My First Million Full Podcast - 03/26/2020
Trends book, Y Combinator, and startups - April 13, 2020 (almost 5 years ago) • 01:02:18
Transcript:
| Start Time | Speaker | Text |
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Shaan Puri | Sam do you have the coronavirus | |
Sam Parr | I was not able to get tested, but it appears so based off of just symptoms from...
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Shaan Puri | oh no | |
Sam Parr | according to my doctor so who the fuck knows | |
Shaan Puri | but you were saying so far kinda mild | |
Sam Parr |
Today's a little worse, today for sure. The way... Okay, so you know how everyone says it's like "not that bad" or "bad"? That's hard to quantify. So the way that I've been quantifying it is: would I stay home from work today if this was last June? Right? And yesterday was the first day that I would have stayed home.
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Shaan Puri | gotcha | |
Sam Parr | and just barely today for sure I would stay home from work | |
Shaan Puri | I see | |
Sam Parr |
So no, it's not that bad, but dude, shortness of breath is scary. Because like, it's not bad, right? I can breathe perfectly fine, but it definitely is like, "Oh my God, what happens if this gets any worse?" Right? And it's scary.
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Shaan Puri | I've been following a bunch of people who are pretty fit. There's one guy who's an Olympic athlete; I think he's an Australian swimmer or runner. He has it, and he's like, "Yeah, mate, this is tough." He talks about shortness of breath and how it's impossible to train like this.
Then, somebody retweeted it and pointed out, "This guy's an Olympic athlete, by the way." He was basically saying, "Yeah, this gets tough."
There's another guy I follow who's healthy; he was on *The Bachelor*. His name's Colton, and he got it too. He's a pretty jacked guy; he was an NFL player for a bit. When he does his little Instagram posts to update his fans about how he's doing... | |
Sam Parr | he's saying it's bad | |
Shaan Puri | Yeah, he's just like... you look at him, he looks raggedy as hell. He is getting knocked out by this thing, and it's been like a week.
He's doing just at-home treatment and he's quarantined in a room. His girlfriend and their family just deliver meals to the door. He kind of opens the door, drags it in, and then eats.
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Sam Parr |
I haven't left the home in about a week. On Saturday I went for a walk, but besides that, or since Saturday, I haven't gone on a walk. I haven't left the house at all.
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Shaan Puri | wow | |
Sam Parr |
You know what's crazy? So, do you know how you hear about T.I., Martha Stewart, and Dr. Dre all serving house arrest? Their house arrests are definitely different because their homes are massive.
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Shaan Puri | right | |
Sam Parr | but a | |
Shaan Puri | bowling alley in it | |
Sam Parr | But house arrest would suck. Now that I realize it, I'm like, it wouldn't be that cool, right? It is still a little bit of an arrest.
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Shaan Puri | Yeah, it's crazy. Okay, well, I hope your symptoms are mild. I hope it's just actually the cold because...
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Sam Parr | I think it's fine. We'll see. I mean, whatever, it's all the same, right? Right? Alright.
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Shaan Puri | Well, the show must go on. So, what do we want to talk about today?
First, you guys released this book thing. What is that? I saw that yesterday.
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Sam Parr |
It's just to get more sales trends, to get people in the door, and it's incredibly effective. What we did was we put together all of our best talks from HubSpot Ron and we transcribed them.
When I first started the company, do you remember this book called "Founders at Work" by Jessica Livingston? I love that book... it changed my freaking life. And it's not even a book technically, but like she didn't do any work other than what you and I do every week.
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Shaan Puri | right | |
Sam Parr | And she just transcribed her interviews. So I was like, "Let's do that." And so we did. It's pretty cool.
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Shaan Puri | Yeah, I downloaded it and I started to skim through it. I was reading the Pandora guys one, and that's good.
Okay, where do people get it? If they're listening to this and they want that, where can they find it?
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Sam Parr | Good question. I want to see... We just posted it on Tuesday, so let me see if it even ranks on Google. Let's see.
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Shaan Puri | We'll put a link to it in the description if you want to read this thing. Is it free, or do you have to become a subscriber? It's a dollar.
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Sam Parr |
It's a dollar, and everyone's like, "What's the catch?" I'm like, "Well, it's a dollar, and then you're gonna be automatically subscribed to Trends, but you have two weeks to cancel." So get value or just sign up and try it, and if you don't like it, then just cancel and you're only out a dollar, right?
So if you go to trends.co, you should see that at the top like a link. Okay? But it's not even ranking for Google yet, and hopefully we can link to it in here.
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Shaan Puri | okay cool we'll do that that's that's fun that's exciting I'm glad you guys did that | |
Sam Parr | yeah it's great the cold email lecture one was even better I mean that people love that shit | |
Shaan Puri | Yeah, okay, cool. So we wanted to... we did a bunch of the YC companies a couple of days ago, on Tuesday. The reaction was good; people wanted more. We only did 5 or 6 of them that time.
The way I'm thinking about this is like, I listen to a couple of sports podcasts, like the Bill Simmons podcast. Every year, around the NFL draft, there are these special annual events that you do deep dives for. To me, that's kind of what the YC demo day is.
I could see us doing this as a recurring thing in the podcast, where it's like, "Oh, that's our version of the NFL draft." You see all these hot prospects, and you're scouting them. You're checking them out and using them to see what the smartest people are working on, where they see the opportunities, and then what we think about those.
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Sam Parr |
What did your friend say? I... because I talked to Jack and a couple other guys about this, and they go, "I think the batch is pretty weak." I totally disagree. I think there's a bunch of amazing things.
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Shaan Puri | So, people who have been going to YC Demo Day for years, this is like their favorite thing to say: "Oh yeah, the YC batch this year is weak."
I don't know to what extent that's true versus just a cool thing to say. You sound cool by saying it. I was skeptical of those comments. Jack's not the type to do that, though.
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Sam Parr | He wasn't totally negative, but he was basically like, "It's okay." | |
Shaan Puri | So, what I heard from people who have been going to Demo Day for a while is that, in the past, it was like the glory days. There was less competition on the investor side, and the companies were of better quality and fewer in number. This allowed investors to go deeper with them.
One of the problems now is that, for example, Demo Day has become an event where they get up on stage and talk for, I think, one minute. They do a one-minute presentation, and then it's like, "If you're interested, come talk to me." There’s a line of investors already wanting to talk to that person after the one-minute pitch.
It's so competitive that half the deals are already done before Demo Day, just because people swoop in beforehand. The other half get done shortly afterward. A lot of smart people are saying, "Dude, this is a frenzy that is not smart."
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Sam Parr | now but it's but it doing 2 | |
Shaan Puri | To a one-minute pitch, it's just a slide—one slide and two paragraphs. Then you decide to talk to them more or not. | |
Sam Parr | And I think that's great. To be honest, if I was an operator—which I am—I see these and I'm like, "Oh my God!"
