Andrew Wilkinson, founder of Tiny (which owns 20-30 internet businesses worth over $1B in total value), joins Sam and Shaan to discuss how he’s preparing his businesses and personal finances for a potential recession. He walks through stress-testing frameworks, his shift to cash and Pershing Square Holdings personally, conservative venture strategies, a new procurement/negotiation business called Dealmaker, and buying put options as an insurance policy. The episode also covers renting vs. owning real estate, books as networking tools, and how to create serendipity when you’re too busy to meet people randomly.
Speakers: Sam Parr (host), Shaan Puri (host), Andrew Wilkinson (guest, founder of Tiny)
Cold Open and Episode Intro [00:00:00]
Andrew: I’m mostly holding cash and waiting for winter to come. I’m going to buy businesses personally as well. I just want businesses.
Sam: You don’t own any Vanguard index fund? You’re literally sitting on — I imagine tens of millions of dollars of treasury bills?
Andrew: Yeah.
Shaan: All right. On today’s episode we have Andrew Wilkinson joining. If you don’t know, you gotta know. Andrew is the creator of Tiny. Tiny owns somewhere around 20 to 30 businesses at this point — they own Dribbble, they own AeroPress. Basically he buys and sells businesses. Total value maybe over a billion dollars at this point, definitely over $100 million in revenue. He’s sort of known as the Warren Buffett of the internet, or that’s the model he chose. He didn’t do the startup path, didn’t do the investor path where he’s just putting small checks into companies. Instead he finds these little gems of businesses, buys them, and he’s been doing this for 10 to 15 years now.
Andrew’s become a good friend — he’s a friend of the pod, he listens to the pod, he knows the vibe. He’s probably the most well-liked guest we have, so we’re always happy to have him back. In this episode we talk about preparing for winter: what moves he’s making or has made to prepare for what’s going on in the economy, what he’s doing in his business, what he’s investing in. We talk about a couple of his new ideas — one, a negotiating-as-a-service / procurement business, and another company he’s working on. We also go on some tangents about why you should only rent your house, different ways he gets together with other entrepreneurs in groups. It’s a good episode, about an hour and a half. I think you’ll like it. All right, enjoy.
Tesla Road Trip and Electric Car Wars [00:02:00]
Sam: Dude, wait — hold on Shaan. I haven’t seen you in a minute. Where are you, how are you?
Shaan: Oh dude, I’ve been literally sitting at Tesla charging stations for like the last year of my life, it feels like. I made a horrific mistake of renting a Tesla for a road trip.
Sam: Where’d you go?
Shaan: Just from here to LA — from the Bay to LA. I thought, okay, that’s cool, might have to stop once or twice. It’ll stop five times. Basically every 90 minutes I had to stop for 30 minutes. It was awful.
Sam: How fast were you going? Were you going above 80?
Shaan: No. Nothing. Not fast. Two kids in the back, a bunch of snacks — this was not some road warrior trip. And I had the opposite effect from what I wanted, because this was supposed to be my “sell my wife on a Tesla as our next car” trip, and it had the opposite effect.
Andrew: You know what’s interesting — I bought a Tesla like eight or nine years ago and it was insane, it felt like going to the future. I just bought the new BMW iX, which is their electric SUV, and you realize the main feature of Tesla is how quiet and fast it accelerates. And instead of being a Tesla feature, you realize — oh, that’s just an electric car feature. Then I get in my BMW, plug in CarPlay, and you realize at the end of the day these electric cars don’t have any real competitive advantage. Tesla’s interior is so much worse than BMW and these German and American manufacturers. I’m really curious to see how it all plays out.
Sam: They’ve done such a good job of rebranding fake leather as “vegan interior.”
Andrew: That’s exactly what they say — “vegan-friendly interior.” I’m like, you just have low-quality fake leather.
Sam: Whenever I sit in them they feel like plastic. I’m not a Tesla fan. I also think they’re like super not sexy. The Model X looks like a weird big toe or something.
Andrew: I mean, they’re great cars, I really like them. I just think everyone overestimated their competitive advantage. At the end of the day you’ve got all these legacy manufacturers, and if Apple and Google are providing the interface that most people use, it barely matters. It’s just a platform with an electric motor that takes you from A to B. And the Tesla interface is really bad — you can’t sync your maps up on the screen or anything.
Sam: Shaan, are you getting one?
Shaan: Actually I still probably will, but yeah, I’ve got to do some research.
Sam: Now that I joined the Tesla subreddit — two million members on Reddit alone, and that’s the niche part of it. I don’t know exactly how many Teslas have been sold but let’s say there are five million out there. Those are five million high-net-worth people who can be targeted with specific products. I’ve seen people capitalize on this — one guy had this thing where he’d turn the trunk of your Tesla into a sleeper van, like a bed that fits perfectly in the back. They were doing seven figures on just this one product with minimal ad spend, because they could go highly targeted on Instagram to reach Tesla owners.
