Special: Acquired x My First Million

0:00 And this is for our podcast, correct? Or this is going on your podcast or both? Good good question. Like we're open to whatever. Yeah. I think we should record it and see what fits, but like by default, I think it'll definitely work on our feed. If you guys feel good about it on your feet, I think great, just dual purpose it. Great. I love it. Okay. Uh are we rolling then? Welcome to this special Unnumbered crossover episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

0:37 I'm David Rosenthal. And we are your hosts. This episode is a crossover between Acquired and the My First Million podcast, a podcast from the hustle for business builders, schemers, and dreamers. The show is hosted by Sean Puri and Sam Parr, and this crossover episode was just Sean and Us. Sean works on special projects at Twitch and was most recently the CEO of Bebo, a once massive part of the consumer internet in the early two thousands. Sean was also the CEO of Blab.im, which some of you may have used a few years ago. Our episode today has two parts. First, we had Sean take us through what it was like to buy Bebo out of bankruptcy many years after its heyday. and build something new with the assets, eventually selling it to Twitch.

1:22 This is the first time on our show that we'll be talking about a company that was sold and not bought. Which for those of you who have ever been through an exit know that that is the far more common scenario. The second part of the show is more of the My First Million format, where David and I spitball startup ideas and talk tech trends with Sean. Also, we should say that while Acquired is normally a family friendly show, at least for families who love analyzing business histories together, this episode has a bit of profanity.

1:51 As always, if you love acquired and want to hone your own craft of company building, you should join the community of Acquired Limited Partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls where we talk with all of you directly, and of course our book club and Zoom calls with the authors. The most recent episode in the feed is the recording of our book club Zoom with Will Thorndike, author of The Outsiders. If you aren't already a limited partner, you can click the link in the show notes or go to acquire.fm slash LP, and all new listeners get a seven day free trial. Also, if you want to hang out with the acquired community and discuss all things tech news, strategy, and ideas, you should join us in our Slack at acquired.fm/slash Slack. All right listeners.

2:39 Now is a great time to talk about a new partner of ours here on Acquired, Lagora. The agentic operating system that is redefining how the world's best legal teams work. Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do. operate with obsessive customer focus.

3:14 They embedded inside a massive law firm. For months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legor's Bet Here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work. and do higher value work. And this means that the pie can grow even as each individual task takes less time.

3:46 And they recently launched Lagora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And Lagora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Lagora numbers essentially speak for themselves. When they have a head to head pilot with their top competitor, they win seventy percent of the time. Lagora now has over a hundred thousand lawyers on the platform from twelve hundred legal teams in fifty countries. And crazily, they went from one million to a hundred million in ARR.

4:33 In about. Eighteen months. truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reach for it during crunch time, or whether a partner trusts it before going into a conversation with a major client.

4:48 If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at Lagora.com/slash acquired. And just tell'em that Ben and David sent you. And now Over to our crossover episode with Sean Purie of My First Million. Sean, are you open to telling us a little bit about the story of Bebo? Because I think listeners have acquired uh

5:11 probably don't know your background and might know an element or two of that story, but I think getting a little bit of uh of context around all that would hold it on on your show. No, uh I haven't. And the you know one of the reasons why was initially I I was pretty worried because you know, when you get acquired, there's like these like pretty strict like what you can disclose and not disclose. So so I've sort of over time figured out, okay, I can't say certain numbers, that's fine, no problem. But I can just generically tell the story of what our company was and how this all came about and the kind of twists and turns of the story. The hard part is I'm the host, so it's always awkward, like what am I gonna interview myself? Like uh so this is perfect. You guys can ask me questions. No, this is great. Um So one of the companies that we're that I can talk about is Beb, which is the company that uh most recently I ran. And Bebo actually has a really funny story. I and I only came in kind of at halftime. So I'll tell the first half of the story, but the key disclaimer is I was not the CEO and founder during that First period.

6:05 uh which was a way bigger exit. I wish I was the CEO and founder back then, but it was my my partner, Michael, was the CEO and founder of that time. So For those who don't know, his wife Sochi, right? What's that? With the and husband and wife duo, who had built multiple companies together actually, at Bibo was their sort of biggest hit. Um and so I'll tell kind of the the the the quick version then we could dive in. So the quick version is Did you know there was this company back in the day when MySpace and Facebook were, you know, uh taking off. Facebook at the time was still in colleges. MySpace was actually the biggest network and was famous, and celebrities, musicians were all using it.

6:40 And so Uh Michael, when he tells me the story, because I've asked him a bunch of times, like, you know, Dad, can you tell me like what was it like back then? Uh like tell me these internet war stories. And so he was telling me, he's like Initially I was Um Actually, let me finish the short short version, I'll tell you the whole thing. So the short version is built a social network called Bebo, got really popular, but it became clear to him that Facebook was gonna win this war and that like where he was now was like more like the top and was like, look, I should start looking at is there an exit here for us? Uh because I'm not sure. What year is this?

7:10 This might have been two thousand seven, two thousand eight. Uh, I think the deal closed in two thousand eight, so probably let's say two thousand seven started thinking along these lines. Uh Facebook had been out for three years, had expanded out of colleges, I think at this point. And um was at high school level, I think. And so basically was like look, we've built a cool product, but man Um were and was Bibo was big in certain markets like Europe, New Zealand, Ireland. If you're in Ireland, like you know, Bebo was like more trafficked than than Google at the time. And so um decides to sell, sells the company for eight hundred fifty million dollars to AOL. Huge exit at the time, sold for more than MySpace did, and um

7:49 And so amazing exit for Michael and Zochi, and they went on to do a whole bunch of great things both philanthropically as well as they own seventy percent of the company. And they own seventy percent of the company at at the exit uh because of and I I'll I'll go into why they were able to own that and and it at the begin uh if we want to go into that detail too. But so they sell it then. Fast forward a few years, Facebook takes over the world, AOL basically writes off B bow kind of like a year and a half later as like a tax write off of like, it's worth nothing to us now. We we we we write it as essentially zero. Um product kind of dwindles obviously. And

8:21 Now it's five, six years later. Um Michael comes to me and at this time I'm uh I'm running his idea lab. So a startup studio that he had built. He was basically funding him and Zochi were funding themselves. Michael originally was the CEO, um, and then I joined to work with him. I came to San Francisco to work with him. And then a few months later he put me in charge of the lab. He's like I'll go to the board and I'm gonna you know, me and Zochi, we're gonna do cool billionaire shit, like you go run this thing. Uh and I was like, Hey more power to you, that's what I would do too. Uh I don't know if I would bet on me. I'm like a twenty five year old kid, but like, you know

8:55 Uh thank you. I'll try my best. And um He comes to me at a certain point and he says, Hey You know, we actually have the opportunity to buy Bebo back. I heard, you know, he Bebo had traded hands, so a private equity guy had bought it off of AOL. He had invested in that and it he knew that had gone nowhere, that guy didn't even really do anything.

9:13 And then he's like, he knew it was gonna go into bankruptcy and it was gonna get bought by somebody. And he's like, We have the opportunity to buy it back. Would you be interested? We're already building social kind of consumer products, anyways. That's the point of the lab. Maybe We could use this brand name, maybe we could use the email list, maybe we could use the servers, I don't know, whatever, whatever's there. Would this help us in any way, you know, get

9:33 better distribution for one of our product ideas. So the again, this is the the longest short story I've ever told. We go buy it back. We go buy it back for a million dollars. And so we go to this crazy ass auction I can talk about, but buy the buy the company back for one million. So sold for eight fifty, bought for bat bought it back for one. And then a couple years later we now sold it again.

9:53 uh you know, to uh to Twitch, we got acquired by Twitch and which is owned by Amazon. And so Uh I'm currently. And when you're buying for one, does it d does it come with like all of the data it's ever had? Like all the email addresses from every epoch of the company? Uh y it comes with whatever's still there. So some shit gets lost along the way. You can't recover that. But but yes, in theory. In theory, yeah. So we got like a eighty million person email list, which is one of the assets. Now What we found when we got that eighty million Even list was Hey, it looks like this email list might have been bought and sold before or something. Cause this is not this does not have a great sort of sender ab send rating, essentially.

10:31 The other thing the the c other key component was Bebo had started back when Hotmail and AOL were like the rage. And then Gmail came and everybody switched. And so what we had was

10:42 Essentially eighty million emails, of which, you know, approximately forty million were like my teenage hotmail address that I never check and will bounce or or just go go. Go into the abyss. And um so that turned out to be a lot less useful. Um Well, the funny thing, uh I don't know how much of this I can share, but the funny thing is one of the things in buying it was we actually bought two assets. We bought the company and that brand and the the domain and the email list and all that stuff for a million bucks. But in that same auction, we bought the sort of legal rights to sue the previous owner for, I don't know, 50,000. That Actually they won a they won the the the case, they won the suit for like multi you know, multiple millions of dollars. And so that asset turned out to be really, really valuable and have a great NY and then the domain and the email list turned out to be a little less valuable than we originally had hoped.

11:33 Wow. Did um Did you guys use uh uh to our previous conversation an SBA loan at all in in the No, it was financing the purchase. Michael and Zochi were like, Hey, straight cash, you know, I I don't think it would it would have qualified necessarily, right? It didn't have positive cash flow, it didn't have a lot of things that you would need and it was kind of a hairy deal going through bankruptcy. So you needed to be an all cash buyer to to buy it. And so I cut you off a little bit, take it so Where is it eventually now and how did it get there and why? Okay. Let me try to make that up. Where is it eventually now? Uh so we got acquired now.

