Transcript
Raw auto-generated captions — not yet polished.
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 foreign [Music] you want to set us up what are we doing what are we doing here uh well this is the first time the three of us have been on a pod so at least come on I think three or four times somehow you’ve never been here during during those even though y’all are friends you know each other and uh that’s just strange to me but I think this we’ll see how this goes I mean I think this will be fun the three of us here I wanted silly to come on because there was a whole bunch of like rich people smart people [ ] that was going on over the weekend there was the Silicon Valley Bank disaster Bank Run all that good stuff there’s stuff going on in the stock market and so so is the guy I go to whenever I have questions I said all right well just bring them on the Pod instead I’ll ask you the questions here instead of just uh texting or calling and so that was my that was my idea did you guys did you guys get impacted by this at all I had money in Silicon Valley Banks through my uh my fund uh so our our Venture fund had money through Angel list Angeles keeps all their money or kept all their money in Silicon Valley Bank and so we were lucky that I started hearing about it and I was like yeah I think we should get out and uh and so we ended up we had like 1.5 or 1.6 million dollars in that account um maybe a little more actually because they hold some for management fees and then we got it all transferred out to a bank I’ve never heard of they were like you want to move to grasshopper bank I was like you could put it in the [ ] field outside your office you know you can put it anywhere just don’t leave it in the bank where they’re where it’s like a bank run is going on yeah uh so we got we got out like literally in the nick of time um so yeah we were almost impacted but not not in a like major major way like there were some people that were stuck tens of millions or even 100 million dollars so I’m sure you heard some crazy stories like what did you hear I how did it play out from your perspective yeah I was at this SV Angel uh founder event founder Summit in San Francisco on Thursday when the bank run was happening and um people all around me were on their phones trying to take all their money out of SVP and transfer it uh and people walked out of the sessions and were sitting on their laptop trying to do that one guy told me that he wired 70 million dollars out of his SVP accounts that morning into his personal Morgan Stanley account because he didn’t want to wait for a bank account in the business name to open because that would take 24 48 hours which literally in normal circumstances that would be maybe not illegal but a hugely frowned upon definitely ill-advised yeah it looks like you’re about to steal 70 million dollars of other people’s money and put into your pocket but I think the people right away was it like let’s see what happens because you know the the series of steps was I saw the stock price go down that was the first text I woke up to Sam in our group chat somebody who showed the stock was down 30 or 40 percent and it just seemed like a stock problem it seemed like oh the company is you know getting hammered but like dude I feel like I’ve seen that five times in the last you know five months it was something 40 but then somebody was like oh yeah could this mean that the bank goes under and then the wheels started turning in my head and fortunately I had seen I had seen and not acted on two crypto like Bank runs in the last year and been burned by those so my I’m a criminal under under reactor I don’t really react even in cases of emergency which is good because in normal life usually things are not an emergency and it serves me well but when there is an emergency I’m also pretty laid back and so this time I I was I was smart enough to be like hey we should do something right now don’t wait don’t wait to see how this plays out there is no upside in waiting to see how this plays out did people recognize it right away where you were absolutely like hey there this could trigger a bank run yeah and I think in the beginning of the day no everyone was kind of chill about it but uh a ton of VCS I think starting with Peter Thiel said to their portfolio companies if you have money in svb take it out and take it out immediately like right now do whatever you need get it out of svb and let me explain I’m the least educated on finance stuff here so let me explain from a five-year-old’s perspective what happened here so basically Silicon Valley Bank it’s like the 19th largest bank in America something like that top 20 16th 16th and uh it’s usually used by Silicon Valley based startups and other people who related to startups and so what happened was during 2021 22 when VCS were going crazy and startups to raise a huge amount of money they used Silicon Valley Bank so they took on tens of billions of dollars of new bank accounts uh but the and so they had all this new money and so what they did was they bought long-term bonds that yielded a rate of like 1.5 percent which in a way it was them thinking like we’re just going to be conservative and like and not do anything crazy here with all this extra money then fed increases the rate to three and four percent and their customers which is startups with new cash are burning tons of money and lowering their uh deposits or their their savings and checkings accounts and then it became uh public on Wednesday stay at the quarterly earnings at the earnings report that they said um we bought these 1.5 bonds which is not good because the FED recently raised the rates to three and four percent which means our 1.5 percent long-term bonds are now devalued we have to sell a bunch of them at a huge loss people heard about that social media went crazy VCS tweeted get your money out immediately everyone starts pulling their money out and then by Friday uh the FED set or the government steps in and says uh we gotta stop this they’re gonna run out of money this is not good everyone’s gonna get hurt is that a good summary of from a from a from a dummies perspective of what happened yeah I think that’s pretty good um I think that all of those things could have happened except if you know Silicon Valley is just such a um insular place but also such a viral place where everyone talks to each other so I think if it wasn’t for the fact that it was Silicon Valley and everyone talks to each other there wouldn’t have been a bank run this fast like um on Thursday when the bank run happened 42 billion dollars people try to wire out 42 billion dollars in one day out of Silicon Valley Bank how much money do they have 100 billion they have something 200 yeah something like 180 billion dollar in deposits so that’s 25 25 cents on every dollar was tried to be wired out in one day and what happened when people tried to do that it just said uh no I mean what was the what what did they see on their screen in the beginning of the day it was working so uh this guy wired out 70 million dollars a bunch of other people at that SV Angel event were wiring money out no problem uh come the afternoon they couldn’t log in to Silicon Valley Bank so it just wouldn’t let you log in in fact I tried to log in yesterday I have a Silicon Valley Bank personal account and it also said uh you can’t log in until Monday because you’ve I know in the past your companies use Silicon Valley Bank I think you you raised money from them so first were you affectionate and second why does everybody use Silicon Valley Bank uh I think they said 50 this on their website I don’t know if it’s true but fifty percent of venture back startups um used Silicon Valley Bank that’s crazy is it just the brand or did they do something that that was like advantageous to startups yeah they do a couple of things so one they have strong relationships with all the VCS um and or so they thought yeah so they thought so they’ve they’ve had strong relationships with everybody so all the VCS are like doing their own banking all the lp all the Venture funds are doing banking at Silicon Valley Bank already and then they host tons of events around Silicon Valley and sponsor tons of events so you just see their brand name everywhere as the bank that you should use um and it kind of has like an elite Vibe a little bit which is yeah stupid because or that’s not stupid but the the a lot of media headlines were like Bank used by the rich and famous or Tech Elite is going under and so the sentiment was like ah screw them which maybe that is partial part the reality a lot of rich people do use them but like payroll companies use them and when you there was a lot of companies like Rippling that the hustle used for payroll years ago where you pay your payroll to pay your employees Rippling is the inner is the middle man they hold on to your money for three or four days and then they pay your employees Rippling used them and so three or four hundred five hundred thousand employees of companies both blue collar and white collar weren’t going to be able to pay their bill or weren’t going to be able to receive their paycheck uh so it’s not just like you know the elite yeah it’s kind of the name’s a little bit of a misnomer for whoever presents yeah the other reason we use them at tinico and this might be my greatest Personal Achievement was I got uh free tickets to the NBA finals uh from Silicon Valley Bank where they invited me to hang out in their box and watch the game so uh you know there’s a bunch of perks like that for using Silicon Valley bank and then also if you raise any debt they’re a huge Venture debt provider in Silicon Valley so oftentimes when