0:00:04 I’ll talk to my barber and he tells me this story that’s pretty crazy about muscle milk.
0:00:17 So he’s got my hair and he knows I have the podcast. So every time I go in for a haircut,
0:00:22 he just gives me research and it’s great. Did my handyman knows I have the podcast and he always
0:00:26 asked me what stocks he should buy. And I’m like, that’s not the point, bro. He thinks you’re Jim
0:00:32 Kramer. Yeah. He’s like, so what stocks should I buy? I’m like, I don’t know. I don’t know.
0:00:36 Don’t ask me that. Just change the light bulb, please. If he asks you, what’s the best way to
0:00:41 increase my testosterone right now using an illicit drug? I feel like that is what he should be
0:00:47 asking you. Clearly he’s not a listener. What can I buy from a forum that will make my tendons
0:00:51 stronger? Sam has answers to those types of questions. Yeah. I’m like, do you want to know
0:00:56 some really cool subreddits or a legal place to download books? I got you, bro.
0:01:02 All right, go ahead. I’ll talk to my barber and he’s like, dude, you know whose hair I was cutting?
0:01:08 He goes, he’s your neighbor. I’m my neighbor. And he goes, yeah, the guy lives just down the
0:01:14 street from you. It’s the family that started muscle milk. So they started back in 1998.
0:01:21 And it actually started because he bought a sub brand called Cytomax from his employer.
0:01:25 It’s not what ended up working, but I think it’s a hilarious starting point.
0:01:31 It’s sort of like how SpaceX started because he wanted to send like a small plant to Mars.
0:01:35 And now he’s like, you know, built like a trillion dollar company doing this.
0:01:40 You know, what’s the colostrum? I get so many ads on…
0:01:46 Colostrum, good stuff. Dude, is it like from a animal or a human?
0:01:52 It’s from a cow, yeah. Damn. So I’m like depriving some newborn cow from, you know,
0:01:57 like her fresh milk. Well, that’s how I’ve ever seen how milk is made. It’s pretty insane.
0:02:00 No, no, I don’t… It’s messed up.
0:02:03 Is it just tons of devices that hook onto you like an alien?
0:02:07 All right. This is my wife’s vegan. So she’s forced me to like go down this road to like
0:02:11 acknowledge what goes on. Here’s how a lot of milk is made. I can’t say all,
0:02:16 but I think this is like the mainstream way. They impregnate a cow artificially.
0:02:20 Literally a dude sticks his hand in and like artificially inseminates a cow.
0:02:26 Gets the cow pregnant. Cow has a baby. Baby is then ripped away from the cow,
0:02:31 but placed nearby so that the mom can hear the crying and will produce more milk.
0:02:36 And then they take the milk. Yeah. I mean, that’s sad.
0:02:43 Fucked up. What kind of podcast is this? I literally drink a sad ass vegan podcast.
0:02:48 I drink a glass of whole milk just last night. And now I regret it.
0:02:54 Back to muscle milk. Yeah. Okay. So muscle milk, not actual milk. It’s a supplement.
0:02:59 And it starts out as powder. You put in a drink and he’s like, cool. I think bodybuilders are
0:03:04 into this. They’re willing to drink this kind of chalky, nasty drink. And he buys it. And
0:03:09 basically it’s a family business. So it’s Greg Pickett and his kids are involved with it.
0:03:15 And what’s cool about this business is years later, muscle milk becomes a household brand.
0:03:21 They end up selling the thing for $450 million. So this will make almost half a billion dollars
0:03:26 off this muscle milk thing. The guy lives down the street. They basically started this as a
0:03:32 cul-de-sac company, meaning he lives in one house. The son lives in another house. The sister,
0:03:36 his daughter lives in another house. And they all just live in one cul-de-sac.
0:03:40 Sounds awesome. And like the kids play together and then they just built this behemoth that way.
0:03:45 Like, isn’t this insane? That is badass. That is badass. That was like inspiring to me. It’s just
0:03:50 like a family, like you’ve heard of a family business, but dude, just imagine the cul-de-sac
0:03:54 business. I’m kind of inspired by this very much in the vein of thinking of find the people you
0:03:59 love and do life with them. Like, so how, okay, how did it win? Muscle milk.
0:04:02 Wait, really quick? Have you seen “Landman,” the oil show?
0:04:07 Hell yeah, I’ve seen “Landman.” I might have wore a cowboy hat yesterday just
0:04:11 feeling a little Billy Bob Thornton myself. I haven’t seen it, but this clip I just saw
0:04:16 makes me want to watch it. But basically, Jerry Jones comes on and Jerry Jones, like,
0:04:21 gives this like amazing acting performance where he talks about the importance of working with
0:04:26 this family and how he’s proud of his wealth and his real estate. And he’s proud of the cowboys,
0:04:31 but you know what he’s proud of most is that I got to spend time with my kids and we work together.
0:04:35 And that’s why they’re here at my deathbed because they loved me and we got to spend a
0:04:40 whole bunch of time together. And I heard that speech and I was all in for one, I was all in.
0:04:46 And two, Jerry Jones, who would have thought? He like had tears in his eyes. I’d not think he
0:04:50 could act like that. Somebody was saying they’re like, I don’t think, I think this is such a good
0:04:54 performance because he’s not acting. I think all of this is just true for him. And he just said the
0:05:01 truth, which, which is great. Landman, fantastic show. Yeah, it was such a good scene. All right.
0:05:07 So tell me about milk and mussels. Milk and mussels. All right. So they start the business,
0:05:13 pretty humble plan. They bought this like kind of supplement and it’s powder you mix into drinks.
0:05:18 And they were like, look, if muscle, bodybuilding enthusiasts drink this, this would be great.
0:05:23 We think we can make this more mainstream, but we don’t really know how we just kind of are
0:05:27 believers in the general idea. And they were like, look, if this thing ever got to like
0:05:32 18 million in sales, that would be like, imagine that that would be crazy. And they,
0:05:37 that was like at the dinner table talk. By the time they sell this thing is doing over 200 million
0:05:43 in revenue at about 60 million a year in profit before they, they sold. So they built like a
0:05:49 really, really successful company. How did they do it? They eventually, and what I love about
0:05:53 these stories is you hear about the story and you’re like nod your head. You’re like, yeah,
0:05:57 that makes sense. How’d that happen? But then you look at the timeline and sometimes I’ll force
0:06:02 myself to literally draw out the timeline. So it’d be like, all right, 9 10 98, they start the
0:06:09 company and then I’ll draw 99, 2000, 2001, 2002, 2003, 2004. It’s like 2004 is when they actually
0:06:15 made the product that hit, which is the ready to drink like we’ve all seen, you know, the muscle
0:06:19 milk carton. And so you, when you hear that, you’re like, okay, cool, 2004. Then it really took
0:06:22 off and you just sort of read the numbers and the revenue ramp and it looks good. But then you
0:06:28 think you zoom in and you, you force yourself to look at that like five or six year time period.
0:06:31 And you’re like, there’s not, they don’t even talk about what they were doing during that time
0:06:37 because it’s just like the forgotten, the forgotten grinding out years of trying to make
0:06:41 shit happen and staying in the game long enough to get lucky. And what were they doing?
0:06:46 They were just selling, they were just trying to sell and they were selling to like really small
0:06:51 niches, but ever expanding out of that niche. And eventually he has an insight, the dad has
0:06:56 an insight and the insight is basically like, Hey, you know what, flavor matters. And he’s like,
0:07:01 if more people are going to drink this, it’s going to be because I, I can’t get this to taste like
0:07:05 dessert. And he realized that the initial market they were looking at, which was bodybuilders,
0:07:11 they took pride in drinking nasty shit. And so anytime you tried to make like a fruity,
0:07:16 better tasting thing, sweeter thing, they almost kind of rejected it because it felt
0:07:19 less hardcore and they were super hardcore. And that’s who the market was.