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Shaan Puri | for the founders it's fantastic | |
Sam Parr | well I'm like I should do that | |
Shaan Puri | And even for the investors, I actually think this one's better because it's digital.
So, it's like you say, it's like Tinder. You basically, when you see the listing, you say "yes, I'm interested" or "no, I'm not." If you say yes, then they get a request that says, "This person wants to talk to you," and then they can say yes, and then it matches.
I think that's actually better this year because it's digital. I think people are going to take time to have conversations. Whereas when it's sort of a live event, it's again, it's just like a meat market. You're just sort of... it's like, you know, the old Wall Street trading floor. People are just standing up and yelling things. It's a little bit faster-paced, and people don't feel like they're able to make thorough decisions.
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Sam Parr | And what's in... Well, I think what we... I don't know if we told this to people. I don't know, we might have to blank this out. We won't name names, but people can't see what you and I see.
So, we're reading off like a private list, and I don't think we're breaking any of the rules. I mean, it's not like... it's not like... you know.
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Shaan Puri | I don't think so. TechCrunch has reported on all these companies now. Also, there are some companies that say off the record, and we just won't talk about this. No problem.
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Sam Parr |
You want... Can I... Wait, yesterday I was pretty hopped up on DayQuil. The other day, did we talk about this? So here's a theme that I noticed:
We talked about last time how there's like "X of India," right? So right now I see "Bill.com of India." This thing's for Latin America...
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Shaan Puri | yeah flexport for africa yep | |
Sam Parr | okay so we saw that a lot we saw that a lot and I like you | |
Shaan Puri | Said the India thing. Last time I went back and looked, there are like 28 companies in the batch that are Indian startups. Like, India took over the spelling bee, and now we're taking over Y Combinator (YC). That's what's going on. | |
Sam Parr | So at first, I was like, "I don't know if I like that." Not the country thing, but like, "We're just gonna... we're this business, but of that region."
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Shaan Puri | right | |
Sam Parr |
And I think I've changed my opinion. I think it's cool because Y Combinator is supposed to be all about innovation and... well, it's not exactly innovative to say you're gonna be the "SmileDirectClub of Latin America," but I still think it's cool. That's one I want to bring up. Did you... did we talk about that?
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Shaan Puri | last week talk about that one no | |
Sam Parr | did you read that | |
Shaan Puri | I I didn't look into it but yeah we can talk about it | |
Sam Parr | Okay, so what was it called? They don't... How do I do a search on here? But anyway, it was called...
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Shaan Puri | do you see | |
Sam Parr | I can't do like a they're not letting me do a control f | |
Shaan Puri | oh really | |
Sam Parr | Oh no, it is okay. It was called Moons. They just say Smile Direct Club but for Latin America.
Here's why I like this: in one of their decks, they go, "Smile Direct Club became a $1,000,000,000 company in 5 years. We're gonna do it in 4."
I looked up the people behind it, and they previously worked at Rocket Internet, which is notorious for cloning companies in different industries, like cloning Amazon but for Thailand or something.
I mean, there are pros and cons to that, but it definitely creates some value. The fact that they said that at Y Combinator, I just think they're ballsy, and I love these guys.
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Shaan Puri | Yeah, so there's a bunch of these: **Gusto for Africa**, **Acorns for India**, **Cameo for India**, **Flexport for Africa**, and **SmileDirectClub for LATAM**. Right? Like, this is a... you know, it's not like a groundbreaking idea, but it really does stand out when you look at the list.
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Sam Parr | I wanna do the opposite I want someone to tell me what's cool in india that's not in america | |
Shaan Puri | So, I'm doing that. I'm basically putting together a report of the coolest companies in India that don't have analogs here.
For example, there's this company called **Byju's**. Have you ever heard of Byju's (B-Y-J-U)?
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Sam Parr | and b y j u | |
Shaan Puri | yeah this guy basically started off as a teacher and he would teach like essentially test prep because | |
Sam Parr | oh you freaking love this | |
Shaan Puri | I think I've told you about this before but basically this | |
Sam Parr | yeah you've you you you like you say that's your dream | |
Shaan Puri | Yeah, this guy started off as a small teacher in a town, basically. He was doing test prep and then sort of got bigger and bigger. People wanted to learn from him to the point where he was selling out stadiums of people coming to watch him teach math. When I saw the picture of the stadium, I thought, "This is..." | |
Sam Parr | that's right remarkable | |
Shaan Puri | Then he turned it into an online learning platform, basically a video-based teaching platform, sort of like Khan Academy but for profit. It's an $8,000,000,000 company now. This guy, Biju, is sort of one of the youngest billionaires in India. He's a T-shirt turned billionaire, which is very rare.
You know, cool product, cool company. There's actually a company in this Y Combinator batch that's trying to compete. The former first instructor of Biju said, "I was the face of Biju because I was in all the videos." He left to start his own thing and mentioned, "Here's the dirty secret about Biju's platform: it has very low retention. It's great at making money and getting people to sign up, but less than 15% of people stick with the course as it goes along. We're doing this another way, and we're going to win." They're in this batch as well.
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Sam Parr | So that's interesting. I would love to ask you questions about that.
First, I want to tell you that I'm looking at their Wikipedia. It says they are worth **$8,000,000,000**. They do **$80,000,000** in sales, and then it says they only have **5** employees.
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Shaan Puri | Yep, that's wrong. Also, they do more revenue. Recently, they were over $100,000,000. I think I read something where they were doing over $100,000,000, but there's no way they have 5 employees. | |
Sam Parr | That'd be amazing! Why is this big in India but not in America? Is it because Indians love math and science? I mean, yeah.
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Shaan Puri | So, education is like, you know, God in India. You can be dirt poor in a village, but you'll do anything to educate your kids.
Even the sort of Indian people in America, you probably have noticed, are like, you know, their parents are pretty strict about education. You gotta get good grades and all that stuff.
Indians are willing to pay anything for education, and they don't really pay much for anything else. Entertainment is usually lower on the list, although Bollywood does well. But, like, on a per capita basis, where are you gonna spend your money? Education is sort of number one for Indians.
So that's the first part. The second part is they have such a huge population. You can take a really small amount of money from such a huge number of people and build a very big company. That's the second part. | |
Sam Parr | how how much bigger is india than america in population what three times | |
Shaan Puri | Yes, 4 times. I think it's over 1,000,000,000 and us at 300,000,000. I believe so, it would be about 4 times.
Of course, not all those people have smartphones, and not all those people have money. But, you know, India has sort of the largest growing middle class. So that's some of the reason why this works. It's because people are willing to pay for education.
There are so many people that if you take a few bucks from each, everybody's willing to pay for this because it's education. That adds up.
But, you know, 8,000,000,000 is sort of outpacing their revenue growth, right? So I think part of it is the story of what this becomes and their sort of defensibility. That's probably why they're valued so much higher than their revenue would suggest.
