Unicorn Founder on Unseen Arbitrages, the Paradox of Wealth + Charlie Munger Wisdom ft. Ryan Petersen

0:00:01 All right, today we’re talking to Ryan Peterson.
0:00:04 Ryan’s an interesting guy because he started out working at a pizza shop,
0:00:06 bootstrapping his own company to millions of dollars.
0:00:09 And now he runs Flexport, which is a multi-billion dollar company.
0:00:10 So he’s kind of done both sides.
0:00:14 The big Silicon Valley game, as well as the bootstrap, makes something out of
0:00:16 nothing, form of entrepreneurship.
0:00:17 And we talk about three things.
0:00:21 The one big lesson he learned when he became friends with Charlie Munger,
0:00:22 what Charlie Munger really taught him.
0:00:25 Number two is a masterclass in negotiation.
0:00:28 So things that he learned about negotiation back when he was in
0:00:29 business school, that still help him today.
0:00:31 And the paradox of wealth.
0:00:33 So why chasing money?
0:00:35 Well, money is great and you want to make money.
0:00:36 And he says money is great too.
0:00:40 But how instead of chasing money directly, you should do something else instead.
0:00:41 He calls this the paradox of wealth.
0:00:43 So enjoy this episode with Ryan Peterson.
0:00:55 Okay, today you have the Silicon Valley success story.
0:00:57 So you’ve got Flexport, this like,
0:01:01 behemoth of a company, multi-billion dollar company, went through YC.
0:01:04 You did the Silicon Valley, you won the Silicon Valley game, which is great.
0:01:05 And I live in Silicon Valley.
0:01:09 I like, you know, I spent 10 years trying to win that game.
0:01:13 The other side of it, though, that’s I think a lot more relatable is you were,
0:01:16 you know, working at Domino’s Pizza as a team.
0:01:18 You flipped scooters from, you know, on eBay.
0:01:22 You then built Import Genius, which is a bootstrap company that I think had
0:01:25 kind of like real EBITDA.
0:01:27 Like, I think you were making millions in EBITDA along the way.
0:01:28 Right, still am, still am.
0:01:29 It’s still a good business.
0:01:31 Exactly. So you’ve done both, right?
0:01:32 You’ve done the bootstrapper game.
0:01:34 You’ve done the flipper game.
0:01:39 And then now you’ve done the big, you know, Silicon Valley disruptive, disruptive game.
0:01:41 And so I think that’s cool that you did them.
0:01:44 And not just that you did all those things, but one sort of led to the other.
0:01:47 Is that right? Like the scooters led to Import Genius, which led to ultimately Flexport.
0:01:51 Yeah, I think they’re definitely drawing the lines backwards.
0:01:56 You can make that pattern really easily that really the scooters.
0:01:59 I was working for my older brother and his business partner, Michael Kenco.
0:02:03 And we had a lot of frustration with freight forwarders and customs brokers.
0:02:06 And we had a lot of frustration with finding good factories.
0:02:08 Those were kind of the two big problems that we saw.
0:02:16 I have this e-com business that has overlapped.
0:02:18 I started it kind of right before or right during COVID.
0:02:22 Basically, we launched right after COVID and we’ve now done over, I don’t know,
0:02:24 50 million in revenue.
0:02:27 But I would not have found my factory had I not used Import Genius.
0:02:33 And I remember I was like, I’m kind of like a shortcut taker in general.
0:02:36 So I was like, OK, either I can go on Alibaba and I could try every single
0:02:38 supplier on here, try to find a good one.
0:02:42 Or I could go to whoever I think has the best quality
0:02:45 and just try to reverse engineer who is their factory, who is their supplier.
0:02:50 And actually, I remember buying the $99 or $199.
0:02:52 I don’t remember what it was, like Import Genius subscription.
0:02:55 And then actually, there was somebody in your chat team that did the search
0:02:57 for me because it wasn’t showing up initially.
0:03:00 And they went back like further in the records, 12 months, 15 months ago.
0:03:03 And they found one manifest.
0:03:04 And so people don’t know how this works.
0:03:10 What you guys did was basically you took public data about the shipping manifest.
0:03:14 And then you organized and structured it so you could see for any business
0:03:17 who is their supplier and for any supplier, who are all the businesses they work with.
0:03:18 Is that right? Is that the right way of describing it?
0:03:19 Yeah, that’s what Import Genius does.
0:03:22 It’s still, it’s still, we haven’t raised prices much either.
0:03:24 It’s still about the same as you said, $99 or $199.
0:03:28 We might raise it a tiny bit, but ImportGenius.com is the business that I started.
0:03:30 And, you know, if I didn’t mention Alibaba, because that’s
0:03:32 I started that business out of frustration.
0:03:37 I was living in China for a while and I would use Alibaba to find a factory
0:03:40 that would show up at the factory and they weren’t expecting people to just show up.
0:03:44 And it’d be like fake factory, like he’s just a middleman.
0:03:48 You know, or like one time they did give him a couple of advanced days,
0:03:51 but I showed up and they were like very clearly like faking it.
0:03:54 Like this was not what you guys in a warehouse with no equipment or anything.
0:03:57 So, yeah, it was frustration for that.
0:04:03 I think of ImportGenius kind of like the organic search results, like Google.
0:04:07 You know, if it was all ad words, that’s kind of like what Alibaba is,
0:04:09 like people paying for price and that, et cetera.
0:04:15 Alibaba.com is of course the original business was B2B searching for factories,
0:04:18 but that that’s not what drives their market cap.
0:04:22 Their market cap is driven by Taobao and Alipay and all these other products.
0:04:25 Right. But yeah, the original business is like finding factories.
0:04:27 I think ImportGenius is a much better way to do that.
0:04:31 I do think that my brand is around seeing problems that somehow other people
0:04:35 just kind of take for granted and they’re blind to in some way that they just sort
0:04:40 of accepted as that’s just reality and then actually getting really curious
0:04:42 about it and looking at what could you do to solve it.
0:04:44 And that’s where ImportGenius came from.
0:04:46 That’s where Flexport came from.
0:04:48 And that’s sort of that same problem.
0:04:48 It’s annoying.
0:04:49 I’m kind of annoying that way.
0:04:53 Like when I go to a restaurant, I’m like doing bottleneck analysis on the cash
0:04:57 year, like, what would I do to like, you know, get this, get the traffic
0:04:59 flowing faster through this place?
0:05:00 But yeah, I can’t help it.
0:05:01 What does Paul Graham’s work for this?
0:05:03 Schlepp blindness, right?
0:05:04 He’s got blindness.
0:05:07 Yeah, I usually point people to that essay on Paul Graham’s essays called
0:05:11 Schlepp blindness, which is this idea that you’re kind of blind to the biggest
0:05:12 problems in the world.
0:05:14 Paul has a good quote about you.
0:05:15 I found in my research.
0:05:17 This is the make you blush section.
0:05:18 All right.
0:05:22 So it says Paul Graham, founder of Y Combinator says, Ryan is what I call
0:05:27 an armor piercing shell, a founder who keeps going through obstacles that would
0:05:28 make other people give up.
0:05:30 A, do you think it’s true?
0:05:32 And B, why do you think Paul thinks that about you?
0:05:33 I don’t know if it’s true.
0:05:36 We work, I do work really hard and don’t give up easily.
0:05:39 Paul and I have had a great relationship for a long time.
0:05:40 And he’s seen me since the very early days.
0:05:44 I met Paul when I was before I even, I had started Flakesport, but barely.
0:05:46 My brother did Y Combinator the year before me.
0:05:48 We were renting a house.
0:05:51 Actually, it used to be Max Levchin’s house because we used to get his mail.
0:05:55 I don’t know how long before it wasn’t been a long time before because it wasn’t
0:06:00 a very nice, it was like, yeah, it was like before you got rich.
0:06:04 But, uh, we were renting this apartment and it was near a dog.
0:06:09 It was there a park where Paul would take his kid, George, who’s now older.
0:06:14 But when it was, and we would, uh, we would take my dog there to play.
0:06:17 So we would just like run into Paul and my brother was in YC at the time.
0:06:19 So we got to striking up conversations.
0:06:23 So Paul’s seen me since like, Flakesport was just an idea, basically.
0:06:24 He’s been a great advisor for us.
0:06:26 Said nice things to a lot of people.
0:06:28 What, uh, what did Paul help you with?
0:06:32 Cause I’ve asked people this a couple of times and I feel like everybody’s got
0:06:34 a great Paul Graham story of like there was a, you know, these, there’s
0:06:37 these like crucible moments in every startup or there’s these moments of
0:06:42 uncertainty and Paul either brings either a certain level of confidence or clarity
0:06:45 or a question or a bit of advice that was, was helpful early on.
0:06:47 Do you, do you feel like there was one of those for you?
0:06:52 I think Paul’s got his super power is like, not, he only sees what’s possible
0:06:56 and like how valuable or big could this thing be if everything worked and he
0:06:58 ignores every other outcome that’s possible.
