I Ranked the Best & WORST Businesses to Start Before 2026 | Andrew Wilkinson

0:00 We have sixty five million of ARR. We do over forty million dollars of Ibita. We also manage a two hundred million dollar fund. So we're over three hundred million in revenue across thirty businesses and all the businesses in the fund are profitable as well. I don't know, I'm kinda like if that's failing, like sign me up, right? You've owned a number of agencies. How much revenue lifetime has Meta Lab generated for you? The hundreds of millions of dollars of profits, not revenue. I don't know that I would still rank it very highly though. SAS Where are you putting SaaS? I would say it's a What do you think about marketplaces? Well, I would say it comes down to scale. A good marketplace like Airbnb, I'd say an A. I'd rank marketplaces in general as That's the one I would disagree with you with. I feel like I gotta ask you this because I think you get a lot of shit nowadays. I think a lot of people go look at the tiny stock and then they click like Max. And basically you see just a downward trend. A lot of people I see on Twitter want to kind of look at that and say, Oh, this guy calls himself the Warren Buffett of the internet and he says he buys these great bits. businesses.

1:00 Um I feel like I could rule the world, I know I could be what I want to I put my law in it like my day's all on the road, let's try to get it. Andrew is uh One of the Most visited guests on the pod. Always good to have you, man. Uh I wanted to play a game with you. You've done many types of businesses you've done.

1:21 Agencies and Yeah, private equity and you've started, you know, e-commerce companies. You've done a a huge number of companies in the last twenty years. So I want to do a game where we rank The different types of businesses that you could start. And w we could work out this criteria together, but I I think the idea should be

1:38 We're not looking at the outlier scenarios. So in every industry, right. The world's best plumber. Makes a fantastic living. trade to go into. No offense to the plumbers out there listening, but we're not looking at just the extreme outlier. So I think that here's my criteria for a great business, Andrew. It's going to be The median successful outcome.

1:58 Okay, so like the sort of like normal case. If you can make it work. That's the first that's the first criteria. The second thing is we're thinking we're taking into account both the lifestyle as well as the um the result, the upside. So you know. If one thing is just makes you miserable

2:14 um or overwork you like crazy, then that would be obviously worse than a business that ha that lets you have a great flexible schedule and flexible location, for example. So lifestyle matters. Upside matters and we're looking for kind of the median success case. But but you know, in some of these it's gonna be like dude it's Median success. I mean

2:33 Only the top point one percent make it. So You have to factor that in. The likelihood of success matters uh in these in these scenarios. Okay. If you're w if you're listening on audio, it's gonna be a little more fun if you go to YouTube or go to Spotify. And actually You can see on screen the the stuff that we're sharing. All right.

2:50 So here we go. Here's the tier list. Uh if you've never seen a tier list before They're ranked as you would expect, sort of A, B, C, D, E, F, uh A being better than F. But there is, of course. S tier. And I don't even I don't even really know what S tier stands for. I think it's like from the gaming world, but it's basically like

3:06 S tier is sort of like God tier. It's the best you can it's the best of the best. Okay. So we're gonna start Little way up here. Uh and for each, Andrew, I want you to give me your almost like rapid fire take on like You know, kinda what this business is, why it's either great or why it sucks. Okay. So the first thing we're gonna do, easy. An M L M.

3:23 Which is actually a surprisingly common business that people get into, uh, if you just look at the raw numbers of people who take part in MLMs. So MLM, where are you taking where you're ranking it? I mean I would rank an MLM as an F, it's a fundamentally unsustainable business that Um breaks.

3:40 I mean The problem with an MLM is It's reliant on recruiting other people and and it doesn't actually make money. based on selling services. It s it basically makes money by Finding the next sucker.

3:53 And If the person that starts the M L M Finds a lot of suckers. They can make a lot of money. Yeah. And the first couple layers can make a ton of money.

