I Ranked the Best & WORST Businesses to Start Before 2026 | Andrew Wilkinson

I Ranked the Best & WORST Businesses to Start Before 2026 | Andrew Wilkinson Speaker 1: We have 65 million of ARR. We do over 40 million dollars of EBITDA. We also manage a 200 million dollar fund. So we're over 300 million in revenue across 30 businesses and all the businesses in the fund are profitable as well. I don't know. I'm kind of like if that's failing like sign me up, right? Speaker 2: You've owned a number of agencies. How much revenue lifetime has Metalab generated for you? Speaker 1: The hundreds of millions of dollars of profits, not revenue. I don't know that I would still rank it very highly though. Speaker 2: SAS. Where are you putting SAS? Speaker 1: I would say it's a. Speaker 2: What do you think about marketplaces? Speaker 1: Well, I would say it comes down to scale. A good marketplace like Airbnb, I'd say an A. I'd rank marketplaces in general as. Speaker 2: That's the one I would disagree with you with. I feel like I gotta ask you this because I think you get a lot of shit nowadays. I think a lot of people go look at the tiny stock and then they click like max and basically you see just a downward trend. A lot of people I see on Twitter want to kind of look at that and say, oh, this guy calls himself the Warren Buffett of the internet and he says he buys these great businesses, but what's going on? Unknown Speaker: I feel like I can rule the world. I know I can be what I want to. I put my all in it like no day. Speaker 2: What's up? Speaker 1: Andrew is here. Speaker 2: Andrew is one of the most visited guests on the pod. Always good to have you, man. I wanted to play a game with you. You've done many types of businesses. You've done agencies and private equity and you've started e-commerce companies. You've done a huge number of companies in the last 20 years. So I want to do a game where we rank The different types of businesses that you could start. And we could work out this criteria together, but I think the idea should be, we're not looking at the outlier scenarios. So in every industry, right? The world's best plumber makes a fantastic living. That may not mean that plumbing is the best trade to go into. No offense to the plumbers out there listening, but we're not looking at just the extreme outlier. So I think that here's my criteria for a great business, Andrew. It's going to be the median successful outcome. Okay, so like the sort of like normal case, if you can make it work. That's the first criteria. The second thing is we're taking into account both the lifestyle as well as the result, the upside. So if one thing just makes you miserable or overworks you like crazy, then that would be obviously worse than a business that lets you have a great, flexible schedule and flexible location, for example. So lifestyle matters, upside matters, and we're looking for kind of the median success case. But in some of these, it's going to be like, dude, Median success, I mean, only the top .1% make it. So you have to factor that in. The likelihood of success matters in these scenarios, okay? If you're listening on audio, it's gonna be a little more fun if you go to YouTube or go to Spotify and actually you can see on screen the stuff that we're sharing. All right, so here we go. Here's the tier list. If you've never seen a tier list before, they're ranked as you would expect, sort of A, B, C, D, E, F. A being better than F. But there is, of course, S tier. And I don't even I don't even really know what S tier stands for. I think it's like from the gaming world, but it's basically like S tier is sort of like God tier. It's the best you can. It's the best of the best. OK, so we're going to start with a little layup here. And for each, Andrew, I want you to give me your almost like rapid fire take on like We're going to talk about what this business is, why it's either great or why it sucks. The first one we're going to do, easy, an MLM, which is actually a surprisingly common business that people get into if you just look at the raw numbers of people who take part in MLMs. MLM, where are you ranking it? Speaker 1: I would rank an MLM as an F. It's a fundamentally unsustainable business. I mean, the problem with an MLM is it's reliant on recruiting other people and it doesn't actually make money based on selling services. It basically makes money by finding the next sucker. And if the person that starts the MLM finds a lot of suckers, they can make a lot of money. And the first couple layers can make a ton of money, but then it always explodes or they get indicted or something like that. Speaker 2: So where are you ranking it? Speaker 1: I would say that's an F. Speaker 2: Okay. It's going in the F. Although it does sound like for the MLM owner, you know, it's not necessarily an F. You know, one of the associates or as they call them, you know, the business owners that they like to call themselves that are underneath. Yeah, that's F tier for them. Speaker 1: I think if you are willing to go to jail, too. Like you can make a lot of money, but I mean like 50-50 odds you go to jail. Speaker 2: All right, next one up is one that I think you did. By the way, say if you've done any of these. Okay, so freelancer, which I believe is how you started your career. You were a freelance, what, web designer? Speaker 1: Yeah, yeah. I started making websites out of my apartment, basically. I would rank that probably a D. I think it's a really good business. I'd say it's a living, right? I think there's nothing wrong with freelancing or a restaurant or a corner store or that sort of thing, but fundamentally, it's an owner-operator model and it doesn't really scale unless you scale it, which is what I did. Speaker 2: Yeah, okay. Well, that's kind of the next one, which is actually agency. You've owned A number of agencies, you've probably made, I don't know what the number is, but Metalab has to have generated something like 200 million plus in revenue. How much revenue lifetime has Metalab generated for you, your design agency? Speaker 1: I don't know the exact math, but I think we're probably well over into the hundreds of millions of dollars of profits, not revenue. Speaker 2: Okay, so I'm assuming you might have agency higher than most people. Speaker 1: So I think, well, you know what, I don't know that I would still rank it very highly, though. The reason, my story, I started a web design agency. I scaled it. I got clients like YouTube and Uber and Walmart and all these big companies. And I was terrified. I mean, it's a business where you're either making a ton of money or you're about to go out of business constantly and you swing between those two things. And so because of that lumpy nature, I'd maybe give it a C, but it would be a tentative C. It would kind of, yeah, it's really, really a hard business. Speaker 2: And the hard part is you're saying clients come and go. It's that one, it can be feast or famine with clients. Is that the reason why? Or is it the, Headache of operating and delivering the service? What is it about the agency that makes it not A&B? Speaker 1: Instead of web design, let's imagine you're an accountant and you start an accounting firm and you start auditing 30 companies. Now, companies don't like to switch accountants and they don't like to switch auditors. So if you have that, that's a really high quality consulting business. However, if you have a $500, let's say that you hired 30 people in the Philippines and you do graphic design for $500, you might have months where you're making $300,000 and then you might have months where you're making nothing because you're not getting any clients. The worst thing that happens in these businesses is You win a client like Walmart, let's say. They come along and they say, hey, we want to give you $10 million of work over the next year. And so you start panicking. You go out, you hire 30 people. And then a new PM takes over that team at Walmart and they just cut your budget. And all of a sudden you're left with 30 people you have to lay off. So I think it depends on the nature of the business, honestly. Speaker 2: So you did MetaLab. You've also had like a game design agency. You've had like a A no-code agency, you've had probably what, six to 10 different? Speaker 1: 10 to 15 agencies and services, business copywriting, social media, web development, design, a lot of different stuff. Speaker 2: What were the sort of top two agencies you did and what were the sort of bottom two agencies you did? Speaker 1: Well, I would say that we really haven't had a lot of success with recreating the success of Metalab. Metalab was the business, you know, like I said, I started with zero. And now does very significant earnings and revenue. A lot of the other agencies have not hit in the same way. And I think the distinction with Metalab is, It did so much defining work in like 2008 to 2015 where we designed the first version of Slack. We worked on all sorts of projects that were kind of groundbreaking and we planted our flag and built a reputation. And so I think the reputation piece is hard to recreate. And so we've had a lot of success with Metalab. We had a lot of success acquiring a company called Z1, which is in Spain. They're a smaller web design agency and the theory there was literally just Metalab gets a ton of leads that are too small for it, so let's buy another smaller agency and let's just send them those leads. And so I think we acquired that business for We've made $300,000 or something and we've probably made single-digit millions of profit in it. We didn't knock it out of the park, but it's just an amazing base hit. Speaker 2: Hey, what's up? If you're liking this episode, the research team at Hubspot has taken all the rankings that we're doing today in this episode, and they made it a downloadable thing in case you want to go see the final tier list. You want to download it and maybe have a little breakdown of our commentary for each one. It's available in the show notes below. You can go ahead, download it totally free. Okay, next one up, SaaS. Where are you putting SaaS? Speaker 1: I would say it's a B, probably. I think, again, it depends on the type of SaaS. If you have a SaaS software that is a ChatGPT thin wrapper and does something like put a funny nose on your friend's face and you trick people into subscribing to it for six months and they always churn, I'd say that's a pretty bad SaaS business. If you have a SaaS business that Let's say has become the dominant player in funeral home management and all the funeral homes use it and they don't want to switch because it's the standard. That's an