#158 - Buying Michael Jordan's House (and Making a Profit), Investing in Athletes & Successful Startup-Studios

look if you don't figure this out you're fox you're broke yeah i feel like i could rude the world i know i could be what yeah who wants what's sean why we keep getting two things that's kinda like keeping me up at night the first which doesn't keep me up at night but weird me out why do people keep confusing us and the second thing and the second thing that does keep me up at night is i don't know if they're saying it just about me or about both of us but they say that we look differently because think thought yeah they yeah and and i i think both are like i think both are insults wrapped in disguise like they're not saying anything bad but the way they're kinda like laughing makes me think it's not a it's not a good thing i don't think it's an upgrade for them if they sell someone said that i write like a bro but i look like a nerd and like you're you're you're insulting both eye looks and i like how do you make me look i wanna look like a bro maybe and talk oh wait which one do i wanna do i wanna look like a broad talk and and talk like a nerd maybe that's hilarious yeah so that's thing people make us up that means for months they've just been listening to this and they think i'm you they think you're me and when they follow us they you know they have it all wrong it's kinda funny and then i have a do you know what e h it well what's what's e for what are you talking about i'm about to rent one so it's a twelve thousand dollar device and it looks kinda like a wake board but it has like a three foot to four foot like rudder that sticks on the bottom it and and then the bottom of that rudder is a motor and it's like a boosted skateboard with like a with like a handheld acceleration device and it you lift off and it you ride three feet above the water i've seen was now that you say i thought you were talking about something related to like i don't know microphones or voices you you just switched topics it with a hard left turn but i i appreciate that so i still saw this because what's the name of that one surfer guy who's like super famous lair hamilton yeah hamilton i saw him doing this where he was go i don't know if it's i think his was like even taller but basically he was surfing with you know there's like a there's like an underground fin and then he's elevated above the water and he was like and there's it's like a jet ski that he's standing on it was kind of crazy sounds like that's what this is yeah well i'm about to go do it in a in an hour i'm pumped is the next before we get into ideas it might be it might be they're i'm getting ads for it constantly on social media it might be we have a good episode today because you brought something up incredibly interesting and i i went deep on it but before we get into that can i tell you a quick story yeah go for it okay so a few weeks ago i got mocked on the internet for like doing this trap in a closet for with andrew chen thing so this guy named andrew chen what is a partner at andres h got a cool start e blog but i heard he told me one of the wilder stories i've heard recently so when he was in i think i could i might get some of the details like wrong by year or two but when he was in about sixth grade he took the sat and scored really high and when he did i think it's a university university of washington does this thing where every five or ten us they take five or ten students per year who are in six or seventh grade sometimes younger like twelve years old whichever grade that is and they asked them to come to college to come to university of washington and he was one of the students and so he at at sixth grade i think he what skipped seventh grade and went straight to college and he moved there in a dorm went to college and i asked him who else was in it and he actually said emmett emmett sc from twitch was one of the folks wait so he didn't go to he didn't like become a coma soon he just went for like a camp or something or he's no like duty house stuff like he literally instead of going to seventh grade he moved into a dorm went to college and and here's where it gets even crazier so he like moved there moved away from home which i i think his parents are from the state as well but it was like moved half an hour far our away from home lived there as a college student and he understandably was kind of embarrassed and didn't really tell a lot of people and so they thought that even though he was however whatever you in seventh grade they kinda assumed that he was just another eighteen year old and apparently he told me that he had dated a girl he just kinda acted normal and they didn't find out that he didn't like hide it from them but he didn't bring it up and they didn't find out until senior year or something like that when everyone was turning twenty one and they're were like when you turn twenty he's like oh i'm i'm actually seventeen years old or six or whatever sixteen yeah and i it it's a pretty wild story and i asked him like who else was part of this program he said the founder of twitch was some person running a huge hedge fund just like baby genius like real baby geniuses crazy fascinating story and apparently the university of washington still does this every year where they select i forget what they call the program but it's like a a thing where they have psychologist and therapists meet with the kids every quarter every month to discuss what's going on and it was incredibly fascinating and in a very typical genius response i said isn't that weird that you skipped high school and he was like well when you think about it adolescence is really just like a societal constraint and i kind of experienced the say that i was oh yeah i mean i guess right but the like thanks for proof of my point just a fig of my imagination yeah i was say that wild that is wild i also i don't know if that's true because emmett definitely went the yale and so did justin cons i don't know well maybe it was through yale but he said that emmett was part of the same program or maybe he dropped out like he said that time was dropped out h thirteen i love it would that emmett was part of his program i i don't know what it program that they do it in in a ton of different schools but like a thirteen year old freshman in college would you let your kid do this or would you want your kid to do this let's say your kids twelve scores high on a test would you want them to skip high school and go and be a thirteen year old college student and like amongst the you know amongst the crazy eighteen year olds so it's a good question because your my gut instinct is probably the same as everyone else's which is high school is important you learn about yourself and and it's important to go through all that normal stuff but we also complain that high school often or that like what you learn in high school is kinda bullshit and and you know what does the world look like if you do combine the two so like maybe it i don't so i don't know but isn't that isn't that a wild story yeah that that's crazy i is such a fun fact about someone yeah i i also think it's an interesting strategy for the colleges like why are they doing this i think it's kinda cool i remember the reason i ended up going to duke is because they had this thing called the the tip program which is the talent identification program and you would take the i don't know the psa or something like that and then if you scored above a certain thing duke could send you this kinda like kit this goody bag and it basically was like it felt like getting an owl from hogwarts and it's like hey you're twelve and like we wanna invite you to this special school for the gifted and talented and it just said like you scored high on this we have identified you as a talented person we would love to you know like have you come visit our campus and like eventually and it the shit worked i went to do eventually i didn't put too and two together that's why but like if i think about that's why i started paying attention to them and that's why i started following the basketball teams that's how i even heard about it otherwise as a twelve year old kid you don't even you don't even hear about colleges right so i thought that was pretty interesting and if you think about it