#108 with Ben Gilbert and David Rosenthal - Brainstorming with the Acquired Podcast

and this is for our podcast correct or this is going on your podcast or both good good question like we're open to whatever yeah i think we should record it and see what fits but like by default i think it'll definitely work on our feed if you guys feel good about it on your feed i think great dual purpose it great love it okay are we rolling then yeah i feel like i could rule where i know i could be what i want to put at all in it like a days all on a roll less travel never looking back my let's do quick quick intros so i've not i've actually i've never bet 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 i don't know if it's your voice or your mike but something is perfect it's all we yeah if 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 so yeah but fortunately we have david's dulce tones and butter voice that right complete the the equation and ben you have the like kind of sound proof panels in the background and stuff like that i i just like roll out of bed and push go and see if it works alright so we have david and ben here with us these guys host the acquired podcast which is we'll talk a little bit about that so you do that you're also venture capitalist from what i understand if i remember correctly in the from the podcast correct and the podcast i so i used to listen to a bunch of it at the beginning because i'll tell you a funny story we have a guy and our in our office at our startup named jason and jason is great in all these different ways he's super enthusiastic he's a go get he'll make shit happen he's very creative 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 fax wrong so he would be like oh you know that's you know they got bought by this company and we're like it was this other company or they raised this number and it's like nope that's not the right number so he was always like getting fact checked and then one day jason started coming in with just these knowledge bombs and we were like that's not right wait that is right and i was like how did you know that backstory like did you research this like i didn't understand and then i realized the secret he was listening to y'all podcast and he was you know basically what you guys do is you tell the story of great kind of acquisitions in tech history and and you go through kind of like very methodically you like research it well and you tell a very good linear story with no plot holes and so jason all of a sudden had this superpower where he was telling these perfect rendition of what went down and i was like what the fuck is going on and so that's why i was like okay what's this podcast that you listen to so i listened to a few of them i haven't listened recently i know you guys been you pumped out a ton of them you get we got it back in because we're not just acquisitions anymore we realized these stories like we were limiting ourselves would just acquisitions because right what we'll get into this what to you know acquisitions are a limited part of the universe so we just did epic games we did spacex like supposedly so it's just like success story in addition to acquisition story type of thing yeah the the goal is that we tell the story of like the obviously the very deep story of any sort of great company but then also try and to understand the playbook of why it worked right i love i love them i listened to a bunch where you had like a three part and i'm like oh man this is so deep i love it and then i was like and then i sort of switch my habits in general where i was like okay i don't wanna get smarter i just wanna escape so now my podcast listening is like i need junk food that's how i listen to my podcast now so totally i i just go for like more entertainment less information but i know there's a bunch of people who listen to this that would actually really dig that because they wanna hear the stories they want the real information and that's what you guys provide in a very good good way so anyways that's my my genuine shout weekend gonna say too podcast your guys show is awesome we love it and one of the reasons hey you're just like good you guys have great flow chemistry like you're awesome but b it's such a good counterpart to like what we do when acquired like we tell this like this like certain part of you like the internet like history and like as it exists and it's like these big huge flashy companies but like there's a million ways to skin the cat and like there's so many other good businesses out there and so many other people working doing amazing things that are never gonna be spacex but like that's cool like you know been like your golden hip episode i love that one right yeah yeah on one hand you have the story of spacex 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 and you know he quit his job as a construction worker before that you know that that's the sort of other end of the spectrum of like cool success stories that are just different flavors yeah so cool you guys find these and you you know he bring these folks on the show and this is awesome okay our podcast podcasts are great we love it sorry go ahead vince i was gonna say like i also just like that it feels more like classic i i'll say classic american but classic entrepreneurship like right 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 fabulous and by telling everyone they should go do that you just set most people up for failure whereas it's not as long as you're really focused you really listen to your customers you really iterate your really capital efficient 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 and so i i i love that reminder in her lives yeah i i would say like neville has this really like money line when he's talk or i don't know who stole it for i think it was like nas tel or something when he was like you know like you know what's your political stance he's like well with my family i'm a communist with my friends i'm socialist with my you know my city or my town i'm a democrat and went you know i'm a libertarian at the at the federal level or whatever and it's just a great yeah it's a it's a it's just a money quote but i have sort of a similar thing in the in entrepreneurship it's the the 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 if i'm advising somebody to start something i advise the types of things we brainstorm on on the podcast all the time which are these you know small niche businesses that can generate a ton of cash flow and then when i do it myself i just go sole entrepreneurship and i just create content that i think you know a lot of people can love and i don't have to talk in i don't have to like have employees or an office that that's my dream right and so there's there's these different flavors that you each is good for a different purpose and for a different person so know anyways that's my view on it 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 think that's a great idea so you came on and i was like okay what are we gonna do are you guys gonna come on and tell great stories and i'm just sitting here with my popcorn because i'm down for that but actually you guys came with a bunch of ideas and so i wanna jump in and r through a bunch of these and like normally the way me and sam do it is just like you have here 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 and we'll just say like okay what you and then one person r on one and then when we're bored of it we just say alright got another one and you just keep us because it's like we don't get to do this acquired anymore like acquired this is awesome this is like you know when like successful business person goes to burning man or marty g or something it's like oh i to let my hair down and just you know shoot the shit on half baked ideas that will totally not work most likely yep that's what this is so so when you guys get excited about ideas or you know some of the stuff you sent over shoot you know what caught what's what's on your mind what are you guys seeing as interesting let's let's jump in with some of these different ideas you got yeah so i'll i'll start because i i have your your naval quote sort of inspired i have a very bi lens on the way that i look at ideas and i don't think i realized it until recently that so i should give a little bit of background so i started a thing called pioneer square labs five years ago we're a startup up studio where we spin out companies all of which go on to get venture back we've done that twenty four times in the last five years and we're based in in seattle so really looking to make a dent in in the entrepreneurial ecosystem in the northwest so we're coming up with ideas all the time too yeah so then we also have the venture fund ps ventures where we invest in early stage companies in in the northwest and so and many that we have nothing to do with starting 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 and i 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 and like i it's probably the engineering background but like i i put on my blind real quick and just go heads down and i feel like fight every instinct 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 and i'll be like yeah but i need to fix the way that headers look on our website and like i have a really good idea for how to do that and sorry i need two hours now and so like i have a massive bias towards things i can fully conceive of and and we'll be satisfied with i do you have is a is a really good one that but the i think 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 is this gonna be a massive thing is this a moonshot idea and 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 and like that that's almost disheartening right because then you scope down the universe super super narrowly and and you know most of the time what you're doing is is saying now i'll wait for the next one and that's a frustrating and and sometimes disheartening job but i 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 yeah i i i i would agree also when you said that thing about like kind of the way you two are are different it reminded me of this you know alright take a shot i said framework framework that that i heard one time that has always stuck with me i know if you guys have ever heard this but bill gross who's the founder of idea lab he's kinda like yeah in inter inter you know internet og he gave this talk once and he talked about have you have you heard this about the four kind of personalities that that come together to make a company no yeah so so basically he says every company needs these four personalities and they come in a certain order so he he's called epa ai so not a great acronym but it works and so epa so e is the entrepreneur so he he gives us an analogy you're sitting in a room say you're sitting in a classroom and one kid is gonna look out the window and it's just you know there's just a there's just grass outside but