0:00
I talked to my barber and he tells me this story that's pretty crazy about Muscle Milk.
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0:12
So, he's got my hair and he knows I have the podcast.
0:13
So, every time I go in for a haircut, he just gives me research. And it's great.
0:19
Did my handyman knows knows I have the podcast and he always asks me what stocks he should buy and I'm like, that's not the point, bro.
0:25
He thinks you're Jim Cramer.
0:26
Yeah, he's like, so what stocks what stocks should I buy? I'm like, I don't know. I don't know. Don't ask me that.
0:33
Just change light bulb, please.
0:33
If he asked you like, you know, what's the best way to increase my testosterone right now using an illicit drug, I feel like that is what he should be asking you.
0:42
What kind of Clearly he's not a listener.
0:44
What can I buy from a forum that will make my tendons stronger?
0:46
Like you Sam has answers to those type of questions.
0:50
Yeah, I'm like, do you want to know some really cool subreddits or illegal place to download books? I got you, bro. All right, go ahead.
0:58
I talked to my barber and he's like, dude, you know whose hair I was cutting?
1:03
Um He goes, he's your neighbor. I'm my neighbor.
1:06
He goes, yeah, the guy lives just down the street from you.
1:07
It's the family that started Muscle Milk.
1:09
So, they started back in 1998 and it actually started because he bought a sub brand called CytoMax from his employer.
1:22
And which is like, who does that?
1:22
Who Who goes to their employer and is like, hey, can I buy this like asset that's kind of undervalued or whatever?
1:29
And it's a niche product and he has this idea which is he names it Muscle Milk because he wants to name it after mother's milk, like after breast milk and he wanted to make a drink that had the nutritional profile of breast milk.
1:42
Cuz he was convinced that breast milk was the most like nutritious food ever.
1:46
It's not ended up It's not what ended up working, but I think it's a hilarious starting point. Yeah.
1:49
It's sort of like how SpaceX started cuz he wanted to send like a a small plant to Mars and now he's like, you know, built like a trillion-dollar company doing this.
2:00
You know, what's the colostrum?
2:00
I get so many ads on on Colostrum good stuff.
2:05
Dude, and I don't Is it like from a animal or a human? It's from a cow, yeah.
2:11
Damn, so I'm like depriving some newborn cow from you know, like her fresh milk.
2:18
Well, that's how all Have you ever seen how milk is made? It's pretty insane. No. No. how milk is made? It's It's messed up.
2:24
Is it just tons of devices that hook onto you like an alien?
2:27
All right, this is this is my wife vegan so she's forced me to like go down this road to like acknowledge what what goes on.
2:33
Here's how a lot of milk is made.
2:34
I can't say all, but I think this is like the mainstream way.
2:38
They impregnate a cow artificially.
2:41
Literally a dude sticks his hand in and like artificially inseminates a cow. Gets the cow pregnant. Cow has a baby.
2:47
Baby is then ripped away from the cow, but placed nearby so that the mom can hear the crying and will produce more milk and then they take the milk.
2:58
Yeah, I mean, that's that's sad. [ __ ] up. I hate that.
3:02
What kind of podcast is this?
3:04
Dude, I literally drink a sad-ass vegan podcast is this now.
3:07
I drank a glass of whole milk just last night. And now I regret it. What up, YouTube? Sean here.
3:16
You guys know that I have started a newsletter company and sold it. Sam has done it, too.
3:19
Sam built The Hustle, got it to millions of subscribers, sold it to HubSpot.
3:22
I built a company called The Milk Road.
3:24
It's a crypto newsletter and sold it for millions of dollars 1 year later.
3:27
And we've both had success with this newsletter business model.
3:29
So, the team at HubSpot got together and they did a research project called The Future of Newsletters and they're trying to put together some research around where they see opportunities for the newsletter industry, what are some of the, you know, sort of checklist, some things you should pay attention to when it comes to newsletters, and a bunch of other data and research that they're packaging together.
3:49
If you want to check out what the HubSpot team has put together, go to the link below this video and and download it. It's free.
3:55
You can check it out and you can learn something about newsletters. Back to Muscle Milk.
3:59
Okay, so Muscle Milk, not actual milk, it's a supplement and it starts out as powder you put in a drink and he's like, cool, I think bodybuilders are into this.
4:07
They're willing to drink this kind of chalky nasty drink and he buys it and basically it's a family business.
4:13
So, it's Greg Pickett and his his kids are involved with it.
4:19
And what's cool about this business is years later Muscle Milk becomes a household brand.
4:23
They end up selling the thing for $450 million.
4:25
This I'll make almost half a billion dollars off this Muscle Milk thing.
4:30
The guy lives down the street.
4:32
They basically started this as a cul-de-sac company, meaning he lives in one house, the son lives in another house, the sister his daughter lives in another house and they all just live in one cul-de-sac.
4:46
The kids play together and then they just built this behemoth that way. Like isn't this insane? That is badass. That is badass.
4:52
That was like inspiring to me.
4:54
It's just like a family like you've heard of a family business, but dude, just imagine the cul-de-sac business.
4:58
I'm kind of inspired by this.
5:00
Very much in the vein of thinking of find the people you love and do life with them.
5:04
Like so, how did How did it win?
5:06
Um Muscle Milk Wait, really quick, have you seen Land Man, the oil show?
5:12
Hell yeah, I see Land Man.
5:13
I might have wore cowboy hat yesterday just feeling a little Billy Bob Thornton myself.
5:17
I haven't seen it, but this clip I just saw makes me want to watch it.
5:21
But basically Jerry Jones comes on and Jerry Jones like gives this like amazing acting performance where he talks about the importance of working with his family and how he's proud of his wealth and his real estate and he's proud of his the the Cowboys, but you know what he's proud of most?
5:35
Is that I got to spend time with my kids and we work together and that's why they're here at my deathbed because they loved me and we got to spend a whole bunch of time together.
5:44
And I heard that speech and I was all in for one. I was all in.
5:46
And two, Jerry Jones, who would have thought?
5:52
He like had tears in his eyes.
5:54
I did not think he could act like that.
5:56
Well, so somebody was saying they're like, I don't think I think this is such a good performance cuz he's not acting.
6:00
I think all of this is just true for him and he just said the truth which which is great.
6:06
By the way, Land Man, fantastic show.
6:08
Yeah, it was such a good scene.
6:08
All right, so tell me about milk and muscles. Milk and muscles.
6:12
All right, so they start the business pretty humble plan.
6:18
They bought this like kind of supplement and it's powder you mix into drinks.
6:21
And they were like, look, if muscle if bodybuilding enthusiasts drink this, this would be great.
6:26
We think we can make this more mainstream, but we don't really know how.
6:30
We just kind of are believers in the general idea.
6:31
And they were like, look, if this thing ever got to like 18 million in sales, that would be like imagine that. That would be crazy.
6:40
And they that was like at the dinner table talk.
6:43
By the time they sell, this thing is doing over 200 million in revenue and about 60 million a year in profit before they they sold.
6:49
So, they they had built like a really sick really successful company. Um How did they do it?
6:55
They eventually And And what I love about these stories is you hear about the story and you're like you nod your head, you're like, yeah, yeah, that makes sense how that happened.
7:03
But then you look at the timeline and sometimes I'll force myself to literally draw out the timeline.
7:06
So, it'd be like, all right, 1998, they start the company.
