The insane story of Blake Schroll: the high school dropout who’s building supersonic jets

The insane story of Blake Schroll: the high school dropout who’s building supersonic jets Speaker 1: Okay, I have an amazing story. If you're, if you're entrepreneurial, Sam, if you have a pulse in your body, if there is a single blood vessel in your body, you are going to be fired the fuck up after this. I don't know what you got. What do you have scheduled after this? Cancel it. Unknown Speaker: All right, let's hear it. Speaker 1: All right, so you probably heard of this company Boom Supersonic, yes? Garry Tan: Yeah, I had the opportunity to invest in this company years ago, and I didn't have any money then. But also, even if I did, I would have passed on this. It's a ridiculous proposition. Speaker 1: I didn't have any courage then either. That was the real problem. Garry Tan: Well, like a guy at Silicon Valley said he's going to build a commercial airline. He's going to build a jet that can be a supersonic commercial airplane. Speaker 1: Right? Garry Tan: That sounds ridiculous. Speaker 1: Exactly. So the thing that's going viral right now is former Groupon product manager, because he worked at Groupon, is LinkedIn literally goes Groupon product manager, then created the first supersonic jet in like, you know, whatever, 56 years. So it's this insane jump on LinkedIn and that's kind of going viral right now. It got me curious because I remember back in the day, this was 2016. Garry Tan: Did you see the deal? Speaker 1: It's not like somebody sent it to me to invest. I could have if I chased it down and then actually several times since then I could have invested but I didn't. Maybe not too late. Maybe now's the time. But I remember watching Demo Day. Do you remember this story? Do you remember his Demo Day pitch at YC Demo Day? Garry Tan: I didn't know he went through YC. I didn't pay that close attention to it. So he went through Y Combinator? Speaker 1: Exactly. Went through Y Combinator. Now, I remember at the time it stood out. Now, YC does a lot more like moonshot type of companies. Back then, it was all apps. It was all software. You're making an iPhone app. You're making like a B2B SaaS tool. Garry Tan: And this is 16? Speaker 1: 16. And there was this one guy there who was like, we're creating supersonic air travel. You're going to be able to fly from New York to London in three and a half hours. That's what we're doing. Remember the Concord? We're going to do that again. And he gets on stage, and I remember thinking while he's pitching, I'm like, how is he going to have traction? Because every YC pitch ends the same, where they show their user growth. We're growing 30% week over week, but it's like going from like, you know, three to six to nine, right? Like, it's like they have some crazy growth rate, but it's on a very small customer base. But that's always the pitch. So I remember wondering, what's this guy going to do? And at the very end of his pitch, he whips out a piece of paper and he goes, and as of last night, we have five billion in pre-orders, thanks to Richard Branson and Virgin. And we were like, what? Five billion? And he had an LOI. It wasn't actually a purchase order, it was an LOI. Garry Tan: Which basically just says, one day, if you can actually build a safe supersonic jet, we will definitely buy it. Speaker 1: We will maybe buy it. That's what it means, right? Like when somebody invites me to a party I don't want to go to, I'm going to start sending LOIs. Because an LOI just means I'm generally interested, but I'm probably not going to do it. But still, it was impressive. Five billion. Still to this day, nobody's walked into YC Demo Day with five billion dollars worth of letters, letter of intent. So, OK, I remember seeing that. Then he disappeared for a while. Then he actually had to go do the work. Garry Tan: Do you guys remember when marketing was fun? When you had time to be creative and connect with your customers? With Hubspot, marketing can be fun again. Turn one piece of content into everything you need. Know which prospects are ready to buy and see all your campaign results in one place. Plus, it's easy to use, helping Hubspot customers double their leads in just 12 months, which means you have more time to enjoy marketing again. Visit Hubspot.com to get started for free. Speaker 1: So, let me tell you this guy's story because right now in Silicon Valley, there is a buzzword. Actually, I would say it's kind of like an early buzzword. Like I would be buying stock in this buzzword because it's about to go mainstream and that word is high agency. You've seen high agency floating around? Garry Tan: No. Is high agency the new contrarian? Speaker 1: Oh, it is. I mean, it shits on Contrarian, dude. It runs where Contrarian walked. Garry Tan: We have to sell Democratize. Democratize is done. Speaker 1: That was my grandfather. Garry Tan: We have the short Contrarian. Speaker 1: We're going all in on High Agency. We're long High Agency. Garry Tan: The man in the arena. Has that just plummeted? Speaker 1: Had a moment. Had a moment. But Chamath just butchered that one, so that one's done. Alright, so check this out. So, high agency is this word and there's our buddy George Mack, by the way, is like all in on high agency. Like he, I think he's writing a book about high agency right now. By the way, he bought the domain highagency.com. And I was like, how'd you get that? He goes, the guy let it expire after 10 years and I sniped it right away. Garry Tan: It's a very low agency move. Speaker 1: High agency by him, low agency by the other, right? It's like in football, the low man wins. No, no. In business, the high agency man wins. And so the classic meme, which we should put on the screen on YouTube, is the cartoon guy is trapped on an island. And he has these like pieces of bark or wood or whatever and he spells out help. He's waiting for someone to come save him. That's the low agency guy and the high agency guy takes the wood and makes a boat and rows away. Right, so that's like the gist of this. Okay, but this guy. This dude from Boom Supersonic, what's his name, Blake? He's just absolutely dripping with agency. He's soaked. This guy is soaked. This guy is a buffalo wing and he is tossed, hand tossed. All right, so here we go. Story starts. He drops out of high school. His parents sent him to a good high school, like a nice private school. And he doesn't feel like he fits in. He doesn't really look like get that interested in class. He drops out. And so now he's high school dropout. Like parents are kind of concerned. He ends up finding something that he's really into like science and math like he in this like after school program or there's some shit like that, but forget that. First high agency move. Once he started getting interested in science, math, engineering, he's like, actually, I think I do like school. I just didn't know what I just didn't like my high school the way I was doing it. But now I found I actually do like to learn. I want to go to college. Well, how do you go to college? You don't have a high school degree or a high school dropout. He finds that at Carnegie Mellon they have a special program for high school dropouts who want to go to Carnegie Mellon. So he applies as a junior and he writes an essay about why, you have to write an essay, why you didn't finish high school. And he writes, high school had nothing left to teach me. He gets in, not only does he get in, he gets the merit scholarship and he graduates with a bachelor's in computer science. Okay, so what does he do next? His next move is that he's like, I want to be an entrepreneur. But I don't know what idea I want to start yet, so why don't I