0:07:05 And that is probably the right way to do seed investing, you know,
0:07:06 in a power law world to find like that.
0:07:12 And so he always saw, if Flakesport really worked, the outcome is so outsized
0:07:15 and enormous given the industry size and their importance.
0:07:22 Then, and then he could help us sell that story to other investors, to candidates.
0:07:26 He would send emails early days to like top engineers, saying really great things
0:07:32 about us quotes like the one you mentioned to different press and stuff like that.
0:07:36 He’s also been a really big supporter of Flexport.org, which is our
0:07:41 humanitarian relief logistics division that, that helps nonprofits doing
0:07:46 refugee camp logistics or other sorts of disaster recovery logistics.
0:07:49 He’s been, he’s donated millions of dollars to us there and helped us
0:07:50 get the word out about all that stuff.
0:07:52 So he’s a huge supporter of Flexport.
0:07:53 That’s amazing.
0:07:56 Yeah, I always think about like the first believer.
0:08:01 I think everybody has this person who believes in you more than you believe
0:08:02 in yourself for a period of time.
0:08:05 And it’s sort of like a, it’s like a short loan.
0:08:09 It’s like a short term loan that you can get of conviction and is very helpful
0:08:10 to an entrepreneur.
0:08:12 And it’s actually very helpful to be that person, especially once you have a
0:08:16 little bit of success as an entrepreneur, you now can lend a little bit of
0:08:20 conviction to other people you believe in when they, when they don’t really have it.
0:08:21 Yeah.
0:08:22 I mean, Paul’s job is hard.
0:08:25 Well, he’s, he’s retired now, but the job of being a YC partner, a
0:08:27 leader of YC is just super hard design.
0:08:29 A lot, most of those people are going to fail.
0:08:32 So you have to kind of dilute, dilute yourself.
0:08:35 If you really want to say only focus on what could happen.
0:08:37 Well, that’s probably now what’s going to happen in most of the cases.
0:08:40 That’s very hard psychologically, I’m sure.
0:08:41 Yeah.
0:08:44 Maybe he needs another essay that’s like Schlett-Morandis, but it’s on the
0:08:44 investor side.
0:08:47 It’s like, you know, fail, fail blindness.
0:08:51 It’s like the ability to easily forget with import genius.
0:08:52 You took publicly available data.
0:08:53 You structured it.
0:08:56 You made it into a useful business that generates millions of dollars in your
0:08:56 profit.
0:09:00 It seems like your brother also did that same business model, right?
0:09:02 In a different space with BuildZoom.
0:09:07 Can you explain maybe what is the underlying, you know, way, framework of
0:09:10 how to think about it, business ideas like that, that might, that might succeed.
0:09:12 Cause it seems like there’s a pattern that there’s multiple ideas like that.
0:09:13 That, yeah.
0:09:17 BuildZoom was born out of the frustration of finding a contractor.
0:09:20 BuildZoom is my older brother, David’s company, one of his companies.
0:09:26 And he was my co-founder with import genius and my boss for a while.
0:09:28 And yeah, he was sort of my mentor in startup world.
0:09:32 BuildZoom was born out of the frustration of finding a contractor to work on your
0:09:37 house and underlying it is this public dataset of building permits are largely
0:09:39 public record, but hard to access.
0:09:41 And we had a lot of experience of doing that with import genius.
0:09:45 So I built the search engine on building permits and lets you look up at
0:09:49 wherever you are, any house, you can see who the contractors were that built on,
0:09:53 that worked on it, which is pretty useful as a homeowner, by the way, as a tool.
0:09:55 See who, who built the problem.
0:09:57 If you have a problem, go find that person.
0:09:58 They probably can help you with it.
0:10:02 But also you’re doing due diligence on contractors.
0:10:07 No, you know, be able to talk to the actual homeowner or she worked, like who
0:10:10 worked with them, making sure that the reviews are actually for people that
0:10:11 hire this contractor.
0:10:13 Like there’s a great dataset out there.
0:10:17 So they built, they built a nice little business on top of that dataset.
0:10:21 I think that government data is a big opportunity.
0:10:26 The government has tons of public records on all kinds of stuff and no real
0:10:30 incentive to organize it in ways that are particularly useful.
0:10:35 It makes it hard to build defensibility onto these businesses, because other
0:10:37 people can, if it’s public record, other people can access the data too.
0:10:42 Um, so you have to get distribution or build some kind of a network
0:10:43 effect on top of it.
0:10:48 Like in building this case, it’s like reviews that you’re layering onto this
0:10:54 and sort of brand is always the ultimate network effect that you can build onto it.
0:11:00 But, you know, I think people overthink to defensibility a little bit.
0:11:01 Like, how could you have defensibility?
0:11:02 You’re a startup.
0:11:06 Just like, you know, if it was defensible, how could you possibly do it yourself?
0:11:10 Uh, yeah, we, we did an episode recently on, uh, I was like, I found
0:11:12 this app that’s called Oasis.
0:11:14 It’s a water, water quality tracking app.
0:11:19 So basically like how much, how much, you know, forever chemicals are in your water.
0:11:20 Oh, yeah.
0:11:23 This, it’s this kid, this is kid who did the same thing.
0:11:26 He basically was like, he lived in, I think Minnesota, where they had like
0:11:26 clean water.
0:11:28 He drank tap all the time.
0:11:31 He moved to LA, started drinking tap water, it tasted funny.
0:11:32 He got a little bit sick.
0:11:34 He’s like, oh man, I wish I could figure this out.
0:11:39 Turns out every city has their own testing data that’s publicly available.
0:11:43 Turns out that you can request from every bottled water company their reports as well.
0:11:47 So then he created this app that basically presented to the consumer.
0:11:50 And then he goes viral on tiktok with these like, kind of like fear-based.
0:11:54 Like, did you know that blah, blah, blah, but you can check this using this app.
0:11:58 And he’s built a, you know, a thriving business on this thing.
0:12:01 I think he’s at like 50 K M or R and he’s just a kid in his twenties.
0:12:05 It’s not the most defensible thing to RFK junior, man.
0:12:06 He’ll be over it.
0:12:08 That’s right.
0:12:10 But I think it’s kind of amazing that you could do this,
0:12:12 taking public data and making that happen.
0:12:13 Yeah.
0:12:18 Brand and network effect distribution, getting users, getting people loyal to it.
0:12:20 Accenture, high velocity.
0:12:23 Yeah, I got, I remember I got in a fight on Twitter like five years ago
0:12:25 with some guy talking about moats.
0:12:30 And I, I was just making a play on words saying, well, you know, the moat
0:12:34 turned out to be not that useful once someone invented artillery.
0:12:35 Right, right.
0:12:37 So moats, we don’t use the moats.
0:12:40 Like, what are you going to put alligators to defend your business?
0:12:44 So I was talking like, actually, you know, you don’t really want to hide behind
0:12:51 some walls, like the real ever, ever since the Blitzkrieg in like 1940 and 1939,
0:12:54 whatever, we learned that like high velocity attack is the way to win.
0:12:56 Not like sitting behind defensive walls.
0:12:57 Right.
0:13:01 And I don’t know, some investor like got really upset with me that I didn’t believe
0:13:06 in moats, uh, of course, you know, it’s, I’m just making a play on words.
0:13:07 Right.
0:13:10 Well, you, you wrote in here something that found pretty interesting.
0:13:12 I didn’t know you were friends with Charlie Munger.
0:13:16 And speaking of moats, Buffett Munger famously talked about how
0:13:18 defensibility and moats are super important.
0:13:19 Can you tell the story?
0:13:20 How did you become friends with Charlie Munger?
0:13:22 Yeah, RIP.
0:13:23 Um, what?
0:13:25 Oh, what I know.
0:13:28 Friendly with Charlie Munger, let’s say, uh, I had dinner at his house
0:13:31 seven or eight times, um, before he passed.
0:13:33 I went to his 99th birthday party last year, actually.
0:13:37 I’m a huge fan of, he has this essay, which I think every
0:13:40 young for every person should read, especially young people trying to figure
0:13:44 their way through the world called, um, he’s called the art of worldly wisdom.
0:13:45 Yeah, definitely.
0:13:48 If you go to worldly wisdom, Charlie Munger, you’ll find it.
0:13:50 I actually found it on Paul Graham’s website.
0:13:54 I believe PG published it to the Y Comedator website at some point.
0:14:00 And I had read it when I was young and feeling uninspired or like trying
0:14:02 to figure things out, what should I do with my life?
0:14:10 And the, the essay basically argues that there’s in every discipline, like
0:14:13 biology or chemistry or whatever the distance, there’s a, you know, you can
0:14:16 define a number of disciplines, however you want, sort of, but somewhat arbitrary,
0:14:18 but just say there’s a few hundred disciplines in the world.
0:14:23 And then in each one, there’s two, there’s two or three big ideas that
0:14:24 carry 80% of the freight.
0:14:30 If you know those two or three big ideas, you kind of will get 80% of that
0:14:30 whole discipline.
