Special: Acquired x My First Million

[0] And this is for our podcast, correct?

[1] Or this is going on your podcast, or both?

[2] Good question.

[3] Like, we're open to whatever.

[4] Yeah.

[5] I think we should record it and see what fits.

[6] But, like, by default, I think it'll definitely work on our feed.

[7] If you guys feel good about it on your feed, I think great, just dual -purpose it.

[8] Great.

[9] I love it.

[10] Okay.

[11] Are we rolling then?

[12] Welcome to this special, unnumbered crossover episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them.

[13] I'm Ben Gilbert.

[14] I'm David Rosenthal.

[15] and we are your hosts.

[16] This episode is a crossover between Acquired and the My First Million podcast, a podcast from The Hustle for business builders, schemers, and dreamers.

[17] The show is hosted by Sean Puri and Sam Parr, and this crossover episode was just Sean and us.

[18] Sean works on special projects at Twitch and was most recently the CEO of Bebo, a once massive part of the consumer internet in the early 2000s.

[19] Sean was also the CEO of Blab .im, which some of you may have used a few years ago.

[20] Our episode today has two parts.

[21] First, we had Sean take us through what it was like to buy Bebo out of bankruptcy many years after its heyday and build something new with the assets, eventually selling it to Twitch.

[22] This is the first time on our show that we'll be talking about a company that was sold and not bought, which for those of you who have ever been through an exit, know that that is the far more common scenario.

[23] The second part of the show is more of the My First Million format, where David and I spitball startup ideas and talk tech trends with Sean.

[24] Also, we should say that while Acquired is normally a family -friendly show, at least for families who love analyzing business histories together, this episode has a bit of profanity.

[25] As always, if you love Acquired and want to hone your own craft of company building, you should join the community of Acquired Limited Partners.

[26] You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls where we talk with all of you directly and of course our book club and Zoom calls with the authors.

[27] The most recent episode in the feed is the recording of our book club Zoom with Will Thorndyke, author of The Outsiders.

[28] If you aren't already a limited partner, you can click the link in the show notes or go to Acquired .fm slash LP and all new listeners get a seven -day free trial.

[29] Also, if you want to hang out with the acquired community and discuss all things tech news, strategy, and ideas, you should join us in our Slack at Acquired .fm slash Slack.

[30] Okay, listeners, now is a great time to thank one of our big partners here at Acquired, ServiceNow.

[31] Yes, ServiceNow is the AI platform for business transformation, helping automate processes, improve service delivery, and increase efficiency.

[32] 85 % of the Fortune 500 runs on them, and they have quickly joined the Microsoft's at the NVIDIAs as one of the most important enterprise technology vendors in the world.

[33] And, just like them, Service Now has AIB.

[34] baked in everywhere in their platform.

[35] They're also a major partner of both Microsoft and Nvidia.

[36] I was at Nvidia's GTC earlier this year and Jensen brought up ServiceNow and their partnership many times throughout the keynote.

[37] So why is ServiceNow so important to both Nvidia and Microsoft companies we've explored deeply in the last year on the show?

[38] Well, AI in the real world is only as good as the bedrock platform it's built into.

[39] So whether you're looking for AI to supercharge developers in IT, empower and streamline customer service, or enable HR to deliver better employee experiences, service now is the platform that can make it possible.

[40] Interestingly, employees can not only get answers to their questions, but they're offered actions that they can take immediately.

[41] For example, smarter self -service for changing 401k contributions directly through AI -powered chat, or developers building apps faster with AI -powered code generation, or service agents that can use AI to notify you of a product that needs replacement before people even chat with you.

[42] With ServiceNow's platform, your business can put AI to work today.

[43] It's pretty incredible that ServiceNow built AI directly into their platform.

[44] So all the integration work to prepare for it that otherwise would have taken you years is already done.

[45] So if you want to learn more about the ServiceNow platform and how it can turbocharge the time to deploy AI for your business, go over to servicenow .com slash acquired.

[46] And when you get in touch, just tell them Ben and David sent you.

[47] Thanks, Service Now.

[48] And now, over to our crossover episode with Sean Puri of My First Million.

[49] Sean, are you open to telling us a little bit about the story of Bebo?

[50] Because I think listeners of Acquired probably don't know your background and might know an element or two of that story, but I think getting a little bit of context around all that would be really fun.

[51] On your show?

[52] No, I haven't.

[53] And And, you know, one of the reasons why I was initially, I was pretty worried because, you know, when you get acquired, there's, like, these, like, pretty strict, like, what you can disclose and not disclose.

[54] So I've sort of over time figured out, okay, I can't say certain numbers.

[55] That's fine.

[56] No problem.

[57] But I could just generically tell the story of what our company was and how this all came about and the kind of twists and turns of the story.

[58] The hard part is I'm the host, so it's always awkward.

[59] Like, what am I going to interview myself?

[60] Like, so this is perfect.

[61] You guys can ask me questions.

[62] This is great.

[63] That's why you have two interviewers.

[64] Perfect.

[65] So one of the companies that I can talk about is Bebo, which is the company that most recently I ran.

[66] And Bebo actually has a really funny story.

[67] And I only came in kind of at half time.

[68] So I'll tell the first half of the story, but the key disclaimer is I was not the CEO and founder during that first period, which was a way bigger exit.

[69] I wish I was the CEO and founder back then.

[70] But it was my partner, Michael, was the CEO and founder of that time.

[71] So for those who don't know.

[72] With his wife, Sochi, right?

[73] What's that?

[74] Michael is Zodji, husband and wife duo who had built.

[75] multiple companies together, actually, at Bebo was their sort of biggest hit.

[76] And so I'll tell kind of the quick version that we could dive in.

[77] So the quick version is, did you know, there was this company back in the day when MySpace and Facebook were, you know, taking off.

[78] Facebook at the time was still in colleges.

[79] MySpace was actually the biggest network and was famous and celebrities, musicians were all using it.

[80] And so Michael, when he tells me the story, because I've asked him a bunch of times, like, you know, dad, can you tell me like, what was it like back then?

[81] like tell me these internet war stories and so he was telling me he's like initially I was actually let me finish the short version they'll tell you the whole thing so the short version is built a social network called Bebo got really popular but it became clear to him that Facebook was going to win this war and that like where he was now was like more like the top and was like look I should start looking at is there an exit here for us because I'm not sure What year is this?

[82] This might have been 2007, 2008 I think the deal closed in 2008 so probably let's say 2007 started thinking along these lines Facebook had been out for three years, had expanded out of colleges, I think, at this point, and was at high school level, I think.

[83] And so basically it was like, look, we've built a cool product, but man, we're, and was Bibo was big in certain markets, like Europe, New Zealand.

[84] You know, if you're in Ireland, like, you know, Bibo was like more trafficked than Google at the time.

[85] And so decides to sell, sells the company for $850 million to AOL, huge exit at the time, sold for more than MySpace did.

[86] And so amazing exit for Michael and Zocchi.

[87] And they went on to do a whole bunch of great things, both philanthropically as well as.

[88] And they own 70 % of the company.

[89] And they own 70 % of the company at the exit because of, and I'll go into why they were able to own that.

[90] And if we want to go into that detail, too.

[91] But so they sell it then.

[92] Fast forward a few years.

[93] Facebook takes over the world.

[94] AOL basically writes off Bebo kind of like a year and a half later as like a tax write off of like, it's worth nothing to us now.

[95] You know, we write it as essentially zero.

[96] Product kind of dwindles, obviously.

[97] And now it's five, six years later.

[98] Michael comes to me, and at this time, I'm running his idea lab.

[99] So a startup studio that he had built, that he was basically funding him and Zocci were funding themselves.

[100] Michael originally was the CEO.

[101] And then I joined to work with him.

[102] I came to San Francisco to work with him.

[103] And then a few months later, he put me in charge of the lab.

[104] He's like, I'll go to the board, and I'm going to, you know, me and Zocchi, we're going to do cool billionaire shit.

[105] Like, you go run this thing.

[106] And I was like, hey, more power to you.

[107] That's what I would do too.

[108] I don't know if I would bet on me. I'm like a 25 year old kid, but like, you know, thank you.

[109] I'll try, my best.

[110] And he comes to me at a certain point and he says, hey, you know, we actually have the opportunity to buy Bebo back.

[111] I heard, you know, he, Bebo had traded hands.

[112] So a private equity guy had bought it off of AOL.

[113] He had invested in that.

[114] And he knew that had gone nowhere.

[115] That guy didn't even really do anything.

[116] and then he's like he knew it was going to go into bankruptcy and it was going to get bought by somebody.

[117] And he's like, we have the opportunity to buy it back.

[118] Would you be interested?

[119] We're already building social kind of consumer products anyways.

[120] That's the point in the lab.

[121] Maybe we could use this brand name.

[122] Maybe we could use the email list.

[123] Maybe we could use the servers.

[124] I don't know, whatever.

[125] Whatever's there.

[126] Would this help us in any way, you know, get better distribution for one of our product ideas?

[127] So, again, this is the longest short story I've ever told.

[128] We go buy it back.

[129] We go buy it back for a million dollars.

[130] And so we go to this crazy -ass auction I can talk about, but buy the, buy the company back for one million.

[131] So sold for $8 .50, bought it back for one.

[132] And then a couple of years later, we now sold it again, you know, to Twitch.

[133] We got acquired by Twitch and we just owned by Amazon.

[134] And so I'm currently at Twitch.

[135] And when you're buying for one, does it come with like all of the data it's ever had, like all the email addresses from every epoch of the company?

[136] It comes with whatever's still there.

[137] So some shit gets lost along the way.

[138] You can't recover that.

[139] But yes, in theory, in theory, yeah.

[140] So we got like a 80 million person email list, which is one of the assets.

[141] Now, what we found when we got that 80 million e -bill list was, hey, it looks like this email list might have been bought and sold before or something because this is not, this does not have a great sort of sender, a business, you know, send rating, essentially.

[142] The other thing, the other key component was Bebo had started back when Hotmail and AOL were like the rage.

[143] And then Gmail came and everybody switched.

[144] And so what we had was essentially 80 million emails of which, you know, approximately 40 million were like my teenage hotmail address that I never check and will bounce or just go to go into the abyss.

[145] And so that turned out to be a lot less useful.

[146] What the funny thing, I don't know how much of this I can share, but the funny thing was one of the things in buying it was we actually bought two assets.

[147] We bought the company and that brand and the domain and the email list and all that stuff for a million bucks.

[148] But in that same auction, we bought the sort of legal rights to sue the previous owner for, I don't know, 50 ,000.

[149] That actually, they won the case.

[150] They won the suit for like multiple millions of dollars.

[151] And so that asset turned out to be really, really valuable and have a great ROI.

[152] And then the domain and the email list turned out to be a little less valuable than we originally had hoped.

[153] Wow.

[154] Did you guys use, to our previous conversation, an SBA loan at all?

[155] in financing the purchase?

[156] Michael and Zocchi were like, hey, straight cash.

[157] I don't think it would have qualified necessarily, right?

[158] It didn't have positive cash flow.

[159] It didn't have a lot of things that you would need.

[160] It was kind of a hairy deal going through bankruptcy.

[161] So you needed to be an all cash buyer to buy it.

[162] And so I cut you off a little bit.

[163] So where is it eventually now and how did it get there and why?

[164] Okay.

[165] Let me try to make the now.

[166] Where is it eventually now?

[167] So we got acquired now.

[168] And so the whole team that was working on it is now, you know, the majority of the team, about 95 % of the team is at Twitch and got bought because we had built a whole bunch of things.

[169] So one of the things where we bought it, I'll kind of tell the story.

[170] It's kind of interesting entrepreneurial story.