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Sam Parr | do you think that that that can be popular in america | |
Shaan Puri | oh I think so like I think khan academy is fairly popular and it's mostly in america | |
Sam Parr | no money though | |
Shaan Puri | No, it's just... yeah, it's a nonprofit, and they don't pour money into growth like these guys do. I'm sure these guys are aggressively trying to grow and using their payback to sort of fund more growth.
But yeah, I do think something like this can work here. We'll see; there might be other reasons why it doesn't.
There's a whole bunch of other companies. I basically found these five guys on Twitter who are in the Indian startups scene that are actually really smart. Once I started following them, I began seeing awesome companies all the time.
I'm trying to put together essentially the Mary Meeker Internet Trends report that she does every year for global internet trends. I'm doing that just for the state of the Indian startup scene.
Here's what you need to know because a lot of people in America want to know but are not going to do the research to figure out what's going on in the Indian tech scene. I think I can distill it down.
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Sam Parr | I am writing that down and probably gonna steal that that is a great idea | |
Shaan Puri | okay great | |
Sam Parr | What did you call that? It was cool, like a trends report by Mary Meeker for different countries.
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Shaan Puri | yeah mary meeker for for for india basically | |
Sam Parr | Can I tell you why I think that's a great idea? It's because... have I told you about Kevin Ryan?
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Shaan Puri | no maybe you have he's the he's in charge of that media company right | |
Sam Parr | So, Kevin Ryan was the 20th employee at DoubleClick. DoubleClick ended up becoming AdSense or AdWords, and Google bought it for $3 or $4 billion. Very successful.
He was the CEO and the 20th employee, so he was successful in that regard. With his earnings, he told me that he made $20 million personally. He then went and started something called Silicon Alley Group.
Silicon Alley Group created MongoDB, which is now a publicly traded company worth billions of dollars. They also created Business Insider, Zola, and about four other things. One of the things they did was create Gilt Group, which is like flash deals for women's clothing.
The reason he started it was that he called and emailed them, asking all these questions, and became friends with them. He told me that he was walking down the street in Paris and saw a long line outside of a women's store. He asked a woman, "What is this line for?" and she replied, "Well, they do these deals every day, only for an hour at noon."
So, they started doing them online, but they still do them in person. He thought, "Oh cool, I'm going to do that in America," and that's how Gilt started.
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Shaan Puri | Nice, yeah. So you're basically saying to import the sort of behaviors and innovations you see in foreign markets back into the U.S. Not just right now; the U.S. is an exporter of innovation, and you're saying we can also become an importer of innovation. | |
Sam Parr | yeah I mean look you did it and you kinda or you tried to do it with sushi trains | |
Shaan Puri | Yeah, yeah, yeah. When we did their sushi thing, that was common in Australia. In the U.S., I never saw it.
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Sam Parr | and I don't think it still has caught on but you you did the same thing | |
Shaan Puri | well we tried | |
Sam Parr |
We tried. You definitely tried, and it was a good swing. I think it was a great swing.
In case you're curious, I just looked it up while we were talking. Khan Academy, because it's nonprofit, has all their financials available. They do about $80 million in sales.
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Shaan Puri | Yeah, so actually, on par with Biju. Does it say real quick where you're at? How many students do they have that are active learners or anything?
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Sam Parr | It does. So, if you go to **Khan Academy Annual Report** at **khanacademy.org**, you can see all the information.
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Shaan Puri | Okay, I'm gonna check that afterwards and I'm gonna do a report on them because I'm an education nerd. So, I'm gonna bring them to the table for the next podcast.
Alright, so let's go back into the YC companies. Let's just trade off. You do one that you find interesting, and I'll do one that I find interesting. Go for it!
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Sam Parr | I did smile direct club for latin america your turn | |
Shaan Puri | My turn. Alright, so I'm going to do this one. I don't know exactly how you say it: "Ease Wholesale" or "Easy Wholesale."
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Sam Parr | I love that you're bringing that up yeah | |
Shaan Puri | Really interesting company. So basically, the premise is that it's a marketplace for buying and selling used smartphones.
I'll tell you some of their stats. I haven't verified how real these are, but they say that used smartphone sales are **$46 billion** a year in the annual market. They also claim that **230 million** smartphones are sold per year. You can do the math if that checks out.
What they did is create a marketplace where, if you have phones and you're a wholesaler, you can basically say, "Hey, I'm either looking to buy or looking to sell." They made it like a stock market. You put up a bid, saying, "I'd like to buy this iPhone," and if somebody has it, they can fill your order. They can close your transaction out or your ticket out.
Alternatively, you could say, "I'm selling **100** of these specific Android phones," and somebody could respond, "I'll buy **10** of those." They made it easy.
They mentioned that most of this used to happen through Facebook groups, WhatsApp, and sort of the underground, you know, just using social tools. But there wasn't a marketplace that was focused on this.
So far, they have **$400,000** in GMV (Gross Merchandise Volume). You can assume maybe they're making, you know, in the tens of thousands of dollars themselves.
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Sam Parr | so gmv gross merchandise | |
Shaan Puri | volume | |
Sam Parr | volume okay | |
Shaan Puri | So basically, how much is total sold through their market? If a cell phone sells for $1,000, that's $1,000 of GMV (Gross Merchandise Value). Their cut might be 5% to 10% of that.
This is because the used smartphone marketplace is this big, and they have some stats about how fast it's growing. They say that used smartphone sales are growing faster than new smartphone sales per year. This is because, you know, Apple is trying to make the old model irrelevant so quickly. Sure, some people do upgrade, but there are still all these other phones out there that are still very good phones.
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Sam Parr | I can afford new phones. Up until my most recent phone, all of them have been used.
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Shaan Puri | And the best part about these guys is, I believe that they were bootstrapped. I'm not 100% sure, but they've gotten to this point. They themselves were former buyers and traders of cell phones. They had sold, prior to this, just as brokers, $8,000,000 worth of cell phones.
Then, they decided to create a sort of technology marketplace out of this. So, if you think about it, it's a marketplace model. I love that they're going for the used smartphone market. I love that they're doing a marketplace. I love that they came from a background where they actually did this manually before and were sort of prolific brokers.
A++! Love this company here on the YC list. | |
Sam Parr |
Okay, I like it. Let me play devil's advocate here, which is... okay, so I looked up a few things.
First of all, I think that this is a lot harder than people think. The reason why I think it's a lot harder is:
1. I think it's incredibly competitive with a lot of people who are already very established.
2. I think getting distribution and getting eyeballs on their product is gonna be prohibitively expensive, maybe.
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Shaan Puri | right | |
Sam Parr | I also think that so there's a company called swappa do you know swappa | |
Shaan Puri | no but I see your note here | |
Sam Parr | Okay, here's why this is interesting. I've actually used it before, but what's interesting is I posted—or I have a thread that I found—of the guy who's behind Swappa. It's the same thing but slightly different. I don't know how it's slightly different, but it's the same. You buy used cell phones.
What's interesting is that in 2011, the guy who started Swappa posted on Hacker News. He said, "Hey, I'm launching this thing on the side. Here's what it does." So you can actually go and see how he started it.
