Jesse Pujji on Bootstrapping a +$1B Business + Selling To The Ultra Rich

Digital Marketing, Ultra Rich Clients, and Nelly - August 26, 2024 (7 months ago) • 01:07:14

This My First Million podcast episode features Shaan Puri and Sam Parr interviewing Jesse Pujji, a successful entrepreneur and former Goldman Sachs associate. Jesse shares valuable insights from his entrepreneurial journey, including the importance of targeting wealthy clients and leveraging unique insights. He also recounts entertaining anecdotes from his career.

Aux Insights: Jesse discusses his successful private equity consulting business, Aux Insights. He explains how he identified a need in the market for marketing due diligence and value creation services for private equity firms dealing with digitally native companies. He emphasizes the importance of understanding demand and finding a "starving crowd."
Selling to the Rich: Jesse highlights the advantages of selling to wealthy clients, such as private equity firms and hedge funds. These clients are less price-sensitive, rational, and value certainty, making them ideal customers.
GLG and Early Ampush Funding: Jesse shares how he and his co-founder leveraged GLG, an expert network, to conduct market research before launching Ampush, their first company. They later used GLG as experts themselves and even sold research reports generated from their expertise, effectively bootstrapping Ampush’s early funding.
Kahane vs. Growth Assistant: Jesse compares two of his ventures, Kahane, a plugin for e-commerce sites, and Growth Assistant, a marketing talent agency. He explains how Kahane, despite being a "cool idea," failed due to a lack of demand, while Growth Assistant thrived by directly addressing a market need.
First Rain and Information Arbitrage: Jesse discusses First Rain, a software tool that alerts hedge funds about company news. He points out the high profitability of selling information to these clients who prioritize valuable data. He proposes a similar business idea leveraging aggregated Facebook ad spend data.
Red Ventures' Success Story: Jesse details the impressive growth of Red Ventures, a company known for its unique culture and operational efficiency. He outlines their four main levers for value creation: traffic acquisition, on-site optimization, pricing strategies, and lean staffing.
The Importance of Private Equity Understanding for Founders: Jesse advises profitable founders to understand private equity and roll-up strategies, highlighting how they can significantly increase a business's value.
Jesse's Early Facebook Story: Jesse recounts a story of how he and his co-founder attempted to build a high school version of Facebook in 2005. He even called Mark Zuckerberg, posing as a competitor, to learn about Facebook’s strategy.
Finding Fulfillment over Financial Success: Jesse, Shaan, and Sam discuss the importance of pursuing work that is personally fulfilling, even if it doesn't lead to maximum financial gain. They share anecdotes about missed opportunities with companies like Facebook and Airbnb, ultimately emphasizing the value of finding joy and purpose in one's work.
Nelly at Jesse’s 40th Birthday Party: Jesse shares the entertaining story of how he managed to get Nelly, a famous rapper from his hometown, to perform at his 40th birthday party by providing valuable business advice and assistance.

Transcript:

Start Time	Speaker	Text
00:00	Shaan Puri	Said a couple of interesting things, so let's break this down.
00:02	Jesse Pujji	We have no money; we're bootstrapping. Let's get ourselves on GLG as experts. I'm like, "Okay, my charge is $500 an hour." She goes, "No problem." But we talked to someone after a few weeks, and he goes, "Do you guys have research?" We looked at each other and we're like, "Yeah, yeah, we have a report. It's $5,000." So I always joke that was AMP pushing angels around. We raised $150,000 selling research reports to hedge fund people. That's pretty sick.
00:25	Shaan Puri	That's an amazing story.
00:26	Jesse Pujji	And by the way, there are 8 of them that all have like high 8 or low 9 figures in EBITDA. The whole category has just crushed it.
00:32	Shaan Puri	The two takeaways from this, by the way, are: sell to the rich and then your way of figuring out what they need was... "Jesse, what up dude? How are you doing, man?"
00:49	Jesse Pujji	What's up, guys? I'm pumped to be on here.
00:51	Shaan Puri	Good to see you! Where should we start? You sent us a document that had a bunch of cool ideas in it. Which one do you want to start with?
00:56	Jesse Pujji	Yeah, I mean, maybe some of the stuff we've learned at GatewayX as we've been building new ideas. I think the idea I'm most excited about, which I think Sean, you and I have talked about, is Aux Insights.
01:06	Shaan Puri	Sam, do you know about this business?
01:08	Sam Parr	No, what is Aux Insights?
01:10	Shaan Puri	Oh dude, this is sick! Okay, so tell us about this business.
01:12	Jesse Pujji	You're gonna love it, Sam. So, you know, one of the things that I've learned while starting new businesses—some of which you guys probably know, like Kahane. Sean, you were a customer of it. It failed, or we stopped doing it. One thing I've learned sitting in this seat is that it's really important to understand demand. There has to be a customer who has a problem that you need to solve. That's how I stood up Growth Assistant. I already knew people needed it, so I just launched it, and it immediately started to work. I started my career in finance and consulting. I went to Penn and have a million friends who are in private equity. After we sold Ampush, I would get a call from one friend once a month, without fail, who worked at Blackstone or TPG or one of these fancy private equity firms. They'd say, "Hey, I have this deal in front of my investment committee. It's a $1 billion company, and I'm getting asked all these questions about their Google and Facebook ads. Jesse, what if they don't perform well? How do we know they're good at them?" They're asking me to look at the web traffic and make some analysis. Jesse, I have no idea, and my investment committee is not happy because I can't convince them to buy this business. What should I ask them? So, the first few calls, I'm like, well, the same thing any of us would do: "Go look at Google Analytics. How many creators are they testing?" My fourth guy was like, "Dude, can you just do this for me?" I'm like, "You know me, I'm like, well, yeah, a couple hundred thousand dollars, I'll do it for you." He's like, "Oh, that's it? Yeah, done! Let's go do this." So, Aux Insights is essentially a private equity consulting business that works for private equity firms, specifically in the office of the CMO, focusing on marketing-related diligence and what's called value creation. Value creation happens after they buy the business. They want you to spend time helping them put together a strategy for how to grow the business. There are businesses like Accordion, which is a cool example. They have $300 million in revenue and $100 million EBITDA, and it's only a 12-year-old company. They do the same exact business for the office of the CFO, so anything finance-related. Yeah, Accordion. I mean, you could look at LEK, which has $800 million and $250 million in EBITDA. McKinsey has an over $1 billion business just for private equity firms, and it's got 55% EBITDA margins.
03:14	Shaan Puri	And when you say "their office," their CFO... So let's break this down. You said a couple of interesting things. The first was, it's a lot easier to succeed in business if you first find the starving crowd—find the really hungry market. Versus how you and I, Sam, like started out. At least I should just speak for myself. I don't know if you did the same thing, but I would always be like, "What's a cool idea?" or "What's something I could make?" or "What's something that seems easy to do?" It was easy at the start because it's so familiar or it's just nearby. I had no idea about the demand, or the demand was all in other broke people like me. So it's going to be really hard to sell and make money, or I need so many customers to make money. Whereas you're like, "Well, let me work backwards. Who are the richest people and the richest companies?" It's like private equity, hedge funds, that type of customer.
03:58	Jesse Pujji	They're not price sensitive at all; they're urgent.
04:00	Shaan Puri	And they're super rational. They're like, "Cool, if I can buy something for $100,000, but it's gonna help you make a $10,000,000 decision, great!" You know, the math... I'm in. So they're wealthy, they're not as price sensitive, they're rational. In your case, you figured out what the need was because you had one fortunate circumstance, which was that they were calling you to ask about this thing. What you built was like a marketing due diligence. They're looking at a company and need to know: Are the digital ads performing very well? Not so good? Are there any red flags or concerns? In the same way that if I want to go buy a company and I get a bunch of financial statements, I might ask a super financially literate friend.
04:42	Jesse Pujji	To go look at it, yeah.
04:43	Shaan Puri	Yeah, like, "Hey, my accountant, can you look at this? Can we do a quality of earnings? Can we get some understanding of whether these numbers are solid or not?" They are really financially literate, but they're not as Facebook Ads, Google Ads, and Pinterest Ads literate as you are. So, you're providing that diligence. Then, after they buy, you're like, "Cool, and then we'll help you leverage some strategies that might be able to grow this thing after you buy to create the value," right?
05:06	Sam Parr	You should get background. So, you started and sold Ampush for some tens of millions of dollars, I think.
05:11	Shaan Puri	Visual Marketing Agency
05:12	Sam Parr	And then, with that money, you went and started Gateway X, which is almost an incubator.
05:18	Jesse Pujji	Yeah, we call it a studio, Mitol Co.
05:20	Sam Parr	Where you have started 3, 4, or 5 businesses.
05:23	Jesse Pujji	We started with 6. We've shut down 2. One is kind of going sideways, 2 have crushed it, Aux being one of them, and one is new.
05:30	Sam Parr	Got it. Okay.
05:30	Jesse Pujji	And let me jump in and say two things. What we call it at GatewayX in the studio, Sean, is that we have to have a unique insight and an unfair advantage. I want to build, like, in 10 years, I want this holdco studio thing where we've got 5 to 15— I don't care what the number is— operating companies. They're all profitable, compounding on top of each other, and we've got this super cool culture of builders basically inside of it.
05:53	Shaan Puri	You don't raise money at the start for them, right?
