John Coogan, co-founder of Soylent and Lucy, joins Sam and Shaan to brainstorm $1M+ business ideas including a creator-owned VPN and an ammunition supply chain roll-up. They debate lifestyle businesses vs. venture-backed companies, dig into AI wrapper opportunities, and close with John’s legendary story about working a telephone clear-tape scam for exactly one day at age 17.
Speakers: Shaan Puri (host), Sam Parr (host), John Coogan (guest, co-founder of Soylent and Lucy, EIR at Founders Fund)
Cold Open / VPN Tease [00:00:00]
Shaan: It’s useful for crypto users to use a VPN, and so that was one of my ideas — but we sold before we got around to doing that.
Sam: That would have been cool if you would have done that.
Shaan: That’s a pretty cool move. Too bad.
Introducing John Coogan [00:00:18]
Shaan: All right, what’s up — we got John Coogan here. John, somebody who I only know through a lunch at a Mexican restaurant in LA, and that’s the best way to meet anybody who’s going to be a podcast guest.
You’ve got a crazy background. I’ll give people the rundown if they don’t know who you are. You’ve been an entrepreneur your whole life, never had a job, started two companies that were both really interesting. Soylent, which was basically a meal replacement drink — tasted like the milk of Honey Nut Cheerios, which I always appreciated. And then Lucy gum, which is a nicotine gum. Both of them went through YC, they’ve raised over 130 million dollars combined. A bunch of good lessons there.
You’re also an EIR at Founders Fund, which is one of the more interesting places to hang out or be a part of. And, like us, you’ve made the mistake of leaving entrepreneurship to just be a YouTuber. So you know how to make content too, which is amazing. You make really awesome videos. Sam was sending me one this morning. Sam, you like his stuff?
Sam: I love it. Yeah, I like your stuff, John.
Sam: By the way, Shaan, I’m an investor in Lucy, so I gotta get that out of the way. And probably a user too at one point, for sure.
John: I mean, you did invest like four years ago. The fact that I haven’t been on yet — I think I earned my stripes by posting on YouTube and playing in the content world.
Shaan: Yeah. What is your valuation — can you say it?
Sam: I think I invested $25,000 at a $10 million valuation.
Shaan: Yeah, you were probably in like the seed round. Now the company’s worth like $60–70 million.
Sam: On paper I’ve made a little bit of money. Not bad.
Shaan: We had one of the other co-founders of Lucy on the pod once. This guy — we had met him at some event, maybe a Hustle event, some nighttime thing — and he was holding court. That was Dave?
John: Dave. Yeah.
Shaan: He was telling stories. Five people around him. He’s got ideas. He’s like, “Oh, there needs to be something called Pleasure Island, it’s a place where you could just go sin.” And I was like, who is this guy? What is he talking about? He’s telling stories, he’s amazing, everybody’s just captured by this guy. I’m like, we gotta have him on the pod.
He comes on. Tells none of the stories, none of the ideas. He’s like, “No, I don’t want to test all those on the pod.” And we were like, dude — I don’t even think we ever ran the episode because he refused to tell the good stuff.
Shaan: So, John, will you make the same mistake as your pal?
John: Absolutely not. I do think a lot of founders have just a ton of scar tissue built up from the last ten years of the media going after tech founders and tech bros. Like, anything you said could be taken out of context and turned into clickbait. But now that Elon bought Twitter and caused enough chaos, you can just say whatever you want. I’ve been telling every founder I know: cancel culture is over. Just say what you believe.
Shaan: We’re going to do some of your philosophies — like “cancel culture is over” — but first let’s run through the background, because both of these startups are so interesting. Can you give us the origin story for Soylent?
The Soylent Origin Story [00:03:10]
John: Yeah. This was maybe 2012. I’d just moved to San Francisco. You had kind of Uber and Airbnb, but very few people in the San Francisco venture community were doing like a drink, an actual product you could eat or drink — something that wasn’t software-based but was still innovative. Andrew Andreessen Horowitz got behind it, and it was this interesting in-between thing. And I think it started out of a hacker house, right?
Shaan: Like, you guys had a crazy house — is that right?
John: Yeah. So, Warby Parker was like the first e-commerce company to think about it from a tech-first angle. We were a couple years after them, right around the same era as Dollar Shave Club. But yeah, we met in a hacker house. My co-founder and I went to preschool, middle school, and high school together, then went to college in the same city. We moved out to Silicon Valley looking for a place. We find something on Craigslist — an Airbnb listing — and they’re like, “This place is incredible. It’s got a pool, five bedrooms, it’s exactly like The Social Network, you’re gonna love it.”
We show up. The pool is filled with algae. The bathrooms don’t work. Just absolute squalor.
We grind for like six months there, then eventually moved to the Tenderloin, which is an even nicer community. We were technically in a one-bedroom with three guys. I was living in the living room. Another guy — Rob, the guy who actually came up with the idea for Soylent — was living in what was technically a closet because it didn’t have a window. We were just hacking. Wake up, program, go to sleep.
Sam: Not a lot of dating going on.
