AI transcript
0:00:04 the headline here is they made the investment so it’s not like they passed they made the investment
0:00:10 and their best case scenario they wrote was 400 million as an exit value 400 million and now it’s
0:00:18 140 billion i feel like i can rule the world i know i could be what i want to i put my all in it
0:00:23 like my days off on the road let’s travel never look let me uh tell you about something that i’ve
0:00:28 been thinking about and i thought it was really cool and our friend shiel just shares the best
0:00:33 stuff and so i’m sharing man on x the most interesting man on x the most interesting man
0:00:39 i know actually he does a lot of amazing stuff but he shared something but so i got to give him credit
0:00:44 but basically i saw this jeff bezos quote and i want to know what you think about it and he said
0:00:50 something where he said um i think it’s generally human nature to overestimate risk and underestimate
0:00:54 opportunity and then he went on to say and so i think entrepreneurs in general would be well advised
0:01:00 to try and biased against that the risks are probably not as big as you perceive the opportunities may be
0:01:05 a lot bigger than you perceive and so uh the interviewer was like you seem really confident and
0:01:09 he goes well you call it confidence but maybe i’m just accepting that human bias and i’m trying to
0:01:14 compensate against it and i thought this was interesting i’ve been thinking about this i i saw
0:01:19 this like weeks and weeks ago and every time i’ve been thinking i’m like there’s so many businesses
0:01:24 or opportunities that i see where i’m like i can’t believe that that thing is that big and i myself
0:01:29 fight this as well and where i think this thing can’t be that big you know i think i’ve said this
0:01:33 multiple times for different products that i said that will never work and it becomes huge and even
0:01:37 jeff bezos by the way he fell victim of this there’s this one quote where he was like driving
0:01:42 packages he says when i was driving packages to the post office myself and taping up and typing up
0:01:47 all the listings i thought maybe if i’m lucky maybe this can be a hundred million dollar revenue
0:01:52 company someday and so like everyone has this but i saw this amazing thing where it was shiel sharing
0:02:01 a memo from bessemer so bessemer is a vc i think they’re a fantastic vc but they’re a big vc so they
0:02:06 created this part of their website where they release old memos and if you don’t know what that is a memo is
0:02:12 where whoever wants to invest into a company who works at a vc they make a memo justifying their thoughts
0:02:15 and then typically the partners like agree on it they’re like yeah that was a persuasive argument
0:02:21 we’re on board and so they did a cool thing where they released the memos from past deals
0:02:28 and they had this amazing deal or this amazing memo on shopify and this was when shopify was raising
0:02:32 five million dollars at a 20 million dollar valuation the company was doing five million in revenue
0:02:40 and i want to show how bad bessemer who is a professional vc i think they have tens of billions in
0:02:46 under management i want to show how bad they are predicting stuff so they said this is straight these
0:02:54 are quotes from the memo they said in 2010 uh shopify had 132 million dollars in gmv which would
0:03:03 put shopify in the top 50 online retailers and so at the time that is how small the category was
0:03:07 let’s let’s say the other numbers because that sounds like a big number right so they had 5 000
0:03:13 they had 10 000 customers total and they were doing 5 million of revenue themselves so the 5
0:03:18 million of revenue that’s the company’s revenue and then all the shops on shopify their sales total was
0:03:24 132 million right and now do you know how many you know how many customers there do you actually know how
0:03:31 many they have now i know that they add more than 10 000 paid customers every week now i think there’s
0:03:35 there’s multiple million customers they have multiple million and i believe so the company is
0:03:44 now worth 130 billion i believe uh at 1.200 billion i believe they do something like close to a trillion
0:03:50 dollars in gmv so i can’t even tell you what that math is what the multiple is they’re probably doing
0:03:56 this amount like the 132 million like every hour like an hour yeah every hour yeah you’re saying we
0:04:02 underestimate the the upside of of these things we underestimate the market size and the the headline
0:04:07 here is they made the investment so it’s not like they passed they made the investment and their best
0:04:14 case scenario they wrote was 400 million as an exit value and so 400 million and now it’s 140 billion
0:04:22 they said if all things work out we think in four to six years this company could sell for 400 million
0:04:29 dollars right and we will 20x our money something like that uh 15x our money obviously that’s wrong
0:04:35 the company’s worth 130 billion dollars but they had all these other stats that were wrong and in the
0:04:41 memo they even have updated quotes so the person who wrote the memo will give you an update and he
0:04:48 wrote in the memo he goes a few months after we invested oracle had acquired one of shopify’s
0:04:54 competitor for 500 million dollars and i remember emailing toby who’s the ceo of shopify about how
0:05:00 great it would be if someday maybe we can achieve that outcome but i thought it was just a little bit
0:05:07 too aspirational and then he has this other line where he goes um some of the other uh employees and
0:05:12 advisors at shopify when we made our investment they thought to themselves you know i think like this
0:05:18 company at best is going to be worth around 50 million dollars and so the associate at bessemer
0:05:23 who made this deal he goes look toby these guys are saying 50 million dollars can we put something
0:05:27 in the contract that says you are not allowed to sell the company for less than 50 million dollars
0:05:32 because this guy was like that’s all it’s going to be worth and toby was like dude i’m not agreeing
0:05:36 to anything like that but i’ll give you a handshake offer i promise you i won’t sell until at least
0:05:44 75 million dollars and so it’s just funny that this is like how small the best of the best presumably you
0:05:48 know top one percent are thinking about different opportunities that today are so obvious to us but
0:05:50 back then were really hard to predict
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0:06:04 did it with a little help from hubspot when they started data was housed across multiple systems
0:06:10 hubspot unified their website email marketing and fan experience in one platform this allowed their
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0:06:29 help you grow better all right back to the pot so i have a bunch of follow-ups on this because
0:06:33 this is a subject i’ve literally been thinking about i’ll tell you i’ll tell you why i was thinking
0:06:37 about this simultaneously but let me first just uh let’s start with a little bit of humbling so
0:06:43 um here’s a list of products that i was totally wrong about meaning they were already working so
0:06:49 forget the scenario of ah that’ll never work but like yeah that’s working but that’s probably small
0:06:53 probably niche okay so here’s products that i personally was wrong about over the last 15 years
0:07:01 um calm and all the meditation apps my buddy alex was doing it he was in my peer group who’s in our
0:07:06 mastermind group and i was like that’s cute you know that’s cute like i hope you know i don’t really
0:07:10 understand what you’re doing here maybe you’ll make some some money it’ll be like a job i didn’t really
0:07:17 fully understand it do like meditations now like a like there’s multiple meditation apps that are
0:07:21 billion dollar companies that seemed implausible at the time he was also really successful already
0:07:28 yeah yeah exactly so so i didn’t doubt him i thought he was awesome and i didn’t even think
0:07:31 like it wasn’t gonna work it’s like oh it’ll work but it’s just small it just seems like a
0:07:37 too small of a market okay other markets i thought were too small on snapchat my username was like has
0:07:42 the word test in it still to this day because i was like yeah cool like but this is never gonna be
0:07:47 a thing and i mean this is just like a goofy kind of sexting thing how big is the market for that
0:07:53 another one airbnb so i met the founder of couch surfing before i heard about airbnb and we hung
0:07:59 out at my office and i was like wow couch surfing what a crazy idea go sleep in someone else’s just go
0:08:04 sleep in their house and they’re in the extra you know couch or air mattress that they have um all right
0:08:10 cool so airbnb comes out and i’m like wow great you’re trying to be couch surfing how ambitious of you
0:08:14 and um i think couch surfing topped out at like 50 million dollars or something like that
0:08:21 uh like it maybe it was max like 100 or 200 million and you know airbnb today is a like 100 billion
0:08:31 dollar company so i i i read that i think in america one out of every 30 dollars spent on travel is on
0:08:38 airbnb that’s a cool stat i like that’s insane right it’s insane i want absolutely insane yeah
0:08:47 in america yeah one minute out of every day for every entrepreneur on average is spent listening
0:08:53 to our podcast i bet there’s like a number like that that’s true right yeah like they said it in like
0:08:59 one of their pitch decks but it’s just absolutely astounding that you and everyone else me too thought
0:09:05 that it was just couch surfing but it’s just it’s not 10 times better it’s not 100 times bigger it’s
0:09:12 10 000 times bigger uber was another one uh black uber was like black car limos i was like cool rich
0:09:17 people in san francisco who takes black cars small idea i don’t understand why you know the founder of uh
0:09:22 of stumble upon is like doing this but okay whatever i guess rich guys just lose touch and they just start
0:09:27 working on niche things that nobody nobody’s gonna be too niche another one musically i remember we were
0:09:32 at the office trying to build social products and morgan this guy who worked with me he was like hey
0:09:38 my daughter loves making these lip sync videos on musically and it was actually even maybe even a
0:09:43 different thing besides musically but this idea of like you record yourself on video and then there’s
0:09:48 music mixed in and you’re kind of lip syncing and dancing uh you make little dance videos and i was
0:09:52 like okay cool morgan but can we get to work now like we’re trying to build the next big thing here
0:09:57 and like you know stop distracting us with this and uh you know has anyone ever just like showed
0:10:00 you a briefcase full of cash and then you like accidentally kick it into the gutter that’s what
0:10:05 that’s what we were doing um okay so those are things that i was totally wrong about well hold let me tell you
0:10:10 one more alex lieberman shared a dm that he got from the founder of cursor so cursor is a company that in
0:10:18 or something like that grew to 10 billion dollars and the guy emailed alex lieberman asking for advice
0:10:25 or like what he should do and left him off yeah left him on red hey we all miss in fact bessemer has a
0:10:29 part of their website called the anti-portfolio have you ever seen this no they were the first bc i think
0:10:35 that did this so they created if you go bessemer bvp.com slash anti dash portfolio it’s basically just
0:10:40 honoring the companies we missed and it’s just like airbnb apple ebay google like it’s all the
0:10:46 companies they had the opportunity to invest in but passed for varying reasons um and they just like
0:10:50 humble themselves with this so this is like the this is the opposite of the hey let me show you our memos
0:10:56 of how smart we were um this is like you know the other side of the coin and it’s crazy man for any
0:11:00 anybody who’s like worth a damn in business your your anti-portfolio is going to be much bigger than
0:11:05 your portfolio which is just a bizarre situation if you’re any good if you’re if you’re any good and
0:11:10 you’re in the game for any like decent amount of time your anti-portfolio is much bigger part of this
0:11:16 is underestimating the size of markets and the other there’s many things here the other part is not
0:11:24 understanding math because 10 000 times or 1 000 times whatever that’s actually it’s really hard to
0:11:30 estimate and so like to put it in really simple terms i remember working with financial uh my financial
0:11:37 advisor and they there was like this line item for 250 000 in 18 years and i was like griffin what is
0:11:43 this man he goes uh well that’s i just baked in like college expenses uh and i was like but i’m not
0:11:47 gonna pay for all four years up front or are you thinking we’re gonna have triplets what’s the deal
0:11:53 here and he was like no i just took the trailing 20 year growth rate of college education and i assumed
0:11:59 that they’re gonna go to like a top 75 like cost school and i just applied that number to the to the
0:12:04 to the future and that’s just what it came out to 250 000 a year and i was like i it’s just it’s it’s
0:12:10 really hard to understand what like five percent growth is per year or whatever it is and a really
0:12:14 good way to understand this though that i’m trying to like get beyond the math is i’m been really
0:12:20 obsessed with thrive so uh josh kushner and one of the reasons why i’m into it is you hosted this event
