How Roger Federer Became The First Tennis Billionaire (#367)

Shaan Puri

I saw that roger federer was one of he's he's part of the the billy athlete club

Sam Parr

so there's like roger federer is

Shaan Puri

Five athletes have made $1,000,000,000: Tiger Woods, Floyd Mayweather, LeBron James, Ronaldo, and I think Michael Jordan. It may also be Messi, so that might be six. I think it's five, and now Federer is in that club.

Sam Parr

The whole Adam Levine thing is ridiculous. It's just like... is that in the "Santa's fake" section of the newspaper as well? It's just the most... People are acting like it's a big deal. It's like, dude, what do you expect? Look at the guy. Of course he cheats.

Shaan Puri

I don't even know the story why did he cheat

Sam Parr

I don't know

Shaan Puri

because he why like what what's the controversy like did he do something really crazy

Sam Parr

I only read the headlines. I think he just texted, like, his yoga trainer and said, "I wanna roll around naked with you all day." Then he texted this other lady and said, "Hey, I wanna go out with you. Why are you so hot?" Later on, weeks later, he texts and says, "Hey, my wife's pregnant and we're gonna name the baby your name. Is that cool with you?" Which is super freaking weird. But I don't know if he did anything wrong, like legally. He's just doing what guys with body tattoos who live in LA do, you know? They just cheat. He's got the face of a cheater, right? I mean, this is obvious.

Shaan Puri

At the bottom of your tattoo sleeve is just a place to put your number. It's like, I wouldn't have gotten this sleeve as a married man if I wasn't trying to, you know, play the game.

Sam Parr

Dude, speaking of bros, I think I've just invented something. I've been doing this for the past few weeks. I call it "fitness dip." You know how people dip tobacco? They put stuff in their lip? Lately...

Shaan Puri

yeah

Sam Parr

you know like chewing tobacco you put it in your lip

Shaan Puri

heard of it but you're the only guy I know who does it

Sam Parr

Yeah, just like a fat lip lately. What I've been doing is just putting in... Have you seen PB Fit? It's like powdered peanut butter.

Shaan Puri

yeah that that's great I love that

Sam Parr

I just get a tablespoon of it and I stick it on the roof of my mouth. I'll just suck on it for like an hour. It's my fitness dip, and it just keeps me from...

Shaan Puri

pacifier for you

Sam Parr

Yeah, it keeps you... It's like chewing gum, almost. You know, you can't eat anything because you have that in the roof of your mouth, and you're just sucking on it real slowly. That's my new fitness dip.

Shaan Puri

Alright, so how do you get an idea like this? I'm not saying it's a bad idea, or that it probably doesn't taste good, or that it might be therapeutic or whatever. But why are you like, "You know what? Something needs to go on the top of my mouth. What can I do? What can I do?" PB Fit powder? Alright, I'm going to try it. I've never even wanted to put anything on the top of my mouth, nor have I just taken foods and thought, "What if I stuck this here for an hour? Would that be better than just eating it?"

Sam Parr

Because I go to the store and I just look at all the products. I look at new stuff and it says to add water, and I'm like, "What if I don't? What if I just eat this as plain powder?" And I did. A rebel without a cause over here, I don't know. I just tried it. It was interesting to me. It... it... it works. Add water. Don't tell.

Shaan Puri

me what to do yeah

Sam Parr

it works it works you should try it

Shaan Puri

I definitely will not. Alright, so what do we have today? You got ideas? You got topics?

Sam Parr

I've got a ton of stuff. Let me... we can start off with something. One thing that's like... I don't know if this is actually interesting or not, you tell me, but basically I'm reading this book called "**More Money Than God**" and it's about the history of hedge funds. Do you know anything about hedge funds?

Shaan Puri

not not a lot tell me

Sam Parr

Yeah, well, you know I'm only in the first half of the book so I can't tell you much about how they operate now. We're still in like the 1980s, but basically, the guy who invented it was called a hedge fund, and his name was Alfred Jones... Alfred Winslow Jones. A.W. Jones is what they call him. It's kind of interesting, he was a journalist for *Fortune*. You know, he was just a writer. It's crazy that *Fortune* even existed back then. This was in like the '30s, '40s.

Shaan Puri

And for some reason, hedge funds are so funny to me.

Sam Parr

that's what it that's what it was called

Shaan Puri

I know it's real, but for some reason, it just seems like something we would say wrong, trying to be smart. But like, yeah, I'm looking at investing in some hedge funds. And people would be like, "Is he putting a 'd' at the end of that?"

Sam Parr

I'm like you know go out there have fun and break an egg you know just

Shaan Puri

yeah it just I continue on

Sam Parr

and so it's called it was called a hedged fund and he was researching for an article stock pickers and he found this like small group of people that were doing like some slightly different stuff with hedge funds or with stock picking and at the time like basically rich people viewed wall street and a lot of like equity investing as just a way to preserve wealth not really grow wealth and this guy aw jones he was in his forties journalist and he goes oh with these you know small group of people that I'm researching this like mathematical formula stuff that they're doing it's actually really really interesting and so he raises I think $100,000 at the time and what he does is basically the kinda dumb way of explaining it is which is the only way I understand it is that he just like does a combination of longing going long on things with borrowing leverage meaning if he invests $80,000 he would borrow another $50,000 now he's a $130,000 into a stock then with the rest of his $100,000 he would buy shorts in such a combination where his upside was much higher and his downside was a little bit protected and there was like some math behind it and at the time this was revolutionary but here's where things get actually really cool that itself wasn't the revolutionary part I mean that was one part of it that wasn't the main thing the really cool thing that he did which wasn't done ever before is he hired these young stock pickers and instead of just giving them a salary he goes alright you work for me I've raised $1,000,000 you get 50,000 you get 50,000 you get 50,000 you get 50,000 you get 50,000 you can go and hire 2 people to work with you you're your own group you're your own group you're your own group and get after it let's see what you can do the person who does least best or the person does worst you guys are out and he created this like cutthroat culture of these people who were just getting after it and he was the first person that made it so you they were only paid a percentage so 20% of future upside and at the time he did it because that was that just means your your tax more it was more beneficial for you it wasn't income tax it was a capital gains tax and your tax benefits were like way greater but he told his folks he goes yes the reason we're doing this is phoenician sea captains used to keep a fifth of the profits of successful voyages and that's like how he like he didn't say psh hey it's just so we can for this tax thing but like he like justified it there's a weird reason but anyway this team structure that's what like changed everything prior to that wall street was just like the stodgy sleepy place of like look we're just doing 80% stocks 20% bonds and we just let it sit there but then he once he changed that incentive structure everything changed and that kinda got me interested that that's kinda like been sitting with me because at the hustle we used to do this too where for our quotas for our salespeople we would say you know go out and get ad sales and you get a percentage of what you close but then they would close like dumb shit they would close like for example they're like who cares if it's a porn company if it's a weed company if it's a shitty service like it doesn't matter and then we're like woah actually that's a good?