somebody's gonna look at that grass and say you know what there should be a parking lot there and you know we all come into work or 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 so entrepreneur comes up with the vision see something before it exists based on you know pain point or a personal dream then they have p which kinda sounds like hub band 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 the kind of visions every single time but they're very good at downloading the vision they hear the vision they say yep got it makes sense and their brain immediately goes to oh by the way six floors no no what it should be is two different structures that each have this you know whatever they start immediately their brain starts building building that vision out and they're gonna be able to take words and turn it into you know some form of action so he draws these curves like if a 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 but then if you have the e and the p the p jumps in after the initial values created and takes it to the next level but then if you just have the two of them your your venture will be a mess because you need the a which is that actually an administrative type of person a type of person who says okay great we have a vision we have a a plan of production we're actually going we have six employees 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 we gotta get organized here and so you need a a takes it to the next level and then the last one is i i is the student who's not even looking out the window it's just looking at the other three people being like you guys need to learn how to work together it's the integrator and so the eye is this amazing person who can figure out okay how do we get this group of talented people to be cohesive over time and how do we you know one person thinking one thing another person's another thing how do we get alignment and so i and i found this in my startups too and i what 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 yeah so then you'll know who to partner with and win to partner with them and i at the beginning does nothing for you but an eye is great kind of at the end of that cycle you know same sort of thing so anyways i just wanted to share that when do you think you need the a's and the eyes so for my experience you don't need them unless you hit product market fit so sometimes the e is totally off base you didn't need a parking lot at all or you know you you build the parking lot but you didn't have a plant and you know get customers so it's once your once your product is been pulled by the market 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 your thing that's when you start to need a and then you need eye as the team grows to a certain size right because a two person team you don't even need meetings you're just constantly in sync you're just sharing a brand message and then once you once you even get to six six is like oh shit we all are doing different things we all need to talk more 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 it is is like a square so like at as you get you know from six to twelve you don't need double the communication you need you know quadruple the communication or whatever yeah and i i've seen that to be true in a perfect world or in a a easy to model scenario where every person in the organization musk communicate equally with everyone else in the organization then the number of communicating lines is right proportional to the square of the number of people the exactly because it's a network right so every node needs multiple connections to all the other nodes or at least to different hubs and so it creates all these different lines that you need to to work on and that's where the a and the i help a lot because the a is like hey let's write things down so other people can read this and the eye is like hey here's like a common way to write things down so we're all say saying the same thing and have the same bar for you know what it takes to say yes to a project or whatever it is alright today's episode is brought to you by tempo tempo dot fit is the website i actually use this i've used this for a few months now and it's this machine that has a touch screen in this three d sensor and what it does is they give you weight like a hundred and fifteen pounds of weights and it's for strength training so what it is is it measures your body and it sees how much weight you're lifting it sees how many reps you're doing and how much effort 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check it out i use it if you look me up on twitter you'll see i'm always filming videos where i'm talking to that company say i'm trying to crush their employees on the leader board because i actually love this thing and i i use it all the time so check it out okay yeah frame frame frame power over great everyone come back from business school that's actually yeah exactly get real academic about these things in reality you don't need to know any of this shit you just gotta go and you know in and when you look back on it you'll say oh yeah that matches up to what i did but it's not like you go forward saying i gotta be a better peak you know it doesn't doesn't work that way so anyways you guys had a bunch of ideas let's let's rip off the first one what do you got 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 brainstorm idea and and shoot the shit about it and so i figured a little lot that would be a fun thing for us to do here 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 and i can see sort of a path to how to accomplish it and the the the gist of the idea is i wanna book an airbnb or a vr and all it tells me is whether it has internet or not and that is completely useless in the world of i sit on zoom for eight hours a day and so i'm thinking this is like a totally bootstrap maybe even no codes thing where you just say hey to get access to it's basically ways for wifi where whenever you're somewhere you you know upload the geo coordinates maybe you put the address in have to figure out some security stuff on that but you just take a screenshot of a of a speed test and then we just have this big database of all these different places and anyone who stayed there and the screenshots they've uploaded and yeah that's that's the basic gist so is basically solving the problem of i need great internet because everything is done through zoom and so when i'm out and about i need trust i need a trusted source to know where my internet is gonna be good versus okay versus whatever i whatever and particularly when you're when you're like traveling working remote like we did this my wife and went to santa barbara for a month rented in near an airbnb for a month bed you're doing this later is like tons of people are doing this now isn't sam's is doing this right yeah sam's you know nomadic you know bouncing around every two weeks or three weeks i think yeah i mean it's this classic cold start problem with like what a useless website you've created ben there's zero entries on here so you gotta figure out some way to sort of bootstrap that that cold start problem but i think the data entry is is really easy and then you could do cool stuff over time like chart how it's gone up and down and and at the very least you can probably create like five to ten spots in every city where like super nerds who saw this on product hunt uploaded data for the first time so it has like a pretty low bar for minimum efficient scale right would you literally build it on like based off of what airbnb inventory is so airbnb tells you doesn't it have wifi or not which is kind of useless it's like yes if if it doesn't have wifi just take it off the site if it has wi okay that doesn't tell me if it's gonna work for what i need it could be the site class our coffee argument of like oh we we've created this experience for you that is wifi free so you can but yes that's not at all we're looking for right right funny so ben put this on our list last night where where we were brainstorming these ideas and and i was like holy shit did you have did you talk to this guy we we both know who's super awesome in seattle because i just talked to him yesterday afternoon he was also thinking about this idea i'm like oh no i didn't and i think it just speaks to like the timing and the need for this is so acute right now i mean of the four of us on our two shows three of us have done this in the past like couple months are gonna do it now in covid like this this went from like yeah like it would be you know it's really nice when i get good air good wifi at my airbnb to like no i need this right 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 you know take take a time time out for five minutes and be like i'm am i really this upset about the wifi i'm like yes okay so here's what like cool bounce back totally doable you could stand this up on web flow and you know do a little bit other no code stuff in the background maybe a little bit of code that you had over time 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 for for airbnb listings and vr listings and the like i wondered know 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 our better my buddy was calling it occasions you know you're you're you're doing this like here is where the best places for this are well you start to onboard a little bit at supply and maybe all a sudden it becomes its own network just kinda like hip camp has kinda offload a lot of the the you know two true camping type experiences off and gl off of airbnb maybe start to dis aggregate it right you you know the the two ways i was thinking about this when you because you just wrote a very simple thing wifi site for air airbnb i didn't know what that meant i thought my brain actually went to a different thing i didn't know you meant wifi website i thought you meant wifi site so like first 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 wifi and it's like i don't actually wanna go camping but i do wanna be like not in my room anymore and so like you know could i be outdoors could i have great could i be outdoors and have great wifi like that already is like i love outdoors and i love great wifi and they rarely come together and so if you could create these wifi f sites that were awesome that were just comfortable places to go sit maybe there's little food trucks around there whatever i think you could build kind of like this weird outdoor c working thing i'd love to see somebody like take a take a shot of trying one of these be the other the other angle i thought you guys might be going is like sort of that boing 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 everybody who comes here wants wifi and better wifi than you're providing we will give free wifi in exchange for you know their email and you could potentially do that with airbnb hosts so you could basically say hey we will boost your wifi through either those kind of mesh networks