0:12:26 and we had the founder of oscar come you had um mario come and i thought he was i thought he was
0:12:30 like the most impressive smartest guy there and so i was like going down the rabbit hole i’m like
0:12:34 all right you partnered with josh kushner and josh kushner is now leading all these amazing things
0:12:40 and josh kushner recently invested in open ai at a 250 billion dollar valuation which is astoundingly
0:12:45 expensive that’s just that number’s hard to comprehend and someone was questioning josh kushner
0:12:49 and he was like what i learned was in the real estate days you know his parents are real estate
0:12:58 tycoons in new york city he was like i’ve learned that you can’t really over spend on park avenue real
0:13:02 estate so park avenue is on the upper east side that’s where like the louis vuitton store the tiffany
0:13:07 store he was like there’s just been so many examples where someone said in the fanciest part of new york
0:13:13 city that this building is way too expensive but when you buy the best typically it’s never too expensive
0:13:17 like there’s always going to be someone in 10 years who wants to pay more for it so my logic is
0:13:25 i’m going to find the park avenue of startups so open ai cursor whatever it is and i’m willing to
0:13:29 spend what people think is it a crazy amount of money i don’t care about the valuation because i just
0:13:34 think that those will outperform those the other ones and i’ve been really trying to like embrace that
0:13:39 even though it’s very challenging to like actually do that this is michael saylor’s argument about
0:13:46 bitcoin so his argument about bitcoin is basically that of all the digital assets bitcoin is digital
0:13:53 manhattan and there’s only 21 there’s only 21 million uh million blocks that’s that’s the real
0:13:58 estate that’s the land you want to get as many of the 21 million as you can at basically any price
0:14:02 because this is digital manhattan and over the next hundred years that’s all that’s going to matter
0:14:06 is basically like how much of that did you own you know i shouldn’t say that’s all that’s going to
0:14:12 matter but basically you don’t look for the third best thing you buy manhattan right like you don’t go
0:14:16 try to figure out what’s going to be the seventh thing because it’s cheaper right now like no no
0:14:20 the move is always you buy the manhattan thing and you just plan to hold it over the long haul
0:14:25 when you know it’s a scarce rare asset and like that’s the whole thing with crypto is like there’s
0:14:32 it’s a scarce rare asset which is conceptually that is way easier to understand than 1000x uh you know
0:14:35 like because i see manhattan real estate i’m like yeah this is like bumping this is great
0:14:41 then it goes to the next stage which is having the courage to believe that your opinion is right
0:14:46 yeah and so like for example someone like you who’s who’s in the bitcoin or it was or is in the crypto
0:14:50 industry and you do believe in it it’s like well if you believe that to be true why aren’t you borrowing
0:14:56 every dollar you can to do it and that is where uh courage comes into play and that’s really hard to
0:15:01 buy into this concept so i say i buy into this concept conceptually but i’m not truly acting on it
0:15:10 at least not in uh not not in a 100 type of way all right folks this is a quick plug for a podcast
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0:15:37 there’s also other factors so for example uh i have a very funny goal my last goal on my like
0:15:46 you know uh annual goals is just called it just says avoid ruin because my life is great and so
0:15:53 actually like one key thing at all times is avoid ruin like do not do extremely dangerous things take
0:15:59 care of my health and don’t make disastrously risky financial investments that like even if i believe
0:16:04 even if i have conviction even if the upside is there i really just don’t need to i just don’t
0:16:09 need to risk ruin at any given time i think it’s the kelly criterion just do not risk ruin keep yourself
0:16:13 in the game is always important so like you don’t need to borrow every dollar even when you have
0:16:18 conviction right there’s like there’s but i think that’s what separates uh not all the best so i don’t
0:16:23 think buffett has ever like risked uh you know he famously has said uh don’t risk what you have for
0:16:26 what you don’t need or something like or don’t risk what you need for what you don’t want or i forget
0:16:32 exactly the quote where but it’s like risky needlessly risking things yeah but my brother john
0:16:35 who i’m visiting in missouri he’s not into startups and he was like why do you why are you still doing
0:16:39 this like why don’t don’t don’t risk anything i was like well i don’t really risk anything but he’s
0:16:44 like but do the really successful like the elons risk everything and i was like a lot of them i think
0:16:51 do i think that like there are like the 10 out of 10 the best of the best the crazy elons of the world
0:16:55 i think that when they say i was sleeping on couches i think you don’t really want to believe
0:16:59 that because their friends are billionaires or whatever yeah i’ve been around enough of these
0:17:05 yeah it’s a really nice couch but i’ve been around enough of these like crazy crazy crazy like
0:17:08 one percent of the one percent the freaks amongst the freaks some of them i actually do think
0:17:16 don’t avoid ruin correct i just don’t think that’s wise i don’t think i don’t think a lot of them
0:17:19 very wise i think they’re great achievers and but they’re not necessarily i don’t think they’re wise
0:17:23 and i don’t want to do that but don’t you agree with that though that like have you who have some
0:17:29 people do definitely take it to that extreme right like uh there’s there’s levels right so like buffett
0:17:33 actually has been very concentrated at many times i think it’s you know recently had 50 percent of his
0:17:37 portfolio just in apple stock right so like that’s a very concentrated thing and he believes in
0:17:41 concentration but concentration is not the same thing as like you know risking ruin in a way
0:17:48 even somebody like elon you know the ruin for him isn’t losing his money because he’s a money
0:17:53 making machine he’s a achievement machine at any given time he could have even if he had lost it all
0:17:58 through spacex and tesla and whatever he’d be rich again in 10 years and i think he knows that deep
0:18:03 down too right so like the risk of ruin for him might be reputational right there’s a great leaked email
0:18:09 where open ai is talking about um their path forward and this is like when this is when elon eventually
0:18:14 got like sort of kicked out slash left the project of open ai right he’s a co-founder he put the first
0:18:19 40 billion dollars in uh but along the way they realized they need a lot more money and the leaked
0:18:25 email basically shows the brainstorming that they were doing sam altman greg and elon and basically elon’s
0:18:31 idea was so they all came to the realization holy shit this is like this kind of works but we need way more
0:18:36 money like this is going to need way more money to train these models like we’re talking 100 million
0:18:41 dollars plus just for a single training run like let alone operating the company operating
0:18:45 the business from operating the the project and paying all the salaries and now it’s for what
0:18:49 like servers or something like that like uh like literally the gpus and the compute and the electricity
0:18:54 to train one model and then you’re not going to stop there you’re going to train a better model right
0:18:57 so once they realize shit we need 100 million and we’re a non-profit this is not going to really
0:19:01 work who’s going to just elon’s giving us this but like are you elon are just going to give us like
0:19:05 billions that’s probably not going to happen but that’s where this is going and so when they realize
0:19:11 that they’re like we need a way forward so elon’s suggestion was let’s make open ai a part of tesla
0:19:16 tesla will be the commercial machine and then we’ll take some of that profits as r and d and put it into
0:19:21 open ai we’ll fund it that way now sam and greg didn’t like that because they’re like well yeah but
0:19:25 then like you control everything and we’re just kind of like you little bitch we don’t really love that
0:19:30 idea so what if we uh and they were exploring other ideas so they had a microsoft idea which
0:19:34 is what they ended up doing so he’s like microsoft is really interested in giving us you know like
0:19:40 you know potentially like you know multi-billions of dollars uh and free compute but then you know
0:19:43 we’d have to work out a deal of what’s in it for microsoft and then elon basically replies being like
0:19:50 ew like lame being a part of microsoft you know that was like in his reply basically he’s like why not tesla
0:19:55 and then sam altman then there was like a email that referred to sam has been exploring the idea
0:20:00 of an ico so to do a token launch and like what if we find like it was during the crypto like heyday and
0:20:05 they’re like ah i guess like you could just raise a ton of money for kind of nothing like a promise
0:20:14 um if you just do an ico and elon’s reply is basically like uh i am like i am against the ico it is
0:20:19 like i think reputationally disastrous and i will not be a part of the project if you guys pursue that path
0:20:24 like i will take my name off this project because even if that would succeed i just do not like i
0:20:28 don’t think the risk is worth it and so it’s interesting right because like the guy is willing
0:20:34 to risk you know certain things all of his money but not necessarily others right like you you may not
0:20:39 always there there may be other risks it’s weird that was not weird i mean it’s just like intriguing
0:20:43 that he thinks the ico thing is the risky thing but not like the political thing or not like well he did
0:20:48 with the political things initially he was saying i won’t endorse a candidate and i won’t be donating to
0:20:52 them that was his initial stance because same thing it’s like the michael jordan you know oh
0:20:57 you’d like my opinion on this sorry no comment republicans buy shoes too yeah and like one of
0:21:03 the great lines in in you know in in history and so initially elon did have that stance he got pushed
0:21:09 over the edge you know due to a number of factors that maybe only he can truly describe some people
0:21:14 think it’s because his companies were getting like overly regulated and he just was like we can’t do
0:21:18 spacex and tesla if there’s this much regulation some you know people were basically pushing back
0:21:24 on on you know uh capitalism or attacking him so like you know it’s unclear what all the motivations
0:21:29 were of why he decided to then throw his weight into it but when he did he throws all his weight into it
0:21:33 but he initially did not want to take that risk because it seemed unnecessary you know you take you
0:21:39 only take as much risk as you see necessary what what’s cool about elon is once he sees it’s necessary
0:21:44 he’s willing to do it whereas most people will still dilly dally or hesitate to do it which is the gap
0:21:49 that i was talking about you know it’s like courage is a hard thing and then i also but i also think that
0:21:59 we underestimate how different the outliers are in terms of personality to the normal people and so
0:22:07 what i mean is is you and i are live on coasts we are work in a weird tech world it’s pretty fringe
0:22:16 but then there’s people that are 50 times that do you know what i mean in terms of how strange and
0:22:21 unique thinking they are so so for example the collison brothers of stripe i’ll hear like their
0:22:27 opinion on things and i even to me i’m like wow that’s just like way different that’s like he’s so
0:22:32 out there in terms of how this framework or how you believe that it’s just so logical and you totally buy
0:22:39 into that that’s really challenging for me to understand but imagine to someone who is right in the
0:22:46 mean like just like of understanding how different the different people are in terms of their thinking
0:22:50 yeah there’s level there’s levels to this um there’s levels to everything there’s levels to
0:22:54 intelligence there’s levels to crazy there’s levels to risk-taking there’s levels to all that
0:22:58 that is pretty hard to comprehend until until you get closer and closer and closer to that edge
0:23:02 and you realize like oh what i thought was level 10 was not level 10 it was
0:23:08 7 and there’s that this is what 10 is right just imagine what brian johnson the extent brian johnson
0:23:15 goes to for his health there are people who live you know 30 miles in my radius here that are doing
0:23:19 that in just ways that they’re just not publicly broadcasting at but not in just health they’ll do
0:23:23 it in finance they’ll do it in their obsession over specific technology in the lifestyle choice that
0:23:28 they make whether it’s you know a polyamorous lifestyle or it’s a you know the extent to
0:23:33 which they delegate extreme delegation like we were laughing when we were hanging out with mr beast and
0:23:36 he had a he had his runner outside it’s like wait so you got kind of like a personal door dash guy
0:23:42 that just waits around in case you need something but like yeah there’s that like there’s a lot of people
0:23:47 that have these like lifestyle quirks where it’s like wait you peter teal when he flies to a place
0:23:53 has a mattress shipped that hotel so that he gets right sleep because that’s his favorite mattress