0:14:35 Like in biology, it’s probably like Darwin, you know, Darwinian evolution
0:14:38 and something to do with genetics, which are obviously related.
0:14:41 But like, you can get those two or three big ideas.
0:14:45 You’ll have enough biology to be dangerous.
0:14:45 Right.
0:14:49 And then you can learn these ideas by going to read the textbook.
0:14:54 And so if there’s only 300 disciplines in three, two or three ideas, you’re
0:14:59 like, okay, I’ve got to do about 600 to a thousand ideas that if I could
0:15:02 learn them, I’d be like, what Munger calls worldly wise.
0:15:08 It’s an interesting concept that set me off on a journey of, I’ve probably
0:15:11 read hundreds of books as a result of that.
0:15:15 And so searching for the big ideas in every space.
0:15:16 Yeah.
0:15:17 I’m like, what are these disciplines?
0:15:21 I’m like, disciplines I don’t really, that I found boring.
0:15:24 Well, like, okay, whatever, I’ll just go find, I still learn the top ideas from it.
0:15:26 Um, no, I’m not saying I’ve succeeded.
0:15:28 There are some disciplines I just can’t bring myself to.
0:15:31 And by the way, his essay isn’t just saying, there are these ideas.
0:15:32 He actually lists a bunch of them.
0:15:35 So he’s like, for example, things gravitate towards winter take all,
0:15:38 therefore it pays to be number one or number two or just be out.
0:15:40 And then he gives example, right?
0:15:43 So he’ll give, he, the essay isn’t just the concept that these ideas exist.
0:15:44 He gives a bunch of examples.
0:15:45 Yeah.
0:15:47 And then they’re, you know, you thought of them like mental models.
0:15:49 Did you build these mental models from one discipline?
0:15:51 It turns out they’re often applicable in another.
0:15:53 And that’s where a lot of the good ideas can come from.
0:15:56 Um, and a lot, a lot of innovation comes from applying an idea.
0:16:00 Like Richard Feynman’s a great example of this famous physicist.
0:16:03 He spent like two years as a biologist and like, I did some groundbreaking
0:16:06 work in biology just because he took ideas from physics that people hadn’t
0:16:09 really thought of frameworks and applied it to biology.
0:16:10 Right.
0:16:13 Anyways, I was very inspired by Munger for many, you know, decades, really.
0:16:14 Sillium.
0:16:19 And I was at a party at one of my investor’s houses.
0:16:21 And I was just talking to this older guy.
0:16:24 Neither of us knew anybody at this party or didn’t know many people.
0:16:27 And he asked me what my favorite book is.
0:16:31 And I started talking about poor Charlie’s Almanac, which is a great book
0:16:33 that Stripe just reprinted, reprinted, by the way.
0:16:36 I told him that book is my favorite.
0:16:37 And he started telling him why.
0:16:40 And I told the story of the, you know, worldly wisdom and how I was living in China.
0:16:43 I was bored out of my mind sometimes.
0:16:47 And so I bought all these books and just started reading books like hours a day every day.
0:16:52 And he let me talk for a long time before he was like, yeah, I know that book
0:16:52 really well.
0:16:53 I wrote that book.
0:16:56 And it turned out that I was talking to this guy named Peter Kaufman,
0:16:59 who wrote the book, Poor Charlie’s Almanac.
0:17:01 He’s like one of Charlie Munger’s best friends.
0:17:06 And he just thought, God, such a kick out of me telling him so much about how great
0:17:09 his book was that he brought me to Charlie’s house for dinner.
0:17:14 And many, what many times we came friends with a few other of Charlie’s friends.
0:17:17 They got involved, you know, invited to lots of dinners.
0:17:21 And Charlie, I remember when I first told him about what Flyxport does,
0:17:22 he was like, Oh, this is.
0:17:24 That’s great.
0:17:27 You have a great business because the key to success is dumb competition.
0:17:31 And he started ranting about like all of his experience working with great companies.
0:17:35 And I also think that’s a great little tagline, too, is like, remember,
0:17:38 you know, when you’re trying to think of what business to do.
0:17:43 All these guys doing AI startups, like make, I think applying AI to
0:17:46 some old school frozen industry is a great idea.
0:17:50 But just going straight head in, head on against other AI geniuses is like a recipe.
0:17:52 Like who wants to compete with people that smart?
0:17:56 Like you rather compete with knuckleheads wherever you can.
0:17:57 Yeah, exactly.
0:17:58 That’s a very simple principle.
0:18:03 Like in poker, table selection is like probably the most important decision you make.
0:18:06 So everyone thinks poker is about like, you know, the bluffs and the advanced
0:18:08 betting strategies or whatever it is.
0:18:12 And a huge amount of your success comes down to which table did you choose to sit down at?
0:18:15 If you chose to sit down at the fish table, you’re going to do pretty well.
0:18:17 And that one decision was the most important decision you could have made.
0:18:20 If you sit down with all the sharks, well, good luck.
0:18:21 It doesn’t matter how good you are.
0:18:24 You’re probably just going to, you know, bash your head against the wall for a while.
0:18:26 That’s why I don’t play poker.
0:18:31 When you met this guy, like you said, you’re at a party and you’re like,
0:18:31 we both didn’t know anybody.
0:18:35 There’s this like alliance of the outcasts that happens.
0:18:39 And I don’t know if you’ve heard the story about Ben and Jerry’s, but they asked Ben,
0:18:40 you know, Ben, how’d you meet Jerry?
0:18:44 And he goes, well, they go, were you guys friends immediately?
0:18:45 Cause they’ve been friends for a long time.
0:18:49 He goes, no, he goes, we just were in the same PE class and they had,
0:18:50 we had to run the mile and both of us hated running.
0:18:52 So we were the only two guys walking.
0:18:55 And eventually, if you’re just walking at the back with one other guy,
0:18:56 eventually you’ll start talking.
0:18:59 And he’s like, that was the foundation of Ben and Jerry’s also.
0:19:05 I want to ask you about this.
0:19:06 You said you moved to China.
0:19:08 What was the thought process that got you there?
0:19:09 And then what’d you get out of doing that?
0:19:14 Um, it was 2005.
0:19:16 It was clearly booming.
0:19:17 It seemed like the future.
0:19:20 We were at that time was working for my brother.
0:19:24 We had the scooter company buying dirt bikes and wrote, we say scooters,
0:19:29 but off-road vehicles, doing buggy, all kinds of cool motor sports products.
0:19:34 Uh, and we were buying everything from China, but not like they were buying
0:19:35 everything off the internet.
0:19:37 No one had, they hadn’t been to China.
0:19:37 Right.
0:19:40 And during college, I lived in South America.
0:19:45 I lived in Chile and Brazil and I learned, I speak Spanish and Portuguese.
0:19:49 So I was like, I can, if anyone could learn Chinese, I could probably learn Chinese.
0:19:52 I learned these other two languages, which was very naive.
0:19:56 Um, so I saved up a little money and just like moved there.
0:19:58 Did you plan to be there for a while?
0:19:59 Did you buy a one-way ticket?
0:20:01 Well, what was the, what did you tell yourself going in?
0:20:03 I don’t know.
0:20:04 I didn’t have an exit plan.
0:20:08 I was, um, just going to learn Chinese and, and learn about Chinese culture
0:20:11 and history and economics and what’s going on in the boom.
0:20:15 What’s your tip if somebody’s in their twenties and they’re, they’re kind
0:20:18 of intrigued by this, like the adventure path.
0:20:19 What would you tell them?
0:20:20 Like, how would you tell them to think about this now that you’ve done it?
0:20:23 Well, I, I think it’s really about your values, you know, and really
0:20:26 introspecting, you can select your values too.
0:20:28 Well, a lot of people just kind of go through life without thinking about this.
0:20:28 I, I did.
0:20:33 And my value without knowing it consciously, my number one value in life
0:20:36 until I was about 25 or 26 was adventure.
0:20:41 And I just wore on the like trial kinds of go all over the world.
0:20:43 And remember, this was pre iPhone.
0:20:44 So it was like pretty adventurous.
0:20:47 Like I didn’t have GPS in my pocket or translation apps or anything.
0:20:51 I mean, I just had to like trigger stuff out, walking around, asking
0:20:55 people for directions and hoping they’d be nice to me, which they were,
0:20:57 but it was definitely an adventure.
0:21:01 I, I, and so at that time, that was my value was like chasing adventure.
0:21:04 That’s not for everybody, but if it is, like, it’s pretty easy to achieve.
0:21:05 Go into cheap places.
0:21:07 It’s a lot less adventurous these days.
0:21:11 I mean, you show up, you call, now you go to China, you call Uber or DD or DD,
0:21:15 I guess, and you got Google Trans, you got maps, you got translation apps.
0:21:17 It’s like, it’s a little too easy.
0:21:23 Um, I once rode my bicycle from China to Vietnam and no map.
0:21:27 Without the map we had was all wrong, which is worse than no map almost.
