$100M Founder Reveals The Secret To Making Data Profitable

0:00:04 All right. What’s up? We got Anand here. People don’t know this. Right before the episode,
0:00:07 I asked the guest, I was like, “Oh, yeah. What’s your role now at the company?” And
0:00:11 I always asked this. I say, “How can I brag about you? How can I say something really
0:00:14 impressive that you’ve done to give you credibility right away so people know that they should
0:00:20 listen?” And I was like, “Can we say that your company does over $100 million in revenue?”
0:00:24 His words were, “I got in trouble last time. I came on for divulging too much info.” But
0:00:28 you could say around, what did you say? Around the $100 million-ish.
0:00:29 Neighborhood, yeah.
0:00:30 Yeah.
0:00:33 So, we’ll go with that.
0:00:44 You’ve come on before, and I was looking at the comments, and they were all basically,
0:00:48 “This guy’s fantastic. Love his ideas. More of this guy. We need a part two. We need a
0:00:54 part two.” So here we are. Part two with Anand, the founder of CB Insights, who has transitioned
0:00:57 on to doing bigger and better things now with the company.
0:01:02 No, he’s transitioned on. I don’t think he’s doing bigger and better things, though.
0:01:03 Other things.
0:01:04 Yeah.
0:01:06 Smaller, for sure, actually. Smaller and worse things.
0:01:10 Yeah. Yeah. I’m just chronically online on Twitter, so yeah, it’s definitely smaller,
0:01:12 smaller things right now.
0:01:16 We don’t normally do this, but actually, we’re going to make an exception for you. I want
0:01:22 to hear the founding story of CB Insights because you guys started out selling like PDFs and
0:01:27 shit like that, and somehow that went from selling PDFs to starting a nine-finger company.
0:01:30 So I got to hear this story. Can you take us back to the beginning?
0:01:36 Yeah, sure thing. So I left American Express where I worked. Jan 1, 2008 had written a
0:01:37 book.
0:01:39 Were you a big dog at American Express, or were you just like a normal guy there?
0:01:40 What was your situation?
0:01:45 I was a vice president, so it was funny why my wife’s father was like, “Oh, you’re vice
0:01:49 president. Next, you’re going to be president.” And she had no idea. There’s like 40,000 other
0:01:50 vice presidents.
0:01:54 That’s what I used to think, too. I heard VP. I was like, “Oh, you’re next to the line.”
0:01:55 Yeah, I was like, “No way.”
0:01:57 But that’s a pretty liberal job title, right?
0:01:58 Yeah, yeah, yeah.
0:01:59 Making those things out.
0:02:01 Yeah, they hand those out a lot to make you feel like you’re doing well.
0:02:05 Well, give people a sense. You were making like $200,000 a year or something like that?
0:02:06 Yeah.
0:02:07 Is that roughly?
0:02:13 Yeah, $250,000. So it was good living, but I always want to do my own thing. Left going
0:02:19 to do this consulting, financial crisis hits, big banks, our main customer, they basically
0:02:24 are worried about staying solvent, so they just ghost us. And I’m paying two guys from
0:02:30 my old team out of pocket, and I’m just married, so we’re watching savings go down every two
0:02:32 weeks.
0:02:36 We worked in credit card industry, so we said, “What can we do in that space?” And we started
0:02:41 calling ex-colleges who worked at like Capital One and Citi and other places and basically
0:02:47 started doing this, call it like a sentiment survey. What do you think about delinquencies
0:02:53 and lost rates? The metrics that matter in that space, and we’d give it back to them
0:02:58 for free. And they just liked it because they were like, “Oh, am I super optimistic and
0:03:02 all my peers are super pessimistic? I need to recalibrate.”
0:03:06 Why did you originally think that that was a good idea? Usually I have to see something
0:03:11 to even know, “Oh, that’s a business? Oh, cool. Did you see something that existed?”
0:03:13 And you were like, “We could do that for credit card data.”
0:03:19 No, no. In the beginning, we just stumbled into tons of things. I was just like, “I
0:03:25 can’t keep paying these people out of my pocket.” We were doing consulting for a school. We
0:03:28 just kept our feet moving, and anybody who would throw money at us, we were like, “Yeah,
0:03:34 we’ll do that for you.” It didn’t matter. This was just an area. I had this guy, Dominic,
0:03:38 my teammate. He’s like a savant on this stuff. So we kind of were like, “Hey, maybe we could
0:03:45 do this.” It was just a guess. So we started doing GLG calls, the expert network calls.
0:03:51 That was making a little bit of money, definitely not enough to cover costs. Then we met this
0:03:58 guy at this prime broker. These are the guys who settle trades for hedge funds. He was
0:04:02 like, “Hey, I think we could sell this because the mortgage crisis was starting to kind of
0:04:06 get figured out.” He’s like, “I think credit cards is what people are going to freak out
0:04:11 about next.” The thing that the beauty of what he saw was he wasn’t worried about what
0:04:14 his customers cared about today. He’s like, “This is what they’re going to care about
0:04:19 in the future.” So we’re like, “Yeah, cool. We can’t sell it. Maybe you can.” I spammed
0:04:26 every hedge fund guy who went to Wharton that I could find. Nobody cared about what we had.
0:04:30 But what did you have? Was it literally just like you sent a survey to 20 people?
0:04:35 Yeah, it was a PDF that basically showed the trend of how people in the industry thought
0:04:40 things were going in certain key metrics. But how many people in that industry?
0:04:44 Oh, like 25. You’re like, “Oh, we have vice presidents
0:04:50 from AMEX, from Visa, from MasterCard, whatever.” The thing that they wanted was that the important
0:04:54 data was basically like our delinquencies, our defaults are going to go up because that’s
0:04:58 going to spell, that’s going to cause a bunch of ripple effects. That had just happened with
0:05:03 mortgages where if mortgages fail, which nobody thought they would fail, but when they failed,
0:05:08 they caused all these ripple effects and banks went under and all this stuff. So as an investor,
0:05:11 you needed that info. Is that correct? Yeah. So there’s that macro view and some
0:05:16 of it is like, “Hey, I hold a billion dollars of American Express stock.” And I need to
0:05:20 put some number into a model that says how they’re going to do the next quarter. It’s
0:05:26 like a channel check. People go to Apple manufacturers and try to figure out how many
0:05:30 hard drives or whatever they’re shipping out to figure out how many MacBooks are going
0:05:34 to be created. This is the digital equivalent of that.
0:05:41 They’re trying to front run the quarterly earnings report that’s going to come out later.
0:05:46 You’re basically trying to get inputs to guess where they’re going to be so that if it’s
0:05:50 bad news or if it’s good news, you can adjust accordingly before the rest of the market
0:05:51 knows this information.
0:05:56 Exactly. They’re living in an information vacuum. So this isn’t the number, but it’s
0:06:01 a little bit of like leading indicator sentiment that they can use.
0:06:06 All right. Let’s take a quick break because I want to talk to you about some new stuff
0:06:09 that HubSpot has. Now, they let me freestyle this ad here. So I’m going to actually tell
0:06:14 you what I think is interesting. So they have this thing called the Fall Spotlight showing
0:06:17 all the new features that they released in the last few months. And the ones that stood
0:06:21 out to me were Breeze Intelligence. I don’t know if you’ve seen this, but if you’re in
0:06:26 HubSpot and you have, let’s say, a customer there, you can just basically add intelligence
0:06:30 to that customer. They estimate a revenue for that company. How many employees it has,
0:06:34 maybe their email address or their location, if they’ve ever visited your page or not.
0:06:38 And so you can enrich all of your data automatically with one click using this thing called Breeze
0:06:42 Intelligence. They actually acquired a really cool company called Clearbit and it’s become
0:06:46 Breeze, which is great because now it’s built in. I always hated using two different tools
0:06:50 to try to do this. Now it’s all in one place. And so all the data you had about your customers
0:06:54 now just got smarter. So check it out. You can actually see all the stuff they released.
0:07:00 It’s a really cool website. Go to HubSpot.com/Spotlight to see them all and get the demos yourself.
0:07:04 Back to this episode. Sam, he said Prime Broker. Do you know what a Prime Broker is?
0:07:10 I have no idea. Sounds pretty sick, to be honest. Yeah. Is it Prime? Like Prime Time?
0:07:15 Like this is awesome. Yeah. So I still, this is my late person understanding. So there’s
0:07:18 people who settle trades for hedge funds. A hedge fund is buy and sell stock and there’s
0:07:23 somebody who executes that trade. And what they would do is they’d bundle research as
0:07:28 part of the trade. So they’d be like, “Hey, if you trade with us, I’ll give you all these
0:07:32 other research services.” And so they would call these soft dollars. And I think these
0:07:36 have been sort of banned and outlawed or changed since, but we got, at that time, they were
0:07:41 all, this was all kosher. Why? They’re banned because you’re influencing
0:07:46 people to do stuff? Yeah. I think it was like, you know, the stuff
0:07:50 getting bundled in was maybe a little dicey and they just said, “Listen, just charge them
0:07:55 for the trading as if it was trading, and don’t do all this other, you know, kind of
0:07:58 a shugana that like, you know, what’s going on.” It sounds like two gangs. It’s like the
0:08:03 prime brokers against the soft dollars. It’s like, oh man, I don’t know whose team I want
0:08:07 to be on. Why is it called a soft dollar? What does that mean?