go and work for who I think is the greatest entrepreneur right now. And that was Jeff Bezos in 2001. So, Amazon is out. The dot-com crash just happened. Amazon stock is in the tank. I'm betting you're looking that up right now. Garry Tan: 2001, I mean, it was shit. It was a dollar. Now, it's $273. Great. Speaker 1: So, he joins Amazon in 2001 and his goal is to learn as much as he can from Beza. So, he's like, all right, I got to build something that's I'm the CEO of Interest to Bezos. And at the time, Bezos had an idea which was like, hey, we need Amazon products to show up number one in Google search results. So, Blake builds this automated system where he is buying Google ads for every single product on Amazon. Like the entire catalog, he builds an auto bidder so that Amazon will bid, not too much, but bid enough to be the top result on Amazon. Garry Tan: Which is one of the reasons, by the way, that like the, you know, there's like stories of like, there's a story that a company wants you to know. And then there's a story that actually happened. And I've read a lot about Amazon. And one of the one of the make or break moments was the fact that they were one of Google's biggest spenders, and they crushed it and knocked it out the park because Google was underpriced and they were able to get big fast because of that. Speaker 1: People think all these companies are competitors. They're also co-conspirators, right? Google pays Apple tens of billions of dollars to be the default search engine. Apple and Microsoft invested in Apple when they were big competitors. Bill Gates basically kind of saved Apple at a time when Steve Jobs needed investment. And in this case, Amazon is the biggest spender on Google. Like, you know, that, oh, what? I thought these guys were competitors. Garry Tan: And Bezos was one of the angel investors of Google or something like that. Speaker 1: Exactly. So he builds this system. By 24 now, he's 24 years old, three years in, and he was basically working under direct view of Bezos. So he goes, every three months I had to give Bezos a report on how we were doing. And by the age of 24, he's running a $300 million P&L inside of Amazon. He's the GM of that business. But even though he's learned a bunch and he kind of, you know, cut his teeth here, he wanted to be an entrepreneur. So he quits even though he's like a rising star at Amazon and he knows Amazon is like a... Amazon's a winner, right? Amazon was a winner. If he had done nothing else but just stay at Amazon, get promoted as an exec, keep getting stock options every year, he would have made hundreds of millions of dollars, essentially risk-free at that point. But he quits, and him and some guy decide to create a start. So they create a startup. It kind of fails. They create another startup. Eventually, they sell that startup to Groupon. And this is where the LinkedIn part of Groupon comes in, is like this hilarious quote on his Groupon LinkedIn description. So he says what he does, like, you know, senior, whatever, manager of this thing, and then his description goes, nothing like working on internet coupons to make you yearn for doing something that you truly love. So he, after two years at Groupon, he quits and he decides, you know, I want to do a company. I don't know what I want to do it in. And his whole life, he had been interested in flight. He talks about like when he was a kid, he was always interested in model airplanes. His parents took him to a museum. He was always obsessed with flight. One of his things on his bucket list was that, you know, in his 20s, he wanted to go Mach 2. Like he got his pilot's license. He always just was interested in flight, but it was a hobby. And he's trying to think of what startup ideas to do. And his method for figuring this out is, I'm going to write a list of all the ideas, starting with what would be the most awesome if I did it. Down from there. And then I'll just probably cross out the first five because they're unrealistic or impractical. And I'll probably do number five on the list was his plan. But number one was create a supersonic jet because like Elon, the way Elon started SpaceX, you've heard the story where he went into it like thinking this is not going to work. Well, even before that, PayPal sells. Elon now has $180 million. He leaves and he's just curious like, okay, what else? And he's curious, what's the latest with NASA's Mars mission? I haven't heard about our Mars mission. Is it in progress and I just missed it? Is it launching soon? I can't wait to go see it. Maybe I'll fly there and go see it. I want to see the launch. I love rockets. And he goes on the NASA website and there's no mention of Mars. And he's like, what? We went to the moon like in whatever, 73. Like, how are we not? Where's the next mission? And it wasn't even on the website. And he's like, what? And he got so upset by that, that the start of SpaceX was actually that he was going to privately fund a mission. Descend like a plant to Mars. And then it became like a turtle or jelly or something. It was like, you know, some living, some technically living thing. And it was like, I'm going to spend $25 million doing this. It was just like a stunt. And just to kind of like reinvigorate the interest in this. Same way this guy Blake puts on a Google alert for supersonic jet. He's like, I can't wait till there's a supersonic flight. I'll be the first guy to buy it. And he's waiting and he's waiting. He's like, is nobody working on this? And he's like, oh, it must be that it just doesn't, the numbers don't, the math ain't math. Like that's got to be the problem. So he creates a spreadsheet. And in it, he writes down the assumptions. He's like, basically like the engineering assumptions. And he gives himself like a few months to work on this where he's like, all right, let me just dig into this. So I think it was two weeks where he does like, he goes and buys a book because he's like, I don't know anything about how airplanes fly, but he goes and buys a book and he creates an Excel spreadsheet. On one tab was the cost model. He's like, is it an economic problem? Because the brief history is we had this thing called the Concord back in the day. Garry Tan: Have you ever seen the Concorde? Have you ever looked at photos of it? It looked great. Speaker 1: Photos, yeah, slick. And it was like inspiring and everybody loved it. And it was the same idea. You could get from here to London, then New York to London in three and a half hours-ish. Garry Tan: Yeah, it was like three and a half hours or three hours and 45 minutes was the fastest time ever. What's it take now? It's basically double the speed. Speaker 1: So it's eight hours normal flight. So you could fly twice as fast. And the idea was the Concorde was like this luxury item in a way. It was priced really expensive. So this is, you know, almost 50 years ago that it was invented, but it was priced at like $15,000 a ticket. Garry Tan: And if you look at the inside of it, the photos, I think it was only like three seats by three. So it was like a, it was like two or three seats. Speaker 1: It was like 80 something passengers, I think. Garry Tan: Yeah. So there, it wasn't a lot of people at all. So when you think about it, it's hard to make a lot of money. Speaker 1: High price, low volume, not a lot of routes, only limited number of routes. But it had all these problems. If you go look up the problems with the Concord, it was like, yes, it was expensive. It also got really hot. There's this famous thing where when they first launched it to do a PR blitz or to sponsor it, they had Pepsi sponsor the Concord. And so they painted it light blue. And the Concord before that was this white reflective material. To