0:23:58 and he just actually some hotels store the peter teal mattress in the lobby or like in there’s like
0:24:03 storage facility in case he’s gonna come because that’s his demand it’s like yep there’s people
0:24:07 that do that it’s like oh wow i thought taking i thought taking my sleep seriously was like wearing
0:24:11 this whoop band i guess there’s levels to this right i guess there’s like an infinite level level
0:24:18 levels to this it’s a honda civic versus a nascar or it’s making the jv like i was telling my brother he
0:24:23 was like he was comparing me to someone and i was like i don’t think you understand i’m
0:24:30 one of the best on jv at a big high school and these guys are olympians like this right that is
0:24:36 the gap that the you know i think um the guy from uh you told me this story about um the redhead
0:24:41 basketball player the celtics what’s his name scallop scallop and he was like he was like joked
0:24:48 as being the worst nba player but he would go to like uh you know blacktop games and just crush everyone
0:24:53 and he was like you don’t understand that i’m closer to lebron than you are to me yeah and that
0:24:58 made that’s sort of like what we’re describing here you want to do something else well i do i
0:25:01 have one other thing but i want to go back to the market size thing because i have i have something
0:25:07 that i think is a pretty sick example of this all right so there is an amazing story about this
0:25:13 from uber so i remember when i was living in san francisco uber had like just come out i think i
0:25:19 moved there 2012 and i was like it was all pretty new then and i think uber that was such a fun era
0:25:24 that was such a fun era wasn’t it yeah that was like you know our version of like the dot-com boom
0:25:30 right it’s like mobile it was so exciting and so i remember getting in my i got there my friend who
0:25:33 lived in san francisco was like yeah here our rides here and we got into the stranger’s car and i was
0:25:38 like what the hell is this it was actually a sidecar which was the third company after uber and lyft that
0:25:44 just died it didn’t make it i remember uber started getting like a pretty big investment and it just seemed
0:25:49 pretty crazy and they just kept getting crazier and crazy they would raise it like you know first it was
0:25:53 was tens of millions and hundreds of millions then billions of dollars valuation and i remember
0:26:00 reading um this bill gurley blog post that really changed my thinking and the blog post is called
0:26:07 how to miss by a mile is the name of the blog post and bill gurley gurley was one of the early believers
0:26:14 and early investors right yeah he’s oh he’s a legendary vc and now retired and he was one of the main
0:26:18 investors in uber um and like you know famously at the end like you know they ended up kicking travis
0:26:22 out and there’s you know it got it got messy at the end but he was one of the early and biggest
0:26:27 believers okay so basically he talks about this guy um i don’t know how to say his name exactly but it’s
0:26:31 i think it’s aswath damaraddon or something like that this guy who’s like a he’s a well-known
0:26:39 thinker on valuations he’s a professor at nyu stern and he teaches like you know finance and
0:26:44 economics there and so he had wrote an article that said uber is not worth 17 billion this is when uber
0:26:50 raised at a 17 billion valuation he was right by the way uber was not worth 17 billion it is actually 10
0:26:56 times more than that but he was making the opposite argument he was like i think uber is vastly over um
0:27:02 overvalued and bill gurley sort of breaks down this argument and this totally changed my thinking and how
0:27:09 you think about startups so what he said was he goes uh this professor just did this wrote this article i
0:27:13 i wrote this blog post and it seems really well thought through and he’s a very like you know
0:27:17 respected expert and i you know i don’t i’m not saying anything about the guy but i think his
0:27:22 analysis is wrong and he starts with he goes the funny thing about any analysis with hard numbers like this
0:27:27 is that it gives you a false sense of security and he talks about like anyone who’s in math knows the
0:27:33 difference between precision and accuracy precision would be you know oh wow you’ve really forecasted this
0:27:39 down to the second decimal and accuracy is like yeah but it’s just wrong it’s precise but wrong uh it’s
0:27:43 not it’s not on target he was basically saying he’s like he makes two arguments so he makes one argument
0:27:50 about the tam so the total addressable market of the of the of what uber’s market potential is and then
0:27:55 market penetration so how much of it uber will get and he basically is like he goes the tam mistake is
0:28:00 the mistake of thinking that the future will look quite like the past but the arrival of a new product or
0:28:06 service will have a non-zero impact on the overall car for hire market so he goes basically it’s a new
0:28:11 offering it’s got new levels of convenience new price points which will open up new use cases and
0:28:17 he gives a story he goes you know once upon a time at&t paid mckinsey a million dollars to forecast how
0:28:20 big will the cell phone market be they want at&t want to know should we become like a cell phone
0:28:27 maker manufacturer or like should we should we care about that market or not and the mckinsey’s top you
0:28:33 know analysts who are getting paid uh predicted that the market in 2000 the year 2000 would be
0:28:38 900 000 people using cell phones which was less than one percent of the actual number it was 109
0:28:44 billion and they were predicting 20 years out which is really freaking hard correct but it was it was
0:28:49 look it was hard numbers it gave you a false sense of security and so at&t decided not to go not to
0:28:54 invest in that area they ended up to make you know once it was once they realized they were behind the
0:28:58 the ball and you know actually cell phones were going to be a big deal uh they ended up having to
0:29:02 buy the cell company for 12 billion dollars so it’s basically a 12 billion dollar mistake and by the way
0:29:08 now like you know five or six billion people have cell phones it’s like just absolutely ubiquitous
0:29:12 aaron levy the founder of box has this tweet where he said sizing the market for a disruptor based on the
0:29:17 incumbents market is like sizing the car industry based on how many horses there were in 1910
0:29:24 and so uh girly’s talking about this now of course you might say well is this always the case like you
0:29:28 could always say well you know forget the past you’re just being you’re stuck in that old way of
0:29:34 thinking that think about the bright future and uh of course no that’s not always true in fact it’s
0:29:40 probably usually correct that the you know the near future will look like the the near past but the funny
0:29:47 thing about entrepreneurship or any tech investing is that it’s a hits it’s a hits driven game so you only need
0:29:52 one and you can actually be wrong eight or nine times out of ten as long as you get the one right
0:29:58 in a really really big way and that’s not true in other businesses like that’s not true in school you
0:30:02 can’t pass a test that way it’s not true at your job you can’t just like have one great day and then
0:30:08 like have nine duds um like you can’t do that in private equity warren buffett famously was like you
0:30:12 know picking stocks rule number one don’t lose money you know vcs lose money all the time entrepreneurs
0:30:17 get it wrong all the time it’s a very distinct difference and so like and this is actually a
0:30:24 distinct difference oftentimes in you and i’s uh personality which is buffett is predicting that the
0:30:31 future will repeat itself and that the past is the past won’t change for the future vc investing tech
0:30:36 investing is doing 100 the opposite correct both are valid games but you have to know what both are
0:30:40 right you have to know they’re right in their game so like in the stock market that’s probably the right
0:30:44 way to think about things and value investing that’s probably the right way to think about things and
0:30:48 private equity is probably the right way to think about things in entrepreneurship or tech investing
0:30:51 it’s absolutely the wrong way to think about things you won’t make any money doing that other
0:30:58 way and so in our business i have this phrase which is that in our business you know the cynics get to be
0:31:03 right and the optimists get to be rich and so it’s like the cynics will be right and you get to be right
0:31:08 eight out of ten times that might feel good but the optimists are the one who get who get rich and you
0:31:14 have to just know that going in what are your uh what your employees replied all like sean i’m just
0:31:20 asking if you want pizza or hamburgers for lunch like can you just tell me like this might be why
0:31:25 i have no friends but i have a podcast i think you nailed it
0:31:34 so you guys know this but i have a company called hampton joinhampton.com it’s a vetted
0:31:40 community for founders and ceos well we have this member named lavon and lavon saw a bunch of members
0:31:44 talking about the same problem within hampton which is that they spent hours manually
0:31:49 moving data into a pdf it’s tedious it’s annoying and it’s a waste of time and so lavon like any great
0:31:55 entrepreneur he built a solution and that solution is called molku molku uses ai to automatically
0:32:00 transfer data from any document into a pdf and so if you need to turn a supplier invoice into a customer
0:32:05 quote or move info from an application into a contract you just put a file into molku and it
0:32:10 auto fills the output pdf in seconds and a little backstory for all the tech nerds out there
0:32:15 slavon built the entire web app without using a line of code he used something called bubble io
0:32:20 they’ve added ai tools that can generate an entire app from one prompt it’s pretty amazing and it means
0:32:25 you can build tools like molku very fast without knowing how to code and so if you’re tired of copying
0:32:34 and pasting between documents or paying people to do that for you check out molku.ai m-o-l-k-u-dot-a-i
0:32:42 all right back to the pod this is a a great um a great blog post the guy who’s like the the the
0:32:47 anti-hero on this like where is he now he’s still there professor he’s still a professor of course he
0:32:52 is because you know you know skin in the game you can never really be wrong um and so he that guy had
0:32:57 estimated the global taxi market to be a hundred billion so anyways let me zoom it in so i remember
0:33:02 living in san francisco and when this happened girly pointed something out which was that
0:33:09 in san francisco the taxi market size whatever it was let’s just pretend it was like 150 million dollars
0:33:16 uber didn’t just have some percent share of that market it was actually three times bigger than what
0:33:22 the total taxi market was in san francisco it was a total like market expander of a force and you see
0:33:27 that over and over and over again any new product that’s creating a new category it doesn’t just eat
0:33:33 some share of the existing category it just explodes and becomes bigger than that thing so let me kind of
0:33:39 like fast forward to to another area that this came up so i was watching these videos from sequoia
0:33:45 sequoia recently had an ai event and my invite must have gotten lost but i was able to catch it on youtube
0:33:51 afterwards luckily and so i was i think uh darmash was one of the speakers yeah yeah i know so again
0:33:57 maybe my speaker invite also was lost i’m not exactly sure what happened uh but but it’s all
0:34:03 it’s all love amongst amongst me and sequoia so the very first speaker this guy i think it’s pat grady
0:34:07 he’s a partner of sequoia and he has a slide on the screen i’m gonna show you the slide it’s
0:34:13 maybe a top five ugly slide like this might be the worst slide i’ve ever seen in my life
0:34:18 like not only is it ugly it doesn’t even make any it’s illegible like you look at this it doesn’t
0:34:23 even mean anything but he explains it so okay so check out the slide you see this thing right here
0:34:29 yeah so like i remember taking the act where it was like showed you like three shapes or three numbers
0:34:33 and you had to predict the fourth one based off of the pattern i cannot do this with this okay exactly
0:34:38 so if you look at this slide it basically is like a bunch of pie charts but the pie charts have no
0:34:41 annotations just random numbers and then there’s an arrow and there’s a question mark and it just
0:34:45 says so what at the top all right so let me explain what this is because it’s actually kind of insightful
0:34:51 so what he was saying was basically like um if you look at the the let’s say the three most recent
0:35:00 waves of of like tech so you had software which was like i buy cds i put i put the cd-rom inside my cd
0:35:07 or i install uh software on my server at our office that was like software 1.0 and then 2.0 was like
0:35:12 the cloud it was like oh the software just lives in the cloud it’s a sass it’s a service you just kind
0:35:17 of like use what you need you don’t need the servers and the cds and he’s like now we have ai
0:35:24 and so he talks about like basically the software market at the time when cloud came out when like
0:35:32 salesforce came out the entire software market was 350 billion dollars of revenue cloud is already 400
