From making $6/week selling worms to making $110M+

so you went from selling worms you how much money does effects have under management now close to one point six billion out does that blow your mind like close my mind blows my mind what are the traits of a savage founder speed school taught you what time looks like and now you think this is how the world moves you're you're wrong you your speed bar is wrong so if i'm a founder what are the most common emotional blockers slowing me down the big one is just fear we have these mindset spread into us by the norm why is it that sort of eighty five ninety percent of all returns in tech have come from the bay it's because the mindset here are slightly different so can you make me smarter as a founder because it seems like this is important don't think of yourself choosing a job or choosing an industry think of yourselves as choosing a network what do you think of people who are investing in open or the the sort of the models is that where the value is gonna accrue yeah i don't get it i don't get it i think they're making a big mistake and what do you think is the j of opportunity whether entrepreneur or an investor there is gonna be opportunity in yeah i feel like i could rule where i know i could be what i want to put at all in in like a days off on a goal less travel a looking bag so can you tell your high school story because when was doing my research it looks like james harvard princeton yeah exeter you know like you went to the top high school the top college yep top business school yeah so i just thought you must either come for money or just prestige alumni something but i guess you were telling told me before we started that's not the case yeah so i love the phrase you they got me out of the mud i i love so yeah they plucked me from from the mud i i grew up on the dirt road in hampshire about a mile from the nearest paved road my mom was a music teacher might she made about seven bucks an hour and my dad was a a carpenter sometimes she was a a hostess at a at a nearby restaurant and we had twelve cats and two dogs we just we lived in the middle of nowhere and i would sell worms to fishermen who would be fishing nearby that was my first job when i was sick i my first job my first startup up was when i was six and they would come by and they'd need worms to go fishing and so i would dig them out from under the apple trees that were nearby and and put them in the empty cat food cans that we had in the house and sell them for fifty cents and i would make you know six bucks a week during the summer because they would come up the driveway and i would just sell them warm and i went on to do all sorts of other businesses but what happened was in sixth grade i got beat up by guy named james cody i hope he's doing well but he was kind of brutal i'm sure he did not have an easy life right because he was making my life hard too and and when as my friend lance casey picks me up off the ground he said don't worry james we're gonna go to prep school and i said what's prep school and he said it's where the smart kids go and i said do they fight there and he said no they don't fight there and i said well then i wanna go there because i'm i'm a small guy be i still weigh a hundred and sixty five pounds i mean as as my son's call me who all now taller than me they call me a victim weight dad you're still victim weight so so anyway fighting wasn't my forte and so i went home to my dad i said you know i wanna go to prep school he's like how did you hear about pre school and i said well lance told me now lance dad was like the local surgeon and lance was half iranian and half italian and you know the kids kinda picked on him too and and whatnot so he and i were sort of bonded together and and that really changed my life so my dad figured out that i needed to take these ssa tests so i took the test and then and then i applied and and they let me and we wouldn't don't have any money so they just paid it so exited paid for it and so that that really set my whole life off in a different direction and i you know i had you know used clothes from goodwill and everybody else had fancy clothes and you know but and everybody's who's grinding we just grind it and so by the end of my junior i'd skipped out of the first two and a half years of princeton engineering so at the end of that of of the high school they said you know you can you can choose harvard princeton yale because you've achieved all this stuff you built a hover craft that went thirty five miles an hour you're clearly an engineer you know pick which one you wanna go to and i said what's the furthest place from here so i have been assisted by the whole system all the way along and you know people talk about beat their chest and say i'm a self made man and it's shit like most most of us our function of a sixth grade friend who put us on a completely different path right and you went from selling worms for fifty cent of making you know fifty cents of worm to how much money does have under management now close to one point six billion yeah does that blow your mind like close my mind i've written here a bunch of kinda like the greatest hits so these are some of the big ideas that you've shared with me let's see your life on network effects so the effects dot com website is the second most popular vc website in the world and produces a lot more content they've got like six hundred people you know right we have ten people but we're the second most popular and the most popular blog post was called your life on network effects can you do the quick explain so for somebody doesn't know what network effect is the network effect is every new person who uses your product makes the product more valuable for the other users of the product and the great example is twitter the more people who are tweeting the more valuable twitter becomes for everyone facebook microsoft operating system more people using microsoft operating system the more it's more valuable for word perfect to build their software on top of microsoft so that more people can use it and the more people that using word perfect the more i can share my word perfect from you know file with other people right so these are all network effects so if you look at the top you know seven companies in the world in terms of market cap five or six of them have network effects at their core and that was not true thirty years twenty years ago and so most of the big things that dominate our life whether it's comcast or whatever these all have network effects business and so we study them we invest in them we have spent the last twenty years becoming sort of the world's experts at them we've identified seventeen of them they're mathematical principles right and in talking these through with eric and others he started to get these wide eyes like oh that affects how i'm dating oh that affects where i should live that affects what happened to my dad that and i was and he was realizing that the analysis of networks and the network top apologies and network dynamics was actually really applicable to how we live our lives so jimmy me a simple example so whereas besides business how does network effects work in my life dating and parent you know france the simplest and most relevant is where you choose to live so a city is a network right and if you choose to live in a city you are choosing that network and so basically what the article says is don't think of yourself as choosing a job or choosing an industry you're think of yourself as choosing a network okay my company is a network who i hire into my network which journalists i get to write about guy bond that person into my network right which investors i bond into my network right so we think of everything once you start thinking of everything as networks like the whole world looks a little bit different to you where should i go to find a spouse well think about your network when you get married you're joining her network right and she's joining your network you're gonna have to have christmas in thanksgiving or whatever with her parents forever right like and what your life on network affects does is it breaks it down at into seven phases of your life where you are basically choosing a network and and it'll have a really big impact on how your life plays out let's pull another card see what okay okay savage founders yeah so so you know look i've been a founder four times and then the fifth time is starting a venture firm so i have been a founder myself and i've invested in i don't know three hundred different companies over the years and the thing that keeps coming up is that in order to do something extraordinary you have to be relatively savage which means you have to be very fast you have to be very competitive and you you tend to have to be pretty aggressive and and you just can never can never stop and a lot of people say oh they need to be mission driven but that gets confusing with that word or they need to have had childhood trauma and that that's that may be true for some people for sure but in the end we use the word savage just because you just go forward every day you know it's like you wake up every morning and you're listening to bring me to life and you're just you know you're cranking and and and that sort of and that's that's what we look for in founders and that's who i like to be and that's who i like hanging at with and who what are the traits of a savage founder so you so i think people would immediately gravitate towards like maybe hardworking or determine things like that so the number one thing that it it rolls up into his speed so you could you could lay out sixteen characteristics that you're looking for but all of those lead to one thing which is speed and so if we measure speed when we're meeting with the founders that's the main thing that determines and and if you look at their speed over the next five six seven eight ten years when we're working with them that's the main thing that determines their success is that now to get to speed you typically have to push out people who aren't fast so you're end up firing a lot of people who aren't willing to sacrifice who don't enjoy you know type two fun the fun that you look back on and you suffered but you look back on it as if it was fun right type one fun fun in the moment yep type two fun look back on it got it that's right and type two fun is is you're suffering through the whole thing but but at the end you look back and realize it was fun like up for a hack for three straight days and then winning the hack right like that's fun you know not sleeping very much for eighteen months right but then it succeeds and you've got this giant company is really cool that's you look back and you're like i do that again right you know you think about women giving birth like it's type too fun like yeah yeah and they look back and like i i'll do that again so you know i think that that's a that's a main character but it rolls up to speech the other thing is that you can't be afraid of pissing some people off like and the people who aren't afraid of it of just saying what they're thinking or having a different view and not pleasing everyone in the room right those people end up doing a lot better because they see the world differently they're not they're not scared that we can measure there their personality type actually if you look at the best personality test in the world it's called a five factor personality test mc acosta in nineteen seventy two north carolina alright this is the best test in the world and one of the attributes is agreeable ness or disagreeable ness that's a scalar one of the five scalar that they use as if you are disagreeable you end up doing better as a an entrepreneur or a founder mh and as a creator because you don't have this need to please everyone all the time and by it's simple things like you know i remember i went out on a date with a girl when i a teenager and she asked three or four times to get ice cream from behind the counter you know and i'm like at some point you just gotta buy the ice cream my friend and i was getting a little upset because i'm more agreeable and other people were more she was just very disagreeable right she was great it's just a personality tree and so those sorts of things end up showing up in savage founders i think about that with founders we've invested in too it's like they have these almost rough edges that are and and they have things they believe that they're gonna do and they don't really care if you think it's nice they don't really care if you think it's right yeah they believe it's right yeah and that's kind of all that matters and whether they whether ninety nine percent of people agree with them or not it doesn't matter and those people might not end up having great friends yeah they might not have a normal peaceful life but they're gonna potentially do something extraordinary and as a venture investor we have to look for that and in general i've tended to surround myself with people who are both extraordinary and nice like yourself yeah but other people don't don't really care so you know like more of a peter teal type or whatever where he's just like i just want the truth i i don't care if i break people's beak in right who comes to mind savage founder because you know i have this theory that you don't know what a level twelve like on a scale of one to ten you even know what twelve looks like then you meet someone they break your frame you said oh i thought i was already yeah