This Hedge Fund Manager Got Away With Insider Trading… Then Made Billions (#509)

Shaan Puri

Sam, what's up, man? I got some good news for you. Great! Click that link I just put in there. It's, uh-oh, it's your lucky day, bro! Here's an article in the Financial Times called "The Alpha of Ugliness." It turns out that being ugly outperforms. They analyzed a bunch of investors, and the investors who were conventionally ugly outperformed by 2%, I think.

Sam Parr

Yeah, I saw that. But here's the problem: I'm 5'10". I'm not ugly enough to be made fun of, but I'm definitely not hot enough to be 6 feet tall.

Shaan Puri

to get any advantages

Sam Parr

Yeah, so... damn it, that's the issue. Should I get uglier or hotter? I guess uglier.

Shaan Puri

Yeah, when I was in 2nd grade, I really liked this one girl. I was like, "Hey, I want to ask that girl to the... whatever, the dance or something." We had like some party in 3rd grade and...

Sam Parr

now that

Shaan Puri

I think about it... that's kind of young to be asking girls, but that's what happened. So, I went up to her—or no, my friend went up to her—and he was like, "Hey, Sean likes you." She goes, "Sean's ugly." That was 3rd grade, and I'm still reeling. I'm 35 now, and I'm hoping that at 36, I'm off that... but you know, I'm still recovering, I would say.

Hubspot

Our software is the worst. Have you heard of HubSpot? See, most CRMs are a cobbled together mess, but HubSpot is easy to adopt and actually looks gorgeous. I think I love our new CRM. Our software is the best. HubSpot: "Grow better." So, Anand, the founder of CB Insights, tweeted this out, I think a week ago. He does really in-depth tweets where he looks at data and stuff. He had this one thing where he said, "I've found this data that talks about how good you look and your returns." A lot of people think that the hotter you are or the taller you are, the better returns you're going to have, which makes sense. Taller people get better treatment. However, he said no, it's the opposite. There's a correlation between attractiveness—or I guess an opposite correlation—between attractiveness and the rate of returns for investment managers.

Shaan Puri

Well, yeah, because the investment doesn't know how tall you are. You know, the tall guy probably could raise more money, but not necessarily make more money.

Sam Parr

well and it's I guess is it the uglier you are the harder you've had to work

Shaan Puri

yeah that's what I've been clinging to that's the story I've been telling myself

Sam Parr

so speaking of hedge funds or investments let me ask you a question

Shaan Puri

okay do you

Sam Parr

know anything about hedge funds

Shaan Puri

not a lot

Sam Parr

Okay, what you need to know is they work really hard and it's a really intense lifestyle. So, you understand that, I'm sure. Would you, if I paid you $10,000,000 a year, work at a hedge fund as a portfolio manager? Would you live that lifestyle for $10,000,000 a year?

Shaan Puri

I don't know the lifestyle, but probably not, because I really like my lifestyle. I would not trade it for a worse lifestyle, if that makes sense. But like, let's assume, ten years ago, would I have made that trade? Yeah, I would have made that trade. And that's what I think they do. I think they make that trade early in their career, and then that's what they do.

Sam Parr

so I'm reading this book about steve cohen do you know who steve cohen is

Shaan Puri

He owns sports teams and he's one of the most successful hedge fund guys. I think "Billions" is based off of him, right?

Sam Parr

Roughly, yeah. So, Bobby Axelrod is off him, but basically, Steve Cohen started as a trader. He's basically a glorified day trader. That's how he made his first couple billion.

Shaan Puri

worked at like almost like a $1,000,000,000 day trading

Sam Parr

Yeah, that's not the best explanation, but basically, it's day trading on steroids. It's kind of like calling a bodybuilder, "Oh, you like to exercise," but it was basically...

Shaan Puri

his own money or he was at a a fund

Sam Parr

It started with his own... So, he started as a kid, 23 years old. He worked at something that looked like the "Wolf of Wall Street" style setup, where it was a bit dingy in the beginning. He was selling penny stocks in a small operation, basically a garage, with about 30 people. The story goes that they interviewed his boss in this book. The boss said, "Dude, on his first day of work, he came in and said, 'If I were you, I would do that and make that trade.'" The boss was like, "Who do you think you are, telling me what to do on your first day of work?" Steve replied, "I'm telling you, that's going to work." Within a few hours, it made $8,000 in profit. After two years, he was making $100,000 in profit a day for the firm. It was a day trading firm, and in the eighties, day trading wasn't quite popular; it was more about holding something for a long time.

Sam Parr

Of time pick stocks based off the businesses

Shaan Puri

He's so good because he's a savant. He figures out some arbitrage and he's exploiting that. Why is he making $100 a day?

Sam Parr

So at first, he claimed it was intuition. He believes that he's bad at math, which is uncommon for a lot of these folks. He said, "I would just look at the ticker." At the time, it was a physical ticker that would be on the board and it would change stock prices. He was like, "I would just find these weird arbitrages." He would short stocks based on the idea that if something just changed by $1, he thought it should be 50 cents higher. He would buy it and sell it within a few hours. It's incredibly challenging reading this book to figure out exactly how he did this.

Shaan Puri

That's so frustrating as an answer, by the way. It's like my idiot friend from college who's looking at the roulette wheel and is like, "Guys, I feel it's gotta be red. It's been black four times in a row." I'm like, "That's not how this works." That's very frustrating if that's the answer of how this guy became, you know, a billionaire—just good old gut. I just don't know.

Sam Parr

I don't

Shaan Puri

believe that that sounds crazy

Sam Parr

it's very frustrating and you tweeted about it

Shaan Puri

like rain man and just figured out which direction things are gonna go

Sam Parr

Well, I tweeted out about it, and Martin Shkreli, who worked in the hedge fund world, has been replying to my tweets. He's like, "Yeah, it does seem like it's more intuition-based." When you're playing blackjack or poker, you know roughly the odds as you're going really quickly. The problem with Steve Cohen is he's never done a wonderful job of explaining exactly how he did it. However, at the age of about 32, he started his own fund. He had $10,000,000 of his own money, and that's why he started SAC, which is what his firm was called. He hired a bunch of people and gave them crazy commissions where you could earn 30% of the profits you made for the firm. By the time he was around 42, SAC, which was mostly his own money, accumulated about $10,000,000,000. However, after the first $600,000,000, a lot of it was insider trading. They would do crazy things like fly to conferences and take the conference speaker out to dinner at a conference where they were discussing different drugs that might become legal based on various trials they were currently running. They basically bribed these guys to give them information, like, "This trial is going really bad..."

Shaan Puri

Is he going to get in trouble for this or not? Because I'm looking it up. Steve Cohen's net worth is $19,800,000,000, and he appears to be a free man.

Sam Parr

Yeah, so here's the rub: he does get in trouble for it, but after he's worth already probably 5 or $10 billion. They do it very quietly. He's been very quiet for years, building and accumulating about $1 billion. The old... what?

Shaan Puri

does he do later

Sam Parr

Then he gets in trouble, and you want to know something? He completely gets away with it. He gets convicted and he gets in trouble. SAC has to shut down technically, although now it just becomes his family office. A year later, he starts another firm called Point72. The guy, he did not get in trouble at all. He clearly broke the law many, many, many times. However, as I'm reading this book, I'm reading about the lifestyle of what it's like. It is 7 days a week, 12 hours a day, more than 12 hours a day before you...