0:07:25 You know, there’s a lot of people who like take testosterone or steroids or ozempic
0:07:31 and a lot of doctors will offer you a pill, a cream or a syringe. And I’ve asked the doctors
0:07:37 and they go, they all want the syringe because it feels more like this works better. It’s going
0:07:42 through my veins. I can feel it. Right. So yeah. And I think that’s true for the early markets,
0:07:47 the hardcore markets. You know, Ben is like this. Ben is an early adopter of every product.
0:07:51 As soon as a product gets popular, his interest completely drops in it, right? Because the fun
0:07:56 part was doing the hard thing, getting the edge, being ahead. And so same thing for bodybuilders.
0:08:01 So what the genius of the business is that they saw that, Hey, okay, the market we see today,
0:08:06 the people who are buying it today, actually is different. If we want to reach this other
0:08:10 market, we got to like ignore all the signals we’re seeing today. So he goes in the lab and he
0:08:16 starts doing small batch production. And everybody else was so big that they could only test flavors
0:08:23 in basically bigger batches. And so that meant slower cycles. It meant kind of like getting
0:08:28 less like tight feedback loops. So what he did was he goes to LA and he starts testing
0:08:33 flavors in like 15 gallon increments. And he pours it and he gives it to people and they’re
0:08:37 like, Ah, too chalky. And he gives him another one. They’re like too sweet. He gives another one.
0:08:42 And he finally makes this vanilla flavor that they’re like, this tastes like dessert. I love this.
0:08:49 And so he brings those flavors into the ready to drink beverage and it just takes off. It goes nuts.
0:08:52 And eventually like Walmart starts knocking and Walmart’s like, Hey, we want to carry this. He’s
0:08:57 like, dude, we can’t even fulfill Walmart. But he’s like all the specialty stores, the GNCs,
0:09:03 it’s flying off the shelves. And for like the first year, they’re like so inventory constrained
0:09:06 because he nailed the flavors. So what my barber was telling me, which is fascinating,
0:09:10 what caught my attention about this, he goes, So let’s do down the street, they created muscle
0:09:16 milk sold it for like $500 million. But the cool part is he goes, he didn’t sell the flavors.
0:09:19 I go, What do you mean? He goes, Yeah, there’s some story because it’s not out there. But the guy
0:09:26 is that cut my hair. He’s telling me this story, his barber on blast. It’s not like insider trading.
0:09:29 He’s just telling me it’s a really cool story. But he’s like, you know, when you go and research,
0:09:34 it’s not this part’s not as reported. So maybe he got some of the details wrong. That’s my caveat.
0:09:41 But here’s what what we explained, which was basically the when they did the sale, they sell
0:09:46 the brand muscle milk, they sell the operating business is all the distribution. And then the
0:09:52 buyer was like, cool, and the flavors and they’re like, actually, we have our own separate company
0:09:57 that does flavors. And we’re not going to sell you that company. And they’re like, Well, we need
0:10:01 the flavors. Like, cool, yeah, we’ll do a licensing deal. Like, well, we could provide flavors, but
0:10:06 we won’t sell the flavor company. And again, this is where the details are not reported. So either
0:10:10 that’s what happened or right after they sold, they started a new flavor company. Because now
0:10:15 this is what the family does. They have this flavor house that they created. And they were like,
0:10:20 We’re not going to do any brands anymore, but we will do flavoring as like, that’s our that’s
0:10:24 what made muscle milk successful. And that’s what we’re going to do now as a service. And now they’ve
0:10:29 got a bunch of customers for this flavor brand that this flavor house that they’ve created.
0:10:34 And if you look at their facility, it’s like this insane, like, you know, huge facility with
0:10:40 like a fucking vacuum sealed room. And they’re like, Oh, we do this technology like spray flavoring,
0:10:44 where you can add flavor to things that doesn’t add any calories. And they’re basically, it’s
0:10:49 all about flavor tech. And I’m just fascinated by flavor houses and flavor technology.
0:10:56 It’s called flavor insights. It looks awesome. And I see like the they have a video with the
0:11:01 father and his son. And on the about page, it’s the whole family. This is my dream, by the way,
0:11:07 this is why this is even more your dream. While he’s building muscle milk, he’s got a hobby. And
0:11:13 I know that you love a man with a real hobby. And his hobby is racing cars. And he has his own
0:11:18 racing team that he created. And then he himself races and I don’t know shit about racing, but
0:11:24 is it Le Mans, Le Mans? Yeah, it’s like, it’s like a famous, I guess, Le Mans track,
0:11:30 but it’s like a the famous thing is like it’s a 24 hour race. And so like Ford versus Ferrari and
0:11:34 all these things, I think he like won the race or he performed really well. How impressive is
0:11:38 that? Is this like just rich guys doing it? Or is he competing against like real racers?
0:11:42 I’m not a real race enthusiast. So I could be wrong. But yeah, it’s like, dude, like the story
0:11:47 Ford versus Ferrari, it was about the time that Ford beat Ferrari at Le Mans. Like it’s like a
0:11:54 big deal. Yeah, it’s like a movie worthy deal, you know, like Rudy style movie off underdog
0:11:59 winning Le Mans. Right. So you know DHH, the guy that Jason Frieds co-found there?
0:12:01 He competes and out. Did he, I don’t think he won, did he?
0:12:06 He won. Yeah, he won. I think he, I think he won the race and he said he’s competed in it 11 times.
0:12:14 Yeah, it’s sort of like, and oftentimes, like the company that wins, they win for some innovative
0:12:18 reason. And then like 10 years down the line, that car part that helped them win becomes like the
0:12:21 norm. Gotcha. Gotcha. Yeah, so that’s like a big deal.
0:12:28 Isn’t this a total like life goals story? Build a killer brand. You stuck with the thing. You built
0:12:32 it with your family. You do it in the cul-de-sac. I just think it’s amazing. Sell the thing for
0:12:35 $100 million. Yeah, but none of his kids are yoked.
0:12:43 Right? Like these guys, they don’t look very yoked. I’m looking at the family now.
0:12:48 Well, as their public defender, here’s what I have to say about that.
0:12:50 One of the things they talked about with muscle milk is they go,
0:12:54 we wanted to build a product that everybody would look at it and see a different thing.
0:12:59 So they go, women see it as a weight loss product. Men see it as a muscle building product.
0:13:04 Some people see it as a snack. Some people see it as a meal replacement. Our goal was to
0:13:08 build a product that you, that would basically, you know, solve multiple problems for different
0:13:15 people at once. I’m just saying that I want to see some bigger buys and tries on this family photo.
0:13:18 They look great. They look very healthy. More importantly, they look happy.
0:13:22 The founder’s teeth are beautiful. Like he’s got a really nice smile.
0:13:25 I just think that we should see a little thicker neck.
0:13:29 Can I tell you one other thing? So this company that bought them,
0:13:33 originally, I thought it was Pepsi. Pepsi owns it now. But before that,
0:13:37 it was bought by something called Hormel Foods. It’s one of these companies that you’ve never
0:13:42 heard of. This company does $12 billion in revenue. They do like a billion and a half
0:13:48 dollars a profit a year. And if you go to their website, the headline, like tagline for them is
0:13:54 like, we sell more pepperonis than anyone on earth. And they’re this like food holding company.
0:13:57 They own Skippy Peanut Butter. They own Planters. They own Spam.
0:14:04 They own Spam. And then they sell just a shit ton of Ronis, dude. They just sell pepperonis
0:14:11 worldwide. They own Applegate. They own Justins. They own Planters, Skippy, Cheechies. I don’t know
0:14:17 what Cheechies is. Black Label Bacon. They own a lot of shit. I mean, literally, Spam is on their
0:14:24 homepage as their pride and joy. Like the way my parents pin pictures of me up on the fridge,
0:14:29 that’s what this company does with Spam. Which is like, it’s pretty good, horrible for you. But
0:14:33 oh, dude, yeah, Hormel Pepperoni, I know them. That’s one of my snacks. One of my snacks is like
0:14:38 eight pepperoni with a little bit of mozzarella cheese on it, microwaved. It’s a pizza without the
0:14:43 pizza? Yeah, I just call it like Redneck. A pizza hold the dough? Just pepperoni and mozzarella?