mesh network routers or just like provide wifi where you don't have wifi and in exchange we so basically run this little service either you charge five bucks a night for the for wifi or you get that plus their data and then you use that as like kind of the way boing does so that's actually what i thought you're you're initially saying but i don't know if there's a there there that's like that's a a valuable service itself 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 you'd say come on my network i'll pay for you to upgrade your wifi right and then that's how you can onboard the supply right yeah exactly yeah that 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 and now that now backyard are cool or it's how do you give supply that was like un unfavorable how do you make it viable with some like investment that you can pay back in two two night visits you know like could you pay back could you pay that back in that short amount of time i don't know hard space but there's there might be something there let's jump to a different one i'm gonna pick a random we can go meta on this one for a second yeah go for i love i guess this is moving to a different idea but i love that we wrote down wifi f site for airbnb bs and there is three different ideas that came out of that purely because there's insufficient information so you like apply creativity and fill in the gaps and the it reminds me of i the very first time i did anything noteworthy on the internet was i made this website called it's this for that dot com as a joke at a start up weekend because every single pitch was well it's this for that in like two thousand nine 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 start up meme generator and i i'd like come up with some pretty decent ideas after looking at very few words and then trying to extrapolate rare dude i've been to this website so i just went to it now so so like got i went to it the first one is so basically it's like airbnb for stolen goods the next one the next one is so basically it's salesforce for coffee shops don't know what that can make it up and so actually we've played a similar game we there's a there's a game i don't know if you've ever heard of it called powerpoint karaoke yes because you played this yeah it's i i think there's different variations of how you do this but there's a startup up 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 they they come in totally cold and so they see the first slide and they just have to start talking as if this is their presentation and then the next slide comes up and they have to connect it to whatever the hell they were saying know about the previous slide and like create a cohesive story it's a good muscle to exercise it's like improv for business and you know you could do this with startup up pitch as well you could literally just remix you know take one deck of cards which is like successful internet companies and another deck of cards it's is just like niches and you could just like pull two different cars and pitch it and yeah it's kinda surprising how some someone pretty viable do that as a like startup up comedy podcast well i think you guys i think you guys are ready you guys are ready to spin it off oh boy alright what's what we what we got next so you have one in here spa index fun tell me what you think another band special so hear me out on this and i don't know how long the opportunity exists to do this but at least for the moment there's this rush of everyone who has sufficient connection to capital raising that capital into us back and hoping in the next two years that they can leverage relationships with entrepreneurs to get a deal done and take someone public and i you've probably talked about specs on your show we've talked about an program so i don't wanna go into too much detail about the mechanics but i think if you were to bet on specs as a whole and say you know they're they're they all go public they trade right around ten dollars 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 and then at some point they announced an acquisition and you either can redeem and get your money back or you can roll it into the acquisition and so in general like i think we're gonna see twenty plus of these sort of like series c or later startups ups go public through this mechanism of specs in the next i don't know a couple of years and there's two levels of appreciation here there's the first one where you know you buy in at at at ten dollar a share and then there's a pop when they announce who they're gonna buy so you could play the pop game if you want to and then just cash out immediately after that or you could play the longer term game and say do you wanna hold the basket of startups that went public in the twenty twenty twenty twenty one vintage and and hope that there's a a zoom in there and i think it'd be to me it feels like a reasonable upside super mitigated downside type of way to index yes i love this idea when i saw it this is the opposite where i had no there was no question marks about what this idea was i was like oh good idea interesting also i was curious i don't know if you guys know what are the mechanics of starting an index can i create an index do you need to be a certain person is there certain bar how does that work you know damn someone should create angel list for public equity indexes right like like is it just index and get some carry yeah because like you know a bunch people trying to do this with like you know on robinhood or public dot com this new website or whatever it's like this new app where you know i go invest in a basket of stocks you can kinda of follow me it's a social network or on like fuck the social network part like think that's a little bit weak honestly i think that more interesting is i listen to as his podcast i'm like wow ben and david are so smart you know what i wanna do i just wanna own whatever stocks that they own and i wanna basically buy their index that they created and just roll with them in their portfolio like kinda like a money manager but if you guys were basically c an index over time i i i think that that would be it'd be interesting if you could create an angel like platform where it was very trivial for somebody to create their own index and let others invest into it i might have also just invented a mutual fund i'm not sure this answer 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 and which why he's talking of the wall red dow jones which the wall street journal part of dow jones is part of news court and while i was there we sold the indexes index business so the dow jones index x is now owned which is garbage no one you pay any but but it was a billion dollar business within dow jones so billion dollar top line basically no expenses like it was all just pure and and what it was was just a marketing thing it was like you get to use the dow name like that's so it's like a licensing licensing thing yeah that was absurd yeah who's who's paying for that license who pays just to be able to put the dow jones and is it like cnbc has to pay to put the dow jones index on the degree or what i don't i don't know exactly the answer i think it's i don't think like cnbc or like media properties have to pay for it because i think that that that that they're just that's just public but i think if you wanna incorporate that index in your data of whatever like product you're using or whatever right then you gotta pay that licensing fee or if you might also be the data like yeah hey you know dow jones was a powerful brand like the dow jones x y z whatever mutual fun blah blah right that's interesting you know the this 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 was nasdaq maybe new stock exchange and i was like i was like wait nasdaq as a ceo i guess okay that makes sense like you know so nasdaq like what wait what the fuck is nasdaq and he's like well but you know because i just had always heard of nasdaq through the kind of like it's kinda like you hear dow jones it's like oh this is just a sort of a a a name we give to track the market and didn't really fully at the time i had no idea that first of all there's multiple exchanges they're highly competitive with each other they hate each other and they're constantly you know trying to fight for different ipo and then but the part i didn't i kind of knew that part but the part i didn't know was that they license their technology they're like yeah we power the stock exchange in sweden and forty the 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 yep and i was like wow this is a this is a great business actually because it has an ultra powerful brand in the us and then it just becomes like you know and they built this technology stack there's very few competitors to it and and then it becomes kind of like the you know end of one company around what what should i use to run our stock exchange and there's gonna be no switching i bet like i bet nobody wants to switch the sort of full stack they're easy to run their stock that would be crazy right so you have extreme pricing power and i was like wow this is an amazing business i was could you compete with this and that was right around the time that air reese launched the long term stock we changed show it's great exactly which is like just an amazing idea it 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 i ironically for the lean startup up guy to do yeah i mean it's it's the ultimate irony exactly no no quick mvp you know just landing page with you know smoke and mirrors where there's no there's no product behind it you can't do that you know air grease will be in jail telling people about the lean startup in there but but anyways i think the whole idea of stock exchange is just very interesting thing i think a spa index fund is interesting and i wanna know how how you create an index fund i also kinda like the idea of angel but for creating private equities instead of venture funds also i just think like who out there some some somebody out there is just doing like a spa newsletter right just taking advantage of all this spa keyword searches and probably has built like a fifty thousand person pretty valuable email list there is it's called spa is it spa report let me look this up real quick spa research dot com the founders an acquired community member and yeah i think he's got it's a it's a pay walled business there's either some sort of trial or some sort of freemium thing but yeah he's he's building a real business on it yeah i think totally you could do kind of the motley fool or whatever you know basically it's well this is old solution new problem right okay niche newsletter paid newsletter that's old solution new problem everyone wants to know about facts and there's not a definitive place to go find it right like i remember in the crypto boom i ran into this guy who you referring to this this past tense crypto boom yeah yeah crypto the the boom the boom was