#55 - Lead Gen Businesses, Islamic Finance & COVID-19 Virality

boom we're here coronavirus and all yeah this three of san francisco are empty you could have walked down in the middle of the street and would been fine yeah and we're in the studio and sam just coughing up a storm which has got me concerned allergies this may be my last podcast you don't know allergies the type of allergies that you can catch and kill you allergies so this is for all the students of stanford harvard syracuse that have been shut down they're at home certainly just listening to the podcast in quarantine this is for you this one goes out to you yeah good luck alright what do wanna talk about got a bunch of words on the screen they all look interesting where do you wanna start pick one can we talk about i read every review for the podcast we have six hundred reviews maybe seven ninety four just check this one all seven so eight hundred let's say eight hundred i they're all five stars except for like five yeah and that's cool i like it reading the positive reviews those five were from early on when you weren't even on the pods so really i take those i take those out no there were two dot five star reviews again i like listening to negative feedback and i don't like following all of it but some of it i follow the first was that the sound for the guests were bad agreed fair we will listen to that and the second one and i hate this i don't hate it and that it bothers me but i i just don't like i don't think it's bad feedback which is we were called bros right and i don't really care about that because i what's that mean how is that being like people use that as an insult i don't understand why that's an insult yeah it's an insult for sure to be clear it used to not being an insult but being called a bros an insult and yeah i don't know is it the way we talk is it what we talk about is it barb using the wrong words i'm not i'm not exactly sure yeah i don't take offense to that even though people mean it to be offensive so i don't care if people say that yeah i'm not a bro i'm a lover not a fighter i i got multiple angles i got gears what does the pro mean i don't henry what's a bro we we need the get get the get you gotta go into the mic yeah i think i don't think come on bro definitely not a good thing especially if you're like over the end of twenty maybe we have to replace henry with a female and then we'll get more credit for not being just a down yeah fair no i don't care about being called the bro friends like you broke excuse go back and forth so then it's a compliment yeah kind of i don't know whatever i'm not trying to be liked i'm just trying to be me no well here's what i'm trying to do i'm trying to bb and i'm trying to create stuff that people want and predominantly people think it's bro but they love it i'm okay with that yeah like for example i listen to the j rogan podcast joe rogan talks about his carnival of all all meat diet you know working out the you have seen fighting cage fighting hunting you know these are the cars like these are his topics because that's what he's genuinely interested i like talked about and touch about other things to everything else and i like wood people i like listening to stuff for people are interesting and they're interested in certain stuff and so for me the test with this podcast is would i wanna listen to this and so that of the episode i just sort of think would i be interested in listening to that podcast and if it's appealing to me that i'm sure it's appealing to other people it's not gonna be be appealing everybody for sure and then the last bit of negative feedback we got which is we focus too much on the san francisco silicon valley scene and i'm from missouri by way of tennessee you're from everywhere including colorado i love san francisco and i hate it at the same time i'll be the first to make fun of it but also i love all types of cool shit going on throughout the country so yeah that's probably fair if it's interesting let's talk about it in fact i actually think personally i think we skew a little too far in the kinda like low tech ideas and i think there's a lot of interesting high tech ideas that don't require a high tech entrepreneur for example i don't know how to code but i've started tech startups in silicon valley taking venture capital money and worked with an engineering team where i'm the only guy in the room who it doesn't know anything about engineering you can do that so i actually think that there's plenty of cool stuff that we're not talking about that i'm gonna be bringing more of so if you don't like the silicon valley stuff i'm sorry i'm gonna try to bring more interesting technology to the table because there's a lot of it out there feel we haven't been talking about it as much the way that i described san francisco and silicon valley is to me it's kind of like hollywood but it's only only if you're trying to make like a like a big blockbuster hit right i believe that you can make those anywhere mh might be a little bit more helpful if you are physically in hollywood because you'll not because the chances are necessarily higher but because you'll be around other people who have similar wants and dreams and your baseline becomes a certain yep thing for sure but you can certainly make it from an anywhere absolutely it's been proven alright let's talk about some of these things let's start with let's start with the sequoia memo okay did you read this no i avoided it own on purpose next denial the best the best approach yeah i we haven't raised venture capital so it's a little bit different not as applicable okay so you explain let's explain what it is so sequoia is one of the biggest venture capital firms here in silicon valley they're famous for back in two thousand and eight i wanna say they released this presentation called rip ip good times and they basically they called an emergency meeting of all their portfolio companies they invited them to this dinner locked them in a room put this presentation up on the screen that was basically like hey the good times we've all been experiencing are about to end here's why most of you entrepreneurs you have not been a part of these cycles we've been investors through the dot com boom and the bust and then this new boom and this was right before the sort of financial crime of two thousand eight and they told him look money is about to become hard to come by we are going to have a giant financial crisis that will have ripple down effects to you guys to your customers to your clients to your investors and so you need to start tightening up anything you're wasting money on you need to stop wasting it anything if you haven't raised money if you don't have twelve months in the bank you need to go raise money right now to sort of be able to endure a downturn and they just released another one which is the