#18 - The Big Business of Wacky Domains

i sold internet real estate to the tune of a half a billion dollars worth dot app dot blog dot church some of these you've probably right my company was responsible for selling a lot of those it's what's called a ascending clock second price auction the way it works is in this case every twenty minutes it increments up and it's ascending we'd start the betting at two hundred thousand dollars times a number of bidder six hundred thousand dollars to start every twenty minutes it goes up by six hundred thousand with a minimum increment of percent you know once we get to three point six million it goes up higher your top auctions went full how much what do it is like ten million or is it more like it's over a hundred million sweet like she'll you're here yeah did you bring your egg game always bring my again alright do you stretch in the mornings do you eat your breakfast what do you do to to get going in the morning i actually eat no breakfast drink no coffee ever i just a faster now yeah fasting that's not what you've called it not happen could not be breakfast i just haven't nutty breakfast because i don't like it and then if i drink any coffee i won't sleep i don't like a wink at night so no caffeine for me i just naturally am lucky that i wake up with a lot of energy it's awesome great and so you're here to tell your story i met you maybe four or five years ago i don't remember how long it was calling you came over to my office and i don't even know how you got there to be honest i didn't know did i reach i probably reach out to you some i don't whatever yeah but i remember sitting at the bar in our office i do yep and you told me one of the craziest stories of how you of how someone made it that i've met here in in san francisco so million dollar question you've made a million bucks how did you do it yeah so i sold internet real estate to the tune of a half a billion dollars worth and when i say internet real estate i mean top level domains which is like a a domain would be like million dot com but a top level domain would be the dot com part so that all these new ones that came out dot app dot blog dot church some of these you've probably seen right my company was responsible for selling a lot of those gotcha okay if i wanted to create sean dot com yep i do yeah and was taken and was like okay shit what do i wanna be instead i can do sean one two three dot com that's less cool could i get sean dot c could i get sean dot x y z sean dot x y z sean bad whatever right so these other domains these other dot whatever's exist now and you were responsible for selling them to the highest bidder that the whole class of dot like what's what's a what's one of the famous like not dot com not dot com but like what are some of the other big ones so dot app is a big one a lot of these have just started to come out in the past couple of years so you have not heard of them that much yet dot app is gonna be a big one i think dot blog potentially all the blogs have gone decreased in value since this whole thing came out dot x y z is a friend of my nose and he his his thing is the alphabet ends in dot x y z why shouldn't you're done okay you made a bet on that okay so there's a whole bunch of these that are out there and you were selling them so let's where you want to the beginning of that you're sitting around where do you get the idea to even go do this how do you even realize if this is an opportunity worth chasing yeah so i just heard through the news that you could buy your own dot whatever in twenty twelve it was all over the news like people can get your own dot whatever and so i wanted to find out more about this and naturally there are a few things that come to mind like if you were doing it today you might wanna do something like in the crypto space like dot ptc unfortunately in twenty twelve nobody did that so in twenty twelve you do apply you to pay pay a hundred and eighty five thousand dollars to apply for your own got whatever so what would you apply for so like i would i mean the first one comes mind is like porn basically so was like right like what's the most popular thing on the internet like dot x x x porn sex something because if i owned that then every basically anybody who wants to have a porn site now they have an alternative to dot com which has usually taken exactly they come to me and i can sell them their other domains essentially that's exactly right yeah i can which is a governing body the internet actually made an exception and like a while ago created dot x x x how do they decide which of these are gonna exist because some of these are actually country codes right like so all of the two letter ones dot c o dot v c dot tv they're all country codes so dot vc c is saint vincent and the philippines oh really what's tv tu balloons so i even know what that is okay great dot io o is like the british indian ocean territories get so they so under the premise of every country can have their own yeah it actually immediately got c opted by business to be like great tv yeah yeah sports out there remember remember like ten years ago they're were always like dot l y domain yeah that's libya you're for supporting libya and do they get anything out of it yeah they do they the country like the country manages them and like if you buy a dot c o domain that's columbia so nobody else could bought it the country owned it and they're and they sell off the different things so how much does a do you know how much the countries make off like how much does libya make off of all the data wise it's sold do you have any idea i don't i don't know think about it this way they probably make you know whatever it costs and we we could easily do the math but it's in the hundreds of millions that they've made wow okay so this is the country ones and then they started doing just words like that app or whatever see so the way this thing worked was in twenty twelve you apply for your own dot whatever so let's say that me and you applied for dot app you had to pay hundred and eighty five thousand dollars just to apply and by the way they got two thousand applications which means they made three hundred and sixty million dollars in application fees wow and if you were the only one that applied for dot app you got it it was yours you paid a hundred five k one time and then you know some ongoing fees but it was yours and then by the way you could sell everything that app like facebook dot app would have to pay you something per all these things would have to pay you but if you me and let's say some third party who should be use as a third party so me you and donald trump get into getting war me you and trump so me and trump paul we're just doing this so i could beat trump yeah so me you and trump all want that app so i can the governing body of the internet says you guys figured out amongst yourselves if you can't figure it out at some later date i can will hold an auction and they'll get all the proceeds okay but i can prefer is that we sort it out amongst ourselves so what happens next so you go to donald trump and you say we first annie up our our fee we we put a hundred and eighty five k in just to say that was just the application fee right so that's that's basically a sunk cost right and and then they had a reveal one day they were like here all the people that applied okay and then we found out oh shit sean applied trump applied i don't if i'm gonna get this right so then what happens is like the three of us would like be in this what we call contention set which means like contenders to tenders to win it and so this happened and the players aren't like me and trump although kinda similar they are like google amazon there's this billionaire guy who lives in the cayman islands really interesting fellow there's a company called donuts that raised a hundred and eighty million dollar like seed round effectively just just for this okay so me you and trump we go into the bidding war yep and so if each paid application we've each better application fee and then what i said was are you better negotiated than trump he lived the order to the deal man are you better negotiated and you might say no and the people involved again are these it's like google and this billionaire right and so what we said was we can create a fair transparent mechanism for you guys to sort this out the way it works