alright we've got our buddy sai bulky on today if you don't know s he is one of the few people on earth who has bootstrap a company to a unicorn status it's a billion dollar company without ever taking outside money the guy's legend he's in his thirties and he's done all this what i liked about this episode is most people we talked to a lot of guys who made it but they're kinda just like you you ask him what would you do today and they kinda just shrugged like i don't know that's what work for me back then but good luck to you and you're like shit alright i gotta figure this out myself sai the opposite he didn't close the door behind him he kinda just puts a ladder down and he's like hey here's three specific opportunities that i and what i liked about these opportunities he's very specific he says exactly what he would do and actually that he's looked into doing some of these things the second thing is that he these are not like moonshot ideas it's not like oh invent the next big ai thing these are just ideas that will just work like if you do execute them well they will work this is one of those episodes where i actually was like writing down what he was saying is was like oh i should do that i literally slack ben i was like at ben at ben call me when you're free call yeah i i got talk about some of these ideas and by the way at the end we talk about money and we ask a little bit about what people's numbers are you'll understand when you get to that part about what your number is i want you guys to do me a favor if you're listening on your your podcast app go to our youtube page obviously you have to subscribe because that's the gentleman's agreement you subscribe when you when when we create valuable content for you all we ask is just for a subscribe but tell us in the comment section what your number is you understand when you get to that part and also you can view what other people's numbers are so this will be like a little bit of a social experiment i feel like i could rule where i know why i could be what i want to from at all in it like a days off on a goal let's try to do an intro sean yeah so s was on the the podcast like six months ago you were a hit people loved you basically the gist of the pod is you have this empire that you own that you've not raised money for it mostly started as a wordpress blog called wp p beginner and then you saw which wordpress plugins ins among other types of businesses where most popular you bought them or invested in them now your empire is doing something like over a hundred million i think you were somewhat vague but i think you said over a hundred million in revenue the whole thing you own gas stations i think you own tons of real estate so you're just you're you cutting have your hands and everything the title last time the catchy title which i thought was really cool size is one of the very few people on earth who is a bootstrap billionaire meaning or has built a billion dollar company sorry as but but bootstrap so not taking external money and did it kind of slow study in a really unique way where you you really grew inside this wordpress ecosystem and wordpress turned out to be really big andrew wilkinson came on and called this strategy the barn on the whale so there's you know a whale and it's a it's a growing whale and if you can be the right barn you can actually just kinda grow with it and you can ride that you could surf that wave and actually build a large business yourself and by the way for the record we have to protect side here he never said billionaire i think i think we said it so that's us he could he he doesn't have to deny or confirm it i tend not to focus on the valuation the the goal is to keep building cool things that our users are loving and with the team that i enjoy working with and have a good if you want sides like backstory you know from we were talked about like when you were a kid what you were doing in your teens to how you built this empire like we did that episode so this one we're gonna do some different which was just we're like hey come back on you're like well i kinda told my story already but we said actually just come in and hang out with us like we do a normal mfa where we're gonna talk about five different things it'd be great to have you here just to talk about those whatever random things that come up along the way so if you want the backstory go there if you want to hang out come here so sai where you made this amazing document you have a another topic on here that i know that's just gonna get that's gonna it's gonna make sean just super horny because he's gonna be able to promote his own thing what what do you have here about this pop while you do go ahead i'll try yeah yeah i i see you know the there's a massive opportunity in in product type services the offshore market especially in industries where the tam is really really high i believe this is greatly everybody's trying to go build this massive big idea business and spending years and years building software which may or may not work or if if you're good at sales and you have some sort of audience taking this model and going into town or not a matter of fact i was evaluating a business earlier today that just came the right table that that's doing product i service that what's an example yeah give an example because i don't think most will know product size service offshore market that's a lot of words sure sure so look we took an investment stake in a company called ci media and they offer custom wordpress development website maintenance basically web mass related services at affordable prices and we can also do it white label so this is like you if you're a small business and you can afford to hire a full time developer you can go here you know basically get a developer for hire kind of thing at very very low rates because the team is based out of in india and you know there's a white label offer there as well so other agencies by hosting companies businesses can add like add on revenue you know by resell c but other example could be take like very large work like bookkeeping right there's this company called bench i use them yeah they charge you between like two hundred ninety nine dollars or four hundred ninety dollars and then more right per month to do your bookkeeping and they're really really slow one of our portfolio companies were using it and super annoying we brought this thing in house but i know that many accounting firms now have offices in pakistan and indiana tam etcetera where they're doing this cfo in task like a very very basic task like bookkeeping in basic at super low cost so someone can go in and say hey we will do the bookkeeping for you at this rate i know a course like she right this is this is one of the companies you been more low them i think that there there's a large opportunity here where you take a market where tam is really high especially a services market and then you turn into a product service you offshore the talent and then you add like a reseller or a white label model i think the the one that i i was looking at was bookkeeping and i think the the tam they're so so large and the key is is is the reseller and white labeling model which is what we learn from sea hawk media so let's let's talk about ci hawk right because you have a tactical example here so sea hoc is basically you outsource wordpress development agency and how much is it costs roughly let's say it cost like a thousand dollar bill website i'm just making this up and you you're a web hosting company and a bunch of your clients are coming to you and saying hey i want you to maintain my website and you're like well we just do hosting i don't wanna build a services department so they will go to sea hawk partner with c and say hey can you manage these clients for me and we do a split so now there are many of my hosting companies that are effectively white labeling sea hoc media team and offering add on services to their customers like custom website design maintenance by the hour you know site optimization hack site repair all source of these services have been product and delivered without you ever building your own team so in that in that same way by the way this is something that we're gonna do on on wp beginner i know team is working on and is gonna go live is we will start offering professional websites so anybody comes to w beginner can get a website done and so on but you can do the same exact thing in every space so let's say bookkeeping i can go to all the smaller cpa firms that don't have the economics to build on their own bookkeeping and just say why don't you just white label my services and this is like you know