Same thing with adapters that let you charge everywhere, or apps — when I was trying to plan the road trip I typed in the destination and the suggestions for where to stop weren’t great. There’s this old-looking app called ABRP — A Better Route Planner — and it’s the number one ranked thing. Interface looks like it’s from the 90s but it does a slightly better job of giving you custom control over what charging stations to hit. These passionate, locked-in communities — Rolex owners, Tesla owners, Apple fans — are massive opportunities for niche products. The Apple blogs that were out early on were huge over time. Same opportunity with Tesla.
Reintroducing Andrew Wilkinson [00:10:00]
Shaan: We should reintroduce Andrew. Andrew Wilkinson is back — definitely the number one guest of the pod, in our hearts and in the fans’ hearts. I don’t know why we don’t schedule more of these, because every quarter or so Andrew just texts us like, “Hey, I want to come on, I’ve got stuff,” and we’re like, “Great — pick a day, let’s do this.” So he’s back. He’s the founder and CEO of Tiny. They buy beautiful internet businesses.
Andrew, do you still listen to the pod regularly?
Andrew: Yeah, all the time. I take little breaks because I get too pumped up sometimes when I listen. Usually in the sauna.
Shaan: In the sauna?
Andrew: I listen in the shower of the sauna.
Sam: All right — I’m always fully nude when I listen to you guys.
Shaan: Would it make you feel comfortable now if we turned the cameras off and took off our clothes?
Andrew: That would be ideal.
Preparing for Winter: Andrew’s Framework [00:12:00]
Sam: So you have a bunch of good stuff. Where do you want to start? We’re going to talk about what you’re doing for winter — your personal and business finances given that the economy may not be going well. We’re going to talk about different ideas you have, I want to talk about the anonymized workers, you’ve been hiring some anonymous folks, and you’ve also got five or six companies you started that we’re going to do a postmortem on — what went well and what didn’t. Shaan, you’re starting.
Shaan: I was going to say, you drive. Andrew, tee it off. I think there is a consensus now that we’re either in a recession or heading into one, and that this isn’t going to end soon. Give me your take on the market and then what you’re doing to prepare.
Andrew: There’s this great quote by Andy Grove: only the paranoid survive. None of us know what’s going to happen. I was super terrified when COVID hit — I thought the world was going to fall apart and it didn’t. But what I do when something like this happens is stress test my business.
Think about it like this: if you’re about to drive your family in a minivan across a large bridge, a kilometer in the sky, and there’s a one-in-twenty chance the bridge can’t take the weight of your car — you don’t want to drive across, right? Doesn’t matter if you’re probably going to be fine, you just don’t want to go across. You want to over-engineer for the worst-case scenarios.
What people miss is there are two ways this can go bad. The worst is total loss — you go bankrupt, your business fails, you’re embarrassed. That’s terrible. But the less-bad option that no one really talks about is missing opportunity. You get presented with something incredible and you’re illiquid, you can’t take advantage. Say you’re an e-commerce company and suddenly ad rates drop 5x — you could go take the market, but you can’t because you’re barely holding on, no cash reserves. Maybe there’s an amazing acquisition, but you can’t execute. Instead of errors of commission, you get errors of omission.
So I’ve been thinking a lot about this. Generally we operate conservatively — any debt we have, we want to be able to pay it off at any time, we try to keep as much cash as we can at head office. But there are a couple specific things we’re doing that I figured I’d share.
How to Actually Stress Test a Business [00:15:00]
Sam: What does a stress test actually look like? I sit down today — what do I actually do?
Andrew: Say okay, what happens if revenue drops 50% in this business? Are you able to lay people off? Are you stuck in long-term contracts and leases you can’t get out of? Do you have debt you can’t pay? You model it out in a simple spreadsheet: if revenue goes up 20%, here’s what it looks like; if it goes down 20%, down 50%, down 70%. And for example — one thing that often happens is you still have customers but in many businesses there are accounts receivable and people stop paying. They’re going to pay you, but maybe in 90 or 120 days. What happens if no one pays you for two or three months? Do you have enough money in the bank? Do you have credit lines?
It’s wise to do that shadow boxing, imagine the nightmare scenarios, so you can sleep at night.
Sam: Yeah. Okay, keep going.
Andrew: So I’ll talk about what we’re specifically doing. Everyone says the best companies get started during a recession — absolutely true. But I’m not going to be putting a lot of money into crazy venture bets. I’m not going to take a lot of risk. I’m not going to go invest in the e-commerce company with $500K of revenue at a $12M valuation.
I’ll still bet on new companies, but in a much more conservative way. For example, we have an AngelList rolling fund where we invest about $12 million a year. I’m pivoting it to totally focus on secondary and minority buyouts — for example, a founder who gets cold feet or wants to buy out their business partner. I’ll do non-binary deals, where if revenue and earnings get to where they say they’re going to be, the valuation is one thing; if they don’t, the valuation is another — so our investors win in either scenario. And structured deals, like: I’ll give you a $5M valuation, but I want a guaranteed 15% return in the case of liquidation or dividends.
Also, you guys have talked about this a lot, but “default alive” — I want to be investing in businesses where if they can’t raise the next round, they’re not going out of business.
The other thing with venture: we’ve realized we can do venture internally by incubating businesses with low downsides. For example, turning our P&L expenses into businesses in and of themselves. We want better procurement internally, we want to negotiate rates — so we started a business to do that. We want to get better credit across all our businesses — we started another business for that.