[171] So when we were going to buy it, I got split opinions.

[172] I asked a few smart friends, hey, do you think we should buy this back?

[173] And 50 % of people were like, don't touch it with a 10 foot pole.

[174] Like internet companies don't get revived.

[175] That's like not really a thing.

[176] The brand is stale.

[177] It might be more baggage than it's worth.

[178] It's going to be constant confusion if you're launching.

[179] a new thing under that old brand name.

[180] And you know, you don't need it.

[181] Why would you pay for this?

[182] Go put the million dollars into ads and you'll get the same amount of users.

[183] And then the other people were like, I don't know what's going to happen, but what a challenge, what fun if you did it.

[184] And you are also going to get a lot of kind of people who are curious to check out what it became, whether they're actually going to adopt it or not.

[185] It's a good story.

[186] The analogy is like, you know, you go back home to your parents, you know, to your original, you know, to your parents' house when you're after you're 30 years old and they say, hey, we renovated your old bedroom.

[187] you're like, oh, I want to go see.

[188] What do you do with my stuff?

[189] What does it look like now?

[190] That's essentially what we...

[191] Dude, I downloaded the Dig Reader in 2016.

[192] Of course I did.

[193] I had to see what they did with Dig.

[194] Exactly.

[195] Even if you come in thinking, I'm never going to fucking use Dig, you want to see what are they trying to do with Dig and laugh at it.

[196] So we were like, okay, at the very least, we'll get that.

[197] It's better than complete obscurity, I suppose.

[198] And so when we bought it, we did one smart thing, which was we had some predefined ground rules.

[199] We're not going to make, just bring it back as another social network.

[200] We had seen MySpace try that and we're like, no, that game is over.

[201] Facebook has won that game.

[202] Don't try to be like, hey, we're cool again 10 years later.

[203] Like, that doesn't work.

[204] We also didn't have a new product.

[205] And so, but we had to close the deal given the timeline of the acquisition.

[206] We had to close the deal and we had to announce it and we had to turn off the existing product because it was going to cost a whole bunch of money every month to run.

[207] Oh, I saw this.

[208] And so we were like, okay, we're going to do three things.

[209] First, we're going to turn it off.

[210] Second, we're going to preserve the SEO because it has amazing SEO.

[211] And so we're like, how do we lower the cost by 100x while keeping the SEO, everybody's profile page alive?

[212] Because you Google someone's name, their Bebo profile was like in the second or third.

[213] Static pages.

[214] Yeah.

[215] So we created these like static frozen pages that would remain indexable.

[216] I don't know anything about it, but one of our engineers was like, nine engineers in the room were like, there's no way.

[217] And then our youngest engineer was like, well, why don't I just do this?

[218] And then all the other engineers were like begrudgingly like, well, yeah, if we just want to do that, we could do that.

[219] And I'm like, well, that accomplishes the goal.

[220] Of course we want to do that simple thing that accomplishes our goal.

[221] So anyways, so shout out to Quinn for coming up with that.

[222] The last thing was we came up with this video.

[223] We shot it in a weekend and it was basically like an announcement video of, hey, the original founders bought it back.

[224] We're going to bring it.

[225] And it was kind of tongue in cheek.

[226] So we were actually, it looked like a serious corporate stock video of like, hi, I'm Michael.

[227] You know, and I'm the original founder of Beaver.

[228] You know, we had this vision.

[229] And over the years, you know, it grew.

[230] And but then he, you know, like the video starts to make fun of the old bebo.

[231] It's like, you know, we had great times and is basically pointing fun at like, you know, people used to like just, you know, go on each other's profile page and draw dicks like on the whiteboard feature.

[232] And so that was like, he's like, we have the largest repository of hand drawn dicks on the internet.

[233] And so this video kind of goes viral, which was our hope.

[234] So while the 80 million email list was dirty and pretty much unusable, we couldn't send from it.

[235] We got a million new people to sign up to see what's the new Bibo.

[236] And we were like, okay, that's cool.

[237] And they signed up thinking like, this is funny.

[238] I like this guy.

[239] This is like the Dollar Shave Club video.

[240] Exactly.

[241] That was our intent.

[242] Now, it wasn't as successful as that, but it was close.

[243] And so that was the goal there.

[244] And then we were like, okay, well, we still don't know what product we're going to do.

[245] And I was still sort of of the mindset of we need to like test.

[246] We don't want to come back with this big bang and we don't know, you know, that's a one shot thing.

[247] So I was like, I started creating a little sub -list, you know, groups of 10 ,000, 50 ,000 people that was like, hey, do you want to, we're going to launch three new things.

[248] I want you to try them.

[249] You're going to be our focus group.

[250] You're going to tell us if this is any good or if this is dog shit.

[251] And whatever comes out of this will be the new bebo, but you're sworn to ultimate secrecy and blah, blah, blah.

[252] And so we created these little lists and we launched different products to them.

[253] And we, you know, one was this messaging app with crazy avatars that look like Bitmoji.

[254] And then this other one was Blab, which you used, I was like this video chat platform.

[255] and we were launching them under other names to test them first.

[256] The idea was, if it ever works, we'll brand it as BBA, we'll email the whole list.

[257] The last thing we did was we took the live streaming tech we had built and we built a e -sports platform where you would, we built essentially high school e -sports.

[258] So the way you can go play in a football league or a soccer league or a baseball league as a high school student.

[259] It's like what Play versus.

[260] Just like Play versus we're doing.

[261] They were our competitor.

[262] And so you could sign up to be in a fort.

[263] night league.

[264] And we were like, dude, Fortnite's more popular than baseball.

[265] Like, there should for sure be a way, a way to join a team for your school or as a high schooler and play with other high schoolers and compete and play in tournaments.

[266] And because we had built all the streaming tech, we were like, this is cool.

[267] Like, not only are you playing, but your friends or your family can watch, watch you play.

[268] And so that was really cool.

[269] And we were running the biggest high school Eastport League in the country at the time.

[270] And then, you know, a couple of the platforms, you know, came knocking.

[271] And we told them, hey, look, Honestly, I'm a realist.

[272] Like, this is cool.

[273] The students love it.

[274] And the platforms are happy because we're bringing on tens of thousands of new young teenage streamers streaming for the first time who would have never otherwise streamed because they don't want to be a streamer.

[275] They just want to play in tournaments.

[276] And they're like, now they're getting the joy, the thrill of streaming for the first time.

[277] And so we're like, all the value is accruing to them.

[278] We should go try to sell this to one of them.

[279] And so we went to YouTube and Facebook and Twitch and like all the others.

[280] And we basically said, hey, who wants to buy this thing?

[281] ran a process, a pretty tight process over like 45 days and closed a deal and ended up selling the company.

[282] And had you already closed down the other experiments at this point or was Blab still like potentially a thing?

[283] We did them one at a time.

[284] So we had learned that lesson the hard way running the startup studio in general, which is kind of like parallel entrepreneurship, splitting focus is very, very dangerous not to be done unless you are someone much more skilled than me. And so we were doing one experiment all in.

[285] And if it didn't work, we would then cycle and pivot to the next thing.

[286] But we had shut them down by then.

[287] Which was hard, right?

[288] Blab had 4 million users and was growing and some people loved it and used it eight hours a day.

[289] And like I got death threats and, you know, somebody is actually kind of funny.

[290] Somebody sent to the office a 200 page script for a play that was using me as the central character, my CTO is the second central character in our designer or head of community, the other people whose names they knew.

[291] And it was a script of us being.

[292] You know, it's kind of like the office.

[293] It was like us being dipshits, like making bad decisions because they were so angry we're shutting this down.

[294] Oh, my God.

[295] That they sent us like a full play of our, you know, total ineptitude.

[296] And I read the thing and I was like, wow, someone took this much time to do this.

[297] That's, that's awesome.

[298] So why did you shut that one down?

[299] It was that like other messengers were just, you know, it was like a Facebook style situation.

[300] And by the way, can I take a stab at explaining blab from my recollection?

[301] So I guess the three modern comps would be it's sort of like Zoom.

[302] meets Twitch meets Clubhouse, where it's like video collaborative chat in real time that has a broadcast component.

[303] So the experience was like this.

[304] There's three of us on a Zoom call right now, right?

[305] Three little squares.

[306] And so we would be doing this, but where our chat is in the side of Zoom, Zoom is just for private communication.

[307] Blab was public.

[308] It was like a talk show.

[309] So like we could have live people watching this, listening to this, typing in questions.

[310] We could pull the question and put it on the screen and address it.

[311] anybody could call in like an old radio show and like join the conversation.

[312] And so it was like this kind of live, you know, it was like if Google Hangouts had an audience or if Zoom had an audience, that was sort of the premise.

[313] And so we organically had a bunch of cool people use it.

[314] Like I said, the UFC used it when they wanted to do a virtual fight announcement.

[315] We had Tony Robbins come on and do kind of, he would let people call in, tell them their problem and he would like kind of help them, workshop them live just like he does at his big, you know, 7 ,000 person events.

[316] The Jonas brothers did that with their fans.

[317] ESPN would use it every Friday for their basketball show.

[318] But the problem was there was two groups of people using it.

[319] There was all those cool things I just talked about that make it sound legit.

[320] But those people would use it once a week for like an hour.

[321] They're like, okay, I'm doing my live interactive fan thing that's like hard to do.

[322] And like, I'm on the spot.

[323] But like, it's super deep connection with people.

[324] They love me if I do this.

[325] So I'll do it once a week for an hour.

[326] Fridays at three.

[327] That's when my live show happens.

[328] And so we were like, cool, Fridays at 3 are awesome.

[329] What happens every other hour of the day?

[330] Like, how are we ever going to fill this up with good content?

[331] So then the - You had the Facebook, same problem as Facebook Live.

[332] Same as Periscope, Facebook Live, Mirkat.

[333] And we were all at the same time.

[334] Our thing was like, they were like a monologue, like you hold up your phone and you just talk, which we thought was really hard to do.

[335] We were like, dude, dialogue is way easier for people to create content, which was true.

[336] But the hard part was for any given category, like, let's say, business talk or sports or whatever, you had to have 24 -7 interesting content to build a habit for a viewer to just come and show up when they're bored.

[337] And if you just tried to get people to show up on demand, they were like, well, dude, I'm busy.

[338] Like, the whole world is not like, I don't show up on a schedule anymore.

[339] Like, I order things when I want it and I get what I want when I want it.

[340] This is the Postmates era.

[341] Like, you know, I don't want to have to show up when the creator decides to go live and I'm in the middle of dinner.

[342] And so that was always a challenge.

[343] And then the other side, we had people that just, they just use this.

[344] as like you said clubhouse.

[345] They just used it as a room to chill in.

[346] So people would meet each other.

[347] They would become friends.

[348] And then every day, some number of them would get online and it would trigger notifications to the other friends.

[349] And then the party would just rage on all night.

[350] And you would just dip in and out as you were free or you were busy.

[351] You would leave and you'd come back and different set of people would be hanging out.

[352] So it was this hangout platform.

[353] And the cool thing about that was these guys were super sticky.

[354] So we wanted people on all the time.

[355] They were on all the time.

[356] They would fall asleep on the.

[357] platform.

[358] But the problem with them was the core value they were getting was they were making friends.

[359] So they didn't bring any friends to the platform.

[360] So that side was not growing.

[361] The celebrities grew, but we're totally using it one hour a week.

[362] The people using a 40 hours a week brought no friends.

[363] And then those two groups did not coexist at all.

[364] They didn't even understand why the hell they're on the platform.

[365] Oh, crazy.

[366] And so that was the problem that we were never able to solve and why we ended up pivoting.

[367] Wow.

[368] Bring it at home.