companies will raise an equity round uh they’ll also raise a little bit of debt so they’ll raise you know 10 million dollars of equity and three to five million dollars of debt sometimes depending on kind of what their Capital needs are and so when you raise debt from Silicon Valley Bank they require that Silicon Valley Bank is your exclusive banking provider so all of your deposits have to be at Silicon Valley Bank as well that way they’ve got visibility into it and that kind of thing so a ton of startups will get debt and then they have to use Silicon Valley Bank as their bank so they have no other choice and over the weekend basically there was a bunch of people we have a bunch of our mutual friends where they were just like sitting there Friday to Saturday and Sunday morning thinking I think I just had all my money’s gone I don’t know what’s gonna happen I was with like maybe a dozen people and they’re like you know I’ve had hundreds of thousands or tens of millions of dollars I just don’t have that and I have no idea how I’m gonna pay my employees I don’t know what’s gonna happen a Sunday night we find out that everything’s gonna be fine the the corporation Silicon Valley Bank is going under if you’re a stockholder in that I think you’re going to lose everything if you’re a bondholder in that company I think you’re going to lose everything but if you’re a depositor if you’re a customer you’re going to be made whole and so it’s no big deal I think you can access your money now uh is that right is that how this is currently being resolved yeah that’s exactly right so the Federal Reserve and um U.S treasury Department were like if Silicon Valley Bank depositors lose their money this is going to create a systemic risk that systemic risk is everyone who has money in these 2 000 local Community Regional Banks is going to take their money out Monday morning because they’re afraid that their personal bank will have a bank run also so which would this is literally what I’ve grown also right like anybody being proactive would be triggering an actual bank run across many many other Banks and so they had to they had to basically get people to chill before Monday morning yeah exactly like First Republic Bank is a bank that I use and a ton of other startups use and in fact First Republic Bank provides is the bank that Mark Zuckerberg uses to get loans for from for buying a house or just getting a loan against a stock um and there were rumors over the weekend a bunch of my finance friends in New York texted me and said hey do you have any money at First Republic Bank if so get it out Monday morning well so today it’s down 65 so even though this happened uh why is it still down so bad I think people are just still afraid that there’s gonna be uh that depositors are still going to take money out of First Republic Bank there was a funny there was a funny um headline and it said that um you know when you think of this you think of like literal pitchforks and like guys wearing straw hats and like torches standing outside of the bank because there was like a headline that says people are rallying outside the bank just banging on doors to get in and you think like you know like a pitchfork mob and it was really it was like eight or nine like Asian guys wearing Facebook book bags and like North Face sweaters and they and they were smiling at the camera like this this article like they look really happy they’re like waving at the camera uh and I saw that because it was a pretty funny thing well I think that was part of the problem here was like like you said in Silicon Valley everybody’s so tightly networked that like Words spread like wildfire and then back in 2008 when the global financial crisis happened in the the sort of the other bank failures happened there wasn’t really like like Twitter was very new at that point in time smartphones had only come out that same year so it wasn’t like as fast so this was basically like a bunch of people who are all incestuous and all talk to each other a ton on top of that you can now do online banking and just quickly log into your phone or your laptop and wire out 70 million dollars you don’t even need to go to the bank like normally it’s like Bank Run there’s going to be a huge line and that huge line itself is a like barrier to this happening but in this case everybody talked about it everybody moved it out digitally and word started spreading um you know basically fear started spreading across Twitter Tick Tock and other places and it just felt like it’s the end of the world uh you know move now and that that sped this whole thing up up into a one day like tsunami Financial tsunami that that hit um what do you think about like it’s crazy because the I bet the CEO of Silicon Valley Bank woke up Thursday morning and was like what’s the big deal guys this is gonna be fine and uh was it a big deal silly like besides the the fear was it actually that big like was the was the business itself at risk um there is some there’s a real problem with the Silicon Valley balance sheet uh because of the the sort of depositors taking money out in general so even before Wednesday um because of all of the startups that because the startups are the ones that bank at Silicon Valley Bank they were withdrawing money every week to pay payroll and uh because of their burn rates um so there was already a problem but I think that you know Regulators are monitoring bank balance sheet on a monthly basis very closely so they were like this is all fine uh up until that point and so nobody thought this was a problem like the Silicon Valley Bank CEO was like this isn’t a problem Regulators thought this isn’t a problem yeah but he had one line that was bad he goes I we don’t panic I think he said Don’t Panic exactly he did such a terrible job of PR and um the way that they came out on Wednesday and said hey we’re going to raise 1.8 billion we are going to raise two billion dollars because we lost 1.8 billion dollars like they just mismanaged this from a PR perspective and I think if they’d done a better job of that they wouldn’t have gone wouldn’t be dead today and to to um Sean’s Point around just the speed of this happening so the biggest bank failure in American history is Washington Mutual in 2008 and in 2008 10 17 billion dollars was removed from Washington uh withdrawn from Washington Mutual in 10 days and in Silicon Valley Bank it was 42 billion dollars in one day on Thursday so just the speed with Which business happens is like you know so much faster now and I want you I want to get your reaction to two people so Peter Thiel some people are like oh Peter’s teal strikes again he’s the you know this guy’s the Menace and then they’re like he brought down Gawker he got Trump elected and now he he triggered the bank run of silica Valley Bank so Peter you know do you think that that’s uh is it is there is there any truth to that and then the other side is Mark suster who’s another VC down in La who basically came out during the process and was like this is like like you should companies you should keep your money there support Silicon Valley Bank it supported us uh there’s you know we don’t have to have this hysteria if we don’t do the bank run there’s there won’t be a bank run I’m you know keep your money there and if you know for people who had listened he could have caused them to basically you know lose or lose access to the majority of their money so what do you think about those two people and where do you play place the sort of how much blame or credit do you do you give to those people uh I do think Peter Thiel has a ton of power he’s like this Godfather of Silicon Valley uh you know we had a tiny cowboy and Mark Andreessen on our board and he would never mention what anyone else says except he would constantly mention what Peter Thiel says so I think what’s an example um and why uh I think he just Mark Andreessen I think just looks up to uh Peter Thiel and thinks that Peter Thiel has a bunch of good ideas um so for example one idea of what one thing he I remember him saying was um Peter Thiel says the best startups have one source of Revenue uh not eight sources of revenue I’m sure you’ve seen this in startup pitch decks where they’re like we’re going to generate revenue from ads plus we’re going to generate revenue from businesses plus we’re going to generate revenue from these customers um to having like eight different revenue streams is much worse than we’re Facebook we’re going to generate revenue from ads one single clear Revenue Source in the beginning and and do you think that I mean I don’t think he’s the bad guy in the situation because basically what happened with him was uh it’d be like if I’m just a normal person went to the bank account and they tried or the ATM they try to withdraw money and the ATMs glitching and they’re like this doesn’t feel right hey family uh I think you should bounce and go get your money out of this this is like glitching this does not look good because I believe Peter Thiel he did a CAT I think Silicon Valley invested in Founders fund or something like that uh is that the story or he did some type of capital call uh and Silicon Valley could didn’t pay up right away is is that right uh I didn’t say anything about that um and uh yeah I don’t know what that is what I know is that he basically Peter Thiel was the was one of the people in Silicon Valley that was like this is not good everybody take your money out and then you know all the other Venture firms heard that and sent emails to their portfolio companies saying the same thing like on Thursday you know I’m an invested in a bunch of venture funds a bunch of them emailed their LPS and said hey this is our