0:08:12 I think it’s because it’s like, you’re not being charged directly for it. Like it’s bundled
0:08:14 in, right? But you’re being charged for the trading.
0:08:19 Gotcha. Right. So, we go to Nick and Nick, we’re like,
0:08:24 “Hey, $2,500, you know, a quarter or a month would be fantastic.” And Nick’s like, “No,
0:08:31 no, no, I’m not interested in that. We’re going to price this at $12,000, $50,000, and
0:08:37 $100,000.” And we’re like, “Hey, you know, bro, it’s a PDF.” And he’s like, “No, no,
0:08:42 the way we’re going to do this is $12,000 just gets you the PDF, $50,000 gets you the
0:08:49 PDF in a call, and $100,000 gets you the PDF a call, and anytime we hear something juicy,
0:08:54 we pick up the phone for you, and only 10 people can get that one.” Right? So, we get
0:08:59 off the- It’s like only fans for hedge funds. It’s like for a hundred grand, you get feet
0:09:03 and the PDF. Yeah, exactly. So, yeah. So, nobody bought
0:09:09 the foot package, right? But it was a great price anchor, right? And so, what ended up
0:09:16 happening was a bunch of people bought the 50K package and the 12K package. And it was
0:09:20 like a build once, sell multiple times. So, that was going really well. We knew from the
0:09:26 get-go, mortgages had a life span of like the crisis had a life span, and we knew credit
0:09:32 cards would have that too. But it helped us put away enough money and got me paying the
0:09:38 team out of that business versus out of savings, and then that’s what funded CB Insights.
0:09:43 But here’s the craziest part to me. 20 people is not a lot of people to survey. How long
0:09:48 did the survey take to complete? I mean, we would do this survey via the
0:09:54 phone, right? And so, that would take, you know, I don’t know, hour and a half, two hours
0:10:00 per person, right? Because you want to get commentary, right? It’s not just, you think
0:10:06 this is a one, two, three, four, five, right? It was like trying to get context around it.
0:10:10 But yeah, I mean, it’s not a large sample size. I think the big thing here is when you’re
0:10:14 dealing in big, big dollars, some information is better than no information.
0:10:20 Right. That’s insane to me because basically, like, so the hard part is finding a problem
0:10:25 that needs to be solved where like more information or a survey could solve it. But basically,
0:10:30 I could go on GLG. I can go on intro.co. I can go on all these websites. I could pay
0:10:36 someone $1,000 or $2,000 for an hour or two hours of their time. Ask them tons of questions.
0:10:40 Take all of that into a thing and then resell it as a research report for a survey. And
0:10:42 that’s crazy to me.
0:10:46 Those companies do that, right? I think the challenge that you’d have if you wanted to
0:10:51 rebuild what we were building was we knew all the people at the card companies, right?
0:10:55 And they trusted us to give us, like, to have this conversation, right? If you just show
0:10:59 up, Sam, and you’re like, “Hey, Chief Risk Officer at Capital One, let’s sit down and
0:11:03 talk about what you’re seeing.” They’ll be like, “I can’t, I’m not going to, I don’t
0:11:10 know what you’re doing with that.” They knew us, so they knew we weren’t going to do some
0:11:14 incendiary thing with it, right? It was that we’re going to use this, we’re going to package
0:11:18 it up into a survey. It’s going to be anonymized, so it’s never going to be a Capital One sees
0:11:25 weakness or cities like flying on delinquencies, right? It was always aggregated and anonymized.
0:11:32 These are great businesses. They’re data cooperatives or pool data. It just trust is the big thing
0:11:36 that you need in order to get people in the industry to open up to you.
0:11:40 How much did you guys bake, do you think, off the PDFs during that one-year run?
0:11:44 We probably made, like, $700,000.
0:11:45 What was your reaction at the time?
0:11:51 I was like, “I don’t have to go back to work at a big company.” That was it. It was just
0:11:59 relief, right? And yeah, it felt, you know, on-pron reflection, we just stepped in shit.
0:12:04 We just got super lucky that we met this guy, Nick, that he had the foresight to think about
0:12:10 pricing this way. But yeah, I mean, I was just thankful, to be honest, because I was like,
0:12:17 to go back 2010, 2009, after leaving Amex, like, would have been going back sort of tail
0:12:21 between my legs saying I couldn’t hack it as an entrepreneur. Like, the ego hit there
0:12:26 would have been, that would have been the worst part. That would have been, like, devastating,
0:12:29 I think, for me. So yeah, that was just happy.
0:12:35 Jason Freed said something amazing when we talked to him a few months ago. He said, “It’s
0:12:41 better to be extra weird early on, because as a company grows, people are acting more
0:12:47 corporate.” And so, the more weird and unique you start as, hopefully, it’s inevitably
0:12:52 going to get watered down, but hopefully the watered down version is still unique and weird.
0:12:59 I didn’t realize that CB Insights stands for Chubby Brain. And your original logo basically
0:13:04 looks like me as an eight-year-old holding a brain, and the name of the company is called
0:13:06 Chubby Brain. That is awesome.
0:13:12 Yeah, I like the name. It didn’t work out. And yeah, we tried to sell Chubby Brain, like,
0:13:18 the service to Goldman, and they were like, “We can’t use a service called Chubby Brain.”
0:13:24 And so, it wasn’t just them being like hoity-toity. They were like, “Listen, at the bottom of
0:13:29 every slide, we put source for our data, and we can’t put source Chubby Brain at the bottom
0:13:35 because it kills our credibility.” And so, that night, John and I kind of went to a bar
0:13:39 and we were like, “We got to change the name,” and that’s when it became CB Insights. So,
0:13:42 that’s the genesis story of our name.
0:13:48 Sean and I have an LLC that HubSpot pays us to, and I’m pretty sure he wanted to name
0:13:54 the LLC, something like ridiculous. I don’t remember what it was, Sean, but I remember
0:13:56 thinking, I’m like, “I can’t put this on an invoice.”
0:13:59 It’s like, “We’re paying hood rat media.”
0:14:06 It was hood rat media. Yes, you wanted to call it hood rat media. And I was like, “Sean,
0:14:10 no one was going to see hood rat media other than the accountant paying the bill.” And
0:14:13 that’s like the one person who we don’t want to think this is a scam.
0:14:14 Right.
0:14:18 I don’t know if this is an apocryphal story. There was some guy selling something on a
0:14:22 online. It was like a crappy product, and everybody asked for a refund, and then he’d
0:14:29 send them a check. But the check would be from a company called I Like Little Boys, Inc.
0:14:35 And so, nobody would actually cash the refund check because they were like, “I’m not going
0:14:41 to go to the bank with that money in the bank,” so that company on the check.
0:14:44 You said after the last episode, you said that people reached out to you, and we’re
0:14:46 going to get to a bunch of different ideas you have, but you said after the last episode,
0:14:50 people reached out to you saying, “I want to do this data stuff,” and you said they’re
0:14:57 running 100 miles an hour in the wrong direction, and you wanted to correct people who are interested
0:14:59 in this. What were you going to say to those people?
0:15:03 Yeah, I think the big thing is folks kind of thought, “Oh, I have data. It has intrinsic
0:15:08 value,” and that’s the problem. Data itself is not valuable. It’s what you can do with
0:15:13 data that makes it valuable, so the customer doesn’t care that you have data. They don’t
0:15:19 care how hard it was for you to get. They don’t care it’s proprietary. They care about
0:15:26 what edge is it going to give them, and so you have to think about the edge and the outcome
0:15:31 you’re going to drive for the customer upfront. I think of it as like three things. I call
0:15:37 it like ECO, so you’ve got the edge. You have to define what that’s going to be. The C is
0:15:41 sort of can you collect it, and then the O is just the opportunity, and so people would
0:15:48 reach out. They’re like, “Hey, I have data on how much media companies spend on their
0:15:54 writers.” It was like, “Okay, you have it. Who’s going to use it?” They’re like, “I’m
0:16:00 going to talk to heads of editorial teams,” and it’s like, “Listen, media companies, one
0:16:04 is a target or just a terrible place to sell. These are dying companies and you’re trying
0:16:10 to sell them stuff, so bad thing there. Now you’re trying to sell to a head of editorial
0:16:15 team who I’m painting with a broad brush probably isn’t the most data curious, data aware type
0:16:22 of person.” I think that’s a lot of it, is like figure out what edge it’s going to drive,
0:16:27 and then obviously hopefully you can collect it, and then how big is the opportunity, right?
0:16:36 Financial services, AI companies now are big buyers of data, tech, and then the sales and
0:16:40 marketing ad tech world, like those are your big three verticals that you want to think
0:16:46 about generally. There are big data businesses and other verticals, but if you’re starting
0:16:51 at level zero and you’re building a B2B data company, think about the vertical and think
0:16:56 about what edge you’re going to drive, right? Nice to have benchmarking data is a quick
0:17:04 way to build. You could maybe become a thousandaire off of that type of company, right? You’re
0:17:11 not going to build a multimillion-dollar business selling benchmarking data, unless it’s benchmarks
0:17:20 that help you make big decisions. Salary benchmarks, awesome, right? How much am I paying? How
0:17:25 much are my delinquencies versus other big card companies? Amazing, but if it’s benchmarks
0:17:30 on how much you pay for Slack versus other people, nobody cares about that.