0:21:30 And we just had to figure it out.
0:21:33 And we slept at people’s houses at certain times.
0:21:37 Like it was like, yeah, old school adventures.
0:21:40 I think back to my question about why Paul Graham called you, you know,
0:21:42 an armor piercing shell who just, you know, who figures things out.
0:21:45 I think, I think this is where you get the reps in, right?
0:21:49 Like it doesn’t start the problem solving and confidence that I’m going to
0:21:53 figure things out, doesn’t just start the day you incorporate your, you know,
0:21:54 your startup in Delaware.
0:21:57 It starts by getting a bunch of reps earlier in life, maybe.
0:22:02 I think learning a foreign language in that country is extremely, it’s not a
0:22:06 good ROI from like, you probably won’t make any money off of this, especially now
0:22:07 with chat GPT is incredible.
0:22:11 I can do live translation into every app and every language.
0:22:17 I mean, but like the humility of like people, everyone thought I was a freaking idiot.
0:22:19 I mean, I was like, I couldn’t speak.
0:22:25 And like, you know, bus drivers think I’m an idiot and having that over and over
0:22:31 and over again every day is pretty good for your ego and your humility.
0:22:34 And also for relating to other people, like in your country.
0:22:37 And when you went there, so you’re like, I’m going to go, I’m going to learn
0:22:41 the language, I’m going to travel, but you’re a business junkie.
0:22:44 Like you said something I saw in the research, which was like, you know,
0:22:48 I was like, oh, this guy’s my kind of people, you go, my form of entertainment
0:22:51 is making a landing page one night and sending some traffic and seeing if
0:22:52 people click to buy.
0:22:52 Right.
0:22:56 So did you, were you kind of scheming and dreaming about business
0:22:56 while you were there?
0:23:01 What were you doing on the business side while you were sourcing all of our
0:23:02 products from China?
0:23:07 And so I was like, I would go to factories, buy and like evaluate quality,
0:23:12 management, I do everything, make websites, we do marketing, customer service.
0:23:14 Was that scooter business any good?
0:23:15 Did you make any money doing that?
0:23:16 What was the result?
0:23:23 It was pretty good for like, you know, you made salary, like W2 level income
0:23:28 that was above all of our friends at the time, but not like change
0:23:29 your life kind of income.
0:23:29 Right.
0:23:32 You know, this podcast, the title of it is called My First Million.
0:23:36 And one of the things I, at the beginning, the premise of the podcast was
0:23:38 it was going to be, let me bring people on and ask them how they made
0:23:38 their first million.
0:23:40 And then that’s, that’s where it started.
0:23:42 I ended up pivoting to something else and kept the name because when
0:23:44 something gets popular, changing the name is a little risky.
0:23:47 But I still do like the question of like, when you, when you did
0:23:49 make your first million, what changed?
0:23:53 Because I view money as a tool to improve the quality of your life.
0:23:56 And I think it’s very easy to slip into money as this kind of measuring
0:23:58 stake or just think this thing you accumulate over time.
0:24:03 And so I’m curious for you, once you kind of had a win, probably during
0:24:07 the import genius days where, okay, you’ve made some, some like real
0:24:09 money that you freeze up your time.
0:24:10 How’d you use it?
0:24:11 And how did it feel?
0:24:13 And what was your mindset, you know, during that time?
0:24:14 Can you share anything like that?
0:24:17 Cause I think that’s where a lot of people want to get to or they’re,
0:24:18 they’re just at who listen to this.
0:24:20 And I think that would be pretty relatable for them.
0:24:23 First thing I did when I started making money was pay off all my student debt.
0:24:24 Okay.
0:24:26 Uh, that, that, that felt great.
0:24:32 I invested it wisely, put a lot in the wealth front, index fund investing.
0:24:37 Bought a couple of like real estate, cash generating real estate properties.
0:24:38 I made some stupid decisions too.
0:24:42 I once invented it invested in a nightclub that failed.
0:24:43 That was stupid.
0:24:45 But it didn’t change much.
0:24:50 Well, first off, people would tell you that money’s not important or won’t.
0:24:54 I don’t believe these studies that say like, oh, like, you know, you stop.
0:24:56 That’s 75 years improving your life at a certain point.
0:24:58 I’m certain that that can’t be replicated.
0:25:01 You know, most, most of these psychology studies turn out to be not,
0:25:04 there’s a replication crisis in psychology.
0:25:05 And I’m certain that that’s one.
0:25:13 Um, and, and like, you know, that money is great because the more people have,
0:25:16 the more they want must be great.
0:25:16 Right.
0:25:19 That’s amazing.
0:25:20 Can’t get enough of it.
0:25:21 Um,
0:25:23 Wait, can you say more about this paradox of wealth?
0:25:25 Cause I saw you write down this idea.
0:25:28 I want to read you a line from this and just kind of hear, hear you talk about this.
0:25:30 So you, here’s what you wrote.
0:25:34 You wrote paradox of all focusing on making money will cause you to make less
0:25:37 money. Nobody wants to give money to people who are too focused on money.
0:25:40 They perceive them as greedy and self-interested, try to avoid them.
0:25:42 They give money to people who add value for them.
0:25:43 It is fine to want money.
0:25:44 It’s great.
0:25:48 In fact, money is one of the best things in the world, but it’s a paradox.
0:25:50 The more of it you want, the less of it you get.
0:25:54 So hack your brain into instead focusing on the things that are upstream of making
0:25:56 money. What’s upstream of making money?
0:26:00 Yeah, I think upstream making money is solving problems for people at the end
0:26:03 of the day, which means learning how to build your skill set ups.
0:26:06 You can learn upstream of that is learning what the problems are and the
0:26:10 developing a set of skills and capabilities to let you solve them.
0:26:13 Salespeople that can suffer from this or they can be great.
0:26:16 Like great salespeople are really consultative, like you did asking
0:26:20 questions, go to diagnosing problems, understanding what their product
0:26:23 or their firm can do to solve that problem.
0:26:25 And, you know, you bring those together, you win.
0:26:25 Yeah.
0:26:29 Everybody wins, creating win wins, but the perception of a salesperson
0:26:33 is a pusher that, uh, I’m going to make you, I’m going to try to get you to buy
0:26:36 something you don’t want or mean, which is a bad salesperson.
0:26:37 Yeah, we’re late.
0:26:40 But that’s the image that most people have when they think of salespeople.
0:26:46 And, you know, this is true because we can’t even call people a salesperson.
0:26:52 Account executives, because sales is such a bad word.
0:26:54 Yeah, we had to rebrand it.
0:26:56 We had to go ALE instead of Mayo.
0:26:59 There’s only a couple of, this may have changed.
0:27:00 I think it did.
0:27:04 In fact, a few years ago when I looked into it, there were only three universities
0:27:06 in the United States that offered a major in sales.
0:27:07 Wow.
0:27:09 You know, like it’s part of everybody’s job.
0:27:12 It’s like probably 10% of all the jobs in the whole world are sales.
0:27:15 They’re explicitly, and then everybody has to sell their ideas.
0:27:19 Um, and we’ve, yeah, kind of been wrongly scapegoated as though this was
0:27:25 like a terrible profession when in fact they’re the key driver of every company.
0:27:30 Even tech, so many good tech companies fail with good technology
0:27:33 because they can’t ever learn how to sell it, get customers.
0:27:36 And then there’s companies where the tech is just, they don’t even have
0:27:37 tech and they’re just good at selling.
0:27:43 So, yeah, I think hacking the brain, I used to say things are correlated with
0:27:46 money, but I think it’s better to go upstream and actually causing good
0:27:47 generation of wealth.
0:27:52 Uh, and the more you can study that, um, then you’ll get lots of wealth.
0:27:55 And I don’t think it’s bad to want money, but you just have to realize
0:27:58 like it might cause you to get less.
0:28:00 It’s a bit like love, by the way.
0:28:06 Someone’s obsessed with finding a girlfriend or husband or something.
0:28:07 Like it kind of creepy.
0:28:11 You like, you know, work on yourself instead.
0:28:12 Yeah, that’s a great one.
0:28:13 There’s a great story about Buffett.
0:28:16 I don’t know if you’ve heard this one where he goes to a classroom and
0:28:19 there’s a bunch of kids sitting there and he says, all right, let’s play a game.
0:28:22 And he basically says, I want you to point to one person in this classroom.
0:28:26 You could choose any classmate, not yourself, but somebody else.
0:28:29 And you get to get 10% of their earnings for the rest of their life.
0:28:34 Write down on a piece of paper the name of the person you’re picking and why.
0:28:36 And so, uh, have you heard the story before?
0:28:40 I don’t want to, yeah, but maybe it’s not going to surprise you, but like,
0:28:41 it’s, it’s interesting.
0:28:43 The first, I think it makes the point well.
0:28:47 So he, everybody writes down the name and then he brings it up.
0:28:49 He’s like, you know, okay, who here, just raise your hand.
0:28:51 Did you pick the person with the best grades?