is in this three party auction it's what's called a ascending clock second price auction what so what that mean it's it's really simple ascending clock it's a clock auction meaning meaning it's timed okay so in this case every twenty minutes it increments up and it's ascending okay simple so in a three party auction we'd start the betting at two hundred thousand dollars times a number of bidder so it'd be like six hundred thousand dollars to start every twenty minutes it goes up by six hundred thousand with a minimum increment of twenty percent you know once we get to three point six million it goes up higher okay what's your willingness to pay okay so i'm willing to pay right out the gate and now my strategy should i be telling my top bid or my like low ball offer so you for the sake of this you're gonna tell us your top bid but in the actual auction you'd only say whether you're in an ace round okay cool so let's say i'm willing to pay up to ten million bucks to ten million bucks okay cool donald trump he says he's a billionaire i don't actually think he has that much money so let's say his willingness to pay is like five million bucks okay and then my willingness to pay like i think dot app has a lot of values it's can have a lot of value in the future you know domain names are less important but you still want your like dot app and like your your app is what's important and it's a memorable way for people to remember you know what right what the thing is so i'm willing to pay more i'm gonna say i'd be willing to pay like twelve million bucks okay so in this auction what's gonna happen is we're gonna start the bidding six hundred thousand and we used just say yes we're still in we're in okay so either you say you're in or you're out and if you're out you say what price you were in let's say donald trump was actually only in for a half million bucks right in the first increment he would say i'm out and i'm in for five hundred thousand right okay so we we keep bidding we keep bidding and then sean once we get to ten million you're out right that means i've won okay and so i pay ten million bucks oh okay so you were you were willing to be in at ten you might have continued to be in up till twelve i would have been but nobody knows me nobody else is yeah nobody knows nobody knows what your real number is gonna be exactly okay and then so i pay ten million bucks but the real beauty of this auction is where the ten million bucks goes so who gets the money well nobody owns all apps or is it i can that gets it i don't know who who gets the money so a lot of people would think i can get the money but actually this is a separate auction from i can so in this auction the people that get paid are you and donald trump so the ten million bucks of i pay go away yeah we pay we're paying you off effectively to go away and really what this is is like anytime you're splitting a partnership this is like a good way to do it so like if you and me were in business together fifty fifty jv right how would we decide like how much would i to pay you to like free my shares yeah exactly so we would basically do this kind of option where like whoever's willing to pay the most to the other person and that's the idea behind this connection and so they actually get the money they get the money so the paying you guys each five million bucks minus my auction year fee which would be in this case four hundred thousand dollars so we took four percent of the auction fee wow so the first thing is were there people who just went into the auctions trying to get paid out trying to lose put it because you had to apply basically a year before any of this like how their auctions would work yeah okay okay cool so that already prevented that from happening the second thing was your top auctions went for you know how much what do is it like ten million or it more like a hundred million it's over a hundred million wow yeah so i can't talk about the exact prices on the names but the top couple went for over a hundred million and the cheapest one probably still went for like a half million bucks right okay so i'm fascinating but you were sitting there and you said oh cool interesting they're releasing these domain names yeah but then we fast forwarded to and then i'm running these high stakes a hundred million dollar auctions certainly there was something in between where you were like okay how does this work totally do they need an auction solution can i make that auction solution you know how did that actual how did that idea come together from the moment you were just curious about these new domains yeah so it's really my c cofounder is like an expert in auction theory we knew this was happening and we just like sat down and we were like how do we devi away for this to work okay and how do we build any credibility in this industry nobody knows us so we did a couple things that i think worked really well in our favor a like know our cofounder is in a phd from stanford in auction theory like this was just a buddy of yours or buddy yeah actually there's another totally random story but i met my cofounder on a train in india in two thousand six just sat next to him he kind of wow he turned out he was a friend of a friend but he's like a german dude right and i was traveling in india i mean we ended up on this like forty hour train right together became really good friends have like worked together a bunch of time since wow okay alright that's amazing then and that's also funny how common that is how common the randomness is yeah your body knows a lot about auction theory yeah and so how do you how did you even know that the companies were gonna have trouble sort of sorting this out amongst themselves because these are billionaires in google and facebook so you're not even talking to these people how did you know that they needed this type of a solution versus we actually just talked to them and we're were like hey do you need a solution and most of them said no actually like they were like we don't wanna work with you and in fact like for a long time it looked like this business is gonna be a total goose egg you did what there you emailed the lawyers you were calling somebody yeah emailed called like show up in person yep like so they're they had these conferences three or four times a year we'd go to all the conferences and the domain conference domain conferences okay nice must be a if that sounds like a party it was cool because they were like all over the world like i went to johannesburg buenos aires is singapore port like literally know if this is a business yet you're just following your nose you're just curious curious yeah and so my c founder ul has this like loves to tell the story of like you gotta just get in front of these people and so i literally just like looked up everyone who had not responded to me yeah on linkedin on facebook whatever and try to find their face like memorize what their face looked like and then at this conference i would just be searching for them and then so at one point i saw this guy that i needed to get touch with for one of our auctions okay because like in this three party auction if i only have two of the three parties i don't have an option i don't make any money and so you need these auctions some of them were like thirteen to fourteen parties right so if i got if i got thirteen of the fourteen i don't have an option i have no money but if i get fourteen i'm really doing well right so this party that i could not get in touch with them him matter how hard i tried i was in buenos aires saw this guy outside smoking and then i was like do i get different guy i don't smoke cigarettes but i bought a pack of cigarettes and then i just went outside and started smoking a cigarette with him and i was like as if i hadn't been trying to get in touch with them this whole time i was like just shooting the shit and then ultimately like you know became friendly with this guy and i was like oh like you're the guy i actually it's funny like we're in this auction i've been trying to get in touch with you and then he he was like way more amenable he likes started trying and suck amazing yeah that's okay it's not quite like you know the cia operative operators that go undercover and start doing heroin to get into the cartel but it's close it's the closest so you know i've heard okay so you you start smoking to see right so