you know these schools are for profit these schools are trying to get you know they're trying to get tuition they're trying to get people to come in and pay the forty fifty grand to go to school and so these little investments and and you know who doesn't like to be called talented who doesn't like to be called kind of like a ph what parent doesn't want their kid to be identified as a special that shit works and i'm surprised that more schools don't do this and when i start my school i i too i'm gonna do this yeah i'm i'm i'm i'm trying to like do some research on it right now while we're talking and it's not really effective but you'll have to look up this program when you're done it's just a really cool interesting thing and it was funny to meet someone who went through it and it was just such a silly fun fact about someone by the way my roommate in college we when he got when we got to college i like yeah yeah you know we're all seventeen or eighteen whatever we were as freshman and he was like yeah like he would say like yeah and then like i noticed his expression i was like well what he's like well i'm like nineteen and a half about to turn twenty and i was like what why are you so old and basically they they do the exact opposite when it comes to sports so in sports the common thing to do is to like sand your kid and basically hold your kid back a grade or like send them to school a year late so that they're always bigger faster stronger than all the other kids at in their grade and they're always like the star athlete because you have like an extra year of development or you have a better shot i should say of being a star athlete and so he he was from wyoming he's like oh dude in wyoming this is that's par for the course dude to every you know every six grader like an eighth grader age because everybody wants to like have their kid be my first two years of college i was an athlete and i would compete against these guys and there was two groups of people that we would like and i was friends of them but we would tease about they're not really it's like it's a it's a little unfair which is the first was kenyan so kenyan runners right i think that there's i don't know i don't know i don't think they're lying about the age but i think there's a an exemption if you serve in the military so you get to compete in college in college athletics i think until you're this was of ten years or eight years ago however long you get to compete until you're twenty six years old and then the second is for religious stuff so the mormons at age eighteen would bounce for two years so they would be a twenty year old freshman which means they'd be twenty four year old senior in college so i was eighteen my freshman year competing it's twenty four or twenty five year olds and so yeah more the mormons in the in the kenyan if they in anyone served in the military and i know this topic is basically nobody gives a shade about what we're talking about but i will say there is a lesson at in life you get to choose is are you gonna punch up or punch down and the answer ten thing going into college at twelve or thirteen that's a kid who's punching up you're you know you're in a unfamiliar circumstance you're stretching beyond you know what you what you're you're playing in the bigger leagues than where you are and then there's the athletes that are that are held back years or or you know come back and compete against people you know two to five years younger than them that's punching down in weight and i would say like punching down has some benefits because typically you're gonna score better do better in these little like games you know in in you know high school or college athletics but in the end you really wanna be somebody who punches up you always wanna i i think you know for long term success you wanna be somebody who punches up who somebody somebody who's always in a room where you're just barely hanging on because it'll push you to get better more so than just dominating people because you're older and stronger than them won't work for andrew chen i i think he's thirty eight years old but i was like but you're really like forty five right like experience like a forty five year old alright let's get top time job at eighteenth okay let's get to the first one so sean put something on here that i actually think i was telling a friend as i was researching i actually think that this is one of the better ideas that we and and you you've ever come up with the michael jordan thing alright you want it yeah you want me to explain it okay so i've been looking at this house for a long time michael jordan's house has been for sale for like a decade and it hasn't sold and this is his house kind of like you know in illinois near chicago where you know michael jordan was on the bulls and he had this fifty six thousand square foot home in highland park and so this thing originally he put it up for sale and like i don't know nine years ago for thirty million dollars twenty nine million dollars and now it's you know the price has been cut in a half and the thing is still not selling and if you look at the photos you could just go it's like on zillow so you can go look at the photos he's got like an indoor basketball court you know the gate leading up to the driveway has his big twenty three number like in boston it he's got you know everything you would want like huge you know closets because he's got you know all his air jordans or whatever and so his house is it's pretty unbelievable right there's there's all kinds of epic shit here but it's not selling and it's not selling for i think a couple reasons it's like you know it's very custom to michael jordan like it just it's like it was custom made and and and in many senses so you know the other rich people don't necessarily wanna live in a house that's like made for another dude it's also you know it's very expensive for the area the property taxes are really expensive and all that stuff but i was thinking okay the price is now cut in half now it's now it's a thirteen million dollar house or a twelve that you know thirteen million dollar home that you could buy thirteen fourteen and now it's in range where maybe there's something fun you could do with it now you might be getting a value buy so i was thinking alright there's a bunch of people obviously that our basketball fans that love michael jordan there's a bunch of you know new ways to crowd fund that we've been talking about n t's or kickstarter or different different crowdfunding funding platforms so the question is should we buy michael jordan's house should we start a crowdfunding funding campaign and by michael jordan's house so if you can get five thousand people to each put in twenty five hundred dollars then you could own a fractional share of michael jordan's house you could you you could own a piece of of this history and we could just buy it out take it off the market and we could own this thing and then the question is like what do you do with it and so i wanna brainstorm with you a should we buy michael jordan's house and b what could we do with it if we did buy what do you think so the whole n t thing i wouldn't do that i think that i think you've had two ideas here one is to buy his house and twos is to end do the n nfc thing one of those ideas is a great i think the other one is over complicating it i would one hundred percent buy it and the reason why i i think it's such a great idea is immediately after you seeing you write this my thought right away went to grace you know what grace is no that's funny that you don't know what that is it's because it it's such a big deal in my family or elvis at least so grace is elvis presley release house it's in memphis it's in downtown memphis it's actually in a pretty crappy neighborhood now or the neighborhood is not nice and it's like kinda gross but it's just like a cute thing to do if you visit memphis and i went and did research on it and so around six hundred thousand people a year go to grace which brings in something like where i have the numbers here okay so grace just in attendance justin ticket sales brings in twenty one million dollars so it's yeah pretty wild just on tickets and then six hundred thousand visitors a year thirty six dollars a ticket right yes and i got interested in this so i thought