a App Store like 30% cut type of thing or what is the what is the business model cuz because this will let more people do the rock thing this will let people like me do the rock thing where we can just formulate a drink sell it virtually digitally into everybody who has a printer it’s now available and then we get a small income stream royalty stream coming through this yeah by the way the royalty stream for like someone like 50 Cent or something is going to with like 2 to 6% you know so there partic on net right and so there’s a very um different kind of model there we offer a much higher share of Revenue obviously you know this is a a very difficult business to operate so we’ve got to get cartridges made we got to get them to people’s homes we Auto renew so there’s a whole Services component so you know we’ve got a pretty good pitch today for brand Partners um you know we haven’t launched um commercially so I’m not going to kind of commit to what the number is going to be but I think it’s a really really compelling opportunity um and they’re all going to be you know real they’re going to own their brand so if they want to take that brand and use it elsewhere it doesn’t have to be exclusive we don’t own the brand it’s it’s your brand right so you can take your brand at lucky water and if it takes off and you’ve got 10 million people that want to buy it in stores go launch it in stores you know it’s your brand um so yeah I think it’s a platform for letting people kind of create and id8 and um and you know see if they can develop value there and the thing it’s almost like it’s like merch right like I mean just you know monetize your yourself the the device cost you said 4.99 that’s the pre-order kind of price for the first 10,000 orders so once we hit 10,000 the price is going up to 299 for like a nice Nespresso and then you know so so 2.3 trillion a year on this archaic insane system of centralized manufacturing to use a ton of energy and a ton of carbon and a ton of land to just move water into your home when you already have water in your home 120 million Acres of Farmland that could be reduced and returned back to the uh natural ecosystems that we would stop using to grow all this stuff so that’s our long-term incentive right the incentive is can we take that carbon out of the atmosphere can we reduce the waste on water can we return the land to Natural ecosystems and at the same time make a cheaper and better experience for consumers by decentralizing manufacturing and putting these devices in homes and giving people better options um and so that’s why we’re so excited about this you know I think I think we we have an opportunity to do something that has an impact but also hopefully gives consumers something that’s better than what they have today yeah I don’t know if you’re hiring but this is one of those companies where I would look at i’ say wow that would be a cool place to work if I was out there in the job market because you have hard tech problem you have a device that if it works is going to be like a household name you everybody’s going to know it it’s going to be like a Netflix or an iPod or something it’s going to be something that everybody knows if this actually pulls it off I mean you’re on some Willy Wonka you know you’re basically creating this magical device that lets you create whatever you want you know your own little candy your own little beverage in your home I think that’s um it’s pretty inspiring and uh and you know to do that while also having a big impact on the environment right like most people would look at that environmental supply chain you talked about and say how do we make this 20% more efficient at this step how do we make the trucks emit a little less carbon dioxide right how do we how do we just reduce this by 15% and what you’ve done is said why are we doing this in the first place why don’t we eliminate the whole chain so why are we using all this water and all this plastic and all this fuel just to move water from here to there and add a little bit of flavor to it right the water and totally even even worse when there’s already water piped into people’s homes so we already built the the core infrastructure the pipe into the home with water all we got to do is sort of like at the at the last Last Mile not even last mile sort of like the last two feet of counter space just converted into the product people want so I think it’s pretty yeah and like all the refrigerator space and energy to run the refrigerator to store all that stuff and like the the stuff in your in your cabinets yeah so that’s exactly right I mean you nailed it like that’s why it’s so awesome so yeah we are h and we got great offices so and people go to work in the office and so that’s a perk nowadays it’s a per you can see humans if you work with us yeah you know I’m going go out come and meet people IRL I think you know CL climate Corp is cool the insurance companies all it’s not that cool but you know I guess you made some money this is cool this is going to be your your biggest thing I hopefully this will be the thing that you know college version of you would be like all right that was that was sweet not not underwhelmed by that one uh as long as my as long as my kids are proud down the road I I’ll be happy so so that’s all good all right tell people where to go to uh so canada.com go go is that where you can.com C c.com and um yeah you can check out the product specs and the the product video and and uh sign up uh for $99 pre-order reservation thanks for coming on man I really appreciate this I’m a fan of yours it’s been awesome to chat yeah it’s been a great chat I think you really um really nailed it and I appreciate you you listening so that’s been great thank you