reflect heat to not store heat, but the light blue thing made it where it got so hot inside the cabin that you know the hour flight they can only do for 20 minutes because it was like. Cooking everything inside. So like heat was a problem. Noise was a problem. Price was the problem. You know, duration was a problem. Garry Tan: I also think there was a really famous crash too, where it was like, that was the death knell. And I don't remember if I don't, you know, this was years, I was a kid or I don't think I was alive actually, but I remember reading about it and what I read was the reality is that it could have worked or it could have been great, but the perception was that this thing is dangerous and it's too radical and it crashed. I'm never getting on that. Is that right? Speaker 1: Exactly. So the thing that kind of killed the Concorde was they had this flight where during takeoff the tire hit something on the runway and it ruptured the tire and then the plane basically exploded and it killed everybody on board. And that was like, all right, we're done with this thing, too dangerous. So it had safety problems, price problems, heat problems, you know, like noise problems because it would like, you know, shatter windows when it would do a sonic boom. So it was like, So I think in 2003 was the last flight. So in about 20 years, there's been no flight since. Nobody was even working on it. So he has this spreadsheet and he's like, look, am I just nuts? Because the way I'm penciling this out, we only need a 30% improvement in fuel efficiency, a 30% improvement in this one other thing. And he's like, dude, it's been 50 years. Our TVs got better. Our phones got better. Our computers got like dramatically better. Not 30% better. They got like 3,000% better. He's like, I'm pretty sure we could make the plane 30% more efficient and then this would work. Garry Tan: So he goes to this- I can get a TCL 75 inch TV for literally $600 and it's delivered to my door the next day. If I can do that, we can make a chat. Speaker 1: So he goes to this Stanford professor and he's like, he's like, hey, like, you know, this, we need a 30%. I, my calculations show we need a 30% fuel efficiency. And by the way, that Concord was designed at a time where like they use slide rulers and like, you know, wind tunnels to test things. Like, I think we could do this. And the professor was like, yeah, I think you can. Uh, the math is correct. He's like, so, you know, you might have engineering problems, but like the physics are fine. And so he gets encouraged. He's like, I just thought I must not know something. And that's why this hasn't been done. But it's one of these classic things where like, the beginner's mind goes in and they don't see the problems and therefore they do it. Whereas all the experts just assume that's we tried that it doesn't work. And so he goes and he decides to create an airplane company. Okay, so what's the next move? How's he gonna fund this thing? And how's he gonna build it? Because again, this dude just bought a textbook about flight. He doesn't know anything about this stuff. So he's like, all right, I need to recruit a great team and we need some money. So he decides, he takes half of all of his life savings and he decides to fund the company bank account with it. And he hires up something like six to 10 people, one of which he poaches the former chief engineer of Gulfstream. And he's like, I thought it would be hard to get talent because here I am on this fucking Groupon kid saying I'm going to build a, you know, a supersonic jet that's never been, hasn't been done in, you know, 50 years, like the last American New American Airlines company that worked was like 80 years ago or something. So the business plan is a little crazy. I think it cost the Concord like a billion dollars to make the Concord. It was like a billion dollar project. They thought it was 20 million and they ended up spending a billion. He's like, I think we'll need 200 million. But I don't know where I'm going to get all that. So let me just start by funding it myself. Garry Tan: Did he say how much? Speaker 1: He hasn't said the amount, but at one point he's like, I realize like I'm playing chicken with my own bank account here. He's like, I want to go raise money. He ends up raising like a million bucks, still almost nothing. But he gets like a few early believers in. Garry Tan: I have one of my really close friends. Chris was in that round. Speaker 1: Oh, wow. Did he say what he saw or why? Garry Tan: He's been telling me about it for years, and that's originally how I heard about this. And he was like, this guy is just magical. And I just couldn't, I'm like, a Silicon Valley software person starting a jet company? That's really dumb, which is evidenced by dumb ideas being potentially amazing and how that's actually quite common. Speaker 1: And by the way, the airplane market is super fragmented. Oh wait, no it's not. There's two companies. One owns 51%, the other one owns 49%. It's just Airbus and Boeing. That's the whole market, right? So he's trying to go and basically break up this duopoly in theory. Okay, so let's go back to the, so he hires this guy. So he hires a team and he's like, actually one of the surprising things was it was way easier to hire great talent because The bigger the mission, the better the pitch. So he's like, I had a super exciting mission. I didn't have a lot of other things. I didn't have a lot of traction. I didn't have a lot of funding, but I had a great mission. I had an exciting project that was basically like nerd porn. So he's like, any nerdy, you know, engineer who worked on airplanes, you could either go work at Boeing or Airbus. And your job is to like, you know, make sure that the cabin temperature goes down by two degrees so that we could sell more, you know, vodka tonics. Like that was, they weren't trying to innovate at all. So if you were somebody who wanted to innovate, this was like the only option. So he recruits a rate team. Then he goes into YC. And he was skeptical. He goes into Y Combinator. He's like, isn't it just for software companies? But Sam Altman's like, no, no, no. We like hard stuff. Sam's like, I don't know if you're going to get in, but you should go talk to these four other guys who had hardware companies that kind of failed in YC. But they'll tell you that, like, they would have failed much worse had they not had YC. So you go talk to them. They're like, yeah, it was great. Let's do it. So he joins. And he's like, I realized something pretty quickly. He goes, YC is architected in this three-month program around Demo Day. Three months you're going to stand on stage in front of all the investors. You're going to make your pitch and you got to raise money. That's the whole point. And so he's like, what the hell am I going to do in three months? So he goes, I realized that during YC, if I went to them and I was like, hey, we reduced the drag coefficient by 30% and this engine design is really awesome. And like, that's our progress update. We're cooked. And so he's like, I got to figure out something that I'm going to do. So he comes up with two plans. He's like, number one, I got to sell the dream. So he spends a good chunk of his time and money just building like a model airplane that looks sick. He's like, all right, this is not gonna actually help us make the plane, but it's gonna help people see that we're making a plane and it's gonna look awesome. Garry Tan: How much does YC give you, like $125,000? Yeah, at the time. He probably just spent all like $100,000 hiring some firm, making like a really great model. Speaker 1: So he had like a model, but then he also had like a gnarly looking engine. And he's like, we