MFM #172 - Advice to Young Entrepreneurs, Indie Businesses Making Millions, & How to Grow a Podcast

Shaan Puri

I used to chase money a lot, thinking, "How do I make money? Maybe this will make us money. Maybe that will make some money." That was good because I learned skills about how to make money, but the things that actually paid off... none of those really paid off with a big dollar amount.

Sam Parr

Alright, before we actually get into the content, a few things: We've been making a ton of changes to this podcast. The numbers are working... I think the last month was our highest ever, right Abreu?

Shaan Puri

I believe so. Yeah, so I was trying... I think we should start saying the numbers. I think we should start saying what it is, say what we're going to do, and say what happens. So, whether it works or it doesn't.

Sam Parr

Yeah, so the trailing 30 days was, I think, 350,000 listens. Which, if it's not the highest ever, it's one of like top 1 or 2. But the trajectory is really what matters, and that is great. So we're getting around an average episode, I think it's 20,000 downloads an episode, which is, I think, a 60% increase from the year before. Is that right, Abreu? Am I getting all these [numbers correct]?

Shaan Puri

yes sir

Sam Parr

22 23,000 right abreu so so so

Shaan Puri

Let's say we're at 22,000. It used to be 15, of course. It used to be 0, so you know, whatever... it's growing. Our goal is 100,000 per episode. One Rose Bowl stadium per episode is what I want to be doing, something like that. We're not far off. 4x is, you know, it's not far. I think naturally that would happen in a couple of years, and what we're going to do is just accelerate it so it happens in one.

Sam Parr

Yeah, I feel quite confident that if we do the same thing but more, it would happen with time. But I don't want to do that. I'm impatient; I want it to happen immediately. So the changes we've made is we've prepared more for every podcast, which I think is very clearly working.

Shaan Puri

yes

Sam Parr

We now have these videos going, which I also think is clearly working and that makes me feel good. Is it driving downloads? I don't actually... I'm not convinced, but I think it's worth it.

Shaan Puri

You know what it does do? There's a whole group of people that either, A, just don't listen to podcasts or don't listen much. So they're kind of like, otherwise they would only hop in once in a while. They didn't build a habit with us, and they follow just through the clips. So there's actually just another audience that's like, "Oh good! I watch those clips every time because they're good." I always get messages about them.

Sam Parr

Yeah, and I'm in that category as well. I've never... I don't think I've ever listened to a Joe Rogan podcast, but I watch a lot of clips.

Shaan Puri

right

Sam Parr

We're putting our clips on YouTube, which is not working well at all for us. It can maybe be... we're putting the full episodes on, and a handful have 20,000 to 30,000 views, maybe even more. A couple of them have a few more. That's working, but the clips are not working. Then we're doing email blasts and the Hustle. I think that started 2 weeks ago. That is working.

Shaan Puri

We should... we should rewind. We should basically say we had a meeting, which was like, I don't know, a week ago maybe? Something like that. It was like, "Oh, okay, we got all these ideas." Basically, I threw in a few ideas, you had a few ideas, Abreu had a few ideas, and my buddy Ben had a few ideas. We were like, "Oh yeah, great! All these sound good." So, like, who's gonna do them? Then we kind of had this "come to Jesus" moment where it was like, "Look, in Sam we trust." We can't outsource this to somebody else who doesn't really... I don't want to say doesn't care, but it's a different thing when it's your baby, it's your show. You are getting the... the more people who listen to this, the cooler opportunities we get, the better DMs we get every morning. So, like, clearly it matters more to us than it would for even if it was somebody's full-time job. The second thing is, your skill level is super high, right? We saw you grow The Hustle. I saw you grow The Hustle. A lot of people who were subscribers saw you grow The Hustle, saw you grow Trends from scratch, and saw you sell the thing. I got excited because I was like, "I'm gonna get to see Sam in action even closer than I did with The Hustle," where you would send a monthly update. Now I'm seeing how you actually operate, and it's pretty dope. I actually think the listeners will like to see how you operate, how you approach growing a thing, and I think that'll be exciting.

Sam Parr

That's a lot of pressure. Thank you for the comment. I will say, I think growing the podcast has been, I mean, that's actually one of the harder things I've done.

Shaan Puri

yeah but

Sam Parr

HubSpot owns us now. It's not my money... it's their money. And so we're in a totally... I mean, we're... Our owner, you know, the company, this company now does $1 billion a year in revenue. There's like $1 billion+ in cash in the bank account. So we could actually... so we're gonna have a lot more resources. I actually am not convinced that that's actually gonna help us grow though.

Shaan Puri

Yeah, I don't think resources help you grow. But I would say that wasn't the problem before. It can be helpful, but that wasn't necessarily the problem.

Sam Parr

And then, so what we're doing now is we don't have ads in the email anymore. So in The Hustle, we do zero advertisements. The podcast is going out every day now—or not every day, but a lot. Also, what we are launching at HubSpot and The Hustle is we're creating this thing. Well, I actually don't know if I can say too much about it, but there's going to be a lot more podcasts. Amongst those podcasts, we can promote one another, and that's what you're going to hear. So, right, whoever is in our podcast crew, we're going to promote them, them us, yada yada yada. I actually think that's going to help a ton. I think that... I actually don't think I could talk any... I... I don't.

Shaan Puri

It's pretty difficult, who's in that? But we'll say it later when you can. So, okay, can I give the audience the five ideas that we had brainstormed? They were like, "Oh, okay." One thing: 1. **Let's put Sam in charge of it** because Sam knows how to grow things. That was step one. 2. **Okay, so what are the ways to grow a podcast?** If you're going to grow a podcast, we said... I'm going to just rattle off the ideas. - **Number 1:** Big name guests that actually have an overlapping audience. People like Chamath, people like Tim Ferriss. Not just a famous person. For example, we had Jake Paul on—super famous—but his audience and our audience do not have a huge amount of overlap. It's not necessarily that his fans would connect with us and become ongoing subscribers. - **The other one was:** Can you advertise to grow a podcast? Right? Like running some experiments. Take a few thousand dollars, run it on a paid campaign, and see if you can grow through paid advertising. I think we'll find out if that's interesting.

Sam Parr

We're doing... so we bought ads in Player FM. Abreu, is that what we did? "Yep, yep." And then we're buying ads in a few more. I have a few more that we're buying ads in. Did that work? Abreu, Player FM?

Shaan Puri

It's hard to tell because they claim a lot of their views come from desktop listeners, which doesn't necessarily get measured according to them.

Sam Parr

yes okay well

Shaan Puri

it's just oh

Sam Parr

that's like saying

Shaan Puri

like thank you

Sam Parr

Yeah, it's like saying, "No, look, it's like this." This is like selling CBD treats for dogs. Does it work?

Shaan Puri

uh-uh right can't ask your dog

Sam Parr

Yeah, I got it. It's like the greatest pizza ever. It's like selling vitamin B for your puppy.

Shaan Puri

Yeah, exactly. I would say if it's hard to tell, it didn't work. It's a very obvious way to think about it. Okay, another one: go on other people's podcasts. Do a tour going on other people's pods. They already have an audience. Those people listen and say, "Oh man, what a great guy! I'd love to listen to more of this person. They were interesting." Boom! Get some people from there. We tripled down on clips. We found awesome clip makers, and we're making a lot of clips. We're going to post the heck out of them. So I think that's a good strategy. Then the last one that I thought was kind of interesting was to get sharper on the branding. If you want to grow a product, the sharper the hook of what the product is, the better chance you have to grow. It will be more clear and resonate with more people. Being able to describe it well, as well as being on brand all the time about what this is and what you get out of it if you listen to it, is important. I think that's an area that, honestly, we're kind of lacking in, which is ironic because I think we're pretty good at it with our startups. However, we're pretty bad at it with the podcast. The name doesn't really make much sense. The description... I don't know. We don't have an intro when you join to say, "Oh, this is the podcast where X, Y, Z happens." We don't have a highlight reel, like, "Start here if you're new to the pod. Go here, this is the onboarding episode."