newest sequoia memo so that was two thousand eight now they released a new one and they basically were like look this coronavirus stuff is a this is a once in a hundred year virus and there's this it's it happened in china which is like when you shock china you shock the global supply chain and also now that travel is gonna stop a whole a bunch of business is gonna come to a halt but stock market's gonna go into a panic because we've been in a ten year bull run and that's about to sort of end anyways so they they told them the same thing change your spending habits you need to tighten up raise money if you if you have an offer out there take it don't worry about valuation just take it and get the money in the bank and and you know you need to go into sort of survival mode you need to change gears and that's what just came out which i think is very interesting have you made any adjustments to your business not yet but i live like this anyway i'm kind of a cockroach in the first place and i actually think that me living this way has kinda of been a a consequence it has been has hurt me more than it's helped me actually mh i think it it it made it so i wouldn't spend enough money which if you have a machine that turns a dollar into more than one dollar dump the dump the truck your money truck like what ad spend or what do mean i mean look if you have a a funnel where you or a product where if you just spend more a marketing or spend more engineers or spend more content creators and it turns that new customer into more than what you acquired them for right then if anyone had a a little machine that turned one dollar into one dollar and one penny the name of the game is throw as much money on into that machine as you possibly can as fast as you can and i've had those machines i didn't capitalize on it and so i've lived this way all the time and i think it's actually hurt me a lot but in times like these bringing on we don't need to adjust we haven't changed how we've done things just because we're always tight yeah and your company is in a good position but like just now before this we were looking at a company's p and l and it was like cash in the bank two hundred twenty grand or something like that it's like does your couple months away from ins solve you know if that's just the case like whereas you guys are in a much better position yes i do i am i do have a little fear i don't know how i feel about this corona thing when it means what it means for business i do think that i am on the side of of i think it's bad but i don't think it will be as bad as i think or as i originally thought right i i guess i just have faith i have a lot of blind faith that it will work out which so i've been on the other side of so so when we were doing our ideal lab i worked with this guy michael birch michael birch was is known as if you just google he's like one of the top growth guys in the world he sort of was doing an invented viral marketing before viral marketing was a word he did it because he didn't have money back in the day so he built one of the first address book importer where for this company called birthday alarm he had he was like and i think he did it before that at rick marin company i figured forgot what that was called bert was before that so so bert was the first one where he was like hey i want people to send this to their friends what if i just imported all the addresses from their hotmail mail and then i made it easy push this button to send it and he's like he he literally told me at his house he was like i thought that ten days later like i thought there's no way they let this go for more than ten days and he's like it's now been fifteen years and this thing still works and he's like so he was working on viral marketing because he just didn't have a budget so he's like i gotta use my customers to get more customers and do you explain that you didn't explain it totally clear but someone signs up for your it says do you wanna invite your friends here's your gmail contacts click select all and send an email to all of them and so in this case for birth alarm it was i make a calendar rem and i i'll invite you say hey sam can you add your birthday to my calendar i i don't wanna forget your birthday this is before facebook by the way and so you would add your birthday to my calendar and they hey would say hey sam don't you wanna remember sean's birthday that'd be nice like reciprocate kate and you'd be like yeah sure and then he was hey sam you got one birthday on the calendar but you surely got more friends than one so why don't you invite some other friends here let me make it easy for you would you like to import all your friends from hotmail are you're like yes and then and he added one thing at a time to make it more viral so he he would add a pre filled message because he's like oh there people are stopping because i can't think of what to say right so here's a pre filled message i know works and then i just say sent and so then he got this thing super viral so you know birthday alarm grew to fifty million members with zero paid marketing fifty million and and then he's done this again and again since i with the social network be and others so when i worked with them the name of the game was viral growth and so we did a charity campaign trying to raise money for charity water well we made a story a website that was just telling a story of this boy jean bo with no water and then we said can we get this to go viral so we did the same thing import import emails give people to send the story to their friends and raise money for the cause and we got it to go viral so i've literally been been it where like nothing nothing nothing you'd come into work nothing no growth no growth no growth and you would just tweak the right thing and then all of a sudden that you know between overnight something would have doubled the next morning doubled again next morning doubled again and i remember it just going from zero to five million people signing up for this charity thing within like you know two weeks it was insane and so i've seen viral growth and how counter intuitive it is like you don't think you know well yesterday we had four thousand people so today we're gonna have don't know five thousand six thousand so it's like no you're gonna have sixteen thousand the of thirty two thousand and it's gonna you know it's gonna go up to the millions within a few days and so i've seen viral growth when you're talking about it in the good sense from a product perspective now it's viral growth of an actual fucking virus and so and it you could see actually in the us somebody did a great graph where they mapped italy where everything's on lockdown because is italy has started spreading like crazy and they showed italy day one us day one italy day two us day two number of cases and the bar graphs are like identical and