exposure to Silicon Valley Bank as a fund we’re talking to all the portfolio companies and trying to get them to remove all of their money out of Silicon Valley Bank so really they caused the bank run you’re you’re an LP in like you’re an investor in a bunch of funds uh like maybe what like 15 or so big Venture funds uh yep did they have their money tied up and I’ll ask I’ll tell you why I think this is something was a little fishy here so on that Thursday or Friday when it was all going down um VCS were simultaneously telling their portfolio companies hey get safe but at the same time we’re basically saying hey the FED needs to come in and ensure that all the deposit depositors are going to be made in whole and they were saying it anytime somebody uses the like what I call like the single mother story it like makes me very suspicious and what I mean by that is they were like you have to do this because jobs are at stake these companies have to make payroll and if they can’t make payroll next week you know this is going to cause jobs to be lost and you know who works those jobs single mothers and like they basically was all about payroll small businesses jobs saying all the political like buzzwords to get like Washington to do something because you know nobody wants to go be like hey I’m a venture fund we had 90 million dollars in Silicon Valley Bank because they gave us lines of credit and we were we had to keep our money in there and we’re stuck you know we’re way above that FDIC limit and if we’re not made whole we’re we’re screwed um was that the case or is that just my conspiracy should I take off the conspiracy hat or or is that do you think was that a part of it yeah I mean I I saw a bunch of videos of David sacks and Jason calcanus and stuff saying that kind of thing I my I’m skeptical that any of that matters I think the way that um Jay Powell and Janet Yellen look at this is uh there is a systemic systemic risk to the banking system so you know taking a step back from Silicon Valley Bank like the met the American Financial system is this amazing black magic that exists and it is a source of tremendous amounts of prosperity in America and in the world like if you go in places like Pakistan where I was born you don’t have a um you don’t have access to a credit card you don’t have a FICO score you don’t have uh the ability to go get buy a piece of property and get a 30-year mortgage on it that the government backstops you are constantly worried about the uh your currency being inflated because you’re not sure that um the the government is gonna isn’t gonna just print so much money that your rupee that’s worth uh 100 rupees is worth yeah your life savings basically disappears because of inflation and you’re not worried when a company that’s a publicly traded company reports earnings that those are lies in the United States like there is so much stuff that is amazing in America from a financial infrastructure perspective that the rest of the world does not have and the Federal Reserve coming in and bailing out Silicon Valley Bank and doing it without using any taxpayer money making all the depositors whole wiping out all the equity holders wiping out all the unsecured debt holders like that’s the right thing and where’d the money come from yeah if it didn’t come from taxpayers which is that 25 billion back to that come from and also bailout I don’t think it’s the right term because they didn’t bail out the bank the bank is out of business or or it’s dead but they bailed out the depositors right the customers yeah and and you know what people were saying on the internet single mothers yeah yeah because they need that third home in Truckee yeah what people were saying on Twitter which I agree with is that hey when you put money into a bank you’re not thinking of this as buying um a risk asset you’re just thinking of it as I literally have cash I could store it under the mattress but that would be silly I’m gonna store it with the bank and the bank is going to do a better job of taking care of my money than me by storing it under my mattress and that’s an important American value yeah that is a super important American value that is my product that the banks sell yeah it’s Safety and Security faith that you are your money is safe and if that product if they if people start to question that the banking system doesn’t work and you’re one step everything from people everything’s food who cares about this little green piece of paper I don’t know if anyone’s going to care about this or if this is going to be have any buying power tomorrow right money money also has the same thing where the the only attribute that matters is belief in its value and and banks have the same thing it’s belief in the safety there and where’d the money come where’d the money come from though you didn’t answer that um yeah the FDIC is basically is funded by other Banks so um think of it as an insurance fund and Banks pay a premium to that fund and the FDIC Insurance Fund has a hundred billion dollars in uh fees that it’s collected from Banks and in fact um in the Federal Reserve letter that they printed they released yesterday they said any other fees any other money that we need is going to come from a special assessment of other Banks oh wow so they had this money and they said we’re gonna make up to this much available not just the Silicon Valley Bank but any bank that um that needs a loan against their their other like their long-term assets if they have the same kind of duration mismatch where they have yeah they own like they’re good for the money they just can’t get it out today it’s in 30 years they’ll have enough money um for sure it’s just that today the the value of that mortgage that they owned uh you know had gone down 30 or whatever yeah that’s right they said we’ll give you a loan against that asset uh in the meantime who are the uh who are the winners here um to me the winners are other Community Banks and other banks that have this problem so yesterday that uh the government announced this new brand new program on like uh one sheet of paper it was like a Google doc I saw it uh yeah yeah it’s so funny that they uh released stuff in the way that they do they create a new program called the bank term funding program and that’s basically going to prevent the Silicon Valley Bank problem that they had with the long duration bonds so basically Silicon Valley Bank had a 1.8 billion dollar loss because they sold a bunch of luck 10-year duration bonds and uh they have to sell them on for 70 cents on the dollar and what the FED announced is that if you’re a bank and you’ve got a bunch of 10-year paper that’s worth 70 cents on the dollar you could get a loan from us for all of it you can get a hundred uh you can get dollar for Dollar Loan so if you’ve got 98 billion dollars of 10-year paper that’s now worth 60 billion dollars we will give you a loan for 90 billion dollars so that you can uh not have this problem yeah you can basically not have liquidity problem and then the other winners were like there’s a lot of like startup Banks like Mercury it seems like they were just like crushing it uh I think brex was another one like they’re just killing it right well I think the the best thing for them so I think the real winners is First Republic because they would have been wiped out today probably and many others like First Republic so they got you know the bullet just whizzed past their ear and uh you know luckily that was the last bullet and now there’s no more bullets coming today and there’s 2 000 Community Banks in America and so like all a bunch of those would have had a bank run today or this week if they didn’t do what they did Mercury and a bunch of these other startup Banks basically when everyone needed to move out of Silicon Valley Bank it’s like who’s the fastest what’s the next Bank name I know that I can open up an account now um and mercury and others were beneficiaries of that now they got billions of dollars billions and billions of dollars of inflows yesterday or sorry Friday now I think that a lot of that would have skipped town this week so I think they would have been a middleman because who the hell is going to keep their money in a startup Bank um when this is your fear you’re not going to keep 10 million dollars or 20 million you might have moved it there just because you needed a quick Safe Haven but you weren’t going to move in there you were going to still next week go to Chase or Wells Fargo or whatever and go put the bulk of the money there so now I think they’re uh in much better shape because instead of being just a middleman they might keep a lot more of that that depositor uh you know those depository relationships now and is it possible that other than the equity holders and the people directly impacted by this that just like the average American might be impacted positively by this in the next six to 12 months because maybe the FED won’t be doing more rate uh increases so then you know maybe you can get a mortgage in for four and a half percent or four percent in six or twelve months because the you know the government is like oh hey we kind of like achieved our mission because these guys screwed up uh like inflation might not be as bad now because of of this big loss is that accurate or is that too much of a reach I personally think that’s too much of reach I definitely see people saying that on Twitter and CNBC but I think inflation is uh rampant and is has nothing to do with the Silicon Valley Bank problem and basically in two weeks people will have forgotten Silicon Valley Bank problem and they’ll have all they have all their money as of today um so like it’s back to businesses as