7:10
And then I'll draw '99, 2000, 2001, 2002, 2003, 2004.
7:12
It's like 2004 is when they actually made the product that hit, which is the ready-to-drink like we've all seen, you know, the Muscle Milk carton.
7:25
And so you when you hear that, you're like, okay, cool, 2004, then it really took off and you just sort of read the numbers and the revenue ramping and it looks good.
7:30
But then you think you zoom in and you you force yourself to look at that like five or six-year time period and you're like, there's not they don't even talk about what they were doing during that time cuz it's just like the forgotten the forgotten grinding out years of trying to make [ __ ] happen and staying in the game long enough to get lucky.
7:48
And what were they doing? They were just selling.
7:51
They were just trying to sell and they were selling to like the really small niches, but ever expanding out of that niche.
7:56
And eventually he has an insight. The dad has an insight.
8:00
And the insight is basically like, hey, you know what? Flavor matters.
8:03
And he's like, if more people are going to drink this, it's going to be because I I Can I get this to taste like dessert?
8:10
And he realized that the initial market they were looking at, which was bodybuilders, they took pride in drinking nasty [ __ ] And so anytime you try to make like a fruity better tasting thing, sweeter thing, they almost kind of rejected it because it felt less hardcore and they were super hardcore and that's who the market was.
8:28
of people who like take testosterone or steroids or Ozempic and a lot of doctors will offer you a pill, a cream, or a syringe.
8:36
And I've asked the doctors and they go they all want the syringe because it feels more like this works better.
8:43
It's going through my veins. I can feel it. Right. So, yeah. Exactly.
8:48
And I think that's true for the early markets, the hardcore markets.
8:51
You know, Ben is like this.
8:51
Ben is an early adopter of every product.
8:53
As soon as a product gets popular, his interest completely drops in it. Right?
8:59
Cuz the fun part was doing the hard thing, getting the edge, being ahead.
9:03
And so same thing for bodybuilders.
9:03
So, what the the genius of the business is that they saw that hey, okay, the market we see today, the people who are buying it today, actually is different If we want to reach this other market, we got to like ignore all the signals we're seeing today.
9:16
So, he goes into the lab and he starts doing small batch production and everybody else was so big that they could only test flavors in basically bigger batches.
9:27
And so that meant slower cycles.
9:27
It meant kind of like getting less like tight feedback loops.
9:32
So, what he did was he goes to LA and he starts testing flavors in like 15-gallon increments.
9:40
And he pours it and he gives it to people and they're like, too chalky.
9:43
Then he gives them another one, they're like, too sweet.
9:44
He gives another one and he finally makes this vanilla flavor that they're like, this tastes like dessert. I love this.
9:49
And so he brings those flavors into the ready-to-drink beverage and it just takes off. It goes nuts.
9:56
And eventually like Walmart starts knocking and Walmart's like, "Hey, we want to carry this."
10:00
He's like, "Dude, we can't even fulfill Walmart."
10:01
But he's like, "All the specialty stores, the GNCs, it's flying off the shelves."
10:05
And for you like the first year they're like so inventory constrained because he nailed the flavors.
10:12
So what my barber was telling me, which is fascinating, what caught my attention about this, he goes So this dude down the street, they created Muscle Milk, sold it for like $500 million, but the cool part is he goes, he didn't sell the flavors.
10:23
I go, "What do you mean?"
10:25
He goes, "Yeah, there's some story."
10:26
He goes, "It's not out there, but the guy I always that cut my hair you know I've cut his hair he's telling me the story." on blast.
10:33
It's not like insider trading.
10:33
He's just telling me it's a really cool story, but he's like, you know, when you go and research it's not this part's not as reported.
10:39
So maybe he got some of the details wrong, that's my my caveat, but here's what what it what he explained, which was basically the um when they did the sale, they sell the brand Muscle Milk, they sell the operating business, they sell all the distribution.
10:53
And then the buyer was like, "Cool, and the flavors?"
10:56
And they're like, uh actually we have our own separate company that does flavors.
11:03
And we're not going to sell you that company.
11:05
And they're like, "Well, we need the flavors."
11:06
Like, "Cool, yeah, we'll do a licensing deal.
11:07
Like well, we can provide flavors, but we won't sell the flavor company."
11:11
And again, this is where the details are not reported.
11:13
So either that's what happened or right after they sold they started a new flavor company cuz now this is what the family does.
11:19
They have this um flavor house that they created.
11:22
And they were like, "We're not going to do any brands anymore, but we will do flavoring."
11:25
As like that's our that's what made Muscle Milk successful and that's what we're going to do now as a service.
11:33
And now they've got a bunch of customers for this flavor brand that uh this flavor house that they've created.
11:36
And if you look at their facility, it's like this insane like, you know, huge facility with like a [ __ ] vacuum sealed room and they're like, "Oh, we do this technology like spray flavoring where you can add flavor to things that doesn't add any calories."
11:51
And they're basically it's all about flavor tech.
11:54
And I Just like fascinated by flavor houses and flavor technology.
11:56
It's called Flavor Insights.
12:01
It looks awesome and I see like the they have a video with the father and his son and on the about page it's the whole family.
12:08
This is my dream by the way.
12:10
This is how I want So can I tell you why this is even more your dream?
12:12
While he's building Muscle Milk, he's got a hobby.
12:14
And I know that you love a man with a real hobby.
12:16
And his hobby is racing cars.
12:18
And he has his own racing team that he created and then he himself races.
12:23
And I I don't know [ __ ] about racing, but is it Le Mans Le Mans Le Mans. Yeah. Le Mans.
12:30
it's like a a famous Le Lou Le Mans?
12:32
track, but it's like a the famous thing is like it's a 24-hour race.
12:34
And so like Ford versus Ferrari and all these things.
12:39
I think he like won the race or he performed really well. How impressive is that?
12:42
Is this like just rich guys doing it or is he competing against like real racers?
12:46
I'm not a real race enthusiast, so I could be wrong, but yeah, it's like dude, like the story Ford versus Ferrari, it was about the time that Ford beat Ferrari at Le Mans.
12:53
Like it's like a big deal.
12:56
Yeah, it's like a movie worthy deal.
12:58
You know like Rudy style movie of underdog winning Le Mans. Right. So yeah.
13:05
the guy the Jason Fried's co-founder?
13:08
He competes in Did he I don't think he won, did he? He won. Yeah, he won.
13:09
I think he I think he won the race and he said he's competed in it 11 times.
13:16
Yeah, it's sort of like um and oftentimes like the company that wins, they win for some innovative reason and then like 10 years down the line that car part that helped them win becomes like the norm. Got you. Got you.
13:29
Um yeah, so that's like a big deal.
13:31
Isn't this a it's a total like life goals story? Build a killer brand.
13:33
You stuck with the thing, you built it with your family, you do it in the cul-de-sac.
13:38
Uh I just think it's it's amazing.
13:40
Sell the thing for $500 million. Yeah.
13:42
none of his kids are yolked. Right?
13:48
Like these guys, they don't look very yolked.
13:50
I'm looking at the family now.
13:53
Well, as their public defender, here's what I have to say about that.
13:55
One of the things they talked about with Muscle Milk is they go, "We wanted to build a product that everybody would look at it and see a different thing."
14:02
So they go, "Women see it as a weight loss product.
14:06
Men see it as a muscle building product.
14:08
Some people see it as a snack.
14:08
Some people see it as a meal replacement.