I don't know how big it is right now, but it comes up number one when you Google "buy used cell phones." So I would imagine it does... I bet you it does $50,000,000 in sales at least.
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Shaan Puri | mhmm | |
Sam Parr |
Because I'm comparing it to the person that's number 2, which is Gazelle, which is a big company. But anyway, Swap Up bootstraps and so... if I was greedy, if I was these Eze guys (how do you say it, "Eze"?). Yeah, if I was these Eze guys and I... easy? Or what did you say?
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Shaan Puri | let's go with easy | |
Sam Parr |
If I was easy, I would be greedy and want to raise very little money, like less than $1,000,000, and just see how I can make this really profitable. But...
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Shaan Puri | Yeah, they say they launched 3 months ago with $400K GMV monthly and an 8% margin. It's profitable and growing at 20% month over month. Of course, it's easy to be profitable when you have 2 people and you're not taking salaries. But nonetheless, I think this could be a profitable business because of the sort of take rate. | |
Sam Parr | And here's why I don't know if I would raise money if I were these guys. Did you see what happened two days ago? Do you know about OfferUp and Letgo?
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Shaan Puri | I know about them was some something bad happened | |
Sam Parr | offerup and letgo combined oh | |
Shaan Puri | interesting okay | |
Sam Parr | they merged | |
Shaan Puri | and who was the sort of bigger parent was it offerup | |
Sam Parr |
Yep, OfferUp was the bigger parent, and they raised an additional $120 million to make this all work. And so, that's not a good sign.
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Shaan Puri | And they have a pretty cool story. I don't know if you guys told it or where I read this, but OfferUp has a pretty cool story about how it started. I believe—I might butcher this, and I might be thinking of something else—but I believe they were in Canada.
People had these buy, sell, and trade groups on Facebook, and they saw this behavior of local used goods selling happening. Then they started to build off the back of that, these Facebook groups for buying used stuff, and they built OfferUp from that community of people.
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Sam Parr | So, I dig that they also raised **$500,000,000**, right? And they haven't hit terminal velocity. I mean, they're not a player yet compared to eBay and Craigslist.
So, I would say if I was these guys, if I was Eaze or Eazy, I would be very happy to start and own that. If I was an investor, which I am, and I just came across these guys, I think I would invest a small amount of money because I think I can make money off of it.
But I don't know if I would raise venture capital, like a significant amount. Yeah, I think they still need to prove a lot.
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Shaan Puri | yeah for sure but I think it's a good investment I like them alright let's go to the next one | |
Sam Parr | Okay, let's build a plane. I love this! This could potentially be a $10,000,000,000 company, I think.
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Shaan Puri | okay tell tell me why | |
Sam Parr |
Okay, so "Build a Plane." What... So what they do is they look at it. It's boring. Let me see, I'll try to read the exact description, but what they do is... it's project management for construction.
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Shaan Puri | okay | |
Sam Parr | So, let's find it. Build a plane. But here's why I think it's cool. First of all, remember how I... | |
Shaan Puri | I was just going to read their description so people have more context.
We're a powerful dashboard for construction companies. We give them visibility and control of project finances, change management, documents, compliance, and communication.
They built a different company that got acquired for $80,000,000 prior to this. They say Build Plan is solving the core issues of being the centerpiece of projects, empowering full automation.
Basically, they're saying that controlling construction costs and making them more efficient represents a sort of $10,000,000,000 opportunity globally.
Here are some of our features. Here's our product. Check it out.
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Sam Parr |
So when you're building a 300-unit apartment building, and you want to see:
1. How much everything costs
2. RFPs (Request for Proposals) from your vendors
3. What your cash flow is
4. What your cash output is
Simple, right?
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Shaan Puri | Yeah, I think this is one of those situations where if you win, you're in such a big space that your prize is humongous.
It's hard for two reasons. First, it's hard to get any sort of blue-collar project industry to adopt software. That's always a challenge. When you do it, it looks like, "Oh yeah, obviously they used to be using paper and pen, or they used to just use clipboards," and you know, whatever. It looks obvious in retrospect.
But then there's also the fact that there are so many cases where it's like, "Yeah, our thing is better. It would have saved them time and money," but they just didn't put it in their workflow.
So that's one piece. On the other side, I think there's a lot of competition. I know there are several companies that, you know, every year, there are like 15 companies that try to do project management software for construction. The question is, what do these guys know that the others don't? Or what is their unique angle? That didn't come through for me in this pitch. | |
Sam Parr |
It did not come through to me either, but just because the market is so big, if I was these guys, this is one of the few companies where I'd be like, "Get as much cash as you can right out the gate and just throw it at the wall and go big or go bankrupt."
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Shaan Puri | okay I'm not sure why why why do you advocate for that | |
Sam Parr | because it just what | |
Shaan Puri | do you think the cash does for them why do they need so much cash | |
Sam Parr |
I would hire just a... a math... Okay, so there are a few ways that you can grow:
1. You can grow through content marketing
2. You can grow through word-of-mouth, which happens way less than people think
3. You can grow through network effects, like Facebook
4. You can grow through paid advertising, which is really easy if your product is cheap
5. Or you can grow through hiring a sales team
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Shaan Puri | right | |
Sam Parr | I love products that are priced in such a way where you can afford to hire a sales team. You cannot afford to hire a sales team if your product is probably less than $10 a year.
So, what I would do is create a large office in Dallas, a huge office in Charlotte, and then maybe an office in Nashville and Dallas, and then like maybe New York, right? I would just recruit all the salespeople from older competitors, wrap my office in like the startup "y" bullshit, and go for it.
Okay, I like it. Do.
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Shaan Puri | And I think what you... what I heard that you didn't say explicitly is that even though this pitch didn't have everything, it had enough for you. Like, I need to know more. I want to know more.
So sometimes, you know, there are better pitches on this site right now, but there are not better markets. For example, there's this one about a rewards program for gamers. I hate this company. I hate this idea. I hate the market that they're in. It's super hard to make it work. Even if they have a great pitch, even if they have traction right now, it's a stay away from me.
Whereas construction tech is a "come closer." Let's learn a little bit more, right? Let's get some coffee.
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Sam Parr |
It's like building freaking driverless cars right now. It's like you'll probably fail, but if you make it work, it's like the greatest thing ever. Another example is Homebound. Do you know Homebound?
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Shaan Puri | not well | |
Sam Parr |
Okay, it's launched by Atomic... Atomic Labs, or I don't know what they call themselves. Atomic, it's like a startup. I don't know, they just launch companies. They've launched Tim's and they've launched a few others. Tim's, they're...
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Shaan Puri | like monkey inferno which I used to run like a studio that that creates companies | |
Sam Parr | Yeah, they launched one called **Homebound**, and they're doing this but only for people who are building single-family homes.
