4 Big Trends and $0 to $1 Billion Startup Idea Frameworks | My First Million #191

Mike Maples

Let's say everybody's selling bananas. You can't say, "I'm a 5x better banana." Instead, you should come out and say, "I'm an apple." Not everybody's going to want your apple, but 100% of the people who prefer apples are going to want what you have.

Sam Parr

Alright, yeah, Sean. I was playing this podcast called "Pump." It's pretty good. How do you feel?

Shaan Puri

It was good. It was like we showed up with no context. What are we going to talk about? Do I need to talk about Bitcoin? Do I need to have something smart to say about Bitcoin? Because I kind of just, you know, I believe in it. I buy and hold, right? I'm like a monkey in this space. I'm not like, you know, one of these experts. But we talked about solo big and solo capitalist/solopreneur and some of the different kinds of things around that. I thought it was actually a pretty good conversation. Ben was there, and he goes, "I like this one because I feel like everything you said in this was something new that I had never heard you say before." He's like, "Whereas, you know, once you listen to somebody for like 100 hours, you kind of hear the same greatest hits over and over again." He's like, "This felt like new stuff."

Sam Parr

Speaking of listening to us for hundreds of hours, or at least listening to you, we had a good episode. We just interviewed this guy named Mike Maples. Mike was pretty cool. So, Mike is a little under the radar, but he started this thing called Floodgate, which is a really big venture capital firm. He's a really fascinating guy. What all have they done? They've done Lyft and Twitch.

Shaan Puri

Twitter, Cruise, and Okta, which is like a giant enterprise company that's public. So yeah, a bunch of big winners that he was an investor in pretty early.

Sam Parr

Considered one of the best venture capital firms, there is a really insightful guy. He kind of had a hint of biology a little bit. I mean, he was like a real high IQ. I've been using the term "high functioning." He's like a real high functioning guy.

Shaan Puri

functioning southerner right

Sam Parr

he he

Shaan Puri

had this disarming way of talking because he's got this you know kinda like oh is this southern or midwestern accent

Sam Parr

yeah

Shaan Puri

And you know, he's a very relatable, likable guy. But then the things he was saying, each one was like a bullet of an idea or an insight. He definitely had a few refined ideas about where he thinks the puck is going, and I appreciate that. I like that he gave us basically these four waves. He's like, "I believe these four inflections are happening right now, and that's going to create a bunch of opportunity." That's what I look for: how is the world changing, and what's going to be new because of these inflection points?

Sam Parr

Yeah, I was taking notes. The four things are: 1. Blockchain 2. Cloud 3. Office America Next 4. The cloud culture for consumers Those are like the four things, and we went into... we didn't actually go into each one entirely, but he talked a little bit about each one. We delved... we went deep into cloud office. We talked about the opportunities there. I thought it was great. What'd you think?

Shaan Puri

I loved it! I loved the way he had some phrases for things. I thought at the beginning he was a little bit too intellectual for me. I was like, "Okay, wait, where do I go with this?" But it was interesting, though I didn't know how to attach it to a concrete idea. Then I thought about... you know, that was maybe the first 25%, and then the next 75% I thought were fantastic. Where, yeah, he came down to earth. And also, he has this... he has this kind of amazing way of talking. I'm kinda jealous.

Sam Parr

dude you you are like that

Shaan Puri

I know, but I... because I try to be like that. When I see somebody who's really good at it, I'm like, "Oh shit, you're good at this thing!" Most people don't even care about this thing. He had these little phrases, coined terms for either himself, his fund, his philosophy, or his mental models. He'd be like, "You know, a startup is like a jazz band, not a marching band." Then he would explain the analogy and then he would like, yeah.

Sam Parr

He was like, "I want people to choose, not compare," which is hard to understand. But once he explains it, then it's like, "Oh, that's actually a wonderful mental framework."

Shaan Puri

It's like that Kanye song where it's like, "What does it mean?" I don't know what it means, but it sounds provocative. That's how I felt with a lot of his things. I was immediately interested; I leaned in when he would say one of those phrases, even though my brain hadn't figured out exactly what it meant yet. Then he would explain it. So, anyways, I thought he was really good and a super nice dude. I really thought he came across as humble and very likable. I don't know, great episode! I liked him a lot.

Sam Parr

I agree, and he offered to come back. I couldn't tell if, like, when guys are being nice, I'm like, "Well, if you have time, let's just keep going." But I couldn't tell if he was being kind. We'll have to have him back on; he was awesome, right?

Shaan Puri

how did you feel about when you hit him up for some intros there

Sam Parr

was that smooth

Shaan Puri

I thought it was pretty smooth. Yeah, you gave him the opportunity to be a hero, and if not, it was totally okay.

Sam Parr

Yeah, I asked him. I'm going to start asking every guest this question: **Who do you think would be an awesome guest?** Like, who would be good for those podcasts? And then, what do you think is the best way to get in touch with them?

Shaan Puri

Right, and then they have the opportunity to be like, "Yeah, just reach out. He's a nice guy," or "Yeah, let me just shoot him a note right now. I'll tell him I'll interview you guys."

Sam Parr

thought that I thought that was a great angle

Shaan Puri

I know I wanted to call it out because people listening get this sort of behind the scenes. As I heard you say it, I was like, "Oh, smooth, smooth guy, Sam going for the intro. Wow!"

Sam Parr

We didn't get the kill this time, but I feel as though we've built enough rapport with him. I can email Mike, and maybe he'll help; he'll hook it up. But yeah, he did a good job. There we go. So, Mike, I was connected to you because my good friend Noah Kagan said, "You gotta holler at this guy; he's pretty interesting." I had known about you as well because Tim Ferriss lived near me and was a friend of mine. He told me that there are like two or three people whose advice he listens to when it comes to investing. One is Duval, the founder of AngelList; two is Scott Belsky, who started Behance and is now probably going to be the CEO of Adobe; and three was you.

Mike Maples

and okay

Sam Parr

And I was like, "That's kind of interesting." You know, I have not really heard of Mike too much. He kind of keeps a low profile. I looked it up and saw that you started Floodgate, which eventually invested in amazing companies like Twitter, Twitch, and Lyft. So, we have this podcast, Sean and I. It's pretty popular; millions of people listen. All we do is brainstorm interesting ideas. We thought, "You know, we gotta get you on to come and talk about some stuff." And so, here we are.