what are the most visited homes in america so i came up with a few and i wanna fill you in on them so the white house doesn't count because you can just you i think you can get a tour but you could also just walk outside of it but grace six hundred thousand the second one i'm you guys are gonna make fun of me i don't how to pronounce this what is it monte monticello i think so okay monte monticello that's thomas jefferson house and so the interesting thing about this place as well as a few other i'm gonna mention is that they're non nonprofit with means all of their numbers are public and so the revenue for monticello which includes a ton of investment revenue was around two hundred million dollars in two thousand and ten but around eight million seven million came just from tickets sales so eight million a year in ticket sales which is crazy and they have around five hundred thousand people another most visited home is never like homes that people drive by never land ranch people don't go there but the other another great one is mount vernon which is i think what's our first president george washington's house and they do in in in food sales alone this is crazy just in food seventeen million dollars a year wow is that crazy there's a whole thing the whole operations and then they do fifteen million dollars a year in admission sales and in total they do about fifty one million dollars a year in total income which includes ten million from contributions is that crazy but no that's absolutely insane so let me ask you these okay so this all of a sudden this starts to get really interesting right because i think michael jordan is on par with elvis and you know tom jefferson michael jordan has got t j beat by a long shot so you know mj over t tj j i think is is part of the the the slogan that we have when we when we buy this thing but if they're doing this much in traffic i i gotta know is there something else meaning like are these in really like popular areas where there's already just a lot of tourists or something like that and this is just a pit stop because you know michael jordan tu in a neighborhood you'd have to only be going to go to this place i looked up michael jordan address guess how far away it is from chicago airport one of the most popular airports in the world i'm gonna guess forty five minutes twenty minutes it's twenty minutes away okay so it's like have you been in memphis memphis like there's not that much going on in memphis and all these people are going to memphis people are chicago what the fifth most populous city in america or maybe third something like that something that is interesting here so what i would do is i wouldn't do the n nfc thing i would raise two or three million dollars from much of rich people or i would try to use my own money if i had two or three million dollars that i wanted to spend on this and i would buy it and then it would probably cost a fair bit of money to get it set up it probably cost a lot of money another many more millions but then dude would have to convince collectors to lend you the stuff and you create a michael jordan museum yes and that's how you do this and the companies that we've just mentioned grace monticello and mountain vernon so those obviously those folks lived in the seventeen hundreds or probably died in the eighteen hundreds they've been around those properties have been around as tourist destinations for a hundred plus years but they've done fifty million revenue which is a shit ton but even if you've just on two or three million dollars in revenue and you could do that and adjust for inflation for fifty plus years kinda like grace has done it for sixty years that's incredibly fascinating right yeah i'm with so so i think you you know you're shooting on the n thing a little bit but it's not about n what i'm saying is crowdfunding funding so i think that there's a benefit to crowdfunding funding which is that crowdfunding funding is a way to make the story more viral it is a it's a more p worthy story that you know people from the internet people from reddit whoever got together and bought michael jordan's home off the market for for fifteen million dollars they they raised fifteen million dollars and bought the house versus a rich guy went to his rich friends raise money the second thing is those become you know the pure you're evangelist to spread the word and to come make the the pilgrimage to go see michael jordan's house and i think you could do two or three things with it i think you could make it a museum that's like a modern museum that we've been talking about like the museum of ice cream or something like that where the tour is very heavy photo based and so you're you know you're going through and it's all these different photo exhibits of you know you in michael jordan's bed in you know wearing you know a pair of his air jordan are standing in a pair of his giant air jordan or something like that and you make it like a museum of ice cream where you're gonna walk out with you know ten photos that are instagram worthy at the end of it i also think get give give people background on meet on ice cream museum yeah brit you can pull the latest numbers but i think these guys raised at like a hundred million dollar plus valuation and if you if you ever go to one they're pretty cool it's you it's not the most amazing thing i honestly i was a little bit disappointed but the photos do turn out cool it's a museum that you walk through so it's like a guided path and you go through maybe like thirteen different rooms and every room is something cool and you get a little you know you get an ice cream cone of some flavor and then you can take photos next to some like exhibit that they've set up and the idea is not for you to look at the art like a traditional museum but for you to like take a photo in the art and posted it on instagram and that's their marketing and that's the free marketing that they get and so you used the advice stream oh yeah here everybody has it they raised forty million dollar they raised a forty million dollar series a at a two hundred million dollar valuation last year and and i think this could be bigger i think this could be much much bigger as a brand the other thing the other thing that you could do is sports cards or having this incredible boom right now and i think what you could do is you could have certain collectors put their collection in in the house the house could be basically the vault to store some of the most rare memorabilia in the sports world sign basketball shoes and sports cards and that could be part of the museum and you you basically store it and you you store it for some of these collectors so i think i think there's a bunch of stuff you could do to make this work but the idea is like can you buy this thing for thirteen million put another four or five million into you know getting it all set up and then could you make five million dollars a year could you make ten million dollars a year like you're saying these other guys do as a pilgrimage for you know tourists going to chicago and basketball junkie i think the answer is definitely yes and i think it's so interesting i found a i found another example of one and it's called the it's called the national trust for historic preservation and it's a nonprofit and all they do is by nash historical buildings and they store i looked through their numbers they've been doing like fifty dollars or sixty million in revenue for years and i'm still trying to figure out how to entirely read non profit statements but they have a buy a a line item that's revenue less expenses which i guess that just means prop i mean i don't know how they define yeah it's yeah i don't know how they define either of those but it was twenty six million and it's been doing that for years is that nuts so i like this idea i like this idea a lot and i kinda wanna dig a little further into how these homes home museums work because i think this is pretty interesting the other good thing about this by the way is that the basketball hall of fame sucks nobody cares about it nobody goes to visit it all the other sports like you know canton for football these are like tourist destinations you know tons of people go there every year it's really cool and the basketball one is known to be super lame because they