ten out of ten hard work and then i at david go yeah i was oh yeah don't know the first thing about this i'm a seven yeah that's what at level twelve is yeah who kinda broke your frame as like wow that's that's the real savage founder yeah i mean a couple people like you know think about the posh mark ceo right he was so determined he was constantly revisiting his flows he was constantly rebuilding the product he's constantly changing his mind you're running a very complicated marketplace product you have to abandon what you're doing six months ago and do something brand new it's a very difficult business to run and he did it for like eleven years and exited for billions of dollars right chandra he's amazing guy but he's also a nice person you wanna have lunch with them so he's he's in that boundary layer which which i really appreciate right a guy like con who nobody knows yet he's the ceo of firefly which is those videos on top of yeah you've you've got six different businesses you're running inside of that it's a very difficult business to run he went through covid he lost ninety five percent of his revenue he had to adjust to that because no one is on the street to show ads to and so he's survived they're now profitable big company everyone's gotten out of the space like tim he's gonna win the space right people will tell his story later but yeah just savage founder and you said it all rolls up to speed yep but you've also said something which is speed is not what you think yeah what does that mean i actually don't know what you meant by that so most people think speed means you're working eighteen hours a day it's not that it's about an emotional flexibility that allows you to abandon what you were doing before and do the right thing going forward it isn't speed on your original idea it's speed toward success how and that isn't typically what you most ideas don't work you know i always say i have eighty three ideas a week and every three weeks i have a half an idea that's good i mean it's literally that volume of ideas the difference between what's good idea and what what doesn't work and it's okay that most things don't work and the flexibility to move toward what will work is what speed is and it's mostly your emotional tenor and it's how you manage your network around you how you manage your spouse to let him or her know what's about to come it's how you manage your employees so that they know look we're gonna iterate we're not gonna iterate this twice we're gonna iterate this twenty eight times you know that's where snap came from i think it was their twenty seventh app like is that true where what something like story yeah but i i don't know their story in detail but i i understand that it was many many attempts before snap actually work and if you look at you know our gaming company that we did it was our seventh game that final work if you look at my first company it was our twenty seventh test which finally got you know viral you have to prepare everyone around you for all the changes which ends up producing speed so stan and i have never failed we've never lost a dime for anyone we've always made people money for the last twenty five years because we had speed toward the goal of success not speed toward the original thing we were gonna do and and so we got out out of our own way emotionally and so i actually have this lecture i given private about all the emotional barriers you are putting up in front of you that causes you to go slowly and you think it's fast because school taught you what time looks like and then maybe you work for a big company to get a good brand like google or microsoft or whatever and now you think this is how the world moves but you're you're wrong you your speed bar is wrong right and you've got to you've gotta raise your speed bar hey quick announcement so sean here i wanted to tell you that i'm doing a free ceo boot camp why am doing this i'm doing this because over the last fifteen years i've been running my company and i've found a few things not a lot but a few things that are incredibly helpful that i kinda wished i had learned earlier that nobody really seems to teach but have been incredibly helpful for me as a ceo of my business totally free no obligations just doing it for fun so if you're a business owner out there and you wanna come to this thing it's on april sixteenth the link is in the description below and i'm changing teaching something that i had found in a book that i read in the bathroom in a bathroom months and i read this book called the one minute manager and as somebody who hates managing people but wants all the benefits of being a good manager this book was incredible for me it's this book called the one minute manager and i stole this one framework from it and i'm gonna teach it to you at the event and i'm gonna do live q and a with people while there it's gonna be lot of fun totally free you should come if you want it's in the description below i have a thing on here i think it's called the or is it the art of un learning yes is that what you're talking about like your taught things you learn things but then as an adult there's almost like these i've have them five seven things you're i have to un learn these things what are these this is i mean there's so many things it's about speed it's about you know the emphasis on human communication relationship versus the actual product like everyone focuses wanna a build this and do no dude you've gotta talk to people you've gotta talk to your customer you've gotta think about that communication we have these mindset that that get bread into us by the norm right and if you wanna do something extraordinary you have to get out of those mindset i mean why is it that sort of eighty five ninety percent of all returns in tech have come from the bay area it's because the mindset here are slightly different from new york and london and la and our other things and as a result things just happen a lot faster and if things happen a lot better and we should say that again so you're saying the world of technology which is opens to everybody to compete yep everybody's aware of it with y'all all got phones and they're on earth and you're saying eighty five percent of all of the ver returns all the money that got made yep comes from this how many square feet yeah how many square miles is is like seven million people seven million people in the bay area yeah and eighty five percent the returns happen here yeah you gotta ask yourself why right and yep and what you're saying is one of the things is there's a certain mindset a certain way of doing things a certain speed of operating that is different yeah and those are all just assumptions and mindset we make right but the it's literally an order of magnitude you can go faster than you think you can and once you understand that once you set your speed bar that way then life opens up you and that's what savage founders do they realize it mike cassidy is the he was he was the original speed guy i don't know if he was on my car mike cassidy is a guy who founded fire he founded a direct hit the one of the first search engines he sold it for five hundred million after five hundred days he's he's done i don't know four or five businesses they've all worked he ended up at x for a while doing loo and he's just he taught me about speed he was the one who originally figured out in the nineties i can tell you what what did he say he's like you don't need to take you know three months to raise money and get an office and all that stuff if you can do it in four days i can raise money in two days and i can get an office in a half a and i can hire my team in three days and i can have my product out in two months and everyone else was taking two three four years right he was literally doing it two three four months is this a shoot for the stars in your land on the moon situation where okay even if he doesn't do it in two days he does it in five but five is way better than the default five months that could be it yeah that could be it i have a a couple of stories so sometimes i hear these stories about you know you elon built the colossus data center in orange twenty two day has normally it's two years for permitting and then and you hear these stories and it's like wow that's pace that's speed but it's also a little bit like well i'm not building colossus so it's almost distant for me but i'll give it like another story we have a buddy i think he might know so su ali he we were advising a company the company is like we really need to raise money desperately need to raise money i was like okay well we'll be on let's get on the phone now they're like okay we don't have it ready yet so you just told me you desperately really need help let's go so we get on a phone call and we say just give us what you got for so far for the pitch yeah and they gave it to us and we give them some feedback and they're like oh wow this was really really useful and goes great how long do you think it's gonna take you to make these changes like we'll reach back out next week and i really want like so thankful for your help wanna see what happens he goes next week i thought is important like it is important he goes cool like i think you could probably make get these changes done or most of them done eighty percent of them in the next three hours so let's talk again by lunch three pm by lunch yeah exactly so he was like we met at eleven and he's like we're gonna meet to again at three yeah and i just didn't even know that was like a norm you could do especially externally to someone else's company be like why we're not having two meetings today why not why not do two days and as soon as i saw that my own speed bar got raised because i realized like something that was almost an invisible wall really wasn't real yeah and i could change that and make that the that small difference in my own speed pace right so most people think of speed as process or stand ups or schedules or can board isn't it's your own emotional mentality mh that's what speed is and you're saying there's like this list of emotional blockers if i'm a founder what are the most common emotional blockers slowing me down from being higher speed the big one is just fear you're fearful of getting it wrong because you were taught all through growing up that getting the answers right on the test got you love mh got you appreciation got you status got you into the right college and in the real world that's just not the case you're just gotta like like elon just blow up the rockets blow the rockets blow up the rock so the rock is no blow up anymore right and and so his his speed bar is what you see right and so he has broken through into a completely different realm the one that my cassidy has always lived in right and there's just a few of us living in that realm and so much as possible once you live in that realm of your mind yeah you get now that you say you can see it whatever like do they set a target which was do will wind down in two years or whenever he's like we don't need the full term why would i take the full term two years we'll be done we set a date right that was like the first thing you did was set a date right and people burn out and people like oh i i worked there for four years got equity and i'm gone man i never wanna do that again it was miserable they look back and you know what they talk about it thanksgiving well when i was working at tesla i was working at spacex like guess it's the most amazing time your life you talked to people who are in world war two and they're like what was the best years of your life during the war we were together we were bonded we had a mission it is you know so this is type too fun right and and going fast as part of that you have this diagram i thought was pretty cool yeah it's a technology window you have actually two little things here so you have this one which is the technology window curve i hadn't seen this before yeah and then you have this kind of historical thing it's like railroads the technology was in a window was open for forty years cars twenty five years radio of twenty four years and so you and now ai eight years so far so far so can you make me smarter as a founder because it seems like this is important because yeah timing is everything being early is the same thing as being wrong yeah being late is the same thing as being wrong so getting the being knowing where you are in the window seems important but yeah i've never really talked about it this much yeah so look i you know as i i went to harvard business school and i lecture at stanford and lecture at berkeley and mit and and i've never seen anyone teaching this and it was really surprising to me and basically what you realize is that most big interesting world changing companies are result of riding a particular technology wave so if you think about the railroads the giant railroads southern pacific railroad which transformed america they leveraged a new technology which was railroad technology both the steel for the rails and the the steam engines and all the stuff that came with that technology and that that window in the united states was open for only forty years if you were then that was between eighteen thirty and eighteen seventy if you were trying to start a railroad company in eighteen eighty you got your ass kicked right and they all want to be rich and famous like the people who had been building it the forty years earlier but they couldn't anymore because the technology window had closed