[369] So Twitch buys it.

[370] What's the main reason?

[371] Like, what's the repurposed asset here?

[372] Is it mostly the team or is there technology or learnings?

[373] Yeah, all three.

[374] So anytime a company, I always differentiate.

[375] A company could either get bought or it's sold.

[376] We were sold, not bought.

[377] Bought is your Instagram, you're hot.

[378] You're the next big wave.

[379] Everybody recognizes it and people are banging down your door trying to buy you.

[380] We were sold in the sense of like, I approached a bunch of companies and I understood, through kind of conversations, was able to suss out.

[381] What are things that are important to them?

[382] are their big top three strategic priorities as a company?

[383] And then is my little company an answer to any of those problems?

[384] And I was a great framework.

[385] I was, you know, doing some yoga poses to try to make that fit where I was like, oh, you really care about this.

[386] You're doing, instead of customer discovery, buyer.

[387] Exactly.

[388] So, because I was like, I need to sell this company.

[389] It's not going to be the mega home run we think, but there is some value here.

[390] So I don't, I don't want to stay and work on a mediocre, medium -sized business for five years, nor do I want to just shut this down.

[391] and like walk away from millions of dollars of value.

[392] So I need to learn a skill I don't know, which is how to sell a company.

[393] And so I, which, by the way, it's like long time, budget capital, like, you are, you are falling into the 80 % thick middle of entrepreneurs here, venture backed entrepreneurs.

[394] Exactly.

[395] So the first thing I did was, this happens way more often.

[396] I asked six entrepreneurs who had done this before.

[397] I was like, hey, how the hell do I do this?

[398] And they gave me some tips.

[399] And they became what I call my deal doulas, which is like, if you ever had a baby, like, you know, a doula, somebody who helps you birth that baby.

[400] And like, these were the guys who helped me birth this deal.

[401] They helped it, you know, go all the way from the, the tough part of labor all the way to the happy part at the end.

[402] And so, so essentially, I found out what their top strategic priorities were.

[403] And what I, at first I was trying to be really smart about this.

[404] Then I realized, oh, here's how this market works.

[405] You have Twitch, which is the market leader.

[406] And they have strategic priorities about how to grow their business.

[407] Those are very specific to Twitch.

[408] I got to find those out.

[409] And I took some people to beers and I asked a bunch of questions and sussed out that, oh, there's this program that they've realized, and I'll give you kind of the rundown, which was they were sort of in the category of Twitch has gotten really, really big in the same way that Netflix got really big, but then the content costs start to go up.

[410] People start demanding more money, right?

[411] Famous streamers want more money.

[412] E -sports tournaments want money.

[413] Yeah, they want exclusive deals.

[414] Ninja moves over to Mixer.

[415] Exactly, right.

[416] You got streamers getting paid tens of millions of dollars to switch platforms, so that drives up prices.

[417] So Netflix had a smart idea to create original content and like hey this stuff we own so i realized that twitch really needed original content and it needed content that it could it could basically not it could control its cost better and drive a ton of viewership and internally they had been practicing this they had been doing this program totally manually so they had no technology to do it but we were lucky that they themselves had been thinking similarly had been running a program very manually and had come to the conclusion that hey, this works.

[418] We need to scale this using tech.

[419] And then they looked inside the company, they're like, shit, where am I going to get a leader that I trust to do this really hard thing?

[420] We need engineers that know how to build this.

[421] And we need this now, not like 18 months from now.

[422] And so that's a great spot to get acquired in because you say, hey, I'm a leader.

[423] If you meet me and if you believe in me as a person, you think I could be one of the 10 leaders of your company, then the only what you can't hire me. I'm an unhirable person.

[424] You've got to buy me to get talent like that.

[425] Also, I come with 12 engineers that have been working on this for two years and we've already gone through the learning curve and figured out everything.

[426] You get the code and you get the learnings.

[427] And then, you know, in our case, we didn't have revenue or big user base that would matter to them.

[428] But they're like, don't worry.

[429] We already have revenue and users.

[430] We just need the rest.

[431] So I figured out for Twitch, that was the kind of solution.

[432] Then for everybody else, it was, I realized that the core problem was we want to beat Twitch.

[433] So I was like, oh, this makes it really easy.

[434] I just need to put.

[435] pitch this as a way that you could potentially overtake Twitch.

[436] And I need to spin that story and then I need to tell you that Twitch wants to buy this.

[437] So that will automatically get you interested.

[438] And so that became the sort of game you play as an entrepreneur to try to get multiple bidders involved.

[439] And part of it is persuasion, but you know, you can't just persuade these are no dummies.

[440] These are CEOs of billion dollar companies.

[441] They know what the hell they're doing.

[442] So it's not about convincing of something that they don't want to do and making them do it.

[443] It's about finding out what they already want to do, positioning our, like, cutting away the fat of our story into just being the solution for that, and then connecting on a personal level and saying, would you want me as one of the senior leaders of your company?

[444] Would you want me on your extended exec team?

[445] And if so, great, let's do a deal.

[446] It's so funny.

[447] It strikes me, we don't have time to go into it, but like that process is the exact same process of raising money from venture.

[448] Do you want to have a hot round?

[449] You want to have VCs competing over your deal?

[450] You do exactly what you just said.

[451] Right, right.

[452] Exactly.

[453] Yeah, Sean, I think we'd love to have you on the LP show at some point for the, to be our deal dula, to help listeners understand, like, what are the levers you can pull?

[454] What are the ways that you can sort of message different things at different times and different parties?

[455] Putting that aside, thank you for sharing the Bibo story.

[456] Yeah, for sure.

[457] I kept every email I sent and things like that because I was like, I want to help the next entrepreneur who's going to be like me needs this.

[458] This is seven years of effort that they just need to like cash in on and they need a successful outcome.

[459] They deserve it, but, like, they're going to be totally clueless.

[460] You don't get a ton of reps at doing this.

[461] And so how can I, I know when I Googled for it, I couldn't find jack shit.

[462] Everything was about the bot use case, which is like, should I sell my hot company when I have all these offers or should I stay independent?

[463] Like, yeah, there's a ton of content about that because VCs love to talk about that and they'll tell you to stay independent.

[464] And then this is the other side that, like, is a little bit less sexy, usually results in failure.

[465] But if you could thread the needle, it'll be life changing for you, your investors and your employees, like, you know, there should be more content about this.

[466] And so I wouldn't make a course out of this, probably, because there's just not that many people who need to know this.

[467] It's like a very small, it's like a niche of a niche.

[468] But I saved it in case people knock on my door and they're like, hey, can you help?

[469] I'm like, yeah, here's some templates that I used and here's what worked for me. Amazing.

[470] Awesome.

[471] And now you have a podcast.

[472] And I got a podcast.

[473] And that's actually how the podcast started.

[474] During the diligence period, I was, you know, the funny thing is when you're running your company, you just get so worn down.

[475] You're so tired over time, especially when it's not a breeze when it's taken off or whatever.

[476] And then as soon as the sale process started, my creativity muscles just started firing again, started having all these ideas.

[477] And I was like, well, this is the worst time to have a startup idea is when I'm trying to sell my company.

[478] I need to like shut the lid on this and not get tempted to go start something.

[479] And so I was like, oh, maybe I could start something that's safe, a podcast.

[480] And so I started the podcast just for kicks during that time to keep myself busy because otherwise I was going to damage my own deal.

[481] Little did you know what it would be down.

[482] All right, listeners.

[483] Now we shift to the second part of the show, which time for a secret.

[484] We actually recorded first to talk startup ideas, trends, and internet businesses with Sean.

[485] We'll talk about a side project idea I have been kicking around, what our smart friends are dabbling in on the weekends, and a bit more on SPACs.

[486] Let's dive in.

[487] Let's do a quick intro.

[488] So I've actually never met you guys But like I think most people for this podcast I've heard you guys talking And actually just say like five words into your mic Your mic setup is like godly I don't know what I don't know if it's your voice or your mic But something is perfect So just it's all Ben we uh Listen to that If it were like if I were running the tech side of acquired We would still be like talking into our into our MacBooks Yeah but fortunately we have David's Dalsett tones and buttery voice That kind of complete the equation And Ben you have the like kind of soundproof panels in the background and stuff like that.

[489] I just like roll out of bed and push go and see if it works.

[490] All right.

[491] So we have David and Ben here with us.

[492] These guys host the Acquired podcast, which is, we'll talk a little bit about that.

[493] So you do that.

[494] You're also venture capitalist, from what I understand, if I remember correctly from the podcast.

[495] And the podcast, so I used to listen to a bunch of it at the beginning because I'll tell you a funny story.

[496] We have a guy in our office at our startup named Jason.

[497] And Jason is great in all these different ways.

[498] He's super enthusiastic.

[499] He's a go -getter.

[500] He'll make shit happen.

[501] He's very creative.

[502] But the one thing that Jason was always like kind of the punching bag in the office was he would always say the wrong, like he would always have his facts wrong.

[503] So he would be like, oh, you know, that's, you know, they got bought by this company and we're like, no, it was this other company.

[504] Or they raised this number.

[505] And it's like, nope, that's not the right number.

[506] So he He was always, like, getting fact -checked.

[507] And then one day, Jason started coming in with just these knowledge bombs.

[508] And we were like, that's not right.

[509] Wait, that is right.

[510] And I was like, how did you know that backstory?

[511] Like, did you research this?

[512] Like, I didn't understand.

[513] And then I realized the secret.

[514] He was listening to y 'all's podcast.

[515] And he was, you know, basically what you guys do is you tell the story of great kind of acquisitions in tech history.

[516] And, and you go through kind of like very methodically.

[517] You, like, research it well.

[518] And you tell a very good linear story with no plot.

[519] And so Jason all of a sudden had this superpower where he was telling these perfect renditions of what went down.

[520] And I was like, what the fuck is going on?

[521] And so that's what I was like, okay, what's this podcast that you listen to?

[522] So I listened to a few of them.

[523] I haven't listened recently.

[524] I know you guys been, you pumped out a ton of them.

[525] Well, you got to hop back in because we're not just acquisitions anymore.

[526] We realize these stories, like we were limiting ourselves with just acquisitions.

[527] So what did you expand to?

[528] We'll get into this with you.

[529] But like, you know, acquisitions are a limited part of the universe.

[530] So we just did epic games.

[531] We did SpaceX.

[532] So it's just like success story in addition to acquisition story type of thing.

[533] Yeah.

[534] The goal is that we tell the story of like the obviously very deep story of any sort of great company, but then also try and understand the playbook of why it worked.

[535] Right.

[536] I love them.

[537] I've listened to a bunch where you had like a three -parter and I'm like, oh man, this is so deep.

[538] I love it.

[539] Anyways, that's my genuine shout out for the acquired podcast.

[540] We got to say, too, your guy's show is.

[541] is awesome.

[542] We love it.

[543] And one of the reasons, A, you're just, like, good.

[544] You guys have great flow chemistry.

[545] Like, you're awesome.

[546] But B, it's such a good counterpart to, like, what we do on acquired.

[547] Like, we tell this, like, certain part of, like, the internet, like, history and, like, as it exists.

[548] And it's, like, these big, huge, flashy companies.

[549] But, like, there's a million ways to skin the cat.

[550] And, like, there's so many other good businesses out there and so many other people working doing amazing things that are never going to be SpaceX.

[551] But, like, that's cool.

[552] Like, you know, I've been like your golden hippo episode.

[553] I love that one.

[554] Yeah, yeah.

[555] On one hand, you have the story of SpaceX.

[556] And then the other hand, you have like, you know, this guy who's in Iowa who's doing a drone light show company and just local, you know, rural, rural Iowa and, you know, making two million dollars a year.

