Acquired - Special- Acquired x My First Million

0:00And this is for our podcast, correct? Or this is going on your podcast or both? Good, good question. Like we're open to whatever. Yeah. I think we should record it and see what fits. But like by default, I think it'll definitely work on our feed. If you guys feel good about it on your feed, I think great stool purposes. Great. I love it. Okay. Are we rolling then? Welcome to this special unnumbered crossover episode of acquired. The podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

0:38I'm David Rosenthal, and we are your hosts. This episode is a crossover between acquired and the My First Million podcast, a podcast from the hustle for business builders, schemers and dreamers. The show was hosted by Sean Peary and Sam Parr, and this crossover episode was just Sean and us. Sean works on special projects at Twitch and was most recently the CEO of Bebo, a once massive part of the consumer internet in the early 2000s.

1:05Shawn was also the CEO of BLAB.IM, which some of you may have used a few years ago. Our episode today has two parts. First, we had Shawn take us through what it was like to buy Bebo out of bankruptcy many years after its heyday and build something new with the assets, eventually selling it to Twitch. This is the first time on our show that we'll be talking about a company that was sold and not bought, which for those of you who have ever been through an exit know that that is the far more common scenario.

1:33The second part of the show is more of the My First Million format where David and I spitball started up ideas and talk tech trends with Sean. Also, we should say that while acquired is normally a family-friendly show, at least for families who love analyzing business histories together, this episode has a bit of profanity.

1:52As always, if you love acquired and want to hone your own craft of company building, you should join the community of acquired limited partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing in addition to our monthly LP calls where we talk with all of you directly and of course, our Book Club and Zoom calls with the authors. The most recent episode in the feed is the recording of our Book Club Zoom with Will Thorndyke, author of the outsiders.

2:18If you aren't already a limited partner, you can click the link in the show notes or go to acquired.fm-lp and all new listeners get a 7-day free trial. Also, if you want to hang out with the acquired community and discuss all things tech news, strategy, and ideas, you should join us in our Slack at acquired.fm-slash-slack. All right, listeners. Now is a great time to talk about a new partner of ours here on acquired, LaGoura!

2:45the agentic operating system that is redefining how the world's best legal teams work. Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. LaGora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do, operate with obsessive customer focus.

3:14They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you...

3:27drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Lugora's bed here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work, and this means that the pie can grow even as each individual task takes less time.

3:47And they recently launched LaGora agent offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And LaGora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early LaGora numbers essentially speak for themselves when they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over a hundred thousand lawyers on the platform from 1200 legal teams in 50 countries. And crazily, they went from one million to a hundred million in ARR in about 18 months. Truly insane numbers. And that is the real test.

4:39Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm, or you're in-house at a company, you can learn more at logora.com slash acquired, and just tell them that Ben and David sent you. And now, over to our crossover episode with Sean Peary of My First Million.

5:06Ishawn, are you open to telling us a little bit about the story of Bebo because I think listeners of acquired probably don't know your background and might know an element or two of that story, but I think getting a little bit of context around all that would be fun on your show. No, I haven't and you know one of the reasons why was initially I was pretty worried because you know when you get acquired there's like these like pretty strict like what you can disclose, not disclose. So I've sort of over time figured out, okay, I can't say certain numbers, that's fine, no problem. But I can just generically tell the story of what our company was and how this all came about, and the kind of twists and turns of the story. The hard part is, I'm the host, so it's always awkward, like, what am I gonna interview myself? Like, so this is perfect. You guys can ask me questions. This is great. I have two interviewers. Perfect.

5:50So one of the companies that I can talk about is Bebo, which is the company that most recently I ran. And Bebo actually has a really funny story. And I only came in kind of at halftime. So I'll tell the first half of the story, but the key disclaimer is I was not the CEO and founder during that first period, which was a way bigger exit. I wish I was the CEO and founder back then, but it was my partner, Michael, was the CEO and founder of that time. So for those who don't know, what's that?

6:14with my husband and wife duo who had built multiple companies together actually at Bibo was their sort of biggest hit And so I'll tell kind of the the quick version that we could dive in so the quick version is Did you know there was this company back in the day when my space and Facebook were you know taking off Facebook at the time was still in colleges My space was actually the biggest network and was famous and celebrities musicians were all using it and so Michael when he tells me the story because I've asked him a bunch of times like you know dad Can you tell me like what was it like back then? Like tell me these internet or stories and so he was telling me he's like initially I was Actually, let me finish the short version. I'll tell you the whole thing so the short version is build to social network called bibo got really popular But it became clear to him that Facebook was gonna win this war and like where he was now was like more like the top and was like look I should start looking at is there an exit here for us?

7:08Because I'm not sure what year is this this might have been 2007 2008 I think the deal closed in 2008 so probably let's say 2007 started thinking along these lines Facebook had been out for three years had expanded out of colleges. I think at this point and Was at high school level, I think and so basically was like, look, we've built a cool product, but man, and was Bebo was big in certain markets like Europe, New Zealand, you know, if you're in Ireland, like, you know, Bebo was like more traffic than than Google at the time. And so decides to sell sells the company for $850 million to AOL. Huge exit at the time sold for more than my space did. And

7:49And so amazing exit for Michael and Zochi and they went on to do a whole bunch of great things both philanthropically as well as they own 70% of the company and they own 70% of the company at the exit because of and I'll go into why they were able to own that and if we want to go into that detail too but so they sell it then fast forward a few years Facebook takes over the world AOL basically writes off people kind of like a year and a half later as like a tax write off of like it's worth nothing to us now you know we write it as essentially zero Product kind of dwindles obviously and now it's five six years later Michael comes to me and at this time I'm I'm running his idea lab so a startup studio that he had built that he was basically funding him and so she were funding themselves Michael originally was the CEO And then I joined to work with him. I came to San Francisco to work with him and then a few months later he put me in charge of the lab. He's like all

8:43go to the board and I'm going to, you know, me and Zoe were going to do cool billionaire shit. Like, you go run this thing. And I was like, Hey, that's what I would do too. I don't know if I would bet on me. I'm like a 25 year old kid, but like, you know, thank you. I'll try my best. And he comes to me at a certain point and he says, Hey, you know, we actually have the opportunity to buy Bebo back. I heard, you know, he, Bebo had traded hands. So a private equity guy had bought it off of AOL.

9:08He had invested in that and he knew that had gone nowhere. That guy didn't even really do anything. And then he's like, he knew it was going to go into bankruptcy and it was going to get bought by somebody. And he's like, we have the opportunity to buy it back. Would you be interested? We're already building social kind of consumer products. Anyways, that's the point in the lab. Maybe we could use this brand name. Maybe we could use the email list. Maybe we could use the servers. I don't know, whatever, whatever's there. Would this help us in any way get better distribution for one of our product ideas? So the

9:37Again, this is the longest short story I've ever told. We go buy it back. We go buy it back for a million dollars. And so we go to this crazy ass auction, I can talk about, but by the company back for one million, so sold for 850, bought it back for one. And then a couple of years later, we now sold it again, you know, to Twitch. We got acquired by Twitch and which is owned by Amazon. And so I'm currently at. And when you're buying for one, does it come with like all of the data it's ever had? Like all the email addresses from every epoch of the company? It comes with whatever's still there. So some shit gets lost a long way. You can't recover that. But yes, in theory, in theory yet. So we got like a 80 million person email list, which is one of the assets. Now what we found when we got that email, 80 million.

10:22e-mail list was hey it looks like this e-mail list might have been bought and sold before or something because this is not had this does not have a great sort of sender a bit send rating essentially the other thing the other key component was bibo had started back when hotmail and a well were like the rage and then Gmail came and everybody switched and so what we had was Essentially 80 million emails of which, you know, approximately 40 million were like my teenage hot mail address that I never check in will bounce or just go or go or go into the business. And so that turned out to be a lot less useful. The funny thing, I don't know how much of this I can share but the funny thing is one of the things in buying it was we actually bought two assets.

11:04We bought the company and that brand and the domain and the email list and all that stuff for a million bucks. But in that same auction, we bought the sort of legal rights to sue the previous owner for, I don't know, $50,000. That actually, they won the case, they won the suit for multiple millions of dollars. And so that asset turned out to be really, really valuable in this app. Great ROI. And then the domain and the email list turned out to be a little less valuable than we originally had hoped. Wow.

11:34Did you guys use to our previous conversation at an SBA loan at all? No, I'm financing the purchase. Michael and Zotu were like, hey, straight cash. I don't think it would have all the cash buyers, right? It didn't have positive cash flow. It didn't have a lot of things that you would need. It was kind of a hairy deal going through bankruptcy. So you needed to be an all cash buyer to buy it. And so I cut off a little bit. So where is it eventually now and how did it get there and why?

11:59Okay, let me try to make that out. Where is it eventually now? So we got acquired now. And so the whole team that was working on it is now, you know, the majority of the team, 95% of the team is at Twitch and got bought because we had built a whole bunch of things. So one of the things where we bought it, I'll just kind of tell the story, it's kind of interesting entrepreneurial story. So when we were going to buy it, I got split opinions. I asked a few smart friends, hey, do you think we should buy this back? And 50% of people were like, don't touch it with a 10 foot pole, like internet companies don't get revived. That's not really a thing. The brand is stale. It might be more baggage than it's worth. It's going to be constant confusion if you're launching a new thing under that old brand name. And you don't need it. Why would you pay for this? Go put the million dollars into ads and you'll get the same amount of users. And then the other people were like,

12:48I don't know what's gonna happen but what a challenge what fun if you did it and you are also gonna get a lot of kind of people who are curious to check out what it became whether they're actually gonna adopt or not it's a good you know it's the analogies like you know you go back home to your parents you know to your original you know to your parents house when you're after you're 30 years old and they say hey we renovated your old bedroom you're like oh I want to go see what you do with my stuff what does it look like now that's essentially what we do I downloaded the dig reader in twenties sixteen of course i did i had to see what they did exactly even if you come in thinking i'm never going to fucking use dig you want to see what are they trying to do a thing and laugh at it so we were like okay at the very least we'll get that uh... better than complete obscurity i suppose um... and so when we bought it we did one smart thing which was

13:34We had some predefined ground rules. We're not going to make, just bring it back as another social network. Like, we had seen MySpace try that and we're like, no, that game is over. Facebook has won that game. Don't try to be like, hey, we're cool again, 10 years later. Like, that doesn't work. We also didn't have a new product. And so, but we had to close the deal given the timeline of the acquisition. We had to close the deal and we had to announce it. And we had to turn off the existing product because it was going to cost a whole bunch of money every month to run. I saw this. And so we were like, okay, we're going to do three things. First, we're going to turn it off.