Shaan Puri

let's give it

Mike Maples

a shot why not thanks for having me

Shaan Puri

I've listened to your podcast a bunch of times. I remember the episode with Kevin Systrom from Instagram is one of my favorites. So, I forgot what the exact starting... starting greatness or starting... starting.

Mike Maples

starting greatness yeah

Shaan Puri

starting greatness

Mike Maples

And it's kind of a labor of love. You know, some of the people that work at Floodgate, occasionally we'd have some hallway conversations or in a meeting, they're like, "Dude, I wish we could've recorded that." So, in many ways, the guests not only help with the content, but we're trying to help some of the key ideas of starting greatness come alive through the voices of the guests. I think there are some counterintuitive lessons of starting a great startup that are not obvious to people.

Shaan Puri

Right, and you have a good voice. Your intros are great on the podcast. I don't know how much time you spend on that, but the intros are fantastic compared to us. We're sort of famous for barely doing an intro. You'll be 10 minutes in and be like, "Who the hell is this guest?" Sometimes at the end, we do the sort of "Irish goodbye," where we're like, "Okay, that's it." We just sort of end it and go about our day. People have started making fun of us for the Irish goodbye because they're like, "Dude, I also hate saying goodbyes." They dislike the unwind of a conversation. I like how you guys just leave. So, that's kind of our thing. But what we want to start with is we could talk about all the great stuff you've invested in. However, I guess I'm more curious about what's got you excited now. What spaces or trends are you seeing where you're like, "I don't fully know what's there, but there's enough there for me to be interested?"

Mike Maples

yeah and it it might be kind of a good segue into how I think about what the next big thing will be because there's this there's this thing that I say to founders which is very it's very counterintuitive I say if you wanna start a great startup don't try to think of a startup and the reason for that is that great startup founders are like time travelers and they they get out of the present and they visualize different futures that are a breakthrough that break free from the present and when you try to think of a startup right now you tend to orient yourself in the world of the present and so you tend to come up with incremental conventional ideas rather than breakthrough ideas that sort of change the arc of present to a different future and so and that gets to the areas that I'm interested in so what I what I encourage founders to think about are what are the inflections what are the waves of change that are gonna be so massive that it's gonna allow an entrepreneur to change the subject about the future because on some level these waves are the gathering power it's like all the power of the ocean when you surf you you gotta catch the right wave to have a chance to do great things and it's these waves or these inflections they allow the entrepreneur to wage asymmetric warfare on present only with big inflections does an entrepreneur go from being disadvantaged to incumbents to having a fundamental advantage vis a vis incumbents and so then in terms of the areas that I'm interested in I tend to go with the inflections and so one inflection I'm interested in obviously is the blockchains with crypto I think that that if I was starting a startup today that's probably where I would spend most of my time another another area of interest for me is the the transition from what I like to call office culture to cloud culture and so in the past the cloud was sort of more of a delivery mechanism and a business model for application software but now what we see happening is that the the you know Microsoft office literally is a metaphor of the office and it's files and memos and file drawers and that's what our right desktop looks like but now people you know it's it's not the editor that matters as much anymore as the comment system and the versioning it's kinda more like github meets knowledge work and so you know when you when you have cloud culture rather than office culture you you can take advantage of a lot of arbitrage time arbitrage talent arbitrage geography arbitrage you know very tim ferris you know we talked about him a little bit earlier and then the the other thing that I'm interested in is what I loosely refer to as america next and so on some level I think that 2020 was the first real year of 20th century or 21st century and why is that I think that there were a lot of issues that people were paying lip service to a lot of stagnation that people were paying lip service to and I think that 2020 helped people understand our military needs to become more agile and more tech forward that our research in drugs and drug discovery that our ability to get life saving remedies to market faster we need to take seriously there's just you know china is a geopolitical challenger and so as a result I think that there and you know now people talk about build back better but I just believe fundamentally the united states the western world are gonna decide they need to invest for real in tech forward infrastructure and then on the flip side of that they're gonna realize our infrastructure is vulnerable to cyber hackers and ransomware and things like that whether it's organized by rogue gangs or nation states so so those are I'd say those 3 areas + also I'd say cloud culture applied to consumer which some call the metaverse but those are those are the main things that I'm chasing right now and you know obviously I have a lot of colleagues as well at floodgate so we you know we go after cybersecurity and cloud infrastructure and other things but the areas that I described are the ones that I'm most accurate most actively going after

Sam Parr

That for that cloud office one, what products are you looking at that excite you?

Mike Maples

Yeah, so I'll kind of give you an example. One company I'm involved with is called **Almanac**, and it allows teams of people to create documents. If you think about it, this has already happened in code and in design. In code, you had **GitHub**. In the past, you just had code snippets that you shipped around and had some version control. But GitHub made code social. You could branch, fork, and collaborate as a team at the center rather than as an afterthought. Then **Figma** did the same thing with design. What we believe is that in a world where talent can live anywhere, it's going to matter more that you write things down and get consensus. Part of how you get consensus is by having a paradigm that's not office-centric and documentation-focused, but rather cloud-centric. So, why shouldn't you, just like GitHub, be able to branch, merge, and fork documents? You should be able to know every version of that document that ever existed. If somebody forks it and uses it—let's say it's an employee handbook—why not want to know that as well? But that's just one of many examples. I believe that in the future, you're going to have all these different products that presuppose that people will collaborate. What else do I think will happen? I think people will say, "If it can go in the cloud, it should." If it can be asynchronous, it should. Because if I put things in the cloud and make them asynchronous, I can take advantage of all those different forms of arbitrage to run my company better. Whereas if I'm in a meeting-centric culture, I have to be in the room where it happened when a decision got made. I just think that that's an outmoded way of thinking about things in today's world.

Sam Parr

What? So, Sean and I are similar or almost the same age. We are the same age. When we started work, I mean, we used Google Docs right away. But you're a little bit older than us, and that was kind of interesting to you, right? When that first came around. So, when you say, "What needs to be in the cloud?" in my head, I'm like, "Wait, are you kidding me? Isn't everything already like that?" What specifically are you...?