just want to stand there with a big-ass engine and then people will walk by and be like, whoa, is that a jet engine? He's like, yeah, that's the jet engine we're going to use on our supersonic jet. Would you like to hear more? So he's like, I need that eye candy. He needed a booth babe. And for him, the booth babe was the model and the engine. Garry Tan: So smart, right? Speaker 1: Because one of the commonalities of Elon and these other guys is you can't just be an engineer in your little engineering hole. You got to know just enough about the rest, about the marketing, the capital raising, all the other things to survive. So he did. The second thing was he was like, I need these like purchase orders. So he makes a list and he's like, all right, how can I go get LOIs? And he's like, he makes this list. And so he's like, here's this quote, he goes, I realized I couldn't show up to Demo Day with no sales, otherwise my goose was pretty cooked. So I looked at my sales pipeline and it was United, Delta, Lufthansa, Air China, and we only had eight or nine weeks before Demo Day. And I thought to myself, there's no way I'm closing Lufthansa Airlines by Demo Day. It's not going to happen. I'll be lucky if I close them in nine years, let alone nine weeks. So I realized I actually only had two options, a startup airline or Virgin. He goes, so I went all in and focused all of my sales efforts on startups and Virgin. He goes, I went to the startups who are currently operating and I got one of them to do an LOI, but it was a company you've never heard of. But it was the best I could do. And here I was 24 hours before demo day. And the lucky break we got was that demo day was split into two days. If it was demo day one, he would have stood up and said, we have a small LOI from this company you've never heard of. Luckily, we got randomly assigned to Demo Day 2, so I bought an extra 24 hours. In that extra 24 hours, he ends up getting an email from Virgin the night before Demo Day that says, you're allowed to announce, we'll take the first 10 planes, we've got options on them, and through Virgin Galactic, we'll even help you build it. He goes, I fell off my chair. I almost screamed. I had to read the things three times. I couldn't believe it. We went from being the biggest laughingstock on Demo Day to the company that showed up with $5 billion worth of LOIs, a record that won't be broken soon. Garry Tan: Dude, that's so sick. What year is this? What year is this? 2016. So yeah, I was reading, I was looking up my email to try to figure out, did I ever talk to this person? How do I know him? And the earliest thing I could only find was, I think in 2020, it says, The Hustle actually wrote about him and said, United Airline wants to buy 15 supersonic airliners from Boom Sonic. So it took him an additional two years to get the United Airlines thing. Speaker 1: The next ALI. So okay, so then how did he get Branson? High agency, baby. I told you. He's dripping in agency. All right. So what does he do? So he's like, all right. If I want to get to Richard Branson, I got to go through somebody I trust. He goes, I'm also not just going to try one path to Branson. We got to try multiple paths to Branson. So he's like, if I get blocked over here, I got this other long shot going. So he's like, I had this guy on our board who was an astronaut, this guy, Mark Kelly, you probably heard of him. So that guy was on his advisory board. He's like, he knows Branson. He's like, so I'm thinking, all right, we got We got to find a way to get to Richard. And so he goes, we asked Mark, what's the best way to get to Richard Branson? How do we make that happen? And he told me, he goes, hey, you can't get him interested in you, but go where he's interested in his own thing. So what do you mean? He goes, Virgin Galactic has this big rollout for their spaceship. Richard's got to be there. So you just got to get there. Go where he is. And they're like, OK. And so he's like, could you email him and say, hey, These guys I'm advising from Boom Supersonic are gonna be in Mojave when you're doing your rollout. You should meet with them when you're there. And then he reaches out to the Virgin guys and he's like, hey, we're gonna be in town to see Richard. Can we come to the rollout? So basically, they get invited to the rollout. They get there. He's super busy. They end up getting 15 minutes with him when he's at brunch with his mom. And they go up to him and he goes, Richard, they show them what they're doing. They're like, we're building the first supersonic jet since the Concorde. We fixed these problems. We're making that happen. And he goes, look, we're not asking you for your money. All we want to know is this. When this thing flies, do you want a Virgin logo on it? I think that was the key. You gotta ask for the right thing. When you do a deal, it's probably gonna be hard to close. You gotta ask for what's really gonna help you. So we told Richard, look, if you're our customer, we will get money elsewhere. We don't need money from you. And that was crucial. Basically like the first few babies of these that are in the air, do you want them with a Virgin logo or not? And so that was the thing that got Richard Branson across the line, was making the intelligent ask and hustling their way there to get that. Garry Tan: Dude, this is a movie. This is a movie. If it works, if it ends well, it's a movie. Speaker 1: Well, they just did their flight. So they just did their first demo flight. Garry Tan: But it wasn't a, I think what the test was, if I remember correctly, was it the engine that they were testing? They got the engine because the plane is like a small plane, right? Speaker 1: This was a smaller plane than the real plane that they're going to have. And I don't think it was the full speed that they're going to have, but they did achieve, I believe, they achieved supersonic flight. You can check me on that. But yeah, yeah, they achieved the right, they crossed the threshold, they did it safely, they landed it, and as they're like, whatever, XB1 or whatever they're calling that thing. Okay, he's got some great startup advice. So here's the way he described the startup. I like the way he phrased this. So he goes, Here's my advice for startups. Pick something that's gonna be worth it to you personally. That is how you stack the deck in your favor. Stack the deck so that you will be motivated and when you look at what you're creating versus if you went to Google or Facebook or Amazon, it should be a no contest. If you haven't found that, just don't even start a startup. I did that my first time. I just started a startup just because and it was a horrible idea. You should start a startup when you're like, I must make this happen. And something I've come to believe is that the bigger the idea, the easier it becomes because it motivates you and the people around you and you attract better people to come work on it. When we were brainstorming this, most of the ideas we came up with were like, no one's going to really appreciate this, blah, blah, blah, blah. But for us, it was like the most exciting thing we could ever do. And so that's all that mattered was like, you know, stacking the deck in your favor, doing it as a must rather than a, we could do this. And so that was, I thought, one really great takeaway. Garry Tan: My friends, if you like MFM, then you're going to like the following podcast. It's called Billion Dollar Moves. And of course, it's brought to you by the Hubspot Podcast Network, the number one audio destination for business professionals. Billion Dollar Moves. It's hosted by Sarah Chen Spelling. Sarah is a venture capitalist and strategist. And with Billion Dollar Moves, she wants to