Sam Parr

Basically, in a sense, it kind of succeeds a little bit in spite of itself, right? A lot of people say the name doesn't really matter, or sorry, the name doesn't reflect it. In my opinion, towards just names, it doesn't really hurt you. In some occasions, it actually could help you. I think Coinbase is like the perfect name ever, right? But even if Coinbase was called something like "Blue Sky Sunglasses"—I'm just making that up based on what I'm looking at—it would work. "Blue Sky" would have worked.

Shaan Puri

okay so should we move on to coinbase actually

Sam Parr

Let's move on to Coinbase. So, Coinbase went public today, and everything about it is astounding, right?

Shaan Puri

Do you want to start? I can read off some of the numbers to show just how big this business is, and then we can talk about the returns of the investment. So, how big is the business? Coinbase has come out; they're public now, and they released their Q1 numbers. They reported **56 million users** and **6 million monthly active users**, which I think is more than E*TRADE had. You know, E*TRADE had like **3 million** trader accounts or whatever. This is kind of amazing to me that there are more people on Coinbase. Coinbase makes up **11%** of the crypto asset market in terms of how many assets are stored on the platform. They reported **$335 billion** in trading volume. Okay, here are the interesting bits: **$1.8 billion** in revenue for the quarter.

Sam Parr

For the quarter, so round up to 2, so about $8,000,000,000 in revenue is annualized.

Shaan Puri

800 in net income off that off that 1,800,000,000 in revenue

Sam Parr

so like $2,400,000,000 annualized in profit

Shaan Puri

right and and then yeah so basically coinbase goesit lists publicly today it wasn't an ipo it was a direct listing where you basicallyyou know ipo is you create some shares you issue new shares to buyers a direct listing is you don't issue new shares it's just people who have shares can get you know like basically sell some of their shares so they listed they had about a 114,000,000 shares for sale and it's up about 40% on day 1 so the implied market cap as of right now is about a $110,000,000,000 so what I wanted to know was there's this kind of phrase in in the start up investing world which is like anytime there's a gold rush like some new frontier new space it can be hard to like pick the winner it can be hard to like you know just grab your shovel dig and find the gold and there's a 1,000 people looking for gold and you don't know where to dig it might be this one might be that lot that land land you know you don't know exactly where the gold is so the foolproof strategy in any gold rush is what they call the picks and shovel strategy meaning you you sell the shovels to people who are gonna go mine the gold and so coinbase is kind of a classic picks and shovels thing in the crypto market so you you could buy bitcoin you could buy ethereum you could buy 1 o you could buy litecoin or dogecoin or one of the 1,000 altcoins that exist and you're betting okay maybe one of these will become like the digital currency or you could buy a coinbase an exchange that's gonna trade a bulk you know a bulk number of these coins and so I wanted to know once coinbase got up to where it was like a $100,000,000,000 valuation I had the question of what would have been a better investment coinbase at its seed round or bitcoin that same day if you could should you have bought the currency or should you have invested in the company and the reason I thought this was interesting is I remember 2013 I was I just kinda heard about crypto from a guy in my office like pete our our it guy was like dude bitcoin is the shit it's at $7 now it's at $11 I was like I don't know what that means and he was like yeah fuck fiat currency and I was like fiat that was a car I didn't even know that's a currency at the time I didn't know what that meant and he was like mining bitcoin using our servers at the office and he's like oh we mined 2 bitcoin today and I was like okay good for you pete like what does that do you know I was kind of like you know mocking it but I was curious also so I started going and listening to some talks and and and so one of the things I was looking at was like are are smart vcs are people smarter than me investing in this space and what I remember happening was I listened to this talk and it was andreessen horowitz it was marc andreessen who now blocks me on twitter he was talking at a thing he was talking about how crypto is gonna be great how it's how bitcoin is gonna you know is such an interesting technology how blockchains might change everything and then the interviewer was like so how many investments how much money have you put into this you're you're kinda hyping it up like how much money have you invested and they're like we haven't invested in any crypto companies yet this is like I think 2012 20 I think it was 2012 and he goes right now we're just owning the currency we're just buying bitcoin and I was like what that's so weird these guys like they're they're a vc fund they've been on companies there's a few companies out there like I found it to be super strange he goes right now the bet we don't know which of these companies is gonna emerge as the winner so we're just buying the underlying tech the underlying currency we actually think that's the right move right now and and later you know andreessen horowitz has actually did invest in coinbase later and since invested in many projects and actually andreessen horowitz changed their whole fund structure from a private you know vc fund to like some other kind of like financial investment vehicle they went and got registered with like the sec or whatever because they wanted to own crypto assets and you couldn't do that out of a traditional fund they couldn't you couldn't buy currencies out of a traditional fund the the paperwork the docs don't let you and so so anyways I went back and looked at the numbers so coinbase announced a seed round september 2012 I don't know they probably raised it a little bit before that then they announced it they raised $600,000 from investors including a crowdfunding campaign which I which I found interesting because I you

Sam Parr

don't like them

Shaan Puri

I criticize crowdfunding all the time as like, "Me too, it's always the bottom of the barrel." But this was through Funders Club. Funders Club had put in like $285,000 through its crowdfunding into that graph. So anyway, what...

Sam Parr

is is and funders club is just a startup

Shaan Puri

Like, it's a startup. Coinbase was a Y Combinator (YC) startup, and so was Funders Club. They took a share or did a crowdfunding campaign for that. If I read this correctly, I could be wrong in this part, but anyway, I went and asked one of the seed investors—somebody who is a friend and invested in the seed round of Coinbase. I said, "What was the valuation back then?" He said it was **15¢ a share**. So, **15¢ a share** there, and he said the A round was only **20¢ a share**, so it wasn't even that much more. Something like that. So, **15¢ a share**, and now it trades—it's trading right now, like right before this podcast—at **$330 a share** or whatever. You've got this, you know, **2,100x markup**. I think **22,100x markup**. So, if you invested **$100,000** in the seed round of Coinbase, that's worth **$220,000,000** on this day today because it went public. Now, if you had invested in Bitcoin at the same time, Bitcoin in that same month was trading at **$12 a coin**. Now it's at **$62,000 a coin**. So, your same **$100,000** instead, you know, would have been worth **$500,000,000**. So still, Bitcoin was the better investment, even though this was like a, you know, you invest in a startup that became a **$110,000,000,000** company. Still, Bitcoin outperformed, but it's closer than I would have thought because Coinbase has really gone up in value in the last two years.

Sam Parr

So, let's give some more numbers. I think right before we started, the valuation was $80,000,000,000, but a few hours ago it was $100,000,000,000. We're going to use $100,000,000,000 because that math is a little easier. Brian Armstrong is the CEO. He's 38 years old and owns, I think, 20% of the company, which means at a $100,000,000,000 valuation, his net worth is $20,000,000,000. This puts him, I think, in the top 50 richest people in the world at 38. The company, Coinbase, started in 2012, so it's 9 years old. Basically, he became one of the top 50 richest people in the world in only about 10 years. Also, he owns 20% of Coinbase. Who knows how much Bitcoin he owns? I certainly don't know, but you have to ask, how much Bitcoin does this person own? If you told me that it was another $20,000,000,000, I don't think I would be surprised at all. Would you be surprised?