Shaan Puri

Do the lifestyle thing. I want to read Martin's reply to you. So you were like, "This guy Steve Cohen, fascinating!" What I don't understand is, you know, he's basically become worth over $100,000,000 as a day trader on steroids. It says he followed his intuition with bad math. What does that mean? So, great question! Here's what Martin says: "I studied Cohen for a good part of my life, and I think these were the key components. As a trader, he has an unbelievably capacious memory for stocks." Capacious? Wow, that's a word! I love that. I don't quite know what it means, but you'll see me sprinkling that around for the next three days.

Sam Parr

alright I guess it means good we'll just say good

Shaan Puri

good or spacious 1 of

Sam Parr

the 2 yeah so for

Shaan Puri

Any given stock, he literally knows what the situation and controversy is. This is a little bit like how it impresses some people that Cramer knows most of the stocks he's asked about. They are similar animals. Number two, he's unwavering on discipline and portfolio/firm structure with leverage and a diversified group of portfolio managers. The net result for investors is incredible. Other firms like Millennium and Citadel have figured this out too. Cohen is also a very smart businessperson, which most traders are not. He can attract impressive talent because he speaks the traders' language, whereas other similar firms don't have active traders managing the company. I think it's a competitive advantage. The style has been somewhat effectively replicated by its competitors, however, and the arbitrage has all but vanished in U.S. public equities.

Sam Parr

Yeah, so that's still not the best answer, right? That answer doesn't feel good. It's not giving me exactly what I wanted.

Shaan Puri

He said one more thing that I think is great. You were like, "It's crazy that he was getting, you know, 30 to 50% annual fees." He goes, "Remember, Martin, that's 50% net of fees." So his fees were 50%. Basically, he had 10 years where he made about 100% a year. It's arguably the strongest stretch of high returns ever done, similar to Renaissance Capital.

Sam Parr

It's amazing. This guy, he's sneaky. He's a sneaky guy. He does a lot of bad things in this book. Okay, some of them...

Shaan Puri

some of them

Sam Parr

for example you know glg which we've talked about constantly

Shaan Puri

expert network

Sam Parr

He was... yeah, so basically what GLG does—I'm a consultant technically every once in a while on GLG. So, a bank is going to take a company public. Let's say it's HubSpot, for example. They want to know all about email marketing. They find email marketers and ask them about which software they use. They want to learn about whether it's a good company or not, whatever. Well, Steve Cohen was GLG's biggest customer. He spent $1,000,000 a year. He would become friends with the "quote consultants," get their information, take them out to dinner, and be like, "Look, just tell me the truth and I'll put you on salary." For example, if you're on this board, if you work for the government and you're getting ready to approve a drug, just tell me if it's going to get approved. Tell me how the trials are going.

Shaan Puri

He's not using the napkin. I've written the number 3, and as you keep talking, I will start adding zeros. Go.

Sam Parr

Yeah, I mean it was basic like that. They get the information from the guys, and they basically... they honeypot these guys. So they become friends with them, ask about their families, and then they get the information and bail. They never see them again.

Shaan Puri

sounds like your dating life back

Sam Parr

in the day yeah by by

Shaan Puri

The way this GLG thing is really funny. So when you do these calls, tell me if you're like me. I've done a couple of these calls.

Sam Parr

talk really slow

Shaan Puri

yeah first of all it's like 8th grade and I'm trying to hit the word count

Sam Parr

yeah yeah so basically with glg they pay by the hour you could charge $3 an hour

Shaan Puri

I become very capacious. Yeah, I feel absolutely silly doing these. Like, I know in my head, there's an intellectual part of me that's like, "Of course, $2,000 an hour, hell yeah, I should be making that." And you know what? This is gonna be such... I'm giving them liquid gold. That's what I say in my head. However, during it, I become very insecure about what I'm saying. I'm like, "None of this is special. This is all so basic." I feel like I'm a high-paid escort that doesn't know how to have sex. I'm like, "I hope they're happy with what they're getting here for this $2,000 an hour."

Sam Parr

did he ask them if it

Shaan Puri

was just for them mediocre

Sam Parr

It's a weird thing. I don't actually do it anymore, but in this book, one of the ways they made like a **$1,000,000,000** was by doing this for drugs. They found out through their investigation that **10%** of U.S. doctors admitted to being one of these consultants on some of these networks. And that's only the people who admitted it. So, it was like a pretty widespread problem. My takeaway so far in the book is that if you're a white-collar criminal, you could basically get away with it. You can get away with it.

Shaan Puri

That's crazy! So, he got convicted of insider trading. What did he have to pay? Did he go to jail?

Sam Parr

He paid $1,000,000,000. He did not go to jail. Wow! Maybe he paid $2,000,000,000, but he started a new firm the next year, right?

Shaan Puri

He paid $2,000,000,000 as he laughed uncontrollably. Alright, so you were going to talk about their work culture. It sounded like...

Sam Parr

Yeah, so I got obsessed with this work culture. I saw this quote by Keith Rabois. Keith Rabois was at the Pomp's conference, and he talks about 996.

Shaan Puri

do you

Sam Parr

know what 996 is it means chinese

Shaan Puri

work schedule

Sam Parr

It's a Chinese work schedule. It stands for 9 AM to 9 PM, 6 days a week. Keith's stance seems to be that he loves 996. He tells a story about one of his portfolio companies. They just hired a CFO, and the woman who got the job said, "I was specifically looking for a 996 culture." She Googled and found out that on their job listing, they mentioned they were 996. That seems crazy to me because I don't think that's a lifestyle I want. So, I was curious about 996 and went down this rabbit hole of working. Do you know the history? Have you ever read about the history of the 40-hour work week? Do you know how it came to be?

Shaan Puri

Roughly, here's what I know. You tell me where I'm missing something. When we went to the factory industrial model, that's when the 40-hour work week of going into the "office," the plant, or the factory became a thing. It wasn't that way before.

Sam Parr

So, somewhat, yeah. Basically, in the book *Sapiens*, the author hypothesizes that hunter-gatherers, you know, we're talking pre-civilization, worked something like 30 hours a week and spent a lot of time just being idle with family. Then the Industrial Revolution comes along, and factories and machines come about. In the late 1800s and early 1900s, there were a bunch of surveys done among the workers, and it was found that, on average, most of them were working 100 hours a week, 6 days a week. So, they were working constantly, and it was a grind. There were constant protests, and people were fighting over this. Legislation went into power in both England and America in the 1920s, where it was like, "Government workers, you don't have to work that much. We're going to give you a normal work week." But basically, factory workers didn't get anything. Then, in the 1920s, Henry Ford was like, "Hey, look, the thing about our guys working so much and my company being so big, the Ford Motor Company, is that I need people to buy cars. Because if they're working so much, they can't buy pants, they can't buy shirts, they can't go out to eat, and thus they can't buy cars." Therefore, I'm going to try this thing where we're going to create the weekend. We're going to give Saturday and Sunday off because if they don't buy things, people aren't going to buy cars. So, in the 1920s, Henry Ford says, "The weekend's a thing," and that was the beginning of the 40-hour work week, at least in terms of it being systematic.

Shaan Puri

henry ford created the weekend

Sam Parr

He made it like a thing. Yeah, he was the first big company to make it a thing. What he found was he did something crazy at the time. He said, "Hey workers, guess what? I'm giving you Saturday and Sunday off. I'm not even going to touch your pay; your pay is going to stay the same." That was really revolutionary at the time. His workers ended up loving him more. He also did a bunch of crazy stuff. He built towns, similar to what Facebook and Google do now. They actually give you a stipend if you live within 5 miles of the office because he was like, "I want you to be close to the office. I want you to be available when you can, but I'm going to give you Saturdays and Sundays off." That was kind of the beginning of the weekend. Since then, that's kind of become standard. Even though he gave them the weekend, people were still working 12 hours a day. So, people were working 60 hours a week. But then he eventually lowered it a bit to 40 hours a week, and that became what the 40-hour work week in America is for workers. So, he sort of invented that.