ninety percent it was just closed you you wouldn't even think of starting a railroad company today pretty obvious but then you look at other technologies like cable and that was open between like nineteen seventy nineteen eighty four only a fourteen year window during which all the cable companies that were meaningful were created anybody who tried to do afterwards got their same thing was true in consumer internet once we looked at it and you know it it opened in nineteen ninety four because remember ninety three nobody use software right no consumers no small businesses no enterprises so this is very we had some as four hundreds running around and it was all on prem software and blow but it was it was very small suddenly we now have four billion people using software and that was because of the browser and the internet and tcp that opens up and between ninety four and two thousand thirteen it was a fantastic time to start companies in the consumer software space and invest in them from seed or series a in two thousand fourteen the window is closed you could look at the number of unicorns created in two from two thousand fourteen to today and it's it's really small mh like discord tiktok you know star link chat there's like ten of them mh in the west versus how many you know during the the previous let's say ten years you might yeah you that's in a year right and so what we haven't been talking about is that the technology window closed like it closes for every technology one you know window if you look at automobile same thing that all the automobile companies that we know of started between ninety eighteen ninety eight and two nineteen twenty eight right until tesla when the underlying technology window open around lithium batteries and electric engine and now we have two interesting companies tesla and review okay so this this opening of the technology in the closing of technology window is very predictable we don't know how long it's gonna be sometimes forty years sometimes it's eight years like with cell phone networks in the united states was just eight years but the the phases of it are very predictable and there's just six phases in it and and you can see and so once you see these sets phases yeah once these six phases the first phase is just it's a hobby is really interested in the hot and the and the technologies because of fun right geek basically and this is kinda like the what the nerds doing on the weekend we'll all do ten years type of that's right what was a toy before is now a big thing that kind of idea and then there is the the second phase is the status and money phase where suddenly some geek makes a ton of money and gets status and then now everyone's interested ocular sells to facebook and everybody now can understand it because the the the abnormal people the savage people are probably just hobby right but normal people are money and status seeking right right so they can understand money status i want that how do he get that or how does she get that i want that so that's when the knowledge diffuse what's going on over there with those or that internet thing podcast like i start talking about a bloggers start talking about it there's conferences pop up about the ai wave and agents and all this we're we're diffuse the knowledge now more people are getting in on the secret that's right and then you get a blunt tons of competition flows in a lot of investment money comes in teams form everyone can understand the idea because the knowledge is diffuse and so five or six people get together and start a company and then they get fun below and then the incumbents arrive the incumbents arrive because they found the network effect to had a better management team they raise more money and crush the other people something happened to give them their def def right and they established themselves as the incumbents and then they just squeeze down and it does the window closes if you wanna watch an interesting beautiful drama amortization of what this looks like watch the movie tucker with jeff bridges okay it's a story i think the the movie came out of the nineties it was about something that happened in nineteen fifty two and it shows you what it's like to build a car company in nineteen fifty two okay you just get your ass kicked by the incumbent you said the window shot this asking there's nothing you can do there's nothing you can do the and so we see this pattern over and over again and i think it's very important for us as the wind owners opens due to the technology underlying technology and it closes because the the winners get network effects and their flywheel is spinning so fast that even if you're hardworking and you're super smart and you great design and a great engineering yeah you can't compete with a network effect once it really kicks in that's right and it could be a network effect it could be an embedded ness it could be a scale mh or it could be a brand those are the four defense abilities in the digital world that now exist so one of those quick example of each of the fours so like let's do a simple brand so a brand network effect would be something like ford people just keep buying their ford's because they're loyal to ford even though you know the toyota trucks might be better mh you have a brand effect around nike obviously i mean i feel a certain way when i wear it right you know i i project something everybody knows what it means when i wear nike so there's sort of a a knowledge network effect but we we still call it a brand effect quite close to a network effect is just in the mind would like love all luxury brands basically louis vuitton etcetera yep yep those exactly so those have brand effects the network effects are the most powerful because they're really unstoppable and look at facebook i mean they're now one and a half trillion or something and the more people that there they're the more valuable those those networks are instagram what's up and facebook that's classic network effect and you've got embedding like oracle they they embed that software in your operations you're gonna retire before you rip that stuff out right you're they charge you twenty five percent more next year you're gonna pay right there's nothing you can do right it's just we had a start up that was trying to get rid of his what are the the birth alarm they're trying to get rid of our oracle back of the day and it took us like a year and a half of of the of the worst work that every engineer hated just to get off our oracle dependency right and how much was it worth in the app i don't know so that's an embedding and then scale would be something like walmart it's just so many stores so much buying power they can buy cheaper they can sell cheaper everyone just goes there because it's always gonna be cheaper there where is mister beast fit in as a u because a content creator right like he's he's kinda scaled basically he gets he gets paid the most so he invest the most he has the biggest kind of set productions it can give away the most money which creates a lot of of scale effect that's a scale a scale effect and it's a very weak one mh yeah no he's very vulnerable yeah just like buzzfeed was very vulnerable and wasn't gonna go anywhere and why why is that so i explain more well because he's in what's called the fresh produce business which is he has to keep producing fresh produce and putting it on the shelves and then it has a it times out mh and he's not building any network effect he's not building any embedded this it's just you're you're consuming his stuff on youtube and other channels they have the network effect right and and he's just he's playing blackjack at the blackjack table and as i've taught my sons you don't wanna play playing blackjack jack you wanna be the house and what would you do if you're a content creator then how would you if you're mister beast right now how do you not be the first produce business you think about how to create a network effect you think you think you go and learn about the seventeen network effects and figure out which ones you could build right i would go for so like he's got this chocolate brand now right selling feast and he literally told me he sits something the great he goes we he took us to walmart yeah so he got into walmart which is like a heart once you get their same bedding right he's like i have shelf space now yeah doesn't matter if you make it out the truck i have shelf space yeah and he goes i sell this color of blue he's like people don't he's like i just need to keep showing this color of blue and i need to sell this baby blue thing is you know that's that's my game where she sells this dark brown color and i sell this baby blue color color yeah yeah and he might end up building a brand around that chocolate right but it'll take years and it'll take hundreds of millions of dollars and it's not clear that'll it'll happen right what's an example of somebody who you think has been clever about this and done it whether they're content or something else where maybe most people in their industry would have done something that's a bit of a doesn't have network effects but somebody figured out somebody who was a little bit smarter or stumbled into something figured out a way to do it with network effects i can tell you a a funny story about where it should have happened and it didn't which was dana carve asked me about what should i do at dana carve dot com and i said what you should do is you should get robin williams and one other guy and the three of you should create the stand up comedy website like for for that niche of youtube right and then you guys judge every week who's the best and have contest and whatnot and i said you create an each of you on thirty three percent of the company he raised some venture capital and then you sell it for a billion to whatever and i explained all this to him and then at the end of the hour and a half he said yeah so what do i do at dana carve dot com right like he just he just couldn't get out of had the same conversation i went to husband and hospital has become a friend and he was on the podcast and he was he was asked me afterwards it like what what would you do yeah and i asked him i said what comedian today they all sell their specials to netflix yeah and they're super happy like we got the bag right ten million dollars twenty i don't what netflix plays but let's assume it's tens of millions of dollars for dave chappell whoever but it just makes netflix network effects super strong right so they might make ten million but netflix is gonna become a multi hundred billion dollars company in the process right but it comedian could especially if he at lucy k chappell yeah you could theoretically safe if we just put our content here yeah we own the network where all the comedy content is that's a much more valuable thing to own yeah than this special yeah but it was kinda of the same thing it was like yeah but they're throwing a big bag at us yeah and also yeah i want my stuff to be seen that's you know if i go i get distribution if i go if i start to make my own thing i'm giving up distribution that's i don't know if it's worth that's right but somebody if somebody played that long game i that's right i would be very that's right and that is all network bonding and that is all network dynamics and that is exactly the game and very few people thinking that way like a vampire attack like saudi arabia tried to suck off some of the pga guys and and create a new golf thing and then and up emerging back or the us nfl what's a vampire attack a vampire attack is when you go into a network and you try to suck out the blood from what makes that network work okay and you you essentially try to create your own network effect on your platform by sucking out the energy that had been developed on their platform so was it smart what saudi arabia did and the live tour was that like did they execute well or what what's was your takeaway away i didn't follow it that much it looked like it was only a two year effort and then they they collapsed after two years so i don't know that it was perfectly executed but it is the right idea right it is the right idea because they were being told by the they're you know they're trying to improve their brand right they're trying to do brand association to improve their brand everyone's trying to ratchet it up the status of their own brand whether it's saudi arabia or whoever and they they were trying to borrow off the pga and the pga was putting all these restrictions on them and they were they didn't have a free operating field you know they were it's like they were on ios and they're they were like i wanna to pay thirty percent to you let me do my own thing and they tried it and then it's just hard there's an article on on on effects dot com which people should read i think it's one of the better articles but it might not be as red as it should be it's called network bonding theory it's a little bit boring title but i wonder why people didn't yeah network quan theory it's it's and it explains it uses messy as an example within the social within the socket networks and how much he makes for the whole networks oh so what what's the story there with messy the basic story is that in the it was funny because this was before he went to miami right i said you know psg offered to give him that's much amount of money and some tokens because they were doing these like crypto tokens and they still aren't paying him enough like everyone was outraged how much they