0:14:52 Redneck fitness food. Dude, this should be your brand. A line of not that bad for you,
0:15:00 Redneck Snacks. It’ll make you farm strong. Yeah, or do you know like PB Dip? I call it
0:15:04 Dip. But you know PB Powder? The powder, yeah. Yeah, you get a spoon of that and you have straight
0:15:09 and you chuck it up on the top of your roof of your mouth and you suck on that thing for 60 minutes.
0:15:14 I call it like fitness dip. So instead of like having like a fat lipper in, you just have a PB
0:15:24 Dip and your tongue just rubbing against that dehydrated nut. Oh boy. Oh boy, you want to have
0:15:31 a good time? Put a little PB Dip on the roof of your mouth. All right, we got our cold open for
0:15:37 the episode. By the way, let me show you one thing. You said something that I do religiously.
0:15:43 I’ve just sent Ari a document that I just sent her one of the tabs. I have dozens of tabs on this.
0:15:50 All right, can you share your screen? So whenever I read a book, I have this Google Doc that I’ve
0:15:56 used since the year like 2010. All right, so check this out. Whenever I read a book, I do a few
0:16:03 things. One, I make whenever there’s like a year and a money term or some type of milestone,
0:16:09 I write it down in a sheet. And the reason why I write it in a sheet is because a lot of times
0:16:13 when you’re building a company or doing anything that’s like really challenging, you’ll read about
0:16:17 someone else and you’re like, that was easy. And so I like to do timelines and you’ll see like,
0:16:21 oh, okay, like they went four years with nothing happening. So for those listening,
0:16:26 I have got a timeline of Koch Industries, which is like the largest privately held company in
0:16:31 America. I read the biography of their family and I like did a timeline where everything major
0:16:36 happened in their life. And then I converted the dollar amount into 2019 dollars, which is when I
0:16:42 made this particular one. And it’s really fun to do because you could see that things took like in
0:16:47 this case, like 30 years. Right. And so if you like, if you scroll all the way to the left,
0:16:54 I did this with Kirk Kokorian, another one of the guy who I love. And every biography I read,
0:16:59 I create one of these. Just another man you love. Can I just point out a couple things about this,
0:17:05 what we’re screen sharing here that are just fantastic. It’s just a peek into the mind. First
0:17:11 of all, it’s a Google sheet that’s just called sheet, which is just a great title. Okay, scroll
0:17:17 over, Ari. Here’s some of the milestones that Sam wrote down. All right. So he starts for Koch
0:17:25 Industries, 1900, Fred Koch born, 1924. So 24 year gap, big break finds mentor. Okay. So then
0:17:35 it goes 1927, just a quick update, still broke. Then it goes 1929, C success, 1931, big success
0:17:47 with two Gs. Just a big double G success right here. It’s amazing. And then 1940, he buys a company
0:17:53 and that company, he buys it for $4 million. You also should just have pictures on here where it’s
0:17:58 them and the calves. And it’s just your calves just for reference. And you’re just comparing calves
0:18:02 because I feel like, tell me that’s not part of your research process. Is it looking at photos
0:18:06 and judging their looks? Yeah, particularly the Koch brothers because they’re like these tall
0:18:14 waspy guys. And I definitely am sizing myself up to them. Yeah. The total picture of success
0:18:19 includes a picture for sure. It’s like tennis sweaters. It’s like, oh, they’re into tennis
0:18:25 sweaters. Therefore, I will wear tennis sweaters. But yeah, I definitely like two guys that are
0:18:29 both six to from the Midwest with blonde hair, blue eyes, like we there’s definitely like a
0:18:36 that can only be one of us in this room. Dude, there’s this girl who keeps going viral on Twitter.
0:18:42 And it’s the same tweet she does every time. And she just goes, my dad goes to a bar with his
0:18:48 friends every Friday, and he makes a list of topics to discuss. Yes. And then she she put she has a
0:18:53 photo of him holding a printed out agenda. And I’ll just read you one of them. Ted Perry’s fun
0:18:59 capital story shown on Fox News six. Next one, what’s going on with the books? Question mark.
0:19:06 NFL overtime rules. Take ball first or second? Question mark. Bahama breezes. How close is too
0:19:10 close to an alligator? Do you think people that throw garbage out of their car window are the
0:19:14 same people that don’t pick up their dog poop when walking through my subdivision? And then it read
0:19:18 at the bottom goes, please be on time. As you can see, we have another week of a packed agenda.
0:19:23 And it goes super viral every time. It’s like 100,000 likes. And I think everybody who sees this
0:19:27 is like, yeah, that’s part of the winning life. I’d like to go to the bar with my friends every
0:19:32 Thursday and have like an agenda that we print out and we talk about it while wearing our new
0:19:37 balances. Do you know who does this? And he’s not joking. I already know because you’re talking about
0:19:42 a legend, a social legend. And I know it has to be Nick Ray. Tell me I’m wrong. No, I’m wrong.
0:19:47 Is it not Nick Ray? The second time I hung out with Nick Ray, we went to a bar called Lazarus.
0:19:52 Sarah and I came and he goes, Hey guys, I would love to hang out the second time hanging out. I
0:19:57 thought it’d be nice to have an agenda so we could stay on track. And there was a 13 point
0:20:02 agenda list where it was like, ask Sarah about her job, figure out how that’s going on,
0:20:08 explain my dating life and get opinions from it. Like it was a, and we stuck to that agenda and
0:20:13 he took notes. Was it thrilling? Cause I think I’m going to absolutely start doing this. It was
0:20:20 thrilling. You know how like, was it the agenda that was great? Or the fact that he had an agenda
0:20:24 that was great. Which of the two was great? The second one, here’s why. So look, in a world,
0:20:29 everyone wants to be a tough guy. It feels good to be a leader, but you want to know something
0:20:35 everyone likes getting led and like, we’d like the assertive person. I’m just a leader who loves
0:20:41 being led. That’s me. That’s on my LinkedIn. I like leading some stuff, but then there’s
0:20:45 other times where it’s like, just tell me what to do. And small talk is one of those things that
0:20:50 no one just like tells you what to do. And when there’s an assigned leader who has something
0:20:55 outlined for small talk, I’m just like, yes, sir, I’ll do whatever you like me to do. And
0:20:58 thank you. May I have another sir? Like it’s like the best way to go about doing stuff. And
0:21:05 that’s what Nicoray does. Okay. And by the way, that’s how we do this podcast, actually. We both
0:21:10 bring some agenda items and then we discuss in bullet point form. Yeah, I think it’s good.
0:21:15 And he’s done that for years and it’s awesome. All right. We’re going to normalize having
0:21:23 conversational agenda hangouts with an agenda. All right, let’s take a quick break because
0:21:27 I got to tell you about a friend of the pod who’s got their own podcast. If you know Steph Smith,
0:21:32 she is a legend. She’s been on MFM many times and she’s got her own podcast called the A16C
0:21:37 podcast. And it’s all about technology. If you think about it, technology has evolved like crazy.
0:21:42 I mean, I grew up in the 90s. I had CDs, phones had cords. You couldn’t use the internet if your mom
0:21:48 was on the phone. And now there’s like 3D printers and there’s rockets that could go up into space.
0:21:52 AI, there’s so much crazy stuff going on. And you got to have a place that helps you stay ahead
0:21:58 of the curve. And that’s what the A16C podcast is trying to do. It’s a podcast from the VC firm
0:22:01 Andreessen Horowitz. And it’s trying to give you an inside look at the trends that are shaping
0:22:05 our future. They’ve had guests like Mark Cuban and Neil Stevenson on and they talk about topics
0:22:11 like deep fakes or the science behind GLP ones or autonomous drones. No small boy stuff at all.
0:22:14 Steph is the host. She’s awesome. I think you’ll enjoy the podcast. So check it out.
0:22:19 It is the A16C podcast. And I like this tagline to say it’s like eavesdropping on the future.