Sam’s Reaction: Focus vs. New Bets [00:20:00]
Sam: What was your take on that, Sam?
Sam: I think it’s interesting — I personally wouldn’t do that because when things get bad I get afraid and I want to focus, focus, focus. When I think about starting something new I’m like, aren’t you going to have to allocate salaries, website costs, all of that? I get nervous about new expenses in a downturn. Are you saying instead of cutting costs you’d spend a little more to build a company around it?
Andrew: I look at businesses where the downside is really low. Here’s an example — when we started Buyer, which is our negotiation service for software we launched two years ago, we started that business for $50K. We’re finding someone who wants to start a company, we give them all the tools to do it, we partner with them and provide capital, but it’s a very capital-light business that can get revenue within two or three months. I don’t want something that goes for 10 years and is never profitable. I’ve done that before. I don’t do that anymore.
Andrew’s Personal Portfolio: Cash and Pershing Square [00:22:00]
Sam: What are you doing with your personal portfolio? What do those percentages look like?
Andrew: Basically it’s cash — treasury bills. The only stock I hold right now is Pershing Square Holdings, and the reason I like it is: A, it’s trading for far less than the value of the underlying assets. It’s a holding company that owns a bunch of blue-chip stocks and it’s trading at about 66 cents on the dollar — so if there’s $100 of stocks, you’re paying $66. These kinds of holding companies do trade at a discount, but not usually to this degree.
I think there are a variety of reasons for the discount — it’s illiquid, it’s traded in Europe, it’s run by Bill Ackman who has had a few blow-ups, and people associate him with blow-ups. But if you actually look at his record, he’s killed it. The other thing I like about that business is they own a very large position in interest rate swaptions, so as interest rates go up the fund actually does better. Over the last four weeks, the net asset value has barely moved while the broader market has gone down significantly.
But anyway, mostly I’m holding cash and waiting for winter to come. I’m going to buy businesses personally.
Shaan: What do you do with the balance sheet breakdown — personal accounts versus what’s inside Tiny?
Andrew: For most entrepreneurs, most of their net worth is in their business, and their personal accounts are much smaller in comparison. I’m like 90% in Tiny. But I’ve had liquidity from other things outside Tiny — legacy assets that have sold or cash-flowed. I’ve taken that money and compounded it personally. The way I look at the personal money is: if everything goes pear-shaped with Tiny, I still want to be able to retire and be free.
You’re like, “Oh, you don’t have ETFs?” — but as far as I’m concerned, I do have an ETF. Pershing Square Holdings owns 10 positions. It’s a diversified stock portfolio, it just happens to be managed by Bill.
Sam: What percentage is in treasury bills versus Pershing Square?
Andrew: About 50/50 right now.
WeCommerce and Mr. Market [00:26:00]
Shaan: A year or two ago, you co-owned WeCommerce — a collection of Shopify plugins plus a few other products. Really strong business, publicly traded, maybe $50–60 million a year in annual revenue. Peak stock was around $600 million. Now, like the rest of tech, it’s been decimated to maybe $80 million. How does it feel, watching that? You’re one of the only people I know who’s this wealthy, who has gone from that peak all the way down. Where’s your head at?
Andrew: I’ve seen people who are great entrepreneurs often stay just great entrepreneurs — they don’t become investors, they don’t like thinking about the stock market and finance. I actually really enjoy that side and have spent 10 years learning about investing, reading about Warren Buffett.
Warren Buffett’s mentor Benjamin Graham had this whole idea of Mr. Market: the stock market is like this moody person, it goes up and down. At the end of the day, if you know what your business is worth, it’s irrelevant what the stock market says it’s worth. Personally, yeah — there’s a little ego hit seeing your net worth have some zeros pulled off. But I know that number is made up anyway, so it really doesn’t affect me day to day. I just ask: do I still own a great business?
Shaan: There’s a great Buffett story. He says: Sam, let’s say you own a farm, it makes you a million dollars a year. Some yokel walks up and says, “I’ll give you $50,000 for that farm.” You just say, “Go away.” Then someone comes along and offers you $20 million — maybe you consider that. But the idea is, yokels will yell numbers at you and you don’t have to sell. Unless you actually sell, it doesn’t matter. If you sold for $50K because you panicked during a recession — yeah, that sucks. But if you ignore the yokels, it’s irrelevant. We all own houses and the values fluctuate constantly but we don’t feel it because there’s no ticker.
Andrew: Dharmesh said this thing: valuation oscillates around value. Imagine you’re creating value in a business — the line is going up, pretty steady. It’s actually quite hard to have dramatic jumps or dramatic downs in the actual value of a business. But valuation is this crazy, moody line swinging higher and lower than the value at any given time. You have to be able to differentiate between the value of a business and the valuation of a business.