05:55	Jesse Pujji	We don't raise money. We tried it with Kahane, as you know, and it didn't work. It just wasn't for me. I shouldn't say it was fine; it just wasn't for me.
06:02	Sam Parr	What... what’s Kahane? Well, there’s a...
06:03	Jesse Pujji	Great example of Sean's... of like a cool idea. So, you're gonna think the idea is cool the second I tell it to you. In a "shitty idea" business, I was like, "Look, eCommerce sites look like they're 10 years old." Meanwhile, Instagram and TikTok have got these full vertical videos. So, let's make a plug-in to let eCommerce companies change themselves to look more like TikTok and Instagram. The first product was the little stories navbar at the top of every eCommerce site. We had it on Sean's site, and I was like, "Oh, people are gonna engage with it. The content's gonna look bigger." We launched it, and everybody thought it was a really cool idea, right? But nobody actually shot...
06:40	Shaan Puri	By the way, I thought it was an awesome idea. In fact, I kind of still think it's an awesome idea.
06:43	Jesse Pujji	It is a good idea, but it doesn't solve anybody's problems. Nobody's lining up for it. Then we're like, "Oh, it's improving your conversion," but then it's like, "Well, I'm not sure it's improving our conversion." It kind of seems like people engage with it, and then people are like, "It's kind of slowing my site down" or "It takes me too much content," and they just rip it off the site.
06:59	Sam Parr	Was it basically just a plug-in? It's a plug-in thing. Plug-in.
07:01	Jesse Pujji	So, I mean, we had a big vision for it, right? You'd have landing pages, and you could put your influencers on. I still think someone's going to figure it out. But I sat there, and I was like, I got this other business, Growth Assistant. And here's a funny story; you guys will like this. We go to ShopTalk, and you know, ShopTalk matches you. I have one sales guy from Kahane and one sales guy from Growth Assistant, and they both do the matching thing. The Kahane guy gets 3 meetings, while the Growth Assistant guy gets 25 meetings, one selling marketing talent in the Philippines. I go, "Man, if there's ever a signal for solving a problem versus just a cool thing, this is it." That was like one of the key decisions where I was like, I don't want to do this anymore.
07:36	Shaan Puri	And with Ox, so with Connie, he's like, "Yo, you wanna invest? We'd love to have you on board. Here's a deck." I'm looking at it, and I'm like, I kinda like the idea, but I'm not fully sold. So I ended up not investing with Ox. He half tells me the idea through text message, and I'm like, I gotta invest in this somehow, right? Even I was like, instantly, I was like, "This shit's gonna work. This is a great idea. Much easier to solve." One really cool thing I heard Jessica talk about earlier when you were doing Ampush, you signed up for GLG, which is an expert network. Basically, rich dudes on Wall Street will call you and be like, "Hey nerd, you know a lot about this biotech thing?" or "You know a lot about newsletters?"
08:15	Sam Parr	It's like if a banker is about to take a company public, like an email software company. They want to talk to all types of users of email software and ask them questions so they can have more conviction in their decision.
08:26	Jesse Pujji	Yes, and by the way, there are 8 of them that all have high 8 or low 9 figures in EBITDA. To be clear, there's Guidepoint Global, there's AlphaSights. The whole category has just crushed it.
08:37	Shaan Puri	And it's basically like if Brad Pitt called you and was like, "Hey, you ever been to this Italian restaurant in New York?" He's going to take a supermodel there, but you've been there. And he's like, "How's the parm?" And you're like, "That's pretty good, actually." And then they're like, "Cool," they hang up. You don't know why they asked you.
08:48	Jesse Pujji	And they pay you $1,000 for the feedback. Well, here's the story of GLG; it's hilarious. So, I don't usually tell this part of the story, but it starts earlier. Young Jesse is an associate at Goldman Sachs. He decides my best friend, who is my cofounder's hedge fund, blew up during the financial crisis, so he doesn't have a job. He kind of sits around and says, "I don't want to get a job, Jesse. I want to start something." He gets me excited enough that I'm like, "Alright, I want to start something too. Let's go start something." In a few months, I give my notice at Goldman. They're like, "Take 90 days to wind down." I was like, "Hey, do you mind if I use the firm's resources to research my future business idea?" Goldman, by the way, probably has a multimillion-dollar subscription with GLG, so we have unlimited calls. They don't charge us per call because at Goldman, they're paying them so much money. So, my cofounder and I line up three phone calls a week with digital ad experts and lead generation people. We research e-commerce; you name the category, we were talking to an expert in it for like the 90 days before I left Goldman. We also had all the sell-side analysts come and tell us what internet trends we should be paying attention to. This was the research before Ampush started because I was 24 or 25 years old. Then I start Ampush. QuinStreet, which you guys may or may not know, is a publicly traded lead generation business. It goes public, and the same thing happens. A couple of my hedge fund friends call me and go, "Dude, isn't this what you're doing?" I go, "Well, here's what you need to look at and here's how their margins work." Then I get the idea: "We have no money; we're bootstrapping. Let's get ourselves on GLG as experts." So, I call my old rep and say, "Hey, can I be an expert on your GLG?" They ask, and she goes, "Yeah, we need someone." I'm like, "Okay, my charge is $500 an hour." She goes, "No problem." So now, my cofounder and I are doing, on the other side of the marketplace, five calls a week. We're making $2,500; it's good money. But we talked to someone after a few weeks, and he goes, "Do you guys have research that you can put together? The way you're explaining it is so helpful." We look at each other and say, "Yeah, yeah, we have a report. It's $5,000. I'll send you guys a report you can link to; it's super outdated."
10:45	Jesse Pujji	It's a 50-page report. It's going to explain the lead generation industry to you and tell you who the competitors are... blah, blah, blah. He's like, "Yeah, I'll take it." So we basically spent four days, all weekend, putting this report together. Then GLG is like, "Hey, we're getting a lot of other questions about this report. Can you sell more of it?" By the time it was all said and done, we sold 30 of the reports. So I always joke that was "Am Push's Angels" around. We raised $150,000 selling research reports to hedge fund people. That's insane!
11:11	Sam Parr	Alright guys, really quick. Back when I was running The Hustle, we had this premium newsletter called Trends. The way it worked was we hired a ton of analysts and created a sort of playbook for researching different companies, ideas, and emerging trends to help you make money and build businesses. Well, HubSpot did something kind of cool. They took this playbook that we developed and gave to our analysts, and they turned it into an actionable guide and a resource that anyone can download. It breaks down all the different methods that we use for spotting upcoming trends and identifying different companies that are going to explode and grow really quickly. It's pretty awesome that they took this internal document, which we had for teaching our analysts how to do this, and transformed it into a tool that they are giving away for free. Anyone can download it! So, if you want to stay ahead of the game and find cool business ideas or different niches that most people have no idea exist, this is the ultimate guide. If you want to check it out, you can see the link down below in the description. Now, back to the show.
12:04	Shaan Puri	I don't know if you heard on the pod, but Anand from CB Insights did the same thing. Did you hear his story? He basically... no?
12:11	Jesse Pujji	He sold a PDF and turned it into a huge business.
12:14	Shaan Puri	Well, he started with the PDF and he's like, "You know, he's trying to charge like $500." Then he's like, "The best thing that ever happened to us was my buddy was like, 'No, no, no. You need to charge like $12,000 minimum, $25,000 as your medium, and then have a $100,000 option.'" He's like, "Dude, it's a PDF. Are you sure?" And that's okay, right? So they didn't... they made like $300 that year.
12:35	Jesse Pujji	A Giffen good, yeah, right. It gets more value when people think it's more expensive. I mean, that's for pricing. For us, we charge $50,000 a week for a team of consultants, and McKinsey, Bain, and BCG charge $200,000 a week. So our argument is we're 75% cheaper than them but way better in our world of online marketing, you know, in the world that we know extremely well.
12:56	Shaan Puri	How come you don't charge 75% more and say, "We're better"?
12:59	Jesse Pujji	That was so... one of the things I didn't tell you. When my friends were calling me, I was like, "Isn't there someone who does this? Why do you keep calling me about this?" What they told us, this is part of the market research, was they said, "Look, McKinsey, Bain, and BCG are $200,000 a week, and they're not practitioners of marketing, Jesse. They don't actually know the answers." Every time we ask an agency, they come back with recommendations like, "Change your match types" or "Do more lookalike audiences," or whatever. And they're like, "We don't know what the f*** they're talking about. We don't understand what they're saying." What they want is, "You do this, and this much revenue and EBITDA will come." So a big part of our work is literally just translating marketing levers into revenue and EBITDA terms so that they can actually understand what they're going to spend money on or what the risk levers are in the business.
13:40	Sam Parr	Run fake ads, like, you know, a lot of people when they have a company, they'll be like, "We want to make this product, but we're not actually sure if anyone's going to buy it." So, they make an ad for the product that doesn't exist. Sometimes the landing page will be like, "Oh, you caught us a little bit too soon, but let us know if you want this," whatever.
13:56	Jesse Pujji	We've done it in value creation, but we haven't done it in diligence. Diligence is like, you've got 4 weeks. They're trying to determine whether they want to buy the business, and you're just like, you're head... you have so much data. You have to figure out what's going on and be able to give them a smart answer. In value creation, you have 12 or 20 weeks sometimes, depending on the engagement. There, we will definitely run experiments, we'll make ad changes, we'll do all these things, and come back to them and say, "Hey, this is a good idea; this is not a good idea."