usual and business as usual still has massive inflation and the FED is going to continue to raise rates in my opinion I this showed me how naive I am because I was under the impression that if I kept a bunch of cash in the bank that was me doing the safe thing I wasn’t investing this money or trying to get yield on it I was saying look you know I just want to keep this in the bank so that you know just in case and the the 250k FDIC thing was this like idea that existed I had never heard it ever coming to play like in 2008 I was a sophomore in college like I didn’t care or no I didn’t have a bank account you know like I didn’t do anything at that time yeah you thought Lehman Brothers was where you like buy khaki pants like oh you got that new parent leaving exactly it was like are they hosting Thursday this week what’s going on so it’s like yeah this is kind of my first time for this coming into play did you like because I was like who the hell is going to take if you have five million dollars are you really gonna go open up 20 bank accounts each with a 250k limit like that sounds so inconvenient I think that’s what a lot of people do but yeah to be honest does this uh Giannis Greek Freak announced that he has 50 bank accounts at different banks each with up to 250 000 that’s how he kind of secures against us well I saw Jared Kushner when he uh when Jared Kushner became whatever his role was in the government what secretary I forget what he was but he uh had a release like his his income and I remember or his his net worth and I remember looking through it all and he had dozens of bank accounts and it just said 250 000 in each account and I was like why and and this is I mean this seems is is this normal and I you know I’m just the only guy who didn’t do this I had to try not to go above too much above 250 000 but for my business I did but personally no I try not to go above 250. so you spread it across you know how many accounts exactly then Sam what would that be yeah this is our new way to trick people into telling us they’re they’re like what they’re worth be like you’re an FDIC right right yeah I was surprised that Giannis only has 50 Banks I was like no because that story is from his rookie year so he came over from Greece where Greece was like having the banking crisis and yeah and so that was his rookie year that that his he he and his agent did that now he’s worth like 200 million dollars there’s no way he could be doing that at this point he’s got some other you know but rich people have this right like if you’re at JP Morgan and you got 20 million plus they’ll do an auto like sweep into a bunch of accounts for you I think um I’m not sure exactly how it works but I’m pretty sure there are there are products that exist that will do this they just seem Niche to me and seemed like I don’t know a tool for the paranoid it didn’t seem like a thing that uh um I needed to worry about personally yeah it’s so funny because um my father you know immigrant to the U.S uh always worried about the banking system and the US dollar is always like let’s go buy gold bars and bury them under the house uh just so that we know that our money is secured and then he’s also like let’s go open bank accounts in Swiss banks because those are the safe Banks and they’re not going to have this problem um because those also don’t do fractional Reserve right like a Swiss bank is I think one for one um they don’t they don’t keep you know just a fraction of your cash in the bank what’s an example of a Swiss bank and how do you I mean I’ve only seen like Wolf of Wall Street where they like go to Switzerland with like cash in hand is that that’s not actually how you do that I mean how do you open a specific I don’t even know how you would open a Swiss account um you know I think Credit Suisse is uh actually a Swiss bank but it also has a bunch of um was seen as as dangerous for a while I don’t even know the name of a Swiss bank um but I bet you can just open a bank account online and wire the money without having to attach uh cash to Margot Robbie and send her to Switzerland but that would be cool if you could I can’t find this client info have you heard of HubSpot HubSpot is CRM shares its data right application every team can stay aligned no out-of-sync spreadsheets or dueling databases HubSpot grow better all right we I think we we did a good job covering the Silicon Valley Bank but surely you actually had a few other things that I thought were interesting one of them being the uh all birds right what a [ ] company man they are really it’s not working out for them is it yeah all birds is uh in my opinion the ugliest [ ] shoe I’ve ever seen in my life and I remember seeing these um like five to seven years ago in Silicon Valley all the Venture investors that I knew were wearing them around town and I was like you you are ugly your shoe is ugly you’re ugly this sucks this is not a good looking shoe and I’ve heard I saw this tweet that I think is the best way to describe it all birds socially acceptable sweatpants for your feet yeah I’m not a big fan of them either but basically they’ve raised uh two or three hundred million dollars in in funding they’ve done 300 million dollars in Revenue market cap is uh down from 4 billion to 200 million is that right it’s 200 million right now yep yeah down 95 from their IPO in November of 2021. how much of the founders do you think how much they own um I didn’t look at how much the founders owned I bet they owned a lot of it before uh when it went public and I didn’t look at you know kind of how much have they sold off but I got a decent amount so what’s gonna happen with that um so I think that uh you know the the problem that they’ve been having is that their revenue is shrinking um and their costs are really high they’ve opened up a ton of stores like 58 stores in the US and abroad and I think that store strategy isn’t working because not enough people know what all birds are and walk into the stores and want some so they’ve they decide they’re going to stop opening stores they’re only going to open three more stores this year and those are places where they’ve already signed leases they’re going to stop any International growth by they’re not going to open any more international stores they’re gonna uh just do just fine Distributors internationally to try to grow they’re trying to contain costs by their manufactured today in New Zealand they’re going to stop manufacturing them in New Zealand and move it to one place in Vietnam so you know my sense of what’s going to happen to all birds is uh there’s somebody we’re here to bring your own laces from now on like they’re like cutting every corner here there’s like you know we don’t have running water in the office today uh we’re doing that every every other day and until this thing is profitable silly what do you think of this in terms of like d to C so like I think people have basically I think DDC got hot people started a bunch of Brands a bunch of investors came in and funded these companies like they were tech companies but they weren’t tech companies Casper um all birds and then some like Warby Parker and others that that got BR that broke out and then you know so on one hand if I if that’s all I knew if I was just sitting from afar I would have been like this space doesn’t make sense then and now it’s playing out where it’s like yeah these companies are not profitable they’re not doing that well um you know I think they’re burning 100 million dollars a year or something like that like they’re just they’re very mature companies that are still losing a ton of money and I would have just my opinion would have just been that but you and your brother like your brother built native deodorant um it was a profit you know basically raised almost no money uh what did he raise like 500 grand for that business is that is that all he ever like 500 000 yep raised 500 000 built it up basically by himself with like you know a very very small lean team you know packing deodorant like you know at their kitchen table at your kitchen table in your apartment and sold that thing for 100 million dollars when it was highly profitable um that whole way you know then you have that model and you’ve had a you know you we don’t talk too much about your business but you’ve been involved in a very different style of d2c that is highly profitable lean and mean raise zero capital or very minimal capital and I feel like nobody even knows about those businesses those are like you know more under the radar everybody only hears about the big VC ones uh you know like away luggage and stuff like that what what is your take are you sort of like that other way is dumb or are they actually just two different games and you know both both are valid yeah I think there are two different games the native Playbook of Rey’s little Capital um focus on profitability acquired customers uh so that your break even on the first purchase of profitable on the first purchase and uh scale through repeat purchases that are generating a ton of profit using that to either reinvest in the business to launch new products or just take distributions um so I think that’s a super valid Playbook and I think there is a valid approach to the raise a bunch of venture capital and try to build a business at a much larger scale um who’s doing that that you think that they have a good shot yeah maybe um yeah figs in my opinion is a great example because uh they’re like one of the problems with all birds is they’re a fashion brand and at some point the World Turns against you and um like I believe that all birds are ugly I think other people are gonna arrive at a similar conclusion at some point and then all