#5 - The First Viral Website: "Hot or Not"

basically i had nothing to do i was just going out drinking with my friends all the time like almost like five days a week we have the system sending the stats like at noon and at midnight ten thousand dollars fifteen thousand dollars on a good day like twenty something thousand dollars okay and is it recording okay okay so what is this so something that entertain me and so i wanted to create a podcast which was first and foremost just an excuse to hang out with people who i haven't been able to hang out with as much so one way is to say hey let's go grab a coffee and the other way is to say what if we recorded so that other people could be a fly on the wall mh and hear stories or chatter random stuff and i'm not trying to do it educational so for me it's stories so stories is the part where so the podcast is called my first million and the reason i picked that is because the audience that listens to this they are you know entrepreneurs already or entrepreneurs kind of thinking about hey you know it'd be that's the dream i'd love to sort of quit my job and start a business someday yeah and i remember for me and i think for this applies to many people which is the idea of a million bucks is like a magic number even today whenever it's billionaire still if you if you're a thousand air yeah a million bucks sounds like all the money totally understand and so fact when i made my first million i put it all in one account and i went to the atm just to look at it yeah and i and i withdrew money so i had would have a slip of paper that said i had a million dollars and framed that what you do with the slip yeah well you know the funny thing is like then we had all these jokes because i had these atm with the million dollars on it and we were just joking around like man we should like keep these in our wallet and then like when you give a girl your phone number and you just like oh casually like let me let me write it down let me write this if everyone had phones or well let me write it down on the slip of paper i i have it right never actually did it but it was a funny it was it was a funny idea and actually it turned i remember like then i was i was searched googling the idea and like there were companies i remember that sold fake atm slips online oh wow so what so you want the first guy thinking about doing this that whole new industry there yeah so so basically it's called my first million i'm talking to you about how to made a million in all different ways so yeah some people are tech entrepreneurs mh start a business some people made a million bucks selling mushrooms in their mushroom farmers some someone's they didn't crypto cbd mh you know all the different types of thing real estate and so i want to tell stories so that the listeners basically here man first there's a million ways to success you don't have to follow a particular track right and be just a little bit of inspiration and entertainment about how you know these stories tend to be really interesting they kinda come out of nowhere wasn't a perfect plan it wasn't a straight line that usually has ups and downs and and so i wanna tell those stories you know like in in harvard business school they have these h b cases right and everything everything in those cases is like oh you know sean was looking at the window at the charles river thinking about what was what he was gonna do for his company and the solution is always like to give you all this data and then at the end like it's like oh he did this and this and this and this and and then he did that and that and that and that it's like oh look like how like it's everything's like the solution was like a neat package right and in reality you like you know like the guy wasn't in you know he was not sleeping and like he probably did twenty million things before he did but he actually ended up doing or she whatever but you know it's it's funny because like it's it's always like that but it's reality is never like that you know what you mean to exactly nice and so i'll give the brief intro so we have james hong on the show entrepreneurs started famously a company called hot or not one of the first tremendously viral product before viral was really even a thing i would say and now angel investor all around good guy i'm excited to be talking to you last time i talked to you was like five years ago and one time of deal so it's good to good to reconnect and so i always start with you know not kinda how'd you do it but a different sort of question which is really did you always wanna make a million bucks like when you were growing up did you wanna be rich was that a goal of yours not necessarily i wasn't really like oh i have to be rich i my mom tells me that i drew i kinda remember this in third grade i drew her a picture of my house and it i just remember it was on the waterfront and had like two helicopter linen pads and so maybe maybe i did but by the time i grew up by the time with your college i was i wasn't really like i need to be rich but i did wanna do something you know what i mean like i didn't wanna be a bored the thing i learned at my first job with which was at he packard i remember this when the web first came out and i was doing basically sales support for a technical product and i created a website because i was tired of all these people calling me with the same questions i basically eliminated my job and the job of two other people my coworkers we all got deployed onto other things but i remember thinking like they gave me a bonus of like you know they raised they gave me a raise of like five grand or something like that and i'm like i just eliminated like you know three jobs that was probably like you know back then like couple hundred grand or something like that and i got five grand and i just remember thinking like i'll never make as much money as a value i deliver in a company because a company a big company at least has to kind of pay people based on kinda like the median value that any given person that the company will provide right right i think that's kind of the one thing that's changed a little bit like at google and that facebook is that they're now willing to be like oh wow like you created like hundreds of millions of dollars in value then maybe they don't maybe they still don't give you a couple hundred million be like we'll give you ten million right so at least maybe maybe it's not that different today except that things operate at a higher scale and that they're able to because it margin is so high but in any case i was like you know screw that like i'm i'm gonna go work for myself because then i can actually extract you know what i actually yeah rate it most people don't see that so if you're at a company and this is not because companies are evil this is really just a standard way you have to operate you can't if somebody's ten times more productive ten times better than their peers you can't pay them ten times as much usually yeah that's exactly the point people make straight up more money at these big companies than they would being fairly successful as an entrepreneur you know hitting a double or hitting the triple even you know