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Shaan Puri | right | |
Sam Parr | and it's and it's got some traction | |
Shaan Puri | that's cool alright I got another company for you ready | |
Sam Parr | please tell me it's the strippers on demand | |
Shaan Puri | No, but that one's good. I wish I had just talked about that.
So, there's this cool story. This is not a Y Combinator startup, although it maybe should have been.
We're basically in Portland, you know, right now with coronavirus. Everybody's getting deliveries, right? I have a friend who runs a company called Farmstead, and they do grocery delivery. They've been doing this for, you know, two years now.
All Farmstead does is deliver your staple foods: milk, eggs, bread, stuff you need repeatedly. You don't need to go to the grocery store every time you run out of milk; that kind of sucks. So, they just deliver it to your door. They're like a version of Instacart that's just focused on the staples.
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Sam Parr | okay | |
Shaan Puri | And also, you know, for the key difference: Instacart goes to the grocery store, buys stuff, and marks it up. These guys are the grocery store. They buy wholesale and sell retail, so they don't mark it up. They actually get good prices.
So, okay, good startup. They are exploding—20x, 30x—oversubscribed on demand right now because everybody is ordering food in because of coronavirus. Right? So, everyone's getting to try this delivery thing; they're forced to do delivery for the first time.
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Sam Parr | and what's it called again | |
Shaan Puri | those guys are called farmstead | |
Sam Parr | oh not farm theory okay farmstead okay farmstead yeah this | |
Shaan Puri | Is my buddy's company. He listens to the podcast sometimes, so shout out if he's listening!
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Sam Parr | full name love the name | |
Shaan Puri | Yeah, great name, great band. It looks good and the product is good, so I actually like it a lot.
Now, one problem that they're having, and that every delivery company is having right now, is that they're short on drivers. They're short on delivery people. They have too much demand and not enough ability to fulfill it.
So, this company in Portland started hiring out-of-work people from the coronavirus pandemic. Now, what industry has been affected by this? Strip clubs. Nobody's going to strip clubs right now during the coronavirus. So, they hired the strippers to do delivery, and they got a bunch of PR from this, which I think is interesting.
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Sam Parr | is great | |
Shaan Puri | I gotta find out which company it was. I don't know if it was DoorDash or whatever. I don't even know if the company really did this or if the strippers just started signing up for this. It's like, "Oh, we gotta make money, so what are we gonna do? I guess we should become delivering people right now for the interim."
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Sam Parr | I see it I see it | |
Shaan Puri | which do you know which company it is that they're delivering for does it say | |
Sam Parr | He jokingly calls it "Boober Eats."
So, it all started as a joke with Lucky Devil Lounge, one of his clubs. No one was coming in, and they said, "We need to do like Uber for weed delivery or Looper for sex lube delivery." I was like, "Let's do Boober," which is a topless girl who picks you up and takes you to a strip club.
So anyway, that's the joke. I don't think it's real, but it did get PR.
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Shaan Puri |
Yeah, it did get PR. I think I did read that they were like, "The gig workers are basically shifting from one [job] to another." Right? If you can't... if the demand has gone down in this area, it's gone up in delivery, and then more people are becoming delivery drivers. So anyway, I thought that was interesting. It was just... there's...
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Sam Parr | Another one, it's called "Meals for 4-Inch Heels" or "Meals in 6-Inch Heels."
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Shaan Puri | Well, I don't know if it's smart to create your own delivery company, but I think, no, if you're a stripper and you gotta work right now, you know, girls gotta eat. Gotta do something.
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Sam Parr | well I'd bring up another yc one let's let's see what else you got | |
Shaan Puri | So, ditto. I think you'll like this one. Ditto's tagline is: "It's a tool for teams to manage copy from design to production."
So, copy is something we've talked about. I always define copy because I remember when I first moved to San Francisco and got a job in tech. Somebody asked me, "Can you give me some copy?" I didn't know what the hell they were talking about. I thought maybe they said coffee or that I had to go make a copy of something. I didn't know what copywriting meant.
So, copywriting is just like the words on a website, the words on your product.
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Sam Parr | it's it's a very vague word | |
Shaan Puri | Yeah, so, anyways, what these guys did was they said, "Alright, we have all these tools like Figma, you know, Photoshop, whatever. We have Google Docs, spreadsheets. So we have all these collaborative, well-made SaaS tools that help us collaborate on design, engineering, or modeling in Excel.
So why isn't there a tool that helps teams collaborate on their copy?"
They basically built a tool that says, you know, their pitch, which I think you would agree with, is that **copy is the most under-leveraged aspect of product building**. It has a higher ROI and is easier to change than almost any other part of your product. It could drive sales faster with better copy, which I agree with.
What they're saying is that teams don't have a great way right now to collaborate on their copy. So they built a tool that lets you sort of click and make suggestions on what the copy could be or should be, or look at what it was before, that sort of thing.
The product's not super clear exactly what it is, but I like the pros.
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Sam Parr |
I think it's interesting... Okay, but let's talk about this. The people who started it... One of the women... Oh, they're young, but okay. They, so he said, came from venture capital. They were like interns at VCs. So I was gonna say, while they're really young, their first jobs before this were internships. Good for them!
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Shaan Puri | So, I believe their claim: we think copy will be the new visual design. I think that's true. Design has become super important over the last 10 years, and now every company just sort of knows that, hey, design is super important. Usability, UI, and UX are super important as well. However, nobody talks about copy.
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Sam Parr | it's not the fucking new version of that it always has been it just people just | |
Shaan Puri |
Are AI copywriters in vogue in tech companies? Yeah, I'm at a tech company of 2,000 people. I don't think I've heard the word "copy" once. I don't think anybody has a strategy to make our emails better or the text on our website better, you know?
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Sam Parr | It's very encouraging to hear. I don't... this won't do that though. This is like saying Figma is gonna make your website look better.
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Shaan Puri | Yeah, that's true. You know, the tool... I think if you make it easier to use, people will do it more.
But right now, the problem is that people aren't aware or considering this as something they need to focus on. So, they need to educate the market on the importance of copy first, and then on having an easy tool second.
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Sam Parr |
I think it's cool. I think it looks great. There's one red flag that I have, which is their pricing. It's $12 per person per month.
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Shaan Puri | right | |
Sam Parr | It's going to be too hard to build something big when it's so cheap. You really need a lot, a lot, a lot of people.
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Shaan Puri | right | |
Sam Parr |
I mean, they'll need, you know, a million users at that rate. Or not a million, but you know, a lot... maybe, well, yeah, a million users to be really large. So I think their pricing is silly, but they might be able to figure it out.
Great idea, I like the idea, but it's not there yet. But I think that if you wanted to bet on them, it's an interesting bet.
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Shaan Puri | So, here's something interesting. Have you ever read this blog post by Stewart Butterfield called "We Don't Sell Saddles Here"?
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Sam Parr | yeah yeah and and that that's old | |
Shaan Puri | It's old. So, Stewart Butterfield is the founder of Slack. Before they launched Slack, he wrote this memo to the team, which he later released.
