Data Backed Businesses Guaranteed To Make +$1M From Day 1
Distressed Venture and Content Creator Opportunities - April 17, 2024 (12 months ago) • 54:46
Transcript:
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Shaan Puri | Alright, this is part 2 of the episode with Jeremy Giffon. He is the first employee at Tiny. He was there from the beginning when they turned $5,000,000 of equity into roughly $500,000,000 of business value and took the company public just by buying businesses.
Last time, we asked him about those early days, the first business they bought, the mistakes they made, and the lessons they learned. This episode is different. Now we're asking him, "If I was doing Tiny today, how would I do it? How can I do the same thing that they did? What businesses would I buy? What trends and opportunities does he see?"
He tells us the single best investment opportunity he sees today and why he's putting his money behind that. So, this is a fascinating episode, part 2 with Jeremy Giffon. Enjoy!
I want to ask you about opportunities. What business opportunities, trends, or ideas do you have that people who are listening can use to expand their scope?
I remember when I was trying to be an entrepreneur, one of the big problems I had was that I only thought the world was this tiny little circle. I was only looking for opportunities inside my tiny circle. It was only when I listened to podcasts—like I wish MFM was a podcast that existed at the time—that I would hear some idea that I had never considered.
As my circle got bigger and bigger, the more opportunities I saw. So, I want to go through a couple of trends or opportunities you see. If I told you, "What are the juiciest opportunities that you see right now that somebody could pursue, or that you think a smart person could go for?"
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Jeremy Giffon | The second most interesting opportunity I see is what I would be doing if I wasn't raising a fund for these buyouts. It would be finding people with audiences and either buying businesses for them or building businesses for them.
I think it's like an anomaly; the business is in its toddler stage. The way most people with audiences monetize is through ad reads or sponsorships. I think it's kind of like Hollywood. When you're a big star, you'd get paid to hold up a glass of Coca-Cola or something. I believe every person with an audience will eventually find that the money they make from equity in a business they own will massively dwarf the money they make from ad rates or sponsorship reads.
But the big problem here is that generally, if you're a great podcaster or content creator, the last thing you want to do is buy a business. That's risking capital, which is hard, or even start and run a business. So, I think there's a big opportunity to build a business around someone with an audience. You can come to them and say, "Look, I will be the CEO of this thing. I think this is the perfect product for you guys to use and talk about for a long time. I will run it, and we'll split the equity or something like that."
For example, Joe Rogan did this with Onnit and sold that company for a lot of money. There are other examples, like Doug DeMuro with his Cars and Bids. People are starting to do this, but it's still very early.
If I were just going to start a business de novo, I would say, "Okay, who are the content creators that I really like, and what is the perfect product for them?" Then, just make it easy. It's a pretty low-risk proposition for you guys. If you do it right, even with an audience of your size, you can have nine-figure exits over four to five years, and that will obviously dwarf all the money you make from advertising.
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Shaan Puri | If anyone wants to do this, feel free to hit me up at [email protected]. By the way, this is how Tiny's doing this.
Matina, which is the drink they're doing with Huberman, is a yerba mate company they bought. He loves mate and has been drinking it for a long time. It's the perfect type of product for him.
If Huberman were to say, "Now I'm going to take a break from my science stuff to go become a searcher and find a business or a PE deal to do," that would be crazy for him. But Tiny doing it makes sense. They also did it with James Clear; they built the habits app.
So, you know, another app versus an ad read type of thing. I think they're executing on it well. This is also how Congo Brands built Prime. They did a lot of new things, and then they were like, "Okay, cool, we're going to do Prime."
They went and pitched Logan Paul and KSI, saying, "Hey, you guys are going to be the promotion engine for this. You get significant equity in this, and we're going to be the operational backend for this."
We know how to do this. We can build, in their case, what's probably going to be a $10 billion+ company off of that brand.
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Jeremy Giffon | Yeah, it's definitely starting. I think the Churning Group has been very good at it. They did Doug Demuro and Steven Rinella with the hunting stuff, and it's definitely starting to happen.
But I think, like, this is a little bit exaggerated, but I believe most people in a Y Combinator (YC) batch could find a podcaster and just say, "Okay, you're going to be the audience co-founder for this thing. We're going to give you 30% or something, and we're going to work with you. It's going to be a product that you can sell very organically."
The broad thesis is that these audiences are still super underpriced. Basically, the equity you're giving up will be more than compensated for, and I think that'll last for quite a long time. The long tail is really good too, right? You could do it with a very niche YouTuber and still sell a more expensive product or do it multiple times or whatever.
I basically just think everyone with an audience will eventually have some really tightly integrated organic product to sell. | |
Shaan Puri |
Love it! Alright, so that's a great opportunity, which is:
Go find a content creator who's got a great audience with high trust, and basically buy or build the perfect business for them. Have them be your audience co-founder. I think that's... it's basically an **really unfair distribution advantage** you could generate for yourself by doing that.
Alright, love that. What's another one?
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Jeremy Giffon | One other trend that I'm just really bullish on is basically the idea that everything in the modern world is like poison and toxic. I live in New York; the air is making me dumber, the water is ruining my hormones, and all the food that I eat at any restaurant is full of seed oils. Everything that I eat is some combination of soy, corn, and wheat, and the wheat is all sprayed with glyphosate. Just everything is really bad for you.
I'm kind of a freak about it; I have water filters, air filters, and I buy all this specific food and stuff. But it's really mentally taxing. I really wish there could be something like "The Wirecutter" but for products that are not going to kill you. The thing is, it's such a nefarious problem that it runs the gamut. It's like clothes that aren't made out of polyester, bedding that isn't bad for you, cleaning products... you could do every single thing in the house.
I would love to have a "Wirecutter" kind of thing, which is a great business idea, for just like, "This is the version of this thing that is not going to kill you."
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Sam Parr |
Dude, check this out! Go to live-oasis.com. I found this website the other day; my coworker sent it to me. It's... they say, "Do you know what's in your water? 90% of the water sources contain toxins, microplastics, and other contaminants."
And then they rank which water, as in the cities, but also which water bottles... like the water brands.