Shaan’s Contrarian Venture Stance [00:31:00]
Shaan: I have the opposite strategy from Andrew, as I often tend to do with most of my friends — not by design, I wish that wasn’t true. Right now I’m actually doing more deals in venture than I did the past two years. Because this amazing thing has happened: all the founders have just read bad news for six months straight, and it’s done two things. One, a bunch of people who would have quit later quit now, which is fantastic, because picking is really hard in startups. You meet a founder who’s just like, “Yeah, so what? I don’t care what’s going on in the world. There’s a war in Ukraine, a pandemic, the stock market’s down, crypto is down — doesn’t change my interest in this niche thing.” You’re like, okay, they’re in it for the long haul.
The second thing is they’ve cut valuations by 40 to 60% or more. The same deal you could get for $10M you’re now getting for $4 or $5M. But the reality is that business is going to exit seven to ten years from now. They’re reacting to today’s data, but you’re going to get paid out when market conditions are going to be dramatically different.
Andrew: My worry is anchor bias. Everyone was saying venture valuations were crazy in 2019 — let’s say the average angel valuation was $5M, which was much higher than 2016 when I’d see deals for $1–3M. Then in 2020–2021 it goes to $20M. Now it comes back down to $5M and we all go, “Wow, crazy deal!” My worry is these businesses should actually be valued at $1–3M. If anyone came to me with most of these businesses as a cash-flow, real-world investor, it just looks insane. And the only way to get your money back in venture is to have a massive exit.
Sam: Andrew, you said you didn’t invest in Slack when you had the opportunity, missed this or that. You’ve made dozens or maybe hundreds of investments. An exercise I try to do all the time: we constantly say I wish I would have known this company was going to be as big as it was. I always ask myself — what is happening this second, this week, this month, where I’m going to look back and say I really screwed that up?
For me it was when I was running The Hustle — I could buy Facebook users for a dollar and they were worth $10 to me. I knew in the present it was a good deal and I didn’t go harder on it. About eight months ago Shaan and I were like, “We’re never going to make money on angel investing because valuations are $20M when a company should be $5M.” Now I’m seeing these numbers and I’m asking: is that opportunity here right now?
Andrew: You guys have a very unique opportunity because of your profile. Tim Ferriss was able to get into the best deals because people wanted him in them, and you guys have that same opportunity. But the question is: are you playing roulette or are you playing poker? I play poker — I want very good odds in my favor, and I want to know the odds. I still think venture is pretty random. I do it for fun off the side of my desk.
What I’m saying is, you’re about to enter an environment where anyone with cash can buy a business at a 20 or 30 earnings yield — you can buy a business and pay yourself back in two or three years, maybe five years, buying good businesses because everyone’s panicking and wanting to sell. I’d rather play that poker game than venture right now.
Finding Off-the-Beaten-Path Businesses [00:40:00]
Sam: What’s an example of a company you tried to buy recently and they wouldn’t sell, or one you can reveal that just didn’t happen?
Andrew: There’s one really weird one — bridgebase.com. I started playing bridge five years ago. It’s kind of like chess.com. There are all these nerds on the website, the numbers behind it are quite impressive. I think it ended up selling to someone else. We looked at chess.com as well — that obviously blew up with everything that happened with Queen’s Gambit. I won’t kiss and tell on most of them because we still might look at some. But we’ve looked at a lot of off-the-beaten-path interesting businesses — you find a nerdy cohort of people that have a dedicated place where they all gather.
Sam: How much do you think bridgebase.com sold for? Looking at it now, it looks like maybe 8 million monthly unique visitors.
Andrew: I think my mom uses this.
Get-Out-of-Jail-Free Phrases [00:42:00]
Sam: That “kiss and tell” line — I have this sheet on my phone where I save little throwaway phrases I call “get out of jail free” phrases. How do you use a phrase in certain specific situations? Andrew just did one where he got put on the spot, didn’t want to share, and had a phrase that got him out of it smoothly, safely, with no damage done.
My uncle told me this one once. He was trying to do a deal that wasn’t really working. He felt like the deal was doable but they just weren’t there yet, and he wanted to move it forward but couldn’t just say “I want to wine and dine you.” Instead he said, “My mentor told me you’ve got to meet someone belly to belly if you’re ever really going to do a deal with them.” The guy laughed, said “Okay, yeah,” and my uncle used that to get what he wanted: a casual in-person meeting with no formal agenda.
Shaan: “Belly to belly” — that’s a good one. “Face to face” doesn’t have the same touch.
Sam: Gets a chuckle and you understand what they’re trying to do.
Andrew, are you doing any writing at the moment? You’ve always been a great writer but you don’t seem to be producing a lot publicly.
Andrew: Yeah, I’m working on a book actually.
Sam: Really? What about?
Andrew: Just the story of building our business, the experience I’ve had over the last 15 years.
Sam: What’s it going to be called?
Andrew: I don’t know yet, still figuring it out. I just signed with a book agent. It’s fun. I’ve spent so many years frantically writing Twitter threads that disappeared into the ether, and I love the idea of building a narrative story and writing something more substantial. It’s a new thing to learn. I’ll share some stuff with you.
Butterfly Effect Moments [00:46:00]
Shaan: Let me tell you a little story that your book thing reminded me of. When you tweeted that you were coming on, a bunch of good questions came in — but one stood out. A guy said: “Can you each tell us an example of a butterfly effect moment in your life — a chance encounter that nudged you in a different trajectory? At the time it didn’t seem monumental, just a harmless chance encounter.”