a very specific time when you yeah money was flowing freely and my aunt in virginia was like saying the word ethereum in her indian accent and i was like oh shit what hell was going on but there's this guy his name shaq shaq khan and shaq khan and it he he was like kind of this international man of mystery he worked at spotify he's did a bunch of random things that like nobody knows who he is but he's just friends with the all old ceos and like they hire him for like a special project of whatever that he's the wolf paul yeah he's he's exactly he's exactly he's the wolf he's the one they call in so during the initial bitcoin run up when it was going from like ten dollars to a thousand dollars everybody was trying to figure out how do we create bitcoin products and he just created coin desk he was helping create coin desk he's just like oh yeah should just create the news and information site and then we'll figure out from their what other opportunities we wanna go to but like first things first let's create bloomberg or cnbc for bitcoin 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 yep totally the yeah i mean it's it fits it definitely fits into that for anybody who hasn't read this it's really it's quite hard to discover because it's an archive of an old website but it's p m archive dot org and it's it's mark andre it's like a play on his handle and it's his old blog before he started andre h it's and one of the amazing piece of content on there it's like a five piece thing is his career advice which of 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 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 yeah the if yeah if pro rat has written about specs every single morning for the last two weeks then like it's probably a good time to start a spa media business if you feel well positioned to do so right right yeah that's a great call there's there's the other one that's like what what nerds are doing on the weekends we'll all be doing you know five years from now the k and thing yeah and you know wherever wherever wherever a nerd engineer is spending their free time on the weekend's tinkering that's that's the area of of innovation because they just can't help themselves and what do what do you guys think would be that right now eye i think i know if i just think about my smartest friends and what they're doing i think i know one one answer for what i would say but it's there there are lull where there's just no clear answer and then there's like clear periods where where something emerges do you guys have something in mind and do you remember a time when that was happening and you either were aware of it or he you missed it so i have i mean that there's some i'm gonna give a little bit of a different answer than i think we're looking for here my smartest friends who have means are working on climate problems right now that's right and i think like we can talk about gp three we can talk about crypto stuff we can talk about 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 ps company who are saying like actually after doing some reflecting i'm gonna 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 you how how energy breakthrough energy stuff gets funded which is completely broken but that i've i've i've got i've got a company to talk about it but keep going anyway that that's definitely the thing that occurs to me of like my smartest most well intention and people with means and yeah there are a couple names that i've seen these aren't even people i know but i know jesse jacobs just launched a rolling fund for for climate yep i know that josh fell left freestyle i think to work on climate problems i know that you sean wong who's one of the smarter people i like to read his his writings on stuff he's been talking about this working on this for a couple of years now was the ceo of reddit right at some point either before was the ceo of reddit it was kinda like earliest facebook and then he became the ceo of reddit for a while and he's got this very simple i think it's just sean yi sean wong which is hardest to give give a shot being see twitter for a little bit just to make he's rounded all out so yeah he's he's like buying a plot of land in hawaii something like that and doing some radical experiments there's also this guy who the guy who created control labs i think yep which is they got bought by facebook they're kind of like facebook i think he left facebook and i 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 you know a giant set of solar panels into space and then yeah and i was like what the fuck this guy talking about like this know people with brain power you know ten 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 i have a friend who just started a company that like there's i mean this is a a double edged sword but it's just reality like the problems are finally starting to get real with climate 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 awful is coming but like don't be bright winter coming yeah you know but but the tip of the spear is fires in california like those are real real problems that were all like like can't go outside like it's just terrible and right people are losing their homes and properties so i have a buddy who started a reins insurance business for for fire risk in california he's like yeah the insurance industry is like so backward on this that these old s sarcastic models from like past history of like there's a terrible fire in california once every thirty years it's like no happens every year now so like right okay let's deal with this problem and like that's be a great great company that that's gonna be a great value capture mechanism i don't know i mean how does that help us not burn down the planet well it's like there's a but there's is there's there's like you can't get insurance for fire in a lot of places in california anymore like this is a serious problem like yeah so it's a way to address the symptom of a problem and it means what you also get towards painful for lots of people but it's still addressing the problem right you you're not solving the the fire problem you're you're solving the my house burned down problem and i'm which admirable to solve downstream problems but yeah right also speaking of insurance i tried to get insurance for an e commerce business i own and dude you can't get commerce insurance i don't know what the hell going on you can't get business insurance for ecommerce it was so painful i thought i'm gonna start typing the word biz and then google can be like oh you want business insurance cool here here's ten leads that will just call you incessantly and instead it was the opposite it was like business insurance you know for e commerce business called twelve different companies emailed a bunch of them and they're just like oh do you you know is your product oh it's e commerce it's not physical retail oh that's gonna be tough then they're like you know do is it manufactured in china i was like everything's manufactured in china what are you talking about and then they're were like oh yeah it's gonna be really really tough is it's like you're like was this four then is they right i was like like what's the what why they and so they would just email me they'd be like we don't unfortunately we can't we can't find any under writers that will under underwriting for this business and i was like i haven't even told you anything specific or scary i've just said commerce and made in china and like those are the that's everything that's most things you know as far as i'm concerned and they were just like yeah we don't do much e commerce i'm was like who does fucking e commerce then and so i don't know if i'm just a terrible google or shopify not have a preferred partner for this yeah i don't know how shopify not just provide this as a service like you know totally it's a nice like high margin swear a bunch of insurance this is the best business ever were we're shit okay i won't spoil i won't do a spoiler i'll do a teaser our the fact that you said you won't do a spoiler alert means people are gonna know what we're talking about well we're we're gonna do a a probably our season finale this year acquired is going to be a well known insurance business but it's like people it's a best business in the world you get free money right they literally yeah like you get money that you can invest that you have to add add at some point but it's free money and to continue david because you've given away so much of the story 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 buffalo is yeah it's an amazing way to just go buy a bunch of other businesses make more investments in non insurance products it actually seems like a no brainer for shopify because they do wanna build more and more and more technology and that's gonna cost cash right and if it's not shopify then somebody needs to go do like clear bank for e commerce insurance and do it extremely well i know there's i finally got one provider but the fact that it took me the fact that i even had to try means somebody you there's money on the table for someone somewhere you know for this that type of thing okay so let's go back to i think the thing you said is really really interesting like 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 like that's literally the best career move you can do i totally agree i fucked this up a ton like in college like i would i wasn't really even excel in class but i always just thought okay classes where i should go that's where the values is gonna be right that's what i'm supposed to be doing and i ignored all these people i actually literally lap a whole bunch of people who i knew were just like working on random shit they weren't going to class they weren't going to parties they were just like building and like now i'm like begging them to invest in their companies here at silicon valley because i'm like oh dude sorry i like you know you know made fun of you in the hallway like we came to you great i went to do with with stephen from cameo yeah he was a couple years old to and he was actually the funny thing is duke is this school in durham and durham not at not at the time release wasn't a very cool city so there was only one club that anybody could go to one off campus bar basically called shooter shooting and suit several times did you go to duke my david why have you been it yeah i i like small redding as the duke gardens my okay gotcha my sister and brother went to duke so we gonna visit them a bunch of times and then and then they got married gotcha so yeah so of course they take you to shooter since the party fucking place to go so steven from cameo in at the time and was my my brother loves was in wayne manor right right so he used to just host parties at shooters he was just a party promoter so i literally knew this guy as like you know fuck boy number one as like just throwing parties at shooters just he was always like texting people you know