now joe's cpa bookkeeping or you're getting all the clients you charge whatever markup you want you're paying the x so on the back end it still works the same way so if you're like for example shepherd can can like instead of doing a traditional affiliate model you can do this white label model where other people are are just becomes like your leads i have question for both you guys sean went shepherd inside i i'm sure you you know a bit about this as well when you guys are out so i think sean you guys have people in latin america i think you also have people in asia yeah when you are going out and i don't know how many people you guys have but let's just say hundreds when you're going out and you're like finding these people how hard is it to find them how hard is it to train them and how hard is it to keep the quality high i mean it's the main thing right if you don't provide quality talent or if you're not able to provide higher quality talent than somebody could just easily search for then you don't really have a business so for example with shepherd they have a hundred recruiters like i remember i was doing the investment i was like hey what's this like giant payroll thing i thought there's like nobody here like what's what are these hundred people who are these hundred people where's your office he's like we have an office in the philippines in office in lat and what's in that office is just recruiters who are constantly searching for talent and then basically testing them filtering them and trying because you're like the whole game is people wanna hire overseas they want the cost savings but what you don't want is the average person the philippines so the average developer in lat you want the top one percent the top five percent and so who's gonna do that filtering and that's the that is the whole service of what she does is goes to find that to in order to do that is it hard i don't know i would say it's like it's not like rocket science but it did take somebody on the ground in the philippines who started an office has a hundred recruiters there and then they have a whole system and process how they intake talent and so they're getting thousands of resumes and then they're trying to filter down when somebody comes to us asking for a designer or a bookkeeper how do we give them the best and not the average person so you do wanna have that so that's the like that what side saying is you've already built that hard infrastructure now you could go to joe the cpa and say you need a bookkeeper i actually already have the good bookkeeper here you already have a customer relationship why don't you create an add on service it's extra revenue for you without extra work that's really smart right yeah and for you know same the to echo sean's point quality is very very important if you can't deliver quality doesn't work but the good thing over the years that we're seeing is that talent across the world is getting better so if if you go ten years ago and you're were trying to hire overseas whether it's philippines india you may not have had that same level talent but the new generation much better english you know more technological adapt and so on someone mara hiring in sea hawk for example this this is you know super better talent we know they can build for a wordpress website or you if you're a business owner you're like how do know and i go to upwork that this person actually knows who what they're doing figure anybody can go make a profile and up upwork there's right not a lot of vetting being done here you know that this is embedded person who can do it and it's in ci hawk best interest to bet that person because if that person is working on a client's website for some big hosting company you're not just look gonna lose that one client you you might lose a contract right of white labeling the service for that big hosting company and so are you say you gotta start this for accounting up the product service accounting or bookkeeping no i'm not i'm i'm not actively looking to start it but i'm studying it right now and i talked with one of the influencers in in the accounting space to see what if they're the jv potential i bet that guy is just a thrilled to be around the accounting influencer yeah he's like oh he's got his he's got his top button not button do you like to party like that guys is a thrill so you have another one here which is ecosystems and this is the kind of barn on the whale idea that we were talking about earlier reps so you were like you here's what you know i'll be the first admit i've benefited tremendously off wordpress and the growth wordpress and i'm grateful for that andrew has talked about how he with e commerce benefited from the growth of shopify he got an early start making shopify themes and then as shopify grew his themes business grew and then they bought more shopify apps and you said there's gotta be more of these basically that this there's there's not just those two there are more so what are some other ecosystems that you see that you think are exciting the one that i'm excited about is quickbooks and the zero apps so these accounting platforms are very very sticky i missed a deal here it was a really really good business it kinda like three million dollars under revenue extremely profitable and i i believe there's a lot of value in someone acquiring multiple one of these quickbooks apps or zero apps or maybe quickbooks apps and then you ported it over zero and and so on and and then you cross sell so it doesn't matter if the user switch from quickbooks zero or or why is versa you're still keeping that customer you can even multiply that effect by going and tying multiple ecosystems so you can say quickbooks and shopify or in for us and and and so on i think there there's a serious potential here when when you're looking at these businesses this episode i know this episode is good because so is saying ideas and i'm literally like opening up an email thread be like we gotta do this we got days right now and like it looks like i'm sitting i'm almost like on my toes up ready to like go sprint because i like he's saying things that immediately i could see the opportunity this this is good sean do you know how many use this is shocking do you know how many users or how many customers quickbooks has i would guess like two million i would just guess a crazy number sai do know go ahead i believe thirty i think it's thirty million people have thirty million thirty million customers quickbooks have which is insane what does zero have is it's a smaller but it's it's in the millions as well am i right is is it about thirty or is it even more my number could be old i think i think you're you're you're you're you're spot on there and what do you think the place it's software plug or is it agencies that manage service i think the the software play the one that i was looking at a software play and i've seen like other software plays in this not like the one that i really wanted to missed it so stupid you can see the regret your face do know i've never seen you have like fo this is amazing but like you know there there there are other you know implementation partners or around these that have bill adjacent apps that you can go in and then use that as distribution this is a very essential tool like you're not going to not get rid of so you said two great loves of his life his wife and then whatever this app is that got away i the you'll never stop thinking about this app no i i'm i'm studying the ecosystem and i think this ecosystem you can find like wonderful businesses that but they're not gonna be venture growth they're they're not gonna have venture but they're gonna be extremely profitable and you know that people are gonna keep using quickbooks is zero because they as long as they have a business okay so i'm what you're talking about is the quickbooks i just googled quickbooks plugins ins you're just talking about something like that so there's like that's right there's a a variety of plugins ins that you can buy i imagine they cost money yes how much are are you the biggest wordpress plug in business on wordpress i think collectively when you look at it after automatic we would be the the biggest okay the i and i i we promised we're not gonna dive deep in numbers can you say like the second or third place like what how big of a business would they have also tens of millions of dollars yeah and so how big of a business do you think you could build just on the quickbooks platform or the quickbooks ecosystem i think if you look at the app store you know just like shopify as an app store quickbooks seven app store and if you take couple of apps that