14:09
Our goal was to build a product that you that would basically, you know, solve multiple problems for different people at once.
14:19
I'm just saying that I want to see some bigger buys and tries on this family photo. They look great. They look very healthy.
14:25
More probably they look happy.
14:27
The founder's teeth are beautiful.
14:27
Like he's got a really nice smile.
14:31
I just think that we should see a little thicker neck.
14:35
Can I tell you one other thing?
14:35
So this company that bought them originally now they own it it's Pepsi. Yeah.
14:39
Pepsi owns it now, but before that they were it was bought by somebody called Hormel Foods.
14:44
It's one of these companies that you'd never heard of.
14:45
This company does $12 billion in revenue.
14:47
They do like a billion and a half dollars of profit a year.
14:51
And if you go to their website they like the the headline like tagline for them is like we sell more pepperonis than anyone on Earth.
15:01
And they're just like food holding company.
15:02
They own Skippy peanut butter, they own Planters. They own Spam.
15:07
They own Spam and then they sell just a [ __ ] ton of ronis, dude.
15:10
They just sell pepperonis worldwide.
15:13
They own Applegate, they own Justin's, they own Planters, Skippy, Chi-Chi's.
15:15
I don't know Chi-Chi's is They own black label bacon.
15:21
They own a lot of [ __ ] I mean literally Spam is like on their homepage as like their like their their pride and joy.
15:28
Like the way my parents pinned like pictures of me up on the fridge, that's what this company does with with Spam.
15:33
Which is like it's pretty pretty good.
15:35
Horrible for you, but oh dude, horrible Yeah, Hormel pepperoni, I know them. That's one of my snacks.
15:41
One of my snacks is like eight pepperoni with a little bit of mozzarella cheese on it microwaved.
15:43
It's a pizza without the the pizza?
15:45
Yeah, I just call it like A pizza hold the dough?
15:49
Just just pepperoni and mozzarella? Redneck fitness food.
15:55
Dude, this should be your brand.
15:55
A line of of not that bad for you redneck snacks.
16:02
It's like it'll it'll make you farm strong.
16:06
Yeah, do you know like PB dip?
16:06
You know you know I call it dip, but you know PB powder? The powder, yeah.
16:10
Yeah, you get a spoon of that and you and you chuck it up on your the top of your roof of your mouth and you suck on that thing for 60 minutes.
16:16
I call it like fitness dip.
16:18
So like instead of like having like a fat lip or in, you just have a PB dip.
16:22
You're just and your tongue you just rub it against the the dehydrated nut. Ooh boy.
16:31
Ooh boy, you want to have a good time?
16:33
Put a little PB dip on the roof of your mouth.
16:37
All right, we got our we got our cold open for the episode.
16:39
Um By the way, let me show you one thing.
16:43
You said something that I do religiously.
16:45
I just sent Ari a document that I I just sent her one of the tabs.
16:50
I have dozens of tabs on this.
16:50
Ari, can you share your screen?
16:55
So whenever I read a book, I have this Google Doc that I've used since the year like 2010.
16:59
All right, so check this out.
17:02
Whenever I read a book, I do a few things.
17:04
One, I make whenever there's like a year and a money term or some type of milestone, I write it down in a sheet.
17:12
And the reason why I write it in a sheet is because a lot of times when you're building a company or doing anything that's like really challenging, you you'll read about someone else and you're like, "That was easy."
17:23
And so I like to do timelines and you'll see like, "Okay, they went four years with nothing happening."
17:28
So for those listening, I have got a timeline of Coke Industries, which is like the largest privately held company in America.
17:33
I read the biography of the family and I like did a timeline where every everything major happened in their life and then I converted the dollar amount into 2019 dollars, which is when I made this particular one.
17:45
And it's really fun to do because you could see that things took like in this case like 30 years. Right.
17:52
And so if you like uh if you scroll all the way to the left, I did this with uh Kirk Kerkorian, another one of the a guy who I love.
17:58
And I've I every biography I read, I I create one of these.
18:05
Just another man you love.
18:05
Can I just point out a couple things about this what we're screen sharing here that are just just fantastic.
18:10
This is is just a a peek into the mind.
18:12
First of all, it's a Google Sheet that's just called Sheet, which is just a great title. Okay, scroll over, Ari.
18:19
So here is some of the milestones that Sam wrote down.
18:22
All right, so it starts for for Coke Industries. 19 1900, Fred Coke born. Uh 1924, so 24-year gap. Big break, finds mentor.
18:33
Okay, so then it goes 1927, just a quick update, still broke.
18:38
Then it goes 20 1929, see success.
18:38
1931, big success with two Gs.
18:47
Just a big double G success right here. It's amazing.
18:52
And then 1940, he buys a company and that company he buys it for $4 million.
18:57
You also should just have pictures on here where it's them and the calves and it's just your calves just for reference and you're just comparing calves cuz I feel like tell me that's not part of your research process is it looking at photos and judging their looks.
19:11
Yeah, particularly the Koch brothers cuz they're like these tall waspy guys and I definitely am sizing myself up to them. Yeah.
19:21
The the total picture of success includes a picture. For sure. like tennis sweaters.
19:25
It's like, "Oh, they're into tennis sweaters, therefore I will wear tennis sweaters."
19:28
But yeah, I definitely like two guys that are both 6'2" from the Midwest with blonde hair, blue eyes.
19:36
Like we there's definitely like a there can only be one of us in this room.
19:43
Dude, there's this girl who keeps going viral on Twitter and it's the same tweet she does every time and she just goes, "My dad goes to a bar with his friends every Friday, and he makes a list of topics to discuss. Yes.
19:54
And then she she puts she has a photo of him holding a printed out agenda, and I'll just read you one of them.
20:01
Ted Perry's fun capital story shown on Fox News 6.
20:05
Next one, what's going on with the Bucks? Question mark.
20:06
NFL overtime rules, take ball first or second? Question mark. Bahama breezes.
20:14
How close is too close to an alligator?
20:16
Do you think people that throw garbage out of their car window are the same people that don't pick up their dog poop when walking through my subdivision?
20:21
And then it read at the bottom it goes, please be on time.
20:23
As you can see, we have another week of a packed agenda.
20:28
And it goes super viral every time.
20:28
It's like 100,000 likes, and I think everybody who sees this is like, yeah, that's part of the winning life.
20:32
I'd like to go to the bar with my friends every Thursday and have like an agenda that we print out and we talk about it while wearing our New Balances.
20:40
Do you know who does this? And he's not joking.
20:44
I already know, cuz you're talking about a legend, a social legend, and I know it has to be Nick Gray.
20:48
Tell me I'm wrong I'm wrong. Is it not Nick Gray?
20:50
The second time I hung out with Nick Gray, we went to a bar called Lazarus.
20:54
Sarah and I came, and he goes, hey guys, I would love to hang out.
20:58
It's our second time hanging out.
20:59
I thought it'd be nice to have an agenda so we could stay on track.
21:02
And there was a 13-point agenda list where it was like, ask Sarah about her job, figure out how that's going on, explain my dating life and get opinions from it.
21:13
Like it was a and we stuck to that agenda and he took notes.
21:18
And it was Cuz I think I'm going to absolutely love doing this. It was thrilling.
21:22
You know how like You know how like Was it the agenda that was great or the fact that he had an agenda that was great?
21:29
Which which of the two was great? one. Here's why.
21:30
So, look, in a world everyone wants to be a tough guy.