14:04Second, we're gonna preserve the SEO because there's amazing SEO. And so we're like, how do we lower the cost by 100x while keeping the SEO? Everybody's profile page alive because you Google someone's name, their Bibo profile was like in the second or third. Static pages? Yeah. So we created these like static frozen pages that would remain, you know, indexable. I don't know anything about it, but one of our engineers was like, nine engineers in the room were like, there's no way. And then our youngest engineer was like, well, why don't I just do this?

14:32that all the other engineers were begrudgingly like, well, yeah, if we just want to do that, we could do that. And I'm like, well, that accomplishes the goal. Of course, we want to do that simple thing that accomplishes our goal. Anyways, so shout out to Quinn for coming up with that. The last thing was we came up with this video. We shot it in a weekend. And it was basically like an announcement video of, hey, the original founders bought it back. We're going to bring it. And it was kind of tongue in cheek. So we were actually, it looked like a serious corporate stock video of like, hi.

15:01I'm Michael. And I'm the original founder of Bebe. We had this vision. And over the years, it grew. But then the video starts to make fun of the old Bebe. It's like, we had great times. And it's basically pointing fun at people used to just go on each other's profile page and draw dicks on the whiteboard. And so that was like, we have the largest repository of hand drawn dicks on the internet. And so this video kind of goes viral.

15:29which was our hope. So while the 80 million email list was dirty and pretty much unusable, we couldn't send from it. We got a million new people to sign up to see what's the new bebo. And we were like, okay, that's cool. And they signed up thinking like, this is funny. I like this guy. This is like the the Dollar Shave Club. Exactly. That was our intent. Now wasn't as successful as that, but we it was close. And so that was the that was the that was the goal there. And Then we were like, okay, well, we still don't know what product we're gonna do. And I was still sort of over the mindset. We need to like test. We don't want to come back with this big bang and we don't know, you know, that's a one shot thing. So I was like, I started creating a little sub-list, you know, groups of 10,000, 50,000 people that was like, hey, do you want to, we're gonna launch three new things. I want you to try them. You're gonna be our focus group. You're gonna tell us if this is any good or if this is dog shit. And whatever comes out of this will be the new bebo, but you're sworn to ultimate secrecy and blah, blah, blah.

16:24And so we created these little lists and we launched different products to them. And we, you know, one was this messaging app with crazy avatars that look like Bitmoji. And then the other one was Blab, which you used. I was like this video chat platform. And then we were launching them under other names to test them first. The idea was, if it ever works, we'll, we'll brand it as B, but we'll email the whole list. The last thing we did was we took the live streaming tech we had built and we built a esports platform where you would We built essentially high school esports. So the way you can go play in a football league or a soccer league or a baseball league as a high school. Just like play versus. Just like play versus we're doing. They were our competitor. And so you could sign up to be in a Fortnite league. And we were like, dude, Fortnite's more popular than baseball. Like there should for sure be a way to join a team for your school or as a high schooler and play with other high schoolers and compete and play internaments. And because we had built all the streaming tech,

17:18We were like, this is cool. Not only are you playing, but your friends or your family can watch you play. And so that was really cool. And we were running the biggest high school eSport league in the country at the time. And then a couple of the platforms came knocking and we told them, hey, look, honestly, I'm a realist. This is cool. The students love it.

17:40And the platforms are happy because we're bringing on tens of thousands of new young teenage streamers streaming for the first time who would have never otherwise streamed because they don't want to be a streamer. They just want to play in tournaments and they're like, now they're getting the joy and the thrill of streaming for the first time. And so we're like, all the value is accruing to them. We should go try to sell this to one of them. And so we went to YouTube and Facebook and Twitch and like all the others and we basically said, hey, who wants to buy this thing? And ran a process, a pretty tight process over like 45 days and

18:09closed a deal and ended up selling the company. And had you already closed down the other experiments at this point or was blabbed still potentially a thing? We did them one at a time. So we learned that lesson the hard way running the startup studio in general, which is kind of like parallel entrepreneurship splitting focus is very, very dangerous. Not to be done unless you are someone much more skilled than me. And so we were doing one experiment all in. And if it didn't work, we would then cycle pivot to the next thing. But we we had shut them down by then.

18:39Which was hard, right? Black had four million users and was growing and some people loved it and used it eight hours a day and like I got death threats and you know, somebody is actually kind of funny somebody sent to the office a 200 page script for a play that was using me as the central character my CTO is the second central character and our designer or kind of community the other people whose names they knew and it was a script of us being You know, it's kind of like the office. It was like us being dipshits like making bad decisions because they were so angry. We're shutting this down. Oh my god. That they sent us like a full play of our, you know, total ineptitude and I read the thing and I was like, wow, someone took this much time to do this. That's that's awesome. So why did why'd you shut that one down? It was that like other messengers were just, you know, it was like a Facebook style situation. And by the way, can I take a stab at explaining please do for my recollection? So

19:31I guess the three modern comms would be it's sort of like Zoom meets Twitch meets Clubhouse where it's like video collaborative chat in real time that has a broadcast component. So the experience was like this. There's three of us on a Zoom call right now, right? Three little squares.

19:48And so we would be doing this, but where our chat is in the, you know, the site of Zoom, Zoom is just for private communication. Black was a public. It was like a talk show. So like we could have live people watching this, listening to this, typing in questions. We could pull the question and put it on the screen and address it. Anybody could call in like an old radio show and like join the conversation. And so it was like this kind of live, you know, it was like if Google Hangouts had an audience or Zoom had an audience, that was sort of the premise. And so we organically had a bunch of cool people use it. Like I said, the UFC used it.

20:18when they wanted to do a virtual fight announcement. We had Tony Robbins come on and he would let people call in and tell them their problem and he would help them workshop them live just like he does at his big 7,000 person events. The Jonas Brothers did that with their fans. ESPN would use it every Friday for their basketball show. But the problem was there was two groups of people using it. There was all those cool things I just talked about that make it sound legit.

20:43But those people would use it once a week for like an hour. They're like, okay, I'm doing my live interactive fan thing. That's like hard to do and like, I'm on the spot, but like, it's super deep connection with people. They love me if I do this. So I'll do it once a week for an hour. Friday's at three. That's when my live show happens. And so we were like, cool, Friday's at three are awesome.

21:02What happens every other hour of the day, like, how are we ever gonna fill this up with good content? So then the... You had the Facebook, same problem as Facebook Live. Same as Periscope, Facebook Live, Miracat, and we were all at the same time. Our thing was like, they were like a monologue, like, you hold up your phone and you just talk, which we thought was really hard to do. We were like, dude, dialogue is way easier for people to create content, which was true. But the hard part was...

21:26For any given category like let's say business talk or sports or whatever you had to have 24 seven interesting content to build a habit for a viewer to just come and show up when they're born And if you just try to get people to show up on demand They were like we'll do it. I'm busy like the whole world is not like I don't show up on a schedule anymore like I order things when I want it and I get what I want when I want it This is the postmates era like you know, I don't want to have to show up when the creator decides to go live and I'm in the middle of dinner And so that was always a challenge. And then the other side, we had people that just, they just used this as like, you said clubhouse, they just used it as a room to chill in. So they're just, they were, people would meet each other, they would become friends. And then every day, some, some number of them would get online and no trigger notifications to the other friends. And then the party would just rage on all night and you would just dip in and out as you were free or, or, or, or you were busy, you would leave and you'd come back and different set of people would be hanging out. So it was this hangout platform.

22:21And the cool thing about that was, these guys were super sticky. So we wanted people on all the time. They were on all the time. They would fall asleep on the platform.

22:30But the problem with them was the core value they were getting was they were making friends. So they didn't bring any friends to the platform. So that side was not growing. The celebrities grew, but we're totally, you know, using it one hour a week. The people using a 40 hours a week. These are two different friends. And then those two groups did not coexist at all. They didn't even understand why the hell they're on the platform. Oh, crazy. And so that was the problem that we were never able to solve and why we ended up pivoting. Wow. Bring it home. So Twitch.

22:58buys it. What's the main reason? Like what's the repurposed asset here? Is it mostly the team or is there technology or learnings? Yeah, all three. So anytime a company, I always differentiate, a company could either get bought or it's sold. We were sold, not bought. Bought is your Instagram, your hot, you're the next big wave. Everybody recognizes it and people are banging down your door trying to buy you. We were sold in the sense of like, I approach a bunch of companies and I understood, I threw kind of conversations, was able to sus out.

23:26What are the things that are important to them? What are their big top three strategic priorities as a company? And then it's my little company, an answer to any of those problems. And I was like, wait, framework? I was, you know, doing some yoga poses to try to make that fit where I was like, oh, you really care about that. You're doing, instead of customer discovery buyers. Exactly. So because I was like, I need to sell this company, it's not going to be the mega home run we think, but there is some value here. So I don't, I don't want to stay and work on a mediocre, medium sized business for five years.