John: Not a lot of dating, not a lot of anything. Just sticky notes on the wall: okay, after this idea fails, we’ll build this next one. All the worst ideas you’ve ever heard on here, when people come on and give you their bad ideas — we were building all of them and they were all failing.
Shaan: Give us a couple. What were they?
John: Take a picture and it puts it through a filter and mails you a shirt. Just weird stuff like that. There were some ideas that were good, just way before their time. Do you know Google Stadia? Lets you play video games in the cloud, streams it to you. We basically built that — but five years too early. And we didn’t have a trillion dollars of data centers like Google. And even Stadia failed. So of course we weren’t going to get it done.
A lot of those ideas were like: too early, wrong team, bad execution, or just terrible go-to-market. We built some things that were pretty good but it just didn’t work.
Sam: And living with Rob would be odd, because I know Rob — he’s so unique and eccentric and weird, in such an interesting way.
John: Yeah. He’d been writing on his blog and posting on Hacker News. He wrote a bunch of basically viral clickbait targeted at programmers. He wrote a blog post saying how he “hacked Tinder” — and this was before bots and stuff — where he basically claimed he wrote a script that would automatically swipe right on everything, then use generative AI to talk to the person, then use the Uber API to call them a car, then order DoorDash to deliver the food. This was ten years ago.
He’d built a little bit of a following on Hacker News. And the question was: we like building these software companies, we like coding and launching businesses, but we’re going to run out of money and have to get jobs. So we need to look at our expenses.
We paid rent a year in advance — I think fifteen hundred dollars for three dudes to live in the heart of San Francisco. We owned our laptops, paid our internet bill. The only real cost was food. So figuring out how to get food as cheap as possible was a very logical conclusion.
Rob starts whipping up the powders, figures out this meal replacement — instead of buying a cheeseburger here or some groceries there, let me buy a 200-pound sack of protein powder.
Sam: Do you remember that first conversation when he’s like, “Guys, I got it — we’ll just get a bunch of powders and that’ll be the food”?
John: There were basically two phases. The first phase: he told me, “I’m doing this diet experiment, I think it’s going to make me healthier, I’m going to monitor all my macros and micros and start working out.” And I was just like, who cares what we look like — the only thing that matters is our code and our business ideas. Which is very stupid, because obviously you do need to be healthy to be productive. Stupid take on my part.
But I kind of wrote it off. Then he kept doing it for a few weeks. And then we were at a dinner with a friend — she’d made homemade sushi, which is like a treat when you’re broke — and he was like, “No, I’m not going to eat. I’m on this Soylent thing.” And I was like, this is crazy.
It’s sort of like that Brian Johnson before Brian Johnson, right? Stress-testing everything.
He told me what he was calling it, and I was like, “Do you have a name for this?” He said, “I’m calling it Soylent.” And I knew the reference. I was like, this is genius. We need to sell this today. This is going to be the market-entry strategy because it’s going to be so viral.
He basically did a stress test — he lived on it for thirty days. And then people would be like, “Yeah, I think this ingredient’s stupid” or “this is bad” — but if you survived thirty days on only this, I can probably take a sip and see how it tastes. So it created this curiosity.
Sam: When I launched The Hustle, one of the first viral articles was: I paid a guy two grand to live on it for thirty days while running seventy miles a week as an amateur runner.
John: May he rest in peace.
Sam: And that’s what made the story go viral. The Soylent thing was the gift that kept on giving.
John: Yeah, and it was like a left-right issue — everybody had an opinion. And back in the day the Facebook algorithm was entirely comment-driven. People would correct us: “Oh you made a mistake, you accidentally named your company after a Charlton Heston sci-fi movie.” And it’s like, no, obviously we did that on purpose.
But that comment would come in, then another person: “Well there’s actually this book,” and someone else: “You need to fire your marketing people.” And then someone else: “Oh, I actually got the reference.” Every single time we posted anything, you’d get all the comments about whether it’s good or bad, plus all this referential banter. Just massive viral fuel. Any article we posted went viral.
So we were able to trade up the chain — from Vice to the Hustle to BBC to the New York Times to The New Yorker. And eventually Rob was on The Colbert Report, sitting next to Stephen Colbert.
Sam: It definitely shows the power of a viral product. But it was also my first time learning about signal. I’d never bought a fancy watch or a car or jacket or anything, but the first time I saw someone holding a Soylent, this crazy signal went out. Like, “I’m in tech.” You don’t have to ask anything else.
John: Brown guy in San Francisco with a Soylent. You probably would have guessed that one anyway.
Sam: What else does it tell you?
John: It tells you you value productivity over things like taste — maybe even things like health. It’s a value signal. Then it was a contrarian signal. And then it was an “I don’t give a damn what you think about me” signal. It was so powerful as a signaling tool for that one-year period.
But that actually cuts both ways. Food is such a signal, there’s so much badge value. It’s very hard to accrue monopoly power because every food is an extension of personal expression. As soon as everyone’s doing one thing, I want to do something different. So it’s very hard to create one brand to rule them all.
Peter Thiel’s Diagnosis [00:10:45]
Sam: You said something about Peter Thiel — that in one hour he diagnosed everything that would go wrong in your business. Was that about Soylent?