were paying him and i said they're still not paying him enough because he moves the licensing for tv rights and he moves viewership and he he is gonna bring so much more attention to the french soccer system so that every comp every game that messy plays around the french system is gonna be watched three or four times more by the world than it would have been last year right and the value to them of that is way more than they're gonna end up paying him right and so you look at tiger woods if tiger woods plays the pga makes one and a half billion dollars more per year and if he's not playing it's like these nodes in these networks and so if you could get tired to go over here and you could get this in this and if you did the right vampire attack you could actually create a higher status better thing right but it's literally about measuring the nodes and measuring their effects and then having a strategy for the order in which you get them what you compensate them with right if you compensate them with money you could compensate them with titles you compensate with status whatever they want figure out how to compensate them and that's what the article walks through is all the different ways you can compensate people to come to your network i have a real world example of this when i was at twitch microsoft tried to do a microsoft youtube they're all trying to do a vampire attack on twitch so twitch was the number one gaming network for watching people live video games and the number one streamer was ninja so microsoft came out and they offered him something twenty thirty million dollars come to us yeah he might have been making six million or seven million a year on twitch yeah i i don't know these are yeah hypothetical numbers but like some they offered it more than he was making by like a cup you know two three x yeah so he leaves and it's code red inside twitch there's the there's some people who are like we you know we have to keep the integrity you we have to keep our community we can't let them just poach our streamers we have to fight and then there's the finance people who were like that doesn't make any sense that's too much money and then there's people who were like i think if we lose too many people at some point there's a critical mass where people will leave twitch they're right how do we solve this problem and finance we wanted use the finance tool the community people wanted to make an imp heartfelt argument and you know there's other people who are the strategist who are trying to make an argument about like hey there's some tipping point we don't know where it is but there was some math was like you said there's like this is a mathematical principle and so one thing one of the ways that we looked at it was for every viewer forget the streamer for every viewer how many channels are they bonded to use the word bond yeah so it's like they come every every week and they're watching yeah three channels four channels five channels yeah and it turns out if you just take one of those channels out they'll just swap to another channel no problem but as soon as they lose a certain number of of channels in their bonded network they'll just go wherever that is and so strategically if one of those other companies had figured out which network of streamers to go after not the ranked list because they would take ninja who's a fortnite streamer but they wouldn't take the other fortnite streamers they would take this other guy who plays this other style of content yeah and their fans didn't overlap yeah so it was very ineffective whereas if they had gone and been like alright these fifteen streamers are all part they're all core the network all of the them stuff cluster each other cluster a cluster yeah if and they may not look like they're the biggest but there's that would have created the tipping point but they didn't have due the data or the know how beautifully described that's exactly right yeah that's a great story that's that's a perfect example of network bonding and how you can do the math on it and you have to think about it right or you're gonna waste all your money in time right which is what they did yeah alright take another one yes so what do we got here language first yeah so it turns out that look the way i look at it there are five things in the world that kind of explain everything okay one of them is language one of them is networks like if you look at network dynamics like wider rulers rule what's going on with trump what's happening with elections these are all network dynamics and if you study networks you can really understand all that energy is another one mh which is who has the oil who needs the energy to live because our our bodies are just absorbing energy and expanding energy and trees absorb and spend and households absorb and it's you can actually understand the entire world just by studying energy and energy flows but one of them is language language and mindset what do you mean by language so what language so about english or more specific than that more specific so does a guy named george leg the people should study he's a semi epidemiologist over at berkeley and he was the one who found out that the republicans in the seventies said look we are never gonna win another election unless we changed the dialogue in this country in the united states so they went around they created a three ring binder and they created language they said when we talk about tax we're gonna talk about not tax cuts tax relief because we're gonna use the word relief because we're gonna imply it's a disease or a sickness right no one's gonna be thinking that we opposite a stress relief right what are taxes you stress you out right and so so they went through and for every subject they developed they thought about the language they were using and then they took they printed tens of thousands of these three binder and they went all around the country and they took every republican and they say use these words everyone used these words and we will turn the situation around and that was that was just like eight years or six years before reagan got elected wow and it was very very effective and george lake off is like hey democrats you guys have to start thinking at this level and he's been streaming this he's just age who's this guy he's a and then a consultant and he's got his own institute and and and then i think he's retired now but he should study everybody should study whether the were republican or democrat doesn't matter like this is the way the world functions it functions on language and you have to notice that game being played like people are like oh we're gonna build a product and then we'll market it i'm like no dude pick the word first and then figure out what the product does behind the word because the word has a promise to it so in in silicon valley i feel like you described it well people think name of your company doesn't matter just pick one is fine yeah oh look google random word don't worry about it yeah so people think names don't matter yeah and people think marketing and language comes after you build which is go a great product and then at the right before it gets out the door slap few labels on it right in description that'll be enough you believe the opposite so you believe names really matter yeah and that language really the matter could you give me wide names matter very practically it lowers your cost of user acquisition and increases your lifetime value to actually give you the business that you want so we were building a game we knew we wanted to build a particular type of real of of strategy game and we had to decide what call it so we tested out names and we we went on facebook we spent two thousand dollars on ads saying wars of mars wars of space wars of atlanta wars of the amazon wars of egypt and we tried all these different places like where were we gonna have the wars and the number one click through blow mud it was atlanta and so that's so funny when you just said them immediately when you said wars of atlanta i was like that like my my pick would have been that one great the five you just said so that works and so so then we said okay we know it's gonna be in atlanta now what is it is it gonna be amazons of atlanta is it gonna be realms of atlanta is it gonna be wars of is it gonna be dragons of atlanta blah and we went down we did another twenty of those and we spend another two thousand dollars and the number one click through was well the number number one i click through is amazons of atlanta but we knew what people were clicking friday they were looking to look at you know girls girls drawings drawings to the girl so we discounted that and we say what's number two number two is dragons so we're like alright that's the game dragons of atlanta right and we knew we would lower our click through rate our our our cost of click through by seventy five percent right which would give us some massive advantage over the other game and companies that were buying ads on facebook at the time and so we then told the game developers it's gonna be dragons it's gonna be in atlanta and and so then the game rolled from there right and and then the end we were doubling every day and in in the year two i think we did a hundred and twenty million revenue i mean it's you know we merged with k and then and then and then and then the company grew like crazy i think we're fifty five percent of the revenue when we merged i it was like crazy yeah by the way language is one of the ultimate network effects right yeah english why why are people in india china studying english because it's english is a more valuable language has a higher market cap because more people speak it especially in markets that matter you know can't go new york if they don't speak english so i don't know mandarin today or you know i don't know sw but if ninety five percent of the world spoke sw he i would have to learn sw he it would be the most important thing i could do in my life nice he's joined that network of sw he because that was that's where all the the value is so wilson you had said something about language too where you said it's not just about you write language that will describe it to your customers first you're you figure out the words because you're describing to yourself what you should be building mh and it basically gives you clarity as a product builder do you have any stories or examples that that kinda drive that home yeah we had a we had a company is i don't know two decades ago we had a a product that was allowing you to store your digital photos digital photography was new and we're like store your digital photographs here and people would come but not very many people were coming because it wasn't a multiplayer game i store them there i retrieved them there single player game so i said okay guys we're just gonna change the homepage to say share your photos and i just changed the name i changed the word right on the homepage and my team said but james our product doesn't let people share photos we're lying to people right that makes me really uncomfortable and i said so fix it and so three days later they had figured out how to put in features that allowed you to share your photos and within six months we'd registered forty seven million people viral forty seven million yeah back when there was like eight hundred million people using the internet so it was extremely viral because we changed the word wow you also had a lot of viral morality with tickle yeah tickle is the interesting name first and then you had a lot of viral there do you have any good tickle or viral stories yeah so i i i learned about the importance of words in part because the first name i had for the company was emo which none of you can know how to spell know what the hell that is and when i changed the name to tickle in the middle of it my board almost wanted to fire me the entire engineering team threatened to quit they came to me and they said we're all leaving we don't wanna work for a site that sounds like a porn because you're changing this name to tickle and everyone was against it and i knew everyone would be so the process of deciding on the name i picked the two most language savvy people i knew in my company and it was just the three of a suicide and then we announced the change we did not let anybody else a little bit like the luca right trade trade you it's just if you wanna get something done you gotta kinda keep it close to the chest because you know people will be against it wanna complain and wine and do all the things they do so we did it and the traffic went up thirty percent in a week and we had gotten an offer for forty five million as a company when we when we were called emo and then six months later we got an offer for under hundred and ten so it literally doubled the value of the company by changing it to a good name that was spell memorable interesting fun to talk about and so i learned wow you can double the value of your company by having the right name and so that then led me down to watch more and more language and then learn about george leg off and all that kind of stuff and so we had to use that language ability for our viral pass we were in the fresh produce business at tik and we didn't have a network effect initially and so we had to reinvent the growth channels every three months explain what it was and what what was tickle was a site where you could take self assessment tests so think the first buzzfeed okay so we were the first people to put self