might be doing three million four million two million dollars in in that range and you exit by five and you buy those two million doing two million you just build a ten million dollar arr business that may not be cross selling enough so you can unlock more value they might be mis mismatch gems by the way if someone wants to do it reach out to me i would like to invest in that yeah i was studying then if you have a if you're listening and you a quick that yeah john dot com i'll forward you to say you don't worry yeah yeah you're gonna up mafia like where's my cut yeah yeah you wanna there's no direct access here yeah yeah yeah what what them so like when you do i imagine that there's a so there's software like jungle scott i think for or there's a bunch for amazon where you could see which services or products are selling the highest i imagine there's the same for shopify when you're studying quickbooks i can't imagine that that software exists what is studying mean think you're you're looking at the number of reviews that the a specific app has you know all all the signals that they they might be featuring something that's in the popular looking at what's in the new you can google or search in in the quickbooks like a category you know the tags they're using and see how many solutions show up in that and then gauge by okay if only three or four percent of users are gonna leave a review that's probably how many users that they actually have so if somebody has like hundred reviews it that's only four percent of their user base essentially so you could you can sort of make a hypothesis there and say okay this category or this keyword maybe it's receipt management or whatever it maybe has twenty apps and that's that's how big the market size is for a receipt app in quickbooks you're gonna you're you're basically a billionaire building these like the plug ins basically and i think that that's i mean that's that's awesome like that's just so funny because the people listening to this you guys should actually go to the youtube because you're smiling as if it's like too good to be true you're like no one's talking about this i can't believe why is no one talking about this like that's kind of the vibe i'm getting it from your facial expressions i enjoy the game of business and i enjoy find finding these opportunities that allows us to compound compound and and that's what's exciting dude anytime i hear a billionaire talking about where he's founding compounding i'm like talk dirty to me babies yeah like like you're fine so i i should you keep saying billionaire with you is that by the way i'm completely making that up i wanna i wanna respect that i'm i was being hyper it's a state of mind baby it's a state of mind it's not a of mine so yeah let's do open source because i was reading today y comb put out a like request for startups ups they like kinda update this once a year and one of the things and one of the top requests that they had was more for profit open source companies and they're were like we funded git lab and later they named like five they're we found we funded a hundred and fifty of these and we wanna do more like we like this model this is a good model and i was reading it and i was like i think i like i know what it is but i don't know why it's in why it's like particularly interesting or why it's unique and special and so tell us about the open source stuff what what is intriguing to you about open source i believe that open source is one of the most powerful i idea the generation because it gives you many freedoms so anyone from anywhere in the world can look at the code and learn from it imagine like you know having some of the best programmers in the world writing code and then you some new kid in india pakistan or us wherever you are be able to read that code and then when you see something that maybe there's an idea that you have you wanna contribute back to it you can just write a patch and commit that patch and then the project maintain can say okay this is great they can adapt your code and all of a sudden your code is now being used on millions of websites can you explain because this is a kind of counterintuitive intuitive idea right like normal business would be it's our product we hire people they build the product we would never want others to see our secret sauce our code or be able to use it or fork it which it means just basically remix it for themselves and so like i do i don't know is there anything interesting about the origins of this like what it came out was this a controversial idea because it to me it's pretty tie the way you would normally build a business can you paint that picture kind of from first principles and and why would anyone wanna contribute so so well one it's this very very controversial in the beginning right it was copy left you have copyright and this is copy left like hey everything we're building is for the good society for progressing technology for innovation so there's a lot of people that get behind that vision the freedom that it offers in in countries like a lot of people can't afford some of the more expensive enterprise software maybe they're in in pakistan maybe they're in africa somewhere where they don't have the resources to have those kind of tools to build their business and now you have this open source platform let's say wordpress it gives you the freedom to publish anywhere maybe there's censorship happening on any other social media platform or publishing platform and you can self host your own wordpress side and you know put your take out there so that vision you know becomes really really important i think when you look at long term anybody can write code and you can hire developers anywhere so most markets will get competitive and your vision becomes a usb okay and and that's what opens source brings to to the table and it it's going to disrupt basically every established market that exists and there are startups that are coming out i i was i was looking at this guy i talked to this the guy named joseph he runs os s capital and he's deep into the open source communities he's looking at you know various github help projects and he see he's a pretty cool method right he sorts them by the number of stars that means how many developers are really liking that code and then he gets behind them so one of the things that he invested in was app fully which is a notion competitor but open source and a portal so now i can make my own notion and use it maybe i can self host it and significantly reduce cost in my business let's do some examples so there's windows the operating system then you had linux the the open source counterpart and linux is like a what like twenty billion or something that is like a big very big like kind of enterprise and they make their money off just the services right because the product is free that's kind of the whole point of what sources you could just use a self hosted for free but if you want the like is that all that they do with red hat is is it just services that generates so much revenue services add ons you know pre premium versions all that so like ng x for example there's a free version of ng x and then there's the pro version of ng x which gives you a lot more features etcetera to save you time and mean same thing in wordpress the core of wordpress is free and does many many things and then there's then there's plug ins and many of the plug ins are free which gives you a lot of cool things but then if you want more convenience you pay for right additional updates and so you have wordpress which is the free you know open source publisher i don't even know what the closed source version of of wordpress that maybe it's just social media but then you have like android open source ios the the apple you know operating system close source so there's always this kind of like dual winner and and so people have the strategy of just like x but open source like slack but open source notion but open source is that generally like a good like i like blueprints when it comes to business right some somebody told me about a blueprint they were like just super for x the way superhuman just took one piece of work software and was like pay twenty bucks a month but i'm gonna make it like really slick and like incredible ux and just way better design and like a linear was a good example of that linear was basically superhuman for jira for the ticketing system and it worked it's a like a very successful company is a blue is a successful blueprint in your mind like popular thing but open source does that work absolutely i think you take something to have a large tam and then you make open source