you're trying to get in touch with all these people and then convince them that our ways is a way to do it and we had a couple problems it was the billionaire in the came out islands i was talking about she did not want our auction to happen if our auction happened he was reasoning that the prices would go up because people are incentivized for the price to go up because they wanna sell right they wanna make money to get the money and so he wrote like a letter to the department of justice and was like if these guys do this would this be a bad thing and the department of justice sent him basically a non response but he public publicized it as if the department of of justice was against what we were doing i see and so that made google a lot more suspect of us right and you know they don't wanna do anything that could potentially be a file department of justice so we ended up having to work our asses off to get google like i spent a year like going to mountain view convincing people like you know met with a lot of people at google trying to convince them like john a whiteboard our solution right the reality is this is better than another outcome for their department justice the other option is they could get into a room and negotiate i don't see how that's better than this option and why did they ultimately come around so what was your pitch you get you finally get in front of google and you're like look you're the guy who needs to agree to do this yeah their initial reaction you're saying was no we're not interested in this in working with you guys exactly and if one party doesn't wanna work with you guys doesn't work it doesn't work seems like it it seems like a terrible business but love that it worked out so what was it ultimately what was your pitch to convince them that this will be better for you than everybody free for all trying to negotiate okay so a few things some people were worry that the price would go up based off of this but the reality is if like everybody has a price that they're willing to pay and you're not gonna you're not gonna bid higher than the price you're willing to pay because then you might end up getting it right like if you end up winning the auction for a higher price just because you're trying to drive up the price that doesn't make any sense so like this whole notion was un founded and you know we were able to convince some of that like we got google's chief economist tal var involved and it was cool it's like a really amazing experience and then google tested us out first they had us run another auction for them just see how they like working with us right and it went well and is this a piece of software or what how did you actually what with the product in this case yeah the product is yeah it sounds like relatively trivial it's actually not that trivial to build like there's a lot of security involved and yeah it it is like a online portal where you can go in make bids see what happens there's also of course like a banking component so even to enter a bid you have to have put down a a deposit and we have because the bidder are so international they're in accounts all over the world right and then even after you've bid we have to hold a bunch of money in escrow right and one of our bidder a large software company had a requirement that you couldn't use the money that they gave you to bid against them in a future auction so we basically had to hold this money in escrow so we're holding like hundreds of millions of dollars in escrow in accounts like in hong kong it's kinda of that's actually pretty smart of them though to yeah to to put that in can i tell you my bidding story like this yeah i think i know the story and it's a beautiful story so i didn't know how any i of this shit works but four or five years ago maybe maybe more i don't even remember at this point my investor michael birch comes to me he's on the podcast his episode called the hippie with a billion dollars so he comes to me and he says hey you know this company i sold aol called be it's actually aol wrote it off this guy kinda bought it off them he is not really doing very good with it in fact we're gonna sue him because he took our money we invested in him it's not really working out but long story short this company is gonna go through bankruptcy would we want the asset like we could get the domain name we could get the servers we can get the email list of maybe eighty to a hundred million people maybe there's some value in this and said hey wouldn't it be cool if we could turn this around it was more really that it was like we would be cool yeah that was my baby i sold it to them they kinda of researched it and like maybe i'll buy back and do it again like wouldn't that be cool i was like i don't know yeah that like you know i was like interested because i don't know any better and he was like you know most internet companies never made comeback back but let's try it same sort of thing it goes to this bankruptcy process i don't know anything about bankruptcy but there's like a few weeks and then it's like there's a court date in la we gotta go to la and what we're gonna try to do is we're gonna try to buy it out of bankruptcy essentially and we we just had a pay up a few debts you know whatever the money we put in that'll go to the debtors and the asset could be ours so we go down to la it's me our lawyer and our coo and beforehand we're trying to come up with our strategy and we're like you know chickens with our heads off we're like well what's it worth and we're like well who the hell knows like we had very little data plus you're just like estimating what you think can make it into which is dream really and we don't know who else is interested we've seen in the data some other companies that are sniffing around because they've requested some data yeah and then you could see who open the folders ids other the companies are involved we don't know so we show up in la we go to the court i still don't even know actually how this process is gonna assume the judge is gonna say something the judge immediately just says alright you three companies are here to buy this go in that room over there sort it out amongst yourselves this is kinda what you're talking about right sort it out amongst yourselves and then come back me and tell me who's the winner and what's the price and we were like what and there's like yeah there'll be a mediator that was sit there and like just watch the proceedings happen just to make sure there's no foul plans so we're like we go in this tiny room smaller than this room we're doing this and it's us and it's match dot com and then there's tagged which is another like social network but then lost my myspace lost facebook and was sort of still around and so we sit down at this table i have no idea what's gonna happen i hoped it was a process like what you're talking about was some structure yeah and like you know whatever and instead it's like okay so what's the starting bid we'll start the bid at hundred fifty thousand and we're like so somebody says hundred fifteen we're like we'll do and they just had some minimum like you have to go by whatever as like we'll do one eighty we'll do two thirty whatever i just kept going up and did we so at this point did you have a number in your head yeah so we had in our mind we had valued the thing we were like okay i think this thing's probably worth you know just on the parts if you just res resell the parts right away like the domain name the domain the servers the lists you know stuff like that bucks or something this might be half a million bucks half a million bucks okay optimistic half million maybe it's three hundred fifty thousand whatever we were talking about that and then michael you know in his wisdom was like look i don't think we're gonna go in and we're gonna be able to get this for like three hundred four hundred thousand so like i don't think we should try to figure that out i think we should be like what are we willing to pay and i think this thing's gonna go for a million bucks and i'm willing to pay a million bucks yeah for him there's a emotion tied into it too like it was exactly so he was like i'm willing to pay a million bucks and we're like okay well i guess that's our strategy now so in my head of mike million bucks i have no idea what these other guys are thinking and we sit down and so starts going up starts