so and that's because the scale of these companies is yeah because it scaled in the dollar company margin is high right that's really the difference so and so you you were was a straight out of college that you were at he packard or that was straight out of college so i was like forget it because in the meantime know if funny thing that happened is this is ninety i got out of college in ninety five and where'd you go to school just i went to berkeley okay and did engineering electrical intellectual engineering computer science degree and the funny thing is like you know in ninety four i remember summer of ninety four that's when mosaic came out in the first web browser you know coming out of berkeley everyone who got good grades went to grad school or you know at worst got got the good jobs which the good job was like going to intel or hp or whatever right and i went hp and meanwhile our friends who were not as strong students who couldn't get into grad a good grad school who couldn't get a job at hp they ended up taking jobs at other places that we'd never heard of like ebay and yahoo or yeah so like around night around ninety six or went at ninety seven me like ninety six like whenever yahoo went public all these friends got rich and that's kinda like when you realized that like oh like what game should i play exactly right win because he was like i lost when you're when you're at a you know when you come straight out of school you're still thinking oh whoever gets the best grades whoever works at hardest as blah blah right deserves the you know the big prize and then you're like wait what just happened and that's kinda like when reality hits it's like you know what like life is not i mean there's a lot of things in life that determine how you end up doing and i mean a lot of its luck a lot of is just circumstance or whatever and so anyway i realize was like i'm not gonna get rich at hp and not only that i didn't get the value of like even jobs this that i you know got made more efficient yeah exactly and so so around that time i was okay screw this like at that point i was like i'm out of here and then i was like well i was either gonna go to business school because that back then everyone thought business school was was a path and actually to some degree it kind of was because back then to start anything you needed to raise venture money mh and it was easier to raise venture money if you had either a lot of experience on the engineering side or you know like it was nba vcs funding other mba right so it was kinda seen as a path back then to get an nba to be coming on today you don't have to do that because mainly because a cost is so much lower of starting up right like you know like back what did you need to start back then is like oh to start any company well first of all certainly you needed a sun right you need a a box from sun to run the web server and you know that might be like half million bucks or something i mean like just to get started cost a lot of money plus there weren't there weren't as many tools okay it was expensive you might if you wanna buy the box to play just to put up a website with like you know like with a database on it like people thought you have to have a million bucks at least mh right and so nobody has a million bucks lying around today what do you need for that nothing i mean know five hours and i mean like you get your you get a free box you know free instance from amazon whatever it's like it's nothing it's virtually free yep actually when we started hot or not when it first started taken off it was built on a pc i got for free from e trade i think for opening an account five hundred bucks in it it was like the ding is she had no memory or anything but it could run as a server not very well but it got us online right and the first thing we we thought was like we need to get a sun machine like when things took off and so we got a sun machine we were leasing through racks space i think at the time i remember distinctly like hanging out in front of some restaurant in palo alto and larry page saying oh yeah you should buy from rack which was was one new rack mount system company and it turned out that like my neighbor two doors down was the guy the guy who he was like number twenty at google and he was like he was like the remember they used to say there we have a neuro surgeon on if that was him and he was in charge of scaling all their data center ops and so he was handing and he was like yeah guys you should get and this is kind of an untold story about google's you know one of the reasons where they were able to win and yeah so crazy people don't talk too much about this which is they were using commodity cheap hardware yeah and instead of these expensive specialized systems that were harder to scale because they're the robustness of a system with a thousand machines was much better than one sun box you know it's especially central all your problems it's single points of failure right you know one single box and you saw them and that was like you're roger ben or four minute mile where you're like oh we can do it with that too yeah if they're doing it basically and it was cheaper i mean we didn't have money so i was in debt from business school and my partner was a phd grad student so we didn't have money i was we were negative net worth so hot or not kind of was like tinder in you know two thousand right it was it was a website where people would submit their picture and other people would rate them on a scale of one to ten on how hot they were and this was kind of in the day when everyone was scared to post their photo online like if you posted your photo online it was behind a password protected page that you know was for shutter flyer or o photo back in the day so the concept of posting a photo for other people to see that you didn't have full control over who could see it was completely foreign times forget about the rating that was forget about the rating actually the rating actually as an idea came slightly second it it was originally about v mh i was addicted to reality tv back then what we're watch gill back then got you know i used to watch a letter like jerry spring ricky lake all that kind of stuff the the the best part of that those days was i actually ended up going on some of those shoes on spring yeah i was on like ricky lake i think or one of yeah maybe one of those as a guest tell or something like that know was a i was a guest judge they they had people come out like they had the themes would be like my friend thinks she's hot and she's really not and then like they would come out and talk about it and then i would come at the end maybe tell them score so anyway like so so where did that idea come post your photo online and then you said you're added later yeah yeah yeah the rating was like just kind of an add on like oh it'd be cool to have a mechanism where like the audience could give data back right and make it there was this whole what they call the two way web at the time you use was the con the web is about conversations right and so it was like the concept that the audience could actually give response back was new so you'd you're you like people