birds is gonna have to find the next style to get to that place uh to to kind of continue to succeed um figs is basically a uniform so uh it doesn’t need to be better looking over time yeah but that’s a bullsh I think you’re wrong there I think that I think that that strategy is not bad like look at Louis Vuitton you know they’ve been around for 300 years and it’s always been cool I think that their execution they just picked a lame thing yeah I don’t think I don’t think it’s a bad strategy I think they just it’s a stupid shoe or at least that’s what that’s what a lot of people think yeah I mean Nike is a great example of a business that um has scaled to you know more than a a hundred billion market cap I want to say and uh they’re a fashion brand that serves um you know the super high end as well as the low end um so that they figure out how to do it so I think there is a Playbook to go raise Venture money um or private Equity money and get to scale um I just think a lot of the of the companies that have raised money have been undisciplined they’ve hired too many people like Grove collaborative um what do they do Grove collaborative is a San francisco-based startup that’s 10 years old it’s also publicly traded they started out being this Marketplace of kind of natural products so I’ve saw them as um I would see ads for them saying get free Mrs Meyers uh kit and I would click on those ads because I was like free stuff sign me up and they’re basically trying to give you um get you involved in a get you enrolled in a subscription of buying a bunch of Home Products got it okay cool idea cool idea yeah great idea and it went public through us back and it has the same problem as all birds and Away luggage although way is private um growth collaborative stock is down 96 percent and has a market cap of 70 million dollars it’s worth uh you know way less than the cash that they’ve raised that’s crazy yeah and the stock is sub one dollars if they have to do a reverse stock split to avoid being delisted and uh yeah they basically have to fire a bunch of people and uh stop spending as much money on marketing so that they can be profitable and have they basically have to accept declining Revenue to get to profitability and uh that’s what growth collaborative just did in the third quarter of last year it was their first profitable quarter ever so what companies do you like they’re saying all the companies you hey on here you have wish you have Grove you’ve talked about all birds uh you don’t like box yeah which is like Costco online yeah what do you like um I think there’s a bunch of companies that are uh awesome businesses that are worth less than they were in March of um so they’re trading at less than pre-covered valuations and I love those companies but uh some of them are the ones you hear about all the time which is uh Facebook Amazon I think those are two great businesses you and I were walking in in SoHo in New York and after some Meetup and I uh I won’t say the amount you can say the amount if you want but you said I just bought blank amount of stock in Squarespace and my jaw like kind of dropped I was like what did you really why and you like told me how much you love that company and it was a very large amount um and so are you still at the Squarespace uh yeah I bought a million dollars of Squarespace stock I still own it I don’t know if I made any money on it I at some point it turned into like 250 000 because uh Squarespace stock went down so I’d lost 750 000 but I think it has since turned around um you know it’s up 15 year-to-date um I think Squarespace is super undervalued as a business but I’m not sure it’s a great stock to buy uh you have like a long history with Squarespace let me ask you a different different question um at one point you tweeted out something like hey if we you know if a guy happened to have 50 million liquid and wanted to double it um you know what’s your best idea and you got like a hundred replies I remember going through them and being pretty unimpressed with most of the ideas it didn’t seem like I I thought you know you some some great stuff would come out of there but but maybe in something like this 100 people reply and it’s really three interesting ideas did you get anything interesting or what did people say when you tweeted that out and did you get any interesting ideas on what to do with your money from that um I got one interesting idea which was uh try to go buy all of wish or you know 51 of wish um wish has 700 million dollars in cash and its market cap is 286 million so it’s trading at less than cash so you know buy enough stock that you can uh convince management to distribute the stock distribute the cash and shut the company down right and can you and I remember seeing that uh why doesn’t that happen in practice right companies got 700 million in cash it’s trading at 300 million uh why doesn’t you know it seems like the the the the like the video game move is you buy the 300 million dollar company you shut it down tomorrow so it stops burning cash and you distribute 700 million out you profited 400 million why doesn’t that happen in practice or does it happen in practice uh so there are people like Bill Ackman Carl Icahn that are activist investors that do this kind of thing um you know they do it with apple even uh Netflix like call icon uh will basically go by five percent of a company and then call up management and say hey we want you to do X Y and Z and if you don’t we’re gonna just keep being a thorn in your side and so and we’re going to try to remove your board directors and put our board directors in uh we’re gonna threaten to fire youseo they do a bunch of this kind of stuff um and generally what will happen is the CEOs will just listen to Carl Icahn and do what he says or do something else that makes their stock price go up 10 15 20 percent that um and then Carl Icahn will sell his position make billions of dollars and be like great that was fun with something like wish uh it’s if you try to go buy a wish stock it’s so thinly traded that you would basically Drive the price up and you would never be able to buy 51 you’d have to you’d have to pay you know 100 700 million 800 million dollar market cap to basically own 51 of it dude it seems like most of the companies that you’ve mentioned or a lot many of the companies you mentioned went public via SPAC has there been once back that has worked out uh that is a great question I have no idea and for the like I remember chamoth was all about spec I don’t pay attention to the public market so I’m a little I’m definitely out of my depth here but I know enough to know that he was big on specs what are these guys what’s their reputation right now which is they got and did they make money they made money at going up making it happen and so now are they just like oh [ ] y’all like you know what I mean like are they just like uh they don’t care yeah the way this backs work is if you’re the sponsor which is what your mouth was and a bunch of these like he took Open Door public um through SPAC uh Sofi public thrifts back you end up getting a percentage of the company without taking any real risk so chamath has made out like a bandit in I think he’s done five to ten spacks he’s made money in each one of those specs and I think every uh how much um more than a billion dollars across all of those for sure wow and so how does the math work so I remember I think I’d heard one point you have to put up three percent of the capital to own but you own 20 of the company when it goes public is that right or did I did I misunderstand um yeah I don’t remember the math but it’s something along those lines which is for taking the company public you get um it’s probably not 17 but you get something like five percent or ten percent of the company’s stock for basically taking it public and you don’t take any risk you basically raise money from a bunch of Institutions um you hold that money for up to 18 months you have 18 months to find a Target that you want to take public you find a Target you make a deal with them to take them public um all those investors that have gave you money 18 months ago they can either keep their money in the deal or uh sell it and get their ten dollars back and so a bunch of people will sell because they’re like oh this isn’t going to work sell I want to sell my stock so oftentimes um the SPAC which is publicly traded will be trading at ten dollars and then it’ll get and the target will get announced we’re gonna um take uh Grove collaborative public and then the stock will drop immediately when uh the target gets announced because everyone is selling and it’s like oh this isn’t gonna this isn’t a good Target so what’s his reputation then I mean is or is he just like so I mean so original give a [ ] about his reputation well did you did you guys say the thing that’s on this dock which was uh the reverse Robin Hood steal from the poor and give to make himself Rich no no yeah I was waiting for you because I know I don’t I mean I don’t know enough to know about him and Michael schnick but Sean you have a strong opinion about it uh I mean I want to hear Stewie’s opinion I don’t think I have a that strong opinion yeah you give them a hard time dude you give them a really hard time you know I think chimath is super smart super successful I love his uh you know those cashmere sweaters that he wears on all in podcast they look dope I gotta buy me some but what he’s done with the spax is literally the opposite of Robin Hood he’s stolen from the poor and given to himself and uh I’m surprised that his reputation is not tarnished in the public markets or in what is it can you ask your question is it that he ended up