Sam Parr

We need inverse incentives. You know, do the readers like this? Is the click-through rate high? Do they renew? I couldn't figure out how to do that successfully. I couldn't figure it out because all the... I thought...

Shaan Puri

I thought for sure the story was ending with, "So then I created a better system and it worked beautifully." You're like, "I couldn't figure that out. That's too common." It's like, you know, I thought... I would have bet anything that you were about to say, "So then we did this and pat on the back, I did a great job," because I'm so used to people doing that. You know, in tech, nobody says, "We kind of hit this problem and we didn't solve it." We just didn't solve it. You know, nobody ever tells a story like that. I love that you just told a story like that. That's amazing.

Sam Parr

Well, I... so with my new business, I am trying to think, "How do I solve this?" You know, like can I pay 50% of the... but there's... I started researching different ways to solve this. I don't know, have you... I'll tell you a few other examples, but have you had with like the Milk Road or with anything that you've done, have you had [situations] where you're like, "If I just change the incentives, this other thing changed"? So it's like the product isn't the revolutionary or interesting thing, it's like *how* you operate. That's what's interesting.

Shaan Puri

Yeah, I don't think I have a great story personally off the top of my head. We just did one where we needed to fill all the ads for like October or something like that, or whatever some future month. We were a little light, and it was like, how do we get this up? Ben was just like, "You know, if we just told our salesperson we'll give them an extra $10,000 if they can get us to this fill rate, I think they'll do it." I was like, "Yeah, but that's the same thing as their quota. If they just filled it, they would get that percentage." He said, "No, I think if we just say I'll give you $10,000 on top of your quota if you can do this." I was like, "Okay, I guess that makes sense." Instantly, they way overfilled it. I was like, "Okay, I don't think you could do that all the time because, you know, this got them to get off their ass and do something." But yeah, I thought that was interesting.

Sam Parr

What's funny is you're right, that does work and you can do it all the time. So I was researching incentives, and one of the... There's a handful of ways to make... Basically, I think Charlie Munger or some one of the rich smart guys said something like: > "Show me the incentives, and I'll show you the future results." Or something to that effect.

Shaan Puri

me your incentives and I'll show you your outcomes

Sam Parr

There are a few successful ways to incentivize people. One of those ways, as I was reading in a McKinsey study, is that you should actually give bonuses based on 105% performance, not just 90% performance. Research shows that if you overachieve in order to get a bonus, people tend to perform better compared to the other way around. Another strategy is to implement clawbacks. For example, you could give 50% of a bonus upfront, and if the individual does not achieve the goal they set, then you would do what's called a clawback and take that money back. You can apply this concept with kids as well. You might say, "Hey, look, your allowance is $100 a week or $100 a month. I'm actually going to give you $50 now and the other $50 when you complete your chores. But if you don't do your chores, you have to give me that $50 back." This concept of loss aversion actually performs better than simply saying, "I'm going to give you $100 at the end of the month if you do X, Y, and Z."

Shaan Puri

That's 100% right. I think loss aversion is what they call it. Basically, it feels worse to lose money you have than to not gain the same amount of money. Yes, it should be the same thing, but it's definitely not. I had this experience when I did a deal once where we got a $1,000,000 signing bonus. However, it was contingent that if we left before a year, then we wouldn't get the $1,000,000. Personally, I wouldn't get the $1,000,000 if I left before a year. If you had just told me, "Hey, do you want to stay for a year to get this $1,000,000?" I would have thought, "Well, that sounds good, but there are other opportunities. Maybe I could do it another way." But once they put the money in my account and said, "That's there now. Go look at that. Okay, cool. If you leave early, you have to pay all that back," I was like, "Oh man, I gotta pay back $1,000,000." It just felt... my brain knew exactly what was going on. I was like, "I just don't want to pay back $1,000,000. That sounds horrible. I'm definitely not doing that. I'm not losing a million." Whereas if they had just said, "Hey, if you stay a little longer, you can get this extra bit," I would have thought, "Maybe I can go get that some other way." That's kind of a crazy psychological trick. I knew what was going on, and it still felt real to me.

Sam Parr

Well, another interesting example—then we can move on—but another interesting example that I was thinking about is, you know, it's like a really messed up industry: private prisons. Because you're incentivized by how many beds you fill, you know? Yep. And that's like, you know, it doesn't align with what we want as a society. I'm like, well, what it should be is you're paid a little bit of money for how many beds you fill, but then if the inmate, you know, goes back to prison within the next four years after being released, you gotta give me that money back. If they stay out, I'll give you the second half of your payment. I was just thinking of all these different ways to change my incentives around in order to get a different outcome. That was a really good example. But it seems the problem with incentives is that, a) to change them, you have to be kind of bold and be the first to really try something new, and b) oftentimes it's not always straightforward. Like, did you achieve this? Tracking the results is actually a huge task in itself, which is what we had at The Hustle. I'm like, I could do this, but I gotta build all this stuff to track all this. But anyway, I... yeah.

Shaan Puri

Because it's... they call it **second order effects**. Basically, usually the first thing you're trying to incentivize does happen. It's the second thing that goes wrong. Basically, it's... yeah, you got your ads filled, but they filled it with certain types of content, which led to readers being upset, which led to churn or whatever, right? You have to predict what would be the second order effect that comes from some of this stuff. There's a blog called **Farnham Street** that I read about this one.

Sam Parr

the cobra thing

Shaan Puri

yeah like the cobra thing yeah

Sam Parr

go ahead tom

Shaan Puri

sort of like incentives gone wrong I don't even remember the story at

Sam Parr

This? Basically, it was like in India, right now... You know the stereotype of a guy playing like a horn (I don't know what it's called) and the cobra coming up and dancing? It was like, "Whoa, why are there so many cobras in India?" Apparently, I don't remember what year it was, but there was a little bit of a cobra problem. They [the authorities] said, "Hey everyone, we're going to give you $50 for every dead cobra you bring to us," thinking, "Great, we're gonna have no more cobras!" But in reality, the schemers were like, "Oh, let's breed cobras and kill them [for profit]."

Shaan Puri

them and bring them to you

Sam Parr

So, like, "Oh nice, this is free money! This is awesome." And then there is now an overpopulation problem of cobras. I actually have no idea if that's a true story, but that's one of the urban legends.

Shaan Puri

Yeah, that's one of those Malcolm Gladwell stories that just becomes known by everybody, whether it's real or not.

Sam Parr

Have you heard the one about him talking about David and Goliath? Yeah, that one's great. Basically, I'll summarize it in 10 seconds. Everyone talks about David and Goliath as this underdog versus the big shot. But it turns out Goliath was like 8 feet tall because he had a pituitary gland problem, which means he had a low IQ. This made him somewhat of an idiot. He was big, but if you have that pituitary gland issue, you can't see. At the time, the Davids of the world were like shepherds, and they had these slings, which were basically like rifles. So, this lead BB that David had was already deadly. He hit a big guy who was stupid and blind, so it's really not that impressive.