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Shaan Puri | I see one that I used to have. It's very bad. It says out of 100, it's in the very bad category.
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Jeremy Giffon | Well, that's the thing, right? Even if you try, you think you've done it, and then it turns out the thing you bought doesn't even work. It's very complicated.
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Sam Parr |
Well, I go to this and I'm scared because I also see the thing that I have, and it says "bad." Then you click it and they make you pay $5. This is definitely a thing that I purchased recently. I'm like, "Fuck, I gotta see which water bottle is toxic."
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Shaan Puri | It's like, you click one, and it's sad... yeah, horrible.
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Jeremy Giffon | I just want, like, okay, I need a shampoo. What is the one that Huberman, Atia, and Rhonda Patrick all agree on? I'll just buy that one, you know? Yeah, and I think that it can exist for almost every single thing in your house.
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Sam Parr | Ask Sean why he's drinking that water. I know why. | |
Shaan Puri |
Yeah, we hosted this event, this Camp MFM event. It's... we do it at MrBeast's house. We're in like remote North Carolina somewhere, and we all show up. This billionaire shows up, he's got like, you know, his security guard with him or whatever.
I'm just fascinated. I'm like, "Oh, how does this guy travel?" He flew in private, he's got a security guard, but then the thing that really stood out was he's got a security guard who carries this case of waters. We had Fiji bottles of water, which is like... it's in a plastic [bottle].
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Sam Parr | And you probably got that because he thought you were being fancy. You wanted to make a good impression.
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Shaan Puri |
He'd be so impressed with my choice here at Fiji. Like, I went for it, and instead he's got his own Aqua Panna glass bottles. He was just... he'd always be drinking. He didn't say anything, but I was like, "Hey, what are you doing?"
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Sam Parr | That, except he made the noise whenever he saw you drinking out of that. You didn't.
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Shaan Puri | He'd be like... | |
Sam Parr | Joe, what are you?
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Shaan Puri |
I switched to Aquapona for my family's drinking water. I also bought an Athena shower head filter because I realized, "Oh, you're drinking one thing, but then you'll go shower and bathe your naked body in... like the dirtiest tap water with a 30-year-old shower head in my house."
So, I went to afina.com and bought the shower head from there. This filters the water, and I'm just... one by one... replacing different parts of my house to try to get rid of some of the bad stuff.
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Jeremy Giffon | Yeah, traveling with a crate of mineral water—that's a good way to spend money. I like that. | |
Shaan Puri |
Alright, so two good ones I like. I like The Wirecutter for Protestant appeal. By the way, it's just... Wirecutter is kind of like value-based, yeah? And in this case, it's health-based. I think that's just such a simple model that somebody could do.
It's probably like 10 years of awesome execution and real love and care. Like, only the right person should start this business. It's not like anybody can do it, but I do wish somebody did it.
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Jeremy Giffon | I mean, examine did it really well for supplements. Like, it certainly can be done. It's just I would know I would use it every day.
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Shaan Puri | Hey, real quick! You know, one of the cool parts about what we're doing is that people have reached out and told me that they've built actual $1,000,000 businesses. They made their first million off an idea they heard on the show. That is crazy! That's wild! That's why we want to do the show, and we want to see more of that.
One of the questions we get asked over and over again is, "Is there some kind of idea database or spreadsheet where we list out all the different business ideas that we've talked about?" Well, the answer is finally yes! The fine folks at HubSpot have dug through the archive and pulled out 50+ business ideas and put them into a business idea database. It's totally free! You can click the link in the description below and get the database for you right now.
Alright, back to the show! Let's do a couple more trends and opportunities. You had talked... I asked you a question when we were hanging out yesterday, which was, "What are some business types that you really love?" Maybe you guys didn't even make an acquisition in the space, but what are categories that you really loved? You mentioned, I don't know, like a regulation compliance type of category. Can you explain that one?
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Jeremy Giffon | Yeah, for sure. So, like, anytime a government anywhere introduces some kind of arcane rule you have to follow, if you don't follow it, you go to jail. So it's like the ultimate kind of motivation to buy, right?
Sometimes it can be really difficult. We looked at a bunch of examples. One was this great company, a software company in Italy, that just did banking regulation to ensure all the banks are compliant with all these things. That's like an amazing business because, first of all, you're going along with Italian regulation, which is probably a great trade in and of itself.
But like, in the future, Italy is going to have more rules than it does today. Aside from that, a bank is not going to rip that out ever. It hits that golden criteria: it's relatively cheap but mission-critical. That's like a really great one.
There are a bunch of these. There are all these, you know, for buying a house, for vetting tenants, for KYC (Know Your Customer) and AML (Anti-Money Laundering). If you start looking for it day to day, you see it a lot.
I just rented a car, and there's a process there where they check my license against some database. I'm sure that's a piece of software. Those are great because I love it; it's like a low lift, and the downside is super high. You don't really want to mess with it once you've got it working.
The other interesting thing about them is that they exist for every country, at least every Western country. You can go find the software that does that for, you know, Europe or one specific country or whatever, and there are going to be multiple versions of those. Even Canada has different rules than America, so that's either, you know, two different software products or two different companies.
I love those businesses as well. They're also fairly AI-resilient, I think, because it's really, again, like medical stuff. It's really high downside, so you don't want to trust it with AI, and then it turns out you weren't in compliance, and you're going to get a huge fine or go to prison or something.
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Shaan Puri | Yeah, I made a bet recently in the regulatory compliance space. We have this thing on the pod that we talk about: one-chart businesses. This is a business that you don't need a full business plan for; you could just put one chart up on the screen and say, "That's why I'm doing this."
In this case, the chart basically showed that regulation only goes in one direction—it only goes up and to the right. Nobody ever rolls back any of these needs; it's only going to increase. So, if you could become maybe the go-to provider or a key piece of software in a space like that, it's just such a bet you want to make.
You know that regulation only goes up. Compliance requirements don’t just disappear. They don’t say, "Yeah, you know what? Forget them. You don’t need all that compliance stuff anymore." This is never going to happen; it’s only going to go in one direction.
Like you said, you either do it or you don’t get customers, or you go to jail. That’s a pretty strong motivator. I think people are going to want to either get customers or avoid jail. It’s just the right type of space to be in.