version out of it that is cost effective affordable and now you grow with the community over long term like i don't think anybody could build what wordpress did as a proprietary software but the reason why wordpress it was just successful was because all the other website building platforms or all other hosting companies that you say that didn't wanna have the own website builder is started contributing to it so go godaddy instead of building the own website builder i mean they have one but they went in wordpress and start contributing to wordpress and and and many other hosting companies that too so shopify which is essentially a hosting company same thing with wix at the core of it they're hosting they have their own proprietary platforms versus wordpress is built by and built on top of by many many many other hosting companies and this share number of contributors are a lot and you you see the same thing and in chrome as well and and others but can you say that okay so wordpress powers how much thirty five percent of the internet probably a little more like forty percent okay so forty percent okay so shopify has a today they're at worth a hundred billion dollars i don't know what wordpress is worth i don't know what the revenue is because they're a privately health company but for controlling thirty or forty percent of the internet you you should be making many tens of billions of dollars a year in revenue do you think the wordpress is over a billion in revenue i would think no so i think when you think about wordpress wordpress is a community project and there is a proprietary company that the founder of wordpress matt moe like started c automatic automatic has good sized revenues they're are private companies so i don't know what what those revenues are but i it be fair to say it's not as high as as shopify but when you look at the collective ecosystem of wordpress and all the companies that are in it you take godaddy how big gets godaddy you take many many many other hosting companies or wp engine and so on and you put collectively together i would say that the market cap will be bigger yeah so automatic was valued at three billion and it was valued at seven billion at some point and it's private these are i don't know if this is rumors are confirmed but it's like published in a bunch of different places and so that's what the automatic is kind of the the the company that like kind of i don't what would you call the steward of the open source program or the open source project i'm not sure what you would call it they're essentially the red hat what red hat was for linux automatic as that for wordpress right they have the same powder yes yeah and plus sam you you get all the developer street head craig bro like i mean matt moe like that guy's right he he's a made man he's untouchable there's no doubt that it's awesome i think actually when i think of like internet heroes i think matt mu is is is up there i actually used wordpress so check this out here let me explain the difference in business models i used wordpress for the hustle the hustle ended up being worth tens of millions of dollars it reaches hundreds of millions people and we are small compared to many of the others on wordpress you know so i know i had a friend that had a wordpress site that was doing a hundred million monthly unique and so there's no doubt that it's the best but look check this out i bought wordpress software called the woo commerce woo commerce was three hundred dollars a year i had a business on there that was doing five million dollars a year in recurring revenue and i paid them three hundred dollars every single year if this were shopify or something else i would've have been paying them i believe fifty thousand i think is a ten percent or five percent so i been paying them twenty five to fifty grand a year and i was like this is a fucking steal i'm stealing from these guys and i i was like i don't understand that this business i'm getting all of the value and they are getting virtually not well well i think the value disproportionately favored in in in for the consumer and that's what you want in a business right you want your users to have value are coming from you i think like if when when you look at products and this happens when you're studying long term then your product can't be ten x spatter in a specific space it it it really becomes all about the brand and the value that you're delivering when customers are using your product like actively so having that value being so proportional makes your business far more stickier then your competitor who might be charging an arm and like i have a bad idea for where you say so where where else have we seen this where the customer just getting an incredible deal one idea that comes to mind is costco and costco is basically like hey we'll sell you the goods at cost plus ten percent and that's just gonna cover the kind of the carrying cost of putting these items on the shelf so like if whatever that bag rice actually costs it's fat plus ten percent that's the that's always the price and we're gonna negotiate the shit out of these vendors by the way to get the lowest possible version of that price and we're gonna use our scale to do that and all you gotta do is pay us a hundred and twenty dollars a year that's like hundred twenty dollars i'm saving that in one grocery trip two grocery trips this is a no brainer and they've built a like you know huge subscription business off this do you think somebody could do that in the software world because i've i've seen a a couple examples of this where i bought this screenshot tool that's really good it's called clean screenshot x and free free shout out for those guys they so it's really good like screenshot tool but one of the ways you can buy it is off some some service that like it's like it has all the random software tools put there on the shelf like like a costco like an amazon for random software tools and it's usually at a lower price than if you go buy direct then on the site and i think it's if you have if you have a membership to the overall thing then you can just get these tools for free i kinda wonder if somebody could do this with the open source community and just say alright pay us thousand dollars a year and then you're gonna get you know woo comma you're gonna be all these things at the lowest possible price so you're just gonna get they'll go round up all of the software and say hey you're gonna be selling at cost plus ten percent and we're gonna have this you know the subscription revenue to for our members who what we wanna shop there that a how bad how bad on a scale of one the terrible what where is that idea two sided of marketplace are generally a tough business to to build so there are challenges and there's there are challenges in in in the model but but you know you you could you can try it and i think there there are companies doing it i if you focus it on as maybe a sub subset let's say agencies and you say hey development agencies we can get you access to these offers at a lower price probably that's where i would start and then you try to make it broader versus saying we have every software understand because you have to do some back integration the best sdk a lot of indie software don't have the ability to have reseller models and where like hey here's here's my thing take the payment give me money in the back end that's generally not software provisioning works but that there's right a little bit more than nuance there than what costco was so what does this os capital doing they basically you said they go through github projects and they look at like which things have like some combination of engaged users large tam and what do they do they invest in them or are they at they build products for them they're they're investing in them and and then you're investing in the open dash community he's like what they just give hugs and shit what was the money of this whole business we going on they invested five high fives no i no actually they're they're they're investing capital in in those businesses and helping them come into market like i mean if you look at git lab for example it's like eleven billion dollar market cap right now so like app absolutely going after the notion market or or like cal dot com going after the scheduling market i think we're going to see many of these established companies that might be unicorns right now in the project management spaces and such get disrupted by an open source solution and then what's gonna happen is like you and i can take at flow and say we're making notion for doctors and we can take the code for it make it better and