creeping up at about three hundred fifty thousand tagged is like you could tell this guy was like i flew to la i thought like nobody would be here yeah what the hell am i getting myself into was just like like i'm out i don't i don't know what's going on here let you guys do whatever you're gonna do with this so now it's just heads up us and the ia group and so we we continue and it just and everybody's going up in very even increments of like whatever the first person throw it was like thirty thousand more or something like that the next that's just how it went up every time every time and i wanna try to have like a poker about themselves and at about seven hundred thousand they like stepped out of the room to be like we need to make a phone calls is that okay we're like the mediator was like yes no problem you can take a break so they go out take a phone call and i'm hud up with the lawyer i'm like okay this looks like this is probably what they were pre approved for because they gotta go call their boss yeah to figure out what they can do they're they're gonna come back and say no nope take it fantastic or they're gonna come back with a new kinda like top price in their mind and so this probably gonna be an even number so just test like every time it gets to eight hundred nine hundred or a million don't let them get that number like jump above it a little bit a little bit and i talked to the media i was like hey look they can't do this again and she's like yeah okay they're we're not gonna do any anymore we're not gonna any more breaks that interrupts with you do that they had an upper limit it and if you go a little bit above that a little bit it's yours exactly and i went i went outside to try to make small talk with them too to be like man what are you guys gonna do with this anyways and they actually like like fools were telling me what they were gonna do with it so i was like don't have like a robust plan yeah they just wanted the seo and they wanted some other benefits i was like okay these guys aren't it seriously so that's exactly what happened they come back in and starts going up again and add a million our top was supposed to be a million it was at nine hundred something and she just our lawyer just jumped and went one million and fifteen thousand i just threw fifteen thousand on top and they were just like taking it and we're were like great i was like what was your max was like a million was our max yeah and he's like we just didn't know how far you guys would go and i told him i was like dude our guys like emotionally attached to this like he's gonna keep going you should just drop out now before like yeah this gets out of hand and so they they just let us take it out are also max and so i i just remember sitting there like this was a crazy experience like a crazy hand of poker i got to play but i shouldn't even thought in that moment like there's gotta be a better way and it sounds like you guys actually built a better way but actually like the way you guys did it is not bad i mean so typically in that thing what i would have suggested is like you each put a number in an envelope and and that's what it is right but actually like what you guys did allows the bidding to go higher right because there's like excitement and like you said like they had to go out and coming back yeah but like generally in auction theory like we optimize for the fair price okay and we're not necessarily optimizing for the highest price and that's why yours ends with the second highest price basically yeah and the reason for that is let's say if all three of you put your numbers into an envelope yeah you you'd be thinking like what is somebody else willing into bid right instead if it's like i'm gonna pay the second price anyway you're gonna put buy max on buy max yeah that's brilliant okay and you didn't invent that you just took and that's like a known option theory and like ebay auctions if you should can bid as high as you want and you'll pay increment one increment over the next high right so that's like a standard auction theory we didn't invent it gotcha so you basically built this high stakes ebay yeah selling internet real estate yeah which is incredible and you did this this whole process took about how long so from you know you guys have the idea yeah to like your first auction how long was that because i like to give people a sense of like how long business takes to actually mature because when we say it it sounds bang bang bang yeah things do take i think it took like eight months and that was a very difficult eight months yeah like we really didn't think it was gonna work and then we had no idea these things were worth like the first auction so to give you an idea i think we did eight names in that first auction and we were like taking bets amongst ourselves like how much is each of these things the first ones we did it was like dot vote dot photography dot now dot red like that they're these were the ones in the first that we did and so like dot photography i'll use this certain an example how much you think dot photography went for she's i have no frame of reference like i don't even know what you can make off these so i i mean i'll i'll throw a number out there just to be long i don't know so i say dot photography somebody's gonna pay fifteen million bucks for it okay it actually went for a lot less it was like a single digit million number okay but a lot of people say that's a lot for photography like who's gonna use that photography yeah like in such a long name like when you used to like a three letter tl or two letter even for the country codes like dot photography is really long but actually it turns out that photographers want to be like they like their name dot photography right they don't want their name dot photo because that seems unprofessional so they like their name dot photography or like wedding dot photography or like san francisco wedding photography all these names i'm not gonna tell you exactly how much it cost but let let's say it costs three million bucks right so when people learned of this they were like somebody paid three million dollars for not photography that makes no sense but in that first year there were selling of these names for like fifty bucks a adopt photography name and they sold like a hundred thousand on that first year in the first year they made five million bucks out of it and then if you think about recurring it's a recurring it's like yeah kinda like an annuity like obviously there's degradation over time there's churn but like pretty consistent right and so that's at the tone then for you guys yeah and then and there there were peaks and valleys of like after that first auction and then the first name started selling and we realized oh shit people want these names then the prices started going up and then we had some crazy ones that were in the hundreds as i mentioned and then after a while when like the first several had a lot of success because they were the first names the first new names sold and there were all these like domain sq that were like buying them and then when we realized like oh shit now there are a lot of these new names that people started selling them the less yeah yeah started going gotcha okay and so you you said those eight months were tough what was tough and how were you feeling during that time like tell me the stories about it so we didn't actually get any of the like we didn't get the biggest name folks involved in the first auction google amazon that billionaire none of them participate participated in that first auction i see and we were like well our business kinda of blows if we don't get those guys in because like those guys are in the bulk of the auctions right we got these like pid ones right but not the big ones and then we were we decided to take four percent we had no idea how much it was gonna go for so like and oh by the way we had a half million dollar legal bill so and how are you paying for this because this is such a weird company it's such a weird company so we money we didn't raise any money okay we self financed but we basically just we self financed by not paying our legal bill right you know this is easy don't pay your bill in funding you don't eat monday yeah because other than that our only expenses were like our time right and flying around to these conferences give me give people a sense of were you