It's the type of space that 24-year-old me would not have known or appreciated. I thought that dating apps and social networks were the cool, new, sexy things. Now, I realize that what's sexy now is like a knee-length skirt. Show me a compliance business, and I'll show you my interest.
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Jeremy Giffon | The other big opportunity for someone who is wanting to start a business is that you can **front-run** these things. You can see what's going to pass, you can see what's just passed, and you can be the first provider for that. This gives you a huge leg up, especially if it's a fairly niche thing. You could very well be the only option for a couple of years, which is a huge advantage, right?
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Sam Parr | Why don't you start these things instead of just investing in them?
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Jeremy Giffon | I don't like operating businesses. I'm not sure I'm very good at it, and it's not what I enjoy doing.
I think everyone should try to really stay in their zone of genius as much as they can. I believe that it's personally very good and also good for the world if that happens.
So, I'd rather allocate capital to the person who maybe needs capital and is really excited about building something, because I think I'm good at allocating capital. | |
Sam Parr | Alright, two more things on here. The first, I actually don't have context on this, but I'm very interested just because of the title: "The Boy versus The Guy."
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Jeremy Giffon | Yeah, so the boy versus the guy. So it could... it could.
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Sam Parr | It could go a bunch of ways.
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Jeremy Giffon | Yeah, there are a lot of different readings, especially depending on what coast you're on.
Basically, it's the idea of being a lieutenant or being like a protege. Effectively, that would be the classier way to say it, I guess.
In general, there's the trusted lieutenant who is the solid number two—really important—but their whole identity is being a lieutenant to the number one person. Then there's this other genre, which on the West Coast takes shape as a chief of staff a lot. You're kind of this young rising superstar, and there's this sense of like you're really gunning for number one.
What made me notice this originally was, especially in the Valley, every billionaire has one or two really young, smart individuals who just kind of float around them. There's this kind of task agreement: you come work for me for two or three years, you shadow me, you're my apprentice, and then I will back you and open doors for you. It was kind of funny... at some?
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Jeremy Giffon | You know, I was in social situations where it's like, "Oh, it's kind of like flying under the flag of a lord." Everyone is, you know, going on the private jets of these principals or whatever. They themselves are probably broke, but they very much live this lifestyle because they're under the protection of a lord.
I think there's another piece of information that I've figured out about this: it's also an age gap thing. If you're within 20 years of the founder or the number one person in the organization, you're almost always going to be a guy. If you think of all the great firms or even companies where someone has become the new number one, there's almost always at least a 20-year gap between the person. Otherwise, you're too close, and I think that dictates it a lot as well.
So, it's these two different things. The other way to put it would be that the principal really sees something in this young person and wants to, you know, can tell they're on a rocket ship. They're not going to be an employee forever or whatever, but it's like, "You give me 2 or 3 years, and I can really accelerate things for you."
I think that pairs very nicely with the cold email thing, which is, you know, I generally think if you want to start a company, you should just start a company. Don't go work somewhere to get experience or whatever. But I think this might be the sole exception, as it can really open doors for either investment, vouching, or connections.
There are lots of examples of this. I know Ben Casnocha wrote very publicly about being Reid Hoffman's chief of staff. You know, Blake Masters with Peter Thiel, and Sam Altman was this to Paul Graham. There are kind of all these examples that I think are really instructive.
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Shaan Puri | I just recorded an episode with Joe Lonsdale, who was with Peter Thiel. | |
Jeremy Giffon | Yeah. | |
Shaan Puri |
He was basically Peter Thiel's protégé and now has started, I don't know, more billion-dollar companies than anyone else in the country. And I think, you know, he's a fascinating guy because when he was 18, 19, 20, he was an intern at PayPal. Yep, he then was at Peter's family office, then he started Palantir with him, and then, you know, eventually went on to do his own thing.
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Jeremy Giffon | And Joe's done this for a bunch of people. One of my close friends was one of his chiefs of staff, and it's an amazing launching pad. If...
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Shaan Puri | Anyone out there? I'm looking for a boy. I never thought I'd say that, but under this context, I am sure enough looking for a young boy. So we...
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Sam Parr | We need to start a community. We'll call it "We We Them Boys."
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Shaan Puri | You're I. | |
Sam Parr | I don't know. | |
Shaan Puri |
I don't know if you know this, but I've had four people who are kind of in this bucket. I hired them when they were, let's say, between the ages of 16 to 20, and they have gone on to either become, you know... they've gone on to become millionaires. In some cases, millionaires *and* successful content creator/podcaster type of folks as well. And it's happened four times already, so I'm looking for my fifth.
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Jeremy Giffon | Yeah, I think **apprenticing** is really underrated. You know, you think about it in the context of being like a blacksmith or a carpenter or something, but I think for a lot of these things, it's the single best way to learn.
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Sam Parr | Hey, I've got a question. I noticed that you studied philosophy at Columbia?
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Jeremy Giffon | Yeah. | |
Sam Parr | That so, I remembered as a kid, I saw this crazy stat. I think it was the majority of people who scored really high on not the bar, but the test to get into law school—the LSAT. Most of them studied philosophy; that was their undergraduate degree.
Then I saw you studied philosophy, and that's kind of an interesting way to go because now you're raising this massive $100,000,000+ fund.
What did you learn in philosophy that you think is going to help you make a good business person?
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Jeremy Giffon | Yeah, I don't know. It's a big club, you know? Leave it to a philosophy major. I know every philosophy major, but there are tons of names: Reid Hoffman, Peter Thiel, Peter Fenton, Stewart Butterfield. It's like this weirdly overrepresented thing.
My favorite stat about philosophy majors is that, in the top 10% of earners, they are the highest earning of all people. So, if you take the top 10% of every major, they're the highest earning in general. They're not the highest earning overall, but there's that kind of group at the far end.
I don't know exactly what it is. I mean, I can speak to my own experience. I think it's just like, if you're going to spend four years thinking about a set of questions, thinking about the most fundamental questions is just really appealing. That's certainly what it was for me.