watching right but that's still like still where did the lightning bolt strike you know actually there's there's a backstory story to all of this which is that in the late nineties there was this guy called the turkish stud i don't know if you know about i've never heard of it the guy actually i think bo at was based on him i i think the guy who does bo at denies it but it's so clear there was this guy in turkey who had a a webpage with pictures of him like playing ping pong or whatever and somebody no one i don't think to this day anyone knows who did it but someone took those pictures and made another web that was a fake web page and it was like he was he called himself the turkish stud and he's like who wants to come to my country i can imitate to you come have sex you know like it was bored at basically like oh come with sexy dad right and and and it and it blew up there was this company called et tour that kind of like jumped on it and brought et tour was like it was kind of like the equivalent then of stumble upon and would people i know if people remember some which is the point yeah which is equivalent of whatever like reddit maybe me today basically like just took you the random random things on the web because back in there wasn't that much on the web right so it's gonna et or made a big deal out of this guy and he ended up on letterman and whatever you know like and within a month he had like you know million page or something like that right and we just my my my friend and i just thought it was my cofounder jim young he and i just thought it was hilarious because there all these companies back in those days that were raising tons of money throwing lavish parties and stuff like that couldn't get a tenth of the week couldn't get any page views and and and you know this is when like sea jar was starting to talk about viral marketing with hot and like this is so fucking awesome because this it was just irony right it's like this guy is like he didn't even do it someone did it to him and he ended up like on letterman getting all these heads that all these other people were dying for we just thought it was funny and so we kind of had in the back of our mind like someday wanna do i wanna build a trigger stud yeah right so it wasn't even about money it was about i wanna do something that goes viral right if you wanna make that first million if you've got to do your homework our sponsor monday dot com is back to help you prepare with another weekly dose of the monday dot com motivation got a goal get yourself a road roadmap and do research before you dive in an educated brain is like a road runner holding knives it's really fast hard to stop and it's a little dangerous visit monday dot com backslash pod backslash million to get ten percent off and see how their color coded platform can prepare you for success it'll increase your workflow manage your workloads and get you one step closer to get in that button and i was obsessed with this like i had i remember i had like i had him as my screens saver i him playing pink and so so when we were talking about the just various ideas one time this v and whatever came up and then and then like oh you know then you could rate them whatever like hey this could this could be our trigger stud right and so actually when we built it you know like jim was a grad student and i was working at a friend's company the time we were just killing a lot of time and we were ready set up in this house to do a startup so anyway jim just disappeared in his room and like three or four days later he came out he's like okay it's done you know today you could build it in like literally like twenty minutes yes right but back then like you had to do a lot of extra stuff right right and so he came out like gets done and then and i let you upload a photo yeah click through other people's stores basically and then i tested it that weekend i was just playing with it my dad what do you mean by you tested what do i was looking at it like he sent me a link i didn't look at it for a couple days and then i started looking at it a couple days later when i was at home on the weekend my dad was looking over my shoulder walked in the room he's like what are you doing you know and like i was supposed to be like working and or by this point actually no i had quit my job i'm sorry so i was unemployed so i now i remember i was i was supposed to be looking for a job probably so i lied and said this is just something jim's doing right and so he he my dad starts playing with it and then i see him he's the first person ever saw get addicted to rating swipe girls click click otter or not swipe wipes swipe yeah and we just had like i just taken photos from excite personal to like seed it yeah and so he was like oh she's hot she's like oh you know i'm like oh my god like my dad she's like six year old asian engineer supposed to be sexual except you know the three times he had my mom which was you know imagine my conception exactly practically so i was like holy crap like this is pretty interesting so then we launched it like couple days like that monday i remember monday tuesday think it was monday and i just we launched it by sending it i sent an email put myself in jim on the site and then i've sent a link to our pictures and sent it to a bunch of our friends and it's was like i remember was like it was forty two people which i accounted it later but you know because forty two's is a magic number right from but anyway so i sent it out and like it just immediately took off and i think by the end that was at two o'clock in the afternoon and by the end of the day we had had like thirty something thousand ip addresses in our logs distinct and so that's probably you back then a lot of people went through proxies or like aol and a lot of these dial ups use proxies are so there's probably like you know a hundred thousand people or more and we're holy shit i like that's that was crazy so people were just sending it to their friend yeah people were just sending her end like within an hour we had you know had like twenty or thirty submissions and so i was like okay we can take off the fake photos now because like you know that was because it was so slow because it was running on that one machine i think like one like after you voted it would it would take you to the next page view where it would tell you the score of that person and then show you someone else to rate and that that the turnover of that page was about twenty seconds like people were doing it and like clicking away to like go to their other browser window doing whatever and then coming back but people is is amazing like people were just doing it and so we're like holy shit like this is nuts like it just took off like crazy and so by the end of the week i think we were doing like couple million pages a day and this is all still running on a laptop or with this new that but yeah yeah like those there are all these crazy stories about how we scaled it but like it got to two million a day and then like within two months like we were in people magazine i think like we were one of the top twenty most trafficked websites on the web at that time you had your turkish