John: Yeah. We went in for the pitch, sat down, did a working session. Now everyone knows the framework because he’s written the book — Zero to One. It’s incredibly popular. The way venture-backed companies accrue value is through moats. Hamilton Helmer has the Powers framework. Peter has his own theses.
The basics: brand, intellectual property, complex coordination, scale economies, network effects. But at this time, in 2013, everyone thought there would just be a magical network effect that would show up. That’s just not true. A lot of investors were like, “Oh yeah, you don’t need to advertise — people like it so much they’ll just sell it to each other.” That’s true in a multi-level marketing scheme, but not if you don’t build the infrastructure. We never achieved escape velocity.
Peter basically said, “This is a widgets business. Run it like any other business. You have product-market fit — you just need to sell. Bring the customer in, make sure you’re bringing them in cheaper than they’re worth.” He was basically like, “This is a great lifestyle business, guys. Congrats.” And then we raised a bunch of venture and it was a disaster.
Sam: What was your peak revenue?
John: Almost $100 million.
Sam: And I was reading you sold recently — not a good outcome.
John: Right. No disrespect, but the outcome sucked compared to the hype and the peak revenue. I think it was sold by a publicly traded company. I actually don’t know the exact dynamics because there were a bunch of assets rolled up — but it was sold for maybe as much or less than we raised. We raised $100 million, which basically means the common doesn’t get anything.
Sam: So you didn’t get that wealthy from it?
John: We got a decent amount, but not what we should have if we’d maximized how to run that company.
The Lucy Nicotine Business [00:13:20]
Shaan: Then you started Lucy. Lucy is cool. Are you there full-time right now?
John: No, I’m like one day a week at Lucy, mostly helping out with things like this, doing content, and ideally brokering deals with other content creators. We want to do more — we being the Lucy team.
To give some background: Soylent is the nutrition product, we ran that for four or five years. Lucy is a nicotine gum brand and nicotine pouch brand. If your listeners are familiar with Zyn, we’re a direct competitor, but we differentiate on flavor, strength, and a couple other things.
Sam: I’m an all-day Zyn guy.
John: I imagine most people in the audience are. It’s extremely popular. I just wish that Lucy sold at 7-Eleven, because going to the gas station is part of my routine.
Sam: You’ve gotta go see your boys there.
John: A hundred percent. That’s the name of the game. That’s what will actually unlock massive value in the Lucy business.
Sam: People should know — when you email Sam and you’re like, “Hey, I know you’re a super busy guy,” Sam’s busy at 7-Eleven shooting the breeze. Those lotto tickets don’t scratch themselves.
John: I gotta drop off a pallet of Lucy at that exact 7-Eleven. Just leave it. “It’s free. Now Sam can get his.”
Sam: The Lucy things are cool because basically Zyn is just a pouch, but Lucy has what’s called a breaker. You bite into this and you get like a little menthol or flavor.
John: Yeah — it’s a liquid flavoring. A lot of people complain that pouches dry your mouth out. That’s the number one complaint. So we figured out: how do we address that? Well, let’s take liquid flavoring and put it inside a capsule. When you break it, it moistens the pouch, so it doesn’t dry your mouth out.
Sam: Gotcha.
Idea #1: Creator-Owned VPN [00:16:00]
Shaan: All right. Those two ideas you did — Soylent and Lucy — I would say are in the top one percent of weirdo ideas. What are your other weirdo ideas that you’re not doing? You sent us a couple bullet points. Explain them.
John: I think the first one that’s interesting to talk about, since you guys are obviously creating content as well, is this idea of a creator-owned VPN.
VPNs might be the number-one advertiser on YouTube. I don’t have the exact stats, but anyone who’s listened to a podcast or watched a YouTube video can probably name five different VPNs. And yet none of them are venture-backed, none of them are major venture winners. There’s not one running away with the market.
Sam: Have you researched these companies?
John: Yeah, a little bit. They’re all in Panama or Moldova. I’ve tried looking them up on LinkedIn — I did a ton of research on the VPN review website space. There was one called CompareTech that was doing $14 million in revenue, $13 million in profit. I saw their financials. They sold to a VPN company. These VPN companies are crazy. But I looked up their employees on LinkedIn and you can’t find anyone, even though these are companies doing $300–400 million a year in revenue.
Shaan: It’s a very odd space. There’s no big venture winner. No “oh, Airbnb — we all know the CEO, he’s taking it public.” It’s more like there’s a bunch of them, they all print cash, and there’s not really going to be one winner because there’s no network effect. The moat is marketing, that’s why they all spend on marketing.
John: How big is the industry?
Shaan: Easily in the billions in aggregate. Some individual VPNs are doing hundreds of millions in sales. The name of the game is just: check all the boxes so no independent reviewer can take you down with a fatal flaw. Once you’ve checked all the boxes, it’s just a marketing game — that’s why you see them everywhere.
Sam: Is it just a commodity? Is the tech complicated?