Shaan Puri

what a what a legend

Sam Parr

yeah well he's done a lot of bad stuff too so

Shaan Puri

So, I just googled it. Sundays were kind of casually off, but it was like for church. He's the one who made Saturday also off, basically. Then there's the comparison of the 40-hour work week versus the 70-hour work week, which is crazy.

Sam Parr

yeah and he didn't change their pay he goes I'm gonna I'm gonna give you what you want anyway

Shaan Puri

stuff henry ford did like how bad how bad are we talking

Sam Parr

Super anti-Semitic. So, he's a big fan of Hitler. He wrote books called, like, I think he has a famous book—I forget exactly what it's called—but it's called "Our Problem," and it's basically about why Jews are bad.

Shaan Puri

oh

Sam Parr

Wow, so yeah, he is a very, very imperfect person, but that's okay. We could talk about the 40-hour work week, which is interesting. So, that worked out, and that's how the 40-hour work week came to be. Now, over time, a lot of companies have tested 4-day weeks, and some claim that it's effective, but I think the verdict's still out. These things are really hard to measure. Then I went and read a bunch of studies on what's the optimal amount of work time. Have you ever studied what the optimal amount of work time is? No? A lot of research says that humans can only focus and concentrate really hard for about 5 hours a day. That's what some of this research says. There's also a ton of research that shows there's a stupidly high increase—it's like a 30% increase—in heart attacks, blood pressure, and things like that for anything above 50 hours a week. So, there's a huge issue with the 996 work culture and health. I've read enough biographies to know there's definitely a trend. Have you ever heard the story of rich people in the 1800s or 1900s having to go to Florida for fresh air because they needed to relax? Or they had stomach ulcers? Have you ever heard of that?

Shaan Puri

I don't read history books

Sam Parr

there's a pretty like common story amongst types

Shaan Puri

of air pollution or because of something else

Sam Parr

Well, they were just like having nervous breakdowns. It was like a common thing among the biographies. The doctors would be like, "You need fresh air. You have to go to Florida. You need fresh air; you're having a nervous breakdown." It's a very common thing for these guys, like Joseph Kennedy and John Rockefeller, having to retire or take a three-month sabbatical because they're broken. You know, John Rockefeller, at the end of his life... do you know what alopecia is? Yeah, he had alopecia. So, at the age of 50, he lost all of his hair. That's a stress-induced disease, at least a lot of people think so.

Shaan Puri

So, first of all, a couple of questions. Number 1: Is 996 still in effect? I thought I had heard something that China was rolling that back, that they don't do that anymore.

Sam Parr

technically it's illegal

Shaan Puri

but still maybe some people are

Sam Parr

Doing it, but still, it's practice. For example, there are a lot of quotes from JD.com as well as Jack Ma from Alibaba. There are quotes where they're like, "Look, do you want to be successful? If you do, you have to do 996." They say this on record in their WeChat talking about it, right? So, it's still common. I think, though, there is an interesting point here. I think Americans, in particular, don't want to create a narrative about why China can potentially beat us. You say to yourself, "All they care about is work, work, work, work, work," and I just don't want that life. So, there could be the case that they don't actually work significantly harder than Americans, but that's just the excuse we're going to give in our heads. In reality, I think a small percentage of Chinese companies are still doing 996. In general, a lot of the young Chinese are revolting against that, and that's one of the reasons why you see a lot of Chinese American workers. I think they prefer the American style versus the Chinese style.

Shaan Puri

So, okay, that's what's going on in China. Keith Rabois says that he runs his companies on 996. Now, you guys have Barry's Bootcamp like twice a day. What do you... what's...?

Sam Parr

He... what's he doing, bro? Here's what he says. So, there's a company called Tava, which ironically is a software or a service for warehouse workers to help factories find warehouse workers. He says it's a 996 in the office—every single person, every single day. It's very impressive, and it's not surprising why that company has done so well. In fact, he says this is why Asian companies succeed, because they do 996.

Shaan Puri

Yeah, as an investor, you love when your companies do 996. Why not? Of course, of course you love it. Okay, next thing. Do you feel that with Hampton, you're going to be the Henry Ford of our generation and take us down to the 5-hour workday rather than the 8-hour workday? Is that a thing you're doing? Because I'm trying to bring it. I'm trying to revolutionize the adult nap, right? Like, you know, the adult nap is going to be my lasting legacy. When I die, people are going to be napping in the middle of the day, and every day they're going to thank Sean for bringing this new nap culture to adulthood.

Sam Parr

Naps... I've read 100 biographies. Naps are very common among a lot of the people I've read about. By the way, if it makes you feel good, naps are common.

Shaan Puri

you read about legends do legends nap I nap therefore shawnle equals legend

Sam Parr

Yeah, you're Indian, you're good at math, you get it. Do I think that? No, I think the 40-hour work week... I don't think it's broken. That's what I think. I don't think it's broken.

Shaan Puri

How many hours a day are you actively trying to work? And then, how many hours a day do you think you're productive? I'm just looking for those two numbers.

Sam Parr

So, like, I don't plan 9 to 6. I don't like that. I treat running my companies differently. I remember my parents were like, "Oh, you work for yourself, you can come out to lunch with us." I'm like, "No, 9 to 6 is my job. I'm available and I'm working." So I say that I'm 9 to 6. I spend a lot of time thinking. I'll literally just be sitting there, thinking and writing notes. So if you consider that work, I think I work 40 hours a week. If you consider work like typing and actually contributing to a product, way less—10 hours a week.

Shaan Puri

Yeah, I do the same thing where I'm like, "It's awesome! I'm my own boss." The problem is, I'm an asshole as a boss to myself. You know, I work harder when I'm my own boss versus if somebody else was managing me. But nowadays, with kids, my schedule is very different. I basically do these sort of 3-hour sprints three times a day, but at different times. So, like, this right now is my first sprint. It usually starts at around 8:30 or 9 and goes until 11:30 or noon. Then, I go play with my kids for a little bit, which is honestly only like 20 to 30 minutes, but we'll do something fun. After that, I'll come back and do another 90 minutes in that next block. Then, I'll go work out, and after the workout, I have another 90 minutes. So, that's kind of like the second block: those two 90-minute sessions split with a workout. Then, late at night, after my kids sleep, I'll do another 90 minutes. I don't know what that adds up to—90, 90, 90 plus the 3 hours in the morning—but that's how much I work, which is probably like 6 to 7 hours a day.

Sam Parr

And by the way, I think I kind of glossed over this, but at ByteDance, they currently have employees working 6 days a week every 14 days. And then what's the big phone company over there? Is it called Hawaii? How do you pronounce that? Huawei? I don't know. They routinely ask staff for 6-day weeks every month, and they pay them extra for it.

Shaan Puri

right

Sam Parr

So, like, it's still pretty common, but at the end of a 40-hour work week, where it's been a hard week, I find myself fried. I’ll sit and either play a video game or watch TV. I can't do much. I don't know how a guy like Elon Musk or some of these folks have intellectual stimulation for that long. I find it to be very, very challenging, and I personally cannot do it. So, would I take $10,000,000 a year to be a hedge fund portfolio manager and live that life where you're on call 20 hours a day? Maybe for $20,000,000 a year, but for $10,000,000? Probably not. I think it’d be hard.