Shaan Puri

Yeah, David's a bully. Alright, so let me give you an idea. I need a name for this; I don't have a name yet, so this is a working title. But I think, isn't it crazy that basically, we both invest in startups now? I had this realization about one of the startups I invested in. It's just doing absolutely amazing! I'm like, "Wow, that thing is going to make our little investment." We put in $75,000, and I was like, I think it's currently probably valued at around $4 or $5 million. That $75,000 check could really grow! And we're not like... it can still run; that thing can still double twice.

Sam Parr

and you're not doing anything

Shaan Puri

I'm not doing anything and I was like... and also, so that's kind of amazing. I'm like, "Oh, I'm excited!" The fund is gonna have like... like the first really, really big winner. Because we're only two years in, and so it's hard to know what are gonna be your big winners. But I think that one's gonna be one of the really big winners. Now it's looking very, very promising. But the second part is, I would have never guessed that *that* would be the one.

Sam Parr

what can you say what it is

Shaan Puri

No, I don't want to say which one it is yet because I don't know if they want me to say or whatever. But basically, I looked back at literally that batch from that quarter. I did 10 deals, and of those 10, I would have said, "Oh, this is probably somewhere in the middle." I would not have guessed it's the one that's the big winner. I thought, "Wow, that's crazy." I was like, you know, it's pretty unfair that employees at tech companies don't have this sort of portfolio approach. It got me thinking. We talked about the founders, Sarah's list, or the founders we talked about, Sarah's list, and how, you know, if you could pick one of these companies that's going to 4 or 5x over your four years, you can become a self-made millionaire without taking huge entrepreneurial risks. But you gotta pick right. So that got me thinking: why do you have to pick right? I have two startup-related community ideas for you. The first is...

Sam Parr

By the way, the way that you're setting this up, it's like, you know, doesn't it suck that when you eat 4,000 calories a day, you get fat? Why does it have to be that way? It doesn't.

Shaan Puri

what if ice cream had just had a bad rap

Sam Parr

yeah

Shaan Puri

And what if I told you that if you exhale while eating, it has no effect at all?

Sam Parr

yeah it's like duh yeah okay in

Shaan Puri

Alright, so my idea is basically this: you take a job at a tech company, and you get your portfolio of stock options. Or, sorry, you get your stock options. You can then click a button and pool them with other companies that are equally risk-weighted. So, we basically create a credit rating agency where we kind of rate stock options. We're like, "Alright, cool, you're getting it at this price and this valuation. Good, we know that that's set." Secondly, there's a community desirability to these options. Maybe everybody in the community really wants Stripe options because they're like, "Wow, Stripe is great!" But I'm not working at Stripe right now; I'm working at this smaller startup that I think has high upside. However, I consider Stripe options to be AAA stock options. So, you kind of get a valuation and then a trust in the valuation. You basically put your stock in, and you end up with, let's call it, 40% your stock and 60% becomes a blend of other stocks that you get to either pick or index into out of the startup community. As an engineer, designer, or whoever you are, you're getting to be a part of this. You get derisked a little bit from just your one thing because maybe you got a crazy CEO. You got Adam Neumann; you thought WeWork was a good idea. Now, three years later, your stock options are worthless; they're underwater. You know that, "Okay, cool, that's just how the game works." But does it have to be that way? So, Sam, I have two questions for you: How good of an idea is this on a scale of 1 to incredible? And secondly, we need a name for this idea.

Sam Parr

we already know I'm not funny on the spot so the name thing

Shaan Puri

I'm I'm gonna

Sam Parr

That's just... I'm already gonna swing it, share. Yeah, that's already a swing and a miss. I mean, I call the company "The Hustle." Like, I'm not even good at... maybe not on the spot, so.

Shaan Puri

so I

Sam Parr

This podcast is called *My First Million*. We're not exactly good at this. I told Sarah I want to name our kid Buck, and she wasn't feeling it.

Shaan Puri

Dude, that's so funny! I had told my wife... I had been saying this since college: I wanted to name my kid Jumper. And then even I was like, "That's a horrible name." But at some point, I was committed because I had told like 12 people that I was doing this, and those are like my 12 friends. It made no sense, but I... had to stick with it. Till my wife was like, "What are you saying? This is not even close to what's gonna happen."

Sam Parr

Yeah, I've suggested "Biff and Buff," and she's not into it.

Shaan Puri

I think these are like, you know, in Batman comics where they punch and it's like "POW!" It's like "BIFF!" It's like the sound effect of a little cartoon punch.

Sam Parr

I have a feeling that the first name "Chuck" and middle name "Steak" is not going to pass either, but that's to be determined. I'm not good at naming anything, but yeah, I mean, if you could pull this off, dude... One thing that I learned when I was running my company was that I thought, "Oh, it's a privately held business; I can do whatever I want with the shares." Like, I could just say, "You get a share, you get a share, I can give this to you." I didn't realize that it's not... I guess it's not technically regulated, but there are rules, right? For example, if I sell you a share for a dollar, I can't then, six months later, give another employee that same share for 50 cents. I don't know if that would be considered illegal or just against certain rules where you can get in trouble, but it's like you can't do whatever you want. So yeah, if you could figure out how to operationally pull this off, I think it's badass.

Shaan Puri

Well, there are secondary markets where you can actually sell them. But I think this would have to be something you'd have to create—some financial contract, some derivative product that basically says, "I pledge or assign my shares to this portfolio." Basically, in exchange, I receive shares of the portfolio. There has to be some sort of consequence for trying to, you know, renege or whatever. Let's say your startup hits it huge and you're like, "I don't want to do that." So, I don't know the... you know, I'm going to wave my hands in the air right now. What I'm doing right now is legal financial magic. Like, alright, it's done. That's done. Now we just need to, you know, start the company and have it take off.

Sam Parr

yeah I mean it's well well I don't know

Shaan Puri

By the way, that's how I actually run my businesses. I'll go talk to the lawyer or the accountant and I'll be like, "I don't know, we don't have the... we don't know what the contract says." Like, you know, you got it. You got this. So I just give them good vibes and I'm like, "Hey, I already agreed to this deal. You gotta figure out how that works." And they're like, "What? Why didn't you just talk to me first?"

Sam Parr

There's like this leadership principle that you're supposed to give people autonomy and let them figure things out. You're supposed to empower them. But I always just see, I'd be like, "You're not... like you're empowered, dude! I'm empowering you to figure this out."

Shaan Puri

out you're welcome yeah through the autonomy I've given you

Sam Parr

Your ass just got empowered, my friend. Congratulations! Yeah, you're welcome. Thank me later.

Shaan Puri

studies show this makes you happier yeah studies show they're like so upset

Sam Parr

yeah I mean if you could figure that out I think I'm down

Shaan Puri

You just empowered your ass. I just empowered your ass. Classic, yeah.