wealthy before this were you doing okay were you broke because i no i i was i was fine like i didn't need pretty research job was like consulting or something yeah so so my background like i was in consulting before and i had started a bunch of other random businesses that you you you know tell me some of them yeah so what was first foray into business for you i would say like first of all like i always wanted to be like a businessman so like i joke like on my linkedin it used to just say businessman right because like i always just wanted to be a businessman man i didn't even know exactly what it meant you know whatever like i would always be like doing stupid shit like fixing computers as a kid i think a lot of people all these stories yep were you an ebay flipper i've noticed this with my guests a lot of them sold stuff online on ebay or i never i didn't do much of that i did it a little bit but not i wouldn't call that my profession over also like a timing thing so i but i did sell like you know i got a c rom and made cds and i sold to high school kids like these sorts small things sure and then in two thousand two or something like that or two thousand three maybe the ipad many had just come out in four different colors it was blue green yellow and pink and the apple headphones at that time were really iconic if you remember like in the ads that was all the ads were where it was yeah silhouette with white exactly so they had those iconic headphones i got this i i ipod mini for my work at the time and my headphones broke like they i was biking and they fell in my bicycle called spokes or something and like they they broke so i went the apple store with apple wasn't selling replacement headphones at that time so i was like okay i'm just gonna make headphones that look exactly the same as those headphones and then matched them in the different colors of the ipad minis in so we did that and made headphones in those different colors i like found a cheap flight to china flew to china like i didn't know anything about china but i flew i was like i new southern china is where like how are you are made twenty two twenty three yeah no actually i wasn't even twenty i was twenty one i think yeah and so you you're just like okay i need to go figure out where these things were made yeah i need to get someone to make these the ones i want actually i flew to hong kong there were some like electronic show that like read about online i was like go to this electronic show i'll meet somebody and that'll get me in and so i went to electronic show and in hong kong and then i did actually like i met a but like these electronic are amazing by the way like it's just like an insane number of people selling the same shit and like they don't speak english at at that time so you're just like on a calculator negotiating like in dollars point you're just like pointing and then like yeah know they're like eight dollars and then you're like no fifteen cents right yeah yeah the difference is like a hundred and yeah and so ultimately i got these headphones i got these apple headphones for eighty cents a piece including packaging everything and i did like i at this hong kong fair i went and i like negotiate and i went to visit the factory that was awesome by the way and then i went to this other fair called the canton fair i've heard about this yeah okay so it's the world's largest trade fair i think it's like it's twice a year april and october i think three hundred thousand people go to this fair it's in the world's largest trade convention center it's like massive kilometer long yeah my friend told me this is like hundreds of football fields or something like hundreds of football that's exactly right like just the fair is so big and so it's like oh i'm interested in headphones or this thing with socks and he's like dude theirs like thousands of sock providers in the world like you you'll start your morning on one side at by the end you're like it's dinner time and i'm still there's more more providers here to go you can buy literally anything from like a pencil or don't not even a pencil like to the like the cap that holds the eraser onto your pencil you could buy like that in a piece of container quantities if you're to go to be count on two you could buy like construction equipment like even buy everything there in container crisis so anyway i went to that it was just an amazing experience like for a young kid it was my first time to like china and i learned it fearless i think one thing that is common in a couple of these stories i mean we've only touched on a couple things you've done but you have a willingness just to get up and go like just go to the convention go to the conference just go meet like go meet them yeah just try it out because like what's the harm like the harm is you fail but then you've learned something and i think that like i've always been willing to try stuff and it doesn't always work and actually i i have a poor memory of like bad stuff so like i'm i only remember the good stuff but like but actually in the the auction business they're definitely were hard times we're like mean my founder were like at odds with each other we we're like this is really hard and annoying and also like you know living in san francisco our bidder were all over the world so we're like getting on calls at three am like all this shit it was just like a tense time yeah especially if we knew the business wasn't gonna work and then when we had that first option we were like oh alright this is happening it's on we're gonna convince google we're gonna convince everyone and and it was awesome anyway going back to the the headphone business i started buying some real estate i grew up in pittsburgh okay i bought my first house i was twenty two years old we live in san francisco now so it is unbelievable what i paid for it okay so okay so let me tell you about the house and you guys what i paid for so pretty hip like up and coming neighborhood now you know fifteen years later it's like one like probably the coolest neighborhood at that time it was like in transition and it was a two bedroom one bath with a garage small pork yeah guess what i paid for it okay so i don't know what year this was it sounds like it's a while is two thousand like four maybe it thousand four okay so educated guess i think this is gonna be very cheap but this is gonna be like under a hundred fifty thousand dollars maybe under a hundred thousand dollars so i'm gonna say like eighty grand micah okay close yeah we've paid forty seven thousand dollars for it yeah so your down payment is what eight grand yeah yeah hilarious right it's like that's like one month of rent for somebody at san francisco and that's you like a whole house the whole house yeah it's funny because you know a few years ago here actually like i was living with a buddy somebody buddies in mind we're paying eight thousand bucks a month in rent yeah one month and that's sort six months of rent was the equivalent of the house that i bought in pittsburgh so i bought that house you bought it to live in or you bought it to rent to rent out okay and you know kind of like did some minor fixing ups and then ultimately rented it out like got the rent over five years up to like eleven hundred bucks a month yeah so actually was a very fast payback on on the investment and then i actually buy another house in pittsburgh and then ended up buying realized that there's a there's a good opportunity if you buy a multi unit so like if you buy under a four unit it's still considered residential yep you don't have to get a commercial loan you get a residential loan which is favorable rates so i started i really like the idea of buying multi units so i bought a three unit in chicago and i i i'd moved to chicago so i bought it live there here in san francisco bought a four unit and i you still have that one right still have that one yeah that's a cash right there yeah it's it's awesome that's awesome and it's hard to find a cash cow in the bay yeah because here it's an appreciation game yeah cash flow game but you i think you got both here yeah you you know like again it's like i would say being willing to just go in like sometimes like the best opportunities are like there no pictures of this thing online you know you're like what the hell like what kind of stupid real estate agent doesn't put pictures of place