trying to hype up he was good at it love it and and now he's like ceo of like a billion dollar company but you know perfect company for him to be seen like that is it it pattern matches perfectly exactly so yeah he he he's a funny guy anyways forgot what i was going on is but i was i guess what i was gonna say is the follow your follow your smart friend so step one have smart friends that actually do this kind of thing and i think that's if you just do that you're ninety percent the way there and then the last ten percent 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 you know one of those is gonna become a big deal soon and so i'll throw out three that i've seen as trends amongst my friends i have basically tech friends and then i have like smart business friends so of the top one percent of my friends the tech friends are all about gp three and they're all about d defy which is the sort of crypto infrastructure 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 i bet think the boom probably fuel this because people were just like making millions of dollars and like oh shit well they're all flush with cash they're all flush with with not cash they're all flushed with wealth that is in ethereum or is in bitcoin or random you know shit and and so they don't wanna 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 ten thousand into ethereum now i have one point one million so okay cool this is a way i can stake my ethereum or i can land ethereum and i can get twelve percent a year you know doing this you know this is great and i can kinda control the whole thing from my terminal in my computer like that's awesome it's the same game that like multi generational wealth have been playing within trusts in the us for you know a couple hundred years 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 well how do i roll it into something that just kinda 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 exactly exactly like you know that that is that is what's happening and so maybe maybe more stuff needs to get built that's the equivalent of a of a trust or like the ten thirty one exchange of crypto like you know i think that 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 in ethereum and you to them they're still thinking about their ten to twenty thousand dollar investment but now it's two hundred five hundred seven hundred a million dollars you know and so they were like okay cool maybe i could do that again like first con false confidence i could do that again i invest in this new small thing and it could million dollars right exactly it was killed not luck and then the others is i don't wanna pull this out and so you had just looks like when the fed pumps in a bunch of money and the stock market goes up that's basically what happened for crypto why there was so much s money to put into random icos love it alright new ideas opportunity zones for crypto millionaires do you know what's the tax treatment on that opportunity been hunting for ways to avoid paid pay taxes over the past you know year and people keep telling me about opportunity zones and how i should be investing in them and i only understand twenty percent of it so far i i'll give you the a very small amount that i know for sure and leave everything else so i don't say anything wrong but i know you can roll appreciated stock in which i think is similar to a ten thirty one exchange without paying tax on it so it's a a new investment and then i think if you can defer your capital gains taxes for another ten years and right and maybe and then there's some bonus on top of that that's like if you leave it in for ten years then there's some additional favorable tax treatment on top of that so it's like there's a lot of benefits to doing it so let's combine the climate change and tax idea here into one with an idea i've been trying i've been n 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 ninety nine percent 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 and and so you know you have a house you put solar panels on 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 much your your earned income so essentially you can do it for free as long as you have the money to put up upfront and so i've been looking to basically do this now i don't have i don't want i need something bigger than just my house right your house might have like i don't know thirty thousand or fifty thousand dollar project know exactly what it is but it's like what do you do if you need to can i get like a million dollars of tax credits for this i i do a million dollars worth of solar i wanna farm yeah and so i i was driving with my father he was like he was telling me about this he goes yeah you know like on every school you see these solar panels on the parking like garages are just like kind of out outside of the school and he's like yeah this is part of like chevron energy like chevron installs all these and and i and from what i gathered was they have both a kind of a service provider there they're they're a vendor they get paid for that but the bigger thing is that they'll be like hey school you don't need to put up two million dollars for the solar solution we will do it chevron you know out of our profits from oil and gas so they get to say they're doing clean energy things they get to reinvest profits into something that they're gonna be able to get favorable tax treatment on they get to help a school have solar solar power and and then they become sort of a long term you know a landlord of the a less or i guess of the solar panels and the school pays i kind of a small monthly fee but they're are they're from day one you know saving one on the their utility bill so for them it's like a net in anyways even if they pay for this is there's paying less for the utilities 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 kinda of monthly recurring income from this this is gonna go on some farm in you know idaho yeah yeah like a mutual side for this it's an asset manager yeah it's solves the same problem of like i don't wanna do the dirt work of of finding those investments and operationally putting the money in but like i will pay on one side you have the sort of supply of project or so let's say supplies capital and then the demand is people who want solar and like whether this is commercial building schools farms factory these whatever places that need that that could use solar that don't wanna put a quarter million dollar investment into their solar they're like they they are gonna buy them another machine to like run their factory better or whatever but they're happy to take a lower utility bill and they're happy to you know and then on your side you're happy to get you know monthly income plus tax credits so seems like there's a business there button the net is yeah exactly and we're helping the environment so so i like all of that now somebody who's more knowledgeable me probably in five seconds can tell me why this is not a viable thing but for now i'm gonna say it out loud until somebody points that out or builds it i love it 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 a tesla which was weird you know all in and of itself but but now i think tesla solar projects are much more about the roofs and right solar reeves and and power sure okay climate climate is one the other one i said was buying businesses so going more of the forget this venture capital game i'm just gonna buy all these profitable businesses or inter internet or our our mutual buddies yeah tiny capital it's kind of like probably the thought leader and has the longest running track record of doing this of of like kind of people who are public on twitter about it but then there's others like constellation software and you know there's is 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 gonna buy and then build rather than play the lottery and hope i find product market fit with a brand new invention yeah yep i also think so so many people it became so sexy to be an early stage to use the finance an early stage manager or emerging manager or as people would call it maybe solo capitalists in the sort of startup up par or to a rolling fund or something like this there's been so much of a rush to i wanna invest in my friends and relationships who are starting early stage companies that we're now into year five or so of the boom of that and people are realizing how crazy hard it is to produce a market beating return or you know let's let's say better than that that's a top d top quartile return your investors that unless you're really really differentiated and i think most people are kidding themselves on how differentiated they are in 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 but like i i just think much like the way we started this podcast talking about classic entrepreneurship versus you know shoot your laser at the sun and hope i don't know what i'm about there but go bigger go home i was trying to make a metaphor that totally didn't work really a hospital i know right that that it's i think people are just realizing how crazy hard it is and they're like wait a minute if what i'm trying to get is an x percent annual size return gosh i know way better ways of doing that that don't involve this crazy path yeah i i i think that's true if you wanted if you wanted a if i if i was saying hey i have to over the next seven to ten years i have to end up with this amount of wealth or i die that's the path i would go because i'm like okay it's really der risking the market fit side and it's all about execution and growth and because the financing is so favorable right like most people don't realize most people a lot of people listen to this are working at a job and they make a great salary right they might be making two hundred thousand dollars a year and then they're paying kind of like you know income tax on that now they're you know taking home a hundred and twenty or whatever it is and especially exactly for you 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 ten percent you can buy a million dollar business with an sba loan and by the way if you buy it before september twenty seventh either first six months are gonna get paid for you by the sba so you you first six months payback is is taken care of and you know not to mention including including the seller gonna carry ten percent of it themselves so that's how you get to the fifteen percent down total you put five they put ten and then the sba alone covers the rest and every month you're gonna be making you know you're gonna be making a profit on you're gonna half the half the profits are gonna go towards paying back your loan the other half are gonna go to you within twelve months you paid off that whole thing 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 and that path it's like buying a house except the mortgage is like you know instead you paying the mortgage yes exactly exactly and and like a house i can appreciate at a rate