Shaan Puri

I mean

Sam Parr

I mean there's a number right there's a number where you would do it for a couple years

Shaan Puri

I mean, that's putting you on blast, but like you're already going to be creating that much or more value without doing it. So why would you ever make that trade? Right? Like, it doesn't make sense.

Sam Parr

I didn't say I would. I said maybe. I said there's a number. Yeah, there is a number. That number has to be pretty high. $10,000,000? Not a chance. $20? Probably not. I don't know.

Shaan Puri

Yeah, but that sounded like... that sound, that probably not there, sounded like, "Give me 3 more seconds of silence and I'll change my mind."

Sam Parr

But have you ever read a book? Have you ever watched James Bond and seen the villain's lifestyle? You're like, "That's exciting! I want to do bad stuff." That's what that's about.

Shaan Puri

a hedge fund is

Sam Parr

Yeah, yeah, just do it. Just do it. Hoodrat stuff with your friends. That's what it feels like—you're doing bad stuff with your homies, and that does seem appealing.

Shaan Puri

One sexy thing I like about hedge funds is this story from my college days. A guy came into our class with slicked-back hair. I forgot his name, but his dad is a legend in the hedge fund game. He was one of the original hedge fund guys who made a billion dollars or whatever. This son started his own hedge fund, and when he came in, he had that energy you were talking about before we started recording. Somehow, the more successful and rich people get, the more at peace and chill they seem. Ironically, they are also more generous with their time and nicer. This guy had that energy; he was in no rush. I could literally feel that energy coming off him, which was very different from every other person I had seen.

Sam Parr

even the person who

Shaan Puri

We were always rushing from one class to the next or cramming for finals and stuff like that. It's like high achiever stress. It's just like a softball.

Sam Parr

who was this person

Shaan Puri

I forgot his name, but regardless, a guy comes in and he's there to give a talk. He says basically two interesting things that always stuck with me. The first thing he said was he was talking about his hedge fund and, blah blah blah, we were all kind of eating out of the palm of his hand. He asked, "Who here would find it fun to work at a fund like ours and make big bets for a living?" About 80% of the class raised their hands. He then said, "Okay, so look around. Here's 80% of the class that just raised their hands. Imagine if you all applied." Someone had asked him a question about risk, like, "How much should I work this career ladder or should I try this thing that's a little bit of a risk?" So he's explaining, "Look around. Imagine all of you applied to this job. What would your resume look like? All of you would just give me a white piece of paper with black text. You'd put your little name at the top, then you'd put Duke University, and your GPA. Then you'd list your internships, making it sound like you changed the world in those internships." He continued, "There is nothing that differentiates you. You have a degree? Great, that's table stakes. Like, oh great, you went to a good school. So what? So did everybody else that applies to this job. The only thing I can look at to even decide if I want to meet this person is the bottom fifth of your resume, the very bottom 20% where it says 'Other.' That's your chance to say other stuff you're into, your interests, or something you've done that's remarkable or notable. That's the only way I'm going to differentiate between all of you that are raising your hands right now because otherwise, you're all students. You all did an internship, you all got a 3.0 GPA."

Shaan Puri

Whatever your GPA is, it doesn't matter that you were on student council; like, no one cares. When he said, "I would take the next three or four years of your life after college and I would go stuff that other column," he meant that either you're going to make it big doing something cool, or even if all those fail, when you go to apply to a job like mine, I'm going to have some reason to actually want to talk to you. That was one of the most profound things, but also one of the best pieces of career advice that I had ever heard. It actually changed my life. I went and started a goddamn sushi restaurant afterwards because I thought, "That's part of my other." They're like, "Either this works and I create the next Chipotle, or it's a great story from my other section." Because he's right; that ring, that truth was told to me, and the commonality between a...

Sam Parr

A lot of these folks, which I think you have, play poker and they got really comfortable gambling.

Shaan Puri

So, that was the other thing that stood out. He's looking around, and in class, everybody's got a laptop open. I could see he was counting or measuring something. I asked him, "What are you counting? What are you doing?" He goes, "Oh, I'm looking at how many of you guys have Macs versus PCs." He explained that his entire year was focused on making a long-short bet. He said, "I'm either going to go long Microsoft and short Apple, or I'm going to go long Apple and short Microsoft." I was like, "What? I don't even understand what you're talking about, like a long-short sort of spread trade." He continued, "Yeah, so my entire... I'm going to make a $10,000,000 bet, or whatever he said, some ridiculously big number. I just have to make one bet this year, and I'm going to bet $10,000,000 or $50,000,000 on either Apple or Microsoft." He was just trying to understand, "What are you guys using and why? Why do you pick this?" I thought that was the coolest thing in the world. It was like, you know, he could have lit up a blunt in front of me, and I wouldn't have thought he was cooler than what he had just said. His entire year was to figure out whether he should be long Apple or Microsoft, and he was going to walk around the world trying to figure this out. He was going to make a $50,000,000 bet on it, and I was like, "That's so cool! That's incredible!" Meanwhile, I was sitting there playing poker during class, you know, at the $1/$2 tables trying to make $200. This guy was gambling at a whole other level on one concentrated bet. That was very attractive to me.

Sam Parr

I wonder which one he picked hopefully I think

Shaan Puri

he had told

Sam Parr

us at the time

Shaan Puri

I had asked him, "So, which one?" He replied, "I think Apple," and he provided some reasoning. It wasn't just "Apple because it's cool." He was looking into the education market to figure out, basically, our age cohort—what we were buying, what the schools were recommending, and then what he had done. I forgot exactly what he was doing, but he was looking at the importance of knowing what high schoolers, college kids, and young professionals were being told to buy and what they were buying voluntarily. If there was some difference there, he had mentioned something. Now, this was like 15 years ago, so I don't remember the exact details, but I do remember that he was leaning towards Apple.

Sam Parr

So that's my whole summary of hedge funds and the 40-hour workweek. This stuff interests me. Henry Ford, by the way, came up with a lot of good ideas. He invented Kingsford charcoal; that was his doing. Obviously, Ford is known for the assembly line as well.

Shaan Puri

I got a call

Sam Parr

That was a side hustle. The assembly line guy is super fascinating. A very imperfect person, he did a lot of bad stuff too, but he's very interesting. What do you want to do?

Shaan Puri

Alright, so I saw something come by that I think you'll find pretty fascinating. Have you heard about this company called Law and Crime? I saw...

Sam Parr

they were acquired recently

Shaan Puri

They were acquired, and this is a media company that does a combination of true crime and coverage of trials. Yeah, the media company was started by this guy, Dan Abrams, and they got acquired for a rumored nine figures. I was like, "Wow, that's a pretty impressive exit for this kind of crime niche media thing." Do you know about this guy, Dan Abrams? He has an interesting backstory.

Sam Parr

no what's he do

Shaan Puri

So, he's basically pretty prolific with these niche media sites. In 2009, he launched something called "Gossip Cop," which is a celebrity gossip blog. It gets to 8,000,000 monthly unique visitors. So, he goes into celebrity gossip—that's number one.

Sam Parr

I go to **TMZ.com** every day. The homepage is on my list of things that I check every morning.