0:22:23 That’s pretty cool. That’s a good tagline. So check it out. The A16C podcast, wherever you get
0:22:32 your podcast. I have a business that’s pretty cool. Can I tell you about it? Here’s my opening
0:22:36 for this business. Sam, I found the business that you should have started instead of wasting
0:22:43 your goddamn time with the hustle. Okay. I like that. So you built the hustle. And if you recall,
0:22:49 one time you came to me hat in hand, absolutely begging for an investment.
0:22:54 You needed the money and you got that on your knees. And you said, please, sir, invest in my
0:22:59 company. And I looked at it. I flipped through the business plan like it was a flip book.
0:23:06 And I just said, no, thanks. No, you said, you said, look, Sam, you’re coming to a
0:23:11 knife fight with a knife. I don’t even want you to come to this knife fight with the gun.
0:23:17 I want you to come to this knife fight with a magic fucking wand. And that clearly turned away
0:23:23 on my heel with a dramatic spin. And I left the room. And then you tried to pull the door to open,
0:23:29 but it was really a push door. Totally blew it at the end. Did not stick the landing.
0:23:36 Like you clearly had just read that on a whatever the equivalent was of Twitter. And you’re like,
0:23:42 that is now my line. Yeah, exactly. Back when I was like, I had it written on the inside of my
0:23:46 palm. And I was like, Peter Thiel says this magic wand. Somebody totally owns them no
0:23:51 matter what they’re doing. So, but you know, the reality was I looked at the business and you were
0:23:56 like, here’s what I’m doing. I am creating a media company. So every day, we’re going to write the
0:24:02 news. So every, every day you had to recreate your product. Ooh, that sucks. It’s like,
0:24:06 didn’t get any, it’s already benefit of all the work you did in the last three months. It’s like,
0:24:10 not really. We got to recreate it again. We got to bake that cake every morning. Okay, sounds good.
0:24:15 And then you said, and then I was like, cool. So then people pay you certainly for the service
0:24:20 that you’re doing. You’re like, no, it’s free. Oh, okay. But then the advert then we have to do
0:24:24 a separate business basically to a separate customer selling advertisers. I was like, okay,
0:24:28 but certainly they’re on retainer and it’s going to be recurring revenue that’s going to stack up.
0:24:32 You’re like, no, no, no, they’re just going to, if they feel like advertising, they will. If they
0:24:37 don’t, they don’t, every month we’re going to start back at zero. And I thought, damn,
0:24:40 this is a tough business to win. And that’s when I hit you with the knife and the knife fight and
0:24:47 blah, blah, blah. Which it is tough to do well. Yeah. And by the way, the best punch on the whole
0:24:52 thing is five years later, after you successfully sold the business and got rich doing it, I then
0:24:56 copied your business model and did the same thing for crypto and was like, came back to you
0:25:01 basically being like, what was the business plan again? How do you do this? So that’s the end of
0:25:06 that story. Now, here’s a better business that somebody created five years ago that has the
0:25:12 following profile. They don’t recreate the product every day. People pay them for the product on a
0:25:18 subscription. It’s in a hobby that you love doing. And it’s a thing you were doing anyways for free.
0:25:23 So I think you would have been great at it. And also it uses your gift, which is making things
0:25:28 simple, summarizing things, making them easier to understand, saving somebody time doing it.
0:25:34 And this person has bootstrapped this business to 200 million in revenue with 30% profit margins.
0:25:42 I have no idea. What is this? It’s called Headway App. And it is a book summary app. So this guy in
0:25:47 the Ukraine created this company where he takes popular books and he summarizes them. And the
0:25:53 promise is basically, instead of reading the book, I already read it, I summarized it. I could tell
0:25:58 you main point one, I could tell you main point two, I could tell you the main point three. And in
0:26:04 under 15 minutes, you can get the gist of what’s in this book. You’ll get, you know, the big ideas
0:26:08 and you’ll get them explained to you. You could either read it, or we have AI that turns it into
0:26:14 audio and you can just listen to like a 15 minute summary of this book. And we’ve done it for 1500
0:26:20 of the most popular books. And people pay a simple 12, 13 bucks a month for this. And this has become
0:26:28 an absolute juggernaut. So I did not think that these book summary apps could get this big. But
0:26:34 damn, if that’s impressive, 200 million in ARR, 30% profit built this thing out of the Ukraine.
0:26:37 They just raised funding at a $2.3 billion valuation.
0:26:39 Right. Right.
0:26:44 Holy crap. So like, you could have done that instead. And I think you would have been great at
0:26:48 this. By the way, you know, here’s why I said that this, this, like you could have done this,
0:26:52 because when I went and looked at their ads, right, the way this business grows, they run ads
0:26:59 on TikTok, on Facebook, whatever. And the hook of their ads, tell me if this sounds familiar.
0:27:05 My boss thinks I’m a genius, but, and thinks I read 150 books a year, but actually I just use
0:27:10 Headway. That’s their ad. It’s not word for word. I just wanted to really beat you with that one.
0:27:13 But it’s basically the, it’s basically the gist of their ads. It’s the same value.
0:27:20 I invented that ad. I invented that ad. I stole it from someone else and I invented that ad.
0:27:27 That’s my ad. That’s the ad. That’s my ad that I took.
0:27:31 Yes. I stole that from the skim and I invented that ad.
0:27:38 Their ad is a little bit more like, it’ll be the average CEO reads 52 books a year.
0:27:44 How many do you read? Right. So they’re basically making you feel like a shitty CEO, or it’ll say,
0:27:48 everyone thinks I went to Harvard with the amount of books that I know, but actually I just use
0:27:54 Headway. Or it’ll be, meet the app that all the intellectuals are using, stuff like that.
0:27:59 And so those are the sort of hooks that they use to get people to do this with. They’re not saying,
0:28:05 here’s a book summary. They’re basically saying, be a smarter person and be seen as a smart person
0:28:09 because you seem so well read. And here’s your hack to seeming so well read.
0:28:12 So what’s interesting is thrive.
0:28:15 By the way, we should do this for the podcast. It’s like,
0:28:19 my boss thinks I’m kind of retarded, but know a lot about business. The secret is,
0:28:24 I just listen to my first million. But I still sound a little retarded.
0:28:30 My boss is so impressed that I know all these numbers, but then he wonders.
0:28:33 But then he fact checks me.
0:28:39 My boss is wondering why I have pepperoni in my mouth.
0:28:47 This is ridiculous. These guys, so they raise money from thrive, which thrive is a big VC
0:28:52 investor in chat GBT. Are they’re not worried that chat GBT just does all this?
0:28:57 Well, they’re themselves using AI for a bunch of stuff. If you go look at a bunch of their ads,
0:29:04 they’re all AI generated ads. I think businesses like this that are super laser focused on one
0:29:10 thing, even if you can use chat GBT to generate a summary, that’s not the same thing.
0:29:14 They’re not even old. They started in 2019.