the thing is we're just in like whatever day six and you could see by day twenty one where this thing gets to if you don't like lock everything down right away so i am very fearful because i've seen viral growth i've seen viral spread and i know that it doesn't work the way it breaks our brains brains think things go linearly but this goes exponential exponentially and it's really hard to just comprehend an exponential spread and to take this story a different way than coronavirus which is that stuff that you're describing that michael burg you can actually still get all these two cool plug ins that auto automatically like allow people to share a pre populated message to all their gmail contacts we use it and people still share yeah and the the the math works out where you know because you would think i would never do that i wouldn't even email all my contacts we had of people it but people do it and what happens is you know one percent or less will do it but you look at the math one percent of people do it on an average they have three hundred twenty six contacts so for every hundred people that come in you get three hundred twenty six people blasted out in doesn't work as good as that time because the email open rates are much higher than yeah but now people are like i don't know i never talked to sam so if he's sending me this this is junk this is spam now people filter it but in certain countries it works like we were growing like we could do this like clockwork in india in india people still opened it like they did in the us ten years ago and they forward even even higher rates i don't care the forward everything and everybody and so india turkey all these little countries where we would see this crazy growth that you can get the us and or uk anymore that kinda suck because the monetary value ends up you know the value per user is lower there but it does still feel good to get like works and people are shocked by that yeah we did one through sms i remember and over the weekend it went viral and like you know during the week monday through friday everything looks fine is growing but like not at a crazy pace we didn't realize the viral coefficient was two and so over the weekend it took off and started compounding on a big number and we racked up a hundred twenty thousand and sms a hundred and twenty thousand dollar bill in sms is holy we crap going through kazakhstan like we even know we're growing we're gonna grow in kazakhstan and it went crazy and turns out texting and kazakhstan super expensive and so hundred twenty thousand dollars in two days we had to pay off that's crazy sucked well i need it we needed to the texting stuff which we haven't you wanna talk about z mh they just raised was it forty million dollars today at a four hundred million dollar valuation total they raised a hundred and fifty million dollars valuation it's a cool that's a cool service if you're a consumer how does it work yes so you wanna you z if you're trying to find an apartment you'll probably run into december because you're like it's a search engine to find apartments to rent yeah and typically for these new guys san francisco isn't the major market it's typically more middle of more places where they have high rise buildings which we don't have a lot here but basically if you google chicago apartments or moving to chicago or something like that z or apartment list mile the place right to work or a bunch of other things like that will come up and it'll be like here's eight hundred forty three apartments in chicago click here to get information and submit your information okay great here's how they work which a lot of people have no idea how they work henry i'm gonna explain to you how they work and you tell me if you've ever heard this okay so they're lead gen companies do you don't wanna lead company is okay the way it works is a lot of people shocked by this and it's actually way easier to start that most people would realize so the way it works is there's i don't know how many there are who do this but i know that they're for sure four or five that do this that are big names and so just in the apartment space just in the apartment space so there's apartments dot com i believe there's rent dot com and there's maybe two others that are quite large and then there's dozens that you don't even realize exist you'd have to google them and find them but what they do is they work with all of the big apartment building so there's grey star which has probably millions of apartments then there's costa star which has a bunch and then there's every apartment building that you have world star world what one the other ones grey star and then there's avalon avalon bay i think they're called there's a bunch of them and they have millions of units and what they do is they go to red dot com and they go or apartments dot com and they go for every person who signs a lease with us or who calls our our phone we're gonna give you a hundred bucks and so what z can do or probably how they started it out or what anyone can do is they go hey apartments dot com you guys are getting a hundred dollars per call will you give us ten dollars per email we give you of people who are qualified leads so what z did i imagine they did when they launched and i'll explain why i say when they launched what they did was they go these places and they go alright give us a cut of the revenue per email and so the math works out that if we send you five emails basically people who said here's my email address here's my phone number i'm interested in two bedroom at this particular building apartments will we'll be like alright we'll give you ten dollars for that because we're pretty confident that for every five of these we collect one of them will become a lead and so now we make fifty bucks in profit mh and so what up does is they create a different funnel where they learn how to rank really high on moving to chicago find an apartment or they are able to have really good facebook ads and they get all these leads and that's what their margin is and so the and margins for these businesses i know this first firsthand can be sixty to seventy percent gross margin which means let's see that what what's the map behind that you but million bucks comes through the door you paid you know two hundred fifty k on search engine marketing yeah but you know the rest is because there's no cogs there's no there's no physical product you're selling so you have a a very high margin product sixty seven percent margin plus whatever content staff you have internally that's your other cost so it's just a lead gen company yep and the interesting thing i've known a lot of people who have these lead lead legion gen companies i knew a guy who had a lead gen company for swimming pools so if you wanted to buy a swing swimming pool you'd google but swimming pool repairman or indoor