14:17	Sam Parr	So, to make this actionable, like even for me, Sean, or the listener, what do you look for? What can I look for in my business? I assume, obviously, this is only if you are running digital ads, like Facebook and Google ads. What can you look for to determine if there's an opportunity here or if this is stupid and you should shut it down?
14:33	Jesse Pujji	Yeah, I mean, we approach it in a few different ways, right? One is top-down. We use Veros and a couple of other third-party data sources along with our own data to figure out benchmarks for the company. So, if you're an e-commerce business selling water bottles, what should your click-through rate be? What's your conversion rate by channel? That's our top-down way of assessing where they stand. You can get that data anywhere online. Then, the bottom-up part of it is, for example, for Facebook. We'll ask, "Is the account structured correctly?" Oftentimes, there are too many ads trying to break the signal in too many different places, and it needs to be consolidated. The other question we'll ask is, "Is their event match quality good?" Oftentimes, these old-school companies owned by private equity have a match quality of like 3 out of 10, which means Facebook's signal is super poor for them. I bet Sean's company and most startups have a match quality of 9 out of 10 because they've made sure Facebook's getting all the right data. Then there's all the creative stuff. The easiest thing is when someone says, "My performance is bad." I ask, "How many creatives do you test a week?" And they say, "Oh, we do 2 a month." Well, of course, your performance is going to be horrible, right? Creative testing is one of the easiest levers to pull in terms of improving.
15:38	Sam Parr	The Facebook business that you're looking to buy has all these things that they're doing wrong, and they're still succeeding. For you, you're like, "There's opportunity here. If they get this right, you're going to be even better at providing this."
15:50	Jesse Pujji	Exactly, and size, right? So the key deliverable, the first five slides of every deck, are: 1. Here's the grade for every channel. 2. Then here's the waterfall that says what's your current EBITDA. 3. If you improve the things that we think in a pretty moderate way, here's what your EBITDA of the business could be. That's the money chart for a private equity guy. That's pretty sick! Yeah, it's a super cool business. Honestly, the validation that we've gotten is the other cool thing. One of my other tests for a business is if, in my discovery phase, people start asking me to buy it. I know I'm on to something. That's what happened with Growth Assistant. That’s what happened with Aux in the early days of Ampush. I was like, "Hey, this is an idea we have. We want to get you offshore marketing people." And they're like, "Can I get one of those people?" I'm like, "Oh, okay, we're good." Same thing with the private equity. I called some of my buddies and said, "Here's this idea we have. We want to do this." He said, "Oh, I actually have a deal right now. Can you guys start looking at it?" That's awesome!
16:36	Sam Parr	How big is this business now? Is it a year old? Could you say like 1?
16:40	Jesse Pujji	A year old, say it's like $5,000,000. It'll do $5,000,000 this year.
16:42	Sam Parr	Dude, that's insane.
16:44	Jesse Pujji	Yeah, it'll do $5,000,000. And we, by the way, invested one-tenth of what we put into Kahane into it.
16:48	Shaan Puri	And by the way, Sam, I think the key is... because you were like, "What are the marketing levers?" He gave you as good an answer as you can get without having the necessary data. It's like asking a doctor, "What can I do to be better?" but providing none of my data, scans, or notes. The doctor might say, "Well, you should check on your health." The key here with this business, though, is that he won't say this is part of a sales pitch, but it's not that he has to be a marketing savant who will find the genius levers. These companies are really buying certainty. It's a "cover your ass" (CYA) component. That's why a lot of consultants get hired in the world. When you're doing a deal, you need to understand that the thing you're buying doesn't have any horrible warts. That's the first piece. Then, what is the best case, base case, and worst case scenario of what we can do to grow this thing? It's not even about a specific tactic, like, "Oh, change the audience segmentation." It's about needing a plan made by people who know a lot about this, and that's enough to kind of move the ball forward. Then, of course, when you go in and actually do the work, you'll figure it out case by case. If you go to 100 e-commerce companies and take the 10 smartest people in Facebook ads and Google ads, they're going to give you 10 different answers for every single company. One person likes cost caps, another likes average spend, another says simplify the structure, another says use all the new tools, and yet another suggests a different attribution method. There’s no real uniform answer for how to make this work better versus worse.
18:16	Jesse Pujji	Yeah, well, I'll disagree. Can I share my screen?
18:19	Sam Parr	Yeah.
18:20	Jesse Pujji	Yeah, I mean, this is an example of the internal tool or the internal analysis to give you the detailed answer, Sam, of everything we look at when we're trying to assess and grade inside of a private equity. Right, so there is top-down and bottom-up. How much spend is getting placed? What's the campaign structure? And how fast?
18:38	Sam Parr	This I...
18:39	Jesse Pujji	My team made this, yeah.
18:41	Sam Parr	That's so cool.
18:42	Jesse Pujji	So, this is what we go through and do. We're going to turn this into software at some point, by the way.
18:46	Shaan Puri	Any color-coded Excel sheet, we're like, "Oh, this is looking great!" I remember Steph Smith came on and showed me a beautifully formatted Excel sheet. I don't think I even read anything that was in it, but I was like, "You're great! This is fantastic!" I'm such a sucker for formatting on an Excel sheet.
19:01	Jesse Pujji	Well, but Sean's right. The other thing I would think about, too, that I think a lot of entrepreneurs miss—because we're so caught up in ourselves—is the humanness on the other side of the table. So, you say "private equity firm" and you're like, "Oh yeah, private equity firm." But what's really happening is there's a mid-level partner. If they buy a business and then Facebook blows up in a year on them, it's career limiting for them, right? So the human being on the other side wants to go in and sell this deal to their committee and be able to put a good case together. The reason McKinsey and Bain both built billion-dollar businesses doing this is because those people wanted to go look. McKinsey says the market is big. Now, the dream is they go, "Look, Ox says there's X amount of EBITDA available in marketing," and look at the analysis they put together—that's convincing of that.
19:44	Sam Parr	What percentage of the deals do you say are shit? You're like, "No dude, there's no opportunity here."
19:49	Jesse Pujji	We've had, I mean, it's a young business. We've only done 20 projects, but let's say on 25%, we've said, "You should stay the hell away from." I mean, one, there was a straight-up fraud in the SEO backlinking that they would have never spotted without us. That was a huge win, and I mean, they paid us. Obviously, they didn't do the deal. Then we've had a couple where we were not convinced that there was as much leverage. Like, the management team puts together projections, right? So they share projections in these things, and we look at those projections. We basically go, "Dude, this person would have to be the best Facebook ad marketer on the planet to hit these projections." We think they can grow, but we don't think the projections they put together are reasonable. We need to double-click, and as they double-clicked on that, they lost excitement about the deal.
20:30	Sam Parr	Wow, what a cool business! Good job!
20:33	Jesse Pujji	Thank you. Much better than Kahane.
20:36	Shaan Puri	So, your thing was like kind of an office for the CMO. You talked about how Accordion and there's the equivalent for the CFO side. Can you talk about other businesses that are like this, selling to ultra-rich customers? Let's call it hedge funds, investment banks, whatever. I heard you talk about a business that I had never heard of called, I think it was First Ring or First Ring.
20:54	Jesse Pujji	First rain, oh.
20:55	Shaan Puri	What is that? Well, that sounded very interesting.
20:57	Jesse Pujji	Well, the first thing I always tell people is, "Who's the richest man in New York, Sam? Who's the richest man in New York?"
21:02	Sam Parr	I don't want to ruin your story.
21:04	Jesse Pujji	Okay, fine.
21:05	Sam Parr	I'll say, "Ari, who's the...?"
21:06	Jesse Pujji	The richest man in New York, do you think it's long?
21:11	Shaan Puri	Here's the homie, I guess. I hear.
21:13	Sam Parr	The homie, I guess, is a hedge fund guy.
21:14	Shaan Puri	Some real estate guy.
21:15	Jesse Pujji	Yeah, Daniel Och, or Steve Schwarzman, or whatever. Nope, nope, nope. It's Michael Bloomberg. It's the guy who's selling information. So, sitting at Goldman, I had this terminal we were paying $1,200 a month for. You know, they never negotiate price. Every single terminal, they never do volume discounts. And you're like, "Damn, this guy is just... I mean, they're printing money in that business."
21:36	Sam Parr	It also helps that he owns the entire thing.
21:38	Jesse Pujji	He owns the entire thing. But dude, whether he did or didn't, the thing makes like $5 to $10 billion a year in EBITDA.
21:43	Sam Parr	It's huge.
21:44	Jesse Pujji	It's a ridiculous business, right? So I'm sitting there, I'm an entrepreneurial person, and my boss comes up to me and she goes, "You gotta set up First Rain, Jesse." I'm like, "Oh, quick, cool. What's First Rain?" I'm looking through it and it's like, "Pull this stock ticker and get an alert to your inbox when there's news about this company." I'm like, "This is just Google Alerts." And she's like, "What's Google Alerts?" I'm like, "What do we pay a month for this?" She's like, "Oh, we pay like $2,000 per license." I'm like, "Well, our group is like 40 people. We're paying $80,000—no, no, we got a discount. It's $50,000 a month we're paying for this Google Analytics thing." I'm like, "What the fuck?" So, you know, one of the categories for us now—and again, rumor and unfair advantage is very important. I happen to have lots of friends in this world because of where I went to college. Just whatever unfair advantage... where'd...