look at unicorn founders and funders, and she looks for what she calls the unexpected leader. Many of them were Underestimated long before they became huge and successful and iconic. She does it with unfiltered conversations about success, failure, fear, courage, and all that great stuff. So again, if you like My First Million, check out Billion Dollar Moves. It's brought to you by the Hubspot Podcast Network. Again, Billion Dollar Moves. All right, back to the episode. I was reading this quote by the guy, I don't know how to say his last name, but the guy who wrote Crime and Punishment, you know, like this famous novel, and he said, your worst sin is that you have destroyed and betrayed yourself for nothing. And I was reading, I just read that like an hour ago, and it sat with me, and what you've described is exactly that. Speaker 1: Yeah, I love this guy. So, I don't know him, but I'm rooting for them. I want to invest now, because, you know, why not? Let's get on the team. Garry Tan: You know, they, And there's been a lot of, I think there's been, well, there definitely has been, but there's been, I think he's wrote publicly about a lot of the downsides of all this, which is that it's, this has not been clear. I think he had to take a huge down round and he tweeted out about it, I believe. And I think his most recent valuation was $2 billion, which was down from the other amount. But didn't he tweet about the down round and how like they basically almost ran out of money and how it's almost failed a bunch of different times? Speaker 1: I don't know. I didn't see that. I also, I'm different than you. I feel like you love to know the downsides of things. Like even when a guest comes on, that's one of the questions you tend to ask, which is interesting to me because I never really think about it, but you're always like, what are the honest, like it's not all peaches and cream, like what are the downsides of your approach, which is obviously an intelligent question. But I think there's something good about being delusional about it too and just be like, I have a convenient hole in my memory and in my brain to not even really pay attention or remember those things. Garry Tan: The reason I ask that is because I have been a victim of this many times where I go and say, well, this guy did it. Why can't I do it? And then I start doing it and I think to myself, this is way harder than it looked. Why is this so hard? And so I always ask those questions, not to say that someone shouldn't do something, but just to say that it is much more challenging than it appears, and that is okay and normal. Because I remember thinking on my journey, This sucks. This person, he never felt that way. Why do I feel that way? I'm full of shit. What the hell? I'm not good enough. And then I want to be reminded that this is a normal feeling. This is a normal problem I'm having. You got to keep going. That's why I asked those questions. Speaker 1: Yeah. I think it's totally helpful to have that. The one that helps me is Tony Robbins does this thing where he talks about dabblers versus stressor achievers versus masters. I've talked about this a lot, but I won't do the whole thing, but one of the things he says at the end is that anybody who's pursuing anything, no matter what, if you are in it, you're gonna hit plateaus. So forget even downs but like just plateaus where it feels like it's not working, the progress is not happening, it's not happening as fast as you want, it's not growing, it's not working, everyone's saying no, we don't have that investor, whatever it is, right? And the one thing that Tony said that's just always stuck in my mind almost like as a, it's like a jingle in a song or like a commercial where he goes, when that plateau comes, the dabbler quits, The stressor stresses and the master says, ah, I thought I'd be seeing you soon. Hello, my old friend. You're here. I was expecting you, which is like we have this one company we started just a little over a year ago that's just been like up and to the right. Like this company is, I haven't announced it yet, but it's like almost a $10 million run rate already, profitable, bootstrapped in one year. It's like insanely, insanely successful. But we just hit like our, you know, our first plateau and I feel like when we called it out, it was almost like this kind of like embarrassing down feeling of like, oh man, like we didn't have ridiculous growth this month and we're out, whereas I was like, dude, I've been expecting you. Where is the plateau? I know it's coming. I almost don't even trust that it's happening until, you know, that this is real until we start to face some of these and so. Garry Tan: Yeah, that's why I ask those questions is I don't want us as a media or whatever we are to be the ones who I want to be realistic. Speaker 1: Are the biggest business influencers on iTunes? Garry Tan: Well, yeah. Speaker 1: Is Spotify's 13th biggest business influencer? Garry Tan: I just want to say that it is a fucking pain in the ass and it's still worth it. Do you know what I mean? Speaker 1: Yeah, you're right. Speaking of insane agency, speaking of insane downs on the way to a huge up, Have you listened to this episode I did with Nick Mowbray? Garry Tan: It came out this morning and I hadn't listened to it yet, but I saw it pop up this morning and I went and Googled his company and I own a ton of the toys that he makes. Not my kid, me. He owns Mini Brand. Speaker 1: You bathe with the RoboFish? Garry Tan: Well, we have a RoboFish actually, my daughter does, but I told you about Mini Toys, right? Speaker 1: Oh, that's his? Garry Tan: He owns many brands. My wife is fucking weird. When she was pregnant and not feeling well, I would go and surprise her by buying these mini toys, which is the stupidest thing ever. It's a ball full of miniature things, like a miniature can of Coke, a miniature KitKat, a miniature notebook, the weirdest shit. People love it. Speaker 1: My three-year-old loves those. Garry Tan: Dude, I don't know why my wife loves these. Speaker 1: Your 33-year-old loves those, huh? Garry Tan: Dude, you know what I did was I went and bought like literally $300 worth and I hid them in my drawer and whenever like she had a bad pregnancy day where she was like sick or something, I would go and get one and be like, I got something for you. It was like I was like, you know, I had like a secret stash and then also he makes these electric water guns that I went and bought last summer that I would shoot at my daughter like messing around. Have you seen the electric water guns? Speaker 1: Dov, I think it's hilarious how into the toys you are right now. Could I tell you the biggest Oh, holy shit moment from the whole thing. Garry Tan: Well, you got to tell the background. From what I know, it's two brothers in New Zealand that have a toy company that does like three or four or five. Speaker 1: More than that. More than that. So let me start with this. We have interviewed, I don't know how many, 200 guests on this podcast, 250 maybe? Garry Tan: Hundreds. Speaker 1: Billionaires, billionaires, young, old, man, woman, whatever. Garry Tan: Criminals, not criminals. Speaker 1: Criminals, non-criminals, guys you don't want to hang out with, guys that you don't want to hang out with, right? There's a lot of people we've had on this podcast. He is at the top of the mountain. Garry Tan: He's number one. Speaker 1: He's my number one most impressive entrepreneur of all of them. I was blown away. He has the scrappiest hustle story And, like, his bottom was, like, the bottom. Literally living on a dollar a day for years. Literally, this is how funny this guy is. So he, okay, so now I'll zoom out. Now I'll give you the context that