Once upon a time my dad was supposed to go to a meeting in San Diego. He said, “You should come with me.” I was a college junior or senior at the time. So I tagged along. Then my dad’s flight got canceled — he was coming from Indonesia. I was already at my connecting stop, like Kansas City, and he said, “Just go do the meeting. This guy’s great.” So I go to San Diego, meet this guy, Neil Senturia. He comes in 25 minutes late, ball of energy and charisma, immediately cracking jokes. He goes, “Ah man, I’m sorry — I just got off the phone with Kyle at Comcast. Let me tell you one thing: you got a pen? Write this down.” And I’m like, I just met this guy, he doesn’t know my name, and I go get my pen. He says, “Write this down: if you have great customer service, you can run the world.”
This guy had a crazy career — built a skyscraper in San Diego because he thought real estate was the path, then got into Hollywood and wrote scripts, was a showrunner for a bit, started tech companies during the internet boom, married the woman who started 1-800-Flowers, invested in a guy he bumped into in an elevator — ended up being something like Chegg or a big multi-billion dollar thing. He just wowed me with story after story that afternoon.
He takes me to this restaurant where he has a special table with a paper tablecloth, and they bring crayons. He’d just draw diagrams and cut deals at this table. Didn’t have to order — they’d just bring out loads of food. When he walked away at the end it was like Uber — never had to pay. And I was like, I don’t know who this guy is, but that’s what I want to be in life. A ball of energy cutting deals, drawn on tables, five different arcs of career, still seems to have all the energy in the world.
I went back to school and without that, I don’t think I’d have had this blueprint that being an entrepreneur could be cool and could have more variety — you don’t have to choose one thing.
Andrew: That’s a great story. But sorry — the book part?
Shaan: On the way out, after two and a half hours, he shoves a book in my hand. It’s his book. He wrote a note to me in it. On the plane home I read it cover to cover. By the time I was done with the book, I loved the guy.
I’d always thought of books as this mass-market thing — you’re trying to become a bestseller. Then I realized a book is a tool that anyone can use. This guy wasn’t trying to become a bestseller. He used his book to convert a “like” into a “love” — I met him for two hours, I’m not going to talk to him anymore, but this book will sell you on who he is through entertaining stories. That’s how I want to use my book when I write one.
Andrew: I did this personal values exercise about six months ago, thinking about what do I actually want, what do I actually like, why do I do business. And the answer is: I want to meet interesting people. Being on Twitter or on this podcast means I’ll randomly meet people in a coffee shop — someone walks up and says hey, I heard you on My First Million, want to tell me about my business. I’ve probably made 20 new friends from this podcast.
A book takes it to the next level — you get to exist in someone’s brain for 20 or 25 hours. You can actually get someone to truly understand who you are, and when you meet them you don’t have to do your preamble or your pitch. They already know the deal.
Charging for Access: Nathan Barry’s Model [00:55:00]
Andrew: Speaking of meeting interesting people — I was talking to Nathan Barry, who owns ConvertKit. He’s probably worth $200–300 million. He told me how when he travels sometimes he’ll plan an eighth day dedicated to work, where he’ll do a six-hour session and let 20 or 30 people come hang out with him. He charges them — almost like a miniature conference. He got the inspiration from Basecamp: Jason Fried and those guys used to charge $200 to $2,000 for people to come hang out at their office.
I thought I should do this when I travel — it could pay for the trip and I can meet interesting people. The cons: it could feel a little sleazy to charge money for your time. But it is a way to filter to people who cross a certain threshold. Nathan mentioned he went to one of your things, Andrew, and you gave the money away.
Andrew: Yeah.
Sam: Would you do this, Shaan and Andrew?
Shaan: I really struggle with this. Like, I’m on Intro because my friend started it and said use it. I only make an hour or two available a month. But it’s essentially just a service that lets you meet Sam Parr, based on the ads I’ve seen.
Sam: They are killing me with all these ads.
Andrew: It’s a terrible way to use your time, right? We did a charity AMA — we said anyone who pays this amount, we’ll double it. With Nathan Barry and about 20 other entrepreneurs, we did a Zoom for two or three hours answering all their questions. I think we raised about $50K for charity, which was pretty cool.
But I really struggle with this because at the end of the day you’re selling your hours, and I don’t want to be in that business. Also — people expect value. If you’re on day eight of your trip and you’re exhausted, you now have to dial it up. You have to wear a mask, pump yourself up. I’ve realized I’m capable of doing that, but it makes me miserable.
Shaan: I would not charge for it. If I’m doing that, it’s because I want to meet interesting people, so I’d rather just give myself the right to boot someone out early. I can make these meetings 10 minutes.
Brad Feld, one of the main VCs in Boulder, used to have one day a month called “Random Day” or something like that. He’d sit in a coffee shop for four or five hours — no filter, no warm intro required, anyone could book 15 minutes. It was great branding for him — man of the people. And he said: you’ve got to create a landing spot for luck. Other people call it a surface area for serendipity.
Sam: Both of those phrases — “landing area for luck” and “surface area for serendipity” — those are gold. Future book titles.