12:05 Um And so the whole team that was working on it is now uh you know, the majority of the team, uh ninety ninety five percent of the team is at Twitch and Uh got bought because we had built A whole bunch of things. So one of the things where we bought it. I'll I'll kind of tell the story kind of Interesting entrepreneurial story. So when when we were going to buy it, I got split opinions. I asked a few smart friends, Hey, do you think we should buy this back? And

12:26 Fifty of people were like Don't touch it with a ten foot pole. Like internet companies don't get revived. Uh that's like not really a thing. Um the brand is stale. It might be more baggage than it's worth. It's gonna be constant confusion if you're launching a new thing under that old brand name. Um and you know, you don't need it. Well why would you pay for this? Go go put the million dollars into ads and you'll get the same amount of users. And then the other people were like

12:48 I don't know what's gonna happen, but what a challenge. What fun if you did it. And you are also gonna get a lot of kind of people who are curious to check out what it became, whether they're actually gonna adopt it or not. It's a good stuff. It's the analogy is like, you know, you go back home to your parents, you know, to your original, you know, to your to your parents' house when you're after you're you're thirty years old and they say, Hey, we renovated your old bedroom. You're like, Oh, I wanna go see what'd you do with my stuff? What what does it look like now? That's essentially what we've Dig reader in twenty sixteen, of course I did. I had to see what they did with dig. Exactly. Even if you come in thinking I'm never gonna fucking use Dig, you wanna see what are they trying to do with Dig and laugh at it. So we were like, okay, at the very least we'll get that. Uh better than complete obscurity, I suppose. Um and so When we bought it, we did one smart thing, which was

13:34 We we had some predefined ground rules. We're not gonna make just bring it back as another social network, like we had seen MySpace try that and we're like, No, that game is over. Facebook has won that game. Don't try to be like, Hey, we're cool again ten years later. Like that doesn't work. Um We also didn't have a new product. And so, but we had to close the deal given the timeline of the acquisition. We had to close the deal and we had to announce it and we had to turn off the existing product because it was gonna cost a whole bunch of money every month to run. Oh, I saw this. And so we yeah, we were like, Okay, we're gonna do three things. First, we're gonna turn it off. Second.

14:04 We're gonna preserve the SEO because it has amazing SEO. Um, and so we're like, how do we lower the cost by a hundred X while keeping the SEO, the everybody's profile page alive? Cause you Google someone's name, their Bebo profile was like in the second or third. Static pages. Yeah. So we created these like static frozen pages that would s that would remain, you know, uh indexable. I don't know anything about it, but one of our engineers was like Yeah, nine engineers in the room were like, There's no way and then our youngest engineer was like, Well why don't I just do this? And then all the other engineers were like begrudgingly like Well yeah, if we just want to do that, we could do that. And I'm like

14:37 Well that accomplishes the goal. Of course we want to do that simple thing that accomplishes our goal. So anyway, so shout out to Quinn for for coming up with that. The last thing was We came up with this video, we shot it in a weekend and it was basically like an announcement video of hey, the original founders bought it back. We're gonna bring it we and it was kind of tongue in cheek. So we were actually It looked like a serious corporate stock video of like, Hi, I'm Michael, you know, and I'm the original founder of Beaver. You know, we had this vision and over the years, you know, it grew. And and but then he you know, like the video uh starts to make fun of the old Bow it's like

15:12 You know, we had great times and is basically pointing fun at like, you know People used to like just, you know, go on each other's profile page and draw dicks like on the whiteboard feature. And so that was like he's like, We have the largest repository of hand drawn dicks uh on the internet. And so this video kinda goes viral. Which was our hope. So while the eighty million email list was dirty and uh pretty much unusable, we couldn't send from it. Um

15:36 We got a million new people to sign up to see what's the new Bow. And uh we were like, Okay, that's cool. And they signed up thinking like This is funny, I like this guy. Um This is like the uh the Deli Shave Club thing. Exactly. That was our intent. Now it wasn't as successful as that, but we it was close. And um so that was the that was the h that was the goal there.

15:54 And um then we were like, okay, well, we still don't know what product we're gonna do. And I was still sort of of the mindset of we need to like test. We don't want to come back with this big bang and we don't know, you know, that's a one shot thing. So I was like I started creating little sublists, you know, groups of 10,000, 50,000 people that was like, hey Do you want to tr we're gonna launch three new things. I want you to try them. You're gonna be our focus group. You're gonna tell us if this is any good or if this is dog shit. And uh whatever comes out of this will be the new Bebo, but you're sworn to ultimate secrecy and blah blah blah.

16:24 And uh so we created these little lists and we launched different products to them and we, you know, one was this messaging app with crazy avatars that look like Bitmoji, and then this other one was Blab, which you used uh just like this video chat platform. And then and we were launching them under other names to test them first. And the idea was if if it ever works, we'll Branded as Beba will email the whole list. Um, the last thing we did was we took um the live streaming tech we built and we built a esports platform where you would

16:51 Uh we built essentially high school esports. So Um You the way you can go play in a football league or a soccer league or a baseb a baseball league as a high school. Just like play versus were doing they're a competitor. Um And so you could sign up to be in a Fortnite league and we were like, dude, Fortnite's more popular than baseball. Like there should for sure be a pla a way a way to join a team for your school uh or as a high schooler and play with other high schoolers and compete and play in tournaments. And because we had built all the streaming tech We were like, This is cool. Like not only are you playing, but your friends or your family can watch uh watch you play. And um

17:24 So that was really cool when we hit we were running the biggest high school esport league in the country at the time. And then uh you know uh a couple of the platforms, you know, came knocking and we told them, Hey, look Honestly, I you know, I'm a realist, like This is cool. The k the students love it.

17:40 And the platforms are happy because we're bringing on tens of thousands of new young teenage streamers for the streaming for the first time who would have never otherwise streamed because they don't want to be a streamer. They just want to play in tournaments and they're h they're like now they're getting the joy and the the thrill of streaming for the first time. And so we're like all the value is accruing to them. We should go try to sell this to one of them. And so we went to YouTube and Facebook and Twitch and like all the others and we basically said, Hey Who wants to buy this thing and uh ran a process, a pretty tight process over like forty five days. And

18:09 Closed a deal and ended up selling the company. And had you already closed down the the other experiments at this point, or was Blab still like potentially a thing. We did them one at a time. So we had learned that lesson the hard way running the startup studio in general, which is kinda like parallel entrepreneurship splitting focus is very, very dangerous not to be done unless you are someone much more skilled than me. And so we were doing one experiment all in and if it didn't work, we would then cycle pivot to the next thing. Uh, but we we had shut them down by then. Which was hard, right? Blah had four million users and was growing and some people loved it and used it eight hours a day and like

18:44 I got death threats and You know, somebody this is actually kinda funny. Somebody sent a two hundred page uh script for a play That was

18:53 using my me as the central character, my CTO as the second central character, and our designer head of community, the other people's whose names they knew. And it was a Uh a script of us being You know, it's kinda like the office. It was like us being dipshits, like making bad decisions'cause they were so angry we were shutting this down. Oh my god, they sent us like a full play of our uh you know, total ineptitude. And um I read the thing and I was like, Wow, someone took this much time to do this. That's that's awesome. This is inc So why did why'd you shut that one down? Was it that like other messengers were just Yeah. It was like a Facebook style situation. And by the way, can I take a stab at explaining Black to from my recollection. So

19:31 I guess the three modern comps would be it's sort of like zoom Meat. Twitch. Meets clubhouse. Where it's like video collaborative

19:40 chat in real time that has a broadcast component. Right. So so the it w the experience was like this. There's three of us on a Zoom call right now, right? Three little squares. And so we would be doing this, but where our chat is in the you know, the side of Zoom, Zoom is just for private communication. Blab was public. It was like a talk show. So like we could have live people watching this, listening to this, typing in questions. We could pull the question and put it on the screen and address it. Anybody could call in like an old radio show and like join the conversation. And so it it was like this kind of live Uh, you know, it was like if Google Hangouts had an audience or if Zoom had an audience. That was sort of sort of the premise and so We we organically had a bunch of cool people use it. Like I said, the UFC used it

20:17 when they wanted to do a virtual fight announcement. Um We had Tony Robbins come on and do kind of he would let people call in, tell them their problem, and he would like kind of help them, work shop'em live just like he does at his big, you know, seven thousand person events. Uh the Jonas brothers did that with their fans. ESPN would use it every Friday for their basketball show. Um But the problem was There was two groups of people using it.

20:39 There was all those cool things I just talked about that make it sound legit. But those people would use it once a week for like an hour. They're like, Okay, I'm doing my live interactive fan thing that's like hard to do and like I'm on the spot, but like It's super deep connection with people. They love me if I do this. So I'll do it once a week for an hour. Fridays at three. Uh that's when my live show happens. And so we were like, cool, Fridays at three are awesome.

21:02 What happens every other hour of the day? Like how are we ever gonna fill this up with good content? So then the You had the Facebook same problem as Facebook Live. Same as Periscope, Facebook Live, Meerkat, and we were all at the same time. Uh our thing was like they they were like a monologue, like you hold up your phone and you just talk, which we thought was really hard to do. We were like, dude, dialogue is way easier for people to create content, which was true. Um, but the hard part was Um for any given category, like let's say business talk or sports or whatever, you had to have twenty four-seven interesting content to build a habit for a viewer to just come and show up when they're bored. Um

21:36 And if you just tried to get people to show up on demand They were like, Well, dude, I'm busy. Like the whole world is not like I don't show up on a schedule anymore. Like I order things when I want it and I get what I want when I want it. This is the postmates era. Like you know, I I don't wanna to have to show up when the creator decides to go live and I'm in the middle of dinner. And so that was always a challenge. And then the other side we had people that just they just use this as like like you said, clubhouse. They just use it as a room to chill in. So they were just bec they were

22:03 People would meet each other, they would become friends, and then every day some m s some number of them would get online. And it would trigger notifications to the other friends. And then the party would just rage on all night and you would just dip in and out as you were free or or or or you were busy. You would leave and you'd come back and different set of people would be hanging out. So it's this hangout platform. And the cool thing about that was these guys were super sticky. So we wanted c people on all the all the time. They were on all the time. They would fall asleep on the platform. Um, but the problem with them was the core value they were getting was they were making friends. So they didn't bring any friends to the platform. So that side was not growing. The celebrities grew, but were totally you know using it one hour a week.

22:42 The people using it forty hours a week no friends' space. And then those two groups did not coexist at all. They didn't even understand why the hell they're on the platform. Oh, crazy. And so that was the problem that we were never able to solve and why we ended up pivoting. Wow. Bring it home. So Twitch buys it, what's the main reason? Like what's the repurposed asset here? Is it mostly the team or is there technology or learnings? Yeah, all three. So Well any time a company I I I always differentiate a company could either get bought or it's sold. We were sold, not bought. Uh bought is your Instagram, you're hot, you're the next big wave, everybody recognizes it and people are banging down your door trying to buy you.