What he said was, he wrote this blog that was just great. If you're a founder, you should go read this. I'll summarize it very shortly.
So, "we don't sell saddles here." What does that mean? He talks about, let's assume you were a saddle company. You make saddles and sell them. You could make saddles and sell them to existing horseback riders, trying to tell them why their old saddle is not great and how they should be using yours. That's tough because, A, you have to get people to switch, and B, there are just not that many people who are horseback riders today.
He goes on to say that the better approach—and the reason he says "we don't sell saddles here," even though we're a saddle company—is that what we need to do is sell the joy of horseback riding. If we can make people want to horseback ride, we can tell them how awesome it is to ride horses, how it's fun, how it's great exercise, and how it feels great to have the wind blowing in your hair. Then they'll want to do it, and when they do, they'll be like, "Oh shit, I need a saddle." And it's like, "Don't worry, we got you."
He basically says this is the Lululemon approach. Lululemon didn't go to a very small yoga industry at the time and say, "Hey, you should be buying $100 yoga pants." What they did was help spread the joy of the yoga lifestyle. They got more people wanting to do it. That's why they offer yoga classes in their store—like, who does that? They want people to be in that lifestyle.
Then, once you're in the lifestyle, it's like, "Do you want the best?" Because we do have the best materials.
This is just a general strategy: if you're operating in a niche, sometimes you have to actually sell the lifestyle of being in that niche more than your product to the existing people in the niche.
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Sam Parr |
I love that! And... a lot of times—well, not a lot of times, but every once in a while—those marketing things and those selling lifestyle actually become bigger than the original thing. So, for example, this is an instance where one has become bigger, but it's become its own thing, you know? **Michelin star restaurants**.
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Shaan Puri | okay yep | |
Sam Parr | you heard of michelin star restaurants it's like it's it's like the standard of what is good and what | |
Shaan Puri | is good dining yeah | |
Sam Parr | Well, you know, Michelin Tires created that. They did it because they created a guide on which restaurants to visit. Michelin has been around since cars started; it was even around before that. They made rubber for all types of things, and then cars got popular.
It was like, "You guys need to get out and travel the world. You need to see all these amazing things and look at all these restaurants." This one we rate one star; you should go see it. But this one's four stars; you have to go see it. And if you do happen to go see it, make sure that you use our tires.
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Shaan Puri | right how are you gonna get there you better drive if you're gonna drive you better have tires | |
Sam Parr |
Right, and that's how Michelin stars got started. There's a whole bunch of examples like that where these marketing schemes have become their own thing. So anyway, what's it called again? Ditto?
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Shaan Puri | So, ditto. I think they're going to have to do that. I think they're going to have to not sell saddles. I think they're going to have to sell horseback riding first. | |
Sam Parr | And okay, so these people who are starting it are pretty young. Let's see if they're aggressive enough to do this. Maybe they might be able to, but selling copy is really easy.
If I... I could just go to you and say, "Look, you give me a blank piece of paper, and because I have this skill set, I'm an ATM." You know what I mean?
There's this very famous copywriting story of a copywriter who sees a homeless guy holding a sign that says, "I'm blind, please help me." The copywriter goes up to the guy and says, "Hey, let me help you out here." He then writes, "It's beautiful outside," and fills in, "and I'm blind, please help."
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Shaan Puri | interesting | |
Sam Parr | and the whole. Is like dude if you just add 2 or 3 words it changes everything | |
Shaan Puri | right | |
Sam Parr | And so, these people, ditto their ad campaigns. They could be really good. So, yeah, I'm on board.
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Shaan Puri | can I tell a quick story about and we're totally off the yc trend for a second but I did | |
Sam Parr | that is | |
Shaan Puri | A fun thing I just remembered when you told that story: my very first company had no money. We were funding the whole thing off prize money. I would be going out like a busker, pitching at startup competitions, trying to win them. Every time we won, we got more money to keep going.
I don't know why we didn't just pitch to investors, but it was working, so we just kept doing it. We didn't have a lot of money to hire anybody, but we realized, hey, we were right next to the University of Boulder, and we could get a bunch of interns.
Then the question was, how do we pick which interns? How do we know who's good? So I was like, "Alright, we're going to design a test case." We wanted a marketing intern, and I said, "Hey, you know, near the university, there's sort of a homeless population. Let's say today they all earn, on average, $50 a day. That's what they're making today.
So your challenge, to show me your marketing skills, your savvy, your instincts, is to come back and pitch me a plan. The idea was for them to actually go do it, but we never ended up having them actually go do it. We said, "Come up with a plan of how you would earn the most money in a given week."
So, where would you stand? This was about understanding locations and foot traffic, which is essential for restaurants. Where would you pick to go? What would you write on your sign? How would your image look? What would be your sort of look, and why do you believe that would be the most effective way to get money? This was our sort of test. It was a little bit like...
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Sam Parr | on | |
Shaan Puri | Not politically correct, but there was one girl who had a good solution. I don't remember all the details, but it was like, "Oh, I'm going to go to this area because this type of person..."
She was like, "At first, I wanted to figure out who's the type that donates." So she said, "First, I would observe which type of person donates." I thought, "That's smart! Understand the customer first before you implement your plan."
Then she said, "Okay, after that, I would target where that person's commute is. I would be there and have a positive message because I believe that positive messages will sell better than negative ones."
She added, "I would try to tug at people's heartstrings. I'd go for emotion, not logic, on why it can help. I'd say something like, 'I'm struggling and I'm a mother,' or whatever it is." That's why people donate.
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Sam Parr |
Yeah, and it just proves how important copy is. Copy is not just words; copy is understanding how people think and communicating it effectively. It just so happens that often it is used with words.
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Shaan Puri | right | |
Sam Parr |
And speaking of copy, Farm Theory is an example of that. So you have Farm Theory on here, which is... yeah, selling ugly produce to restaurants in India. Is that a Y Combinator thing?
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Shaan Puri | it's a yc company yes it's in india | |
Sam Parr | and that's a company in america and what's it called | |
Shaan Puri | no no it's in it's in india so it's farm theory | |
Sam Parr | I then is it | |
Shaan Puri | Oh, there is also one here. Yeah, yeah, yeah. There's a farm-to-table box. I think that's the ugly produce thing in America. I forgot what it's called.
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Sam Parr | me too I just googled it imperfect foods | |
Shaan Puri | Yeah, **Imperfect Foods**. So, I'll give you the stats on these guys. They’re doing **$22,000 a month** in MRR. They say they have **40% profit margins** and that they’re growing **65% week on week**, which doesn't mean much because it's Y Combinator. However, they are on track to reach **$1,000,000 ARR** in the coming months.
What they're doing is interesting. Farming is huge in India, and they’re saying, "Okay, there’s tons of farming, tons of produce produced, and tons that’s not going to get sold because it looks ugly." It’s not good for consumer retail, but we could buy that stuff for cheap because it’s just waste otherwise.