21:33
It feels good to be a leader, but you want to know something?
21:36
Everyone likes getting led.
21:38
And like we like the assertive person.
21:43
a leader who loves being led. Yeah.
21:45
Like That's on my LinkedIn.
21:45
I I like leading some stuff, but then there's other times where it's like just tell me what to do. And Right.
21:52
small talk is one of those things that no one just like tells you what to do.
21:55
And when there's an assigned leader who has something outlined for small talk, I'm just like, yes, sir.
21:59
I'll do whatever you like me to do.
22:02
And thank you, may I have another, sir?
22:04
Like it's like the best way to go about doing stuff.
22:07
And that's what Nick Gray does. Okay.
22:10
And by the way, that's how we do this podcast, actually.
22:11
We both bring some agenda items, and then we discuss in bullet point form. Yeah, I think it's good.
22:18
I He's done that for years, and it's awesome.
22:21
All right, we're going to normalize having conversational agenda hangouts with an agenda. Okay, let's do more.
22:29
I have a business that's pretty cool. Can I tell you about it?
22:30
Here's my Here's my opening for this business.
22:34
Sam, I found the business that you should have started instead of wasting your goddamn time with the Hustle. Okay, I like that.
22:40
So, you built the Hustle, and if you recall, one time you came to me hat in hand absolutely begging for an investment.
22:50
You needed the money, and you got down on your knees.
22:53
And you said, please, sir, invest in my company.
22:56
And I looked at it, I I flipped through the business plan like it was a flip book, and I just said, no, thanks.
23:03
No, that's not what you said.
23:03
You said, look, Sam, you're coming to a knife fight with a knife.
23:09
I don't even want you to come to this knife fight with a gun.
23:11
I want you to come to this knife fight with a magic [ __ ] wand.
23:14
And And that clearly away on my heel with a dramatic spin, and I left the room.
23:23
And then you tried to pull the door to open it, but it was really a push door.
23:28
Totally blew it at the end.
23:28
Did not stick the landing.
23:29
Like you clearly had just read that on a whatever the equivalent was of Twitter, and you're like, that is now my line. Yeah, exactly.
23:40
Back when I was like I had it written on the inside of my palm, and I was like, Peter Thiel says this magic wand thing.
23:45
Say that to somebody, totally owns them no matter what they're doing.
23:47
Um so but you know, the reality was I looked at the business, and you were like, here's what I'm doing.
23:53
I am creating a media company, so every day we're going to write the news.
23:57
So every every day you had to recreate your product. Yeah, that sucks. that sucks.
24:02
Um it's like, do you get any Is there any benefit of all the work you did in the last 3 months? It's like, not really.
24:07
We got to recreate it again.
24:07
We got to bake that cake every morning. Okay, sounds good.
24:12
And then you said and then I was like, cool, so then people pay you certainly for this service that you're doing.
24:17
You're like, nah, it's free. Oh, okay.
24:19
And you're like, but then the advertise then we have to do a separate business basically to a separate customer selling advertisers.
24:23
I was like, okay, but certainly they're on retainer and it's going to be recurring revenue that's going to stack up. You're like, no, no, no.
24:30
They're just going to if they feel like advertising, they will.
24:33
If they don't, they don't.
24:33
Every month we're going to start back at zero. Yep.
24:36
And I thought, damn, this is a tough business to win.
24:38
And that's when I hit you with the knife in the knife fight and blah blah blah.
24:41
Which it is tough-ish to to do well. Yeah.
24:45
And by the way, the the best punchline of the whole thing is 5 years later after you successfully sold the business and got rich doing it, I then copied your business model and did the same thing for crypto and and was like came back to you basically being like, what How do you What was the business plan again? How do you do this?
25:01
Um so so that's the the end of that story.
25:02
Now, here's a better business that somebody created 5 years ago that has the following profile.
25:09
They don't recreate the product every day.
25:10
People pay them for the product on a subscription.
25:13
It's in a hobby that you love doing, and it's a thing you were doing anyways for free, so I think you would have been it.
25:19
And also it uses your gift, which is making things simple, summarizing things, making them easier to understand, saving somebody time doing it.
25:28
And this person has bootstrapped this business to 200 million in revenue with 30% profit margins. I have no idea. What is this?
25:37
It's called Headway app, and it is a book summary app.
25:41
So, this guy in the Ukraine created this company where he takes popular books and he summarizes them, and the promise is basically, instead of reading the book, I already read it, I summarized I can tell you main point one, I can tell you main point two, I can tell you the main point three, and in under 15 minutes you can get the gist of what's in this book.
26:03
You'll get, you know, the the big ideas, and you'll get them explained to you.
26:06
You can either read it or we have AI that turns it into audio, and you can listen to like a 15-minute summary of this book.
26:13
And we've done it for 1,500 of the most popular books.
26:15
And people pay a simple 12, 13 bucks a month for this.
26:20
And this has become an absolute juggernaut.
26:22
So, I did not think that these book summary apps could get this big, but damn if that's impressive.
26:29
200 million in ARR, 30% profit, built this thing out of the Ukraine.
26:34
They just raised funding at a 2.
26:36
3 billion-dollar valuation. Right. Right. Holy crap.
26:42
you could have done that instead.
26:42
And I think you would have been great at this.
26:45
By the way, we know here's why I said that this this like you could have done this, because when I went and looked at their ads, right?
26:50
The way The way this business grows, they run ads on TikTok, on Facebook, whatever.
26:56
And the hook of their ads, tell me if this sounds familiar.
26:59
My boss thinks I'm a genius, but and thinks I read 150 books a year, but actually I just use Headway. That's their ad?
27:08
It's not it word for word.
27:08
I just wanted to really bait you with that one, but it's basically the it's basically the gist of their ads.
27:13
This is the same value prop as the same ad. I invented that ad.
27:16
I stole it from someone else and I invented that ad. That's my ad.
27:26
That's the ad That's my ad that I took.
27:29
Yes, I stole that from the skim, and I invented that ad.
27:31
Their ad is a little bit more like um it'll be, the average CEO reads 52 books a year. How many do you read? Right?
27:41
So they're basically making you feel like a shitty CEO.
27:43
Or it'll say, everyone thinks I went to Harvard with the amount of books that I know, but actually I just use Headway.
27:48
Or it'll be, here meet the app that all the intellectuals are using. It's stuff like that.
27:54
And so those are the sort of hooks that they use to get people to do this where they're not saying, here's a book summary, they're basically saying, be a smarter person and be seen as a smart person because you seem so well read, and here's your hack to seeming so well read.
28:10
So, what's interesting is Thrive. Thrive.
28:14
should use this for the podcast.
28:15
It's like, my boss thinks I'm kind of [ __ ] but know a lot about business.
28:19
The secret is I just listen to My First Million.
28:23
But I still sound a little [ __ ] My boss is so impressed that I know all these numbers.
28:29
But then he wonders But then he fact-checks me.
28:37
Um My boss is wondering why I have pepperoni in my mouth. This is ridiculous.
28:43
These guys So, they raised money from Thrive, which Thrive is a big VC investor in ChatGPT.
28:47
Are they not worried that ChatGPT just does all this?
28:54
Well, they are themselves using AI for a bunch of stuff.
28:56
Like if you go look at a bunch of their ads, they're all like AI-generated ads.