0:35:37 billion right like like just just like the top cloud players are like more than 400 billion so
0:35:42 basically it’s like cloud didn’t just take some percent share of the software market wasn’t like oh
0:35:47 yeah maybe like 10 of these applications will now go to the cloud or become sass it was like sass
0:35:53 became bigger than the entire software market before that uh and it became bigger by i think uh uh i
0:35:56 don’t know why the numbers here are like again the pie chart is very confusing but it’s basically some
0:36:02 order like it was like you know two or three times bigger and then he’s talking about like ai and he’s
0:36:07 like ai actually is interesting because ai replaces software but ai also replaces labor like you just
0:36:14 you don’t need people to do those tasks it’s services and software and so um he’s like the
0:36:18 the labor market is basically like whatever like 10 trillion this is some some ridiculous number and
0:36:24 he’s like we don’t even know how big the ai market is going to be predicting that with any accuracy would
0:36:30 be foolish but it’s probably a good bet that ai is going to be bigger than the entire cloud market today
0:36:38 and the labor market in the future and so um how big is the labor market isn’t isn’t the labor market
0:36:45 like the market that’s like the main one i mean like like isn’t that everything ever yeah kind of and
0:36:50 so you know in the same way that when girly was talking about uber he’s like you know um it’s going
0:36:55 to be bigger than taxis because it’s more convenient than taxis right if you called a taxi you didn’t
0:36:58 know when it was going to pick you up you didn’t know if it was going to pick you up with uber you got
0:37:03 precise you know you precise timing it’ll pick you up anywhere before taxis didn’t really go to rural
0:37:07 areas uber had more drivers so it was available everywhere because it was available everywhere
0:37:12 you got lower price points because there was more liquidity in the system so when it’s a lower price
0:37:15 point maybe i wouldn’t have called a taxi just to go from here to my friend’s house but if it’s a
0:37:20 eight dollar uber i’ll actually do it and because you get the price points now you get new use cases
0:37:27 so like people use ubers to like help their elderly parents travel or kids or like and the big one was
0:37:30 basically he’s like the big use case i think people are missing is that some people just won’t
0:37:34 buy a car because they’ll be like i’ll uber when i need it so i just don’t need to own a car which is
0:37:38 exactly what happened to me i sold my car in san francisco because i was like why would i deal with
0:37:44 this car parking issues getting get broke into insurance gas all that like no just uber when i need
0:37:49 a ride and so he’s like it unlocked part of the rental rental car market it unlocked part of the
0:37:54 car ownership market and once you calculate those you’re like oh shit this is a trillion dollar
0:37:58 market not a hundred billion dollar market and so you’re off by you know 10x if you had done
0:38:02 the calculation wrong with the wrong assumptions and so ai is going to do the same thing because
0:38:08 i won’t hire a person to do these little things that i’m basically like telling ai agents to do in
0:38:13 my life right like you know i’ll build little i build a little app for piano tracking for my piano
0:38:18 practice or for my health tracking or i’ll uh you know i don’t hire a concierge doctor but i’ll
0:38:23 feed my lab results to chat uh chat gpt and i’ll pay them to like i’ll pay it to analyze all my blood
0:38:29 results and so things i wouldn’t have otherwise hired people for i’m willing to pay ai a little
0:38:38 bit for it and so there’s a new market how many hours a week are you consuming information on just
0:38:45 staying in the know on this topic on ai specifically yeah we had greg eisenberg on the pod and he was
0:38:52 telling me things where i was like i was almost i i found myself having fear i had fear of like
0:39:00 oh this is clearly the future and if i’m not like in the know of this it’s gonna come and destroy me
0:39:05 therefore i owe it to like that’s how serious it was it wasn’t like i’m missing out on an opportunity
0:39:09 to make my business better i’m missing it was like oh no i gotta protect my family like like
0:39:16 this is like my job and so i felt extreme fear over he was saying like magnus have you heard of magnus
0:39:21 is that like the new chinese agent platform yeah yeah yeah and there’s no g just like i think it’s like
0:39:27 manis manis and he was explaining but he’s like three things where i’m like how do i not know about
0:39:32 this yeah like do i need to sign up to like an ai trade magazine like what’s going on right um and
0:39:37 his answer was horrible when i said greg how do i how do you know he’s like i just do or he said
0:39:40 something like that or he’s just like i just hear about it like i was like well that’s like extremely
0:39:46 not actionable for me thanks a lot dick uh so how are you much time are you spending learning about
0:39:53 this topic and where are you turning to look there’s two minds about it one i would say i have no risk of
0:39:59 over investing my time in this i have pretty big risk of under investing my time in this but no risk of
0:40:04 over investing my time in paying attention to what’s going on with ai and being able to like play with
0:40:09 the tools understand what the companies are doing like really think through like where this puck is
0:40:16 going at the same time i’m not trying to drive myself insane so you know like i do think there’s a very
0:40:22 unproductive version of this which is the constant whiplash of new demo new model new this new that new
0:40:28 whatever and so what i’m doing is basically like an intermittent fasting style model where it’s like i
0:40:35 mostly not paying attention to it as in like i’m not actively trying to like react to everything i see
0:40:41 or go seek out or go read every single thing out there or sign up for every single tool what i’m doing is
0:40:45 i’m trying to make it very useful for me so when i have a problem i now add it into my like sort of
0:40:51 solution list like oh do i think ai could solve this so then whatever research i’m doing it’s
0:40:57 actually like a just-in-time solution to a problem i actually have versus just like the kind of like
0:41:02 intellectual jacking off of like just keeping up with everything just like trying everything just
0:41:04 wanting to know everything watching every podcast listen to every youtube video it’s like
0:41:09 no i’m mostly trying to like if i have a problem i try to see could i solve this day i
0:41:13 maybe yes maybe no but that’s interesting i learn a little bit each time i do that but at
0:41:17 least i’m trying to solve a problem i have the second thing is i am carving out free time so like
0:41:21 last year i thought i think i told you what i did this i did like an ai hack week a think week where
0:41:25 i just basically said clear my calendar the only thing i’m doing this week is just going in depth
0:41:29 and the beauty of that is it’s kind of like checking your email you’re like if you want you could
0:41:34 check your email every three minutes and you might find a new email but you’ll just consistently
0:41:38 like it’ll just keep tearing your attention away whereas if you just batch your email and you
0:41:43 just check your email once at noon and once at you know 8 pm or something like that you’re totally
0:41:48 up to date on email but you didn’t have to like have this nervous energy just constantly doing it
0:41:54 and so i’m treating it more like that i agree with you it was nice to um catch up with you i’m getting
0:42:00 all pumped about all this stuff i i’m currently in um saint louis missouri i’m about to go to the zoo
0:42:06 so i’m gonna go to the zoo i’m gonna go see some family tonight um but i was happy i was able to uh
0:42:11 do this podcast from this hotel and potentially reach hundreds of millions or hundreds of or rather
0:42:16 hundreds of thousands of people and uh hundreds of millions of red blood cells what are we what
0:42:21 are we counting here well because like you just started talking about this ai stuff and i’m like
0:42:26 literally staring out the window right now like whenever you talk about this i have notepads here
0:42:31 and i like get flustered where i’m like like i sometimes i think and i’m like what should i say next
0:42:35 but then other times i’m like oh he’s talking about this ai shit like what am i going to do what
0:42:38 i got to do this thing i gotta do that thing like that’s how i feel right now yeah yeah i
0:42:43 definitely feel that by the way i have a couple of of things i forgot to say on the the uber thing
0:42:48 that are great this is the funniest part of the uber thing at the end of that professor’s blog post
0:42:53 you know what he wrote after he wrote this huge like valuation teardown of uber he goes as i attempt
0:42:57 to attach value to uber i have to confess i just downloaded that but have not used it yet i spent most of
0:43:03 my life in in the suburbs where i go for days without seeing a taxi or if i’m in new york i
0:43:09 just use the subway and so it’s like the experts who literally like not only are they not betting on
0:43:14 this enough skin in the game literally never even use the product it’s like but they should just end it
0:43:21 with like ps but what the fuck do i know like that would have saved him a lot of exactly a lot of like
0:43:27 uh reputation there like there’s some great quotes by the way from some ceos who underestimated their
0:43:33 market size so jan coom ceo of whatsapp he said we’re just trying to make messaging better not build
0:43:39 some big business sells for 20 billion um somebody said i thought i’d make a little side money enough
0:43:46 to quit my job that’s sarah blake the founder of spanks oh so you know female bill you know one of
0:43:53 the like first female billionaire entrepreneurs of this like generation mobile gaming so one of the
0:43:59 first mobile games ever was snake on the nokia phones if you remember so the head of nokia nokia’s
0:44:04 mobile gaming division so this guy is in charge of mobile gaming here’s what he said i think mobile
0:44:09 games are just a small add-on it’s not a real market mobile gaming turns out to be 120 billion
0:44:14 dollar market here’s another one the domino ceo in 2010 the year i graduated from college he said
0:44:20 delivery is a convenience it’s not a game changer at the time delivery was uh 10 billion dollars a year
0:44:25 across food delivery it’s now you know more than 10 times that it’s more than 15 times that
0:44:31 in fact i read a crazy stat that some some i don’t know if this is legit but some study came out or that
0:44:36 somebody was doing some analysis and they said that for most local restaurants now 70 of their order
0:44:43 volume is uh delivery orders they’re no longer restaurants that do delivery they’re delivery machines
0:44:47 that also happen to have a restaurant table you know like a table just a down on if you want i go to
0:44:51 restaurants all the time where i feel like i’m the only person there and drivers are coming in and out
0:44:56 the whole time yeah brian chesky we didn’t know the size of the market because we were inventing it if
0:45:00 we listened to market research we would have just made a better couch surfing app and the last one is
0:45:05 elon i don’t care about the market size i care about if we can make something fundamentally different
0:45:11 because if you make something great the market will come it is sick this is this this was like a little
0:45:14 impromptu topic that turned into a whole thing that was awesome
0:45:32 all right so when my employees join hampton we have them do a whole bunch of onboarding stuff
0:45:37 but the most important thing that they do is they go through this thing i made called copy that copy that
0:45:41 is a thing that i made that teaches people how to write better and the reason this is important is
0:45:47 because at work or even just in life we communicate mostly via text right now whether we’re emailing
0:45:53 slacking blogging texting whatever most of the ways that we’re communicating is by the written word
0:45:57 and so i made this thing called copy that that’s guaranteed to make you write better you can check
0:46:03 it out copy that dot com i post every single person who leaves a review whether it’s good or bad i post it
0:46:07 on the website and you’re going to see a trend which is that this is a very very very simple exercise
0:46:10 something that’s so simple that they laugh at they think how is this going to actually impact us and
0:46:15 make us write better but i promise you it does you got to try it at copy that dot com
0:46:21 i guarantee it’s going to change the way you write again copy that dot com
0:00:10 and their best case scenario they wrote was 400 million as an exit value 400 million and now it’s
0:00:18 140 billion i feel like i can rule the world i know i could be what i want to i put my all in it
0:00:23 like my days off on the road let’s travel never look let me uh tell you about something that i’ve
0:00:28 been thinking about and i thought it was really cool and our friend shiel just shares the best
0:00:33 stuff and so i’m sharing man on x the most interesting man on x the most interesting man
0:00:39 i know actually he does a lot of amazing stuff but he shared something but so i got to give him credit
0:00:44 but basically i saw this jeff bezos quote and i want to know what you think about it and he said
0:00:50 something where he said um i think it’s generally human nature to overestimate risk and underestimate