23:18 We were sold in the sense of like I approached a bunch of companies and I understood I I through kind of conversations was able to suss out What are things that are important to them? What are their big top three strategic priorities as a company? And then is my little company an answer to any of those problems? And I was like framework. I was, you know, doing some yoga poses to try to make that fit, uh where I was like, Oh, you really care about customer discovery buyers. Exactly. So because I was like, I need to sell this company Uh, it's not gonna be the mega home run we think, but it there is some value here. So I don't I don't wanna stay and work on a mediocre thing medium sized business for five years.

23:56 Nor do I want to just shut this down and like walk away from millions of dollars of value. So I need to learn a skill I don't know, which is how to sell a company. And so I w by the way, it's like long time but you have to like You are you are falling into the eighty percent thick middle of entrepreneurs here. Venture backed entrepreneurs. Exactly. So the first thing I did six entrepreneurs who had done this before I was like, Hey, how the hell do I do this? And they gave me some tips and they became what I call my deal do list, which is like if you've ever had a baby, like you know, a doula, somebody who helps you birth that baby, and like these were the guys who helped me birth this deal. They helped You know, go all the way from the the the tough part of labor all the way to the happy part at the end. Um and so

24:34 So so essentially I found out what their top strategic priorities were. Um And what I r at first I was trying to be really smart about this. Then I realized, oh, here's how this market works. You have Twitch, which is the market leader.

24:47 And they have strategic priorities about how to grow their business. Those are very specific to Twitch. I gotta find those out. And I took some people to beers and I Ask a bunch of questions and sussed out that oh There's this program that they've realized and i I'll give you kind of the the rundown, which was They were sort of in the category of Twitch has gotten really, really big in the same way that Netflix got really big, but then the content costs start to go up. People start demanding more money, right? Uh famous streamers want more money. Yeah, uh esports tournaments. Yeah, they want exclusive deals. Ninja moves over to Mixer. Exactly, right? You got streamers getting paid tens of millions of dollars to switch platforms, so that bit drives up prices.

25:23 So Netflix had a smart idea to create original content and like hey, this is stuff we own. So I realized that Twitch. really needed original content. Um and it needed content that it could It could s basically not it could it could control its cost better and drive a ton of viewership. And internally they had been practicing this, uh, they had been doing this program totally manually. So they had no technology to do it. But th we were lucky that they themselves had been thinking similarly.

25:50 had been running a program very manually. And had come to the conclusion that hey, this works. We need to scale this using tech. And then they looked inside the company and they're like, shit, where am I gonna get A leader. uh that I trust to do this really hard thing. Um

26:04 We need engineers that know how to build this and and we need this now, not like eighteen months from now. And so that's w that's a great spot to get acquired in because you say, Hey, I'm a leader. If you if you meet me and you if you believe in me as a as a person, you think I could be one of the you know, ten leaders of your company, then you the only way you can't hire me. I'm an unhireable person. You gotta buy me, yeah, to to get to get talent like that. Also, I come with 12 engineers that have been working on this for two years and we've already gone through the learning curve and figured out everything. You get the code and you get the learnings. And then, you know, uh in our case, we didn't have revenue or big user base that would matter to them, but they're like, Don't don't worry, we already have revenue and users. We just need the rest. So I figured out for Twitch that was the the kind of s solution. Then for everybody else it was I realized that the core problem was we want to beat Twitch. So I was like, oh, this makes it really easy. I just need to pitch this as a way that you could potentially overtake Twitch.

26:55 And um I need to spin that story and then I need to tell you that Twitch wants to buy buy this. So that will automatically get you interested. And I and so that became the sort of game you play as an entrepreneur to try to get multiple bidders involved. And part of it is persuasion, but you know, you can't just persuade These are no dummies. These are CEOs of billion dollar companies. They know what the hell they're doing. So you, it's not about. Convincing of something that they don't want to do and making them do it. It's about Finding out what they already want to do. Positioning our like cutting away the fat of our story into j just being the solution for that.

27:29 And then connecting on a personal level and saying Would I would you want me as one of the senior leaders of your company, would you want me a kind of on your extended exec team? And if so, great, let's do a deal. It's so funny. It strikes me we don't have time to go into it, but like that process is the exact same process of raising money from Venture. You you want to have a hot round? You wanna have VCs competing over your deal, you do exactly what you just said. Right, exactly. Yeah, Sean, I I think we'd love to have you on the uh LP show at some point for the to to be our deal doula to help uh help listeners understand like what are the levers you can pull, what are the ways that you can um sort of message different things at different times and different parties. Putting that aside, thank you for for sharing the Bebo story. Yeah, for sure. I I kept every email I sent and things like that because I was like

28:12 I want to help the next entrepreneur who's going to be like me needs this. This is seven years of effort that they just need to like cash in on and they need a successful outcome. Uh, they deserve it, but like they're gonna be totally clueless. You don't take get a ton of reps at doing this. And so how can I I know when I Googled for it, I couldn't find jack shit. Everything was about The bot use case, which is like, should I sell my hot company when I have all these offers, or should I stay independent? Like, yeah, there's a ton of content about that because VCs love to talk about that and they'll tell you to stay independent. Um, and then this is the other side that like is a little bit less sexy, usually results in failure. But if you can thread the needle, it'll be life changing for you, your investors, and your employees. Like You know there should be more content about this. And so I I wouldn't make a course out of this probably because there's just not that many people who need to know this. Uh it's like a very small it's like a niche of a niche. But um I saved it in case people knock on my door and they're like, hey, can you help? I'm like, Yeah, here's some templates that I used and here's what worked for me.

29:07 Amazing. And now you have a podcast. And now I got a podcast. That's actually how the podcast started, during the diligence period I was You know, the funny thing is when you're running your company, you just get so worn down. You're so tired over time, especially when it's not, you know, it's not a breeze when it's taken off or whatever. And Then as soon as the sale process started, my creativity muscles just started firing again, started having all these ideas. And I was like, Well, this is the worst time to have a startup idea is when I'm trying to sell my company. Uh, I need to like shut the lid on this.

29:34 and not get tempted to go start something. And um So I was like, Oh, maybe I could start something that's safe. A podcast. And so I started the podcast just for kicks during that time to keep myself busy. Uh, because otherwise I was gonna damage my own deal. Little did you know what it would become.

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31:20 We're huge fans of Vanta over here, and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get$1,000 off Vanta at vanta.com slash acquired. That's V-A-N-T-A.com slash acquired for a thousand dollars off. And just tell'em. That Ben and David sent you. All right, listeners.

31:41 Now we shift to the second part of the show, which time for a secret, we actually recorded first to talk startup ideas, trends. And internet businesses with Sean. We'll talk about a side project idea I have been kicking around. What our smart friends are dabbling in On the weekends. And a bit more on spaces.

31:59 Let's dive in. Let's do a quick Uh quick intro. So uh I've never I've actually never met you guys, but like I think most people for this podcast, I've heard you guys talking uh and actually just say like five words into your mic. Your mic setup is like godly. I don't know what I don't know if it's your voice or your mic, but something is perfect. So so just it's it's all bad. We uh listen to that. Uh if it If it were like if I were running the text side of acquired, we would still be like talking into our into our MacBooks. Yeah, but fortunately we have David's uh dulcet tones and buttery voice that kinda complete the the equation. And Ben, you have the uh like kind of sound proof panels in the background and stuff like that. I I just like roll out of bed and push go and see if it works. Um all right, so we have David and Ben here with us. These guys host the acquired podcast, which is we'll talk a little bit about that

32:46 Uh so you do that. You're also venture capitalist, from what I understand, if I remember correctly in the from the podcast. And um The podcast I so I used to listen to a bunch of it at the beginning because I'll tell you a funny story. We have a guy in our in our office at our startup named Jason. And um Jason is great in all these different ways. He's super enthusiastic, he's a go getter, he'll make shit happen, he's very creative.

33:10 Uh, but the one thing that Jason was always uh like kind of the punching bag of the office was he would always say the wrong like he would always have the his facts wrong. So he would be like, Oh um, you know that's you know, th they got bought by this company and were like, No, it was this other company, or they raised this number and it's like nope, that's not the right number. So he was always like getting fact checked. And then one day Jasted coming in with just these knowledge bombs and we were like, That's not right. Wait, that is right. And I was like, How did you know that backstory? Like, did you research this? Like I didn't understand. And then I realized the secret. He was listening to y'all's podcast. And he was you know, basically what you guys do is you tell the story of great kind of acquisitions in tech history. And um And you go through kind of like very methodically, you like research it well and you tell a very good linear story with no plot holes. And so Jason all of a sudden had this superpower where he was telling these perfect renditions of what went down. And I was like, What the fuck is going on? And so that's why I was like, Okay, what's this podcast?

34:09 Uh that you listen to. So I listened to a few of them. I haven't listened recently. I know you guys been you've pumped out a ton of them. Um you gotta hop back in because we're not just acquisitions anymore. We realize these stories, like we were limiting ourselves with just acquisitions. So what did you think we'll get into this with you, but like you know, acquisitions are a limited part of the universe. So we just did epic games. Uh we did space and just like success story in addition to acquisition story type of thing. Yeah, the the goal is that we tell the story of like the obviously the very deep story of any sort of great company, but then also try and understand the playbook of why it worked. Right. I love I love them. I've listened to a bunch where you had like a three parter and I'm like, Oh man, this is so deep. I love it. Anyways, that's my

34:52 My my genuine shout out for for the acquired. Awesome. We love it. Uh and one of the reasons for A, you're just like good, you guys have great flow, chemistry, like you're awesome. Uh but B, it's such a good counterpart to like what we do on acquired. Like we tell this like certain part of like the internet like history and like as it exists, and it's like these big huge flashy companies, but like There's a million ways to skin the cat. And like there's so many other good businesses out there, and so many other people working doing amazing things that are never going to be. SpaceX, but like that's cool. Like, you know, like your golden hippo episode. I love that one. Yeah, yeah. On one hand you have s the story of SpaceX, and then the other hand you have like

35:32 you know, this guy who's in Iowa who's doing a drone light show company in just local rural Iowa and uh you know making two million dollars a year and you know he quit his job as a construction worker before that. You know, that that's the sort of other end of the spectrum of like cool success stories that are just different flavors. Yeah, it's so cool you guys find these and you, you know, you bring these folks on the show and this is awesome. Okay, so we can agree podcasts are great. We love it. Sorry, go ahead, Ben. I was gonna say like I also just like that it feels more like Classic I I'll say classic American, but classic entrepreneurship. Right. Like

36:08 we've lumped in entrepreneurship to become this thing that involves tons of money, a winner take all market, in all likelihood failing and flaming out you know fabulously. And by tellyone they should go do that, you just set most people up for failure. Whereas It's not as long as you're really focused, you really listen to your customers, you really iterate, you're really capital efficient, like going and achieving a million dollar a year top line business. Like lots and lots and lots of people do that and can do that and should think they can do that. And so I I I I love that reminder in our lives. Yeah, I I would say like Um

36:46 Naval has this really like money line when he's talking or I don't know who he stole it from. I think it was like Nassim Talib or something when he was like, you know, um They're like, you know, what's your political stance? He's like, Well, with my family, I'm a communist, with my friends I'm a socialist, with my you know, my city or my town, I'm a democrat, and when you know, I'm a libertarian at the at the federal level or whatever. And it's just a great yeah, it's a it's a it's just a money quote. But I have sort of a similar thing in the in entrepreneurship. It's the the the you know, the poor man's version of that, which is You know, if I invest, I go for the billion dollar the potential billion dollar companies. If I'm advising somebody to start something, I advise the types of things we brainstorm on the podcast all the time, which are these, you know, small niche businesses that can generate a ton of cash flow. And then when I do it myself, I just go solopreneurship and I just create content that I think, you know, a lot of people can love and I don't have to talk to an I don't have to like have employees or an office. Uh that's my dream. And so there's the there's these different flavors that you each is good for a different purpose and for a different person. So Anyways, that's my view on it. And so you guys reached out the other day and you were like, Hey, it'd be fun to do kind of a crossover episode. I think that's a great idea. So you came on.