Sam Parr

You like that shit? Move on my part. You like that? Suck on that, Harvard! So, sorry. Speaking of investing, I was reading about the Figma thing. Figma is like the design tool that just sold for $20 billion. So, have you heard of O'Reilly Media?

Shaan Puri

yeah they they publish like books in the conference right like

Sam Parr

yeah basically what's the guy's name who started I had dinner with him one time what's his first name

Shaan Puri

tim o'reilly

Sam Parr

Tim O'Reilly is often referred to as the "Oracle of Silicon Valley" because he has been in the game since the seventies and eighties. He originally started writing books on programming, and his mission statement for his company was actually really cool. It was: "Work on interesting stuff with interesting people." He initially tried books for a little while, but then he decided, "Oh, let's just stick with books. That's fine." However, he didn't necessarily care about books; he just wanted to fund his ability to work on cool stuff. Anyway, they are famous for writing these books now, and they make around $200 to $300 million a year through a combination of books, conferences, and a subscription model where you can pay $50 a month to access a bunch of their technical content. This content is primarily for engineers and similar professionals. They started a little fund using the profits from their business. While the profits were significant, their fund wasn't necessarily large compared to a full-time, proper fund. I was looking at some of the investments they made, and they were involved in Figma's seed round. I did some math, and this doesn't account for dilution or if they sold early, so these numbers could potentially be off by a lot. Assuming that isn't the case, I don't know what Figma's seed round was, but I think they raised $3 million. If you assume that it was around a $15 million cap and it sold for $20 billion, that means it went up by around 1,300 times. So, a $250,000 check could be worth something like $300 million. It's crazy that this is one of those examples where the main thing didn't even make the main money. You know what I mean? The not-so-main thing made more than the main thing.

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." Dude, there are so many examples of that. That actually leads me to another topic I had. Remember when we did Camp MFM? We stayed in a house, and I don't know if you saw it, but did you see on the stairway up to the guest bedroom those plaques on the wall? Did you walk up that staircase by any chance?

Sam Parr

Yeah, I thought they were just like kids' trophies, like basketball trophies. I didn't even look at them.

Shaan Puri

No, they were adult trophies. Basically, what those were. So, the guy whose house we were staying in, he's a venture capitalist.

Sam Parr

oh and

Shaan Puri

He's a venture capitalist who lives in North Carolina. On that stairway up, I was walking and I was like, "Wait, Beyond Meat?" Basically, what he was framing was a share certificate. It's like this guy, you know, whatever his name was, owns 45,000 shares priced at $0.01, like basically 1 cent a share. Then it's like Beyond Meat going public at $11 a share. I was like, "Wait." I literally took out the calculator app, and you know how it doesn't go up to a billion or whatever? I was like...

Sam Parr

I

Shaan Puri

don't know how to think this is

Sam Parr

you gotta turn the phone

Shaan Puri

oh really

Sam Parr

if you turn the phone you

Shaan Puri

could yeah

Sam Parr

that's a fun little fact

Shaan Puri

wow game changer I've been just like you know

Sam Parr

I'm like what's the e

Shaan Puri

How much time? Yeah, exactly. That's my goal—not to be a billionaire, but to get an "E" in my network. The guy basically had like 20 of these on his wall, and they were just like, "Yep, issued shares at 22¢ a share, now going public at $22 a share." I'm like, wow, that's like, you know, these are crazy run-ups. It's like, okay, you own 10,000 shares, 20,000 shares, 15,000 shares, 50,000 shares, and you just do the math. You're like, this is a staggering amount of money that's being generated by this. It is really mind-boggling when you get these investments right. It is also really funny how some of the really successful people made their wealth not out of the main thing that they did, but in a way, out of the main thing that they did. Tim Ferriss is another example. Somebody was asking me the other day, "How much do you think Tim Ferriss makes a year?" I said, you know, I don't know. I don't think he maximizes like...

Sam Parr

no

Shaan Puri

what he can do like he doesn't sell out you know fully like he probably

Sam Parr

just 5 to $10,000,000

Shaan Puri

Yeah, I said that's exactly... I said 5 to $5 million a year, probably of just like cash flow at this point. From, you know, podcast sponsorships, newsletter, whatever, but book royalties, something like that. I said maybe $5 million a year. They're like, "Oh, okay, that's really good, but you know, I guess that's not that big." And I go, "Yeah, but like he also..." Because Tim Ferriss got to invest in Shopify and Uber and like probably made hundreds of millions of dollars off of his Uber investment. Yeah, over $100 million is my guess.

Sam Parr

I would bet that his net worth is north of $1.50, maybe north of $200 liquid.

Shaan Puri

Yeah, which is, I mean, insane. And obviously, what that means is that 90% or more of it probably has come from... not his [main source of income]. If you describe yourself, you might say, "I'm an author, I'm a self-experimenter, I'm a podcaster." But then all the money came from, like, you know, four angel investments or whatever. I think that's really, really impressive, but also more common than you think. Do you know other people who had this? Otherwise, I have an example that I want to go into anyway.

Sam Parr

Yeah, just like a few famous people. You see, like Nas the rapper, on all these cap tables. You know the guy who started Figma? In one of the articles, it said that he had made $10,000,000 because he owned the most expensive crypto... one of those big ones. He bought it for nothing and he sold it, and he had $10 million before he even sold Figma. But what are the other ones?

Shaan Puri

Well, I wanted to do... I was thinking about, "Okay, who do I do as Billy of the Week?" And so my Billy of the Week that I came up with was Roger Federer, the tennis player. A million dollars isn't cool. You know what's cool?

Sam Parr

a $1,000,000,000

Shaan Puri

So, the US Open was on, and it got me thinking about tennis. I saw that Roger Federer is part of the Billy Athlete Club.

Sam Parr

so there's like roger federer is

Shaan Puri

Five athletes who have made $1,000,000,000: 1. Tiger Woods 2. Floyd Mayweather 3. LeBron James 4. Cristiano Ronaldo 5. Michael Jordan (possibly) 6. Lionel Messi (possibly) I think it's five, but it might be six. Now Roger Federer is in that club as well.

Sam Parr

so federer 300,000,000 bump though because he married brooklyn decker

Shaan Puri

No, that's not even included. That's just bonus points. So how does this work? He has the same thing where, okay, he's had a great career, right? Considered, I think, the GOAT in terms of tennis players. He's the greatest tennis player of all time, but less than basically 90% of his money came not from winning tennis tournaments. He's made around $130 million from official prize money from tournaments, and he's got 20 Grand Slam wins. But most of the money he makes is off the court. So just for example...