0:29:21 I know, right? Super impressive. They also have done this other app. So there’s this one ad that
0:29:27 was so frustratingly good. It made me pissed that I didn’t think of this. It’s this simple looking
0:29:31 puzzle. Tell me if you’ve seen this. I don’t know how much you use these. It’s like in a lot of
0:29:38 games. This ad pops up or TikTok. It’s like a maze. Imagine a maze and you start on this
0:29:43 dot and you have to get across without picking up your pen. It just shows somebody trying to do
0:29:51 it and they’re messing up. See if you can solve this. Only 5% of people can solve this, but 50%
0:29:54 of 5th graders can do it or whatever. You’re like, “Ah, I gotta see if I can do this.” You download
0:29:59 the app. By the way, that puzzle is actually impossible. There is no solution to it. They just
0:30:04 put it in. They put a thing that looks simple, but you can’t figure it out. You can’t figure it
0:30:10 out because it is actually an optical illusion. It’s actually impossible. They have this other
0:30:16 app called Impulse that’s done like 70 million downloads and it’s a brain training app. The
0:30:24 framing of that is basically keep your brain sharp with these little mini mind games. My mom
0:30:28 likes a lot of these things because she feels like, “Oh, I’m getting older. I should have these
0:30:33 little things on my phone that keep me sharp.” She plays Sudoku and Crossword and she downloads
0:30:39 apps like this to stay sharp. The skill set, they’re just like crazy good internet marketers
0:30:46 and really good creating apps that retain. Apps that first and foremost get you to convert
0:30:52 and become a subscriber. Obviously, the retention helps. This guy talks to me. He frames it as
0:30:59 micro-learning. He’s like, “How do you get somebody to spend five to 15 minutes a day
0:31:03 getting smarter? What if you use your phones to get smarter instead of just to waste your
0:31:07 time?” He makes it sound like this grand noble mission and at the same time on the back end,
0:31:13 it’s just this ruthless funnel that is run ads. By now, by now, by now. Get the download, convert,
0:31:17 convert, convert, convert, convert and that’s the game. That’s what you got to be. We talked about
0:31:25 them. Remember the period app or Flow? Were they Ukrainian as well? Yeah. These guys all
0:31:32 have a crew. There’s these Eastern European app makers where they have these family of apps
0:31:37 and you go look at their website and they raise no funding and then they’ll have 300 employees
0:31:44 and then their apps will do 100 million downloads a year and it’s based out of Kiev or whatever.
0:31:48 This just seems to be a pattern. I think there’s a very high density of talent
0:31:54 that knows how to build this specific type of company. Yeah, they’re just all homies and they
0:32:00 all have this idea of it feels fun to get one over on someone but then they’re like, “All right,
0:32:04 if we’re going to have that attitude, we should also provide value so we stick around for a long
0:32:08 time,” which is like when every internet marketer ever has, they’re like, “I’m going to do something
0:32:12 shady,” and they win and they’re like, “Oh, but it’d be a lot cooler if the customers came back
0:32:16 to us or if we didn’t have to refund people constantly, so let’s just do the shady stuff
0:32:21 but do it for something.” If I could tell my mom what I do, without shame. Which is like what every
0:32:27 internet marketer ever has done but this is badass. How did you find this? How did I find this?
0:32:31 Actually, that’s another good story. Have you seen this Twitter account Arthur Rock?
0:32:37 I know that Arthur Rock was… No, it’s like a parody account. It’s Arthur Rock,
0:32:40 is his account. Have you not seen this? This thing is amazing.
0:32:46 He’s called Arthur. Bro, just you try to spell Arthur and naturally and just see what happens.
0:32:52 You’ll land exactly at the right thing. It’s A-R-F-U-R. Arthur Rock.
0:33:01 Okay, so it’s this guy who’s this anonymous, he’s like this anonymous VC and what he did is he
0:33:06 just created this Twitter account where he just tweets out numbers from companies that are raising
0:33:12 money or trying to sell and he’s just like leaks information and so he’s just this giant leak
0:33:18 and so he tweeted out the numbers for a headway app but if you just look at his feed, his feed is
0:33:24 like pure signal because it literally just be like, it’ll be like post-hog, 13 million in ARR,
0:33:29 growing 2X year over year. They’re currently raising. It’s crazy. It’ll be like or like somebody
0:33:34 will be like, the founder will be like, we’re pleased to announce that we’ve raised our series
0:33:39 C from Excel. It’s a huge milestone and we feel so validated and then he’ll just tweet out,
0:33:44 he’ll quote, tweet it and just go 50 million ARR as of November up 1.8X year today. Congrats.
0:33:49 Or there’s like another one that like they raised that $400 million post. They did $6
0:33:57 million in 2024. Congrats. Yeah, exactly. Exactly. Like how amazing is this? This is like the best
0:34:03 Twitter account, right? This is really good and you know what’s funny and we’ve seen this again and
0:34:12 again and again. These meme people, anonymous meme jokers are like right a lot. You know what I mean?
0:34:20 It’s sort of like how Esquire or what was it called? American, what was the tabloid that like is in
0:34:24 the grocery store? Enquirer, National Enquirer? Yeah, the National Enquirer. Like they say a lot
0:34:30 of bullshit, but they also like predicted like the Bill Clinton scam or Bill Clinton stuff before
0:34:36 everyone or like the John Edwards affair. And so like I do love filing these Anand accounts. This
0:34:44 guy’s great. Yeah, he says hollow a Catholic prayer app doing 60 million ARR growing 3.5X a year.
0:34:48 Yeah, like he did and he’ll also post updates. So in May, he’ll be like,
0:34:53 “Suno the AI music app just closed around 15 million ARR in the first year. Like to be
0:34:58 invested at 500 million post. Congrats.” And then he’ll, then you know, that was May and then in
0:35:02 October, right? So like, you know, five months later, he just wrote at 40 million ARR now.
0:35:06 All right, so this guy’s just providing, I don’t know, you’re not, you’re not as big of a like
0:35:10 a basketball fan, but like in basketball, there’s these two guys who were like famous on Twitter for
0:35:15 just like, they just had sources everywhere. So it’d be like Shams and it’d be Woj and they would
0:35:21 just always have Intel. And there’s all their entire Twitter feed is literally just inside info.
0:35:25 It’d be like, you know, sources say Jimmy Butler wants trade, his list of teams that he wants to
0:35:31 go to are these four. Or it’d be like, like during the NBA draft, like, you know, 45 seconds before
0:35:35 every pick, they just say they’re taking this guy. And it would just spoil the draft. If I’m one of
0:35:40 these Ukrainian guys, like, I don’t have the skill set to do this. I’m not technical. But I wonder
0:35:45 if you like, do you ever wonder why aren’t there more people just copying fast growing companies?
0:35:52 Like we’ll just… There are. That happens a lot. But I think your answer is actually pretty good,
0:35:57 which is why aren’t there more? So actually, I think I answered your question wrong. I was like,
0:36:01 no, some people do do that. And I think your question is actually correct, which is why are
0:36:06 more people doing this? I don’t want to do this because I kind of have a reputation and I don’t
0:36:11 really want to do it. But if I was a little bit younger, and if I had the skill set, which I don’t,
0:36:15 like, if I see a company that’s going at like 400x a year, which this guy does, he’s like,
0:36:20 here’s some app that was only doing 5 million in revenue, but they’re set to grow 4x. I’m like,
0:36:25 yeah, just go to their website and copy that. Yeah, I mean, it’s not so easy, right? Like,
0:36:30 you could copy a product that doesn’t get you customers. And so you have to not only copy the
0:36:36 product, you have to figure out how they grow and be as good at growth as them. You can figure that
0:36:40 out. You can use all the technology. Like, here’s what their ads say. I’m just going to do that
0:36:49 exact same ad. You can, but most people who have that ability, if you’re that good, you’re also
0:36:54 able to create new things from scratch. And I think also what ends up happening is that a lot of
0:37:03 things look similar, but they’re 80% the same and they’re 20% different. But that 20% difference
0:37:06 is actually a huge difference, right? It’s like, if you’ve ever looked at, we were talking about
0:37:13 flavors earlier, it’s like the difference between two flavors is like a 0.1% change in a certain,
0:37:17 you know, certain chemical, but it’ll change, you know, from vanilla. That’s the difference between,
0:37:22 you know, vanilla and, you know, orange soda or whatever, right? It’s like, there’s, it’s not
0:37:27 that big of a difference on the whole, right? You’re doing 80% the same, but it’s 20% that’s
0:37:32 different. And so, you know, I actually advise this and talk a lot about this, which is if you see
0:37:36 something that’s working, not as a company, maybe, but like, let’s say a trend or a business model,
0:37:41 like, you know, let’s say e-commerce or whatever, try to figure out what’s working better or worse
0:37:46 in a category. And then, you know, if you’re going to go into that category, you’re probably
0:37:49 going to end up, even if you’re trying to be super original, you’re probably going to end up with 80%
0:37:54 of the things the same because that’s how business is. You’re not 100% different. But the key is to
0:37:59 figure out what is your 20% difference going to be and how, how well can you execute on that 20%
0:38:03 innovation? And I think that’s a more humble, honest way of going about things versus,
0:38:08 I think most people believe they’re doing everything 100% original and unique. And that’s
0:38:13 just not true, right? Like, even, this is also for content or wisdom, right? Like,
0:38:19 how many truly original wise things, you know, I love Neval, but how many of Neval’s things are
0:38:25 100% homegrown, not inspired by anything, not, not, not similar to anything else that was out there.