29:00
I think, you know, businesses like this that are like super laser-focused on one thing, you know, even if you can use ChatGPT to generate a summary, that's not the same thing.
29:10
And I think, you know, Dude, they're not even old. They started in 2019. I know, right? Super impressive.
29:16
They also have done this other app.
29:18
So, there's this one ad that was like so frustratingly good it made me pissed that I didn't think of this.
29:25
It's this simple-looking puzzle.
29:27
Tell me if you've seen this.
29:29
I don't know how I don't know how much you use these.
29:29
Like it's like in a lot a lot of games this ad pops up or TikTok.
29:34
It's this like it's like a maze.
29:36
Imagine a maze, and it's like you you start on this dot, you have to get across without picking up your pen.
29:43
And it just shows somebody trying to do it, and they're messing up. Yeah, yeah, yeah.
29:45
And it's like, try see you can solve this.
29:47
Only 5% of people, you know, can solve this, but 50% of fifth graders can do it or whatever.
29:52
And you're like, "Ah, I got to see if I could do this."
29:55
And you download the app.
29:56
By the way, that puzzle is actually impossible.
29:58
If you There's There is no solution to it.
30:00
They just put it in They put a thing that looks simple, but you can't figure it out.
30:03
You can't figure it out cuz it is actually an optical illusion.
30:06
It's actually impossible.
30:08
But it that's their game.
30:09
to down Yeah, they have this other app called Impulse that's done like 70 million downloads.
30:13
And it's a brain training app.
30:15
And the the framing of that is basically keep your brain sharp with these little like mini mini mind games.
30:21
Um and like you know, my mom likes a lot of these things cuz she feels like, "Oh, I'm getting older.
30:27
I should I should have these little things on my phone that um you know, keep me sharp."
30:31
So, she plays Sudoku and crossword and she she downloads apps like this.
30:35
So, there's a skill set They're just like crazy good internet marketers internet marketers and really good like creating apps that replace Apps that first and foremost get you to convert and become a subscriber and then yeah, obviously, you know, the retention helps.
30:51
Uh and you know, this guy talks about He frames it as micro learning.
30:53
He's like, "Micro learning is this How do you get somebody to spend 5 to 15 minutes a day getting smarter?
31:00
What if you use your phones to get smarter instead of just to waste your time?"
31:03
And so, he makes it sound like this grand noble mission and at the same time on the back end, it's just this ruthless funnel that is like Buy now. Buy now. Buy now. Buy now. Convert. Convert. Convert. Convert. Convert.
31:15
And like that's the game.
31:16
That's what you got to be world class at.
31:18
We talked about um Was it Remember the period app or Flow?
31:22
Were they Were they Ukrainian as well?
31:25
Yeah, so Dude, these guys all have like a a crew.
31:27
There's like these Eastern European app makers where they have these family of apps and you go look at their website and they're like no raise no funding and then they'll have like 300 employees and then their apps will do like, you know, 100 million downloads a year.
31:40
And it's like based out of Kiev or whatever, right?
31:45
Like this just seems to be a pattern.
31:46
I think there's like a just a very high density of talent that knows how to build this specific type of company.
31:53
Yeah, they're just like all homies and they all have this like I don't know this idea of like it feels fun to get one over on someone, but then they're like, "All right, if we're going to have that attitude, we should also like provide value so we stick around for a long time."
32:05
Which is like what every internet marketer ever has.
32:08
They're like, "I'm going to do something shady."
32:09
And they win and then they're like, "Oh, but it'd be a lot cooler if the customers came back to us or if we didn't have to refund people constantly."
32:15
So, let's just like do the shady stuff up do it for something like Like if I could tell my mom what I do without shame.
32:20
Which is like what every internet marketer ever has done. Um but this is badass. How did you find this? How did I find this?
32:28
Actually, that's another good story.
32:30
Have you seen this Twitter account Arthur Rock?
32:33
Well, Arthur I know that Arthur Rock was No, it's a it's like a parody account.
32:37
It's Arfur Rock is his his account. Have you not seen this? This thing is amazing. How do you spell Arfur?
32:43
Bro, just you try to spell Arthur and naturally just see what happens.
32:47
You'll land exactly at the right thing. It's A R F U R. Got it. Arfur Rock. Arfur.
32:55
Okay, so it's this guy who's this like anonymous He's like this anonymous VC and what he did is he just created this Twitter account where he just tweets out numbers from companies that are raising money or trying to sell.
33:09
And he's just like leaks information.
33:11
And so, he's this just this giant leak.
33:13
And so, he tweeted out the numbers for Headway app.
33:16
But if you just look at his feed, his feed is like pure signal cuz it literally just be like uh It'll be like Post Hog, 13 million in ARR, growing 2x year over year.
33:25
They're currently raising.
33:28
And it'll be like or like somebody will be like, you know, the the founder will be like, "We're We're pleased to announce that we raised our series C from Excel.
33:36
It's a huge milestone and we feel so validated."
33:38
And then he'll just tweet out He'll retweet a quote tweet and just go, "50 million ARR as of November, up 1. 8x year over year." Congrats.
33:47
Or there's like another one that like they raised that $400 post.
33:48
They did $6 million in 2024. Congrats. Yeah, exactly.
33:56
Like how amazing is this?
33:56
This is like the best Twitter account, right? This is really good.
34:02
And you know what's funny and we've seen this again and again and again.
34:04
These meme people anonymous meme jokers are like right a lot. You know what I mean?
34:13
It's sort of like how um Esquire or What was it called?
34:17
American What What was the tabloid that like is in the grocery store? Enquirer? National Enquirer?
34:23
Yeah, the the National Enquirer.
34:24
Like they say a lot of [ __ ] but they also like predicted like the Bill Clinton scam or Bill Clinton stuff before everyone or like the John Edwards affair.
34:34
And so, like I do love following these anon accounts. This guy's great.
34:38
Yeah, like Hallow, a Catholic prayer app doing 60 million ARR, growing 3. 5x a year.
34:45
Yeah, like he did and he'll also post updates.
34:48
So, in May, he'll be like, "Suno, the AI music app, just closed around 15 million ARR in the first year.
34:54
Lightspeed invested at 500 million post. Congrats."
34:56
And then he'll then you know, that was May and then in October, right?
34:59
So, like you know, 5 months later, he just wrote, "At 40 million ARR now."
35:02
And this guy's just providing I don't know you're not a you're not as big of a like a basketball fan, but like in basketball, there's these two guys who were like famous on Twitter for just like just have sources everywhere.
35:12
So, it'd be like Shams and it'd be Woj.
35:14
And they would just always have intel and there's all their entire Twitter feed is literally just inside info.
35:20
It'd be like, you know, "Sources say Jimmy Butler wants trade.
35:23
His list of teams that he wants to go to are these four."
35:27
Or it'd be like like during the NBA draft, like, you know, 45 seconds before every pick, they'd just say, "They're taking this guy."
35:33
And it would just spoil the draft.
35:35
If I'm one of these Ukrainian guys, like I don't have the skill set to do this. I'm not technical.
35:41
But I wonder if you like Do you ever wonder why aren't there more people just copying fast-growing companies?
35:47
Like we'll just There are. That happens a lot. It doesn't.
35:51
But I think your I think your question is actually pretty good, which is why aren't there more?
35:54
So, actually I think I answered your question wrong.
35:56
I was like, "No, some people do do that."
35:59
And I think your question is actually correct, which is why aren't there more people doing this?