Sam Parr

like is he retired

Shaan Puri

Yeah, so Roger Federer, who just announced literally yesterday that he's retiring. You know, in his last year, he paid like, I don't know, $300,000 in prize money but $90,000,000 from sponsorships off the court, which is kind of insane. But his story is kind of cool. When I was studying these different athletes, I'm actually going to do a whole episode that's just a deep dive on each of these athletes and the moves that they made that made this happen. So, one of Federer's big moves was that early on, he was not getting paid jack shit. Even when he was the best player, they would pay like Andy Roddick more because they were like, "Oh, Andy Roddick, he's American. America's a bigger market." Federer's Swiss, the Swiss market has a tiny population. He's kind of this clean-cut, sort of boring guy. He doesn't have this big personality, and even though he's really good, he's not as marketable. He's not as sellable. This is what they used to tell him. So, he was getting like very small amounts; Nike was paying Andy Roddick more than they were paying Roger Federer, even though...

Sam Parr

the way that

Shaan Puri

was number rank number one

Sam Parr

that's the guy who married brooklyn decker

Shaan Puri

oh yeah andy roddick that's right

Sam Parr

damn missed that one

Shaan Puri

So, anyway, Federer goes and he's making very little money from Nike. Then he carries on and he gets to a $10,000,000 a year deal with Nike. It's sort of like, "Well, you made it. You should be happy. You got this $10,000,000 a year deal. You're set, your family's set, whatever." But he made two decisions, or really one decision that led to two things that made him an extra $600,000,000. Here's what those two were: the first is his contract with Nike is coming up, and the expectation is that he's going to just renew with Nike. He goes to Nike and says, "Hey..."

Sam Parr

this is now or then

Shaan Puri

this is back then he's like I'm one of the you know I'm one of the best tennis players in the world like you know what can you do for me and they're like raj we we we put so much marketing behind you you know the reality is you can't compare yourself to basketball players or to or to soccer players like you know tennis is just a different thing here's the best we could do and they gave him a deal and the deal was basically like every year that you're playing you get x amount of money and he's and you know something similar to what he was making right then but he started he decides you know what I'm gonna pause here I'm not just gonna take this deal I'm gonna go shop around a little bit more and see what I can do and then uniqlo comes at him with this crazy offer and so uniqlo who's not even in the like sports apparel game really but they kind of had this like tennis vibe they're trying to come they're trying to come to the west and and so uniqlo comes out of him and they offer him a 10 year deal worth $300,000,000 that that pays him even when he retires so this is 2018 he's retired now I think he's retired now let's check that he he is retired now right guys but basically he he signs this deal knowing that he will retire during this deal and he's gonna get paid $30,000,000 a year doing this he goes back to nike he tells nike hey guys I got this offer can you also give me an offer like this it doesn't even have to be as much and they're like no we'll we'll throw in this like you know here's an extra free t shirt but you know what I mean yeah no you're not getting a new deal give you a part time alright he leaves but there's one key thing that he kind of knew here which was that uniqlo doesn't make shoes and so he signs the uniqlo deal he starts wearing uniqlo but he's still wearing nike shoes and they asked him at the press conference they're like roger I noticed you're still wearing your nike he's like are you allowed to do he's like oh yeah I don't have a deal with them you know I'm shopping around let's see what's out there for me you know it's exciting I wanna see see what's out there and so for 3 years he keeps wearing nikes essentially for free because he's just playing in them he doesn't have a shoe deal and then finally he gets he does a shoe deal with a brand called on running which I'm guessing you know about on the the running brand they're they're

Sam Parr

They're another Swiss company. Yeah, they're... they're kind of taking the world by storm. You know what's funny? They were one of our advertisers when we first started. They started spending a little bit of money, and their spend kept going up each year. I was like, "You guys are killing it, aren't you?" And they are. I think they make over $1 billion in revenue now. Or maybe they even sold... did they sell?

Shaan Puri

no they went public so so they went public at peak it was like $11,000,000,000 valuation now with with market correction it's back closer to 6,000,000,000 but at the you know at its peak so roger owned 3% of the brand in exchange for he did an equity deal so he said alright I get it you guys don't have the same cash these guys can offer how about a piece of the company and so he owns 3% of the company at its peak his stake is worth $300,000,000 now so that's sort of like bet on yourself and then do an equity deal don't don't trade dollars for time you know trade your brand for shares trade it for equity and that becomes worth $300,000,000 and then he says alright what else can I do so he then takes matters into his own hands he cuts ties with his current representation company starts his own representation company starts his own player management firm to represent him and other players then he starts creating his own tournament so he's got his own like you know cup that's basically like you know the equivalent of the ryder cup in golf where it's like europe versus america so he wants to do the same thing and so now he's got his own competition thing and so he's built this whole empire made over a $1,000,000,000 total most of it 90% of it off the court and I think this is kind of amazing and if you look at it there's a couple like like interesting things here so he he goes up market so he goes basically like how do I go premium so his sponsors are mercedes benz rolex lindt chocolate he didn't do what jordan did which was coca cola and mcdonald's right because he's like alright where's my niche where's my market how do I get paid let me go to these like you know go to rolex basically the second thing that he did was he he he basically not only did he bet on himself not only did he take matters into his own hands he played a very patient game and so I think most people would have been during those 3 years where they don't have a shoe deal they'd just be counting the dollars that they're missing out on I can make 5,000,000 or $10,000,000 a year if I just sign this contract and this is a common trait there's this great lebron james story where lebron is 18 years old he graduates from high school that same day you know the day the first day he's legally allowed to nike shows up at nike or reebok I think reebok shows up at his at his school or whatever they take him to a meeting he's like and I remember dude this is like the longest table I've ever sat at like the longest boardroom table he's sitting at one end I'm sitting at the other end and he's like he slides a check over to me and I look at it it's more money than I've ever seen in my life and lebron comes from like single mom

Sam Parr

right

Shaan Puri

She had him at 16, you know? He couldn't pay electricity bills, that type of thing. He came from being dirt poor. They basically offered him a $10,000,000 a year contract as an 18-year-old kid. He hadn't played a single game in the NBA yet. They looked at him and said, "You sign this now, and you could become our signature athlete. We will put this money behind you. It's the biggest deal we've ever offered to a kid out of high school. Congratulations, son!" He didn't have an agent or anything at that time. He basically just said, "I appreciate the offer, man. Thank you. Let me get back to you." They were like, "Get back to you? This is $10,000,000 a year! What are you thinking?" He tells the story later, saying, "In my head, I'm thinking, man, this is more money than I've ever seen. But if Reebok's offering me this much, I wonder what Nike will offer. I wonder what these other companies will offer." He thought, "I must be worth something to these guys. I don't have to take this deal yet." Just by being patient, he ended up with a much larger deal, simply for not immediately grabbing the first offer.

Sam Parr

The check? You know what trait that's called? It's called... there's this awesome book by this woman named Angela Duckworth called *Grit*. Have you ever heard of that book, *Grit*?