ground pool indoor ground pool set up california right or something like that here's number one and he would he would be number one you submit your information and he would sell it to these people who go in service actually do the thing who actually do the work you're a middle man when you're lead now there's pros and cons of this business the first pro is you could set these up really cheaply and you could start making cash flow very quick like if you were able to spend one month just building this site and creating the relationship with this person you could next day go out and start making cash so long as you were profit acquire a customer right so that's great the second great thing is you could do this for most anything the best way i think to figure out how to do this is you figure out what has the largest total market size with also the largest possible cost per lead with also the least amount of competition and you do like a grid yeah like a grid and so for example i've been bullish on truck drivers the reason why is i think that there's a whole lot of truck drivers in america the average truck driver makes a a a good salary fit let's say fifty thousand dollars a year therefore recruiters would you willing to pay like a hundred bucks per lead so i was like can i send leads there or you could do it for local services so i need a land escape or i near need irrigation work done at my home right my home and someone will buy those leads for like i don't know if fifty bucks so you can do this for anything right you just have to optimize for what so my father law's in the senior living business he owns a couple of facilities and the biggest thing for them like his business look great when he has high occupancy rates and it looks terrible if he gets high vacancy so low occupancy and so there's companies out there that do this for seniors if you start googling like you know you know memory care in alameda california there's a company that will pop up right in the top of search and say hey we've reviewed the top fifteen you know facilities here and come read about them or hey are you looking for this talk to our consultant just put in your email address here and we'll we'll help you get the land in the spot and so then they'll pay these lead gen services a high amount because you know somebody who goes into a senior senior facility they're paying eight thousand dollars per month and they're usually there till end of life and so you get you know the very high lifetime value of that customer so you're willing to pay a thousand dollars per qualified lead who's looking in your area yeah i don't know if you that exact number but high high price and i have firsthand knowledge i know someone personally i know the financials of a senior home living or senior living lead gen business it made hundreds of thousands of dollars a month in revenue and a very good profit i know someone who did it for rent to own properties i know people who have done it for like i said swimming pools i know people who have done for apartments i know a guy who did it for local home services and did about sixty to seventy million dollars a year in sales right and so that's the name of the game i also know people who have done it for jobs jobs is another good one now like rig up has done this they've raised money at a two or three billion dollar valuation and they've done it for oil workers in the way the math works is there's actually way more oil workers in america than you think hundreds thousands or can be hundreds of thousands and those oil workers the barrier to entries is relatively low you don't have to have like a master's degree in something so anyone can do it or a lot of people can do it and the salary is quite high a hundred grand a year in some cases so they're willing to spend a lot of money and so it's a really interesting company or a business rather and a lot of people don't know that's how it works now here's the downside the downside is lead gen companies can be very transactional which means as a business you only capture value and make money the more leads you're coming in through there and often that means you only make money when you're spending money mh a lot of times you they suck at building brands so like i said you could spend something up really fast that means you can likely go away just as fast because let's say that like if you create a url that's like home senior home living california dot com that is not like maybe maybe someone is just gonna google that and they're gonna see it one time they you yeah and then they're gonna get their and they're done they're never gonna think about you ever again and you have to pay for them again and so if you wanna more customers you got pay again right and so that's quite hard so if you can build a brand around it then that's where it's really interesting and the second thing is that you are dependent on the person buying an elite so in my case i worked for a person who was doing lead gen and they go alright there's a cap on this like we can only make a certain amount of money giving leads the way that we become a huge business is we get we make a relationship directly with the apartment buildings and go straight there go straight to them now the reason why that sucked is because the person buying the leads was like oh you're our competition now right you're out and they cut it off and their revenue goes away immediately right and so what thumb tactic did i like thumb tac what they've done is they've built a direct relationship with the people so if you google san francisco wedding photographer and you see a wedding photographer on thumb tac they've built that relationship with them and thumb and that wedding photographer will pay thumb tact directly for elite that's great because there's no middle band to cut out now the downside with that is it costs a ton of money to do this is like a really big build a marketplace and so you likely have to raise money or figure out some scrappy way to get done right but that's my rant on the the big version of these if you take it to its absolute max is like ex xp or booking dot com yeah right so what they're doing is they're saying okay you wanna book a flight i will become the best at ranking for how to search for flights find a good flight here's some recommended trips and then we just the airlines pay us a commission an affiliate fee for every lead we're we're sending them and that is a notoriously difficult niche yeah the lights they've done well but they're hyper competitive and they're you know it's always contentious and then hotels is another one that's quite challenging if i wanted to make money really fast i would find a relatively boring one like trucking jobs yes i find interesting but most people do not so they wanna enter that the flights and travel is a lot sex and so it's can be a lot hard give you another niche