0:17:35 What was your checklist? You said, basically, who’s the buyer? Do they have money and do
0:17:40 they care about this? Two, what edge does the data give them? That was number two. That’s
0:17:44 the most important thing. Is there a third and fourth criteria you have?
0:17:48 If I boil it down, it’s the edge. It’s collection feasibility. How are you going to actually
0:17:54 collect this information? Then three is opportunity. On collection, the big one is folks sometimes
0:17:58 have a hack. They’re like, “Oh, I got it in with this person and they can give me this
0:18:03 exhaust data from their company.” The problem with companies built like that is, when you
0:18:08 lose access to the hack, the whole company’s dead, right? It’s like supply chain risk in
0:18:13 our world. If we bought all of our data from one provider and they decide to change the
0:18:19 rules or go under, you’re dead in the water. Yeah, so how you collect the data is the
0:18:24 other one. Edge, collection, and opportunity are the three that I would look at and really
0:18:26 scrutinize a lot up front.
0:18:31 Can you explain how those worked? Just to finish the story of Chellby Brain to CB Insights
0:18:37 Successful Company, what did CB Insights do on those three criteria? Who was the buyer?
0:18:41 What was the edge you gave them and then what was the collection feasibility?
0:18:46 The buyer, and it’s changed over time, initially it was investors and investment banks. I think
0:18:52 of like VCPE investment banks. They are in the business of sourcing. That’s one of their
0:18:58 key responsibilities. They make their money off of finding and sourcing the right deals.
0:19:03 What we saw was there wasn’t a really structured way for folks to do that. That was the edge
0:19:06 we wanted to deliver. We’re going to give you access to more companies. We’re going
0:19:10 to get them to you quicker and we’re going to have deeper, richer profiles on them. That’s
0:19:19 the sourcing edge. Over time, the opportunity was in that group to start. I think that’s
0:19:24 another big thing is start really narrow. If I made a mistake along the way as we got
0:19:30 too broad, so opportunity was in that group. The edge was a sourcing edge and then collection
0:19:36 was, in the beginning, it was just ground and pound. We had 50,000 articles about funding
0:19:43 and M&A events and me and the guys just went through manually and put in columns in a spreadsheet.
0:19:47 Here’s the investors. Here’s the amount. Here’s the valuation, whatever we could find. Then
0:19:51 we got lucky and hired some amazing engineers and they basically reverse engineered that
0:19:57 process and automated it. Over time, now we do interviews and we do surveys. There’s seven
0:20:01 ways to collect data, at least the way I think about it. Now, we probably do five out of those
0:20:08 seven. In the beginning, it was just brute force. That’s the way. I think Henry Shuck
0:20:13 at Zoom Info, they used to call into company switchboards or whatever and they’d be like,
0:20:21 hey, what’s Bob’s extension? That’s how Zoom Info would get Bob and IT’s number and extension.
0:20:26 A lot of really good data businesses have been built doing really data janitor work
0:20:30 in the beginning. Then over time, they get more sophisticated and all that good stuff.
0:20:35 You’ve done this in a really cash efficient way. I know that you’ve raised a Series A,
0:20:39 but I think you’ve said you’re not even sure entirely if you needed to raise that money.
0:20:47 Do you still own a large percentage of the company? Yeah, we raised late. We bootstrapped
0:20:54 for six years. We’re a very pain tolerant company, I would say. We raised after six
0:21:00 years. The team and I own a solid chunk of the company.
0:21:05 There was an article that came out last year, about eight months ago. You don’t have to
0:21:10 say if this is true or not. I’m just reading the headline of the article. It says CB Insights
0:21:17 to weigh $800 million sale. If that word true, which I don’t want you to even say if
0:21:22 it is or is not true, that would mean that you could walk away with potentially hundreds
0:21:28 of millions of dollars. Would you consider that to be a successful outcome given how
0:21:32 humbly the company started or are you trying to go even bigger?
0:21:39 To say that’s not a successful outcome would sound insane. That would be a successful outcome.
0:21:43 I do think there’s a massive opportunity in front of the business. We hired a CEO earlier
0:21:50 this year and he’s a killer, Emmanuel. I think this business, especially with generative
0:21:59 AI, has a lot of legs to grow. Selling for $800 million back then would have been a fantastic
0:22:02 outcome for everybody involved, but yeah, I think we can get even bigger.
0:22:07 What are some of the data businesses that you think have legs? You said a lot of people
0:22:11 reached out saying, “Hey, I got access to this data,” and you’re like, “I don’t think
0:22:18 you have it quite right.” Are there businesses that you’ve seen or you think somebody should
0:22:20 go build a data business in?
0:22:25 I haven’t thought a ton about new data businesses. I think the areas that are really interesting
0:22:31 are ones to look at that are doing really well. There’s one company I saw recently that
0:22:37 was pretty awesome. It’s called Razor’s Edge. What they do is, I thought their method of
0:22:42 doing it was cool. They’re like a database of donors. If you’re a charity, you need to
0:22:47 raise from these high net worth folks. What they did was they started off with this database
0:22:54 of donors. People like charities and foundations and universities might buy it. What they then
0:23:01 grew into was a CRM to help you basically manage your outbound and your entire relationship
0:23:07 with them. They did this ground and pound method to capture this data in the beginning.
0:23:13 Now what folks do is if Sam’s running a charity and he uploads his list of donors, they’ll
0:23:20 clean it and organize it, and then everybody gets the benefit of that clean data. It’s
0:23:26 become a pool data, data cooperative. Then they’ve added workflow on top of it. I think
0:23:34 that that’s a really impressive formula going from data to data co-op to workflow tool.
0:23:41 I think that’s the future because you want to get into people’s workflow. That’s one
0:23:48 company I really like that I’ve just come across recently. The other area that I think
0:23:54 is interesting, I don’t think anybody’s doing this. I think there’s the potential for a
0:24:03 high-end glass door. Glass door generates this disaffected group of people who like
0:24:12 to bitch online. If you’re a hedge fund and you want to know what’s going on at the company,
0:24:19 a lot of that is a function of how well is the CEO leading the organization. There’s
0:24:24 really no good way of understanding that. I think, and again, I haven’t validated it,
0:24:29 is I wonder if you could go out and interview, maybe you have to pay them $1,000, $2,000
0:24:35 and say, “Listen, I want to interview execs on the team and execs, execs.” I want to do
0:24:42 this deep interview on what do people view as the pros, cons, the strategic vision of
0:24:51 the CEO, and basically get an inside view of the quality of and the followership of
0:24:58 a CEO, which may be an indicator of the quality of that business and how it’s going to do
0:25:04 in the future. I think that’s an interesting idea. You can take these transcripts and use
0:25:10 generative AI to extract structured data from it. That’s one that I’m not going to work
0:25:16 on it, but I think could be interesting. Again, it hits a high value segment. It’s like the
0:25:24 old why’d you rob the bank because that’s where the money is. Hedge funds are great,
0:25:26 a great kind of source of that.
0:25:30 That’s pretty interesting to use the transcripts too, or also the audio recordings. Have you
0:25:37 ever had an argument with your wife or something like that? Imagine these executives describing
0:25:42 the CEO or that you’re like, “Hey, was the CEO any good?” They’d be like, “He’s good,”
0:25:49 versus, “He’s good.” Do you know what I mean? We’re going to look at the inflection of
0:25:53 your voice. I would love to go. You know what I mean?
0:25:58 You can do sentiment on it. You can look at all sorts of things that I think could be
0:26:02 interesting. Again, it’s not going to tell you to buy or sell that stock, but it’s another
0:26:12 input. Then there’s these activist shareholders. If you see a listen over time, XCEO, the team
0:26:17 is losing their faith in that person. Now, this becomes a reason for that activist to
0:26:23 come and say, “Hey, Joe who’s running X, he’s lost the team, and stock performance sucks,
0:26:29 and they’re not doing these things.” It becomes an input. These are people who, the buyers
0:26:33 here, they’re making hundreds of million-dollar, billion-dollar decisions. I think that’s
0:26:40 another interesting vector. There’s probably all sorts of insider trading complications
0:26:44 that you got to deal with on that one. Don’t just run with that.
0:26:50 Sean, when you had… Check out this razor’s edge thing. You said that. I got fascinated.
0:26:55 Do you know how much money razor’s edge makes? I do not know that.
0:27:01 You were like, “This company looks interesting.” They’re publicly listed. There are 24 company
0:27:10 guidance, over a billion dollars in revenue, 33% EBITDA, about $250 million of free cash
0:27:14 flow. There you go. You heard it here first.
0:27:19 Very impressive. Sean, when you had the milk road, because
0:27:24 I know we thought about this at the hustle, but I wasn’t mature enough to see the opportunity.
0:27:30 When you had the milk road, and even now, as you have kind of a mini-media empire, have
0:27:37 you thought about monetizing it via data versus advertising?
0:27:43 I’ve thought about it, but it’s like asking, “My daughter, have you thought about algebra?”
0:27:47 She’s like, “What? Maybe? Yeah, sure.” I don’t even know what I would have been thinking
0:27:53 about. For example, with milk road, we did what you’re talking about. We would go and
0:27:58 we would interview whales. We would go to like 25 of the biggest crypto whales. These
0:28:03 are guys who are placing tens of millions or $100 million bets on NFTs and coins.