John: It’s somewhat complicated to write the code, but it’s not complicated from the customer-wants side. You’re not trying to create some crazy novel invention. And so I call the idea Beast VPN. Obviously Mr. Beast is the biggest creator and he has an international audience — his audience is literally everyone. So what’s a product you can sell everywhere across the world that’s very high-margin, low churn? VPN. That’s why VPNs advertise all over YouTube — it doesn’t matter if the ad is served to someone in Japan or India or Europe, the VPN is available there.
Shaan: I’ll give this idea a 9 out of 10. What I like about this idea is exactly what you said: it takes the weakness of creator businesses — you get a bunch of subscribers whose ad value varies wildly by country — and flips it. This product is actually better for international users than US users. That’s one big strength. Recurring revenue, digital good, high margin — amazing.
I only give it a nine instead of a ten because it’s the first idea and I’m not that easy.
John: Fair enough.
Shaan: To be fair, it might make more sense for a Linus Tech Tips or an MKBHD to do this because they’re more tech-forward. We were actually going to do this at Milk Road. I was like, what’s the best product we could build? What if we did a VPN for the crypto economy? We were one of the more trusted brands in that space — it’s kind of a commodity software, it’s useful for crypto users to have a VPN. But we sold before we got around to that.
Sam: That was a good idea. You should have done that.
Shaan: Well, we still own a piece of Milk Road, so I’ll tell them after this: “Hey guys, let’s revive this.”
Sam: This guy Linus Tech Tips has fifteen million subscribers.
Shaan: Yeah, and he has a team of over a hundred people, multiple channels, a podcast, everything. He actually built his own media platform where you can watch videos and talk in a forum. And he released a screwdriver and sold like five million dollars worth of it.
Sam: I’m sure he did great on that. But the question is: would he have done better if instead of a screwdriver — which is expensive to ship internationally — he sold recurring software that’s 99% margin, like a VPN?
John: Honestly, the screwdriver is cooler than a VPN. You get to build your PC. That’s fun. A VPN is a little boring. I use one, I like VPNs — but, you know.
Idea #2: Ammunition Roll-Up [00:22:30]
John: The second idea: Americans love guns. That’s not changing. We’ve seen through the past few decades that real restrictions aren’t coming. The stocks of munition companies are doing fine. But the price is increasing a lot — some of that’s supply chains, but there might be more structural issues. More people are hunting, more people are buying guns, and shooting is a fun hobby.
Over the last three years, the price of shotgun shells went from ten dollars to sixteen dollars — a pretty big increase. And there’s a massive shortage. So the idea is: maybe we need to bring some efficiency to the ammunition supply chain.
The hottest trend in business right now is roll-ups or search funds. Every guy who graduates from HBS is like, “I’m going to roll up laundromats” or “I’m going to roll up dentists.” They’re all very commodity, not very contrarian. There’s probably not a lot of alpha there.
But those same people coming out of HBS are probably not saying, “I’m going to roll up weapons manufacturers.” Anduril is crushing it on the venture side, but they’re doing insane software, hardware, AI-powered weapon systems — that’s not this. This is: you buy a bunch of companies that make shotgun shells, you move the employees around, you optimize things a little bit. Very boring, private equity-style roll-up. Maybe you hit a scale advantage over time because it is a massive industry. You’re not trying to reinvent the wheel. No 3D printing the shells. Just good operations.
Sam: There are a lot of gun YouTubers — we could mix that in.
John: Oh yeah, you get them involved.
Sam: Do you live in California?
John: I do.
Sam: Are you even allowed to own guns in California?
John: Yes. There are a bunch of restrictions on rifles, certain capacity magazines, but I think most recently it’s become pretty easy to get a concealed carry permit even in San Francisco.
Sam: Wait, what? I thought for years that was impossible.
John: Yeah, most people think it’s unthinkable. But it is becoming easier, which is kind of crazy.
Shaan: I did look at investing in an ammunition roll-up. I was introduced to someone doing it and I was like, I love this idea, but it was so far outside what I’m used to investing in. I couldn’t do the due diligence.
Sam: I wouldn’t touch this either. Not because it’s a bad business — I understand how that’s hypocritical. I love guns, I enjoy them, I buy them, shooting is fun. But I don’t want to own it. That doesn’t mean I think only bad people buy ammunition — I’m just saying it doesn’t have to be my career.
John: Would your opinion change if we were actively in a hot war and it was your duty to America to optimize the ammunition supply chain — because there are troops from some country landing on the beaches of California?
Sam: Yeah, of course. My opinion could change. I’m very open to new data points. I just know that right now, I could probably make money in other ways with less friction.
The Roman Empire Tangent [00:27:10]
John: Sam, I’ve got a question for you. There’s a thing going viral on TikTok right now where girlfriends are asking their boyfriends — I’ll be the wife here — how often do you think about the Roman Empire?
Sam: All the time.
John: Like, why? Under what circumstances would you think about that?
Sam: Just like, Gladiators battling to the death in front of everyone.
Shaan: My wife has a video of this — she didn’t know about the meme, took out her phone, asked me. I was like, “I’m thinking about it right now.” And all the comments were like, “I just asked my husband. He said last week. He said twice a week.” They can’t fathom why a man who doesn’t take out the trash on time who forgot to pick up their daughter from preschool is thinking about the Roman Empire twice a week.