then contribute back to it because the way the licensing is done so there will be flavors of these open source software that that will get created like there are flavors of wordpress that are created and that's what makes it so disruptive because like a doctor who might be using notion we'll say well i wanna go use this tool because it's it does like the extra five percent the notion won't well which categories and products do you think you think this model would work for or you're like you see a particular product category you say if we if we did if we attacked that category with this open source blueprint or framework i think that could be a winning combination i think the open source crm that that that that does a well done a job we'll we'll be will be quite disruptive and and segue to our sponsor play ad maybe that but i think you you you you take you take any you know large tam market and and software and you add open source component but like san stability ai they're basically open but open source they're the ones who make stable diffusion right it's how bigger they i mean they're multi billion dollar right my biz ai hype cycle they're they're very big right but but people actually use you know stable diffusion a lot right it's like it's a big project we invest i sam you invested with me right in cal dot com which is like the cal cal leap but open source competitor because cal is like really expensive and the cal dot com guys have done a good job of building the open source version of that i really like this thesis in fact i think this os uss capital thing is really smart like there's a few like strategic venture fund ideas that i really liked this is one of them another one that i had heard was somebody who's just taking pro so they're like oh you do all the work of finding the company you know thirty percent of them are gonna die or whatever before they raise their next round but the of the ones that raise their next round you have pro rat you could top up and keep your percentage but most investors don't wanna do it or don't have the capital to do it so these guys are just pro rat and that's pretty smart i think there's a few like like strategic venture funds one i really wanted to do was just a flipper so you basically you would say hey i wanna invest but i'll be out when you raise your series a i'm gonna do i'm really helpful in this zero to one but as soon as you get do series a i'm out because a normal venture fund is like seven to ten years and you're hoping for this like thousand x outcome but the seed to series a valuation lift is like three x and it's usually in twelve to eighteen months and so if you could just pick well of like what seed startups are most likely we get to a series a or you're just in an environment where a lot of companies are able to raise their next round you can flip in for the founder it's great because you're like cool i could take this capital today but it's actually non d diluted i'm like they're gonna be out by the next round and that same those same shares go to the next investor so it's actually less d diluted than normal capital but wouldn't you be accused of like a pumping dump but you're not pumping you though like when somebody buys a home and and then sells it a year later is at a pumping and dump for like no like well no because the well i would argue a home has like realized value which is but that's what how from a seed start up when you invest or pre seed start eighteen months later they've now built a product they have customers they have some traction they their story is so much better right like they are a der startup up in some way if they're able to raise theoretically but not always usually you're right you're right but but the risk goes a little bit lower and you you were in the you entered notice he stated at the the problem just like a faux pas like start investing is supposed to be this like true believers i i was in and i'm here for the long haul and like you're gonna change the world whereas when you sell at the series a you're like oh you might change the world but probably not yeah all i know is you changed my bank account you know by three days if i if i sold this right and so i think that's the problem is it's so like it's a anti signal like nobody wants to see that your first investor wants out right away it's such a bad signal so you would have to first build your brand of this is what we do it's not like for any company we do it doesn't mean anything about that we do this with every company we invest in and you'd have to frame it not as like a quick flip because that sounds like self serving you'd have to phrase it as like non d diluted it's like we're are the early stage guys we're really helpful early we don't know anything after that and like we want you to not dilute yourself so much so take our capital because we're gonna basically give you back those shares to sell to the next guy rather than just losing more and more equity as you go yes it's still very very high risk you have to eat very good picker and say yes this was gonna go over from fee to a but like i looked at my portfolio so i looked at like a hundred companies i don't remember where the exact numbers so on top of my head but basically it was like out of a hundred angel investments that i did that i looked at what percentage of them raised the next round and what was the average multiple of the companies that raised the next round you just multiply this together and you'll tell you like what's your expected value and the the math math when i did it last time which was basically that enough companies raised the next round at enough of a multiple where you would be getting a a good i think it was like thirty percent i was i the the math was basically that i would be making thirty percent on my money which was fantastic and better than almost every venture fund out there but i didn't i didn't actually do that strategy because i thought of it later and also it's really hard to get around that perception problem i thought of it when one of my legacy companies raised the series a and i was like this company is not gonna work i wish i could just sell right now and right that's you're proving my point you're you've just proven my point point there's your point no that if i was my point that you could you could well you're not pumping you aren't dumping though yeah you're dump yeah exactly yeah that's what you should that's what we should call it your dumping schemes speaking of numbers i tweeted this out this morning i i'm curious to what you guys will guess so i asked a question i'll tell you like i i do the background so i was talking to i heard this like coach like a exec coach or whatever and i was telling them i was like yeah i'm to he's what your goals for i like i'm to do this this in this and one of the things i said i was yeah if i sell this business i think i'll make and i i don't what i was i i make twenty million bucks and i was like in i was like that'll be great because then paul i was like i was like i don't actually i have no idea what i have no idea what will change and i was like i was like because no it'll be cool because then i can then my life will be better because i'll what will changed and i was like wait what am i doing what is there any benefit to incremental and so i i started thinking about this i was like i do want this however i do think it's a little silly that i can't point to maybe an area of life that i want to improve using the money money's is a tool i believe that but i have no idea what i'm gonna use this tool for i'm just going to home depot trying to get a tool and then i you you what do you need this drill for and i'm like i have no idea oh that was a little silly so i tweeted out a question today i said how much money do you think you need to live your desired lifestyle because i think i'm very close to just living the exact desired lifestyle i haven't don't really have any more like desires of what i wanna change so what is money good for in that sense and so i asked you why i said zero to one million one to ten million ten to fifty or more than fifty fifty plus and i said how much money do you think you need in your bank account in order to be living your desired lifestyle one of the answers got forty seven or forty eight percent which one do you think it is decide and what's your answer yeah well i think if if if you're if you're looking at between those four choices most people probably set ten to fifty that's what i have guessed okay that's what i would have said myself also i think that's like the like kinda my my nothing is perfect not utopia where somebody's feeding me grapes and shit like