one i have a friend who created this business called a p board and what he was doing was international students people you know i went to high school in china and when i when i was graduating in china everybody wanted to come to the us to study everyone wants to come to us colleges so internationally india china indonesia malaysia the best students all wanna come to the us if they can so they wanna come the us they don't know where the hell to start they don't know what schools are they don't know how to apply they don't know how to translate their they're scoring on all these like you know aptitude test in malaysia to like what the us schools want etcetera so a there's a barrier there and the us schools love foreign students because they pay more like i think it's foreign student who international student who's going to school at berkeley will pay double the tuition as a local student not just a in state student like a us out of state student versus international the international student pays double and alan you you pay double so i paid more than double so to school in australia i think the average per semester like five to six thousand for like a a local student i paid like forty five of semester okay so you're alright great so so you've paid like nine times as much going to go into school that that's insane so basically what he was doing so he went to colleges and and do you have all these small colleges that just need applicants because they don't have a brand name so yeah a lot of stanford and harvard they don't really care because they're getting so many applicants anyways doesn't matter but like san jose state you know they were like hey we will pay you a thousand dollars per admitted student three thousand dollars per admitted student so he was getting three grand per admission in contract with all these different schools and then he just had to do lead gen on the other side for students who wanna go to school in america is actually a big market of people who are searching for what happened to it still going i don't i haven't checked in with them lately but i hope you're doing good mh martin i hope you're doing alright so i used to work at university of sydney has a part time job and i remember getting email on time with they're describing the strategy for a year and how they're trying to pivot away from attracting so many international students but that was they couldn't do it because that was the remain source of revenue like they're were making so much money for international students they couldn't stay in afloat if they didn't didn't target yep so if you go to campus right now it's literally just like international students ever i went to university of sydney as a little while it was it was crazy we should shut die we should we should actually talk about that on another time because that's an there's an interesting thing there but to get back to this lead thing to wrap this up there's actually a lot and this is way bigger than people think and one of the biggest ones is credit cards credit karma i don't know what they do in revenue but they just sold for eight billion dollars i bet they did wanna i bet they did a billion in sales and what their hook was we're gonna get you to sign up for a report a credit a free credit report and we're gonna recommend credit cards for you use and they'll make a hundred dollars per credit card affiliate we get you they get now i think about credit cards huge market huge referral fees very competitive nerd wall does the same thing they're they're bootstrap i think i don't know multi hundred million i but i they bootstrap to like fifty or sixty million in sales then raise money so it's quite good now here's another company and here's one more interesting thing you know the penny holder mh no i don't know actually don't know i the penny holder the penny holder dot com kyle spoke at he khan he's a cool guy he he's was a great success story still is but he started the penny holder and what it did was he would write about when he was poor he didn't have any money he would say i didn't have any money was i was trying to pay my bills and so i would do things like drive uber or i would do coupon clipping and he would blog about it and when anytime someone saw an article that he wrote about driving for uber he would make two grand per uber driver and so he was like oh this is i'm gonna blog about all the ways in which i can save money or make extra money and so he did that like through like there's websites where you can fill out surveys and make dollars to and make up a few bucks and he would blog about it and mostly middle america moms would see him and be like that's great i'll make money in the aside and i'll sign up and he would get an affiliate fee and he scaled this thing from zero to sixty million in sales completely bootstrap in like six years i love this right but here's a problem there's this other company called fluent media fluent i think it's called fluent fluent is a publicly traded company and they are performance marketers which means they do what i'm describing but across tons of issues so if someone will say like direct tv will come to them and be like hey we'll give you eighty dollars for every customer you send us and they go great and they spin up these landing pages and fluent media does this with trucking as well they do a bunch of stuff it's a big business it's publicly traded they saw kyle website and how much he was killing because he talked about it a lot for p which i mean it's good and bad good and bad and they just it and and and they they ripped them off completely they created like the dollar saver or like something like very similar like the penny hoard they just copied the website copied the articles and then they threw it on facebook and they drove traffic to an article that said here are the hundred best ways to save money and they did the math so they could get a click for a penny or they could get a click for a dime and each person who came they would make twenty cents because that's the conversion rate of which people would sign up and so kyle at penny holder this is all public you can google it sued them and what they found out was fluent media according to the lawsuit hired one of the penny holders employees and they said yeah here's how we did it and the so they just spun this up and it made a ton of money right off the bat yeah so these are the pros win the suit i think it's ongoing it's ongoing but for kyle but this is why this is interesting because i and in the penny holder month this is a crew a much its audience i think has a great brand and yeah and and nerd wall actually at this point has a great brand at first nerd wall was simply a you're just gonna google artist you're just gonna google best credit card and we're gonna show up one and you're not never gonna remember us but at this point they're doing all