assessment tests on the internet is that a fancy way of saying personality quizzes or personality quizzes yeah yeah and we had you know five phds on staff and it was it was legit and you weren't trying to make something silly you actually wanted to make like kinda of myers briggs the type of stuff yeah you you could actually learn something maybe being full about your yourself your character your how you're wired so that you could make better life decisions yeah yeah that was kinda what you wanted to sell not what the market wanted yeah what the market wanted it was something like which breed of dog are you or who's just celebrity match right or which victoria's secret pain are you you know that kind of thing and those tests all did really well and got a lot of traffic and so about eighty percent of the test taken were silly and twenty percent were serious but yeah how did you even discover the silly ones like did you one day you were just like let's try this at lunch or well how did that happen what happened was we were off salary we were running out of money we were almost dead and never even heard of off salary is that just like the phase right before death yeah yeah rick rick mere was my c cofounder founder we were living in boston at the time and we we were off salary for six months at that point and we said well fuck it yep you know so we get to the fucking moment yeah which is always the best moment two most powerful words in the in the entrepreneurs dictionary right you know you get you get you get clarity finally that you're not gonna do what you set out to you're gonna do what was gonna work right and i said well if fuck it let's just do something that will get traffic because we gotta grow this thing so that we can survive and i are friend who worked an advertising in new york and he said if you want people to remember your ads put the puppies and babies in the ad and then we watched the super bowl ads i'm sure enough they all had puppies and babies in them and so i said hey guys let's do a puppy test and a baby test and they said really finally we can do something fun they were so excited the team was so excited and i said sure and they said well if we're doing those can we do the who's your celebrity match i'm like a fuck go ahead and so we put up the dog test and the baby test and the celebrity match test and eight days later a million people are trying to get on the website wow it was just super what we call novelty viral there was no mechanism for it there was no ab testing that we did we didn't manufacture the reality it was novelty right novelty the person had to tell another they wanted to show another friend doesn't terribly that's right it was such a cool thing for them that they they had to bring it up at lunch and and you sell this company for a hundred and ten million or something like that were you rich before that or that was like your moment to like make it i was not rich i had a white toyota corolla i bought for ten thousand dollars and we my wife and i had two babies and we were living in a rented department and was the company like really successful you did you think it was worth a hundred and ten million dollars or you're like holy shit why are they offering me a hundred ten million dollars for this no no it was definitely worth hundred and ten million it was worth more than that because the company the bought was monster and they needed our viral ability they needed our network effects thinking they needed all the tests we had for all the but as a standalone alone business was it kind of gonna be worth a lot no no we would have had to iterate into something else where we would have had to become the yeah we would had to become more like facebook the problem was we'd started our social network without real names right and you you told me some story about when you sold you're like you did something at the last hour or last minute of the sale yeah what what was that story so we were flying to new york with the fifteenth four of us to finally pitch the sixteen person board of monster they had a seven billion dollar market cap at the time and the night before on the red eye i actually lowered the projections to be more realistic to what we were gonna do and it freaked out my team right they're like dude they're not gonna do this if we lower the projections and i'm like no we we we need to be more honest with them this is gonna be a long term relationship these are good guys blah blah blah so in the end we meet with the the sixty person board they decide to do it and then we go up to the top floor of the building overlooking manhattan and this guy andy mc mccarthy amazing guy he at the time it was probably sixty four or something he's or maybe sixty eight he had he acquired two hundred and twenty companies to build monster monster he had bought for four hundred thousand dollars wow when he had bought an ad agency in boston and they had a side project called the monster board he didn't even know that he had bought it he bought an agency happened about monsters that became the seven billion dollar value wow because so he was just he was a senator position animal yeah it's just an east coast acquisition guy he had a lot of character this is guy anyway he says so you know i offered you you know ninety one would you take take a you know is there any room to negotiate and it said sure take ten percent off and he says interesting what do you want i said i want you to pay all of my employees out before you pay me and i want you to pay my investors before you pay me and he's like well no i can't do that because then the people will leave was like they won't leave he's like but don't people just stick around for money and like no that's not why most people work you wanted them to get their money first and and you're like i'll mine was kicking in a year later or whatever is wanted yeah and why'd did you do that i mean it's a crazy move because i felt that was the right thing to do from my for my employees and for my investors because they stuck with me over this crazy five year ride and you decide that like in the moment or had you been thinking i'm gonna do this no i decided that at the moment and and he he said wow interesting so what do you want said i wanna pay out my employees stuck and he's like will you promised me they'll stay even if i pay them out and i said yeah and he said okay well then in that case i want you around a long time because i can see your character right i can see that you're a real leader right you're a image yeah and and he said okay i wanna put a three year earn out on this based on revenue what about this i said that sounds good and in the end the acquisition price ended up being not ten percent less than ninety one but it ended up being hundred and ten because we performed yeah yeah we outperformed wow that's a great story yeah and so it was and and had had i brought if i had introduced an investment banker into this process he would never would have returned my email or cut walked away this about humans it's about people yeah you i have a picture here i actually met you but before i met you met your business partner yeah you and stan stan santa yep he's amazing too yeah and he told me a story so when i first time i met him he was at my office i remember michael had this glass table so you could draw birch yeah he had this like last table you could whiteboard on the table itself yeah and i had just been writing notes as he was talking and i wrote like business bro mats and i circled it question mark because he told me you guys had been you've been partners for like i don't know at the time maybe fifteen or twenty years yeah and i could just tell it was like wow like you mean when you see a couple at dinner and they're been married for thirty years but they're like it's like they're on their first date and they're just having fun they're talking they're they've got their arm around each other it's like oh man that's what you really want you know when you get married it's not the wedding day the twenty years later what if we're still at dinner like that that's how he was kind of like talking about y'all partnership and so i asked them him i said what's the key like how'd did you make that work what's what's been made it what's made it work he told me a bunch of things i wanna hear your take on it but one story you told me he goes when you sold the company at the time you owned the vast majority of the company maybe ninety percent i think you were wealthier you put more money in it before that or something i was not wealthy but he said you you won't neither of us had any money you you own more of the company and at the time of sale you at the last minute some sort of like equal it in some way you gave him like a yep got a tilt more like a fifty fifty arrangement yeah and i i was really blown away because you you really know what someone's like when the money hits the table yeah and that's not the story you normally hear of what happened when the money at the table the guy who had had the leverage gave instead of took yeah that was inspiring me i still don't remember that that i was like fifteen years ago i heard that story yeah well it stands a special guy i mean i think he said it pretty well he said james turned it into a giving competition i think that's the that's the phrase i think that will help people understand the way he and i look at the world right turn your relationship to a giving contest that's what he told me rule number one yep k and look i think that you know i've read a lot of greek tragedy i alert alert alert all the classics because i went to phillips sex so i got classically trained and you have to have a long arc and and looking at what is a good life and what matters and you know what matters is in the end is deep friendship like if you work hard like even if you don't look my my point is the billionaire life is available to you today it's just in your mind because i know a lot of billionaires i'm not one but i'm nearby and they all wear the same socks you do they eat the same steak you do they drive cars that are as safe as the car you can drive if you can drive a toyota a camry they have a hot shower just like you have a hot shower the distance between your life and a billionaires life is ninety nine percent in your mind and so it's really not about the money it's about the creativity it's about the connection it's about the friendships and it's even harder to make friendships once you have a ton of money because money freaks people out yeah and so just accept where you are like i i say look you can have a fun normal life and live like a billionaire you can have a fun driver life where you go and try to build something do roll ups of you know basement manufacturing whatever and then you can have sort of a global greatness life where you try to be elon and you try to be steve jobs and all that those are out of the three ways to go either way you could live a billionaire life and have a fun life and either way you can make yourself miserable with your own mindset mh and so it's up it's all it's all it's ninety nine percent in your brain so with with me and stan and and with rick who was also a cofounder at tickle it it you know and rick and stan i just went to namibia together we're going to turkey together like i'm still friends with all these people that i worked with starting in in ninety nine i'm still friends with people i went to school in fourth grade with i mean that's it that's life right you know and and without that what's the point without that connectivity there there's really no point to what are gonna be higher status than someone when you gonna be richer than someone it doesn't matter past even a basic point right and so i never wanted to cove whatever capital i could i just wanna make sure something cool would happen and that i had enough to keep creating and look i think that twenty five years ago people who were coming to the bay area were coming because they were generative they were coming because they wanted to create and then because so much money was made by two thousand and eight two thousand thirteen it's changed the tenor a little bit here and we're ruining the experiment because people are so money focused and i i love the my first million podcast i i listen to it oops i love you and the only thing i would say is the naming indicates that it's about the money and i actually think the people love your podcast because you deep down know it's not about the money yeah now we have to talk about money because everyone thinks they want to status in the power show and yeah no tech french will only talk about your product launch as if it's with a financing right because it's talk about the money it does get the clicks but you you guys know that it's not about the money that it's about the creativity and the generative right and and the connection with people the way you connect with each other the way you connect with me the way you can connect i see that in your life and so that's why i think why people really listen to you is because that's what we all really want and yeah there's money involved but doesn't matter right it's just gas in the tank it's not the tank right right right right yeah the somebody said it well they go you know you're trying to go on the road trip and you wanna get in a car you want your pals inside and you wanna have this kind of adventure you're going on and you need gas you'd need fuel to go on the road trip but this is not a it's not a nationwide tour of gas station