23:56nor do I want to just shut this down, like walk away from millions of dollars of value. So I need to learn a skill I don't know which is how to sell a company. And so I, which in fact, it's like a long time but you have to leak.

24:07You are falling into the 80% thick middle of entrepreneurs here. We venture back to entrepreneurs. Exactly. The first thing I did was I asked six entrepreneurs who had done this before I was like, Hey, how the hell do I do this? And they gave me some tips and they became what I call my deal doulas, which is like, if you ever had a baby like, you know, a doulas, somebody who helps you burn that baby. And like these were the guys who helped me birth this deal. They helped it, you know, go all the way from the tough part of labor all the way to the happy part at the end. And so so essentially I found out what those top strategic priorities were. At first, I was trying to be really smart about this. Then I realized, oh, here's how this market works. You have Twitch, which is the market leader. They have strategic priorities about how to grow their business. Those are very specific to Twitch. I got to find those out. I took some people to beers and I asked a bunch of questions and sussed out that, oh, there's this program that they've realized. I'll give you the rundown, which was they were in the category of

25:05Twitch has gotten really, really big in the same way that Netflix got really big, but then the content costs start to go up. People start demanding more money, right? Famous streamers want more money, eSports, tournaments want money, yeah, they want exclusive deals. Ninja moves over to Mixer. Exactly, right? You got streamers getting paid tens of millions of dollars to switch platforms so that drives up prices. So Netflix had a smart idea to create original content and like, hey, this is stuff we own. So I realized that Twitch really needed original content.

25:34And it needed content that it could, it could basically not, it could control its cost better and drive a ton of viewership. And internally, they had been practicing this, they had been doing this program totally manually. So they had no technology to do it. But we were lucky that they themselves had been thinking similarly, had been running a program very manually and had come to the conclusion that, hey, this works. We need to scale this using tech. And then they looked inside the company and they're like, shit, where am I going to get?

26:00a leader that I trust to do this really hard thing. We need engineers that know how to build this. And we need this now, not like 18 months from now. And so that's a great spot to get acquired in because you say, hey, I'm a leader. If you meet me and if you believe in me as a person, you think I could be one of the 10 leaders of your company, then the only way you can't hire me, I'm an unhirable person. You've got to buy me to get talent like that.

26:25Also, I come with 12 engineers that have been working on this for two years. We've already gone through the learning curve and figured out everything. You get the code and you get the learnings. In our case, we didn't have revenue or a big user base that would matter to them, but they're like, don't worry. We already have revenue and users. We just need the rest. I figured out for Twitch, that was the solution. For everybody else, it was Realize that the core problem was we want to beat twitch so I was like oh this makes it really easy I just need to pitch this as a way that you could potentially overtake twitch and I need to spin that story and then I need to tell you that twitch it wants to buy by this so that will automatically get you interested and I and so that became the sort of game you play as an entrepreneur to try to get multiple bitters involved and part of it is

27:10persuasion, but, you know, you can't just persuade these are no dummies. These are CEOs of billion dollar companies. They know what the hell they're doing. So it's not about convincing of something that they don't want to do and making them do it. It's about finding out what they already want to do, positioning, like cutting away the fat of our story into just being the solution for that and then connecting on a personal level and saying, would you want me as one of the senior leaders of your company? Would you want me kind of on your extended exec team? And if so, great. Let's do a deal.

27:38It's fascinating. It strikes me. We don't have time to go into it, but that process is the exact same process of raising money from venture to you. You want to have a hot round. You want to have VCs competing over your deal. You do exactly what you just said. Right, exactly.

27:51Yeah, Sean, I think we'd love to have you on the LP show at some point for the to be our deal doula to help Help listeners understand like what are the levers you can pull? What are the ways that you can? Sort of message different things at different times and different parties putting that aside Thank you for for sharing the Bibo story. Yeah for sure I kept every email I sent and things like that because I was like I want to help the next entrepreneur who's gonna be like me needs this This is seven years of effort that they just need to like cash in on and they need a successful outcome They deserve it, but like they're gonna be totally clueless. You don't get a ton of reps at doing this. And so how can I, I know when I Googled for it, I couldn't find jack shit. Everything was about the bought use case, which is like, should I sell my hot company when I have all these offers or should I stay independent? Like yeah, there's a ton of content about that because VCs love to talk about that and they'll tell you to stay independent. And then this is the other side that like is a little bit less sexy, usually results in failure. But if you could thread the needle, it'll be life changing for you, your investors and your employees. Like, you know,

28:50There should be more content about this. And so I wouldn't make a course out of this probably because there's just not that many people who need to know this. It's like a very small, it's like a niche of a niche. But I saved it in case people knock on my door and they're like, hey, can you help? I'm like, yeah, here's some templates that I used and here's what work for me. Amazing. And now I got a podcast. And that's actually how the podcast started during the diligence period. I was, you know, the funny thing is when you're running your company, you just get so worn down. You're so tired over time, especially when it's not, you know,

29:19It's not a breeze when it's taken off or whatever. And then as soon as the sale process started, my creativity muscles started firing again, started having all these ideas. And I was like, well, this is the worst time to have a startup idea is when I'm trying to sell my company. I need to like shut the lid on this and not get tempted to go start something. And so I was like, oh, maybe I could start something that's safe, a podcast. And so I started the podcast just for kicks during that time to keep myself busy. Because otherwise, I was going to damage my own deal.

29:48Little did you know what it would be all right listeners now is a great time to tell you about a long time friend of the show Vanta AI has scrambled the whole security picture It used to be that you proved that you were secure once a year on audit or a static PDF then everyone would not and you're done But in an AI first world that doesn't hold up anymore. Yep your risk surface changes every week now A vendor turns on an AI feature or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this, quote unquote, shadow AI, running with no security review at all. Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap, and the way that they close that gap is Vanta agent.

30:42Think of it as a GRC engineer that's governance risk and compliance, except that it's software and it doesn't sleep. It finds the issues drafts the fixes and cuts the time that you'd spend on vendor assessments in half. In half, which is exactly why more than 16,000 companies today run on Vanta. Companies like ramp, cursor, and snowflake all stay audit ready and catch the risks that crop up between audits across every vendor.

31:09Every AI tool, the whole environment. And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at Vanta.com slash acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off and just tell them that Ben and David sent you.

31:40All right, listeners, now we shift to the second part of the show, which time for a secret we actually recorded first to talk startup ideas, trends, and internet businesses with Sean. We'll talk about a side project idea. I have been kicking around. What are smart friends are dabbling in on the weekends and a bit more on specs. Let's dive in. Let's do a quick.

32:02Quick intro, so I've never actually never met you guys, but like I think most people for this podcast I've heard you guys talking and actually just say like five words into your mic your mic setup is like godly I don't know what I don't know if it's your voice or your mic, but something is perfect. It's all bad. Yeah, listen to that. If it were like if I were running the tech side of acquired we would still be like talking into our into our MacBook. Yeah, but fortunately we have David's dulcet tones and buttery voice that Can I complete the equation and then you have the like kind of sound proof panels in the background and stuff like that. I just like roll out of bed and push go and see if it works. All right, so we have David and Ben here with us. These guys host the acquired podcast, which is we'll talk a little bit about that. So you do that. You're also venture capitalist for what I understand if I remember correctly in the from the podcast and

32:55The podcast I so I used to listen to a bunch of it at the beginning because I'll tell you a funny story We have a guy in our in our office at our startup name Jason and Jason is great in all these different ways. He's super enthusiastic He's a go-getter. He'll make shit happen. He's very creative But the one thing that Jason was always like kind of the punching bag of the office was he would always say the wrong like he would always have his facts wrong so he would be like oh You know that's you know they got bought by this company and were like, no, it was this other company. Or they raised this number and it's like, nope, that's not the right number. So he was always like getting fact checked. And then one day, Jason started coming in with just these knowledge bombs. And we were like, that's not right. Wait, that is right. And I was like, how did you know that backstory? Like, did you research this? Like, I didn't understand. And then I realized the secret. He was listening to y'all's podcast. And he was, you know, basically what you guys do is you tell the story of great kind of acquisitions and tech history. And

33:53and you go through kind of like very methodically you like research it well and you tell a very good linear story with no plot holes and so Jason all of a sudden had this superpower he was telling these perfect renditions of what went down And I was like, what the fuck is going on? It's amazing. And so that's what I was like, okay, what's this podcast that you listen to? So I listened to a few of them. I haven't listened recently. I know you guys have been, you've pumped out a ton of them. You get, well, you got to hop back in because we're not just acquisitions anymore. We realized these stories like we were limiting ourselves with just acquisitions because we'll get into this with you. But like, you know, acquisitions are a limited part of the universe. So we just did epic games. We did space. So it's just like success story in addition to acquisition story type of thing.

34:34Yeah, the goal is that we tell the story of like the obviously the very deep story of any sort of great company, but then also try and understand the playbook of why it worked. Right. I love I love them. I've listened to a bunch where you had like a three-parter and I'm like, oh man, this is so deep. I love it. Anyways, that's my my genuine shout out for for the choir. We got to say to your guys show is awesome. We love it. And one of the reasons, hey, you're just like good. You guys have great flow chemistry.

35:04You're awesome. But B, it's such a good counter part to like what we do on a quiet like we tell this like certain part of like the internet like history and like as it exists and it's like these big huge flashy companies but like there's a million ways to skin the cat and like there's so many other good businesses out there and so many other people working doing amazing things that are never going to be SpaceX, but that's cool. I'll bend your golden hippo episode. I love that one. On one hand you have the story of SpaceX and then the other hand you have this guy who's in Iowa who's doing a drone light show company and just local rural Iowa and making $2 million a year and he quit his job as a construction worker before that. That's the other end of the spectrum of cool success stories that are just different flavors. Yeah, it's so cool you guys find these and you bring these folks on the show.