0:28:53 And as nobody raises their hands.
0:28:55 So there’s already that tells you something, right?
0:28:59 About school and what we think is the valuable thing versus what everybody
0:29:01 intuitively in their gut knew is the valuable thing.
0:29:05 He says, okay, did you just pick the person with the highest IQ and a
0:29:06 couple of people raised their hands?
0:29:09 Did you pick the guy who could throw the football the farthest?
0:29:10 Nobody raises their hand.
0:29:14 Um, and so then he finds it starts asking, he’s like, what qualities did you pick?
0:29:18 And basically that’s where, you know, it came down to some version of the
0:29:22 following characters that Buffett ultimately used for, for picking people,
0:29:24 which is, you know, he talks about like energy.
0:29:27 So it was people who were really, they’re really obsessed with things,
0:29:27 really into things.
0:29:30 When they get, when they put their mind to a project, they just never stop.
0:29:31 They just never give up.
0:29:33 They just kind of have an endless energy towards something.
0:29:35 Another one was like integrity, right?
0:29:39 Cause if this person is going to act out of bounds, then, you know,
0:29:41 owning 10% of their future, if they’re in jail is not going to do me much good.
0:29:44 I got to have somebody who’s going to play by the rules and play by the law.
0:29:46 They know what rules to break and what rules not to break.
0:29:49 And then the last one was intelligence, which was somebody who’s good at
0:29:51 figuring things out specifically.
0:29:54 So not your grades or just your raw IQ, but somebody who tends to figure
0:29:57 things out and, um, he’s like, great.
0:30:00 So now you have the formula of what you need to be, right?
0:30:02 Like if that’s what you would pick in others, that’s what you need to be.
0:30:06 And there’s, that sort of reminds me of the, the paradox of wealth,
0:30:08 which is like, if you put a hundred people together, you’re like, all right,
0:30:10 who’s going to be the wealthiest?
0:30:14 I think intuitively we would know it’s not the person who’s going to just like
0:30:18 sort of only chase money and try to just extract as much money as they could
0:30:19 out of some system.
0:30:21 It’s probably not going to work as well as somebody who does the things
0:30:21 you talked about.
0:30:25 Speaking of school, I took a negotiations class once and it was one
0:30:26 of my favorite classes.
0:30:28 Um, everyone should try to get into one of these things.
0:30:31 Cause the way you work is you’re always wanted to take this.
0:30:34 I don’t want to go to business school, but I’d love to take a negotiation class.
0:30:38 They’re, you’re given like a case study where both parties read this document.
0:30:42 You have slightly different rules to play and then you negotiate with each other.
0:30:45 Under those conditions, but what’s, what’s amazing is that in a class,
0:30:47 there’s 30 other pairs.
0:30:49 If there’s 60 people in your class, there’s 30 other pairs or 15,
0:30:52 whatever, however many people, um, doing the exact same thing.
0:30:55 So you can compare yourself, how you did against other people in the same
0:30:56 seat as you.
0:30:58 And that was over almost 20 years ago.
0:31:01 It was very interesting cause I’ve stayed in touch with a lot of these people.
0:31:04 And you can track the people who are the best negotiators in a classroom
0:31:08 environment or not the most successful because they’re very good at
0:31:12 extracting too much in a one-off negotiation, but that’s not how life works.
0:31:12 Right.
0:31:14 In life, there’s repeat games.
0:31:15 Like you got to let the other guy win.
0:31:20 You got to, you know, if you just took advantage of someone like they’re never
0:31:22 going to want to do business with you again, guess what?
0:31:24 Like you’re not going to do that well.
0:31:29 So it’s kind of an interesting, like, like long longitudinal study
0:31:30 that someone could do on these things.
0:31:34 I worked with my dad for about nine months and working with your dad’s
0:31:36 an interesting experience in a bunch of different ways.
0:31:39 But one of the things, you actually get to see your dad in a new context.
0:31:40 And I got to see my dad at work.
0:31:43 And one of the things that I asked other people at work, I go, what’s
0:31:43 my dad good at?
0:31:44 What’s his strength?
0:31:48 And they all said, um, you know, he’s a good negotiator.
0:31:52 He’s a great negotiator, but he’s a little too tough.
0:31:53 And I was, okay, interesting.
0:31:56 That’s because I asked strength and weakness and they kind of said the same thing.
0:32:00 So I got into the situation where it was one like high stakes negotiations.
0:32:03 Basically, like the future of the company was like kind of up for grabs.
0:32:04 And somebody had leveraged, somebody else had leveraged.
0:32:09 We all sat down at this table and my dad did one thing really great, which was
0:32:12 he was like, we didn’t really like the options on the table.
0:32:14 And he’s like, Oh, okay, cool.
0:32:18 I’ll always go with the third option that no, I was like, no, what?
0:32:19 Like, what’s your counter?
0:32:19 He’s like, no counter.
0:32:20 No.
0:32:24 And he’s, you know, he’s like, basically in a negotiation, he’s like, um, I was
0:32:26 like, well, how are you going to, you know, explain this?
0:32:28 He’s like, Oh, it’s not about explaining in a negotiation.
0:32:31 The more irrational person tends to win, the more stubborn party wins.
0:32:34 Cause the other person will just realize this person’s irrational.
0:32:35 So I just have to play by their rules.
0:32:37 So he was super stubborn to anyone.
0:32:39 And at the end they took a break.
0:32:42 They kind of like, okay, let’s go break before we kind of come back and finalize.
0:32:45 And I asked this other guy who was kind of the arbitrator sitting there.
0:32:47 I said, what do you think?
0:32:49 And he goes, I think you took too much.
0:32:51 And my dad kind of smiled.
0:32:52 He took it as a point of pride.
0:32:54 And I sort of was like, well, what do you mean by that?
0:32:57 He’s like, he’s like, you, you were at a poker table and you tilted the table
0:32:59 and all the chips went towards you.
0:33:01 There’s no way this deal gets done.
0:33:02 Eventually gets done, right?
0:33:04 Because they have nothing to gain.
0:33:06 You’ve, you’ve taken everything away from them.
0:33:08 So they have nothing to gain out of this transaction.
0:33:12 Today they feel forced, but soon they’ll just realize, ah, this is not even,
0:33:13 I don’t have to do that.
0:33:13 I’d rather not.
0:33:15 And that’s exactly how it played out.
0:33:19 And I, you know, I learned a little lesson sort of at my dad’s expense about
0:33:23 in a negotiation, you sort of, both sides need to leave a little wanting.
0:33:26 Or even if you take too much, you sort of need to give back at the end
0:33:30 in order for something to be sustainable, or especially if you’re playing a repeat game.
0:33:34 Where have you had, you know, negotiation in your life since then, right?
0:33:37 Cause it’s just not a, not a, not an everyday thing.
0:33:38 It’s a, it’s a once in a while thing.
0:33:43 Oh, man, we run a global logistics company where we’re, we have to procure ocean frayed
0:33:46 and air frayed, and then we have to sell air frayed and ocean frayed.
0:33:48 Maybe it’s a daily thing for you, talking custom services, everything else
0:33:50 that we do on the end to end basis.
0:33:52 So there’s a huge amount of negotiation.
0:33:56 I think one of the big opportunities we have in this industry is I think the
0:34:01 industry is very short term focused and transactional, almost mercenary.
0:34:04 And some of these things you have to kind of go with the industry.
0:34:07 You can’t change everything about the industry at once, but being able to play
0:34:08 the long game and say, Hey, we’re going to win.
0:34:13 We’re going to make tons of money by building trust with people and showing them
0:34:18 where the profit pools are and not, not taking too much of it and figuring out how
0:34:23 do we create the right win-win scenario and not, I think it’s a good framework actually
0:34:28 for evaluating any company is kind of, there’s six stakeholders at the table.
0:34:33 For every company you have your customers, you have your vendors, which in some cases
0:34:35 don’t matter that much, but for us, they matter a lot.
0:34:40 You’ve got your employees, your investors, you have regulators, and you have
0:34:43 like the communities where you live and operate.
0:34:46 And so you’ve got these six stakeholders and you got to create a win-win.
0:34:49 And it’s a very simple way for each of them.
0:34:51 They need to win in an ideal scenario.
0:34:55 And you can go through almost any, any company and say, okay, let’s score
0:35:00 them A through F on for each one of those things.
0:35:04 Very rare to find a company where every single party’s winning.
0:35:07 Somebody’s usually, you know, like.
0:35:08 So what’s the goal?
0:35:11 Is it mostly A’s but nothing below a C?
0:35:12 What are you trying to do?
0:35:16 It should be A’s, but where you have something that’s bad, like you’ve got
0:35:19 a lot of risk and that’s no good, right?
0:35:21 It could all come to a stop.
0:35:27 Like if they, especially if that, like the regulators are not happy, communities are
0:35:30 like, I don’t know, protesting you and trying to run you out of town.
0:35:32 Like, I think like every MP is a good example.
0:35:33 I think it’s a great company.