let way too many people in and and it's not like it's not a thing that basketball fans really care to go to can i give you two more examples that we what what what we could consider doing instead of even doing a museum maybe this is even simpler yeah so i'm staying at my friend jack house it's a badass house five doors down or ten doors down something like that nearby is what's they call it the obama house and when obama was in office from when was he in office the o eight twelve with the second the second term or whatever it was he would stay at this house down here and the owners let them stay i think for a massive discount now it's like it has its own wikipedia page and it's called like the obama house and it's sold ten years ago for seven million after he'd had already stayed there which or sorry million i said i say seven for seven million which is a lot of money but they rented it out right now on airbnb for six thousand dollars a night or it if it's booked all the way up a hundred and eighty k a month right and it's granted as the obama house i think that you go to absolutely crush it with a jordan airbnb house would would would you and a group of friends be willing to pull together three thousand dollars a day to stay there maybe i think think the way you'd have to do it is you'd have to make it like a vegas alternative for bachelor parties and stuff like that birthdays it's like what is the man cave man dream vacations like dude we're gonna go stay in michael jordan's house fourteen of us are going and it comes with like all the amenities and you know all that stuff this is where you go this where you wanna go if you wanna live like the sports fans dream i think you could do that i do like the museum one better what was the second idea you had you said you had two oh what wasn't the second i guess it was more so just another example the fresh principal bell air house it's it's kind of interesting but do you remember living in san francisco how there's like the what they called the painted ladies yeah which is the full the full house house and then there's the mist out firehouse i would just wanna buy all these and turn them all to i lived block away from the from the full house house and literally twenty four seven there is somebody standing outside of that house during the time taking a photo of it so there's just a constant and it's not like a it's not like a huge line of people but there's always like four people standing outside taking a photo in front of the full house house every single day for the whole year it's kinda crazy and then it just sold actually and it's sold at basically like i think one point five or two x the market rate in that area so they got basically like a double premium because it is the full house house which i think is you know kinda interesting but okay i think we should i think we should buy michael jordan's house i think we should crowd fund i think we should crowd fund five thousand people together we should own this thing or we could go to rally road and we could say hey rally let's put michael jordan's house on rally and you know let's sell this baby out i think if five thousand right now with if you go in rally road you'll get two thousand of three thousand people buying a fractional share of you know a pair of jordans or a signed autograph or signed rookie card or something like that fuck all that let's own the guy's house so i think you could easily get five thousand people on rally road to buy a fractional share of michael jordan's house i'm surprised they don't already do this if they're listening to this you know go go for it just give us credit and give me a share of the house i actually think that they wouldn't do that because how do you liquidate that it's been on the market for twenty or how long ten years no one is obviously no one's buying it so like how do you get liquidity from that after seven years i don't think you don't i think they same rallies right the point of rally is that they take things that are not assets and they make them not liquid assets to make them liquid assets so because you can own a fractional share now there's liquidity any one person who owns a piece of michael jordan us can swap it for anybody else who wants to own a piece of it so you don't need a fifteen million dollar buyer because you can sell them in blocks of a thousand or fifteen hundred dollars and so when you bring that price point down there's people who wanna own a piece of the a piece of the art a piece of the asset which is how they do like you know they'll sell you know of a harry potter first edition signed you know set of books and you know instead of selling it for twenty five thousand dollars they'll get you know two thousand investors to each put in or whatever whatever the math comes out to a hundred fifty bucks to go buy you know to to own a piece of that thing so they introduce liquidity by making it fractional owned yes but there's still no cash flow you have to create an operation around this to cash flow cash flow there's cash flow in a basketball card there's no cash flow in and air jordans there's no cash flow and carry first agent investor to buy it now dude do you you you're you're still thinking like the old world you haven't seen what's going on around you're staying with jack smith you should go ask jack smith about how this stuff works he's the one who who taught me and he's one of the biggest investors in this stuff he's not buying it for cash flow you know he's buying it because yeah there are there is another there is another collector and when you make it fractional now way more people can get in on collecting it versus just the rich pocket people who could buy the whole asset hundred percent yeah bro but who l who liquidate it after a handful of beers on rally road someone actually buys the car after a few years very rarely occasionally somebody comes and offers to buy out the whole the whole lot and and then they put it to a vote i don't know if you've seen this but like you know let's say a box of pokemon cards went on there like a super rare pokemon card set they i don't know what the ip what the ipo was but on rally the ipo it let's pretend it was fifty thousand dollars and then what happened is a is a big you know asian investor came in and said we'll buy this thing out for eighty five thousand now so you'll all get a profit but we wanna own this thing and they put it to the vote of all the share owners and they said no they said we're gonna hold it we think it's gonna go up so they voted no they voted to keep it so they're not all trying to liquidate soon you know some some people who are are buying and hold investors will will wanna own these assets for a long time because they think hey you know if i just hold this now you know what's michael jordan gonna be michael jordan fame gonna be twenty years from now if michael jordan passes away how much is this gonna be worth and there's people who are in it for the long term so i think there's i think the collectible thing is a little bit different than i think about it differently than you do i would say you basically need jordan to have like a tragic accident or like for example fan came out so so the last dance is ten part documentary that came out on netflix and the espn you know millions and millions of people watched this thing and jordan brand you could see all the price of jordans went up jordan's like brand visibility and brand sentiment went up because this documentary came out he's still alive it wasn't a tragic event but somebody told the jordan story to the the younger generation who you know grew up with you know they were two years old when when jordan was at his prime and so jordan brand got stronger with the last dance coming out and i think this is gonna continue you know over time because he's got all these different you know the legacy becomes bigger than the than the person itself but i have a different thing that's sports related okay yeah you can i do this one so the a different thing that's sports related and ties into the idea of making assets out of things making liquid assets out of things that were non liquid assets so there's this company called big league advanced did you see this thing no keep going alright i'm looking it up so so shout out to joe pom you know pumps pumps brother one