Shaan: The idea is: how do you carve out 1 or 2% of your time for randomness, luck, serendipity? Because the more successful you get, the busier you typically become by default, and all the open space on your calendar disappears.
Andrew: It’s amazing how that goes away. Early in my career I was so flattered when people would email me — I’d write really thoughtful responses. Then you just get more of those and you waste your time. They’re interesting maybe one in five times. So I basically stopped. But then you’re like, oh, how do I get that serendipity back?
For me what I’ve noticed with the podcast is — people aren’t just emailing to pitch or network. They’re sending me stuff that is so specifically interesting to me, or making intros that are so on point. The reason they can do that is because if they listen to the podcast, they know exactly the type of thing I’m into. That’s when you know content is working: you start getting more than you’re asking for.
Sam: “Don’t make your goal ‘well known.’ Make it ‘known well.’” You’ll know it’s working when people send you exactly the right stuff.
Andrew: Dude, I had a guy send me his Google Drive with his tax returns. I didn’t reply to his initial message. He said, “What, you don’t believe me?” and sent the tax returns — 17 million dollars of income, multiple years. Hilarious. Most legit pitch I’ve ever gotten. We should do a YouTube React channel where we just unbox our inboxes.
Sam: Does that guy want to sell or get you to invest?
Andrew: He just wanted to be friends.
Sam: Joe Rogan has this YouTube clip where he reads that quote — “Most men lead lives of quiet desperation.” There’s a version of that for rich people: if you are rich but unacknowledged, there’s something in you that just kills you. We get this on the podcast all the time. People want someone to validate their wealth, validate their career. They’ve won the game and nobody knows.
Shaan: We’ve had so many people where just a mention on the podcast turns them into a public figure. They start creating content. But I want to tell them — you’ve already won. The way you get that validation chasing fame, you’d have to abandon the working formula that’s generating wealth.
Powerlifting and Looking Good [01:06:00]
Sam: Andrew, you’ve got a little five o’clock shadow, jaw looking chiseled — best I’ve ever seen you. What’s going on?
Andrew: Just been powerlifting for the last six or eight months.
Sam: It’s working! Anyone who powerlifts is automatically attractive to me.
Andrew: I’m not at the Sam Parr shirtless Instagram level, but I’m getting there.
Sam: So when you get there — you’re so proud of yourself, but now nobody knows, everyone still thinks you’re just a normal-looking dude. Are you going to post something? Do the fake humble thing where it’s like, “I’m coming forward with these selfies, I needed to be vulnerable”?
Shaan: Who’s the guy from Silicon Valley — the Indian comedian who got jacked? Johnny Mack? Because think about that experience for him. The biggest version of that.
Sam: I’ve personally done progress photos and showed my friends, but I would never post them publicly.
Andrew: I’m definitely less ripped than Chamath, who’s an investor in my thing. But my problem is I’ve got a hardcore farmer’s tan — my arms get dark but my entire body is basically translucent. You can see my heart beating through my chest, so it’s not the best for a six-pack.
Dealmaker: The Negotiation Business [01:09:00]
Sam: I want to come back to something you mentioned — starting businesses off your P&L. I made a firm note to change this after watching my own investing misses. You looked at your expenses and said, what if we could create a business?
The new one — is it still called Buyer, or something else now?
Andrew: We actually started one called Dealmaker. Because Buyer did software, and we sold it to Ramp. So we have to do something different.
The story: Chris and I were maniacal about negotiation in the early days. When you’re the owner, you save $30, that’s $30 in your pocket. But as we got bigger, we had managers and CEOs running businesses with comp based on hitting a very large number. $30K or $30 doesn’t matter anymore to them — but to us the owners, it really matters. How can we make this easy for the CEO, because nobody likes the discomfort of negotiation?
So we created Dealmaker.co. Instead of software, we’re doing office leases, furniture, insurance — all the random stuff in your P&L. You just CC them and they take a cut of whatever savings they generate.
I wanted this because when you’re wealthy or people know you’re wealthy, they will rip you off if they can. Recent example: I got Wi-Fi installed in my house and they had to wire the whole thing — it was tens of thousands of dollars. I could have just gotten mesh networking. Or in our office we got a quote for $20,000 for white drapes. I looked at IKEA — $2,000 for the same thing. Once you’re running businesses, you have a target on your back, and having someone negotiate on your behalf is a very good idea.
Sam: How did you fund this business?
Andrew: About $50K. We don’t put large sums of money into this stuff. We find really scrappy operators, give them all the back-office and legal structure, build the website, and say: “You just take it and run with it.” We go 50/50 or 70/30 depending on the capital involved.
Shaan: Is it working?
Andrew: Yeah, so far it’s profitable.
Sam: So you just CC Dealmaker when you’re talking to vendors and they beat up the vendor for you?
Andrew: Exactly. Think of it as a procurement department. If you go to Walmart — we used to work with Walmart at MetaLab — they’d send you to procurement, some professional negotiator who crushes you in multiple ways: your hourly rate is too high, your payment terms you said net-15, they want net-45. It’s about getting the most.
Shaan: I’m imagining some scrappy guy in a short-sleeve button-up with a half-beard and mustard stain, like Dwight from The Office, just rubbing his hands thinking about a good deal.