0:35:35 Guests pretty much love it.
0:35:41 The, the homeowners definitely love it and making free cash off this unused asset.
0:35:43 Investors done really great.
0:35:46 Uh, the employees seem really happy over there.
0:35:50 The regulators, they not thrilled in some cases.
0:35:52 They did manage it.
0:35:55 Sometimes they like it because it generates tax reminux communities.
0:35:56 I don’t know.
0:35:58 I don’t want people throwing a party in the house next door to mine.
0:36:03 And so that’s an area for them as they have this framework.
0:36:05 Okay, where should we emphasize what are we doing?
0:36:08 And they have, they look at this, I don’t know, they use that exact framework,
0:36:11 but they certainly are going, okay, let’s ban partying.
0:36:13 What else can we do to make neighbors like us more?
0:36:13 Right?
0:36:16 Like, uh, and so it’s a, it’s a pretty simple framework.
0:36:19 I think someone’s looking for a job at a company.
0:36:22 They should definitely take, take the time to score each company they’re
0:36:25 considering on this framework or investors the same way.
0:36:28 Cause it, you know, if everybody’s not winning and the thing might not be
0:36:33 sustainable for the longterm and all the good returns as an investor come by
0:36:37 holding for a very long time and letting the, the, the compounding machine run.
0:36:37 Yeah.
0:36:39 The risk accumulates.
0:36:42 Uh, it may not be a problem right now, but it’s, it’s accumulating eventually.
0:36:43 That’s a powder keg.
0:36:49 So here’s the deal.
0:36:53 I made most of my money from a newsletter business.
0:36:54 It was called the hustle.
0:36:57 And it was a daily newsletter at scale to millions of subscribers.
0:36:59 And it was the greatest business on earth.
0:37:04 The problem with it was that I had close to 40 employees and only three
0:37:05 of them were actually doing any writing.
0:37:08 The other employees were growing the newsletter, building out the
0:37:10 tech for the platform and selling ads.
0:37:13 And honestly, it was a huge pain in the butt.
0:37:16 Today’s episode is brought to you by Beehive.
0:37:19 They are a platform that is built exactly for this.
0:37:22 If you want to grow your newsletter, if you want to monetize a newsletter,
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0:37:38 You are also a partner at Founders Fund, right?
0:37:40 Yeah, I venture partner.
0:37:41 A venture partner at Founders Fund.
0:37:44 Your LinkedIn says, looking for a generational company to back.
0:37:47 How’s that going?
0:37:47 Great.
0:37:50 I mean, I Founders Fund, I’ve been a very loyal part of the Founders
0:37:52 Fund network for a while.
0:37:54 They were our first Series A investor.
0:37:59 They lent our A and our B and participated, I think, in every other
0:38:01 round that we’ve done, basically.
0:38:05 And when they asked me to join, it was kind of no-brainer for me.
0:38:07 I mean, it took me a little while to say no a bunch of times.
0:38:10 I shouldn’t say no-brainer, but the only fund that we can center joining,
0:38:14 because I think they’re really unique in their refusal to follow the herd
0:38:17 and to think for themselves.
0:38:20 But I joined actually Fulltime as a general partner.
0:38:22 And then I came back to Plexport.
0:38:26 I took about six months where I was the executive chairman.
0:38:30 And then I realized I had to come back and be the CEO again at Plexport.
0:38:34 And so I kind of scaled my roll way back at Founders Fund.
0:38:35 But I’m still part of the team.
0:38:38 You said they’re unique in how they do things.
0:38:42 I’ve interacted with them a bunch, too, and felt that.
0:38:44 But I’m always interested, what’s the cause of that effect?
0:38:49 So what is an example of something that they do differently on the input side
0:38:53 that leads to the output of being sort of independent thinkers
0:38:55 or contrarian or willing to make bets that others don’t?
0:38:59 Well, a lot of it just comes from Peter being refusing.
0:39:03 Like he’s just like, that’s his whole life thesis is that people are memetic
0:39:08 and they will chase the same outcome, the same goal, the same object,
0:39:09 the same memetic desire.
0:39:10 Everybody wants the same thing.
0:39:14 And if you can avoid that, there’s a huge arbitrage opportunity.
0:39:17 If you can go look where other people are looking.
0:39:21 And so a lot of it just comes, I would say, probably it’s just from Peter.
0:39:24 But they’ve really trained it into the team.
0:39:26 It’s how does that manifest itself?
0:39:28 It’s a very high paying job.
0:39:30 Founders Fund actually has a better compensation structure.
0:39:33 It’s almost all tied to the outcomes, the performance.
0:39:36 But like a lot of VCs just make super huge.
0:39:40 You’d be surprised how high the salaries are at a lot of the other VCs.
0:39:44 So they make a lot of money in a job that can’t really be measured
0:39:47 except on a 10-year time horizon, even on that, it could be luck.
0:39:53 And so and you don’t have like an overseeing like a boss breathing down your neck.
0:39:56 Like you can do it from anywhere, kind of.
0:40:00 Nobody’s every time I email a VC, they seem to be in France.
0:40:07 So it’s it’s a it’s a job that like is kind of a dream where you just.
0:40:09 So what’s the incentive structure there for?
0:40:11 Like just don’t get fired.
0:40:14 And it’s hard to fire you for performance.
0:40:16 Because it takes a long time for these things to mature.
0:40:17 And again, it could be luck.
0:40:22 So the way you get fired is by everybody consensus agreeing that you’re doing dumb things.
0:40:23 It’s not by doing dumb things.
0:40:28 It’s by having a consensus form around you that this guy’s making dumb decisions.
0:40:29 We got to fire.
0:40:33 And there are a lot of cases where funds fired someone who it turned out
0:40:37 a few years later had like been their best guy, but they didn’t know it.
0:40:41 So therefore, the way to avoid getting fired in VC.
0:40:43 Yeah, this is not found as well.
0:40:44 I like about them that they’re very different.
0:40:48 But is the way to avoid getting fired is to be, well, to double check
0:40:52 everything you do with other VCs, right, to make sure everybody agree.
0:40:54 And you don’t want to do it internally, because then you look like you’ve got
0:40:57 no opinions that you can’t operate.
0:40:59 So you do it with all your buddies at all the other VCs.
0:41:03 So it’s just a collusion, massive collusion racket on perp.
0:41:05 Like there’s no the incentives are just structured
0:41:10 sense that everybody’s talking to everybody to double check and make sure.
0:41:14 And then that leads to regression herd mentality, regression to the mean.
0:41:20 It leads to people not wanting to take a lot of risk, which is just a lay
0:41:21 is just lame, right?
0:41:26 Like venture capitals should be all about risk taking, but it’s not often.
0:41:31 It’s not. And the founders one’s very good at not participating in those things.
0:41:33 They don’t really go to conferences.
0:41:35 The conference they do is called heretic on.
0:41:39 It’s like literally about heretical ideas that you’re not allowed to say out loud.
0:41:41 That’s probably the most unique conference.
0:41:42 Most people probably don’t know what it is.
0:41:44 Can you explain what heretic on is?
0:41:48 And then maybe some examples of what a talk at heretic on might be about.
0:41:51 It’s heretic on his idea.
0:41:54 But most conferences, people on stage are like, you can’t say anything
0:41:56 that’s not sitting the mainstream narrative.
0:42:00 Right. And heretic on the idea is that you come up into a stage
0:42:04 and say something that would like get you canceled or some heretical idea.
0:42:07 The definition, again, they don’t publish the talks online.
0:42:10 I don’t think because of the nature of it all.
0:42:14 But I’m working on, I’m going to do a talk if if I can make maybe next year,
0:42:18 I’ll try to do a talk as the definition of heretic, a person holding opinion
0:42:19 at odds with what is generally accepted.
0:42:22 I texted a bunch of friends who went, I said, hey, what was the best thing?
0:42:26 And they were like, well, like, you know, somebody gave this to I like my belief
0:42:30 in the probability that aliens exist has like, has like actually meaningfully
0:42:35 changed based on X talk, or this person gave this talk about, you know,
0:42:38 the conspiracy around X, Y, Z.
0:42:40 And it just sounds fascinating.
0:42:44 It sounds like one of the few conferences where I would get there early
0:42:47 and stay late, which is like the market is like a brand, right?
0:42:49 Like, don’t don’t just follow the herd.
0:42:52 And they’re not trying to like just reference check every deals.
0:42:55 They’ll put their neck out there, make some crazy bets.
0:42:58 What’s amazing that I didn’t have yet figured out is how they have
0:43:02 such an amazing track record, because I don’t think just yellowing it.
0:43:05 And they’re very good at picking founders, I think, right.
0:43:07 There’s no formula for it because people are unique.
0:43:12 But it’s it is a really interesting and they’re writing.
0:43:17 They’re very big fun these days and they write large checks with conviction,
0:43:21 but without being like spreadsheet monkeys who are just, you know, it’s not all.
0:43:24 And then, of course, they do it due diligence and analysis and stuff.