Shaan Puri

I've seen like silicon valley people talk about it I've never

Sam Parr

Heard that? Well, it's centered around this story. It's like a study where they give a whole bunch of kids a task. They sit them down at a table and say, "Hey, look, you can have 1 marshmallow now, or in a couple of hours, I'll give you 2. But I'm going to set this here, and I'm going to go out of the room for a little while to handle some stuff. When I come back, I'll see if you decided to eat it or leave it there, and that will kind of tell me what decision you made. Sound good?" They leave, and you know, they just see who does what. They measure these kids for like 30 to 50 years—like, for years. What they found is there's a correlation between traditional financial success, you know, like our traditional word of success. There was a correlation between how successful they were and the children that chose to not eat that one marshmallow in exchange for getting 2 in the future. The ones who put it off and ate 2 were more successful. What you've explained to me is like the perfect, real-world, but rare example of grit, where it's like, "No, I'm willing to not do this thing now in exchange for a better alternative potentially in the future." And that's the...

Shaan Puri

delayed gratification

Sam Parr

yes delayed gratification that's like the best way to describe that

Shaan Puri

I'm a marshmallow eater, dude. Like, same! I would have been that first... you know, I would have had it in my mouth while they're explaining the instructions. Like, "What? There's another one coming?"

Sam Parr

Well, I always got frustrated when I talked about... you know, I told you this when they talked about Warren Buffett and Jeff Bezos discussing patience and having fun. I'm like, "Dog, you're way too old. Go have fun now!" Like, there is no... there is no long term, man. *Your* long term...

Shaan Puri

It's like Jeff Bezos now. He's... you know, he's rushing. You know, sig app over there. He's turning into a frat boy. He's like... he wants to be single, do roids, you know, drink beers on a boat. And it's like, alright, it's cool, but... not as cool when you're... How old is Jeff Bezos? Not as cool when you're 57 as it was when you were [younger].

Sam Parr

Oh no, man. It looks like it works... It looks like it's working for him. Let me tell you about this thing I read right before we started. So basically, today I think they're going to announce what the Fed's rate raise is going to be.

Shaan Puri

yeah we're gonna we're gonna learn how much money we've lost today

Sam Parr

Yes, and I don't know anything about that type of stuff, so I'm not going to pretend I do. But I read this interesting article about JPMorgan. You know, JPMorgan is just like, you know, an amazing bank that's supposed to know what they're talking about. I was reading about what their predictions were, and they had this scenario where they outlined three possible outcomes. They said, "If they raise the rate by this much, this much, and this much, here's our prediction on what's going to happen." They weren't being funny; they weren't trying to be silly or anything. So, I'll tell you the range of the three options. Option 1 was: if they raise it by 1%, we are potentially going to have a 5% drop. Sorry, if it's a 0.75% raise, we're going to have one of the best days on record for the S&P 500. So, that's basically it. This is one of the most prestigious banks on Earth, with thousands of people studying this. They say it's either going to be the best day ever or a 5% drop, which is not quite the worst day ever, but it's a really bad day. It just goes to prove that even the quote "experts" don’t know anything. We're all just floating on this rock trying to figure it out. But I saw this and I was like, "Wait, are you kidding me? Is this a serious prediction? It's going to be one of the best days ever or one of the worst days ever, or something in between?" That's basically what the prediction is.

Shaan Puri

It reminds me of those people where you're like, "Alright, so what do you think of the chances that it happens?" They're like, "What? It's a 50/50, man. It could... it's either gonna happen or it's not gonna happen." It's like, no! Just because there's only two options doesn't make it a 50/50. It's either going to be or it's not going to be.

Sam Parr

It's also 50/50. Tomorrow, the analyst is going to be like, "Well, you know, I saw that going one of two ways, but I did not expect it to go the other way."

Shaan Puri

And the funny thing is, it's like they released an 82-page report and it just, like, I don't know, man. At the end of the year, yeah, it just trails off. Yeah, blow me the hell no.

Sam Parr

So, say like... "M&M? Not much, you." That's just what the whole report should be because that's basically what they just said. Like, "What's your opinion?" "Not much, you." I thought that was ridiculous. That's... so I was reading about all these hedge funds and I'm like, "Oh, these guys are smart." But turns out, when I was reading about these hedge funds, these guys are smart but they're... kinda lucky. Like they just make a bunch of guesses.

Shaan Puri

hedged funds yeah did this guy

Sam Parr

I this is a hedged opinion by the way this is the most hedged opinion I've ever seen in my life

Shaan Puri

The thing is, one time I was playing roulette, and I was so down on my luck at the casino. By the time I got to the roulette table, it meant I had gotten bored of poker, then lost money in 5 minutes playing blackjack. After that, I had an absolute roller coaster at the craps table. Now, roulette is my comedown. My fellow gambling addicts out there will know what I'm talking about. At some point, I'm just betting wrong every time. I mean, what are the odds of me being wrong on red or black 12 times in a row? So, I'm just betting both red and black just to feel a little bit of a win. I'm just hoping a green doesn't show up. But basically, there's a tweet that I saw that goes, "Yeah, I never realized my whole net worth was dependent on an interest rate." And so, dude, it's like, until this year, did you know what the FOMC committee was? Did you know that your entire net worth was dependent on 0.75% or 1% interest rate hikes? Like, where the hell did this come from, and why did it turn out that they could just... no?

Sam Parr

I remember interest rate had just

Shaan Puri

ragged all my my net worth

Sam Parr

I remember people talking about the fed and I was like I don't know what the fed is it's like it's like when people

Shaan Puri

say like talking about the fbi yeah

Sam Parr

that's the fed

Shaan Puri

a lot of like breaking bad and darkos I didn't know what the fed is

Sam Parr

You know, people say, "Well, scientists say..." or "They say this..." I thought that's who the Feds was. It was just "they." You know, there's he, him, her, and now there's "they." And so that was the official pronoun. "They" pronouns are...

Shaan Puri

they and fed yeah

Sam Parr

Dude, I saw a guy on Twitter and he put for his pronouns, he put "we - damn - boys."

Shaan Puri

Dude, that's... it's the best one. It's the best one. It's that guy, Jack. Jack R. There's reigns.

Sam Parr

read them boys that that was his

Shaan Puri

it's it's too fucking good

Sam Parr

Yeah, that one will always make me laugh. Alright, I have something interesting. I found this video on YouTube. If you Google on YouTube "Figma seed pitch"...