that but like the what i actually want what i actually care about i think is is totally achievable in that range so do you and so sam's question was a good one what what would your answer be like you've surpassed all these great what what but what do you think actually made a difference in your lifestyle where you're like oh i now have the money to live the lifestyle i want i call it the threshold number you know i have a very simple life i don't i don't have these crazy desires of wearing the fanciest clothes or any of those things for me the the ten million dollar number was more than enough to have a good life you know i do what i do because i enjoy it what would right i'm wanna be productive member of society and this is fun for me but you know people might say their number is more do you think anything changes like maybe like as you go as you go up what gets unlocked at those levels of the game the only ones i could think of i'll just give you my answer so i was like i think if you go above fifty or go above a hundred you know private travel is like you know the big unlock you know you don't have to think you just fly private everywhere do it and do all that i think that's the biggest one and the second one is if if you really care about you being the one to give to charitable causes i think that's the other thing that you could do is you could make large charitable donations i don't really know what else gets unlocked past that but you know you might have other ideas am i missing anything what gets unlocked over for fifty oh i think it's it's just the level of convenience the that you get whether whether it is and but whether it is through private travel whether it is through private help and home and and so on and then in the level of that that you can you know access just just get get elevated also you think there's a difference between fifty and five hundred like is there like a number where you think the level of convenience is mostly quite similar like is it more convenient to have a significantly larger plane that a smaller private plane yeah yeah i mean it makes the difference on how far you're trying to go the poor is small planes putter out it couldn't make it across the atlantic just i i mean yeah yeah like you know you can spend any amount of money that you want if you have money you can spend it they do you really need it i don't know and that's debt based on each person but even if you look at taylor swift right she had to take she took a private jet but it was not hers like she contracted the service to fly from japan or wherever she was to super bowl because her own jet can't fly out far right now does that mean that she she can't afford a bigger yet no i'm pretty sure she can but it just doesn't make financial sense for her to maybe have a global eight thousand or something like this what was your numbers sean mine was in the ten to fifty i thought ten to fifty like that's that is past that is there's very few things that are as appealing or just like big diminishing returns but this is too big my my number my perspective ten years ago would have been one to ten you know i would've have been like oh ten past ten what is it matter and now past ten you're like kinda matters and maybe that same thing happens again i'm not sure that's why i kinda like i said you know wanna ask other people's opinions because again i think a doesn't get talked out talked about much but clearly we're all acting on it everybody who's listening to this podcast everybody on twitter you're all playing a money game and you're spending a huge portion of your life earning earning money and it is probably worth knowing what's worth where does money really improve the quality of your life and what are those thresholds where and what are the things you can unlock and so you could decide for yourself if it's really worth dev voting this much energy in this much time to accumulating more i think ten ten gives you a a base you you've got your fortress of sol ten is enough that you could tell most people to fuck off because you don't need much from anyone i actually still think you can lose ten if you make a handful of bad investments what side do you look at me stupid because i i lose the hundred if you make a handle of that investment no don't no number for you can't lose that's true and i think i think a threshold is ten i think another threshold is fifty that that's my current thinking what do you think happens at fifty what's the difference i think at fifty you can fly private safely like would that like it's no big deal and you can fly private most every time you want and that and that's the only difference well you could have a you know at with ten million dollars liquid i wouldn't buy a five million dollar house certain number your nanny speaks spanish at the next number she speaks english and spanish that's number she speaks english spanish and france right that's what else changes but like sean where you where you live you live in one of the most expensive like fifty mile radius parts of the world like a really sick house is probably six million dollars right yeah you're not gonna buy that way if you're worth ten but you would buy that if you're worth thirty probably right challenge excess so so like we something i will but you know no matter how big your house is you can you would only ever be sitting in one seat at a time so it's it's important to have like perspective to not let the the let the goal post keep moving you know forward in and for what like i mean there they're the house here that's a hundred and seventy million dollar for sale like you know not too far away from somebody who was at the camp with us i won't say their name but they they have a like a probably like a fifteen twenty million dollar home and they called me yesterday and they were talking and they were like oh sorry i've been on like i was because i called them they were like oh i've been house sunny all day a house honey you just bought like your dream home last year and you told me like we went crazy on this house because it's our dream home and it's it's it's what we've been working for all these years why we we made all his money and then they were like he's like god he's like yeah but he's like our hvac broke and he's like he's like you know that's fifth he's fifty grand to fix that he's like my the guy fits our fixed our ac he's got like engineering degrees i play pay two grand a month to our are pool guy a pool guy make a two grand a month he's like in another four grand for landscaping he's like it's just annoying he's like everything that's it's all my problem he's like he's like yeah it's great when we entertain people but most of the time i be like you said i'm just sitting in one chair i'm sitting in the same chair i have whatever ten thousand extra square feet or twenty thousand extra square feet of like empty house and so and it was just like such a visceral reminder of the like the age old wisdom of like first you own your things and then they own you and it was like he was just explaining all the ways that his thing now owned him and he had this like reaction where he's like i gotta change this because like this is not my dream actually i thought this was my dream it is not my dream actually because i don't wanna be owned by this where now my monthly nut is so high i have to stress about you know not all these things or when things break it's such a colossal break i feel so wasteful you know that i'm spending this much just fixing our whatever pool or whatever it is when in reality that money could like i remember what that money could do for i used to live all year off that money now it's just you know going to to one little thing how many square feet was this place i don't know it's probably like fifteen thousand square feet or something like that that's fucking insane that is so insane is it tip thousand it's more than ten less than twenty i dude that's like you you need that's a commercial property basically you need like a property manager that's insane i think it's important one of the things that a lot of people don't think about is the holding cost of anything that you're that you're acquiring whether it's a property or business and what you know understanding the holding cost the real holding cost may help you not make our decisions there's there's other hidden cost right holding cost is one opportunity costs another that people usually discount there's a great tweet that was going viral i if you saw yesterday say but the guy said he goes he goes i think making between a hundred fifty and two fifty k is the worst it's like what he's like is they say it's the worst because