you wanted. But, like, I just needed to say that, that out of every guest I've ever had on this podcast, ever, he is the number one most impressive founder that I've ever had on the podcast. Garry Tan: Okay. And we've had some cool people. Speaker 1: No offense to everybody else. All right, so... Garry Tan: But sorta. Speaker 1: Story, yeah. But know your place. Garry Tan: With all due respect, you fucking suck. Speaker 1: Okay, Robbins. I found that man. This guy, I would say he's the wealthiest man in New Zealand. He's got a company that him and his brother started, family-owned, bootstrapped, self-made billionaire. They do a few billion dollars a year in revenue. They do a billion dollars a year in just profit. Garry Tan: I like that. Speaker 1: And they've been doing that. Garry Tan: That sounds nice to me. Speaker 1: They never had outside investors. He has dominated the toy industry. So he built the most profitable toy company in the world. He then built the fastest growing diaper company in the world. You ever heard of Rascal's Diapers or Million Moon at Target? Garry Tan: Yeah. Speaker 1: So he got the fastest growing diaper company in the world doing hundreds of millions. And by the way, he made that while he was on sick leave. He got his intestine removed because he got Crohn's disease. And while he was on his sick bed laying there, he's like, oh, I guess I'll just dominate diapers now. He didn't say it like that. Garry Tan: He's like, I need a diaper. Speaker 1: That's what happened. So he creates the fastest growing diaper company. He creates the fastest growing hair care company on TikTok now. Garry Tan: Wait, what? Speaker 1: He's Monday hair hair care whenever he owns Monday. Not only all that, he now is building the largest factory in the world, bigger than the Tesla factory, bigger than all that, where robots are going to build houses autonomously. And that's what he's doing. He's building houses with robots now. I'm self-funding the whole thing, by the way. I asked, I was like, is that just got to be hundreds of millions of dollars of self-funding? And he just laughed. So take that for what it's worth. Let me now tell you. Okay, so that's what the guy does. Can I tell you some of the just holy shit stories from this thing? Garry Tan: Yeah. Speaker 1: All right. So the dude's 18 years old. And he like after selling door to door in New Zealand where they live, trying to sell his brother like invented this hot air balloon toy at a science fair, and his brother, his older brother and put him to work and was like, yo, you need to go sell this door to door. The dude, they're like, you know what? We need a factory. And they're like, oh, all the manufacturing is in China. So they moved to China. But the hilarious thing is... Garry Tan: At 19? At 18, I think. Speaker 1: 18, 19, something like that. They go to China. That's the story where they sleep in the bush outside the airport because the airport lights were too bright. So they leave the airport, sleep in a bush, get bit by mosquitoes. They have no money. So they're like, they're just on their own. I was like, oh, so you found a manufacturer in China that you scaled up. He goes, what do you mean found a manufacturer? We went to China and then built a factory on the side of a river. We just went with wood and a hammer and we built a factory. I was like, what was the point of going to China? You go to China, their factories are already there. He's like, yeah, we didn't understand that. We just went there and we just built our own factory on the side of a river and we found this mom to make us food for two R&B a day, 30 cents a day. And then she had some people that could come work in the factory and then we just had our own production line. Garry Tan: It sounds like a shed. Speaker 1: Yeah, they literally built a shed and then they just kept scaling up the shed and he's like, my brother didn't come back home for like eight or nine years. He just slept on the floor of the factory and I slept on the floor too then except for when I had to go sell. All right, so how did they win? He's like, and our product sucked by the way. This is one of my favorite things. It's like everybody who makes it, they're like, the key is just to have a great product. And then if you're a founder, you're like, dude, what? Okay, I've made a great product. Now what? Nothing's happening. People tend to leave out the manual work it took, the lucky breaks it took to get the thing to start working. Garry Tan: What was the product? It was like a plastic hot air balloon toy or what? Speaker 1: Even worse. So it starts with a hot air balloon. Again, we didn't know anything about anything. So we go, we build a shed by the river in China. We're making our hot air balloons. Then we've learned you can't even export a hot air balloon. He's like, literally, it's a fire in a tiny can. Like we can't sell that. So he's like, we realized that was a waste. So we got to come up with a new toy. And again, everybody tries to say we're so innovative. So we innovated. Innovation is great. And then we made a great product. He is the opposite. He's like, so we found that this other toy was selling, so we copied it. We ruthlessly copied that toy and we made a shitty version of it because we didn't know anything about manufacturing. Garry Tan: Dude, so this like white guy moved to China and out Chinese'd the Chinese. Speaker 1: Exactly. Exactly. It was like, dude, we lived on a dollar a day. I was like, so you I was like, I heard the story you ate McDonald's every day. And he's like, every day that I wish McDonald's was our Christmas treat. We would go to McDonald's and he's like, for years, I just remember saying like, Merry Christmas, bro. He's like, Merry Christmas, bro. We would cheers our fries. He's like, I used to eat half the fries and take it back and be like, hey, there's only half the fries in here. You guys drip me and get like the second serving of fries. And he's like, that was the treat. Garry Tan: I used to do that all the time at bars. I would order an iced tea and be like. You made the Long Island Iced Tea wrong. You forgot the liquor. Speaker 1: And by the way, he was not saying this out of pride. He was like, I was almost like a therapist because this guy's never done a podcast, by the way. This was the first podcast I think he's ever done. And there's no stories you can find of this guy. Like, I went to do the research. There's no like, oh, him. You know, normally we do research. You go watch the three most watched podcasts that they've done and you pick up a bunch of stuff. He has zero. He had to download Google Chrome to do the interview. He's like, it's not letting me do this. And we're like, what? And we're like, just open Chrome. He's like, what's Chrome? And I was like, you're a billionaire. You don't know Google. What do you use? He's like, Oh, I think I have Chrome. Hold on. He's like, Oh, I got Chrome. Okay, got it. Got it. Let me switch to my laptop. This is gonna work. Okay. Like just to get on the podcast. Garry Tan: Was he fucking with you? Speaker 1: No, he was dead serious. And so I was like, dude, why don't you do any podcast and tell your story? He's like, I don't know. I just never did. Garry Tan: So, I'm obsessed with being transparent about money, particularly with ultra high net worth people. The reason being is that there's not a lot of information on this demographic. And so, because I own Hampton, which is a community for founders, I have access to thousands of young and incredibly high net worth people. We have people worth hundreds of millions and sometimes billions of dollars inside of Hampton. And so every year we do this thing called the Hampton Wealth Report where we survey over a thousand