that is uncommon i a friend who bought a business i think for three hundred thousand you know on one of these websites he was the first guy i i was like you fucking buy off these random mass websites like you know you love it yeah you go to these butt and stuff like he's like oh yeah bought a bunch of stuff i'm like what and it's because he didn't have connections and i was like he's like i didn't have funding and i didn't have connections 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 but i have to buy profitable businesses otherwise nobody will lend me the money so i'm not taking big risks and so he brought this company that was small but profitable and that company is gonna do you know thirty million this year in revenue so he's gonna literally take it from three hundred that he yeah he is hundred x this business and and i was like dude tell take me back when we were looking at this business what was the i was like first this is very uncommon he don't usually get this type of of lift but i was like did you know that there was this much room he's like yeah i talked to the owner and he was like just always thinking about operations and how to like doing the shipping and the warehousing he'd never ran a facebook ad you know he he never did any marketing and and also you know his seo was a little screwed up and i realized that you know there's a lot of like late potential there and then also he didn't expand in any any adjacent like he didn't launch one new product in four years and so you know just facebook ads plus new product plus you know improving the content seo game and like just this insane lift like he'll sell this company for over a hundred million dollars that he bought on one of these like flip type websites it's insane my god wow sean i'm curious like do you think there is an opportunity to 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 i i think they don't send them draft 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 which you throw this pixel on so i can test some stuff and then i can tell you yeah i think that's a great way to diligence things but honestly you you don't even have to get that smart so like there's a lot of these that they're just not doing one channel and if you know that that channel works if you have experience in that channel that's let's called facebook ads or google adwords or influencers or whatever whatever your your your growth thing and you you know the characteristics of the type of business that works there right so let's say it's facebook you know that the types of products that work are like scroll stopping products like it has to be visually appealing have to understand the value through a visual in less than three seconds the slow of the the beating exactly like making woman's ass yoga pants it does well like a baby it does well like these things just do well on social networks so you're like okay cool i'm gonna do that and maybe little less like i don't know some other like some b2b thing that's not gonna resonate in the same way the spread right they're just reggie spreadsheet beating against your leg doesn't do the same oh what is this you guys get these ads of like two mit grads you know our got together all my ads are crazy because it's only for businesses that i'm looking at buying and so i just like i like try to get myself covered it in their pixels and then i'm like yes re retargeting me i wanna watch everything you're doing and i wanna see your ads and all the stuff so facebook thinks i'm like a forty year old woman just picture you bathing in yeah exactly exactly strange so anyways i think if you know the channel really well it's really not that risky to to you'll know which type of products will work and you just know are how much of they invested into doing this channel okay you can sort of think about the lift you're gonna get you could say hey i'd love to love love to run a trial but what you risk is educating the operator of how good this is gonna work right and and so i you know i think it's a little bit dangerous to do that and you're better off you know betting on yourself in the in that way there's other kind of funny ways you could do it but i i won't go into those that are slightly in the gray area of it well as another topic i'm gonna i'm gonna steal the baton here a little bit and say sean are you open to telling us a little bit about the story of be because i think listeners have acquired probably don't know your background and might know an element or two of story but i think getting a little bit of of context around all that would be really fine have you even told it on on their habits and you know the one of the reasons why it was initially i was pretty worried because you know when get acquired there's like these like pretty strict like what you could disclose and not slow so so i've sort of over time figured out okay i can't say certain numbers that's fine no problem 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 the hard part is i'm the host so it's always awkward like what am i gonna interview myself like so this is perfect you guys could ask me questions this is a great word i have two interview yeah so i can i could tell the story so the company so one of the companies that we're i can talk about is bmo which is the company that most recently i iran and be actually has a really funny story and i only came in kinda at halftime time 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 i wish i was ceo founder back that but it was my my partner michael was the ceo and founder of that time so for those who don't know with his episode right michael and z your husband and wife duo who had built multiple companies together actually at bi was their sort of biggest hit and so i'll tell kind of the the the quick version that we could dive in so the quick version is did you know there was this company back in the day when my myspace and facebook were you know taking off facebook at the time was still in colleges my myspace was actually the biggest network and was and celebrities musicians were all using it and so michael when he tells me the story because i've asked him a bunch of times like you know dad could you tell me like what was it like back then like tell me these internet or stories and so he was telling me he's like initially i was actually let me finish the short servers and i'll tell you the whole thing so the short version is built a social network called be got really popular but it became clear to him that facebook was gonna win this war and like where he was now was like more like the top and was like look i should start looking at it is there an exit here for us because i'm not sure that what's that what year is this when this might have been in two thousand two thousand eight i think the deal closed in two thousand eight so probably let's say two thousand seven 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 and so basically it was like look we built a cool product but man we're and was be was big in certain markets like europe new zealand you know you if you're in ireland like you know be was like more traffic than than google at the time and so decides to sell sells the company for eight hundred fifty million dollars to aol huge exit at the time sold for more than mice myspace did and and so amazing exit for my z and they went on to do a whole bunch of great things both philanthropic as well as a business and they own seventy own seventy percent the company at at the exit because of and i i i i just wanna paint i was just gonna say i'll i'll go into why they were able to own that and at the be if we wanna go into that detail too but so they sell it then fast forward a few years facebook takes over the world aol basically rights off people kind of like a year and a half later as like a tax write off of like it's worth nothing to us now with you know we we we write it as as essentially zero product kind of d obviously and now it's five six years later michael comes to me and at this time i'm i'm running his ideal so startup up studio that he had built that he was basically funding him and z were funding themselves michael originally was the ceo and then i joined to work with him i came to san francisco to work with him and then a few months later he put me in charge of the lab he's like i'll go to the board and i'm gonna you know me and z we're gonna do cool billionaire shit like you go run this thing and i was like hey more power part to you that's what i would do too i don't know if i would bet on me i'm like a twenty five year old kid but like you know thank you i'll try my best and he comes me at a certain point and he says hey you know we actually have the opportunity to buy be back i heard you know he be had traded hand so a private equity guy had bought it off of aol he had invested in that and it he knew that had gone nowhere that guy didn't even really do anything and then he's like he knew it was gonna go into bankruptcy and it was gonna get bought by somebody and he's like we have the opportunity to buy it back would you be interested we're already building social kind of consumer products anyways that's the point in the lab maybe we could use this brand name maybe we could use the email list maybe we could use the servers i don't know whatever whatever's there would this help us in any way you know get better distribution for one of our product ideas so the again this is the the longest short story i've ever told we go buy it back for we go buy it back for a million dollars and so we go to this crazy ass auction i can talk about but buy the buy the company back for one million so sold freight eight fifty bought for bought it back for one and then a couple years later we now sold it again you know to to twitch we got acquired by twitch and we're just owned by amazon and so i'm currently at twitch and and when you're buying for one does does it come with like all of the data it's ever had like all the email addresses from every it comes with whatever still there so some shit gets lost along the way you can't recover that but yes in theory in theory yet so we got like a eighty million person email list which is one of the assets now what we found when we got that email eighty million list was hey it looks like this email list might have been bought and sold before or something because this is not how this does not have a great sort of send a you know send rating essentially the other thing the other key component was be had started back when hotmail and aol were like the rage and then gmail came and everybody switched and so what we had was essentially eighty million emails of which you know approximately forty million were like yeah my teenage hotmail address that i never check and will bounce or or just go go go into the mails or and so that turned out to be a lot less useful what the funny thing i don't know how much is this i could share but the funny thing is one of the things in buying was we actually