Shaan Puri

If he owned $20,000,000,000, that's a lot. That is a very, very large amount. So I don't think it would be quite so high, but I wouldn't be surprised if it was over $1,000,000,000. I think $20,000,000,000 would be like... he'd be one of the top 3 Bitcoin whales, I think. At $20,000,000,000 or something like that, you know?

Sam Parr

okay okay

Shaan Puri

so so I think I think that'd be way too much

Sam Parr

Would you think... I didn't do the math ahead of time, but would you think he would be a top 50 Bitcoin holder? That seems reasonable, right?

Shaan Puri

It's plausible, yeah. So, I don't know... He, I don't think he's ever said or disclosed if he was buying the underlying coins. So, the biggest thing is, did you hold? Right? Because Bitcoin on this run-up, right? So from when, you know, if he's doing Coinbase, Bitcoin's at $10 a coin, right? That becomes your kind of frame of reference. Bitcoin today is trading at $63,000. $63,000 from $12 is such a mind-boggling change. When I was talking to my friend who is an investor in Coinbase, I said, "Wow, does that mean that Coinbase outperformed Bitcoin?" He goes, "No, I think Bitcoin still wins." He goes, "But name one person who held all their Bitcoin from 2012 to 2021." He's like, "Me, Sam's..." Right? Well, I guess like of people who owned a lot of it at that time.

Sam Parr

no I didn't I didn't own a lot I owned I bought 100 of dollars' worth but no not a lot

Shaan Puri

So, let's say you owned a lot. You know, as that nest egg becomes $10,000,000, $20,000,000, or $100,000,000, a lot of people would liquidate some of it. He was saying, "You know, all of us at Coinbase, we really couldn't sell this whole way." He goes, "The illiquidity was a feature, not a bug." The fact that we couldn't sell this whole time for Coinbase was the best money-making strategy for us—to not be able to be liquid until now.

Sam Parr

I didn't sell, but my numbers were like tens of thousands or maybe hundreds of thousands of dollars. It certainly was not a million or tens of millions, but I didn't sell because I actually forgot my password. I was like, "I just don't want to log in, it's too hard," and so I didn't log in.

Shaan Puri

have you still you you have it now or no

Sam Parr

Yeah, I have it now. I had... I just never did like a "forgot your password" thing in my email because I was like, "Too much work. Maybe it's a sign I'm just not gonna sell." And so I didn't sell. But can... what do you have in front of you? Are you looking at something?

Shaan Puri

looking at this tweet you put in of daniel goetz

Sam Parr

I wanna bring I wanna bring this up

Shaan Puri

yeah

Sam Parr

So, the numbers here are fascinating, but I actually don't think that's the really fascinating part. What's fascinating is the psychology behind this. Because today it's Coinbase, in 20 years it's gonna be something else. 50 years ago it was real estate or something, 100 years ago it was oil. There's always *something*. And the psychology behind the human being, I think, is far more interesting. And by the way...

Shaan Puri

He was an engineer at Airbnb before he left to go start Coinbase. His Airbnb shares, you know, would have done amazingly as well, right? Like, well...

Sam Parr

He only worked at Airbnb, I think, for a year. Before that, he worked at Deloitte. So, I'm almost positive. Granted, he was probably a genius—probably like, you know, crazy high IQ—but he was a normal guy, just a normal 9 to 5. Also, let's talk about the personality part here that I love. I like knowing what drives people, what makes them tick. We talk about "Billionaire of the Week," and it's not actually about necessarily the money, but what do people think who achieve greatness? In this case, it's money, but in reality, greatness could be a variety of things. So, Daniel Gross is the guy we have in this podcast. He went to Hacker News. If you guys don't know what Hacker News is, you should read it every single day. It's basically Reddit but only for nerds. I love it; I read it every day. It's tech folks. Anyway, Brian Armstrong has a handle on tech news or on Hacker News, and you can read his old posts. Daniel Gross tweeted out some of this guy's old posts. His handle is actually... I don't know what his handle is, but, well, it's sorry, it's @barmstrong. So, @barmstrong actually had a blog. Listen to his blog; this is actually kind of funny. It's called StartBreakingFree.com, which is kind of on...

Shaan Puri

right

Sam Parr

On brand consistently... and actually, if you go to startbreakingfree.com, it's controlled by a virus. So it, like, they... it automatically wants you to install a [malicious program].

Shaan Puri

it's controlled by a virus let's see

Sam Parr

what I mean like go are you like it's like a

Shaan Puri

like if I go to it right now he's gonna try to install like you know security software that actually

Sam Parr

is

Shaan Puri

gonna steal all my money yeah just steal all the bitcoin

Sam Parr

Yeah, it's going to say something like, "You won! You're the lucky winner!" Somehow, he let the domain expire or something like that, and someone got a hold of it. So now it's just a scam, which is kind of funny considering the guy who's supposed to be with his security let his web domain expire. But anyway, you can see his post history, and he was launching a lot of stuff. He launched this one thing, and it says, "Hey Hacker News, I just built a new forum software." Then another post says, "Hey Hacker News, I just built a new photo sharing website." So the guy was really prolific, and it's really interesting to see his posts.

Shaan Puri

Yeah, he was definitely trying. What Daniel tweeted out was, "I look back at Brian's Hacker News submissions before he started Coinbase." What you can see is a story of a hacker working on different projects, slowly zeroing in on his launch coordinates. He's consistently shipping stuff. They're not all like, you know, some of them have like one upvote, seven upvotes, 32 comments, right? They're not taking off. So you see a guy taking a bunch of swings. As his swings, you can see it was, you know, something about maps, something about how would you start your own country, something about could you build an entire web app in one language. And then it's like, "Bitcoin Android release," you know, like how Airbnb does X. And then it's about, you know, how to build your own forum, Bitcoin iPhone app, and you know, just sort of finding his thing. This is true for everybody, right? People joke about Sam's, you know, Sam's footlong wieners or whatever, your hot dog stand.

Sam Parr

yeah

Shaan Puri

You know, my sushi restaurant... it's like if you dig back into people's first projects, you're always going to find interesting things. Like Mark Zuckerberg's first project that I've heard him talk about. Have you heard this? The dentist office thing? No? He set up an internal internet network for his dad's dental office. It was like a messaging system where the secretary at the front desk could message him in his office at the back. So he just kind of set up the internet inside their office and let them message each other. Then he built Wirehog, you know?

Sam Parr

and wirehog I think was really successful by the way for like a 17 year old kid

Shaan Puri

For a 17-year-old kid, it was more successful. There are chat transcripts from when he left to go work on Facebook. He moves, you know, in the social network, to Palo Alto. It's like, "This is it! Facebook's gonna be the thing." There are chat transcripts of him talking at that time, like, you know, because he's the one who wants to...

Sam Parr

go to the facebook

Shaan Puri

Yeah, like I think Wirehog's the thing. You know, like even them, it's not obvious at that time. Whereas people try to project that these guys are visionaries, they are, you know, visionary geniuses who never had a doubt in their mind. Then they saw the future and built it. It's like, well...

Sam Parr

Well, I actually think that a couple of those things are true: 1. They could be visionary geniuses, or rather, they could be geniuses. But that's actually not a prerequisite, though it does help. 2. They definitely had doubt. Regardless of how confident someone is, it doesn't matter if you're Conor McGregor and you're going into a fight - you always have doubt, no matter what. 3. They probably didn't have a vision until it started getting a little bit of traction.