0:28:10 Now, remember with crypto, if you’re a whale, whales have multiple characteristics. First,
0:28:15 it’s a small market. Second, these guys have a big check. A big check, small market equals,
0:28:18 they can actually move the market. Third, they’re very influential, meaning when they
0:28:22 do something, everybody else follows in because they have a reputation. They became a whale
0:28:27 because they picked something early on well. Everybody thinks this person is the oracle.
0:28:31 We interviewed them and we talked about what’s your bullishness, what’s basically sentiment
0:28:37 on the market. We asked what projects they’re most bullish on, what their picks are. We
0:28:43 had all this info and then instead of selling it to maybe crypto funds or hedge funds or
0:28:48 anybody like that, we were like, “This will be a great lead magnet for free newsletter
0:28:52 subscribers. Let’s give it all away for free as a PDF in order to get subscribers.” We
0:28:57 did. It was a bonus if you referred people, for example. That thing was so valuable actually
0:29:04 that we didn’t really understand the value that we had. It’s like somebody who now Airbnb
0:29:08 and makes 100K a year off their kid’s bedroom that’s unused. At the time, it just seemed
0:29:13 like an empty room. We just thought we didn’t understand the value of that unused asset
0:29:14 at that time.
0:29:19 I think once you start a data business, you are now on a treadmill. Somebody’s buying
0:29:24 a subscription. What Sean did was smart in the sense of if it wasn’t working, he didn’t
0:29:29 have to keep doing it. Once you sell it to an institution, now they’re going to expect
0:29:36 it quarterly or monthly and now you are on this. Now you got to keep doing it. It’s like
0:29:39 you want to be thoughtful before you jump in that market thing up.
0:29:42 There’s two that I’ve thought of. I’ll shoot them at you. These are half-baked ideas, but
0:29:45 two that I’ve thought of in the past. You tell me if you think they’d be good or bad
0:29:53 ideas. They’re both very similar. The first one is headhunting talent, so executive talent.
0:29:58 All across the tech industry, talent is at a premium. Somebody who’s a, let’s call it
0:30:05 like VP, SVP and up, so all the way up to the C-suite, those people will make seven figures.
0:30:10 Millions of dollars, if not tens of millions of dollars as their package when they go join
0:30:15 a tech company. The way that the whole industry works is you have a four-year vesting cycle
0:30:21 typically. Knowing when somebody is ready to look for a new job is extremely valuable.
0:30:28 Knowing where they’re at in their vest cycle, that they might be willing to hop and switch.
0:30:32 I think that’s valuable information that could be used in the recruiting business, which
0:30:38 is typically just a services business, not a very data-driven business. One idea was
0:30:44 to understand the vesting cycles of the top 1% of Silicon Valley talent in order to maybe
0:30:50 create a recruiting data business or a recruiting service business on top of that data. That
0:30:54 was the first idea. Quick reaction to that. It might be a bad idea. I never did it.
0:30:59 Yeah. I think the recruiting service business is a better idea than the data business. I
0:31:04 think with data, when you have to try to get somebody to do a new behavior, that’s really
0:31:10 hard. Recruiters who are used to, it’s really networky and it’s very, “Hey, I’ll take you
0:31:15 to lunch,” and that kind of business. Then being like, “Hey, now we have data.” Again,
0:31:20 there are some ones that are really data-driven, but I would say generally it’s probably not
0:31:25 their MO. When you’re like, “Hey, do this thing because it’ll make you more powerful
0:31:30 that you’ve never done before,” that tends to be a tough hill to climb. Building a services
0:31:35 business with this as your edge, I think is an interesting, could be an interesting idea.
0:31:40 Let me tell you another one. That’s not exactly data, but I’ll lump it in here. I saw this
0:31:44 business called Home Options. I loved the idea of this business. What this guy was doing
0:31:50 was he was going to homeowners and he’d say, “We’re not selling their home.” He’s like,
0:31:56 “Hey, I’ll give you $1,000 cash today for the right to sell your home whenever you’re
0:31:59 ready.” They’d be like, “What do you mean?” He’s like, “I’ll give you $1,000 today. You
0:32:05 want to make a new patio? You want to buy a new couch? Here’s $1,000 today just to say
0:32:12 when it comes time to sell my house, I’ll use you or one of your partners as my agent.”
0:32:15 They would take those options and they would bundle them up and they would go to a broker
0:32:22 in the area and they would say, “Hey, I have 500 home options to sell people’s homes. Would
0:32:28 you guys like to buy these for $3,000 or $2,000 or whatever it was?” Then I’m making up the
0:32:33 numbers here just to not put this guy’s whole business model in blast, but he would then
0:32:36 sell it on an upcharge to them and they would say, “Great. We’ll happily take that because
0:32:41 when these come to fruition, each one of these options when they sell their home is worth
0:32:46 $10,000 or $20,000 or whatever it is.” There was a business model built in and I thought
0:32:52 this was genius. I was like, “Wow, this guy’s taking all of this future leads, giving them
0:32:56 a no-brainer deal today and then immediately flipping it to somebody who’s in the business
0:33:01 of having those leads.” Now, obviously, the timeline is the hard part. When is somebody
0:33:03 going to think of this other house? 20 years from now, 30 years from now, and I’m sure
0:33:07 there’s some smart way to filter for people that might be maybe younger, maybe more mobile,
0:33:12 more willing to move in a sooner timeline. I thought there was a similar business somebody
0:33:17 could do in the tech world. Again, just back to the world I know, which is, Anand, you
0:33:22 do CB Insights, you’re leaving, you’re going to do a new company, let’s say. As an investor,
0:33:27 those types of people are very, very valuable. I would actually pay founder, I know VCs would
0:33:32 pay founders. Let’s say Sam, right there, like Sam, you did the hustle, you’re a great
0:33:38 founder. Before you do Hampton, if I could just pay for the option, the right to invest
0:33:41 in your next company and you’re going to get a bunch of cash today that might be runway
0:33:45 for you to figure things out, might be just go on vacation, whatever you want to do with
0:33:49 that cash and you’re just saying, “Cool, I’ll give you guys first look, first right over
0:33:55 refusal on my next company.” Yeah, I like that one. I think VCs have these EIRs,
0:34:00 entrepreneur in residence, which kind of are like that. It’s like, “Hey, I’m going to pay
0:34:05 you and you can figure out your next idea.” I think the question I’d have is, if somebody
0:34:10 just had a successful exit, is the amount you could give them going to actually be enough
0:34:16 of an incentive? If you can figure that out, there was a firm that did, it wasn’t this,
0:34:21 but they would basically send term sheets to startups they wanted to invest in. They’d
0:34:25 just be like, “Hey, here’s a term sheet, here’s a valuation.” Once you see that, it
0:34:29 sort of like incepts you. You’re like, “Oh, I think we’re worth that.” You might not be
0:34:33 worth that, but it would start the conversation. I wonder if you could come up with the right
0:34:40 number, you just send a big mail merge to all the founders who meet the bill and then
0:34:45 just see if that generates conversations for you. In the worst case, they at least are
0:34:51 like, “They like you.” If you’re not a D-bag in the meeting, they like you. Then it is
0:34:56 time, they at least have a good impression of you. It’s an interesting deal flow idea.
0:35:01 Now that you’re no longer full on full duty at CB Insights, I know that you’re kind of
0:35:06 tinkering around with some other things. You’re in an interesting phase right now where instead
0:35:12 of being theoretical on MFM about which ideas you think are cool, you’re actually being
0:35:16 practical. You’re like, “I actually may pursue one of these things. What are you thinking
0:35:24 about doing?” Yeah. I don’t think it’s a may. I am going to do this. What we’re working
0:35:31 on is building a school of entrepreneur. It’s an in-person six to 12th grade school. If
0:35:37 you know the IMG Academy for sports, the basic idea is people go pro in sports at a high
0:35:42 school. You should be able to go pro in business. IMG, if I remember correctly, it’s like
0:35:48 a school built mostly for athletes that are potentially going to go pro based in Florida.
0:35:54 It was owned by Endeavour, which owns UFC and TKO and PBR, whatever else Endeavour owns,
0:36:02 a large public-economic company. They recently sold it for, I think, $1.5 billion. It’s just
0:36:06 a high school pretty much. Is it a school or is it just a training facility?
0:36:10 It’s a full school. It’s a boarding school in Florida. It started off as the Bulletary
0:36:16 Tennis Academy, and then it morphed into this. They do all sports, tennis, track, football,
0:36:24 basketball. They do summer camps. Their other big business is summer camps or camps. Let’s
0:36:25 call them.
0:36:29 Dude, if you’re spending that much money to go to that high school for track and field
0:36:36 in hopes of getting a return under investment, that’s like going into a quarter of a million
0:36:40 dollar debt for an art history degree. You know what I mean? It ain’t there.
0:36:45 The thing that they’ve done really well is they recruit really elite athletes. Those
0:36:51 really elite ones might get a scholarship. Let’s say there’s five basketball teams at
0:36:56 IMG. The top team will actually get sponsorship from Nike and stuff that will be used to defer
0:37:03 or defray tuition costs. Really, elite athletes maybe get a free ride or close to free ride.
0:37:07 Other than everybody else who’s probably quite good, but also might have a parent or parents
0:37:14 who think little Bobby and little Sally are going to go pro, who just have visions of their
0:37:21 kid going pro in something will spend a lot of money. I think tuition is like 40 to $70,000.