stud yeah we had we beat the turkish stud right you know the funny the funny has us is fancy you know the funniest thing about that is that it turns out that the turkish stud got popular because he first hit the scene because there was this woman at salon dot com salon was like an online magazine and seeing back then that was pretty popular and there's this woman who was a writer named janelle brown and she wrote about the turkish she made the turkish stud happen really because i i think that's how it and everyone else found out about them well my friend was called me like the first day that we were running and he's like hey i got a friend who works at dot com named janelle can you talk to her i'm like okay you know like we'll talk to her but like we have to remain anonymous reason didn't know if we were gonna like get in trouble for or you know like you were gonna be offended by this or whatever and so he's like okay she said she'll talk you anonymously and then so i did i was talking to this woman janelle and she was interviewing me and she's clicking on the site that while she's doing it and then she's like and we didn't have that many photos on the side of the time so she hit mine but there's no way for her to know that but she's like wait a minute is this james hon i'm like yeah so how did she put two to two together did she put chanel brown was the very first person i met in college she her door literally face my door in the dorms at berkeley so i was like she's like james it's janelle brown i was like oh because at that point i just knew her friend janelle jane right so i was like oh my god like janelle like please don't tell when i'm doing this like so she's like okay okay no problem i you know i said you would be anonymous and i'll respect that right wow so so she did actually but the traffic actually got so bad that first day that i called her say hey jane like don't yes i was like can you please not run it because like remember like we were running on a server that was at a time when we were hosting the photos and it was a thousand dollars a megabit per second so i figured like at the end of that day or whatever i was like man this thing's gonna cost like the run rate was like you know fifty thousand dollars a month and it was doubling every like whatever hours and and so the the trick with bandwidth pricing the no one knows anymore because everyone just goes to aws and gets charged on throughput but back in the day like when you when you pay for bandwidth most carriers will give you will bill you at the ninety fifth percentile of your usage which means you have five percent of you can spike to infinity and you're fine right so that basically is a day and a half on the you know in thirty days right so we had basically a day and a half of forty thousand to do as much as we want but we were approaching that day and a half and like holy shit this is gonna be forty thousand dollars a month or whatever like we were actually we almost shut it down yeah and so i i told janelle like i asked can you not run this she's like i would love to help you but it's a slow news day so so you know like now i understand how journalists work you know like she they're you know they're on a daily like they gotta put out something every day or whatever so i was like oh shit so our solution was to that night we moved it to berkeley because like i said my partner was a grad student in at berkeley so like the university drove i remember we drove to berkeley at like three in the morning and we went to his grad student office and we set up the box we you know hid it under his desk we stacked books in front of the box like it was just like this lone wire coming out from under his desk that's costing the university i or two thousand cost universe university and doubling like i said it was it was doubling like every like four hours anyway we turned the the site was down for a couple hours we turned it back on and like we looked at the logs lot you know we tailed the log and it's like boom boom boom boom boom boom boom right so like we're like holy shit like we because we weren't sure if it was gonna die once turned it off for a couple hours or whatever right anyway so i remember we that was at like five thirty in the morning we got it finally back up and then we like drove home and like crashed and then jim got like a call from his adviser at like nine or something apparently like the it guy at berkeley like spit his coffee out when he saw the logs in or whatever the the you know the knock management tools and followed the wire must have followed the wire and he like what the hell is this luckily didn't turn the box off you know actually i remember we taped i took like a box of thumb tax and took half the box and put it over the power switch and taped it so like maybe that was a signal that them not to turn this box off but anyway luckily jim's adviser was a he was the dean of engineering at berkeley and he was also one of the c cofounder of like cadence and synopsis he was like a father of that and he was also a venture partner at mayfield field venture partners so he was like a very entrepreneurial guy right so he's like okay wasn't a problem this was an opportunity well in his wisdom he saw this is an amazing thing he's like okay look i will buy you couple days like you gotta you gotta figure something out yeah and so we did so we ended up calling racks space which at that time was a rink dink very small company so relatively but they were the leaders in managed hosting at the time and i just happened to know you know i looked at their about us page and their vp of biz dev went to stanford law school around the same time as a guy named josh becker went to law school at stanford so josh put me in touch with him and then i was like hey listen you know like we don't have any money but i think we're a good poster child for you guys because that's her whole stick is like you don't have them have money up front but you can they can scale you up today because they have machines ready to go you know like because back then if you wanted to buy machines even if we had the money it would take time a month right to get the machines and to wrap and all and stuff so so you is the best marketing money i'm buy this is perfect so they're like okay put a logo of racks space above the fold we love what you're doing we love the growth and i and i said look i'm getting a ton of inbound inquiries about press like i will mention you guys everywhere i can mh and so they're like perfect let's do it and to the ramp they didn't even we didn't even know how big how many machines we were gonna end up taking and they didn't care they're like look just when you need new machines tell us and we ended up calling them every night saying we need even more machines right right and they were like yes let's do it like and in like we hadn't even worked out the the terms deal yeah yeah like there was no paperwork at this point things just like well some of those things moved to well yeah and this is how the web really was back in the day like everyone just kinda helped each other you like you know i think ebay hosted yahoo or maybe the other way around but anyway you