Jack Smith on How r/WallStreetBets is Beating Wall Street - From the Archive

hello m fans it's me the artist formerly known as producer ben this week we had a scheduling conflict so the episode is going to come out a day late coming tomorrow in the meantime we wanted to keep you ti over with something from the archives so today we're playing an episode with jack smith jack is a founder he's sold an ad tech startup up for hundreds of millions of dollars he's really successful he's one of these wild indie hacker types who's always got some interesting kinda weird project going on so on this episode he talked about his big payday wall street bets oh yeah remember that vcs in the media game and much more it's a great episode jack's a really interesting and thoughtful guy and he's coming back on the show next week so he thought it might be helpful to catch up on what he said last time so please enjoy this episode from two years ago with jack smith yeah i feel like i could rule to where i know i could be what i want to put at all in it like a days off on a less travel never looking back what's up we got jack here jack smith how are you man doing good how are you guys so spoke at how cohn where i met them years years ago started this company called bang which sold for like what seven hundred fifty million dollars is like an ad thing which we're actually gonna talk about today started ship which raised a lot of money got a lot of hype and what happened to that went to zero went to zero so you win something you lose them but you you want a major one the reason why you are here is because we wanna talk about bull at least i do for a second but before we get into that sean you invited me to the thing called apex right that's right and you did it all wrong yeah so okay we talked about it on the podcast apex is like a supposed to be like a digital mas aid party so you're supposed to show up you pick a new name that's your mask nobody knows who you really are and then you come in and it's kinda like it's a private group but nobody has a real name so you can kind of the ideas you speak more freely but of course sam first joins the thing like two weeks late then he's like what's apex as if we been talk about it no why i knew we talked about it about it i hadn't used it before so as he joins and then he uses this real name and then he goes on and says hey guys it's sam what's up i'd love to hear your feedback like it's a fucking facebook group which we already also have the reason i did it was i was browsing it because i i didn't bother to actually look but i was looking now there's only like five hundred members people were saying like nice stuff that's great some people were saying really mean stuff is that crazy yeah dude that's what it's supposed to be that's the j of a synonymous platform let let them say what they want someone said a thread who do you like better sean or sam and they just shit on both of us for like the stupid both of us yeah it's okay getting negative feedback they did like some mean stuff from like why does that even matter but don't you just wanna know what's actually in people's minds like i love knowing what's actually in people's minds even if it is like it's some random point or it's really mean it's like that's the stuff you'd never hear like there's positive there's compliments there's constructive feedback and then there's just the shit people really think about you so this is the way to see the shit people really think about you do i tell a story about using a po stick a lot you did it once i think it's because you have all these like random skills slash hobbies and so each time it's a different one it'll be like i can dunk i can skateboard ward i can write a po stick i used to run track like you always have like a thing like that so that's what they were making fun of so someone made fun of me for like he's like i get it you sell hot dogs that you're good at the po stick yeah i thought that was hilarious me too that was a fun that that was a that was a good one that was a good that was a good way to make fun of me but people said some so what is this this an app but it's an app that's a group for the podcast listeners i think this app can take off an app that i just discovered called apex that it lets you host these these types of private mask grades these top private groups i got invited into one that was super interesting so then when i was telling that story i was like we'll we'll make one for this this group for listeners and and we'll put the the link in there and then it got hundreds of requests i was like dude i'm gonna go through and approve all these because to get in the door you have to link your like i made it where you have to show social id like at the beginning and then after that you can't see who's who but like at the beginning you could just make sure that they're not like bots or spam the developer who made the app he went i was like can you just auto accept all these people and he just went did that so so now there's like a few hundred people in the group did you guys see you know the bella guy yeah yesterday he tweeted he's got a thesis that in twenty years you won't know what most people actually look like because on the internet everything will just be anonymous i believe that so first i'm pretty sure in my that first group that i got invited i'm pretty sure ba in there you can kinda tell when people talk because they say some ideas that really you know and he's such an original thinker that like if he's saying it's either somebody just parody what he says or tim and i know he's friends with some of the people who who started the group so i think that is him but he's been saying this for a while and actually just yesterday i went back and i watched maybe five different youtube talks of his because i went for a hike and i just put his youtube talks on from back in twenty thirteen he has two like big ideas so one of them is what you're talking about which is separating you know your real identity from your work identity and your public social media identity so he basically thinks the way that we treat like our social security number that's how we're gonna treat our real name and face it's not gonna be something you give out unless you have to and you use that to like create accounts and those accounts have their own usernames so when you go to work you're not gonna be jack smith with your face you're gonna be maybe you're call like you know growth guy thirty three and your growth guy thirty three you work you know for some company and when you show up on zoom calls you're not gonna show your face you're gonna show like an avatar or something so that you can basically have a separate identity and he called this five six years ago because he's like he's like social media is turning into a a mob and people are gonna start getting he didn't say the word canceled but he was like describing cancer culture he's like you can just say something on twitter and you could lose your job for it that was your personal opinion and your free time on