0:00:54 opportunity and then he went on to say and so i think entrepreneurs in general would be well advised
0:01:00 to try and biased against that the risks are probably not as big as you perceive the opportunities may be
0:01:05 a lot bigger than you perceive and so uh the interviewer was like you seem really confident and
0:01:09 he goes well you call it confidence but maybe i’m just accepting that human bias and i’m trying to
0:01:14 compensate against it and i thought this was interesting i’ve been thinking about this i i saw
0:01:19 this like weeks and weeks ago and every time i’ve been thinking i’m like there’s so many businesses
0:01:24 or opportunities that i see where i’m like i can’t believe that that thing is that big and i myself
0:01:29 fight this as well and where i think this thing can’t be that big you know i think i’ve said this
0:01:33 multiple times for different products that i said that will never work and it becomes huge and even
0:01:37 jeff bezos by the way he fell victim of this there’s this one quote where he was like driving
0:01:42 packages he says when i was driving packages to the post office myself and taping up and typing up
0:01:47 all the listings i thought maybe if i’m lucky maybe this can be a hundred million dollar revenue
0:01:52 company someday and so like everyone has this but i saw this amazing thing where it was shiel sharing
0:02:01 a memo from bessemer so bessemer is a vc i think they’re a fantastic vc but they’re a big vc so they
0:02:06 created this part of their website where they release old memos and if you don’t know what that is a memo is
0:02:12 where whoever wants to invest into a company who works at a vc they make a memo justifying their thoughts
0:02:15 and then typically the partners like agree on it they’re like yeah that was a persuasive argument
0:02:21 we’re on board and so they did a cool thing where they released the memos from past deals
0:02:28 and they had this amazing deal or this amazing memo on shopify and this was when shopify was raising
0:02:32 five million dollars at a 20 million dollar valuation the company was doing five million in revenue
0:02:40 and i want to show how bad bessemer who is a professional vc i think they have tens of billions in
0:02:46 under management i want to show how bad they are predicting stuff so they said this is straight these
0:02:54 are quotes from the memo they said in 2010 uh shopify had 132 million dollars in gmv which would
0:03:03 put shopify in the top 50 online retailers and so at the time that is how small the category was
0:03:07 let’s let’s say the other numbers because that sounds like a big number right so they had 5 000
0:03:13 they had 10 000 customers total and they were doing 5 million of revenue themselves so the 5
0:03:18 million of revenue that’s the company’s revenue and then all the shops on shopify their sales total was
0:03:24 132 million right and now do you know how many you know how many customers there do you actually know how
0:03:31 many they have now i know that they add more than 10 000 paid customers every week now i think there’s
0:03:35 there’s multiple million customers they have multiple million and i believe so the company is
0:03:44 now worth 130 billion i believe uh at 1.200 billion i believe they do something like close to a trillion
0:03:50 dollars in gmv so i can’t even tell you what that math is what the multiple is they’re probably doing
0:03:56 this amount like the 132 million like every hour like an hour yeah every hour yeah you’re saying we
0:04:02 underestimate the the upside of of these things we underestimate the market size and the the headline
0:04:07 here is they made the investment so it’s not like they passed they made the investment and their best
0:04:14 case scenario they wrote was 400 million as an exit value and so 400 million and now it’s 140 billion
0:04:22 they said if all things work out we think in four to six years this company could sell for 400 million
0:04:29 dollars right and we will 20x our money something like that uh 15x our money obviously that’s wrong
0:04:35 the company’s worth 130 billion dollars but they had all these other stats that were wrong and in the
0:04:41 memo they even have updated quotes so the person who wrote the memo will give you an update and he
0:04:48 wrote in the memo he goes a few months after we invested oracle had acquired one of shopify’s
0:04:54 competitor for 500 million dollars and i remember emailing toby who’s the ceo of shopify about how
0:05:00 great it would be if someday maybe we can achieve that outcome but i thought it was just a little bit
0:05:07 too aspirational and then he has this other line where he goes um some of the other uh employees and
0:05:12 advisors at shopify when we made our investment they thought to themselves you know i think like this
0:05:18 company at best is going to be worth around 50 million dollars and so the associate at bessemer
0:05:23 who made this deal he goes look toby these guys are saying 50 million dollars can we put something
0:05:27 in the contract that says you are not allowed to sell the company for less than 50 million dollars
0:05:32 because this guy was like that’s all it’s going to be worth and toby was like dude i’m not agreeing
0:05:36 to anything like that but i’ll give you a handshake offer i promise you i won’t sell until at least
0:05:44 75 million dollars and so it’s just funny that this is like how small the best of the best presumably you
0:05:48 know top one percent are thinking about different opportunities that today are so obvious to us but
0:05:50 back then were really hard to predict
0:05:59 you don’t become the world’s most valuable women’s sports franchise by accident angel city football club
0:06:04 did it with a little help from hubspot when they started data was housed across multiple systems
0:06:10 hubspot unified their website email marketing and fan experience in one platform this allowed their
0:06:15 small team of three to build an entire website in just three days the results were nearly 350 new
0:06:22 signups a week and 300 database growth in just two years visit hubspot.com to hear how hubspot can
0:06:29 help you grow better all right back to the pot so i have a bunch of follow-ups on this because
0:06:33 this is a subject i’ve literally been thinking about i’ll tell you i’ll tell you why i was thinking
0:06:37 about this simultaneously but let me first just uh let’s start with a little bit of humbling so
0:06:43 um here’s a list of products that i was totally wrong about meaning they were already working so
0:06:49 forget the scenario of ah that’ll never work but like yeah that’s working but that’s probably small
0:06:53 probably niche okay so here’s products that i personally was wrong about over the last 15 years
0:07:01 um calm and all the meditation apps my buddy alex was doing it he was in my peer group who’s in our
0:07:06 mastermind group and i was like that’s cute you know that’s cute like i hope you know i don’t really
0:07:10 understand what you’re doing here maybe you’ll make some some money it’ll be like a job i didn’t really
0:07:17 fully understand it do like meditations now like a like there’s multiple meditation apps that are
0:07:21 billion dollar companies that seemed implausible at the time he was also really successful already
0:07:28 yeah yeah exactly so so i didn’t doubt him i thought he was awesome and i didn’t even think
0:07:31 like it wasn’t gonna work it’s like oh it’ll work but it’s just small it just seems like a
0:07:37 too small of a market okay other markets i thought were too small on snapchat my username was like has
0:07:42 the word test in it still to this day because i was like yeah cool like but this is never gonna be
0:07:47 a thing and i mean this is just like a goofy kind of sexting thing how big is the market for that
0:07:53 another one airbnb so i met the founder of couch surfing before i heard about airbnb and we hung
0:07:59 out at my office and i was like wow couch surfing what a crazy idea go sleep in someone else’s just go
0:08:04 sleep in their house and they’re in the extra you know couch or air mattress that they have um all right
0:08:10 cool so airbnb comes out and i’m like wow great you’re trying to be couch surfing how ambitious of you
0:08:14 and um i think couch surfing topped out at like 50 million dollars or something like that
0:08:21 uh like it maybe it was max like 100 or 200 million and you know airbnb today is a like 100 billion
0:08:31 dollar company so i i i read that i think in america one out of every 30 dollars spent on travel is on
0:08:38 airbnb that’s a cool stat i like that’s insane right it’s insane i want absolutely insane yeah
0:08:47 in america yeah one minute out of every day for every entrepreneur on average is spent listening
0:08:53 to our podcast i bet there’s like a number like that that’s true right yeah like they said it in like
0:08:59 one of their pitch decks but it’s just absolutely astounding that you and everyone else me too thought
0:09:05 that it was just couch surfing but it’s just it’s not 10 times better it’s not 100 times bigger it’s
0:09:12 10 000 times bigger uber was another one uh black uber was like black car limos i was like cool rich
0:09:17 people in san francisco who takes black cars small idea i don’t understand why you know the founder of uh
0:09:22 of stumble upon is like doing this but okay whatever i guess rich guys just lose touch and they just start
0:09:27 working on niche things that nobody nobody’s gonna be too niche another one musically i remember we were
0:09:32 at the office trying to build social products and morgan this guy who worked with me he was like hey
0:09:38 my daughter loves making these lip sync videos on musically and it was actually even maybe even a
0:09:43 different thing besides musically but this idea of like you record yourself on video and then there’s
0:09:48 music mixed in and you’re kind of lip syncing and dancing uh you make little dance videos and i was
0:09:52 like okay cool morgan but can we get to work now like we’re trying to build the next big thing here
0:09:57 and like you know stop distracting us with this and uh you know has anyone ever just like showed
0:10:00 you a briefcase full of cash and then you like accidentally kick it into the gutter that’s what
0:10:05 that’s what we were doing um okay so those are things that i was totally wrong about well hold let me tell you
0:10:10 one more alex lieberman shared a dm that he got from the founder of cursor so cursor is a company that in
0:10:18 or something like that grew to 10 billion dollars and the guy emailed alex lieberman asking for advice
0:10:25 or like what he should do and left him off yeah left him on red hey we all miss in fact bessemer has a
0:10:29 part of their website called the anti-portfolio have you ever seen this no they were the first bc i think
0:10:35 that did this so they created if you go bessemer bvp.com slash anti dash portfolio it’s basically just
0:10:40 honoring the companies we missed and it’s just like airbnb apple ebay google like it’s all the
0:10:46 companies they had the opportunity to invest in but passed for varying reasons um and they just like
0:10:50 humble themselves with this so this is like the this is the opposite of the hey let me show you our memos
0:10:56 of how smart we were um this is like you know the other side of the coin and it’s crazy man for any
0:11:00 anybody who’s like worth a damn in business your your anti-portfolio is going to be much bigger than
0:11:05 your portfolio which is just a bizarre situation if you’re any good if you’re if you’re any good and
0:11:10 you’re in the game for any like decent amount of time your anti-portfolio is much bigger part of this
0:11:16 is underestimating the size of markets and the other there’s many things here the other part is not
0:11:24 understanding math because 10 000 times or 1 000 times whatever that’s actually it’s really hard to
0:11:30 estimate and so like to put it in really simple terms i remember working with financial uh my financial
0:11:37 advisor and they there was like this line item for 250 000 in 18 years and i was like griffin what is
0:11:43 this man he goes uh well that’s i just baked in like college expenses uh and i was like but i’m not
0:11:47 gonna pay for all four years up front or are you thinking we’re gonna have triplets what’s the deal
0:11:53 here and he was like no i just took the trailing 20 year growth rate of college education and i assumed
0:11:59 that they’re gonna go to like a top 75 like cost school and i just applied that number to the to the
0:12:04 to the future and that’s just what it came out to 250 000 a year and i was like i it’s just it’s it’s
0:12:10 really hard to understand what like five percent growth is per year or whatever it is and a really
0:12:14 good way to understand this though that i’m trying to like get beyond the math is i’m been really
0:12:20 obsessed with thrive so uh josh kushner and one of the reasons why i’m into it is you hosted this event
0:12:26 and we had the founder of oscar come you had um mario come and i thought he was i thought he was
0:12:30 like the most impressive smartest guy there and so i was like going down the rabbit hole i’m like
0:12:34 all right you partnered with josh kushner and josh kushner is now leading all these amazing things
0:12:40 and josh kushner recently invested in open ai at a 250 billion dollar valuation which is astoundingly
0:12:45 expensive that’s just that number’s hard to comprehend and someone was questioning josh kushner
0:12:49 and he was like what i learned was in the real estate days you know his parents are real estate
0:12:58 tycoons in new york city he was like i’ve learned that you can’t really over spend on park avenue real