22:32	Sam Parr	You go to college.
22:33	Jesse Pujji	I went to Penn.
22:35	Sam Parr	Fancy.
22:35	Jesse Pujji	The Wall Street training school... A bunch of my friends work at hedge funds and private equity firms. These guys want information like that; they're willing to pay tons and tons of money for everything. They're not price sensitive at all. If they can calculate the ROI of every decision they make, that's what we were told about First Rain. They go, "Oh, it's $50,000 a month, but if it gets us one trade ahead of somebody else, it's paid for itself for the full year." Because of the numbers they're dealing with, they can just pay anything. Just like the $200,000 to diligence a project for a half a billion dollar deal—it's nothing for them. This category is a great one to sell into. Actually, I have another funny story you guys will like. So, on GLG, GLG has been like my life, my savior in business. What happened for me is I became like a regular—take that term any way you want—four hedge fund dudes for Facebook. Every quarter, ten same people would call me and they would go, "How's the quarter going, Jesse? Do you think spend's gonna be up or down?" because they own huge positions in Facebook. So, one of the guys eventually said, "Jesse, I want access to your data. I just want the aggregate." I'm allowed to share this; it's my data at Ampush. I'm spending $100,000,000 a year. He goes, "I want just full real-time access to your data." I said, "I can give it to you in aggregate; I can't give you any client data." He asked, "Well, what can I get to you?" I was like, "Well, bootstrap company, right? We've been dealing with this working capital situation with our bank. Will you just give me a $5,000,000 interest-free loan?" He said, "Done." So this guy, Peter, he's a good friend of mine now. He gave us a $5,000,000 loan so we didn't have to pay any interest to our bank for working capital. All I had to do was basically give him a real-time feed from our Tableau or whatever of our aggregate CPM, CTR, whatever—all of our data for Facebook. So anyway, First Rain is a basic software tool you sell to hedge funds because they're willing to pay anything for it. One of my ideas, by the way, and if anyone's listening who wants to build this with me, I need someone very good at analytics and decent at sales. With my network, I could probably get $5,000,000,000 in Meta Facebook spend and give people a survey every quarter: "Did you spend more or less? How excited are you?" It'd have to be a really robust survey. Then I'd go to all these hedge fund people and say, "You can have access to this data every quarter. It's $50,000 a quarter, and you have to guarantee me two years of a subscription." I think I'd have people lined up out the door, willing to pay for that data. Then I would do it for Google, then I would do it for Amazon, then I would do it for all of these different platforms.
25:05	Shaan Puri	Dude, even easier! Why not just go to Triple Whale, who already has all the data? Yeah, that's it. And be like, "Hey, Triple Whale, let's do this line of business basically."
25:15	Jesse Pujji	100% yeah, let me license your data for exclusive use in the financial services. Because that's not going to be important for them, you can basically create something that hedge funds would pay for. The best thing I would do with hedge funds is say, "I'm only going to sell it to 20 of you, but let's do a reverse auction." This way, they would bid against each other for this data. As long as you limit it, they'll do that because they don't want everyone having the data. That's a really important thing to them. But anyway, the lesson here is that category alternative assets are a great thing to bootstrap into. One deal can basically make you as a business, and then you can go from there.
25:48	Shaan Puri	Yeah, my old business partner used to call it "just adding a zero." He would say, "Basically, what market or product can we go into where we do the same exact work but we just add a zero to the end of the dollar amount that we're able to charge?" Like, Sam, you told me this with your events too. You used to charge, I think, like $300 a ticket, but then other people charged $3,000. And then I forgot who it was, like Recode or whoever it was, charged $30,000 a ticket.
26:10	Sam Parr	And it was like the same work, same product. It was ridiculous. I did the exact same thing, Sean, that you said you did, where you're like, "I have an idea, but I'm broke, so I'm just gonna assume that everyone else is broke." And that's when I go...
26:23	Shaan Puri	Hang out with other broke people. Yeah, it was like an easy thing. The two takeaways from this, by the way, are: sell to the rich. You know you're going to be able to add a zero to what you're doing. Then, your way of figuring out what they need was that you had friends in that circle. You could go make friends, or you were using GLG. You were like, "I have one area of expertise that could be my calling card to get in the door." Then, that will be how I understand what these people need. Maybe I can pair what I know with what they need into a data product or a consulting product.
26:54	Jesse Pujji	And to tie it together, actually, anyone listening, I would say: What is it that you know extremely well? Or a couple of things that intersect with each other? So first, figure that out. Then, determine who's willing to pay you the most money for what you know. That's essentially what I did with my business. I was like, "I know this thing. Who's going to pay me the most for it?" And that group is going to pay me the most by far.
27:12	Sam Parr	Can I... you didn't put it on the sheet, but I want to talk. I want to ask you a couple of questions about this, particularly because I don't know if Sean knows much about this company. I know a little bit about it, but I know that what I know is they're like crazy impressive. So, I think you sold your company to Red Ventures, is that right?
27:28	Jesse Pujji	So, we saw it. It's a longer story. We sold a minority stake; they wanted to buy the whole thing, but we couldn't get to terms. We sold a minority and gave them an option to buy the rest of the business. They started buying content assets and decided not to buy the rest of our business. Eventually, we ended up selling it to someone else. But we did it for basically...
27:42	Sam Parr	Know them.
27:43	Jesse Pujji	For two years, we operated as one company because the plan was originally for them to buy us. So, I know them and Rick incredibly well. Do you?
27:49	Sam Parr	Know about this company, Sean Red Ventures?
27:51	Shaan Puri	I know about the surface level, and actually, we've hit up Jesse, being like, "Dude, this is fascinating! Should we get Rick on?" He and I would... I want to know more.
27:59	Sam Parr	Well, there's one part of the story that I just want to mention, which was amazing. It's like he started this thing, and then he was actually on the plane that Sully landed in the Hudson. He gave this amazing talk when he said, "I was like 1 or 2 years into my business, and for some reason, that life or death situation kind of changed my outlook on life." Now, Red Ventures is known as one of the best places to work, and it sounds like it's a great company. So, yeah, tell us what's the background.
28:26	Jesse Pujji	Yeah, so the story, the way that they tell it, is that they started the business in 2000. Rick and Dan are the founders, and they're both friends and multibillionaires. They actually met at Ascendant in the late nineties. Do you guys know what Ascendant is? They had the coupon book and launched Orbitz. They were like the original internet holding company. They met there, and it was very direct marketing heavy. So, in 2000, the two of them broke off on their own, literally months before the internet imploded. They started Redf, which is what it was first called. Five years later, in their story—I'm not telling it, they are—Rick says, "Dan, give me a dollar." Dan gives him a dollar, and he goes, "You can have my half of the business. I hate this business. I don't want to do it." So they do a hard reset five years in. I think they were barely doing $1,000,000 EBITDA. These guys are the best learners you've ever met. Now, go back to 2005. There was this new thing called Google AdWords, and agencies were starting. Their businesses were lead generation. For whatever reason, they had a relationship with DirecTV. They said, "Hey, DirecTV," if you remember back then, was looking for satellite people to sell in the mall—like these resellers. Rick, or one of them, had this idea: "Let's go to DirecTV and become a dealer." So they go, "Hey, DirecTV, you want to be a dealer?" "Oh sure, we love dealers! What's your territory?" They go, "Oh, this new thing called the internet will be our territory." "Okay, sure, we don't know anything." So they became DirectStar TV, an authorized dealer of DirecTV. But as part of their deal, they owned all the web rights, all the AdWords rights, and all the SEO. In four years, they built a $75,000,000 EBITDA business just selling DirecTV subscriptions because they would run the media, take the phone calls, and all these things that are commonplace today—like what you do on your website gets cookied. They were pioneers in all of that stuff.
30:10	Sam Parr	And basically, if someone became a reseller of the TV tech, Dish Network, or wherever it was, DirecTV, they gave Red Ventures like $1,000.
30:19	Jesse Pujji	Dollar bounty for every single customer they get. Red Ventures just had to do it for less than that. Between their media and, of course, after a few years, DirecTV is like, "Well, we can't get rid of you because you're driving all of our customers, but we don't like the deal we made." So then they renegotiated a million different times. I know they still probably work with them, but then they went and took that out. Then General Atlantic, the big private equity firm, invested and has crushed it on that deal. They went and did that for any high LTV purchase you can imagine. So every credit card company worked with them: American Express, Verizon Wireless, people who sell pest control—anything that was a long-term purchase. Basically, Red Ventures was either running their marketing. When they invested in us, we wanted to do the same deal for direct-to-consumer companies, which did not work nearly as well as it worked for them. But that's a different story for a different day. So, they got to 2015, doing $2 to $2.3 million in EBITDA, and there was no more growth left, which is why they invested in us. They did a bunch of other things, and Rick's really smart. He goes, "Okay, I'm gonna invest in Jesse." He did five other deals at the same time, the same year. A year later, Ampush is going, "Okay, the other one went down to zero." You know, but they bought an SEO business that they used their same playbook on. Within nine months, they took it from $3 million in EBITDA to $9 million in EBITDA. They go, "Oh shit, so that worked. Okay, let's go do a bigger deal." So then they bought like a $10 million EBITDA SEO content business, and then it took it to like $25 million.