0:43:28 But there’s they’re much more built on who the founder is and what they’re all about.
0:43:33 Right. Before you came on, I asked in the I sent this like doc to every guest.
0:43:35 And I one of the questions I asked is like, what are three strong opinions
0:43:36 or life philosophies you live by?
0:43:39 So one is related to what we’re talking about.
0:43:43 You had this quote from Emerson says, the great man is he who in the midst
0:43:47 of the crowd keeps with perfect sweetness, the independence of solitude.
0:43:49 And you had some examples under this.
0:43:50 Can you talk about that?
0:43:51 What that means to you?
0:43:52 And what are some examples?
0:43:56 Well, there’s some great, very practical examples that you can use in your life.
0:44:00 And you’ll be able to see that this is true and literally related to crowds.
0:44:04 And next time you are entering a stadium, watch, your brain will want
0:44:06 to just follow the people mindlessly into the stadium.
0:44:10 But if you’re able to snap out of that and go, wait, let me think for myself right now.
0:44:11 These people have no idea.
0:44:13 Most of them have never been to the stadium before.
0:44:14 They don’t know where the entrance is.
0:44:17 Right. There’s always another entrance that nobody’s lined up for.
0:44:20 You could just walk right in always like or parking.
0:44:22 I’m a big skier.
0:44:25 Whenever you go to the ski resort, there are these guys that are like waving
0:44:29 parking attendants and their their job is to park all the cars.
0:44:34 But their job is not to park your car as close to the mountain as you could be.
0:44:37 Like their job, like there’s not a thousand spaces right next to the chair lift.
0:44:41 So they’re going to point everybody to where there’s a thousand chair spaces,
0:44:43 which like for sure, you’re going to have to take some kind of shuttle.
0:44:46 Right. It’ll take you an hour to get to the ski lift.
0:44:49 But if you just ignore that guy, I mean, I don’t want to be rude.
0:44:52 And to go away to do this, it’s not like breaking the rules or whatever.
0:44:56 But go straight to the front and there will be a spot right next to the chair lift
0:44:57 because somebody leaves.
0:44:58 Somebody’s always leaving.
0:45:03 And so, yeah, you can you can apply this at the very practical level of like
0:45:06 moving your own body around when there’s large groups of people
0:45:09 and watching the herd mentality play out.
0:45:14 It’s very difficult often for people to do like people are terrified of public speaking.
0:45:19 For good reason, like for thousands of tens of thousands of years,
0:45:22 if you were standing in front of a large group of other humans,
0:45:25 they were probably about to kill you.
0:45:27 You’re either a leader or they were going to kill you.
0:45:30 So the bad’s going to happen.
0:45:33 This should be, of course, it’s terrifying.
0:45:37 And learning how to become their leader is not instinctual.
0:45:40 I think it may be for certain sub, you know, certainly not for me.
0:45:42 I took me a long time to get practice.
0:45:48 Some some degree of just practicing to not feel terrified in front of groups
0:45:49 and then to enjoy it.
0:45:51 And like, I don’t think leaders are terrified.
0:45:56 They they love the crowd or like, but even Bruce Spring, Bruce Spring says
0:45:59 he still gets nervous when he goes and plays and then he has to like hack his
0:46:03 brain to believe that that that’s like energy can harness to give the fans
0:46:04 what they want. Yeah.
0:46:06 Like you’ve mentioned a couple of things like just like that.
0:46:08 Bruce Spring’s in the mindset, hacking your mind.
0:46:10 Are you big into mindset?
0:46:17 I think any founder is it’s a it’s very hard for people to understand
0:46:23 what a roller coaster it is emotionally and how painful like the lows are pretty low.
0:46:26 And the high and the low can come in the same day.
0:46:29 You get a punch in the face constantly.
0:46:32 And yeah, you can get pretty down.
0:46:37 You need to have release mechanisms and hacks and ways to get yourself back up.
0:46:41 Because it’s not it’s certainly not not for everybody.
0:46:46 Can I tell you a little hack I do that maybe maybe is useful for anybody out there.
0:46:49 So I have a slack channel called literally highs and lows.
0:46:54 And what I do is that any time there’s a high or a low, I’ll go post it there.
0:46:56 And the beautiful thing about it, because it’s a slack channel,
0:46:59 you could just scroll up and realize you’re like three months ago.
0:47:02 Oh, yeah, I remember that felt like kind of the end of the world.
0:47:03 That felt really bad.
0:47:04 And now I don’t it’s like a stubbed toe.
0:47:07 It’s like, do you remember how your last stubbed toe felt?
0:47:09 Like, is this like a private channel?
0:47:09 Is this for yourself?
0:47:10 It’s me and my co-founder.
0:47:13 So we do this and I do this in across every business I have.
0:47:16 And so whether it’s a high I room and then I go back and I get humbled
0:47:20 immediately by a low, I’m like, OK, don’t don’t get too high on your own supply here.
0:47:21 Or it’s a low currently.
0:47:23 And I’m like, well, I’ve already gone through.
0:47:26 If you just scroll up, I’ve already conquered a bunch of mountains like this
0:47:28 before I’ve dealt with this, I’ll be fine.
0:47:32 And it’s like an immediate like kind of perspective machine.
0:47:34 And it’s not even like somebody else perspective.
0:47:37 It’s like, I also was in the same channel three months ago,
0:47:42 saying the same thing, crying wolf basically about this high or this low.
0:47:46 And neither, neither are as good or as bad as they seem in the moment.
0:47:48 It’s yeah, I like that.
0:47:48 I might try that.
0:47:54 But it’s very hard for another non sounder to appreciate how difficult that is.
0:47:57 My wife is a former journalist, tech reporter, in fact.
0:47:58 Oh, nice.
0:48:04 Her watching my ride firsthand, watching is the wrong word.
0:48:09 Participating in it has really kind of I oh, she’s like, man,
0:48:12 I wish I would have known this side of the thing when I was writing about tech.
0:48:18 And understood like because, you know, I think tech reporters are they all
0:48:23 reporters by very important function of like holding the powerful accountable.
0:48:26 But like founders are not that powerful.
0:48:30 It kind of suffering through like, right, you know, we’re up against
0:48:31 some very powerful forces in the world.
0:48:34 Like we feel like we’re the ones like trying to, you know, speak
0:48:37 truth to power and fight for the little guy and stuff.
0:48:41 And then meet on the narrative within the media has been like, oh,
0:48:43 the tech that, you know, the founders are the ones that we have to hold accountable.
0:48:48 We’re like, what about this like multi billion dollar trillion almost tens
0:48:50 of billion dollar mega corporation that I compete with?
0:48:53 Like, I’m kind of pathetic sometimes.
0:48:55 I mean, we beat them every day.
0:48:57 But like sometimes they’re better than us at certain things.
0:48:58 I’m like, we’re trying to get better.
0:49:00 We get better what’s faster than they do.
0:49:02 But we’re not always the best.
0:49:05 We’re starting out like, especially as an early stage founder.
0:49:08 You have another one of the life philosophies that was simple.
0:49:09 It had no extra words.
0:49:12 So I kind of want you to hear, I kind of want to hear your explanation of it.
0:49:14 You said, you can just do things.
0:49:17 What does that motto do for you?
0:49:19 Oh, I don’t know.
0:49:22 I think there’s this idea that you need somebody’s permission to do.
0:49:26 I mean, you should have it’s why, by the way, a law class is useful
0:49:30 for people if you’re an undergrad to try to get like into a basic class.
0:49:31 A law class?
0:49:34 Yeah, law, like don’t break the law, but you should have an understanding
0:49:36 with legal and what’s not.
0:49:38 China GPG is pretty amazing for this.
0:49:39 But in general, like it’s not illegal.
0:49:44 You can just do it and there’s a lot of things that people are expecting.
0:49:47 You know, we come up through this like education system where it’s everything’s
0:49:52 gated and you can’t get to 12th grade math until you finish 11th grade math or
0:49:55 whatever, and you don’t get to go to college unless you get these grades.
0:49:59 And so within the institutions of the world like others, you can’t just do
0:50:00 things. You have to follow the rules.
0:50:02 But like in the real world, that’s how it works.
0:50:06 Like there is no boss like waiting to tell you what you can do.
0:50:11 A lot of people believe that they have to raise venture capital
0:50:13 to start a company, for example.
0:50:15 And we’re like, well, maybe you should think of a different idea
0:50:18 that doesn’t need any money and just do it.
0:50:20 And that’s what we did.
0:50:24 And we raised VC after 10 years of doing companies without.
0:50:27 Right. Yeah, you don’t need to have like the victim mindset.
0:50:31 You have you on the YC application, there’s this question about like what
0:50:34 and the YC application is not long either.
0:50:36 So if the question’s on there, it must have some value.
0:50:38 There’s only like seven questions on the whole application.
0:50:43 And it’s what’s an example of a real world system that you’ve hacked?
0:50:47 Meaning like kind of like this, like you could just do things or not following
0:50:49 the crowd, finding the side door into something.