Shaan Puri

Right, and I go back through this interview on YouTube of Mark Zuckerberg. There's this college news station that's interviewing him. Some guy has a college podcast and he invites Mark Zuckerberg on because he's got the college social network that's kind of taking off on a handful of colleges. I think they're on like, I don't know, 5 or 10 campuses at the time. The interviewer asks, "So what is this going to be? You're going to go out to more colleges and then what? High schools? Non-college students?" Mark Zuckerberg is sitting there in his basketball shorts with a red Solo cup in his hand, and he's like, "I don't know. I don't know if it has to do that. Why can't this just be like the cool thing for colleges? Once you take it out of the college thing, then you let everybody in, it's less cool. Maybe this is just cool." Now, he's literally putting satellites into the sky to give people in India the internet so that they can use Facebook. You know, his aspirations changed.

Sam Parr

The takeaway here is that I actually just went back to my high school the other day to give a talk, and I was like, "Dude..."

Shaan Puri

doesn't everything look small when you walk in high school

Sam Parr

Yeah, and you'd be a 16-year-old and you're like, "Oh my gosh, I felt I was mature. I felt I knew what I was doing." You're a child.

Shaan Puri

yeah I could beat you up

Sam Parr

Yes, yeah. I'm like, "Dude, I'm 30," and I thought that we were more similar, but we're not.

Shaan Puri

we're not at all yeah yeah

Sam Parr

we're not like why

Shaan Puri

are these chairs on low to the ground

Sam Parr

Yeah, everything is so small and... water fountains are disgusting. I can't believe I used to drink from them. Anyway, I was like, "You guys just do shit, take swings, tinker on stuff." First of all, a lot of stuff that starts out cool actually looked really dumb early on. But even if it stays dumb, just get into the habit of taking swings, right? And making stuff. Because like, I'm not *uber* successful, but my first shit was like a poison ivy business. It was a...

Shaan Puri

poison ivy business what is that

Sam Parr

My first stuff was like stupid, and it led to this thing and this thing. Hopefully, the thing that I'm doing now is actually going to lead to something even bigger. I also did a ton of research and found out that there is this poison ivy treatment called **Zanfel** (Z-A-N-F-E-L). I think it's Zanfel. Basically, I did more research and found out that the guy who started it used to work at a cleaning supplies company. I was like, "Oh, that's interesting. What is going on here?" That's kind of weird. I saw that connection and did more research. I found out that basically what he did was he took this thing called **Mean Green**. It was really good at washing oil off mechanics' hands, and it costs like $5 for a gallon. It was dirt cheap. But he found out that the way poison ivy works is if a leaf gets on you, it leaves this oil on you. You have to use this oil remover to get it off.

Shaan Puri

to yeah yeah yeah same thing with poison oak or whatever

Sam Parr

Yeah, yeah, same thing. I was like, "Oh, so I'm just gonna bulk buy this mean green crap, repackage it, and sell it for $40," as opposed to selling it for $40 for something like a Carmex size or a chapstick size thing when it costs $40 for literally an industrial-sized barrel. I just repackaged it. I was making thousands of dollars a month. Then I quit doing it because I was like, "I don't want to do this." Anyway, it was kind of a cool thing, but I shut it down because I was like, "Alright, this is making money, but I don't want to do this. I'm not proud of this. This isn't something I like to tell people I'm doing. It's kind of lame." Even though it was making like $5 a month, I shut it down. The thing that we're doing now, I have a feeling it's going to lead to something even bigger. In Coinbase's regard, everything was much bigger in a much shorter time frame, but it doesn't matter. The exercise, I think, is still true.

Shaan Puri

That's great! You know those guys who came and set up my studio here? They just released a vlog on this channel. This guy, Henry... I forgot his last name. Henry Bladcaster or something like that. I don't know what it is, but basically, I don't know how you'll find him. Henry on YouTube. He did this thing where he put out a video saying, "Oh, the advice that I got from Sean Purry." I was like, "Okay, well, I'm one of his, like, I don't know, 100 subscribers. I'll click this. This is about me, so I will go ahead and watch this video." His videos are actually super well made. He's like a... yeah, very Casey Neistat-ish.

Sam Parr

like mini casey neistat yeah

Shaan Puri

Yeah, which just shows how hard it is to win on YouTube. His quality is really high, but like no one gives a shit because it's just YouTube. There are a billion things on there.

Sam Parr

hey as we said just give it some time and just keep trying in my hip

Shaan Puri

So, the advice... I was curious what the advice was because they came over and they were doing all the work. I was just sort of standing in the garage with a cup of coffee, trying to be a nice spot. I wasn't helpful, but I was trying to talk to them. They were hammering things, and I was asking them questions, giving them some kind of advice. I said, "Here's how I would do it if I were you guys." I really resonate with anyone who's around 22 or 23, smart, but chose not to go the traditional path. That feels right, but then you also get these hunger pangs of doubt. It's like, "Shit, my friends actually have a salary." Meanwhile, I'm sleeping in a one-bedroom apartment with three other people. I really empathize with that because that's where I was. I just want to tell them what I would tell myself, which is, "Dude, you're doing the right thing. Here's how you need to think about this, though. Don't worry. Here's how this is going to play out." What I told them was, "Look, honestly, the best times of my life were when three of us were living in a one-bedroom apartment. My co-founder and my roommate lived in my closet because he couldn't even afford our dirt-cheap rent. So, Trevor lived in my closet and turned it into a room for himself with a lava lamp and stuff. Then, his girlfriend moved in with him in the closet too."

Sam Parr

oh my god

Shaan Puri

And so then, I was like, you know, he had a grocery cart because he didn't have a closet. He was living in a closet, so he stole a shopping cart, rolled it into his closet, and used that as his hamper, his closet for himself. I just remember, at the time, everything seemed so shitty. I was like, "Oh, this is the shitty version of life." Now I'm like, no, that was the most fun time. All we were doing every day was just trying to figure things out, trying different schemes and projects. We had no responsibilities, no burden, and we were just partying for fun on the side. I just remember thinking, now that I look back, that was the shit. That's what I was trying to tell him. I was like, "First of all, guys, this is the best. Embrace this part. You're never going to get to have this again with your friends like you have right now. It's so fun. Embrace these five years." The second thing is, I used to chase money a lot. I would think, "How do I make money? Maybe this will make us money. Maybe that will make some money." That was good because I learned skills about how to make money. But the things that actually paid off, none of those really paid off with a big dollar amount. The things that paid off were the people I was meeting, doing projects with, or learning from. Those relationships pay off big in the end. You know, the learning of building skills around like... I did my first e-commerce project. I was selling these wristbands called fatbands.com, and it was...

Sam Parr

just a

Shaan Puri

Fat wristband that I noticed a bunch of kids were wearing on campus. I thought, "Oh wait, maybe that's a trend. Let me just try to sell those online." You can customize them, and so those skills translated, but the business did not. What I told him, the advice that he put in the video that I didn't even realize I said, was: "You're 23 years old now. Here's the trick to this whole thing. You're doing the right thing every day. You're just making stuff, you're trying stuff, you're making content, you're having a blast with your buddies. We're going to measure the scoreboard when you're 30, not when you're 24." That was the game changer—like, kind of like advice I wish I had and that I gave them.

Sam Parr

and maybe 35 or 40

Shaan Puri

Right, like, basically it's like, don't... you're planting seeds. Don't go dig up that seed the next day and be like, "Shit."

Sam Parr

this didn't

Shaan Puri

Grow into a plant. Like, no... plant that seed, water it, enjoy it, and just say, "Look, I'm not trying to win the whole game in one year or a year and a half." And if my friends who took this banking job or consulting job are doing better than me in 18 months, I don't need to feel like I made a bad choice. I'm making the right choice for me, and it's going to... let's look at this as a 10-year game. We can only measure the score at the Q4 [fourth quarter] 10 years from now. So that's the only time you can really look at the scoreboard.