31:42	Sam Parr	When you say "SEO content business," you're talking about like The Points Guy?
31:46	Jesse Pujji	Yeah, the first one was Reviews.com. The second one, I'm forgetting the name of it, but they did a couple of those. Rick's like, "Alright, I'm ready for the big time." He went and bought Bankrate, which is a $1,000,000,000 publicly traded company for a 100 in EBITDA. It owns The Points Guy, it owns CreditCards.com, and in less than 2 years, they tripled the EBITDA of the business. Then they bought Healthline and they bought CNET. I mean, they basically took their... and now the services part of their business is a tiny part of their business, while the SEO content part is a massive part of their business. But the same culture, the same playbook, and it's an incredible business. Incredible.
32:20	Shaan Puri	Can you explain what they're doing? They buy these SEO businesses, which is, let's just take Bankrate as an example. People Google "best..."
32:26	Jesse Pujji	Yep.
32:27	Shaan Puri	Mortgage rates... more current mortgage rates. Bankrate has done the content work and the SEO work to be the top thing that shows up on Google. So then you click it, you go in, and they have like these affiliate offers. That's all great. What Red did was, am I right, that they bought a business that was primarily SEO-driven and then they layered on paid to that? Is that the main thing that they did, or what did they do to the assets?
32:52	Jesse Pujji	There are four major levers they pull. The first thing I have to tell, and whenever I tell this story, is about Rick. It's the most unique culture. You guys, I just take you there, and you gotta tour the campus and check it out because you've never seen anything like it. There's a great New York Times article where they describe it as part Wall Street trading desk, part Southern politeness, and part hard-nosed direct response marketing. That's exactly it; it's a very apt description. But anyway...
33:16	Sam Parr	That's why I wanted to ask you about it. Because Rick seems like an anomaly. He seems like a... like this is normally kind of a... not this could be a shady industry. Yeah, it often is a shady industry. He doesn't seem like a shady guy, and he seems like people love working there, which is rare.
33:31	Jesse Pujji	He's one of the most special people I've ever met. I mean, he's one of the most special people in the world, I think.
33:35	Shaan Puri	What would we notice if we turned the campus? What would we see?
33:38	Jesse Pujji	Funny you asked that. So, one of my requests to him when they invest is, "I want to shadow your leadership team for a week." My ten leaders and I are going to shadow your leaders, and I want to see what you guys do. What you'd find is, you know, these things that are like startup outages. They've done it at a scale of 5,000 people. Every meeting is short. Every meeting starts with the bottom line. Numbers are the only thing that is ever talked about in levers, and every person is basically trying to optimize more EBITDA in any discussion they're having. They don't talk about the work that gets done as independent of that. Another example is how they shape teams. For digital marketers, they don't say, "We have a client team and we have a marketing team." Instead, they say, "We have team click-through rate, team conversion rate, and team traffic volume." They literally organize people by the KPI that they're trying to drive so that there's a deep, deep focus on it. They have these really cool things called business reviews where basically Rick and the leadership team sit, and you have 20 minutes to come in and give an update on your business. Real decisions are made about the business, and he does like 40 of those over 2 days. It's a high-energy, very smart environment. It's a very unique culture. But anyway, so the culture is a starting point.
34:45	Jesse Pujji	By far, because without it, I don't think any of this works. They have four main levers. The first is the improvement of traffic acquisition, both paid and organic. So, to your point, Sean, they'll layer on paid in a really smart way. They think a lot about cost per visitor and revenue per visitor, and they get that equation working extremely well. But they'll do a lot of SEO as well, and they'll get the volume up. I think I remember, high level, when they bought The Points Guy. I'm making these numbers up, but it was doing $0.70 in revenue per visit and maybe $0.40 in cost per visit. Two years later, it was doing like $1.00 to $1.70 in revenue per visit and like $0.90 in cost per visit, but the visits were up by like a factor of two or something like that. So, the first lever is traffic acquisition. The second lever is that they're extremely good at on-site optimization. If you guys pull up The Points Guy or any of those things now, you'll say, "Wow, the Platinum American Express is plugged here," but it's plugged in a smart way. You want to click on it, but it doesn't feel too salesy. They're very good at getting the on-site optimization to be significantly higher. The third lever is that they're incredible geniuses when it comes to pricing to the efficient frontier of a customer's curve. You guys know what I mean when I say that?
35:49	Sam Parr	You're using a lot of words, my friend.
35:52	Shaan Puri	Independently, but when you put them together that way, it was just a combination I wasn't familiar with.
35:56	Jesse Pujji	Credit card... so you're American Express, right? American Express is probably willing to pay $700 per credit card application, but their person on their side will pay $200 if they can. So, the only way to figure out the exact willingness to pay for an incremental customer by your customer in their business is crucial. If you can do that, your profits skyrocket. Basically, we could say it simply: they're good at pricing. They can really charge more for what they get. I'll tell you a funny story. A guy who's retired now, but he's a good friend of mine. He's a Southern dude, very disarming, but then he's smart as hell. He said, "Jesse, we were 60 days from closing. We were going to close this Bankrate deal, and their team told me there was a bid at auction for how you bought credit card applications. No technology could beat it." He said, "I looked at it and I saw Discover was only paying $500 for an application, and they said they were willing to pay $900. Why are we not charging them $900?" He's like, "Well, that's how the algorithm works." He goes, "The day we closed the deal, Jesse, I threw away that algorithm. I pulled up a spreadsheet, called all the customers, and said, 'What are you willing to pay? What are you willing to pay?' I got them, I charged them exactly what they were willing to pay, and I got 20% more in EBITDA overnight within the first month I owned the business." So, that's the third lever they're good at. The fourth lever is that they're not crash-and-burn people, but they're very thoughtful about their investments. When they invested in Ampush, I cut the headcount under their tutelage by more than half, and our revenue grew during that time. They're very good at truly challenging the bloat in an organization and asking, "How many people do we actually need?" One story you guys will love is that one of their executives said they bought some government-owned thing. It's a really weird business that mails you all the mailers when you move. I'm forgetting the name of it right now, but...
37:41	Sam Parr	It's just hate that.
37:43	Jesse Pujji	So, it's actually... it was owned by the USPS and then it got... I
37:46	Sam Parr	Hate that.
37:46	Jesse Pujji	Now, Red Ventures owns it. I go, "So how'd you decide how to reduce the headcount?" He goes, "We took the top three managers in the company and we held a draft." So we basically put everyone's name on the board and said, "There's only 40 people of 80 staying now. Go draft your best people." And again, they’re compassionate with obviously the people they like. It's not meant to be negative towards them, but these organizations are very good at leanly staffing. So those are the four big levers, and that's how they get the kind of results they get.
38:16	Shaan Puri	That's dope! I appreciate the Red Ventures master class. That's great. They're like a juggernaut that I didn't know much about in terms of how they actually operate.
38:23	Sam Parr	Your boyfriend, the guy from Silver Lake, the guy you love. Who's the guy? What's his name? That you have a crush on?
38:29	Shaan Puri	I should probably know his name if he's my boyfriend. Egan, what is his name? Egan.
38:33	Sam Parr	I think he's on their board.
38:35	Jesse Pujji	Yeah, he's on their board. GA's on their board. I mean, look, they're all minority holders. They've never raised a dollar of primary capital. So, in my opinion, they're a bootstrap giant. They've taken secondary, but they've never raised primary.
38:47	Shaan Puri	Their headquarters is in North Carolina or something, right?
38:50	Jesse Pujji	Yeah, they're in Charlotte. But again, dude, Rick is a hustler of all hustlers. It's right across the border in South Carolina because the state of South Carolina has paid for the whole thing with tax incentives.
39:02	Sam Parr	You have on here that every profitable founder should understand PE and roll-ups. What's that mean?
39:07	Jesse Pujji	Yeah, I think one of the biggest value creation levers, if you're running a $2 to $5 million EBITDA business, is a roll-up. I'll tell the story of the company that ended up buying Ampush because it kind of still hurts me a little bit when I tell it. There was a business called Elite SEM. It's an SEM agency with $4 million EBITDA. The same year, I think Ampush had like $6 million or something. In 2015, we went to deal with Red Ventures. I learned a ton, but these guys sold to a business called Mountain Gate Capital. Let's assume, I don't know what they paid, but let's assume it was an 8 times EBITDA, which is a fair multiple. So they paid $32 million for the business. The founders rolled 30%. I don't know for a fact, but I'm just making that up in this scenario. The founders rolled 30% of the value, they took $20 million off the table, and they rolled the rest in. Mountain Gate goes and buys another 6 different businesses in the $1 to $2 million EBITDA range. Now, for those businesses, they pay like 4 to 5 times EBITDA. Then they grow the whole thing organically. So then they go for, what's the math? Let's say they buy another 5 or 6 companies, they buy 10 in EBITDA. The total invested capital is, call it $60 million, ballpark. But now the business is worth 15 times, correct? It was bought by New Mountain, who bought Ampush. It was bought by New Mountain for 15 times EBITDA, which is $225 million. So the founders got $20 million, then got another bite of, call it $40 million or something like that. The PE firm obviously crushed it on it. My push to founders would be like, if you understand that multiples are a function of growth, stability, and margin or defensibility, however you want to think about that, all of those things improve with scale. What they call it, the finance nerds call it multiple arbitrage, which means I can buy at a low multiple and then sell in a few years for a higher multiple. I think a lot from, if I'm a profitable bootstrap founder, including myself, like even for Growth Assistant and other things, I'm like, this seems like such an obvious path to create a tremendous amount of value. That's better than the venture path for so many different reasons. I think everyone should look at it in their space. By the way, I've been approached multiple times and pitched on this. It's on my list of like creative AI meets roll-up. So Jesse, let's go buy a creative agency, redo their processes with AI, right? Then once you figure that out, let's go buy 10 more of them. Not only will you be able to roll up and get all this multiple arbitrage, but you will create a much more profitable business. I think there are a lot of strategies out there. I would say, like, I think a lot can be done with private equity without private equity. But the founders running these businesses should be the ones leading them. The more the founder has the strategy, the better they're going to do with the PE firm if they ever need the capital to go do it.