your social media and that's affecting your career he's like so these things are all gonna split your communications name is gonna be one your work identity is gonna be another and then your real thing is gonna be like your social security number to remember last week or a few weeks ago a few months ago where we shared that kevin sis like selling yep instagram for a billion dollars all being not all but a negotiated via text message like messenger or something right and then leaked yeah yeah jack and i i know do this with our friends and i guess what i'm getting is do you i don't know if you do the sean i know don't me and jack do this do you have friends who you rarely or if ever have met but you can send one of your closest friends and you only communicate via a texting version yes i have people like that that i met on twitter then i went to twitter dms and then i went to like i imessage or or signal and you know they've called me before and like you know i've hung out with them either zero times or one time in my whole life which is weird by the way right it's a weird thing so just add to that like as you're saying that bella called this six years ago or whatever well actually i had read this book last summer up there it was written in nineteen eighty one and it basically describes this concept where this is like pretty much even before the internet stuff it's called true names and basically the concept is that your most valuable thing even beyond your social security number is your true name and these people live they basically spend all their life in virtual reality and their friends they have no actual idea who they are and even though their friends like if they wanna get real power over someone is when they find out what their actual name and identity is and these guys then are like because they're like so powerful and stuff and then so it's pretty inch instinct that yeah even like thirty years ago this guy is predicting this do you guys think this is because ba he's a fu right so first of all everything he says i think of him like somebody who literally is a time traveler like he comes back in time and he says something to me and i'm like okay even if i don't understand this this is just what the future is i just don't know if it's five years ten years twenty five years from now he's crazy not necessarily a bad way but i think he predicts a lot of stuff and he's definitely right sometimes but those types of people are are probably wrong more than right sure sure i'm not saying he's right all the that's not what i mean to say i mean the things he says they sound so foreign to today because there he's he focuses on the future and like kinda like the deep future and the radical future not like small incremental changes but like what would the big shifts be and there's one school of thought which is like you're never wrong you're just early for a lot of these predictions like your guy who wrote this book in nineteen eighty one right like you're wrong until you're right for a lot of these big ideas like the idea of bitcoin this universal currency that's actually been around for a while and then it was wrong until it starts to become right i believe in it did you guys read the book american king pin the one about the silk road i haven't read it but yeah i'm familiar with it awesome so you you should read it it's awesome it's so fun but anyway silk road was a multi billion dollar enterprise all of his employees obviously because they couldn't reveal who they are they were only like identified by like usernames and they had no idea who they were and they paid each other and i was reading about it it was a pretty harmonious work like it was like a good work environment and it was only username based and people got paid and they had meetings it was incredibly fascinating so yeah i buy into it did i tell you about the conversation i had with one of the early developers of the silk road one of those guys no what he listens to the pod and he reached out and he's he's like hey this is who i am confirmed his identity and he's like i was you know one of these people if you google my username you'll see all these articles about me i just you know and so i i can't say too much but like i talked to this guy for a while fascinating guy i can't see too much but basically he was a fan of the podcast okay i'll tell you something crazy and i gotta ask him what i can say we don't have to just delete wow if we cut it out just know if you're coming back in right now in the recording we just talked about some crazy shit that we had to cut here's what i wanna talk about this is not that interesting on the surface but i figured out what jack could give us some intel perspective so tab you sean you told me you don't find it to be that fascinating neither do i to be honest i think that it's kind of like a shitty not shitty i wouldn't enjoy working there but basically it's like those small square thumbnail ads at the bottom of a cnn and article and it says like a eighty year old still looks like he's fifty here's how and you click and it goes to an article that explains why this supplement is great and then of small percentage of people buy it the company just filed to go no they did a spa which is obviously all the rage but they released some numbers and so they do about a billion dollars in revenue three hundred and fifty million of which they actually get to keep so they pay out a billion dollars to the publishers and they get to keep thirty five percent of that they have thirty five million dollars in revenue hundred and something million dollars in eb so these are crazy profitable businesses only valued at two and a half billion dollars i think so not valued like crazy high yet the reason why interest me is v i don't know i'll let jack say if he wasn't to say any numbers was like kinda like that too and then sean europe what's his name fe one sean's best buzz we've done the podcast started a company that's probably even bigger than bang and tab combined these are crazy fascinating to me because like they kinda seem like these ad tech businesses they kinda seem like magical a little bit like it's hard to very hard to make magical money printers yeah jack what do you think well i don't know if it's necessarily hard to make but what makes you think there's hard to make so i guess we talk about a lot of basic ideas we talk a lot about direct to consumer stuff so like gym shark or something that just does a slightly better marketing we don't talk too much about software we talk about collectible like it's mostly like hard goods i just think that there's something a little mystical about an ad network because a like ads is online is one of the biggest industries there is b it's like always in the background but we kind of it's kind of forgotten and see some big players control it it's just i don't know you don't agree with me that it's a little bit like mythical like not you know what i mean like is there's some mysterious bit about it that a lot of people who are insiders have no idea how it