Sam Parr

And the seeds that you're planting, at least in my experience—and I think in a lot of my friends' experience, and also seems like you for sure—is it's shit, it's shit, it's shit, it's shit... and then suddenly it's like, "Oh my God, it worked!"

Shaan Puri

it hits yeah

Sam Parr

It's like, for the most part, it's not great. Then finally, it's like, "Oh, okay, now it's all happening."

Shaan Puri

Your learning goes in this gradual curve. Your learning does go up every year, where you're like, "Oh man, last year I was such a dummy. I didn't know shit about shit, and now I know better how I would do this." Then the same thing happens the next year and the next year. But your results can kind of stay flatlined for like a decade, almost for 7 years, before it actually stops being a flat line and just curves up rapidly.

Sam Parr

So, I wanted to continue talking about this, but I'm actually going to save my stuff that I have... these notes here. I'm going to save that for the next time because I don't want this episode to be entirely this stuff. Although, frankly, I love this stuff. Abreu, do you like this or not?

Shaan Puri

yeah man I'm just soaking it all in

Sam Parr

Okay, I like this stuff. But Sean, do you want to move on, or do you want to do the other thing? Do you want to do MicroAcquire, or do you want to keep talking about this?

Shaan Puri

I don't wanna keep talking about this I wanna do either some micro acquire or some ideas

Sam Parr

I want to do Micro Acquire, and this is an idea... Actually, okay, but we at The Hustle, we worked with this guy. I never talked to him because I wasn't the one working on the project, but anyway, I just started hanging out with him recently. This guy named Andrew - people call him Gaz, but his last name is like Ghaznati or something. Do you know Andrew?

Shaan Puri

jazdekhi or something yeah

Sam Parr

gazdekhi I think they just call him gaz do you know andrew or do you know who he is

Shaan Puri

I did the like the mini spac with him so that's the only way I know him just through dms I never talked to him

Sam Parr

I never met him. Andrew is 32. I think he previously had a company that was an agency, and he told me that he sold it for tens of millions of dollars. So, it was very, very successful. But his new thing is incredibly interesting. It's called **Micro Acquire**. I think it's just microacquire.com, that's right. The premise is very simple: he finds people that want to sell their company, and he just talks about it in the newsletter. It's basically like AppSumo or The Hustle, but a newsletter that sends out cool companies. Except what he does is he makes you pay money to get access to it. You only have to pay $200 or $300, though, and you get a year's access. His numbers are pretty interesting. Keep in mind, Andrew is actually the only employee. So, no one works there. As of today, he's got 1,500 subscribers paying $299 a year, which brings his revenue to about $400,000 a year. I posted a chart of this. Did you see the chart I posted?

Shaan Puri

no I'm on his twitter because I was looking for that because I know he posts oh here it is yeah

Sam Parr

No, I have the chart. I posted it, and he just sent this to me. So I guess, I mean, I said, "Can I share it?"

Shaan Puri

He builds it publicly, so he announces the revenue as part of his way of getting more traffic. So, he's at $425 ARR (Annual Recurring Revenue).

Sam Parr

for in front of him chart yeah that's a pretty amazing chart

Shaan Puri

Really, all the growth happened in November, December, January, and February. It was just in the last 4 or 5 months.

Sam Parr

Yeah, and it's pretty interesting. I actually shared with you... just scroll down a little bit more. I shared with you his vision, but what this guy is building—I mean, this is his vision, we'll see if he can pull it off—is a different type of AngelList. Basically, he wants to disrupt investment banking and he wants to make it easier to buy and sell companies. It's incredibly fascinating. So he wants to... sorry, not disrupt AngelList, but kind of be like AngelList.

Shaan Puri

**Describe what it is. So, what is microcurrent?** You go on there if you want to buy a small SaaS business. A small business that makes recurring revenue through subscription. And that's the thing I...

Sam Parr

browse and the size are

Shaan Puri

It ranges, so you could buy one for **$5,000** that's making **$100** a month in revenue or something like that, or even **$0** revenue but it has users. You could buy a business for as low as **$1,000** or **$5,000**, and as high as there are a couple for like single-digit **$1,000,000** on there. Maybe there are a few that are outliers, but that's like, I would say, the sweet spot. The range for these things is kind of like **$100** to **$1,000**; that's where the decent businesses are on this platform. This is the thing where I talked about this once on the pod. He had DM'd us and he was like, "Hey, love My First Million, you guys are great. Would you guys want to do something with me where I give away a **$5,000** micro SaaS business?" I was like, "Dude, that's a great idea! I'll go in with you and I'll pump this to the audience." So basically, I tweeted out—like I didn't even talk to him, I didn't actually even respond to his DM. I just tweeted out, "Hey, me and Andrew are giving away a SaaS business for **$5,000**. Who wants it?" All the businesses there, we'll buy it and give it to you. These are businesses that are already working to some extent, you know? We just need to add some hustle. Who's a hustler? Who wants this business? What ended up happening was a bunch of other people started chiming in, being like, "I'm in for **$5,000**. I'll put **$5,000** in." So we ended up raising **$100,000** as a micro SPAC, meaning a blank check company. We raised **$100,000** into an entity to go and use that entity to buy a business off of MicroAcquire. Then, as of last week, it closed. We found an entrepreneur, found a business, and we closed that deal to buy a Shopify app.

Sam Parr

That's amazing, and that's pretty wild. I'll be eager to see what happens, and I'm sure you'll reveal in like 6 to 12 months. My opinion around Micro Acquire is: at worst, it's going to be okay. At best, it could be amazing. I don't know what's going to happen to it. What do you think? It's a really fascinating business, and... the thing is, now I'm actually shocked he's letting me talk about it because I feel like I can clone this so quickly.

Shaan Puri

Yeah, it's a lot of work. Like I saw this guy doing the one deal we did, and it was just a *massive* amount of work. They have to: - Shepherd everything - Make it happen - Do the paperwork - Get the deals - Do the close But that's not even the real work.

Sam Parr

for micro acquire well well they they have to help you do the transaction

Shaan Puri

So, that's their function. What's good is that they don't make money on the transaction closing; they make money on you paying a premium subscription. I pay a monthly fee to be able to browse businesses, which is a much better model because you're not just reliant on taking a brokerage fee from closed M&A deals. There just isn't a lot of closed M&A that happens. However, there are a lot of people who are curious and will pay, you know, $100 or whatever it is, $200, to be able to browse the premium listings and get the details, get the info, and so on.

Sam Parr

What I would do if I were Andrew is decrease the price to **$99 a year** or even **$39 a year**. That would make it an impulse buy, and I would get loads of people. Then, I would focus on selling this company. I would also have a course that costs between **$2,000 to $5,000**, which would include a community and be focused on buying and selling companies and running businesses. I'm pretty confident that you could get that to around **$30, $40, or $50 million** a year in business. I don't know if that would be a valuable company to sell, but I'm pretty sure you could make **$10 to $20 million** a year in profit for at least a handful of years.

Shaan Puri

I think it's

Sam Parr

that's what I would

Shaan Puri

I think it's needed, so I think it's smart that he specializes in SaaS. I think that it's smart that he's a curated marketplace versus like Flippa or these different places where you're just dealing with so much junk. You don't know what to trust, so I think he's doing it right by bringing trust to these lower-trust marketplaces. I'm with you; I really like the project. The minimum is a good outcome, and the maximum is like, "Oh wow, this was a big idea hidden in plain sight." I think it's interesting. I think it's more likely going to just be the good outcome, but I like that it has the option to do both. It seems like a fun kind of business to build if you're this guy.