Shaan Puri

For example, there are startups that are creating virtual offices. They recognize that while everyone is remote and there are many advantages to that, you miss out on the ability to socialize, get to know each other, and build trust outside of the traditional settings, like the water cooler or the conversations that used to happen in the break room. So, there are these innovative startups proposing solutions, like online towns and similar concepts. They offer a virtual office where you can literally walk around and bump into people. I don't know if any of these ideas actually work, but they are making attempts to transition the physical office into the cloud. It's not just that documents are in the cloud; it's about hanging out with coworkers in the cloud as well.

Mike Maples

And the problem with most cloud offerings today is that they're basically rehosted office culture.

Sam Parr

right

Mike Maples

so like zoom zoom is a meeting but it's a meeting online it's not like it's asynchronous in any way it's not you're just rehosting the meeting rather than redefining how work happens now with zoom you can take advantage of geography arbitrage I suppose so that is a good thing but you're not able to take advantage of time and talent arbitrage as easily but like like what I what I believe ends up happening at the limit is in in office culture everybody has a job description and and and what I think in cloud culture you know people have already talked about this but this idea of a jobs to be done theory and so like when you think about it all of us don't just have one job all of us do a whole bunch of jobs like if you take even a very simple example let's say that I work at a a flower shop I might type things into the computer to manage customer records I might take reservations and orders I might some parts of the day arrange the flowers well when you really think about it the principle of comparative advantage would suggest that any parts of that any of those jobs to be done that could be done asynchronously or in the cloud you should try to do that if you can because then you could take advantage of labor arbitrage time arbitrage and geography arbitrage and then if I'm a great flower arranger that's what I should be spending my time on is the thing that I'm really good at and so what I think cloud culture lets people do at the limit is broadcast their comparative advantage to the world and get paid by the network for giving the network what it wants so I think that it'll you know the reason I call it cloud culture as well is who says everybody has to work at a company right like people said that robots are gonna eat the jobs but I think that's precisely the opposite of what's true I think that software is gonna reduce the need for people to think they need to work at companies because it's gonna all the things I would have had to possess to to have a job I'm not gonna need those things anymore by working at a company I'm gonna be able to have all those things in software on my own and so I think more and more people are gonna people are gonna realize that really there there is a aggregate of jobs that people do and all of them could be thought of as like almost like a derivative that could be assembled in different ways and then move to the cloud or you know let you specialize and I think that that'll over time change the fundamental culture of how teams work

Shaan Puri

And tell me, tell me if I misunderstand this, but I think one thing that you just said is that the idea that one person belongs to one firm is potentially an outdated and suboptimal idea. Instead, you said that a user basically contributes to the network and gets paid for that contribution. So, one person might belong to multiple firms, and a firm might change. So, what does that look like? You're the time traveler. Yes, let's say we fast forward 10 years. A smart guy like me, how does my situation look? Today, my company got acquired by Twitch. I have a day job at Twitch. You know, great! That's something I do. And I... you know, before COVID... thanks.

Mike Maples

Thanks for your efforts there, by the way. I mean, we monetized that a little while ago, but thanks for your efforts.

Shaan Puri

of of course anything I can do for you

Sam Parr

By the way, you saying "we monetize that" is a wonder. That's a really cool flex.

Shaan Puri

I'm gonna I'm gonna feel that way

Mike Maples

so okay so then what 10 years from now so like maybe maybe I should start from the beginning there so what do I think is really happening right that that underlies all my investing I basically believe that starting around 1850 we had centralized means of production mass distribution mass production and what that allowed us to do is to create the modern corporation but in 18/70 there was no accounting there were no org charts none of the stuff that we take for granted as a company really existed but mass production and mass distribution had a tendency to to centralize things because you got supply side economies of scale and mass distribution allows you to get things out to people I think what started to happen probably in the late seventies early eighties with the microprocessor is now the economy is animated by mass computation and mass connectivity and those 2 those two attributes tend to decentralize the means of production and so you know I think we've moved from river rouge plant for ford model t's to personal 3 d printers in the future and I think we've moved from peak centralization of 3 tv networks in the late fifties early sixties to now anybody can be their own publisher or media company that goes direct and so there's a a lot of very basic assumptions we have about companies that are just a 150 year artifacts of time like somebody in 18/20 wouldn't recognize a normal company of today there weren't any there weren't any companies more than 20 people in the us you know in in 18/20 hardly maybe a few spinning looms of a 100 people but so what I believe is now the idea is the the social contract between a person and a big company people assume that it's not gonna that it's gonna persist and I think it's gonna be radically different so in the in the in the 1900 you know you had people wanting to be at a company for a very long time and you had large country companies because the coordination advantages of having a large organization at scale with supply side economics was valid and created abundance then the same happened with the military then the same thing happened with the government media all of our major institutions but now I think the pendulum is swinging in the other direction towards a worldwide network where everybody on the network every individual is a node on that network and every individual has a node on that network has a comparative advantage and they get they get paid by the network when they give the network what it wants and that's true for money it's true for jobs it's true for everything in my view

Sam Parr

are there examples of startups now that are that are executing this

Mike Maples

Yeah, so in the early days, our investments were in these pure play networks: Twitter, Twitch, companies like that.