36:02
And I think I don't want to do this cuz I kind of have a reputation and I don't really want to do it.
36:08
But if I was a little bit younger and if I had the skill set, which I don't, uh like if I see a company that's growing at like 400x a year, which this guy does.
36:15
He's like, "Here's some app that was only doing 5 million in revenue, but they're set to grow 4x."
36:20
I'm like, "Yeah, just go to their website and copy that."
36:24
Yeah, I mean it's not so easy, right?
36:26
Like you could copy a product that doesn't get you the customers.
36:28
And so, you have to not only copy the product, you have to figure out how they grow and be at as good at growth as them. figure that out.
36:38
You can use all this technology like here's what their ads say.
36:40
I'm just going to do that exact same ad.
36:43
You can, but you know, most people who have that ability, if you're if you're that good, you're also able to create new things from scratch.
36:52
And I think also what ends up happening is that a lot of things look similar, but they're you know, they're 80% the same and they're 20% different.
37:01
But that 20% difference is actually a huge difference, right?
37:04
It's just like if you've ever looked at We were talking about flavors earlier.
37:07
It's like the difference between two flavors is like a 0.
37:11
1% change in a certain you know, certain chemical, but it'll change, you know, from vanilla.
37:16
That's how That's the difference between, you know, vanilla and and you know, orange soda or whatever, right?
37:21
It's like there's it's not that big of a difference on the on the whole, right?
37:25
You're doing 80% the same, but it's 20% that's different.
37:26
And so, you know, I actually advise this and and talk a lot about this, which is if you see something that's working, not as company maybe, but like let's say a trend or business model, like, you know, let's say e-commerce or whatever.
37:40
Try to figure out what's working better or worse in a category.
37:42
And then, you know, if you're going to go into that category, you're probably going to end up even if you're trying to be super original, you're probably going to end up with 80% of the things the same because that's just how business is.
37:52
You're not 100% different.
37:52
Uh but the key is to figure out what is your 20% difference going to be and how how well can you execute on that 20% innovation?
38:00
Um and I think that's a more humble honest way of going about things versus I think most people believe they're doing everything 100% original and unique and that's just not true, right?
38:10
Like even This is also for content or wisdom, right?
38:13
Like how many truly original wise thing, you know, I love Naval, but how many of Naval's things are 100% homegrown, not inspired by anything, not not not similar to anything else that was out there? It's very rare, right?
38:27
Like that's not how anybody does things.
38:29
Tony Robbins talks about this.
38:29
He's like, "Yeah, I I learned under Jim Rohn."
38:32
And Jim learned learned under Zig Ziglar or whatever.
38:34
And like it's the same school of thought, but like me putting my twist on it is is what makes all the difference.
38:40
Then you have people like Rocket Internet, which are literally like pixel for pixel clones, but even they operate in different markets.
38:47
So, they'll be like, "Cool, we're building Amazon in Thailand."
38:51
Yeah, Amazon for for Brazil or Thailand or whatever.
38:52
And turns out once you try to do that, you're going to like over time and a lot of things are going to end up different.
38:59
All right, let me tell you a story really quick about some investment thing that I heard about that I would never do, you would do, but it's a thrilling story. Okay. Let me guess.
39:09
It's obscure, overly complicated, doesn't really make a whole lot of sense, too much risk, and will end up netting less than the S&P 500 in the long run.
39:19
No, this one he came out on top, actually. So, the story is this.
39:25
First of all, like I was just listening to Scott Galloway's podcast while I was driving somewhere.
39:28
I think it was like over Christmas break.
39:32
And something happened at the very end of the podcast.
39:34
I was with Sarah and I literally pulled over to the side of the highway and I was like, "Are you listening to this?"
39:39
And she was like, "Shut up. No."
39:42
But I'm like, right, but this Can we get an instant replay on YouTube of your wheel diagram you just did?
39:47
How big is your wheel, dude?
39:49
You're like literally driving a school bus. What was that? It's like a ship. It's a ship. out wide.
39:54
It's like a tractor that you're driving. Yeah, it's a ship.
39:57
I pulled the ship over and I literally had to sit down because she yells at me when I use my phone and I had to like type this out.
40:03
So, I had this note and remembered it.
40:05
But, Scott Galloway had Michael Lewis on.
40:06
So, Scott Galloway is an investor and podcaster.
40:10
Michael Lewis is a an amazing author, wrote about FTX's downfall and he was with Sam Bankman-Fried when this all happened.
40:16
And so, he he, you know, he has a unique perspective.
40:20
In the 45-minute part of this like 50 or 55-minute episode, Scott Galloway just mentioned something where he's like, "Yeah, I bought some of the the bankruptcy claims against FTX."
40:30
And Michael Lewis started talking about something else.
40:34
And then Michael Lewis goes, "Wait, wait, wait, wait, wait. What?
40:38
You made a good investment where you bought the FTX claims? What was that about?"
40:41
And Scott like just casually throws this out there.
40:44
But, the story's actually pretty amazing.
40:45
So, the background is this.
40:47
So, in 2022, FTX goes bankrupt because or sorry, FTX goes bankrupt because SBF, Sam Bankman-Fried, he's over-leveraged and he spent all the money and whatever.
40:57
It didn't work out because of a bunch of different reasons.
41:01
And because of that, $10 billion in customer funds are lost.
41:04
You know, they're just gone.
41:07
And people are distraught. They're freaking out.
41:08
But, when a bankruptcy happens, one major thing happens, which is the person who had the money in FTX, so let's say I stored $1 million in FTX, I now am a am going to have a claim against that company for $1 million.
41:22
So, it's going to go to court and we're going to figure out how do I get my money back somehow.
41:27
And in a lot of cases, you get no money back.
41:29
And so, what happens is these kind of vultures, I mean, I don't know what you want to call them, but they come along and they go, "Hey, FTX owes you a million dollars.
41:40
You're probably not going to get that back.
41:41
You might get that back, but I'll tell you what, you have a million-dollar claim, I will buy that claim from you for a hundred grand.
41:46
So, you get the hundred grand today, whereas the other outcomes are potentially you eventually get nothing or maybe you'll get a little bit more like a hundred grand, two hundred grand, three hundred grand, but it's going to be in like four or five years and you don't even know for sure.
42:01
So, just let me buy your claim."
42:01
And so, sure, you can do that.
42:03
So, it creates a market when that happens.
42:04
But, Scott Galloway, he's kind of a he's kind of a strange guy.
42:08
And he had this quote on this podcast where he's like, "When I see fire, I run towards it."
42:12
Because when cuz I've known enough seeing a lot of bankruptcies that when there's when a bankruptcy happens, there's opportunity.
42:19
And so, Scott Galloway, he reads the paperwork about the claim or about the bankruptcy.
42:26
And what he notices is that Sam Bankman-Fried, unlike a lot of different Ponzi schemes, a lot of times with Ponzi schemes, they're spending this money on coke, hookers, planes, like party [ __ ] SBF maybe did a little bit of that, but you want to know what he was a did real degenerate about? Venture investing.
42:44
He loved investing in companies.
42:47
And one of the companies he invested in a few and I think a lot of them didn't work, but one of the big ones that he invested in was he invested in Anthropic, which is like the number two or the number three best AI company.
43:02
And Scott looks at the numbers and they don't actually say what the valuation was of what of what the they don't they don't say the valuation of Anthropic when Sam Bankman-Fried invested in them, but what they say is that he invested $500 million.