I don't think I really learned anything that's super... It's funny, like, you know, I'm Canadian. I had to get a visa to be in America, and a big thing with visas is whether what you studied is relevant to what you're working on. You know, the answer for philosophy, as far as the U.S. government is concerned, is no, it's not relevant to anything. But I'm always like, "Well, no, it's relevant to everything." It's like, how should I live? What should I hope for? What can I know? These are relevant to every field.
I think maybe the other way to look at it is that it's just about being interested in the most fundamental and the most abstract versus learning something more applied. There's something about that that just kind of draws these very curious... I guess, like intellectuals. I don't really mean that in a complimentary way, just people who like to think a lot.
But there's also a big difference between people who study philosophy in undergrad and then move on, and people who study philosophy for their whole lives. Those people are really the ones who just think, "You know what? I actually want to think about what is a good way to live for the rest of my life." And I think that's a little crazy, right? Like, at some point?
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Jeremy Giffon | You wanna go? Okay, I've explored this now. It's time to go... move on.
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Shaan Puri |
I wanted to ask you about holdcos, which seem to be the new trend of people buying businesses. I think a lot of them take inspiration from Tiny and what you guys did. What's your take on, you know, the holdco trend or influencers out there who are like, "I own 500 businesses"? What's your take on all that?
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Jeremy Giffon | Bragging about how many businesses you own is really weird and probably a contrast signal to how good you are. By the way, anyone who owns a lot of businesses will, and should, tell you that. Like, I know Andrew would certainly say that if he could have one tiny business, that would be much better.
It's always a weird thing to say, "Oh, I've acquired 100 businesses" or whatever. I guess unless you're like Constellation or Shore Capital or something, where the whole point is that you buy a million businesses. Because, yeah, it's always better if you can have the results from one company. That would be way better than having to own a bunch of them.
And that leads to the topic of holding companies, which is something that people don't understand. There are two real reasons why you would start a holding company versus a fund or some other structure.
One is because you want to hold everything forever, and I think that's a fairly faulty premise. Usually, when people think about the merits of holding everything forever, they look at Buffett or they look at venture capitalists. You don't want to be the person who sold Google at the IPO or whatever. And Buffett famously owns everything, although that's not actually true; Buffett sells stuff all the time too.
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Jeremy Giffon | Sam talks about him being a little bit different than his public persona.
Both of those groups—Buffett is talking about railroads, insurance companies, and energy companies—are companies that ostensibly will exist for 50 or 100 years. Venture capitalists, even more than that, are looking specifically to find the 1 in 1,000 company that will be a 50-year company.
However, most companies are not 50-year companies, especially not $5,000,000 software companies. You know, it's kind of crazy to buy a Chrome plug-in and say, "Yeah, I need to own this thing for 40 years." It's like, no. First of all, software is really difficult.
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Shaan Puri | My kids will inherit this Chrome plug-in.
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Jeremy Giffon | Yeah, you're not buying one of two railroads in Canada. You know, like you're buying a chrome plug-in.
So first of all, just thinking like, "Oh, I need to hold this forever," I think is a bit flawed. Then, second of all, if you get the chance to sell it for a great price, that is probably the way that you maximize returns if you're actually interested in just making the most money.
So that's one thing with holding companies. The other is that I think when the more investor-type start them, they really don't appreciate that a holding company is part of it. Your holdings are the other half of the company.
You just run a big operating business. You know, Tiny has, I can't remember, it's like north of 1,200 employees across the portfolio. That's a big business that you're running. For most investors, that is a completely contrary skill.
If you're a good investor, the last thing you should be doing when you meet a great investor is thinking, "Oh, you'd be great as the CEO of a 1,200-person company." Generally, those are very far apart.
What can end up happening is you spend a ton of your time actually just operating a business, and you're not able to invest, which is the thing that you're probably the best at.
So yeah, in general, I think they're quite overrated. | |
Sam Parr | And you also actually said, "You're like most Harvard guys who are trying to buy a plumbing business. They shouldn't buy a plumbing business; they should just go and start a plumbing business."
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Jeremy Giffon | Yeah, this one always cracks me up. It's like your resume is, you know, Harvard, Goldman Sachs, Harvard Business School, Bridgewater, and then it's like Ohio Plumbing Company.
I always think, like, I get it. The math works; it can be lucrative, whatever. But I always think, imagine if you had, you know, you're this brilliant young person. If you had just moved to Ohio when you were 18 and started a plumbing company, you'd probably control all the plumbing in the state. You know what I mean? You'd just wipe the floor with them.
It's always weird that people want to go through all these loops. I think a lot of it is just to make themselves feel very fancy, like, "Oh, you know, I set up this deal, this acquisition, these investors," and stuff. But a lot of these businesses, I think if you just started them, you could really wipe the floor with the existing competition. | |
Shaan Puri | You have one more thing that you're known for, which is something like the **pre** and **post-fall**. I don't know what this is. Can you explain this? Somebody texted me this and said, "Oh, you gotta ask about pre and post-fall."
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Jeremy Giffon | So, I define "fall" as a pseudo-biblical idea. I really see it as a moment in your life where you've been brought to your knees by various circumstances. It could be a death, a breakup, a health scare, bankruptcy, or any of those things that truly humble you.
Not like how most people say they're humbled, which is often just, "Oh, I just got on the cover of Forbes; I'm so humble." No, it's actually the exact opposite. It's about being truly, truly humbled. I believe that this experience changes someone for the rest of their life.
I think it happens to everyone, totally at random times. It could occur early in life or late in life. You can see it in people. The extreme example would be a veteran who's been in a lot of combat. Nothing is really going to shake someone who's been through a bunch of firefights.
This applies to anyone who's experienced really hard, dark times. Many entrepreneurs have their "fall" while building their businesses. It can get really difficult, hard, and lonely.
The best way to describe it is that after someone's post-fall, you can see it in their eyes. They've been through worse, so they're not easily shaken. In contrast, someone pre-fall may be very successful, but if nothing bad has ever really happened to them, I view that as a liability.
If you're going to partner or work with them, you might think, "Boy, when something goes off the rails here, this could lead to a big blow-up." Of course, if you're a broke kid, it's one thing, but if you're a high-flying person, the way you can blow up is far more spectacular.