Shaan Puri

what what is then what what

Sam Parr

do you mean pure play

Mike Maples

a a pure play network would be you're not really reimagining a part of the economy so like twitch was a whole new thing and you could argue that twitter's had a big impact on the media but but but that wasn't the thesis when we invested but then we started to get interested in this idea of well perhaps every sector of the economy is gonna be reimagined around sort of the the the micro means of production and so rather than economies of scale it's gonna be local economies of algorithmic computation and networks that span the globe and so why did we invest in lyft lyft was a more modern way to think about getting a ride than taxis taxis are a centralized command and control tops down dispatch driven technology lyft says hey riders and drivers can advertise their presence in real time on a network and algorithms will form an ad hoc connection so it's kinda like this return of the invisible hand and now all of a sudden the invisible hand is done by algorithms rather than you know kind of in the good old days of people trading fur for musket or something like that but like it's it you know that's what we see happening time and again you know ohmconnect is another board I'm on they're trying to create incentives for people to use less electricity but but they're basically applying the ideas of software defined networks to subtracting energy that homes use during certain times of the day and so I believe that every you know what is tesla really tesla is a car company that's animated by network capitalism not industrial capitalism right they they they it's a software defined car it's updated over the air it leverages machine learning it leverages network effects with all the sensors in the network to help it self drive better apple was a network capitalist centric phone compared to like nokia which thought we need to sell the best widget and so in sector after sector of our economy the companies that are software defined at their their core I believe software defined network centric companies at their core are gonna keep winning and they're gonna keep displacing the companies that think of computers as the thing that you did to make your industrial thing go faster so you know burger king isn't a software defined network even though it has computers it uses computers to say how many hamburgers did I sell today but it doesn't use computers to reinvent food in any fundamental way and the companies that we're investing in are companies that leverage network capitalism to reimagine reinvent markets from the beginning damn

Shaan Puri

it's a big idea

Mike Maples

I hope that wasn't that may be a little bit out there but that's kind of

Shaan Puri

it I so I yeah

Sam Parr

It's such a big idea that it's hard to... How can I make this more practical for myself and the listeners who are interested in this field?

Mike Maples

Yeah, and so the way I would say to make it more practical for listeners is this: The tendency is to ask, "What's my career path going to be?" But through the lens of the 20th century, you know, I'm going to make a progressive set of steps, and I'm going to get rewarded as I do the things that I seem to need to do in society. However, I would argue that it's more important in today's world to figure out: 1. What am I awesome at? 2. Or maybe not even what am I the best in the world at, but what am I best at among all the other things I'm good at? 3. What does the world value? 4. And what am I passionate about? The intersection of that set of things is where you want to develop your talents. Over time, that's where your comparative advantage will be the highest, and that is where the network will pay you the most for contributing to it. But I think sometimes it's useful to not just think about what company do I want to join or what set of companies should I join for my career. Instead, you should say: The entire world is a network. Everybody is a node in that network. How can I be the best version of myself as a node in that network? How can I create the most possible value for that network so that I'll get recognized by it and paid for the value that I deliver?

Shaan Puri

So, how do you do that? Let's take you for example. Let's say you look at the world this way: it's a giant network, and you're trying to have your comparative competitive advantage. So, what's your comparative advantage?

Mike Maples

Yeah, I would say that my job is to be the very best partner for a super ambitious founder in the 0 to 1 phase. So, right, if you look at my podcast, people say, "Hey, why don't you have this guest? Why don't you have that guest?" But starting greatness is all about 0 to 1, awesome startups, and super ambitious founders. What was it like before they succeeded? There's power in addition and subtraction. You know, sometimes by saying what you're not for, by niching down, you're very powerful to the people who care about your niche. Because people say, "Where have you been all my life?" So what you're trying to do is find that set of like-minded co-conspirators for the niche that you've really chosen to be great at. And not get preoccupied with the fact that you can't do it all. You're way better off understanding what you can just stick the landing at and develop your talents so you can do it even better through time.

Shaan Puri

And today, Floodgate is more like a traditional firm. It's like a company, kind of like the current world versus the old world. You have a brand, multiple employees, a central fund, and your LP base. It's sort of static, and then you're investing in a specific set or criteria of companies. Whereas the way you're describing things, it sort of feels like—correct me if I'm wrong—it sort of sounded like in the future, 20 years from now, what you might have done instead of setting up Floodgate is you would have set up, I don't know, a one-person investing fund yourself or like a DAO or something like that. Basically, a trust that's going to invest in a whole bunch of things on the network. You wouldn't need the structure of a fund with employees and all these different things. So, would you, if you didn't have this already set up and you were setting it up for the next 20 years, have set up your investing differently than you did with a kind of traditional VC fund?

Mike Maples

Well, I like the way we're set up because I think that when you're investing in these crazy, risky startups too early—way too early, or legally ambiguously too early—it's good to have friends. It's good to have people to run ideas by. But we have a very... I'm not saying I don't... I'm not sure our point of view works for everybody. I don't even think a startup is a company. I think a startup is the capabilities and talents of the founders and their insight about the future. What you're betting on is two things: 1. That their insight is right. 2. That they're good enough to navigate the idea to a great product someday. But like, Lyft started as Zimride, and Twitter couldn't decide whether to call it "Voicemail 2.0" or "Twttr." Twitch started as Justin.tv, and Okta started as Sasher. So, what do you do with the fact that 90% of your profits come from things that started out different? My theory on that is the way to succeed is to realize that a startup isn't a company at all. It's the insights and the founders. You make fun of your ability to predict what they're going to come up with; it is false precision to even try. But instead, where you should be precise is: Can these people do the job? And is this a powerful enough breakthrough insight?

Sam Parr

I believe it's your partner. I looked up who the top venture capitalists were. I think it was your partner. What's her name?

Mike Maples

anne miracco yeah

Sam Parr

Yes, Anne is... I looked at CB Insights from 2020, 2019, 2018, and 2017. I think she was in the top 10, sometimes number 2 or 3, in many, many years consistently. You just showed me a sign or a thing of dollar bills with Steve Blank, you know, who's like the godfather of Silicon Valley, saying, "Everything Mike does turns into money." I wish... what makes you guys great? What makes you able to spot these interesting opportunities?

Mike Maples

I think that, you know, it's funny. If you had, say, Warren Buffett on your show, or you've had Stan Druckenmiller before on your show, right? When they talk about investments, you'll probably notice they discuss a few things: - What's the operating history of the organization? - What is their competitive moat? They have a set of factors that cause them to think that a company is a good investment or not. What's interesting is that in our world, none of those mental models apply. A startup is not a company; there is no operating history. There is no moat. They don't even have a product yet, and they have no customers. So, what I think we're better at than most is: a) understanding that's true, and b) then asking, "Okay, so what should the mental models be?" If Charlie Munger and Warren Buffett have 90 mental models and they don't apply to startup investing, well, what are the mental models for startup investing then? We've spent years just being students of that question. We probably have about 30 or so that we've developed. We try to evaluate the startup through the lens of those mental models rather than make the mistake of thinking that a startup is a rehosted company. It's not; it's one or two.