right forget right right that's a great way to put it i love that i love that yeah so yeah so i i turned it into a giving competition with stan and then he turned it right back into a giving competition with me eric and and rick did as well and and yeah it's been great i'm wanna do some of some more of these i'm wanna do one that's not positive i wanna do regrets you had told me something when i came and hang out with you you said that you were talking about a mistake you had made you go i had my first success or whatever and then you go i kinda isolated myself i wanted to do my own lab partly due to ego and you know whatever and you started doing your own thing and you and you said like you drew this diagram on a whiteboard yeah and you were like i was in the core the white hot center of the network of silicon valley of silicon valley and you all the right people and they like me and i like them etcetera and then you're like i kinda went over here to try to build my own empire you're like the smart thing would have been to just join facebook or invest in uber what and you gave me a couple of quick examples yeah no that's that's right i you know in two thousand and six when i left tickle after the acquisition i wanted to just build more stuff and i had this great guy stand who i just loved living in his brain right and he seemed to love living in my brain so we just were happy to get an office and live each other's brains and build stuff so we created an incubator and we build twenty four different products over the course of three and a half years and we had so much fun i we were just spending my money right my post tax money and we had a blast and we we were so creative every day it was we were doing eight different experiments you know on the internet to see what would happen and in the end we came out with three companies from that ended up working and making people money and raise venture and doing all that stuff but we did it in a way where as my friends told me later we didn't know how to be helpful we didn't know should i send you deals to invest in should i come work with you should i send you people to hire should what should i do right what and and so our structure of the incubator wasn't super network centric it was creativity centric it was isolated a little bit and that was a mistake and had i gone and worked at facebook and learn more about that ecosystem where had i gone and become a venture guy or or opened up a shin to say yeah i'm doing this but i also wanna be investing on the side i wanna make twelve fifteen twenty investments a year as an angel and i'd be helpful and i didn't do any of those things and that was just a mistake now i just had to have four kids in thirty seven months and my wife and i were moving houses and you know my parents were my mom got dementia and you know we were busy there's excuses but i didn't have the clarity and as a as a mentor i would suggest if people think again about the network go back to my life on network effects think about everything you do as how does this affect the people and the network connectivity that have or don't have going forward one of the things you said there you were like you told me you go you gotta create your api api people who don't know is basically like you you'll say you make a website if you want other other developers to other engineers to be able to like make their product compatible with yours yours you put out documentation you say hey here's what i could do mh if you ask me this question i can give you this information i can give you this data you know twitter has an api hey you wanna see the tweets here's the tweets yeah you wanna see the most trending ones yeah here's the trending ones that's what i can offer you yeah and here's what i want back you know here's the things i'm working on if yeah and maybe i can tap into your api yeah and so you were like you need it sounds like what you had at the time was just a fuzzy api people didn't know how to plug into you they where you could help they didn't know how you wanted to be helped you put you're in a creative mode and that stuck with me because i was oh i do i the same problem i need to to make it clear work what am i trying to do yeah because actually when you help people there's a lot of goodwill that's built up people love to help you back yeah but not if they don't understand what game you even play and what you like to do and what your what your dreams are what you what's a great at your superpower yeah it's all fuzzy and i think making that less fuzzy was one of my big takeaways from it yeah that's a great idea and you know i think that the bay area more than other cultures is a non zero sum thinking environment right it's one of our key traits and that's fo that's that's further by this idea that here's what i can help you with right and and here's how you can help me and what do you think about people who leave california leave san francisco because they don't wanna pay taxes i think it's shorts sighted i'd look anyone can move it's very sensitive very emotionally sensitive to people about their choices about where they wanna live and you know if you don't like it here or somehow you feel like everyone smarter than you and therefore you feel bad every day because you have low status and whatever like they'll get a therapist don't like doug move out of the state just because you're feeling bad all day but a lot of people don't like it for whatever reason i i can't imagine why but they don't and so they'll leave or they'll think i can go be a big in a right smaller pond somewhere else but generally they're moving because their husband's mothers nearby they can help raise the kids and there's a network we call it network gravity that pulls you away from from the bay area and you just have to fight all the network gravity and just go there and be in that ecosystem and if if i can earn you know twenty times more here and pay thirteen percent extra tax versus new hampshire or florida then isn't that worth it right and and if i'm not smart enough and good enough to earn twenty times more or even two times more then yeah i should leave if i'm and you know if i'm not good enough to explain the nba shouldn't be in the nba right but this is the nba right and so the thirteen percent tax on being able to plan the nba is nothing yeah yeah i remember you said that because at the time i'm i think this was like covid time just something like look like tons of people were moving and they were moving not for doc because they didn't like it they're moving because they were like why i if i can work online anyways might as well just be somewhere else i'll save thirteen percent and i remember you'd just been like that's insane like i like if you if for that reason because one idea one one comment one comment one ser conversation one brunch you go to used to host these brunch what one connection there has paid itself off you know many times over and that that that definitely reinforce that for me one of things i wanna ask you about is you you've been early to a lot of big things you wrote a blog post about bitcoin before bitcoin yeah you were in social gaming before social gaming really had took off yeah you were in social networking before facebook was invented right so my natural question is what's next what do you see around the corner yeah yeah we also got into tech bio in two thousand sixteen which is you know software driven biology and we also get into ai in two thousand eighteen which wasn't quite as early as kind of von node with with open ai and and and elon but it was pretty close yeah i mean so what's next did a lot of things is next this is what's interesting about the current time there is gonna be opportunity in in robotics that hasn't existed before mh there is going to be opportunity i mean we're just we're just seven eight years into the tech bio thing and that's gonna go that window will be open for thirty years we're gonna learn so much about dna and what it's going on there and then ai is gonna touch everything and so i think that ai has created a whole new set of consumer experiences i think the window they will be open for three to four years mh for people hasn't even really started i mean we're we're writing a a blog post about consumer ai stuff and it's hard to find interesting companies like right you've got ai dungeon and you've got you know and character a you've got like fifteen or twenty but you don't have fifty right interesting consumer attempts and we're waiting so consumers back yep tech bio yep robotics yep those are three yep space continues i think the space window is still open for another three to five years but it'll start to close here soon because remember spacex started twenty years ago and and services services services services you mean by services anything that's a service like my accounting firm or my tax firm or my but now with ai is that what now ai that's but now with ai so i think that pe firms and startups are gonna grab ai and go in to trans form all the workings of corporations but also service firms banks right there everything that's a service to you as a consumer is gonna be transformed by by ai faster cheaper better easier in ways we can imagine completely rethinking it and so i i would encourage people to think through what are services businesses in my area that i could bring ai to and blow the price by thirty percent mh and just take market share what's an example a good example would be you know architecture contracting building building houses lawn care like what can you do for my lawn but let's say there's a lawn care place a long term business near me yes make and a million dollars of your profit guys ready to retire yeah i think okay i could buy that business today yep at a fair price yep but i know that with ai i'm gonna be able to do what i'm gonna have a robo kind of receptionist yep and so i'm say and i'm gonna go around with a video camera and the video is gonna notice what all the plants are so to catalog the entire i can now produce a beautiful thing for this owner right that he never saw she never saw before i don't know what every plant is i don't know what their water amounted it like right ai is gonna give me x rays vision for their landscaping and allow me to provide them a service no one's ever been able to provide before and i can schedule stuff more easily i can that all the customer service stuff goes to ai and i provide a much better service so you could either charge more for the high end clients because you can do something better or you could charge the same and give them a better service so you could charge less right and just take market share right now with ai there's like a fog of war if all these companies are all competing to the deaf billions and billions of dollars are getting invested and is unclear who's gonna win where's is the value gonna accrue and i think from if i was get if anyone's is gonna have an answer i would wanna hear yours because you think about network effects which is the thing they kind of creates the the defense term defensive value for these companies so what do you think of people who are investing in open ai or the the sort of the models is that where the value is gonna accrue yeah i don't get it i don't get it i think they're making a big mistake in two thousand twenty two and we first started writing about this we actually came out and set it on our blog post which is ai is gonna be like water you gonna get free unlimited ai processing on your cpu on your phone within three to four years there there's no doubt it's going to free in the same way that i can use my phone i don't have to pay anybody anything to use my phone on you know for hours a day and i don't understand why everyone's plowing so much money into this because it's so clear that you're gonna have open source whether it's three months six months or nine months behind when you're actually think about defense you have to think about ten twenty thirty years right so it doesn't matter the open source is gonna end up just taking over and you're gonna be able to do it on cpus so both nvidia and all of these giant l companies are spending all this money on training are gonna go to zero eventually mh and that's why that's why nvidia is trying to get everyone to use cuda because that's their operating system level that locks people into their software which is more of a microsoft that's it's an operating so what we call it a platform network effect now they're they're trying to force a platform network effect while they have the hardware that everybody wants right so that they can be durable long term it's smart i get it and we'll see if it works and the same thing with open ai like i don't get like i don't know why everyone's plowing money to it i think it's crazy because they have to move up to an operating system layer where there's a platform network effect or they have to move up into the application layer where they're a network effects because otherwise deep zeke or the twenty deep seats that are coming are gonna are gonna not cause them to get any revenue so i don't know what's going on i'm not sure why people don't see it that way but i've seen it since twenty two and everything i'm seeing now teaches me the same thing i mean deep seek was obvious and look the ninety i don't know what the percentage is but let's say ninety six percent of all the processing in the world is still cpu and these models will start working on cpu in the next twenty four months and then when you do