this advertising and commercials and people like turn to the nerds like it's working that's their commercial so really interesting business model i i like lee gen but a lot of people didn't realize how that worked henry was that interesting did you learn how it worked that was great yeah alright i got another one for you man z so this is cool this is one of my favorite reasons to do the podcast is that interesting people just reach out and tell me about their business so man z is this so this guy sam reached out he listens the podcast what's his last name sam m or something like that at me too and so he was like hey i got this business you know would love some help with it or just would love to chat and so i said okay let's let's chat i get on the phone and i end up blown away by what these guys are doing so they teach me about something i've never heard of and is now very finance very very fascinating to me so what they do is mans does islamic financing we've talked about that what's that we talked about not on podcast but we talked about it off offline because i was pretty interested in it so henry do you know what islamic financing is lead i don't think you'll know this one definitely not so are you are you muslim i'm not i'm gonna the well i'm i'm neither but like my my family is hindu do so i didn't know about this but basically in the muslim faith there's actually sort of the advice is against traditional loans so a interest which is known as like rib i think in the in in their faith is frowned upon in these so a traditional mortgage where you go to the bank you have your down payment you take out a loan and you're paying interest is actually not compliant with with their with their faith and their law and which is i actually common in a lot of other different religions is that true yeah so i'm i'm catholic christian and where i was raised that way and there's definitely rules regarding handling money and interest and things like that and i think the the fundamental basis i'm gonna kinda butcher of this so i apologize but i'll i'll i'm just trying to explain as best as i understand it so so apparently you know money you sort of fiat currency which is just not peg at anything it's just a made up concept the the belief system is that money has no value inherent value in itself and so you should not be charged interest for borrowing money which is this sort of abstract concept so they have loans or they have a sort of agreements which can work as long as both sides are taking shared risk and getting sort of shared shared upside shared return in some way so there's there's sam islamic i believe so yeah and his his partner mohammed is also and so they were explaining to me that hey there's this big thing called islamic financing and there's these islamic challenger bank and so if you ever heard the word challenger bank check this out it's pretty pretty cool we know that banking has been around forever these big bank brands that are you know in every country there's there's big banks that are worth billions of dollars and recently over the last let's say five to seven years there's these things called challenger banks or neo banks they're called and so in brazil there's a bank called new bank and new bank and b and new bank is worth ten billion dollars one of the most valuable startups in brazil in the uk there's challenger banks oh my god i'm gonna forget challenger just means a new one such a start bank yeah and they're they offer different things so what what these guys did was better digital access so mobile apps quicker ability to get sort of credit cards and and debit cards spun up and so there's you know there's just a couple of them that are huge now few different multi billion dollar startups done this what these guys have done is they've done this for a faith based bank which is basically say there's a set of customers out there in this case muslims who are not being served well by the generic banks and we can make a bank that serves them better and the way we're gonna do it is you wanna take a mortgage out you can either take a sort of mortgage out traditional mortgage which is not compliant or you can take one out that's compliant with your faith we've come up with a mechanism that is blessed by sort of the the village elders you know the the sort of leaders in the in the community that says yes this is you know i think s laws is what it's called it's thing it's compliant with s law and then on the other side this is this will this works as a mortgage you can actually buy your home and so these guys have this have this concept and in other countries this is apparently really big so in africa indonesia places where the muslim population is the dominant population they've already solved this problem but in places like us canada where it's just a minority of the population mission is is muslim they don't have these banks yet so i love this startup up idea because how are they doing so how they're doing so they're they've they spent a lot of time making sure that they can actually get it to be compliant and actually get the financial mechanism to work that took them a while over a year maybe two years now they've gotten that to work and they have basically they have two sides of a marketplace on one side they have people who are investors because you know if you're gonna issue mortgages their average mortgages is like five hundred thousand dollars so it takes a lot of capital to start this us they don't wanna be the one they don't wanna go raise a billion dollars and then start issuing these loans they want on one side to have investors who will put in the capital to fund these loans and on the other side they wanna have the borrowing who are trying to buy a home who can pull from this pool of you know sort of halal financing you know this this financing that's compliant and so they have ten million dollars committed on the on the investor side one point two million in their bank ten million total and then and they're just every week they're trying to close more to those checks i think which is a small amount but the this is like just inbound interest this is not like they've they've haven't really done anything yet but ten million will let you let you do if you just do half million dollar loans that means they can do whatever twenty mortgages right now and every mortgage has a certain value so it's about worth i don't know twenty k a year to them is that mortgage just in their fee that they get on top of it and so and on the other side they have all these applicants i think you know about a thousand applicants and these are what they call super prime applicants because these are people who are doctors lawyers they have good jobs they they have the money they have the means to to to afford their homes they're just looking for a solution that doesn't force them to compromise their faith so i