Shaan Puri

Of those mental models that we wouldn't expect, right? Like, you know, I might expect somebody to say, "We want to be in a big market with customers who really love your product." It's like, okay, yeah, great. You know, we want to be growing, you know, extremely fast—exponential growth. Well, yeah, it's obvious at that. I also enjoy checkmate. So, what's a mental model that's not so obvious? Where 100 people in a room would nod their heads and immediately say, "I already do that. I already think that way" when it comes to investing for me?

Mike Maples

yeah so I'll just give a few examples you know so I'd say at a meta level we have a set of mental models about founding teams and then we have a set of mental models about insights and founding team a good example would be jazz band and not a marching band so in companies you have org charts you have people who want sheet music and dance steps and if you don't give that to them the the organization's gonna be a chaotic mess and all screwed up and discombobulated in a startup it's more like when you go to the french quarter and you watch a jazz band there the got the lead goes on a riff and everybody else just goes with it and you'll never hear that tune the same way ever again but everybody knows that that's what they're in it for and nobody's saying hey that's not on my sheet music you didn't say that was gonna happen that's that's the way they like to offer their art to the world and so I like to say when a when a startup starts it goes through this breakthrough sequence it has to have a great insight which is something about the future that's not obvious that most people don't know and then after that they have to create a product breakthrough where they get product market fit in 0 to 1 and then they have to have a growth breakthrough where they get escape velocity and then and only then do they earn the right to someday be in the pantheon of companies but it's but it's wrong headed to give startup founders big company advice at any of those stages in fact all of those stages are different it would be bad to give growth advice to an insight developer for example because it would be precisely wrong so that would be an example on the team side to me the on the insight perspective it would be don't be market first because there is no market yet and so rather than trying to think of a startup market we wanna arrive at startup markets by following inflections we wanna we wanna say okay cost of an ai prediction is going down exponentially how is power gonna shift in the industry because of that and like what what new markets might arise that had never existed before these inflections they they power your why now so like with lyft gps has got included for free in smartphones and we believe that everybody's gonna have smartphones someday even though in 2010 only 10% did so you could say wow now I can see a world in the future where drivers and riders will be able to locate each other

Shaan Puri

on a

Mike Maples

The network effect will be significant because there will be all these people who have these phones. You could have been right about that before, but you would have still failed because you wouldn't have had enough people with the phones, and they wouldn't have been able to find each other. So, I'd say that's the other counterintuitive thing: you can't look at the company's tangible operating history because there is none. What you have to do instead is imagine a world where their inflections change the future in a dramatic way. That change will alter the rules, and all the stuff that people think is going to happen will be something very radically different. And why do I believe this entrepreneur? What is it that they've discovered about the world that could cause me to take that bet?

Sam Parr

What you're describing is awesome. It's a narrow but wonderful outlook. What you're discussing about inflections and looking at the world in 20 years is definitely about disruption. These are the things that allow a company like Uber or Airbnb to go from not even an idea to a small idea, and then to a $50 to $100 billion company. These are truly disruptive and transformative things. On the other side, there's a podcast that aired today where Sean interviewed a guy named Brian, who owns 100% of 1-800-GOT-JUNK. The revenue might be $400 to $500 million, and he owns all of it. So, who knows? He's probably worth $2 to $3 billion and has a pretty calm life. He's not doing anything probably innovative at all. I mean, maybe there are micro-innovations, like our supply chain is a little bit interesting or the way we dispatch people is a little bit interesting. Or it could just be operational excellence, meaning our website ranks number one or we know how to...

Shaan Puri

get the name

Mike Maples

right when adam

Shaan Puri

knack was a was a yeah stellar name

Mike Maples

yeah it's a

Sam Parr

Cute brand! How do you... So, like, you're all... You're what we just discussed was far on one end. Do you ever look at the other side? Or for your job, do you only care about one side? Maybe you just like to shoot the shit or talk to your friends who want to get wealthy. Do you say, "Yeah, but this side's actually kind of interesting too?"

Mike Maples

Yeah, and it's funny because we alluded to this earlier. I don't try to be for everybody; I try to be the very best at the thing I aim to excel in. So, my view is that I want to focus on breakthrough startups, particularly in that 0 to 1 phase. I like to say I'm a "rocket fuel salesman." I go to founders and I say, "Don't take my fuel if you don't want to achieve escape velocity with that rocket that's on a launch pad." Because if you're not sure it's a rocket, this fuel ain't gonna be good for your vehicle.

Shaan Puri

right it may just on your scooter

Mike Maples

Right, and so like I probably don't deserve too much credit when it does escape, but I probably don't deserve too much of the blame when it doesn't. I'm just like, "Just be clear about what I'm selling here." People say, "Well, you know, it's not realistic that everybody should build one of the $20,000,000,000+ exit startups of the year." And I'm like, "You're correct about that." I'm not saying that my advice or my approach is mainstream or even normal. In fact, I would say it's hyper not normal. But in that area, I sell rocket fuel to people who want to blast their rockets into outer space and get escape velocity. I try to be the very best. So, a lot of your listeners might be like, "Oh, that's interesting and kind of intellectually stimulating," but I'm not one of those. But that's okay. There are lots of ways to get rich in this world, and there are lots of ways to succeed in business. It all comes back to, "What is my comparative advantage?" and not being preoccupied by all the things you can't be the best at.

Sam Parr

So you're not even close to the guy who sees, "Oh wow, there's a ton of really poorly run laundry stores or laundromats. We should buy all of them and put a backend software." I mean, that doesn't even kind of closely... or that doesn't even, yeah, even get you excited?

Mike Maples

Well, not only that, if somebody said, "Hey, can you give me some advice on how to grow this?" I would say, "You should not listen to me. I don't know what I'm talking about. I don't know how to do laundromats at scale." It's not even a question of whether I'm interested; it's a question of whether I'm competent. And I'm not. I'm not trying to be, and I've let go of the idea that I need to be.