43:18
And Scott does a little math and he's like, "I think the valuation was around five billion dollars, meaning SBF owns 10% of this company.
43:26
And this was happening two years ago.
43:29
He's like, "I think Anthropic is going to raise money at a $10 billion valuation and then eventually one day at a $60 billion valuation."
43:35
Which by the way, as of today, there are rumors that that's happening.
43:38
And because of that, I think I can buy a claim for 20%, so a million-dollar claim for $200,000.
43:43
And if you do all the math, I think I could actually triple or quadruple my money based just off this venture return, let alone if we ever are going to claw back any of the crypto that was lost.
43:55
Well, turns out a few things happened. One, Bitcoin exploded.
44:01
And because of that, well, maybe not because of that, but they were able to recap or claw back a lot of the money and Bitcoin exploded.
44:12
And so, a lot of these people are going to be getting back a lot more money than they actually had in there because the money, you know, the Bitcoin was just sitting there growing.
44:18
And also, Sam Bankman-Fried's investments, one of them killed it.
44:23
Knocked it out of the park.
44:24
And so, I think now, the people who lost money, they're getting something like 125% of their money back, which is not bad for a Ponzi scheme that you were a victim of. Scott said the numbers.
44:34
He goes, "I bought uh $250,000 worth and I sold I bought two a fifty a million-dollar claim for 250 and I sold it for uh uh 90% of the million."
44:46
So, he like tripled his money.
44:50
And Scott like goes through the story and he explains like his reasoning on this podcast and it was amazing, to be honest.
44:58
Like, how on earth you could find value in this way.
45:02
Yeah, that's that's super impressive.
45:02
I actually happened to hear this segment, too, and had the same Yeah, I wasn't driving a bus, but I had the same sort of like neck snap reaction where I was like, "What?"
45:12
What's funny is you said a couple of things, but I don't think you said a couple of things, but I think we have to correct a couple of things.
45:20
One, it wasn't a Ponzi scheme.
45:20
No, I meant like a lot stole customer funds.
45:24
I did I guess I wasn't mean that this was a Ponzi scheme, but it's in that category of like schemes where, you know, a lot of people are like, "How do I get my money back?" Scam. You lost your money. Yeah, exactly.
45:35
The other thing is that he was saying, you know, I valued FTX's stake in Anthropic at four billion.
45:38
But, that's not really what happened.
45:40
So, they sold their stake for 800 million.
45:43
So, I think he put in 400 or 500 million and they sold it for 800 or 900 million in the liquidation.
45:48
And so, it wasn't the Anthropic investment that really paid off.
45:53
He was using the Anthropic investment as a downside protection where he was like doing the math where he was like, "All right, that gets me that gets my investment up just a little bit to like a safe zone, but then what else can there be?" Yeah, exactly.
46:05
So, I but I think his math was wrong.
46:07
So, he said in the thing, he goes, "I valued the Anthropic uh based based on the Anthropic uh stake, I thought it was worth four billion.
46:16
The total claims are nine billion.
46:17
So, I thought Anthropic was giving me 44 cents on the dollar for every dollar of claims that I would buy.
46:24
Um claims were selling for 22 cents on the dollar."
46:26
So, he says, "To me, this is the easiest trade I ever made."
46:27
But, the reality is that the Anthropic stake ended up being worth less than one billion, right?
46:33
So, it would have been 10 cents.
46:34
So, he got it right even though his logic was wrong.
46:38
And we had Sheel on the other day and he basically said his two best investments kind of worked out the same way.
46:43
He's like, "I bought Nvidia in 2017 because I thought that crypto mining was going to take off and Nvidia took off, but not because of crypto mining at all. It turned out it was AI.
46:53
And it you know, kind of like I was wrong, but I was I got massively right."
46:56
He goes, "Same thing with Bitcoin."
46:58
He's like, "I bought Bitcoin early on because I thought it was going to be this fast peer-to-peer transfer thing."
47:05
Turns out that was all wrong, but Bitcoin went up anyways because of this other store of value, gold you know, digital gold use case.
47:10
And so, I think what ended up happening is that he made a great investment, but I think his underwriting was wrong.
47:15
I think that's one of the hard things about doing this like what you know, the smart money investing is that when you're right, you feel like such a goddamn genius.
47:26
And when you're wrong, you chalk it up to, you know, whatever.
47:28
You sort of either mentally block it out, you either say you're wrong or or you think maybe one of your assumptions got got a little off.
47:35
But, this there's also this weird state where you can end up right even though your underwriting was wrong and you can flike kind of like luck and skill.
47:41
And I guess the question is uh I guess like that's one of my my observations I've had in this process of of like as I do my own investing and get some things right, get some things wrong, I talk to other people, it's very humbling to realize how much of this even your wins aren't your aren't yours.
47:57
They're not your wins because you got so much of it wrong.
48:01
Well, and there's an another learning that I had, which is finding value in crap.
48:05
Like, this story like this was the worst that that like this was the worst asset, the worst company.
48:14
Like, you don't want to touch this because A, it's like a scam.
48:17
So, like there's a no go there.
48:20
And B, it's like a reputational ruiner.
48:22
Like, who wants to be involved in this guy?
48:24
And then it's like I have so much better things to do.
48:28
Why would I waste my time with this pile of [ __ ] And what was interesting was seeing Scott walk through his reasoning on how he can still capture value from a horrible situation.
48:39
And I thought that that was really intriguing because that is not how I tend to do things. Like, what do they say?
48:45
Try to trying to catch a falling knife. Like, Yeah.
48:49
when something's bad, it's just going to get worse and you just stay away.
48:53
But, that's not always the case.
48:55
Dude, when I went to Mohnish Pabrai's house and we recorded that podcast together, we did the podcast and then at the end, he's kind of just like touring me around and I go to his desk where he works.
49:04
I like seeing like literally where you sit when you work.
49:09
I think the environment kind of tells a lot.
49:11
And he has this placard on his desk like the way you would have a like if you walk into a bank or whatever, it would be like the name tag of the of the bank manager or something like that.
49:21
But, instead of a name on it, it just said, "Trouble is opportunity."
49:26
And literally, he was reminding him he wanted this on his desk because in those moments where there's panic, where there's trouble, he wanted the reminder that trouble is opportunity.
49:35
And not all trouble is opportunity, right?
49:38
Like one of his isms that he had took from Charlie Munger and Buffett is he puts things in what he calls the two hard pile.
49:45
So, he's like yeah, you know, I look at a hundred opportunities.
49:50
I could probably tell you the three obviously good ones and I could tell you the 10 obviously terrible ones.
49:57
But then the other whatever 77, I'm I just put in the two hard pile and I'm sure some of them are really good.
50:02
But I just throw things in the two hard pile when they're too hard.
50:05
And so for example, you know, I was asked him like what's your thoughts on crypto?
50:08
And he was like well I think there's a case for it.
50:11
I think there's a case against it.
50:12
He's like but I just don't do anything cuz I put it in the two hard pile.
50:15
So, I like I don't need to win in that.
50:16
Uh it's too hard for me to figure out so I'm not going to bother.
50:20
And I think this I the concept of the two hard pile is so valuable because I used to be very black and white about everything.
50:26
Like either it's good or it's bad.
50:27
And if it if I thought it could be good, I would smash my head against the wall trying to like make it work.
50:33
And if it was bad, it had to like stand out as bad for me to like to to throw it away.