Sam Parr

I think he wants it to be the **okay** outcome, which is that he owns it and lives a really good lifestyle.

Shaan Puri

right

Sam Parr

And which, by the way, I think I would probably do the same as well. Yeah, so anyway, that's a cool company. What do you got?

Shaan Puri

I got a couple of things to discuss. So, I'll go for it. We talked about this before, but I'm curious what you think. So, **Photopea**. We talked about this many, many months ago, but you know, we were much smaller then. Those people probably aren't even listening anymore, so we'll just pretend it's the first time. There's this thing called Photopea, and all it is, is it's Photoshop but it's free and it's in the browser. You don't have to download anything. The guy who makes it, I don't know much about him, but he posts on Reddit. There’s a pretty big thread about it. I think you know a little more about him than I do, kind of like the backstory. But it's a free version of Photoshop that has cloned pretty much every feature of Photoshop. It's like the exact UI of Photoshop, which is crazy because Photoshop is such a complicated piece of software to build. This guy just chipped away, just chipped away, just kept chipping away, and basically built Photopea. And "pea" as in the vegetable, like P-E-A. So, you go to photopea.com, and it's just like one banner ad that says how they make money. I think it does about $1,000,000 a year now because so many people use this thing. It's popular among students and people who don't want to spend money because Photoshop is really expensive. People who don't want to buy Photoshop can use Photopea and get like 80 to 90% of the same power without any of the cost and without any of the headache of downloading a big application that’s one gigabyte.

Sam Parr

what oh my god I'm on it so we I know this person is that what you're

Shaan Puri

I remember the first time we brought it up. You had already heard about it because I was like, "Dude, I have a really obscure thing," and then you, being Mr. Obscure, were like, "Oh yeah, I've seen this on Reddit." At the time, I remember being shocked that you knew about this thing because I thought I had just discovered like an uncovered gem, you know?

Sam Parr

Yes, I see it. It's from November 2018. A guy... yes, because it got 50,000 upvotes, and he started it by saying: > "I made a free alternative to Photoshop. Ask me anything." And that's how he got promotion for it. Yeah, I like this. So... and you think he's making $1,000,000 a year doing this?

Shaan Puri

Yeah, so I don't know why Ben told me this. Ben gave me this topic and he was like, "Photo P." You know, he's like, "You know Photo P?" I was like, "Yeah." He's like, "You know it's been a million dollars a year." So if I'm wrong, Ben's wrong. I didn't look at it myself, but...

Sam Parr

by the way I got access to similarweb I've got a premium account now so I can

Shaan Puri

actually you got the goods

Sam Parr

Yeah, I know someone who works at HubSpot. I don't know if I can blow up their... anyway, I got SimilarWeb.

Shaan Puri

Dude, I'm the same way. At Twitch, I was like, "Oh dude, you got a premium App Annie account? That's like a couple thousand dollars a year to see app download stuff. Can you share the login?" And they're like, "You know, we're a company. You just buy a seat, and the company pays for the seat." They're like, "If you think you would use this, just buy it." I'm like, "Oh, but..." I felt like such a pirate! I had to hide. I was like, "Oh yeah, yeah, of course, of course I wouldn't bootleg that." Like, what? That's not what I meant.

Sam Parr

That I'd still try to be a little bit less "hoodrat Sam" and more like, "Oh yeah, this is ROI positive, just buy it."

Shaan Puri

Right, right. It's actually looked down upon to be that way. I was negotiating with somebody and they're like, "Wait, why are you trying to save us all this money negotiating with this vendor? Just pay the thing and do it upfront."

Sam Parr

and you're like but this goes against like everything in my genes I can't not do it like what do

Shaan Puri

you mean booked him a hotel but it's in the motel 6 like I saved us a $200

Sam Parr

I always used to tell people, "Yeah, like, we'll take care of your accommodation." They would actually be sleeping in my...

Shaan Puri

stay at my aunt's house

Sam Parr

And I would actually go... I would stay at my girlfriend's house and they would get my bedroom. I did that all the time. I'd be like, "Yeah, we'll take care of your accommodation. Come speak at Hustle Con." They just stayed at my house. So, according to SimilarWeb, Vodopea gets 8,500,000 monthly uniques. They spend a ton of time on the website, and most of the traffic is direct. So if you told me that this made $1,000,000, I would think, "Are you sure it's not $1,000,000 a month?"

Shaan Puri

I don't know because I... I gotta check. I don't think it's a month; I think that would be pretty, pretty crazy. I think a year, because you know, he's not monetizing well, right? He's just got display ads. So, he's got the bottom of the barrel monetization, I think, on the site.

Sam Parr

yeah you could probably crush this though speaking of dis oh go ahead well I

Shaan Puri

Was just gonna say, like, you know, okay, so what? So I think the "so what" here is that Photopea is cool and interesting. It's just a cool thing to know about. But couldn't you do this for more things? First of all, take the whole Adobe suite. You could do the Photopea for After Effects, do the Photopea for Illustrator, Photopea for the whole suite, right? Anything that has over a million users, you could do this for. What else? Maybe it's like AutoCAD. I don't know if that's free or if you pay for it or whatever. You know, like, I forgot what that thing is called... MATLAB or something like that. It's a thing that all the engineers have to use. Is MATLAB paid? Can you do this? I think a version of this is called OBS. Have you ever used OBS?

Sam Parr

no what's that

Shaan Puri

**OBS** is an open-source piece of software that's basically the most popular tool for every Twitch streamer or YouTuber. It's the easiest way to stream high-quality video and audio from a PC to Twitch or whatever platform you choose. For years, Twitch didn't have any way for new streamers to go live. If you went to Twitch and said, "Great, I want to be a streamer," they would respond, "Cool, go use OBS." But many people would wonder, "What the hell is OBS?" Twitch didn't have a button that simply said "Go Live." The same was true for YouTube; you couldn't just go live on YouTube without using more sophisticated software. OBS is actually an open-source project maintained by a small community of developers, but really, it's just one guy named Jim. I met this guy, and Jim is about 5 foot 7, with long hair down to his waist. He looks like an open-source app developer. He operates with extremely high ethics and morals, stating that the app is 100% free. He has been working on it for a decade, and it's supported by donations from people who say, "Dude, I run my whole business off OBS; sure, here's $10." Interestingly, Twitch was actually paying him every month just to keep maintaining OBS because it was cheaper to pay Jim a certain amount of money than to have 20 engineers try to recreate this software.

Sam Parr

I think that is cool. When I hear that, I'm like, "That's badass!" I love that it exists. But what was my thing earlier? I'm like, "Cornrows and sleeve tattoos." I respect it, and I think that's badass. I just don't want to pay for it. I'm not wearing it, and that's my case with this. I'm so happy that it exists, but I ain't doing it. There are a bunch of examples of this. Another example is Spiceworks. Spiceworks.com was doing like $50, $60, $70 million a year in revenue, and they ended up selling because they raised too much money. It didn't work out, but they had traction. Basically, what Spiceworks did was create software. If you have like 1,000 employees and you wanted to figure out which computers you needed to buy, they created software to help you figure that out, which normally costs money. They actually made money through advertising on the website. In my opinion, that's neat, but just charge people money for your thing. Would you rather be Photopea or Adobe? Which one?

Shaan Puri

of course of course of course

Sam Parr

I know which one I'd rather be. So I think it's cool to actually do that free stuff just to get a ton of users, but after a while, if I was Fotopea, I would be like, "Well, if I just... I should just hire more engineers and we should just make some premium features and upcharge." And that is what I would do, right? I would not do this [current strategy].