35:54This is awesome. So we can agree on that. Yeah, I also. That's so great. We love it. Sorry. Go ahead, Ben. I was going to say, like, I also just like that it feels more like classic, I else like classic American, but classic entrepreneurship. Right. Like we've lumped in entrepreneurship to become this thing that involves.

36:13tons of money, a winner take all market in all likelihood failing and flaming out, you know, fabulously. And by telling everyone they should go do that, you just set most people up for failure, whereas it's not.

36:27As long as you're really focused, you really listen to your customers, you really iterate, you're really capital efficient, like going and achieving a million dollar a year top line business, like lots and lots and lots of people do that and can do that and should think they can do that. And so I love that reminder in our lives. Yeah, I would say like Neville has this really like money line when he's taught, or I don't know who stole it from. I think it was like Naseem Telly or something when he was like, you know, They're like, you know, what's your political stance? He's like, well, with my family, I'm a communist, with my friends, I'm a socialist, with my city, or my town, I'm a Democrat, I'm a libertarian at the federal level or whatever. And it's just a great, yeah, it's just a muddy quote. But I have sort of a similar thing in entrepreneurship. It's the poor man's version of that, which is, you know, if I invest, I go for the billion dollar, the potential billion dollar companies. If I'm advising somebody to start something, I advise the types of things we brainstorm on the podcast all the time, which are these

37:21you know, small niche businesses that can generate a ton of cash flow. And then when I do it myself, I just go solo-preneurship and I just create content that I think, you know, a lot of people can love and I don't have to talk down. I don't have to like have employees or an office. That's my dream, right? And so there's these different flavors that each is good for a different purpose and for a different person. So anyways, that's my view on it. And so you guys reached out the other day and you were like, hey, be fun to do kind of a crossover episode. I think that's a great idea. So you came on and I was like,

37:50Okay, what are we going to do? Are you guys going to come on and tell great stories? And I'm just sitting here with my popcorn because I'm down for that. But actually, you guys came with a bunch of ideas. And so I want to jump in and riff through a bunch of these. And like normally the way me and Sam do it is just like you have here. We just have a sheet with like a bunch of bullet points that like you don't even understand the full idea just from the bullet point. And we'll just say like Okay, what you got, and then one person will riff on one, and then when we're bored of it, we just say, all right, I got another one. And you just keep going. This could be so fun for us, because it's like, we don't get to do this on a choir. This is like, you know, when like a successful business person goes to Burning Man or Marty Gras or something, it's like, oh, I get to let my hair down. I just, you know, shoot the shit on half baked ideas that will totally not work, most likely. Yep, that's what this is. Cool. So when you guys get excited about ideas or, you know, some of the stuff you sent over, you know,

38:41What's on your mind? What are you guys seeing as interesting? Let's jump in with some of these different ideas you got. Yeah, so I'll start because I have your devolqued sort of inspired.

38:57I have a very bifurcated lens on the way that I look at ideas and I don't think I realized it until recently that so I should give a little bit of background. So I started a thing called Pioneer Square Labs five years ago. We're a start-up studio where we spin out companies all of which go on to get venture backed. We've done that 24 times in the last five years and we're based in Seattle. So I'm really looking to make a dent in the entrepreneurial ecosystem in the Northwest. So we're coming up with ideas all the time investors now too.

39:26Yeah, so then we also have the venture fund PSL ventures where we invest in early stage companies in in the Northwest and so and many that we have nothing to do with starting and so I sort of sit on both sides of the house of coming up with ideas and also evaluating ideas that are not my own and I have a massive bias with my own ideas Where I'm excited about it no matter the market potential if I can fully conceive of how to build it in my head and how it will deliver value to me as a customer and like I it's probably the engineering background but like I put on my blinders real quick and just go heads down and I feel like fight every instinct like David will be like hey, I think there's this really big way we can move the needle for acquired and pitch me this big grand plan and I'll be like yeah, but I need to fix the way that

40:18headers look on our website and like I have a really good idea for how to do that and sorry I need two hours now and so like I have a massive bias towards things I can fully conceive of and and will be satisfied with the value. I think this idea you have is a really good one. But the I think the way that I like think about or evaluate other ideas is definitely Sean in that same way that you thought about like you know, is this winner take all, is this gonna be a massive thing? Is this a moonshot idea? And the scary part that always comes along with that is like, well, if this is a really good idea and now just happens to be the perfect moment in time where someone can do this, are these people, the people that are going to pull it off out of all the other people who are also thinking of this rare moment in time where there's a good idea that hasn't yet been done.

41:10That's almost disheartening, right? Because then you scope down the universe super, super narrowly. And most of the time what you're doing is saying, now I'll wait for the next one. And that's a frustrating and sometimes disheartening job. But I think that finding that spot in the middle where you can sort of believe in other people's ideas as much as you do your own that you get excited about and apply the same amount of skeptical rigor that you do to things you're being pitched to things you come up with. That's sort of where the magic lies in the middle. Yeah, I would agree. Also, when you said that thing about like kind of the way you two are different, it reminded me of this, you know, all right, take a shot. I said framework framework that

41:55that I heard one time that has always stuck with me. I don't know if you guys have ever heard this, but Bill Gross, who's the founder of Idea Lab, he's kind of like an Internet OG. He gave this talk once and he's talked about, have you heard this about the four kind of personalities that come together to make a company? So basically he says every company needs these four personalities and they come in a certain order. So he's called EPAI. So not a great acronym, but It works. And so EPA I so E is the entrepreneur so he gives us analogy you're sitting in a room. So say you're sitting in a classroom.

42:29And one kid is gonna look out the window and there's just grass outside. But somebody's gonna look at that grass and say, you know what? There should be a parking lot there. And we all come into, we all come to school every day and parking is such a hassle. There should be a parking lot there. It could be six stories high. We should build a parking lot. And so entrepreneur comes up with a vision, see something before it exists based on a pain point or a personal dream. Then they have P, which kind of sounds like you, Ben, which is the producer.

42:56So a producer is somebody who gets along extremely well with with the E. They're not usually the one necessarily to come up with the kind of visions every single time, but they're very good at downloading the vision. They hear the vision. They say, yep, got it. Makes sense. And their brain immediately goes to, oh, by the way, six floors. No, no, no. What it should be is two different structures that each have this, whatever, they start immediately, their brain starts building that vision out, and they're gonna be able to take words and turn it into some form of action. So he draws these curves, like, if it's just the E alone, there's this initial value, because they come up with a vision, and then his sort of Peter's out and goes nowhere, because there's no production. But then if you have the E and the P, the P jumps in after the initial value's created and takes it to the next level. But then if you just have the two of them,

43:42Your your venture will be a mess because you need the a which is an actually an administrative type of person a type of person who says okay great We have a vision. We have a plan of production. We're actually going we have six employees But if no one's doing payroll if no one's feeding anybody if nobody's like writing things down about our plan like we're screwed We got to get organized here, and so you need a takes it to the next level and then the last one is I eyes the student who's not even looking out the window It's just looking at the other three people being like you guys need to learn how to work together

44:12and it's the integrator. And so the eye is this amazing person who can figure out, okay, how do we get this group of talented people to be cohesive over time? And how do we, you know, one person's thinking one thing, another person's thinking another thing, how do we get alignment? And so I've found this in my startups too, and the reason I bring it up is because...

44:31It's really useful to know which one you're great at, which one your superpower is. So then you'll know who to partner with and when to partner with them. And I at the beginning does nothing for you, but an eye is great at the end of that cycle. Same sort of thing. So anyways, I just want to share that.

44:47That's also when do you think you need the A's in the eyes? So from my experience, you don't need them unless you hit product market fit. So sometimes the E is totally off base. You didn't need a parking lot at all. Or you know, you build the parking lot, but you didn't have a plan to get customers. So it's once your product has been pulled by the market. So once the demand is pulling more of the product faster than you can produce it or asking for more features than you can keep up with, but they're actually using your thing.

45:15That's when you start to need A, and then you need I as the team grows to a certain size, right? Because a 2% team, you don't even need meetings, you're just constantly in sync, you're just sharing a brain. And then once you even get to six, six is like, oh shit, we all are doing different things, we all need to talk more. And then there's this rule, I forgot what it's called, but every time the size of your team doubles, The communication required is like a square. So like, as you get, you know, from six to 12, you don't need double the communication. You need, you know, quadruple the communication or whatever. Uh, yeah. In a, in a, in a perfect world or an easy to model scenario where every person in the organization must communicate equally with everyone else in the organization. Uh, then the number of communicating lines is, right.

46:03proportional to the square of the number of people. Exactly. Because it's a network, right? So every node needs multiple connections to all the other nodes, or at least to different hubs. And so it creates all these different lines that you need to work on. And that's where the A and the I help a lot. Because the A's like, hey, let's write things down. So other people can read this. And the I is like, hey, here's like a common way to write things down. So we're all saying the same thing and have the same bar for what it takes to say yes to a project or whatever it is. Yep. That's awesome.

46:31Okay. Framework hour over. Everyone come back from business school. Exactly. I get real academic about these things. In reality, you don't need to know any of this shit. You just got to go. When you look back on it, you'll say, oh, yeah, that matches up to what I did. But it's not like you go forward saying, I got to be a better P. It doesn't work that way. Anyways, you guys had a bunch of ideas. Let's riff off the first one. What do you got? So we thought about Talking about some of the stuff that's more directly related to our show here, but people seem to come on your show and then throw out their latest like brainstormed idea and shoot the shit about it. And so I figure that would be a fun thing for us to do here. And so I try to apply my own criteria of what's a thing that occurs to me that I want in the world that the time is now. And I can see sort of a path to how to accomplish it. And the the just of the idea is.