bought two assets the we bought the company in that brand and the the domain and the email list and all that stuff for a million bucks but in that same auction we bought the sort of legal rights to sue the previous owner for i don't know fifty thousand that actually they wanna they won the the the case they won the suit for like multi you know multiple millions of dollars and so that asset turned out to be really really valuable and have a great roi and then the domain the email list turned out to be a little less valuable than we originally had hoped wow did did you guys use a a to our previous conversation an sba loan no you know in financing information that you were like hey straight cash you know i i i don't think it was it would a qualified right it didn't have positive cash flow i didn't have a lot of things that you would and it was kind of a harry deal going through bankruptcy so you needed to be an all cash buyer to to buy it and so i cut off a little bit take so where is it eventually now and how did it get it reply okay let me try to make that where is it eventually now so we got acquired now and so the whole team that was working on it is now you know the majority of the team about ninety ninety five percent of the team is at twitch and got bought because we had built a whole bunch of things so one of the things where we bought it also to kind of tell the story kind of interesting entrepreneurial story so when when we were going to buy got split opinions i asked a few smart friends hey do you think we should buy this back and fifty percent of people were like don't touch it with a ten foot poll like internet companies don't get revived that's like not really a thing i the brand is stale it might be more baggage than it's worth it's gonna be constant confusion if you're launching a new thing under that old brand name and you know you don't need it why would you pay for this go put the million dollars into ads and you'll get the same amount of users and then the other people were like i don't know what's gonna happen but what a challenge what fun if you did it and you are also gonna get a lot of kind of people who are curious to check out what it became whether they're actually gonna adopt it or not yeah you're gonna analogy like you know you go back home to your parents you know to your original it to your your parents house when you're after your you're thirty years old and they say hey we renovated your old bedroom you're like oh i wanna go see what you do with my stuff what what does it look like now that's essentially what we dude i downloaded the dig reader in twenty sixteen if course right exactly even if big you come in thinking i'm never gonna fucking use dig you wanna see what are they trying to do with dig and laugh at it so we were like okay at the very least we'll get that better than complete obscurity i suppose and so of course when we bought it we did one smart thing which was we we had some predefined ground rules we're not gonna make just bring it back as another social network like we had seen myspace try that and we're like no that game is over facebook has one that game don't try to be like hey we're cool again ten years later like that doesn't work we also didn't have a new product and so but we had to close the deal given the timeline of the acquisition we had to close a deal and we had to announce it and we had to turn off the existing product because it was gonna cost a whole bunch of money every month to run and so we this yeah we we're like okay we're gonna do three things first we're gonna turn it off second we're gonna preserve the seo because as amazing seo and so we're like how do we lower the cost by a hundred x while keeping the seo the everybody's profile page alive because google someone's name their be profile was like in the second or third yeah so we created these like static frozen pages that would that remain you know index i don't know anything about it but one of our engineers was like yeah nine engineers in the room were like there's no way and then our youngest engineer was like well why don't i just do this and that all the other engineers are like beg gru like class well yeah if we just wanna do that we could do that and i'm like well that accomplishes the goal of course we wanna do that simple thing that accomplishes our goal anyways so shout out to quinn for for coming up with that the the last thing was we came up with this video we shot it in a weekend and it was basically like an announcement video of hey the original founders bought it back we're gonna bring it we and it was kind of tongue in cheek so were actually it looked like a serious corporate stock video of like hi i'm michael you know and i'm the original founder of bib you know he had this vision and over the years you know it grew and but then he you know like the video starts to make fun of the old be it's like you know we had great times and his basically pointing fun it at like you know people used to like just you know going on each other other's profile page and draw dick's like on the whiteboard feature and so that was like he's like we have the largest repository of hand drawn dicks on the internet so this video kinda goes viral which was our hope so while the eighty million email list was dirty and pretty much unusable we couldn't send from it we got a million new people to sign up to see what's the new be and we were like okay that's cool and they signed up thinking like this is funny i like this guy this is like the the exactly that was our intent now it wasn't as successful was that but we it was close and so that was the that was the that was the goal there and then we were like okay well we still don't know what product we're gonna do and i was still sort of the mindset of we need to like test we don't wanna come back with this big bang and we don't know you know that's a one shot thing so i was like i started creating a little sub you know groups of ten thousand fifty thousand people that was like hey do you wanna we're gonna launch three new things i want you to try them you're you're gonna be our focus group you're gonna tell us if this is any good or if this is dog shit and whatever comes out of this will be the new be but you're sworn to ultimate secrecy and blah blah blah and so we created these little list and we launched different products to them and we you know one was this messaging app with crazy avatars that looked like bit mod and then the other one was lab which you used i was like this video chat platform and then and we were launching them under other names to test them first the idea was if if it ever works we'll we'll branded it as be but we'll email the whole list the last thing we did was we took the live streaming tech we had built and we built a esports platform where you would we built essentially high school sports so the way you can go play in a football league or a soccer league or a base baseball league as a high school student it's like just like play do they are a competitor and so you could sign up to be in a fortnight league and we were like dude fortnite it's more popular than baseball like there should for sure be a play a way way to join a team for your school or as a high schoolers and play with other high schoolers and compete and play tournaments and because we had built all the streaming tech we were like this is cool like not only are you playing but your friends or your family can watch watch you play and so that was really cool when we we were running the biggest high school esports league in the country at the time and then you know couple of the platforms know came knocking and we told him hey look honestly i you know i'm a realist like this is cool the the students love it and the platforms are happy because we're bringing on tens of thousands of new young teenage streamers with streaming for the first time who would have never otherwise stream because they don't wanna be a streamer they just wanna play in tournaments and they're they're like now they're getting to joy the the thrill of streaming for the first time and so we're like all the value is acc to them we should go try to sell this to one of them and so we went to youtube and in facebook twitch and like all the others and we basically said hey who wants to buy this thing and ran a process a pretty tight process over like forty five days and closed a deal and ended up selling the company and had you already closed down the the other experiments at this point or not was labs so we had learned that lesson the hard way running the start of studio in general which is kinda like parallel entrepreneurship splitting focus is very very dangerous not to be done unless you are somewhat much more skilled than me and so we were doing one experiment all in and if it didn't work we would then cycle pivot to the next thing but we we we had shut them down by then which was hard right lab had four million users and was growing and some people loved it and used it eight hours a day and like i got death threats and you know somebody is actually kinda funny somebody sent to the office two hundred page script for a play that was using me as the central character my cto is the second central character and our designer head of community the other people was whose names they knew and it was a a script of us being you know it's kinda like the office it was like us being dip ships like making bad decisions because they were so angry we're shutting this down that they sent us like a full play of our you know total in and i read the thing and i was like wow someone took this much time to do this that's that's awesome that this wow so why didn't why you shut that one down it was that that like other messengers were just did it was like a facebook style situation or and by the way can i take a stab at explaining lab to from my recollection so i guess the three modern comps would be it's sort of like zoom meets twitch meets club house where it's like video collaborative chat in real time so the experience like this there's three of us on a zoom call right now right three little squares and so we would be doing this but where our chat is in the you know the side of zoom zoom is just for private communication lab was public it was like a talk show so like we could have live people watching this listen to this typing in questions we could pull the question and put it on the screen and address it anybody could call in like an old radio show and like join the conversation and so it it was like this kind of live i've you know it was like if google hangouts had an audience or if zoom had an audience that was going toward the premise and so we we organically had a bunch of cool people use it like i said the u used it when they wanted to do a virtual fight announcement we had tony robbins come on and do kind of he would let people call in and tell him their problem and he would like kinda help him workshop them live just like he does at his big