of his one of his brothers who you know does these twitter threats all the time so he did this twitter thread that caught my eye and it was about this player for fernando tat so this guy what are the young i don't follow a baseball anymore because baseball slow and boring to me now but i used to and you know back in the day well remember bernie pat his is that for is it for fernando test touching junior because okay when i was a kid the senior played in saint louis and he was like a huge deal i think he hit like he hits three grand slams in one inning and he was like our hometown hero for years okay that sounds crazy but yeah basically this guy is like one of the youngest star baseball players and now like he you know signed one of the big contracts so we signed a three hundred forty million dollar deal with pad and the interesting thing that came out of that was that this company that i had never heard of called big league advance made thirty million dollars off of that deal so who who is big league advance so basically what these guys do is they go to minor league baseball players of which there are thousands and they say look you're making you know you don't make shit in in the minor leagues you you you know you get you're riding the bus you you you get paid nothing and you're hoping to one day get to the league and you're hoping one day to become a star you're hoping for the tit story where someday you'll sign a a huge contract and what they do is they go and they offer you a deal so they'll say like hey we'll give you a hundred thousand dollars from one percent of your future earnings so it's an income share agreement like we've talked about with lambda school and whatnot and they'll go and they'll say you know three hundred fifty thousand dollars for eight percent of all your future earnings so we'll bet on you we'll take a risk on you so you get some money today you can give your family a better life today you don't have to keep like rough it while you work your way up but hey if you hit it big like we're gonna get paid out and they basically do a bunch of analytics on their side to try to guess which players to invest in what what are what is the exact deal to offer them so it's like a startup up investor who's coming up at the valuation of every binary league baseball player and they know they'll lose many money on like eighty percent of the deals that don't pan out and they're hoping that the twenty percent that do turn into huge returns like a fernando to t junior and so i think this is an awesome idea this actually is similar to a company that we've talked about called pipe pipe is they basically take companies that have saas revenue and they say hey you got all the saas revenue let's turn that into a t able invest asset let's take your contracts you have with customers let's make us so that anyone could just buy some of your saas contracts off you and you get money today upfront for for those contracts you don't have to wait the twelve months for for your customer to pay you every month and and for that that investor they're gonna get a premium you know so they'll pay you the year's worth of the contract and in exchange they get like a twelve percent return on on their money and you get money upfront which you can reinvest into your business so i really like these companies that are taking things that were not invest t able assets and making them invest t assets and i think big league events is a cool one because it basically betting on minor league players that might turn into stars what do you think of this but well i'm looking at their website so how can a minor lead does that ruin the amateur stat or is there still amateur status within an my is pro minor league is is at you're a pro you're player you're part of a team's pharmacy system and you get paid you're out of the college system by then by then so you can only do the you can't do this for college kids correct correct that's cool so i think that you i'm looking at their website now so you i imagine this would work for golf baseball tennis basketball tennis i guess anything that's like crazy numbers related right like you can kinda like i wonder which sports do you think are the most predictive in terms of baseball is known to be the most predictive and the most like kinda statistically model because your your teammates kinda don't matter when you're up there batting it's just you and there's no like team dynamics whereas in basketball a player can be better or worse because there's five other the people on the court all moving around and it all affects each other but you know that that doesn't really matter in this case what here what you're basically saying is let's say there's a like this guy spencer din when tried to do this on the nets he he he had signed like let's call it a thirty million dollar contract and what he tried to do was offer people token shares in his future so he said look i i i think today i'm a like a b level player i think i'm gonna be an all store someday so if you invest in me now you'll get a share of my future contract and so you're just betting on a player you're just saying i think that this player is gonna be a star and i think this player is gonna earn this much in his career so i will i'll invest now in an income share agreement of his future earnings and so for the player they get money upfront they don't have to wait to earn their contracts and they get a little bit of insurance like if anything happens they get hurt or you know something bad happens in their career hey at least they didn't risk it at all they got paid somewhat upfront and for a fan it's a way to kinda of bet and invest in players that you think are gonna have more future earnings than than their what they're offering today as a valuation this is so amazing i'm looking at their so they've raised a hundred and fifty million dollars i think they from the looks of it it looks like they only have like thirty employees do you think that's accurate and if they made thirty million from from this this one guy alone so this was like the big home run and then you know they've had other things where like they they're they got sued by a player because they offered him three hundred sixty thousand dollars for ten percent of his future earnings and then he you know he tried to sue them being like oh shit that was like a predatory deal i didn't wanna give up ten percent of my all my future earnings were just three hundred sixty k but in actuality the guy only made one point two million in his career so it actually turned out to be a profitable deal you you know he took three hundred sixty k up upfront and ended only paying a hundred twenty k out to these guys in the end so so he dropped his lawsuit i why is why is there so little information about these guys online you think there's really no i fly like on front base page they they're not a tech company it's just a financing company basically they they try to fly under the radar they also got like kinda dis out like the med league baseball doesn't like them the players association associations said we do not like we don't like like we don't say that this is a good thing but for a player you know it's it's they're cutting a deal with the individual player and and i guess it's loud in baseball whereas in basketball the nba blocked the thing i was talking about they blocked spencer din from token patronizing his future contract and and basically selling off future future earnings so some leagues are not allowing it but major league baseball still still does allow it minor only league baseball still allows it so my question is this and you're more a sports guy than i am and i'm looking at this and it seems awesome my question is what actually would make this fail and not work well so bad predictions so you invest in a bunch of players that don't pan out you can go underwater like i don't know i don't know how favorable they're i don't know how much room margin of safety they have when they do this stuff like with startups for example just like just like start up investing a lot of people are angel investors or a lot of you know average vc funds actually can't even beat the stock market in terms of returns and they're ill liquid and they're risky and they they don't they don't outperform and so it really comes out of these guys ability