47:31I want to book an Airbnb or a VRBO and all it tells me is whether it has internet or not and that is completely useless in the world of I sit on zoom for eight hours a day right and so I'm thinking this is like a totally bootstrapable maybe even no code thing where you just say Hey, to get access to, it's basically ways for Wi-Fi, where whenever you're somewhere you, you know, upload the geocordinates, maybe you put the address in, we'd have to figure out some security stuff around that, but you just take a screenshot of a speed test, and then we just have this big database of all these different places, and anyone who stayed there, and the screenshots they've uploaded, and yeah, that's the basic. It's basically solving the problem of, I need...

48:15Great internet because everything is done through Zoom and so when I'm out and about I need trust I need a trusted source to know where my internet is gonna be good versus okay versus whatever you know whatever I have so it's I think particularly when you're when you're like traveling working remote like We did this my wife and I went to Santa Barbara for a month rented an Airbnb for a month bed you're doing this way is like tons of people are doing this now isn't Sam's doing this right? Yeah, Sam's you know nomatically, you know bouncing around every two weeks or three weeks Yeah, I mean, it's this classic cold start problem of like what a useless website you've created Ben there's zero entries on here So you got to figure out some way to sort of bootstrap that that cold start problem, but I think the data entry is is really easy and you can do cool stuff over time like charting how it's gone up and down and And at the very least you can probably create like five to ten spots in every city where like super nerds who saw this on product hunt uploaded

49:11data for the first time. So it has like a pretty low bar for minimum efficient scale. Right. Would you literally build it like based off of what Airbnb inventory is? So Airbnb tells you doesn't have Wi-Fi or not, which is kind of useless. It's like, yes, if it doesn't have Wi-Fi, I just take it off the site. If it has Wi-Fi, okay, that doesn't tell me if it's going to work for what I need.

49:33It could be the psych class coffee argument of like, oh, we've created this experience for you. That is Wi-Fi free. So you can, but yes, that's not all we're looking for. So it's fun. So Ben puts us on our list last night, where we were brainstorming these ideas. And I was like, holy shit. Did you talk to this guy? We both know he's super awesome in Seattle because I just talked to him yesterday afternoon. He was also thinking about this idea. And I was like, oh, no, I didn't. And I think it just speaks to like The timing and the need for this is so acute right now. I mean, of the four of us on our two shows, three of us have done this in the past like couple of months are going to do it now in COVID. Like this, this went from like, yeah, like it would be, you know, it's really nice when I get good air. Good wife. I have my Airbnb to like, no, I need this. Right.

50:23Yeah, Wi-Fi is, you know, up there with food and water as far as I'm concerned. So we forget COVID. I always need great Wi-Fi. And if I don't, I'm like, you know, I have to like, take a time, time out for five minutes and be like, am I really this upset about the Wi-Fi? I think it pulled though, like, and I have to like, rebound off that. It's totally doable. You could stand this up on Webflow and, you know, do a little bit of other no-code stuff in the background, maybe a little bit of code that you add over time.

50:50This could be this could be a wedge into something more interesting though, right? Like you know on its own great you can build this It's a little product maybe you charge for it. I think you probably better monetize this with affiliate for Airbnb listings and VRBListings and the like I wonder though if you could actually use this to bootstrap inventory of places and have it then become its own network of like, oh, you want long-term, you know, I better, my buddy was calling it, workations. You know, you're, you're, you're doing this like here is where the best places for this are. Well, you start to onboard a little bit of that supply and maybe all of a sudden it becomes its own network, just kind of like hip camp has kind of offloaded a lot of the, the, you know, true camping type experiences of and glamping off of Airbnb. Maybe you can start to disaggregate it.

51:39Right. You know, the two ways I was thinking about this when you, because you just wrote a very simple thing like Wi-Fi site for Airbnb. I don't know what that meant. I thought my brain actually went to a different thing. I didn't know you meant Wi-Fi website. I thought you meant...

51:52WiFi site. So like first, my first thought was around hip camp, which is like, is there just a cool outdoor area where I can be outdoors and sitting and comfortable but have amazing WiFi? And it's like, I don't actually want to go camping, but I do want to be like not in my room anymore. And so like, you know, could I be outdoors? Could I have great, could I be outdoors and have great WiFi? Like that already is like, I love outdoors and I love great WiFi and they rarely come together. And so if you could create these WiFi sites that were awesome, that were just comfortable places to go sit. Maybe there's little food trucks around there or whatever. I think you could build kind of like this weird outdoor co-working thing. I'd love to see somebody take a shot of trying one of these. The other angle I thought you guys might be going is like sort of that boingo wireless or whatever that's called, which is like they went to airplanes or there's a version of this for coffee shops which is like, hey look.

52:46Everybody who comes here wants Wi-Fi, and better Wi-Fi than you're providing, we will give free Wi-Fi in exchange for their email. And you could potentially do that with Airbnb hosts, so you could basically say, hey, we will boost your Wi-Fi through either those kind of mesh networks, mesh network routers, or just provide Wi-Fi where you don't have Wi-Fi.

53:08in exchange we so basically run this little service either you charge five bucks a night for the for Wi-Fi or you get that plus their data and then use that as like kind of the way the boingo does so that's actually what I thought you were you're initially saying but dude I think that's I don't know if there's a fair there valuable service itself but if you did they'll like if you're trying to build your own network of longer term rental properties this would be a great growth hack you'd say come on my network I'll pay for you to upgrade your Wi-Fi And, and then that's how you can onboard the supply. Right. Yeah, exactly. Yeah, that's an interesting point of like, how do you either onboard new supply? Like, okay, you've got a, whatever, you've got a backyard. And now that backyards are cool. Or it's, how do you give supply that was like, unviable? How do you make it viable with some like investment that you can pay back in two, two night visits? You know, like, could you pay back? Could you pay that back in that short amount of time?

54:07I don't know, hard space, but there might be something there. Let's jump to a different one. I'm gonna pick a random bullet. Can I go meta on this one for a second? I love, I guess this is moving to a different idea, but I love that we wrote down Wi-Fi site for Airbnb's and there's three different ideas that came out of that purely because there's insufficient information. So you like apply creativity and fill in the gaps and the reminds me of...

54:31I had the very first time I did anything noteworthy on the internet was I made this website called it's this for that.com as a joke at a startup weekend because every single pitch was well it's this for that in like 2009 and it was like the first time I got tech crunch so we still maintain the websites my buddy Eric and I and it's like it just comes up with random x for y pitches. And as you just like click to refresh, it's like a startup meme generator. And I've like come up with some pretty decent ideas after looking at very few words and then trying to extrapolate from there. Dude, I've been to this website. So I just went to it now. So I went to it. My first one is

55:07So basically, it's like Airbnb for stolen goods. The next one. So basically, it's Salesforce for coffee shops. Don't know what that means. Can make it up. And so actually, we've played a similar game. There's a game I don't know if you've ever heard of it called PowerPoint karaoke. I think there's different variations of how you do this, but there's a startup variation of it, which is somebody gets up.

55:33There's a PowerPoint deck behind them and they don't know what it is. They come in totally cold. And so they see the first slide and they just have to start talking as if this is their presentation. And then the next slide comes up and they have to connect it to whatever the hell they were saying, you know, about the previous slide and like create a cohesive story. It's a good muscle to exercise. It's like improv for business and, you know, you could do this with startup pitches as well. You could literally just remix, you know, take one deck of cards, which is like, Successful internet companies and another deck of cards are just like niches and you could just like pull two different cars and pitch it and Yeah, it's kind of surprising how some pretty Bible ideas should do that as a like startup comedy podcast I Think you guys are ready you guys are ready to spin it off All right listeners

56:19Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part. Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like the risks are real.

56:46Exactly, and the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower. Yep, AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

57:13And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approval, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security. ServiceNow already runs more than 100.

57:33billion workflows annually, and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates. And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

57:55So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com slash acquired and tell them that Ben and David sent you. All right, what's what we got what we got up next. So you so you have one in here. Spac. So hear me out on this and I don't know how long the opportunity exists to do this, but at least for the moment, there's this rush of everyone.

58:27who has sufficient connection to capital, raising that capital into a SPAC and hoping in the next two years that they can leverage relationships with entrepreneurs to get a deal done and take someone public. And you've probably talked about SPACs on your show. We've talked about an RLP program, so I don't want to go into too much detail about the mechanics. But I think...

58:49If you were to bet on specs as a whole and say, you know, they're they all go public. They trade right around $10 a share because they're effectively worth exactly the amount of cash that they have in the bank, which is a trust in the Cayman Islands or something that's like untouchable. And then at some point they announce an acquisition and you either can redeem and get your money back or you can roll it into the acquisition. And so in general, like I think we're going to see 20 plus of these sort of like series C or later startups go public through this mechanism of specs in the next I don't know a couple of years and There's two levels of appreciation here. There's the first one where you know you buy in at

59:33at $10 a share and then there's a pop when they announce who they're going to buy so you could play the pop game if you want to and then just cash out immediately after that or you could play the longer term game and say do you want to hold the basket of startups that went public in the 2020-2021 vintage and and hope that there's a zoom in there and I think it'd be to me it feels like a reasonable upside super mitigated downside type of way to index. Yes.

1:00:03I love this idea when I saw it. This was the opposite where I had no, there was no question marks about what this idea was. I was like, oh, good idea. Interesting. Also, I was curious. I don't know if you guys know what are the mechanics of starting an index? Can I create an index? Do you need to be a certain person? Is there a certain board? How does that work? Do you know? Oh, damn. Someone should create an angel list for public equity indexes. Right. Like where I maintain an index and get some carry.