0:37:28 The camps are a great feeder for the school, but they’re also like, parents want their
0:37:36 kids to achieve a lot. They want to give them a lot of opportunity. The camps are, I paint
0:37:43 with a broad brush, like dad who played baseball, who always wanted to go pro, couldn’t ever
0:37:49 make it once the sun, they think has a shot and they’re like, “Hey, IMG is the best place
0:37:56 to go.” It is. Then they pay a lot of money for these camps. It’s a pretty brilliant model.
0:38:01 They just got acquired by a company that’s basically a European company that’s acquiring
0:38:06 private schools. Private schools are just a giant business. They’re acquiring private
0:38:14 schools around the world. They’re doing a roll-up of those. IMG’s great brand has had
0:38:17 really legit athletes come out of it.
0:38:23 I love the idea of creating a school. There’s many variations of this idea, but creating
0:38:28 as a boarding school around entrepreneurship or a different model of teaching. Here’s
0:38:36 what I want you to do. Can you give me the two-minute impassioned rant on what needs
0:38:40 to change and what you’re going to do, what’s broken and what you’re going to do about it?
0:38:43 I want you fired up for this one.
0:38:49 Schools today are about compliance and conformity. That’s what they do. If you go back and look
0:38:55 at how schools started, it was Rockefeller and these Titans of industry basically trying
0:39:01 to create compliant factory workers. When you go to it, it’s, “Hey, show up at school
0:39:05 on this time. Sit in your seat. We’re going to tell you some tasks to do. When the bell
0:39:10 rings, get up like a robot and go to the next class. Then at the end of the day, we’re going
0:39:16 to dismiss you with another bell.” What they’ve done is create people who are really good
0:39:21 at reading a map. It’s like a scavenger hunt. “Hey, I need some community service on my
0:39:25 thing. Let me go do that. I’ll start some bullshit nonprofit to look good for college
0:39:32 applications. I’ll play three years of a sport.” This checklist that you have to navigate
0:39:39 the map. I think what we need is a school for kids who actually are going to build the map,
0:39:44 for explorers and developers. That’s what the School of Entrepreneurship is about, which
0:39:52 is follow your curiosity and build stuff and learn how to think versus what to think.
0:39:56 I think entrepreneur is a lot like engineering. Even if you decide not to become an entrepreneur,
0:40:02 you learn a way of thinking that’s going to serve you well wherever you go. The idea
0:40:10 is you’ll go pro in business. You won’t take AP classes. There’ll be no SAT, ACT prep.
0:40:17 It’s going to be about learning and building. It’s really experiential, right? We’re working
0:40:22 on having retail on campus. If you want to learn geometry, you’re going to lay out the
0:40:26 floor plan of your retail store. That’s how you’re going to learn geometry. It’s not going
0:40:30 to be, “Hey, let’s learn the Pythagorean theorem in a class,” and then the kids are
0:40:35 like, “When the hell am I ever going to use this?” Yeah, that’s what we’re going to do.
0:40:43 Are you going to raise money for this thing? We’ve got a few folks already. We’ve got a
0:40:50 decent amount of capital committed. This is not my next startup in the sense of, CB Insights
0:40:56 is going to check my significance box or success box. This is my significance box. I might
0:41:02 start two, three other companies. We’re trying to think of an engine to build 200,000 companies.
0:41:08 This is my next thing till when I die at my desk, this is the thing that I’m going to
0:41:17 be working on. It’s not a VC-backed private school to exit. I think the big thing is recruiting
0:41:22 formidable kids. This is one of the biggest challenges. IMG has all these stats. Who’s
0:41:27 the kid who jumps the highest and scores the most points? We don’t have that. The kid who
0:41:31 has a 5,000 subscribers on YouTube is probably the kid who should be at this school, not the
0:41:36 kid who’s really good at standardized tests. The kid who’s sold stuff on Roblox or built
0:41:40 the lawn mowing business. Yeah, but that’s the vision.
0:41:46 Where’s your campus going to be? Don’t know. My partner on this is an LA. The coast would
0:41:54 be easy family-wise. Interestingly, red states are much more open to education innovation.
0:41:59 That’s a conundrum we’ve got to figure out. We had a lot of work to do before we figured
0:42:02 that out. If I was betting money, it’s probably going to be on one of the coast just because
0:42:07 it makes logistics of life easier. What would that curriculum look like to
0:42:11 teach a sixth grader to prepare for this stuff?
0:42:21 I think it’s not subject-based. It’s competency-based. It’s critical thinking or it’s public speaking
0:42:29 or having conversations. A lot of it is project-based and experiential. What I meant
0:42:34 to mention earlier is we’re trying to figure out how to have retail on site with the school.
0:42:40 These kids are operating and building a company. In order to build the company, you have to
0:42:46 do algebra to build your model. You have to lay out the floor plan of the shelves in the
0:42:53 retail store and that requires geometry. I think I have a daughter who’s 14 and she’ll
0:42:58 constantly come home and ask, “Hey, when am I ever going to use this?” That’s a common
0:43:04 question. We’re trying to find ways of integrating it organically into what you’re doing so
0:43:11 that you never feel like I’m learning something that makes no sense. That’s what we’re working
0:43:17 on now. We’re talking to some teachers who can help us build out the lesson plans here
0:43:20 and then get going from there.
0:43:27 The crazy thing about this business or the hardest part, in my opinion, it’s like once
0:43:35 Harvard becomes Harvard, it’s easy to maintain. When you think about all this protest going
0:43:38 on, people are like, “Oh, Harvard’s going to shit. These colleges are going to shit.”
0:43:43 In my opinion, I hear that and I’m like, “No, it’s not. It’s withstood so much crap. Once
0:43:48 a brand is a brand, it’s really hard to ruin.” It’s hard to convince your first group of parents
0:43:53 to actually become a customer of yours. How are you going to solve that?
0:43:59 I actually don’t think that’s as hard. I posted this on Twitter. I got a bunch of inbound
0:44:06 from folks who really like the idea. I’d say it came from two camps. It came from rich
0:44:11 tech people and then it came from, I’d say, generally people in the middle of the country
0:44:17 who are like, “I have a son or daughter who I think is really smart but who is struggling
0:44:25 in the cram, exam, erase model of schools.” They’re not good at memorizing 50 state capitals,
0:44:31 but they’re really good at building an audience on YouTube or whatever. They’re like, “I think
0:44:36 my kid has more potential than is being realized.” I actually think there’s a bunch of folks
0:44:43 like that. I’d agree with you, Sam, if I said, “Hey, we’re trying to recruit Manhattan upper
0:44:51 east side parents who want that old model.” I think there’s a bunch of folks. If you look
0:44:57 at the home schooling statistics and growth, there’s a lot of people who are unhappy with
0:45:02 how schooling is happening in this country and they’re just opting out. I think there’s
0:45:07 a big segment of people who feel like, “I’ve got a kid with a lot of potential who’s just
0:45:13 not with that potentials being squashed.” I’ve had a lot of good conversations with
0:45:20 folks that I think the market for this is giant actually. If we could recruit 100 formidable
0:45:27 kids from each state, that’s 5,000 kids. I think that’s very, very feasible.
0:45:31 You have a few ideas on this list I want to go through. Can you tell us about these?
0:45:33 Let’s start with the first one, slime museums.
0:45:40 Yeah. I don’t know if your kids, Sean, your kids might be old enough. Slime is like crack
0:45:45 cocaine for kids. There’s this place in New York City called the Slumu Institute. My kids
0:45:51 wanted to go there. We went on a weekend and we get in there. The thing I do when I go
0:45:57 to a place when I see it packed, I start talking to the staff. I was like, “Hey, how many people
0:46:02 come through this place?” The woman was like, “Well, pre-COVID it was 1200, but right now
0:46:09 we’re doing five to 600 a day.” I was like, “Per day, we spent $40 a ticket and then
0:46:14 we spent another 30 for an upsell where they dump slime on your head and they video-record
0:46:20 it and stuff.” 70 bucks, four of us, $280. When you start doing the math on this and
0:46:27 then at the end they sell you slime. Let’s say one out of five people actually buy it.
0:46:31 I came home, I immediately went to Google Sheets. I was like, “I got to put a model,
0:46:36 like a model together.” I was like, “Okay, this one place in New York City probably does
0:46:44 like six to eight million dollars of revenue.” The beauty of it was that because it’s slime,
0:46:48 there were 10 people who worked in this pretty big facility because it was really interactive
0:46:53 but you didn’t need people to run the exhibits. It was just like the kids would just be like,
0:46:59 “Oh, this slime smells like this and this slime is greasy or whatever.” It was really
0:47:05 low overhead. Money printing machine, I think I just read that they did 30 million. Now
0:47:09 they have LA, Atlanta, a couple other places. I think last year they did 30 million at these
0:47:17 slime museums. I think in general these kids experiential type of museums, if you want
0:47:23 to call it that, museum of illusion, spy museum, they all kill it and they’ve all got this
0:47:31 template where it’s very not labor intensive. I think that’s part of the genius. I loved
0:47:36 this business and these two women are just killing it, which is amazing. I think there’s
0:47:41 a big opportunity there and other experiential stuff. I just wish most of them were good.