Sam: I think about 9/11 and World War II like 90% of my day. What would I do if I was on that plane? Like, I think about that constantly. It’s just a very normal masculine urge.
Shaan: There’s this joke — girls, he’s like, just so you know, being obsessed with history, particularly World War II, is a precursor to becoming a Republican. Early onset.
Sam: Sean, don’t you think about World War II on a regular basis?
Shaan: No, but I have my own version of it. When I walk into a place I’m assessing: if I had to, how would I rob this place? Or if something went down, what’s the move?
Sam: My buddy David imagines ninjas coming through every door and window and how he would take them out tactically. And every time I’m in a baggage claim I’m like, I could take any of these bags right now and just walk out. There is zero security in this place.
Shaan: You know Scott Galloway said: you should exercise so you can kill and eat most everyone in a room, or at least outrun them. That’s kind of what we’re talking about right now.
John: Yeah, 100%.
Founders Fund and Peter Thiel’s World [00:30:45]
Shaan: John, you’re EIR at Founders Fund. I remember someone saying about the early days of PayPal — Max Levchin wouldn’t hire some engineer because, as he put it, “He plays basketball three times a week. I don’t know any great programmer who does that.” Very anti-jock. Do you get to hang out with the Founders Fund people a lot in person? Seems like a room full of very interesting and very different people.
John: It is. They’ve done a great job of not creating a monoculture in a very small organization. There are definitely complete jocks there — I mean, obviously we know Keith Rabois, who exercises like five times a day.
Sam: I wouldn’t call Keith Rabois a jock.
John: Why not? He’s a fitness nut. He’s trying to be the best at sports.
Sam: Why does that guy behave the way he does on Twitter? He’s like, needlessly rude.
John: I think a lot of it is just holding the line. When he sees something that’s not true, he doesn’t want it to spread, so he just shuts it down aggressively. He’s put his flag in some places — like Miami — so if Miami doesn’t work, it’s going to hurt him. But, you know, you could love something and also admit it might not be the best.
I think a lot of these behaviors are learned. Everyone in tech has been beaten down for every little thing they say, so a lot of people have put up walls. I think it’s time to take down the walls and be a little less defensive generally. I understand where all these behaviors come from.
Shaan: What’s Sean Parker up to? We haven’t heard about that guy in years. We need to get him back on Twitter. If you talk to anyone who knows him, they’ll say he was the greatest poster of all time.
John: Those guys — Rahul Ligma and Daniel Johnson — do you remember the stunt they pulled? They fooled CNBC into reporting that they were Twitter employees who got fired. They’re like doing a normal startup now, actually building something. They should have just gone all in on being personalities. I would have dropped the startup after six months and just gone full troll to see what happens.
Sam: Rahul Ligma still makes me spit water out my nose when I hear that name.
John: They could have a Patreon funded only by billionaires who just pay them to do comedic statement art — against the media, local politicians, whatever. That’s what I would have done.
Debate: Lifestyle Businesses vs. Venture-Backed [00:34:50]
John: I have a thing on this document I want to debate you guys on. The line is: “Lifestyle businesses are worthless.”
Sam: Make your case.
John: This is mostly just like — I can represent the VC crew, and you guys are the kings of the lifestyle business.
Sam: We aren’t kings of that — I actually want to be the king of it. I’ll accept that compliment.
Shaan: I think we’re in the middle. We respect both. Very few people are genuinely in the middle, and I think we are.
John: Fair. So basically: lifestyle businesses are great, but define that. I would say non-venture-backed, non-hyperscaling, non-monopoly — something without a crazy moat where you just go work at it, maybe it gets really big, maybe you wind up as a billionaire, but you didn’t do the growth-at-all-costs insane thing.
Shaan: And what’s hyper-growth?
John: Two or three times a year. Sometimes ten times a year at the early stages. But I’m specifically thinking of Facebook — I’m thinking about power law outcomes in venture. About one percent of companies that get started raise venture capital, but about 99% of the market cap in public markets took venture. Venture has this wildly disproportionate outcome. I believe the bigger the company, the bigger the impact on the world. So if you want to have a really big impact, you should be trying to raise money and grow very quickly. You’re not going to build a hundred-billion-dollar company compounding at two or five percent a year over your lifetime. It just won’t happen.
Sam: Let me play the other side. You’re saying 99% of the value is created by the one percent of companies that raise money. To me that’s also saying: 100% of the soldiers on D-Day who ended up killing Nazis had to land on that beach anyway, right? And I’m like, yeah, but the other ones got killed. How about I just not worry about killing Nazis and start this little thing on the side?
The VC thing — as an investor, you’re funding all these companies and you don’t care which one dies because you know one of them is going to make your money. But from my perspective: if I can get rich with a higher likelihood of success — which is often the number one reason people start businesses — why wouldn’t I go that route?
John: Because I think your overall impact on humanity and society and the world will be lower. Would you rather own 100% of a $100 million company or 1% of a $10 billion company? The $10 billion company is having a much larger impact on the world.