Shaan Puri

that's part of your 8 hour workday

Sam Parr

well you know you got like the same news websites that you check I just wanna see what's going on

Shaan Puri

I check no news websites, but anyway, this guy creates a "gecosystem," which is an internet site for meme culture. He launched that in 2010. He then created something called "Mediate," which is basically power rankings for media personalities. That one gets 14,000,000 monthly uniques and is still going today. He also launched something called "Stylite," which is kind of like the same thing—power rankings but for designers, models, writers, and people in the style business.

Sam Parr

holy shit

Shaan Puri

This is Prolific SportsGrid, which is a sports news business that was acquired in 2013. So, he's creating a bunch of these all in this timeframe of like 2009 to 2015. Roughly, he created all of those that I just mentioned. He created one more in 2012 called "Brazzer," which was basically about personalities, like chef personalities. I'm like, this guy's an interesting model. But, all of those are the right niches. There's, you know, missionary versus mercenary people. He strikes me as somebody who's mercenary, where he's like, "Oh, these idiots care about celebrity chefs? Alright, here you go! I'm gonna tell you every goddamn thing you need to know: news, information, stories about these celebrity chefs." Oh, these people love, you know, whatever it is—style, media personalities, or celebrity gossip? Great! I'm gonna create... I'm gonna go fulfill demand. I got thirsty customers; I'll go open up lemonade stands right next to them. That's the style of entrepreneurship that I get out of this guy.

Sam Parr

And if you Google this guy and click on images, most people will recognize him. Do you recognize him? He's on MSNBC; he's on TV all the time. Yeah, exactly! He's really good looking, he's got a great voice, and he's always commenting on... like one of my guilty pleasures: I watch *Cops* all the time. I freaking love *Cops*! That's my favorite show. They have a spin-off called *Live PD*, and he's always on there saying, "Oh, what she did, she's about to get charged with X, Y, and Z."

Shaan Puri

right

Sam Parr

so this guy I know

Shaan Puri

He's basically a media entrepreneur, and he's on all the things that you mentioned. So, Abrams Media, I guess, is the thing that's launching all this stuff. One of the things he launched in 2016 is Law & Crime. That's the one he just sold. It started as a legal news website, then it expanded to live streaming trials. They have a cable show, an OTT show, and a YouTube channel with 5 million subscribers. They cover every trial. Right now, I'm pretty knee-deep in this SPF trial. I can't look away from the car wreck. Rarely does news get me, but this one... I mean, I'm embraced in its arms. I'm fully engulfed by this SPF trial. There's definitely a part of our brains that's wired to tune into this stuff. I watched the Depp versus Heard Netflix show. I don't know if you saw that one, but it was really well done. The Netflix documentary on the Johnny Depp trial is captivating. You watch these things, and you just get fully engrossed in them. So, he sees that and creates this platform. They raised $5 million and reportedly sold for nine figures—over $100 million. I don't know if that's exactly true. Three years ago, the reported revenue was around $13 million top line. So, who knows where it landed? Maybe it's at $20 or $25 million now. I'm not exactly sure, but it's an amazing exit and an incredible entrepreneurial career. By the way, during the time he was launching Law & Crime, he also launched a Christian TV streaming service called Ambo TV, which I bet is also a great niche. You know, I love that niche.

Sam Parr

Which is crazy. I mean, the guy's not Christian at all, so that's very...

Shaan Puri

I said do you know dan abrams ago you didn't know the guy you're like he's not christian

Sam Parr

Well, Abrams is a Jewish last name, and I'm looking at his Wikipedia page. It says he was raised in a Jewish family. His father also has a Wikipedia page... Fair enough, okay. So you win. That's what I'm looking at.

Shaan Puri

Sam alright so this is which

Sam Parr

is ambo tv what's a christian show

Shaan Puri

So, go to **ambo.tv**. They are just live streaming, you know, good old Christian entertainment. It's not something I normally watch, but you can basically watch live biblical literacy. You can view inside one of these churches, like the Christ Evangelical Life Church, live. You can also view past sermons, interviews, and shows. This site doesn't seem to have a ton of traffic, but let me look at the YouTube channel. I bet the YouTube channel... no, it's pretty small too. So, this Christian site thing looks like it hasn't quite taken off yet, but I do like this niche. I feel like it could be successful as well.

Sam Parr

And then he has another one called the **Whiskey Raiders**, a site that uses a proprietary algorithm to rate whiskeys on a scale of 50 to 100.

Shaan Puri

Yeah, I mean, this guy just goes into passionate niches, right? So it's like, "Passionate niche, let me create it." This is what Ramon did with the soap opera blog. It's like, "Wow, you built and sold a soap opera blog for $9,000,000! That's incredible! How did you even have this idea?" He was like, "Well, I created Facebook pages around a bunch of niche topics: wrestling, politics, soap operas, and others. I saw that the fan page for these soap operas was popping off; it was like the second or third most popular one." So then he created a blog. He'd never seen a soap opera in his life, and he created a blog where they would write spoilers, recaps, and stories about these soap operas. He built up so much traffic that he was able to sell it for almost $10,000,000 without ever raising any money. It was incredible.

Sam Parr

By the way, what this guy is doing—Dan Abrams—how he's prolifically launching new stuff. I think media is the best industry if your intention is to launch a lot of things. Someone kind of described it once, where they told me that a media company is basically a collection of different projects all under one brand. Whereas a software company typically has one product with added features, and you're just scaling it. The interesting thing about media is when you understand what types of things grab people's attention and how to look at certain numbers to understand where there's an underserved need.

Shaan Puri

and nerd

Sam Parr

And nerd, yeah, you can basically do that for any niche that you like. It's a formula, a lot different than software.

Shaan Puri

It's a lot like that too. You notice that someone who knocks it out of the park with one e-commerce thing knows that they could do this five times over. It's just a matter of having the energy and the desire to create an organization that's going to launch multiple brands versus just one. But it's so applicable to do exactly what you did for one.

Sam Parr

But there's a problem with e-commerce, which is that your cash is tied up in inventory. With media, you typically have more operating cash flow, so you have more money to deploy to some of these resources. How much of your business—so you have an e-commerce business—how much of the money is in inventory? A significant amount, without saying particular numbers.

Shaan Puri

probably 30% in inventory so not not not that's

Sam Parr

not horrible yeah that's not that's not horrible yeah a lot of times it's worse so I would imagine

Shaan Puri

It can go wrong if you mess up. If you misforecast or you get a bunch of dead stock or slow-moving inventory, that can stack up real quickly and become a big issue for you. But also, it depends on how you run it. In the same way that there are 100 people now trying to create newsletter businesses, those 100 are not going to have the same success that you did with The Hustler or that I had with Milk Road. Why is that? Because it's how you operate. The same thing applies to e-commerce. If you set up the right payment terms with your factory, for example, we sell inventory before we have to pay money for it.

Sam Parr

yeah so that's great

Shaan Puri

Right, negative cash conversion. So once you get set up like that, then you're... you know, you're an idiot if you're losing money or tying up too much money in inventory. That's not necessary if you run it well. It's when you make a mistake or if the market turns that you can get in trouble.

Sam Parr

tell me about this guy tyler and what his post said I I I think I know who he is

Shaan Puri

Yeah, so I don't know a ton about this guy, Tyler Hodge. I've seen him on Twitter; he's around on Twitter. But he wrote a great blog post that I loved. I don't know if you saw this, but it was about sardines. Did you see this blog post about sardines? So I...