entrepreneurs and we ask them all types of information about their personal finances. We ask them about how they're investing their money, what their portfolio looks like. We ask them about their monthly spend habits. We ask them how they've set up their estate, how much money they're going to leave to charity, how much money they keep in cash, how much money they're paying themselves from their businesses. Basically every question that you want to ask a rich person, we went and we do it for you and we do it With hundreds and hundreds of people. So, if you wanna check out the report, it's called the Hampton Wealth Report. Just go to joinhampton.com, click our menu, and you're gonna see a section called Reports, and you're gonna see it all right there. It's very easy. So, again, it's called the Hampton Wealth Report. Go to joinhampton.com, click the menu, and then click the Report button, and let me know what you think. What motivates this guy? Speaker 1: He's just a maniac, dude. Garry Tan: Was he calm? Speaker 1: Very calm. I felt like it was almost like a therapy session because I'm asking him about these times back in the day and he's almost like, yeah, I don't know what we were doing or why we were thinking that. Garry Tan: Like he just doesn't think about behind. Speaker 1: And he was like, yeah, we were super scrappy, but he's like, we were also a little mentally ill. He goes, we were so naive that naive is not even the right word. So he's like, for example, we got sued for millions of dollars because, again, we copied someone's toy. And so it's like a $2 million lawsuit. It's either going to bankrupt the company because we don't have $2 million or we have to fight it. But the lawyers that we talked to were like, it's going to cost you a million dollars to fight this. He's like, dude, we had like a few thousand dollars. He's like, so I go to Colorado and I find this lawyer. He's like, this guy eventually got disbarred. But I find this guy Chad, and I tell him, hey, I'm going to do all the legal work, you put your name on this. And we're going to fight this this way. And I paid him $50 to put his name on it. And I did the all the lawsuit stuff myself, just like googling. And we fought the lawsuit that way. And then Chad got disbarred like later for other reasons. He told a story of, he's like, dude, we got this, we got this. He goes, I used to, I was like, so how did you sell the thing? Like, how did you sell these toys? You're selling the product stuff and you were copying somebody else. So why would anybody buy this? He goes, I emailed, he goes, I made a list of every retail buyer of every store in every region of the world. And I emailed or called them every single day. He remembered the name of every buyer. This is from like 15 years ago, because he would call or email them every day. He goes, the Walmart buyer. He's like, I would call her or email her every day. He's like, I never forget her. And he's like, one day she emailed me being like, Nick, I do not need your daily email about your product. And he goes, Well, listen, Jen, I'm sorry. It's just a great product and I just had to tell you about it because we've really got some exciting things in the pipeline. It's like I just didn't let up. Finally, he goes, she just sent me the two most beautiful words in the English language, send sample. He's like, we're in. And he gets this like Walmart order. And by the way, actually before that, somebody's like, hey, do you have your showroom in Hong Kong? I'll send one of my buyers. He goes, Of course, of course, showroom in Hong Kong. Yeah, we got one of those. He's like, what's a showroom in Hong Kong? So he goes to Hong Kong. He rents this little cubicle where they put like escorts in, you know, it's like the red light district and like it's enough for one human body and he just sleeps in there because he doesn't have enough money for a hotel, sleeps in there and then when a buyer shows up, he just pops out and he's like, hey, it's me, whatever, you would like to see our showroom? And they're like, yeah, what is this? This is a dressing room for like one person to change clothes in. He's like, yeah, yeah, toys are inside. Here you go. And he ends up getting this order from Walmart for 2 million units. And he's like, oh my God, that's $30 million. He's like, this is amazing. At that time, the revenue was like 150K a year. And he tells this story about how he's like, First, he's like, I go and he goes, I learned two words of Chinese, too slow and go faster. Because our factory, our little old factory by the river had never produced 2 million units of anything. And he's like, so we had to produce 2 million units of this thing. I come home, I take over the factory because I'm just like, my brother's like not working fast enough. And then he's like, and then Walmart basically cancels the order after he's like super deep in it. And he like took a loan from the like, from a contract manufacturer to like help him build the 2 million units. And then he goes and harasses the Walmart buyer to hold up to the end of the bargain. And he's like, by the way, product doesn't sell. Not a single one. He's like, it retails at $30. Discount to $25. Discount to $20. Discount to $15. He goes, it ends up selling for $0.50. It was like concrete on the shelf. Garry Tan: How'd you find this guy? Speaker 1: I don't know. I read something. I must have heard something or read something. Because about a few years ago, we talked about him on the podcast. Garry Tan: Yeah, I remember that, like three years ago. Speaker 1: Ben has emailed him, no joke, he showed me, 17 times over the next 18 months to get him to come on the podcast. Garry Tan: This guy sounds awesome. I need to go and watch this. Speaker 1: You've got to go listen to this episode. You know, he's not like Mr. Super Storyteller or Mr. Suave. I mean, he's a great guy, but he just tells it like it is. But if you listen to this thing, I don't know how long it is, like 90 minutes or something like that. I mean, it is one of the most incredible entrepreneurial stories I've ever heard. Garry Tan: By the way, all right, so let me tell you a story now because we... This is Chinese related, but we're just telling stories about interesting people. I gotta tell you about someone I just read about. Have you ever, have you even been to New York? Have you ever been to New York? Like Manhattan? Speaker 1: Yes, I have, yeah. Garry Tan: Okay. When you were here, did you see these crazy guys on electric, they're like, they're called electric bikes, but they're basically motorcycles. They're like the Uber Eats and DoorDash drivers. Speaker 1: No, I don't think those happen even. Garry Tan: Dude, so in New York, like four years ago, It just popped up that all of these Uber, there's 70,000 Uber Eats and DoorDash people in New York City, in like the Manhattan and Brooklyn area. It's like, and they're all riding these electric bikes that fly. They look like they're normal bicycles, but these things literally go 60 miles an hour. And I ride my bike everywhere when I'm in New York City. And like, these fuckers have almost killed me tons of times. And they're dangerous. They're really dangerous. And what you'll notice is that they all have like these gloves on their bikes. Have you ever seen these like door dash drivers in the winter? Speaker 1: Yeah, I've seen that. Garry Tan: Well, they keep them there in the winter, in the summertime too. And the reason they do that is because underneath those gloves, they have like a motorcycle style acceleration, like a twisty thing on the grip, which is illegal. You can't have that because that like, you know, at what point are you to go from being a bicycle to being a motorcycle where there has