with the nvidia chips and why you need these huge clusters about so it's gonna be i i i think people are making a lot of bad bets it's gonna be a lot of money lost and one of the arguments is oh but we have the data you know maybe elon we have the x data feeds that's gonna make our model better yep come off this come out and it's all about who owns the data yeah what's your message to off yeah i just think that's wrong i just think it's wrong i can s your data i can steal the data i can cobb together different datasets sets to approximate the data and as we know if you go to google and just type in data network effects like it there's the first article you're gonna get this explains why data network effects aren't they're as some in terms of their def and they're just not that powerful they're they're valuable to an extent they're they're valuable to get to a threshold and to get into a range but you know if if if chat gb sees what i'm typing and then gets incrementally better the next guy behind me can't see that it's incrementally better the increment in which it is better is too small to be perceived by the user right okay and so i don't think that it's all about the data and i and i think this is a fiction that google and microsoft tell wall street and their employees for two reasons they tell wall street because they want wall street to think that they're gonna be the winner because they have the data therefore they win and then they tell their employees why would you wanna go be an entrepreneur why would you leave the the the beautiful con of this giant company because you know we're gonna win because we have all the data right there might be some applications where that's true i'm open to the fact that there could be some but there's very very few and in the end microsoft and google are not gonna win because of the data they're gonna win because of their scale right and they're gonna win because they already have the distribution right customers already got if i type it in i'm defaulted to their to their service so that's because it's already in my way so they they won the game twenty thirty forty years ago and that's why they get a chance to win the game today not because they have the data because i can get your data to so buyer or sell nvidia i don't give advice i don't trade so there's like our opinion like eu you think they're they're oh i i i mean opinion is that i would i would sell yeah nvidia compared to long term i would still be a a google on a microsoft buyer because of the distribution right because there's gonna be a tremendous value created for both consumers small businesses and enterprises and they already have their hooks into them and they're the incumbents right and we are in the age of incumbents when it comes to software and they are gonna win because of their distribution but not because they of the data that's just the fiction if you were the ceo of open ai what would you do i would i would try to build an operating layer and get everybody to sign in to my operating later in the same way that microsoft has their operating system layer and then i would create two or three applications the way microsoft did in the nineties or like office or whatever and then i would just go buy up other companies just like microsoft did just run the microsoft playbook mh the problem is that microsoft's main product was the operating system so they had the network effect from day one mh whereas open ad does not have a network effect at all the the main thing they have right now is distribution and the subscriptions but the consumers are f and smb are f and they'll move off to something for ten bucks or five bucks or right as long as it's good enough and maybe it'll have some other thing they like better because it's for their vertical or rhino knows so where do you think what do you think is the j kind of opportunity whether they're entrepreneur or an investor well i we think it's in the application layer in the operating layer and so we are investing in things that can build network effects and we're looking at verticals typically where where people can get rapid growth and network effect so that even after a year or two their scale allows them to have a network effect which makes it hard for anyone to compete with them well what's an example maybe something you invested that you're excited about you think has the kind of the right architecture to do well oh something like an ai dungeon which is coming out with a multiplayer i don't know that ai dungeon is a a role playing game based on ai it was the first sort of ai gaming company and they're still the biggest and they're still for the most advanced and they're in our portfolio and and i work with those guys and they're gonna build out a a network effect around rpg games that are powered by ai so so you think of gaming companies adding ai but we were thinking ai companies adding creating game trading games or things like a company like an even up which is ai for personal injury lawyers it's a vertical microsoft and google don't want right but it's still eighty billion dollars a year they need software to help them run their business it's great business i about two billboards for personal entry on the way here exactly you were just talking about it like exactly what is this industry right and and and people don't what's what doing with ai with it well they're they have to submit these three hundred page documents to the court to gotcha and they'll also have to evaluate the people who come in the door to see whether they should take the case on or not right and the ai helps them collect the data to analyze the data and then figure out what the court case would look like and whether they would actually get the money they want from this or not which the the judges actually like because then they're not bringing spacious cases they're only bringing cases that that you know should have some sort of compensation mh okay there we go so app application layer operating system layers of specific verticals we're also investing in some speed ups for the the overall our tools and architecture dev tools dev tools yeah and stuff like that because we think that you can get distribution quickly and then build lock in the way atlas has done mh and if you were twenty five again and it's twenty five in the year twenty twenty five yeah and you if you stan rick you guys are hanging out again yeah what do you think you would be doing well first i would have the conversation do we wanna have a fun normal life a fun driver life or a global greatness life right and what's your answer my answer is sort of global greatness i think that it's just fun to play in that game to see if like like we take a away registered a hundred fifty million users when they're six hundred million people on the internet like right that was that was touching the world right it was kinda fun i think it's fun to do stuff at scale i'm really interested in scale right things that scale are software media money a few other things and just i like to work in those mediums but you would have to decide like don't don't think that you have to be steve jobs in order to live a great life mh realize you can have a fun normal life and you're in the global greatness game but you seem like you're not steve jobs you seem like you're happy like i it was one of my notes was like i loved this guy's lifestyle like you you showed up in a and a fun shirt yeah we hung out for a couple hours you tell me how you know you're like i spend a couple months out of the year with my kids we try to travel as you can that's as many months as they have me yeah you but i wanna max that that far out yeah you were writing a tv show for fun yeah like you weren't like elon running six companies sleeping on the factory floor that wasn't like you didn't give that vibe right yeah you seemed like a happy you know to happy to dude who had kind of like balance but you were still scaling so like you know are you in that game or are you some other yeah i'm at i'm i'm upper middle class i'm lower upper class sort of in that in that area if you want like that's code i'm on that border land you know i get invited to the rooms yeah where the global greatness is happening but i love spending time with my wife and my kids right and that's my priority is to have a great family life and you know everyone tells me that i look younger than am when i'm like because i love my wife and i don't drink alcohol it's pretty simple you know and yeah we've taken the kids to hike to the everest space camp we've sailed across the ocean we we got attacked by orc and our boat was destroyed like we go snow camping in the winters it's live in igloo and yeah we do all the fun stuff with the kids did you have to wait till you're wealthy to do those things or were you doing it all along the way because like i think if i'm listening to this i'm yeah good well cool you're sort of rich and retired i got it i wanna get rich and retired but until then i'm gonna grow no no what i did was right after college i moved jobs every six months and sailed across both the atlantic in the pacific i learned how to pair of glide i learned how of scuba dive i did all the adventure stuff i lived in hong kong i lived in beijing twenties twenties yeah and then i realized that i wanted to do some global greatness so i started grinding and so i ground for three years of battery ventures as an associate in boston and then i ground actually i had a lot of fun at harvard business school for a year and a half where i met my wife and then i i ground in my startups but then what was interesting is once i had plenty of money then i ground again because it was fun it was type too fun yeah it was creativity it was generative ness you know and this is the thing i i love this word generative because if you wanna understand what elon is doing he's just generating he's generating tweets he's generating kids he's generating companies he's he's generating he's just moving stuff around and and and a lot of people here in the bay area i find are like that not as extreme but like craig don who who you know is the head of revenue at roblox that guy has generated he's like he's like howard he's you're like jungle the guy's like terra forming the american river to create an incredible camp for him and his friends right and he worked on it he bought it for two hundred and forty thousand dollars and he worked on it for twenty two years with his own hands right and yet he's worth way more money than any of us needs because that's what he loves doing it's type too fun so there's there's always been this this approach to venturing that i've had and i ground and tried to get some place for like i don't know eight years and other than that it's all just been you know pick up the adventures every minute you can because life is short right you you don't seem maybe maybe this conversation feels different but like you didn't seem to me like you were somebody who was kinda like in the like a lot of people like elon worship camp it's like like you know he's the north star mh and like everybody else is just some like some you know standard deviations away from you long and and you just feel bad about yourself for not being here standard deviations closer to you elon yeah yeah whereas like i think use you're kind of in my camp which is like you admire parts of him yeah not all and of the parts you admire you sort of incorporate that into your your gamer or your you know whether it's to speed or maybe his yeah fearless things that are like cautiously admirable totally i'm i am curious like who do you admire who do you learn from a lot like who's who's kinda like your mentor whether you know them or you just read about them a lot like who are the people that inspire you i'm certainly inspired by what elon has been able to you know when i when i knew him in the two thousands he he and i were in some of the same circles he just seemed like a a a normal guy really yeah he just seemed like a really generative cool guy like craig the out or like anybody else you couldn't have picked in a room you wouldn't have been like that guy that guy's gonna be no i want to i want to oh somebody else might have but i i wasn't capable of doing it and i remember in two thousand is what what i admire about elon is that in two thousand and seven after the the third rocket blew up i emailed him and i'm like elon the next one's gonna i said i said it's gonna work eventually and when you do it'll make it all the more sweet man just keep going wow and he he emailed me back like four hours later like thanks man needed that you know like he was in the trenches he was putting everything on the line you know he's an entrepreneur doing entrepreneurial things and that's what's admirable about and whether you're doing a bakery or whether you're doing a construction company or whatever you're going through that same journey and that was what was admirable about is that he was clear eyed in his effort toward doing that back then and and he just keeps expanding the purview the sort of scale at which he's he's operating you also had this idea for one world currency yeah before bitcoin yeah in nineteen ninety seven and there was a thing called cyber gold and i was at battery ventures at the time and i was trying to convince my bosses we should take a look at this because we were gonna have software based currencies and where'd that coming from i mean that's not obvious it's not were you reading sci fire no it's just i was an associate i was