Sam: There’s a great book called I Will Teach You to Be Rich by Ramit Sethi. He makes a really good point — you don’t get rich by paying attention to lattes and building budgets and not buying lunch out. You get rich by paying attention to the macro big things: when you buy a house, the difference between 3% and 2% interest is massive, but no one thinks about that. This is the stuff you want to outsource.
Shaan: How does a company actually use this? How does Dealmaker work the twenty-thousand-dollar furniture deal?
Andrew: It’s an army of guys who love to negotiate. We train them, give them the books we’ve read, have a process, they get CC’d and go for it. They say, “Your first quote was X, we saved you Y — give us a cut of the savings.” In some cases a company retains them for a comprehensive P&L review, but usually it’s just being CC’d.
Sam: My dad should work for you. He’s incredible at this but very unorthodox.
Andrew: Here’s the thing — you and I would walk into a car dealership and say, “I have two hours. If you can get me the car in two hours I’ll sign whatever you want.” That’s the worst possible negotiating posture, but I value my time. I have a friend who will go to five of the same dealerships, get quotes from all of them, name-drop them to one another, walk out five times, do ten test drives — and he’ll save ten thousand dollars. But there are people for whom that’s totally worth it.
Sam: My dad will be on the phone with some company just going… he does it for petty things. He’ll call an airline and ask why they charged him for his seat. They say “that’s how planes work.” He just sits in that awkward silence until they say, “We’ve loved having you as a customer, sir.” He just holds the discomfort until they give.
Shaan: Most people bail from awkward silence. Your dad just camps there.
Salary Negotiation: The Hidden Game [01:20:00]
Sam: You need something like this for salary negotiation. I remember negotiating my salary when we sold The Hustle to HubSpot — my wife was in the room but on the other side of the screen so they couldn’t see her. They told me a number, and I was like, “Yeah, whatever, whatever’s cool.” My wife was on the other end like, what the hell, shut up.
Shaan: Here’s why it could be cool: I remember at Twitch they told me a salary, and I just let it sit in silence. They’re like, “Did you say something?” And I said, “Oh, no, just… lower than I thought.” Then I said, “Can you explain how you guys get to a number like this? Where does this number come from?” They don’t really know. Then they said the magic word — “We have bands.” That’s code for a range, which is code for “we’re trying to see how much of a sucker you are.” So I said, “So for my role, there’s a specific minimum and maximum band — and you’re offering me something other than the top?” Or better yet: “Have you ever gone out of band? What situations would cause that to occur?” They said, “Someone has to vouch for it, write a memo.” I’m like, cool, now I know what I’m going to ask for.
Once you realize these are all negotiable, and there’s a process bound by specific rules — like a robot that can only make certain moves — you can just go around it. You can get a lot more than you’re currently getting.
Sam: I got a speeding ticket during the pandemic, in rural Kansas, and they were doing Zoom hearings. I had a lawyer friend listen on speakerphone and text me what to say in real time. The judge was like, “Wow, you really know what you’re talking about.” I’m like, “Oh yeah, I really didn’t think I did anything wrong.” That’s the model — have someone CC’d on all negotiation emails, or listening to the Zoom and coaching you in real time. Give them half of whatever raise they get you.
Andrew: Or just let the silence work. I was at Twitch and when they named the salary I said, “Um… just lower than I thought.” And then I said, “Can you explain how the process works?” Buying time. Once they said “bands,” I knew: okay, now I know the rules of the game, and I can go ask for the top.
Buying Put Options as Business Insurance [01:28:00]
Andrew: Let me do one more thing that I wanted to share. We were talking about winter coming and I had a story for this.
We’re doing several things: stress testing all the businesses, dialing in our P&L, pulling excess cash into head office, loading the elephant gun for a big acquisition. Two interesting things we’re doing specifically:
One — if you have debt, lock in now, even at a higher rate. A lot of people are anchored to the 3% rate they could have gotten, and now rates are at 5% they don’t want to lock in. To me it’s about certainty. I want to know when I stress test a business that my interest is at 5%, period.
The second, and this is more speculative — we’re buying put options on the stock market as an insurance policy.
Here’s what we did in 2020. We started freaking out about COVID early — Chris and I kind of locked down in late January or early February, when everyone was still saying it might be nothing. We looked across all our businesses. At the time a lot of our revenue came from agency work, large Fortune 500 customers. What’s the first thing Fortune 500s do? They pay everyone late. So we’re looking at late payments causing cash flow issues, startup clients potentially not paying. The number was $5–10 million that we might lose.
So in late February we said: if the S&P 500 goes down 20%, we will get a big payout. We bought put options — $500K, going out about a year. It’s like buying insurance on your house: you pay the premium and hope nothing bad happens, but if the house burns down, they pay you $5 million.
Those options went from $500K to $7 million. Chris and I are laughing. We sell them, take $7 million onto our balance sheet. Then we look at each other: are we the guys who just sold our insurance policy? Should we keep holding? What if this is 1929?
So we took everything except $500K, re-bet it — and lost everything. The markets rebounded.