really like this business there's a working model in the uk there's a working model in in africa there's working model into the indonesia there's nothing in canada where these guys are and there's nothing really in the us where where you think they're america i think there's look this up i think there's like a couple million only two two million i wanna say roughly that's pretty interesting i like that i think that there's a bunch of weird rules around banking i mean they're not weird they should be there but and so starting a starting a bank i think it's it's also nearly impossible it's very difficult so what all the neo banks do all the charter banks do not real banks they're not real banks they sit on top of bb or they sit on top of these other banks and they're just the app they're the consumer facing layer but the banking happens with their underlying partner and it's sort of like the lead gen model that you're talking about they go to these banks and hey i can get you a whole bunch more customers i'm gonna spend all the money doing the marketing they'll be banking with you but we own this sort of relationship yeah and that's actually pretty common i use this thing my debit card is simple if you're people i've heard of it yeah this is my debit card it's pretty cool i like it because the customer service i can just text and they're like easy these like young guys in portland and they they're easy to chat with and they answer twenty four hours a they were acquired for a hundred million dollars and i was like it was like a freaking bank that's it yeah and i did it's not a bank yeah and it was what's called bb yeah that's who they used bb compass i think it's exactly they're under they're in there's like a few that are underneath all these now the very first there's a now one of the challenger banks got their very first banking charter banking license which is very rare i forgot their name but they just announced a couple weeks over the last two weeks that so the so now it's very interesting now once that sealed broke because it was so hard to apply for this yeah think we and they all want robinhood hood wants their license bricks once their licensed it's just very hard for them to get that i you need five or what is the number you i you'd need ten percent in reserve yeah you need a certain amount reserve that's not even that problem it's just that there's no incentive for the government to give these out they're like you you kinda high you know tech startups do i really wanna give this to you you've only been around for so long i don't know if i have the trust in you so now the seal broken the first one got it we'll see what what that means but what i like about these guys is they're not a bank they're not taking your deposits they're just doing loan issuance so on one side they have the reserve cap the their investment fund but they're using other people's money opm on one side yeah other people's money to make the the loans and they're the broker and they take one to two percent at the transaction fee and people are willing to pay a premium to have halal financing just like people willing to pay a premium for halal meat or for vegan or kosher meat you know whatever like right people are willing to pay a premium for things that are compliant with their faith i think this could be big and you what's interesting i think that they've had a hard time raising money from traditional vcs because this is they didn't understand i'm hard to understand yeah you have to like you know most vcs are old white guys and you know it's the sort of cliche and you know i know they do look into it but i think that there's now there's the natural challenges of any high aspiration startup they have those that they have the problems that any any startup of that's really ambitious but then they also have the problem of like first they need to educate you about this problem like you saw how i stumbled through this explanation and i talked to these guys for an hour you know and that's where i am after an hour of really trying to understand it but you and you read this by fe con you're you're best so i ran yeah i ran it by him i introduced them yesterday i said hey fe understands this he's muslim he's an investor he's a technologist he's an entrepreneur if he doesn't like this i don't like this what did he say and so he so he he's like i've looked into this he's like a lot of my friends really wanted this i tried to look at what options are available in the us they suck they're really super high premiums it's he practicing yeah like you know to an to an extent like what i wanna know is do really like like he doesn't pray five times a day but he doesn't eat pork right so he's like culturally he drinks but like his dad runs the mosque and san jose and you know like it's it's so even people who are like culture who aren't incredibly devout or into this if he had the option he would prefer while financing overnight if it was convenient and he's like the problem with all the existing options they're not convenient they're not easy to use and they're very high premiums he's like if these guys did it conveniently i think this could be big so he's gonna talk to him we'll see like i'm i'm not a practicing kat anymore are you are any you guys catholic you're catholic for sure right you meet me on friday online yeah i've been bad about it honestly i went to like all boys catholic high school so me too i doing all boys yeah catholic high school i don't anymore but that's another thing i don't eat meat during lent on fridays friday so try not to so it's kinda it sounds like that's what it it's kinda like where it's like people it's spectrum it's a you prefer it but not yeah you prefer it especially if it's convenient for you you'd you'd you know the way henry just said that lot of guilt there like yeah i should but i don't so there's you know if you could make it where people do what they want to do without lifting a finger then they'll do it you know it's great that's pretty cool i like that i like that thing or i like that angle of finding because i don't know anything about muslim culture i don't know anything about hindu culture which is you where where you're from you i don't know you probably don't know too much about kathleen yeah it's kind of an interesting way to like look at how other religions do things right another thing that we should talk about not today because i don't think we know what we're talking about we definitely don't yet is building things on top of banks i think that's super interesting but what do you mean by that so like what simple did and like what the what what's the name of this company man man spell it m man n z i l man okay kinda like what man did a bill building a front end on top of someone else's back end right which is the bank i think that that's really interesting simple dot com is my card i