0:47:47 We go to a bunch of them and some of them are just grifty money grabs and you’re like,
0:47:54 “Oh man, I spent $250 for this,” but some of them are quite excellent. That was one.
0:48:00 To me, these are the new Build-A-Bear workshops. It’s out of the house. It’s a kid’s activity.
0:48:03 Kid’s going to be super excited about it. It could be birthday party. It could just
0:48:09 be a weekend. It could be whatever. As the parent, you buy the $40 ticket, but it’s
0:48:13 never the end. The upsells are too strong in the moment because you need the video.
0:48:19 The kid wants the slime on the way out. It’s basically like a gift shop on the way out.
0:48:23 Obviously these things have a craze period where it becomes the thing and then it gets
0:48:27 written up in all the magazines and the New Yorker and you see it all. All the influencers
0:48:34 go and then there is some normal on the other side of it, but it’s interesting to see how
0:48:39 people have reinvented the Chuck E. Cheese’s of the world to be optimized around social
0:48:45 media. Meaning, how do you do things that are going to be photo worthy that are going
0:48:52 to be shared inherently by people who are going through the experience? Also, you need
0:48:59 to get kids out of the house off their screens doing things. As a parent, there’s a huge
0:49:03 need for that. There’s a much bigger appetite because even if you do the slime museum once
0:49:08 twice a year, there’s a lot of other weekends that you could do something. There can actually
0:49:15 be many of these in this model. Yeah, for sure. It’s pretty genius. That’s
0:49:20 one area I’m thinking about. The other one, I think that’s interesting. I ran across this
0:49:29 company called Dillow. It’s like a giant Amazon Go store. What they do is they go to property
0:49:36 managers that have at least 200 housing units in an area, multi-family. They’ll say, “Listen,
0:49:44 we’re going to set up this basically compact convenience store in your community.” It’s
0:49:50 stocked with all the good stuff. I live in a city, but I go visit my mom. If we need
0:49:55 to get milk, I got to get in the car, I got to drive eight minutes, and I basically spent
0:50:02 a half hour of my life to buy something that’s like $7. What these guys do is they put this
0:50:08 convenience store, it’s like Amazon Go style. One person goes in, they badge in, only one
0:50:12 person can be in the store. They’re on a clock, so they got to get out in a certain amount
0:50:17 of time, and they just go and buy stuff, and then it just auto debits their account or
0:50:23 whatever. They go to the property developer or the property manager, say, “Listen, we’ll
0:50:29 put up the $100,000 to build this out, and we’ll restock it, and we’ll cut you in as
0:50:36 a property manager on some of the revenue.” Once we recoup our investment, this is an
0:50:43 amenity now that the property manager can offer to their tenants. It’s a revenue stream
0:50:52 on top of it. I thought this was a really good distribution hack, I guess, for them,
0:50:54 and so I really like this idea, and then obviously-
0:50:58 Oh, we had this idea on the podcast several years ago. I don’t know if you remember this.
0:51:02 This was one of the drunk ideas, I believe. I think it was in the drunk ideas episode.
0:51:06 It might have been one of the other ones. I was like, “Why isn’t there a neighborhood
0:51:13 shop that’s basically run by the HOA in a way or by the members of the community?”
0:51:20 And then all you do is wholesale in the products, and you basically take the markup of the rest,
0:51:24 and so you have a grocery store that’s in the neighborhood, basically. That’s kind of what
0:51:28 this is. So, do they have the tech like Amazon Go where it auto figures out what you took
0:51:30 off the shelf? Yeah. So, there’s no staffing because that’s
0:51:35 the big thing here, right? Because what the property manager doesn’t want is, “Hey, the
0:51:42 store is not open because person X didn’t show up.” So, this is 24 by 7, and it’s got
0:51:48 the cameras and whatnot, and again, reportedly. And yeah, it’ll just say, “Hey, your total
0:51:52 bill is X,” and sort of those convenience store prices, which tend to be kind of high
0:51:58 margin, and yeah, you’ll get billed either to some credit card or maybe on your HOA
0:52:04 or something. And the thing they talk about is, over time, they’ll learn to personalize
0:52:10 what’s in the store, right? So, if this community really likes certain type of Cheetos, that’s
0:52:14 what they’re going to see more of. This company looks like it’s brand new
0:52:18 and tiny. I can’t find anything on the internet. There’s no founder. There’s no CEO. I can’t
0:52:22 find anything. It’s really, yeah. So, I was just talking to a friend of mine who’s in
0:52:27 real estate and property management, and so, he was telling me about this, and he’s like,
0:52:31 “Yeah, they’ve got a bunch of facilities,” and I think they’re targeting the Sun Belt,
0:52:35 right? Because if you’re in New York City, you can walk to these things, right? But if
0:52:41 you’re in most areas of the Sun Belt, the Carolinas, Texas, et cetera, you just can’t
0:52:45 do that, and so, they’re trying to solve that problem. Yeah, so I think it was…
0:52:49 Their app has six reviews. So, you have to have their app to get into the store, and
0:52:53 only have six reviews. So, I assume this is either brand new or just not popular yet?
0:52:59 It’s early days. I think they have a few facilities up and running, right? But yeah, I just thought
0:53:04 the way they’re going to market, essentially, they’re sort of B2B to C, right? They’re going
0:53:08 to the property managers who then are blessing this, and then they’re going to… The property
0:53:12 managers, because they have a vested interest in making money on this, are going to start
0:53:15 promoting it as well to their community. It’s really smart.
0:53:18 So, did you do the napkin math on what you think this could be?
0:53:23 I didn’t do that. What I was trying to figure out was, and my friend didn’t know yet because
0:53:29 they’re in the negotiation phase, I was like, “How much do they need to make back before you,
0:53:33 as a property manager, start making money, and what’s the revenue cut there?”
0:53:39 But I mean, this is like a scale play, right? Can they be the new dollar store
0:53:42 in every multi-family kind of community out there?
0:53:48 And yeah, I think that’s the angle. And then I don’t know if there’s… Are there certain large
0:53:54 multi-family property developers and managers they can go to and get all of a sudden, “Hey,
0:54:00 we’re now all of a sudden in 100 developments?” But yeah, I don’t know. I suspect it’s a big
0:54:02 opportunity, though. All right.
0:54:03 You want to do one more of these?
0:54:04 Yeah, do more.
0:54:08 Two more. Sean’s just like, “Dance.”
0:54:09 Again, keep going.
0:54:11 I put another coin in. I want to go again.
0:54:15 Let’s go. Put another coin in. Yeah, so my daughter’s into fantasy football,
0:54:21 and if you watch ESPN now, I think it’s become unwatchable because it’s all about gambling,
0:54:26 right? It’s like, “Here’s the line on this,” and blah, blah, blah. And I’m like, “I don’t really
0:54:31 want her seeing all this.” And she’ll ask me, and I’m like, “I don’t think this is a good thing.”
0:54:37 So I started digging into the UK actually kind of did, opened up online gaming a bunch of years
0:54:43 earlier. And if you look at the research there, to nobody’s surprise, it has not led to good things,
0:54:50 right? Like people are addicted and going into bankruptcy and all sorts of good things or bad
0:54:56 things. And so the US, just whatever we do things, we do them at times 100, right? And so
0:55:02 the US is sort of doing this. And so we’re seeing this experiment play out that is going to create,
0:55:07 I think, a lot of challenges. And so I think the opportunity here is there used to be a business
0:55:14 called, I think, American Addiction Centers, and they were basically for drug and alcohol
0:55:21 dependence. I think there’s, again, another offline play in online addiction centers,
0:55:27 right? So parents want their kids off the phone, I’m addicted to porn, I’m addicted to DraftKings,
0:55:34 I’m addicted to trading naked calls on Robinhood, like whatever it might be. And so you go there.
0:55:39 And I think the interesting thing here is there’s all this commercial real estate that’s available.
0:55:46 I wonder if you can get that really on the cheap. And this is a group that’s a little bit more,
0:55:52 I think if you went to a commercial real estate provider and said, “Listen, I’m going to bring
0:55:56 in people who are addicted to hard drugs,” they’re going to be like, “No, no, no, I don’t want that,
0:56:00 right?” But this is a group like, “Hey, I’m going to bring in a bunch of nerds who can’t get off their
0:56:06 phone and we’re going to treat them.” The risk to a property owner is a lot less from this group.
0:56:11 So I think you’ve got an opportunity to get real estate on the cheap and hopefully do some good
0:56:16 in the world. I think the challenge with these American Addiction Center and these other ones
0:56:22 was in a for-profit business, you always want to lower the cost. And so what ended up happening was
0:56:27 people weren’t getting good outcomes and service was really bad. And I think there were some really
0:56:33 horrible things that happened. So I think this is a big inflection which is going to happen.
0:56:40 I think Dave and Buster’s now allows gambling on Top Shot. Sean and I are playing against each
0:56:44 other. I can literally bet Sean, “Hey, I’m going to get 10 and you’re going to get less.”
0:56:50 It is pretty ridiculous. I was reading about what’s the big one, DraftKings or whatever.
0:56:54 They have account managers. So if you become, I read about this one woman who was making like
0:57:00 150 grand a year. So whatever that puts her at, in terms of class, but not like crazy wealthy.
0:57:06 And she lost all of her money and she was $500,000 in debt. And she had an account manager that was
0:57:11 like, “Hey, Kim, we just opened up this new game. I know that you’re a big fan of this type of game.