4:03 But then it always explodes or they get indicted or something like that. So where are you ranking it? I would say that's an F. Okay. It's going in the F. Although it does sound like for the MLM owner, you know, it's not necessarily an F. You know, one of the one of the associates or as they call them, you know, the the business owners that they they like to call themselves that are underneath. Yeah, that's F tier for them. I think if you are willing to go to jail too. Like you can make a lot of money, but I mean like

4:29 fifty fifty odds you go to jail. All right. Next one up is Uh, one that I think you did. And by the way, say say if you've done any of these. Okay. So Freelancer, which is I believe is how you started your career. You were a Freelance what web designer? Yeah, yeah, I started making websites. Uh out of my apartment basically.

4:47 Um I wouldn't I would rank that probably A D. Um I think it's a it's a really good business. I'd I say it's um

4:55 It's a living. Right. I think there's nothing wrong with freelancing or a restaurant or a corner store or that sort of thing, but Fundamentally it's an owner operator model and it doesn't really scale unless you scale it. Which is what I did. Yeah. Okay, well that's the the kind of the next one, which is actually agency.

5:14 You've owned A number of agencies. You've probably made I don't know I don't know what the number is, but Meta Lab has to have generated something like two hundred million plus in revenue. How much how much revenue lifetime? has MetaLab generated for you, your design agency. I don't know the exact math, but I think we're probably well over

5:32 Into the hundreds of millions of dollars of Um profits, not revenue. Okay, so I'm assuming you might have agency higher than most people. So I I think Well, you know what, I don't know that I would still rank it very highly though. Um

5:46 You know, the reason some you know, my story, I started a web design agency, I scaled it, I got clients like Um YouTube and Uber and Walmart and all these big companies And I was terrified. I mean, it's a business where you're either making a ton of money or you're about to go out of business constantly and you swing between those two things. And so Because of that Uh lumpy nature.

6:10 I'd maybe give it a C But it's be it'd be a tentative C it would it would kind of Yeah, it like it's really, really a hard business. And the hard part is you're saying Clients come and go.

6:21 It's that one it can be feast or famine with clients. Is that is that the reason why? Or is it the headache of operating and delivering the service. What what is it about the agency that makes it like not D. Instead of web design, let's imagine you're an accountant And you start an accounting firm and you start auditing Thirty companies. Now companies don't like to switch accountants and they don't like to switch auditors.

6:44 So if you have that That's a really high quality um consulting business. However, if you have a Five hundred dollars Let's say that you hired

6:54 thirty people in the Philippines and you do graphic design for five hundred dollars, you might have months where you're making Three hundred thousand dollars and then you might have months where you're making nothing because you're not getting any clients. The worst thing that happens in these businesses is You win a client like Walmart, let's say.

7:13 They come along and they say, Hey, we want to give you Ten million dollars of work over the next year. And so you you start panicking. You go out, you hire thirty people, and then a new PM takes over that team at Walmart and they just cut your budget. And all of a sudden you're left with thirty people you have to lay off. So I think it depends on um the nature of the business, honestly.

7:34 So you've you did Meta Lab. You've also had like a game design agency. You've had like a A no code agency. You've had how probably what, six to ten different ten to fifteen agencies and services business copywriting. Social media Um di web development. uh design a lot of different stuff. What were the sort of top two agencies you did and what were the sort of bottom two agencies you did?

7:57 Well, I would say that we really haven't had a lot of success with recreating the success of MetaLab. Metal Lab was the business, you know, like I said, I started with zero. and now does uh, you know, very significant earnings and revenue. A lot of the other agencies have not hit in the same way. And I think the distinction with Metal Lab is It did so much.

8:18 defining work in like 2008, 2015, where we, you know, we designed the first version of Slack. We worked on uh, you know, all sorts of projects that were kind of groundbreaking. And we planted our flag and built a reputation. And so I think The reputation piece.

8:36 is hard to recreate. And so we've We've had a lot of success with Meta Lab. We had a lot of success acquiring a company called Z One, which is in Spain. There are um a smaller web design agency and the theory there was literally just

8:50 Metal Lab gets a ton of leads that are too small for it. So let's buy another smaller agency and let's just send them those leads. And so I think we acquired that business for Three hundred thousand dollars or something, and we've probably made single digit Uh millions of profit. Yeah.