Shaan Puri

I watched that this morning dude

Sam Parr

awesome let's talk about it because basically the story is I believe it was in this video was filmed I think in 2013 so the video the video was posted in 2020 but the way looking at it he looks pretty young maybe not 2013 young but he looks young but regardless he's going through his pitch and basically so figma recap sold this week on monday or friday or something like that for $20,000,000,000 one of the biggest exits ever for a venture backed startup and the guy who ran it started the business when he was 19 and there's this video on youtube of him pitching this guy named daniel gross who was actually on our pod early on who had a fun and I had a few takeaways from this pitch and so it's like a 20 or 18 minute or 10 minute video of him pitching my 5 takeaways were a he's a kid he even if it even the video is like new he looks like he looks like he's 18 but and he looks so young and he talks kinda young but he's really wise like you could you you hear him speaking and you're like it's very impressive hearing him talk the second is that the pitch was basically videos of the product it was a prototype like a demo of the prototype not as much of a deck and oftentimes throughout the pitch it was pretty fun and he like used the product to photoshop the guy he was pitching daniel he photoshopped his face and made it he made him look like another person and daniel the guy being pitched was like oh my god this is hilarious this is awesome and dylan the guy pitching was just like having fun and showing him the product and that was so much better than just showing a deck and the last two things were tech skills so the guy is like clearly technical and we often talk about how like it does you don't need this stuff and technically you don't need it but goddamn it helps this guy is clearly like they built something that like was actually working and that is such an advantage I do think you need to learn that and the last thing is that it's an mvp it does not look good at all it's pretty ugly and it's and it's mildly effective but it's effective enough that you can see the future

Shaan Puri

Yeah, exactly. I watched this thing... You could find it if you go to YouTube. It's called "Dylan Field Pitches Seed Stage Figma to Daniel Gross." That's the name of the YouTube video. It's got, what, 30,000 views now, I think?

Sam Parr

but I bet you probably

Shaan Puri

all of it's in the last

Sam Parr

2 days yeah yeah yeah

Shaan Puri

So, he's pitching, and my observation was very much like yours. First of all, it doesn't feel like a pitch because most pitches are like, "Hey, here's our company. We're going after this really big market. Did you know we have a TAM of $3,000,000,000,000 a year spent on healthcare?" And they're like, "Oh wow, okay, $3,000,000,000,000, that's cool. What are you doing?" And they're like, you know, we like...

Sam Parr

we sell weed

Shaan Puri

Yeah, like we help you do squats using your phone camera, like with better form. And it's like... I don't think that's the $3 trillion of healthcare spend, but okay. Yeah, like I'm not sure what...

Sam Parr

what the wrong stuff was like a a stupid quadrant thing with them on the top right

Shaan Puri

Right, everybody else, you know, the Y-axis is if you're, you know, stupid or smart. And then this one is if you're hardworking or lazy. It's like...

Sam Parr

I don't

Shaan Puri

know what this is lazy and dumb and we're hardworking and smart

Sam Parr

It's like this: a $20,000,000,000 company. Are you sure you're better than them? I think they're...

Shaan Puri

Yeah, they're like, "You know, poor product." It's like, "I don't know about that."

Sam Parr

you're a poor product

Shaan Puri

it makes me mad

Sam Parr

you're like

Shaan Puri

you're like very irritated

Sam Parr

What they should do is put themselves in the bottom left and be like, "But one day, this we could..."

Shaan Puri

we can move yeah like

Sam Parr

we're gonna move ourselves on

Shaan Puri

The grass was 6 weeks ago when we met, and now we've moved up. Just imagine the trajectory. That's actually the reality; that's what's happening.

Sam Parr

we've already moved an inch on this screen imagine if he give us 5 years

Shaan Puri

It's not to scale, but he's doing this pitch. Basically, the first slide is a picture of him on a boat. It's like, "Here's me on a boat." He used to work at Flipboard. He goes, "I worked at Flipboard twice." Then he introduces his co-founder, saying, "He was my friend at school. We dropped out." Next, he shows this video of a talk. He says, "I was really inspired by this talk by Bret Victor, 'Inventing on Principle.'" By the way, this same talk, I think, is the one that the Webflow guy said was his inspiration for building Webflow. It was the same grainy video of this guy explaining how to build a real product. Well, I think the...

Sam Parr

I think the takeaway from the talk is... or he says something in the talk about how it's morally right to help people to create. Or something like that, where he's like, "Your goal as a business builder is just to help people create," or something along those lines.

Shaan Puri

And so, the Webflow guy, like in the demo he's doing, is illustrating the difference between having to choose a bunch of options from a menu or writing a bunch of code and then pushing run to see how it happens, versus just seeing the thing and being able to edit it live. It's like a drag-and-drop, what you see is what you get editor. You can be so much more creative when you're using the "what you see is what you get" version because you're just shuffling things around in real time. I think everybody's kind of experienced this in general. So anyway, he gives this talk and then he shows a bunch of demos. All the demos are like, "Oh look, I made this airplane and it blends with the background," and then, "Oh, I did this thing where I merged these two people's faces together." You look at this and you don't think, "This is a $20,000,000,000 company someday." You'd have to have a lot of foresight to see that. What you see when you look at this is really just two indicators that this would be successful: 1. This guy seems really smart and like he's a creative builder, so I'd bet on him to be successful in life for sure. 2. The second thing, which I think is the underrated part of what people talk about for Figma, is that there was a technology change. There was an inflection in technology when WebGL came out. I remember when WebGL first came out.

Sam Parr

don't even know a

Shaan Puri

bunch of

Sam Parr

these the other companies

Shaan Puri

I mean, I'm not technically enough to take it and explain it, but basically what it did was let you do cool graphics stuff in the browser.

Sam Parr

got it

Shaan Puri

That you weren't going to be able to do unless you otherwise normally... Like, normally a browser was weak. If you wanted to play a game with cool graphics, you needed to download the game. You needed to have the application of the game to run on your computer's hardware because doing it in the browser was going to be too laggy, too slow, too whatever. WebGL was just a web framework that let people build things that were like cool, graphical stuff—3D stuff, you know, real-time stuff—in the browser. So that's why when Figma came out, you would see people working on the document with you. I'd see your mouse moving around in real time, and that was like a magic trick. You had never seen that before. At the time, I remember we were building stuff, and when WebGL came out, all of our developers were really intrigued by it. There was cool stuff you could do in WebGL that wasn't possible before. Then the question was, "What's the application?" Where he landed was, "I think we can recreate the whole Adobe Creative Suite in the browser, and here's how we're going to do it." That actually made a lot of sense. He didn't pitch it that well; he mentioned those things during the presentation, but you'd have to ignore 80% of what he said and just be like, "Oh, that's just fun experimentation." This guy's smart. WebGL is a game-changing technology, and this idea of recreating the Adobe Suite in a browser and making it free for everybody—that's a great idea. So, you had to sort of see the great pitch through all of that.

Sam Parr

The forest here, dude. So, remember how I told you about this guy named Brett Adcock? He's like this billionaire who created a bunch of different companies, including basically a flying car business. Remember that guy? Yeah, so he tweeted out the other day, "Here's what I've learned about entrepreneurship." One of the five things he said was to pick really, really big ideas because then you can attract more investors, and it's easier to get employees and all that type of thing. It's like that "make no small plans" thing. That concept has always made me self-conscious because every plan I make is pretty small. Like, you know, I want 1 marshmallow right now, not 2 later. You know what I mean? Yeah, I only make small plans compared to that plan. It's kind of cool that this Figma thing doesn't seem that grand. It was, but it doesn't seem that way early on, and that makes me feel better about my deficiencies. So, thank you, Dylan. You know what I mean? When people say "grand ideas," I'm like, "Yeah, but running a newsletter is kind of fun," right? You know what I'm saying?

Shaan Puri

like I don't

Sam Parr

I don't know how to make robots

Shaan Puri

yeah but I do dream about that sometimes I'm like okay

Sam Parr

me too

Shaan Puri

In an alternate life, what am I doing right now? I'm like, "Why am I not changing whatever? Building the next big thing, you know, the next Pixar or making a flying car or whatever?" It's like, I could do it. I know that I could do it. I do think about doing it. Maybe I will end up doing it, but for some reason, I sort of am like, "I don't know." There's a question of how hard do I want to work, right? You know, if I made my quadrants, I'm putting myself in the lazy quadrant where I'm like, "I don't need to do the hardest thing to impress myself." So I'm trying to figure out the things that I can do that impress myself, that are also not going to ruin my life and my lifestyle.

Sam Parr

dude paul but what I mean

Shaan Puri

I like being home with my kids. I like that I don't have to freak out. I don't have an office of 100 employees that are like, "We're hard-charging and we're about to die at all times." I kinda like that I don't do that. So I just need to find a way to impress myself that fits in my framework, and I think that...

Sam Parr

what about roger federer

Shaan Puri

you gotta do that

Sam Parr

Like, who's doing his stuff? You know, Roger Federer. I was gonna ask you that. Who's doing his stuff? We had Mark Laurrie on the podcast, and I talked to a bunch of people who worked with him. They're like, "Yeah, he's really good at raising money." Then he hires people, and they kind of said, well, he wasn't doing the hard work. He did a lot of the work early on, but he kind of got all the leverage by getting the money, having the idea, and starting it. Then, like everyone else, he did a really good job of hiring them and letting them do their thing. But same with Roger Federer; he isn't the one running a lot of that stuff. I wonder how he partners with people.

Shaan Puri

Yeah, well, the other one that I was looking at was Floyd Mayweather. Floyd Mayweather has kind of an amazing "bet on himself" story, like this too. You probably know it, but I don't know if most people do. Boxers in general, and UFC fighters, make basically nothing, with like one or two exceptions. Boxers can make, you know, $10,000,000 to $20,000,000 in a fight, and they could do that once or twice a year. That's great! That seemed like the top. What Floyd Mayweather did was he was like, "Who the hell is making all this money?" Because I see that crowd is full of people and the pay-per-view number is huge, but where does the money go? The reality was that the money would go to the promoters, it would go to the cable companies, it would go to all these other people. So, he decided to bet on himself. He buys out his contract. He takes $750,000 out of pocket and buys himself out of Top Rank, which was the promoter that promoted Oscar De La Hoya and Manny Pacquiao, all these guys. He starts, you know, Mayweather Promotions. Now, his business model is basically vertical integration, right? To use the business school term, he's like, "Okay, I'm not just gonna be the talent. I'm also gonna be the production for the show." This means that I also collect the live gate revenue, which means that I also have to pay the other fighter. I have to write the check. I'm also gonna own a piece of the pay-per-view. He's like, "I'm gonna make money on every hotdog sold in this venue. I'm gonna make money on the merch. I'm gonna make money everywhere." Because of that, now when he does a fight, like his Manny Pacquiao fight or his Conor McGregor fights, he's pulling in somewhere between $250 million to $400 million.

Sam Parr

that's crazy

Shaan Puri

Himself on those fights, per fight, so he, you know, more than 10x, more like 20x'd what he could make by betting on himself and building that brand. Then he created all the associated brands. He basically thought, "Why are these sponsors paying me to wear their stuff? Why don't I just create my own clothing line?" So he created the Money Team clothing line and decided to own his own brand rather than promoting other clothing lines. LeBron did the same thing. He thought, "Why am I promoting McDonald's?" So he bought equity in Blaze Pizza and said, "Cool, I'll just own a piece of this chain rather than just be a promoter." There are basically a bunch of people who follow this model. Floyd, you know, he did a couple of things. One was he went all in on self-branding. He changed his brand from "Pretty Boy Floyd" to "Floyd Money Mayweather."

Sam Parr

and he knew that people were gonna hate that

Shaan Puri

He knew that people were going to hate it, and he started doing hateable things. For example, he would post a photo of himself at a dinner table, but there was no food on the table—just stacks of cash everywhere. He'd say, "This is how I eat," or whatever, right? He would also throw a wad of cash at somebody and make fun of them because they were poor. They would pick up the dollars because, you know, this is like $10,000. So, he would do things that would get attention. He would do things that would build his brand. In reality, he looked like this party guy who owns strip clubs, but he never smoked or drank. The guy trains at like 3 in the morning. So, he kind of built this brand of being a badass or whatever, but in reality, he's an extremely well-conditioned athlete who is extremely disciplined and never ran into any of those problems. He hired Al Haymon, who had run...

Sam Parr

You know what I mean? He's like, "We have to do a whole episode on this," because Al Haymon's really intriguing. Al Haymon, if you Google his face, there's like 4 pictures of him on the internet. He's one of these guys, I think he's famous for... you never meet him in person, but he does everything on the phone. And he's always in the background of the most powerful boxers and fighters in the world.

Shaan Puri

And before that, you know what he was doing? No, he was doing the same thing in the music industry. He represented Janet Jackson and Whitney Houston, helping to build their brands and their whole business empires. Then he taught Floyd how musicians make their money. He said, "Oh, I need to do that." Basically, my fight is me on tour. I need to own the tour. I need to own the shows. I need to make the money from the tickets, not just be the fighter who goes on the stage. So Al became his business guy on that side, and then he has Leonard Ellerbee who does it on the Mayweather Promotion side. And like the joke, of course, about Floyd is that he can't read. It's like he's saying, "I can't read, but I know numbers." He found a way to make a ton of money. He understood the core fundamentals of business and knew how to put people in place. So he generates a lot of money. Now, some people think he's going broke because he spends so much.

Sam Parr

I think he might be like I totally believe that

Shaan Puri

that's hard to say

Sam Parr

Dude, I totally believe that this podcast... we are the internet dork renaissance. We started with Adam Levine cheating on his wife, and then I think we went to like the history of hedge.

Shaan Puri

funds option shares

Sam Parr

Yeah, and then RSUs, option shares, then we talked about the Fed and JPMorgan, and then back to Mayweather and Al Haymon. You can't get this anywhere else... you just can't.

Shaan Puri

where are you gonna get all this

Sam Parr

yeah yeah you know

Shaan Puri

we we are the chinese buffet of podcast yeah

Sam Parr

They say that true wealth is created by being like a narrow... an inch wide but a mile deep. Not here. We are a... we are a rain puddle. We are just gonna cover everything just a little bit.

Shaan Puri

Well, you built your whole life off being 4 inches long, so it all worked out for you in the end. Yeah, and you made a comedy at the end of the show and you get the comedy.

Sam Parr

Average at best in lots of different areas. If you're average at best at just about everything, you're kind of above average. So, it works out well.

Shaan Puri

alright that's that's the show

Sam Parr

I'm exhausted I gotta take a nap nap after that