[557] And, you know, he quit his job as a construction worker before that.

[558] You know, that's the sort of other end of the spectrum of like cool success stories that are just different flavors.

[559] Yeah, it's so cool.

[560] You guys find these and you, you know, bring these folks on the show.

[561] And this is awesome.

[562] Okay, so we can agree on our podcasts are great.

[563] We love it.

[564] Sorry, go ahead, Ben.

[565] I was going to say, like, I also just like that it feels more like classic, I'll say classic American, but classic entrepreneurship.

[566] Right.

[567] Like, we've lumped in entrepreneurship to become this thing that involves tons of money, a winner take -all market, in all likelihood failing and flaming out, you know, fabulously.

[568] And by telling everyone they should go do that, you just set most people.

[569] up for failure, whereas it's not, as long as you're really focused, you really listen to your customers, you really iterate, you're really capital efficient.

[570] Like going and achieving a million dollar a year, top line business, like lots and lots and lots of people do that and can do that and should think they can do that.

[571] And so I love that reminder in our lives.

[572] Yeah, I would say like, Naval has this really like money line when he's talking, I don't know who he stole it from.

[573] I think it was like Nassim Tel Av or something when he was like, you know, they're like, you know, what's your political stance.

[574] He's like, well, with my family, I'm a communist, with my friends, I'm a socialist, with my, you know, my city or my town, I'm a Democrat.

[575] I'm a, you know, I'm a libertarian at the federal level or whatever.

[576] And it's just a great, yeah, it's just a money quote.

[577] But I have sort of a similar thing in entrepreneurship.

[578] It's the, you know, the poor man's version of that, which is, you know, if I invest, I go for the billion dollar, the potential billion dollar companies.

[579] If I'm advising somebody to start something, I advise the types of things we brainstorm on the podcast all the time, which are these, you know, small niche businesses that can generate a ton of cash flow.

[580] And then when I do it myself, I just go solopreneurship and I just create content that I think, you know, a lot of people can love and I don't have to talk to.

[581] I don't have to like have employees or an office.

[582] That's my dream, right?

[583] And so there's these different flavors that each is good for a different purpose and for a different person.

[584] So anyways, that's my view on it.

[585] And so you guys reached out the other day and you were like, hey, it'd be fun to do kind of a crossover episode.

[586] I think that's a great idea.

[587] So you came on And I was like, okay, what are we going to do?

[588] Are you guys going to come on and tell great stories?

[589] And I'm just sitting here with my popcorn because I'm down for that.

[590] But actually, you guys came with a bunch of ideas.

[591] And so I want to jump in and riff through a bunch of these.

[592] And like normally the way me and Sam do it is just like you have here.

[593] We just have a sheet with like a bunch of bullet points that like you don't even understand the full idea just from the bullet point.

[594] And we'll just say like, okay, what you got?

[595] And then one person will riff on one.

[596] And then when we're bored of it, we just say, all right, I got another one.

[597] And you just keep going.

[598] This is going to be so fun for us because it's like, we don't get to do this on Acquired.

[599] It's the anti -acquired.

[600] Yeah.

[601] This is awesome.

[602] This is like, you know, when like a successful business person goes to Burning Man or Marty Graar or something, it's like, oh, I get to let my hair down and just, you know, shoot the shit on half -baked ideas that will totally not work, most likely.

[603] Yep, that's what this is.

[604] Cool.

[605] So when you guys get excited about ideas or, you know, some of the stuff you sent over, you know, what's on your mind?

[606] What are you guys seeing as interesting?

[607] Let's, let's jump in with some of these different ideas you got.

[608] Yeah, so I'll, I'll start because I have your Naval quote sort of inspired, I have a very bifurcated lens on the way that I look at ideas.

[609] And I don't think I realized it until recently that, so I should give a little bit of background.

[610] So I started a thing called Pioneer Square Labs five years ago.

[611] We're a startup studio where we spin out companies, all of which go on to get venture backed.

[612] We've done that 24 times in the last five years.

[613] and we're based in Seattle.

[614] So I'm really looking to make a dent in the entrepreneurial ecosystem in the Northwest.

[615] So we're coming up with ideas all the time.

[616] And you guys are investors now, too.

[617] Yeah.

[618] So then we also have the venture fund, PSL Ventures, where we invest in early stage companies in the Northwest.

[619] And so, and many that we have nothing to do with starting.

[620] And so I sort of sit on both sides of the house of coming up with ideas and also evaluating ideas that are not my own.

[621] and I have a massive bias with my own ideas where I'm excited about it, no matter the market potential, if I can fully conceive of how to build it in my head and how it will deliver value to me as a customer.

[622] And like I, it's probably the engineering background, but like I put on my blinders real quick and just go heads down.

[623] And I have to like fight every instinct.

[624] Like David will be like, hey, I think there's this really big way we can move the needle for acquired and pitch me this big grand plan.

[625] And I'll be like, yeah, but I need to fix the way that headers look on our website.

[626] And like, I have a really good idea for how to do that.

[627] And sorry, I need two hours now.

[628] And so, like, I have a massive bias towards things I can fully conceive of and will be satisfied with the value of.

[629] But I think this idea you have is a really good one.

[630] But the, I think the way that I like think about or evaluate other ideas, is definitely, Sean, in that same way that you thought about, like, you know, is this, is this winner take all?

[631] Is this going to be a massive thing?

[632] Is this a moonshot idea?

[633] And the scary part that always comes along with that is like, well, if this is a really good idea and now just happens to be the perfect moment in time where someone can do this, are these people, the people that are going to pull it off out of all the other people who are also thinking of this rare moment in time where there's a good idea that hasn't yet been done.

[634] And like that, that's almost disheartening.

[635] right?

[636] Because then you scope down the universe super, super narrowly.

[637] And most of the time, what you're doing is saying, no, I'll wait for the next one.

[638] And that's a frustrating and sometimes disheartening job.

[639] But I think that finding that spot in the middle where you can sort of believe in other people's ideas as much as you do your own that you get excited about and apply the same amount of skeptical rigor that you do to things you're being pitched to things you come up with, that's sort of where the magic lies in the middle.

[640] Yeah, I would agree.

[641] Also, when you said that thing about, like, kind of the way you two are different, it reminded me of this, you know, all right, take a shot.

[642] I said framework.

[643] Framework that I heard one time that has always stuck with me. I don't know if you guys have ever heard this, but Bill Gross, who's the founder of Idea Lab, he's kind of like, you know, Internet OG.

[644] He gave this talk once, and he talked about, have you heard this about the four kind of personalities that come together to make a company?

[645] so no so basically he says every company needs these four personalities and they come in a certain order so he's called EPAI so not a great acronym but it works and so EPAAI so E is the entrepreneur so he gives us analogy you're sitting in a room so say you're sitting in a classroom and one kid is going to look out the window and it's just you know there's just there's just grass outside but somebody's going to look at that grass and say you know what there should be a parking lot there and you know we all come into work we all come to school every day and parking is such a hassle there should be a parking lot there it could be six stories high we should build a parking lot and so entrepreneur comes up with a vision see something before it exists based on you know a pain point or a personal dream then they have p which kind of sounds like you ben which is the producer so producer is somebody who gets along extremely well with with the e they're not usually the one necessarily to come up with the kind of visions every single time but they're very good at downloading the vision.

[646] They hear the vision.

[647] They say, yep, got it.

[648] Makes sense.

[649] And their brain immediately goes to, oh, by the way, six floors?

[650] No, no, no. What it should be is two different structures that each have this, you know, whatever.

[651] They start immediately their brain starts building building that vision out.

[652] And they're going to be able to take words and turn it into, you know, some form of action.

[653] So he draws these curves.

[654] Like if, uh, if it's just the E alone, there's this initial value because they come up with a vision and then it sort of peters out and goes nowhere because there's no production.

[655] But then if you have the E and the P, the P, the P, jumps in after the initial values created and takes it to the next level.

[656] But then if you just have the two of them, your venture will be a mess because you need the A, which is actually an administrative type of person, a type of person who says, okay, great, we have a vision, we have a plan of production.

[657] We're actually going.

[658] We have six employees.

[659] But if no one's doing payroll, if no one's feeding anybody, if nobody's like writing things down about our plan, like we're screwed.

[660] We've got to get organized here.

[661] And so you need A, A takes it to the next level.

[662] And then And the last one is I. I is the student who's not even looking out the window.

[663] It's just looking at the other three people being like, you guys need to learn how to work together.

[664] And it's the integrator.

[665] And so the I is this amazing person who can figure out, okay, how do we get this group of talented people to be cohesive over time?

[666] And how do we, you know, one person's thinking one thing, another person is thinking another thing.

[667] How do we get alignment?

[668] And so I've found this in my startups too.

[669] And the reason I bring it up is because it's really useful to know which one you're great at which one your superpower is.

[670] So then you'll know who to partner with and when to partner with them.

[671] An eye at the beginning does nothing for you.

[672] But an eye is great kind of at the end of that cycle.

[673] Same sort of thing.

[674] So anyways, I just wanted to share that.

[675] Oh, that's awesome.

[676] When do you think you need the A's and the I's?

[677] So from my experience, you don't need them unless you hit product market fit.

[678] So sometimes the E is totally off base.

[679] You didn't need a parking lot at all.

[680] Or, you know, you build the parking lot, but you didn't have a plan to, you know, get customers.

[681] So it's once you're once your product is being pulled by the market.

[682] So once the demand is pulling more of the product faster than you can produce it or asking for more features than you can keep up with, but they're actually using your thing, that's when you start to need A and then you need I as the team grows to a certain size, right?

[683] Because a two -person team, you don't even need meetings.

[684] You're just constantly in sync.

[685] You're just sharing a brain.

[686] And then once you even get to six, six is like, oh shit, we all are doing different things.

[687] We all need to talk more.

[688] And then there's this rule, I forgot what it's called, but like every time the size of your team doubles, the communication required is like a square.

[689] So like as you get, you know, from six to 12, you don't need double the communication.

[690] You need, you know, quadruple the communication or whatever.

[691] And I have seen that to be true.

[692] In a perfect world or an easy to model scenario where every person in the organization must communicate equally with everyone else in the organization, then the number of communicating lines.

[693] lines is proportional to the square of the number of people.

[694] Exactly, because it's a network, right?

[695] So every node needs multiple connections to all the other nodes or at least to different hubs.

[696] And so it creates all these different lines that you need to work on.

[697] And that's where the A and the I help a lot.

[698] Because the A is like, hey, let's write things down so other people can read this.

[699] And the I is like, hey, here's like a common way to write things down.

[700] So we're all saying the same thing and have the same bar for what it takes to say yes to a project or whatever it is.

[701] Yep.

[702] That's awesome.

[703] Okay.

[704] Framework hour over.

[705] All right.

[706] Everyone, come back from business school.

[707] Let's...

[708] Yeah, exactly.

[709] I get real academic about these things.

[710] In reality, you don't need to know any of this shit.

[711] You just got to go.

[712] And when you look back on it, you'll say, oh, yeah, that matches up to what I did.

[713] But it's not like you go forward saying, I got to be a better pee.

[714] You know, it doesn't work that way.

[715] So, anyways, you guys have a bunch of ideas.

[716] Let's riff off the first one.

[717] What do you got?

[718] So we thought about talking about some of the stuff that's more directly related to our show here, but people seem to come on your show and then throw out their latest like brainstormed idea and, uh, and shoot the shit about it.

[719] And so I figure that would be a fun thing for us to do here.

[720] And so I tried to apply my own criteria of what's a thing that occurs to me that I want in the world that the time is now.

[721] And I can see sort of a path to how to accomplish.