0:38:28 Very, very rare, right? Like, that’s not how anybody does things. Tony Robbins talks about
0:38:33 this. He’s like, yeah, I learned under Jim Rohn and Jim learned, learned under his Exigler or
0:38:38 whatever. And like, it’s the same school of thought, but like me putting my twist on it is,
0:38:43 is what makes all the difference. Then you have people like Rocket Internet, which are literally
0:38:48 like pixel for pixel clones, but even they operate in different markets. So they’ll be like, cool,
0:38:54 we’re building Amazon, Amazon for, for Brazil or Thailand or whatever. And turns out, once you
0:38:57 try to do that, you’re going to like over time and a lot of things are going to end up different.
0:39:07 So I’m obsessed with being transparent about money, particularly with ultra high net worth
0:39:11 people. The reason being is that there’s not a lot of information on this demographic. And so,
0:39:16 because I own Hampton, which is a community for founders, I have access to thousands of young
0:39:20 and incredibly high net worth people. We have people worth hundreds of millions and sometimes
0:39:24 billions of dollars inside of Hampton. And so every year we do this thing called the Hampton
0:39:29 wealth report where we survey over a thousand entrepreneurs and we ask them all types of
0:39:33 information about their personal finances. We asked them about how they’re investing their money,
0:39:37 what their portfolio looks like. We asked them about their monthly spend habits. We asked them
0:39:40 how they’ve set up their estate, how much money they’re going to lead to charity, how much money
0:39:44 they keep in cash, how much money they’re paying themselves from their businesses. Basically,
0:39:51 every question that you want to ask a rich person, we went and we do it for you and we do it with
0:39:54 hundreds and hundreds of people. So if you want to check out the report, it’s called the Hampton
0:39:58 wealth report. Just go to joinhampton.com, click our menu and you’re going to see a section called
0:40:02 reports and you’re going to see it all right there. It’s very easy. So again, it’s called the
0:40:07 Hampton wealth report. Go to joinhampton.com, click the menu and then click the report button. And
0:40:14 let me know what you think. All right, let me tell you a story really quick about some
0:40:20 investment thing that I heard about that I would never do, you would do, but it’s a thrilling
0:40:27 story. Okay, let me guess. It’s obscure, overly complicated, doesn’t really make a whole lot of
0:40:34 sense, too much risk and will end up netting less than the S&P 500 in the long run. No, this one,
0:40:41 he came out on top actually. So the story is this, first of all, I was just listening to Scott
0:40:46 Galloway’s podcast while I was driving somewhere. I think it was like over Christmas break and
0:40:49 something happened at the very end of the podcast and I was with Sarah and I literally
0:40:54 pulled over to the side of the highway and I was like, are you listening to this? And she’s like,
0:40:59 shut up. No. But I’m like, all right, but this is actually amazing. Can we get an instant replay
0:41:03 on YouTube of your wheel diagram you just did? How big is your wheel? Did you’re like literally
0:41:10 driving a school bus? What was that? It’s like a ship. It’s a ship. It’s like a tractor that you’re
0:41:14 driving. Yeah, it’s a ship. I pulled the ship over and I literally had to sit down because
0:41:18 she yells at me when I use my phone and I had to like, type this out. So I had this note and
0:41:22 remembered it. But Scott Galloway had Michael Lewis on. So Scott Galloway is an investor and
0:41:28 podcaster. Michael Lewis is an amazing author, wrote about FTX’s downfall and he was with Sam
0:41:32 Beckman Freed when this all happened. And so he, you know, he has a unique perspective.
0:41:40 In the 45-minute part of this like 50 or 55-minute episode, Scott Galloway just mentioned something
0:41:47 where he’s like, yeah, I bought some of the bankruptcy claims against FTX and Michael Lewis
0:41:50 started talking about something else. And then Michael Lewis goes, wait, wait, wait, wait, wait.
0:41:55 What? You made a good investment where you bought the FTX claims. What was that about?
0:42:00 And Scott like just casually throws us out there, but the story is actually pretty amazing. So
0:42:07 the background is this. So in 2022, FTX goes bankrupt because, sorry, FTX goes bankrupt because
0:42:12 SBF, Sam Beckman Freed, he’s over leveraged and he spent all the money and whatever. It didn’t
0:42:18 work out because of a bunch of different reasons. And because of that $10 billion in customer funds
0:42:22 are lost, you know, they’re just gone. And people are distraught. They’re freaking out.
0:42:28 But when a bankruptcy happens, one major thing happens, which is the person who had the money
0:42:36 in FTX. So let’s say I stored $1 million in FTX. I now am going to have a claim against that company
0:42:40 for $1 million. So it’s going to go to court and we’re going to figure out how do I get my money
0:42:46 back somehow. And in a lot of cases, you get no money back. And so what happens is these kind of
0:42:50 vultures, I mean, I don’t know what you want to call them, but they come along and they go, hey,
0:42:56 FTX owes you a million dollars. You’re probably not going to get that back. You might get that back.
0:43:00 But I’ll tell you what, you have a million-dollar claim. I will buy that claim from you for a
0:43:06 hundred grand. So you get the hundred grand today, whereas the other outcomes are potentially you
0:43:11 eventually get nothing, or maybe you’ll get a little bit more, like a hundred grand, two hundred
0:43:13 grand, three hundred grand, but it’s going to be in like four or five years and you don’t even know
0:43:17 for sure. So just let me buy your claim. And so sure, you could do that. So it creates a market
0:43:23 when that happens. But Scott Galloway, he’s kind of a strange guy. And he had this quote on this
0:43:30 podcast where he’s like, “When I see fire, I run towards it.” Because I’ve known enough seeing a
0:43:35 lot of bankruptcies that when a bankruptcy happens, there’s opportunity. And so Scott Galloway,
0:43:42 he reads the paperwork about the claim or about the bankruptcy. And what he notices is that Sam
0:43:48 Bankman freed, unlike a lot of different Ponzi schemes, a lot of times with Ponzi schemes that
0:43:55 are spending this money on Coke hookers, planes, like party shit. SPF maybe did a little bit of
0:44:00 that. But you want to know what he was a real degenerate about? Venture investing. He loved
0:44:05 investing in companies. And one of the companies, he invested in a few, and I think a lot of them
0:44:10 didn’t work, but one of the big ones that he invested in, was he invested in Anthropic,
0:44:17 which is like the number two or the number three best AI company. And Scott looks at the numbers,
0:44:26 and they don’t actually say what the valuation was. They don’t say the valuation of Anthropic
0:44:31 when Sam Bankman freed invest in them. But what they say is that he invested $500 million. And
0:44:38 Scott does a little math, and he’s like, “I think the valuation was around $5 billion,” meaning
0:44:44 SPF owns 10% of this company. And this was happening two years ago. He’s like, “I think Anthropic is
0:44:48 going to raise money at a $10 billion valuation, and then eventually one day at a $60 billion
0:44:53 valuation,” which by the way, as of today, there are rumors that that’s happening. And because of
0:44:59 that, I think I can buy a claim for 20%, so a million dollar claim for $200,000. And if you do
0:45:05 all the math, I think I could actually triple or quadruple my money based just off this venture
0:45:11 return, let alone if we ever are going to claw back any of the crypto that was lost. Well,
0:45:18 turns out a few things happened. One, Bitcoin exploded. And because of that, well, not because
0:45:25 of that, but they were able to recap or claw back a lot of the money and Bitcoin exploded.