So, have you really been humbled by life in a true way? When you look at it that way, it's quite evident that people either have or haven't, and I think it makes a big difference.
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Shaan Puri | Do you want to talk about these special situations, distressed venture stuff, or do you want to save that for later?
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Jeremy Giffon | Yeah, we can talk about that.
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Shaan Puri | Okay, tell us, what is the opportunity here?
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Jeremy Giffon | Yeah, so the opportunity is this: it really combines a lot of the factors that I love. Effectively, there's this whole class of venture-backed companies where they raised too much money, especially in 2020 and 2021.
You get this strange phenomenon where you can have a business that's doing $10,000,000 a year in revenue and growing 30% a year, but maybe it raised $40 or $50 million. As such, the founder is probably not going to make any money because the pressure stack is so high.
The other part is that the investor is really not going to make any money—not in the sense that they want to. A venture investor, they want a good investment to return the fund generally. So, it's like this weird thing where you have this great asset. You know, if you guys owned a business that was doing $10,000,000 in revenue and growing 30% a year, you'd be very happy with that.
But if it's owned by a venture investor and run by a founder who's got this pressure stack, the founder's not going to make any money, and the venture investor doesn't really care about it. So, it's kind of this, like, in some sense, it's actually a worthless asset.
We've done these deals at Tiny before, and what I'm really interested in is doing a lot more of them personally. I've been talking to a lot of founders and a lot of GPs about this, and there's just this huge opportunity.
The opportunity is really to take a business that's, because of its cap table, just broken—it's not working for anyone—and turn it into a business that works. For example, say the founder owns 10% and the pressure stack is $50 million. You can turn it into a business where they own 30% and can run it profitably. It can be a great business.
A question that I always ask founders is, "What would you do if you just bootstrapped the thing or if you owned the whole thing?" Generally, that's a different answer than if they were in their current situation.
It's a service for the venture investors as well because they have to be responsible for these things. They have to go on the board, they have to audit them, they have to think about them. A lot of these companies take up a lot of their time, and they're not the ones that are going to drive returns.
So, it's just this weird kind of vestige of the fact that venture returns have been so high that there's all this waste. There are these $10, $20, $30 million a year companies that are not really making money for anyone. This is a weird situation, right? Because there's nothing wrong with the business, but you can get them for cheaper than you would otherwise because there's this weird second and third order incentive set.
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Shaan Puri | Normally, a distressed business... the business is broken.
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Jeremy Giffon | Exactly.
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Shaan Puri | Here, it's that the cap table is broken, but the goals of the investors don't line up with the realities of the business. Is that right?
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Jeremy Giffon | Exactly, exactly.
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Sam Parr | Is that what you're going to do?
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Jeremy Giffon | Yeah, that's... I love special situations. I like all different types. You know, I think when Tiny started, bootstrap businesses were kind of a special situation. Now, it's way more popular, and I view this as...
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Sam Parr | A special situation is a really nice way to... I love a good special situation. I mean, that's a lot better.
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Jeremy Giffon | It's totally, totally... | |
Sam Parr | **Special situations** sounds a lot nicer than **distressed asset**.
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Jeremy Giffon | Yeah, yeah, yeah, for sure. But it's like this idea of, "Oh, there are all these people that want different things." If you can just arrange the bricks, so to speak, then everyone gets what they want. You can unlock this puzzle. With what I'm doing, everyone is better off. The VCs are happy, the founder is happy—everyone's better off.
I love those situations when you can create them. And then, to go back to our initial point, it's a very specific thing. So you're going to come to me because you know that's what I do. I'm going to get stuff that other people don't get because I'm doing this very specific thing.
For my particular form of laziness, I love it when people just know what I offer and then they come to me. It makes things so much easier than having to go to them and convince them to do something, you know?
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Shaan Puri | It seems like you are like me, which I love because I like you to look at me. But it's also rare.
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Sam Parr | You remind me of myself. I think that's why I love you.
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Shaan Puri | You're great because I see part of me in you.
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Sam Parr | But. | |
Shaan Puri | It's the opposite of what most people come on the podcast and say. Most people come on the podcast and say, "You gotta work super hard. Hard work is everything."
Both you and I asked a different question. We're like, "How can I be lazy and win the most?"
And we're like, "Yeah, I take pride in a certain form of laziness." I'm going to be super active in one area, but I absolutely reject a certain type of sweat. That's how I think about it.
Do you think about it the same way?
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Jeremy Giffon | Yeah, totally. I have another archetype for this. You can divide the world into the Arnold Schwarzenegger kind of type and then maybe the Sam Altman type.
It's not to say that Sam Altman doesn't work hard or that Arnold Schwarzenegger isn't smart. They are both examples of doing both, of course. But, you know, Schwarzenegger's biography is literally about "laying more bricks," lifting more weights, and grinding it out. When he becomes an actor, it's about more auditions, more movies, and more practice.
In contrast, someone like Altman found this big opportunity and was really clever about how he set it up. It's more about making these strategic moves.
And probably like you, Sean, I find there's a certain elegance in doing things with the least amount of moves. Other people aren't like that. I bet you're probably more like those who work really hard, grind it out, and put in the hours. I know you’ll have Shackleton in mind. I think Shackleton is a lot like this—just outworking everyone else. | |
Shaan Puri |
Acting like you don't lie... You looked around like, "Well, I don't know," but you are like that. You're like "hard equals good" because hard means *I'm* hard, whereas I'm like "easy equals good" because it means that *I'm* clever. It's like you admire a different attribute.
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Sam Parr | No, yeah, I mean there's value, I think, in just sweating sometimes. You know, I think that sometimes because a thing is hard, therefore it is good for you. I definitely believe that.
But I mean, I only work like 40 hours a week. I work a normal work week. But yeah, I mean, I fall a little bit in the middle. I do think that just doing a hard thing for the sake of it being hard, there is some type of divine goodness within that.
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Jeremy Giffon | Yeah, and you gotta do both. There are periods of really hard work for the lazy person, and vice versa.