you know seven thousand person events the jonas brothers did that with their fans espn would use it every friday for their basketball show but the problem was there was two groups of people using it there was all those cool things i just talked about that make it sound legit but those people would use it once a week for like an hour they're like okay i'm doing my live interactive fan thing that's like hard to do and like i'm on the spot but like it's super deep connection with people they love me if i do this so i'll do it once a week for an hour friday is at three that's when my live show happens and so we were like cool fridays is at three are awesome what happens every other hour of the day like how are we ever gonna fill this up with good content so then the re you had the facebook same same as periscope facebook live mee cat and we're were all at the same time our thing was like they they were like a monologue like you hold up your phone and you just talk which we thought was really hard to do were like do dialogue is way easier for people to create content which was true but the hard part was for any given category like let's say business talk or sports or whatever you had to have twenty four seven interesting content to build a habit for a viewer to just come and show up when they're bored and if you just try to get people to show up on demand they were like well dude i'm busy like the whole world it's not like i don't show up on a schedule anymore like i order things when i want it and i get what i want when i want it this is the post made era like you know i i don't wanna just have to show up when the creator decides to go live and i'm in the middle of dinner and so that was always a challenge and then on the other side we had people that just they just use this as like like you said club house they just use it as a room to chilling in so they're just be they would people would meet each other they would become friends and then every day some some number of them would get online and they would trigger notifications to the other friends and then the party would just rage on all night and you would just dip in and out as you were free or or or or you were busy you would leave and you'd come back and different set of people would be hanging so it says hangout platform and the cool thing about that was these guys were super sticky so we wanted people on all all the time they were on all the time they would fall asleep on the platform but the problem within was the core value they were getting was they were making friends so they didn't bring any friends to the platform so that side was not growing the celebrities grew but were totally you know using it one hour a week the people using a forty hours a week right brought no friends it's too different and then those two groups did not coexist at they didn't even understand why the hell they're on the platform and so that was the problem that we were never able to solve and why we ended up committing wow wow okay so i know we've got some some limited time left here so bring it home so twitch buys it what's the main reason like what's the repurposed asset here is it mostly the team or is there technology savings well anytime a company i i i always differentiate a company could either get bought or it's sold we were sold not bought bought is your instagram you're hot you're the next big wave everybody recognizes it and people are banging down your door trying to buy you we were sold in the sense of like i approached a bunch of companies and i understood i i threw kind of conversations was able to su out what are things that are important to them what are their big top three strategic priorities as a company and then is my little company an answer to any of those problems and i was fucking yeah i was doing some yoga poses to try to make that fit where i was like oh you really care about this you doing you're doing instead of customer exactly because i was like i need to sell this company it's not gonna be the mega home run we think but it there is some value here so i don't i don't wanna stay and work on a mediocre i mean medium sized business for five years nor do i wanna just shut this down and like walk away from millions of dollars of value so i need to learn a skill i don't know which is how to sell a company and so i kinda which embedded as like long capital leak you you are falling into the eighty percent right thick middle of entrepreneurs here move exactly so the first thing i did was this how i asked six entrepreneurs who had done this before i was hey how the hell do i do this and they gave me some tips and they became when i called my deal do list which is like if you ever had a baby like know do list somebody who helps you bert that baby i like these were guys who helped me birth this deal they helped it you know go all the way from the the the tough part of labor all the way to the happy part at the end and so so so essentially i found out what their top strategic priorities were and what i at first was trying to be really smart about this then i realized oh here's how this market works you have twitch which is the market leader and they have strategic priorities about how to grow their business those are very specific to twitch i gotta find those out i took some people to beers and i asked you a bunch of questions and su out that oh there's this program that they've realized and i'll give you kind of the the run 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 people start demanding more money right famous streamers want more money esports tournaments want money yeah they want exclusive deals and moves exactly you got getting paid tens of millions of dollars to switch platform so that drives up prices 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 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 no technology to do it but we were lucky that they themselves have been thinking similarly had been running a program very manually and had come to the conclusion that hey this works we need to scale this using tech and then they looked inside the company they're like shit where am i gonna get a leader that i trust to do this really hard thing we need engineers that know how to build this and and and we needed this now not like eighteen months from now and so that's that's a great spot to get acquired in because you say hey i'm a leader if you if you meet me and you if you believe in me as a as a person you think i could be one of the you know ten leaders of your company then the only way you can't hire me i'm an unfavorable person you gotta buy me it's to get to get talent like that also i come with twelve engineers that have been working on this for two years and we've already gone through the learning curve and figured out everything you get the code and you get the learnings and then you know in our case we didn't have revenue or big user base that would matter to them but they're like don't don't worry we already have revenue and users we just need the rest so i figured out for twitch that was the the kind of solution and for everybody else it was i realized that the cobra problem was we wanna beat twitch so i was like oh this makes it really easy i just need to pitch this as a way that you could potentially overtake twitch and i need to spin that story and i need to tell you that twitch wants to buy buy this so that will automatically get you interested and i and so that game the sort of game you play as an entrepreneur to try to get multiple bidder involved and part of it is but you know you can't just persuade these are no dummies these are ceos of billion dollar companies they know what the hell they're doing so you it's not about convincing of something that they don't wanna do in making them do it it's about finding out what they already wanna do positioning are like cutting away the fat of our story ti just being the solution for that and then connecting on a personal level and saying what i would you want me as one of the senior leaders of your company would you want me kind of on your extended exec team and if so great let's do a deal it's so funny well we don't have time to go it but like that process is the exact same process of raising money from venture you you wanna have a hot round you wanna have vcs competing every your deal you do exactly exactly yeah sean i i think we'd love to have you on the lp show at some point for the to to be our deal dual to help help listeners understand like what are the levers you can pull what are the ways that you can sort of message different things at different times in different parties i know we don't have time for it today but putting that aside thank you for for sharing for sure i kept every email i sent and things like that because i was like i wanna help the next entrepreneur who's gonna be like me needs this this is seven years of effort that they just need to like cash in on and they need a successful outcome they deserve it but like they're gonna be totally clueless you don't take get a ton of reps at doing this and so how can i i know when i googled for it i couldn't find jack shit everything was about the bought use case which is like should i sell my hot company when i have all these offers or should i stay independent 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 and then this is the other side that like a little bit less sexy usually results in failure but if you could thread the needle a it'll be life changing for you your investors and your employees like you know there should be more content about this and so i i wouldn't make a course out of this probably because there's just not that many people who need to know this it's like a very small it's like a niche of a niche but i saved it in case people knock on my door and they're like hey can you help them like yeah here's some templates that i used and here's what work for me amazing and now you're podcast guest and that's actually how the podcast started during the diligence period i was you know the funny thing is when you're running your company you just get so worn down you're so tired over time especially when it's not you know it's not a breeze when it's taken off or whatever and then as soon as the sale process started my creativity muscles just started firing again started having all these ideas i was like well this is the worst time to have a start up ideas when i'm trying to sell my company i need to like shut the lid on this and not get tempted to go start something and so i was like oh maybe i could start something that's safe a podcast and so i started the podcast just kicks during that time to keep myself busy because otherwise i was gonna damage my own deal did you know indeed what it would become well listen this was fun good dual episode i appreciate you guys coming on and i feel like we didn't even get to have these ideas on list so there's definitely more ammo if we we wanna do this again sometime so that's it that's a wrap