to pick and value players accurately if they can't do it well they're gonna go they're gonna go broke and if they can do it well they're gonna make a bunch of money and i think that's a healthy setup how challenging is it to to do this because i don't i don't know anything that's sports but i feel like this whole money ball thing seems kinda like table stakes at this point for for professional teams right i don't think it's that challenging to be honest with you i think that there's you know you you're getting your collecting data all the time you have scouts you have all these different ways to value players and in this case it's such an inefficient market because the minor league players just make nothing and the baseball team don't wanna pay them a lot it's like hey dude you know do you wanna live out your dream or not and so we'll pay you the absolute minimum required for you know just to have you in our our minor league system and so what these guys are doing that smart is they're taking a percentage of all the future earnings and and so i think they're they're basically going up against nobody right now but i think and i think there's even easier way to do this in the nba because the nba has guaranteed contracts so let's say i sign a five year hundred million dollar deal i'm a nba star cool that means i'm gonna get twenty million dollars a year drip to me and so somebody could come and offer this guy eighty million dollars upfront or seventy five million dollars upfront lump sum here's your money today and good you can use that you can go ball out if you nba does does the nba does the nba have big as big of a minor league i know they have the two league you be like i know money i have got friends that go in the minor league of baseball yeah so the nba league is not anywhere near like all baseball players stars and don't stars and not go through minor league baseball stars in the nba go straight to the nba they skip g league g league is like journey men and so it you wouldn't do this with minor league in in the nba you do it with the actual nba athletes and and for them what you would be doing is saying cool you're on your first contract i'm betting that your second and third contract are gonna be bigger and i'm willing to pay you up upfront on this multi year contract because hey it's guaranteed you could go and break your leg tomorrow and you're still gonna get all this money from your team so the nba has guaranteed contract so it's way less risky you could just say look i'll give you this money up upfront so you can go invest it and you can go ball out you go by by your mom house you go buy that by the i thing you always wanted and in exchange i wanna get some some margin on the because i'm willing to wait the four or five years for your contract to play out and i can bet on your next contract and i can you know give you some future some money today in exchange for some percentage of your future because i think you're gonna be a star i i think that this is this is awesome would you value this at a software company because how like if it's like a at the light if the average length of an ml b or nba player i don't know what it is but i bet it's in the eight to ten year range which means you're you have a really high lt tv you have i imagine of quite predictable stream of income would you value this at software or close to software no i don't think so because it it can't scale that's a beauty the the beauty of software is that it's scale sort of infinitely and you know for every additional customer you have you don't have that many additional cost in this case i think this is more like real estate i think they're it's just people as property you're buying this asset this multi family property that has this much rent and it's gonna it's gonna cash flow for this many years and so you basically are i think you're just buying properties yeah but real real real estate sells for almost saas like multiples real all estate sells at at like what like a five or six percent cap rate yeah but software is like fifty dude like if you go look go look at salesforce or slack or go look at these guys multiples you know it's it's like you you're at hubspot hubspot is doing a billion dollars year of top line revenue that's not profit and you know even on the revenue i think hubspot valued at what it's like a thirty billion dollar company or something like that so it's a thirty x thirty x of revenue in that case so a software has better better multiples than real estate sure well do you wanna talk about one more thing yeah go for it let's talk about we don't have enough time i think to really dive deep into the studio model but i'm really interested in this so there's two companies that i've been eyeing the first is atomic which is sorry this guy named jack abraham and he has launched maybe ten different startups ups one of them being him which is a multi billing dollar company but the more interesting person is this guy named josh kushner kushner his brother everyone might know as jared kushner he's the guy who was on trump's cabinet josh kushner married to this model what's the her what's her name carly k i think so he's like kinda have quite of a fascinating lifestyle or fascinating life but with he started a small fund he was born into a wealthy family so he he had money early on invested four hundred thousand dollars into instagram made a significant some from that and then has since not invested in companies through his his fun but really started them and one of them or she has two of them one is oscar which just went public and his stake that is one point two the other one is called cad i think it's called which is a rich person's investment platform but what do you think and the reason i brought this up is because you kinda had that experience a little bit like your be was kind of a startup studio do you like this model of starting companies and operating them but doing more than one at a time or do you think that just passively investing is better alright so i so the thing we did which was was called monkey fern bib was one of the companies inside monkey was definitely a studio and in fact before jack started atomic we met up in our office and he said hey i'm thinking about doing the studio tell me everything you've you've learned good and bad about running the studio so i can kinda learn from those mistakes and i told him hey like here's what i think is great here's some of the things i think that that trip us up if i was you starting from scratch here's how i would do it and then he's you know he took that and he so jack came to you yeah he came to by our office and we hung out and we we brainstorm and i kind of told him look these are the strengths and weaknesses of the of the studio model how are you planning to do it and to his credit he already what he had as an idea coming in was already the exact advice i was recommending and so it's not like oh i told him you should do x y z then he went and it he was already planning to do it that way but but yeah and at the time i was like you know good luck because very few studios there there are many many studios the studio is like the the reason studios happen is like successful entrepreneur wins they take some of their lottery winning and they're like alright fuck i'm gonna do a studio this time because i can't pick one idea and i just wanna do a bunch of shit i wanna do a bunch of cool things and like now i have my own money i don't need other investors so much or i can i can easily raise money from investors to have this big reputation and so you saw you know garrett camp the c cofounder of uber he starts to studio mark pink the founder of z he starts to studio kevin rose that you know sold his company to google then he starts to studio michael bur does be sells it to aol he started at the studio that i i i ran you know there's a whole bunch of these guys that that do this stuff and very few of them have success we didn't have any breakout wins garrett camp from uber he he didn't win mark pink he didn't win kevin rose he didn't win so so you know there was for a long time there was literally zero like breakout winners from studios and recently there's been a few that have worked atomic has had a few that have worked him is like the big win for them it's a public company now i believe and