incredible SaaS business. I mean, SaaS businesses, they're often highly recurring, really good margins. I mean, they can be incredible, but you really have to find something with a limited amount of competition or high switching costs. Speaker 2: Tell the quick story of the DJ software SaaS business, because that's kind of like the funeral home example you have. So you're saying it's a vertical niche tool that's like mission critical for an industry to run on. They're unlikely to ever switch. And you know, that's going to be super, super sticky for a long time with high margins. It sounds like I don't know a lot about the DJ software business, but like, can you just tell the quick story of that one? Speaker 1: For the last 10 years, everybody has been obsessed with buying SaaS software companies and thinking you can't lose in that industry, which right now is still true. But over the last two years, I got really scared of buying software companies because you look at vibe coding and LLMs. LLMs increasingly can build software. And it's not that it's going to put all these businesses, let's say you have a SaaS software company and there's 10 competitors five years ago. I just think there's going to be 50 or 100 competitors in the future. And when that happens, competition equals margin compression. So we've basically said no to almost every single SaaS software company we've looked at over the last two years. But one came across our desk that we could not say no to. And that was Serato. Have you ever DJed, Shaan? Did you ever go through that life crisis? Speaker 2: You know what? I appreciate that you even think it's possible that I look like a guy who's DJed before. So I take that as a compliment, but no. Speaker 1: I had a phase in like 2012 where I was trying to meet girls and I learned how to DJ. And so I kind of knew the industry and the dominant software company in that world for the last 20, 25 years, I think, My first million is a company called Serato and it's an incredible piece of software. I mean, DJs all over the world use it. I think like Diplo, you know, a gazillion of the top DJs and these two guys in New Zealand built it and what they did was really smart. They partnered with the hardware manufacturers like Pioneer and they deeply integrated into the hardware. And so what that means is that A, it's become the standard, right? So when you're the standard, that is really exceptional. Most DJs use one of two pieces of software, either Rekordbox or Serato, right? So very limited competition and there's lots of upstarts and stuff. But once someone really integrates into an ecosystem like Serato, they're buying like $5,000 of hardware. They're not gonna switch off really easily. And the manufacturers, frankly, they don't wanna integrate with Some random college kid who's vibe coded some AI DJ. Not to say that people can't come and compete with us. It's just harder because it doesn't have a hardware mode. So I think SaaS with a hardware mode is pretty incredible. That business, we shared some of the numbers when we bought it. I mean, it's doing $45 million of revenue, $15 million of EBITDA. It's been growing like crazy, moving into a SaaS model from licensing. I'm a huge fan of that business. Speaker 2: Why does a business like that grow? Like, are there just way more DJs or something else? Speaker 1: I think as long as a DJ is a desirable thing to be. I mean, if you think about it, one of the weirdest phenomenons, you know, when I would go to a nightclub, it doesn't matter how much money I have in my bank account. I remember looking around and going, Oh man there's all these great girls here but you know none of them none of them know that you know i've got all these businesses i'm i'm a cool guy or whatever and you're literally like they don't know i have a design agency. Exactly but like i look up i actually had a friend who's a dj and he would get paid like, 200 bucks and some beer tickets and he'd be swarmed with girls and he'd have status and throughout the city, he'd be the man. And so I think as long as that's true, as long as young men think DJs are cool and women increasingly, there's way more female DJs now. I just met an amazing one yesterday. But as long as that's true, I think people are going to want to do it. I mean, it's just fun to mix music and you can you can become famous. You can express yourself. So I don't know, as long as that's true, it's like we've got one of the toll roads to achieving that. Speaker 2: Yeah, I like the analogy of the toll road. Okay, next one I'm going to do. Actually, I'll do an easy one. Restaurant. I think you've owned or I think you own or still own a restaurant. Speaker 1: Yeah, I own a bunch of restaurants, actually. And I always say a restaurant is a really good passion. If you're really passionate about it, you love food. It's a labor of love. As you know, I know you had a sushi restaurant, but I have when I meet somebody and they say, I have a successful restaurant, I want to like, Like Wayne's World, get down on my knees and say I'm not worthy because if you're successful in a restaurant, it is one of the hardest businesses. If you think about for you to go in and eat a good meal at 6 p.m., people had to wake up at 3 in the morning. They had to bake bread. A million things had to go right. They had to train 30 people. It's just like a Rube Goldberg machine of business. So I would rank it as an E, probably one of the hardest businesses and low margin and difficult. Speaker 2: Yeah, for people to get context, most successful restaurants, even the big chains like a Subway or Chipotle or things like that, 10% margin is the good case scenario. It's like that's doing well. Of course, you know, there's exceptions like luxury, you know, sort of Michelin star restaurants might have higher margins. On the whole, if 10% is winning, but your revenue is capped at what you can produce, because again, you're working seven days a week. You're there for breakfast, lunch, and dinner. You always have to be there. You always have to go in and make the product again, fresh every single day, and you're only as good as your last interaction with the customer. It is just such a brutal business. It is an absolutely terrible business. In fact, it's funny that the only business you've ranked below it so far is an MLM. It's pretty much a crime. It's the only thing that's been worse. Speaker 1: And you know, like I said, like we own restaurants. I think they're really important, but I just don't. If you want to make money and you want to get rich, I don't think that's a good way to do it. It's like I always use the gym analogy. If you go into the gym and you try and deadlift 300 pounds on day one, you will hurt your back and never come back. And I think entrepreneurs who go into restaurants, they have a rough go. Speaker 2: All right, next one, marketplace. So an online marketplace, how do you think about marketplaces? This would be something like whether it's Etsy or an eBay or an Amazon, or it could be, you know, even marketplaces like AngelList as a marketplace, Twitch is a marketplace, anywhere where there's suppliers, there's supply and demand, right? There's creators and viewers. YouTube is a marketplace of creators and viewers as well. So what do you think about marketplaces? Speaker 1: Well, I would say it comes down to scale. You've got Airbnb on the side there. I think small marketplaces are really hard. We own some and I think it's like lightning in a bottle. If you can get supply and demand to match, they're phenomenal businesses, but they're highly competitive. I like a business where it becomes a verb. Airbnb is a great example. If I think maybe we should rent a house, Airbnb, the word just pops into my head. I go to the browser. I look up Airbnb and I'm going to use it. That, I would say, is probably a B or an A business, so very, very highly ranked. But if you started a marketplace for people who want to borrow Let's say like construction tools or something like that. Speaker 2: Yeah. Speaker 1: Oh my God. Like I've just seen a million of these fail. They're so difficult. Speaker 2: And so where you rank in marketplaces? Speaker 1: I would say a good marketplace like Airbnb, I'd say an A. I'd rank marketplaces in general as a C. Speaker 2: Wow. First big controversial pick there. I can't believe you rank it as a C. That's the one I would disagree with you with. I think if you get a marketplace to work like an Airbnb, it's S tier. Speaker 1: We're talking about business model. Speaker 2: If you're one of the very few successful marketplaces, you're an S. It's one of the most defensible, lucrative businesses in the world, but because the likelihood of success is so low, I would have just knocked it down to probably an A if you can actually get one going even. Speaker 1: Let's put Airbnb as an A. I'm down with that. I just can't agree with the business model in general as being a C because we're basically ranking in terms of We're talking about quality and difficulty. For example, we could say that the services business, the accounting firm, let's say PwC. PwC 75 years ago was just one accountant with a few partners. Now today, if you want to get audited, you're a public company, you have basically five options. You're going to pay a fortune for their rubber stamp. I'd say we could rank that as a B or an A, but we're talking about the business model. Speaker 2: Okay, fair enough. Agree to disagree on that one. All right, this Airbnb is not the company Airbnb. It's owning Airbnbs, short-term rentals. So saying, oh, you know what? Here's how I'm going to make money. I'm going to get a property. I'm going to get a home. I'm going to put it on Airbnb and I'll be a short-term rental unit owner. Maybe I'll do two. Maybe I'll do three. What do you think of that plan? Speaker 1: I'd say it's a D, similar to freelance. The risk there, regulatory. I bought a beautiful apartment in Vancouver. I go to Vancouver a lot and I said, oh, I don't want to own a second home, but the 28 days a month I don't use this place, I'll Airbnb it. So I Airbnb it. I'm making a fortune. It's great. I love it. All of a sudden, the city of Vancouver changes the regulations. Boom. There goes my margin. There goes my business. You know, total nightmare. And now I just, it's fine. I have a tenant, but it's just not nowhere near as profitable. Speaker 2: The same thing happened to my parents. They were Airbnb-ing their house in San Francisco, making a killing, and then San Francisco changed the rules, said you can only Airbnb 90 days out of the year. So basically three out of the 12 months, you can Airbnb. So then nine out of the 12 months, their