to be rules. And so there's, There was this weird thing where I'd be walking around and I'm like, I even would ask these guys, what is this bike? And they don't speak English. They couldn't tell me, but I was like, I want to know what this bike is that goes 60 miles an hour and has like a twisty throttle thing because this is sick. I want one. And so I started doing research around it. And I think I talked about it in the podcast. I couldn't find out what it was. Well, two or three days ago, an article came out and it told the story about what this thing was. And it's pretty ridiculous. And so Basically, there's a guy who comes from China. He's got a too hard of a name to pronounce but his American name is Andy. He comes in 2011 and when he comes, he basically admits that he goes, I paid a guy 45 grand and he smuggled me in from Mexico. I came illegally and then in this article, they even linked to a rap video that he did when he was broke and poor and he was like, I decided to come to America to make it rich. That was like the Chinese lyrics of this video. Well, it turns out the first thing that he did was he noticed that there was all these Uber Eats bike riders and they get punished if they don't bring or if they don't show up in time. If you don't deliver quickly, you get docked. You don't get the full rate. I think he borrowed 12 grand from someone and he starts importing these electric bikes from China and he opens up a shop. One of these shops was right by my house where I used to stay in Brooklyn years ago. I would always see these guys. They would hang out outside the shop. Well, what I didn't realize was that he scaled this thing so fast to where he started having like literally 30 different stores all around Manhattan to where he's selling these things. It's called fly e-bikes. He's selling these e-bikes that go like 40, 50 miles an hour, and they're only $1,000. It's incredible. And they're incredibly illegal. They literally just don't follow any of the laws, but if you look at the under, there's like a, when you order these bikes, there's like says something in the plate. It says like, there's literally like a metal plate and it says like, you know, this meets this USA standard, this and that. And like in the article, someone was like, nobody checks that. It's just basically an honor system and that we hope that you do it, but there's no one actually checking these things. But the guy ends up, Andy, selling 70,000 bikes. In four years, and a few months ago, I think it was in September, he had the audacity to take the company public. And so it goes public on the NASDAQ. And I think the ticker is F-L-E-Y. And you can see the ticker, I think that, and you can see I put all their financials in this document, but the year before they went public, they were doing like 30 million in revenue and like two or three million dollars in profit. But they're getting sued like crazy because their bikes catch on fire because they follow no rules. He basically admits that he's like, yeah, we're cowboys. We build first and we ask questions later. And so homes have built down. People have actually died from the batteries catching on fire in someone's apartment and burning the fucking apartment down. And they're getting sued. And one of the lawyers suing them, he's got this quote where he's like, dude, six years ago, these guys were busboys serving dishes or cleaning dishes in restaurants. Now they're running a publicly traded company. They know nothing about building bikes. They're just like getting the cheapest shit they can over here. And it's all true, by the way. They're insane. But I cannot believe they went public. And in like the one of the I went and watch. Listen to this. I listened to one of their reports or when investors were interviewing the CEO, Andy, before he took it public. And they're like, why did you decide to take it public? And he says he was inspired by the movie Wolf of Wall Street. And that's why he decided to take the company public. He says that in a YouTube video. In a YouTube video, he says, I decided to take it public because I saw Wolf of Wall Street. And so now, because of all these lawsuits and because the company is just like shit, like it's just like they're breaking so many laws, they just do whatever the hell they want. The stock has crashed. Speaker 1: We need a spin-off pod of just absolutely renegade Chinese founders just doing things that we would never dream of. I would subscribe to that instantaneously. Garry Tan: Well, he's like the real-life Xin Yang from Silicon Valley where he just spoke at SIGGS and someone's like, you know, you really need safety stuff and he's like, who says? Like, you know what I mean? Like he says too. Speaker 1: Right now the DeepSeek founder is getting a lot of pub for the same reason. Garry Tan: This guy's hilarious, but it is actually inspiring that all these dorks are like, we've got to do this. We've got to have this process. We've got to do this. Meanwhile, you've got this guy, Nick, moving to China and not knowing shit. Then we've got this Chinese guy moving to New York and not knowing shit. It still works. His company, by the way, he started an electric bike company. It does $30 million in revenue and $3 million in income. Not nothing. And he started with $12,000. Pretty badass though, besides the fact that it's incredibly illegal and dangerous and people are dying. But besides that, it's kind of an interesting story because I've always wondered where these freaking bikes have come from. I got to give a shout out to Curb. They have an article and it's called The Moped King. How an ex-delivery worker upended the streets of New York City for better and for worse. Um, and it's called Fly E-Bike. Speaker 1: Yeah, yeah. Yeah, I just need the spin-off. Somebody needs to make the, uh, not the right way to do it, but still impressive, uh, version of Mutt. Garry Tan: Uh, yeah, we went from, like, we went from, like, um, inspiring, who cares about money, we're gonna, like, make travel better to, um, hardcore shark, does whatever it takes, but still ethical, but, like, I'm gonna get rich and just conquer the world. To, uh, fuck everyone, get paid. Speaker 1: The full journey, exactly. Garry Tan: Yeah. Speaker 1: Alright, that's it. That's the pod. Garry Tan: Is that it? That's it? That's the pod, alright. Speaker 1: Hey, Shaan here. A quick break to tell you an Ev Williams story. He started Twitter and before that he sold a company to Google for $100 million. And somebody asked him, they said, Ev, what's the secret, man? How do you create these huge businesses, billion-dollar businesses? And he says, well, I think the answer is that you take a human desire, preferably one that's been around for thousands of years, And then you just use modern technology to take out steps. Just remove the friction that exists between people getting what they want. And that is what my partner Mercury does. They took one of the most basic needs any entrepreneur has, managing your money and being able to do your finance or operations. And they've removed all the friction that has existed for decades. No more clunky interfaces. No more 10 tabs to get something done. No more having to drive to a bank, get out of your car just to send a wire transfer. They made it fast. They made it easy. You can actually just get back to running your business. You don't have to worry about the rest of it. I use it for not one, not two, but six of my companies right now, and it's used by also 200,000 other ambitious founders. So, if you want to be like me, head to mercury.com, open up an account in minutes, and remember, Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank and Trust members FDIC. All right, back to the episode.