Shaan Puri

I love your answer, by the way. I have something to say about that too. But I would say, you know, you've made me realize that I think one of the things we're trying to build as our competitive advantage is that we can get on this podcast twice a week. We shoot the shit, either just me and Sam or we bring on a great guest like you. We talk about everything. For instance, one of the most popular episodes was Balaji talking about "the future of startups are cities." It's like, wait, what? Balaji will bend your brain with the blockchain. Then the next episode, which is probably the most listened to, features this entrepreneur with a side hustle. We break down his business of vending machines. He's got 27 vending machines and is making six figures in profit. He got started with very little capital, and it doesn't take rocket science or rocket fuel to do it. Our listeners enjoy the breadth of topics we cover. We can hop from blue-collar work—like we have a segment called "the hillbilly side hustle," which is a simple thing you can do—all the way to discussing disruptive ideas, such as how AI impacts this space.

Mike Maples

And is it okay if we talk about Balaji for a minute? Because I think he's amazing. Let's do it! He's crazy. So, like, you know, earlier I mentioned this idea of **cloud culture**. I think Balaji probably has the best handle on this of anybody I talk to. I've listened to much of what he said, but what I think happens at the limit is that all of these different cloud cultures are like their own societies. Yep. Right now, the main organizing principle of society is the **nation-state**, which is also an economies of scale-centric model. But if you think about it, what is Bitcoin really? Bitcoin is a society of people who care about sound money, and the protocol is what enables governance. So, these cloud societies, at the limit, I think look more and more like the future version of countries. You know, what is a country really? It's a bunch of people who decide what their boundaries are, who decide who gets in the club. But then they have a constitution where they decide how to separate powers and how to protect the rights of individuals against the mob and the tyrant. That's exactly what Bitcoin does with its protocol.

Shaan Puri

And just to use some other examples: **Bitcoin** is for the people who have this cult-like belief or religious belief around sound money. **Ethereum** is for people who believe in programmable money. Then you have **Wall Street Bets**, which is like, "Hey, let's just give the middle finger to the large incumbents." So, how does David beat Goliath? We're basically going to screw around with them and make profits while we do it. That's what we're here for. We will assign ourselves names; they call themselves "retards" and things like that because in their culture, that's okay. **Burning Man** is a pop-up culture that happens for a week in the desert where all these people behave totally differently than they will the other 51 weeks out of the year. So, there's a whole bunch of these pop-up cultures and cloud cultures that all have different virtues, different admission criteria, and all the different pieces you just described.

Mike Maples

And it's so interesting because there are historical parallels. Right? Like in the Reformation, the Pope used to declare all the answers. Then, all of a sudden, the printing press comes out along with double-entry accounting. Now, Martin Luther can distribute the Bible to lots of people in a permissionless way, ironically. Not only that, but the merchants of Venice can trade with each other without a central authority because they can have double-entry records and keep track of IOUs. To me, the internet and blockchain are just so amazingly parallel to that. I think society ebbs and flows. It's like when you're too decentralized for too long, it gets chaotic. Then, you have innovations that centralize the means of production, but then it gets too centralized. What we're seeing now, I believe, is Wall Street Bets. It's a perfect example. The people at the edge are saying the network should decide, not the center. If you read books like "Revolt of the Republic" and things like that, you see a world where the people at the edge are starting to say about the people at the center, "You're illegitimate." Just like the people at the edge back in the Reformation started to say that about the Pope and some of the things that were happening with exclusionary, you know, sort of insider-only activities.

Shaan Puri

And in the last two years, you know, social media went from being on the edge to pointing at mainstream media. Mainstream media is now synonymous with "fake news," right? That wasn't even a thing five years ago. Now, mainstream media is used as a derogatory description of something, which is kind of crazy. That's a big change.

Mike Maples

And the important thing is, I try not to be too judgmental about it. I don't sit there and say, "Oh, those mainstream media people are no good." I'm just like, it's inevitable that media is going to decentralize. It's inevitable that money will. It's inevitable that politics will. It's inevitable that a lot of these things will. Arguing for it or against it is kind of like arguing against the direction of the wind. It's just... it's fruitless. But then, back to your listeners. To me, what that means writ large is, if the 20th century was about being the "organization man," following the rules, and progressing up the hierarchy, that doesn't exist anymore. Now, you have to take agency for your own life, own your comparative advantage, and understand that this is your responsibility as a free person in this world. If you do that, you're going to be incredibly rewarded in the 21st century. But if you wish that it's like the 20th century, I got bad news for you: it's not going to be.

Sam Parr

Floodgate invested in Refinery29, right? For those who don't know, unfortunately, a lot of our listeners are men, so they may not be familiar with Refinery29. It is a huge media company geared towards women. You can find them at Refinery29.com. They were pretty big, right? They had maybe $200 million or $150 million in revenue, and then they sold or merged with Vice or something like that.

Shaan Puri

yes

Sam Parr

And Vice is like probably a $1,000,000,000 a year entity. With everything they have going on, do you think that media companies like that, given what you're saying about... I mean, because Vice is at this point, even though they weren't new, Vice and 29 are probably almost like old school at this. Do you think that those styles of media companies are still going to be great companies, given what you've just said?

Mike Maples

Well, I think that there's going to be a very rich ecosystem of all types of media companies. To me, the defining new characteristic will be that media is no longer a function of the credentialed elites telling you what to think. That was the real problem that we started to see in the media, in my opinion. You had a set of credentialed elites running these media companies, of which there weren't very many. These institutions are all inherited now rather than founded. The people running these institutions didn't really understand what made them great in the old days. As a result, they started to get worse over time in their effectiveness and legitimacy. To me, the real question about media is not so much whether there is one way it's going to happen or not. I think that the winners will be those that niche down, have a comparative advantage in the type of content they cover, and attract the attention of the people who care about that type of content. The credentials won't define it because the old media companies had credentialed elites running them, but they also had a monopoly on distribution with newspapers and how they got print magazines out. So, I think that all of that is going to change.

Sam Parr

Is there any media companies or opportunities that you're looking at and you're like, "Oh, that's kind of interesting for us?"