cash cow disappeared overnight. Today's episode is brought to you by Hubspot because using only 20% of your business data is like dating somebody who only texts you in emojis. First of all, that's annoying. And second, you're missing a lot of the context. But that's how most businesses are operating today. They're only using 20% of their data unless you use Hubspot. That's when all your emails, your call logs, your chat messages, they turn into insights to help you grow your business because all that data makes all the difference. Learn more at Hubspot.com. All right, I want to do content creator. So for the person who says, I want to create the next podcast, I want to be the next YouTuber, I want to be an Instagrammer, I'm going to build a following and then I'm going to make a ton of money because I'm going to get brand deals or launch my own products or who knows what. But I'm going to go all in on being a content creator. Speaker 1: So I think that's probably a D. I would argue that if you become the next Andrew Huberman, You're an A. You think about in a world of AI, if somebody has a trusted relationship with you, it's a phenomenal business. The issue with it is it just doesn't scale. So in terms of defensibility, it's amazing, highly profitable, very simple to operate. But one of the problems with it is, and I know a lot of these people, if you don't show up and you don't bring the fire on the camera every single day and you stop posting, your business goes to zero. And I think that's a bit of a, it's a bit of a prison, I think, for some people. Speaker 2: Why did you say Huberman? Is it because of the trust factor or because it's in health or wellness or medical? Is that the important factor there, the niche, or is it just the level of trust that people have? Speaker 1: If Huberman was doing the same sort of podcast, but he was doing it about candy, he's reviewing candy. And if you sell candy, It's the affiliate margins are not that good. The candy company won't pay that much to do it. If you're doing health, like if you think about Huberman is basically promoting athletic greens, health supplements, that kind of stuff. Those things can be very, very profitable and the customer lifetime value is high. And so he can charge a hell of a lot for advertising. And then also, I mean, if you think about it, like Huberman, we own, we're friends with Andrew. We own a Yerba Mate business with him. He is able to basically bring, I would call it $20 million of free marketing to any business he becomes a part of. And so if he takes equity in businesses or owns businesses, he grows them massively. I mean, we took the Yerba Mate business. I think it's grown 300, 400% since he got involved with us. Speaker 2: All right, next one. Owning real estate. So buying properties, either cash flowing them or flipping them. Obviously, this is a big space, right? So there's like a thousand variations of how you do this. So I think it's a little bit of a tough one, but just give me your general thoughts on going into real estate, whether it's multifamily, it's commercial real estate and saying, I'm going to try to buy these properties using some debt. Maybe I'm just gonna cashflow these properties or maybe I'm gonna try to improve them and sell them for a higher cap rate when I exit. Speaker 1: The beauty of real estate is predictability, I think, depending on the sort of real estate. I think there's really a big distinction between real estate ownership, where you just buy something and you rent it out, and then there's real estate development, where you actually buy a piece of land or you buy something, you add value. I remember talking to your, I think it's your brother-in-law who does the real estate, where he was like, look, I know all of the people that need space, and I just go and I acquire a strip mall, And before I close, I already know that I'm going to put someone new in and, you know, it's going to be a way higher quality asset. And then you can refinance it out or whatever. To me, that's kind of a no brainer way to make money. So I would rate that a C probably. Speaker 2: All right. Go ahead and C. And why is that not higher? Because, well, if you're not doing the value add or you don't have that unfair advantage like my brother-in-law has. Speaker 1: The reason I don't really do much real estate is because I don't like anything with a ceiling. You know, if you buy, let's say you buy a 40-tenant apartment building or something like that, the rent is gonna be, let's say that some old lady owns it. She hasn't increased the rent in, you know, 30 years or something like that. You're gonna buy the building. Over time, you can get an increased yield by increasing the rent, but there's a ceiling on that rent and you can't innovate to make more money, whereas in a business, let's say a digital business like a web design agency or software company, you can take your profits and you can actually grow the business and you can increase revenue. It's very difficult to do that in real estate without massive capex. Speaker 2: Well, I think they do the same thing, right? They take the profits or they refinance and go buy a second property. What's wrong with that? That works. Speaker 1: Yeah. I mean, you can do it. I don't know. It's just not something I've spent a lot of energy on. When someone tells me that they're going to go do it, I think of all the things they could do, that's a pretty solid approach. And I think one of the things I've noticed is that I know a lot of really wealthy real estate people and I've been fascinated by how illiquid it is. $2 billion of real estate, but the actual profits that come out of it are like $20 million a year, which is amazing, right? It's made their family wealthy. The bank understands that they live a good life, but they don't actually have that much liquidity, and it's often tied up in the next project and the next project and the next project. So I think it's a great way to make your kids really, really wealthy and ruin a few generations, and then they'll buy an F1 team and then lose all their money. Speaker 2: Alright, we have nothing in the S tier yet, so I got to try to get there. I think this is the guy to do it, so I have an icon here of Warren Buffett and this represents Investing, so just being an investor generically, but I think maybe the way I was really thinking about this, because I think Buffett is a little unusual in the way that he's structured his company. So really this is to me owning an investment fund or being in the money management business, investing other people's money and taking fees and a profit off the top of it. Is that? Speaker 1: Well, no, I would argue a little bit differently. Investment management is an incredible business, but I wouldn't put Buffett in that category because he doesn't actually manage other people's money. The distinction I would make, let's say you're a hedge fund manager like my friend Bill Ackman. He went out, he raised hundreds of millions of dollars, he bought a bunch of stocks, he would go and advocate for these companies to improve, and then he would take fees on that. If you think about that business model, you actually don't need to really put that much money into it yourself, and you can make a profound amount of money if you perform The structure of hedge funds is typically 2% of managed assets plus 20% of the profits. Let's say that you raise $100 million and you triple it in a short period of time, you can suddenly make $30, $40, $50 million of carry and fees and stuff. Those are really tremendous businesses in my opinion. The problem with them is that Your investors can pull their cash out. And so what Bill has done that's so smart, and I would rank Bill as S and Buffett as S, and then other asset managers lower, they have permanent capital. That's the real distinction. And that means their investors can't pull their money out. They're gonna make those fees no matter what. And they can literally, I mean, if you think about the simplicity- Sorry, why is it permanent capital? Speaker 2: I can sell my Berkshire stock today. I can sell my Pershing Square today. What do you mean it's permanent? What's permanent about that part? Or are you not talking about that? Is there some other money? Speaker 1: You're just trading little stock certificates of ownership between the businesses. But what I mean is typically a hedge fund manager would say, let's say I give a hedge fund manager a million dollars, I can withdraw that capital. The only way that they can give me that money back is by selling stock. Let's say you're the hedge fund manager. You go out, you invest in some company. The stock goes down. I lose faith. I say, Shaan, I want my money back. You have to go sell part of your stake, potentially losing quite a bit of money, whereas someone like Buffett or Ackman People are just trading the stock certificates, right? Those are just ownership shares. Sure. Speaker 2: Even when I'm out, whoever I sold it to, they're in. So the money is essentially there even if the stock price goes down. Speaker 1: Exactly. And if you think about it just in terms of the beauty of their business model, Buffett's is more complex. With Bill's business, for example, he simply just goes out and he buys 10 stocks. And he has 50 employees and he makes hundreds and hundreds of millions. Sometimes, some years, I think he makes billions. Speaker 2: Wait, wait, wait. So Bill Ackman's firm only has 50 employees? Speaker 1: Yes. Speaker 2: 50 employees. I think he manages, how much does Bill Ackman manage? Speaker 1: 16 to 20 billion, somewhere in there. Speaker 2: So, okay, let's call it 15 billion. So he's got 15 billion under management. You know what, we gotta break the rule and we gotta do a little public math here. He takes a 2% fee or he doesn't take the fee? Speaker 1: He takes a fee on, I think it's a blended fee of between 1 and 2% depending on the pool of capital. Speaker 2: Let's call it 1.5%. So let's say he's taking 1.5%. So his firm, with 50 employees, whose job is to go and analyze and find 10 stocks to own, is making $200 million plus a year in cash flow off of just the fees. Speaker 1: Well, you gotta remember, so that's revenue, cost, there's cost to it, transaction, legal, all the other stuff. And again, I think that number swings around based on the performance and stuff as well. Right. Speaker 2: But how high could that cost be? He's got 50 employees and is legal. He's not doing M&A with private companies. He's doing public company investing. Speaker 1: I believe, I mean, we don't need to do the public math. People can look it up. But if you look at Pershing Square Holdings, his public