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Sam Parr | But I think when people say they don't work hard and they still achieve greatness, I think they're full of shit. Like, Sean, you say that you are lazy. Dude, you'll text me a paragraph like a book at like 10 PM. You're still doing shit! You're just laying on the couch while your wife is watching TV and you're on your phone. You know, you're not at a desk.
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Shaan Puri | I view laziness as not that you don't do anything; it's that you don't do things you don't want to do. I just do all the things I want to do at full force because I like them. I want to do them.
I just don't do a lot of things that I don't want to do. I'm very selective or cheap about how much effort I'm willing to put into things that I don't actually want to do, and I'm willing to be lazy on those.
It's kind of like the definition of work versus play. Work is, you know, how do you define work? One way of defining work is it's the stuff that you don't want to do voluntarily. Play is the stuff that you do want to do voluntarily.
I just opt into a lot more of play than I think most people do. I have a lower tolerance for work that I don't want to do than I would say the average successful person.
The reason I like Jeremy coming on is because it's cool to see examples of a different play style. We've seen a bunch of the other play styles, and they sound amazing. The David Goggins "work harder, grind more, show up early, leave late" mentality— I get that. That's a cool play style; it's just not what everybody wants to do. So, I like hearing about other play styles.
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Jeremy Giffon | Yeah, I mean, Sam, you're definitely right. I'm sure I do a bunch of stuff that I'm not even conscious of. I'm working a lot harder than other people because it just feels innate.
But I think another way to look at it is that there's certainly a type of person who soothes themselves in different ways. Some people will just soothe themselves by putting in way more hours, you know, working on that diminishing marginal return piece of like, "Oh, I just put in a few more hours on this."
Other people, I think, are more focused on figuring out the exact right thing to do. They spend all their time thinking about, "What is the exact right move?"
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Sam Parr | You guys want to do a 50-mile race with me in August? Dude, I've been training for this thing. I had to run 10 miles on Sunday, and I haven't run that far in forever. I'm just like... depleted. So, you want to come work hard? Come join this race with me!
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Jeremy Giffon | Yeah, that's probably a good one. Everyone who loves the super endurance stuff is probably a grinder at heart. It's just about, "If I do so much of this, it'll just be better than everyone else."
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Sam Parr | It sucks. I just do it. It sucks. | |
Shaan Puri | So, when we were in Austin last week, we were hanging out with... do you know Isaiah Photo? Do you know who that is, Sam?
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Sam Parr | No, no, I don't.
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Shaan Puri |
He's a YouTuber who lives in Austin, and he's got probably like 10 million YouTube subscribers. If you go look at what his popular videos are or what kind of was his break, he would do stuff like these challenge videos. These are kinda like "grind" videos:
- Counting to 100,000
- "How I will lick this jawbreaker as many times as it takes till the jawbreaker disappears"
- "How many licks does it take..."
These videos are what made him popular.
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Sam Parr | It takes. | |
Shaan Puri | He'll hold a lighter on and he'll be like, "How long until this lighter just goes out? How much lighter fluid is in this? How long does that last?" It's like a hundred million views or whatever, right? People love this stuff.
To his credit, he found what people wanted and he gives it to them. At the same time, I'm like, "Oh man, I'd shoot myself if I had to do that," because that's not a path that's very appealing to me.
But that same personality, I'm like, "Oh, what do you do for fun outside of YouTubing?" He was like, "Oh, I love running." Same thing. I'm like, "Oh god, what's the deal with you runners?" He's like, "Oh yeah, I really want to run. I want to start a run club. I love running."
And I'm like, "If somebody told me, 'Yeah, you gotta run today,' they just said, 'Sean, you've got a bad day today.'" So I'm not trying to be a runner, but there are so many successful people that love running, and there's a really high correlation there.
On the other hand, I went and did a podcast with Monish Pabrai. Jeremy, I assume you know him?
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Jeremy Giffon | Because, yeah. | |
Shaan Puri | Andrew told me, he's like, "He was my first value investing man crush." | |
Sam Parr | A stepson is great, Monash.
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Shaan Puri | Is that the first time you've done that? When's the last time you did that type of runoff?
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Sam Parr | Years ago, yes, when I met my wife. Yep, that was out on a porch.
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Jeremy Giffon | Sounds like you've got practice.
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Shaan Puri | Yeah, exactly. He was like, "Yeah, I take a nap every day." He's like, "A good year is I make 1 or 2 investments," which is like literally clicking a button. It's not even like he runs a company; he's just buying a public stock. And he's not even day trading or analyzing everything. He's like, "1 or 2 good investments in a year would be a fantastic year."
He reads and he chills. I was like, man, both guys I would say are winning. They're winning at their craft. To have 10,000,000 YouTube subscribers is phenomenal, and he's built a wonderful life for himself. The other guy, you know, is a phenomenal value investor, but the lifestyle and the things that they value are so different.
One guy maybe has to stomach losing $75,000,000 of net worth in a day, and he's got to be cool with that. The other guy's got to stomach waking up tomorrow and being like, "How do I come up with the next crazy video?" It was really remarkable to see that.
So, you know, I think, Jeremy, you were talking about how you sort of pick your prison in a way. I'm assuming you've sort of seen these different games that people play and decided which one is appealing to you.
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Jeremy Giffon | It's funny. I call guys like Monish the "nap room" guys. There's a whole set of value investors that have a room in...
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Shaan Puri | The office, he showed me. He's like, "This is my nap room." He opened it up, and I was like, "This is amazing!"
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Sam Parr | Is that a thing? Nap room, guys?
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Jeremy Giffon | Yeah, there I've met at least three or four different value investors like that who have a place to nap.
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Shaan Puri | I want to ask you about that same idea but in a different way. I'm going to give you my observation, and I want to know if you have any specific stories that line up with this.
So, my observation: we talked about Andrew Grind, right? He comes on here, acts super zen, super calm, super philosophical. He wants to be like Warren Buffett. He's playing bridge half the day, he's reading, and then once or twice a year, he just blesses us with a beautiful investment.
But, you know, one thing I have seen Andrew do is that he may not work super hard, but he works very fast. He is incredible at sniffing out opportunities. He is incredible at fast follow-ups. He moves really quickly when he's excited about something. That's the first thing I noticed.