0:57:15 You might be able to win all your money back if you try this new one out because it has higher
0:57:21 stakes.” And they added an account manager to get her to start gambling more. And it does
0:57:25 freak you out and think in 15 years when the kids who are growing up with us, what are they going
0:57:29 to be like? And there’s actually probably an interesting case study. Sean and I both lived
0:57:33 in Australia. And I don’t know if you remember this, Sean, or if you were of drinking age when
0:57:41 you went there. But in all of the bars, they have two things. They have a room that has two things
0:57:46 in it. It’s like the main bar and then a different room. And the room has pokey machines, which is
0:57:54 basically a slot machine. But then it also has tons of TVs with every horse cricket match. So
0:57:58 like a horse racing cricket match. I forget what else they have. And you were just sitting there
0:58:05 right there gambling. You can gamble and get drunk and have a meal. And it is like full all the time.
0:58:10 I wonder what they’ve done to solve that similar problem that we are also going to face.
0:58:15 They’re like, well, that’s what the beer is for. When you’re done, go over there and you’ll feel
0:58:21 better. It’s like there are restaurants that are like KFC Taco Bell combined in one.
0:58:28 It was like the seven deadly sins all under one roof. New York City had something like it was
0:58:37 called OTB, off track bedding. And it was like horse races. But they didn’t throw the alcohol
0:58:44 grenade in there as well. New York has standards, right? We’re not going to allow that. So yeah,
0:58:52 it was just gambling. But now it’s just like on your phone. So I think this is a mega trend
0:58:59 that’s going to come out. I think you’re definitely onto something. The inflection is so real.
0:59:07 The influx of gambling into sports is like, it happened overnight. It went from never discussed
0:59:13 to everything is sponsored or integrated in about like, if you’re watching the NBA playoffs,
0:59:17 it says in the third quarter, it’s like the line at the start of the game, the current live action
0:59:24 line is this. And, you know, every player, all the NIL deals, they can do this now. So the flood
0:59:29 gets opened as to how much does it get pushed on people. As somebody who used to gamble a ton,
0:59:33 I know that for most people, it’s not going to work out. They are not going to beat the house.
0:59:37 They’re not going to be going to beat the market. And they’re just going to lose their money. And
0:59:41 what I don’t understand is I guess this is like a naive thing of mind is like,
0:59:47 the psychology around going to the addiction centers, because everybody I knew who was in this
0:59:53 space of like, your gambling starts out fun, then sort of becomes a little bit unhealthy the way it
0:59:58 goes. I feel like 0% of those people were going to go voluntarily, like go to driver’s ed. What I
1:00:02 thought you were going to say is that you can get the companies like, unlike the drug industry,
1:00:07 where like, there’s no, there’s no corporation that sells heroin, right? That’s not the,
1:00:10 there’s no, there’s no one person to target, but DraftKings FanDuel, these companies are
1:00:14 going to have a giant target on their back and their money printers. And so I thought you were
1:00:20 going to say that they will as a sort of corporate social responsibility, like cover your ass type
1:00:25 of thing, they might sponsor or pay for seats in all these different locations, like all these
1:00:29 different areas. And then you could provide the service for free for people. I thought that might
1:00:33 be where you were going with that. Do you think that’s viable or no? I, you know, I just, I’m not
1:00:38 to convince that like a for-profit and you know, Sam was just talking about these account managers
1:00:44 for the whales, right? Like, I think they want to encourage those people to gamble more. And like,
1:00:49 they talk about, you know, if you read their 10Ks and Qs, like they have a ESG initiative and they
1:00:54 do this for people who are, but you know, I, I got to believe it’s like, you know, kind of putting
1:00:59 lip service, giving this lip service, like I just, you know, I can’t believe they would do that.
1:01:05 You know, I think if I’m DraftKings or FanDuel, the thing I do is if I have a Ventures team,
1:01:10 I invest in this. And so then, you know, I create the problem and then I also benefit from the cure.
1:01:16 So that’s the, you know, the kind of the evil genius corporate way of doing it. But yeah,
1:01:20 I don’t, I don’t think they’re going to, they’re going to, you know, drive this on their own.
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1:02:13 I have one other question for you. It says your friend. What, what stuff are you really into right
1:02:19 now? Are you like really digging any books, shows, you know, random rabbit holes that you’re going
1:02:22 down? Is there anything that you’re super interested and fascinated by right now?
1:02:27 Yeah, you have the free time. I’m pretty lasered in on like youth development right now, right,
1:02:34 in education. Like, that’s where I’m spending all my time. So there’s a great book called Weapons of
1:02:41 Mass Instruction. And it’s basically like, you know, it’s an, I’ve never, it’s like a book,
1:02:47 it’s the only book I describe as aggressive. And it basically like talks about like how schools
1:02:52 are totally broken. And it’s actually by an ex-teacher. So that one’s, I thought was really
1:02:58 good that I’m, I really like that one. Yeah, that’s a big area. And the other area I’m spending a lot
1:03:05 of time on is I’m talking to lots of professional sports coaches. So a big part of schooling is
1:03:11 motivation. And so I’ve talked to, I’ve gotten into like the Texas Rangers and a couple college
1:03:17 football team kind of coaching networks. And these guys, they’re mostly guys, they’re amazing.
1:03:21 Like I do a 30 minute zoom with them. And I’m like, I want to run through a wall
1:03:27 after talking to you, right? And I’m trying to figure out if what they do for athletes, you could,
1:03:32 you know, could you, could you implant them in a school? And could they do that same kind of
1:03:37 motivating thing for young people in a different domain? What’s so good? What do they do on the
1:03:42 call? That’s so awesome. I think what they, they’re really good at figuring out when they talk about,
1:03:47 you know, young people, which is who they’re generally coaching, right? They really like
1:03:53 think about what they care about. You know, the beauty of it is it’s actually not very complicated,
1:03:57 right? They think about like, what does that person care about? So one of them is a coach on a minor
1:04:03 league team. And he’s like, listen, that kid doesn’t care if we make it to the World Series of like
1:04:11 AAA. He’s like, that kid wants to get to pros, the pros, right? And so he’s like, I got to work on,
1:04:17 I get everything I do has to ladder up for him to help him get there. And, you know, the odds are
1:04:22 very low, right? And so they’re very selfless in the sense of like, as the coach, it would actually
1:04:29 be better if that kid played his heart out and we won the World Series of AAA. But the reality is,
1:04:33 if he does a really good job, that player, he’s actually going to get called up and they’re
1:04:37 actually going to lose them. So like, they’ve just got this like way of thinking about,
1:04:45 you know, like what motivates people and like how to get into that. And then they think a lot about
1:04:51 like the team dynamic really a lot. And I really have found that really interesting. And then there’s
1:04:56 a great book I read about the De La Salle high school football team. So it’s like the winningest
1:05:00 high school football team in history. It’s out in California, I think. And the coach wrote this
1:05:05 book and like half of it’s like, what drills do the safeties do and stuff like stuff I don’t care
1:05:11 about. But there’s like an upfront part about leadership and motivation and creating accountability
1:05:17 that I actually think like anybody in a company should read like it is unreal because these kids
1:05:22 aren’t responsible to just the coaches or their school. Like they feel a really deep
1:05:27 sense of responsibility to each other. And I actually think like that’s something we need
1:05:32 more of. And I really like, I think there’s a lot of lessons that can be applied from youth
1:05:36 development and sports to other domains, you know, whether it’s corporate life or whether
1:05:41 it’s a school that we’re trying to build. What’s the name of that book? Chasing Perfection.
1:05:46 You know, the De La Salle football way or something. I think if you read the first half
1:05:50 of the book before they start getting into like, you know, what O-line drills they do and stuff,
1:05:55 it’s really, really good. Sounds similar to like the score takes care of itself.
1:05:59 Is that the Bill Walsh way? Bill Walsh book. Yeah. So, you know, same thing. Super successful
1:06:04 football coach. It’s a football, it’s a sports book, a football book, but it’s not at the same
1:06:09 time. It’s a program building leadership book actually. And it’s an entire philosophy of like
1:06:13 focus on the inputs. The outputs will always take care of themselves if you got the inputs right.
1:06:18 Yeah. And how he kind of turned around a losing program into a winning one.
1:06:22 Yeah. I think the other thing he talks about a lot is like subtraction, right? Like where she’s
1:06:26 like, he needs like a lot of teams want to add new things to, they like want to add new plays.
1:06:31 He’s like, we have three plays on special teams we do. Like that’s it, right? And so they really
1:06:35 minimize and like, it’s actually like, if you have young kids, you ever seen those stride bikes?
1:06:42 Yeah. Right. Like the brilliance of that is they just subtracted pedals out, right? Like it’s like,
1:06:45 and it actually helps kids learn how to ride better. And I don’t think people think about
1:06:50 subtracting stuff out. They like always want to add. And I actually found like, there was a certain
1:06:56 genius of how this coach and his team or his coaching staff thought about simplifying a lot
1:07:01 and subtracting complexity out. And so, yeah, there’s, it’s like a very profound book on many
1:07:06 levels. I just think it’s like, it’s a really good one. So that’s another… Have you read the talent
1:07:11 code? No. You’re gonna write that down. That’s a good one for you. In general, you should check out
1:07:18 my college roommate, who’s one of my best friends, sketch Trevor Reagan. He has a pretty fascinating
1:07:24 story where he was like, from a tiny town in Wyoming. And when I got to Duke, they were like,
1:07:27 your roommate, he’s like, trying out for the basketball team. So I’m like, sweet, I’m looking
1:07:33 out for, you know, a six six black dude. I’m like, that’s going to be my roommate. And instead, this
1:07:37 five eight, you know, white kid from Wyoming shows up and I’m like, you’re the guy who’s trying out
1:07:41 for the team. Like, what? How is this going to work? And he was an incredible basketball player.