right and then you look inside and it's gorgeous you're like okay that person just lost out on like like that person lost the seller many hundreds of thousands of dollars because like people didn't go see this place because they didn't up you know stuff like that that's it's weird yeah the those are the opportunities so when you bought this first house they're only twenty years old you're buying this place you wanna rent it so you're thinking already how do i get an asset yeah how do i make cash flow off of it which a lot of people who are listening right now through either a are already doing that or wanna do something like that yeah some of it is yeah i need the confidence to you know take the leap but the other part is like what i called light bulb turning on so were you reading a book and we're like oh this is this is how this strategy works did you have a mentor where you're parent telling you what's okay so it's really weird there i i was just like searching the internet like crazy for this and there was this forum do you remember fat wallet yes okay so fat well it was a place where you could trade like coupons are like the best deals they had a forum section and actually this forum section had this one thread about buying a house and like making money by buying houses and it had like thousands of responses and i read this thing religiously before i bought this house and i was like this is this is the first house i'm gonna do it and is definitely nervous did you on there like hey guys this is the one i'm looking at here's the numbers yeah yeah yeah here's the numbers like what do you think that's how i learned to play poker there's two plus two forums is this long time forum on the internet yeah and that's where i you i would just read this thing all night and because i didn't know any friends who did this yeah same i i didn't really know people in the in the space yeah actually you know my my dad like knew i was interested and like he had another family like we had another family friend that was interested so he like had me go sit down with that uncle and like just learn from him for a couple of hours what he did and then but then this forum is really what i where i learned a lot right and so that was it that that gave me the confidence to do it unbelievable okay so you did the you did some real estate what were some of the other were there any other notable businesses you did the headphones thing how much were we making out of the headphones thing you sort of you get you get these yeah rough numbers because i don't remember the specifics you know we're buying these things for under a buck and we sold them online for depending we sold her for fifteen or twenty bucks so obviously great profit margin but we didn't really know how to market but this is a great crash course for me on marketing right so originally we only bought a thousand headphones so it only actually cost a thousand dollars and set up the business because you bought that i mean obviously there's was my trip to china whatever whatever but like you know it was under it was like a few thousand dollars maybe to set up the business and then you know made the website and then we're trying to figure out how to market online and i'd never done it before and i think this was at a time where there weren't like your standard ways to do it and like facebook wasn't really a thing but when facebook launched i was actually one of the first marketers on facebook and so here's how it worked actually i think it really like this so facebook at that time when they launched ads for the first time they were ads on your campus okay remember facebook at that time was like only within your campus so like i went to carnegie mountain university so i had access i could put an ad and the idea was like you'd put a flyer for a party and it it would this is this is how like un they were at that time it's insane to imagine facebook and being so sophisticated it now right but it it was like everybody sees it basically it was everybody sees it on the campus and it was five or ten dollars per day to market it day everyone on your campus and it didn't matter what campus you were so what i did at that time was i got friends who went to the university of michigan and like a ohio state and i was just like what are the biggest universities that i have friends at because that's gonna be the cheapest ad space so i got their facebook passwords and i posted as if i was them right these ads and that that ended up being like movies a clever drink yeah i love that yeah and so it was like just like it like you asked about how much money we made i i actually don't remember but we ended up selling eleven thousand i remember our first order was one thousand headphones our second order was ten thousand headphones so we bought them for nothing like eleven thousand bucks and then you know we sold them for whatever a hundred and fifty plus thousand but we spent a lot on marketing so it was a great side business that i would say the money was really great to me at that time in my life yeah in college it's like wow mean if if they make a thousand bucks a month in college like yeah isn't it was an insane it was a great amount of money but more importantly i learned like how to market online right and and like i was we were doing all sorts of other stuff like at that time blogs were really popular and that was how a lot of people got content and so we would do like giveaways with blogs it was just like it was a time to experiment i think at that time there wasn't a lot of people weren't writing a lot about how to market online right and so i had to like figure it out on my own which was awesome yes that's great and so you've done a bunch of different things and so you've you know made a little accessories company i think you did stock ops option just trading at top options trading yeah so this is actually like through a friend of mine a friend of mine really got me into this and we basically realized that you could look at mostly internet companies you could look at like google trends data and at this time which was like like ten years ago the market totally was not correcting for this already right so we would look at google trends data like make an estimate on whether there were a lot of visits to that site or not so we would we were doing these for like price line dot com tripadvisor yep travel to like these sites and we'd basically make guesses based on this like trends mainly this one data source which was like google trends data this one blue squiggly line yeah and we sort of like see what the analysts had recommended and then we basically based on google trends data we were like okay do we think this company is gonna outperform this quarter and so we would do an options trade literally we would do it the day of earnings and that earnings we either had made a killing or not right but we did pretty well and i would say like with the trends data that we were probably right three out of five times which if your trading options is pretty good right and so you've dabble in all these different things from trading to real estate to starting a you know a tech business you're an angel investor right now yeah you've made a podcast and sold a podcast with nobody freaking does so if you haven't heard the pitch to out the page it's now you sold it to kim with give it which got acquired by spotify so you done all this awesome stuff i think it's great because it's kind of inspiring because i myself also don't wanna be one track for my whole life yeah there's some things i know i'll do forever i'll always be interested in the businesses i'll always be interested in teaching which is kinda how i think about this podcast yeah but i you know who knows i i dabble in ten different things what's been your favorite so most fun ones to work on i'm curious about that and then the second is in terms of money making which one do you think was actually the best way to make money was it more investing starting your own company the online online sales of of different stuff options trading real estate yeah which one was most fun which one was the best for money yeah i'd say the most fun like hit some pretty high highs with the auction business and it was mainly because for the first time in my life i felt like boy this is something that i am really good at mh and like it was really like this business development