works i think it is quite unique in terms of it's one industry where it's very easy to make sizable revenue right bang there was a number of other companies started around the same time which also got to hundreds of millions in revenue so advertising i think is a way that you can make a sizeable amounts of revenue it was actually harder to raise venture capital funding for it though because like venture investors are like oh i hate advertising and for whatever various reasons tell the story really quick about how you actually got came up with this idea for for v well basically we were started we're working on a different idea which was really shitty idea it was basically an app store where every app would have a video showing what it did instead of just screenshots so it was cross platform app store and then the idea that this was not really going anywhere and we were at this incubator called angel pads and there was basically just about four or six weeks till demo day so we just had to come up with a business idea and so in the space of two weeks we basically just prototype six different business ideas like created fake landing pages for each one and just try to sell them the main takeaway that i had from this incubator is that the guy told us hey i want you to go and call twenty of your prospective customers so for us those was app developers and he said don't pitch them like don't try and sell your idea just ask them what is your biggest challenges in your day to day life and so we called these guys and they were like hey we're engineers we know how to build an app build a game but we don't know how to get users for this so then we were like okay let's try out like six different ideas so one of them was like how to get reviews like it on app review sites and stuff and we tried selling it for like we were like hey this is normally gonna cost a hundred and fifty dollars we'll give it to you like twenty dollars and people told us like oh yeah love this idea it's great or sign up as soon as i get home we got like zero sales like people were just telling us the idea is great they didn't wanna sign up tried out all these different ideas and then actually ser went into a meeting of an investor and we wanted to record the meeting so we're like hey oh okay rich called this opened this like sam recorder app and it started like auto playing on full volume like some video for coke like i'm trying to close about the fuck but then we actually just thought fall like hey wait a minute what if we had videos like this but like advertising other games other apps instead of like coke stuff and so we went to those percentage customers who said hey what if you could have like a movie trailer for your apple game shown inside of other apps or games like fifteen seconds people were like oh i love this i wanna be your first customer put me down for like five thousand dollars ten thousand dollars ad spend as soon as you're ready to launch i wanna be the first customer so they were throwing money at us so then we knew that alright this a good idea but actually when we told the guy running the incubator that we had come up with this idea he was quite early on at google and stuff basically he said to us like i just went on a whiteboard and i was like yeah it's kind of in the past week kind of this is what i how i think mobile advertising and advertising works like you kind of have games that wanna get users and these other games will wanna get paid so we can show ads in there the guy basically stood up and he just like slams his hands on the table was like you guys don't have a clue about advertising you just look this up on google in like the past week there's people like google and facebook ads who have like ten years experience in this and you think that you can disrupt this because you just googled this like five minutes ago and so actually i remember one day just like being in the toilet and then just like late at night because we've stayed late in figure a speech or you were literally taking shit okay actually there like at one am in in this shared office space everyone else had gone home and i'm by myself and i'm thinking like we did what you told us to do we went and spoke to the customers and asked what their pain point is he was trying to push a strip his different business idea and so we we actually just like had to basically stand up to him and then we said hey listen i know you really wanted us to go in this direction if you do this idea you're not gonna get a single dime of funding this idea sucks and you have no experience in it you done what you're doing and we said listen in we really do value advice but we followed what you said and we think there's a pain point here so we're gonna go with this and then he we kinda make fun of him like few later about there but actually at the time as well he intro us to another company in the space and i remember we were meeting with the founders would just come up the idea and the founders is like oh yeah so yeah okay so what what technology are using to oppose you're using like rt tms or like the and we're like i have no idea what you're talking about but actually it gave us a refreshing perspective because we could just think about things from the needs of those app developers like and and when it and when fast forward to a couple years when it's sold how big was it when it's sold i don't know the exact numbers about hundreds of millions in as you described tab like gross income and then you pay out let's say like forty percent of whatever if the money goes to the publishers and so you keep sixty percent so in the hundreds of millions of revenue there's a tweet i put out the other day that's like one of these fortune cookie tweets but i think it's true which is if you if you wanna know how something works you ask experts if you wanna know how something is gonna work you ask a beginner basically right so the idea is that experts can describe how things already work but they're not great at describing how things could work or should work in the future and that's where the beginner mind really helps so one thing i've been thinking about so the b works because they go at the bottom of who knows hundreds of thousands of websites and they must get like a billion impressions a month i don't know what it is but it's a lot one thing that you and i had always discussed was we're like we should create a taboo for email and there is something almost like that live intent i think it's pretty shitty but with the rise of email i wouldn't call it the rise of email but it's it's popular right now what's causing someone back from making this work for email you think lack of impressions or what emails obviously being around a long time maybe if i was to look for opportunities i maybe wouldn't be looking at email you could often maybe look at like more emergent platforms like club house for example there's no monetization around that right because email it's just been around a long time i guess but that doesn't rule it out maybe one of the bits is that email obviously