multi you know a multi billion dollar win that they inc in their studio then there's the bark bark box guys so they they i think they're their studio called pre hype so they they you know they took bark box public and they've done very well and i think they also have row which is the competitor to him so now there's been a few like there's somebody got on the score board so it definitely can work i would say the odds are that studio the guy right and now thrive yeah thrive with oscar going public is is great and so i would say the odds are still you know it's just like startups where it startups ninety percent of startups ups you know fail similar similar odds of the studio it's not like you get that much better i would say a couple things super fun to do because who wouldn't want this it's like a entrepreneur playground you get to go to work dream up ideas you have a you have a bunch of teams that are building them all in parallel you in theory you're killing the the losers and you're doubling down on the winners and you know you're just being super creative every day so it's like the dream job then does it do you actually increase your odds of success on one hand yes because you're getting multiple shots on goal you're not you don't have all your eggs in one basket with one idea the second thing is that you're learning pretty rapidly so you're learning from all these different reps these different attempts you're doing and you're keeping the team together so like when a team even if you fail the team retains those learnings and just applies it to the next project right away whereas in a normal startup if you fail it's like everybody goes and gets a job for two years because now you're you know you just did this thing for three years it didn't work you're in debt you need to go makes money and so typically the team breaks up and goes into something else in this case the team sixty together the learnings are retained so that that's that's what's good the bad part which i think is what you're gonna focus on the big butt of this whole model that i think is what makes it not a great idea if you if you're if you're optimizing for success i don't think this is the best way is you're not focused because you have multiple ideas and you know one of the benefits of one of the key things in life is is focused and laser focus on on making something successful and the second thing which is kinda related to that is like shiny object syndrome every project goes through like kind of periods of plateau like i remember with the hustle you started off you know with the events then you started the blog and then like there was a moment i remember our conversations where you were like the blogs are bringing in a bunch of traffic but i don't think this is working need to figure out something else what if i did this daily email newsletter right you were like trying to figure out what do we do is it video is it this newsletter what what is it and in a studio when that happens when you plateau or things to stop working or some growth stalls is super easy to instead of being like fuck how do we find a way out of how do what can we try to make this work it's really easy to be like hey what that other idea that we're doing like that one's still super exciting it's not in a plateau right now so you just like unconsciously start to spend more energy on the thing that's not stuck because like who wants to stay in a fucking stuck on a stuck project but as an entrepreneur you've no choice you told everybody you told your investors you told your team you told your mom i am building this and you have to find a way and that's like the most valuable thing a startup has is that like the the the the do or die situation for a startup and i think a studio takes away to do our dime mentality because it's like do this or do that or do that or do the other thing and so you have all these options and those options actually they actually take away your biggest asset as a startup so i would say if you're going for fun studios are dope if you're going for success i think that going all like dabbling and picking a start up to go all in on is a better model than trying to run a studio with multiple projects and that's actually what i remember my what i spoke to you about years ago when we started hanging out at monkey inferno is i don't remember which one it was blah be one of them like it seems pretty good but like every business there were some problems where you're like people are coming but we're getting hacked or i i don't remember what the problem was yeah or it was like kinda good kinda bad yeah and i was like dude just like just figured it out and i actually thought that you were at for part of me was like oh sean's at this great place where he could do anything he makes money and he has an unlimited budget he could do anything i actually think that that hurt a lot of times and it would've have been a little bit better if it was like look if you don't figure this out you're you're you're fucked you're broke right yeah exactly i think you you called it for what it was like really early on you were like dude i think having everything right we had like a fucking private chef we had the dope office we had all the engineers we needed we had unlimited funding and runway we could just keep going and you were like dude it's gonna make you soft like don't you you know having all this shit is like not good for you i i remember you like pointing that out really early on and then also like just pick one of these and stick to it don't like don't get distracted by having a lab or a studio where you have all these different things going on and you're just dividing up your attention twenty percent here thirty percent here ten percent here and like what if you just put a hundred and twenty percent into like the one and you just found a way you know i you i remember you're saying that stuff but it seems really fun it is and when it works it's like oh wow it worked and it's fun and that's what i'm seeing when i when i when i i mean i don't know these guys but from an outside perspective and i'm sure it sucks on the inside just like everything else has pros and cons it seems quite fun it seems really exciting to be able to win big and have multiple shots on target it it seems really interesting so one thing by the way one thing i think atomic did good that they changed the model so he was so told him i was like i told him about these problems and he was like yeah we're gonna do it differently he's like we're gonna only do one project at a time that team is do or die on that project he goes they have nine months to raise their their series a and if they can't raise the series a in nine months they're out like you're out of a job and he's like in reality we're gonna keep the good people we're gonna offer them a job on the next one but like it's not a given that like oh if this doesn't work no problem like just work on this other thing that we're doing and he's like that's gonna have urgency that's gonna have focus they're not gonna split their time between different projects and he's like i'm gonna be the ceo of of the project you know like that we're doing and the other big thing was they weren't going after consumer like we were doing consumer and like social apps which are you know lower odds of of hitting the lottery whereas he was like yeah consumer super hard you know it's just really hard to you know the consumers are f we're gonna do b b and so that they started doing only b b stuff you for a long time and and him was the one kind of like consumer hit that they've had the other things that they've had that have done okay or are b b companies which i think are a smarter model to do e founders is a great example of one of that that's working in europe where it's like they only do saas and they really focus on problems that they know that are in the b b space because their own companies have this problem so then they build a product for that they build make a company out it they've had big hits like front came out of that and different things like that well ro internet does it as well and they're they have there tens of billions of dollars with the value that they've created but the best example of this my favorite actually and i just realized this was as we were talking is kevin ryan kevin