0:45:29 And so a lot of these people are going to be getting back a lot more money than they actually
0:45:33 had in there because the money, you know, the Bitcoin was just sitting there growing. And also,
0:45:39 Sam Bankman freed investments, one of them killed it, knocked it out the park. And so I think now,
0:45:45 the people who lost money, they’re getting something like 125% of their money back,
0:45:49 which is not bad for a Ponzi scheme that you are a victim of. Scott said the numbers. He goes,
0:45:58 “I bought $250,000 worth and I sold, I bought to a million dollar claim for $250,000 and I sold
0:46:06 it for 90% of the million.” So he like tripled his money. And Scott like goes through the story
0:46:12 and he explains like his reasoning on this podcast. And it was amazing, to be honest. Like,
0:46:18 how on earth you could find value in this way? Yeah, that’s super impressive. I actually happened
0:46:23 to hear this segment too and had the same, you know, I wasn’t driving a bus, but I had the same
0:46:29 sort of like neck snap reaction where I was like, what? What’s funny is you said a couple of things,
0:46:33 but I don’t think, you know, it’s a couple of things, but I think we have to correct a couple
0:46:38 of things. One, it wasn’t a Ponzi scheme. No, I meant like a lot. He stole customer funds.
0:46:43 I guess I wasn’t mean that this was a Ponzi scheme, but it’s in that category of like schemes where,
0:46:47 you know, a lot of people are like, how do I get my money back? Scammed, you lost your money. Yeah,
0:46:52 exactly. The other thing is that he was saying, you know, I valued FTX, the stake in Anthropica,
0:46:57 $4 billion, but that’s not really what happened. So they sold their stake for $800 million. So I
0:47:02 think he put in $400 or $500 million and they sold it for $800 or $900 million in the liquidation.
0:47:07 And so it wasn’t the Anthropic investment that really paid off.
0:47:11 He was using the Anthropic investment as a downside protection where he was like doing
0:47:16 the math where he was like, all right, that gets me, that gets my investment up just a
0:47:19 little bit to like a safe zone, but then what else can there be?
0:47:23 Yeah, exactly. So I, but I think his math was wrong. So he said in the thing, he goes,
0:47:29 I valued the Anthropic based, based on the Anthropic stake, I thought it was worth $4
0:47:34 billion. The total claims were $9 billion. So I thought Anthropic was giving me $0.44 on the dollar
0:47:39 for every dollar of claims that I would buy. Claims were selling for $0.22 on the dollar.
0:47:43 So he says, to me, that was the easiest trade I ever made. But the reality is that
0:47:47 the Anthropic stake ended up being worth less than $1 billion, right? So it would have been $0.10.
0:47:53 So he got it right, even though his logic was wrong. And we had SHIELD on the other day and he
0:47:58 basically said his two best investments kind of worked out the same way. He’s like, I bought Nvidia
0:48:04 in 2017 because I thought that crypto mining was going to take off. And Nvidia took off,
0:48:08 but not because of crypto mining at all. It turned out it was AI. And I kind of like,
0:48:12 I was wrong, but I was, I got massively right. He goes, same thing with Bitcoin. He’s like,
0:48:16 I bought Bitcoin early on because I thought it was going to be this fast peer to peer transfer
0:48:22 thing. Turns out that was all wrong, but Bitcoin went up anyways because of this other store value
0:48:27 gold, you know, digital gold use case. And so I think what ended up happening is that he made a
0:48:31 great investment, but I think his underwriting was wrong. I think that’s one of the hard things
0:48:36 about doing this like, what up, you know, the smart money investing is that when you’re right,
0:48:42 you feel like such a goddamn genius. And when you’re wrong, you chalk it up to, you know, whatever
0:48:46 you sort of either mentally block it out, you either say you were wrong or you think maybe one
0:48:51 of your assumptions got a little off. But there’s also this weird state where you can end up right
0:48:55 even though your underwriting was wrong and you conflate kind of like luck and skill. And I guess
0:49:01 the question is, I guess like, that’s one of my observations I’ve had in this process of like,
0:49:06 as I do my own investing and get something’s right, get something wrong, I talk to other people,
0:49:12 it’s very humbling to realize how much of this, even your wins aren’t your, aren’t yours. They’re
0:49:17 not your wins because you got so much of it wrong. Well, and there’s another learning that I had,
0:49:26 which is finding value in crap. Like this story, like this was the worst, like this was the worst
0:49:33 asset, the worst company, like you don’t want to touch this because a, it’s like a scam. So like,
0:49:38 there’s a no go there. And B, it’s like a reputational ruiner, like who wants to be involved
0:49:42 in this guy. And then it’s like, I have so much better things to do. Why would I waste my time
0:49:49 with this pile of shit? And what was interesting was seeing Scott walk through his reasoning on
0:49:54 how he can still capture value from a horrible situation. And I thought that that was really
0:50:00 intriguing because that is not how I tend to do things. Like, what do they say, trying to catch
0:50:05 a falling knife? Like, yeah, when something’s bad, it’s just going to get worse and just stay away.
0:50:12 But that’s not always the case. Dude, when I went to Monash Preprise House and we’ve recorded that
0:50:17 podcast together, we did the podcast and then at the end, he’s kind of just like touring me around
0:50:22 and I go to his desk where he works. I like seeing like literally where you sit when you work. I think
0:50:28 the environment kind of tells a lot. And he has this placard on his desk, like the way you would
0:50:33 have a, like if you walk into a bank or whatever, it would be like the name tag of the, of the bank
0:50:38 manager or something like that. But instead of a name on it, it just said, trouble is opportunity.
0:50:45 And literally he was reminding him that he wanted this on his desk because in those moments
0:50:50 where there’s panic, where there’s trouble, he wanted the reminder that trouble is opportunity.
0:50:55 And not all trouble is opportunity, right? Like one of his isms that he took from Charlie
0:51:01 Munger and Buffett is he puts things in what he calls the too hard pile. So he’s like, yeah, you
0:51:06 know, I look at a hundred opportunities. I could probably tell you the three obviously good ones
0:51:13 and I could tell you the 10 obviously terrible ones. But then the other whatever 77, I’m,
0:51:17 I just put in the too hard pile and I’m sure some of them are really good, but I just throw
0:51:21 things in the too hard pile when they’re too hard. And so for example, you know, I was asked
0:51:25 like, what’s your thoughts on crypto? And he was like, well, I think there’s a case for it. I think
0:51:28 there’s a case against it’s like, but I just don’t do anything because I put it in the too hard pile.
0:51:32 So I like, I don’t need to win in that. It’s too hard for me to figure out. So I’m not going to
0:51:38 bother. And I think this is the concept of the too hard pile is so valuable because I used to be
0:51:42 very black and white about everything, like either it’s good or it’s bad. And if I thought it could
0:51:47 be good, I would smash my head against the wall trying to like make it work. And if it was bad,
0:51:52 it had to like stand out as bad for me to like, to throw it away. So you said a hundred ideas.
0:51:57 The story is the story is this, he’s at the, he’s at lunch with Warren Buffett and he goes,
0:52:01 Warren, I think one of your great gifts is you’re a great judge of people.
0:52:04 He was talking about like, you know, Warren Buffett hired that guy, Ajit,
0:52:08 who like runs their insurance business. He’s like, I just think you’re a great reader, reader of
0:52:12 people, judge of people. How do you do it? What’s your secret? And he goes, I don’t think I’m a
0:52:15 great reader of people. And he’s like, but I’m not trying to be humble. He goes, I just approach
0:52:21 it differently. He goes, it pays to be a harsh grader when it comes to people, meaning the cost
0:52:26 of being optimistic about somebody who turns out to not be great, to let them into your circle of
0:52:32 friends or to do business with somebody who turns out to not be great is so costly that I just rule
0:52:36 a bunch of people out. He goes, if you put me in a cocktail party and you let me have five minutes
0:52:40 with a hundred people in that five minutes, I could probably tell you the five people who are
0:52:45 really outstanding. I could tell you the five people who are really lousy and I just don’t want
0:52:50 anything to do with them. They just obviously came off super bad, like in a five minute interaction.