is an open protocol but it's somewhat closed in terms of the only tracking that you have is if someone views an image and stuff and then the kinda trend is to like block those things you know like hey app like blocks all the track open tracking and blocks like images and stuff so that's like one limitation but yeah you could do it i guess the main bit was size of email newsletters and how many can you sign up and probably the impressions it's gonna generate is still a lot smaller than to taboo can because da has the whole internet as a target market and you guys had mobile apps which was new and gonna be huge because the thing is like most new email newsletters their numbers that they report are probably kind of fake right i mean like i have ten million subscribers how many of them actually read it so there's an equation for any ad business it's i'm just making stops to top my head but i have to think of a buzz but like value is equal to number of people multiplied by the quality of people a twelve year old is designed gonna be the same as like a six year old high earning doctor so quality times quantity times the amount of page views that you get per person i mean it was that about right well i mean again you can't say you can't generalize that a twelve year old is not as valuable was a six old surgeon because actually like in games that could be the most valuable user as a twelve year old with their mom's credit card buying fifa game pack stuff but basically the way we saw it is how can you make the most money for the publisher and that is by providing the most value for the advertiser volume you said value value which is deep of it's a low cost per click no no so this the thing like t differently as well it was one of the first ones the first advertising places to ignore that so how the industry was before it was kind of done as you're saying like it was charged like tv ads cpm cost of people that watch this and when we thought about it we were like wait this app doesn't care how many people see their ads they just want users and so we were one of the first to charge cpi cost per install so we were like hey it doesn't matter if like ten people watch the video or like a hundred thousand just pay us a dollar every time someone installs something so think you need to abstract what does the advertiser actually want they don't want clicks they don't want impressions if they're d to c they want sales they want revenue that that's all they care about the other stuff is layered on top they're like false metrics that kind of abstract or they have to do calculations to compute their core metric is there anywhere in the ad space that even remotely interest you now or are you completely over it people also said to us when we started like oh how did you get interested in ad industry we were never interested in advertising we were just solving a problem that we observed as the most compelling problem in the mobile app industry we were interested in mobile apps we launched twelve to eighteen months after the iphone app store had launched weeks we got perfect timing in a high growth market i actually had read about iphone apps in a ga report people kinda shit on ga reports but actually that's where i saw these trends like hey mobile apps iphone apps are exploding and this was the biggest problem in that industry so it's not that i find advertising interesting or i'd be searching for an advertising business i would be searching for what are the emerging industries and trends and what are the biggest problems in that it might be the advertising is a big problem in that industry but i wouldn't you know be searching for an advertising solution what's the next mobile apps i don't know right that's the challenge just like once in a decade you mentioned club house i guess we haven't talked about it too much sean and i i think actually this could be a good story so our friend my i don't know how sean you got looped into him but nora narendra is this this guy named nora narendra who's a friend of mine he listens to the podcast and thus became friends with sean and he has a saw in a group thread and he texted me a link to club house i think i was like user like four hundred and i like logged in and i was like this is so stupid i hate this it's just a bunch of silicon valley people it's so lame narendra this is dumb and he kept telling sean and nice no this is cool it's gonna be a thing and like anytime controversial or something and he goes you guys log in like listen to what these guys i was like oh my god i don't wanna be part of this is so dumb well he kinda called it well there's news right so they just raise money at a billion dollar valuation probably less than a year since like launching their test flight so that's kind of amazing sam do you still think it's stupid or you have revised your pin well obviously i'm i'm wrong no for you to you is it do you like it now or do you not use it i don't like it jackie do you like it i didn't use it i thought no one would like it and objectively i'm wrong i knew people would like it because we had built blah and blah was so similar to club house and there's differences right like you know there was no pandemic happening at during lab where people like needed to connect kind of like the whole world you know my mom does zoom calls with their family now right like everybody search for some digital solution to talk to other people so that was different we were also you know video and cl only audio and that's you know could be a difference we saw very similar things which just at like some group of people or nora lorenzo of the world they will make friends with a whole bunch of like semi strangers who they start to get along with on the platform and then a bunch of inside jokes somewhere urge and then this habit forms where they start every night apm they just wanna see what's going on they get the notification that four people are talking and then they they join in and oh shit four hours of flown by six hours of flown by and like i'm still on club us and like wow this is kind of addictive and i still don't think this is gonna work in fact i was debating a friend i have a friend who's a an investor in a bunch of social companies that were like the big winners right like the i can't say what companies things would give him away but like you many of the multi billion dollar social networks and i said you know are you a believer and he said i i said would you invest at this valuation because i think investing in a billion dollar valuations i wouldn't do it right now the first round was at a hundred million dollar valuation i also wouldn't have done that he said yeah i would it's a you know asymmetric bet meaning small chance of of success but the success would be so huge it's still the right bet to and i was like yeah but you can kinda talk yourself into that for like any social product right sure if the social if apex works it's gonna be massive but if it doesn't it's you know you just lose your size of your bet he's like yeah but like this has a bunch