Sam Parr

didn't see it but I'm pulling it up now by the way the blog post it's gonna make a comeback I think

Shaan Puri

Dude, I'm with you. I read this one post and I was like, "I don't know who this Tyler guy is, but I like him." I was like, "I like him and I respect him." One blog post could do that for you. It's very hard for that to happen in, you know, a single tweet or an Instagram story or a TikTok short, right? Like, it takes a little bit more... one blog post.

Sam Parr

you need more time

Shaan Puri

yeah exactly I think podcasts work well with it but

Sam Parr

Podcasts, YouTube videos—if they're longer, it worked out. It's basically the amount of time that you've taken from someone. Like, that's how investors do it.

Shaan Puri

Supposed to... He's like, "I'm reading this book, *Margin of Safety*, and in it, he writes about this famous bubble that happened that you probably haven't heard of." I guess it's not that famous, but there was a bubble that happened that you probably are not aware of, which was the sardine bubble in Southern California. So, I'm going to read it out for you here, you guys. There's an old story about a market craze in sardine trading where sardines disappeared from their waters in Monterey. The commodity traders started bidding up the price of a can of sardines. The price of one can of sardines soared, and everybody's buying up these cans of sardines. They're making a bunch of money flipping them. One day, a buyer decides, "You know what? I'm going to treat myself. I'm going to take one of these expensive cans of sardines, I'm going to pop it open, and I'm going to enjoy it." He pops it open and immediately becomes sick. He's vomiting and he's like, "Oh!" He tells the seller, "Hey man, I bought these expensive sardines from you. These are no good." The seller's like, "You don't understand. These are not eating sardines; these are trading sardines." And he's like... so then Tyler draws the...

Shaan Puri

He's like, "It feels like this is what's happened in the last few years with tech company valuations." He's like, "There was a game to be played. You would invest in the seed round and then the A, and you know this company is trying to use that money to grow. It's not really profitable, but don't worry about that, right? We're losing money, but it's all good. We're growing and we got this narrative." And the narrative just needed to be sold to the next round investor, the B round.

Sam Parr

you know the the better analogy for this is crypto

Shaan Puri

Well, I don't think it's quite there. There is some in crypto, right? But like there's the NFT stuff in crypto. The difference is to get to the core of what he's saying. Crypto is a different type of asset. Right? Crypto is not a productive asset; it's not a cash-flowing asset. So what he's talking about is that you would get these businesses that would go later and later stage, and each round is getting bigger and bigger because everybody is basically following the greater fool theory. They're thinking, "Well, I don't care if this business actually generates a lot of free cash flow. I could just sell it to the next buyer." They would do that until they get to the point where it goes public. But now the music has stopped, and these companies have to be... you know, they're opening up the cans of sardines and realizing that, "Oh shit, these were not eating sardines; these are trading sardines." So you see a company like Hopin go from a $4 billion valuation or a $2 billion valuation, whatever it was, to I think it sold for like $10 million or $20 million the other day. You know, it's down whatever, 100x from its peak valuation just two years ago. And there's another company called Better, which is like a mortgage company that's also about to go bankrupt after a $1 billion valuation. This is going to keep happening. You're going to see a bunch of these sort of dead unicorns. In crypto, there was a version of this. Like NFTs, for example, are you buying this because you love the art, or are you buying this because you think the price is going to go up? For 95% of the people, 99% of the people, it was, "I'm buying this because the price is going to go up." That works until the price stops going up, and then at that...

Shaan Puri

We all are sitting here holding these, like, you know, these trading sardines that we don't want to eat. The difference, of course, is that what Tyler's making is that what's in vogue now is eating sardines. Companies where if you couldn't sell it to the next person, if you can't exit, if you can't IPO, if you can't go raise the next round, well, it doesn't matter. Just pop it open and eat it, right? It doesn't matter; the company has profits, it has cash flow. So we can... we don't need to flip this to the next person. It produces enough cash flow. You know, this sounds very basic to a lot of people. The whole idea of crypto is triggering to them, or the idea of venture capital and these unprofitable tech companies that raise money at these crazy valuations. That's just triggering to them. So, you know, for the cash flow kings out there, this is like... you know, today is your day. Now is your era. You are now kind of like king of the hill at the moment. I wanted to bring this up with you because I feel like you have really never gotten into any of these trading games. I have never seen you get swept up in angel investing where you're like, "Yeah, this company today is worth $10 million even though it's got no product and no revenue." But it doesn't matter because they'll raise an A at $50 million, I'll be marked up 5, and then it will raise a B at $120 million, I'll be marked up 10x or whatever. I've never seen you fall into that one, or crypto, or really any of these trading games. You seem to be a guy who always goes into eating sardines games, whereas I've dabbled in both and made money and lost money in sort of both. I'm curious what your reaction is to this.

Sam Parr

Yeah, so a bunch... The first thing is the reason I've never gotten into that is I think people default to being too optimistic about particular businesses. You know what's interesting? One of the very first signs or pieces of writing that humans have ever discovered— we're talking cavemen era— they wrote on the cave that said, "The generation after them is lazy and they just don't care." That's like a common theme. Every generation says the one after them is lazy, they just don't care, and "their music sucks." Yeah, their music sucks. It's like the same thing over and over again. You said something about we're caught up in this at the moment. My philosophy is we have always been caught up in that. Human nature doesn't change. We have been the same for almost forever, and the way that we act today is the way we have always reacted. So when I see new things, I think, "This isn't new. This has been here many, many, many times." My goal is to find out what has been here for hundreds and thousands of years, and that is where I choose to place my time. For example, in this blog post, he quotes Sarah Gao, who is a famous investor. Apparently, one of her portfolio companies said, "Sarah, tell all the founders their job is to generate cash flow because no one has ever told me that." And that's crazy, but that's a common thing. Yep, and I was... I'm taking this. Do you know how to read a balance sheet or cash flow statement or P&L?

Shaan Puri

yes but you know of course there's there's levels to that game

Sam Parr

So, I don't really know how to read it. I'm taking my intent to take a course, like I want to do one of these executive MBA classes, one of these fancy ones. But before I even did this, I bought a course called "The 4-Day MBA," where this guy is teaching me how to read a balance sheet. His whole course is summarized in a very simple way. It's basically that the purpose of cash is to generate or just to buy stuff that you can then sell to create profit. That profit can turn into cash flow. A lot of times, people focus on profit, but profit is a hypothesis; cash is a fact. It took me taking that course to realize and get back to basics, like, wait, everything is about creating cash flow.

Shaan Puri

yeah

Sam Parr

And he uses this wonderful example of Enron. He's like, "Check this out. Look at this balance sheet. They're generating lots of profit, lots of profit." Goldman, Morgan Stanley, they're all saying, "Buy this company! Buy this company! Their stocks are great."

Shaan Puri

p and l the p and l will show you the profit

Sam Parr

No, that's the issue. Profit isn't important; operating cash flow is. On paper, they were making lots of profit. The problem is that they weren't actually making profit, or rather, they were, but they weren't creating operating cash flow. The vast majority of their cash came from financing activities, aka raising more money. This is why there's a book called *The Smartest Guys in the Room*. Apparently, everyone was like, "Oh, they'll be fine. They're the smartest guys in the room." You see these trends today with crypto, with Web 3, and now with AI. Before that, it was with social media, where the smartest guys in the room say it's okay that they're not making profit, it's okay that they're not making cash, and it's okay that this valuation is huge. But that's just a common problem that we see over and over again. I get suspicious of all those things because I read a lot of history, and you see patterns. This is a very common thing; we have thought this way from the beginning.