Sam: That’s not an obvious answer. For a lot of people it’s: I would rather have 100% and be able to go on vacation, have cash flows come directly to me, not deal with all the other stuff. I get the argument. But I prefer the higher-likelihood path.
John: I believe humans have a duty to each other to have the largest impact possible. Venture-backed companies often do that.
Sam: You don’t really believe that though. Because if you did, wouldn’t you be curing cancer instead of selling nicotine gum?
John: Well — the best way to stop lung cancer is to get people to switch to nicotine pouches away from cigarettes. Don’t let facts get in the way of a good argument.
But here’s the synthesis, and I think we’ll agree on this: what you should actually do with your life is pick the hardest, most interesting, most value-creating problem that you’re equipped to solve. Could I create a cancer-curing drug? No. I don’t have that background. I should pick the most ambitious thing and the best idea that I have, and then be very rigorous about whether that idea is appropriate for venture capital.
Mark Zuckerberg without venture capital — that company would be dead. And I’ve been part of companies where we raised VC for a company that didn’t need VC, and it also killed the company. So you have to pick the best idea you’re equipped to solve and then decide the financing strategy that aligns with that. There’s no one-size-fits-all.
Sam: Do you wish you had done a different idea instead of Soylent, or do you wish you just hadn’t taken VC and gotten wealthy?
John: I mean, right before Soylent, I was working on natural language generation in 2013 — which is the hottest trend now. If I’d just stuck with that for a decade I’d probably be doing something really cool right now. But I also think you would have been more impactful if Soylent hadn’t raised and you’d gotten rich, and then been able to go chase some other crazy moonshot.
Sam: Someone corrected me on a similar argument once. They were like, yeah, but it’s a lot easier to go after moonshot ideas when you don’t have to worry about a mortgage. As someone who had a bootstrapped exit, I agree. You’re more dangerous when you have $10 or $20 or $30 million — when you’re like, “I’m rich enough not to worry, but not rich enough that I want to stop.”
John: I 100% feel like I’m in that category. And thus, I think lifestyle businesses are awesome — because they can get you there faster.
Sam: Yeah — get the base hit before you do the big thing. Not unreasonable.
John: And there are freaks out there like Elon who are willing to risk it all. Though PayPal could be framed as less ambitious than SpaceX and Tesla — like, the mission might not be as big, but it funded everything else.
Shaan: Andrew Wilkinson tweeted something about this — like, learn to walk before you run, most people who want to do a big ambitious thing should start smaller to learn how to do business. A bunch of people agreed. I totally disagreed. I was like, if you know the thing you want to do, you should just go do the thing.
The way doing something before your bigger thing works well is when the smaller thing was actually the biggest thing you knew at the time, and as you did it, your worldview expanded and your ambition expanded. That’s not the same as deliberately doing something smaller first.
Elon actually replied to that thread — sort of confirming what Andrew said for his own case. Like, he couldn’t have created SpaceX without the money and skills and reputation from Zip2. Specifically someone said they’d talked to Elon early on and he’d said he decided he wanted to die on Mars — “just not on impact” — and that the way to do it was to get a lot of money, so he went to the internet to get the money as quickly as he could.
I don’t totally believe that narrative. I don’t think when he was sleeping under his desk as a college kid he was like, “I’m only doing this to amass a fortune to launch three ships to Mars.” Also, he went and did X.com after Zip2 — so it’s like, if you already have $60 or $80 million out of Zip2, it would be surprising to me if he was like, “That’s not enough, I need $250 million.”
John: There’s also a big question about whether you should ever sell a company at all. If your real goal is to have an impact on the world, maybe the company is the best way to do that and you should just continue running it endlessly.
Sam: My goal is very simple. If you want to have maximum impact on the world — that is not my goal. So it’s very easy for me to rule that out. I’m trying to have the best lifestyle I can have. That’s my selfish and very transparent goal. Improving my quality of life, and with that my family’s quality of life.
John: The beauty of that is that by doing what you do to achieve those ends, you will naturally have a positive impact on the world. It might not be as big as curing cancer or getting us to Mars, but there’s economic activity that provides value and utility to various people. As long as you have a moral compass that doesn’t result in you doing something really unethical, you’ll probably have a net positive effect on society.
Sam: My trainer has a good way of saying this. He says: my goal is to have an amazing lifestyle quality of life — that’s why I do things. And everything I do needs to be mutually beneficial to the people that interact with it. If I make a product, it needs to be mutually beneficial to them. That’s the only caveat.
Shaan: Is your personal trainer like your life coach?
Sam: Yeah. That’s a recurring thing — Shaan’s personal trainer is his life coach.
Politics: Who Do You Align With? [00:48:20]
Shaan: John, you’re cool because you have one foot in the startup world and you’re hanging out with bigwigs, but you’re also just someone who can joke around and shoot the breeze. Who do you align with politically?
John: I really like this guy Mark Hurd, who’s a Republican from Texas. He worked for the CIA and was on the board of Palantir, and he would be the first computer scientist president. I think that would be very interesting — someone with a CS background running the country. We’ve had this very long arc of lawyer, lawyer, businessman, lawyer, lawyer. He’s a younger guy. I’m proud to endorse him.