talking to companies and this guy approached and he said i got this thing called cyber gold and i think that we're gonna have software based gold and it's gonna be currencies we're gonna pay each other and i said actually sounds like logical that sounds like the real future and then the second thing that happened was we were a tickle a few years later and we saw a korean company that was selling a digital rose thirty two pixels by thirty two pixels or something or sixty four by sixty four for four dollars and ninety five cents and i was one of one of my engineers said hey james take a look at this and it was in korean we didn't know what was going on but we could see that there was a price on this little digital thing that i could send to a girl on this social network that they had right and stan was standing behind me and i turned around and i looked at him and he looked down at me and i there it is people are gonna buy pixels mh this was out don't know two thousand two thousand one two thousand two something like that and people are gonna buy pixels because it's just like buying a thing because it just affects your brain you know it's all in our minds right and then we're like okay so now we're gonna have digital goods that people pay for even though that there's nothing to it and we got cyber gold and and then second life comes along so i had this funny experience i go to a tech conference called pc form and there's this guy there and he's sitting next to me during a during one the and we go out and he's like oh i'll show you my thing and i said great and so he waves over these other two guys it turns out it's larry and sergei and so the four of us sit on a couch in the sun and he opens up his laptop and he's like i've got this thing and it's a virtual world and it's called second life this out works and this z and i'm like so do you have a currency he goes yes we do it's called linden dollars and so i said okay very interesting and so he gave us this demo and it was very cool and so i went out to him he and not walked outside and ser sergei and larry went elsewhere and i said to him this this is gonna be like i i said to him the only question now is philip what color are the robes meaning i see what you're doing you're creating a religion like you're you're you're moving humanity into this other realm and he was like oh he's like you really know what i'm doing like you you you get it at a deep level i'm like yeah and so i ended up on his board with mitch poor and bill girl and whatnot for five years and and second i've got big i got big it was on the cover of every magazine it it was the talk of the town they raised it over a billion dollars from goldman and others and in the end it didn't end up becoming the world changing thing but the what what zuckerberg was trying to do right now with his virtual world is still behind what corey and philip were able to do with the technology in two thousand and three and four right and still behind it they had had never seen any company that was twenty years ahead in the digital realm and they are still that far ahead what and what way are they hit well just the pixel encapsulation the controls the the the world how the world functions right the integrate creating an actual functioning of of digital world the cool thing about that is a lot of games have an in game currency that's not what the linden dollars are the people the players of the game like the use of the currency as a real currency to buy sell trade like at a like full level like it's been going for for years or years years right has it it was like a fully baked currency not like not just like oh i gotta buy gems to get the power up and then i'm i'm out here right right it was so multiplayer everybody's using it with each other really valued it and you could trade linda dollar against us dollars in british pounds right on open exchanges right and we would manage the fluctuation of the currencies and we had it took us a few years to figure that and us it took them a few years to it wasn't me doing it but i was watching them to do it and i was meeting with them and learning about how they were balancing the currency so it didn't have that many fluctuations and so all that we saw all that and and you know the way we measured the world was seven hundred sixty million dollars of gdp and what are the number of people who are making more than a thousand dollars a month in second life and we would watch that chart like because it was actually people were living in there right so we realized that money is just completely made up in our heads and that you can exchange it whatever we went off the gold standard and seventy two there's nothing too money it's all just in our minds and so we say it's all our minds you just mean as long as as long as we all believe it it works as soon as one of us doesn't believe that there's nothing underneath it besides that the belief network effect it's the belief network effect it's actually on the one of the seventeen right network effects and bitcoin is just purely bitcoin is a coin right we just don't believe and it's the best one it's it's just the best point right it's on a spectrum it's not a different thing right it's there's dollars also a meme coin in this the dollars the point absolutely and they just list out the reasons to believe what what underlies the belief why do you believe the us dollar we have aircraft carriers we have tax base well yeah those are all reasons those are more reasons to believe than bitcoin right but with bitcoin you can't print anymore and that's like a negative for the us dollar so you just list out for every believable thing you just list out what are the reasons to believe right and and they're on a spectrum it's not it's not a different thing so in two thousand four i bought a url blue dot com because i was like we should create the world's cyber to through pricey domain blue dot com that's premium it was pricing yeah it was pricey which you believed but i believed i believed and believe in language and i believe in naming and all that and so i went to philip up i said you know we should create the world's global currency and we should as one friend says to another yeah one friends there's another and we should call it blue because you have green backs like like dollars and they have the blue currencies so you have a global currency and so we got together every week on a wednesday afternoon with mitch ka and fill up and me and stan and we would talk about how we were gonna pull this off and so this was not just shooting was like we were planning yeah this is two thousand seven two thousand that's just one drone conversation no no it went on for a bunch of weeks it went off for bunch of weeks and the what we had back then was bit torrent right so bit torrent was a distributed thing where everyone had a copy or pieces of the copy of the movies and we could all share right and so what we were gonna create we're gonna create a torrent currency and it was gonna be encrypted and we were going to leverage it off linda dollar to start with what it was gonna be an independent company it was gonna be its own thing we're going through at week by week we were sort of nailing down all these topics but then we came to something we couldn't figure out which was this creates senior ridge to the us dollar which is illegal after the laws in place after the civil war remember those sixteen hundred different currencies in the us before the civil war just means creating a currency creating a currency that's above the us dollar above me senior it can't can't do anything that's above the us dollar meaning senior is essentially outlawed any currency which wasn't the us dollar to be used and so we knew that if we were to do it the ftc would come after us at some point now remember the sec and the ftc did shut facebook down from launching libra because facebook was already too powerful and the government saw them as a threat and it was there was gonna be some senior and some crypto right so we were right that at some point but we knew what hadn't needed happen is we need to have an imma conception we needed to be born so that no one knew it was us because philippine had four kids i had four kids we had plenty of money we had all of our friends target on your back we like being an american we don't wanna have to move to the bahamas or or entertainment islands don't wanna have a target about it we don't want the m sixteen banging and i door in the middle of night the we had too much to lose so we had to figure out how can we do this and not be known as the people doing it the problem was we had talked at the lobby at david horn lobby about one currency to rule them all philip and i let a talk with about twenty people about this to get their ideas and at the end they said well i guess we know who's gonna go do this so we knew that there was twenty people outside of the room who knew we were working on this and eventually someone would track it back to us and so we couldn't solve that problem right of anonymity and so we didn't go forward with it and then about a year later i get an email from philip saying is this you did you do this and it's the bitcoin paper wow and i and he was pissed he was like cut me out you cut me out and i was like no dude it's not me and in fact we both know that of the two of us it's more likely to be you is it you and he said no it's not me wow so so we we missed out on on creating bitcoin did you buy yeah of course of course and i was lecturing about it and then what happened was the next lobby i went and i let a a a a session on bitcoin about thirty five people came and whole bunch of people went and bought and six people have come up to me and said i owe my house to you yeah yeah so why are you not like a hundred billionaire there then you had the idea before the idea right like before the price was i did you have i bought a bunch but i did buy an them did you have the i have entrepreneurs entrepreneurial stubborn which is when i had an idea and somebody else did it i sort of become like yeah ego to i know i i i want them to fail slash like i i don't invest in it when it's like wait i thought you believed do you want you leave so much you almost wanted to do it yeah i have a resistance yeah i don't know if it's i think it's creator stubborn nest you want you wanted to been the creator rather than the participant exactly yeah yeah i have that too i that's it the other one i was gonna bring up was this great line you had to go you talked about some therapy couple therapy you dive into or something like that you said therapy is just realizing how much of an asshole you are makes you a better partner for your free your wife yeah totally that was great advice no i'm am i am a big fan of as is my wife of taking any self improvement thing that comes along right why not what if you have to lose and anybody who's hesitant to do that stuff not only do i find you not courageous but i also think you're missing out on the fact that interpersonal relationships is the most important thing you do in your life it determines whether you're gonna be successful at your business right it determines whether you have a good death like all the things that are important are determined by that and yet we don't spend nearly enough time on it you know i i have a friend whose boss told her wants oh you don't need a coach you're fine like what she wants a coach like everybody should have a coach like awesome right like just you can always get better and and you know i i learned this just in life and it's kind of obvious but learned it for my wife who's the nicest person in the world and of anyone i know she's the person who needs therapy least right and she heard about this thing landmark for from our friends and she's was like oh i wanna do it and i'm like why she goes oh because then i might be able to love people better right i'm like oh that is awesome yeah but an attitude right and and so she and i took these five classes at the landmark form over the course of two years and i don't think i'd be married without it because i just hadn't been developed in the basic ways of you know if you go to stanford business school and you ask people what's the best thing you took at stanford they're like touchy feely and if you go to harvard business school and say what was the most important thing in learn how visible say lead lead in and and touchy feely the same class basically in the two different schools and i find it's the same thing in the world it's like the most important thing you learn and let people don't focus on them you go to conscious leadership that's a great program you got joe hudson doing programs you got hoffman institute doing programs there's all these ways to just further yourself and deepen yourself and that's makes relationships like staying and you can have as much money you want or as little money you want still be happy as hell right so what what are we doing you know and and and and literally on the fourth course at landmark forum i'd suddenly like over my eyes i'm like oh i'm a total asshole i understand i'm i'm you know in all these ways i'm asshole and unless you admit to yourself here you're an asshole how can you stop being an asshole right step one right of the asshole recovery program yeah love it james thanks for doing this man a long time coming yeah yeah thank you sean i feel like i could rule where to know i could be what i want to from my all in it like the days off on a roll less travel never looking back