Shaan Puri

Yeah, but the story of the tech industry, like the story of all the startup industry in Silicon Valley, is that that actually was correct. Like you're saying, with social media, the story was these companies, you know, it's a... yeah.

Sam Parr

but most won't fail most fail

Shaan Puri

of course

Sam Parr

of course some worked

Shaan Puri

But you... that's what it is. I think the real lesson is you have to know what game you're playing. So, for example...

Sam Parr

correct I I agree

Shaan Puri

When you're playing the Silicon Valley game, most of these companies are going to fail or be sort of inconsequential to your returns. The only thing that matters when you're doing venture capital or tech investing is that every year there are like 20, maybe 30 companies that matter. Did you get into them? How many of those did you get into? Is it 0, is it 1, is it 2, is it 3?

Sam Parr

The issue, though, is that people put too large of a percentage of their net worth into these things. That's where it becomes a huge problem, and a lot of people do that.

Shaan Puri

I don't think that's true. I think most people are not even invested in startups. Well, the average person is not invested in startups; it's like 0%.

Sam Parr

But, get startups out of this example. You could say crypto. I mean, a lot of people have gone broke because of it. The underlying asset still does not have a repeatable way to deliver cash flows.

Shaan Puri

And that's the difference. You know, there are different types of assets. For example, you could buy a watch or you could buy art. They're never going to produce cash flow. You could buy gold bars; they're never going to produce cash flow.

Sam Parr

there's different types of assets certain types of art certain rolex rolexes have grown no

Shaan Puri

no they're not they're nonproductive assets

Sam Parr

But they are collectibles. There is a history of 100 years, 50 years of people wanting to purchase them.

Shaan Puri

of course of course

Sam Parr

not as much not not as much with crypto

Shaan Puri

Yeah, and of course, you don't get the same upside because it's sort of a... you know, that game is played out. It's a more efficient market versus crypto collectibles. So here's a new version of collectibles. In this one, you could be Jack Butcher and you can make $1,000,000 because you understood that crypto collectibles were going to be a thing. Or you could have come in at the wrong time or put in the wrong percentage. Of course, you could make money and lose money in any of these, but the idea is you have to know what game you're playing. If you're playing the game of crypto, or investing in gold, or investing in art, or investing in watches, you are not playing the same game as somebody who's investing in cash-flowing businesses. If you're investing in startups, you're not playing the same game as somebody who's investing in cash-flow businesses. So I think the important thing is you have to know which game you are even playing and then what are the rules and topology of that game. For example, with venture investing, the mindset is actually, "I'm going to lose money 8 out of 10 times here." Then if you go read Warren Buffett, you're like, "Oh, this guy's the greatest investor of all time. Let me learn something about that that I can apply to angel investing." Warren Buffett's first rule is "Don't lose money." His second rule is "Don't forget rule number one." If you use Warren Buffett's rule, you could never be Peter Thiel. If you use Peter Thiel's rules, you could never be Warren Buffett. These are different games, and you have to know the rules of that game in order to play it. What I think is interesting is that at different times, each game might have a sort of hot season. There are these windows where certain games are more ripe, more attractive, and more lucrative to play. But my...

Shaan Puri

Is you asked why I don't do this type of stuff? It's because I get nervous about many things.

Sam Parr

Of those games, I believe that, for example, before startups in the early 1900s, there were car companies. Do you know how many car companies existed in the 1920s and 1930s? Tons! Most of them went bankrupt, except for like five. There were tons of car companies, and it was the exact same thing as tech companies today. So, I'm wary of those types of games. I fall a little bit more into the Warren Buffett philosophy, where I'd rather have steady but smaller returns as opposed to big, lumpy jumps. I do get big, lumpy jumps, but I do those in things that I can control, which is starting and selling companies. I just prefer not to do it in things that I don't have control over.

Shaan Puri

Yeah, and to be clear, you don't actually play the Warren Buffett game. You play the index investing. Basically, I don't try to make my money on the investments. I try to be sort of safe and conservative with my investments because I'm going to be aggressive and risky with entrepreneurship. Yeah, which is not what Warren Buffett does. He doesn't start companies; he buys companies.

Sam Parr

I met Warren Buffett in the sense of trying not to lose. I'll try not to lose money, and I will take a somewhat more conservative approach than many of my peers.

Shaan Puri

Yes, yes, yes. The startup investing game is a **chasing and waiting game**, which is a very strange combination. You're trying to chase to find one of these breakouts that are going to become one of the 20 companies that mattered this year, not the 2,000 that didn't matter. Then, you have to play a waiting game to let those seeds kind of bloom over the next, you know, 7 to 10 years.

Sam Parr

a month ago you went to brian johnson's house so I wanna ask you about that or do you wanna save it for friday

Shaan Puri

no you could do it

Sam Parr

Let's do it! Well, so Brian Johnson, the crazy guy who I love, who claims he'll... or he's trying not to die by decreasing his age. You went to his house, you interviewed him. That's going live soon. How was it? Was there any spectacular learning from him?

Shaan Puri

Yeah, going to his house is kind of remarkable. It's a big house, not huge, but definitely a nice place. I walk in and actually meet his son first. So, I see his son... his son who's on the...

Sam Parr

same on instagram

Shaan Puri

he's on the same protocol as his dad pretty much

Sam Parr

yeah rep right

Shaan Puri

20... Yeah, like whatever. He's like 20 years old or 19 years old or something like that. So, he's like, "I think he's in college or going to college," something like that. He is super ripped and a super kind guy. I was like, "So, what's it like to be, you know, eating lunch with your friends and you've got the green sludge while they're eating nachos or whatever?" And he's like, "Yeah, it's cool. I don't care. You know, I'm doing what I want to do." It's like, you know, the independent-mindedness that it takes to live a lifestyle like Brian Johnson's. You could see, like, you know, from even just as a parent how that shapes your kids to be a little bit different. And you're like...

Sam Parr

oh you're emotionally healthy

Shaan Puri

That's boring, you know? I was like, "What do you think would be great out of this interview with him?" and he was like, "You know, I hope you clear up some of the misconceptions. There are a bunch of misconceptions as to why he's doing this, and if people understood why he's actually doing this, they would feel a lot differently about what he's doing." So, you know, I just enjoyed that. I got a tour of his house. He showed me where he works out, where he eats. He opened up his fridge, and literally, I was like, "Let's see what's in here." He opens up his fridge, and there's literally nothing in the fridge. There is absolutely nothing in the fridge. There's like one bottle of red wine on the side. Then he's like, "Oh yeah," and he opens up his freezer. There's some medicine in there. I'm like, "Oh, what's that for?" He's like, "Oh, that's like this drug that they give to people with leukemia, but I just take it proactively." I was like, "Oh, cool." You know, you're trying to find rapport when you go to someone's house. I was like, "So I wear this Fitbit. I'm cool. I'm into tracking too, right? Like, yeah, I work out sometimes. I eat sometimes. I eat chips." You know, he's like, "Wow." It's literally like me meeting a bit of an alien person because his lifestyle, discipline, values, and priorities are just very, very different from mine, but also very cool and very inspiring. He's a very, very cool guy. So he was like, "When you go to someone's house, you meet somebody, and they're off camera, within three minutes you get a vibe of what's this person's vibe. Some people will give you a hardcore 'fuck off' vibe. Some people are kind of like 'let's get this done' vibe." He was totally different. He was very kind, very curious, you know? It felt respectful, very, very respectful, and very nice.