0:13:02 estate so park avenue is on the upper east side that’s where like the louis vuitton store the tiffany
0:13:07 store he was like there’s just been so many examples where someone said in the fanciest part of new york
0:13:13 city that this building is way too expensive but when you buy the best typically it’s never too expensive
0:13:17 like there’s always going to be someone in 10 years who wants to pay more for it so my logic is
0:13:25 i’m going to find the park avenue of startups so open ai cursor whatever it is and i’m willing to
0:13:29 spend what people think is it a crazy amount of money i don’t care about the valuation because i just
0:13:34 think that those will outperform those the other ones and i’ve been really trying to like embrace that
0:13:39 even though it’s very challenging to like actually do that this is michael saylor’s argument about
0:13:46 bitcoin so his argument about bitcoin is basically that of all the digital assets bitcoin is digital
0:13:53 manhattan and there’s only 21 there’s only 21 million uh million blocks that’s that’s the real
0:13:58 estate that’s the land you want to get as many of the 21 million as you can at basically any price
0:14:02 because this is digital manhattan and over the next hundred years that’s all that’s going to matter
0:14:06 is basically like how much of that did you own you know i shouldn’t say that’s all that’s going to
0:14:12 matter but basically you don’t look for the third best thing you buy manhattan right like you don’t go
0:14:16 try to figure out what’s going to be the seventh thing because it’s cheaper right now like no no
0:14:20 the move is always you buy the manhattan thing and you just plan to hold it over the long haul
0:14:25 when you know it’s a scarce rare asset and like that’s the whole thing with crypto is like there’s
0:14:32 it’s a scarce rare asset which is conceptually that is way easier to understand than 1000x uh you know
0:14:35 like because i see manhattan real estate i’m like yeah this is like bumping this is great
0:14:41 then it goes to the next stage which is having the courage to believe that your opinion is right
0:14:46 yeah and so like for example someone like you who’s who’s in the bitcoin or it was or is in the crypto
0:14:50 industry and you do believe in it it’s like well if you believe that to be true why aren’t you borrowing
0:14:56 every dollar you can to do it and that is where uh courage comes into play and that’s really hard to
0:15:01 buy into this concept so i say i buy into this concept conceptually but i’m not truly acting on it
0:15:10 at least not in uh not not in a 100 type of way all right folks this is a quick plug for a podcast
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0:15:37 there’s also other factors so for example uh i have a very funny goal my last goal on my like
0:15:46 you know uh annual goals is just called it just says avoid ruin because my life is great and so
0:15:53 actually like one key thing at all times is avoid ruin like do not do extremely dangerous things take
0:15:59 care of my health and don’t make disastrously risky financial investments that like even if i believe
0:16:04 even if i have conviction even if the upside is there i really just don’t need to i just don’t
0:16:09 need to risk ruin at any given time i think it’s the kelly criterion just do not risk ruin keep yourself
0:16:13 in the game is always important so like you don’t need to borrow every dollar even when you have
0:16:18 conviction right there’s like there’s but i think that’s what separates uh not all the best so i don’t
0:16:23 think buffett has ever like risked uh you know he famously has said uh don’t risk what you have for
0:16:26 what you don’t need or something like or don’t risk what you need for what you don’t want or i forget
0:16:32 exactly the quote where but it’s like risky needlessly risking things yeah but my brother john
0:16:35 who i’m visiting in missouri he’s not into startups and he was like why do you why are you still doing
0:16:39 this like why don’t don’t don’t risk anything i was like well i don’t really risk anything but he’s
0:16:44 like but do the really successful like the elons risk everything and i was like a lot of them i think
0:16:51 do i think that like there are like the 10 out of 10 the best of the best the crazy elons of the world
0:16:55 i think that when they say i was sleeping on couches i think you don’t really want to believe
0:16:59 that because their friends are billionaires or whatever yeah i’ve been around enough of these
0:17:05 yeah it’s a really nice couch but i’ve been around enough of these like crazy crazy crazy like
0:17:08 one percent of the one percent the freaks amongst the freaks some of them i actually do think
0:17:16 don’t avoid ruin correct i just don’t think that’s wise i don’t think i don’t think a lot of them
0:17:19 very wise i think they’re great achievers and but they’re not necessarily i don’t think they’re wise
0:17:23 and i don’t want to do that but don’t you agree with that though that like have you who have some
0:17:29 people do definitely take it to that extreme right like uh there’s there’s levels right so like buffett
0:17:33 actually has been very concentrated at many times i think it’s you know recently had 50 percent of his
0:17:37 portfolio just in apple stock right so like that’s a very concentrated thing and he believes in
0:17:41 concentration but concentration is not the same thing as like you know risking ruin in a way
0:17:48 even somebody like elon you know the ruin for him isn’t losing his money because he’s a money
0:17:53 making machine he’s a achievement machine at any given time he could have even if he had lost it all
0:17:58 through spacex and tesla and whatever he’d be rich again in 10 years and i think he knows that deep
0:18:03 down too right so like the risk of ruin for him might be reputational right there’s a great leaked email
0:18:09 where open ai is talking about um their path forward and this is like when this is when elon eventually
0:18:14 got like sort of kicked out slash left the project of open ai right he’s a co-founder he put the first
0:18:19 40 billion dollars in uh but along the way they realized they need a lot more money and the leaked
0:18:25 email basically shows the brainstorming that they were doing sam altman greg and elon and basically elon’s
0:18:31 idea was so they all came to the realization holy shit this is like this kind of works but we need way more
0:18:36 money like this is going to need way more money to train these models like we’re talking 100 million
0:18:41 dollars plus just for a single training run like let alone operating the company operating
0:18:45 the business from operating the the project and paying all the salaries and now it’s for what
0:18:49 like servers or something like that like uh like literally the gpus and the compute and the electricity
0:18:54 to train one model and then you’re not going to stop there you’re going to train a better model right
0:18:57 so once they realize shit we need 100 million and we’re a non-profit this is not going to really
0:19:01 work who’s going to just elon’s giving us this but like are you elon are just going to give us like
0:19:05 billions that’s probably not going to happen but that’s where this is going and so when they realize
0:19:11 that they’re like we need a way forward so elon’s suggestion was let’s make open ai a part of tesla
0:19:16 tesla will be the commercial machine and then we’ll take some of that profits as r and d and put it into
0:19:21 open ai we’ll fund it that way now sam and greg didn’t like that because they’re like well yeah but
0:19:25 then like you control everything and we’re just kind of like you little bitch we don’t really love that
0:19:30 idea so what if we uh and they were exploring other ideas so they had a microsoft idea which
0:19:34 is what they ended up doing so he’s like microsoft is really interested in giving us you know like
0:19:40 you know potentially like you know multi-billions of dollars uh and free compute but then you know
0:19:43 we’d have to work out a deal of what’s in it for microsoft and then elon basically replies being like
0:19:50 ew like lame being a part of microsoft you know that was like in his reply basically he’s like why not tesla
0:19:55 and then sam altman then there was like a email that referred to sam has been exploring the idea
0:20:00 of an ico so to do a token launch and like what if we find like it was during the crypto like heyday and
0:20:05 they’re like ah i guess like you could just raise a ton of money for kind of nothing like a promise
0:20:14 um if you just do an ico and elon’s reply is basically like uh i am like i am against the ico it is
0:20:19 like i think reputationally disastrous and i will not be a part of the project if you guys pursue that path
0:20:24 like i will take my name off this project because even if that would succeed i just do not like i
0:20:28 don’t think the risk is worth it and so it’s interesting right because like the guy is willing
0:20:34 to risk you know certain things all of his money but not necessarily others right like you you may not
0:20:39 always there there may be other risks it’s weird that was not weird i mean it’s just like intriguing
0:20:43 that he thinks the ico thing is the risky thing but not like the political thing or not like well he did
0:20:48 with the political things initially he was saying i won’t endorse a candidate and i won’t be donating to
0:20:52 them that was his initial stance because same thing it’s like the michael jordan you know oh
0:20:57 you’d like my opinion on this sorry no comment republicans buy shoes too yeah and like one of
0:21:03 the great lines in in you know in in history and so initially elon did have that stance he got pushed
0:21:09 over the edge you know due to a number of factors that maybe only he can truly describe some people
0:21:14 think it’s because his companies were getting like overly regulated and he just was like we can’t do
0:21:18 spacex and tesla if there’s this much regulation some you know people were basically pushing back
0:21:24 on on you know uh capitalism or attacking him so like you know it’s unclear what all the motivations
0:21:29 were of why he decided to then throw his weight into it but when he did he throws all his weight into it
0:21:33 but he initially did not want to take that risk because it seemed unnecessary you know you take you
0:21:39 only take as much risk as you see necessary what what’s cool about elon is once he sees it’s necessary
0:21:44 he’s willing to do it whereas most people will still dilly dally or hesitate to do it which is the gap
0:21:49 that i was talking about you know it’s like courage is a hard thing and then i also but i also think that
0:21:59 we underestimate how different the outliers are in terms of personality to the normal people and so
0:22:07 what i mean is is you and i are live on coasts we are work in a weird tech world it’s pretty fringe
0:22:16 but then there’s people that are 50 times that do you know what i mean in terms of how strange and
0:22:21 unique thinking they are so so for example the collison brothers of stripe i’ll hear like their
0:22:27 opinion on things and i even to me i’m like wow that’s just like way different that’s like he’s so
0:22:32 out there in terms of how this framework or how you believe that it’s just so logical and you totally buy
0:22:39 into that that’s really challenging for me to understand but imagine to someone who is right in the
0:22:46 mean like just like of understanding how different the different people are in terms of their thinking
0:22:50 yeah there’s level there’s levels to this um there’s levels to everything there’s levels to
0:22:54 intelligence there’s levels to crazy there’s levels to risk-taking there’s levels to all that
0:22:58 that is pretty hard to comprehend until until you get closer and closer and closer to that edge
0:23:02 and you realize like oh what i thought was level 10 was not level 10 it was
0:23:08 7 and there’s that this is what 10 is right just imagine what brian johnson the extent brian johnson
0:23:15 goes to for his health there are people who live you know 30 miles in my radius here that are doing
0:23:19 that in just ways that they’re just not publicly broadcasting at but not in just health they’ll do
0:23:23 it in finance they’ll do it in their obsession over specific technology in the lifestyle choice that
0:23:28 they make whether it’s you know a polyamorous lifestyle or it’s a you know the extent to
0:23:33 which they delegate extreme delegation like we were laughing when we were hanging out with mr beast and
0:23:36 he had a he had his runner outside it’s like wait so you got kind of like a personal door dash guy
0:23:42 that just waits around in case you need something but like yeah there’s that like there’s a lot of people
0:23:47 that have these like lifestyle quirks where it’s like wait you peter teal when he flies to a place
0:23:53 has a mattress shipped that hotel so that he gets right sleep because that’s his favorite mattress
0:23:58 and he just actually some hotels store the peter teal mattress in the lobby or like in there’s like
0:24:03 storage facility in case he’s gonna come because that’s his demand it’s like yep there’s people
0:24:07 that do that it’s like oh wow i thought taking i thought taking my sleep seriously was like wearing
0:24:11 this whoop band i guess there’s levels to this right i guess there’s like an infinite level level
0:24:18 levels to this it’s a honda civic versus a nascar or it’s making the jv like i was telling my brother he
0:24:23 was like he was comparing me to someone and i was like i don’t think you understand i’m
0:24:30 one of the best on jv at a big high school and these guys are olympians like this right that is