Are you more Republican than Democrat, or do you vote both?
John: I vote both. It depends on who can have the highest impact on technology and the business community — those are the things I think we need to be prioritizing.
I do think there’s an interesting thing as I look back on Trump. I didn’t vote for him, didn’t support him, voted against him twice. But there’s this weird situation where the problems he brought were obviously really bad — I think he really divided the country and created a lot of chaos. Net negative for the United States. But he did kind of get China right. He started getting people to wake up about the fact that we’re in a great power competition again.
You could see a world where the China situation dissipates and things get better — in which case Trump will be remembered as an idiot basically. But the opposite could also happen: the China situation gets hotter, and then people look back to Trump as a genius who foresaw it all and took the first steps to make things safe.
What’s interesting is that the way we remember presidents is often not by what they actually did but by how their decisions look in hindsight. Like in venture: don’t judge an investment until 10 or 20 years later. Same thing. Maybe we shouldn’t judge our presidents until we have the full arc of history.
AI Wrappers and the Barnum Effect [00:52:00]
Shaan: You mentioned earlier that you were working on natural language generation in 2013. Now LLMs are all the rage. You had an idea around this that I liked because it was very different from how most investors talk about AI. You said everybody is knocking AI startups for being “just a wrapper on top of GPT.” You had a different take.
John: My take is that that might be a reasonable critique for a growth-stage VC to have at an investment committee meeting. It is not what we should be putting out on Twitter to the next generation of young builders. I know a lot of kids who are 17, 18, 19 and they’re hacking and building ChatGPT wrappers and some of them are making a ton of money.
Shaan: What’s an example?
John: Like, narrowing it down: there are a few people who’ve done dating coaching apps — if you’re bad at texting, you go to this app and it fine-tunes responses to be a little more engaging or spicy. Homework help. Rap lyrics. Whatever.
A lot of people will say, “Those aren’t appropriate for venture capital, therefore they should not be built.” But that’s where I’m flip-flopping from my “lifestyle businesses are bad” position. These are phenomenal for getting experience. If you ever talk to somebody who ran some small business in high school, that’s always a bull signal for entrepreneurship. It doesn’t matter what the thing was. Oh, you were hustling sneakers? Reselling concert tickets? My thing was buying DJ equipment in the United States and exporting it to Australia — just hustling that in high school. Everyone has one of these stories.
Shaan: So we want a lenza for ChatGPT. What’s lenza?
Sam: I don’t know what that is.
Shaan: It’s an app where you upload ten selfies from your camera roll and it generates AI images that look like you — like that’s Sam’s face but on Superman. It was rumored to be a Russian company. It was based on Stable Diffusion and a Google paper called DreamBooth. Nobody knew what those meant. Your aunt doesn’t know what Stable Diffusion or DreamBooth is, but she probably downloaded Lenza Magic Avatars and had that as her profile picture for a bit. Number one in the app store for a while. Made a bunch of money.
That’s the kind of thing — if you’re toying around with ChatGPT and you don’t build something really fun and cool because you think “this won’t be a generational company,” you’re losing.
John: Exactly. And I think about this even less from the economic side and more from the experiential side. You just need to go build the fun thing and put it out there and see how it goes.
Here’s what I would build. There’s something that language models are particularly good at called the Barnum effect. Have you guys heard of this?
Sam: No.
John: The Barnum effect is a psychological phenomenon where I can say something that sounds like it’s very specifically tailored to you, but it’s actually vague and applies to everyone. An example: “Sam, you have a great need for other people to like and admire you. You have a tendency to be critical of yourself. You have a great deal of unused capacity which you have not turned to your advantage.”
Sam: Yep, yep, yep.
John: Those things resonate with everyone. They feel personalized. It’s like astrology.
Shaan: They use this in astrology.
John: Exactly. And what I’m thinking is: someone should take ChatGPT and LLMs and make some kind of viral personality quiz, viral astrology app, something along those lines that exploits this effect — because LLMs are really really good at it. And it goes viral: “Did you get your custom personality test through this chatbot?” Just like, “Did you get your Lenza magic avatars?” “Yeah, I did that, I did the in-app payment, it was $5.99.”
Shaan: That’s a great prediction. I think that’s going to happen very soon. We’ll look back at this clip and say John called it.
Sam: It has to happen. Steve Jobs said once that when a technology breakthrough happens, there’s a set of twenty things that are going to happen no matter what — it doesn’t matter who does them, they will unfold. You just don’t know when and you don’t know who.
Shaan: That’s how I feel about this idea. Love it.
The Telephone Clear Tape Scam [00:59:00]
John: Your ideas were actually very solitary earlier on. You said you did your high school flipping thing. You also were a telephone marketing scam artist. Tell that story.
John: Have you watched Workaholics?
Sam: A little bit.
John: I use The Office as a reference point, because that’s the default small-business in America. They make a thing and then they ship it out.
So the scam worked like this. I found the job on Craigslist. I show up wearing a suit. I’m probably seventeen years old. I brought a resume. I’m like, “I want this job.” And they’re like, “It’s not that type of job. You do not need to be wearing a suit. Just sit over there. You’re going to call these numbers, call down the list, and when they pick up, read this script.”