They can sell it to restaurants that don’t care about the aesthetic look of the produce. You know, they’re not picking like a consumer does in the grocery store, where they pick the best-looking one out of a barrel. The restaurants don’t care; they’re chopping it up, processing it, and turning it into food. If they can get lower food costs, fantastic!
Right now, it’s **$720 a month** just for the restaurants in **Bangalore**, which is a part of India. They believe it’s a big market. They claim a **$500,000,000 market** just in Bangalore for the restaurants there. That sounds a little high to me, but the value proposition makes sense. The restaurant saves about **30%** by buying ugly produce, the farm gets some revenue out of something that would otherwise be no revenue, and they take their cut in the middle.
I like it. What do you think?
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Sam Parr |
I like it now, but let me... I'm always being like the negative guy. I like it, but let me tell you:
Okay, I'm a subscriber to Imperfect Produce. First of all, it's not imperfect. Like, this is a shtick of the... of Farm Theory, of them selling things that are ugly.
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Shaan Puri | so what are you saying they they look normal you're saying | |
Sam Parr |
Yeah, it looks normal. I mean, it doesn't look like it's a wonderful marketing scheme, but it's... it's just normal shit, right?
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Shaan Puri | Yeah, I'm guessing you would not sign up for something that just says, "Here's vegetable delivery," correct?
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Sam Parr | Yes, it's like saying there's a famous copywriter named Joe Sugarman. He wrote this great ad for a new Casio watch. He said, "We use space-age aluminum with quartz movement."
And every watch has that same aluminum and quartz movement; it's used in nearly every single watch. He just explained it in a great way.
So this is the same thing with these guys. It's a shtick that works. It's real. It's like Guinness putting a ping pong ball in their beer.
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Shaan Puri | I don't know about that what is that what what are they | |
Sam Parr |
Guinness beer, if you buy it in the can, there's a ping pong ball in it. Apparently, that ping pong ball has a little bit of... is it nitric oxide? Some type of gas in there that keeps it super fizzy.
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Shaan Puri | I see okay | |
Sam Parr | and when they released that ball it like went up big time | |
Shaan Puri | I love it | |
Sam Parr |
Yeah, so this is great marketing. I'm into it. I don't know anything about India, so it's hard for me to say that, but I do know that I just googled it. Imperfect Produce, they have 200,000 subscribers.
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Shaan Puri | and what do you pay per month roughly | |
Sam Parr | it's a weekly bill I think I was paying $200 a month | |
Shaan Puri | wow that's kinda incredible | |
Sam Parr |
Yeah, big market. So... I think it would depend on how talented these entrepreneurs are, but you definitely can build something significant here.
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Shaan Puri | right okay give me one that you like and then I'll be the bad guy saying wedgeband | |
Sam Parr | did we talk about upflow let's talk about upflow | |
Shaan Puri | okay | |
Sam Parr | Okay, I didn't know this until I started my business. Collecting your cash flow is actually really hard. My father-in-law has a moving business, and he's like, "Yeah, it's a pain in the butt to collect the money."
With my business, you know, we make, let's say, 8 figures a year, and collecting the money is still a challenge. I used to have a team of two full-time people whose job it was to collect the money. But then I found an outsourced service to help me with it.
A lot of companies, even if you're small—let's say you only do $1,000,000 a month in sales—you need someone full-time just to collect that money. That person could be a $70,000 a year salary employee. It's expensive.
There are a lot of services that I've recently found, but there aren't that many that help you collect money. Upflow is one such service. It's built software where you can track who owes you money based on your QuickBooks, and you can constantly send email reminders to those people.
Now, the service that I use is literally a person who does it.
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Shaan Puri | right | |
Sam Parr |
And it's incredibly effective. I pay $500 a month for it, I think, and it's... easy. Like, I would totally... that's the last business expense I'm going to cut because it is *so* effective. So I like Upflow for that reason.
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Shaan Puri | Let me ask you a question. When you saw this, did you send it to your finance team? Like, "Let's use this."
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Sam Parr | yeah we I I signed up for an account | |
Shaan Puri | And what was the reaction? You know, what is the, let's call it, the friction in adopting something like this? Because you definitely have a workflow already to collect money.
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Sam Parr | So, that was the friction. I said, "Edie, this new Sean just showed me this new company. It's at Y Combinator. I signed up; it looks neat. If you have any problems with our current vendor, give these guys a look."
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Shaan Puri | right | |
Sam Parr |
Yeah, and so the friction is that... She said, "Our people work really, really well, so I don't want to disrupt it." I said, "Yeah, don't worry about it, but if I was starting again from scratch, I would maybe use these guys."
Now, the problem... You could play devil's advocate here.
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Shaan Puri | no no no go for it | |
Sam Parr | The problem is that the company I use is like an old-school company. They have men and women in their forties and fifties who are in Missouri, pinging these people. That works; it's low-tech and super effective.
The problem I see with these guys is that if they try to get too techy, like in Silicon Valley, it could not work. What they could do is just hire like 200 people in Missouri to do this manually, and that could be super effective. If they try to get cute with the tech, then it could not work.
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Shaan Puri | And what do you do when you use the Human Solution? What do they take? What's their fee? | |
Sam Parr | them $500 a month | |
Shaan Puri | okay so they they don't take anything on the actual collected thing okay | |
Sam Parr | No, but I bet you there might be a scale, right? I can tell you what I use. I think it's called Axim (A-X-I-M).
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Shaan Puri | okay let's check them out thanks | |
Sam Parr |
Oh wait, no that's not it. Is it Axim? Let's see... I found technologies. Oh, let's see, they could maybe...
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Shaan Puri | okay while you look at that I'm gonna tell you | |
Sam Parr | go ahead | |
Shaan Puri | I'm going to tell you what I don't like about this because I'm just trying to put my hater hat on. In general, I like this idea, but I'll say I hate the way they're describing it. We're building Venmo for B2B.
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Sam Parr | yeah stupid I | |
Shaan Puri |
I don't think that's what this is, and I think that's confusing. I think what they need to say is:
"We help businesses collect X% more revenue by automating the collection service."
Today, this is what happened. So I think they got cute with this "Venmo for B2B," and I don't see that at all unless I'm totally misunderstanding the product. So that's the first thing.
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Sam Parr | I I I I totally agree with you | |
Shaan Puri | It is kind of impressive. They have 160 paying customers and $50,000 in MRR. That's pretty damn good for where they're at. To be at $50,000 in MRR this early is actually quite impressive. So, they're definitely doing something right. I don't want to hate on it just for hating's sake. I think they have a good thing going here. I don't know about the competitive landscape, and I hate the way that they're describing it.
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Sam Parr |
I completely agree with you. I think that they're describing it very stupidly. I just sent you the link to the service that I use: aximinc.com. The tagline is "Improve cash flow, reduce risk, save money." We manage your accounts receivable. Very simple.