9:09 It's not We didn't knock it out of the park, but it's just an amazing bass hit. Right, right. Hey, what's up? If you're liking this episode, the research team at HubSpot has taken all the rankings that we're doing today in this episode and they made it a downloadable thing in case you want to go see the final tier list. If you want to download it and maybe have a little breakdown of our commentary for each one, it's available in the show notes below. You can go ahead and download it totally free.

9:36 Okay. Next one up. Sass. Where are you putting sass? I would say it's a B, probably. I think um it again, it depends on The type of SAS. If you have a SAS software

9:49 That is a chat GPT thin wrapper and does something like uh put a funny nose on your friend's face. And you trick people into subscribing to it for six months and they always churn. I'd say that's a pretty bad SaaS business. If you have a SaaS business that

10:05 Let's say has become the dominant player in funeral home management. And all the funeral homes use it? And they don't want to switch'cause it's the standard. That's an incredible

10:16 SaaS business. I mean SaaS businesses They're often uh high recurring, really good margins. I mean, they can be incredible, but you really have to find something with a limited amount of competition or high switching costs. Tell the quick story of the DJ software SAS business because that's kinda like the funeral home. Example you have. So you're saying

10:36 It's a vertical niche. Tool. That's like mission critical for an industry to run on. They were unlikely to ever switch and you know, that's gonna be super, super sticky for a long time with high margins. It sounds like I don't know a lot about the DJ software business, but like can you just tell the quick story of that one?

10:54 Yeah, I mean for the last ten years Everybody has been basically like obsessed with buying SaaS software companies and thinking you can't lose in that industry, which Right now it's still true. But over the last two years, like I got really scared of buying software companies because

11:11 You know, you look at vibe coding and LLMs and I I just think like L's increasingly Can build software And it's not that it's gonna put All these businesses, let's say you have a SaaS software company and there's

11:24 Ten competitors five years ago. I just think there's gonna be fifty or a hundred competitors in the future. And when that happens Competition equals margin compression. So We've basically said no to almost every single SaaS software company we've looked at over the last two years, but one came across our desk that we could not say no to. And that was Serrato.

11:44 Have you ever DJed Sean? Do you ever go through that uh that life crisis? You know what? I appreciate that to even think it's possible that I look like a guy who's DJed before. So I take that as a compliment, but no. I had I had a phase in like twenty twelve where I was trying to meet girls and I learned how to DJ and so I kinda knew the industry And the dominant software company in that world for the last twenty Twenty five years, I think.

12:07 Is a company called Serrato. And it's an incredible piece of software. I mean, DJs all over the world use it. I think like Diplo, uh you know A gazillion of the top DJs. And these two guys in New Zealand

12:21 Um, built it and what they did was really smart. They partnered with The hardware manufacturers like pioneer and they deeply integrated into the hardware. And so what that means is that A it's become the standard, right? So when you're the standard

12:37 That is really exceptional. Uh most DJs use one of two pieces of software, either record box Or Serrata, right? So very limited competition and there's lots of upstarts and stuff. But once someone really integrates into an ecosystem like Serrato They're buying like five thousand dollars of hardware.

12:56 They're not gonna switch off really easily. And the manufacturers, frankly, they don't want to integrate with Some random college kid who's vibe coded. Some AI DJ. Uh, you know, not to say that people can't come and compete with us, it's just harder.

13:11 because it's not it doesn't have a hardware mode. So I think SaaS with a hardware mode is pretty incredible. You know, that business, we shared some of the numbers when we uh bought it. I mean it's doing forty five million dollars of revenue. Fifteen million dollars of EBITD uh It's a it's been growing like crazy, moving into a SaaS model from licensing. I'm I'm a huge fan of that business.