of things that might actually work and i was like cool i think i'm just too jade so my own failure with b has made me think that this can't work and i think that's kind of a dangerous position to take and they announced this round it says there's a million subscribers yeah we hit four million right we had four and a half million when we shut it down those were all active that was like total users within and it was i think sixteen months after we start guys has four was four million users and i think on a monthly basis we had four hundred thousand active that's why we knew that's not gonna work because ten percent of your user base being active every month is too low and we also knew that like the problem with some of these apps is it would be one thing if everyone was using club with their friends right if we were using club to shoot the shit because oh sam austin and jackson and somewhere else and sean's in california you know we need the club has to bring us together that will grow like crazy because everybody will invite their friends or their families to the app apple will grow like crazy and it'll be super sticky but apps like club house and what lab did was the fund was meeting a whole bunch of new people that you were hanging out with now the problem with that is that doesn't the scale because you're not bringing your friends to the network you're coming to the network to make friends that's why in likes it he made a bunch of friends like you go on and see the rooms he hangs out with i bet you those are people he's never met in real life like they're cool people they're are people who have things in common with but they were not his ir friends and so because of that you don't grow viral because people aren't bringing their own friends and then it's also not sticky for most people because most people will have the reaction you had sam you go in and you're like if you don't immediately find a live chat room that's interesting to you and also you don't have like the time and the bandwidth because it's like post no editing right so it's it's gotta be like good right away and get to like something that hooks you otherwise you're gonna bounce and you do that three times you could be like why am i opening this app i should just open instagram every time i open instagram the top photo on my feed is on point it's awesome even if that photo was taken three days ago but the algorithm knows this is juicy you're gonna you're gonna get some dopamine hit of like pleasure or or laughing or whatever from this photo and here's the next photo of the next photo so that's the thing that those apps have that apps like club house and what killed lab they don't so i would still be betting heavily against it now that's not a cool position to take because like who well you know what's the fun in rooting against a startup up like there is no market for me to go short the startup up or bet against it because everyone's like yeah duh like it's hard to build the next twitter but like maybe this can be it much do you guys remember me cat yep yeah that was just as trendy as this right i think part of this valuation is just the market environments for funding at the moment so i mean mee will probably have raised a billion dollar funding when it gets peak as well so i think it's just too early to call it i do agree with what you're saying sean that what i don't like about it at the moment and what i think what be a challenge is that all of the content is ep like it just disappears right other places as you said instagram twitter out this content is like evergreen like i can see a tweet from like six years ago maybe bella largely sent out that thing six years ago and i can like it and free resurfaced since it's evergreen content and they're getting more and more content all of the time this they need to make sure the content is a star at every minute of the day which you won't be right so this is the thing i went to a brunch i think you were there jack actually those james carrier brunch that he used to throw the n nfl brunch i went to one of them while were working on lab and he was one of the lead investors of mee he was one of the guys who helped mee kat figure out what it was gonna be and i talked to him i was night man i was like we're hitting this problem mee cat hitting this problem here and like everybody on the outside thinks this space is so hot but all of us on the inside are fucking panicking because we know how hard this is to get users to stick around when it's live unpredictable content and he was like yeah he's like he drew this like diagram with his hands he goes think about it this way every network every app that you're gonna open has to be interesting so there's like this interesting miss scale you gotta be high on the interesting scale he's like in youtube has this problem instagram has a problem pinterest facebook every trying to show you something interesting and they have like millions and billions of photos to pick from but they're you know they're gonna show you something interesting the algorithm does that the problem with mee cat and lab and all you guys is then you cross section that with something that's super interesting that's happening right now and that right now problem the evergreen problem you're talking about it doesn't make the problem two x harder or four x harder it makes it like two million times harder and that's the main problem that's the one reason that really twitch is the only live network that has worked unless you count live tv which i guess is you know a different sort of outlier with like highly premium produced content and so twitch is the only one where it's user's creating content live and it actually works and one of the reasons why is because when you're streaming a game the person can kinda just come in whenever there was no beginning middle and end of a conversation just hop in they're playing the game and you gotta leave and everyone want and the streamer stays live for like eight hours straight you know so the interesting people are online for eight hours a day because playing a game is easy you can actually do it for eight hours whereas talking on club house for eight hours would be impossible to be interesting for eight hours and so that's the problem with apps like club hours and that's why like the fundamentals to me don't make sense i think the valuation and all this stuff is for people who don't really understand what's happening at like how hard do stop networking is to make i don't know like the valuation i'm not that concerned about i did see another tweet someone at google asked eric schmidt when he was ceo and he saw this at the time they bought youtube he's like did we buy youtube for the right price people are saying it's bit expensive less one point five billion or whatever he said no we definitely didn't buy it for the right price he was either way too cheap or way too expensive ask me in ten years so i don't think this one billion matters it's a binary bet it could get massively youtube was already working youtube was