you know dumping on retail because it was always designed it was kind of designed that way it was gonna be that way or oh well the Market’s just turned and everything’s down you know like I I don’t fault Jeff Bezos because my Amazon stock is down you know like that’s out of their control it’s a good business blah blah blah versus no the way these were set up it was a bit of a house of cards you know um he was gonna make money and at some point this was going to happen because these fundamentally didn’t make sense which one which one is it more yeah you’re asking is the what’s the intention yeah do you think do you think he knew and that the intention was yeah this is probably how it’s gonna play out but let’s just see um to me these are pump and dump schemes uh like in Wolf of Wall Street if the company is sound and uh gonna go public generally the companies will go public on their own uh using the traditional IPO path or a direct listing um you know that’s what Squarespace Spotify slack all these companies that went public during the same era that he was doing these specs the companies that go public through specs are trying to rush to get public and it’s not the airbnbs of the world it’s the Grove collaboratives of the world and so fives of the world that are doing it um businesses that that are not as sound now what they would say was like the very first one I think he did was virgin and it was look this is a company that you’d have to be a rule like you know Tech investor to understand it’s got a really long-term huge vision and you know they needed somebody who believed and they didn’t want to you know take their chances with the with the short-term minded stock you know uh you know IPO stock market so some version of that was like you had to be a True Believer in Technology Innovation and you had to be smart enough to understand how big this business could be that’s why I’m taking it public and so it kind of made sense on the first one and then pretty soon it was like just putting lipstick on the pig and selling it and that’s how it felt to me at least and so I’m kind of of the same opinion which is I think obviously he’s smart and obviously he’s successful I don’t think those are arguable I think that uh he’s also very pompous you know I don’t love his personality I also think that what he did with the specs I think you know uh seems to be more like like more like the pump and dub or uh putting lipstick on a pig like you know these weren’t great businesses it was what can I do to just you know to get something to to cash here um because he again he had a free role in a lot of these exactly and so you know and I and I find him to be you know somewhat disingenuous when he when he talks like you know I remember before he took Metro mile public it was uh Buffett had Geico I have Metro Mile and here’s why it’s better blah blah blah fast forward like less than a year at Metro mile is you know sold for 30 cents on the dollar to Lemonade um because it was whatever not in good shape at that time um and then you know no mention of it ever again you know it’s like oh yeah on to the next yeah the the thing um you know there’s a bunch of people that were uh pumping Bitcoin or other crypto products and when they tweet there’s a ton of people that reply to their tweets saying [ ] you I lost my life savings because of your um because I took your financial advice when chamath tweets I look to see what the responses are there aren’t many people that are like hey you screwed uh all the you know the public moms and single moms and uh families on uh on these specs dude I was with your brother one time silly and we were hanging out and someone was talking about a get rich quick scheme and how like uh I think I someone they were like saying like uh you know no no one likes to quit get rich quick scheme and your brother goes uh whoa whoa whoa whoa whoa getting rich quick is the best way to get rich and uh and your brother’s pretty funny because sometimes he’ll say funny stuff but it’s like oh yeah you’re right that is like that’s way better and Sean was talking about chamoth and virgin he’s like you know we don’t care about the short term it’s for the long term and a lot of times when I when I read about this these uh public markets and they talk about long term I’m like yeah I think you’re I I kind of care about the short term I definitely care about the short term a bit too uh so and and they like use that word long term to uh disguise like bad [ ] like you know it’s about the long term it’s not about the short term just hold it’s the long term I’m like I don’t know getting rich quick and in a short amount of time that’s that sounds nice too uh I would like it not to fail in the short term uh that would be nice there there’s this Warren Buffett quote where uh somebody is like some reporter is like hey what you talk about is pretty um simple and sounds like anyone can do it uh why aren’t more people applying the Warren Buffett strategy and and becoming billionaires and his response was everyone wants to get rich quickly I’m about getting rich slowly and nobody has the patience to do it yeah but here’s my issue with that when he talks about that he keeps talking about the long term and he’s 95. uh it’s like bro there there ain’t a long term have some fun yeah you don’t have long term anymore stop talking about long term maybe long term stops when you’re 60. it’s like enjoy it yeah I was talking to these um 25 year olds and I was like two million dollars when you’re 25 is more valuable than 20 million dollars when you’re 45. because you can basically do awesome stuff at 25 that you’re not going to be able to do at 45. yeah dude I agree I agree um Sean what are you gonna say I was gonna say uh you had shared this blog post about a good a good quest which is uh I think a guy from Founders fun I think wrote it a while a while back I remember reading at me like this is actually pretty interesting seem like something that maybe maybe resonated with you can you explain the idea of a good Quest and then I want to hear you guys uh talk about it um yeah it’s kind of like this guy basically was like some guy found responders Stevens I um he was basically like a bunch of the brightest Minds in Silicon Valley and in America and in the world are uh focused on bad quests so kind of in a game you can uh in the game of life you’re either focused on something that is noble and honorable and makes the world a better place or in his language you’re focused on short-term things that are going to make you rich quickly uh even if they’re incremental improvements um so a slightly better mouse trap and he basically is like there is no uh we’re wasting society and um people are wasting their energy brilliant people are wasting their Brilliance on dumb problems and we should be trying to solve the greatest problems that we have in our lifetimes and that is the noble work and everything else is [ ] and he points out he’s like most I don’t know man but this guy look but do our Pro his former job he he used to work at Mike’s Hard Lemonade I don’t know if I can trust this guy did you really that’s how he knows dude that’s the experience he did the total opposite he works at Andrew a defense company but like I don’t know I prefer Nerf like sorry go ahead I’m an idiot yeah he’s a co-founder of mandrel so he points out this thing which is like you know the average person is not capable of going on one of these good quests so if you’re brilliant if you really are in that kind of like top one percent of talent uh and motivation and ability it’s kind of like your moral imperative like you you kind of got to be the ones doing this because who else if not you then who um is sort of the the mindset that he has um and so I would say that like you know I think you’re awesome but you you yourself are like I want to go in a good question you’ve been telling me this for like five years yes and you’re like I’ve spent my whole life building these like mouse traps that make a bunch of money because I just wait for them I just see them they’re obvious this widget I could sell this widget and make a bunch of money um and you’ve done that are you did this blog post tip you over the edge to do a good Quest or did it have the opposite effect and turn you off and say actually you know F this guy and F this whole like noble Quest [ ] maybe next week [Laughter] um you know I went to this uh SV Angel Event in San Francisco last week um and I’d been to San Francisco in a really long time because I was having this like existential question myself of uh should I be going on good and hard quests versus easy quests and you know easy quests are great because you have a great quality of life like uh you don’t work that hard um you can go play tennis in the middle of the day or work out at noon like my brother every day at noon will go work out for two hours in the middle of the day um we could have a sick pad in in New York and maybe a place in La and and travel all over the place I mean you guys have a pretty nice life yeah yeah like he’s gonna go to Japan uh next week um just for fun to look at uh go to the Cherry Blossom Festival um so you know he’s uh it’s very easy to be seduced by like quality of life and easy quests in my opinion I like how you’re using your brother here instead of yourself you do all the same things you’re just like yeah using him as like this guy it’s way easier to use him uh than kind of look at the mirror look in the mirror more closely um and so you know I went to that event and uh Sam Altman spoke and he was basically like um everyone thinks open AIS and overnight success I’ve been working on this for seven years God damn it and so have all of these