company, you can basically see what they pay him in fees every year. Speaker 2: Okay, that's incredible. Speaker 1: Let's not forget, that's no matter what. That's not the reward. That's not the 20% reward. I remember talking to him in 2020. He was freaking out about COVID and he had put $25 million into a derivatives position, betting, kind of buying fire insurance against COVID, dropping the market. He made $2.4 billion of profit or something insane off of that. I think it was $25 million bet. And you think about he got fees on all of that. Like it's unbelievable. And he also owns, let's not forget, he owns like $6 billion of that capital he manages. So that's his money. Speaker 2: Okay, that's incredible. What about the other side of it where you talked about the hedge fund manager? So where are we putting them? So if Buffett and Ackman are your first S-tier, where are you putting the general hedge fund manager, money manager who's got assets under management but not permanent capital? Speaker 1: I'd give it a B. Just because of the nature of the swings, you're pretty much guaranteed as a, let's say you have a large venture capital fund or you have a large hedge fund, you're pretty much guaranteed over 10 or 15 years to become a decamillionaire almost no matter what, which is kind of a crazy thing about the model, but you might get blown up at some point. Speaker 2: But explain the inconsistency because I believe Ackman also has like blown up or almost got blown up, you know, a couple of times. What's the difference in your mind between what you're talking about? Speaker 1: Bill keeps getting shot and then miraculously getting back up. He has a great line. He just says the secret to success in business is just getting back up over and over and over again. What happened to him was Bill has made so many incredible investments, but I believe in 2014 he bet against Herbalife Transcription of interview with Shaan Puri on August 6, 2012. I'm a smart model, but it was run in a kind of unethical way and the company blew up. So between Herbalife and Valiant Pharmaceutical, his investors lost faith in him and a lot of them pulled their cash. And so suddenly, his whole hedge fund is blowing up. And fortunately, in 2012 or 2013, Bill had raised, I believe it was like $4 billion of permanent capital in Pershing Square Holdings. And Bill was able to basically bet on himself. He went to JP Morgan. He went to Jamie Dimon, who he's buddies with, and he got a $500 million or something loan to bet on himself and buy more stock. And he managed to come out the other end absolutely killing it. And I think the big lesson for him was don't short stocks because he was shorting stocks and be a lot more disciplined about investing in businesses with leverage or exogenous risks. I think There's this funny story. Bill went out and he bought these little plaques and he puts them on every single person's desk at Pershing Square and it's the Ten Commandments. It's like, thou shall not short stocks. Thou shall not invest in a business with too much debt, et cetera. So Bill has really learned the lesson and been through it. Speaker 2: Do you know how in venture capital, the sort of the normal VC fund isn't going to It's basically like a pretty poor performing asset class because you're illiquid for 10 years and then this sort of, you know, the IRR that you get out of it is less than if you just kept it in an index fund. So like venture capital on the whole is a pretty bad asset class. Of course, the top funds perform pretty well. Is basically hedge fund management the same distribution or do they on average do better? Speaker 1: So there's this great story. There's this guy, Ted Saeeds, he's a fund manager, a fund of fund manager, and he had lunch with Buffett and he said, Warren, I'll bet you, I think it was a million dollars, that I can choose a basket of hedge funds and they'll outperform the S&P. And I believe he lost that bet to Buffett. Buffett basically said, on average, funds do not outperform, which is very true. I mean, most hedge funds, most venture capital Do not perform and I think that's kind of what's distinct about private equity. I think, I don't know for sure, but I think most private equity funds at least have a reasonable return. Speaker 2: Hey, quick message here because you know that feeling when you send a wire and it actually works, no friction? Well, I've used Mercury for years now and let me tell you, it just works. And that's why I use it for not one, not two, but eight of my companies. From credit cards to invoices, I have everything in one place. There's no janky dashboard. I'm never told, please visit a local bank branch. None of that tomfoolery. And a few months ago, I landed a big client. And the first thing I did, I sent them a clean branded invoice, boom, deal closed, cash in the door. That's the kind of banking experience I want. And that's why I use Mercury. So if you're running a startup and you want banking that feels like it's built in this century, well, go to mercury.com and get started in minutes. Mercury is a financial technology company, not a bank. Banking services are provided through Choice Financial Group, Column NA, and Evolve Bank & Trust, members FDIC. All right, we got a couple more I wanna do. Local services, so you're starting a local pest control business, HVAC, things that are, I got the handyman icon here because it is something that you do with a guy wearing boots and overalls that comes and does something in your local area. Speaker 1: So I would say that's a C. Those are hard businesses, but if you can dominate a local industry, let's say like You really good at internet marketing and you own an HVAC business and you're able to hire great technicians. There's only so many technicians out there and so they're kind of fundamentally difficult to compete with and I think they're challenging. I know a lot of people over the last few years who have bought HVAC businesses or plumbing companies And they're like, you know, guys that look like you and me and they, you know, they come in and they're dealing with all these blue collar guys and they're like, who the fuck are you? Why would I come and work with you? And so I think, I think they're, they're good businesses. If you're like, let's say you're a very enterprising HVAC technician and you want to start one of these businesses, you can do phenomenally well. But I think they're actually quite difficult to operate for a outsider. Speaker 2: Alright, I got a couple more. Venture capital slash angel investing. Although they're a little bit different. One's investing other people's money and one's investing your own. I bucketed them together here. Speaker 1: I would put angel investing as an E. I think I view angel investing a little bit like playing roulette. I like to play poker. It has better odds. I look at private equity or buying businesses more like poker. And I just know I think the classic entrepreneur story that you guys have talked about a million times is you make some money as a founder, you want to pay it forward, you don't really get stocks in real estate and businesses or acquiring other businesses. Speaker 2: Or they seem slow or they seem a little too boring, a little too common. Speaker 1: And you hear a Jason Calacanis, you know, I'm the first investor in Uber and, you know, whatever. And so you want to do that same thing. And it's a little bit like you've ever been pitched by a founder and they have like a popsicle company and they say like, Well, I know we're like tiny right now, but there's this one company that sold to Procter & Gamble for 300 million. It's just, it's all story driven. And don't get me wrong, there's amazing angel investors like Lockheed Groom and people that do amazing stuff. But I think for layman, it's a terrible, terrible thing to do with your money. Speaker 2: Yeah, it does feel a little bit like golf. It's an expensive hobby, but if you enjoy it, fantastic. Speaker 1: I mean, we talked about this, I think on the last episode or two episodes ago. When I first started out, I got in the habit of angel investing. I have $30 million or something tied up in angel investment, completely illiquid. I have no access to it. I'd much rather own like stocks in real estate or something. Speaker 2: All right, I have one more here that's buy a local sweaty startup. Oh, we have Cody Sanchez entering the chat here. I couldn't find a good icon, so I just put Cody on here for lack of a better term. It's a picture of Cody at a laundrobat. I don't actually know, by the way, if Cody really pushes that you should buy laundrobats, but I think that's a little bit of a narrative. I'll use her as a figurehead for this idea that you should find a local sort of brick and mortar, a sweaty business. You know, go buy a boring Main Street business and you're going to cash flow. Then you reinvest the cash flow and you buy the second laundromat. Then you buy a car wash and you keep going in that direction. Where does Andrew Wilkinson rank that model on the tier list? Speaker 1: I mean, I love Cody and I love Nick, Nick Huber. I think what they're advocating is basically, look, Don't go and work for someone else when you can create your own job. And I think if you can be an owner-operator... Speaker 2: But they don't say that. I think if they said that it would be a lot more of an honest broker, right? You said one key word, which is what they say is own your own business. And you said own your own job. And I think there's a big difference between those two things. Speaker 1: Well, I think that's a fundamental question. Are you buying your own job? Are you buying a business? If the business If it returns more than the cost of the owner's salary, then I'd say that's great. I'd say that's a C. Chris and I always say, if you can skip the line and instead of working your way up and starting businesses, you can just buy a already working business and just improve it, I think that's phenomenal. I mean, it's really a lot of what we've done. So my story, I started the web design agency, Metalab. That business grew. I then took almost all my profits and I started like 10 other businesses and almost all of them failed. It was really exhausting and at the end of that process, I had one business that I could sell, another one that was kind of alive, but I started 10 and I'd put almost $10 million or $15 million into all these terrible businesses. If I had just taken the $1 million, $2 million a year and just bought businesses and just improved them, I think I'd be much farther ahead than I am today. Speaker 2: Well, that's what you eventually started doing, right? What you did at some point