making these deals happen so yeah i'd say like you had to have like some strategic thinking like understanding the economics to build this auction model and like be a people person to connect with these people right and i felt like this was a perfect this was really good for me yeah and i had such high highs when it started to work like i i told you like i had such a low lows also like with my founder and like but when it was working i was like boy for the first time in my life yeah i was like thirty years old thirty something i was like for the first time my life this is what i meant to be doing something that like brings all my like skills together and like my weaknesses i can let go of a little bit and let other people handle right so that was a super high high another high high actually it was not this is sort of counter to this podcast but i spent a year volunteering in india mh and i was doing micro finance and i lived on a dollar a day and actually you know like in india is not as hard as obviously this year but like i learned a lot by that process too and no i think it's just an adventure you wanted to it was a more adventure yeah we no like calculated purpose for going down that no no was an adventure so i'd say like recommendations wise like fucking choose adventure like so give me an example where you could have chosen non you could have chosen maybe a a practical choice or yeah well i mean like when i did that i was a management consultant making a six figure salary at twenty five years old and i chose to move india for zero money and it was amazing and like how did you make that decision like what was the what was like your thought process you're like okay today i'm doing this tomorrow yeah happy be an india we living on a dollar a day yeah i was getting like annoyed at management consulting life and as you do as you do as everybody who you know has worked in banking consulting like lawyer big law everybody knows this feeling and then i had seen this movie it's called rung ascent an indian movie and it was like very inspiring to me yeah so i saw this movie and i was like i wanna do something for india and so just for background like i grew up in america but my parents are in indian heritage and i always felt a strong title to india even though i'd never really lived there yeah so i was like i gotta do something for india i heard about this fellowship apply for the fellowship and i ended up working with k k dot org for those of you guys don't know it's a really cool site it lets you make a loan to individual in the developing world so for example you can go on the site with twenty five dollars on your credit card help a farmer in ghana by an irrigation pump and you get your money back almost always it's like ninety nine plus percent repayment rate but you don't get any interest so that what you're giving up is your interest and so you could just rein you could just roll it over to the next person rolled over to the you put twenty five bucks and once and you might end up helping ten people over the course of a few years or whatever that's exactly right yeah as as you get paid back yeah so i was doing that in india and i was helping set up india for them and there were regulatory against constraints anyway but like the coolest thing was i got to experience so many different things like through the course of this year i ended up we like followed people around who were like in our demographics so i spent a day as a rag picker so rag picker are like the recycle of india they go around it's like in san francisco you see like these like asian men and women like picking up the cans yeah in in india it's like really poor people who like do this stuff for recycling and so i spent a day with this like kid who is probably like eleven or twelve years old just following him around picking up rags like learning what's recyclable what's not it's funny like i actually real i learned at that time that still applies me today like plastics are just not really that recyclable and especially like the shit we throw here it's just actually not that recyclable like things you should use more like aluminum like stuff that that you can recycle it was such a hard job and i was like oh for the first time in my life this is something i really cannot do ever again like there was a time where we like we jumped into a dumpster and like a dumpster in india is really fucking gross like the street is during the street imagine dumpster that's exactly right like the street is so dirty the dumpster is just shit but we were you know we went in there i would realized na people have really hard lives and i think before that i didn't truly have an appreciation for how difficult other people have it yeah because i you know i grew up not in a rich family or anything but like middle class my parents you know dad's an engineer never had to worry about anything in life and this is was the first time i realized boy like life is tough and it made me really appreciate that and also wanna like spend some part of my life in you know helping those people or or something so now what i do is i invest in fintech companies and you know everybody like the bullshit thing is like we're making the world a better place whatever whatever i definitely can't argue that all of our investments do that but i think we strive to try to make the world a little bit better yeah and it's like you know helping underserved could be one angle to it it could be helping people like us just like oh shit dealing with my bank sucks like i want a better alternative so and do you think you'll ever jump back in the operating side yeah to start another business it's a great question like i'm surprised you're you've been investing for as long as you have been yeah it's it's true i i think part of the reason it's been good for me is i'm i invest really early and then have companies working out of my office so the company working in my office like every day i'm talking to them so i get the feeling that i'm working on them and i share in you know some of their highs it's not the same yeah because like the highs are not nearly as high but also the lows are not nearly as low so it's kind of fair yeah so so for me i like getting my hands dirty with the company so i do do that and that's where i get i get some fulfillment but i think maybe ultimately i'm really enjoying investing i'm gonna be doing this for a while you know in retirement or something i probably will start some other businesses nice you have this investing framework sixties t's friend lot pointing this great you said this it's not like super super revolution revolutionary they're sort of obvious things but i like the sixties t's i think that most people it hasn't been put that way i don't think yeah and it's pretty catchy so i like it i don't even know if you remember all the all the sixty now i'm like matt what are i can help you i i hear i'll tell you what i remember but tell it through a story because you invested in you've invested some good companies take you know investment you're really proud of yeah and then walk us through the sixties t's and then we'll we'll wrap up after that sure so we'll talk about flex sport because it's like a few billion dollar company amazing yeah so so flex port really don't know for those who don't know it's like a it started out as a customs broker and now it's like a really all things shipping company mostly focused on trans specific trades or like us to china and that us to china i think is like thirty percent of the global trade so it's a it's a win thing so they're connecting here they're connect the cargo the shippers basically with people with the customers were trying to send receive and then the brokers in between essentially right yeah exactly right yeah so i met ryan and the ceo like five years ago how'd do you meet did you just reached out to him cold or he reached out no he friend of a friend and we met at a party and i was like this guy's awesome like we shared this like love for like hacking stuff so you give you another example at that time we were buying adwords with our uber promo codes and what does that mean so you know how like there's an uber referral you get like ten bucks if somebody else uses a zero referral code yep you advertising we were just advertising our referral code on google and so we were buying uber for twenty cents in the dollar great so we