37:48 And I was like Okay, what are we gonna do? Are you guys gonna come on and tell great stories and I'm just sitting here with my popcorn because I'm down for that. But actually you guys came with a bunch of ideas, and so I wanna jump in and uh rift through a bunch of these and like normally the way me and Sam do it is just like you have here. We just have a sheet with like a bunch of bullet points that it like you don't even understand the full idea just from the bullet point. And we'll just say like

38:12 Okay, whatcha? And then one person will riff on one and then when we're bored of it, we just say, All right, I got another one. And you just you just keep going. This is gonna be so fun for us because it's like we don't get to do this on acquire. This is like, you know, when like a successful business person goes to Burning Man or Mardi Gras or something, it's like oh I get to let my hair down and just, you know, shoot the shit on half baked ideas. That will totally not work, most likely. Yep, that's what this is. Cool. So s when you guys get excited about ideas or you know, some of the stuff you sent over You know. What caught what's what's on your mind, what are you guys seeing as interesting? Let's let's jump in with some of these different ideas you got.

38:47 Yeah, so I'll uh Uh I'll start 'Cause I I have Uh your your Naval quote sort of inspired um I have a very bifurcated lens on the way that I look at ideas, and I don't think I realized it until recently that

39:02 Um, so I should give a little bit of background. So uh I started a thing called Pioneer Square Labs five years ago. We're a startup studio where we spin out um companies, all of which go on to get venture backed. We've done that twenty four times in the last five years, uh, and we're based in in Seattle. So I'm really looking to make a dent in uh in the entrepreneurial ecosystem in the Northwest. So we're coming up with ideas all the time. Yeah. So then we also have the venture fund, PSL Ventures, where we invest in early stage companies in in the Northwest. And so uh and many that we have nothing to do with starting. And so uh I sort of sit on both sides of the house of coming up with ideas and also evaluating ideas that are not my own. And I I have um A massive bias with my own ideas.

39:49 where I'm excited about it. no matter the market potential, if I can fully conceive of how to build it in my head and how it will deliver value to me as a customer. And like I It's probably the engineering background, but like I pr I put on my blinders real quick and just go heads down. And I have to like fight every instinct Like David will be like, Hey, I think there's this really big way we can move the needle for acquired and pitch me this big grand plan. And I'll be like, Yeah, but I need to fix the way that

40:18 headers look on our website and like I have a really good idea for how to do that. And sorry, I need two hours now. And so like I I I have a massive bias towards things I can fully conceive of and and will be satisfied with the value of it. But the I think I think the way that I like Think about it or evaluate other ideas is definitely, Sean, in that same way that you thought about like

40:44 you know, is this is this winner take all? Is this gonna be a massive thing? Is this a moonshot idea? And and the scary part that always comes along with that is like, well, if this is a really good idea and now just happens to be the perfect moment in time where someone can do this, Are these people the people that are going to pull it off out of all the other people who are also thinking of this rare moment in time where there's a good idea that hasn't yet been done? And like that uh th that's almost disheartening, right? Because then you scope down the universe super, super narrowly and most of the time what you're doing is is saying, now I'll I'll wait for the next one. And that's a f frustrating and sometimes disheartening job. But I I think that finding that spot in the middle where you can sort of believe in other people's ideas as much as you do your own that you get excited about and apply the same amount of skeptical rigor that you do to things you're being pitched to things you come up with, that's sort of where the magic lies in the middle.

41:41 Yeah, I I I I would agree. Uh also y when you said that thing about like kind of the way you two uh are d are different. It reminded me of this Um you know, all right, take a shot. I said framework. Framework that um uh that I heard one time that has always stuck with me. I don't know if you guys have ever heard this, but

41:59 Uh Bill Gross, who's the founder of Idea Lab. He's kind of like internet OG. He gave this talk once and he talked about have you have you heard this about the four kind of personalities that that come together to make a company? So No. So basically he says every company needs these four personalities and they come in a certain order. So he is called E P A I. So uh not a great acronym, but It works. And so E P A I, so E is the entrepreneur. So he gives us analogy. You're sitting in a room So say you're sitting in a classroom and one kid is gonna look out the window and it's just you know there's just a gr there's just grass outside. But somebody's gonna look at that grass and say, you know what, there should be a parking lot there. And uh, you know, we all come into work, we all come to school every day and parking is such a hassle. Um, there should be a parking lot there, it could be six stories high.

42:46 We should build a parking lot. And so entrepreneur comes up with a vision, see something before it exists based on, you know, a pain point or a personal dream. Then they have P, which kinda sounds like you, Ben, which is the producer. So producer is somebody who gets along extremely well with with the E. Uh they're not usually the one necessarily to come up with the the kind of visions every single time, uh, but they're very good at downloading the vision. They hear the vision, they say, yep, got it, makes sense. And their brain immediately goes to Oh, by the way, six floors. No, no, no. What it should be is two different structures that each have this, you know, whatever. They start immediately their brain starts building uh building that vision out. And they're gonna be able to take words and turn it into, you know, some form of action. So he draws these curves like

43:27 If uh if it's just the E alone, there's this initial value because they come up with a vision and then it sort of peters out and goes nowhere because there's no production. But then if you have the E and the P, the P jumps in after the initial value is created and takes it to the next level. But then if you just have the two of them, um Your your venture will be a mess because you need the uh A, which is actually an administrative type of person, a type of person who says, Okay, great, we have a vision, we have a a plan of production, we're actually going, we have six employees, but if no one's doing payroll, if no one's feeding anybody, if nobody's like writing things down about our plan, like we're screwed. We gotta get organized here. And so you need A, A takes it to the next level. And then the last one

44:05 is I I is the student who's not even looking out the window, it's just looking at the other three people, being like, you guys need to learn how to work together. And it's the integrator. Um and so the the I is this amazing person who can figure out, okay, how do we get this group of talented people to be cohesive. uh over time and how do we you know one person's thinking one thing another person's thinking another thing how do we get alignment and so I've and I found this in my startups too. And I w the reason I bring it up is because uh it's really useful to know which one you're great at, which one your superpower is. So then you'll know who to partner with and when to partner with them. An I at the beginning does nothing for you, but an I is great kind of at the end of that cycle. Um you know same sort of thing. So anyways, I I just wanted to share that. Oh, that's awesome. W when do you think you need the A's and the I's? Um so from my experience, you don't need them unless you hit product market fit. So sometimes the E is totally off base. You didn't need a parking lot at all. Or you know, you you build the parking lot, but you didn't have a plan to get customers. Uh so it's once you're once your product is being pulled by the market.

45:05 So once the demand is pulling uh more of the product faster than you can produce it or asking for more features than you can keep up with, but they're actually using your your thing. that's when you start to need A and then you need I as the team grows to a certain size, right? Because a two person team, you don't even need meetings. You're just constantly in sync, you're just sharing a brain. And then once once you even get to six, six is like oh shit. Uh we all are doing different things. We all need to talk more. And then there's this rule, I forgot what it's called, but like

45:34 Every time the size of your team doubles The communication required It's like a square. So like um as as you get, you know, from six to twelve, you don't need double the communication, you need, you know, quadruple the communication or whatever. Uh and I see that to be true. In a perfect world or in a a uh easy to model scenario where every person in the organization must communicate equally with everyone else in the organization, uh, then the number of

46:00 communicating lines is proportional to the square of the number of people. Exactly. Because it's a network, right? So every node needs multiple connections to all the other nodes or at least to different hubs. And so it creates all these different lines that you need to to work on. And that's where the A and the I help a lot. Cause the A is like, Hey, let's write things down so other people can read this. And the I is like, Hey, here's like a common way to write things down. So we're all say saying the same thing and have the same bar for you know what it takes to say yes to a project or whatever it is. Yeah. That's awesome.

46:31 Uh okay. Fra framework hour over Everyone, uh come back from business school. Let's uh have it. Exactly. Uh I get real academic about these things. In reality, you don't need to know any of this shit. You just gotta go and you know when you look back on it, you'll say, Oh yeah, that matches up to what I did. But it's not like you go forward saying, I gotta be a better P You know, it doesn't doesn't work that way. So Uh anyways, you guys had a bunch of ideas. Let's let's riff off the first one. What do you got? So We thought about

47:01 Talking about Some of the stuff that's more directly related to our show here, but People seem to come on your show and then throw out their latest like brainstormed idea and uh

47:13 And shoot the shit about it. And so I figure well that would be a fun thing for us to do here. And so I tried to apply my own criteria of what's a thing that occurs to me that I want in the world that the time is now And I can see sort of a path to how to accomplish it. And the the the gist of the idea is I wanna book an Airbnb or a VRBO and all it tells me is whether it has internet or not. And that is completely useless in the world of I sit on Zoom for eight hours a day. Right. And so I'm thinking this is like a totally bootstrappable, maybe even no code thing, where you just say

47:49 Hey, to get access to it's basically ways for Wi-Fi where whenever you're somewhere, you, you know, upload the geo coordinates, maybe you put the address in, we'd have to figure out some security stuff around that, but you just take a screenshot of a s of a speed test, and then we just have this big database of all these different places and uh anyone who stayed there and the screenshots they've uploaded and um Yeah, that's that's the basic just it's basically solving the problem of I need great internet because everything is done through Zoom. And so when I'm out and about, I need trust I need a trusted source to know where my internet is gonna be good versus okay versus whatever I you know, whatever I have. So it's I think particularly when you're uh when you're like traveling, working remote, like Uh we did this. My wife and I went to Santa Barbara for a month, rent an air uh an Airbnb for a month, Ben you're doing this later. It's like tons of people are doing this now. Isn't Sam's doing this, right? Yeah, Sam's you know, nomadically tr you know, bouncing around every two weeks or three weeks, I think.