[722] shit.

[723] And the gist of the idea is I want to book an Airbnb or a VRBO and all it tells me is whether it has internet or not.

[724] And that is completely useless in the world of I sit on Zoom for eight hours a day.

[725] Right.

[726] And so I'm thinking this is like a totally bootstrappable, maybe even no code thing where you just say, hey, to get access to, it's basically ways for Wi -Fi, where whenever you're somewhere you, you know, upload the geo coordinates.

[727] Maybe you put the address in.

[728] We'd have to figure out some security stuff around that.

[729] But you just take a screenshot of a speed test.

[730] And then we just have this big database of all these different places and anyone who stayed there and the screenshots they've uploaded.

[731] And yeah, that's the basic just.

[732] It's basically solving the problem of I need great internet because everything is done through Zoom.

[733] And so when I'm out and about, I need trust, I need a trusted source to know where my internet is going to be good versus okay versus whatever, you know, whatever I have.

[734] So it's, I think particularly when you're, uh, when you're like traveling, working remote, like, uh, we did this.

[735] My wife and I went to Santa Barbara for a month, rented an Airbnb for a month.

[736] Ben, you're doing this later.

[737] It's like tons of people are doing this now.

[738] Isn't Sam's doing this, right?

[739] Yeah.

[740] Sam's, you know, nomatically, you know, bouncing around every two weeks or three weeks, I think.

[741] Yeah.

[742] I mean, it's this classic cold start problem of like, what a useless website you've created, Ben?

[743] There's zero entries on here.

[744] So you got to figure out some way to sort of bootstrap that that cold start problem.

[745] Right.

[746] But I think the data entry is is really easy and you can do cool stuff over time, like charting how it's gone up and down and at the very least you can probably create like five to 10 spots in every city where like super nerds who saw this on product hunt uploaded data for the first time.

[747] So it has like a pretty low bar for minimum efficient scale.

[748] Right.

[749] Would you literally build it on like based off of what Airbnb inventory is?

[750] So Airbnb tells you, does it have Wi -Fi or not?

[751] Which is kind of useless.

[752] Right.

[753] It's like, yes.

[754] If it doesn't have Wi -Fi, just take it off the site.

[755] If it has Wi -Fi, okay, that doesn't tell me if it's going to work for what I need.

[756] It could be the site glass coffee argument of like, oh, we've created this experience for you that is Wi -Fi -free.

[757] So you can, but yes, that's not at all we're looking for.

[758] So it's funny.

[759] So Ben put this on our list last night where we were brainstorming these ideas.

[760] And I was like, holy shit, did you talk to this guy, we both know who's.

[761] super awesome in Seattle, because I just talked to him yesterday afternoon.

[762] He was also thinking about this idea.

[763] I'm like, oh, no, I didn't.

[764] And I think it just speaks to, like, the timing and the need for this is so acute right now.

[765] I mean, of the four of us on our two shows, three of us have done this in the past, like, couple months are going to do it now in COVID.

[766] Like, this went from, like, yeah, like, it would be, you know, it's really nice when I get good Wi -Fi at my Airbnb to, like, no, I need this.

[767] right uh yeah wifi is you know up there with food and water as far as i'm concerned so we forget covid i always need great wifi and if i don't i'm like you know i have to like take take a time time out for five minutes and be like am i really this upset about the wifi i think it's cool though and i have to like rebound totally doable you could stand this up on web flow and you know do a little bit of other no code stuff in the background maybe a little bit of code that you add over time um this could be this could be a wedge into something more interesting though right like you know on its own great you can build this it's a little product maybe you charge for it i think you probably better monetize this with affiliate uh for Airbnb listings and VRBA listings and the like i wonder though if you could actually use this to bootstrap inventory of places and have it then become its own network of like oh you want long term you know uh or ben of my buddy was calling it workations you know you're doing this like here is where the best places for this are well you start to onboard a little bit of that supply and maybe all of a sudden it becomes its own network just kind of like hip camp has kind of offloaded a lot of the uh the you know true camping type experiences off and glamping off of Airbnb maybe you can start to disaggregate it right you know the the two ways i was thinking about this when you because you just wrote a very simple thing like Wi -Fi site for Airbnb i didn't know what that meant i thought my brain actually went to a different thing.

[768] I didn't know you meant Wi -Fi website.

[769] I thought you meant Wi -Fi site.

[770] So my first thought was around Hip Camp, which is like, is there just a cool outdoor area where I can be outdoors and sitting and comfortable, but have amazing Wi -Fi?

[771] And it's like, I don't actually want to go camping, but I do want to be like not in my room anymore.

[772] And so like, you know, could I be outdoors, could I be outdoors and have great Wi -Fi?

[773] Like, that already is like, I love outdoors and I love great Wi -Fi and they rarely come together.

[774] And so if you could create these Wi -Fi sites that were awesome, that were just comfortable places to go sit, maybe there's little food trucks around there or whatever, I think you could build kind of like this weird outdoor co -working thing.

[775] I'd love to see somebody like take a shot of trying one of these.

[776] The other angle I thought you guys might be going is like sort of that Boingo wireless or whatever that's called, which is like, you know, they went to, you know, airplanes or, you know, there's a version of this for coffee shops, which is like, hey, look.

[777] everybody who comes here wants Wi -Fi and better Wi -Fi than you're providing, we will give free Wi -Fi in exchange for their email.

[778] And you could potentially do that with Airbnb hosts.

[779] So you could basically say, hey, we will boost your Wi -Fi through either those kind of mesh networks, mesh network routers, or just like provide Wi -Fi where you don't have Wi -Fi.

[780] And in exchange, so basically run this little service, either you charge five bucks a night for Wi -Fi or you get that plus their data and then you use that as like kind of the way Boingo does.

[781] So that's actually what I thought you were initially saying, but I don't know if there's a there.

[782] A valuable service itself.

[783] But if you did the like, if you were trying to build your own network of longer term rental properties, this would be a great growth hack.

[784] You'd say, come on my network.

[785] I'll pay for you to upgrade your Wi -Fi.

[786] And then that's how you can onboard the supply.

[787] Right.

[788] Yeah, exactly.

[789] Yeah, that's an interesting point of like, how do you either onboard new supply, like, okay, you've got a, whatever, you've got a backyard.

[790] And now backyards are cool.

[791] Or it's how do you give supply that was like unviable?

[792] How do you make it viable with some like investment that you can pay back in two night visits?

[793] You know, like could you pay back?

[794] Could you pay that back in that short amount of time?

[795] I don't know, hard space, but there might be something there.

[796] Let's jump to a different one.

[797] I'm going to pick a random bullet.

[798] Wait, can I go meta?

[799] on this one for a second.

[800] I love, I guess this is moving to a different idea, but I love that we wrote down Wi -Fi site for Airbnbs, and there was three different ideas that came out of that purely because there's insufficient information, so you like apply creativity and fill in the gaps.

[801] And it reminds me of, the very first time I did anything noteworthy on the internet was I made this website called It's This for That .com as a joke at a startup weekend, because every single pitch was, well, it's this for that.

[802] in like 2009 and it was like the first time I got tech crunch so we still maintain the websites my buddy Eric and I and it's like it just comes up with random X for Y pitches and as you just like click to refresh it's like a startup meme generator and I've like come up with some pretty decent ideas after looking at very few words and then trying to extrapolate from there dude I've been to this website so I just went to it now so I went to it but first one is so basically it's like Airbnb for stolen goods the next one the next one is so basically it's sales force for coffee shops don't know what that means can make it up and so actually we've played a similar game there's a there's a game i don't know if you ever heard of it called powerpoint karaoke uh yes yes i think there's different variations of how you do this but there's a startup variation of it which is you know somebody gets up there's a powerpoint deck behind them and they don't know what it is they're coming in totally cold and so they see the first slide and they just have to start talking as if this is their present And then the next slide comes up and they have to connect it to whatever the hell they were saying, you know, about the previous slide and like create a cohesive story.

[803] It's a good muscle to exercise.

[804] It's like improv for business.

[805] And, you know, you could do this with startup pitches as well.

[806] You could literally just remix, you know, take one deck of cards, which is like successful internet companies and another deck of cards that's just like niches.

[807] And you could just like pull two different cards and pitch it.

[808] And yeah, it's kind of surprising how some pretty viable ideas come out of it.

[809] do that as a like startup comedy podcast?

[810] I think you guys are ready.

[811] You guys are ready to spin it off.

[812] All right, listeners.

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[833] All right, what's what we got up next?

[834] So you have one in here, SPAC index fund.

[835] Tell me what you're thinking.

[836] So hear me out on this.

[837] And I don't know how long the opportunity exists to do this.

[838] But at least for the moment, there's this rush of everyone who has sufficient connection to capital, raising that capital into a SPAC and hoping in the next two years that they can leverage relationships with entrepreneurs to get a deal.

[839] on and take someone public?

[840] And you've probably talked about SPACs on your show.

[841] We've talked about an RLP program, so I don't want to go into too much detail about the mechanics.

[842] But I think if you were to bet on SPACs as a whole and say, you know, they all go public.

[843] They trade right around $10 a share because they're effectively worth exactly the amount of cash that they have in the bank, which is a trust in the Cayman Islands or something that's like untouchable.

[844] and then at some point they announce an acquisition and you either can redeem and get your money back or you can roll it into the acquisition.

[845] And so in general, like I think we're going to see 20 plus of these sort of like series C or later startups go public through this mechanism of specs in the next, I don't know, a couple of years.

[846] And there's two levels of appreciation here.

[847] There's the first one where, you know, you buy in at $10 a share and then there's a pop when they announce who they're going to buy.

[848] So you could play the pop game if you want to and then just cash out immediately after that.

[849] Or you could play the longer term game and say, do you want to hold the basket of startups that went public in the 2020, 2020, 2021 vintage and hope that there's a zoom in there?

[850] And I think it'd be, to me, it feels like a reasonable upside super mitigated downside type of.

[851] way to index.

[852] Yes.

[853] I love this idea when I saw it.

[854] This was the opposite where I had no there was no question marks about what this idea was.

[855] I was like, oh, good idea, interesting.

[856] Also, I was curious.

[857] I don't know if you guys know, what are the mechanics of starting an index?

[858] Can I create an index?

[859] Do you need to be a certain person?

[860] Is there a certain bar?

[861] How does that work?

[862] Do you know?

[863] Oh, damn.

[864] Someone should create an angelist for public equity indexes.

[865] Right.

[866] Like where I maintain an index and get some carry.

[867] Yeah, because I like, you know, a bunch of people trying to do this with, like, you know, on Robin Hood or public .com, this new website or whatever where it's like, this new app where, you know, I go invest in a basket of stocks.

[868] You can kind of follow me. It's a social network.

[869] But like, fuck the social network part.

[870] I think that's a little bit weak, honestly.

[871] I think that more interesting is I listen as podcast.

[872] I'm like, wow, Ben and David are so smart.

[873] You know what I want to do?

[874] I just want to own whatever stocks that they own.

[875] And I want to basically buy their index that they created and just roll with them in their portfolio, kind of like a money manager, but if you guys were basically curating an index over time, I think that that would be, it'd be interesting if you could create an angelist -like platform where it was very trivial for somebody to create their own index and let others invest into it.

[876] I might have also just invented a mutual fund, I'm not sure.

[877] It feels like, so I don't know the answer to how you do this, although I should, but I used to work at Dow Jones and which I used to work at the Wall Street Journal's part of Dow Jones.

[878] It's a part of News Corp. And while I was there, we sold the indexes business.

[879] So the Dow Jones Index is now owned by one of the big Chicago company.

[880] Which is a garbage index, and no one should pay any attention to it.