know or maybe as nets posted ebay anyway everyone used to help everyone and so yeah so they're like yeah don't worry about it like just get big and then we'll figure it out later that's what we did and and so it grew and grew and what did the traffic get to kind at its peak gosh let me i'm it's it's been so long ago like i think we were doing about maybe like fifteen million ten to fifteen million pages views a day and you have to remember me like today like that might not seem as big but at the time it was it was harder things that grow as fast as they do because there was no social media so like when things got passed around they were passed around by email or you know it wasn't as easy as just clicking a button mh which you know and you know any bit of friction reduction can increase the liquidity of any system by like ten x right so like things did just did not grow that fast back then and it just i mean like today like it would have probably been like insane anyway it was insane by those data standards and like i said in within two months i think net nielsen or whatever had us as like we were bigger than espn you know and it was just like two guys like in their underwear like in in their living room like coding right or whatever and yeah so anyway we cut that deal with them and but we still had the problem of like they gave us when we finally worked out the numbers they're like okay you can have a year they gave us a half a year of free hosting and then a quarter of like fifty percent off and then a quarter of twenty five percent off and then we and then in the year we would have to start paying so but that was more than generous right that that was just amazing but we didn't know that like in and at that point in time like we're like okay we made our trick stud we want this thing to keep going but jim needed to get back to his dis dislocation and i needed to go back to finding a job or whatever we didn't think that there was any business model in this in fact we stuck ads on the site when it first started and and i remember we were going through like twenty four seven media or some like some some ad network back in the day that was pretty big the cpm at that time was point two five cents cpm which means for every thousand pages dues we got point two five cents right you know today it's like dollars right right and so it basically wasn't enough it was barely like it wasn't gonna cover anything right so we still needed to figure out how to like make this thing last so the first thing we did was that's when we stopped hosting photos and we started sending people to yahoo and saying hey just send us a url of the photo on yahoo and let yahoo basically paid for this right and that cut the bill by what well i mean that that killed almost all of the bill yeah right now we just have to pay for the machines but basically all of the cause was basically all of that fifty thousand in doubling was bandwidth for the pictures right and you know it's the funny thing is a month or two after we did that yahoo shut off all ability for anyone to host to to use pictures that were hosted by them but somehow we got white listed and and and like two years later i was speaking at berkeley and i i met a guy who worked on on geo cities he was your angel inside yeah basically and i was like hey listen i wanna you know look a gift force in the mouth and like i'm kinda nervous to ask you but why why are you doing this for us like you were and they're like oh yeah you know like we love hot know we just didn't wanna be the guys who killed it so like i said people used to help people out really cool and but anyway we knew we had to get off of them so the first thing we did was we cut a deal with a photo you know people were starting to get digital cameras at the time and they were willing to pay a bounty you know a dollar for every user that has a digital camera so what we did is we said hey if you don't have a digital camera which most people at the time didn't go to geo cities and yahoo will host it for free but if you have a digital camera please go to o photo and they would pay us a dollar basically mh and they even paid us twenty five grand up upfront again really just to help us out you know there's there's a guy knew named mitch brown who worked there who did bd and at the time the company was run by this guy james joaquin who he was ceo of a photo he's now running obvious ventures with evan williams anyways evan james awesome people james loved it too so they were really just doing it as a favor to help us out they didn't didn't really know us right but that's how the web was and so did it ever become a business or yeah so what ended up happening so we realized it had to make money because we needed to hire somebody to run the thing because was clearly like we weren't gonna run it we were gonna go back to getting a real job or going back to finishing this jim's phd and so but you know like the ads were started you know slowly the ads started making more money it wasn't enough to pay for the bills that's why we added the dating clearly side of it so we were the first ones to do like the concept of what you would call double opt in dating like if you if you say you're interested in someone then they can say they're interested in too you know like what tinder is today they have swipe we invented the to my knowledge we invented the javascript auto submit radio button so it's back then you remember you had to hit submit every time you clicked the button so hot know was the first one that yeah it was two clicks so we made it one click we never seen it before so we think we invented it but you never someone probably did it but like but we had to figure out how to do it on our own and but that's amazing because now there's no rejection it's like if yeah we got connected it's because we both we think right hot right the because our whole thing was you have a no highly liquid marketplace there is no rejection because you don't even remember everyone you said yes to but and the other thing that it did is was it protected the woman who like you know because basically we saw match dot com and all these guys is basically pi right like oh look at my look at my you know all these you know women or a men that the you you might think they're high like oh you wanna talk to him you know like you you twenty dollar you gotta right like and and what that did is that that what that end up doing is like that led to lots of men paying and flooding women with messages and were like the woman just just look at their photo have no and then that guy just like got basically ripped off and and the woman got you know the and noise was too low for the women and so we thought that was just kind of an inefficient thing right and so we thought you know doing it basically it was speed dating mh and doing it as speed dating ringing speed dating online was a good idea and so that's what we did and that actually so we turned that on we turned on charging for it so the way it worked was like one of the two people once you matched had to be a paid member so it's equivalent of look you you a guy smiles at a girl in a bar she smiles back at the end of day someone's gotta buy