Mike Maples

I would say that my colleague Ann Murico is probably smarter about that than I am. You know, it's funny... even within Floodgate, I tend to stick to my areas that I'm excited about. So there's a lot of exciting things that I'll probably miss, but I'm going to ask you a question.

Shaan Puri

Yeah, I'm going to ask you a question that might be hard to answer because it's one of those things like, "Oh, you know, how are you?" But you've said a couple of things that caught my attention. You have these nice phrases. So, one is, I didn't realize that I see this on your bio here. I didn't realize you coined the term "thunderlizards." I've heard many investors talk about thunderlizards as something they want to invest in, which is like, sort of like, you know, the Godzilla-type companies that emerge every decade or so. That's what you really chase because those are where all the returns are, and those are what change the world. But you also said, "I'm a rocket fuel salesman." Yep, you are catchier than your average VC. You have a little sort of gift there of coining these little mind viruses, these little phrases that stick with people rather than just saying a bunch of jargon. Is that a skill you learned consciously, or is that just, you know, growing up, your parents talked like that? Where did that come from?

Mike Maples

I don't know, but I guess the way I look at things in this world is you want to force a choice and not a comparison. And so, like, what do I mean by that? Like, the whole... you, you, you...

Sam Parr

just did it again

Shaan Puri

you did it again yeah exactly right

Mike Maples

And so, if I say, "Hey, we're investing in particularly disruptive types of companies," that's not the same as saying "thunderlizards." Why is this so important? Well, if you're trying to create a breakthrough, by definition, it breaks free from the present. So, it can't be compared to something in the present because if it's comparable to what's in the present, it's too incremental, too conventional. When I say "force a choice and not a comparison," I tell founders, "If everybody's selling bananas, you can't say, 'I'm a 5x better banana.' Instead, you should come out and say, 'I'm an apple.' Not everybody's going to want your apple, but 100% of the people who prefer apples are going to want what you have. Forget the guy who wants the best banana; there are a thousand of those people. You need to waste not an erg of energy on them. You need to spend your time on the people who potentially value your advantage and start a movement around that." Earlier, we talked about markets. Companies have markets that could be segmented, sub-segmented, and classified. Startups don't. Startups create movements. They have a secret about the future. They get early believers who co-conspire with them to co-create a different future, and the market emerges as a consequence of the movement succeeding. But in the early days, we just have to get people moving. We have to get people moving to somewhere different, not better. As a result, we must force a choice and not a comparison. As a seed investor, I have to do the same thing because there are 2,000 seed funds now. It was innovative when Anne and I helped invent seed investing in 2006, but now there are 2,000 firms. We have to come up with some way for people to say, "Okay, I can't reconcile the choice of working with Floodgate versus BrandX."

Shaan Puri

I think at sam writing writing checks with writing checks on the spot that's how we differentiate

Mike Maples

Well, I don't know, but I think there's a lot to be said about niching down. I think a lot of people would benefit from the idea of how to force a choice and not a comparison. It takes more courage, and it forces you to say no to more than you say yes to. But if you do it the right way, the stuff you say yes to... I like to say it's "less but better" is the way to think about it.

Sam Parr

You've had some amazing people on your podcast. You've invested in a ton of incredible companies, and I bet you know just about everyone in this world of all these people that you've invested in or did business with. If you guys were put on a stranded island, who do you think would come out on top? Who's the most formidable person that you've worked with?

Mike Maples

Oh, there have been so many great people. I think a lot of it would be a function of just who had the right idea at the right time. You know, so much of this is just... I call it a "founder future fit." It's just like, you know, when Andreessen did Mozilla, he was the perfect person in the world at the perfect time to do that idea. So, you know, it's not just how formidable the person is, but it's also about whether the timing was right and if they were just the right person at the right time.

Sam Parr

I'm obsessed with stories and I love interesting personality types. Is there anyone that fits that bill of being incredibly formidable? Like to the point where you think, "How can you be more like that person?" or "I wish everyone thought a little bit more like this person."

Mike Maples

Yeah, so I try to learn from everybody, but I never try to imitate or be like somebody else. Because then that defeats the purpose. Now I'm comparing myself to somebody else, and I never do that. I don't believe that people should compare themselves with anybody. I think they should learn from people, but I don't think they should compare themselves to others. I also don't think they should have heroes. And I think that, yeah.

Shaan Puri

You've mentioned a couple of people that you've learned from. You know, Balaji being one. Tim Ferriss said he learned from you. Who are some other names? If people listen to this and they're like, "You know, or me, right? I've really enjoyed hearing you talk during this hour. I think you've got a bunch of smart ideas." I want to know, you know, what's he eating? Basically, what's your information diet? What are some of your favorite people to follow and learn from? Who are you getting a bunch of interesting information from that's not just like the rest?

Mike Maples

Yeah, so I like the Farnam Street blog a lot with Shane Parrish. And by the way, just because I don't invest like Buffett and Munger doesn't mean I don't study them like crazy, right? Because I think that when I read how they look at the world, I'll understand what's different about how they look at the world. But I'll also connect dots that will make the difference in my world more clear.

Shaan Puri

mhmm

Mike Maples

I read a ton. I probably read about one or two books a week, just in general. Some of the ones that I've read recently that I like include "The Courage to Be Disliked" by a couple of Japanese authors. I think it's amazing. Then I went down this rabbit hole of the psychiatrist Alfred Adler, who kind of came of age at the same time as Freud and Jung but wasn't as famous. I think Alfred Adler's ideas about individual agency are perfectly timed for the 21st century. I've been liking everything that I can get my hands on about him. It's weird because although I read a lot of books, there's always a subset that I come back to over and over again. I try to take notes because I want to make sure I really understand it so that I can explain it to somebody else in a really clear way. So, I like "The Courage to Be Disliked" quite a bit. I've also been reading a lot of stuff on stoicism lately, which I find to be very misunderstood. But you know what's...

Shaan Puri

the misunderstanding

Mike Maples

I think that most people view stoics as, you know, emotionless individuals who turn the other cheek when things go bad. However, I actually find that when you read about the stoics and their actual philosophies in this world, they are quite optimistic and inspiring. I find it helpful to internalize some of the lessons of stoicism and some of the lessons of Alfred Adler. I often find myself reading those books over and over again, trying to make a list of things to learn. I ask myself every day, "Am I exercising those muscles?" Then there are other times when a friend of mine will say, "This is a really good book," and I think, "Gosh, I just read that."