There are two ways to look at that. One: gambler’s fallacy, one last roll at the roulette table. The way I think about it is: I lost my premium. I paid for insurance, the bad thing didn’t fully happen, I didn’t deserve to keep the $7M payout. The fact that we had that money in our account for five days is kind of irrelevant.
The way to apply this: if you own a SaaS business and your entire net worth is in it, you might find a publicly traded SaaS business that’s a comp to yours, buy out-of-the-money put options on a basket of those, and say: if the market gets crushed, that’s probably an indication my kind of business is doing badly too. It’s an interesting way to sleep at night.
Sam: Where did you come up with the math on $500K?
Andrew: There’s a website called Options Profit Calculator — you put in the stock and it’ll show you various scenarios. I said: in previous recessions, if that happens over the next year, what payout do I get? And I modeled the different payouts based on where the market went.
Renting vs. Buying Real Estate [01:36:00]
Sam: Are you buying any real estate right now?
Andrew: No. I hate real estate.
Shaan: Same. I hate real estate so much that I don’t build equity in my own houses. I do interest-only mortgages because I want everything in businesses. A business can earn $1 million in revenue and do $100 million the next year through creativity. There’s no apartment building you can buy that’ll do that.
Sam: How do you qualify for an interest-only loan?
Shaan: You just have to make a lot of money. You need some collateral or other assets. And you need to lock in the rate — I locked in at 5% when I waited too long from 3%. But it goes back to: I want to sleep at night. Interest rates could go to 8 or 10%, which is historically not high probability but certainly possible. I don’t want to deal with that.
Andrew: Sean, are you buying a house now?
Shaan: No, I just rented this place — it’s like a two or three year rental.
Andrew: I love renting.
Shaan: Me too. Basically: buying the house you own is not a great investment. There’s no yield — you are the tenant. People conflate buying property that pays you (an asset) with buying property you live in that costs you money (a liability).
The second thing: picking the place you want to live is not the same as picking the best investment. What are the odds the best use of significant capital is the place my wife really likes the countertops? People put 50 to 90% of their personal net worth into a single investment — a house — and go, “It doubled in value over 15 years.” Yeah, if you’d just bought an ETF you’d have had the same result. If you bought individual stocks you probably would have done way better.
Andrew: Yeah, I would just rent a house all day and put everything into equities and businesses. We have a holding company, I own a bunch of positions in businesses — the house doesn’t need to be in the mix.
Sam: I own a house in Austin that I’m renting out now. I’m not there. For the next 10 years, Sarah and I are renting for sure. I want to go a step further — I want to rent all my furniture too. There’s a company called Feather where you can rent furniture. I intend to rent a place, spend 10 to 15 grand a month on rent, another 2 to 3 grand renting all my furniture. I want to own nothing.
Shaan: I was in Brooklyn for four months renting a furnished place. It was sick. Made me so much happier.
Andrew: Over the last couple years I bought a house at a lake locally, a place in Vancouver, a house here — and the management is a whole other business. I have staff managing the houses, they’re always breaking, renovations, designers, furniture. Everyone thinks they want 10 palatial estates all over the world, but you’re running yet another business to manage, yet another P&L, yet another group of people. Don’t cry any tears for me, but it’s really annoying.
Shaan: Everybody ends up in a prison of their own making. You want to design that prison — decide what you’re going to be a prisoner to. If I bought a fancy car in San Francisco I’d just be stressed all the time that it’s going to get scratched or broken into. That would net make me less happy and less free. You want to ask: what constraints am I willing to put on my time and energy because the payoff is worth it?
Andrew: I mean, there are all those sayings — if it floats or flies, rent it. Apply that to most things frankly.
Camp MFM and Entrepreneur Peer Groups [01:44:00]
Andrew: You guys did Camp MFM. Are you going to do more of that? You really regret not going, I know.
Sam: Bro, I know. I hate basketball.
Shaan: No one played basketball. I was the best player there, which — not saying much. Ben on the pod was dunking on people. Nick Huber was great. But besides that, everyone was just decent.
Andrew: What would be the version of that that you would do, where the two staples are: great, interesting, curated people coming — and you’re not just sitting in a room looking at a whiteboard. It’s doing something that’s a passion, with networking filling in the gaps. What would yours be?
Andrew: Honestly, I’m not a big hobby person. Most entrepreneurs I know are obsessed with business. It’s been a real challenge for me to find those things.
I just did something I really liked — I do Forum groups, like EO but I just do it myself. Five or six guys, meet once a month, talk about everything going on in our business. We just did a Forum retreat in Whistler — beautiful mountain, hiking all day, cold plunges, exercise. There’s something about being in a group of guys where you’re sweating and your heart rate is going and you’re talking about what’s actually going on in life. That feels really good.
We also had this pack of cards at dinner with really uncomfortable questions — what’s a rude word your parents would use to describe you, how have you let someone down in life. I love that stuff. For me it’s about: how do you create things that facilitate deep, interesting conversations, ideally with people you have something in common with?
Sam: All right guys, this is great. I loved seeing you, Andrew.
Shaan: Not belly to belly, but your face has become a better face in the last six months. Looking full, thick, tight, strong.
Andrew: Thanks, guys.
Sam: Okay, guys.