ryan is someone who i admire and and i i joke that we kinda look like he's probably thirty years older than me but i tease that we like he kinda looks like i look like him what kinda look alike and he he was the twentieth employee at i forget what it was called but it was double click it was called double click and it was sold to google for multi billions and eventually became google adwords and adsense and he told me that he made around twenty million dollars when he sold it which is definitely a shit ton of money and then using that him and this guy named dwight and would invest three hundred thousand dollars and give a company six months to show traction and the outcome of their companies there's a a a a couple losers and a couple winners or probably a lot more losers than winners but the first one is mongodb d which is currently publicly traded at a twenty one billion dollar valuation the second one is business insider which is probably a it was sold for five hundred million dollars probably worth a lot more now the third one is z which prior to the pandemic was doing hundreds of millions of dollars in sales and i think that there's like four or five more that had been hits right and and he told me i actually called him and i emailed them like every month for like three years to trying to get him to talk to me and eventually he let me fly out there and meet with him and he told me that all he does is him enjoy i mean they're wealthy right so they can do this but they he they just come up with an idea and they just get a piece of paper and a pencil and they like write out the math and they're like oh that's kinda interesting alright let's try to find someone to do it and we'll give him three hundred k to do it now this sounds like a very simple process it might be simple but it's still quite hard to pull off but they've done it and it's and it's called silk silicon alley insider it's the name of his thing and you'll have to look this guy up it's really interesting think that's jason cal that's not that's not those guys no it's it's they have the same name oh okay interesting it's it's called the wait is it called silicon alley insider it's called the ali corp sorry you're right it's called ali corp so so i think there's business insider was called silicon alley insider interesting so so i think so so there's it's just like accelerators right there's like a million accelerators in the world every college has one every little city has one and then you have like comb that just like kicks ass you know so best sorry to interrupt guilt guilt guilt is the other one that he started right go ahead that's that's a bunch of hits so basically you have like it's not that is this model good or bad it's like how do you execute it and who are the people involved in it so like why comb is an accelerated that is probably created you know i don't know hundred billion dollars worth of value now out of the companies that have come out of it easily over a hundred billion actually or airbnb alone is a hundred billion so so y comment is like the best and then you have techs stars and then you have like all these other accelerators that like have i've never had a hit and so our accelerator model is good or bad like if you said it was bad you'd be wrong because y comb that it hit but if you said it's just great and you can repeatedly make success using this model no that's not true i think the same is true for studios and everyone is different because you have to make a bunch of choices it's like for example are you gonna do multiple ideas at once or are you gonna do one at a time are you gonna have shared staff working across projects or are you're gonna have staff dedicated to their one and they live and die with the one are you gonna fund it indefinitely or are you gonna give it a six months or nine months time period to to get to some traction raise money from external investors or are you just gonna let it run forever do you come up with the ideas or do you invite in founders they spend some time coming up with the idea like e right there's all these different differences that like there's all these like little choices that will lead to a totally different outcome it sounds like in that case they come up with the ideas and then they find an operator in jack's case he came up with ideas and he was the initial operator and then he hires a ceo you you know in experts case they bring in an operator and they the operator comes up with the idea and so there's all these different versions of it and you know a lot of it just depends on both luck as well as who's involved like truly great entrepreneurs and investors can have success where somebody else copying the same model that they have won't may won't be able to pull it off because they don't have the right judgment and that's why i think i felt right i think i didn't have the same judgment that these guys who have had success like with them with their model i think they were better at playing that game than i was it also helps to be wealthy i think and be able to write ten to twenty three hundred thousand dollar checks and had the the time to do it and so i don't wanna dismiss that but but a lot of them raised money like jack he raised money he raised i don't know like a hundred million dollars or something from entry and h and others to fund his lab even though he himself was like you know you know doing super well he had sold a company to ebay he was like crushing it at paypal or whatever or whatever like our ebay when he was there yeah the he sold his company for seventy five million dollars when he was twenty i'm not just i'm not dismissing any of their skill i'm just saying this is definitely like a after you get your hit it's a lot i'm not just missing that at all it's like it's a lot easier to become a good golfer if you have some money to afford a fancy fancy clubs and a membership there's a bunch of people trying to do this that don't have that right there's there's a group just got bobby he listens assist the podcast he's doing this for creators he's like alright we're gonna make a studio we're gonna just build products for the creator economy and i don't think they have a big track record or anything like that but that's their focus they're trying to do a studio for i'm gonna think it's impossible i know another group of guys easier another group of guys that i'm bet i i would bet on that the main guys this guy kumar and if you you should follow him on twitter he's amazing he's super interesting on twitter and facebook his handle is data rate no oh i know who is and he's just like really into all these alternative a weird guy yeah he's a weird to dude he's really sharp and he's really out there different type of thinker and so he's like he's like really into like you know the the energy industry and so he'll build like little products for the energy industry that you didn't even know like there was a need for so i think this guy's gonna do well because he knows where to sniff he knows where to sniff out some money because he's looking at problems that the average kind of engineer in silicon valley or new york or la they don't even know these problems they don't even know these companies exist and so you know he's he was doing one for example like his friend is a lawyer and you know there's like all these like little rule changes in like your local regulation or your local law and he's just made an alert system where it'll alert you about whenever this rule changes and he can go get a bunch of alerts to sign up for these email alerts and it's a saas business that you know can do well or you know energy prices when they when they rise and fall how how you know how are you gonna track that how do you get how you build the database of that that information so he's got all these like really random ideas that i think the average entrepreneur doesn't really even know about those markets enough to like to know those problems and therefore he finds some kind of untapped opportunities well i think we should dive deep on this sometime like even more and i wanna get jack on here and i would love to get kevin ryan on here because i this sounds cool it definitely sounds like a rich guy's playground and frankly i wanna do it i feel like i could rule where i know i could be what i want to travel never looking back