Sam Parr

what was he curious about you

Shaan Puri

Well, first he was just thankful. He was like, "Oh yeah, the first episode we did was a lot of fun, the one that we had him on a long time ago." He said that really helped get the word out there. He received a bunch of good messages from it, and that led to more good things. So, I think the first thing was like, "Thanks for doing that." That was the first thing. The second thing was, "How do you react to this?" He was curious, asking, "What do you think of this? Is this something you would do? How can I make this more approachable? What do you find?" He was almost doing a bit of research in a way, rather than just being a know-it-all, saying, "I already know the answer. I have the answer. You guys are all idiots for not following." Instead, he was having an open mind about what a person who's not in the protocol might think or how they might react to this.

Sam Parr

and did he have help running around his house like doctors

Shaan Puri

And chips. He's like the number two person. She helps do a bunch of things, but it's not like house help. That's like his, you know...

Sam Parr

she's like no I meant like nurses

Shaan Puri

Oh, there were no doctors or nurses there when I was. We went up to his room where he had all the heavy machinery to measure your skin, eyes, ears, and all that stuff. I was like, "So you're really measuring every organ separately?" He said, "Of course! Skin is the largest organ in your body; it needs to be healthy. And, you know, my eyes are important. That's how I see." I asked, "Well, would you say it like that?" He replied, "Yeah, sure." I then asked, "So what's the weak link?" He said, "Left ear," or maybe it was the right ear; I can't remember. He mentioned, "I have the ear of a 70-year-old." I asked, "Why?" He explained, "From shooting. You know, I used to... whatever. One ear is down, but the other ear is exposed. So when I would shoot that loud gunshot that I used to do with some frequency, it messed up my ear. It's very hard to rejuvenate or recover an ear. So, you know, this goddamn thing is the weak link."

Sam Parr

did you change anything in your life after seeing him

Shaan Puri

I tried his protocol for about 20 days so I

Sam Parr

ate way

Shaan Puri

Yeah, so I ate the... I told my chef, I was like, "Hey, this is the new thing I want. I would like some sludge for lunch, and then I want some nutty pudding." I tried to buy... I didn't do all of his supplements. That's the one thing I didn't do because to do his supplements, you need like 65 things that I couldn't even source online. I was like, "How the hell do...?"

Sam Parr

you do this and did you feel good

Shaan Puri

I mean, I definitely felt lighter, like a lighter weight. You can literally feel your body has less baggage on it, you know, when you're doing it. However, I really detested the main meal, like the lentils and green stuff. The one I had when I followed the recipe did not taste like the one he had at his house. So, I think he's got new versions of the recipe that are better tasting.

Sam Parr

that's so fascinating I'm seeing a lot of peep there's a whole subreddit of people saying they're living his life

Shaan Puri

well there's a there's a group of people they're

Sam Parr

like living his life light

Shaan Puri

that are doing this so they hold what's called tea parties which is a testosterone party so you it's a bunch of guys they get together they have a tea party where you get tested and you get your testosterone levels and you find out you know do you need to be taking testosterone or what and then that same guy has created a meal delivery service called the blueprint delivery service which is takes brian johnson's meal plan and makes it easy to do because again that's a that's honestly the hardest part of the whole thing it's like it's not easy to just do it and there's like it's hard enough to stick to something it's if you add a bunch of friction of making it hard to even do that's that's pretty tough so I think it's great that somebody's doing that I think that's honestly a good business idea because when I met with this guy I was like oh between the first time we talked to you and now he is way more famous and then between now and where he's gonna be in like sort of 3 years you could tell this guy is just gonna become one of the most well known people in this world like I think that his story is gonna be one of the most well known people in this world because he is essentially donating his body to science while he's still alive which is like just a crazy thought and he said this during the interview he goes a bet against me is a bet against ai and I probably wouldn't bet against ai and I go what ai what do you mean he goes well I've basically handed over my body and the decisions I make for my health to whatever the technology tells me is optimal and so if you think this is not gonna work you're basically saying that science and technology is not gonna make better decisions than the average human like no way of course it's gonna make better decisions and I'm just gonna do what the data tells me what the algorithm will tell me to do and he's like long term that's ai and he goes a bet against me is a bet against ai and then he so the crazy thing by the way and this is in the interview and I don't know how people are gonna receive this because it's like kind of intense the interview is a bit intense he's like he's basically like I'm competing with jesus and he doesn't say that but he keeps comparing himself to jesus and I'm like that's kind of blasphemous so what what do you mean and he's like well here's the thing he's like I was told because he grew up pretty like in a very religious like upbringing he goes I was told do x y z and then you'll die and then after you die you'll go to heaven I have a different offer for you do x y z and don't die and he's like that's my whole thing don't die if you're against me you're on team death if if you're with me it's team don't die it's like that's how simple he's bowled it down to and I'm like well you're still gonna die like the current thing is you're aging slower but you're still aging and that's where he was like correct that's currently what's happened

Sam Parr

yeah for now

Shaan Puri

The better the tech gets, the better the AI gets, the more I'm able to experiment, the closer I get to just slowing down the... the speed of aging to the point where I'm not gonna die.

Sam Parr

One of the takeaways I have is that what he has done is significant. However, you can do a version of this where you dedicate your life, or just six months, to something—like some crazy experiment—and talk about it. You can build a career around that. Another example of this, which is way more attainable, is the carnivore diet. Right now, you could be one of those guys who only eats meat for six months. That's challenging, but it's not that challenging, and you could build a career out of that. He has spent a lot of money; I think he says he spends $2,000,000 or $1,000,000 a year. That's out of this world for just about everyone. But there are other experiments that you can do, and it becomes your identity. You can build a career around that. Tim Ferriss did that a little bit with "The 4-Hour Body," where he tried things that weren't crazy, but he did a really good job of explaining it and making that part of his identity. He built a really great career around it. I think that's really fascinating. That's a takeaway I have: Can you dedicate six months to something, talk about it, and will that actually change your life for the purpose of actually talking about it? You know what I mean?

Shaan Puri

Yeah, I think that's totally true. One of the cynical ways to look at Brian Johnson is that he just did one of the greatest pre-launch marketing campaigns of all time. Now he's rolling out his olive oil and he's launching his, you know, blueprint supplement pack or whatever. It's the ability for anybody to follow his protocol simply.

Sam Parr

I don't think that's similar

Shaan Puri

I don't think that's true at all. The guy's way too rich to become an olive oil salesman. You know, I doubt that he's got $800,000,000 or whatever. He sold his last company for $800,000,000. I don't think that he's doing this to launch a new supplement brand. I don't think that was his intention at all. I genuinely believe that he needed some purpose in his life, and he found purpose and meaning in doing this. Now he's trying to do it at level 12. So he's like, "Cool." For most people, they can find some purpose and feel good in exercise or taking care of themselves. He just turned that dial up to level 12, and that's what I see in him.

Sam Parr

well that's awesome and you know that's

Shaan Puri

You don't necessarily want to be at level 12 because the wheels start to come off when you're at that level. It's pretty intense, but it's cool. It's very cool that there are people who live at level 12. I'm glad that Michael Phelps exists. I am glad that Elon Musk exists. I am glad that Brian Johnson exists. They allow you to see what level 12 looks like, and then you can dial that down to whatever makes sense for you. But you can take inspiration... you at least know what level 12 is.

Sam Parr

What I say about those people is, I know two things for sure: I love that they exist, and I'm not them.

Shaan Puri

right

Sam Parr

That’s what I know. Well, that’s sick! I’m excited to see the episode, and I guess we’ll end there. That’s the pod.