41:48	Shaan Puri	Right, you mentioned AI. I want to ask you about that because you were early to the social networking wave. I think you were doing a social networking type of thing in the first year of Facebook. I think there's some story where Zuck called you.
42:01	Jesse Pujji	I called him on a cell phone, pretending to be somebody else. That was a good one.
42:03	Shaan Puri	Oh, you called Zuck? Tell that story. By the way, who did?
42:06	Sam Parr	You pretend to be.
42:09	Jesse Pujji	So, summer of '05, we were like, "Oh my God, Mark Zuckerberg is a year old. He's our age, right? We're like, he's our age. He's gonna crush it, but he's never gonna go into high school." Somebody should start a high school Facebook, and we're like, "Why not us?" So we started the High List. I have the documents; we had these little icons and all this stuff. We basically rebuilt a clone of Facebook at the beginning of the summer. We went to go buy hsfacebook.com, and some kid at Columbia—I don't even remember his name, maybe he's listening and can identify himself—he owns it. He goes, "Well, I'll sell it to you for like $20,000." And we're college kids, so we're like, "No thanks, we'll call it the High List." We built the whole product and launched it. Literally, on the eve of the launch, he calls us and says, "Mark Zuckerberg wants to buy hsfacebook, so I'm giving you a last chance, buddy. You can get it." I was like, "Oh my God, we need to." My first question was, "Is he gonna launch in high school?" He said, "Yeah, he says he is." I was like, "No, are you sure? I think the guy's bullshitting me." So I said, "Prove it." He forwards me the email from Zuck, and this is just a guy named Mark Zuckerberg; it's not Zuck as we know him today. The guy includes a 917 area code number—sorry Zuck, your area code's 917 on your cell phone—and I don't know what the rest of it was. I don't remember, but basically, it has a cell phone number. So I'm like, "Okay, how do we call and verify this is true?" I call Zuck, by the way, from my summer internship office at Bain Capital. I'm sitting inside some finance company calling him. I go, "My name is Tom Goldberg. I'm partners with this guy Bob, and we own hsfacebook together. I wanna make sure that you're not cutting me out of this deal that you apparently have with him." He goes, "Yeah, I'm gonna buy it from him, and you need to sort that out with him." Then I go, "Well, what are you gonna do with it?" I kid you not, he spends 30 minutes outlining the entire strategy that Facebook has executed. He goes, "First, we're gonna go to high schools, then we're gonna go to workplaces, then we're gonna go into pods." He had the whole strategy. This is in '05, dude; this is a year into Facebook.
44:04	Sam Parr	And he's like...
44:06	Jesse Pujji	One of
44:06	Shaan Puri	The most chains and cool shirts.
44:08	Jesse Pujji	Yeah, he didn't hear that right. Around the age of 20, he was like 22 or when I was 21. Then he's like, "Wait, by the way, what was your name again?" And I'm like, click. Needless to say, our high school Facebook plan did not work out. They launched and crushed us, and we went and got jobs in finance.
44:25	Shaan Puri	That's an amazing story. That's my second story. And by the way, isn't the funny thing that the actual answer was "go join Facebook"? Like, just do whatever you can do.
44:35	Jesse Pujji	In my life, that has been the right answer to maximize my outcome. When I started Amposh, dude, for 10 years, I was focused on the outcome. A buddy of mine got a job with the same resume and got a corporate development position. He didn't take it, and I thought he was an idiot for not taking it. But we still have his offer; it's like, "Oh, that would have been worth $75,000,000."
44:54	Sam Parr	Dude, I know I talked to a guy the other day who was like the 200th or 300th employee of Facebook. He was like, "I had $100,000,000 in Facebook stock."
45:02	Jesse Pujji	Yes.
45:02	Sam Parr	You know, he worked there for seven years or something like that.
45:05	Jesse Pujji	What I should have done is said, "Hey, look, I started this high school competitor. Do you want to hire me, dude?" Because I'd probably be like a billionaire right now, since I'm a year into the business existing.
45:13	Shaan Puri	And by the way, to start Facebook, it took an unbelievable amount of work and genius to be among the founding members, like the first 5, 10, 15, or 20 people there. It was a tremendous amount of work. You're scaling something that's massive, and you have to be really sharp, or you're going to get washed out. To be the 100th or 200th person at Facebook, you don't need anything special, to be honest. All your...
45:39	Jesse Pujji	Views: 1,000. Like, you're right.
45:41	Shaan Puri	Hey, get over here! Can you lift boxes for a bit? Alright, he lifted boxes for a bit. Hey, can you... we got a bunch of spammers. Can you look at all these and figure out what we're going to do? Tell the team we need people to filter this. By employee 200, you no longer need to be at the top of the genius curve anymore.
45:56	Jesse Pujji	Than, dude.
45:57	Shaan Puri	Work, you know, an incredible amount, and you still get rich.
46:00	Jesse Pujji	I was four years into Ampush and I was looking for a head of sales. Our best place to hire salespeople was from Facebook itself because they knew how to navigate the beast and get us more leads from that. I get this guy, and we love each other from the first dinner. You know, he meets two other people on the team, and then he's four interviews in. I do the classic talk, "Alright, let's talk comp for a second." We're a startup, so we'll give you a couple points of equity. He gets this very scared look on his face and says, "Jesse, I'm investing $800,000 a month in Facebook stock. How are you gonna match that?" I'm like, "Dude, what? Yeah, why are you here? Nice to meet you, buddy. I'll see you later."
46:38	Sam Parr	That is absolutely insane! Sean, have you heard the story about Noah Kagan and how he was hired to work at Facebook? Noah was the 30th or 32nd employee. Basically, what happened is he was out at a party, and he was drunk or something like that. He tells a TechCrunch reporter, "We're gonna launch this thing and that thing, and it's gonna be the best thing ever." It becomes a news article the next day. Zuck goes to his desk and says, "You're fucking with my company. You're out." He fires him on month 9. So, Noah was 3 months away from his first dividend. Noah has told me, "Had I just made it those 3 months, those shares today would be worth about $100,000,000." All because he... kind of...
47:24	Jesse Pujji	You know, I had a...
47:25	Sam Parr	Had a big mouth when he was 21 and drunk at a party.
47:28	Jesse Pujji	He was Ampush's first Facebook Ads client, believe it or not. AppSumo was. That's awesome! I got his first customers for him.
47:36	Sam Parr	Yeah, and now it's like, you know, a business that does $100,000,000 a year in revenue. So it kind of worked out, but it would have worked out a lot easier if they had kept his mouth shut.
47:43	Jesse Pujji	I, you know, but my thought... I don't know how you guys feel about that. I've done that math and I'm like, but I don't think I could have worked. I don't want to work for someone.
47:51	Sam Parr	Of course, you can't look back and be like...
47:53	Jesse Pujji	But I mean, even if I could make that decision now, I don't think I would have wanted to work for Facebook or anywhere for that long. Or like, dude, I would...
48:00	Sam Parr	Really, that would have been awesome.
48:02	Jesse Pujji	What were?
48:02	Sam Parr	You gonna say, Sean?
48:02	Shaan Puri	I think you're both right. So, dude, for the math on this, just to put it in perspective, let's say you join when Facebook is valued at $1,000,000,000, which I think was a few years in. I don't think it was right away because at the time it was unclear that social networking would be that big. So, let's say you join at a $1,000,000,000 valuation and you're employee number 400. You're so junior, and they give you $10,000 of stock a year. You're going to make a $100,000 salary, and you're going to get $10,000 of stock over 4 years. You've accumulated $40,000 of stock. Even at a $1,000,000,000 valuation, today Facebook is a $1,350,000,000,000 company. So that's... you get...
48:43	Jesse Pujji	Thousand a bagger.
48:44	Shaan Puri	Multiplied by a thousand, $1,300 times your $40,000, it's a $54,000,000 stock option you got for being the janitor at Facebook at the right time. This tells me a couple of things. Number one, picking the right company and project will be, by far, the most impactful thing you can do in your career. It will beat your hard work, your intelligence, and even being right many times in a row. You just have to be right once at the right time. I should point this out: every kind of four years, it's pretty obvious what winning companies look like. My version of this was that I only did two job interviews in my life. The first one was at Monkey Inferno, which is the studio I ended up joining because I wanted to be in the studio. The other one was Stripe. I could have told you right then that Stripe is the winner; it's the winner of the stars. The reason that was the only other interview I did was because I was like, "Stripe is the winner." It was super obvious. I've done the similar heartbreaking math of, "Wow, even if I had joined, I would have just been a sales guy, a biz dev guy." I had no seniority, and I would have made an absolute fortune. Now, on the other hand, you have the Jesse thing, which is: do you want to do it? Would you actually have stuck it out? And even beyond that, would you have held? There is no chance that I would have held. I bought Bitcoin in 2014, but I did not hold all the Bitcoin. I gambled, that's right, I threw Bitcoin away on a poker night one night because I was just playing online poker. I did all kinds of things. That's now a four times $60,000 thing. At the time, Bitcoin was like $300, so it was like, yeah, I thought a $1,000 investment was actually a quarter of a million-dollar investment. So, you know, the idea that I would have held is ridiculous. I don't think the math is actually real because nobody holds for that long.