didn't know they did this at first this is kinda what drop shipping is so where you build the layer that says i'm gonna get the customer to a landing page and they buy yep but it's just gonna place an order with this other manufacturer and they'll ship it directly to them super effective i like that with banks because like simple they did this all i mean it's it's a little different the card is all white and it's brand like looking yeah and their app is really good and so it's kind of interesting i i think this is kind of what b is doing it's the totally were card yeah they're layered on top of mastercard i i love these things i i really like that let's talk about a how how many minutes are we in we're we're about an hour in okay you wanna love this we can answer some questions or do you wanna do let's do one of these fun ones so let's do the rebranding words so this was in the hustle group hustle trends the trends hustle facebook group which is like a source for for entertainment and gold which go to trends dot c and sign up and if you use the phrase million million you'll get fifty trans dot code slash might plug i believe that's it is it is it slash million or it's a promo code both both will work trans code slash million or transact com and you guys have this thing where you can sign for a dollar which is pretty dope yeah it's working group love i love it okay so so so somebody in the group did can scroll i don't i remember if i have their name i i i i should have their name to your other yeah there you go okay we don't have the name we should which fine alan you find the the name of the guy who who wrote this because i wanna give them credit so somebody was just talking about like hey isn't it funny how people just re brand stuff and like give it a whole in new meeting so he's was talking about msg he's like oh msg which was like got this really bad reputation for being this food additive of whatever and just rebranded it as umami and now it's this like foodie word that like is good and somebody came into the the comments with like a bunch of really funny ones you wanna know another food one aioli aioli mayonnaise love is mayonnaise that has a little garlic flavor look it i don't think that's true i'm pretty sure it's better for you than mayonnaise look it up aioli is flavored mayonnaise look up aioli versus google aioli mayonnaise telling you aioli is badass but there's like way more yeah you have to do in a separate task can't you can't do this because we have to hear right there what's the answer say it says it right there what's the top result what's it say is aioli any different than mayonnaise is aioli garlic olive oil on males made from egg yolks and canola oil in my offer alright henry winds okay it's not it's not exactly mayo but i like the intent alright so let's go back to the dock chilean and c bass is actually called pat tooth fish yeah it's awesome yeah i love it so so so this guy had a bunch of them for business which i like so or nerves you know when you skip you know i don't i'm i'm like this i skipped breakfast for years because i'm just lazy it didn't wake up early enough and now it's intermittent and fasting it's like this health trend it's like oh i'm fasting till me it's like yeah you skip breakfast marlon and montgomery okay marlon marlon was the original post and then who posted all these comments in it jeff so logan jeffrey logan had a bunch of them that were fire that i like that's the reason i put it on here okay so when you just quit your job because you wanna travel now that's called disperse retirement hilarious which i like when you're a grossly under unemployed writer or marketer now you're a digital no because you have to go live in some low cost area or a coach when you just like to eat beef and cheese because it's delicious and now that's called carnival diet or keto i used to called the salami and cheese redneck char sleeping around online dating i don't agree with all these i'm just i'm i'm relaying logan's good on when you quit your shitty business idea that was battle along and never everyone told you it was bad it's called pivoting i like that mailing fast when you have a fear of commitment and therefore do not own anything and do not settle down you're now practicing minimalism i love that so these are great and in general you know funny to aside i think there's a lot of power to this i think as a leader you often have to re brand stuff so that it's more palatable to your team and or to your customers packaging yeah you have to frame things package them up in a certain way we do this with our sushi restaurant where we realized that if we just describe things better or differently with with with better words people would buy more and or we could charge more because people wanted to have sushi that was more sophisticated so when we called it you know whatever you know atlantic salmon with a blah blah blah rather than just saying salmon that was better or if we would create a whole new word altogether and put a little trademark next to it that was even better than using common words every once in a while i like there's certain things that they use the positive phrase and just generally accepted it i'd like to use like a word that means the same thing but it's generally regarded as a negative just to fuck with people so for example instead of saying like well we're gonna get the customer to do this like we're gonna get them in gonna buy by doing this or we're gonna influence them by doing this i like to use the word manipulate so like yeah let's manipulate let me get them to do this like like where is that by definition work right just a just stick out of what happens if we call it what it is yeah let's just say so we're gonna manipulate up like i'm gonna manipulate this person to like me and they're like are you do at well i'm gonna be nice and charming and it'd be listen to what they said but if you use that word manipulate instead of influence it fucks with them and i love that just a screw of people like yeah know like or like when political people say like well they have an agenda i'm like yeah well like i'm here to talk to you about my agenda which is to do like right of course i have an agenda i'm trying to get you to do stuff i'm like yeah you're you're targeting like someone has a political agenda duh be sure right they should have a political agenda though i love using those words so so heather if you scroll for a second so does that's end of this episode thanks for listening tell your friends make it all happen leave us a review we like that give us the real talk in the reviews because we read all of them and we like it or tweeted us sam got twelve thousand twitter followers down he has surpassed me in the twitter ranking eleven thousand three hundred eleven thousand three hundred county so so he's winning great alright we're out of here thank you