other AI um scientists and AI engineers and it took us seven years to make chat GPT what it is today that’s not that long it’s not that long but uh it’s it’s a really long time like basically they didn’t launch a product for maybe five years or something along those lines um and you know he had every Quest at his disposal he could have just simply sat back and Angel invested and done you know become you know as proficient at pickleball as one can be right like he had he was running YC at the time and he left probably you know the the best job in Silicon Valley which is running YC yeah probably the highest paid lowest effort job you could have like it’s up to you how hard you want to work there but exposure to new people new entrepreneurs new ideas you get to do all the fun [ ] you get to see all the smartest people you get to be the king maker uh you know you have the infinite money glitch if you’re her if you’re doing everyone in Silicon Valley is coming to kiss your ring hey quick to go do this non-profit AI thing and I remember at the time I remember literally at the time this was like what did he do this like 2016 or 2019 or something like that he he left he had been funding it as his own like you know personal passion project basically until then that he left YC to do that and I remember thinking at the time I should probably just go follow Sam Altman like if he is gonna do this with his time there’s really no better signal in the world that that’s this is like the right place to be unfortunately I didn’t act on that but I remember having that thought in back in you know 2018 2019. yeah it’s it’s funny to me that you say that like seven years is not a long time um because yeah I guess in a sense it’s not but seven years at the same time seems like Infinity um when you’re working on uh a startup and you’re there’s no immediate gratification like I can’t think of the last time I was able to work on something for seven years without some form of immediate gratification I mean there was there was there was Milestones uh look at this guy the did Trey Stevens who started Android like funding rounds winning certain contracts some type of press I mean that’s like pretty cool you know there you got you can get yourself you can get your dopamine hit but what are you gonna do are you gonna quit doing this small boy [ ] that makes a lot of money you’re gonna start doing something like legitimate that like actually matches your IQ um yeah I want to try and do a hard Quest but what what’s what’s the what are the handful of ideas or industries that uh tickle your fancy and then doing something in healthcare would be really amazing and transformative I I think healthcare in America is so bad uh it’s shocking to me like um you know my mom had a bunch of medical problems last year and just getting access to doctors uh is insane um like if you want to get see a specialist you have to wait 60 or 90 days to go see a specialist specialized doctor and um a friend of mine who’s a doctor was like here’s how you solve this here’s the concierge uh medicine practice you give them 30 000 a year yeah I had one it was 25 Grand a year yeah you pay them 25 Grand 30 grand a year or whatever it is and all they do is they are able to get you appointments faster because they’re able to text the doctors because they know the doctors personally because they used to work with them and say hey can you do me a favor I’ll see my guy uh next week instead of three months from now um it’s kind of like gangster a little bit like it’s like uh it’s like the doctors are it’s run by the streets you know what I mean it is pretty weird it’s not cool yeah it’s not cool it’s broken and then the other really [ ] up thing is um if you have a medical problem and a neurologist will be like this is a cardiac cardiologist problem and the cardiologist will be like this is a neurologist problem and the two of them are like Superman and Clark Kent which is they’re never in the same room at the same [ ] time so you can’t actually get real information about what the problem is and they never talk to each other they talk to each other through like handwritten notes uh in the dark of night do you have a tangible idea on this or you’re just like healthcare it’s like healthcare is just too big of a word doesn’t mean anything yeah it is too big of a word one idea that I’ve been taking around with is um like remote monitoring of patients so uh you know my mom um lives in Dallas um sometimes there sometimes traveling I want to have some device that she has that is like monitoring her blood pressure um her blood sugar her heart rate and uh reporting that to me and to all these other doctors in um you know real time so that if there’s a problem you know it faster and so that you can go track this stuff right now when you go to the doctor and if you have blood sugar problems or um high blood pressure problems they’re like what was your blood pressure last week versus what is it right now what was your blood sugar last week versus what it is right now that it’s always reported uh yeah it’s always wrong yeah it’s self-reported and um it’s just so broken and I think being able to track this stuff in a more automated seamless seamless way device yeah like I got a whoop and uh you know that’s doing some extra tracking but yeah some kind of embedded device that’s like continuous glucose monitor plus um some way to measure your blood pressure and uh kind of keep in one one place um the other thing that I think is a really interesting idea is that I went to Georgia Tech in 2003 and at the time they were working on building a smart home and one of the ideas they had for a smart home was a smart toilet so imagine when you’re using the toilet every time you use the toilet it texts you and says dude uh you’re eating too many French fries right stop dual sample basically yeah stool and urine sample and uh are measuring in real time what’s up wasn’t there a company that was doing that in San Francisco that was totally a fraud was it you biome is that what they were doing it wasn’t a smart toilet though I think you had to send it to them uh okay wow [ ] that that’s that’s kind of weird right I can’t even how do you get a well I don’t know but uh no those are interesting I’ve seen people like tinkering around with this idea I do think it’s very fascinating I have no idea how you do it what do you [ ] a net and it like takes a little strain uh I don’t know I don’t know what the mechanics are but I think it’s an interesting idea that like let’s put it let me ask you a different way I think you have a very good way of thinking about problems and what I mean by that is every time I’ve come to you with an idea like two things happen that that are different with you than with most people one is you’re like I’m not you don’t sit there and ask like uh is this feasible or how would we do it you know like that question comes later it’s like first let me decide on like the big idea and you know how how could you know would this be amazing if it happened okay then I’ll go find a way to make it happen or like you know your brother when he started the deodorant company I remember somebody was like boys do you know anything about deodorant he’s like no I know nothing about deodorant but in six months I don’t know everything there is to know about deodorant and sure enough you know built a very big dinner man so like the kind of like not being limited by what I know today is like you know I would say one factor and the other is like um you’re not one at least from what I could tell like you don’t really consider like plan B’s or like if this fails or why would this fail uh you I remember when we started a thing together you were like yeah I just I was trying to do that and you were like I don’t know man I don’t really think that way I just sort of uh I decide to win and then I do it and I just plan to win and I don’t really focus on the rest am I am I correctly understanding that or no um yeah I think I think starting with starting with is if can this work and uh or like you know what are so many people when they’re evaluating an idea uh immediately are like no this is not gonna work for reason X Y and Z actually my brother is like this um and so I hate talking to him about new ideas because he’s always just like [ ] on them he’s just kind of a skeptic by Nature so I definitely start with the uh if this works uh what does the world look like and uh uh can this be a big deal if it actually works um so when I think about the smart toilet I’m like cool uh right now to figure out if you have colon cancer they do uh you have to poop in an envelope and send it to a lab um what happens if this is automated right now uh like there’s all these medical things that I should probably be doing differently I just have no idea what they are and even if I knew them I didn’t I don’t have a good way to like have somebody enforce it in a automated way um if that happened across America we could solve diabetes because oftentimes diabetes is a disease that you choose instead of a disease that um you’re forced with so yeah definitely start with the if this works is it going to be a big deal then I’m kind of like cool could I get customers for this and if I could then I’m kind of like that’s all you really need to start you don’t really need an any more information about like how to build a toilet or um any of the science like I think you can figure that out later but can this be big would this be big if it worked and can I get customers yeah yeah those are the two and often what you know one thing that happens I look at a lot of startup like investment deals with sui and uh it’ll be like here’s these great people there’s