was You guys decided to switch into buying businesses that are already working as your main business to be in. And I believe you guys invested, you can correct me if I'm wrong, but I think the initial kind of seed capital was you took something like five or six million bucks from MetaLab, it's profits, and you were like, this will be the base and then we'll try to find these sort of compounding businesses that we can hold for a long time, which you guys call wonderful businesses, great. And that's what has become Tiny, the public company today. I think the market cap's something like 200 something million dollars. Speaker 1: Yeah, basically we just started buying businesses in 2013 when we read about Warren Buffett and we're like, oh my God, this guy's doing easy mode. Why are we doing hard mode? But to be honest, Buffett has this great quote, I'm a better businessman because I'm an investor and I'm a better investor because I'm a businessman. And I think that in order to be a good investor, You need to have run or experienced the chaos behind the scenes at different businesses. And I think the beauty of what we did was we got really lucky. So we went to the gym. We didn't deadlift 300 pounds. We got really lucky with Metalab and it worked. So that built our confidence to go try more stuff. Then we tried every bad business model. We did drop shipping. We started a restaurant. We did a skincare company, like all sorts of dumb stuff. We always joke we put forks into electrical sockets. We learned a lot. And then we started investing. And so what we could do is we could look at these businesses and say, oh, wow, this is actually a really high quality business. And I know that because I've operated a similar one. Speaker 2: And do you remember how much capital you started doing that with once you once you stopped starting new businesses, you decided to go start buying? Speaker 1: I think it was like four or five million bucks. We basically sat down and said, okay, we're going to start this thing called Tiny. I'm going to own 80%. You're going to own 20%. And that was only because I had more capital because I was the one who owned most of Metalab. And Chris put in 500k or a million bucks and I put in the rest and that's it. We never put any more money in. Speaker 2: So I was gonna ask you, was that just a seed or did every year, oh, we found a new business, let's take more Metalab profits and put it into Tiny or no? Speaker 1: No, nothing. I mean, we merged. So it was interesting. So I actually own Metalab myself. I own 90% of Metalab and then my brother and Chris and a few other people were small shareholders in it. And so that's what basically I diversified with. So I went off and in my family office, did all the venture investing and bought some real estate and bought newspapers and restaurants and other dumb stuff. But Tiny itself, Really just grew from that original amount. Speaker 2: So that's pretty incredible. I feel like I gotta ask you this because I think you get a lot of shit nowadays. I think a lot of people go look at the tiny stock and basically you see, I think you guys went, or you like did this reverse merger. And so then the stock basically like shoots up in 2021 at the kind of like peak era at that time. And then basically it's just a downward trend since then. And I think a lot of people I see on Twitter want to kind of look at that and say, oh, this guy calls himself the Warren Buffett of the Internet and he says he buys these great businesses, but what's going on? Look at your stock. And so they see that and they say, Man, is this guy like many other people on the internet who maybe either overstate their claims or whatever, right? That's a common problem on the internet, I would say, on the whole, is that you don't know who's real, you don't know who's actually good, and so you have this public company that's a little bit of a public scoreboard in a way, and people get really riled up about that. On the other hand, and this is kind of like, you know, the two parts of the trial, right? You have the prosecution, the defense in a way. The other hand, you say, look, there's a guy who took four or five million, you know, first created this design agency that was really successful as a business, has generated, you said, over $100 million of profit lifetime. And then you took, you know, four or five million bucks and you compounded that into a 200, between 200 and 300 million dollar business that holds all these interesting assets. And, you know, cool, like the stock prices go up and down. That's not necessarily the end all be all. And even if you said, look, that's how big it was. It's still fantastic. I don't know a lot of people who are listening to this that have done anything that's more impressive than that. So I admire, even if your worst case, least generous interpretation is today's current stock price, that's still pretty damn impressive. So I guess what's your reaction to this? You're sitting there. You don't want to go out there and fight all the internet trolls or anything like that, but how do you see this? What's your take on this? Speaker 1: It's pretty funny because we started in 2006, basically 20 years ago, bootstrapped this business. Until 2023 when we went public and over the last 10 years, I think since we started Tiny, we've compounded our earnings at 25%. We do almost $250 million of revenue. We have $65 million of ARR. We do over $40 million of EBITDA. Chris and I still own the majority of the public company. These are all things you can look at the public filings and see. If you also, we talked about asset management, I mean, we also own or we manage a $200 million fund managed by the public company. With $40 million of it, our own capital and that owns AeroPress, Letterboxd, all sorts of other businesses. If we include that, that adds another $65 million of revenue. So we're over $300 million in revenue across 30 businesses and all the businesses in the fund are profitable as well. I don't know. I'm kind of like, if that's failing, like, sign me up, right? And I don't know what to say to the trolls. Like, you know, don't feed the trolls. Speaker 2: Right. Well, let's take the vulnerable side a little bit, right? Because I always ask myself this whenever I get criticized. And my first reaction is like, what the hell are you guys talking about? Like, do you not see? Do you not see? And I want to, like, kind of defend myself. But at the same time, I always ask myself this just for my own learning, which is basically like, What about this is fair? What is the fair criticism? And I think that's always been an important question for me. It keeps me honest because, you know, look, either I'm just going to ignore it. I got nothing from it. I'm going to get mad about it and think they're stupid. I get nothing out of it. Or I mostly, you know, disregard what I think is the sort of like off base line of thinking. But maybe there's, you know, some things, some part of it that's fair. Oh, it is fair that I said this. It is fair that I didn't. I didn't do this or it is fair that I thought it would be X and actually it turned out to be Y. You know, those are some things that are fair, right? So what would you say is fair criticism about you? Speaker 1: First of all, I just want to say I really empathize with people. I remember watching like Shark Tank and I'd be like, oh wow, Kevin O'Leary, you know, he sold his business for billions of dollars. And then you go read the juicy gossip that, you know, he got $10 million or whatever out of that deal. And I think it's very easy to kind of have the one blurb and then judge someone. And I think before I went through this experience, I would just believe what I read on the internet and kind of enjoy it, to be honest. I think there's this dirty, horrible part of humanity, myself included, that loves when somebody who's on an upswing falls. Talk about Bill Ackman. Bill's an amazing investor, but he's loud, and I'm loud, too. I'm extroverted. I like talking about what I'm doing. I like talking about our companies and everything, and it's really, really fun To watch someone loud like me fall in the mud, right? And I see this in myself. You know, you kind of cheer and enjoy it. Like celebrities go through this too, where it's like they're awesome and everyone loves them. And then all of a sudden, you know, they like to shit on them for a few years and then they love them again. Like Justin Bieber, everyone hated him for the last five years. Now everyone loves him again. I just kind of think that's the course of things. And I think it's kind of, I just got to eat humble pie and There's a lot of great things I get out of being loud on the internet and talking about this stuff. I've connected with so many incredible entrepreneurs. I've made so many new friends. I love talking about this stuff and teaching people about business and stuff, but this is the price. And I'm willing to pay the price and it sucks. And for me, it's a button, right? Like when I was a kid, I have ADHD and I'd always fuck up and I'd always be the one in our family that was blamed for everything. And so being misunderstood is a big button and I really have to resist. Getting on the horn and trying to argue with everyone because it really doesn't help so I think for me We're just focused on delivering good results and building great businesses which we're continuing to do and people on the internet are going to twist it however they want to the reality is Sixty percent of the businesses that went public in 2023 when we did are still under their IPO price. So Asana, Sweetgreen, Coupang, like all these other businesses, they're all under IPO. Does that instantly mean that what the founder has built is invalidated and they're a moron? No. And I think that, you know, the fair, the really fair criticism, though, of us is our business is a bit confusing, right? Even our stock chart, like starting businesses. So I made all this money from the Web design business started a bunch of companies. One of those companies became the dominant seller of themes in the Shopify ecosystem. And Chris and I always had it in our head. We were like, let's take a business public. We'd love to do that. And so we actually went and we partnered with Bill Ackman We had sold the business to a family office. We bought it back and we took that business public. And we took it public in January 2021. Do you remember what was happening in January 2021? Every stock was going to the moon. And so you have this business that's doing $40 million or something in revenue and like $7 million of EBITDA. And it goes to, literally the day we took it public, it jumps from