0:24:36 the gap that the you know i think um the guy from uh you told me this story about um the redhead
0:24:41 basketball player the celtics what’s his name scallop scallop and he was like he was like joked
0:24:48 as being the worst nba player but he would go to like uh you know blacktop games and just crush everyone
0:24:53 and he was like you don’t understand that i’m closer to lebron than you are to me yeah and that
0:24:58 made that’s sort of like what we’re describing here you want to do something else well i do i
0:25:01 have one other thing but i want to go back to the market size thing because i have i have something
0:25:07 that i think is a pretty sick example of this all right so there is an amazing story about this
0:25:13 from uber so i remember when i was living in san francisco uber had like just come out i think i
0:25:19 moved there 2012 and i was like it was all pretty new then and i think uber that was such a fun era
0:25:24 that was such a fun era wasn’t it yeah that was like you know our version of like the dot-com boom
0:25:30 right it’s like mobile it was so exciting and so i remember getting in my i got there my friend who
0:25:33 lived in san francisco was like yeah here our rides here and we got into the stranger’s car and i was
0:25:38 like what the hell is this it was actually a sidecar which was the third company after uber and lyft that
0:25:44 just died it didn’t make it i remember uber started getting like a pretty big investment and it just seemed
0:25:49 pretty crazy and they just kept getting crazier and crazy they would raise it like you know first it was
0:25:53 was tens of millions and hundreds of millions then billions of dollars valuation and i remember
0:26:00 reading um this bill gurley blog post that really changed my thinking and the blog post is called
0:26:07 how to miss by a mile is the name of the blog post and bill gurley gurley was one of the early believers
0:26:14 and early investors right yeah he’s oh he’s a legendary vc and now retired and he was one of the main
0:26:18 investors in uber um and like you know famously at the end like you know they ended up kicking travis
0:26:22 out and there’s you know it got it got messy at the end but he was one of the early and biggest
0:26:27 believers okay so basically he talks about this guy um i don’t know how to say his name exactly but it’s
0:26:31 i think it’s aswath damaraddon or something like that this guy who’s like a he’s a well-known
0:26:39 thinker on valuations he’s a professor at nyu stern and he teaches like you know finance and
0:26:44 economics there and so he had wrote an article that said uber is not worth 17 billion this is when uber
0:26:50 raised at a 17 billion valuation he was right by the way uber was not worth 17 billion it is actually 10
0:26:56 times more than that but he was making the opposite argument he was like i think uber is vastly over um
0:27:02 overvalued and bill gurley sort of breaks down this argument and this totally changed my thinking and how
0:27:09 you think about startups so what he said was he goes uh this professor just did this wrote this article i
0:27:13 i wrote this blog post and it seems really well thought through and he’s a very like you know
0:27:17 respected expert and i you know i don’t i’m not saying anything about the guy but i think his
0:27:22 analysis is wrong and he starts with he goes the funny thing about any analysis with hard numbers like this
0:27:27 is that it gives you a false sense of security and he talks about like anyone who’s in math knows the
0:27:33 difference between precision and accuracy precision would be you know oh wow you’ve really forecasted this
0:27:39 down to the second decimal and accuracy is like yeah but it’s just wrong it’s precise but wrong uh it’s
0:27:43 not it’s not on target he was basically saying he’s like he makes two arguments so he makes one argument
0:27:50 about the tam so the total addressable market of the of the of what uber’s market potential is and then
0:27:55 market penetration so how much of it uber will get and he basically is like he goes the tam mistake is
0:28:00 the mistake of thinking that the future will look quite like the past but the arrival of a new product or
0:28:06 service will have a non-zero impact on the overall car for hire market so he goes basically it’s a new
0:28:11 offering it’s got new levels of convenience new price points which will open up new use cases and
0:28:17 he gives a story he goes you know once upon a time at&t paid mckinsey a million dollars to forecast how
0:28:20 big will the cell phone market be they want at&t want to know should we become like a cell phone
0:28:27 maker manufacturer or like should we should we care about that market or not and the mckinsey’s top you
0:28:33 know analysts who are getting paid uh predicted that the market in 2000 the year 2000 would be
0:28:38 900 000 people using cell phones which was less than one percent of the actual number it was 109
0:28:44 billion and they were predicting 20 years out which is really freaking hard correct but it was it was
0:28:49 look it was hard numbers it gave you a false sense of security and so at&t decided not to go not to
0:28:54 invest in that area they ended up to make you know once it was once they realized they were behind the
0:28:58 the ball and you know actually cell phones were going to be a big deal uh they ended up having to
0:29:02 buy the cell company for 12 billion dollars so it’s basically a 12 billion dollar mistake and by the way
0:29:08 now like you know five or six billion people have cell phones it’s like just absolutely ubiquitous
0:29:12 aaron levy the founder of box has this tweet where he said sizing the market for a disruptor based on the
0:29:17 incumbents market is like sizing the car industry based on how many horses there were in 1910
0:29:24 and so uh girly’s talking about this now of course you might say well is this always the case like you
0:29:28 could always say well you know forget the past you’re just being you’re stuck in that old way of
0:29:34 thinking that think about the bright future and uh of course no that’s not always true in fact it’s
0:29:40 probably usually correct that the you know the near future will look like the the near past but the funny
0:29:47 thing about entrepreneurship or any tech investing is that it’s a hits it’s a hits driven game so you only need
0:29:52 one and you can actually be wrong eight or nine times out of ten as long as you get the one right
0:29:58 in a really really big way and that’s not true in other businesses like that’s not true in school you
0:30:02 can’t pass a test that way it’s not true at your job you can’t just like have one great day and then
0:30:08 like have nine duds um like you can’t do that in private equity warren buffett famously was like you
0:30:12 know picking stocks rule number one don’t lose money you know vcs lose money all the time entrepreneurs
0:30:17 get it wrong all the time it’s a very distinct difference and so like and this is actually a
0:30:24 distinct difference oftentimes in you and i’s uh personality which is buffett is predicting that the
0:30:31 future will repeat itself and that the past is the past won’t change for the future vc investing tech
0:30:36 investing is doing 100 the opposite correct both are valid games but you have to know what both are
0:30:40 right you have to know they’re right in their game so like in the stock market that’s probably the right
0:30:44 way to think about things and value investing that’s probably the right way to think about things and
0:30:48 private equity is probably the right way to think about things in entrepreneurship or tech investing
0:30:51 it’s absolutely the wrong way to think about things you won’t make any money doing that other
0:30:58 way and so in our business i have this phrase which is that in our business you know the cynics get to be
0:31:03 right and the optimists get to be rich and so it’s like the cynics will be right and you get to be right
0:31:08 eight out of ten times that might feel good but the optimists are the one who get who get rich and you
0:31:14 have to just know that going in what are your uh what your employees replied all like sean i’m just
0:31:20 asking if you want pizza or hamburgers for lunch like can you just tell me like this might be why
0:31:25 i have no friends but i have a podcast i think you nailed it
0:31:34 so you guys know this but i have a company called hampton joinhampton.com it’s a vetted
0:31:40 community for founders and ceos well we have this member named lavon and lavon saw a bunch of members
0:31:44 talking about the same problem within hampton which is that they spent hours manually
0:31:49 moving data into a pdf it’s tedious it’s annoying and it’s a waste of time and so lavon like any great
0:31:55 entrepreneur he built a solution and that solution is called molku molku uses ai to automatically
0:32:00 transfer data from any document into a pdf and so if you need to turn a supplier invoice into a customer
0:32:05 quote or move info from an application into a contract you just put a file into molku and it
0:32:10 auto fills the output pdf in seconds and a little backstory for all the tech nerds out there
0:32:15 slavon built the entire web app without using a line of code he used something called bubble io
0:32:20 they’ve added ai tools that can generate an entire app from one prompt it’s pretty amazing and it means
0:32:25 you can build tools like molku very fast without knowing how to code and so if you’re tired of copying
0:32:34 and pasting between documents or paying people to do that for you check out molku.ai m-o-l-k-u-dot-a-i
0:32:42 all right back to the pod this is a a great um a great blog post the guy who’s like the the the
0:32:47 anti-hero on this like where is he now he’s still there professor he’s still a professor of course he
0:32:52 is because you know you know skin in the game you can never really be wrong um and so he that guy had
0:32:57 estimated the global taxi market to be a hundred billion so anyways let me zoom it in so i remember
0:33:02 living in san francisco and when this happened girly pointed something out which was that
0:33:09 in san francisco the taxi market size whatever it was let’s just pretend it was like 150 million dollars
0:33:16 uber didn’t just have some percent share of that market it was actually three times bigger than what
0:33:22 the total taxi market was in san francisco it was a total like market expander of a force and you see
0:33:27 that over and over and over again any new product that’s creating a new category it doesn’t just eat
0:33:33 some share of the existing category it just explodes and becomes bigger than that thing so let me kind of
0:33:39 like fast forward to to another area that this came up so i was watching these videos from sequoia
0:33:45 sequoia recently had an ai event and my invite must have gotten lost but i was able to catch it on youtube
0:33:51 afterwards luckily and so i was i think uh darmash was one of the speakers yeah yeah i know so again
0:33:57 maybe my speaker invite also was lost i’m not exactly sure what happened uh but but it’s all
0:34:03 it’s all love amongst amongst me and sequoia so the very first speaker this guy i think it’s pat grady
0:34:07 he’s a partner of sequoia and he has a slide on the screen i’m gonna show you the slide it’s
0:34:13 maybe a top five ugly slide like this might be the worst slide i’ve ever seen in my life
0:34:18 like not only is it ugly it doesn’t even make any it’s illegible like you look at this it doesn’t
0:34:23 even mean anything but he explains it so okay so check out the slide you see this thing right here
0:34:29 yeah so like i remember taking the act where it was like showed you like three shapes or three numbers
0:34:33 and you had to predict the fourth one based off of the pattern i cannot do this with this okay exactly
0:34:38 so if you look at this slide it basically is like a bunch of pie charts but the pie charts have no
0:34:41 annotations just random numbers and then there’s an arrow and there’s a question mark and it just
0:34:45 says so what at the top all right so let me explain what this is because it’s actually kind of insightful
0:34:51 so what he was saying was basically like um if you look at the the let’s say the three most recent
0:35:00 waves of of like tech so you had software which was like i buy cds i put i put the cd-rom inside my cd
0:35:07 or i install uh software on my server at our office that was like software 1.0 and then 2.0 was like
0:35:12 the cloud it was like oh the software just lives in the cloud it’s a sass it’s a service you just kind
0:35:17 of like use what you need you don’t need the servers and the cds and he’s like now we have ai
0:35:24 and so he talks about like basically the software market at the time when cloud came out when like
0:35:32 salesforce came out the entire software market was 350 billion dollars of revenue cloud is already 400
0:35:37 billion right like like just just like the top cloud players are like more than 400 billion so
0:35:42 basically it’s like cloud didn’t just take some percent share of the software market wasn’t like oh
0:35:47 yeah maybe like 10 of these applications will now go to the cloud or become sass it was like sass
0:35:53 became bigger than the entire software market before that uh and it became bigger by i think uh uh i
0:35:56 don’t know why the numbers here are like again the pie chart is very confusing but it’s basically some
0:36:02 order like it was like you know two or three times bigger and then he’s talking about like ai and he’s
0:36:07 like ai actually is interesting because ai replaces software but ai also replaces labor like you just