[881] But it was a billion dollar business within Dow Jones.

[882] So a billion dollar top line, basically no expenses.

[883] Like it was all just pure money.

[884] And what it was, it was just a marketing thing.

[885] It was like you get to use the Dow name.

[886] like that's it's like a license yeah essentially um yeah oh that is absurd and who's who's paying for that license who pays to be able to put the Dow Jones and is it like CNBC has to pay to put the Dow Jones index on the screen I don't know exactly the answer I think it's I don't think like CMBC or like media properties have to pay for it because I think that that that they're just that's just public but I think if you want to incorporate that index in your data of whatever like product you're using or whatever then you guys to pay that licensing fee or if you want to use the brand it might also be the data stream you know Dow Jones was a powerful brand like the Dow Jones XYZ whatever mutual fun blah blah blah blah right that's interesting you know this reminds you I had this meeting once where this guy came to our office and he was like yeah I'm the CEO of NASDAQ I think it was NASDAQ maybe New York Stock Exchange and I was like I was like wait NASDAQ has a CEO I guess okay that makes sense like you know so NASDAG like what wait what the fuck is NASDAQ?

[887] And he's like, well, because I just had always heard of NASDAQ through the kind of like, it's kind of like you hear Dow Jones.

[888] It's like, oh, this is just sort of a name we give to track the market.

[889] And I didn't really fully at the time.

[890] I had no idea that, first of all, there's multiple exchanges.

[891] They're highly competitive with each other.

[892] They hate each other.

[893] And they're constantly, you know, trying to fight for different IPOs.

[894] And then, but the part I did, I kind of knew that part.

[895] But the part I didn't know was that they licensed their technology.

[896] They're like, yeah, we power the stock exchange in Sweden.

[897] and 40 other countries, and we make, you know, a billion dollars a year or whatever the number is, just licensing our stock exchange technology to other countries for their stock exchange.

[898] And I was like, wow, this is a great business, actually, because it has this ultra -powerful brand in the U .S. And then it just becomes like, you know, and they built this technology stack.

[899] There's very few competitors to it.

[900] And then it becomes kind of like the, you know, end of one company around what should I use to run our stock?

[901] exchange and there's going to be no switching I bet like I bet nobody wants to switch the sort of full stack they're using to run their stock exchange that would be crazy right so you have extreme pricing power and I was like wow this is an amazing business I was like could you compete with this and that was right around the time that Eric Lee's launched the long term stock exchange exactly which is like just an amazing idea seems like it's been a little bit slow to market as you would maybe expect but turns out taking a stock exchange to market is not just putting up a website measuring clicks yeah exactly either there's no sort of, you know, ironically, for the lean startup guy to do kind of the ultimate art. Exactly.

[902] No quick MVP, you know, just landing page with, you know, smoke and mirrors where there's no product behind it.

[903] You can't do that.

[904] You know, Eric Reese will be in jail telling people about the lean startup in there.

[905] But anyways, I think the whole idea of stock exchanges is just very interesting thing.

[906] I think a SPAC index fund is interesting and I want to know how you create an index fund.

[907] I also kind of like the idea of Angel's, but for creating private.

[908] equities instead of venture funds.

[909] Also, I just think, like, who out there, somebody out there is just doing like a SPAC newsletter right now and just taking advantage of all the SPAC keyword searches and probably is built like a 50 ,000 person, pretty valuable email list.

[910] There is, it's called SPAC, is it SPAC report?

[911] Let me look this up real quick.

[912] SPACresearch .com.

[913] The founders and acquired community member and, yeah, I think he's got, it's a paywalled business.

[914] There's either some sort of trial or some sort of freemium thing.

[915] But yeah, he's building a real business on it.

[916] Yeah, I think totally you could do kind of the motley fool or whatever.

[917] You know, basically it's, this is old solution, new problem, right?

[918] Okay, niche newsletter, paid newsletter.

[919] That's old solution.

[920] New problem.

[921] Everyone wants to know about specs and there's not a definitive place to go find it, right?

[922] Like, I remember in the crypto boom, uh, I ran into this guy who is, you're referring to this past tense crypto boom.

[923] Yeah, yeah.

[924] Crypto, oh, the boom, the boom was a very specific time when, you know, money was flowing freely and my aunt in Virginia was like saying the word Ethereum in her Indian accent.

[925] And I was like, oh, shit, what the hell is going on?

[926] But there's this guy, his name's Shaq, Shaq Khan and Shaquil Khan.

[927] And he was like, he's kind of this international man of mystery.

[928] He worked at Spotify and he did a bunch of random things that, like, nobody knows who he is, but he's just friends with all the CEOs.

[929] And like, they hire him for like a special project.

[930] He's the wolf from full fiction.

[931] Yeah, he's exactly.

[932] He's the wolf.

[933] He's the one they call.

[934] in.

[935] So during the initial Bitcoin run -up, when it was going from like $10 to $1 ,000, everybody was trying to figure out how do we create Bitcoin products.

[936] And he just created Coin Desk.

[937] He was helping create CoinDesk.

[938] He's just like, oh, yeah, we should just create the news and information site.

[939] And then we'll figure out from there what other opportunities we want to go to.

[940] But like, first things first, let's create Bloomberg or CNBC for Bitcoin.

[941] And I was like, oh, man, such a simple idea that could be executed because you're nimble and you're, you know, very responsive to where the world is going.

[942] Totally.

[943] Yeah, I mean, it's, it fits, it definitely fits into that.

[944] For anybody who hasn't read this thing, it's really, it's quite hard to discover because it's an archive of an old website, but it's, uh, P .M. Archive .org, and it's, it's Mark Andresen's, it's like a play on his handle.

[945] And it's his old blog before he started Andresen Horowitz.

[946] And one of the amazing pieces of content on there, it's like a five piece thing is his career advice, which, course starts with like you can't plan your career so I refuse to give you any advice but if I were to here's five articles on it and one of the things is like if your five smartest friends are getting together at two in the morning and going to Denny's because of something exciting that they're thinking about or something that's new in the world go with them every time and it's such a good like litmus test for if yeah if pro rata has written about SPACs every single morning for the last two weeks then like it's probably a good time to start a SPAC media business if you feel well position to do so.

[947] Right, right.

[948] Yeah, that's a great call.

[949] There's the other one that's like what nerds are doing on the weekends will all be doing, you know, five years from now, the Chris Dixon thing.

[950] And, you know, wherever a nerd engineer is spending their free time on the weekends tinkering, that's, that's the area of innovation because they just can't help themselves.

[951] And what do you guys think would be that right now?

[952] I think I know, if I just think about my smartest friends and what they're doing, I think I know one answer of what I would say.

[953] but it's, there are lulls where there's just no clear answer and then there's like clear periods where something emerges.

[954] Do you guys have something in mind or do you remember a time when that was happening and you either were aware of it or you missed it?

[955] So I have, I'm going to give a little bit of a different answer than I think we're looking for here.

[956] My smartest friends who have means are working on climate problems right now.

[957] That's right.

[958] And I think like we can talk about gpT3 we can talk about crypto stuff we can talk about um there there are other sort of frontier technology things at the moment but probably five times in the last couple months i've had really smart people that i've tried to recruit to start something with me to join a PSL company who are saying like uh actually after doing some reflecting i'm going to go work on some climate stuff and there's there's no capital structure to support that i mean we have a whole David, we did that deep dive on how energy, breakthrough energy stuff gets funded, which is completely broken.

[959] I've got a company to talk about it, but keep going.

[960] Anyway, that's definitely the thing that occurs to me of my smartest, most well -intentioned, and people with means.

[961] And yeah, throw out a couple of names that I've seen.

[962] These aren't even people I know, but I know Jesse Jacobs just launched a rolling fund for climate.

[963] I know that Josh Felser left.

[964] freestyle, I think, to work on climate problems.

[965] I know that Yishon Wong, who's one of the smarter people I like to read his writings on stuff.

[966] He's been talking about this, working on this for a couple years now.

[967] The CEO of Reddit, right?

[968] At some point, either before or after Alan Powell.

[969] He was the CEO of Reddit.

[970] He was kind of like earlyish Facebook, and then he became the CEO of Reddit for a while.

[971] And he's got this very simple website.

[972] I think it's just Yishon Wong, which is hard to spell.

[973] He should give a shot of being CEO Twitter for a little bit, just to mix it up.

[974] Round it all out.

[975] I'm still long read it by the way And so yeah He's like buying a plot of land in Hawaii or something like that And doing some radical experiment Oh awesome There's also this guy who the guy who created control labs I think Which is they got bought by Facebook They're kind of like Did he leave Facebook?

[976] I think he left Facebook And I don't know if he's working on this But I saw him talking about or tweeting about Like you know we really could just go put solar panels into space And harness the sun's energy that way And then beam it to the earth or something crazy like what would it take to like you know throw a you know a giant set of solar panels into the space and then yeah and I was like what the fuck is this guy talking about like this you know people with brain power you know 10 orders of magnitude more than mine I'm like oh wow I didn't even I can't tell if you're joking or if you're serious you're probably serious and it sounds like a joke to me that's how big the knowledge gap is here yeah what's super exciting to me on this is um I have a friend who just started a company um that like there's I mean this is a double -edged sort, but it's just reality.

[977] Like, the problems are finally starting to get real with climate.

[978] Like, I think one of the reasons why there's no good funding structure for it and clean tech failed and all this is just like, everybody knows that this like wave of awfulness is coming, but like nobody feels it yet, you know?

[979] But, but the tip of the spear is fires in California.

[980] Like, those are real, real problems that we're all like, like, can't go outside.

[981] Like, it's just terrible and like people are losing their homes and properties.

[982] So I have a buddy who started a reinsurance business for fire risk in California.

[983] He's like, yeah, the insurance industry is like so backward on this.

[984] These old stochastic models from like past history of like, there's a terrible fire in California once every 30 years.

[985] It's like, no, it happens every year now.

[986] So like, okay, let's deal with this problem.

[987] And like, that's going to be a great company.

[988] That's going to be a great value capture mechanism.

[989] I don't know.

[990] I mean, how does that help us not burn down the planet?

[991] It's like there's a, but there's a serious, but like you can't get insurance for fire in a lot of places in California anymore.

[992] So like this is a serious problem.

[993] Yeah, so it's a way to address the symptom of a problem.

[994] And it makes the symptom much less painful for lots of people.

[995] But it's still not addressing the problem.

[996] You're not solving the fire problem.

[997] You're solving the my house burned down problem and I'm shit out of luck.

[998] Which is great and admirable to solve downstream problems.

[999] Right.

[1000] Yeah.

[1001] Also, speaking of insurance, I tried to get insurance for an e -commerce business I own.

[1002] And, um, dude, you can't get e -commerce insurance.

[1003] I don't know what the hell is going on.

[1004] You can't get business insurance for e -commerce.

[1005] It was so painful.

[1006] I thought, I'm going to start typing the word biz.

[1007] And then Google's going to be like, oh, you want business insurance?

[1008] Cool.

[1009] Here, here's 10 leads that will just call you incessantly.

[1010] And instead it was the opposite.

[1011] It was like business insurance, you know, for e -commerce business, uh, called 12 different companies emailed a bunch of them.

[1012] and they're just like, oh, do you, you know, is your product, oh, it's e -commerce, it's not physical retail?

[1013] Oh, that's going to be tough.

[1014] And then they're like, you know, is it manufactured in China?

[1015] I was like, everything's manufactured in China.

[1016] What are you talking about?

[1017] And then they're like, oh, yeah, it's going to be really, really tough.

[1018] It's like, it's like, you're like, who's this for then?

[1019] Right.

[1020] I was like, you fraud?

[1021] Like, what's the, why is it going to be tough?