Shaan Puri

right you

Mike Maples

know it's just fun

Shaan Puri

It's great! Alright, we're coming up on the hour, so we can wrap it up. Mike, thanks for joining. This is great! Where do people find you if they want to get more? So, obviously, the podcast "Starting Greatness." Where else should they follow to get more?

Mike Maples

Yeah, I'm on Twitter at **@m2jr**. Let's see, that's probably the best place. You can also check out **floodgate.com**.

Sam Parr

you're you're a tweet machine I've been following you since I talked to tim years ago about you

Mike Maples

Okay, yeah. If you guys want to cover any other topics, I'm happy to. I know that we kind of bounced around.

Shaan Puri

I want the American Exes. I feel like that would have been an interesting one. I think we should, if you're up for it, do a round two around American Exes. I think there's a bunch there that people would enjoy.

Mike Maples

Are talking a ton about... yeah, in all these themes, right? I think that the idea of blockchains and sort of thinking about the future of money, and how we're going to a currency governed by commons rather than fiat government, is interesting. I like to say that computing phases have evolved. You had mainframes, then you had PCs, and then you had the internet. They always start with an enabling technology and they commoditize the prior. Mainframe computers were expensive, and then PCs made computers basically free. Proprietary software becomes valuable. Okay, the next thing is the internet, where software becomes open source and amassing lots of proprietary data becomes valuable. So, one way I look at blockchains is that they're the next wave of computing. They're going to probably democratize data and control of things back to networks. Then, what becomes a valuable thing? My instinct is that it's about governance. There’s a lot of conversation we could have about that, and that might be interesting. I totally agree with America next... all the stuff that I think is going to have to happen for the military to be more agile and for us to kind of upgrade our thinking about stuff.

Shaan Puri

You know, when you're talking, I'm like, "This is what I could be like if I could just focus on three things that I really believed in." If I could just stop thinking about other stuff for like two years, I could have this level of clarity and insight. You're making me want to focus, which Sam and many others in my life have tried to get me to do before.

Mike Maples

Can you appropriate creative ideas from the world? But then I think you want to be a mile deep somewhere.

Shaan Puri

right so it's

Mike Maples

Like a T, right? And it's like, that's why you read several books at a time. But then you also go deep on a small number that are truly great.

Sam Parr

Do you... who should we invite next onto this podcast? Who do you think are some of the best storytellers and prolific idea folks? You had Reid Hoffman; we're trying to get in touch with him. Is there anyone else that you think we should invite?

Mike Maples

Reid Hoffman, Naval Ravikant, and Chris Sacca are always good storytellers. I can think about that. You know, the Instagrammers are fun. Andy Radcliffe is probably not as famous as some of your guests, but boy, is he a clear thinker and a great communicator.

Sam Parr

what's the best way to get in touch with reid just to call him you think

Mike Maples

Probably, let's see... or you could just say that I've mentioned you guys and that it is a good show. I enjoyed it. I'll be the...

Sam Parr

People that you just mentioned, I'll email them and say, "Mike said you're the guy."

Shaan Puri

yeah I'll just tell

Mike Maples

You know, I haven't seen as much of Chris Sacca lately, so I don't know if that would be as effective with him. But I think that some of the other guys would recognize me pretty well.

Shaan Puri

I showed up for Chris one morning. He texted me and said, "Hey, I gotta film a Shark Tank intro. We need some bodies in the background for my intro." I left my job and went to where he was at 9 in the morning. I filmed as a body double; I was an extra in the background for his Shark Tank intro. So I'll pull that favorite card and be like, "Hey Chris, okay, now is the time to pay it back."

Mike Maples

Yeah, if you haven't had Mark Cuban, I think he's really good. By the way, it's funny because you guys are using Zencastr, and so does Shane Parrish. I was on his podcast, and after he listened to the talk, he said, "There are so many upfront questions I wish I'd asked you. Can we do this again?" I was like, "Sure!" So we ended up having a lot of content that he kind of cut down. But if you find yourself in that position, let me know. I'm happy to help you make it as "less but better," right? If we're going to ship a product, it might as well be **fucking awesome**, right? So, I love you.

Sam Parr

where are you from

Mike Maples

I was born in Oklahoma but moved all around because my dad was an IBM employee. Yeah, and then he worked at Microsoft.

Sam Parr

yeah I feel like how old how old are you

Mike Maples

early 53

Shaan Puri

yeah

Sam Parr

So, you're... I'm 31. So, you would have had to have me when you were quite young. But I feel like you could be my uncle, I think.

Shaan Puri

I I I that's funny

Mike Maples

that's what the founders call me their nickname for me is the crazy uncle

Shaan Puri

so me I

Sam Parr

I think we kind of look the same. I could tell you, I thought you would have been from the Midwest or maybe the South. I'm from Missouri.

Mike Maples

oh nice yep show me state

Sam Parr

Yeah, and my cousins live in Oklahoma, in Owasso, Oklahoma, where they buck bulls. I have a feeling you and I could be distant cousins, and we don't even know it.

Mike Maples

yep yeah you never know coming from missouri to oklahoma you never know

Sam Parr

yeah well I appreciate this man this is awesome sean you got anything to say

Shaan Puri

No, my camera died. I'm at the overheating mark. But Mike, this is great! Thank you for coming on. I enjoyed that. That was good.

Sam Parr

and you're in austin

Mike Maples

now I live in marin county so I'm in northern california

Sam Parr

oh I thought you lived in austin for some reason

Mike Maples

No, I helped him though find his place. When he decided to move, I... you know, I used to live in Austin about up until 15 years ago. My family's from there; all my relatives and stuff are from there.

Sam Parr

you know I'm just you did the opposite of what everyone else did

Mike Maples

It seems so. Everybody keeps asking me, "When are we going to move back to Austin?" I, you know, I don't know. I'm pretty happy with where we live. But, you know, it's a pretty crazy time, so you never know. We'll see.

Sam Parr

well well thanks for being here we'll talk soon