0:36:14 you don’t need people to do those tasks it’s services and software and so um he’s like the
0:36:18 the labor market is basically like whatever like 10 trillion this is some some ridiculous number and
0:36:24 he’s like we don’t even know how big the ai market is going to be predicting that with any accuracy would
0:36:30 be foolish but it’s probably a good bet that ai is going to be bigger than the entire cloud market today
0:36:38 and the labor market in the future and so um how big is the labor market isn’t isn’t the labor market
0:36:45 like the market that’s like the main one i mean like like isn’t that everything ever yeah kind of and
0:36:50 so you know in the same way that when girly was talking about uber he’s like you know um it’s going
0:36:55 to be bigger than taxis because it’s more convenient than taxis right if you called a taxi you didn’t
0:36:58 know when it was going to pick you up you didn’t know if it was going to pick you up with uber you got
0:37:03 precise you know you precise timing it’ll pick you up anywhere before taxis didn’t really go to rural
0:37:07 areas uber had more drivers so it was available everywhere because it was available everywhere
0:37:12 you got lower price points because there was more liquidity in the system so when it’s a lower price
0:37:15 point maybe i wouldn’t have called a taxi just to go from here to my friend’s house but if it’s a
0:37:20 eight dollar uber i’ll actually do it and because you get the price points now you get new use cases
0:37:27 so like people use ubers to like help their elderly parents travel or kids or like and the big one was
0:37:30 basically he’s like the big use case i think people are missing is that some people just won’t
0:37:34 buy a car because they’ll be like i’ll uber when i need it so i just don’t need to own a car which is
0:37:38 exactly what happened to me i sold my car in san francisco because i was like why would i deal with
0:37:44 this car parking issues getting get broke into insurance gas all that like no just uber when i need
0:37:49 a ride and so he’s like it unlocked part of the rental rental car market it unlocked part of the
0:37:54 car ownership market and once you calculate those you’re like oh shit this is a trillion dollar
0:37:58 market not a hundred billion dollar market and so you’re off by you know 10x if you had done
0:38:02 the calculation wrong with the wrong assumptions and so ai is going to do the same thing because
0:38:08 i won’t hire a person to do these little things that i’m basically like telling ai agents to do in
0:38:13 my life right like you know i’ll build little i build a little app for piano tracking for my piano
0:38:18 practice or for my health tracking or i’ll uh you know i don’t hire a concierge doctor but i’ll
0:38:23 feed my lab results to chat uh chat gpt and i’ll pay them to like i’ll pay it to analyze all my blood
0:38:29 results and so things i wouldn’t have otherwise hired people for i’m willing to pay ai a little
0:38:38 bit for it and so there’s a new market how many hours a week are you consuming information on just
0:38:45 staying in the know on this topic on ai specifically yeah we had greg eisenberg on the pod and he was
0:38:52 telling me things where i was like i was almost i i found myself having fear i had fear of like
0:39:00 oh this is clearly the future and if i’m not like in the know of this it’s gonna come and destroy me
0:39:05 therefore i owe it to like that’s how serious it was it wasn’t like i’m missing out on an opportunity
0:39:09 to make my business better i’m missing it was like oh no i gotta protect my family like like
0:39:16 this is like my job and so i felt extreme fear over he was saying like magnus have you heard of magnus
0:39:21 is that like the new chinese agent platform yeah yeah yeah and there’s no g just like i think it’s like
0:39:27 manis manis and he was explaining but he’s like three things where i’m like how do i not know about
0:39:32 this yeah like do i need to sign up to like an ai trade magazine like what’s going on right um and
0:39:37 his answer was horrible when i said greg how do i how do you know he’s like i just do or he said
0:39:40 something like that or he’s just like i just hear about it like i was like well that’s like extremely
0:39:46 not actionable for me thanks a lot dick uh so how are you much time are you spending learning about
0:39:53 this topic and where are you turning to look there’s two minds about it one i would say i have no risk of
0:39:59 over investing my time in this i have pretty big risk of under investing my time in this but no risk of
0:40:04 over investing my time in paying attention to what’s going on with ai and being able to like play with
0:40:09 the tools understand what the companies are doing like really think through like where this puck is
0:40:16 going at the same time i’m not trying to drive myself insane so you know like i do think there’s a very
0:40:22 unproductive version of this which is the constant whiplash of new demo new model new this new that new
0:40:28 whatever and so what i’m doing is basically like an intermittent fasting style model where it’s like i
0:40:35 mostly not paying attention to it as in like i’m not actively trying to like react to everything i see
0:40:41 or go seek out or go read every single thing out there or sign up for every single tool what i’m doing is
0:40:45 i’m trying to make it very useful for me so when i have a problem i now add it into my like sort of
0:40:51 solution list like oh do i think ai could solve this so then whatever research i’m doing it’s
0:40:57 actually like a just-in-time solution to a problem i actually have versus just like the kind of like
0:41:02 intellectual jacking off of like just keeping up with everything just like trying everything just
0:41:04 wanting to know everything watching every podcast listen to every youtube video it’s like
0:41:09 no i’m mostly trying to like if i have a problem i try to see could i solve this day i
0:41:13 maybe yes maybe no but that’s interesting i learn a little bit each time i do that but at
0:41:17 least i’m trying to solve a problem i have the second thing is i am carving out free time so like
0:41:21 last year i thought i think i told you what i did this i did like an ai hack week a think week where
0:41:25 i just basically said clear my calendar the only thing i’m doing this week is just going in depth
0:41:29 and the beauty of that is it’s kind of like checking your email you’re like if you want you could
0:41:34 check your email every three minutes and you might find a new email but you’ll just consistently
0:41:38 like it’ll just keep tearing your attention away whereas if you just batch your email and you
0:41:43 just check your email once at noon and once at you know 8 pm or something like that you’re totally
0:41:48 up to date on email but you didn’t have to like have this nervous energy just constantly doing it
0:41:54 and so i’m treating it more like that i agree with you it was nice to um catch up with you i’m getting
0:42:00 all pumped about all this stuff i i’m currently in um saint louis missouri i’m about to go to the zoo
0:42:06 so i’m gonna go to the zoo i’m gonna go see some family tonight um but i was happy i was able to uh
0:42:11 do this podcast from this hotel and potentially reach hundreds of millions or hundreds of or rather
0:42:16 hundreds of thousands of people and uh hundreds of millions of red blood cells what are we what
0:42:21 are we counting here well because like you just started talking about this ai stuff and i’m like
0:42:26 literally staring out the window right now like whenever you talk about this i have notepads here
0:42:31 and i like get flustered where i’m like like i sometimes i think and i’m like what should i say next
0:42:35 but then other times i’m like oh he’s talking about this ai shit like what am i going to do what
0:42:38 i got to do this thing i gotta do that thing like that’s how i feel right now yeah yeah i
0:42:43 definitely feel that by the way i have a couple of of things i forgot to say on the the uber thing
0:42:48 that are great this is the funniest part of the uber thing at the end of that professor’s blog post
0:42:53 you know what he wrote after he wrote this huge like valuation teardown of uber he goes as i attempt
0:42:57 to attach value to uber i have to confess i just downloaded that but have not used it yet i spent most of
0:43:03 my life in in the suburbs where i go for days without seeing a taxi or if i’m in new york i
0:43:09 just use the subway and so it’s like the experts who literally like not only are they not betting on
0:43:14 this enough skin in the game literally never even use the product it’s like but they should just end it
0:43:21 with like ps but what the fuck do i know like that would have saved him a lot of exactly a lot of like
0:43:27 uh reputation there like there’s some great quotes by the way from some ceos who underestimated their
0:43:33 market size so jan coom ceo of whatsapp he said we’re just trying to make messaging better not build
0:43:39 some big business sells for 20 billion um somebody said i thought i’d make a little side money enough
0:43:46 to quit my job that’s sarah blake the founder of spanks oh so you know female bill you know one of
0:43:53 the like first female billionaire entrepreneurs of this like generation mobile gaming so one of the
0:43:59 first mobile games ever was snake on the nokia phones if you remember so the head of nokia nokia’s
0:44:04 mobile gaming division so this guy is in charge of mobile gaming here’s what he said i think mobile
0:44:09 games are just a small add-on it’s not a real market mobile gaming turns out to be 120 billion
0:44:14 dollar market here’s another one the domino ceo in 2010 the year i graduated from college he said
0:44:20 delivery is a convenience it’s not a game changer at the time delivery was uh 10 billion dollars a year
0:44:25 across food delivery it’s now you know more than 10 times that it’s more than 15 times that
0:44:31 in fact i read a crazy stat that some some i don’t know if this is legit but some study came out or that
0:44:36 somebody was doing some analysis and they said that for most local restaurants now 70 of their order
0:44:43 volume is uh delivery orders they’re no longer restaurants that do delivery they’re delivery machines
0:44:47 that also happen to have a restaurant table you know like a table just a down on if you want i go to
0:44:51 restaurants all the time where i feel like i’m the only person there and drivers are coming in and out
0:44:56 the whole time yeah brian chesky we didn’t know the size of the market because we were inventing it if
0:45:00 we listened to market research we would have just made a better couch surfing app and the last one is
0:45:05 elon i don’t care about the market size i care about if we can make something fundamentally different
0:45:11 because if you make something great the market will come it is sick this is this this was like a little
0:45:14 impromptu topic that turned into a whole thing that was awesome
0:45:32 all right so when my employees join hampton we have them do a whole bunch of onboarding stuff
0:45:37 but the most important thing that they do is they go through this thing i made called copy that copy that
0:45:41 is a thing that i made that teaches people how to write better and the reason this is important is
0:45:47 because at work or even just in life we communicate mostly via text right now whether we’re emailing
0:45:53 slacking blogging texting whatever most of the ways that we’re communicating is by the written word
0:45:57 and so i made this thing called copy that that’s guaranteed to make you write better you can check
0:46:03 it out copy that dot com i post every single person who leaves a review whether it’s good or bad i post it
0:46:07 on the website and you’re going to see a trend which is that this is a very very very simple exercise
0:46:10 something that’s so simple that they laugh at they think how is this going to actually impact us and
0:46:15 make us write better but i promise you it does you got to try it at copy that dot com
0:46:21 i guarantee it’s going to change the way you write again copy that dot com
Episode 710: Sam Parr ( https://x.com/theSamParr ) and Shaan Puri ( https://x.com/ShaanVP ) talk about how to evaluate risk and upside of new ideas.
—
Show Notes:
(0:00) Bessemer’s $140B misjudgment of Shopify
(5:47) Shaan’s Anti-portfolio
(15:26) Goal: Avoid Ruin
(21:30) Outlier personalities
(24:51) Underestimating Uber
(32:16) “You can’t overinvest in AI”
—
Links:
• Want Sam’s Playbook to Uncover Business Opportunities? Get it here: https://clickhubspot.com/bzo
• “How to miss by a mile” – https://tinyurl.com/2rxubfwa
• Leaked OpenAI emails – https://www.techemails.com/p/elon-musk-and-openai
—
Check Out Shaan’s Stuff:
• Shaan’s weekly email – https://www.shaanpuri.com
• Visit https://www.somewhere.com/mfm to hire worldwide talent like Shaan and get $500 off for being an MFM listener. Hire developers, assistants, marketing pros, sales teams and more for 80% less than US equivalents.
• Mercury – Need a bank for your company? Go check out Mercury (mercury.com). Shaan uses it for all of his companies!
Mercury is a financial technology company, not an FDIC-insured bank. Banking services provided by Choice Financial Group, Column, N.A., and Evolve Bank & Trust, Members FDIC
—
Check Out Sam’s Stuff:
• Hampton – https://www.joinhampton.com/
• Ideation Bootcamp – https://www.ideationbootcamp.co/
• Copy That – https://copythat.com
• Hampton Wealth Survey – https://joinhampton.com/wealth
• Sam’s List – http://samslist.co/
My First Million is a HubSpot Original Podcast // Brought to you by HubSpot Media // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano