How Course Businesses Work & How Irish Pubs as a Service is Making Millions | My First Million #183

Shaan Puri

That alone is kind of like to your... Here, if you're a creator with an audience and credibility, if you've done something, if you're actually good at a skill, yeah, you can get to $1,000,000 a year in profit, not just revenue, doing it as an individual course creator.

Sam Parr

Yes, and the path is quite straightforward. The tactics are simple, but it's basically...

Shaan Puri

yeah I feel like I can rule the world I know I could be what I want to

Sam Parr

Alright everyone, what's happening? We have a good episode, but before we get to it, please do me a favor: click the subscribe button on iTunes and the follow button on Spotify. Last week, we got a ton more Spotify listens because they're doing something. I think there's like a pop-up right now that shows people when you listen to the podcast and asks if you want to follow. Anyway, I want to see if that's working, so go ahead and click follow on Spotify and then click subscribe on iTunes. The reason why is that the more you click that, the higher we go up in the rankings. The higher we go up in the rankings, the more listens we get. The more listens we get, the more **content** that we can create. So do that now! In this episode, we're going to talk about course businesses. Course business is something that a lot of people are interested in. I think it's one of the easiest ways to make $1,000,000 a year. But we're also going to talk about how companies are making $100,000,000 a year doing it. So go ahead and give us a listen. We're going to talk all about course businesses. It's going to start in just a second. And make sure to click subscribe, click follow, and we'll talk to you soon. We have a lot of cool stuff going on. But how are you doing?

Shaan Puri

I'm good I'm still recovering from your sick burn about my sweatshirt

Sam Parr

They'll see on video. It's not that it's bad; it's just that it would have been a lot better if you wore it as like a 9-year-old in 1994.

Shaan Puri

I look like a skateboarder who got his birthday present. Oh yeah, and you know, a 12-year-old skateboarder who got his birthday present. Then Abreu clapped back at Sam and told him he looks like a knight who's wearing the chain link stuff that goes under your armor.

Sam Parr

you look like the extra from the disney movie brink

Shaan Puri

okay I have not seen that but

Sam Parr

you you look like a nineties disney movie extra

Shaan Puri

dude I wish that would be an upgrade from my reality

Sam Parr

have you do you read books

Shaan Puri

I can't tell if this is another burn. Well, that's a transition to a real question: Do I read books? Do you know how to read? Yeah, I read books.

Sam Parr

How many books do you read? I'm not... this is real. This is real.

Shaan Puri

How much do you bench press? I read like I'm reading a book all the time. Does it have one book that's going at any given time? I probably read, I don't know, 3 or 4 a year.

Sam Parr

do you when you're reading it do you feel like you absorb it

Shaan Puri

yeah I intentionally read slow and I reread and I take notes

Sam Parr

So, what I'm doing now instead of... you know, do you know who Ryan Holiday is?

Shaan Puri

I know about him yeah

Sam Parr

I love Ryan. He's cool, but he reads like five books a week. That's popular; people will say, "My New Year's resolution is I'm going to read 50 books this year." Right? And I'm like, "Damn, that's hard just to do." But like, do you learn anything?

Shaan Puri

and right

Sam Parr

What I'm trying to do now is only read 2 or 3 books a year. But I'm quizzing myself; I'm trying to master it, and it's been really hard.

Shaan Puri

So, what I do is I get a bunch of books. I'll buy a book every 3 days, probably, if anything looks interesting. I have an unlimited book budget for myself, and I've had this for a long time. I just decided, "Okay, I'm not going to have a budget."

Sam Parr

I do the same thing by the way it's and

Shaan Puri

So, I just instantly buy it on my phone. I use the Kindle app on my phone to read. I have a Kindle and I have physical books sometimes, but my phone is always with me, so I like that better. I end up reading more there. What I do is I will read like 5% of 50 books in a year, right? I will just pick up a book, start skimming through it, and I just assume that most books are bad. So, I do not complete 95% of the books that I start, and I think that's totally okay. The book has to actually be interesting or grab me or say something interesting for me to try to finish it. But then, once I do read a book that I like, I will reread that book multiple times over the years. I'll reread the book in...

Sam Parr

A few years ago, I did the same thing. I used it as a reference book and I reread it a ton of times. I want to ask you, so today I want to talk to you about course businesses. I went down a rabbit hole and I called someone right before the podcast to get intel and insights. It looks like you have a ton of ideas, but can we start with something really easy? You got into an argument with someone on Twitter—that's what you have listed here. You alluded to it a week ago. What happened? I don't know what you're talking about.

Shaan Puri

Okay, so, I want to try to do this without restarting the fight. I tweeted out that I said, you know, I don't even know what I said exactly. I basically said Elon Musk and Jake Paul have... Yes, I said, "Elon Musk, you know, sells cars, launches rockets, raises money, and does all this stuff." Then, you know, Tesla never runs a commercial. Jake Paul is like... he does the same. He's going to sell a million dollars' worth of pay-per-views for this boxing match that he has coming up without a commercial. I said, "The best marketers don't spend a dime." Right? Just kind of like an observation. It's not like... obviously...

Sam Parr

also like a cute sound bite tweet

Shaan Puri

Yeah, just a sound bite thing. Obviously, many marketers spend money, and they're great at it. It's a smart thing. I do spend money when I advertise too; it's great. So that's not really the issue. Some people are able to hijack people's attention in the news and have done very well with it, right? So I tweeted that out. It doesn't even seem like that controversial of a statement to me. I moved on with my life, and then a few people started commenting. A bunch of people were like, "Yeah, true, blah blah blah." Then a couple of people commented, "Yeah, but Jake Paul’s an asshole." Okay, fair enough. That doesn't matter to me. Then one person, who's a writer for The New York Times, basically says, "I can't believe you." I can pull up the tweet; I should pull up the tweet because this is going to be stupid if I...

Sam Parr

You know, I'm not the person you're talking about. Her name is Taylor Lorenz. She works for The New York Times. A lot of people in the tech world, and a lot of people in general, really dislike her. And I... I actually... what's the objective here? A lot of people really love her. So we don't always want to go to the negative side, but sure, sure.

Shaan Puri

Sure, okay. So, I have my stuff in front of me. By the way, I don't have her tweet because she now has blocked me, but that's the end of the story. Alright, so I said, "Elon is pumping Dogecoin on Saturday Night Live. All the Paul brothers are raking in tens of millions just by stealing Floyd Mayweather's hat while the camera's on." The greatest marketers don't spend a dime. By the way, did you see the hat thing? The "gotcha hat" thing?

Sam Parr

so funny

Shaan Puri

Yeah, so funny. Okay, so if you haven't seen it, Jake Paul's older brother Logan is scheduled to fight Floyd Mayweather. Logan Paul is a YouTuber, and Floyd Mayweather is probably the greatest boxer ever. It's not even going to be close. It's not even a real contest.

Sam Parr

it's like 2,001 odds

Shaan Puri

Yeah, it's like a celebrity death match of two celebrities disagreeing to go punch each other. But one of them is actually a professional puncher.

Sam Parr

yeah

Shaan Puri

And so, anyways, they have to sell the fight. In the press conference, they have to pretend like, "Oh, I'm talking trash like I'm gonna beat you," and you're talking trash like you're gonna beat me. Anyways, Jake Paul stole the show. This wasn't trending very well because it's so one-sided. Not a lot of people wanted to buy this because there's not much intrigue about what's gonna happen. The only people who want to buy it are just those who want to see a bit of a circus. So, Jake Paul goes up to Floyd Mayweather, and they're talking trash. They're like, "You know, I could beat you up," and "You could beat me up." Then Jake Paul goes, "Got your hat!" and just took his hat and ran away like an absolute third grader on the playground. Funny as hell, of course! To ham it up, Floyd Mayweather tries to go fight him because he took his hat, and then there are like 70 people all holding their camera phones up recording the thing.

Sam Parr

yeah just the shit show just a shit yeah

Shaan Puri

So, that went viral. It gets on every blog and goes viral on social media. Some people think it's stupid; some people think it's whatever. It doesn't matter what your opinion is; they got a bunch of attention from it. In fact, Jake Paul then tripled down on it. He did the "Gotcha Hat" thing, which went viral on social media. While it's going viral, he has his merch guy create "Gotcha Hat" hats, puts them up on his store, and sells out of them. Then, he gets a tattoo on his leg that says "Gotcha Hat" and posts that, which also goes viral. So, he got a double pump, a second wave of news PR out of it. I was just pointing out that these guys are good at marketing. They're good at marketing themselves; they're self-promoters by definition. You really can't disagree that the Paul brothers are not good self-promoters. They self-promoted themselves.

Sam Parr

and made

Shaan Puri

A huge number of people say yes, and then a couple of people are like, "You know, these are pranksters. They shouldn't be labeled as great marketers." Don't set them up as anything to be emulated. Basically, don't say they're good because a lot of what they were saying was like, "People follow you."

Sam Parr

Well, they were basically saying, "Well, Sean, they're bad people." And you're like, "Yeah, I don't care. That's not the point." They could be the worst person on earth. I'm just saying, I'm just showing that they get eyeballs.

Shaan Puri

yeah they're effective at marketing that's all I said yeah

Sam Parr

it's like saying like a like a cigarette company could be a great marketer who cares if you think cigarettes is good or bad

Shaan Puri

And so, this writer for the *New York Times* basically takes this as an opportunity to come in and promote her own article in the *New York Times* that says, "I covered the story about the sexual assault allegations against him." So, you know, you really... basically, I don't know exactly what she said because, again, she blocked me. I can't go read it. But it said something to the effect of, "It's messed up to promote them or say something positive, like to be saying that they're good or whatever when they're actually jerks, they're bad guys, they're assholes." They said, "This guy's been accused of sexual assault." So, I kind of... I don't even remember what I said back, but I went back and forth, and I was just saying what you just said. I am not saying that they're good humans. I'm not saying they're great citizens. I didn't say they should be president. I said they're good at marketing. I don't really see how that's arguable. Then, you know, they clapped back again and said, "You're a jerk for saying that he's good." And so, a couple of things happened. First is...

Sam Parr

dude I I like r kelly could be a great singer and also a horrible human being

Shaan Puri

Yes, and so one of them was like, "Is there really anything to learn from these guys?" Blah, blah, blah. And so, anyway, they're going back and forth, and I'm getting agitated at this. The New York Times writer, she goes, she said something that was like, again, just trying to virtue signal. I just replied, I go, or she was... she said something like, "I don't think he knows the... he's... I don't think he thinks he's making..." talking like replying to me, talking about me, but as if I'm not in the room. Anyway, I thought that was just a weird way of saying it, and so I just go, "You are the Jake Paul of journalism."

Sam Parr

oh my gosh

Shaan Puri

Got blocked instantly, and you know, a bunch of people had a big reaction to that. Now, I thought this was the perfect kill shot. Why? Because that's not an insult to me. First of all, it's true. Her brand of self-promotion as a journalist is confrontation. She gets into confrontations with people like Heath Rowl, Balaji, Nava, and whoever else. She just goes and picks fights on Twitter with Marc Andreessen. So, she goes to the biggest names, creates controversy, picks fights, and then, as soon as they sort of attack back, she turns that into a story about how "big bad tech is bullying me." I was just pointing out that actually, her form of self-promotion is the same as Jake Paul's. He went to Floyd Mayweather, agitated him, got the "gotcha hat," and used that controversy and confrontation to build his own brand. So, I was correct in identifying her own playbook of self-promotion. B) It's not an insult to me. Again, I have no problem with Jake Paul. Jake Paul came on the podcast, and I think this guy's a good marketer. I don't take such a black-and-white look at people and say that this person is good, and this person is evil. I just don't think the world is that black or white. Anyways, I wasn't trying to insult her, but she took it as an insult, of course, because that's why it was the perfect one-liner. I was able to insult her without even insulting her. So, that was the confrontation. Then, I got a bunch of DMs from people, and people at my company were like, "Hey, can you not pick fights with journalists?" I was like, "Okay, I'm sorry. I really wasn't trying to pick a fight with the journalist initially."

Sam Parr

well that's pretty funny yeah well that's a good story I

Shaan Puri

By the way, I still have no problem with her. I actually think she's a really effective marketer of herself too. Like, I know her name; I don't know any other tech journalist's name. I genuinely think she does a very good job at promoting herself by covering interesting and controversial topics. She was covering TikTok early on, and then also her brand of sort of taking it to the powerful people in tech. I view it as an effective form of marketing. I also think she's good at it, so I really have no ill will. But I did think it was cool.

Sam Parr

I think it's a pretty good one-liner. I unfollowed like everyone on Twitter. I've been spending less time on it because it makes me angry. But I wish I would have seen that because that's pretty wonderful.

Shaan Puri

By the way, this was the best part: all the white nights. Do you know what a white night is? Yeah, so for those who don't know, a white night is like sort of a... I mean, how would you describe it?

Sam Parr

Like someone who, they don't necessarily care about the topic. They're just trying to act like they're saving the day so the girl likes them.

Shaan Puri

Yeah, it's basically dudes online who come to the rescue of women to virtue signal how they are the good, noble supporters of good and evil, whatever. So, anyways, there are a bunch of white knights in the thread who were like, "Yeah, Sean, I can't believe you did this. I can't believe you would give someone this platform." First of all, Jake Paul has a 50 times bigger platform than me. Second of all, yeah, that is my platform. I put out things that are interesting or, you know, I put out truths. I'm not trying to tow the politically correct line. Then I go to this guy's Twitter. I go to his Twitter, and the second retweet is, "Conor McGregor has sold this many millions of dollars of whiskey." Oh my god!

Sam Parr

you know

Shaan Puri

He's promoting it. Guess who also has a bunch of sexual assault allegations against them right now? Conor McGregor. So he was allowed to promote that—Conor McGregor was.

Sam Parr

cool and pissed

Shaan Puri

I called him out. I go, "Dude, I like you. We've been friendly before, but what a hypocrite! Look at your own timeline." Dude, you're saying this guy is great at business. This is his timeline. He goes, "Honestly, I just didn't know that about Connor." And so it's blah blah blah, and then a bunch of people were eye-rolling like, "Oh, you didn't know? Good. Yeah, okay, cool. Let's all you..."

Sam Parr

Didn’t you know? Everyone knows that that guy punched an older guy in the bar. This has been on the news.

Shaan Puri

Yeah, you thought Conor McGregor was sort of, you know, a goody two shoes? Yeah, right. This guy's been in the news, he's been in jail, he's done all this stuff. So, I just thought that that was the classic hypocrisy of people on Twitter.

Sam Parr

Well, I didn't see it. I'm happy I know the story. I love that you do that; I think that is great, and I think you should continue to do it. Hopefully, you won't stop just because you were asked not to, but we'll see. Do you want to talk about the course business? I actually didn't get into it, but I saw a company that I think is kind of silly for what they're trying to disguise themselves as. However, I actually think it's good for what it really is, and I want to bring it up. I went and did a ton of research, and I know that you're interested in courses as well.

Shaan Puri

okay I'm I'm fully teased go for it what is it what's the company

Sam Parr

Okay, so today, for this little segment, let's talk about the course business, the education business, whatever. I broke it down into four different categories. There's this company called... I don't know if it's called Beyond Deck or On Deck. On Deck, yeah, it's called On Deck. The URL is beyonddeck.com. It's actually really confusing what they advertise themselves as. If you go to beyonddeck.com, frankly, I didn't know what it was. I didn't understand it. I did some research, and I think I understand it now. The way that I see it is it's a course business. So basically, you pay... I don't even know the price actually. Is it like $500? It's like a hundred dollars, I believe, and you sign up for...

Shaan Puri

it's over $1,000

Sam Parr

it's over $1,000 is it under $2

Shaan Puri

yeah I think it ranges between $1,200 something like that

Sam Parr

1 and 2

Shaan Puri

maybe 1 and 3

Sam Parr

$1 and $3, and you sign up for a cohort-based class, meaning there's a start and an end. They have about 15 different classes, probably at this location.

Shaan Puri

I I gotta stop you these aren't it's not a class why why are you saying it's a class yeah

Sam Parr

that's what it is you you can call it

Shaan Puri

So, there's no teacher. Okay, here's how I would describe it, right? You know Eric Thornburg, right?

Sam Parr

I don't know

Shaan Puri

oh you don't know okay eric's a good guy he's he was early on at product time he left and he's created a bunch of things since then one of which was on deck so the way he thinks about on deck and the way he talks about it is on deck is basically like a modern day business school so why do people go to business school people go to business school because they wanna build a a network they wanna maybe learn about business and they're looking to kinda like pivot their career in a different direction right they were doing one job they wanna go to the next job they don't know what it is they wanna change industries change roles change whatever change careers so business school is this great pivot. To do that so what on deck did was they sort of made an unbundled and digital version of that actually not even digital there's a lot of in person components to it so what it is is you let's say and they have a bunch of different tracks but let's say you wanna go into let's say you wanna become an angel investor and you're not an angel investor today so on deck is your pivot to do that you apply to join you say great I'll pay the $1500 to go to the on deck angels program and yes there is some education they bring in speakers who are angel investors they'll talk about angel investing that sort of thing but it's basically a x week program for you to you know go from where you are now to that track that you wanna be on and it can be with angel investors it's a little bit more like a course which you're talking about which is you're gonna learn about a thing and then by the end of it you can do it but they the it started with just people who were on deck to build their next company I was like alright you don't know what you're gonna do next why don't you join a group of other people who are also thinking about their next opportunities maybe they have a great idea you could join their team maybe you could find a cofounder and and do this here and it was just people who were looking to make a change and and you would pay to basically to to join this to get a good network so the network is all kind of like other kinda like just like if you go to harvard you're getting other people who have a certain caliber of of of person who's gonna go on to do a certain caliber of things and you pay to go be a part of like an 8 week program or whatever to go do that

Sam Parr

yeah that sounds like a class to me an 8 week program where you're learning and talking to

Shaan Puri

Other people, it's just a lot less about the learning content side, and it's a lot more about the network that you want to build.

Sam Parr

Then, in that case, I would say the likelihood that they're going to be quite huge, I think, is actually lower. It would actually be better if they were a course business. The problem with that is they're either going to have to raise prices to be tens of thousands or hundreds of thousands of dollars a year, or they're going to have to decrease the standards of who they let in and keep the price low, thus ruining their network.

Shaan Puri

So, let's talk about some of the programs that they have. They have **OnDeck Founders**, which is for people who want to start a company. They also have **OnDeck First 50**, aimed at talented operators who want to join an early-stage company as one of the first 50 employees. This could be the next Airbnb or something similar. Then there's **OnDeck Investors**, where you can learn about angel investing. Additionally, there's **OnDeck Podcasters**. This program is for those who want to start and grow a podcast. You can join a batch of other people who are also looking to start a podcast, listen to speakers who are existing successful podcasters, and by the end of it, you'll have built up some momentum on this new path that you weren't on before.

Sam Parr

so let's just say who cares about on deck because it got me thinking about the course business I think it's a course business you say it's not it doesn't really matter what it is because that is what got me interested in the course business and the problem with the course business is when we say the course business oftentimes people will categorize anything that's even remotely related to course into the same category and that's actually false that's not that's not how it should be and so what I wanna talk about is the 4 categories and let's talk about what why each one is interesting and so I'll just briefly list what those are so the first one is basically one person or a smallish company making a handful of courses that's like our friend jack butcher right that's like ramit sethi our good friend or my good friend ramit sethi and we're gonna I'll go back and we'll actually talk about what makes that what it is the second are platforms so things like udemy things like teachable a lot of people say this is the course business that's not a course business that's a tech company that makes technology so people can create and sell courses I'm not even gonna talk about that because that's a totally different category even though people do sometimes refer to it like this category or in with courses the third one is the master classes of the world these are another example is this company called the great courses these are businesses that create 100 eventually of different courses and they go and sell to consumers for a $100 to $200 $300 a year and the 4th one is b to b companies that sell education to companies and so a company like that is pluralsight which sold for $3,000,000,000 and does something like $500,000,000 in revenue there's a there's a a few other there's coursera there's there there's actually a handful of them that I didn't know about but in researching there's a handful that do 300 to $600,000,000 a year in sales multibillion dollar business now I wanna go through each one and explain what makes them tick or at least what I think make them tick and I and I in order to do this I went and talked to my friend ryan dice ryan dice runs this thing called digitalmarketer.com and he he's been in the game for 20 + years and we kinda talk through this so the first category is these like single person creators I think you're like that I'm not like that at the moment I could probably easily become that and I I enjoy that and I actually think that the path to making a $1,000,000 a year this way is incredibly straightforward and it's a very high likelihood in term all all relative to starting a business but it's like a really high likelihood of making like a $1,000,000 a year it's very high likelihood that you can make $200,000 a year and so these are companies like I will teach you to be rich dot is that what it's called I will teach you to be rich.com it's what you've done what what was your newsletter called

Shaan Puri

the all access pass

Sam Parr

that wasn't quite a course like

Shaan Puri

it's it's what I announced I I don't know if you saw this I tweeted out that I was doing a course

Sam Parr

yes yes yes yes

Shaan Puri

And I said, "Hey, I'm going to do a course on power writing, basically writing for the real world." I just tweeted out, "Would you be interested? Here's what this skill has helped me with: it's helped me get jobs, it's helped me get investment, it's helped me grow my companies, and it's helped me make money." So, writing in the real world—emails, tweets, blogs, ads, landing pages—that type of writing, you know, going from good to great is a big difference. Would you want to learn this? I said it'll cost $400 for the first batch of people, whoever's kind of the guinea pigs. Let me know if you'd want to do this. I got, I think, I don't know, 1,200 replies from people filling out the survey saying they want to do this. So yeah, just that alone is kind of like to your point. Here, if you're a creator with an audience and credibility, if you've done something, if you're actually good at a skill, yeah, you can get to $1,000,000 a year in profit, not just revenue, doing it as an individual course creator.

Sam Parr

Yes, and the path is quite straightforward. The tactics are simple, but it's basically to build an audience. That's all.

Shaan Puri

most part

Sam Parr

That mostly has... yeah, but even that, there's a process to it. I mean, it's not easy, but it's simple. You build up an audience where people rally around one type of thing, and then you eventually create something that costs $100 all the way up to $1,000. My good friend, one of my best friends, Neville Medhora, has done this with copywriting. He probably... I don't know what he makes, but if he said $1,000,000 a year, I would think that sounds about right. There's Jack Butcher, like we said. My wife, Sarah, is actually launching one. Sean has one. I've launched one at The Hustle before, but it's not live now. It was, and it's pretty interesting. It's the easiest path, probably, to make $1,000,000 a year, I actually think. The way that you scale it is really hard, though. Now, here's the downside: it's pretty hard, I think, to get past $10,000,000 a year in revenue on that. Not that that should be the goal necessarily, but it definitely caps out relatively low. However, as long as you don't base this on your personality, it's a pretty good business that you could sell to private equity or something like that for a bunch of money. After you've created the course, you then create a consulting or coaching service that costs $10,000+ a year. You could potentially have a pretty good $10,000,000 to $20,000,000 a year company. I like that.

Shaan Puri

I'll give you an example. My uncle does this. He's in real estate and he himself has like, I don't know, a $200 million real estate portfolio. So he created a course on how to get into multifamily apartment investing. The course, I think, is like $5,000. He sells a bunch of those, and then out of that, some people pay him $25,000 for more one-on-one in-depth coaching because they're really going for it. For them, it's not hard to justify $5,000 or even $25,000 because the economics of even a single apartment building that they're buying are such that that's...

Sam Parr

that's who's your what costume pippa mal

Shaan Puri

he's my uncle

Sam Parr

oh which uncle

Shaan Puri

my my uncle I mean you don't know him

Sam Parr

you wanna you wanna you wanna you wanna pip him out though I'm I'm trying to

Shaan Puri

Oh, I don't even know what his course is called. He's my uncle Vinny. We should have him on; he's got an incredible story, and his personality is amazing. He's the most joyful person I've ever known, almost to the point where people think, "Are you high or something?" But he's just like that 24/7. He's high on life 24/7. It's kind of amazing.

Sam Parr

So, Uncle Vinny is a great example. There's a good example of this. Now, the second one that I mentioned is like these masterclass businesses. These companies have a pretty clear path to reach around $100,000,000 a year in sales. What you do is create something that is in the $200 to $300 range for an annual subscription. You scale fast by buying a lot of ads. But before you do that, you have to create a pretty big library of course content, which can take many years.

Shaan Puri

I know quite a bit about masterclass do you want me to give you kind of like some of the interesting bits so masterclass they started by a guy went to harvard business school I believe and then he you know one of the core insights was he wanted to create what he said was the library of alexandria for alexandria or alexandria basically whatever the library was of like kind of like all the best of human knowledge at that time he basically was like I wanna create that of today's time and so he they spend upwards of half a $1,000,000 per masterclass just on the production value alone even their first one was over $500,000 and so the production value is like kind of insane it's like a hollywood shoot that they do personally I don't even know if that's necessary I think that's a nah that's totally overkill but that's their shit the bigger part was that they got the biggest brand name so they go if you wanna learn business well here's howard schultz from the ceo of starbucks you wanna learn basketball steph curry's masterclass you wanna learn comedy here's steve martin you wanna learn I don't know writing here's aaron sorkin and so they took the the a + + talent which is a key differentiator right because most of these online courses are like you said it's me it's ramit sethi it's like these like niche you know I'll just make fun of myself here right we're nobodies in the world compared to what masterclass went and did and then masterclass was like great I can take you know chef gordon ramsey's cooking course I can create a hype 32nd trailer and I can blast that on facebook ads and basically he gordon ramsey has enough brand pull that I can profitably acquire customers and so they do this with a bunch of creator a bunch of different course creators serena williams whoever else they cut a rev share deal with them so they give them an upfront kinda like minimum guarantee and then they have like a rev share on every course sold you know you get x and then they turned it into like a classpass style subscription where now you pay the $15 a month you get access to all of masterclass and I actually talked to the founder the ceo and I was like he's a great guy and I was like you know do people I took one and you know but like do people does does a person really wanna go learn cooking from gordon ramsay and then basketball from this person then tennis from serena williams like it seems like do I need the all you can eat buffet and like do I come back is the retention high and he just showed me the numbers he was like look we're we're making x 100 of 1,000,000 of dollars a year it's growing at this pace and look at the churn the churn's not so bad I said how do you keep the churn so low like for an education product like this and he goes when people take a masterclass it's they keep their subscription even if they're not coming back and taking a course every month why because it's aspirational they they have a dream of like learning photography they want that hobby to to exist they buy the masterclass and if they have one experience where they feel like their hero or their idol kinda shared a like a real nugget of wisdom with them that's enough to keep them hooked

Sam Parr

so I

Shaan Puri

thought that was pretty interesting

Sam Parr

And that's the thing that we should discuss. That's the downside of this business, as well as every other category that I'm mentioning. This freaks people out. I wouldn't even say it's retention, but it's completion. So, our good friend Nick Cooper launched a course, and he goes, "Dude, 200 people bought this. Do you know how many people finished and did the whole thing?" He was like, "The number is, if it's not this exact number, it's close... he's like 3."

Shaan Puri

he's like 8 or something yeah

Sam Parr

yeah it was like he was like nothing and I was like yeah man that's really normal

Shaan Puri

Well, he was being... he was like, "Dude, did I make a shitty course?" I was like, "No, this is the standard percentage completion." If you go to Udemy, I remember they had said at one time that only 6% of people complete the course. 6%, right? A hundred students come in, and imagine on the last day of the semester, only 6 people are left in the class. So, you know, for Nick, it's pretty much in line with those single-digit completion rates. That was a big problem with education online.

Sam Parr

And that sucks. Actually, I would say two things. First, for people getting into this business, just know that it's so weird that you're going to make all this money and you're crushing it, but most people don't even use the damn thing.

Shaan Puri

And by the way, they're not pissed. It's not that they used it because they didn't like the product. Often, it's just that life happened. They got busy and didn't follow through. If they're upset at anyone, they're upset at themselves for not actually taking the full action on the course. They're not upset with the course, which is counterintuitive.

Sam Parr

The second thing here is, is that even important? Is this even a problem worth solving? The answer, I actually think, unfortunately, is no. This is not a problem worth solving. People aren't going to take it; that is just how people are. We should move on and just make money off of it because just the fact that they buy is interesting. That kind of helps them in a weird way, just like you with books. Just like you with books.

Shaan Puri

It's like me with books. Yes, that's true, but I would disagree in that I do think it's a fight worth fighting for. Because if people aren't actually taking the course, ultimately they didn't get the real value of the product. This means they're not going to come back, and they're not going to tell friends to do it, which means your business is going to suffer. So, can it be done? Can you get above 6%, 10%? Can you get 30%, 40%, 50%?

Sam Parr

dude even that sounds fucking crazy to me

Shaan Puri

I've asked people who charge $5,000 per course. They said under 30% is still what they get as a completion rate. It's just insane because that's such a big financial commitment for people individually, not out of their company's pocket, but out of their own pocket. Just to spend that money and not complete is insane to me, but that's what happens. Now, Lambda.

Sam Parr

School, though, when we had cohort classes, like a live cohort class, it was like 75% completion.

Shaan Puri

Rate... exactly! That's exactly what I was about to say. Lambda School switched to live, cohort-based learning with a clear, high bar for entry. So, Lambda School, most courses—right? When Nick, Uber, Ramit, and myself sell a course, we want pretty much as many people as possible to take it. That's how you make your money, right? You're like a college; you want to admit as many people as you can, unless you're the top college where your brand is really about not accepting everybody. Similarly, with Lambda School, because they don't get paid until you get a job, their incentive was not to let any "Joe Schmo" in. Their incentive was, "Dude, we only want a student if we think they're actually going to finish this course and if they're serious about it." Because of the filter on the front end and the format being live and in a peer group, they had over 75% completion rates. Then, I invested in this company, Maven, for the same reason. They were saying, "Hey, we're going to make it easy for you to teach a cohort-based course." That was appealing to me because, so far, cohort-based courses are the only thing I've seen where people actually finish the course. So, we'll see.

Sam Parr

So, that is something we have to acknowledge when we're going through this process or discussion. Most people don't buy your stuff. They...

Shaan Puri

won't yeah

Sam Parr

and if you're doing really well like what did you say 70%

Shaan Puri

yeah

Sam Parr

Do it. So, it's kind of crazy that that's a pretty nutty, nutty thing. Now, to wrap up the master class, I don't know if I have to call this like a mass consumerism course, business category, I don't know what.

Shaan Puri

That is Linda.com, which would also be in this at the time. Now, Linda's more B2B, but when Linda started, it was a place to go learn anything, right? So, Linda.com, MasterClass—there's a bunch of MasterClass-type platforms. For example, there's a MasterClass, but instead of Steph Curry and Gordon Ramsay, it's famous YouTubers. They're called Monthly, I think. Monthly.com is trying to do the same thing as MasterClass, but their stars are social media stars, and I think they were actually doing pretty well. There's another one that's like MasterClass for athletes. It's like, "Okay, we're just going to take the vertical of sports." It was, you know, started by... is that a...

Sam Parr

call that's on sneak

Shaan Puri

Shit, I just talked to him the other day. This would be a perfect shout-out for him. I apologize that I don't have it off the top of my head, but basically, he was a trainer. He's a trainer for Kyrie Irving and a bunch of NBA stars. So, he's able to say, "Hey Melo, create your course," and "Hey Kyrie, create your course," etc. He can access top-flight stars in basketball because he himself is a basketball trainer. He creates a masterclass just for that group, just for that audience, which I thought was actually a pretty interesting model.

Sam Parr

a was his name aiden rabin

Shaan Puri

no I'll find the name let me ask ben real quick but yeah go on I'll I'll get the name

Sam Parr

So anyway, in order to make that style of business work, what you have to do is create mostly evergreen course content. The name of the game is to get as many as possible that meet some type of quality bar.

Shaan Puri

right

Sam Parr

And you just go big and try to create 100 of them or thousands of them. How do you...? The Great Courses is one example. I think they do like $150 million a year in revenue. I don't know about MasterClass, but I bet they're around $200 to $300 million. Alright, and then the fourth or the third category... So I had three categories: I had the small creator, I had tech stuff, but we're going to get rid of the tech thing, like Udemy.

Shaan Puri

Solo, solo teacher platforms like Udemy and Coursera. Then you have high-end libraries of courses like MasterClass. What else?

Sam Parr

Now here's the fourth one, and most interesting one, which is B2B education - corporate training type of stuff. Easily the biggest one, hands down. An example of this is Pluralsight. Have you heard of Pluralsight?

Shaan Puri

I've heard of it but I could I've heard the name before but I couldn't have told you what it did until this

Sam Parr

Beautiful, lovely name. It's geared specifically towards engineers and it just teaches the latest and greatest tech stuff that you give to your engineers. They go through this, and Pluralsight is one of them. There's actually a bunch more, and many of them do $300,000, $400,000, or even $500,000,000 a year in revenue. But this is where it gets kind of tricky. These businesses are based on one thing: salesmanship. You just hire a large sales team, go out to these companies, and sell. I went and asked the people at HubSpot, "Why do you guys buy this stuff?" They actually told me all about it. They said, "Well, basically, we're ranked really high on Glassdoor, and we recruit a ton of people. One perk that we have is that we give you $5,000 a year for education." Now, we could have bought Pluralsight, and that would have actually solved the same thing, which is we want to be the best place to work. We offer loads of perks, like we'll teach you X, Y, and Z. Another example of why these courses are important is that companies like Cisco or Microsoft have tests and exams that they want you to pass—certifications that they want you to pass in order to either get a promotion or just to put it on your resume that you have this interesting credential. Pluralsight teaches you how to succeed at those certifications, and they charge something like $600 a year per head. You just have to hire a sales team, give each salesperson a quota of $300,000 to $500,000, and say, "Here's the Yellow Pages, start dialing." That's why Pluralsight is based in Utah; because the Mormons are amazing salespeople. They've spent two years selling a religion to people, so they're really good at it. But this business is probably the biggest... but oddly, it's really not so much about the...

Shaan Puri

it's not about education

Sam Parr

It's not about education; it's about salesmanship. The way that you win this is by going down a very narrow niche. You hire subject matter experts—people who know their stuff. You pay them a flat fee, sometimes a royalty, but you prefer to do a flat fee because your gross margins will be significantly larger. Then, you go very niche and very role-specific. You sell into the HR and learning or learning and development budgets at large companies. This can be challenging because those are typically the budgets that are slashed first. However, they exist, and they have to be spent. So, pretty much, it's a game about getting inside with these people and selling to them. It may seem kind of lame, but there's money to be made.

Shaan Puri

Yeah, I wonder if somebody could do that. So, that's the way that most corporate software was sold too, until Slack and some others started this like "bottoms up" sales process inside companies.

Sam Parr

where they basically how it sold though

Shaan Puri

it isn't isn't but there's so bottoms up saas became its own category where the model was you make your software useful to even if the whole company doesn't adopt it you let an individual person kind of in the front lines or the middle ranks of a company start using it they use it with their team they're kinda like their sub team other sub teams start using it and then you go to the cio you have a meeting with them and you say hey by the way you know a bunch of your employees are using this thing you need to buy the like the enterprise version so that you have like security stuff like secured you have oversight over what's going on and that anybody in your company can get access to this right now it's everybody's putting down their own card and trying to make this happen and so that became a pretty popular model yammer was one of the first to do it then slack and others I wonder this would be the only way I would wanna do it if I was an entrepreneur going to the space because I wouldn't really wanna do the enterprise sales path where it's not really about the content it's just about the sales you know how good you are at sales as a company because if you go bottoms up you're really going off of making stuff that the individual employees actually want to learn from and then secondly you're only as good as as them sort of retaining or actually wanting to use this so I think that's a healthy thing in the end although it is harder actually than the other path so I wonder if there's a way to do that the hard part here is just like there's 6% completion rate for hobbyists trying to learn I think similarly you know for example I know that when when the learning and development team sends out an email at twitch I asked my team I said hey do you guys do any of these courses that there's a bunch of free stuff available here they pay for it you can just go take it like could help you and they're like yeah that's a good idea but like I just don't have the time like everybody feels overworked so the amount of time an employee's gonna carve out to just do optional education is so low that I just think that most of the things that live in the what's it called the learning manager whatever like the lms learning management system inside companies is untouched right it's just twinkie sitting on a shelf

Sam Parr

So that's exactly another thing. Not only is it about salesmanship, but basically these courses... the truth is, it's not actually about teaching your workers something good. It's about offering it, and if they use it, fine. But the fact that you offer it makes you look better, and you could hire more people. As I don't own my company anymore, but when I did, I would never have bought the stuff. I would've been like, "Look, if you want to take something, we'll buy you any book you want." I'm not... but we're not paying for these super courses because no one's gonna use them. But that's not how a big company thinks because they want me to put it on their perks and benefits. And here we are. But that is my very high-level summary of this course business. I was very curious as to how they work. If I was... well, I am... I'm not gonna watch any of this anytime soon. But the first one, the creator one, that's a no-brainer.

Shaan Puri

It's a no-brainer once you have an audience, right? If you don't have an audience, it's not really going to work. Then you're more in one of the other buckets. But I think you correctly identified that if you have an audience, it's a no-brainer business model for people with audiences. However, it also has a cap and takes up time, so you have to choose accordingly. Alright, let's talk about some other ideas. I have one that I saw today that I think is pretty interesting. It's called the Irish Pub Company. Did you see this tweet? No? So we got tagged in this. By the way, that's the best signal that we're doing something right. Now people just tag us in things that they know are the type of stuff we want to talk about. We've built the brand of, like, when you hear about a cool niche business that's crushing it—something so simple that you would have otherwise just never heard of. This is perfect for "My First Million." So, somebody tagged us.

Sam Parr

oh this is awesome

Shaan Puri

Our friend Chris, Chris J. Baki is his handle. I don't know if it's Baki or Bach; I think it's Bach. He tweeted this out, so shout out to Chris! He was on the podcast a while back. He's a super entertaining guy on Twitter; you should follow him. One of the things he said is, "The Irish Pub Company is one of my favorite companies." They charge $1 to $4 million for an Irish bar in a box, which basically means it's an Irish bar as a service. Here’s how it works: they give you, you know, like six styles to choose from for the style of Irish bar. They provide you with the Guinness signs, the right bar tap handles, and all the decor, the seats, and stuff like that. They ship it all to you and install it for you. And like bang, now you have an Irish pub! I think this is such an amazing business. They've done over 2,000 kits, and it's about $1 to $4 million per kit, according to him. I haven't researched too much more since this happened like two minutes before the pod, but that's over 30 years—that's $2 billion over 30 years that this company has generated just selling the Irish bar in a box. What they say if you go to their website is, you know, "Hey, here are the stats." The Irish pubs produce, you know, X more revenue than a traditional bar and have this much more foot traffic. Basically, it's saying, "Hey, if you throw this kit onto a generic bar, your bar is more successful; it'll pay itself back." What do you think of this business?

Sam Parr

So, the owner's name is **Mel McNally**, which is like the perfect name. He is the founder of the **Irish Pub Company** and the creator of the **Guinness Irish Pub concept**. He launched this in partnership with **Guinness Brewery**, which, based on what I'm reading from the about page, sounds to me like Guinness was like, "Hey, we need more Irish pubs to exist in this world so we can sell more Irish beer and Guinness beer. Can someone come and help us figure this out?" And that's how he started this. This is so cool! I love this!

Shaan Puri

Right, it's crazy. They're making... I mean, I think just looking at the numbers, if these numbers on their website are accurate, I think they're doing like **$50,000,000+** a year doing this. Just like the consulting, the brand identity, then the installation, the shipping, and then the service after that. It's pretty, pretty awesome. How'd this guy find it? Inside airports? They do it in, you know, just different cities, hotels, different stuff like that.

Sam Parr

how did your buddy find this

Shaan Puri

I have no idea. He just tweeted it out, so it's great. I don't know, I think this is such a cool concept. Then you can think about, like, okay, how many more concepts are there like this, right? So, I can think of, if you take any sort of subgenre, the question is: is there a market for that? So, I'll give you... let's just brainstorm for a second, right?

Sam Parr

Well, there's one great example that you brought up a long time ago, or maybe a year ago, that I think is probably killing it. That was "Bathroom in a Box." Yes.

Shaan Puri

made made renovations

Sam Parr

Yes, all they do is select one of five different bathrooms, and they come and make it. You can obviously do this for every single room in the home, but...

Shaan Puri

We talked about the guys who came and set up our video conferencing setup. You know, this good-looking setup that we have right now with the lighting, the audio, and the DSLR camera. The whole tech is set up, and the wires are taped to my table so I don't have a wire mess. I told the guys, I said, "Hey, you need to turn this into a home video conferencing studio in a box." You could do just like the bathroom guys did; you could do this in every city in America right now, especially with remote work, podcasters, Twitch streamers, and YouTubers. A lot of people want a cool video setup. If you just have four options to choose from on your menu, you now have simple operations and the ability to scale as you buy parts in bulk. I think that's another version of this, but just on the bar concept. I think there are a few more ideas. Any brand with licensed intellectual property (IP) could work. For example, could you create a Disney diner? You take IP that people love and create a bar or restaurant out of it, sort of like the Rainforest Cafe style. You could sell that as a "in a box" concept for any common establishment: coffee shops, diners, pubs, and so on.

Sam Parr

But aren't you confusing this "whatever this in a box" concept with franchises?

Shaan Puri

So, it's not... So, the idea would be you would partner with, let's say, I don't know, let's call it the Simpsons. You partner with the Simpsons franchise and you say, "Hey, look, for every one of these, wouldn't it be great if you could have, you know, I forgot what the bar is called in the Simpsons, but like whatever the name, you know, wherever Moe works or whatever?"

Sam Parr

yeah or do patty's pub

Shaan Puri

Yeah, you do. Exactly. You could have *It's Always Sunny in Philadelphia* and basically have Patty's Pub in a box. Every city should have a Patty's Pub. So, you go and say, "Every one of these we sell, you guys get 10%. You gotta do nothing more than let us use the name Patty's Pub." Now, you go to bars and say, "Hey, look, you as a generic bar have no differentiation of why tourists should come here or why the locals should choose you. Can you upgrade?" I think there are a bunch of different concepts that would work with this. One is gaming. Gamers have a deep passion. I lived in Denver, and there were some bars like this where the bar had old-school retro arcade machines. All the drinks and menus looked like video game stuff, you know, old Nintendo. They had life-size Jenga and whatever, right? It was a place to hang out. You could play skee ball or do whatever, and they just got way more foot traffic than a normal bar. Why? Because this one you would go to and have Instagram-worthy experiences. You would post in your story that you're drinking the Mario drink while playing Duck Hunt or skee ball or whatever it is. So, I think gaming is one niche, like an Irish pub, that you could show that if you kit your bar out with this, you're going to get more foot traffic and more sales.

Sam Parr

I would need to think about which of these could work, but this "in a box" thing is kind of interesting. I had a friend that did "Book in a Box," and they would write a book for you. I think it was making 8 figures in revenue, but it sounded like a real pain in the ass because it was far too customizable to be in a box. Whereas a pub thing probably isn't. That's way easier. That's like, you got running water, you got, you know, this many dimensions.

Shaan Puri

Well, this is basically just a set. It's one interior decoration theme that you just slap on, and boom, you got an Irish pub. Now, you didn't have a pub; now you got an Irish pub. So, I just wonder, you know, a) could you just compete with them? Or b) are there other themes that are, even if they're not as popular as an Irish pub, like what's the second most popular kind? Is it German? Is it, you know, an Asian style pub? Is it a Russian drinking bar? Is it...?

Sam Parr

I don't know

Shaan Puri

I don't think... Is it a wine bar? A tequila bar? What is it? Is it an Italian wine bar? I don't know.

Sam Parr

I I don't know you're asking a non drinker I'm I'm out of the loop on this one

Shaan Puri

I do have a different idea

Sam Parr

what's that

Shaan Puri

That I think is kind of interesting to chat about. So, clear ice. Have you ever heard of clear ice?

Sam Parr

what is it

Shaan Puri

This to me feels like... I'll find you the URL. Go to clearice.life. So, clearice.life. This is not something I would do, but I've learned that these things that I just shake my head at and think, "Who the f*** wants to do this?" I learned the hard way that like 3 years later, it's like, "Yeah, this is like a hobby that a lot of people have that's growing like crazy." Here's another example of this: You know, like SodaStream. I think you probably do SodaStream, right?

Sam Parr

Dude, I have a video on TikTok. It's one of the only videos I ever posted, and it got like 200,000 views because I attached a scuba tank-sized CO2 thing. I rigged it to my SodaStream so it can last like 3 years versus having to constantly replace the canisters. Yeah, I love SodaStream!

Shaan Puri

so the first time I heard this I was like oh you like make your own sparkling water at home like what's the fucking. Of that like why

Sam Parr

don't you sodastream is like a $5,000,000,000 a year company or something

Shaan Puri

I know that's my... When I heard about it, I was like, "Who would want to do this? Why is this a hobby? Who wants to do this at home? Why is this a DIY category?" But it was a huge category, and like, you know, it got bigger and bigger. Craft beer is the same thing. I remember like a decade ago, these guys were brewing their own beers, and I was like, "Why? There are so many beers. Why don't you just go buy some?" Then, over time, more and more home brewers and craft beer enthusiasts emerged.

Sam Parr

Have you ever met a white guy before? There are two jokes about white people: they always have bottle openers on them, and they love brewing their own beer at home.

Shaan Puri

Yeah, basically, this category is just stuff I observe white people do, and I'm confused about. Another one is there are a bunch of these extreme coffee habits that people have, like pour-over coffees. Anyway, there are a whole bunch of these little niche hobbies of DIY things that I don't understand, but they definitely are big, and they create a whole ecosystem of businesses around them. So, clear ice is the latest one I saw, and I was like, "What is clear ice?" Clear ice is basically... I might not even fully understand this; that's how white this is. So, you translate this for me. What I understand is it's like an amazing piece of ice. Not just the stuff you get out of your fridge or your little tray, or the stuff you buy in a bag, but it's like this is high quality. It's super clear; there are no impairments or anything in it, so it doesn't flavor your drink. If you're drinking whiskey, it won't affect the flavor of your whiskey. It's also one big cube, so there's less surface area, which means it dilutes your drink less.

Sam Parr

well you knew that right

Shaan Puri

I didn't think about this stuff. I don't care. I just put the ice in, I drink by drink, and when it gets diluted, I drink it. It's kind of gross.

Sam Parr

haven't you it's like they sell

Shaan Puri

these like whiskey ice yeah

Sam Parr

Yeah, they sell these cubes or balls. It involves surface area, melting, and diluting your stuff slower.

Shaan Puri

Right, and so, anyways, this hobby... this is like some stuff that you would find in the hustle trends thing. This is my own little contribution to trends. You know, Steph Smith, if you're listening, put this in the news! Go research this. My spidey sense is tingling that this is one of those little niche hobbies that you could sell products, information, courses, whatever. There are a lot of people that want to make their own homemade ice. Again, I could barely understand why, but it's a thing that people are doing. I bet you that there's a movement to be had or a sort of wave to surf if you want to build a business around this super niche hobbyist business.

Sam Parr

Dude, no. I'm not on board with this. I think this is stupid. First of all, is this even that big? It's clear.

Shaan Puri

I saw it as part of a growing trend. I don't know if it was a subreddit or where I saw it, but I noticed it in a way that made me think, "Oh, this is one of those things that's popular, and I don't understand why." It's like ASMR... what is that?

Sam Parr

asmr is awesome so don't you better be careful

Shaan Puri

That's how all those felt to me at the beginning. I was like, "This is weird. People do this?" And then, like, yeah, a lot of people want this and do this.

Sam Parr

Yeah, look, I'm looking around on Google. I get it. To me, this sounds like a pretty tiny thing, but it's tiny enough that you could make a pretty good living doing it, though. Like, I knew...

Shaan Puri

Yeah, all you want to do is catch these early, right? You want to catch them when they're somewhat tiny but very passionate. The bet you're making is that the passion, the tiny passion, will stay and the tiny will not. That's pretty consistent. When you have the passion there, the passion stays, and the tiny becomes medium size, then becomes large over time.

Sam Parr

Yeah, I guess it could work. I mean, I'm looking... I'm trying to look it up. There was this other one, a home brewery company that I... for a long time, I didn't know that people, basically beer nerds, track all the beers that they've ever tried. I interviewed a guy to work at The Hustle, and he worked at one of these companies. It was like tens of millions, maybe even close to a hundred million dollars in revenue. All it was, was an app where you could track all the beers that you drink. So, put that in that category of things I have no idea exist, and also, they don't excite me.

Shaan Puri

Alright, let's do one more real quick. Okay, here's one that I'm just curious about. I don't have ideas around this just yet, but let's do an off-the-cuff brainstorm. There's this article that came out about the amount of space that is now available in San Francisco because of work from home. There is some absurd amount of vacant space. Companies are taking $10 million or even $100 million write-offs on their real estate just to get out of it and move on. They're just writing it down. So, here are some of the numbers: there are $200 million of real estate impairments in the past year since COVID. It's almost $1 billion if you add in the lease-related write-downs from large companies like Salesforce, Dropbox, Uber, PayPal, and Zendesk, all getting rid of their real estate. Dropbox itself has $400 million of impaired real estate right now. They think that in this quarter, Q1 of... sorry, the last quarter of 2021, the amount of vacant and sub-leasable space was 10 million square feet. In 2019, that was 3 million. So, it's tripled the amount of available sub-leasable square footage. The companies are basically saying, "Hey, it costs us $90; we'll take $20 for it." So, you're able to get real estate for about one-fourth of the traditional cost.

Sam Parr

now we're talking this is a good I yes this is an interesting

Shaan Puri

Real estate. So, what comes to mind? What do you think of when you hear about this opening that's in the market?

Sam Parr

Okay, for the sake of discussion, let's just assume that San Francisco has a bunch of wacky laws. I mean, like, can't...

Shaan Puri

do with things

Sam Parr

Yeah, and they also have some really crazy tenant... what's it called? Rent-controlled stuff. So let's just assume that we're going to research these laws later. And isn't that a big deal?

Shaan Puri

let's assume we're never gonna research these laws that's what it's really is

Sam Parr

But, so what could you do with this arbitrage? I mean, the obvious answer is like WeWork can make a killing right now if they believe in their model. Can they just go ahead and do the thing where they lease a lot of it up front and hopefully they can fill it? But what else could you do with this? I don't know, man. That's a hard question. What would you do?

Shaan Puri

I don't know. Yeah, I think you have to see what you... I think you want to think about it this way: where is demand growing for space? Being central in a city would now make a very big difference.

Sam Parr

cloud kitchens

Shaan Puri

Cloud kitchens, cloud grocery, and convenience stores—like cloud corner stores, basically like "fridge no more" or something like that. I think those are kind of interesting because of services like GoPuff. You have a whole bunch of people in the city, and now when they push the button, they get their items in under 10 minutes. They took a floor in the bottom of the Salesforce Tower; you know, the second floor is now all robo convenience stores that will just quickly deliver to you. So, I think you have to find something like that. Maybe it is WeWork-style co-working spaces, but there's got to be something else you could do with this prime real estate. Maybe there's something in education where you create a distributed campus across a whole bunch of different cities. For example, you could take a business school, like Harvard Business School online, which they have, and say, "Great! You can attend Harvard Business School online in downtown San Francisco, downtown LA, and all these places," because that's where that type of clientele wants to be. Now, you get a once-in-a-lifetime opportunity to lock up that real estate at a fourth of the cost. I don't know, those are just some random ideas off the top of my head.

Sam Parr

The list... I think that's quite an interesting idea. That's actually a good idea because that would... yeah, it's some, you know, it's like the equivalent of a study abroad, but you're just going to do it in San Francisco, right? Which was prohibitively expensive for the longest time. That is actually kind of an interesting idea. So, do you know what the price per square foot is right now? Because he's saying...

Shaan Puri

in this they were

Sam Parr

saying 25

Shaan Puri

They were saying **$20 a square foot**, which is like... that's an annual number, right? So it would have been **$90 a square foot annually**. Now, **$20** is kind of what's quoted in this CNBC article.

Sam Parr

do you know how that compares to like in austin like a more like a sea level city

Shaan Puri

I don't know. I think that is like what a mid-level city would have been without the pandemic. That's my guess, something like that. I think San Francisco was 4 to 5 times more expensive per square foot than, you know, a B-level city.

Sam Parr

You know, I think that I've been living in Austin now for just a handful of months. I miss San Francisco dearly. I do think that if you're starting a company now and you have a good-sized workforce, it would be interesting to try to sign a lease that you can book out for 5 or 10 years. I do think it's going to roar back eventually. I mean, I think that's the opportunity.

Shaan Puri

Here's another one. Let's say you're a venture fund, or a late-stage venture fund. What if you took the real estate and then basically any of your companies could just use this and pay you the, you know, pay you market rent or slightly above, maybe slightly below? So, all your portfolio companies now have their real estate problem solved, and you know, you could place them because of that.

Sam Parr

Dude, people were shitting on WeWork, myself included. I think now it's like, this makes sense in a lot of these cities—the WeWorks of the world. Not only that, I think that they're just going to come back like crazy because every employee says the exact same thing: "Well, I would love to work from home for a few days a week."

Shaan Puri

yeah exactly it's

Sam Parr

like well dog I can't pay rent a few days a week if I have my own lease

Shaan Puri

right I'd love to diet a few days a week

Sam Parr

Yeah, so I think that like the Saunders of the world and a bunch of these other companies that didn't do so hot for the last two years, I think they absolutely can be started right now. It sounds crazy, but I don't think it is even a little bit.

Shaan Puri

bro I loaded up on airbnb stock today

Sam Parr

oh my gosh I'm devastated I I've been seeing it go down where where is it at now

Shaan Puri

So, it's going down because the lockup ended. I don't know if you guys sold your shares or not, but the lockup ended, so people could start selling. This put a bunch of downward pressure on the stock. Plus, the market in general is struggling.

Sam Parr

out wait did it end I thought oh did it end I didn't even know

Shaan Puri

I thought

Sam Parr

it ended in june I think it ends in june

Shaan Puri

I think it's 6 months for some for for I think for some insiders at least

Sam Parr

they can dump

Shaan Puri

they can dump today

Sam Parr

why on earth would you ever dump airbnb stock right now

Shaan Puri

But I bought it because, A, I just... I'm stupid. I just buy stocks when I feel like it. But B, I saw some data that was showing how a huge amount of Airbnb bookings— I think 28 to 30%— are actually... I don't remember the exact percentage, but it's a very large percentage of Airbnb revenue or bookings that was coming from stays longer than 30 days. Now, this means that it's actually not just vacation rentals. You know, it's actually millennials just saying, "I want to stay here for a little while." I think that's a pretty big trend. People are saying, "I don't want to buy. I don't even want a one-year lease; that's too much commitment." How do I hop from place to place? Similar to what you did last year, dude. So many 28-day-plus stays.

Sam Parr

I think that is actually an interesting trend that people should take advantage of. We actually have a guy coming on the podcast named Bill Smith. I guess his name is like a real generic name. He started a company that sold for around $600 million based in Alabama. It was like an Instacart competitor. He's got this new company called Landing. Do you know what I'm talking about?

Shaan Puri

yes

Sam Parr

What's the URL? It's called something like "Landing Home" or "Home Landing." But anyway, what it is, is they lease out apartments in different places. They take the whole lease and then sublease it for people who want to stay for a month. The thing about Airbnb is that they actually charge a fee—10% if you're staying for two weeks. If you're staying in New York, like I'm going to be moving there for 3 or 4 months, it's prohibitively expensive. So if my rent is $10 a month, I'm paying $1,000 a month just in Airbnb fees. If I could figure out how to reduce that fee to something that makes sense for the longer term, I think that in the future, people like us—and maybe a little bit younger—will find it incredibly normal to live somewhere for 9 months and somewhere else for 3 months.

Shaan Puri

right

Sam Parr

And so, if they could figure that out, it's huge. But do you agree that, like, would you consider living somewhere for three months out of the year?

Shaan Puri

for sure I plan to do that yeah

Sam Parr

where are you gonna go

Shaan Puri

I have a little baby right now, so it's just a bit tricky. But yeah, that's the lifestyle I'm going to live: living in one place and then the other place for 2 to 3 months out of the year.

Sam Parr

without sounding like a total douche is this a rich guy thing or do you think that like lots of people are gonna be doing it

Shaan Puri

Well, you could do it economically. I know a lot of people that did this and made money doing it. It wasn't just a rich guy thing. They live in San Francisco predominantly, and then they Airbnb their San Francisco place for a month. They go live in Mexico or South America, and actually, they make money while traveling because the San Francisco Airbnb costs more. They're able to charge more for that than they pay in South America.

Sam Parr

My mortgage, insurance, and everything at my house costs about $4,510 a month. I think that we're going to get about $10 a month when we rent it out. Amazing! We've already booked a place. I'm living in Brooklyn from July to September, and I plan on doing that indefinitely. I think a lot of people are going to be doing that as well.

Shaan Puri

cool I gotta run I gotta get out of here but good episode we're out