48:44 Yeah, I mean it's this classic cold start problem of like What a useless website you've created, Ben. There's zero entries on here. So you gotta figure out some way to sort of bootstrap that that cold start problem. Right. Um, but I think the data entry is is really easy and then you can do cool stuff over time, like charting how it's gone up and down and um I don't know, at the very least you can probably create Like five to ten spots in every city where like

49:08 super nerds who saw this on product hunt uploaded data for the first time. So it has like a pretty low bar for minimum efficient scale. Right. Would you literally build it on uh like based off of what Airbnb inventory is? So Airbnb tells you does it have Wi-Fi or not, which is Kind of useless. Um if it doesn't have Wi Fi, just take it off the site. If it has Wi Fi, uh okay, that doesn't tell me if it's gonna work for what I need. It could be the sight glass art uh coffee argument of like oh we we've created this experience for you that is wifi free, so you can but yes, that's not at all we're looking for. So it's funny. So Ben put this on our list last night, uh where where we're s brainstorming these ideas and um And I was like, Holy shit, did you have did you talk to this guy we we both know who's

49:51 Super awesome in Seattle. Uh,'cause I just talked to him yesterday afternoon. He was also thinking about this idea. And I was like, Oh no, I didn't. And uh I think it just speaks to like The timing and the need for this is so A cute right now. I mean Of the four of us On our two shows. Three of us have done this in the past. Like

50:11 couple months are gonna do it now in Covid. Like this this went from like Yeah, like it would be you know, it's really nice when I get good airb good Fi at my Airbnb to like no, I need this. Right. Uh yeah. Wi Fi is, you know, up there with food and water as far as I'm concerned. So we forget COVID. I always need great Wi-Fi. And if I don't, I'm like You know.

50:33 I have to like take take a time uh timeout for five minutes and be like, um am I really this upset about the Wi Fi and I have to like rebound. Totally doable. You could stand this up on webflow and you know, do a little bit of other no code stuff in the background, maybe a little bit of code that you add over time. Um This could be this could be a wedge into something more interesting, though, right? Like, you know, on its own, great, you can build this. It's a little product. Maybe you charge for it. I think you probably better monetize this with affiliate. uh for Airbnb listings and VRB listings and the like.

51:04 I wonder though if you could actually use this to bootstrap. Inventory. Of places. And have it then become its own network of like, oh, you want long term, you know, uh Ben and my buddy was calling it workations, you know, you're you're you're doing this. Like here is where the best places for this are. Well, you start to onboard a little bit of that supply and maybe all of a sudden it becomes its own network, just kinda like Hip Camp has kinda offloaded a lot of the

51:30 uh the you know two camping type experiences off and glamping off of Airbnb. Maybe you can start to disaggregate it. Right. You know the the two ways I was thinking about this when you'cause you just wrote a very simple thing like Wi Fi site for Airbnb. I didn't know what that meant. I thought my my brain actually went to a different thing. I didn't know you meant Wi Fi website. I thought you meant Wi-Fi site. So like first my first thought was around hip camp which is like, is there just a cool outdoor area where I can be outdoors and sitting and comfortable, but have amazing Wi Fi. And it's like I don't actually want to go camping, but I do want to be like not in my room anymore. And so like, you know, could I be outdoors? Could I have great could I be outdoors and have great Wi Fi? Like that already is like I love outdoors and I love great Wi Fi and they rarely come together. And so if you could create these Wi-Fi sites that were awesome, that were just

52:21 Comfortable places to go sit. Uh, maybe there's little food trucks around there or whatever. Um I think you could build kind of like this weird outdoor co working thing. Um I'd love to see somebody like take a take a shot of trying one of these. The other The other angle I thought you guys might be going is like sort of the Boingo Wireless or whatever that's called, which is like You know, they went to sh you know, airplanes or

52:43 Um, you know, there's a version of this for coffee shops which is like, Hey, look Everybody who comes here wants Wi-Fi. And uh better wifi than you're providing, we will give free wifi in exchange for you know their email. And um you could potentially do that with Airbnb hosts. So you could basically say, hey, we will boost your Wi-Fi. um through either those kind of mesh networks, uh mesh network routers, or just like provide wifi where you don't have Wi-Fi.

53:06 And um In exchange, we so basically run this little service, either you charge five bucks a night for the for Wi Fi or you Get that plus their data, and then you use that as like kind of the way Boingo does. So that's actually what I thought you were you were initially saying. But I don't know if there's a there. A valuable service itself, but if you did the like if you're trying to build your own network of longer term rental properties, this would be a great growth hack. You'd say, Come on my network, I'll pay for you to upgrade your Wi Fi. Uh And

53:38 Right. And then that's how you can onboard the supply. Right. Yeah, exactly. Yeah, tha that's an interesting point of like How do you either onboard new supply, like, okay, you've got a Whatever, you've got a backyard and now that now backyards are cool. Um, or it's how do you give supply that was like unviable, how do you make it viable with some like investment that you could pay back and two two night visits, you know, like could you pay back

54:03 Uh could you pay that back in that short amount of time? Um I don't know, hard hard space, but there's there might be something there. Uh let's jump to a different one. I'm gonna pick a r random bulletin. Wait, can I go meta on this one for a second? Go for it. Uh I love I guess this is c moving to a different idea, but I love that we wrote down Wi Fi site for Airbnbs and there's three different ideas that came out of that purely because there's insufficient information. So you like apply creativity and fill in the gaps. And the uh it reminds me of um

54:31 I ha the very first time I did anything noteworthy on the internet, uh, was I made this website called it's this for that dot com as a joke at a startup weekend because every single pitch was well, it's this for that in like two thousand nine. And uh it was like the first time I got tech crunched. So we still maintain the websites, my buddy Eric and I, and it's like it just comes up with random X for Y pitches and as you just like click to refresh, it's like a startup meme generator. And I I've like come up with some pretty decent ideas after looking at very few words and then trying to extrapolate from there. Dude I've been to this website, so I just went to it now. Uh so I I went to it the first one is So basically it's like Airbnb for stolen goods. The next one is so basically it's Salesforce for coffee shops. Don't know what that means. Can make it up. And so actually we've played a similar game. We uh there's a there's a game, I don't know if you've ever heard of it called PowerPoint Karaoke. Uh yeah. It's a

55:27 I think there's different variations of how you do this, but there's a startup variation of it, which is, you know, somebody gets up, there's a PowerPoint deck behind them and they don't know what it is. They they they come in totally cold. And so they see the first slide and they just have to start talking as if this is their presentation. And then the next slide comes up and they have to connect it to whatever the hell they were saying. Yeah, about the previous slide and like create a cohesive story. Uh it's a good muscle to exercise. It's like improv for business. And um You know, you could do this with startup pitches as well. You could literally just remix, you know, take one deck of cards which is like successful internet companies and another deck of cards which are just like niches and you could just like pull two different cards and pitch it. And uh yeah, it's kinda surprising how some pretty viable ideas. We should do that as a like startup comedy podcast.

56:10 I think you guys are ready. You guys are ready to spin it off. What? All right listeners. Now is a great time to thank our longtime friend of the show, ServiceNow.

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57:30 already runs more than a hundred billion workflows annually and trillions of transactions for more than eighty-five percent of the Fortune five hundred. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates. And in a future, that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is Who's managing them all? So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out service now.com slash acquired and tell them that Ben and David sent you. Alright, what's what we got what we got up next. You

58:10 So you have one in here, spac index function. Tell me what you're thinking. So Uh Hear me out on this and I don't know how long the opportunity exists to do this, but at least for the moment there's this rush of everyone um Who has sufficient

58:29 uh connection to capital, raising that capital into a spAC and hoping in the next two years that they can leverage l relationships with entrepreneurs to get a deal done and take someone public. And I I you've probably talked about SPACs on your show. We've talked about an R L P program, so I don't want to go into too much detail about the mechanics. But Um I think If you were to bet on specs as a whole and say You know, they're they're they all go public. They trade right around ten dollars a share because they're effectively worth exactly the amount of cash that they have in the bank, which is a trust in the Cayman Islands or something that's like untouchable.

59:03 And then at some point they announce an acquisition and you either can redeem and get your money back or you can roll it into the acquisition. And so In general, like I think we're gonna see twenty plus of these sort of like series C or later startups go public through this mechanism of spacks. in the next, I don't know, a couple of years and um There's two

59:28 levels of appreciation here. There's the first one where, you know, you buy in at at at ten dollars a share and then there's a pop when they announce who they're gonna buy. So you could play the pop game if you want to and then just cash out immediately after that. Or you could play the longer term game and say, do you want to hold the basket of startups that went public in the twenty twenty, twenty twenty one vintage and and hope that there's a a zoom in there. And I think it'd be uh to me it feels like A Reasonable upside, super mitigated downside type of

1:00:00 Way to index. Yes. Uh I love this idea when I saw it. This was the opposite where I had no um And there's no question marks about what this idea was. I was like oh good idea, interesting. Um also I was curious, I don't know if you guys know what are the mechanics of starting an index? Can I create an index

1:00:17 Uh do you need to be a certain person? Is there a certain ball? How does that work, do you know? Oh damn, someone should create a angel list for public equity indexes. Right. Like where I I maintain an index and get some carry. Yeah,'cause like, you know, a a bunch of people trying to do this with like, you know, on Robinhood or public dot com, this new website or whatever where it's like this new app where you know, I go invest in a basket of stocks. You can kind of follow me. It's a social network. But like fuck the social network part. I think that's a little bit weak, honestly. Um I think that more interesting is I listen to his podcast, I'm like wow, Ben and David are so smart.