drinks right right and it's usually not the girl bit and so and that's that's how we had a payment model so all of a sudden like as soon as we turn that on i think it was like within a month it was like by the end of the year we were at like a half a million dollar run rate which was enough to like hire someone and pay the cost or whatever i mean actually at that point the cost was zero a because we had the free hosting or whatever right but even you know if you have any if you can find any model that can convert even a small percentage i think we were converting actually we were converting like five percent of our users were paid including the woman and then by the end of it we had optimized it to like twenty percent of people who join paid right awesome it was enough to pay for everything and then you know if it doesn't matter if you have scale if you can even have any model that makes enough money if you were a lean operation you can definitely pay your salaries and have like a lifestyle business if one right and so that's what we had basically we were doing half a million and and then just kept growing like organically and so all we had to do at that point we were basically like we're the modern day equivalent of people who ran a laundromat like we just have to keep these machines running and you know we have to install new machines to support and you know like we have to like but we're just collecting quarters and yeah so that so we kinda of stumbled upon it wasn't you know like it sounds much more intentional than it was it was like we kinda stumbled into having a very profitable business and then you decide to sell the company at some point well yeah so we ran it for eight years around year three or year four we finally started we hired people so what happened is we ran for three years or so out of the house just a two of us and at that point we were doing like three to four million in revenue almost all of it was profit my c cofounder started riding motorcycles and at some point i was like hey you know like if you if something happens to you that's probably not good for their hot or not right know like and and also like frankly he was tired and i was not bus kill but i mean like when we were also like i mean at that point we were running like he he was running ops on like a hundred machines you know was so we haven't having to go to the data center all the time if that running the ops probably got tires him he automated it as much as he could so he wouldn't have to go in that often but at some point in time we brought in a a a friend of his from high school greg lin and we brought in don paul who did customer service because at that by that point i was doing a lot of the customer service emails and stuff like that and so we brought her in and so we basically had now a company we had employees and then we started hiring more people and more people not that many but we hired a few more people and then it kinda became like we we had responsibility we had employees and we had them you know yet we always have to manage people to some degree and that wasn't really either of our thing and so we both kind of flame out on on it we're just not very operational people either of us or that's at least i wouldn't say we're not operational was not the part we enjoy mh and so the more people we hired kinda of like the more of a drag it became and yeah we both got tired probably year four year five i would say and then i took a break and jim took over and then jim left and i took over and then at some point we're just like let's just we're just gonna sell this thing it was right before the two thousand eight crash so it was a good timing in that sense but we probably let it go for a lot less and it was worth just because it was a downturn right because at that point in time it was doing like six million in earnings but both of us frankly were so tired of it and you know our good friends had just started gyms really close with steve chen at the time from youtube and we watched them go from zero to one point six billion in like how long you know a year yeah and we didn't really see hot or not getting to that scale that quickly ever arguably you know you see what happened with tinder and maybe that's true although it's not clear hot or not would become tinder because hot not had the rating part which made it grow but i could also hold it back fun being pure play dating but in in any case we were just like screw it you know like we both just wanted to do anything else at that point when i had left i had started this thing with el lee he was a cofounder of eva called save my ass which would send your girlfriend or wife flowers on a regular but semi random basis it was one of the first subscription actually it was one of the first subscription commerce scenes we'd ever i'd ever seen but then i had to go back to hot not so i stopped we're gonna i'll started a clear slide which took so he had to so we ended up shutting it down just because not and was actually doing decently well like the scale was but anyway we neither of us could deal with it so yeah we ended up selling the company mainly because we were just tired of it mh wanted something else to work on and so how did again because you make your first mail and you made it basically during that while you're collecting quarters like you said you're running the laundromat dude that was a awesome period of time because i was like i was still in my late twenties we have the system sending the stats like at noon and at midnight and that was mainly so we would know like how the system's doing if it if it had problems or not you know we how many matches were made per hour blah blah blah or up to that point in time but it also had how much money we had made up to up to that time for that day and so at noon and at at midnight i basically get this today saying oh today you made ten thousand dollars fifteen thousand dollars on a good day like twenty something thousand dollars and and you know i would have to divide deviate it up and figure out my portion but i was holy shit right this magic but i was like i had a bunch of my friends always knew like when we because basically i had nothing to do i was just going out drinking with my friends all the time like almost like five days a week and admin midnight would be like i remember like i think was my friend philip kaplan i just remember i'm like you buy in yeah right because like because because he saw me pull my phone i've been i'm like i'm my end it was funny like yeah back in those days like no one was making money on the web this was like the like the dark period right i mean i used to like go out with philip up all the time evan williams from you know at that time he's doing blogger he was like i you know i met evan because i'd sent him a message saying hey like he was about to like practically shut down longer it was just him by himself at that point and i was like hey you know we we had all this excess bandwidth at this point so i was hey if you want free you you know photo hosting happy to help you out right so that's how i met him and that's that became good friends and so like i remember i would pick up evan from his apartment