1:00:30Yeah, because like, you know, a bunch of people trying to do this with like, you know, on Robinhood or public.com, this new website or whatever. It's like, it's new app where, you know, I go invest in a basket of stocks. You can kind of follow me to social network, but like, fuck the social network. I think that's a little bit weak, honestly. I think that more interesting is, I listen to this podcast. I'm like, wow, Ben and David are so smart.

1:00:52You know what I want to do? I just want to own whatever stocks that they own. And I want to basically buy their index that they created and just roll with them in their portfolio. Like kind of like a money manager, but if you guys were basically creating an index over time, I think that that would be, it'd be interesting if you could create an angelist-like platform where it was very trivial for somebody to create their own index and let others invest in it. I might have also just invented a mutual voucher. This also feels like a good answer to how you do this.

1:01:21Although I should, but I used to work at Dow Jones, and I used to work at Dow Jones, which is the Wall Street Journal's part of Dow Jones, it's part of Newscorp. And while I was there, we sold the indexes business. So the Dow Jones index is now owned.

1:01:39But I wanted the big Chicago company just a garbage index and no one should pay any attention to it But it was a billion dollar business within Dow Jones a billion dollar top line Basically no expenses like it was all just pure mud and and what it was it was just a marketing thing It was like you get to use the Dow name like that's It's like a license. Yeah, um Yeah, that is absurd Who's paying for that license? Who pays to be able to put the Dow Jones and is it like CNBC has to pay to put the Dow Jones index on the screen? I don't know exactly the answer. I think it's I don't think like CNBC or like media properties have to pay for it because I think that they're just that's just public but I think if you want to incorporate that index in your data of whatever like product you're using or whatever, then you got to pay that licensing fee

1:02:28or if you want to use the brand. Yeah, it might also be the day. You know, Dow Jones was a powerful brand, like the Dow Jones XYZ, whatever mutual fun blah, blah, blah. Right. That's interesting. You know, this reminds me, I had this meeting once where this guy came to our office and he was like, yeah, I'm the CEO of NASDAQ. I think it was NASDAQ, maybe New York Stock Exchange. And I was like, I was like, wait, NASDAQ has a CEO, I guess, okay, that makes sense. Like, you know, so NASDAQ, wait, what the fuck is NASDAQ? And he's like, well, Because I just had always heard of NASDAQ through the kind of like, it's kind of like you hear Dow Jones. It's like, oh, this is just sort of a name we give to track the market. And I didn't really fully at the time. I had no idea that first of all, there's multiple exchanges. They're highly competitive with each other. They hate each other. And they're constantly, you know, trying to fight for different IPOs and then, but the part I did, I kind of knew that part, but the

1:03:20Part I didn't know was that they licensed their technology. They're like, yeah, we power the stock exchange in Sweden and 40 other countries. And we make a billion dollars a year or whatever the number is. Just licensing our stock exchange technology to other countries for their stock exchange. And I was like, wow, this is a great business actually because it has an ultra powerful brand in the US. And then it just becomes like, and they built this technology stack. There's very few competitors to it.

1:03:47And then it becomes kind of like the, you know, end-of-one company around what should I use to run our stock exchange? And there's going to be no switching, I bet. Like, I bet nobody wants to switch the sort of full stack they're using to run their stock exchange. That would be a little easy, right? So you have extreme pricing power. And I was like, wow, this is an amazing business. I was like, could you compete with this? And that was right around the time that there's stock exchange. Exactly, which is like just an amazing idea.

1:04:15Seems like it's been a little bit slow to market as you would maybe expect, but turns out taking a stock exchange to market is not just putting up a website measuring clicks. Yeah, exactly. There's no sort of, you know, ironically for the lean startup guy. Exactly. No, no quick MVP, you know, just landing page with, you know, smoking mirrors or there's no, there's no product behind it. You can't do that. You know, Eric Rees will be in jail telling people about the lean startup in there, but.

1:04:44But anyways, I think the whole idea of stock exchanges is just very interesting thing. I think a SPAC index fund is interesting and I want to know how you created an index fund. I also kind of like the idea of Angelis but for creating private equities instead of venture funds. Also, I just think like who out there, somebody out there is just doing like a SPAC newsletter right now and just taking advantage of all the SPAC keyword searches and probably has built like a 50,000 person, pretty valuable email list.

1:05:09There is, it's called SPAC. Is it SPAC report? Let me look this up real quick. SPACresearch.com, the founders and acquired community member. And yeah, I think he's got, it's a pay walled business. There's either some sort of trial or some sort of freemium thing, but yeah, he's building a real business on it. Yeah, I think totally you could do kind of the Motley Fool or whatever. You know, basically it's old, this is old solution, new problem, right? Okay, niche newsletter, paid newsletter, that's old solution, new problem.

1:05:38Everyone wants to know about SPACS, and there's not a definitive place to go find it, right? I remember in the crypto boom, I ran into this guy who... You're referring to this past tense crypto boom? Yeah, yeah, crypto boom. The boom was a very specific time when money was flowing freely, and my aunt in Virginia was like saying the word Ethereum in her Indian accent, and I was like, oh shit, what the hell's going on?

1:06:04But there's this guy, his name's Shaq Khan and Shaqil Khan. And he was like, he's kind of this international man of mystery. He worked at Spotify and he did a bunch of random things that like nobody knows who he is, but he's just friends with LCOs and like they hire him for like a special project. Yeah, he's exactly, he's the wolf. He's the one they call in. So during the initial Bitcoin run up when it was going from like $10 to $1,000.

1:06:30Everybody was trying to figure out how do we create Bitcoin products and he just created a coin desk. He was helping create coin desk. He's just like, oh yeah, we should just create the news and information site and then we'll figure out from there what are their opportunities we want to go to. But like first things first, let's create Bloomberg or CNBC for Bitcoin. And I was like, oh man, such a simple idea that could be executed because you're nimble and you're, you know, very responsive to where the world is going. Totally. Yeah.

1:06:57Yeah, I mean, it fits, it definitely fits into that. For anybody who hasn't read this thing, it's really, it's quite hard to discover because it's an archive of an old website, but it's pmarchive.org, and it's Mark Andreessen's, it's like a play on his handle, and it's his old blog before he started Andreessen Horowitz, and one of the amazing pieces of content on there. It's like a five piece thing is his career advice, which of course starts with like, you can't plan your career. So I refuse to give you any advice, but if I were to, here's five articles on it. And one of the things is like, if your five smartest friends are getting together at two in the morning and going to Denny's because of something exciting that they're thinking about or something that's new in the world, go with them every time. And it's such a good like litmus test for

1:07:45Yeah, if Pro Rata has written about SPACs every single morning for the last two weeks, then like it's probably a good time to start a SPAC media business if you feel well positioned to do so. Right, right. Yeah, that's a great call. There's the other one that's like, what nerds are doing on the weekends? We'll all be doing, you know, five years from now, the critics and things. And, you know, wherever a nerd engineer is spending their free time on the weekends tinkering, that's the area of innovation because they just can't help themselves.

1:08:14What do you guys think would be that right now? I think I know, if I just think about my smartest friends and what they're doing, I think I know one answer of what I would say, but there are lulls where there's just no clear answer and then there's like clear periods where something emerges. Do you guys have something in mind or do you remember a time when that was happening and you either were aware of it or you missed it? So I have, I'm gonna give a little bit of a different answer than I think we're looking for here. My smartest friends who have means are working on climate problems right now. That's right. And I think we can talk about GPT-3, we can talk about crypto stuff, we can talk about there are other frontier technology things at the moment, but probably five times in the last couple months I've had really smart people that I've tried to recruit to start something with me to join a PSL company who are saying actually after doing some reflecting.

1:09:12I'm gonna go work on some climate stuff. And there's no capital structure to support that. I mean, we have a whole, David, we did that deep dive on how energy, breakthrough energy stuff gets funded, which is completely broken. But I've gathered, I've got a company to talk about. But yeah, keep going. Anyway, that, that's definitely the thing that occurs to me of like my smartest, most well-intentioned, and people with means. And yeah, there are a couple of names that I've seen. These aren't even people I know, but I know Jesse Jacobs just launched a rolling fund for climate. I know that Josh Felser left freestyle, I think, to work on climate problems. I know that Yushan Wong, who's one of the smarter people I like to read his writings on stuff. He's been talking about this working on this for a couple of years now. He's the CEO of Reddit, right? At some point, either before or after. And he was the CEO of Reddit. He was kind of like early-ish Facebook. And then he became the CEO of Reddit for a while. And he's got this very simple website. I think it's just Yushan Wong, which is...

1:10:12hard to spell, but he should give, uh, give a shot at being CEO Twitter for a little bit just around it all out. So long read it by the way. And so yeah, he's, he's like buying a plot of land in Hawaii or something like that and doing some radical experiment. Oh, awesome. There's also this guy who, the guy who created control labs, I think, um, he would just think they got bought by Facebook. They're kind of like, did he leave Facebook? I think he left Facebook. And I don't know if he's working on this, but I saw him talking about or tweeting about like, You know, we really could just go put solar panels into space and harness the sun's energy that way and then beam it to the earth or something crazy. Like, what would it take to like, you know, throw, you know, a giant set of solar panels into space and then, yeah, and I was like, what the fuck is this guy talking about? Like this, you know, people would bring power, you know, 10 orders of magnitude more than mine. I'm like, oh, wow, I didn't even, I can't tell if you're joking or if you're serious, you're probably serious and it sounds like a joke to me. That's how big the knowledge gap is here.

1:11:08What's super exciting to me on this is I have a friend who just started a company that like there's I mean this is a double-edged sort but it's just reality like the problems are finally starting to get real with climate like I think one of the reasons why there's no good funding structure for it and clean tech failed and all this is like Everybody knows that this like wave of awfulness is coming but like but The tip of the spear is fires in California. Like those are real, real problems that were all like can't go outside. Like it's just terrible and like people are losing their homes and properties. So I have a buddy who started a reinsurance business for, for fire, risking California. He's like, yeah, the insurance industry is like so backward on this these old stochastic models from like past history of like there's a terrible fire in California once every 30 years. It's like, no.