like we totally bonded over these like hack things that we love to do yeah and and then i was like okay like when you're he was telling me he was at that time not you were doing that with him or are you doing that with your other friend with him oh with him okay and then he was telling me like you know he wanna start this business flex sport before he went to yc like all this stuff i like dude whenever you're ready like i'm giving you money yeah but no i i said that early on and it was really strength of team so like the first his team okay like this guy you know i could tell he's somebody's gonna break through walls to to to make success happen and not only that like he'd already been successful he had this other company called import genius so he knew import genius basically a list of all of like the stuff that's being imported in the us s and makes it easily accessible and so he he was doing like several millions of dollars a year in that bootstrap business right in revenue and it's a obviously a related business to his the business that he wanted to start so like he knew what he was doing team check mark team check mark technology so like the second team is there a technology need here fuck yeah like this is all a paper and pen and fax process old school old school customs brokers are like phone banks like you're on the phone and calling people and so like is their a need for technology absolutely okay another t this is kind of a cheap total addressable market okay sure how big is the market how big is the market shipping are you kidding me a trillion dollar market okay so easy easy check or three t's on the way to sit three t's on the way to six is it six or is it five three five four three maybe it's just three no the traction traction yeah so traction was one in this case when i invested he didn't have any right and but with this previous business which was in a related space yeah exactly so you kind of like at some point you make a leap of faith and say this guy's gonna bust through walls and get the traction and also like early traction if you're able to start selling into other startups ups you can get that like i didn't have a doubt that he would be able to get that so he did i have the two of the keys for you excellent tell me terms terms okay so what are the terms of the deal yeah so the terms are fair yeah and and you know so that investment for you now is that's big win it's a big win you're gonna make more of that than you did off any of your businesses you might no probably not but but it it is a very through a normal angel investment so let's say oh i'm listening to the podcast i'm inspired by all these tech companies yeah i wanna write twenty five thousand dollar checks yeah and that's what i was doing by the way twenty five thousand and you know sometimes at at the early stages like you know didn't have that much money yeah i was like you know would you let me in for like they would be like can do i'd be like what's your minimum and they'd be like fifty i'll give be left that yeah i'll do you have that okay i'll do twenty five if you'll let me okay so and then you have to be like i'm gonna be so helpful to your business whatever would because i'm doing it it's some angel investing now but i don't know if i'm doing right okay here's thinking about tell if wrong yeah so i think that i'm gonna be writing checks that are about twenty five thousand on average and i'm setting aside three to four hundred thousand to do it like okay it's like ten bets or twelve fifteen if i some of these are lower checks then i get to twelve fifteen bets yeah and and i'm risking you know let's say that that's gonna be the less than it's gonna be like ten percent of net worth basically that's i think that's right that's something okay if i lose it i lose it but that's how many bets i have so is that you know where were you kinda how was your calculus when you're like i'm start writing these risky check would say my calculus was similar similar yeah and then i ended up doing a lot more of them but i had some early signs of things were going really well now part of it is at that time was a great time to invest as compared to today unfortunately like the valuations were just so much lower yep some of these companies you know invested in that are now billion dollar companies i invested in at five million dollar valuations and now those companies raising a seed round might be like twelve and if you think about it like that's a big difference that's of return half didn't half and people like people really don't think about entry point valuation as much as they really should right so okay so in a in a win state you write a twenty five thousand dollar check let's say whatever five million valuation yeah you it becomes a multi it becomes a billion dollar company a one to three billion dollar company something like what do you make as an angel investor on a home run like that what is the base yeah yeah sure sure so yeah let me just i i think the way just to factor in a little bit of illusion okay so so let's say let's say you invested twenty five k in flex seed so flex sports seed it was at a there there are were many different like it was many different seeds but like where i invested at the first seed it was a ten million dollar cap which was very expensive at the time but i had had faith and ryan and the seventh faith pain faith faith faith hard rt yeah and so he's taking a lot of money in yeah subsequently and now it's three billion dollar company but obviously not three hundred times your money right because there's been so much solution along the way so actually where this one sits today i think is eighty seven times so that twenty five thousand dollars ended up becoming over two million twenty five grand turns into over two million yeah and and so some a lot of people are selling now yeah i'm not i i'm believer in the company so like so it could end up being more of it could end up being a lot more if you believe and like the company keeps their continues to grow like could this be ten x and then you're talking like wow that's a lot of money through an individual yeah amazing yeah okay great and i think the last t if i remember that you had said was totally random totally random so i wanna make we touch on so totally random yeah so it's like when i make an investment in a company i'm investing in a person typically or people and i wanna spend time with these people and if i can't spend time with these people i am not interested in investing mh and it's been like you know the folks that i've invested in i've like spoken at their weddings like it's been awesome yeah and like like so ryan for example like you know as batch parties a month ago a really good time he's investing in my new fund like these are relationships that i like i wanna really cultivate right and for me i have a lot of fun talking about business so i wanna have other friends to talk about business with and help them yeah even if i'm not helping them i'm learning about what they do so the totally random pieces is like are these cool people like can i have random discussions with them right and have a good time awesome dude do you have a hell of a story i'm really glad we did this caught you when you were back in town because you travel around the world i following you on facebook is like following the national geographic it's like oh he's in a tunnel in egypt and he's posting a photo that he's like you know at the top of this tower in moscow or wherever you were a traveler alright so this is awesome if somebody listens to this and they wanna either help you get in touch with you something like that how should people follow you find you twitter is good or you can email you what's twitter handle at pit p i d e s i so for those you don't know so i grew in pittsburgh so pitt and then this this is like short for indian indian yeah and this is like totally lame but i've i've had it since eighth grade so it was my aol capture will have get my aol most of us knew to shed that and lake college we were like oh wait that was stupid i'm no longer that mine was mister apple so i'm no longer mister i don't know what that was but i got rid of it twitter's easy email i'm starting a new fund and just starting to fund race for it it's called better tomorrow yeah and i'm shield at bt t dot vc okay i'm gonna invest in new fund awesome great let's do it a my number