1:00:51 You know what I wanna do? I just want to own whatever stocks they own. And I wanna basically buy their index that they created and uh just roll with them in their portfolio. Like kinda like a money manager, but if you guys were basically curating an index over time, um I I I think that that would be It'd be interesting if you could a create an Angelist like platform where it was very trivial for somebody to create their own index and let others in invest into it. I might have also just invented a mutual fund, I'm not sure. So I don't know the answer to how you do this. Although I should. But I used to work at Dow Jones and the which I used to work at the Wall but Dow Jones, which the Wall Street Journal is part of Dow Jones, it's part of News Corp. Um

1:01:30 And uh While I was there, we sold the indexes business. So D the Dow Jones index is now owned. By one of the big Chicago company. Which is a garbage index and no one should pay any attention to it. But it was a billion-dollar business within Dow Jones. So billion dollar top line. Basically no expenses. Like it was all just pure market. And and what it was, it was just a marketing thing. It was like you get to use the Dow name. Like that's

1:01:57 It's like a license. Yeah, yeah. And who's who's paying for that license? Who pays to s to be able to put the Dow Jones and is it like C N B C has to pay to put the Dow Jones index on the screen or what? I don't know exactly the answer. I think it's I don't think like C and B C or like media properties have to pay for it'cause I think that That that they're just that's just public. But I think if you want to incorporate that index in your data of whatever like product you're using or whatever, then you gotta pay that licensing fee. Or if you wanna use the brand. Dow Jones was a powerful brand, like

1:02:33 The Dow Jones, XYZ, whatever mutual fund, blah, blah, blah. Right. That's interesting. Uh you know, th this reminds me, I had this meeting once where this guy came to our office and he was like, Yeah, I'm the CEO of NASDAQ. I think it was Nasdaq, maybe New York Stock Exchange. And I was like I was like, Wait, Nasdaq has a CEO, I guess. Okay, that makes sense. Like, you know, so Nasdaq what wait, what the fuck is NASDAQ? And he's like, Well

1:02:57 But you know,'cause I just had always heard of NASDAQ through the kind of like it's kinda like you hear Dow Jones, it's like, Oh, this is just a sort of a a a name we give to track the market and and I didn't really fully at the time I had no idea that First of all. There's multiple exchanges, they're highly competitive with each other, they hate each other, and they're constantly, you know, trying to fight for different IPOs. And then but the part I didn't I kind of knew that part, but the part I didn't know was that they license their technology. They're like, yeah, we power the stock exchange in Sweden and 40 other countries, and we make you know, a billion dollars a year or whatever the number is, uh just licensing our stock exchange technology to other countries for their stock exchange. And I was like wow, this is a

1:03:36 This is a great business, actually, because it has this ultra powerful brand in the US. And then it just becomes like, you know, and they built this technology stack. There's very few competitors to it. And um and then it becomes kind of like the um, you know, N of one company around what should I use to run our stock exchange? And there's gonna be no switching, I bet. Like I bet nobody wants to switch the sort of full stack they're using to run their stock exchange. Totally crazy, right? So you have extreme pricing power. And I was like, wow, this is an amazing business. I was like, could you compete with this? And that was right around the time that Oh yeah, we've had them on Stock Exchange. Exactly, which is like just an amazing idea.

1:04:15 Seems like it's been a little bit slow to market, as you would maybe expect, but uh turns out taking a stock exchange to market is not just uh putting up a website measuring clicks. Yeah, exactly. Th there's no sort of uh qu you know, for I ironically for the lean startup guy to do it. Exactly. No no quick MVP, you know, just landing page with you know smoke and mirrors where there's no there's no product behind it. You can't do that. Uh you know, Eric Reese will be in jail telling people about the lean startup in there. But um But anyways, I think the whole idea of stock exchanges is just very interesting thing. Uh I think a spac index fund is interesting and I wanna know how how you create an index fund. I also kinda like the idea of Angelists, but for creating private equities instead of venture funds. Um also I just think like Who out there some some somebody out there is just doing like a spa newsletter right now and just taking advantage of all the spac keyword searches and uh probably has built like a fifty thousand person vet pretty valuable email list.

1:05:09 There is uh it's called SPAC is it spac report? Let me look this up real quick. SpaCresearch.com. The um founder is an acquired uh community member, and uh Uh yeah, I think uh he's got it's a it's a paywalled business. There's either some sort of trial or some sort of freemium thing, but yeah, he's he's building a real business on it. Yeah, I think totally you could do kind of the Motley Fool or whatever. You know, basically it's O this is old solution, new problem, right? Okay. Niche newsletter, paid newsletter, that's old solution, new problem.

1:05:38 Everyone wants to know about spacks, and there's not a definitive place to go find it. Right. Like I remember in the crypto boom. Uh I ran into this guy who You're referring to this this past tense crypto boom? Yeah, yeah. Crypto the boom the boom was a very specific time when, you know, money was flowing freely and my aunt in Virginia was like saying the word Ethereum in her Indian accent, and I was like, Well shit, what the hell's going on? Um But there's this guy, his name's Sh uh Shaq, Shaq Khan, and uh Shaquille Khan, and it he he was like he's kind of this international man of mystery. He worked at Spotify and he did a bunch of random things that like y nobody knows who he is, but he's just friends with all the CEOs, and like they hire him for like

1:06:18 A special project for the picture. Yeah, he he's he's exact exactly, he's the wolf. He's the one they call in. So h during the initial Bitcoin run up when it was f going from like ten dollars to a thousand dollars Everybody was trying to figure out how do we create bitcoin products and he just created Coin Desk. He was helping create Coin Desk. He's just like, Oh yeah, we should just create the news and information site and then we'll figure out from there

1:06:39 what other opportunities we want to go to, but like first things first, let's create Bloomberg or C N B C for Bitcoin. And I was like, Oh man, such a simple idea that can be executed because you're nimble and you're you know, very responsive to where the world is going. Totally. Yeah. Yeah, I mean it's it fits it definitely fits into that, uh for anybody who hasn't read this thing, it's really it's quite hard to discover because it's an archive of an old website, but it's

1:07:05 Uh P M Archive dot org and it's it's Mark Andreessen's it's like a play on his handle and it's his old blog before he started Andreessen Horowitz and one of the Amazing.

1:07:19 pieces of content on there. It's like a five piece thing is uh his career advice, which of course starts with like you can't plan your career, so I refuse to give you any advice, but if I were to, here's five articles on it. And one of the things is like If your five smartest friends are getting together at two in the morning and going to Denny's because of something exciting that they're thinking about or something that's new in the world, go with them every time. And it's such a good like litmus test for If yeah, if Pro Rada has written about spacks every single morning for the last two weeks Then like it's probably a good time to start a spac media business if you feel well positioned to do so. Right, right. Yeah, that's a great call. There's there's the other one that's like Uh

1:07:59 W what nerds are doing on the weekends will all be doing, you know, five years from now, the Chris Dixon thing. And uh you know, where wherever wherever a nerd engineer is spending their free time on the weekends tinkering, That's that's the area of of innovation because they just can't help themselves. And uh What do you guys think would be that right now? I I think I know If I just think about my smartest friends

1:08:19 And what they're doing. Uh I think I know one one answer of what I would say, but it's There there are lulls where there's just no clear answer and then there's like clear periods where something emerges. Do you guys have something in mind, or do you remember a time when when that was happening and you either were aware of it or you you you missed it? So I have uh I'm gonna give a little bit of a different answer than I think we're looking for here. My smartest friends who have means

1:08:43 are working on climate problems right now. That's right. And I think like we can talk about GPT three, we can talk about crypto stuff, we can talk about um th there there are other sort of frontier technology things at the moment, but probably five times in the last couple months I've had really smart people that I've tried to recruit to start something with me to join a PSL company who are saying like, uh Actually

1:09:10 After doing some reflecting. I'm gonna go work on some climate stuff. And there's there's no capital structure to support that. I mean we have a whole David, we did that deep dive on how how uh energy uh breakthrough energy stuff gets funded, which is completely broken. But um I've I've I've got a I've got a company to talk about. But yeah. Keep going. Anyway, that that's definitely the thing that occurs to me of like my smartest, most well intentioned and people with means. And yeah, th th throw out a couple of names that I've seen. These aren't even people I know, but Uh I know Jesse Jacobs just launched a rolling fund for for climate.

1:09:46 I know that uh Josh Felser left Freestyle, I think, to work on you know climate problems. I know that Y Sean Wong, who's one of the smarter people, I like to read his his writings on stuff. He's been talking about this working on this for a couple of years now. Read it, right? At some point either before or after He was the CEO of Reddit. He was kinda like early ish Facebook and then he became the CEO of Reddit for a while. And he's got this very simple website. I think it's just Y Y Shon Wong, which is Hard to spell, but you should give uh give a shot at B and CO Twitter for a little bit just uh mixing. Just round it all out. I've still long read it, by the way. And so yeah, he's he's like buying a plot of land in Hawaii or something like that and doing some radical experiment. Awesome. There's also this guy who the guy who created control labs, I think. Um which is they got bought by Facebook. They're kind of like, Did he leave Facebook?

1:10:34 I think he left Facebook and I th I don't know if he's working on this, but I saw him talking about or tweeting about like You know, we really could just go put solar panels into space and harness the sun's energy that way and then beat it to the earth or something crazy. Like what would it take to like, you know, throw a you know, a giant set of solar panels into space and then Yeah, and I was like, what the fuck is this guy talking about? Like this you know, people with brain power, you know, ten orders of magnitude more than mine. I'm like, Oh wow. I didn't even I d can't tell if you're joking or if you're serious. You're probably serious and it sounds like a joke to me. That's how big the knowledge gap is here. What's super exciting to me on this is um

1:11:11 I have a friend who who just started a company um that like There's I mean, this is a a double edged sword, but it's just reality. Like Uh Problems are finally starting to get real with climate. Like I think one of the reasons why there's no good funding structure for it and cleantech failed and all this is just like Everybody knows that this like wave of awfulness is coming, but like feels it yet, you know? But but

1:11:35 The tip of the spear is fires in California. Like those are real, real problems that we're all like Like can't go outside. Like it's just terrible and like people are losing their homes and properties. So I have a buddy who um started a reinsurance business for Uh for fire

1:11:52 risk in California. He's like Yeah, the insurance industry is like so backward on this. These old stochastic models uh from like past history of like there's a terrible fire in California once every thirty years. It's like no. Happens every year now. So like, okay, let's deal with this problem. And like that's gonna be a great company. That that's gonna be a great value capture mechanism. I don't know. I mean, how does that help us not burn down the planet? Well, it's like there's a but there's a there's a serious but like you can't get insurance for fire in a lot of places in California anymore. So like this is a serious problem. Like Yeah, so it's a way to address the symptom of a problem. And it makes the symptom much less painful for lots of people.