a $250 million market cap to $1.2 billion. We didn't take it public at 1.2 billion, but that first day, that's where the chart starts. Then the mania is over and the chart starts going down. As the chart started going down, we ended up deciding, hey, let's take Tiny public, so we merge into it. Really, the Tiny story is this. We've been compounding at 25% from almost nothing. What people see, unfortunately, because that's what's in the public market, is this little dip down here. To be honest, I get it. I think you really have to take the time to understand the business and the story and why it looks like that. But I'd encourage people to do their research and actually dig in and understand what we own. Because from my perspective, I think we own a lot of pretty incredible businesses. Speaker 2: And you still own the majority of the business? Speaker 1: I do. Speaker 2: And is that still, you know, the majority of your net worth basically? So your skin, how much skin do you still have in the game? Speaker 1: Yeah, this is what's so funny is like people, I mean, I've even people have said like, oh, you did a pump and dump. And I'm going like, what are you talking about? Like I've sold almost no stock and the only stock I did one large transfer, I think of eight million dollars. I moved it to my foundation so I could start doing philanthropy. I haven't taken any cash out. I still own all the stock and people say, oh, you're a pump and dumper or something. I don't know. It's kind of sad. Speaker 2: And so you hear all this and you've also talked about this idea of the courage to be disliked. I think maybe that was the right book at the right time for you during this period. I haven't actually read the book. It's a killer title. What is the thing that I can learn from that book? Speaker 1: So Sam just did that great, I love that episode he did where he basically said, here's the recipe to a miserable life and let's invert. And one of my favorite inversions is that you actually want people to hate you. You do not want to be liked by everybody. I think that's a great signal that you're doing life wrong. And I think if you told me this 10 years ago, like I would think that's insane. I remember I read this Warren Buffett quote, it takes 20 years to build a reputation and five minutes to ruin it. And for me, I really internalized that. I was like, Oh my God, I need to make sure that, you know, everyone thinks positive of me and I better protect this reputation. Then every founder I meet for coffee, I have to, you know, woo them and make them like me or whatever. I really felt that I had to be consistent and predictable. For example, I buy companies and I'm a Warren Buffett wannabe value investor kind of guy, but I also really like startups. I like starting restaurants and all this other chaotic stuff. People don't like that. I remember the moment I realized what was going on. My dad retired. My dad was an architect. He retired and I took him out for a beer. I said, Dad, what now? What are you going to do with all your time? He was saying he didn't really know. And I said, well, dad, I've got I've got money. Why don't we team up and you can become a real estate developer? You can build the things that you've always wanted to build. And he goes, what do you think someone's going to say if I suddenly call them up? They know me as architect David. And all of a sudden I'm pitching them on a real estate development. People don't like it when you leave your box, Andrew. And I was like, oh, my God, like I I know that feeling. Have you ever had a restauranteur friend who pitches you on a tech startup they're starting all of a sudden? Or your yoga instructor gets their real estate license. They want to sell your house or whatever it is. My mental reaction, I hate this about myself, my mental reaction is stay in your lane. I don't like it. It makes me uncomfortable. I don't know why. And it's incredibly hypocritical because I'm a flip-flopper. I love jumping around. I'm an inch deep and a mile wide. It's like I hate in others what I hate about myself, and I realized we're all like prison guards. We all have these labels. For me, it's like I'm an investor and an entrepreneur, but then it goes deeper. It's like I'm in tech, not real estate. No real estate allowed. I'm bootstrapped. You can't do venture. That's weird if you do that. I'm pro-crypto or anti-crypto, and these labels kind of lock you into this identity, and I've seen this. In a lot of big public figures, so like, do you remember when the CEO of Goldman Sachs, David Solomon, it came out that he was like a DJ? He loves to DJ, right? This guy on the weekends and evenings, he DJs. And the press went crazy. There was an article in The Economist about how, you know, is Goldman Sachs suffering because he's, you know, DJing? Do you think they would have said that if he was playing golf? We see Kim Kardashian get passionate about prison reform. We're like, fuck you, Vanity Project. Jonah Hill starts surfing. Let's make mean memes about him. Michael Jordan plays baseball. Betrayal. I realize our brains are just prediction machines and they get upset when things don't match. For me, I realize I don't fit cleanly in a box and it's messy like everyone else. I remember I started asking all my friends about this and stuff and I was sitting up at my lake house with a group of entrepreneurs and I talked to these guys and I said, look, what would you do if no one was looking? And one of my friends runs this massive industrial business, like, you know, billion dollar business. And he says, My happiest moment is behind the oven cooking for people. And I actually would want to start a restaurant. And I said, oh, you just want to own a restaurant? He said, no, no, no. I want to be the chef of like a Michelin star restaurant. And he said, I feel like I could never do it though because I have so much of my ego tied up in being a business person. And everyone would think that I'd gone insane. And at that moment I was like, No, I wouldn't. But when I think about it, I would definitely be gossiping and going, Oh my God, he's lost his mind. And so he's escaped the prison and we need to beat him with our batons. And you see this with legal degrees, bad marriages, Disappointing your parents, the industry you've spent 20 years in. And the issue is all these promises were made by the person you were before, not the person you are now. And so I realized I'm in this quicksand. I don't know what to do about it. And in January, I found this book called The Courage to be Disliked. And it's one of these books where you see the cover and you just instantly kind of know. You're like, okay, I kind of get it. And it's really interesting. It's written in this very odd way where it's a dialogue between like this wise old man and a young guy. And the core idea is just like seeking recognition is a trap. It's impossible to make everybody happy. And if you try, you're going to end up living somebody else's life. And so you have to be hated. You have to have the courage to be disliked. And reading this book, it was like someone gave me the keys to my cell. You know, I'm in this cell and there's no walls on either side. They're like, by the way, there's no walls. You can walk out. And so my New Year's resolution this year was I'm done with the likability game. I'm going to have the courage to be disliked. And I'm going to say what's true for me. And so you might have noticed, like I've been writing a newsletter. I'm talking about all sorts of stuff. I'm talking about, you know, having ADHD and, you know, all my weird businesses or whatever. And I'm just saying, fuck it. If people don't get it, that's fine. And, you know, I'm going to keep buying businesses and doing great stuff. And on this side, I'm going to have a bunch of hobbies. Speaker 2: You know, I like that when I was in high school, I used to wear mismatched socks. I still wear mismatched socks, but I would like I would leave the house and I would be wearing two different socks. And to me, I didn't even think twice about it because I don't know. I was just not even, who cares? It's just socks. But everybody would comment on it. My mom would comment on it about the way out the house. What are you doing? She was like horrified. Like, I can't believe you're doing this. And I was like, what do you mean? It's just they're both socks. Yeah, the pattern doesn't match. Who gives a shit? And at school, people would make fun of me for it. But they sort of realized like, oh, we made fun of him and he just continued doing it. But also, I wasn't even doing it really as like some statement. I just didn't care. I just decided not to care about socks the same way everybody else did. And I decided that the idea of matching socks really didn't matter to me. And maybe it matters to other people, more power to you. But it just didn't matter to me. I don't think I realized at the time how important of a like mini lesson or trait that would be in the future. I remember moving to San Francisco and we were self-funding or not self-funding, but like I had basically like a billionaire backer. So Michael Burch was funding like the lab we were using to do startups. We didn't take any outside funding, but one of our companies started to pop and we got, I don't know, like a million users, 2 million users, 3 million users. And, you know, VCs got a little bit excited. So there was an investor at Founders Fund that reached out. And I took the meeting because I was always intrigued by Peter Thiel. And I thought, I don't know, maybe this will somehow lead to me meeting Peter Thiel. So let me take this meeting, even though I really didn't want investment. And we go in and I started asking, you know, he's supposed to ask me about the business. I'm just asking him questions about Founders Fund. Because again, I don't really care if he invests in me or not. I'm just here to like learn about them. I'm asking all these questions that if you ask a normal VC, what stage do you normally invest in? Answer. Precede. What's your typical check size? Answer. 