it's too much money to just say fuck i'm just gonna go do this thing i really want so it's like too much money to walk away from but it's not enough to ever like actually get escape velocity financially because you're paying a huge amount of taxes and then you probably live in a your lifestyle creeps up and so and i and i saw like i see this so often which is that there's some range i don't know what the the the numbers depend on where you live and what industry you're in but something like two hundred grand to five hundred grand is like that it's that's the real golden handcuffs and that's the real like danger zone that doesn't sound like a danger zone it's a hit but it's a hidden in danger usually because if you're making that much you're probably very talented however it is so hard to walk away from that amount of money if you once you get to that and take a risk maybe start a business or take another job that might give you all kinds of other things but maybe have less certainty or less annual guaranteed pay and i could see that tweet going viral because i think it resonated with so many people the guy had like no followers but the tweet had like twenty thousand likes you know i mean it also depends on your personality you my uncle to move to us forty years ago he's a teacher and you know teachers in america don't make a lot of money but he's still retired millionaire so think it's all about how you invest that and yeah compounding i think that tweet is really fucking stupid what i think that i think that if you make two hundred fifty thousand dollars a year you can live a very rich life i think that you could have a beautiful rich life i think you can retire by a certain age i think i think that that is an out of touch tweet i think that tweet is true if your goal is to make tens of millions of dollars or be your own boss at at a young age i think it's think it's true for the people that's true for right which is if you wanna be an entrepreneur or you want to be financially free and not have to trade your time for for a salary right no you can be financially free on two fifty a year if you safety and i don't know you i i live in california i'm using in california is my frame of reference here yeah where you live definitely changes things and what your burn is but you california like a lot of places like stuff i don't know like what's the amount of money you need even if you're living in texas like do think is the real amount money you pay two fifty a year and then you have taxes so you're taking home i don't know what the math is but like something like one seventy five or one eighty something like that and then you pay for life and you might be stash away a hundred k a year how many years do you have to stash away a hundred k in order to like be financial financially be be financially free it take some a decade plus yeah a decade decade right and and even it gets to two fifty that takes you usually seven to ten years to get to making that right seven years to get to that that sally threshold too right so now you're seventeen to twenty years in that's a lot that's a long time side what are you gonna say i you don't like what sean saying right now i could tell i think it's they're there's certain something about the guaranteed payment and it really depends on your personality like the folks that are gonna become an entrepreneur they don't need to walk away from two fifty all the times like i mean when i started i had nothing knows that right so a lot of folks start out and they don't have a salary and they they just kinda go and pursue it the you if that's what you wanna do you go do you you have to have conviction and i think that's that's key to success anyways especially as an entrepreneur one thing i'm not giving advice to other people for what they should do or what the average versus you do i'm saying from my perspective of what i would want in my life which is the only thing i can really speak on is the things that i know about myself right and i know that most of the people who listen this podcast are gonna be people who are like minded otherwise how did you get to episode five hundred if you weren't into entrepreneurship or you weren't like minded and and in some way with with our ethos and for people in our world i think that it's a valuable message right like i i think there's a lot i know a i a lot of friends personally who are in this situation i know what they actually want out of life i know where they where they live in the lifestyle they desire and for them that is a very dangerous interesting of course to an if i'm just speaking generically that advice totally doesn't apply it's totally out of touch and it's it's a total overkill and get that i think that's fair we i i wanted to give you an ali wanted to give you an ali you it's like i shot myself on the foot and then i put a band aid on at the van i'll go where do we wanna go from here let's do a couple other ones that you have on this dock so you have let's go to the bottom here with the the strong strong opinions or philosophies and so you talked about acquiring a business versus paid marketing i think this has kinda interesting i think most people don't really think about this i know when i was running my company i never thought like hey let me grow through acquisition that wasn't so it wasn't on my radar what's your point here what do what do what do you think is the the takeaway i think when when you think about growing a subscription business there's only three ways to grow it you get new customers you expand existing customer you reduce churn in the new customer bucket most of the people are always looking at ppc and especially a certain scale you might be spending a lot of money in ppc paper click paper like exactly they're click advertising and your c might be high especially in a very very competitive market in that sense it makes sense to just go pay revenue multiplier to buy a business that has the customers that you that you're targeting anyways and then cross sell and i would say that that's that's something that more ceos need to think about when they're thinking about growth do you know who knows about this yeah boy i sold the hustle to hubspot because i actually didn't know about this they knew about it with they they made the right i know about it in that i know a guy i i know a guy so i know a guy who did this and they bought my business that was the whole point of hubspot that was the whole point this podcast now i don't have too much information i haven't been part of it forever but i think it's working so are you talking about buying other like products or like content sites anything in everything i i was looking at this publicly traded company and where i was looking to potentially establish a sizable stake and their revenues were growing steadily but not exponentially because they couldn't compete with the larger competitors but the reseller side of their business was great i one of their reseller were actually making more money than this company was but what's a reseller like can you give an example that isn't related to this company sure so like i could for example resell hubspot or any any other you know hosting i can be hosting reseller i can make my own hosting up me selling amazon i can be amazon reseller on and so so for this business they basically just acquired one of their reseller and boosted their revenue there's like the same customer that they had that the re and bringing it in i wanted to work with the management and just kind of fund their acquisition of the reseller because the margins if if it was in house we much much better how can a reseller make more than the main thing if you're just resell and then presumably giving a cut back to the the mothers ship how does the reseller ever make in no it it's a it all depend them up pricing and how you're licensing and what you're charging on on your end okay and so like i let's say if we we both could be drop shipping the same thing and i could charge like a five times premium because i know how to market better and gotcha you're charging only two x okay right so but but that's just one example that you can you can look into your own ecosystem start acquiring your reseller and and bring that customer in house but also what helps hubspot did the content site makes total sense what was zen just recently did with klaus makes total sense and and so on so i think that when when you're looking at you know acquisition and and growth like in i'm talking about acquisition from like new customer acquisition think of i m and a as a as a viable option especially when your ppc budget is is high could your wordpress and empire