0:52:54 But then there’s 90 people that I just can’t make a judgment on in five minutes. And I,
0:52:58 but he goes, so I just put them all in the bad pile. They’re all in the too hard to know pile.
0:53:03 And so I just rule them out because it’s not worth the brain damage to try to figure it out on a
0:53:10 case by case basis, just so you don’t miss a good one. Because the cost of a bad thing is worth way
0:53:14 cost me much more than missing out on a good thing. Cause there are more good things that I could just
0:53:18 filter for and I’ll find those good things like over time, that’ll be obviously good. I’ll just
0:53:23 focus on the obviously good things. And he does this with investing. He does this with people.
0:53:27 And it’s just a very useful heuristic. Cause I think most of us try to be,
0:53:31 if there’s a hundred, we try to be accurate at the hundred level. It’s like,
0:53:36 I want to have an accurate grade on all hundred and I’ll spend all my time on the hard to judge
0:53:40 things and I’ll get a lot of them wrong, but I’m trying to get them right. And therefore I’m taking
0:53:45 a too much risk. Whereas his take is don’t take too much risk. Take the obviously good and act on
0:53:49 it. Obviously bad throw them away and everybody else put them in the too hard pile and ignore it.
0:53:52 Can I dumb this down? Let me explain why I’m a genius.
0:53:57 When I go to a restaurant, there’s like two columns of entrees.
0:54:02 I start at the top and I skim down and the first one that I see, that’s a seven out of 10,
0:54:09 I go, oh, that’s it. Med you over. I don’t look at the menu for the rest of the meal. I don’t
0:54:16 second guess it. I just say the first one, that’s a seven. That’s done. And I’m able to do that right
0:54:20 away. Is this applied to everything? Is this marriage advice? Is this, what other things
0:54:25 does this apply to? Where does this not apply? I mean, yeah, I think it could apply to marriage.
0:54:30 The idea of settling is good. You settle for something that’s pretty good and you can make
0:54:34 it great. I don’t know. Is there any data on Indian couples who have been,
0:54:41 Yeah, arranged marriages have the same quote unquote success rate as American marriages,
0:54:47 which are like involved dating and selection and courtship and then eventually engagement
0:54:52 and then marriage versus like the way that Indian couples do it is very much the menu that you scan
0:54:58 the listing. Like that’ll do. Engineer, good family, full set of teeth, seven out of 10, let’s go.
0:55:02 I will see you at the altar for the first time. Yeah, yeah.
0:55:12 No, I just think that’s how I order. Like I’ve done that for years. It’s just, I just don’t want,
0:55:16 I want less choice. And I think what Warren Buffett is actually saying is similar, which is like,
0:55:21 I know for certain that these three are fine enough. Therefore, I don’t care about the rest.
0:55:26 Yeah. You know, that book, the Mark Manson book, Settle Art of Not Giving Enough,
0:55:31 like I think that book, it got so popular that it sort of got written off. You know what I mean?
0:55:34 Like, do you ever hear a smart person being like, man, I learned so much from this book,
0:55:39 the Settle Art of Rocking? Like it’s not like, it’s not like a cool intellectual thing to reference
0:55:44 because it’s pop. It’s like pop. It’s mainstream. It’s like, if I’m like, oh, I really like
0:55:48 Justin Bieber’s music. It’s like, okay, what? That’s like a low status thing to sort of say.
0:55:53 But there, you know, he brings up one good point in the book. The book is basically around one
0:55:58 point, which is life is not about caring about everything or not caring about everything. It’s
0:56:03 about choosing, you know, assume you have a limited set of, you know, Fs to give in your pocket,
0:56:07 like you got five to give, choose wisely, choose the things you’re going to care about. So like,
0:56:12 you know, the menu, you just don’t have to care to get that right. And that’s kind of like the
0:56:16 Warren Buffett, like you could just throw a bunch of things that is too hard pile and ignore them.
0:56:23 And then like, there may be a few decisions where actually getting it right really, really matters.
0:56:27 And then you have enough bandwidth to actually care about those things because you’re not caring
0:56:31 about everything. Yeah, I think that’s good shit. What do you want to do now? I want to give you one
0:56:37 other story. Have you heard this Bill Ackman story of his running into the fire when everybody
0:56:42 else is running out story, the his, his four hour investment decision? Do you know this one?
0:56:47 Man, I thought it was like literally a fire. Well, kind of. It was the ’08 crisis, which I think to
0:56:53 people on Wall Street felt like, you know, the giant fire. Oh, you mean Bill Ackman,
0:57:02 the famous Twitter influencer? He invests? Wait, he’s an investor? Bill, we’re joking. I hope you’re
0:57:09 still coming on later. All right. So he tells the story of it’s ’08, the financial crisis happening,
0:57:12 banks are failing, the Bear Stearns fails, and then this other bank is going to fail,
0:57:17 and people don’t know what’s going to happen, widespread panic. And the bank, Wachovia, was on
0:57:26 the brink. And basically what he did was he did a, he’s like, I had four hours. I spent four hours
0:57:32 just looking at the business of Wachovia and came to a decision in four hours that the panic was
0:57:38 overblown and that Wachovia would be saved and that Wells Fargo, which ended up buying Wachovia,
0:57:44 was far healthier than the market believed in that moment of panic. And so he made a huge
0:57:48 investment and it was like, you know, one of his most lucrative investments ever. And it was a four
0:57:54 hour decision and it was made at a time of extreme panic when trouble was opportunity.
0:58:00 And when everybody else was just running out, you know, screaming, he was calm and basically
0:58:04 looked at the situation and assessed the risk return differently, which is sort of like what
0:58:09 you were talking about with the Scott Galloway, when FTX just feels taboo in every way and it
0:58:13 feels like, you know, the worst possible situation. And he’s like, cool, it’s the worst possible
0:58:18 situation at a price. And there’s a price for everything. And the price, you know, for him
0:58:21 to buy those claims at 22 cents on the dollar turned out to be the right price.
0:58:29 Dude, Bill Ackman’s also like six four, I think, which is pretty cool. We should create an index
0:58:37 for CEOs above six two. And I bet it’d be, I bet it’d do. All right. All right. So he bought,
0:58:47 let’s see, 178 million shares at $3.15 a share. So he spent $560 million after four hours of thinking.
0:58:54 And his estimate was that it was going to be worth more than double that. And the next week,
0:59:00 Wachovia bought it at about $7 a share. So he basically doubled 500 million in a week.
0:59:06 That’s insane. All right. Well, that’s cool. Bill Ackman’s great. All right. Great story.
0:59:09 Great story. All right. I think that’s a pretty good podcast. What do you say?
0:59:14 I think that was all right. All right. That’s it. That’s the pod.
0:59:35 Hey, everyone. A quick break. My favorite podcast guest on my first million is Darmesh.
0:59:40 Darmesh founded HubSpot. He’s a billionaire. He’s one of my favorite entrepreneurs on earth.
0:59:46 And on one of our podcasts recently, he said the most valuable skill that anyone could have when
0:59:51 it comes to making money in business is copywriting. And when I say copywriting, what I mean is writing
0:59:56 words that get people to take action. And I agree, by the way, I learned how to be a copywriter in my
1:00:00 20s. It completely changed my life. I ended up starting and selling a company for tens of millions
1:00:05 of dollars. And copywriting was the skill that made all of that happen. And the way that I learned how
1:00:11 to copyright is by using a technique called copywork, which is basically taking the best sales
1:00:16 letters. And I would write it word for word, and I would make notes as to why each phrase was impactful
1:00:20 and effective. And a lot of people have been asking me about copywork. So I decided to make a whole
1:00:25 program for it. It’s called copy that copy that dot com. It’s only like 120 bucks. And it’s a simple,
1:00:30 fast, easy way to improve your copywriting. And so if you’re interested, you need to check it out.
1:00:36 It’s called copy that you can check it out at copy that dot com.