500K to a million dollars or whatever. Everybody's got these predefined boxes, labels. What industries or what categories do you invest in? B2B, SaaS, enterprise, blah, blah, blah. They have these labels that they were like, and I went to the founder's fund guy. I'm asking the same questions. He's like, we just, I don't know, we just try to find the singular businesses and then we, I don't know, back up the truck. Like how much money do you need? How much money can we put in? Let's put, how much money do you need now? Then we'll put more money in later. What stage? Who cares? Let's go. And so he was, and he said that when Peter started Founders Fund, he had almost like a Fight Club style rule. And the Fight Club style rule was the only rule is that there are no rules. The rules that we set as a fund are going to limit our ability to find the singular business. And this is why Founders Fund was one of the only VCs to own a shit ton of Bitcoin starting 2014, 2015. Most VCs couldn't even buy crypto, like by their bylaws basically. And they didn't even see Bitcoin as a like, they were so blinders on to like, we need to find the next Facebook, right? We need to find the next Mark Zuckerberg, that they didn't think that this anonymous Soshi Nakamoto, open source project, creating a currency, like it broke all the rules. But that was the thing that mattered. And so Founders Fund has had a few of these really contrarian bets. They backed Andoril when Silicon Valley, like at the time, it was completely unpopular to back a weapons company. It was like so like the narrative at the time was that that was a bad thing. In fact, Google had to shut down their weapons project. They had a big contract with the Department of Defense and Google just turned it down because their own employees were like, this is not right. I don't want to sign up to be part of making weapons and killing. And so the companies bowed down and the venture capitalists bowed down and there was only a couple of investors and Elad Gil came on this podcast and he said, the day I saw that Google shut that project down, I knew there's a huge opportunity. If anyone was willing to go against the grain and actually build a weapons company, they were going to do phenomenally well. It makes total sense for The US, we're going to have a defense department, right? I think everyone agrees in that and the defense department is going to need weapons. And if the weapons are built by a high-tech company, that's going to be better than building low-tech old-school weapons. Like this all makes sense. And that's when he backed Anduril and Founders Fund backed Anduril. And so I just saw the payoff. You know, in Silicon Valley, they call it being contrarian, but what does it feel like in practice? I think it's what you're talking about. The courage to be disliked, the courage to look stupid, right? The ability to think differently, right? All these terms that have been floating around, they all sort of apply to this thing. And I'll share one more story that kind of reminds me of this, which is one of my business heroes is Jesse Itzler. And he came, you came to one of our hoop group events, the basketball camp we do. So Jesse was there and Jesse was laughing. We were at the table, he's just laughing. He's like, all these guys, he's like, they're all talking about their like crazy ambitious plans. Like this guy's building a city. This guy's building a religion. This guy's building rockets. This guy's building this. And he goes, I'm literally selling a calendar. Because his project right now is called The Big Ass Calendar. It's literally a calendar you put on your wall so you can be a little more intentional about how you're going to spend your time this year. And he's like, I think it matters, but like in the grand scheme of this, I sell a $19 calendar. You know, it's just funny I'm even here. And here's a guy who reinvented himself 10 times, did not stay in any box, right? Started as a white guy rapper. And that wasn't really fully working out. So he writes us a jingle. It becomes the New York Knicks song. He sells a sports jingle company. When he sells the company, he gets to ride on this guy's private jet. He's like, this is amazing. Starts a private jet company, gets involved in a coconut water brand. He now hosts a big running event because he loves running. He has a sauna company because he loves sauna. And he basically is just like almost productized himself. And none of the labels that you try to, whatever label you try to apply to this guy, Oh, he must just be a brand builder. Then he tells me about how he, you know, invests in this like, he decided that water was going to be really important. He bought, he invested in like land that produced really pure water. And I was like, oh wait, so you're an investor. He's like, well, no, I don't really, I don't really care about investing. I just, so he was unlabelable. And so I really find a lot of inspiration in people like this. And the thing that he said that really stuck with me, I was like, so what are you going to do after this? And, you know, in this room, when you're surrounded by these hyper ambitious, hyper talented people, it's very tempting to just be like, oh, I need to ratchet up how big my thing sounds, you know, that I'm working on. Otherwise, I'm sort of low status in this room. And he told me, he goes, oh, I think I'm going to go be an assistant basketball coach with this like local, like, like this all black college that's nearby. Like, I want to go be the assistant coach. Like, I love basketball. He's like, but dude, I was like, I was like, what are you? Why assistant basketball coach? Like, clearly not for the money. Like, you know, because you want to get into basketball. He's like, no, dude, I just want to be on the bus. He's like, some of the best times in my life were on the bus going to a game. He's like, if I could just be on the bus. Oh, dude, that's going to be good for the soul. And I just admire this guy having the courage to be like, yeah, I'm going to go do this thing that sounds completely random. But as soon as he says it, it instantly resonated. And like I'm actually now an assistant coach for a high school basketball team near me because I was like, dude, I want to get on the bus. That actually makes total sense to me. That was a huge part of my childhood. I would have so much fun doing that, even though I don't know how that fits with like the rest of the stuff. It doesn't really need to fit. It just needs to be something I want to do. Speaker 1: All that totally resonates. I mean, I think Do you ever listen to Invest Like the Best? Amazing, amazing podcast. He has some great guests, but there's definitely an archetype and the archetype is the like autistic super genius investor who's like, I, you know, I buy laundry, not laundromats, let's say, you know, it's like Brad Jacobs. He's like, I just, you know, I choose an industry and then for five years I buy every company in it and I take it public and then I make, you know, I compounded 30% and then I go do it again and again and again. And there's a very clear formula. And I have never I've never had a formula. And I think the benefit of like there's OK, like I was on Kauai, the Hawaiian island, and someone goes, you've got to go to this doughnut place. They fry their doughnuts in coconut oil and they're these purple doughnuts made of sweet potato. And I'm like, OK, so I go and, you know, it's amazing, delicious doughnuts. And I start talking to the guy behind the counter. And he says, oh, yeah, we're expanding. We just we just did one in L.A. And I said, what? You're you're like a little tiny donut shop on Kauai. Like, how did that happen? And he goes, do you know Kevin Rose? And I'm like, yeah, I know Kevin Rose really well. What are you talking about? And he goes, Kevin came and he ate these donuts and he loved them. And so he invested like $10 million in our business and now we're scaling it across the country. Now, Kevin is a fascinating guy. I mean, last time I talked to Kevin, he's like, yeah, I did the donut company and then I'm flying to Sweden tomorrow and I'm meeting with Teenage Engineering, which is like this audio file company or whatever. And then, you know, he told me about this Alzheimer's, this company that's doing an Alzheimer's drug he invested in. None of those things fit together in a box and Kevin is a great example of, When I see Kevin on a podcast, I jump. I have to listen to it. The Random Show with Tim Ferriss is my favorite show in the world. Both of those guys have been so good at not allowing anyone to put them in a box. As a result, they've created this magnet. I had two options. I can be Value Investor Andrew with my formula. It'll be very good for raising money. I can go and invest like the best. I can tell my clean story. I'll look like a duck and quack like a duck, right? There's a lot of positives to that. You get less hate, easy to raise money. Investors like it, whatever. But if you're just interesting and you share what you're doing like Kevin Rose does, really interesting things come to you and I would argue like most of our best businesses come from me. It's like, you know, I was a barista and I got obsessed with coffee. And I bought AeroPress. I love movies and I tried to invest in film. So I actually like had this period where I was like flying down to Hollywood and meeting people and looking into investing in movies and stuff. And I looked at it and I was like, I'm going to lose so much money. And at that same time, I happened to be in Auckland with Tim Ferriss randomly and I I was in town and I went, oh, there's this guy who runs Letterboxd there. I should have a coffee with him. And that coffee, literally, I had coffee with Matt and I made an offer for the business within four hours. So like these things happen randomly. And I think you need to create that magnet for interesting people and entrepreneurs to seek you out. And I don't know that anybody listens to, you know, the autistic super genius talk about his formula and spreadsheet for buying a type of business and goes, I wanna do business with that guy. I wanna sell my business to that person. Maybe there's a certain type where that is appreciated, but that's not my jam, you know? And you know, I'm gonna get my two to 3% hate quota for that, and that's just fine by me. Speaker 2: Well, you're gonna get the hate either way. You think the ASG crowd doesn't get the hate? Of course they do, too, right? Speaker 1: Totally. Speaker 2: You're gonna get the hate either way. If you're not getting the hate, you probably haven't, you know, it's just a signal you haven't really Done enough, yeah, you haven't made it. Speaker 1: And how jealous are you, by the way, of those guys, right? I wish that I could be that focused. I wish I'd get that excited about buying, you know, waste management businesses. I do, but it's just not true. You know, it's not true to me or you. Speaker 2: Exactly. Why would I be jealous of something that I would be miserable of? Speaker 1: Can you imagine My First Million if every time you just talked about one vertical would be the most boring podcast of all time? Speaker 2: Dude, the greatest hack in the world is If you're gonna be jealous, be jealous of the