[1022] So they would just email me. They'd be like, we don't, unfortunately, we can't, we can't find any underwriters that will underwrite for this business.

[1023] And I was like, I haven't even told you, anything specific or scary.

[1024] I've just said e -commerce and made in China.

[1025] And like, those are the, that's everything.

[1026] That's most things, you know, as far as I'm concerned.

[1027] And they were just like, yeah, we don't do much e -commerce.

[1028] I'm like, who does fucking e -commerce then?

[1029] And so I don't know if I'm just a terrible Googler or, uh, how does Shopify not have a preferred partner for this?

[1030] Yeah, I don't know.

[1031] How does Shopify not just provide this as a service?

[1032] It's like, it totally.

[1033] It's a nice high margin.

[1034] This could float a bunch of their investments.

[1035] This is the best business ever were.

[1036] Okay, I won't do a spoil alert.

[1037] I'll do a teaser.

[1038] The mere fact that you said you won't do a spoiler alert means people are going to know what we're talking about.

[1039] We're going to do a, probably our season finale this year on Acquired is going to be a well -known insurance business.

[1040] But it's like people, it's the best business in the world.

[1041] You get free money.

[1042] Right.

[1043] Yeah.

[1044] You literally just like you get money that you can invest that you have to pay back at some point, but it's free money.

[1045] And to continue, David, because you've given away so much of the story.

[1046] now that like we may as well round it off like if you have a large insurance business that allows you to have a nice big float you can invest that float in other things and it's if you're a good capital allocator is yeah it's an amazing way to just go buy a bunch of other businesses make more investments and non -insurance products it actually seems like a no brainer for shopify because they do want to build more and more and more technology and that's going to cost cash right And if it's not Shopify, then somebody needs to go do like ClearBank for e -commerce insurance and do it extremely well.

[1047] I know there's a, I finally got one provider, but the fact that it took me, the fact that I even had to try means somebody, you know, there's money on the table for someone somewhere, you know, for this type of thing.

[1048] Okay, so let's go back to.

[1049] I think the thing you said is really, really interesting.

[1050] It really resonated with me when you said the, you know, if your friends are going to Denny's at two in the morning, like just go with them.

[1051] Like, that's literally the best career move you can do.

[1052] I totally agree.

[1053] I fucked this up a ton.

[1054] Like, in college, like, I would, I wasn't really even excelling in class, but I always just thought, okay, class is where I should go.

[1055] That's where the value is going to be, right?

[1056] That's what I'm supposed to be doing.

[1057] And I ignored all these people.

[1058] I actually literally laughed at a whole bunch of people who I knew were just, like, working on random shit.

[1059] They weren't going to class.

[1060] They weren't going to parties.

[1061] They were just, like, building.

[1062] And, like, now I'm, like, begging them to invest in their companies here in Silicon Valley because I'm like, oh, dude, sorry I, like, you know, know, you know, made fun of you in the hallway, like, you went to Duke, right?

[1063] I went to Duke, yeah.

[1064] Were you there with, um, with, uh, Stephen from Cameo?

[1065] Uh, yeah, he was a couple years older than BAS.

[1066] And he was, actually, the funny thing is Duke is this school in Durham.

[1067] And Durham's not a, at the time, at least, wasn't a very cool city.

[1068] So there was only one club that anybody could go to, one off campus bar basically called Shooters.

[1069] And I've been to shooters several times.

[1070] Did you go to Duke?

[1071] Uh, my, David, why have you been to, yeah.

[1072] I have performed a wedding at the Duke Gardens.

[1073] Okay, gotcha.

[1074] My sister and brother -in -law went to Duke.

[1075] So we were going to visit them a bunch of times and then they got married there.

[1076] Yeah, so of course they take you to shooters is the only fucking place to go.

[1077] So Stephen from Cameo at the time was, uh, Wayne Manor.

[1078] My brother -in -law was in Wayne Manor.

[1079] Right, right.

[1080] So he used to just host parties at shooters.

[1081] He was just a party promoter.

[1082] So I literally knew this guy as like, you know, fuck boy number one as like just throwing parties at shooters.

[1083] just, he was always like texting people, you know, trying to hype up parties.

[1084] He was good at it.

[1085] Of course he was.

[1086] And, um, and now he's like CEO of like a billion dollar company.

[1087] Um, but, you know, and it's the perfect company for him to be CEO off.

[1088] Like that is it, it pattern matches perfectly.

[1089] Exactly.

[1090] So, uh, yeah, he's a funny guy.

[1091] Uh, anyways, forgot where I was going to this, but I guess what I was going to say is the follow your, follow your smart friends.

[1092] So step one have smart friends that actually do this kind of thing.

[1093] And I think that's, if you just do that, you're 90 % of the way there.

[1094] And then the last 10 % is like, listen to them and follow them and like be, be interested in their things that seem just like random toys right now, because they will probably become big deal.

[1095] You know, one of those is going to become a big deal soon.

[1096] And so I'll throw out three that I've seen as trends amongst my friends.

[1097] I have basically tech friends and then I have like smart business friends.

[1098] So of the top 1 % of my friends, the tech friends are all about GPT3 and they're all about defy, which is this sort of crypto infrastructure.

[1099] for they're doing things that like I don't think these guys own a stock but they're like oh yeah I'm you know in this defy system where I'm staking and I'm yield farming and I'm like you know creating these really complex lending mechanisms and I'm like what the hell is going on like when did you turn into a finance guy and it's because all of a sudden engineers who like money are like oh I can use my engineering to make a lot of money and the crypto boom probably fueled this because people were just like making millions of dollars and like oh well they're all flush with cash they're all flush with with cash they're all flush with wealth that is in Ethereum or is in Bitcoin or random ass you know shit coin and and so they don't want to take it out they're not ready to like leave the crypto game but they're like well I you know I was just trying to invest 10 ,000 into Ethereum and now I have 1 .1 million so okay cool this is a way I can stake my Ethereum or I can lend Ethereum and I can get 12 % a year you know doing this.

[1100] This is great.

[1101] And I can kind of control the whole thing from my terminal and my computer.

[1102] Like, that's awesome.

[1103] It's the same game that, like, multi -generational wealth have been playing within trusts in the U .S. for, you know, a couple hundred years.

[1104] But now, like, these crypto millionaires have the exact same problem of, like, I'm sorry, I have to pay what taxes if I pull this out into cash?

[1105] Well, how do I roll it into something that just kind of can spit off exactly as much cash as I need to live and I can leave it as an ill -liquid asset the rest of the time?

[1106] Exactly, exactly.

[1107] Like, you know, that is, that is what's happening.

[1108] And so maybe, maybe more stuff needs to get built.

[1109] That's the equivalent of a, of a trust or like the 1031 exchange of crypto.

[1110] Like, you know, I think that's where a lot of potential is like, this is why the ICO boom happened was so many people had made so much money off Bitcoin and Ethereum.

[1111] And, you know, to them, they're still thinking about their 10 to $20 ,000 to $20 ,000 investment.

[1112] But now it's $200, $500, $700 ,000, you know.

[1113] And so they were like, okay, cool, maybe I could do that again, like first false confidence that I could do that again.

[1114] I can invest in this new small thing and it could also get a million dollars.

[1115] It was skill, not luck.

[1116] Right, exactly.

[1117] It was skill, not luck.

[1118] And then the other is, I don't want to pull this out.

[1119] And so you had just, it's like when the Fed pumps in a bunch of money and the stock market goes up, that's basically what happened for crypto and why there was so much slush money to put into random ICOs.

[1120] Huh.

[1121] All right.

[1122] New idea is opportunity zones for crypto millionaires.

[1123] Do you know about the tax treatment on that?

[1124] On the opportunity zones?

[1125] I've been hunting for ways to avoid paying taxes over the past year, and people keep telling me about opportunity zones and how I should be investing in them.

[1126] And I only understand 20 % of it so far.

[1127] I'll give you a very small amount that I know for sure and leave everything else unsaid, so I don't say anything wrong.

[1128] But I know you can roll appreciated stock in, which I think is similar to a 1031 exchange without paying tax on it.

[1129] So it's a new investment.

[1130] Right.

[1131] So let's combine the.

[1132] climate change and tax idea here into one with an idea I've been trying I've been noodling on I actually have said this on the podcast before but I need to say it again because I'm still thinking about it which is not true of 99 % of the ideas I say so one of the best simple ways to reduce your tax burden is to is to do a solar installation right so there's a solar tax credit that the government gives.

[1133] And so, you know, you have a house.

[1134] You put solar panels on.

[1135] Yes, you pay the upfront investment, but then you save on your utilities and you get the tax credit that you can use to, you know, eliminate a whole bunch of your earned income.

[1136] So essentially, you can do it for free as long as you have the money to put up up front.

[1137] And so I've been looking to basically do this.

[1138] Now, I don't have, I don't want, I need something bigger than just my house, right?

[1139] Your house might have like, I don't know, a $30 ,000 or a $50 ,000 project.

[1140] I don't know exactly what it is.

[1141] But it's like, what do you do if you need to, can I get like a million dollars of tax credits for this?

[1142] Like, can I do a million dollars worth of solar?

[1143] I want a farm, yeah.

[1144] And so I was driving with my father -in -law and he was like, he was telling me about this.

[1145] He goes, yeah, you know, like on every school, you see these solar panels on the parking like garages are just like kind of outside of the school.

[1146] And he's like, yeah, this is part of like Chevron energy.

[1147] Like Chevron installs all these.

[1148] And from what I gathered was they have both a kind of a service.

[1149] provider.

[1150] They're a vendor.

[1151] They get paid for that.

[1152] But the bigger thing is that they'll be like, hey, school, you don't need to put up $2 million for the solar installation.

[1153] We will do it, Chevron, you know, out of our profits from oil and gas.

[1154] So they get to say they're doing clean energy things.

[1155] They get to reinvest profits into something that they're going to be able to get favorable tax treatment on.

[1156] They get to help a school have solar power.

[1157] And then they become sort of a long -term landlord of the lessor, I guess, of the solar panels.

[1158] And the school pays like kind of a small monthly fee, but they are there from day one, you know, saving money on their utility bill.

[1159] So for them, it's like a net gain anyways, even if they pay for this.

[1160] There's paying less for the utilities.

[1161] So I was thinking, why isn't there a marketplace where I can, I don't have to buy a building and like do this whole solar plan, but I just say dollars, please invest that into the solar projects for me and give me my tax credits back and give me my kind of monthly recurring income from this, this is going to go on some farm in, you know, Idaho.

[1162] Yeah.

[1163] It's an asset manager.

[1164] It solves the same problem of like, I don't want to do the dirty work of finding those investments and operationally putting the money in, but like I will pay you something to do that on my back.

[1165] So in one side you have the sort of supply of project or let's say supplies capital and the demand is people who want solar and like whether this is commercial building, schools, farms, factories, whatever, places that need, that could use solar that don't want to put a quarter million dollar investment into their solar.

[1166] They are going to buy another machine to, like, run their factory better or whatever.

[1167] But they're happy to take a lower utility bill, and they're happy to, you know, on your side, you're happy to get, you know, monthly income plus tax credits.

[1168] So it seems like there's a business there.

[1169] Solar is installed.

[1170] Yeah, exactly.

[1171] And we're helping the environment.

[1172] So I like all of that.

[1173] Now, somebody who's more knowledgeable than me, probably in five seconds can tell me why this is not a viable thing.

[1174] But for now, I'm going to say it out loud until somebody points that out or builds it.

[1175] I love it.

[1176] Well, this is part of, I don't know the exact history, but, you know, Solar City looked a lot more like this before it combined with Tesla, which was weird, you know, all in and of itself.