13:32 Why does a business like that grow? Like are there just way more DJs or something else? I think as long as a DJ is a desirable thing to be. I mean, if you think about it, one of the weirdest phenomenons, you know, when I would go to a nightclub, It doesn't matter how much money I have in my bank account. I remember looking around and going Oh man, there's all these great girls here.

13:52 But you know, none of them none of them know that, you know, I've got all these businesses and I'm I'm a cool guy or whatever. Um and You're literally that meme like they don't know I have a design agency. Exactly. But like I'd w I look up I actually had a friend who is a DJ. And he would get paid like Two hundred bucks and some beer tickets, and he'd be swarmed with girls and he'd have status and throughout the city he'd be the man. And so I think as long as That's true. As long as young men think DJs are cool, uh, and women, I mean increasingly there's way more female DJs now. I just met an amazing one yesterday.

14:27 Um, but as long as that's true, I think people are gonna wanna do it. I mean, it's just fun to mix music and you can you can become famous, you can uh, you know, express yourself. So I don't know, as long as that's true, it's like we've got one of the toll roads to achieving that. Yeah, I like the analogy of the toll road. Okay. Next one I'm gonna do uh Uh actually uh do it do an easy one. Restaurant. I think you've owned or I think you own or still own a restaurant. Yeah, I own a bunch of restaurants, actually. Um, and I always say

14:58 A restaurant is a Uh a really good Passion. If you're really passionate about it, you love food, it's a labor of love. As you know, I know you had a sushi restaurant. But I have when I meet somebody and they say

15:11 I have a successful restaurant. I want to like Like Wayne's world, get down on my knees and say I'm not worthy because If you're successful in a restaurant, I just it is one of the hardest businesses. If you think about for you to go in and eat a good meal at six PM, people had to wake up at three in the morning, they had to bake bread, a million things had to go right, they had to train 30 people. It's just like a Rube Goldberg machine of business. So I would rank it as an E Um probably one of the hardest businesses and

15:41 Low margin and difficult. Yeah, for people to get context. most successful restaurants. Even the big chains like a a Subway or a Chipotle or things like that. Ten percent margin. Is

15:55 The good case scenario. It's like that's doing well. Of course, you know, there's there's exceptions like luxury, you know, sort of Michelin Star restaurants might have high power margins, but It on the whole, if ten percent is winning and then your butch of revenue is capped at what you can produce because again, you're working seven days a week. You're there for breakfast, lunch, and dinner. You you know, you basically you can't Like you always have to be there. You always have to go in and make the product again fresh every single day, and you're only as good as the your sort of last interaction with the customer. It is just such a brutal business. It is a it is an absolutely terrible business. In fact, it's funny that the only business you've ranked below it so far is an MLM. Pretty much a a a crime is the only thing that's been worse so far.

16:38 And you know, like I said, like we own restaurants. I think they're really important But I I just don't if you wanna make money and you wanna get rich, I don't think that's a good Way to do it. It's like uh I always use the gym analogy. If you go into uh the gym and you try and deadlift three hundred pounds on day one, you will hurt your back and never come back. And I think entrepreneurs who go into restaurants, uh, they have a rough go.

17:03 All right. Uh next one. Marketplace. So an online marketplace. Um Where how do you think about marketplace? This would be something like a Whether it's a Etsy or an eBay or an Amazon. Or it could be, you know, even marketplaces like uh Angel List as a marketplace, Twitch is a marketplace, anywhere where there's

17:22 Suppliers. There's supply and demand, right? There's creators and viewers. Uh YouTube is a marketplace of creators and viewers as well. So what do you think about marketplaces? Well, I would say it comes down to scale. Like you've got Airbnb on the side there. I think Small marketplaces are really hard. We own some. And I think it's like lightning in a bottle. If you can get supply and demand to match

17:45 They're phenomenal. businesses, but they're highly competitive. I like a business where it becomes A verb? So Airbnb is a great example. Like

17:54 If I think like, oh, maybe we should rent a house, Airbnb, the word just pops into my head. I go to the browser, I look up Airbnb. And I'm gonna Use it. That I would say is probably a a B or an A business, um, so very, very highly ranked. But if you started a uh marketplace for

18:13 People who want to borrow Let's say like construction tools or something like that. Yeah. Oh my God. Like I've just seen a million of these fail. They're so difficult. And so where are you ranking marketplaces? I would say a good marketplace like Airbnb, I'd say an A. I'd rank marketplace in general as a C.