50:35	Jesse Pujji	I agree.
50:36	Sam Parr	That's insane! I've got the same story, by the way, with Airbnb. I think I was going to be employee 120 or something. I don't know, also it was a $20 an hour job. I don't even know if the equity would have been a lot, but you do the math and it does sting a little bit.
50:51	Jesse Pujji	Dude, I mean, one way... like, I worked at Goldman. I was 25. My 29-year-old boss made $2,000,000 a year, and my 35-year-old boss was making $15,000,000 a year. Then I got off that path because I was like, "I don't want to sit here and look at spreadsheets all day." It's a very non-dynamic job. I looked at my boss and asked myself, "Do I want to be them one day?" I said no. I literally wrote this down to keep myself honest. I said, "I'm okay with like half my personal expected value to be able to do my own thing in the future." I don't know, I've never rerun the math, but I had to make that decision for myself.
51:26	Sam Parr	What's a $15,000,000 a year employee at Goldman do?
51:30	Jesse Pujji	There's a bunch of jobs that make that kind of money, but in my world, I was in the buy-side hedge fund. They were investing; we had a $7,000,000,000 fund with a 2 and 20 structure. If the fund delivers 10% a year, they make the fees on $7,000,000,000, which is like $700,000,000. It's about $350,000,000 in carry, and there are four senior people. Now, Goldman might even get half of it or whatever, but they're paying 50% out of whatever the people make in that situation. Bankers make that much too. I mean, all these financial services at a seniority level, they all make tons of money. There was a guy who endowed a scholarship I got when I was at Penn. He was a partner at Goldman and the head of the infrastructure fund. He told me he was making $55,000 a year.
52:11	Shaan Puri	And then when he told you, did he just smirk? The biggest smirk you've ever seen in your goddamn life? It was just... it was permanent. He had a facial expression that stuck with him.
52:19	Sam Parr	But I...
52:19	Jesse Pujji	I saw that and I was like, "Yeah, but you've been there 30 years. Have you ever been in those atmospheres?" None of the three of us would last more than 2 or 3 years in those atmospheres. They're not just political; it's smart. It's not... I don't know, it's more than money, right?
52:33	Shaan Puri	I totally agree. I think our actions have shown that. But I also think it is entertaining to see the sort of mind-bending amounts that people make doing certain things. In the case of joining companies early, like, wow, that's kind of it. That's all you really had to do in terms of financial success. There's a funny tweet that Chamath put out the other day where he said, "Bill Gates, you know, if he had just basically held his Microsoft stock, he'd be, I think, the richest man in the world or, you know, number one or number two, something like that." Instead, he did the Gates Foundation. He did a whole bunch of other things. He sold and then has his family office. The top reply, which was like a huge ratio, was, "Now do you with Meta?" Because he's thinking about Facebook. He's like, "Great, I got a billion dollars, and then I'm going to do Social Capital. I'm going to do this, I'm going to do that, and I'm going to do SPACs." I'm going to do all these things for, you know, the next 12 years, 15 years. If he had just simply held the Meta stock and chilled, he would have financially outperformed his own brilliance doing all this different investing action.
53:38	Jesse Pujji	Yeah, you know, but that's the thing. That's why you gotta do things that you actually care about, or that light you up, or that motivate you in a way that's different from cash. I mean, dude, the other thing—how many... I mean, you guys probably have friends like this. I have friends who are worth more than I am, who have much more money, but they got it through like a meta-type situation. They're like the most insecure. They're like, "Oh, I just got lucky." They're afraid to talk about it. It seems like a horrible existence. And there's a lot of people I know like that. I met one of the founders of YouTube once, and the guy was like, "My lotto ticket success." You know, he was very unhappy with the amount of money he had made. So you think that it's like, "I'm on easy street." I get it. But the psychological thing that people feel like fraud... I mean, it's a whole other vector of challenges that come with it. Versus, I think all three of us are founders. You start a business, whatever it is, you made it. You did it. There's a different element to it, in my opinion.
54:29	Shaan Puri	I like talking about it the same way I like looking at mega mansions on the internet. It's fascinating to one part of my brain, but then the main part of my brain is like, "I wouldn't even want that."
54:37	Jesse Pujji	Like, yeah, exactly.
54:37	Shaan Puri	Like, not even in the excuse, like, "Dude, that's way too big." That wouldn't be fun to live in; that'd be uncomfortable. And man, the maintenance of that would be like a pain in the ass. That's not what I want. In the same way that when we got acquired by Twitch, I had thought in the last 7 years I had worked towards building a successful tech company. I was in the venture capital world, and success in that world is you build a $1,000,000,000+ company. We were doing a social type of product, a media product, and Twitch is like one of the 10 winners that actually existed. Then I saw Emmett's day-to-day, and I was like, "Oh man, I would be miserable if I was doing this." Not even in a... like, it was just that it wasn't fun. His job fundamentally was like putting out fires, and all problems roll up basically.
55:22	Jesse Pujji	It's the worst problem that they roll up.
55:24	Shaan Puri	Yeah, yeah, shit rolls up the bill. Exactly. It's the worst problems that roll up past your executive team because they would solve a bunch of them. But the ones that they can't really solve cleanly roll up to you, so you get the worst of the worst that roll up to you. He would sit in the conference room and basically, you know, his calendar was managed by somebody else. There’s a 30-minute block, and another 30-minute block, and another 30-minute block. He’s reading memos and making decisions all day. I'm like, man, the fun factor is not there. That's when I started asking a question. That's why I started this podcast. I was like, "Who's having the most fun?" rather than "Who is the most successful?" or "Who is the most rich?" It's just fundamentally, "Who's having the most fun?" I remember looking at Joe Rogan, and I was like, "I think Joe Rogan's having a blast." It seems like he basically has a podcast, which is like an unedited, unscripted thing. He's hanging out with comedian friends or super interesting scientists and paleontologists, just fascinating people like that. Then, on the side, he does comedy, which is a craft that he really cares about. He also does the UFC, which is like his hobby, and he gets to commentate for that and sit ringside. But he also doesn't overdo any of the things. Meaning, he doesn't do his podcast in a way that's optimized for views. He's not like, "I want to do a 3-hour conversation because that's what I want," not because that's optimal for the algorithm. For UFC, he doesn't travel. He's like, "I'll do the ones that are nearby me, but I'm not gonna fly around the world every weekend commentating." Same thing with his comedy stuff. He's like, "You know, I'm gonna do it the way that I wanna do it." When I saw that, I was like, "Okay, that is a different model of success that I want more than what I wanted in my twenties."
56:57	Jesse Pujji	You used Joe Rogan, but I honestly think you can apply that to anyone. Like my hedge fund friends who love hedge funding, they're happy. They love it. It's about finding your thing. It's about finding the thing that you really enjoy and then just going all in on it. Those are the people I think who are winning.
57:09	Sam Parr	You really gotta enjoy doing it a lot because it all really sucks to get there. Do you guys remember Zuckerberg in '06 to maybe '08 to '15? I would not have traded places with him. I wouldn't. I would never in a million years trade places with Elon Musk, but the idea of having all...
57:28	Jesse Pujji	These things.
57:29	Shaan Puri	Me neither.
57:30	Sam Parr	No trade.
57:32	Shaan Puri	I also reject that trade, Zampar.
57:34	Sam Parr	Very, very, very fair of him to say that. But it does seem cool. I guess what I mean is that I can acknowledge that it seems awesome. That would be cool to have, and also, I'm not willing to do it. But that's fantastic.
57:48	Shaan Puri	Yeah, I think one of the most powerful things is figuring out what's cool for you versus what's cool for me. Right? There's so many things where I see people's lives set up, and I'm like, "That is super cool for you." I don't mean that in a negative way; it's like I do think it is super cool. I think it's even cooler that it's what you wanted. But I have to figure out what is cool for me and what that looks like.
58:07	Sam Parr	You know what's funny? In our last episode, you talked about the seven spiritual roles. You mentioned that book you were reading or thinking about reading, and I went and bought it. Personally, I'm in a bit of a place now where I think some people call it "the second mountain." You know, you've already achieved a little something to where you're secure, but you're like, "Alright, what's a problem that I want to work on?" Or, "What's a way to spend life that may be a little bit higher up on Maslow's hierarchy of needs?" So, I'm personally still asking myself. It's not defined yet for me.
58:42	Shaan Puri	Jesse, do you have one? I'm curious.