The second thing I noticed about Andrew is that not only does he move really fast when he's excited about an opportunity, but he'll just keep texting you about it or prodding until he finds out more information. He'll fly to meet you right away, but he is also persistent.
For example, with some of the businesses, it's like, "Yeah, I used to love that business, so I emailed him every month for like five years." Then finally, one month, they were like, "Yeah, I am willing to sell the business." I think that was the case for maybe Letterbox or Dribbble, where he was just emailing the founder continuously. Aeropress was the same thing; he was just emailing the guy like, "Hey..."
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Jeremy Giffon | Yep. | |
Shaan Puri | Have you thought about selling this month?
Hey, have you thought about selling this month? Some version of that question was hanging around the hoop. In fact, when we sold The Milk Road, the same thing happened. We tried to sell the business, but we walked away from these guys at the last minute.
If I were them, I would have thought, "Oh, I hate those guys. Screw them! Let's kill those guys." Instead, they were super professional about it. They said, "Okay, no problem. Sounds like you want to go a different direction."
A month later, he said, "Hey, I didn't see any announcement. No deal went through." We were like, "No, we decided not to do it for this and this reason." He replied, "Well, we're still interested." I was like, "Wow, that was so different from how I would have done that."
So, we made it a practice for us whenever we're buying businesses. It's like, **a)** don't get personally offended when it happens, and **b)** we schedule an automated reminder a month or three months later. Let's just follow back up and make sure that we check in and say, "Hey, is there still an opportunity here? We still like the business. We liked it then, and we like it more now."
You know, if there's still an opportunity, let us know.
That idea of hanging around the hoop... Are there any other stories, either on Andrew's moving fast or being persistent and just following up over and over again, that you remember?
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Jeremy Giffon | Yeah, I mean, on the fast thing, it's annoying but it's true. The most successful people in the world respond instantly. I cannot believe it's kind of infuriating how true it is.
When you email the billionaire CEO, it's like a 30-second response. When you email his vice president, it can be a week or something. That is just so true. I really try and force myself to respond fast.
I wrote this little script for Gmail that archives my email every 24 hours, so I have to respond or it just disappears. I feel like it's a really good nudge to just send the simpler text message response.
Andrew is super, super high-paced and really energetic. The thing that comes to mind is when you're at lunch or whatever with him. If he thinks of someone you should meet, he will pull out his phone and send the intro email before you've even finished the sentence.
It's good and bad. Sometimes you're like, "Wait, I don't want to meet that person," or whatever. But it's also just this idea that if you think about it in terms of iterations, it's so many more iterations of just making something happen.
Also, movement, especially when you're an operator, creates information. You learn more by doing more things, and so it's a really powerful combo.
In terms of following up, I think just being a little... Andrew used to call it being "Dennis the Menace." Just being a little bit more willing to poke your head in, even when it might be a little gauche or whatever, can be really powerful. It's kind of that just like, "Hey, are you still interested in selling? Are you still interested in selling? Are you still interested in selling?" | |
Sam Parr | That "Dennis the Menace" bit, that's a good one.
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Shaan Puri | That's a good one.
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Jeremy Giffon | Like, that's a good one. He's willing to be the menace more than most people. He is willing to... he does menace. People do say, "You're menacing me, stop it." But it also really pays off because, just like, you know, it's... and if you think about it, it's like, okay fine, who's that guy who emails me every three months? Maybe you had a bad day or you're done with the business or whatever, and you're like, "Alright, I guess I'll see what that guy has to say," you know?
And yeah, it's incredibly powerful. More people should do it and just generally be less afraid. I learned this doing a lot of cold emailing for sales. You know, if you send out 1,000 cold emails, you're gonna get one or two responses that are just someone going ballistic, like, "If you email me again, I'll sue you," or whatever. But the other 998, it's either positive, no response, or neutral. It's just like all upside, basically.
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Shaan Puri | Alright, so I want to shift gears to what I call the **spicy hot take section**—the **semi-controversial opinion section**. If we were in a club right now, this is that part where the DJ starts; like, the beat's about to drop, and we all know things are about to get a little crazy, a little fun. That's what's about to happen in this podcast.
Okay, so here's the first prompt. I'm just going to prompt you, and then I want you to kind of give us your rant on it. The first prompt is about Mr. Beast. The question is: **Should Mr. Beast be selling chocolate bars? What should Mr. Beast be doing instead of selling chocolate bars?**
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Jeremy Giffon | Yeah, I mean, I think it's a testament to how valuable audiences are. All the most valuable businesses that have been created are like the worst businesses: chocolate bars, supplements, merch, that kind of stuff. These are really bad businesses.
So I always think, okay, what happens if Feastival is just the most successful creator brand? What happens when that is, you know, a really good business, a bank, or like a great software tool or something like that?
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Shaan Puri |
And then probably explain why chocolate bars or Prime from Logan Paul are bad businesses. Because somebody might say, "Oh, they're doing $100 million of revenue" or "They're gonna sell for a billion dollars." But you're saying bad business as a characteristic, like the underlying fundamentals of that category. So explain that.
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Jeremy Giffon | Yeah, the reason... like, you can still be very successful selling chocolate bars. Like, Hue Kitchen is one of my favorite companies, and Jason Karp has chocolate. I know he's very successful with that.
But it's kind of that thing of, like, you know, is it a restaurant or is it a SaaS company? There are levels of difficulty, basically.
So, you know, there are just businesses... if you could contrast extremes. A chocolate bar has low margins, is not a repeat customer, and is not a super necessary product or anything like that. Versus, say, something really low on the stack like home insurance or property insurance, or Visa or Mastercard—like something that you need every day. There are just better qualities of businesses.
Then, the other way you could think about it is: what would be the enduring enterprise value of the business without the person? So, Feastables is going to have a way harder time without Mr. Beast than, you know, if he built a bank. If the bank had hundreds of thousands of customers or whatever, ostensibly he could go away from that, and it might make the business grow slower or whatever, but it's still a really great business.
So, I actually view it as very bullish for the creators. It's very bullish for the space. It's kind of like you're making it work on hard mode, and I wonder what it looks like when it's kind of on easy mode.