The script goes something like this — I probably still remember it by heart. When they pick up, you do not ask how they’re doing. You do not talk to them. You just say: “Shipping department, please.” And you want to make it sound like you’ve been disconnected. Like you were already talking to the shipping department.
Half the time people are like, “What are you talking about, this is a law firm, we don’t have a shipping department.” But the other half are like, “Yeah, we got a shipping department, I’ll transfer you down there. You must have just gotten disconnected.”
So now you’re down in the shipping department. Imagine Dunder Mifflin. You just talked to Pam. Pam transferred you down to Darryl in the shipping department. And then you say: “Hey — you guys are still using the two-inch clear tape, right?”
Sam: I see it.
John: That was the line. The secret is: it’s like asking an office if they use 8.5 by 11 inch paper. Or asking a podcaster if they still use microphones. Yes, everyone uses two-inch clear tape in a shipping department — it’s the packing tape you use to tape boxes. So they’re obviously going to say yes. But it sounds like you’ve already sold to them.
Then if they say yes, you say: “Hey, I just want to thank you — not for being a customer, just thank you. And we’re going to send out another box of that two-inch clear tape for you guys, and I’m going to throw in a Starbucks gift card for you personally. Your name’s going to be on it. This one’s for you.”
And I’m running through this training and I’m like, “How much is the Starbucks gift card for?” And he’s like, “Don’t worry about it.” And I’m like, “No, I need to know, because what if they ask me?” He’s like, “They’ll never ask you.” And I was like, “No, I have to know. I cannot do this job unless you tell me.” Finally he said: five dollars.
So they do the Starbucks gift card thing, they get the guy to say yes, and then they send it out with an invoice. You don’t need to collect credit card details over the phone. And they’ve priced this clear tape at exactly the level they think most accounting departments will just stamp and pay without questioning. It was $500 for a box of clear tape. It costs them five dollars to produce.
Shaan: How much money did the company make?
John: Millions. The guys were driving around in sports cars. I ran the numbers while I was there — I only worked there one day and then quit because I figured out it was a scam almost immediately. But a lot of people stuck around.
Even then, I think I sold a thousand dollars of clear tape. The conversion rate is insane because they’re just trying to get the one sale. And the guys in the shipping department — first of all, hilarious — they don’t even use their own clear tape. It just falls apart. They buy the stuff that gets thrown away in China, manufacturing defects, for like ten cents. Then they sell that for $500, which is already an order of magnitude more than you could get at Staples.
Shaan: Are they still doing this scam?
John: I don’t think so. They had an F from the Better Business Bureau and I imagine it eventually dissolved or got all their phone numbers blocked.
Sam: What did these guys look like?
John: They actually looked exactly like the three of us.
Sam: I figured.
John: The CEO was wearing a black hoodie. Driving an Audi R8, I think. That was the big move.
Sam: There’s some guy listening to this right now who’s in a shipping department and just had a holy-crap moment. “We’ve been getting the tape guy for years.”
Shaan: And then there are a thousand other people listening going, “So how do I get the leads?”
John: I ran into a guy who’d worked there a year later — he came up to me at a concert. I didn’t recognize him. He was like, “John, the tall guy! How’s it going? Remind me where we know each other from.” “Delta shipping.” “Oh yeah, I worked there for like a day. Are you still there?” He’s like, “No, they fired me. They fire everyone every three months because they need to turn people over. As soon as one person finds out it’s a scam, they’ll tell everyone else. Like a Ponzi scheme — you’ve got to get rid of anyone who knows the truth, because as soon as one person figures it out they’ll scare everyone else.”
I’m like, “That’s tough. What are you doing now?”
He goes, “I’m selling drugs at this concert.”
Sam: Good deal.
What’s John’s YouTube Channel? [01:04:30]
Shaan: Tell people what your YouTube channel is, and why are you doing YouTube? You could be out there building another business, but you’re making content.
John: Basically I got bored during the pandemic. And honestly, content has always been super important for launching companies — our first viral success at Soylent was content. I’m an entrepreneur, so having a voice is important.
My YouTube channel — just search John Coogan. I also have a podcast now: PowerLaw.fm, hosted by John Coogan. It’s not an interview show. It’s deep dives on power law people and companies — these power law outcomes.
Sam: Good name. Good concept.
John: Yeah, I really like it. The biggest problem is I don’t have a lot of focus. I’ll talk about geopolitics. My last video was on Doug Demuro breaking down his business. I’m all over the place. But it’s a lot of fun and there’s clearly value in what we do — people enjoy it, it makes them happy, and you meet interesting people. We got to have a great conversation because of it.
Shaan: We appreciate you coming on. This has been really fun.
John: Hey, we don’t have a lot of focus either. Look — we went from scams to “who are you gonna vote for” to guns. Your audience won’t be perfectly optimized, but in terms of the lifestyle: this is the way to run the content machine. Don’t go too crazy with it.
Shaan: Well said. Thanks for coming on.
Sam: That’s the pod.