1:12:33 But it's still not addressing the problem. You're not solving the cl the fire problem, you're you're solving the my house burn down problem and I'm I'm shit out of love. Which is w great and admirable to solve downstream problems, right? Yeah. Uh Also, speaking of insurance, I tried to get insurance for any commerce business I own. And um Dude, you can't get e-commerce insurance. I don't know what the hell's going on. You can't get business insurance for e commerce. It was so painful. I thought I'm gonna start typing the word biz

1:12:59 And then Google's gonna be like, Oh, you want business insurance? Cool, here, here's 10 leads that will just call you incessantly. And instead it was the opposite. It was like business insurance, you know, for e commerce business, uh, called twelve different companies, emailed a bunch of them, and they're just like, Oh, do you, you know Is your product um Oh, it's e commerce, it's not physical retail? Oh, that's gonna be tough. And then they're like, you know, do you is it manufactured in China? I was like, everything's manufactured in China. What are you talking about? And then they were like, Oh yeah, it's gonna be really, really tough. Uh it's it's like it's like You're like, who is this for then? What's the why is it gonna be tough? So they would just email me, they'd be like, We don't uh unfortunately we can't uh we can't find any underwriters that will um underwrite for this business.

1:13:41 And I was like, I haven't even told you anything specific or scary. I've just said e-commerce and made in China. And like those are the that's everything. That's most things, you know, as far as I'm concerned. Uh, and they were just like, Yeah, we don't do much e commerce. I'm like, Who does fucking e commerce then? And so I don't know if I'm just a terrible Googler. Or uh How does Shopify not have a preferred partner for this? Yeah, I don't know. How does Shopify not just provide this as a service? This is like a totally you know it's a nice high margin. This could float a bunch of their insurance. I'll do a teaser. Okay. The mere fact that you said you won't do a spoiler alert means people are gonna know what we're talking about. Well, uh we're we're gonna do a uh probably our season finale this year on Acquire is going to be

1:14:26 A well known insurance business. It's like people are it's the best business in the world. You get free money. Right. Yeah. You get money. That you can invest.

1:14:36 That you have to pay back at some point, but it's free money. And to continue, David, because you've given away so much of the story now that like we may as well f round it off, like if you have a large insurance business that allows you to have a nice big float. You can invest that float in other things. And it's if you're a good capital allocator is Yeah, it's an amazing way to just go buy a bunch of other businesses, make more investments in non insurance products. It actually seems like a no brainer for Shopify because they do want to build more and more and more technology and that's gonna Cost cash. Right.

1:15:08 Uh and if it's not Shopify, then somebody needs to go do like Clearbank for E commerce insurance and do it extremely well. I know there's a I I finally got one provider, but Um The fact that it took me The fact that I even had to try means somebody you know, there's money on the table for someone somewhere, uh, you know, for this that type of thing. Um

1:15:27 Okay, so cle let's go back to I think the thing you said is really, really interesting. It really resonated with me when you said the Um, you know, if your friends are going to Denny's at at two in the morning. Yeah, like just go with them. Like that's literally the best career move you can do. Um I totally agree.

1:15:42 I fuck this up a ton, like in college, like I would I I wasn't really even excelling in class, but I always just thought, okay, class is where I should go. That's where the value's gonna be, right? That's what I'm supposed to be doing. And I ignored all these people. I actually literally laughed at a whole bunch of people who I knew were just like working on random shit. They weren't going to class. They weren't going to parties. They were just like building. And like now I'm like begging them to invest in their companies here in Silicon Valley'cause I'm like, Oh dude, sorry I like you know

1:16:08 You know, made fun of you in the hallway. Uh like Uh you went to Duke, right? I went to Duke, yeah. Were you there with um With uh Steven from Cameo. Uh yeah, he was a couple years older than me. Yes. And he was actually the funny thing is Duke is this school in Durham, and Durham's not a not at the time at least wasn't a very cool city. So there was only one club that anybody could go to, one off campus bar basically called Shooters. Shooters Oh, I've been to Shooters several times. Did you go to Duke?

1:16:37 Uh my David, why have you been to informed a wedding at the Duke Gardens. Okay, gotcha. My sister and brother in law uh went to Duke, so we're gonna visit them a bunch of times and then they got married there. So Yeah, so of course they take you to shooters'cause it's the only fucking place to go. So Steven from Cameo actually. Shooters in uh Wayne Manor. My my brother in law was in Wayne Manor. Right, right. So he used to just host parties at shooters. He was just a party promoter. So I literally knew this guy as like You know, fuckboy number one as like just throwing parties at shooters, just he was always like texting people, you know, trying to hype up parties. He was good at it. Of course he was. And um and now he's like CEO of like a billion dollar company. Um But you know, it's the perfect company for him to be CEO of like that is it it pattern matches perfectly. Exactly. So uh yeah, he he's a funny guy. Uh anyways.

1:17:26 forgot where I was going with this, but I I guess what I was gonna say is The Follow your follow your smart friends. So step one, have smart friends that actually do this kind of thing. And I think that's If you just do that, you're ninety percent of the way there. And then the last ten percent is like listen to them and follow them and like be be interested in their things that seem just like random toys right now, uh, because they will probably become big deal, you know. One of those is gonna become a big deal soon. And so um

1:17:51 I'll throw out three that I've seen as trends amongst my friends. I have basically tech friends and then I have like smart business friends. So of the top one percent of my friends, the tech friends are all about GPT three. And they're all about uh DeFi. Which is the sort of crypto in infrastructure uh for they're doing things that like I don't think these guys own a stock, but they're like

1:18:13 Oh yeah, I'm you know, in this DeFi system where I'm staking and I'm yield farming and I'm like you know creating these really complex lending mechanisms and I'm like, what the hell's going on? Like when did you turn into a finance guy? And it's because all of a sudden Engineers who like money are like oh I can Use my engineering to make a lot of money. And the the crypto boom probably fueled this because people were just like making millions of dollars. Like oh.

1:18:37 Well they're all flush with cash. Uh they're all flush with with not cash. They're all flush with wealth that is in Ethereum or is in Bitcoin or random ass, you know, shitcoin. And um And so they don't want to take it out. They're not ready to like leave the crypto game, but they're like, Well I You know, I was just trying to invest ten thousand into Ethereum and now I have one point one million, so uh Okay, cool. This is a way I can stake my Ethereum or I can land Ethereum.

1:19:02 And I can get twelve percent a year, you know, doing this? Oh yeah, this is great. And I can kinda control the whole thing from my terminal and my computer. Like that's awesome. It's the same game that like multi generational wealth have been playing within trusts in the US for you know, couple hundred years but now like these

1:19:20 crypto millionaires have the exact same problem of like I'm sorry, I have to pay what taxes if I pull this out into cash? Well, how do I roll it into something that just kinda can spit off exactly as much cash as I need to live and I can leave it as an illiquid asset the rest of the time. Exactly. Exactly. Like the you know th that is that is what's happening. And so maybe maybe more stuff needs to get built that's the equivalent of a of a trust or like the 1031 exchange of crypto. Like you know, I think that that's where a lot of potential is. Like this is why the ICO boom happened was So many people had made so much money off Bitcoin and Ethereum and You know, to them, they're still thinking about their ten to twenty thousand dollar investment, but now it's two hundred, five hundred, seven hundred a million dollars, you know.

1:20:01 Um And so They were like, Okay, cool, maybe I could do that again. Like first con false confidence that I could do that again. Yeah. I could invest in this new small thing and it could also give me a little bit of a skill not luck. Right, exactly. It was skill, not luck. And then the other is I don't want to pull this out. And so you had just what's like when the Fed pumps in a bunch of money and the stock market goes up. That's basically what happened for crypto and why there was so much slush money to put into random ICOs.

1:20:26 Huh. All right, new ideas, opportunity zones for crypto millionaires. Yeah, yeah. Do you know about the tax treatment on that? Uh on the opportunity zones. I've been hunting for ways to avoid paying taxes over the past you know year and uh people keep telling me about opportunity zones and how I should be investing in them. Um, and I only understand twenty percent of it so far.

1:20:47 I I'll give you a very small amount that I know for sure and leave everything else unsaid so I don't say th something wrong, but I know you can roll appreciated stock In the which I think is similar to a ten thirty one exchange without paying tax on it. So it's a a new investment. Right. So let's combine the climate change and tax idea here into one. uh with an idea I've been trying to I've been noodling on. I actually have said this on the podcast before, but I need to say it again because I'm still thinking about it, which is uh not true of ninety nine percent of the ideas I say. Um

1:21:18 So One of the best simple ways to uh reduce your tax burden. Um is uh to uh is to do a solar installation, right? So there's

1:21:28 Um a solar tax credit that the government gives And um And so you know, you have a house, you put solar panels on, yes, you pay the upfront investment, but then you save on your utilities and you get the tax credit that you can use to, you know, um eliminate a whole bunch of your your earned income. So essentially you can do it for free as long as you have the money to put up up front. And um

1:21:48 So I've been looking to basically Do this. Now I don't have I don't want uh I need something bigger than just my house, right? Your house might have like I don't know, a thirty thousand or a fifty thousand dollar project. I don't know exactly what it is, but it's like what do you do if you need to W can I get like a million dollars of tax credits uh for this? Like can I do a million dollars worth of solar I want a farm, yeah. And so I s uh I was driving with my father in law and he was like He was telling me about this. He goes, Yeah, you know, like on every school you see these solar panels on the parking like garages are just like kind of out outside of the school.