Shaan Puri

Well, there's another way of looking at it, which is that sometimes "free" doesn't mean no ambition. For example, Skype was like, "Hey, free international calling," and WhatsApp did the same thing. Why did WhatsApp take off? Because SMS was actually really expensive. You had to pay for every text, especially international texting; it was super expensive. So, WhatsApp being free was the growth hack. For these guys, I would say free is also the growth hack. But, you know, if you want to just be one person maintaining this thing, where you do it matters. Photoshop is still at least big, but nowhere near as big as texting and calling was. That was such a huge market. The second thing is, if you're going to do free, find some other way to capture a ton of value. Skype and WhatsApp were able to capture a bunch of value using a totally different method. Whereas Photopea is like, "Cool, here's one banner ad, and that's enough for me." Or OBS is like, "Hey, donate to me, and that's it." Whereas OBS could have created premium features, sold to Twitch, or done many things to try to capture more value out of the free thing that they made.

Sam Parr

Do you know the website Unsplash? Unsplash is like an alternative to Getty Images. So Getty Images... everyone has probably heard that name, but not a lot of people probably use it. We used it; we paid them $50 a year and we were a small client. Getty Images, they pay photographers, they buy rights. Why?

Shaan Puri

Were you paying so much because there are cheaper or free options for photo libraries?

Sam Parr

Getty's is the best. A lot of free or cheap options don't actually have images of the people. For example, if you want to write about Elon Musk, many of the free ones don't have good pictures of him. Once you get to the size that we like, which is not that big—once you get past around 500,000 monthly uniques—you probably want to stop doing things illegally when it comes to photos. There are all these people that... yeah, and which is like, it's the right thing to do, right? You are using other people's stuff, so you shouldn't do it. It's okay to kind of bootleg it early on, but after a while, you should pay for it. We were a small operation, and we paid, I think, tens of thousands of dollars. Anyway, there was this competitor called Unsplash. I think Unsplash is dope; I think they're badass. They were just acquired recently. I got a little information where I found... I heard a little bit about what they were doing. They were only doing around $4 to $5 million a year in revenue, even though like hundreds of millions of their images were being downloaded.

Shaan Puri

right

Sam Parr

And I was actually shocked at how small they were. If I had that much traction, I would have been far more aggressive about selling ads on the site and far more aggressive about getting subscriptions and charging a lot of money for them. This website, Unsplash, which from the outside appeared to be doing wildly well, I imagine they were actually acquired for a lot of money. If a proper person could get their hands on that, they could crush it, I would think. But if you have that much usage, like Unsplash, it wasn't ubiquitous but it was quite popular. You can make way more money by charging money upfront for all that stuff. When Unsplash is giving away their stuff for free, I think they're only doing like $400,000 to $500,000 a month in revenue.

Shaan Puri

Right, right, right. Okay, yeah, that's a good example of one. I had one other topic I wanted to discuss. Which one's more interesting to you? Is it the "Affirm for X" or is it "Game Film for Salespeople"? I'll let you pick from those two categories.

Sam Parr

affirm and I have a I have a take on there that you're not gonna like

Shaan Puri

Oh, okay, good, good. Alright, so if you don't know what Affirm is, Affirm was a company started by Max Levchin. I think... am I mixing this up? Yep, it's the same, right? Alright, so Max Levchin, the co-founder of PayPal, Affirm went public, I think this year or last year. It's about a **$17 to $18 billion** company right now. What Affirm does is when you're on an e-commerce site, you're buying a mattress online, you go to Casper's website, and it'll be like, "Oh wow, this mattress is $1,200," and it'll say, "Or for 96 easy payments of $8, you can own this mattress." Right? So it's basically a pay-as-you-go software that lets e-commerce stores sell more stuff. If people don't have the full amount or are hesitant to spend a large amount of money right now, you can offer them pay-as-you-go plans with zero effort, and then they take a cut. So, you know, on our e-commerce store, we use one called Sezzle. Sezzle will basically say, "Great, you could buy this thing for 4 payments or 8 payments of $10 instead of paying the full amount right now." And then they take 7%, and then they send us the rest of the money. So it is kind of a no-brainer as a retailer because it really does improve conversion. For us, customers were asking for it because they were used to buying it all.

Sam Parr

and it's a it's it's a publicly traded company now it does really well

Shaan Puri

And so, there are several of these [buy now, pay later services]. There's Afterpay in Australia, which is even bigger. Afterpay is a $34 billion company, which is kind of interesting because normally Australian companies are much, much smaller. Klarna is big in Europe, I think, for this [type of service].

Sam Parr

I think klarna is even bigger

Shaan Puri

It's bigger than all of them. Exactly. So, Klarna is probably the biggest one, and there's kind of this war going on. They're all trying to... I think Affirm partnered with Shopify, so it's built into Shopify now. That's a big move. But basically, "pay as you go" is an interesting space. It was one of the big ideas that just came out in the last ten years. It's a good example of how, once it started working in the U.S., it was not hard for people to just sit back and say, "Cool, we're going to do Affirm for Australia, we're going to do Affirm for the UK, we're going to do Affirm for India," whatever, right? So, I think generically that was a good business idea. What I thought was interesting is what else could you use it for? I heard of one company in this year's Y Combinator batch that was doing "pay as you go."

Sam Parr

how did you get access to that

Shaan Puri

Bro, big-time investors like us, that's what we get access to. Actually, Y Combinator (YC) still has not accepted me into the investor pool, even though I've invested in probably like 10 YC companies at this point. Yes, but I have a friend who gave me access, so that's no problem. So anyway, one of the companies, what they do is they're a firm for general contractors. So, another high-ticket item: you're getting your garage redone, or whatever, bathroom remodeled, or you're building out a multifamily apartment complex. What they did is they went to the general contractor, just like that's their version of the e-commerce store, and they said, "Hey, instead of charging your client $12 for this, you can just offer them pay-as-you-go." This helps your clients pay you money, and you get a higher collection rate. You have fewer late payments and defaults, and a higher conversion rate because people can afford you this way. It makes you more affordable. They were doing alright; they had decent revenue, and it was still early. But I thought, "Oh, this is interesting. Are people going to do pay-as-you-go in more industries, more sectors? And what else might they do?"

Sam Parr

But I'll pause there. Here's my take: **Klarna**, **Afterpay**, and **Affirm**... I like the people who start them, I think they're horrible companies for the world. I think that they should burn down completely and not exist. I think that... [pauses] Why?

Shaan Puri

because it's getting people in debt

Sam Parr

It's getting people in debt. It's making you buy stupid shit that you can't afford. So where's Affirm? Like, if you go to Fashion Nova... people who can't afford [these items are using buy-now-pay-later services].

Shaan Puri

yep

Sam Parr

Who... people who want to use Affirm for a $29 pair of pants? I'm like, "Don't buy those fucking pants. Don't use Affirm. Don't buy any of this. You don't need this bullshit. Don't buy it. Do not buy it. Run!" And also, if you're going to have to buy it, don't go into debt to buy it. I think this is horrible, and I'm actually shocked that a guy like Max Levchin, who I think is a cool dude... He started PayPal, he started all this stuff. As badass as the guy seemed, like a nerd (I love nerds), what are you doing? This is useless. You're just...