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Shaan Puri |
Alright, next one: **Net worth is a silly metric**.
So why is net worth silly, and what's a better metric instead? You've told me something about personal cash flow or something like that being a better metric.
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Jeremy Giffon | Yeah, yeah. I mean, my other line on this is that being a billionaire is a state of mind.
First of all, the amount of billionaires is, like, it's so bullshit. It's always a complete matter of taste. You know, it's like, "Well, my company would be worth $1,000,000,000 if it were to sell." And even in public companies, it's not even real because most of the time, if you own a ton of the public company and you were to dump it all, it would massively drop the price.
So I really think it's kind of this thing. One, it's more like this mimetic label. Once you get labeled a billionaire, it kind of just sticks, and people just refer to it. I see this a lot. People use it as a way to describe someone who is in a certain class. I actually think it's more of a class marker than anything.
You know, he lives a certain lifestyle, he hangs out with certain people, he's like a billionaire. It really has nothing to do with whether or not you actually have $1,000,000,000 or you own something worth $1,000,000,000.
The other thing is, yeah, like cash... liquidity is so crazy. The amount of people who are labeled billionaires, and when you're like, "Okay, could you wire me $100 tomorrow?" the answer is no. I've been shocked by this over and over.
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Sam Parr | And over-explain that more. What do you mean? So, people who you have read about?
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Shaan Puri | Saying no because they don't want to wire you $100,000.
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Jeremy Giffon | It's definitely my... it's definitely.
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Sam Parr | Is that the time? Can you wire me $100? No.
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Shaan Puri | Not a queen, man.
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Sam Parr | No, I can't.
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Jeremy Giffon | Can't do it probably, but no, like people don't keep a lot of cash. It really is like one way to look at this is in a party seed round or whatever. I'm always shocked by who doesn't wire the money or how you have to chase them down. Or they have to wire it in tranches or anything like that. I think it's just that cash flow is so far from net worth. And so, like... | |
Sam Parr | And you had like... you... sorry, go ahead, Sean. What?
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Shaan Puri |
Sam, we have a funny experience with this. We were at a lunch with somebody and you were asking them, "What level of money made a difference? Like, where... what's the next level of unlock?" And you're like...
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Sam Parr | He said, "25 this much," or like you.
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Shaan Puri | You said a number that was like a net worth number, and he was like, "Yeah, that was a good number." You know, when I was doing that every year, then blah blah...
He was like, "Wait, annual link?" You were like, "Annual cash flow?" Was that because I was kind of saying the whole net worth?
And he was like, "Yeah, that's what I was doing in annual cash flow." It was very clear that if you had that much in annual cash flow, you essentially had infinite money.
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Sam Parr | Yeah, well, it was like we were thinking 25 is a good number. He goes, "Yeah, I agree. Having that come in every year is awesome." And I was like, "Oh yeah."
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Shaan Puri | I literally, like, in the booth of the restaurant, just walked down to the bottom. Yeah, I was under the table and I was just like, "Oh, what's down here?" I mean...
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Sam Parr | It's cool. Did I read that you tried to create some kind of equivalent, like a chart of cash flow to net worth?
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Jeremy Giffon | Yeah, I thought a lot about this. So, part of that is talking about one weird thing about Tiny. I’ve probably talked to 3,000 or 4,000 bootstrap entrepreneurs, and the vibes that they give off... I don’t know. I’ve met a handful of billion-dollar net worth founders, and the vibes between them and someone who makes, you know, $10,000,000 a year from their Chrome plugin or whatever, are very different.
There’s something about how free they feel when they have that cash flow coming in. Because there are two things: one is that maybe the net worth never actually translates into cash. A very funny thing is that all the Silicon Valley guys, when behind closed doors, are really envious of the New York hedge fund guys because they’re so liquid. They might not actually be as rich per se, but they make so much cash that it’s like it may as well be a whole different thing.
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Shaan Puri | How much do the hedge fund guys make in New York?
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Jeremy Giffon | Yeah, this is another hot take. When I started getting interested in making money, the most common thing you hear is, "You cannot get rich on a salary." You gotta own equity; you gotta own a business.
In New York, there are lots of guys—lots of guys—making $5 million, $10 million. There are people making $100 million. I've met one guy at a big hedge fund.
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Sam Parr | What is it like as a portfolio manager? Is there a bonus?
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Jeremy Giffon | Yeah, there's at least one guy out there who makes $1,000,000,000 in annual compensation.
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Sam Parr | But what's normal? Like, let's say you're hanging out with your New York finance friends.
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Jeremy Giffon | It varies... it varies a lot. But in a good year, an analyst at a big hedge fund will make between **$3 million to $5 million**. In a really good year, it can be a lot more than that because usually it's a percentage.
You know, being a senior person at a big fund, you make a lot of money and you kind of take no risk in some very real sense. I think that was certainly surprising to me.
Just to come back to the cash flow thing, Andrew was always such a cash flow person. At the time in Canada, there was just no funding, so you had to live or die off cash flow. I think it's more instructive to think about money in terms of cash flow.
The other thing is, when you have a net worth—like say you sell your business and you just have a bunch of cash—even if, psychologically, Sam, I know you're big on the money psychology stuff, the idea that you're living off a fixed or finite amount really changes how you view things.
Even if it's a ton of money, versus the idea of, "I make, you know, whatever, $100,000 a month," just the idea that it just comes in... it changes a lot.
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Sam Parr | Me and Sean have this good friend who sold his business and walked away with **$60,000,000**. I said, "That feels awesome!" He replied, "It feels horrible, man." I asked, "Why?" He said, "I'm a brown immigrant. I need cash flow. If I don't have cash flow, I feel broke. I need money coming in every month. I can't spend this."
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Shaan Puri | I think we should wrap it up, Jeremy. Where should people find you if they want to get more of you, follow you, or become big fans of you? Where should they go?
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Jeremy Giffon | Twitter, Jeremy Giffon. My DMs are open. Yeah, that's the best place.
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Shaan Puri | Awesome! Thanks for doing it, man. Really fun.
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Sam Parr | Alright, hanging.
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Jeremy Giffon | Thank you, guys.
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Sam Parr | It's fun. That's the pod.
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