1:22:19 And he's like, Yeah, this is part of like Chevron energy, like Chevron installs all these. And um And I and from what I gathered was they have both a kind of a service provider, they're they're they're a vendor, they get paid for that. But the bigger thing is that they'll be like, Hey school, you don't need to put up two million dollars for this solar installation. We will do it, Chevron, you know, w out of our profits from oil and gas. So they get to say they're doing clean energy things. They get to reinvest profits into something that they're gonna be able to t get favorable tax treatment on. They get to help a school have solar solar power, and um and then they become sort of a long term uh, you know, uh landlord of the of

1:22:55 Uh uh uh less or I guess of the solar panels and the school pays like kind of a small monthly fee, but they are they are from day one, you know, saving money on their their utility bill. So for them it's like a net gain anyways, even if they pay for this, they're paying less for the utilities. So I was thinking why isn't there a marketplace where I can I don't have to buy a building and like do this whole solar pl plan, but I just said please invest that into these solar projects for me and give me my tax credits back. um and give me my kind of monthly recurring income from this this is gonna go on some farm in in, you know, Idaho.

1:23:28 Yeah. Yeah, he's an asset manager. It solves the same problem of like I don't want to do the dirty work of pay of finding those investments and operationally putting the money in, but like I will pay you something to do that. Whether this is commercial buildings, schools, farms, factories, whatever. places that need that that could use solar that don't want to put a quarter million dollar investment into their solar. They're like they they are gonna buy a another machine to like run their factory better or whatever. Uh but they're happy to take a lower utility bill And they're happy to you know and then on your side, you're happy to get, you know, monthly income plus tax credits. So seems like there's a business there, but solar is installed. Yeah, exactly. And we're helping the environment. So so I like all of that. Now

1:24:13 Somebody who's more knowledgeable than me probably in five seconds could tell me why this is not a viable thing. But uh for now, I'm gonna say it out loud until somebody points that out. Or builds it. I love it. Well this is part of um I don't know the exact history, but you know, Solar City looked a lot more like this before it combined with Tesla. Um Which was weird.

1:24:35 you know, all in and of itself. But um Uh but now I think Tesla's solar projects are much more about um the roofs and uh uh solar roofs and and power walls, but Right, for sure. Um

1:24:48 Okay, climate uh climate one. Um The other one I said was buying businesses, so going more of the Forget this venture capital game. I'm just gonna buy all these profitable businesses or internet. Yeah, Tiny Capital's uh is kind of like probably the thought and has the

1:25:06 longest running track record of doing this of of like kind of people who are public on Twitter about it. But then there's others like Constellation software and you know, there's a whole bunch of different different folks that do this. Um But a lot of my smart friends are going down this path of hey, I'm gonna buy and then build rather than play the lottery and hope I find product market fit with a brand new invention. Yeah. I also think so so many people it became so sexy to be an early stage

1:25:31 to use the finance term an early stage manager or emerging manager. uh or as people would call it maybe solo capitalists in the sort of startup parlance. um or do a rolling fund or something like this, that there's been so much of a rush to I wanna invest in my friends and relationships who are starting early stage companies that we're now into year five or so of the boom of that and people realizing how cra it is to produce a market beating return, or, you know, let's let's say better than that, that's a top decile, top quartile return for your investors. Um That

1:26:04 unless you're really, really differentiated, and I think most people are kidding themselves on how differentiated they are in the in the deals that they have access to, unless you're incredibly differentiated. You probably should go play a lower beta game where uh uh you can put in some sweat equity like having to use your PM or dev talents to rehab a business that is uh available to you for a below market price, but like I I just think uh much like the way we started this podcast talking about classic entrepreneurship versus um you know, shoot your laser at the sun and hope. I don't know what I'm talking about there, but go big or go home. Uh I was trying to make a metaphor. Uh investment. It's uh I think people are just realizing how crazy hard it is and they're like, Wait a minute, if what I'm trying to get is an X percent annualized return, gosh, I know way better ways of doing that that don't involve this crazy power law. Yeah, I I think that's true. If you wanted Uh

1:27:00 If you wanted a If if I was saying, Hey, I have to over the next seven to ten years, I have to end up with this amount of wealth or I die. Um, that's the path I would go, right? Cause I'm like, okay, it's really de risking the market fit side and it's all about execution and growth. Um, and because the financing is so favorable, right? Like Most people don't realize this. Most people a lot of people listening to this are working at a job.

1:27:24 And they make g a great salary, right? They might be making Two hundred thousand dollars a year. And then they're paying kind of like you know income tax on that and now they're you know taking home a hundred and twenty or whatever it is. Especially if they live in California. Yeah, exactly. And so Um You know, m most people d fail to realize is that for

1:27:43 Um Either z no money down or like kind of like You know, you could put down five to ten percent. You can buy a

1:27:54 Million dollar business with an SBA loan. And by the way, if you buy it before September twenty seventh, you the first six months are gonna get paid for you by the SBA. So you you first six months payback is is taken care of. And um You know, to mention seller financing or seller's gonna carry ten percent of it themselves. So that's how you get to the fifteen percent down total. You put five, they put ten, and then the SBA loan covers the rest. And every month you're gonna be making, you know, you're gonna be making a profit on you're gonna half the half the profits are gonna go towards paying back your loan, the other half are gonna go to you. Within twelve months you paid off that whole thing. And oh, by the way, if you improved operations doing one of three stupidly obvious things, uh you know you've now created an asset that is worth

1:28:36 Two, three times what you bought it for. And um It's like buying a house, except the mortgage is like You know, instead of you paying the mortgage, the mortgage is paint you. Yes, exact exactly. And and unlike a house, it can appreciate at a rate that is uh uh uncommon. I have a friend who bought a business I think for three hundred thousand you know on one of these websites. He was the first guy I knew I was like you fucking buy off these random ass websites like you know He used one of these marketplace you go to Flippa and stuff like that. He's like oh yeah I bought a bunch of stuff I'm like what

1:29:06 And uh it's because he didn't have connections. And so I was like, he's like, I didn't have funding and I didn't have connections. So I just go to these places where I don't need a reputation or connections and I can get funding from these like very simple pools of capital. Um, but I have to buy profitable businesses, otherwise nobody will lend me the money. Um, so I'm not taking big risks. And so he brought this company that was small but profitable. And that company's gonna do, you know, thirty million this year in revenue. So he's gonna literally take it from three hundred thousand So he hundred X'd. He yeah, he basically hundred X this business and and I was like, dude Tell take me back. When you were looking at this business, what was the I was like, first, this is very uncommon. You don't usually get this type of of lift. But I was like, Did you know that there was this much room? He's like, Yeah, I talked to the owner and he was like, just always thinking about operations and how to like doing the shipping and the warehousing. He'd never ran a Facebook ad. You know, he never did any marketing. And um, and also, you know, his SEO was a little screwed up and I realized that.

1:29:59 You know, y there's a lot of like latent potential there. Um, and then also he didn't expand at anything any adjacent like pro he didn't launch one new product in four years. And so, you know, just Facebook ads plus w new product plus you know improving the content SEO game. And like just this insane lift. Like he'll sell this company for over a hundred million dollars that he bought on one of these like flipping type websites. It's insane. Sha Sean, I'm I'm curious, like do you think there is an opportunity to

1:30:26 Um, if your skill set is like amazing growth marketer to get really surgical about running ads against other people's products and trying to get data back from like, Oh my God, I know something they don't and Send them traffic. It's hard because you don't own the pixel on their website, but maybe as a part of like, hey, I'm interested in doing the deal, would you throw this pixel on so I can test some stuff and then I can tell you what I can afford to pay. Yeah, I think that's a great way to diligence things. Um, but honestly, you you don't even have to get that smart. So like There's a lot of these that they're just not doing one channel. And if you know that that channel works, if you have experience in that channel, let's call it Facebook ads or Google AdWords or uh influencers or whatever, whatever's your your your growth thing. And you s you know the characteristics of the type of business that works there, right? So let's say it's Facebook.

1:31:12 you know that the types of products that work are like scroll stopping products. Like it has to be visually appealing. You have to understand the value through a visual In less than three seconds. The slow mo of the Theragun beating against a thigh, making the ripples, like you never know. Exactly like it does well, like a baby. It does well. Like these things just do well on social networks. So you're like, Okay, cool, I'm gonna do that and maybe A little less like I don't know, some other like some B to B thing that's not gonna uh Resonate in the same way. The spreadsheet will change your life. Exactly. The spreadsheet beating against your leg doesn't do the work. You guys get these ads of like two MIT grads, you know, are got together and X. Dude, all my ads are crazy because it's only for businesses that I'm looking at buying. And so I just like I like try to get myself covered in their pixels. And then I'm like, Yes, retarget me. I wanna watch everything you're doing and I wanna see your ads and all the stuff.

1:32:01 Uh so Facebook thinks I'm picture bathing in in D to C pixels. Yeah, exactly. It's like a very strange thing. Exactly. So anyways, I think if you know the channel really well It's really not that risky to To know you'll know which type of products will work and you just know are how much have they invested into doing this channel. Okay, you can sort of think about the lift you're gonna get. You could say, Hey, I'd love to love love to run a trial, but what you risk is educating the operator of how good this is gonna work, right? Um

1:32:30 And and so I th you know, I think it's uh A little bit dangerous to do that and you're better off, you know Betting on yourself in the in that way. There's other kind of Funny ways you could do it, but I I won't go into those that are slightly in the gray area. Well, listen, this was fun. Uh good dual episode. I appreciate you guys coming on. And I feel like we didn't even get to half these ideas on the list, so there's definitely more ammo if we we want to do this again sometime. So uh appreciate you guys.

1:32:55 Coming on our my show. Thank you for having me on your show. We literally we got to do both shows here. It's great. We'll taste of both. Yeah, I like it. Cool. Well, thank you everybody for listening and uh That's it. That's a wrap. All right, listeners. Now is a great time to talk about one of our Favorite companies, Statsig.

1:33:12 Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI powered experiences at scale. Yeah. In the crazy speed of today's AI world. Shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly.

1:33:34 The real advantage is how quickly you learn what changes actually created value for customers. And how fast you can use that signal to guide what you ship next. This is where StatsIG comes in. It brings experimentation, feature flags and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to Statsig.com slash acquired to get started. That's it for today. If this is your first time listening to Acquired and you like what you hear, you should subscribe.

1:34:12 And feel free to check out my first million wherever fine podcast products are distributed. As always, if you love acquired and want to hone your craft of company building, you should join the acquired community of limited partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls, where we get to talk with all of you, and of course our book club and calls with the authors like recently Will Thorndike from the Outsiders. If you aren't an LP, you can click the link in the show notes or go to acquired.fm slash LP Everyone gets a seven day free trial. So great to have so many of you in here is a blast.

1:34:50 And with that We will see you next time.

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