Shaan Puri

do you know how this shit started how he got the idea

Sam Parr

tell me

Shaan Puri

he was so this is the version of the story I know I'm gonna be you know somebody who was there probably knows a lot more details but what I heard was there was an engineer who had so he had this lab like I had monkey inferno he had a lab called hvf hard valuable fun and basically it was an incubator where he said I'm gonna do any project that satisfies those three criteria it's gotta be hard it's gotta be valuable it's gotta be fun and so and then they kinda like didn't have like I think they've they've had you know a few nice companies glow came out of it it's fertility tracker and then affirm was the big one and max like went all in and he became the ceo of affirm and all that stuff to to take it forward but the origin story from what I heard was there's an engineer who had come up with like a new like database technology or database technique he's like oh look at this he's like basically he's like nerding out he's like look at this we could do like so much computation in so little time and like with this new technique and I was like okay but what are you gonna use that for it's just kinda like blockchain it's like great you have blockchain but like why do we need a blockchain what are we gonna use it for does it really make this better and like there's you needed to find an application so the way that blockchain found money currency as as the core killer app what he what max realized was he came into the this guy was a eir for him so for months he was just like working on this like databasing technology and how he was gonna use it couldn't couldn't really figure out an application and then one day max walks in and he goes dude like credit scoring and credit reporting is so like ancient we should be able to like if you're a person today I should be able to take signals from the internet social social networking data publicly available data on the internet to do instant credit worthiness versus like the way that this works today with this kind of like you go get a credit score and it's based off of like you know stuff in the past so his his insight was there has to be a better way to determine the creditworthiness of a person and he's like your databasing technology is actually perfect for doing that on the fly and doing that at scale and so they came together and he's like great I'm going to like basically create this application to do this and I think at first they didn't want to do I don't think the very initial idea was what they ended up doing which was like pay as you go on ecommerce websites but pretty quickly they realized that's the use case that's the market that needs this the most is basically instead of like I guess my question to you would be do you also feel the do you also use a visa and mastercard like because it's just credit cards that's all this is it's just credit so do you also hate credit cards the same way you hate pay as you go

Sam Parr

You wanna know what's funny? My personal credit card limit is $4,000. I've never had any debt other than that.

Shaan Puri

mortgage use debit cards instead of credit

Sam Parr

I do it because lately someone has advised me to do it, but for a long time, I haven't. I'm not against credit, and I realized that what I'm saying is not entirely logical. It's definitely emotionally driven. You're saying... and I'm not going this hardcore libertarian route, which is like, "Well, I'm against the government; therefore, all government is bad." I'm like, "No, no, no, no, no." What I'm doing right now is basically drawing the line, right? I get that that's not always the best approach, but I think that credit cards in some cases are good, and Affirm in most cases is bad. That's what I think.

Shaan Puri

okay I think that's you know that's what I

Sam Parr

Remember the people... Do you know, in Europe, like our friend Ramon and a lot of my other friends from Europe, they were like, "You know, credit cards? We don't use credit cards." Like in Germany, for instance. Yeah, like in a lot of places in Europe, if you want to...

Shaan Puri

use a credit we use bidets proper clean

Sam Parr

Yeah, which by the way, whenever people are flipping out over COVID toilet paper, I'm like, "Dude, take a shower." Like, why are you flipping out over this? Why are you fighting over... anyway...

Shaan Puri

you're gonna shower every time you shit

Sam Parr

How inconvenient today! But like, the inconvenience is not bad enough that I'm going to fight over that.

Shaan Puri

that's fine that's fair

Sam Parr

that's what I'm saying

Shaan Puri

saying gonna like stab someone and like

Sam Parr

Talk to them about jail over this. Like, I'll just take a shower or I'll just be uncomfortable. Anyway, I just think like credit cards aren't that common in Europe. It's definitely an American thing. But long story short, I am not in favor of Affirm. I think that is a stupid thing to spend his life working on. That's my opinion. I would love for him, if we could goad him or bait him into coming on here and convincing me otherwise because I'm open-minded, but I think it's dumb. I think it's stupid for general contractors. That's a little bit different, but for buying like a $29 pair of pants, like, don't buy the pants.

Shaan Puri

Well, my family member trains his daughter in jujitsu. So maybe we could use the daughter-jujitsu connection to get Max on the pod very soon.

Sam Parr

am I wrong though do you agree or disagree

Shaan Puri

I disagree. I disagree completely. I think credit is a great thing; it helps the economy move. I'm always in a "don't hate the player, hate the game" type of situation where I put the burden on the individual. In the same way that I wasn't like, "Oh my God, is Juul evil?" or "Is Grey Goose evil because it's alcohol and alcohol causes problems?" No, I don't think so. I basically live my life where I never blame a company for tricking me into doing something. I blame myself if I don't have the self-control and the thought process to manage it. That's how I look at others too. I will never blame a credit card company for someone getting into debt. Now, what I do say is if you're not transparent about what the fees are, what the charges are, and what the rates are, then that's shady. You're withholding information; you're not disclosing, you're hiding the fees. But in this case, they don't charge people more. A lot of the time, it's actually 0% interest. They can offer customers 0% interest because they take 7% from the merchant for helping them close the sale. So, it's actually an interesting model compared to that.

Sam Parr

interesting I didn't know I didn't know the full price

Shaan Puri

Creditworthiness... When I bought an 8 Sleep mattress using Affirm, I was like, "Oh, do I want to spend like $2 right now?" So, I thought, "I'll try this Affirm thing." I was like, "Oh, this is cool! I can just pay in payments, and it's 0% interest because I had a credit."

Sam Parr

I also have an 8 sleep score. I tried doing it with theirs, and I actually was going to have to pay a pretty hefty fee. I was like, "Oh no!"

Shaan Puri

that's credit cards you don't have high credit

Sam Parr

For some reason, I don't have good credit. My credit score is not bad anymore, but it was bad because I didn't have a history. Anyway,

Shaan Puri

Well, I have one last idea on this. I think this is the same thing as, like, you probably know what layaway is. I don't even really fully understand what layaway is. Layaway sounded like a total scam to me.

Sam Parr

It's silly. It's silly. Basically, what it is is if you want to buy a $500 thing, you would go each week and you would give them a little bit of money. You would start paying down your balance, and then eventually you'd get the item after.

Shaan Puri

You get that item because you don't like... With Affirm, you get the item first and then you pay later. Buy now, pay later, right? That's the...

Sam Parr

Well, you have to remember there's one big thing, which is... if it's going to take you 3 months to purchase, and you can't buy stuff if you don't have the internet, you want to guarantee that it's yours.

Shaan Puri

Right, and I guess for me, it's like our item is really out of stock. But apparently, there's a huge thing like Walmart; in most parts of the country, layaway is a huge part of their business. It seems like a pretty predatory thing in a way, but I don't know too much about it, so I shouldn't really speak on it. But anyway, I guess my question is: why aren't people doing Affirm for retail stores? Why isn't this the same option every time I check out? You know, my wife goes and shops at, I don't know, Nordstrom. When she checks out, they're like, "Oh, do you want to open a Nordstrom card?" or whatever. Why isn't it, "Hey, do you want to pay the full amount today, or would you like to pay in installments?" You could pay in installments. Now, maybe this is already the case; I don't know. But it seems like something that should be built into the point of sale at retail stores. I don't do a ton of retail shopping, so yeah, this might be me being dominant. Actually, it's totally a thing.

Sam Parr

Does Affirm plug into Shopify? Yes. A lot of people use Shopify, but like Nordstrom doesn't use it. However, a coffee shop might.

Shaan Puri

Yeah, not really. They're trying to do more. Square is definitely trying to do a lot of like retail and online, blah blah, you know, brick and mortar and online. So maybe Square does it, but I think a lot of retailers just have their old school POS still.

Sam Parr

This is like one of those rare topics that you're bringing up, and I'm like, "Oh, I don't know. How do people buy stuff at stores? I haven't done it."

Shaan Puri

Yeah, I mean, I'm saying we should just smoothly exit this topic before we try too hard.

Sam Parr

we gotta find the emergency exit at this one

Shaan Puri

okay I think we just wrap it up that's a good good episode