1:12:04happens every year now. So like, okay, let's deal with this problem. And like, that's going to be a great company. That's going to be a great value capture mechanism. I don't know. I mean, how does that help us not burn down the planet? Well, it's like, there's a, but there's a serious, but like, you can't get insurance for fire in a lot of places in California anymore. So like, this is a serious problem. Like, yeah. So it's a way to address the symptom of a problem. And it makes the symptom much less painful for lots of people.

1:12:33But it's still not addressing the problem. You're not solving the fire problem. You're solving the my house burn down problem. And I'm sure that I should add a lot. Which is would grit and admirable to solve downstream problems. Right. Yeah. Also, speaking of insurance, I tried to get insurance for any commerce business I own and.

1:12:50Dude, you can't get e-commerce insurance. I don't know what the hell's going on. You can't get business insurance for e-commerce. It was so painful. I thought, I'm going to start typing the word biz and then Google's going to be like, oh, you want business insurance? Cool. Here's 10 leads that will just call you incessantly. And instead it was the opposite. It was like business insurance for e-commerce business called 12 different companies, emailed a bunch of them. And they're just like, oh, do you, you know, is your product?

1:13:18Oh, it's e-commerce. It's not physical retail. Oh, that's going to be tough. And then they're like, you know, is it manufactured in China? I was like, everything's manufactured in China. What are you talking about? And then they're like, oh, yeah, it's going to be really, really tough. It's like, it's like, you're like, who is this for then? Right. I was like, you fraud. Like, what's the, why is it going to be tough? So they would just email me. They'd be like, we don't, unfortunately, we can't, we can't find any underwriters that will underwrite for this business.

1:13:41And I was like, I haven't even told you anything specific or scary. I've just said e-commerce and made in China. And like, those are the, that's everything. That's most things, you know, as far as I'm concerned. And they were just like, yeah, we don't do much e-commerce. I'm like, who does fucking e-commerce then? And so I don't know if I'm just a terrible Googler or Shopify not have a preferred partner for this.

1:14:03Yeah, I don't know like how to shop. I not just provide this as a service. It's like it's totally it's totally it's a nice high margin. This could float a bunch of their investments is the best business ever. We're okay. I won't spoil. I won't do a spoiler. I'll do a teaser. Okay. The mere fact that you said you won't do a spoiler alert means people are gonna know what we're talking about. Well, we're gonna do a probably our season finale this year on acquired is going to be a well-known insurance business. But it's like people it's the best business in the world. You get free money. Right.

1:14:32Yeah, you literally just like you get money that you can invest That you have to get some point, but it's free money and to continue David because you've given away so much of the story now that like we may as well fit round it off like if you have a large insurance business that allows you to have a nice big float You can invest that float in other things and it's if you're a good capital allocator is Yeah, it's an amazing way to just go buy a bunch of other businesses, make more investments in non-insurance products. It actually seems like a no-brainer for Shopify because they do want to build more and more technology and that's going to cost cash. Right. And if it's not Shopify then somebody needs to go do like Clear Bank for e-commerce insurance and do it extremely well. I know there's, I finally got one provider, but the fact that it took me

1:15:21The fact that I even had to try means somebody you know there's money on the table for someone somewhere you know for this type of thing Okay, so let's go back to I think the thing you said is really really interesting they really resonated with me when you said the You know if your friends are going to Denny's at two in the morning Like just go with them like that's literally the best career move you can do I Totally agree I fucked this up a ton like in college like I would I wasn't really even excelling in class, but I always just But okay, class is where I should go. That's where the values gonna be, right? That's what I'm supposed to be doing. And I ignored all these people. I actually literally laughed at a whole bunch of people who I knew were just like working on random shit. They weren't going to class. They weren't going to parties. They were just like building. And like, now I'm like begging them to invest in their companies here in Silicon Valley because I'm like, oh, dude, sorry. I like, you know, you know, made fun of you in the hallway. You went to Duke, right? I went to Duke, yeah. Were you there with Steven from Cameo?

1:16:18Yeah, he was a couple years older than BDS and he was actually the funny thing is Duke is this school in Durham and Durham's not a not at the time release wasn't a very cool city. So there was only one Club that anybody could go to one off-campus bar, basically, called Shooters. Shooters? Oh, I've been to Shooters several times. Did you go to Duke? Uh, mine. David, why have you been to, yeah. I have bar-informed a wedding at the Duke Gardens. Okay, gotcha. My sister and brother-in-law went to Duke, so we were gonna visit them a bunch of times, and then they got married there. Yeah, so of course, they take you to Shooters, it's the only fucking course to go. So Steven, from Cameo, at the time. Shooters in Wayne Manor, my brother-in-law was in Wayne Manor. Right, right.

1:16:59So he used to just host parties at shooters. He was just like party promoter. So I literally knew this guy as like, you know, fuck boy number one as like just throwing parties at shooters. He was always like texting people, you know, trying to hype up parties. He was good at it. And, um, and now he's like CEO of like a billion dollar company. Um, but, you know, the perfect company for him to be CEO of like that is it pattern matches perfectly. Exactly. So, yeah. He's a funny guy. Uh, anyways.

1:17:26I forgot where I was going, but I guess what I was going to say is the follow your smart friend. So step one, have smart friends that actually do this kind of thing. And I think that's, if you just do that, you're 90% of the way there. And the last 10% is like listen to them and follow them and like be interested in their things that seem just like random toys right now because they will probably become big deal. You know, one of those is going to become a big deal soon. And so.

1:17:51I'll throw out three that I've seen as trends amongst my friends. I have basically tech friends, and then I have like smart business friends. So of the top 1% of my friends, the tech friends are all about GPT-3, and they're all about DeFi, which is this sort of crypto infrastructure. They're doing things that like...

1:18:10I don't think these guys own a stock, but they're like, oh yeah, I'm in this DeFi system where I'm staking, and I'm yield farming, and I'm creating these really complex lending mechanisms, and I'm like, what the hell's going on? When did you turn into a finance guy? And it's because all of a sudden, engineers who like money are like, oh, I can use my engineering to make a lot of money. And the crypto boom probably fueled this because people were just making millions of dollars, and they're like, oh.

1:18:37Well, they're all flush with cash. They're all flush with with not cash. They're all flush with crypto. Well, that is in Ethereum or is in Bitcoin or random ass, you know, shit coin and and so they don't want to take it out. They're not ready to like leave the crypto game, but they're like, well, I you know, I was just trying to invest 10,000 into Ethereum and now I have 1.1 million. So okay, cool. This is a way I can stake my Ethereum or I can land Ethereum and I can get 12% a year, you know, doing this. This is great. And I can kind of control the whole thing from my terminal and my computer. Like, that's awesome. It's the same game that like multi generational wealth have been playing within trusts in the US for, you know, a couple hundred years. But now, like, these crypto millionaires have the exact same problem of like

1:19:24I'm sorry, I have to pay what taxes if I pull the sound to cash. Well, how do I roll it into something that just kind of can spit off exactly as much cash as I need to live and I can leave it as an illiquid asset the rest of the time? Exactly, exactly. That is what's happening. And so maybe more stuff needs to get built. That's the equivalent of a trust or like the 1031 exchange of crypto. That's where a lot of potential is. This is why the ICO boom happened was So many people had made so much money off Bitcoin and Ethereum. And to them, they're still thinking about their 10 to $20,000 investment. But now it's $200, 500, 700, $100 million. And so they were like, OK, cool. Maybe I could do that again. First false confidence that I could do that again. I can invest in this new small thing. And it could also give them knowledge.

1:20:12Right, exactly. It was still not luck. And then the other is, I don't want to pull this out. And so you had just, let's like, when the Fed pumps in a bunch of money and the stock market goes up, that's basically what happened for crypto and why there was so much slush money to put into random ICOs. Huh. All right. New ideas, opportunity zones for crypto millionaires. Do you know about the tax treatment on that?

1:20:34on the opportunity zones. I've been hunting for ways to avoid paying taxes over the past year and people keep telling me about opportunity zones and how I should be investing in them and I only understand 20% of it so far. I'll give you a very small amount that I know for sure and leave everything else unsaid so I don't say anything wrong but I know you can roll appreciated stock in which I think is similar to a 1031 exchange without paying tax on it so it's a new investment Right. So let's combine the climate change and tax idea here into one with an idea I've been trying. I've been noodling on. I actually have said this on the podcast before, but I need to say it again because I'm still thinking about it, which is not true of 99% of the ideas I say. So one of the best simple ways to reduce your tax burden is to do a solar installation, right? So there's

1:21:29a solar tax credit that the government gives. You have a house, you put solar panels on, yes, you pay the upfront investment, but then you save on your utilities, and you get the tax credit that you can use to eliminate a whole bunch of your earned income. Essentially, you can do it for free, as long as you have the money to put up upfront. I've been looking to basically do this now I don't have I don't want any something bigger than just my house right your house might have like I don't know 30,000 or 50,000 dollar project I don't know exactly what it is but it's like what do you do if you need to what can I get like a million dollars of tax credits for this I can I do a million dollars worth of solar I want to farm yeah and so I I was driving with my father-in-law and he was like he was telling me about this he goes yeah you know like on every school you see these solar panels on the parking like garages or just like kind of outside of the school

1:22:19And he's like, yeah, this is part of like chevron energy like chevron installs all these and And from what I gathered was they have both a kind of a service provider like they're a vendor they get paid for that But the bigger thing is that they'll be like hey school You don't need to put up two million dollars for the solar installation. We will do it chevron, you know out of our profits from oil and gas So they get to say they're doing clean energy things they get to reinvest profits into something that they're gonna be able to get favorable tax treatment on, they get to help a school have solar solar power and then they become sort of a long-term landlord of the less or I guess of the solar panels. And the school pays kind of a small monthly fee, but they're from day one saving money on their utility bill. So for them, it's like a net gain anyways, even if they pay for this, there's paying less for the utilities.