already massive massively it just might have died because of the you know all the copyright lawsuits that they were getting hit with instagram was pretty early when it got bought by facebook and stuff right i mean not as early as this but instagram was also sticky and again the like fundamentals of instagram you could see why that would work you knew that people viewing photos on a feed you know that works oh these guys have done it well on mobile and they're like faster than facebook on mobile they they sort of built facebook for mobile and so facebook buying them made sense haven't seen the data so maybe i'm wrong maybe maybe club has some amazing retention metrics that have defied the odds of all the other there's of us who have tried something similar i doubt it i think stuff points towards it not working i'm just saying they're not judging the valuation based on data probably too much at this stage right it's it's like oh wow this seems that this is a big opportunity thing that means if it becomes a ten billion dollar company you only ten extra money and i think that you the risk reward there is so far off that you know to me this is an an example of investors you know just wanting to be the one who gets the hot girl at the dance you know like club house is the name everybody knows and you can sort of talk yourself into it like becoming a ten billion dollar company is no fucking joke you know like i think snapchat when they went public were what ten or twenty like max and that was ten years in not to share on him because seems like a great guy than some of his writings things about pro his growth expert but andrew chen has had a couple of big bet failures like he joined jason a couple of years ago his big bets and things like atrium which like died like twelve months later like i can't remember up a bit but some of them have like died yeah yeah and like i think he was also in secret which was like probably the last big social app to do this was secret where secret comes out it's in a small number of people's hands it's super interesting and the tech guys love it and you know it raised at a hundred million dollar valuation boom just like club houston it didn't get to that next one at at the billion yi did but secret didn't and then both of those died because of kind of fundamental problems which were around you know like know fully anonymous networks what what's interesting to me is like i just don't really invest much in consumer reps because i just don't get it and i think what is highlights that the most to me is that sequoia and i can't remember the other firm but they are investors in whatsapp like the biggest consumer exit of all time they're also investors in things like secret so if these guys that have massive teams they're looking at all the data they're going to the board meetings of whatsapp they have all of these data points if even them can pick a consumer app that like imp like twelve months later how am i gonna be able to pick the winner we talk a lot about a lot of cool stuff on here but we never really talk about the social network like these like poppy fun things and is that would you say it's because you you just hate that now because you see no no so i'm not like i'm not i i don't hate it i am probably too scarred by it so like i'm i'm scarred by remember i would never go try to build another social app i think it's like just in terms of the risk reward ratio guess so there's just so many better ways for me to have success than to try to be the the genius who catches lightning in a bottle you know the lottery ticket winner who really comes up with the next snapchat the next instagram the next pinterest whatever right like i would love it but damn that's hard and there's just so many other ways where i have a much higher chance of success so would do it again but i love thinking about it i love talking about it i love using these apps a trial of them right like i enjoy them and actually enjoy using club house sometimes i actually thought that the the real value of club house was for anybody who was on it during the first like three to five months you could meet every single interesting person in tech or even like hollywood like i had conversations with nba players on there i had conversations with you know scooter braun i had conversations with you know from from kind of like justin bieber manager all the tech people were on there the vcs who again i tweeted this you can't get a meeting with these guys if you try to schedule them their ea will say you know they're booked till march how's is the third week of march for you and then you have to fake also being busy but like let me check even though you know you have you know you don't schedule three months out out and then that guy will be on club house for three hours that night you know shoot the shit doing nothing so like it was the best way to build your network and build your kind of friend group and one even one connection that came out of club house could really change the trajectory of your life because all the people on it early on heavy hit and then now as it gets kind of like more open up to more people because they want more users and now you know they send me a message that says you have thirty invites that's like okay they're trying to juice growth they're trying to try to accelerate growth now that value is gone so i don't think it's that interesting anymore so i know jack has told you probably pretty soon sorry sam was just gonna say like if there was anything else she wanted to talk out with the taboo thing there was one or two points had in and also kind of felt like you should mention games stop today i don't know if you've been following it but the craziest yeah go for it explain what's going on for people who don't know well with games stop i saw a chart saying that trading volumes for stocks are approaching what they were in the dot com compatible basically for games stop blackberry and like some of these other junk what the professional investors would say like junk the fundamentals like these are dying stocks like games stuff is like a pokemon card store based at the other the moment is dying so hedge funds were basically saying hey we're think you should shortlist this stock like the numbers of trash people on reddit in this group wall street bets they basically club together and they were like hey let's just screw these hedge fund guys and let's just pump this stock now games stop the guy this up acted the the founder of chewy had become an activist investor like six months ago just saying oh i think i can improve them he invested seventy five million it's gone to over a billion in six months the stock was up at one point over like a hundred percent today alone like if you look at the stock chart it just went up like down that's a straight line it's a twelve hundred percent gain seventeen hundred percent game i mean like a hundred plus percent today alone because everybody is like just buying like options calls that expire on friday because basically what happens is all these