1:07:45 He was like the best basketball player in Wyoming. His dad, his both of his parents were teachers and
1:07:50 coaches. And he always just thought, okay, I’m going to play sports and then I’ll go be a teacher
1:07:56 and coach too someday. And what he did was when he went back to Wyoming, he started with a summer
1:08:01 camp. And he was like, all right, I’m going to teach basketball. And he also like, he was a
1:08:04 manager on the Duke basketball team. Duke basketball team is probably the most, you know,
1:08:08 prestigious program in college basketball. So he like took what he learned there. But he was
1:08:12 like, you know what? What do I wish I had when I like, what would have made me a better player?
1:08:16 Because he almost made the team. He was the last guy cut. And he’s kind of kind of sat with him of
1:08:21 like, could I have done anything differently? I thought I worked super hard. So could I have worked
1:08:25 smarter in any way? Was there anything that in my training protocol would have led me to actually
1:08:30 make the team versus being the last final guy who didn’t make the cut? Because it killed him to not
1:08:34 be on the team. That was his dream. And like, it’s like, you don’t watch that story. You don’t
1:08:39 watch the Rudy movie where you, where he doesn’t get to play. But that was what happened in his life.
1:08:43 And it’s like, damn, that sucks. I didn’t even really believe that that was a possible outcome,
1:08:46 but it was. And so he, when he went back, his summer camp, he’s teaching, you know, I don’t know,
1:08:50 seventh grade girls, and they would be doing a layup drill, but he put a giant TV screen with
1:08:55 a Tivo like kind of instant replay of what they were doing. So because he’s like, one of the things
1:09:02 is you never, as a youth player, you never get to see yourself doing anything. Like the, or the
1:09:06 feedback loop is there’s like a huge gap between when you’re playing in the gym to when you finally
1:09:10 might one day see like some film of you that then, then you’ll be told, hey, you should do this
1:09:14 differently next time. And then another three days goes by before you’re back in the gym doing that
1:09:18 thing. So instead he like, shorten the feedback loop. And he started, and then he went and studied
1:09:22 all these coaches. He went and hung out with Pete Carroll. He went and hung out with the best, like,
1:09:28 he would find that the women’s Olympic volleyball team in the US dominates. So he went and studied
1:09:31 under that coach to be like, how does he run his program? And he was just like, he’d run camp
1:09:35 string the summer, which is only three months. And then nine months out of the year, he would just
1:09:39 go learn. And I thought it was fascinating. He did that for like, you know, seven years. So now he
1:09:43 has this, he puts out free content. That’s like in his thing called the learner’s lab, which is
1:09:48 basically it’s like how the science of learning, how do you become a better learner? And he started
1:09:51 it with, with sports, but then he realized like, pretty quickly, oh, this applies to everything,
1:09:57 like business, school, whatever. And he gets brought in by all these sports teams and big
1:10:01 companies to give talks to like, how do you actually teach people how to learn better? How
1:10:06 do you create a environment? Like basically his theory is almost like, if the soil is good,
1:10:10 the plants will grow. And like, if you’re wondering why your plants aren’t growing, have you ever
1:10:14 looked at your soil, maybe your soil is messed up, like maybe the setup, the culture, the environment
1:10:18 that you’re, you’re setting up here is not going to lead to that type of growth. And so he’s put
1:10:22 out a bunch of fascinating stuff that I haven’t really heard anybody else do. You should check it
1:10:27 out. One of the genius things he did was like, Huberman, he went and read all the white papers
1:10:32 about learning and like motor development and all this stuff. And then he’s like, dude,
1:10:38 this is gold. It’s just buried in old scientific white paper that was made by an old white scientist
1:10:41 who doesn’t know anything about social media or how to get the message out there. So he would go
1:10:45 read all these and then he would turn it into like an animated video and put it up on YouTube.
1:10:50 And these videos that seem so niche can get like a million views because it’s actually
1:10:54 interesting content, but it was just stuck in science world, which was not like applicable to
1:10:57 where most people go look for information or entertainment.
1:11:00 Yeah, I should check out Trevor’s stuff. Like he sounds like he’s doing sort of God’s work there,
1:11:05 which is awesome. But yeah, there’s a ton of like amazing research about youth development,
1:11:11 education, learning that like people just ignore. Like it’s like proven stuff that says, you know,
1:11:15 if you want a young person to like learn something, you should quiz them daily. Like
1:11:20 it’s shown to work. But like if you talk to, I’ve talked to probably 70 or 80 teachers,
1:11:25 not a single one can does it. And part of it is like it’s logistically very challenging. So I
1:11:31 understand that. But there’s so many things at work and like we still treat education very
1:11:35 artistically, right? It’s like, you know, it’s like everybody’s an artist like, oh, Sam likes
1:11:39 teaching history this way and Sean likes teaching it this way and Anand likes teaching it this way.
1:11:44 It’s like, hey, just go and like do like improv, you know, and instead of being like,
1:11:51 oh, what Sam does works like Sean and Anand like follow the script because like the kids love it
1:11:56 and like it works and you can color outside the lines a little bit, but you can’t like go rogue
1:12:00 and just come up with your own thing. So yeah, I think I’ll check, I’ll check that out. But yeah,
1:12:04 there’s a ton of like really smart people who dug into this. We just, for whatever reason,
1:12:10 we just seem to ignore it. In that Monash Pabrai interview we just did, he said something, he’s
1:12:15 like the like something like the neurons in the brain. And normally I’m like, you’re an investor,
1:12:19 what do you know about the neurons in the brain? But I was at his house and like one whole wall
1:12:22 was all just science books. It’s like, there’s like an investing book section. There’s a huge
1:12:27 section of just science books, either psychology or biology or physics, whatever it was. And he
1:12:30 was just telling me about all these different books he was reading and what he liked in each one.
1:12:34 And one of the things he was saying was between the ages, I forgot what he said, like 10 to 19
1:12:40 or something like that, like 80, 90% of the neural connections form during that time. And it’s
1:12:44 basically the peak time to specialize. And he’s like, if you look at all the great ones, whether
1:12:47 it’s like, you know, the great musicians, whether it’s Warren Buffett, you know, buying his first
1:12:55 stock at age 10, it’s like the great ones at every field during that key golden period,
1:13:00 they begin to like really go deep on an area and become great at that. And not everybody should
1:13:04 specialize, but the people who really want to become the outliers and do great, like that is
1:13:10 the golden era. And I’m sitting there, I’m like, oh, I guess I missed the boat. I don’t know what I
1:13:12 was doing there that time, but it wasn’t that. And he’s like, well, you always got your kids,
1:13:18 you know, to try. Yeah, for sure. Yeah. I mean, you know, I spent eight years in Spanish and like,
1:13:24 I can say, Mayamo Anand, Puedo Irel Banio, which is like my name’s Anand, where’s the bathroom,
1:13:30 right? And so like, that’s a waste of time for everybody involved, right? And instead,
1:13:35 I took Spanish for three years, it’s just no hobo. That’s all I got. You got it.
1:13:41 Strong H in that hobo. You didn’t even say, well, you don’t speak. You’re just like, I don’t speak.
1:13:50 Yeah. So we got your neurons working on that, which is, you know, so I think like there’s a lot
1:13:55 of like, yeah, wasted potential wasted time here. And yeah, that neurons thing that the thing he said
1:14:00 about, you know, if somebody has a lemonade stand early in life, like that’s a great sort of indicator.
1:14:07 Like, yeah, I gotta believe that certainly like a sign of somebody who’s formidable that is,
1:14:12 you know, could do great things. And so yeah, I think we got to tap into that a lot more.
1:14:15 Thanks for doing this, dude. Round two. Done.
1:14:15 Right. Cool.
1:14:21 Yeah. Well, do you want people to follow you anywhere or get more of you on any, any platform?
1:14:29 Yeah. Asanwall on Twitter, or my name on LinkedIn. I’m on LinkedIn voice or something. So,
1:14:34 you know, I don’t mean to brag, but that’s that’s my thing. So yeah, I don’t think that’s a brag.
1:14:38 It is. It is a record. That is a full on brag right there. I’m pretty good.
1:14:45 I’m big on LinkedIn is actually. I framed it. I framed my, I framed my thing. It’s in our bedroom.
1:14:50 Do you make your wife look at that before?
1:14:54 I’m like, you realize the prize that you got. Yeah, it’s a big, it’s a big thing.
1:14:59 Whenever we get in a fight, I’m like, let’s go into the room and look at the LinkedIn influencer
1:15:05 thing I got. You play the cards, you’re dealt, I suppose. All right. This has been fun, man.
1:15:06 All right. Thanks.
1:15:07 All right. See you.
1:15:11 I feel like I can rule the world. I know I could be what I want to.
1:15:18 I put my all in it like no days on. On the road, let’s travel, never looking back.