this great technology great product blah blah and he’ll just be like cool so how are you gonna get customers and like you you’d think like this like appears to be like a baffling question to so many Founders or they’ll say something and he’ll be like okay so what do you mean so what do you mean like what are you where are you gonna go or like you know have you done that tell me about three times in your life that you’ve done that and uh and then he’s sort of like you know I’m in or out based on their ability to get customers and I think yeah it’s like the I told you that my meme of the year is that midwit Meme it’s like the genius and the idiot the way they think it’s aligned and the analyzer who’s taking into account 75 variables actually ends up with the wrong answer more often than not and like this idea of like can it be you know if it worked would it be big and can I get customers is the sort of the midwit meme like you know in real life yeah I don’t think you need to know more than that in fact um Sam and I were on this call where this guy was pitching uh I think it’s the company was called Firefly it was pitching ads on top of Ubers and taxi cabs in uh like this physical device that was on top of the and they’re around now but I think at the time he wanted a hundred million dollar or maybe 60 million dollar valuation and uh it was crazy I remember being off that call and I was like huh yeah Sam messaged me and was like this is bananas can you believe this guy uh this guy’s valuation and the audacity um and he was uh I think at the time losing money um on each individual device for years so yeah there are there are often times where people I I’m shocked by how many people are like cool I figured out what the product is but I have no idea how to get customers I have no idea what the economics of that looked like and that’s where companies go to die um how’d that company end up by the way did it did it do it it still exists but I have no idea got it um I’m drinking the water this water here this is a 25 bottle of water because it’s like pure water that’s been filtered um it I’m in LA right now it turns out that if you drink tap water in La supposedly according to this guy it has Pharmaceuticals in the water without Irwin or something yeah I think this instrument one and uh this water is basically uh pure in a way that like you can’t get water anywhere else these days and so it costs 25 a bottle this is insane and it tastes just like water and you’re pointing it so it’s a yeah so you know super interesting idea um I I didn’t talk to this guy or anything but um I wonder what their distribution strategy is uh because I think putting 25 water at irwan or Whole Foods is like an inadequate distribution strategy to get the meaningful skill for this well I’ll give you the counter example I was doing some research on the milk boys um who and I won’t do the full thing about the novel Boys in their kind of business Empire but one thing that stood out was I was watching this clip and it was John Shahidi who you guys might know because he’s like kind of came he was like in Silicon Valley then he transitioned into like Hollywood influencer stuff when he had his like mobile app shots get popular from like a bunch of fine stars is John their manager and he’s now their manager so like shots didn’t work out he didn’t build the next Snapchat uh even though he had every influencer and Justin Bieber and Floyd Mayweather and like all these people using it and investing in him but he was like cool I can help these influencers out so he started managing influencers and now he just is the manager of the note boys and they were like so they’re there’s hard Seltzer brand happy Dad which is basically like it looks literally like a Bud Light uh like just like it looks like the right product it’s towards the right market and um they value the company I think at 250 million dollars right now they’re doing I forgot how much uh exactly I’ll pull it up it’s getting close to 100 million in Revenue yeah it’s close to 100 million in Revenue so somewhere between 50 and 100 million in Revenue uh so the brand is doing really well and it’s very young it’s like it’s like a very new um brand but they were like oh so for happy Dad like you know what’s what’s the next product are you coming out with a new flavor or like a hard alcohol like what do you get to do because no we have basically Futsal we’ve done all the hard work to get foot soldiers to get into gas stations 7-Elevens and whatever and so rather than compete with ourselves and like the fiercest competition in the drink Market in those we just looked around the store we just sent people into the stores that were like doing these like gas station sales for us and they looked around and were like what’s the easiest category we can win and they’re like so we’re doing uh beef jerky they’re like beef jerky is like a really stale category we already have this distribution channel into these uh gas stations and stuff in convenience stores like hundreds if not thousands of these stores across the country that is The Edge all we have to do is work backwards from that like we have the we have the front end sales now we just need to figure out the back end product that should go into that into that sales Channel and when I hear that I’m like the milk boys run a more sophisticated business operation than like 95 of Silicon Valley in just that one way of thinking yeah it’s amazing um yeah there’s this Justin Quan Khan quote uh first-time Founders are obsessed with products second time Founders are obsessed with distribution now I think there’s this uh concept of um I just focused on distribution the product comes after I have distribution yeah that’s what like what we did with the audience right it’s like cool I’m gonna build up a big podcast we didn’t sort of intentionally go about it this way we just wanted to do a podcast but once you realize oh cool I could just build up a huge audience I can come up with great products after uh I don’t even need to like know what product it would be going in yeah I didn’t understand that with the hustle I was like why are you guys investing and they’re like because building an audience is really hard and I was like that’s not that hard to just do this this beep up Boop and you got it and then I kind of later on I realized that to build an audience that’s engaged it’s kind of it is a little formulaic but it’s also a lot of luck and kind of catching lightning in a bottle where and then once you have it it’s uh very very very very valuable now that I don’t have it anymore I’m like ah I get it that was hard yeah it’s amazing to see people all around uh the world doing this now and all these verticals like you know Doug demuro um did this then uh got an audience then started cars and bids dude that was early on Sean I was telling you Doug tomorrow that that car’s in Biz it’s gonna be big now his competitor was just in the New York Times last week for selling a billion dollars with the cars congrats on uh investing on that when you called it yeah yeah about that yeah did you try to invest in Doug Demarest thing uh maybe like a DM on Twitter was about the extent of it uh but oh so no it was most I just it was I talked the talk I didn’t walk the walk and also I didn’t have a lot of money at the time I think he it’s it’s about four years old but no I I I talk to talk that’s about all I did it’s also amazing because uh these guys will um are often bootstrapped right because they basically start with no audience they just start making an audience and then uh once they have an audience they’re generating so much profit from the audience through YouTube videos or whatever uh so they don’t even need outside Capital so I think even if you chase them down he might have been like I’m already making money I don’t need to raise money um so it just turns a lot of Silicon Valley stuff upside down of like you know distribution first that generates profit then you use that profit to um make product silly did you look at the feedback from your last episode people loved you they like your voice they say that you’re calming and I agree right all right I uh I only listen to feedback that like Sean or Ben Levy texted me you had very positive feedback people liked you they said that you’re calming that they would do anything that you’d say things like that very it got a little weird yeah thanks for doing this people thanks for doing this hopefully uh people enjoyed the uh Silicon Valley Bank breakdown and a few other things and uh if you made it this far we’re doing a meet up actually Sean tomorrow you’re not going to make it we had we have it like sold out like right away 500 people but uh we’ll be doing another one April 28th ish and we’ll announce that more info on that soon yeah I got one quick thing I want to plug which is um you know Sean has this guy who’s his right hand guy who helped him on all these different projects uh I want to find a right-hand guy to help me with a bunch of projects so like source and diligence Investments of research random business ideas I have come work for me full time for the next five or ten years and let’s go do something amazing and what do they find you you can find me on Twitter DM me all right and is your hand what’s your handle it’s s-u-l-i it’s my full name s-u-l-e-m-a-n-a-l-i all right that’s good you’re one of the very few people that has taken advantage of this to actually promote something but you did it at the end you could have done in the beginning but that’s all right [ ] it only the strong made it here that’s what he filtered about that’s right he filtered out the week the week people all right we’re out of here that’s the pot cool