58:45	Jesse Pujji	Yeah, you know, and I've done... I think Sean, you know this. I've spent probably the better part of 6 or 7 years on this personal growth journey, which has turned into a spiritual journey. The defining moment came for me maybe 3 years in when my coach was like, "What's the one thing you can't not do?" It's a really weird question. The exercise for... yeah, yeah, you can do it, Sam, right now. What's the one thing you can't not do? Write down a few sentences and then every week, look at those sentences and see if they seem to grow with you. That's a good idea. In one funny way, he says, "What's the thing that comes in the room when you show up? What's the stench?" His point was that we try to make purpose this far-out thing we have to go get, but it's actually the thing already inside of us that we just need to tap into and live more fully. For me, it was that I love helping other people be the best versions of themselves, like raising their game to the next level of what they're capable of. Even in this podcast, I think I taught you guys two new things. It just comes out; it's not purposeful. I've made it more purposeful now, but at the time, it wasn't. It was a thing any of my friends would tell you about me. Any of my employees would tell you, "Dude, Jesse walks in and like the bar goes up." It's like an exciting... One of the interesting examples of this is when he asked, "So how do you keep your to-do list, Jesse?" I said, "Initiatives or clients." He said, "What if you kept your to-do list based on the people you worked with, like executives, and how you're helping them be the best versions of themselves?" He said, "You'd probably still get the work done that you need to get done, but you'd do it in this very inspired way." Gateway X, I mean, Gateway X is a whole function of me going, "The thing I want to do is help other people learn and grow." I'm not the CEO of any of these companies. Now, I do actually keep my to-do list that way. I don't write "growth assistant" or "AUX." I write "Adrian" and "Casey," and I'm like, "How am I helping those people?" I find it's a weird thing. When I frame my success or my life through the P&L's of those businesses, I get very negative. I'm not as powerful; I'm more of a scarce-minded person. When I frame it as, "How do I help those individuals?" which is the same thing because they're running the businesses, I'm creative, I'm happy, and I'm more flowing. For me, that's the thing, and it feels ever so energizing for me. I think I could do it for a really long time. Obviously, the setup, the way I've got it set up, matters a lot too. I'm not running any of the individual businesses. I don't think I want to. I don't want to run staff meetings, I don't want to run comp plans, hiring... all these things. I've done it; you guys have done it. It's not what I want to do, but I do want to help grow each of these businesses.
01:01:06	Sam Parr	Dude, you're awesome! I appreciate you doing this.
01:01:09	Jesse Pujji	Thanks, man. What do you...?
01:01:10	Shaan Puri	Think, Scott! It's great to see you, by the way. How'd you get Nelly at your birthday party? What was that about? Tell that story before we go.
01:01:18	Sam Parr	Just a...
01:01:18	Shaan Puri	Quick one.
01:01:18	Jesse Pujji	So, I turned 40 in May, as you guys know. I have a cool video montage of the party my wife threw for me. It was an awesome party! I've been telling all my friends about Saint Louis since I was 18. When I went to college, I was like, "Saint Louis is the best city!" Everyone else was skeptical. I said, "I'm going to move back there one day," and they were like, "No, you're not." Then I moved back, and they were like, "Oh, shit! You moved back!" I had 200 people in town who I've been raving about Saint Louis to for over 10 years. So, I thought, what's the most ridiculous thing you could do if you're me, having your 40th birthday? Like Nelly! I mean, you guys are similar in age. From my high school to early college, Nelly was like the biggest rapper on the planet, and he's from my hometown.
01:01:53	Sam Parr	Nelly was our guy. He was the first famous St. Louis guy, and it doesn't matter what race you are or how old you are. Music—Nelly was like our son. He made us so proud.
01:02:04	Shaan Puri	If you're in your thirties or forties, just close your eyes. I'm just going to say a few words that will take you back: Country Grammar, Air Force Ones, EI, Chuck, and Her. Oh my God, like just the memories that come with those words.
01:02:19	Jesse Pujji	So, I'm like, "Alright, I'm... you know, what's a ridiculous thing I could have at my party?" I'm thinking, "Have Nelly perform there." So my wife goes through the normal channels, and they're like, you know, he basically doesn't do this, right? So he's like, "Look, it's $300,000 just as a starting price. By the time you do it all, it's half a million." And I'm like, "I want to die with $0, but like, that's a little rich for my blood, so I don't want to."
01:02:38	Shaan Puri	Live with zero.
01:02:39	Sam Parr	Yeah.
01:02:40	Jesse Pujji	So, I'm like, "Alright, we're not gonna do that." Then I kind of feel sad for a few months. But then the entrepreneur in me goes, "Wait, come on, there's gotta be another way to approach this," right? So, St. Louis is not a big place. I asked a couple of people, "You know Nelly's people, right? Can you introduce me?" I get to know them, and they're great. By the way, there's this guy, Mike Chaffin. They're wonderful guys. I get to know him, and they introduce me as this guy who's like an expert digital marketer and e-commerce guy. So, I'm like, "Hey, what's going on in your world?" They go, "Da da da da da." Then I find out, "Hey, you know Nelly is actually working on two big e-commerce businesses, like his team is." I go, "Oh, tell me more." They tell me all about it, and I'm like, "Okay, well, here's the thing you should think about. Make sure you tag this pro." They're like, "Oh wow, you know a lot about this." I'm like, "Okay, how can I be helpful?" And then I just basically have been working with them. I say, "Right, here's the Shopify app. Do this. Here's a good contractor for this." I'm really helping their team get it going.
01:03:34	Jesse Pujji	It came out that the aux business was launched, and I'm like, "Yeah, I charged private equity firms like $200,000 to $300,000 to do this." Nice, right? And they're like, "Oh, but you've just been doing it for free. What can we be helpful with?" I'm like, "It's funny you ask. A young man's dream would be to have Nelly at his birthday party." And you know, they're his people, so they're like, "Well, let's go talk to him." They go, "Well, he's gotta meet you because he doesn't know who you are, and if he doesn't know you..." So I take my wife, you know, I get my sort of urban look going, and I'm there. We become friends. He's a super nice guy, really friendly.
01:04:03	Shaan Puri	Dude, have you ever been more nervous walking up to that meeting?
01:04:06	Jesse Pujji	I was nervous. My wife was super nervous, like, "Why the hell am I here right now?" We met him in this Soho wannabe in Saint Louis, a club wannabe.
01:04:14	Shaan Puri	You go for the handshake, dap up. What are you doing?
01:04:16	Jesse Pujji	Yeah, you know, not the handshake, but the... you know.
01:04:18	Shaan Puri	Got it. Pull in.
01:04:19	Jesse Pujji	Yeah, of course. And so, that goes really well.
01:04:24	Sam Parr	Oh yeah, my guy. He started using that phrase, "my guy."
01:04:28	Jesse Pujji	And he asked me, "So, what do you want to do?" I think I was like, "Oh man, you gotta come out to EI. We gotta have the intro." It's gonna be like... and he looks at me and says, "Okay, you're a real fan." I'm like, "Yeah man, this is like... you were the guy." So they're like, "Okay, Nelly loved you. We're in." Then they're like, "Wait, what was the date again?" It's May 25th. I'm like, "Well, he's in Napa on the 24th night at some festival, and then he needs to be in Vegas on the 26th day for a day party." They're like, "He would do it as a friend now, or because you've helped him, but he just can't make the date work, Jesse." So again, I'm like depressed for 48 hours, and then I'm like, "No, fuck this! What if I fly in private both ways?" They go, "We'll talk to him. Come back the next day." Okay, he'll do it, but it's gotta be a G4 or better. Oh my god! Now, he does not fly in anything below a G4. So I go and I do a bunch of... you know, I've been flying private a little bit since the Ampersale, and I talked to a bunch of these brokers. I basically get them to beat each other up. It was round trip, so it got a little cheaper per hour than it normally would. But for $60, I got him a round trip on a G4 from Napa to STL, and STL to Vegas. He rolls into the... you know, he rolls in, and by the way, he was amazing at the party. I'll text you guys videos and stuff. But it was scary because he wasn't under any contract with me, so he could have come out, said, "Hey, happy birthday, Jesse," and he could have left. He ends up doing a 45-minute set, and his manager told me, "Dude, he was so hyped. There were all these Indian people who knew his music. He was so pumped that you guys were all just rapping." My brother and I are on stage rapping "EI" with him. It was, dude, it was a top three life moment. It was unbelievable.
01:06:10	Sam Parr	That's so awesome.
01:06:12	Jesse Pujji	Yeah, little story. It was honestly one of the best hours of my life.
01:06:17	Sam Parr	And that was super cool.
01:06:19	Shaan Puri	Lil Dicky, if you're out there listening, I would... I'm turning 40 in a few years. I would love to start, you know...
01:06:24	Jesse Pujji	Getting to the... Dude, you gotta save that money.
01:06:27	Sam Parr	You’re pretty. Yeah, you have to hope that his career just goes down.
01:06:30	Jesse Pujji	Well, I told my wife, "For your 50th, I'll get Beyoncé." Hopefully, by then, I'll have a little more money and her stock will be dimmed down.
01:06:37	Shaan Puri	Yeah, we gotta just catch them right before they hit cameo. They can't be peaking; they gotta be on some sort of a decline, but not all the way rock bottomed yet. So that's what we're going for.
01:06:47	Sam Parr	Jesse, we appreciate you. You're the man! Thanks for doing this.
01:06:50	Jesse Pujji	You guys, good to see you!
01:06:51	Sam Parr	Alright, that's it. That's the pause.

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Jesse Pujji on Bootstrapping a +$1B Business + Selling To The Ultra Rich

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