50:37
The so you said a hundred ideas The story is the story is this.
50:40
He's at the He's at lunch with Warren Buffett and he goes Warren you I think one of your great gifts is you're a great judge of people.
50:47
And he was talking about like you know, Warren Buffett hired that guy Ajit who like runs their insurance business.
50:52
He's like I just think you're a great reader of reader of people, judge of people. How do you do it? What's your secret?
50:57
And he goes I don't think I'm a great reader of people.
50:58
And he he's like but I'm not trying to be humble.
51:01
He goes I just approach it differently.
51:03
He goes it pays to be a harsh grader when it comes to people.
51:07
Meaning the cost of being optimistic about somebody who turns out to not be great, to let them into your circle of friends or to do business with somebody who turns out to not be great is so costly that I just rule a bunch of people out.
51:19
He goes if you put me in a cocktail party and you let me have five minutes with a hundred people.
51:25
In that five minutes, I could probably tell you the five people who are really outstanding.
51:28
I could tell you the five people who are really lousy and I just don't want anything to do with them.
51:33
They just obviously came off super bad like in in a five-minute interaction.
51:37
But then there's 90 people that I just can't make a judgment on in five minutes and I because so I just put them all in the bad pile.
51:43
They're all in the two hard to know pile and so I just rule them out because it's not worth the brain damage to try to figure it out on a case-by-case basis just so you don't miss a good one because the cost of a bad thing is worth way cost me much more than missing out on a good thing cuz there are more good things that I could just filter for and I'll find those good things like over time.
52:03
They'll be obviously good.
52:04
I'll just focus on the obviously good things.
52:05
And he does this with investing.
52:08
He does this with people.
52:09
And it it's just a very useful heuristic cuz I think most of us try to be if there's a hundred, we try to be accurate at the hundred level.
52:16
It's like I want to have an accurate grade on all hundred.
52:20
And I'll spend all my time on the hard to judge things and I'll get a lot of them wrong.
52:25
But I'm trying to get them right and therefore I'm taking a too much risk.
52:29
Whereas his take is don't take too much risk.
52:31
Take the obviously good and act on it.
52:32
Obviously bad, throw them away and everybody else put them in the two hard pile and ignore it. Can I dumb this down?
52:37
Let me explain why I'm a genius.
52:40
When I go to a restaurant, there's like two columns of entrees.
52:42
I start at the top and I skim down and the first one that I see that's a seven out of 10, I go oh, that's it. Bend you over.
52:54
I don't look at the menu for the rest of the meal. I don't second-guess it.
52:55
I just say the first one that's a seven. That's that that's done.
53:02
And I'm able to do that right away.
53:03
Is this is this is this is this a plat everything is this marriage advice?
53:05
Is this what what what other things does this apply to?
53:08
Where does this not apply?
53:09
I mean yeah, I think like it could apply to marriage.
53:11
Like the idea of like settling is like good.
53:12
Like you settle for something that's pretty good and you can like make it great. I don't know.
53:18
Like is there any like data on like Indian couples who have been uh Yeah, like arranged marriages have like the same quote unquote success rate as like American marriages which are like involved dating and selection and courtship and then eventually, you know, engagement and then marriage versus like the way that Indian couples do it is very much the menu.
53:37
The you scan the the listings and engineer good family, full set of teeth seven out of 10, let's go. Yeah.
53:47
I will see you at the altar for the first time. And then you high-five.
53:51
Uh no, I um I uh I just think that's how I order.
53:55
Like I've done that for years.
53:57
It's just I just don't want I I want less choice.
54:01
And I think what Warren Buffett is actually saying similar which is like I know for certain that these three are fine enough.
54:06
Therefore, I don't care about the rest.
54:09
Yeah, you know that book um the Mark Manson book Subtle Art of Not Giving an F.
54:12
Uh like I think that book it got so popular that it sort of got written off. You know what I mean?
54:18
Like do you ever hear a smart person being like man, I learned so much from this book The Subtle Art of Not Giving an F.
54:21
Like it's not like it's not like a cool intellectual thing to reference because it's pop it's like pop. So popular. It's mainstream.
54:28
It's like if I'm like oh, I really like Justin Bieber's music. It's like okay, what?
54:33
That does like a low status thing to to sort of say.
54:36
But there you know, he brings up one good point in the book.
54:38
The book is basically around one point which is um life is not about caring about everything or not caring about everything.
54:44
It's about choose you know, assume you have a limited set of you know, Fs to give in your pocket.
54:48
Like you got five to give, choose wisely.
54:53
Choose the things you're going to care about.
54:54
So like you know, the menu you you just don't have to care to get that right.
54:58
And that's kind of like the Warren Buffett.
55:00
Like you can just throw a bunch of things in the two hard pile and ignore them.
55:02
Um and then like there may be a few decisions where actually getting it right really really matters and then you have enough bandwidth to actually care about those things cuz you're not caring about everything.
55:15
Yeah, I think that's good [ __ ] What do you want to do now?
55:17
I want to give you one other story.
55:18
Have you heard this Bill Ackman story of his running into the fire when everybody else is running out story?
55:24
The his his four-hour investment decision. Do you know this one?
55:28
Oh man, I thought it was like literally a fire.
55:32
Well, kind of it was the 08 crisis which I think people on Wall Street felt like you know, the the giant fire.
55:39
Oh, you mean Bill Ackman, the famous Twitter influencer? He invests?
55:46
Wait, he he he's an investor? we're joking.
55:48
I hope you're still coming on later. Um All right.
55:51
So, he tells the story of it's 08, the financial crisis happening. Banks are failing.
55:56
Like Bear Stearns fails and then this other bank bank is going to fail.
55:59
And there's people don't know what's going to happen. Widespread panic.
56:02
And the bank Wachovia was on the brink.
56:06
And basically what he did was he did a four He's like I had four hours.
56:11
I I spent four hours just looking at the business of Wachovia and came to a decision in four hours that the panic was overblown and that Wachovia would be saved and that Wells Fargo which ended up buying Wachovia was you know, far healthier than the market believed in that moment of panic.
56:29
And so he made a huge investment and it was like you know, one of his most lucrative investments ever.
56:34
It was a four-hour decision and it was made at a time of extreme panic when trouble was opportunity.
56:42
And when everybody else was just running out, you know, screaming, he was calm and basically looked at the situation and assessed the risk-return differently which is sort of like what you're talking about with the Scott Galloway when when FTX just feels taboo in every way and it feels like uh you know, the worst possible situation and he's like cool, it's the worst possible situation at a price.
57:02
And there's a price for everything and the price you know, for him to buy those claims at 22 cents on the dollar turned out to be the right price.
57:09
Dude, Bill Ackman's also like 6'4, I think. Which is pretty cool.
57:13
We should um create an index for CEOs above 6'2.
57:18
And I bet it'd be you I bet it'd do all right. All right.
57:23
So, he bought let's see, 178 million shares at $3. 15 a share.
57:29
So, he spent $560 million after four hours of thinking.
57:35
And his estimate was that it was going to be worth more than double that.
57:40
And the next week Wachovia bought it at about $7 a share.
57:42
So, he basically doubled 500 million in a week. That's insane. All right. Well, that's cool. Bill Ackman's great. Uh all right. Great story. Great story. All right.
57:53
I think that's pretty good podcast. What do you say?
57:57
I think that was all right. All right. That's good. That's the pod.