inputs, not the outputs, all right? I just said something profound. Pull over your car, write this down, okay? Listen, everybody looks at the result that somebody has in their life and they get jealous of the result. And that leads you astray because you don't even really know what it takes to be that, to get that, to have that, right? If you're going to be jealous, it's hard. So most people try to just turn off the jealousy knob. I'm just not going to do it. Well, good luck with that. It's a pretty tough thing to do to really, truly kill envy inside you, right? There's a certain level of enlightenment and wisdom you need to reach to truly just never feel that envy again. So instead, just redirect it. Get envious of people whose inputs you're jealous of, their day-to-day, the work that they do. And if you're like, man, I would love for my day to look like that. I would love to work like that. Not the results of the work, but the work. And so, for example, Bill Simmons is a guy like this. I don't know how much you know about Bill Simmons, but he's a sports podcaster. But before that, he was a he was a blogger. You know, he tried to get hired by a newspaper. They rejected him. So he starts his own Boston sports guy blog. And he's just sitting there writing about his hometown sports because, you know, since he was four years old, his dad's been taking her to Boston sports games. And he somehow like blogged his way literally to like ESPN ended up giving him his own section. Then when he's at ESPN, he's like, I'm not just like any. And by the way, they're like, he's a he's a journalist. No, well, he doesn't do journalism. He's just writing as a fan. So I guess we'll call him a columnist. No, he's not really a columnist. I guess he's a blogger. We couldn't. By the time they were trying to figure out one label, he goes and creates 30 for 30. He reinvents the sports documentary space. And he pulls that off. And then he gets fired at ESPN for speaking his mind. And he goes and he leaves and he starts The Ringer. And it's a podcast network and now he's Bill the Podcaster. He sells it to Spotify, makes hundreds of billions of dollars. And there's this great clip the other day that came out of like this big trade happened in the NFL. And there's this clip in The Ringer office and Bill is carrying a microphone in one hand and a chair. And he's like basically like jogging through the hallway because he wants to go join one of the other Ringer podcasts to come talk about this trade that just happened. Like that's not his podcast. He doesn't need to be there. He's got all the money in the world. He could be on a yacht. He could be on an island. And he's sitting there running with a chair and a mic because he really wants to go talk to friends about what's going on in the world of sports because that's what he loves to do. So I'm jealous of Bill Simmons, not because he sold his company for hundreds of millions of dollars or has a popular podcast, but because the guy gets to talk to his buddies about the thing that he loves all day when he doesn't have to be. Speaker 1: Right. Speaker 2: And so I'm jealous of the inputs. And so, you know, I think that's a thing that if more people did, you could kind of use your jealousy as more of a compass to figure out what do you really want to go do? Speaker 1: I think if more people knew the behind the scenes of a lot of these super wealthy people, they wouldn't want that life like the there's a lot of there's a lot of sad. We're very wealthy people, as you know. I think the trick is, how do you figure out what you're great at and you actually enjoy? Because there's things I'm great at that I just don't enjoy, like sales. I love pitching and selling and talking to people. Sorry, I'm very good at it. But I actually, it drains my life force. It's misery, right? And so I think like, you know, for me, I started out headphones on, coding, making websites. 20 years later I've realized I can write and talk about things I'm passionate about and that creates opportunity which I can then funnel into all my various businesses. I think being a human router and just doing the thing you're great at, you're doing this too. It's like Ben might run all the day-to-day operations. You just get to go and do the thing you're amazing at and it benefits your business in a profound way and I think that's the trick. Speaker 2: Well, I would even push back. It's not even that, oh man, there's all these wealthy people who are miserable. There's a lot of wealthy people who are happy doing something that you would be completely unhappy doing. I remember when we got bought by Twitch and I was like, oh, you know, I get to meet Emmett. He was my boss. He's the founder of Twitch. He did the thing that I had been trying to do. He started a tech company. It like took over the space that he was in. It became like one of the few social networks that was out there. That's what I was trying to do before that. And, you know, the guy sold his company for a billion dollars and here he was running this thing. And it was like a big part of the Internet. I think Twitch was like the second biggest consumer of bandwidth or something that year. Like, is it crazy? Speaker 1: And. Speaker 2: I saw his day, and he was happy doing it, which was basically he sat in the boardroom on the ninth floor of the office on a long table, and he sat at the front, and the COO sat next to him, and then teams would come in 30 minutes at a time, and they would sit down. They would put a memo in front of him. He would read it. He would ask them questions. He would grill them, and sometimes he'd be like, this sounds fantastic. Can't wait to see what's next, and sometimes he'd be like, this doesn't make any sense to me, and he would kind of rip them apart, and then they would be like, leave, go back. They would do a week of work and come back again the next week for their weekly 30-minute meeting with him. And that's what he did all day. And I just remember looking at that and being like, thank God I saw this because this is not what I would want. I thought this was my dream. I thought literally what he had done was the dream for me, dream outcome. And I realized that would be kind of a nightmare of a life. And so wait, if that's the nightmare, not the dream, then what's the dream? And then you start asking and you start looking around and you start thinking about what would be really interesting. And that's when I started the podcast because I looked at Tim Ferriss and others and I thought, that sounds pretty fun. And so an easy hack, Because I'm starting a new content project, my first new kind of big content project since My First Million. And the trick is, instead of trying to think about what would be really popular, what would get millions of views, what would get millions of subscribers, the better question is, what would I have fun doing 3,000 times? Because if I do it 3,000 times, I'm probably going to get good at it, and I'm probably going to stick with it, and I'm probably going to get a good result, sure. But more importantly, I'm going to go do it 3,000 times. I better really be like, let me optimize for that instead of optimize for what might work. Speaker 1: Let me ask you this. Are you leaving your cell? Are you breaking out of your cell? Is it something that people go, wow, this is crazy? It's like when Tim Ferriss launched his card game or he made that weird crypto project. Is it one of those? Speaker 2: I've explored that wide. Totally weird. Go make a movie. Create a Broadway play. I've explored all that. And there's things, but that's not the active thing I'm working on. One of them is, I would say, different in that it's a different mode to be in. So, for example, this podcast is live, it's improvised, it's unedited. I get on here and I just do me. And then I don't really think about it after the fact. There's a team that basically takes it, they edit it, they title it, they package it, they send it out there. And I don't really think about it again. Whereas the thing I'm doing right now is a little bit more of a craftsman approach. It's like, I'm not just going to improvise it. And it's this like, you know, three weeks later, that's kind of gone. I'm going to make a new one. It's like, no, I'm gonna make one thing. It's gonna be great. But that means I'm going to really like have to be a craftsman about this. And I'm going to really have to go and take a take a scalpel to this and try to like make it as great as I possibly can, which is not a mode I'm normally in. Speaker 1: That's awesome. I mean, it's like the happiest I've been in the last 10 years is writing my book, just headphones on, doing something and actually shipping something that will be relevant hopefully in 20 years that you can go back to. Speaker 2: Yeah. Speaker 1: There's something so ephemeral about podcasting and tweeting and all the other stuff. So nice to zoom out. Speaker 2: Totally. Well, Andrew, thanks for coming on again, man. It's always good to hang. And yeah, you want to shout out anything, your newsletter, anything you want to shout out? Speaker 1: Yeah, I mean, that's mostly I haven't really actually been tweeting very much. I've been posting on my newsletter and I really love it. I sit down like once a month and I kind of do like what Tim Ferriss and Kevin do. I just like write about all the random things I'm excited about. Sometimes it's about business. Sometimes it's about other stuff. But yeah, people can sign up neverenough.com. The newsletter's there. And I love it. It's been so much more enjoyable to just sit down and actually write something formally and take my time instead of tweeting out toilet thoughts randomly and then fighting with trolls. Unknown Speaker: All right, man. Speaker 2: Good to see you. Speaker 1: Yeah, great. Unknown Speaker: She did I feel like I can rule the world. I know I could be what I want to Let's travel never looking back. Speaker 2: Hey, let's take a quick break. I want to tell you about a podcast that you could check out. It is called The Science of Scaling by Mark Roberge. He was the founding CRO of Hubspot, and he's a guest lecturer at Harvard Business School. The guy's smart, and he sits down every week with different sales leaders from cool companies like Klaviyo and Vanta and OpenAI, and he's asking about their strategies, their tactics, and how they're growing their companies as, you know, head of sales or chief revenue officer. If you're looking to scale a company up, if you're a CRO or a head of sales that's looking to level up in your career, I think a podcast like this could be great for you. Listen to The Science of Scaling wherever you get your podcasts.