in knowing and like you know like he he didn't have much money at that point in time so i was the that i was like the you're the right a baller right so yeah so like you know how times have changed right like yeah no this one's on here right it but yeah yeah yeah basically but i mean like anyway like those were really the days because the people who were still around no one knew that we were gonna make money at the time and like we were in the we were one of the few people who were making money most of the people were having a hard time but you know like a lot of like really famous names were still like after the dot com crash happened all of like the mba kinda disappeared and the only people who are stuck around were like the people who are just like passionate about it so many people that are like huge today were just hanging out back then and it's like you know because people are like oh how do you know all these people it's such a you know like the silicon value there's so many people you know running around like how do you know all these people like dude like there were like ten of us back then we used to hang out right like very simple yeah and so so you're kind of amazing in that you've been here so long you built one of the kinda staple named products that everybody remembers fondly and since everyone over the age of x yeah if you don't know it's that's like the litmus like were you were you really around or you just right if i was single like no i probably can't get you yeah exactly and so since then you've transitioned to being an angel investor do you i mean how do you think about stuff now do you think about getting on the horse and starting a new do you love investing and that's what you wanna do yeah you know like so i got i mean i i was never an angel investor i just invested in my friends right and so like people and you know like like i said people back then we all everyone helped everyone so like we would invest in friends you know you'd like you would invest in people you didn't even they didn't even know what they were gonna do yet right and like it was pretty cool like like and how what were the results of that because you know some people would say investment in france it's crazy strat this is crazy not national strategy seems to do really well i mean probably depends on how well you pick your friends right like i stupidly passed on a lot of friends where i'm like i don't see it or whatever and now when like i passed on uber i passed you know like i passed on like all these things were like i i mean literally i would be like a billionaire there right post tax if you just if you just just invested in the people that i actually liked you know but i think it depends on how you pick your friends like all of the people that i enjoy talking to and being friends with tend to be like really smart and really quirky too like create like people yeah like smart creative or whatever that like like people who are like a little crazy but really smart and can pull stuff off right and so those people tend to do well and so i mean yeah i mean i've definitely done pretty well i think i mean actually i've never really compared to other people but i think i've done pretty well with my angel investing but you know like i mainly just invested in my friends and i don't really see myself as an investor and it's actually to in reality being an angel investor i is basically my cover for not working because i'm basically mostly just hanging out at home with my kids you know i got mister your mom driving i'm i'm like my kids show for basically taking them to school taking them to swimming or whatever but but i think about that a lot and and the other person the person who introduced us michael bur he's another person who i feel kinda out out of the rat race yeah he he definitely does things he does lots of interesting projects but he's not just saying okay the you know he's sold people for eight hundred fifty million next one's gotta be a billion right he's not just endlessly in the rat well listen not gonna i'm not gonna criticize anyone if they choose to be in the rat race and they if that's what they want that's what they want i i i'm all about everyone has to figure out what makes them happy and and the only the only advice i have to people really about this is look you only have to make yourself happy don't try to make other people happy live your life for yourself but be honest with yourself about what makes you happy because like society wants to tell you oh you should wanna make a ton of money or you should wanna like not make a ton of money and go meditate or whatever right and i'm just saying you know whatever is right for you is right for you you gotta be honest with yourself but if you can be honest with yourself go do whatever you wanna do like i have friends who have to be billionaires and like look that's not my thing but if that's what makes them happy go do it right right but for me like you know like i always thought i would do something else again but then i had kids and then like you know like how that that can be like all encompassing and you know like for i just realized like you know i built an app that was like a youtube for kids before youtube kids came out i i was like i just wanted learn to code again and and i made an iphone app and my son at some point was like and i'm like i'm a shitty coat so i wasn't very efficient so i was always like coding until four in the morning but the bus still comes at seven thirty so like i'm getting no sleep and i was c always grumpy and i'm just kinda like it doesn't matter if it's a hobby i'm always thinking about it right and basically at some point my son was like daddy when you gonna play with us again and i was like oh shit like right that got so well i mean like at that point it's a choice and i'm like okay fuck forget i can't do this like i am so obsessive about anything i build that like the dad that i wanted to be i wasn't able to be it and so what's be for you now what what what's the rest that makes you happen listen look it's not to say that i don't love the idea of starting a company and look it's and it's not for the money it's for the adrenaline rush right like it's basically like gambling like this thing's likely to fail it might succeed it might win big if it you know and so it is like gambling in a away but like we're and so it's a huge adrenaline in rush when you start a company and the highs that's why the highs are high and the lows are low it's like being the entrepreneurs is like volunteering to be bipolar basically right and so you know like but i had to decide and i said well screw i'm i'm not willing to sacrifice these things so the next best thing is that like i can just angel invest more and so that's kinda what i've done you know like i i think i've been pretty successful at it not as successful as if i just invested in my friends that's kinda like my new strategy like like i have a friend yeah you're like like i have a friend who just pick ping me the other day i'm like you know what i don't even need to know like right because we were we had a call schedule and i brought in a friend and then i was like hey guys i gotta go take