0:50:54 I asked my friend, Shiel, who I think invested in Flexport early on,
0:50:56 I go, hey, I got Ryan on the podcast today.
0:50:58 What’s a good Ryan story from early days?
0:50:59 He goes, oh, there’s a bunch.
0:51:00 He gave me one.
0:51:07 He goes, he bought AdWords for the keyword Uber promo and just put
0:51:11 his own promo code there and just got a bunch of cheap Uber rides for himself.
0:51:12 That way. Is that true? Did you do that?
0:51:16 I got, I became Uber’s best customer
0:51:18 lifetime, probably because I did.
0:51:21 I got like $10,000 in Uber credits by doing that.
0:51:25 And then I treated Uber like it was free because it was free for me for a while.
0:51:29 And I’ve probably netted out, netted out the spending.
0:51:34 Like, I bet you that, you know, I spent way too much for Uber as a result.
0:51:36 Yeah, that was a good hack.
0:51:36 I didn’t come up with that.
0:51:37 I copied it from a friend.
0:51:41 But you know, what’s funny is I had two friends that did that.
0:51:44 And I never, it never occurred to me to also do that, right?
0:51:47 Like I just assumed it was done because other people had done it.
0:51:49 And I think they kind of shut it down.
0:51:51 I’m not sure I’m not sure it was even bad.
0:51:54 Like I think I paid for Google’s AdWords campaign or Uber’s AdWords campaign for them.
0:51:58 So we had this dude call into the podcast once and he’s a guy in India.
0:52:03 And what he was doing was he realized there’s an arbitrage where Uber had this
0:52:07 like credit, like kind of you give credits to somebody and then you’ll get credits, right?
0:52:10 That was the kind of like the PayPal give 10, get 10 type of model.
0:52:15 But what they didn’t do is they didn’t account for geographic differences at the time.
0:52:17 So he would just get a bunch of people in India to sign up.
0:52:20 He’d give them, you know, $10 of Uber credits, which is like a big deal.
0:52:25 And they would sign up and they would take a ride and a ride in India is really cheap.
0:52:28 And he would get $10 of credits and he would sell it to Americans.
0:52:31 And so I bought thousands of dollars of credits off this guy.
0:52:34 And I wrote really, really cheap because you could buy like five grand of credits
0:52:38 for like a thousand dollars because this guy was farming them in India, basically.
0:52:39 And this worked for years.
0:52:43 And he called into the podcast and he was like literally in like a small apartment
0:52:47 in rural India. And he was like, he’s like, I make, you know, like,
0:52:51 but I forgot what it was like $15,000 a month, which is more than like my entire village
0:52:54 makes basically doing this. He goes, I don’t know how long it’ll last.
0:52:55 That’s why I’m still living here.
0:52:57 I’m just saving it up for now.
0:52:59 But eventually they’ll close this loophole.
0:53:00 And when they do, you know, that’ll be a sad day.
0:53:04 But it was amazing to see that loophole, that hack.
0:53:07 Yeah, I definitely spent through the credits pretty quick
0:53:10 and then just became Uber’s biggest customer for a long time.
0:53:13 Now, now I’m mostly riding my bike and I stopped riding Uber to work.
0:53:16 One thing I find fascinating is you have a side hustle.
0:53:19 And I find this interesting when entrepreneurs have these like side things
0:53:21 that just work right off the bat.
0:53:24 You did this one about phone booths, like phone booths and companies.
0:53:26 Could you just quickly tell this story?
0:53:27 Because I think it’s kind of inspiring.
0:53:29 Yeah. Well, unfortunately, it closed down.
0:53:31 They sold the company and I didn’t make any money.
0:53:33 I think it was kind of mismanaged, to be honest.
0:53:34 OK, fair enough.
0:53:37 We basically it started at Flexport.
0:53:42 We never had enough conference rooms or and so I made
0:53:45 I got these carpenters on Craigslist to make a couple of phone booths out of
0:53:49 just like wood built at phone within our office at Flexport
0:53:53 and put like a lot of foam padding in there to make it somewhat soundproof.
0:53:57 And they were terrible, the ones I made myself on Craigslist
0:54:02 because I didn’t put we put a fan, but not enough ventilation.
0:54:04 So you’d come out of this thing, just dripping and sweat.
0:54:08 And yet people were in there nonstop using it.
0:54:12 I was like, if the product is this bad and yet everybody wants to use it,
0:54:14 there’s like something here. Yeah.
0:54:18 So my friend, Henrik, who’s the founder of AirHelp,
0:54:21 really ran with this idea and should give him all the credit.
0:54:23 He built it into a company.
0:54:25 I kept talking about it.
0:54:27 This is another thing to do is like talk about your business ideas
0:54:29 that added parties and stuff.
0:54:32 And if everybody wanted, every time I talked about this idea with founders,
0:54:34 they’d be like, I want to buy five of them.
0:54:36 It was like, oh, man, I should just start this company.
0:54:39 I’ve got like a waiting list to buy this stuff.
0:54:41 So we made like these really nice, Swedish design.
0:54:45 And now that the company’s failed or been sold, I can tell you the IPs.
0:54:49 The secret here, the intellectual property was we didn’t.
0:54:53 We put three fans in that thing.
0:54:55 Then put the genius, the genius hack.
0:54:59 So we was doing like $50 million in sales.
0:55:02 50? Yeah.
0:55:04 We’re selling thousands of them and somehow we couldn’t make money.
0:55:05 I was very frustrated.
0:55:06 We hired a CEO.
0:55:09 Just the unit economics are wrong or the overhead was the problem.
0:55:11 Too many people on the team spending money on BS.
0:55:12 I’m not sure what happened.
0:55:14 I’m a little pissed about it because it’s like, dude,
0:55:15 you’re selling $50 million of the phones.
0:55:17 You should make 10 million a profit at least.
0:55:19 Like the high margin.
0:55:19 All right.
0:55:22 Somebody should reboot this idea and just do it without the mismanagement.
0:55:24 I believe so.
0:55:26 Now, it might have become very competitive space.
0:55:27 I think there’s a lot of people at the time.
0:55:30 There was no good cheap phone booth out there trying to make like,
0:55:33 I think we sold them for like three grand.
0:55:34 But you can make a phone booth for a thousand bucks.
0:55:37 Like, come on, it’s not that hard.
0:55:40 So I think in the, you could just do things category.
0:55:40 I’m going to put this in there.
0:55:42 I think somebody could just do this again.
0:55:45 Yeah, feel free to run with that one because that company didn’t work.
0:55:46 They sold to somebody.
0:55:48 But I think the founder had ambition to be like
0:55:51 billion dollar unicorn company instead of like, dude, let’s.
0:55:55 Let’s tell this thing to staples for 50 million dollars and like be happy.
0:55:56 Right.
0:55:58 Exactly.
0:55:59 Right.
0:56:00 Thanks for coming on, man.
0:56:01 This is, this has been fun.
0:56:03 I’m a user of Flexport.
0:56:04 I use it for my e-com biz.
0:56:06 You’ve, you’ve helped me forward a bunch of freight.
0:56:08 I, here’s how I know you’ve helped me.
0:56:10 I still don’t know what freight forwarding really is.
0:56:13 And we’ve done, you know, tens of millions of, you know, a year in revenue.
0:56:14 And that’s the beauty of it.
0:56:15 I don’t have to know.
0:56:17 I just know that our shit gets taken care of.
0:56:18 It’s a low price.
0:56:19 It’s the easiest to use tool.
0:56:21 So thank you for, for making that happen.
0:56:24 Thank you for importing this also, because I would have never found my supplier.
0:56:28 Had I not used that, where should people follow you and find out more?
0:56:29 I’m on Twitter.
0:56:36 My handle on x.com/typesfast is my handle and go to flexport.com.
0:56:40 If you’re a e-com business where you run any kind of logistics, you need to
0:56:42 ship things from anywhere to anywhere.
0:56:46 We started in freight forwarding, which is why joking should be called freight
0:56:46 email forwarding.
0:56:50 Sean is like passing emails around the world to get a container or smear freight
0:56:53 move. But last year we acquired Shopify Logistics.
0:56:57 And now we do direct to consumer fulfillment all the way to the door,
0:57:01 as well as like distribution into Amazon, FBA handling that problem of like
0:57:03 getting appointments and managing all of that.
0:57:07 So helping brands solve problems in their supply chain is what we’re all about.
0:57:08 There we go.
0:57:11 By the way, you’re at your handle is types fast.
0:57:12 And I love it.
0:57:13 Your brothers is types faster.
0:57:16 Ultimate big brother move for him to do that.
0:57:17 It was true.
0:57:17 He does type fast.
0:57:20 All right, Ryan, thanks so much, man.
0:57:21 Thank you.
0:57:24 I feel like I can rule the world.
0:57:29 I know I could be what I want to put my all in it like no days off on a road.
0:57:31 Let’s travel never looking back.
0:57:33 ♪ Everybody ♪
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