people sorted the stock but then if the stock goes up they kind of have to cover their short positions because everyone's pumping this one stock basically treating in the stock market like game kind of funny to see but like yeah is approaching like dot com bubble levels of stuff because people were posting like really scientific sounding stuff in reddit group like oh yeah this is called like a quantum short freeze where there's not enough stocks and then they said like they're basically were chad shit if people even knew they were chatting shit in the comments they were like you formatted your post free professionally with like bullet points sounds legit i mean right and then they're posting screenshots that they just put in like a hundred thousand dollars by order so it's kind of like the dot com thing where everyone was just buying stock any stock that's was called dot com now everyone's buying oh someone sorted the stock let's let's just pump it like hedge fund people are saying short this let's just buy that do you think that this is all from robinhood hood that these people are using like blackberry etcetera like even they're putting out announcements like we have no material news while our stock is up forty percent say because even though raw introduces you'd think like oh wait they maybe don't have as much money as hedge funds so how can they move the stock so much it's because they're all buying crazy leverage options they're buying options that expire on friday which means that you can essentially move the needle of the stock just by putting in like one dollar you can move it massively because you're basically doing a game of ro you're like hey yeah now i'll lose all my money but i have a small chance of winning so basically they can increment they can move the stock much more because they're just buying these super risky crazy options because they don't give a shit if they lose all their money so it is is robin hood it looks like to me it's so crazy what robinhood hood has become i actually can't stand it it's funny yeah but i definitely i'm sorry i'm gonna i feel kinda sad for people because i think it's gonna mess up a lot of people it's funny scary yeah it's funny scary i actually had a funny story so about three days ago i i'm in this psych chat group and i posted it and i said hey who's got hot stock tipped for me i i feel like gambling and i told i i said i got a hundred k i'm gonna gamble you know give me give me some give me your recommend best recommendation and so people just responding is there's like six seven people this group they were like you know this because of this back because of this reason you could just speculate on this you know just funny things and greg is who's been on the pod a couple times he goes i think games still has a twenty x to go and i actually didn't know what was going on with games up at the time this was i think the first day of the pump like when it was like fifty percent or something like that and i looked at i was just like what is he talk games stop i was just like was like you know just referencing some again some obscure all dead thing as whatever and so anyways i picked one i put an arcade into it and then fucking games has been uploaded i think i would had like seven hundred thousand dollars or something crazy if i had literally just taken his like his joke recommendation to be serious it was crazy yeah it's it's messed up it's funny i don't have like elon elon musk pumping do coin just because it's like funny mean yeah it's it's wild how and so is there something i actually don't know is there something when the shorts cover their position that boost the stock more because they had to cover is that why it's like double pumps yeah because when you cover a short you have to buy the stock at any market price so these guys one of the analogy had his like actually warren buffett said that he doesn't like shorting a stock because then he's like you can't sleep at night because here's an analogy let's say ex stock is games stock is ten dollars if i buy the stock i kind of have infinite upside right like it could go to a hundred thousand or whatever but if the stock goes bankrupt i only lose my ten dollars i have a capped downside but if i shop the stock i actually have a capped upside i can only make a certain amount if it goes to zero i only can make ten dollars but then if it keeps going up i actually have an unlimited upside that's why on robin hood or any of these platforms you have to have special permissions to short stock because you actually can lose an infinite amount of money beyond the capital that you assigned to that trade i was just looking at tesla's short positions about at one point tesla was the most short stock in the market and then tesla stock obviously has gone insane and so just in the last what is this so this is the last actually is the short position up i think there might be a larger short so january of twenty twenty it was twenty five million of short interest and now and at the end of the year it was sixty million so so even even with the the massive run up and people certainly covering their positions it looks like the short position is still huge against tesla which it's interesting it makes sense to me i mean it could be new people buying in you know like tesla at all time high let's new people come in but the people that sorted it before if their hedge fund is a billion dollars and they put a lot of money to this if the source gone up ten x they could have lost ten x their money they need to get out of the position at any price and that's what kind of creates somewhat of a spiral that the price could keep going up as shorts have to comma one more little thing i don't know how much time you have jack but are you paying tents i do need to jump off okay one minute okay maybe we can't do this one alright i'm just gonna give you the short version of it actually let's do this one i'll do i'll do a short one are you familiar with grayscale scale btc yeah grayscale so jack explain grayscale to sam quick i mean i'm not totally familiar with of it but the stock ticker is is gb t and i believe that it's just like a derivative of bitcoin at like a premium so it's kind of like an etf for bitcoin it that's etfs a bitcoin are not legal so these guys have launched somebody else so that institutional people can buy it without having to create a count on cracker or something so the guys who started gracie i think one of them was the former cofounder of coinbase base i believe for this barry silver guy yeah barry silver involved maybe i got it wrong maybe he's doing a separate one but basically you know the wink bosses and and others have been trying to start a bitcoin etf to make it easier for a normal investor to go into e trade and buy into bitcoin without having to figure how to hold it or figure how to start an account on coinbase base or whatever else and it just keeps getting rejected and i think jack last time you were on you mentioned an idea like this you were like why does somebody create a bitcoin