1:23:09So I was thinking, why isn't there a marketplace where I can, I don't have to buy a building and like do this whole solar plan, but I just say, dollars, please invest that into the solar projects for me and give me my tax credits back and give me my kind of monthly recurring income from this, this is going to go on some farm in, you know, Idaho. Yeah. Yeah. Yeah.

1:23:31It solves the same problem of, like, I don't want to do the dirty work of finding those investments and operationally putting the money in, but, like, I pay something to do my best. Exactly. You don't want the supply of project? Or, let's say, supplies capital, and then the demand is people who want solar, and, like, whether this is commercial building, schools, farms, factories, whatever, places that need that could use solar that don't want to put a quarter million dollar investment into their solar, that they are going to buy another machine to, like, run their factory better or whatever. But they're happy to take a lower utility bill.

1:24:00And they're happy to, you know, and then on your side, you're happy to get, you know, monthly income plus tax credits. So seems like there's a business there, but solar is installed. Yeah, exactly. And we're helping the environment. So so I like all of that. Now somebody who's more knowledgeable than me probably in five seconds can tell me why this is not a viable thing. But for now, I'm going to say it out loud and tell somebody points that out or builds it. I love it. Well, this is part of.

1:24:26I don't know the exact history, but you know, Solar City looked a lot more like this before it combined with Tesla, which was weird, you know, all in and of itself. But now I think Tesla's solar projects are much more about the roofs and solar roofs and power walls put. Right, for sure. Okay, climate, climate is one. The other one I said was buying businesses, so going more of the forget this venture capital game, I'm just gonna buy all these profitable businesses or internet. Our mutual buddies, Tiny Capital. Yeah, Tiny Capital is kind of like probably the thought leader and has the longest running track record of doing this, of like kind of people who are public on Twitter about it, but then there's others like Constellation Software and there's a whole bunch of different folks that do this. But a lot of my smart friends are going down this path of, hey, I'm gonna buy and then build rather than

1:25:22play the lottery and hope I find product market fit with a brand new invention. Yeah, I also think so many people it became so sexy to be an early stage to use the finance term an early stage manager or emerging manager or as people would call it maybe solo capitalists in the sort of startup parlance or do a rolling fund or something like this that there's been so much of a rush to I want to invest in my friends and relationships who are starting early-stage companies that we're now into year five or so of the boom of that and people realizing how crazy hard it is to produce a market-beating return or, you know, let's say, better than that. It's a top-desile, top-core-tile return for your investors that unless you're really, really differentiated, and I think most people are kidding themselves on how differentiated they are and the deals that they have access to, unless you're incredibly differentiated,

1:26:14You probably should go play a lower beta game where you can put in some sweat equity like having to use your PM or dev talents to rehab a business that is available to you for a below market price but like I just think much like the way we started this podcast talking about classic entrepreneurship versus, you know, shoot your laser at the sun. I don't know what I'm talking about there, but go bigger. Go home. I was trying to make a metaphor for the investment. It's, I think people are just realizing how crazy hard it is. And they're like, wait a minute. If what I'm trying to get is an X percent annualized return, gosh, I know way better ways of doing that, that don't involve this crazy power law. Yeah. I think that's true. If you wanted

1:26:59If you wanted a, if I was saying, hey, I have to, over the next seven to 10 years, I have to end up with this amount of wealth or I die. That's the path I would go, right? Because I'm like, okay, it's really de-risking the market fit side and it's all about execution and growth. And because the financing is so favorable, right? Like most people don't realize this. Most people, a lot of people listening to this are working at a job and they make a great salary, right? They might be making...

1:27:28$200,000 a year. And then they're paying kind of like, you know, income tax on that and how they're, you know, taking a home 120 or whatever it is. And especially if they live in California. Yeah, exactly. And so, you know, most people fail to realize is that for either no money down or like kind of like, you know, you could put down five to 10%. You can buy a million dollar business with an SBA loan.

1:27:57And by the way, if you buy it before September 27th, either first six months are gonna get paid for you by the SBA. So you, first six months payback is taken care of. And, you know- That's mentioned seller financing. Including the seller's gonna carry 10% of it themselves. So that's how you get to the 15% down total. You put five, they put 10, and then the SBA loan covers the rest.

1:28:17And every month you're going to be making a profit. Half the profits are going to go towards paying back your loan. The other half are going to go to you. Within 12 months, you paid off that whole thing. And oh, by the way, if you improved operations doing one of three stupidly obvious things, you've now created an asset that is worth two, three times what you bought it for.

1:28:39That path... It's like buying a house except the mortgage is like, you know, instead of you paying the mortgage, the mortgage is paying you. Yes, exactly. Exactly. And unlike a house, it can appreciate at a rate that is uncommon. I have a friend who bought a business. I think for...

1:28:53300,000, you know, on one of these websites. He was the first guy I didn't know. I was like, you fucking buy off these random ass websites like, you know, you used one of these marketplaces. You go to flipper and stuff like that. He's like, oh, yeah, bought a bunch of stuff. I'm like, what? And it's because he didn't have connections. And so I was like, he's like, I didn't have funding and I didn't have connections. So I just go to these places where I don't need.

1:29:13a reputation or connections and I can get funding from these like very simple pools of capital but I have to buy profitable businesses otherwise nobody will lend me the money so I'm not taking big risks and so he brought this company that was small but profitable and that company is gonna do you know 30 million this year in revenue so he's gonna literally take it from 300,000 to he 100x to yeah he basically 100x this business and I was like dude take me back when you were looking at this business what was the I was like, first, this is very uncommon. You don't usually get this type of lift. But I was like, did you know that there was this much room? He's like, yeah, I talked to the owner and he was like, just always thinking about operations and how to like doing the shipping and the warehousing. He'd never ran a Facebook ad. You know, he never did any marketing and also, you know, his SEO was a little screwed up and I realized that, you know, there's a lot of like latent potential there. And then also, he didn't expand at any any adjacent like

1:30:06he didn't launch one new product in four years and so you know just Facebook ads plus new product plus you know improving the content SEO game and like just this insane lift like he'll sell this company for over a hundred million dollars that he bought on one of these like flip a type websites insane Sean I'm curious like do you think there is an opportunity to if your skill set is like amazing growth marketer to get really surgical about running ads against other people's products and trying to get data back from like oh my god i know something they don't I think it's hard because you don't own the pixel on their website, but maybe as a part of like, hey, I'm interested in doing the deal. Would you throw this pixel on so I can test some stuff and then I can tell you what I can afford to pay? Yeah, I think that's a great way to diligence things. But honestly, you don't even have to get that smart. So like, there's a lot of these that they're just not doing one channel. And if you know that that channel works, if you have experience in that channel, let's call it Facebook ads or Google AdWords or influencers or whatever, whatever's your growth thing.

1:31:08and you know the characteristics of the type of business that works there, right? So let's say it's Facebook. You know that the types of products that work are like scroll-stopping products. Like, it has to be visually appealing. You have to understand the value through a visual in less than three seconds. The slow mo of the Theragun beating against a thigh, making the ripples, like you know. Exactly, like, it does well, like a baby. It does well. Like, these things just do well on social networks. So you're like, okay, cool. I'm gonna do that and maybe...

1:31:33a little less like, I don't know, some B2B thing that's not gonna resonate in the same way. The spreadsheet will change you. All right, exactly. The spreadsheet beating against your leg doesn't do the same. You guys get these ads of like two MIT grads, you know, are got together and X. Dude, all my ads are crazy because it's only for businesses that I'm looking at buying. And so I just like, I like try to get myself covered in their pixels. And then I'm like, yes, retarget me. I want to watch everything you're doing and I want to see your ads and all the stuff.

1:32:02So Facebook thinks I'm like a 40 year old baby in D to C pixels. Yeah, exactly. It's like a very strange. Exactly. So, um, anyways, I think if you know the channel really well, it's really not that risky to, to know, you'll know which type of products will work and you just know how much of they invested into doing this channel. Okay. You can sort of think about the lift you're going to get. You could say, Hey, I'd love to love, love to run a trial, but what you risk is educating the operator of how good this is going to work, right?

1:32:30And so, you know, I think it's a little bit dangerous to do that and you're better off, you know, betting on yourself in that way. There's other kind of funny ways you could do it, but I won't go into those that are slightly in the gray area. Well, listen, this was fun. Good dual episode. I appreciate you guys coming on. And I feel like we didn't even get to have these ideas on the list. So there's definitely more ammo if we want to do this again sometime. So I appreciate you guys.

1:32:55Coming on on my show, thank you for having me on your show. We literally got to do both shows. Great. We'll taste it both. Yeah, I like it. Cool. Well, thank you everybody for listening, and that's it. That's a wrap. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep.

1:33:25crazy speed of today's AI world. Shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers, and how fast you can use that signal to guide what you shipped next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences, or just evolving your existing core product,

1:34:03go to statsig.com slash acquired to get started. That's it for today. If this is your first time listening to acquired and you like what you hear, you should subscribe and feel free to check out my first million wherever fine podcast products are distributed.

1:34:17As always, if you love acquired and want to hone your craft of company building, you should join the acquired community of limited partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing in addition to our monthly LP calls where we get to talk with all of you. And of course, our book club and calls with the authors like recently will Thorn Dyke from the outsiders. If you aren't an LP, you can click the link in the show notes or go to acquired.fm slash LP. Everyone gets a seven day free trial.

1:34:47so great to have so many of you in here is a blast. And with that, we will see you next time.