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Shaan Puri | we outsource it so you don't have to worry about it | |
Sam Parr |
And if you click "Meet the Team," the founder's name is James Axsom. Oh, sorry, James Mixa. So "Axsom," the name of the company, is his last name backwards. Gotcha.
It looks like his son or his husband - some relative - is also working there. And it's a very low-key, unsophisticated way to go about doing it... and it works.
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Shaan Puri | probably doing like 30,000,000 a year | |
Sam Parr | Yeah, and like you could see who's collecting the money. They have the names of the people working there.
So anyway, I like this business. I just think that if this company, Upflow, is run by a bunch of young Silicon Valley guys, they have to be careful not to overthink it and get cute. I think they could just do old school ways but package it in an interesting way for Brex, or for Sean's new startup, or for whoever.
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Shaan Puri | Right, right, right. Okay, we'll do one more. We're almost out of time, so I'll do this company. I don't know how you say it—Taiv. It's T-A-I-V. Weird name; I don't know why they chose that name, but whatever.
So, what these guys are doing is, you know how every bar or restaurant has TVs and they're playing sports, usually, or whatever it is? What they're saying is, "Hey, the commercial break—that's a lost opportunity."
So, what they do is they hijack the commercial break on that TV and they just upsell stuff from your menu. You know, you're watching the game, and when the commercial happens, it'll show the wings that they have on the menu. It'll be like "$9 for these wings right now." You want it? It's a commercial just locally for your bar or restaurant.
I love this idea because I think there are a lot of restaurants out there who are in this scenario. They have lots of bars and lots of restaurants that have TVs, so I think there's a decent market for it. I like the idea of helping them make money; it's a very simple solution.
But the thing is, most of these restaurants and bars haven't done anything yet. So, like, there's a lot of low-hanging fruit still available. This is one that I like—it's like sort of an ad block for those TVs.
What I think might be challenging for them is selling into bars and restaurants. I think that's going to be a slow and painful process for them. | |
Sam Parr | alright I'll I I have a little background info information on this you know chive tv | |
Shaan Puri | no what's that | |
Sam Parr | Okay, so you know TheChive.com? Yep.
TheChive.com was founded by Leo, and I know Leo and John. Leo is one of my investors and someone I look up to. He started TheChive, and now they have Chive TV. The way it started was they would get a lot of funny videos, like America's Funniest Home Videos, which features dads getting hit in the nuts by their kids swinging a piñata baseball bat—just silly stuff.
In all of Texas, they would give bar owners these little dongles, like Amazon Fire Sticks, and they uploaded all this programming. They just constantly filled the pipes. So if you go to a bar, you see America's Funniest Home Videos in the background, and Chive would put their ads in the mix. They made a million dollars doing it, so much so that they eventually spun it off into a different company called Atmosphere TV. They've just raised $10 million to launch it, and Leo was like, "This is going to be a multibillion-dollar business."
Now, the verdict's still out on whether that's going to happen, but Chive TV was huge for TheChive. Atmosphere, he says, is going to be the greatest thing ever. He mentioned that what they need to do is just go out and hire a ton of salespeople—hire you guys.
Yeah, we're just going to hire a ton of salespeople and we're going to do this.
Another bit of background is that you and I talked to the folks at Firefly. I won't put words in your mouth, but I have no problem saying I thought that was a horribly dumb, stupid idea. This idea is a little bit similar, but I think it's way better. | |
Shaan Puri | Right, yeah, more defensible for sure. Fireflies is the company that puts a little ad, a little billboard thing on top of an Uber, so an Uber driver can make a little bit more money. That's cool.
But this is a little bit different. This is more, what I'll call, it's not dependent on the ad market, which I like. You're internally advertising stuff in the restaurant or the bar to get people to have a little higher check size.
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Sam Parr | Yeah, but that's not what they're saying. In their deck, they say at first they're doing what you're describing.
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Shaan Puri | right | |
Sam Parr |
And they go, "They said all of our 1-year contracts are insanely profitable, but our next phase is to sell ad time at $25 per CPM [Cost Per Mille, or cost per thousand impressions]."
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Shaan Puri | Interesting. Okay, so maybe the in-restaurant upsell is not as good as I thought. That's why they're already planning to go out of that.
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Sam Parr |
And for now, I think that's a good market. But in their numbers, what they're assuming is that they're going to have a $25 CPM [Cost Per Mille]. They're saying that's going to make us way more money and create this new $32 billion market.
The math is that we have X amount of impressions and we're going to put $25 CPM ads on there. Now, here's the problem: their fill rate is not going to be 100%. It's not even going to be close to 100%.
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Shaan Puri | So, that sounds a little ridiculous. Here's the other thing I don't like: they charge $42,100 per location per year. That's really expensive for a restaurant or bar.
They also charge a one-time $1,500 hardware installation fee. I just think that they've added a lot of friction to the adoption of this. I think it was already going to be hard to get people to adopt it. That's a high price and a high one-time installation fee that they're asking people to pay. So, that seems tough for me.
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Sam Parr | That said, I think that this could be a business that makes tens, 20, 30, 40, or even $50,000,000 a year in sales. This is a great company to own, but not a great company to invest in. If they raise all this money, that's my opinion. | |
Shaan Puri | yeah that makes sense | |
Sam Parr |
So, I like this. They just... Someone smart once told me, "The only thing that you can't screw up in business is your cap table." And so when I look at a lot of these companies, I think that could be good, so long as they don't screw up their cap table.
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Shaan Puri | Right, yeah, that is one way to die for the wrong reasons.
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Sam Parr | that's a great way to put it | |
Shaan Puri | Okay, cool. So, we're going to come back and do more of this. I also think we have Brent Bishore scheduled tomorrow to come in and talk about buying companies, roll-ups, that sort of thing.
So, we'll see how that goes. I need to confirm with him that he's still available. His name is Brett Bishore. He owns something called Permanent.
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Sam Parr | oh yeah I like that guy | |
Shaan Puri | yeah he's he's small | |
Sam Parr | And then another thing that we can do, Sean, is my friend Dave, who founded Soylent and also started Lucy. Lucy Nicotine is a company.
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Shaan Puri | I invested in | |
Sam Parr | do you wanna I he just texted me he said he wants to come on do you want him on | |
Shaan Puri |
I definitely want him on. Alright, I've told the story before, but when I bumped into him at the Hustle Con after-party, we did a mini brainstorm right there. He had, you know, **5 bangers** - 5 amazing ideas just come off the top of his head. So he's the type that I look for, which is like people who've got more ideas than time. Do you want...
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Sam Parr | me to ask him for this tuesday or next thursday | |
Shaan Puri | yeah let's do it tuesday | |
Sam Parr | alright I'll ask him and hopefully the the people wanted him as well | |
Shaan Puri |
Okay, thanks for listening everybody! Stay safe, share the podcast, tell your friends, post on Twitter, give us a little love. We're trying to keep growing this thing... it's growing, and we want to keep it growing, so share it!
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Sam Parr | thank you |