index fund like just do it in middle east do it somewhere else that's like just not on the us you know on the nasdaq well i think i was saying that my friend is doing it in the middle east or not my friend a guy had known right and so g hill i mean it's been so crazy successful so basically this thing has grown like crazy so they now have twenty four billion in assets under management as like pretty new thing they are buying some sick amount of bitcoin i think they hold over three percent of all bitcoin now and the crazy thing is that everybody who's buying bitcoin from there is buying it at a premium because they have not only like a management fee of two percent they literally they just trade at a higher price than their underlying bitcoin holdings so you're paying a premium for that convenience and i just think this is like one of the like like these guys are gonna make the guys didn't in charge of this you know probably gonna make over a billion dollars doing one of the simplest simplest in terms of like they didn't build a product they didn't invent bitcoin it probably had to do a lot of regulatory work though because otherwise i have someone else would done it i think they paid some lawyers basically to say hey could we do this and yeah let's go ahead and list this and and see what happens on you know on otc and i just think it's it's insane that it's training i don't know what the premium is i believe it's i do need to jump now guys but this was super fun as always so alright thanks for coming jack take care guys thanks you jack sean i wanna bring one more thing up to you okay i'm also supposed to jump but yeah let's do oh well really quick andre h yeah so they and h is regarded one of the best maybe the best vc from out there by people in the know it's not it's not the best but it is definitely two one but it has a brand name that is it's like who knows what's better princeton on harvard but it's like has that say has that name so they got popular because they had podcasts my friend just texted me maggie who's the head of content at nerd wall you know a multi hundred million dollar business and she just got recruited and hired there so i love this idea that they're doing they're building out their media arm i don't know if that makes money i think it does there might be ads on it pretty interesting what do you think about this so i don't think they have a a medium business today i think they put out content just like most vcs do they have podcasts and stuff to like be thought leaders so they get better deal flow but now they're like no why do we need to go to the wall street journal when we wanna write an opinion piece let's just make a media company and we will write opinions into that and like let's actually blow this thing up i think this is a really smart idea kind of a no lose situation like they have multiple billion dollar plus funds so the media business doesn't need to be a big business for them for this to add value to them no it could easily pay for itself though just that they have now it would pay for itself and so i think that it will i think it will be successful you know financially but at a a scale that's for them for probably pretty small but the impact and the influence and the ability to like dictate their own terms and not be behold into the media and having to like play nice with journalists and do all this stuff they're like no we'll just be the journalist why not and this has already been a trend right like mark jason on twitter will get millions of impressions but i think it's smart of them to go straight into the media business and compete and i love how the media people are all so upset about this yeah it's stupid for anyone to be upset about it i can't stand that it's awesome i can't stand on the eli of people like gate keeping around who can and cannot share their opinion who can and cannot have quote news or be a quote journalist i think it's awesome i'm on board i think it's great by the way i think this is a general trend for vc which is that not that's is not exactly the case for reason but it's a good example vc is gonna shift i think to businesses that startups need that happened to invest that have basically they have of venture arm so i'll give you an example i've ever heard of tu ventures no so this a guy i think they've bradley tu he's like a kind of a a big dog in the like kind of like lobbying world kind of like the legal political world so he was early investor in uber airbnb and you know handful of other the really big winners because he was the guy who's helping them go into cities lobby with the cities and and get you know they're kind of like new product you know like airbnb or uber was a new idea get it through with governments and so he was a service provider that they would normally pay for for their servant for for their their startup and he was like yeah but i'm a venture investor so if you want me to work with you on this let me invest it so this guy's made a killing on airbnb and uber and these other guys and i think the same thing is gonna happen for lawyers like every startup up today goes to one group of people for investment and another group of people for legal services somebody and you know maybe it's me that somebody gonna go buy a law firm and be hey here's what we're doing we're cutting prices down to the bare minimum we're gonna be ultra client friendly and we're gonna just invest off we're gonna we're gonna raise a fund out of this legal you know this law firm to invest in all the companies that we work with that that that we do this for i think it's a good idea i think legally i think you can't do that for a law firm but i understand your point think that what they take equity right now and some start some do they take instead of cash they take equity don't think they have owners do they their partners yeah there's like a partners yeah the other thing that that works there is like recruiting so every startup of wants to recruit engineers so instead of being a recruiting firm that makes all your money your business model is give me twenty percent of the first year salary it's gonna be a business model that is basically like i will do the recruiting for you but we invest in your company we invest and then we are your recruiter firm at cost i'm on board with i think it's great although i would wanna i've never taken money from any of these big guys i would wanna ask them do actually use the services they provide it's different from oh i'm interested in her and we have some marketing people on staff to being like no we're a badass ad agency with a venture arm you know we are a badass legal firm with a venture arm we're a badass ass recruiting firm with ventura i think it's a different thing and i think founders are gonna start taking that because they're gonna be hey i get two for one here yeah look it was kinda like that read who came on reed what's the youtuber guy's name yeah yeah yeah mister manager yeah that's right yeah that's that's a good example cool i gotta a jump so alright see you see you