my kids and i'm in but it doesn't matter i mean you know the funny thing is like that's what happened with audio and twitter with evan i was like hey after after blogger got sold because actually blog before it got bought by google he was in trouble and nick dent and i were both like kinda talking to evan about maybe we could invest in it just to basically to bail it out yeah keep it going and ended up not happening because he ended up selling to google for you know whatever million you know in two thousand two or something like that two thousand three and so when that happened i was like evan i don't care what you're doing next i'm in right and basically and then when he when he returned the money for audio i was like let me know when to put back into twitter you know and then there's a whole long story i ended up not oh no there's a whole long story about that it's a tragedy but it's fine because gonna make another podcast that's another lost million i basically decided i i i wanted to choose friendships over money and that's how that ended their that's a long story jordan and i don't regret that actually so we're but anyway so so so the other you know we gotta we gotta wrap up but the one question so normally i have these like five questions i ask at the end sure but there's one that i'm really curious about for you because i see you as this incredibly creative guy who has very humble not saying you know it all on all that stuff i'm just curious if you were twenty one today i if i basically if i took all your money out of your bank account but i gave you back years and i say you're twenty one today you know how would you make your first million today what what would you what would you be curious about what would you be playing and what spaces would you be playing and if if you're were back in the game at twenty one today well listen i mean i think you can as you alluded to earlier you can make money in any space so i'm not gonna speak about what speed i mean you should you should probably work in whatever space you're gonna ob access about and that can be you know like you said what i mean it be anything it doesn't have to be tech but like whatever you whatever you're obsessed about that's probably a good place to start because it's a people who like know a product inside and out that kind of can take it to the next level and do something innovative or whatever that'll kind of get you attention to to make money forget about advice for i'm not just i'm not gonna say but but what i will say to someone who's twenty one is this after the crash happened we actually got a buyout offer for like six million in two thousand it was for the four of us and it was vest over five years and it was very tempting we thought about taking it but then at the end of the day we basically decided that was not enough money to sell out our youth because when you're young you have no liabilities like i you don't have a mortgage all you have is time right you're five reality is time is all any of us have even at my age time is all i have right money is like a man made concept right like i have my time and i will never have time with no liabilities ever again once i like get a family or i have a mortgage or whatever like so and and at this point we're i was living a really cheap lifestyle like it's also true of like lifestyle like once you lease that car it's hard to go backwards right right so if you i would say this like keep your life as frugal as possible don't don't you know don't borrow money to live lavish you know like basically live as frugal as you can team up with people cofounder who also can live that lifestyle with you so you don't have to raise any money even though it's easy to raise money today i i would still probably start things without raising any money just let me like you gotta live so maybe you gotta raise a little money to pay rent you know you don't have to be in silicon valley you can be in a you can be in an apartment in houston you know paying two hundred bucks a month rent or whatever five hundred dollars a month rent you know as long as the two of you or three of you can live and and build and then just keep keep building until you come up across something that has traction and then go scale it right and look like i said like nothing is like an h b case like the first like very few people i know have something hit on their first try nobody knows what's gonna happen you just kinda like lean and whatever kinda seems to be sticking you like go in that direction and so it sounds like what you would do is you would keep your burn rate low yeah you would love you'd get in a house with a couple of friends and you would bang out ideas that you were just curious about or interested in pricing personally like if you know like we i had the benefit of like we were living in jim's parents they had like a investment house and so we were i was living their rent free no actually no i was paying him rent actually like really nominal rent and then when hot or not took off i was like dude i'm not paying your rent anymore he's like okay i'm like this is gonna be big i'm not paying your rent but to the extent you can keep your rate your burn low and just keep building the story the the lesson to me is not save money the lesson is value the time and make sure that you're spending every year of your life the way you wanna be spending it and one of the ways is to do that is to keep you know get that reserve cap so that you're not gonna go trade your hours for dollars right i mean leslie look i'm i'm probably an extreme example of this argument look i have enough money where i don't have to work anymore i don't have any fiscal constraints but i'm still not able to do this because i got my kids and i'm choosing to do that instead so you know like so if money is not not the only limit out there and so when you get older you're going to you only accumulate liabilities in life unless you're willing to like you know just abandon everything which is you know like not you know different strategy well yeah i mean like like i said people can do whatever they want for themselves but like that's not my strategy right so life is not easy for everyone you know equally and so like everyone has their own challenges on that but like i said if you can get if you can get a job at one of these companies go work for a while save that money don't increase don't live like you're making that money and then go do it right and do it with a friend because it's very very mentally hard to do it alone wonderful well james it's been an awesome conversation man i really appreciate you yeah you're coming out it's great great senior again and great talking to you again and i think a lot of people are gonna both enjoy the story of hot or not a lot of people won't even have ever heard of it before so this be the first time they mandate date if i'm single exactly that's like the line them and then and then i think what what you said at the end here about about valuing your time and and making the choice that makes you happy and not playing what other people's playbook i think that's a great great message so appreciate you coming on there right thanks awesome bye