[1177] But now I think Tesla's solar projects are much more about the roofs and solar roofs and power walls.

[1178] Right, for sure.

[1179] Okay, climate is one.

[1180] the other one I said was buying businesses so going more of the forget this venture capital game I'm just going to buy all these profitable businesses or internet our mutual buddies tiny capital yeah tiny capital is kind of like probably the thought leader and has the longest running track record of doing this of like kind of people who are public on Twitter about it or then there's others like constellation software and you know there's a whole bunch of different different folks that do this but a lot of my smart friends are going down this path of hey I'm going to buy and then build rather than play the lottery and hope I find product market fit with a brand new invention.

[1181] Yeah, I also think so many people, it became so sexy to be an early stage, to use the finance term, an early stage manager or an emerging manager, or as people would call it maybe solo capitalists in the sort of startup parlance, or do a rolling fund or something like this, that there's been so much of a rush to, I want to invest in my friends and relationships who are starting early stage companies that were now into year five or so of the boom of that and people realizing how crazy hard it is to produce a market beating return or, you know, let's say better than that, it's a top decile, top quartile return for your investors that unless you're really, really differentiated, and I think most people are kidding themselves on how differentiated they are in the deals that they have access to, unless you're incredibly differentiated, you probably should go play a lower beta game where you can put in some sweat equity like having to use your PM or dev talents to rehab a business that is available to you for a below market price.

[1182] But like I just think, much like the way we started this podcast talking about classic entrepreneurship versus shoot your laser at the sun and I don't know what I'm talking about there, but go bigger, go home.

[1183] I was trying to make a metaphor like a bond villain.

[1184] investment.

[1185] It's, I think people are just realizing how crazy hard it is and they're like, wait a minute.

[1186] If what I'm trying to get is an X percent annualized return, gosh, I know way better ways of doing that that don't involve this crazy power law.

[1187] Yeah, I think that's true.

[1188] If you wanted, if you wanted a, if I was saying, hey, I have to, over the next seven to 10 years, I have to end up with this amount of wealth or I die.

[1189] That's the path I would go, right?

[1190] Because I'm like, okay, it's really de -risking the market.

[1191] fit side, and it's all about execution and growth.

[1192] And because the financing is so favorable, right?

[1193] Like, most people don't realize this.

[1194] Most people, a lot of people listening to this are working at a job, and they make a great salary, right?

[1195] They might be making $200 ,000 a year.

[1196] And then they're paying kind of like, you know, income tax on that.

[1197] Now they're, you know, taking home 120 or whatever it is.

[1198] Especially if they live in California.

[1199] Yeah, exactly.

[1200] And so, you know, what most people fail to realize is that for, either no money down or like kind of like you know you could put down five to 10 percent you can buy a million dollar business with an SBA loan and by the way if you buy it before September 27th either first six months are going to get paid for you by the SBA so you first six months payback is taken care of and you know not to mention seller financing including including the seller is going to carry 10 % of it themselves so that's how you get to the 15 % down total you put five, they put 10, and then the SBA loan covers the rest.

[1201] And every month, you're going to be making, you know, you're going to be making a profit on, you're going to half the, half the profits are going to go towards paying back your loan.

[1202] The other half are going to go to you.

[1203] Within 12 months, you paid off that whole thing.

[1204] And oh, by the way, if you improved operations doing one of three stupidly obvious things, you know, you've now created an asset that is worth two, three times what you bought it for.

[1205] And that path, it's like buying a house, except the mortgage is like, you know, instead of you paying the mortgage, the mortgage is paying you.

[1206] Yes, exactly.

[1207] And unlike a house, it can appreciate at a rate that is uncommon.

[1208] I have a friend who bought a business.

[1209] I think for 300 ,000, you know, on one of these websites, he was the first guy.

[1210] I didn't know, I was like, you fucking buy off these random ass websites.

[1211] Like, you know, you used one of these marketplace.

[1212] Yeah, you go to Flippa and stuff like that.

[1213] He's like, oh, yeah, bought a bunch of stuff.

[1214] I'm like, what?

[1215] And it's because he didn't have connections.

[1216] And so I was like, he's like, I didn't have funding and I didn't have connections.

[1217] So I just go to these places where I don't need a reputation or connections and I can get funding from these like very simple pools of capital.

[1218] But I have to buy profitable businesses.

[1219] Otherwise nobody will lend me the money.

[1220] So I'm not taking big risks.

[1221] And so he brought this company that was small but profitable.

[1222] And that company is going to do, you know, 30 million this year in revenue.

[1223] So he's going to literally take it from 300 ,000.

[1224] So he 100 X. Yeah.

[1225] He basically 100 X this business.

[1226] And I was like, dude, take me back.

[1227] When you were looking at this business, what was the, I was like, first, this is very, uncommon.

[1228] You don't usually get this type of lift.

[1229] But I was like, did you know that there was this much room?

[1230] He's like, yeah, I talked to the owner.

[1231] And he was like, just always thinking about operations and how to like doing the shipping and the warehousing.

[1232] He'd never ran a Facebook ad.

[1233] You know, he never did any marketing.

[1234] And, um, and also, you know, his SEO was a little screwed up.

[1235] And I realized that, you know, there's a lot of like latent potential there.

[1236] Um, and then also he didn't expand it anything, any adjacent like, he didn't launch one new product in four years.

[1237] And so, you know, just Facebook ads plus new product plus, you know, improving the content SEO game and like just this insane lift.

[1238] Like he'll sell this company for over $100 million that he bought on one of these like flippa type websites.

[1239] It's insane.

[1240] Sean, I'm curious.

[1241] Like, do you think there is an opportunity to, um, if your skill set is like amazing growth marketer to get really surgical about running ads against other people's products and trying to get data back from like, oh, my God.

[1242] God, I know something they don't and send them traffic.

[1243] Like, it's hard because you don't own the pixel on their website, but maybe as a part of like, hey, I'm interested in doing the deal, would you throw this pixel on so I can test some stuff and that I can tell you what I can afford to pay?

[1244] Yeah, I think that's a great way to diligence things.

[1245] But honestly, you don't even have to get that smart.

[1246] So, like, there's a lot of these that they're just not doing one channel.

[1247] And if you know that that channel works, if you have experience in that channel, let's call it Facebook ads or Google AdWords or influencers or whatever is your growth thing.

[1248] and you know the characteristics of the type of business that works there, right?

[1249] So let's say it's Facebook.

[1250] You know that the types of products that work are like scroll -stopping products.

[1251] Like it has to be visually appealing.

[1252] You have to understand the value through a visual in less than three seconds.

[1253] The slow -mo of the Therogun beating against a thigh, making the ripples.

[1254] Like you know.

[1255] Like it does well.

[1256] Like a baby.

[1257] It does well.

[1258] Like these things just do well on social networks.

[1259] So you're like, okay, cool.

[1260] I'm going to do that and maybe a little less like, I don't know, some B -to -B thing that's not going to resonate in the same way.

[1261] This spreadsheet will change your life.

[1262] The spreadsheet beating against your leg doesn't do the same.

[1263] Do you guys get these ads of like two MIT grads, you know, are got together and X?

[1264] Dude, all my ads are crazy because it's only for businesses that I'm looking at buying.

[1265] And so I just like, I like try to get myself covered in their pixels.

[1266] And then I'm like, yes, retarget me. I want to watch everything you're doing and I want to see your ads and all the stuff.

[1267] So Facebook thinks I'm like a 40 -year -old woman.

[1268] I just picture you bathing in D to C pixels.

[1269] Yeah, exactly.

[1270] It's like a very strange.

[1271] So anyways, I think if you know the channel really well, it's really not that risky to, you'll know which type of products will work.

[1272] And you just know how much have they invested into doing this channel.

[1273] Okay, you can sort of think about the lift you're going to get.

[1274] You could say, hey, I'd love to love to run a trial.

[1275] But what you risk is educating the operator of how good this is going to work, right?

[1276] And so, you know, I think it's a little bit dangerous to do that.

[1277] and you're better off, you know, betting on yourself in that way.

[1278] There's other kind of funny ways you could do it, but I won't go into those that are slightly in the gray area.

[1279] Well, listen, this was fun.

[1280] Good dual episode.

[1281] I appreciate you guys coming on.

[1282] And I feel like we didn't even get to have these ideas on the list.

[1283] So there's definitely more ammo if we want to do this again sometimes.

[1284] So appreciate you guys coming on my show.

[1285] Thank you for having me on your show.

[1286] We literally got to do both shows.

[1287] It's great.

[1288] We'll taste of both.

[1289] Yeah, I like it.

[1290] Cool.

[1291] Well, thank you, everybody, for listening.

[1292] and that's it.

[1293] That's a wrap.

[1294] Our sponsor for this episode is a brand new one for us.

[1295] Statsig.

[1296] So many of you reached out to them after hearing their CEO, VJ, on ACQ2, that we are partnering with them as a sponsor of Acquired.

[1297] Yeah, for those of you who haven't listened, VJ's story is amazing.

[1298] Before founding Statsig, Vijay spent 10 years at Facebook where he led the development of their mobile app ad product, which, as you all know, went on to become a a huge part of their business.

[1299] He also had a front row seat to all of the incredible product engineering tools that let Facebook continuously experiment and roll out product features to billions of users around the world.

[1300] Yep.

[1301] So now Statsig is the modern version of that promise and available to all companies building great products.

[1302] Statsig is a feature management and experimentation platform that helps product teams ship faster, automate AB testing, and see the impact every feature is having on the core business metrics.

[1303] The tool gives visualizations backed by a powerful stats engine unlocking real -time product observability.

[1304] So what does that actually mean?

[1305] It lets you tie a new feature that you just shipped to a core metric in your business and then instantly know if it made a difference or not in how your customers use your product.

[1306] It's super cool.

[1307] Statsig lets you make actual data -driven decisions about product changes, test them with different user groups around the world and get statistically accurate reporting on the impact.

[1308] Customers include Notion, Brex, OpenAI, FlipCart, Figma, Microsoft, and Cruise Automation.

[1309] There are like so many more that we could name.

[1310] I mean, I'm looking at the list, Plex and Vercel, friends of the show at Rec Room, Vanta.

[1311] They like literally have hundreds of customers now.

[1312] Also, Statsig is a great platform for rolling out and testing AI product features.

[1313] So for anyone who's used Notion's awesome generative AI features and watched how fast that product has evolved, all of that was managed with Statsig.

[1314] Yep.

[1315] If you're experimenting with new AI features for your product and you want to know if it's really making a difference for your KPI's stat sig is awesome for that.

[1316] They can now ingest data from data warehouses.

[1317] So it works with your company's data wherever it's stored so you can quickly get started no matter how your feature flagging is set up today.

[1318] You don't even have to migrate from any current solution.

[1319] you might have.

[1320] We're pumped to be working with them.

[1321] You can click the link in the show notes or go on over to stat sig .com to get started.

[1322] And when you do, just tell them that you heard about them from Ben and David here on Acquired.

[1323] That's it for today.

[1324] If this is your first time listening to Acquired and you like what you hear, you should subscribe.

[1325] And feel free to check out my first million wherever fine podcast products are distributed.

[1326] As always, if you love Acquired and want to hone your craft of company building, you should join the Acquired community of limited partners.

[1327] You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing in addition to our monthly LP calls where we get to talk with all of you and of course our book club and calls with the authors like recently Will Thorndyke from the outsiders.

[1328] If you aren't an LP, you can click the link in the show notes or go to Acquired .fm slash LP.

[1329] Everyone gets a seven -day free trial.

[1330] So great to have so many of you in here is a blast.

[1331] And with that, we will see you next time.

[1332] Thank you.