have existed without you owning wp beginner so wp p beginner for the listener by the way it's like a blog if you google how to set up an email service on wordpress wp p beginner which site owns always shows up number one so would your empire have existed without wp p beginner well and no the answer is no but for many reasons no i i think you can't build solutions to solve problem that you don't fully understand and for me to be able to build the best solution in the market i had to communicate with the audience i had to understand what their pain points and that i believe was our biggest advantage a forced the marketing and having the audience is very important too very very important but i think that understanding of the pain pinpoint is crucial like for example in talking to their customers and also our my various company founders and gm i realized that we were not happy with their help us offer so we went and an acquired stake in groove right which is a help us offer that will drastically reduce cost for anybody who's using zen for anybody using helps but now i know that like certain customers that are that are using groove may also want our other solutions and i know that many of our customers that agencies and so on they're all using a helps you know help desk software so i can you know cross promote groove to them and say hey if you switch from zen dash or whatever you'll say forty percent if you if you're an agency you using front for your communication switch here and you'll save eighty percent so that level of synergy guess unlocked and can be quite lucrative can we finish with these two like life life lesson type things i think they're both good and i i know we're on time but i wanna do it anyways compounding goodwill is the best form of compounding what do you mean by that i think too many times we are very transactional in the relationships that we're in it's you know we're doing something nice and saying hey do something back in return for me i think just giving with no expectation return a lot of us are are very smart and sometimes in that we can be kinda you know a holy you know and and and not so nice so i think intellect is a gift and kindness of the choice and if if we choose to be kind over long term this this comes back multi multi multi folds so not letting your ego the keyboard warrior get to you and then you know i'm sorry then you're you're hundred percent wrong yeah just just go going along and we're you trying help out wherever but you can even if you feel like you're in the right sometimes it's better to just be kind anyways yes know sometimes i i get stuck on that where i'm like this is but this is right that's what we said and actually it doesn't matter where we said i should just suggest in that moment it's it matters more to them than it does to me to just let it to just be kind and just go their way rather than than mine i've learned that lesson in the hard way a couple times absolutely absolutely wrote this guy's named guy spear i've seen this guy around but i don't know him who is this guy he's got something special he was some conference thing right that people really like who is this yeah but why is he get the example of that yeah so he he's a really good friend now and we're in a form together so he his conference is called value x very well known value investor had a book as well and you know he talks about compounding goodwill in his book and then intelligent investor educational value investor actually and i'm always really really amazed by his level of generosity the amount of like hey you need this let me just connect you with x and y and the and long term what he's been able to do is build this amazing network of super duper talented people that like you know if he rings they'll pick up and you know help out whatever and nothing nothing in in returns i think he is an amazing example and i learned a ton from him even you know over chicago a couple months ago and he gave me an idea to acquire like a the very cool deal idea of i was doing acquisitions and then low long story short i was able to actually use it deal came and used the exact tactic to make a make a purchase in a very tax efficient way so i think his ability to just you know do that as really good but i you know i don't know you that while we're we're friends but we don't hang up too much if i had to guess i would say that you're a very shrewd negotiator and i would say that you're probably a very disciplined and firm manager i think you're probably quite nice but i think that like you're a very disciplined person which sometimes people would say well you're just being an asshole or something like that you know if you have enough employees some of them are gonna think that about you how are you balancing being a nice person and also like trying to get the best of a deal or trying to capture a little bit more value for yourself than for the other person i think not all juice have to be squeezed if you think about value on a very long term way so part of the discipline is to say okay well we don't have to squeeze all the deals today you know you that that's the whole point about compounding goodwill and if if i acquire something for a founder and let go a few percentages because that helps me have a great long term relationship with this person that's a worthwhile decision rather than saying you know what you're down and i'm gonna like you know kinda crush it and that that that's not good for reputation long do you go into do you go into a negotiation saying here's my threshold of i can no longer do or i won't do it at this number but i will do it anything below this and then you go with like a number and you leave room for that negotiation or for that threshold and then you just don't ever cross that particular number like is that a like super calculating about it like well like a well because i know that i know that he's a value investor and a value invest sir they like at some point they're like you you make money on the buy you make money when you buy something at a low price and so like there has to be like a threshold of like it doesn't make sense after this and so i just didn't nice guy anymore the just because you're winning it doesn't mean the other person has to lose and i think that's a very important aspect of compound and all you know that that's also the example like you just pick you know you're very smart you don't have to prove the other person wrong you can you can agree disagree or move on and just saying okay you know there's fine maybe it's sports while considering this and you know letting that conversation be in and and and going away but of course business you have to be very very disciplined if especially as a capital all and that's that that's that let me tell you guys a quick story as we wrap up here that was like the best good guy story that i heard i i heard it on another podcast but apparently adam sandler adam sandler was in new york he was taking acting class classes and the the teacher was like hey i wanna take you out for a beer let's talk so teacher takes him out and he goes look adam them you don't have what it takes and i just want you to quit doing it now because i don't want you to waste two decades and just not gonna go your way i wanna show you love and respect by telling you now obviously ten years past adam sandler still doing this he's an epic star he's at the top of his game he's at a bar in new york he's with his friends he's with his buddies he sees that professor that teacher out and he's and i imagine in his head he's thinking like well should i go rabbit it in his guy's face and being like told you i win he walks over to the guy and he brings his buddies with him and adam looks at his buddies he goes hey i wanted meet i want you guys to be professor blake blank they were the only professor that was kind enough to take me out and buy me a beer and i heard that story and i was like that is one of the best stories i've ever heard about treating people respectfully even though you know you may be a little bit angry or you didn't like that time but sean did you use saw that saw that clip i love that story it's brad pitt telling the story by the way which just makes it even better you did good but brad pitt tells the story which a little bit better i think just hey no i saw andrew san santana say it oh okay maybe there's somebody else i think sam did the excellent y'all yeah you're my brad sam both both both hot guys from missouri i'll take it yeah sai thank you very much that's the pod thank you i feel like got rude world i know i could be what i want to put at all in it like the days off on a go less travel never looking back