18:31 Wow. First big controversial pick there. I can't believe you s rank it as a C. That's the one I would disagree with you with. I think if you get a marketplace to work like an Air B, it's S tier. Well, are we saying I'm working market'cause we're talking about business model. If you're one of the very few successful marketplaces, you're an S. It's like it's one of the most defensible lucrative businesses in the world.

18:54 But because the likelihood of success is so low I would have just knocked it down to probably an A if you can actually like Get one get one going even. Let's put Airbnb as an A. I'm down with that. I just can't agree with the business model in general as being a a C, because we're basically ranking in terms of

19:12 quality and difficulty, right? Yeah, exactly. And I I just think like Like, for example, like we could say that the services business, the accounting firm, let's say PWC, right? PWC Seventy five years ago was just one accountant. And with a few partners.

19:28 And now today If you want to get audited at your public company, you have basically five options. You you're gonna pay a fortune for their rubber stamp. Right. So I'd say like we could rank that as a B or an A, but we're talking about the business model. Okay, fair enough. Uh

19:44 Agree to disagree on that one. All right. This Airbnb is not the company Airbnb. It's owning Airbnbs, short term rentals. So saying, Oh, you know what? Here's how I'm gonna make money. I'm gonna get a property, I'm gonna get a home, I'm gonna put it on M B and I'll be a uh I'll be a short term rental unit owner. Maybe I'll do two. Maybe I'll do three. What do you think of that plan? I'd say it's a D, similar to freelance.

20:04 Uh you know the risk there regulatory. Um, I owned a so you know, I bought a uh beautiful apartment in Vancouver. I go to Vancouver a lot and I said, Oh, I don't want to own a second home, but You know, the twenty eight days a month I don't use this place, I'll Airbnb it. So I Airbnb it, I'm making a fortune, it's great, I love it. All of a sudden City of Vancouver changes the regulations.

20:26 Um There goes my margin, there goes my business. Uh you know, total nightmare. Uh and now I just it it's fine, I have a tenant, but it's just not nowhere near as profitable. The the same thing happened to my parents. They were Airbnb their house in San Francisco, making a killing, and then San Francisco changed the rules said you can only Airbnb ninety days out of the year.

20:44 So basically three out of the twelve months you can Airbnb. So then nine out of the twelve months they're Their cash cow disappeared overnight. Today's episode is brought to you by HubSpot because using only 20% of your business data is like dating somebody who only texts you in emojis. First of all, that's annoying. And second, you're missing a lot of the contact. But that's how most businesses are operating today. They're only using 20% of their data, unless you use HubSpot. That's when all your emails, your call logs, your chat messages, they turn into insights to help you grow your business because all that data makes all the difference. Learn more at hubspot.com.

21:16 Um, all right, I want to do content creator. So for the person who says, I wanna create the next podcast, I wanna be the next YouTuber, I wanna be an Instagrammer. I'm gonna build a following and then I'm gonna make a ton of money because I'm gonna get brand deals or launch my own products or Who knows what, but I'm gonna go all in on being a content creator. So I think that's a that's probably a

21:34 D. Um I would argue that If you become the next Andrew Huberman. You're a you're an A. Like you're a B like you think about in a world of AI

21:46 Um, if somebody has a a trusted relationship with you Um, it's a phenomenal business. The issue with it is it just doesn't scale. So in terms of defensibility, it's amazing, highly profitable, very simple to operate, but One of the problems with it is and I know a lot of these people

22:04 If you don't show up And you don't bring the fire on the camera every single day and you stop posting, your business goes to zero. And I think that's a bit of a it's a bit of a prison, I think for some people. Uh why did you say Huberman? Is it because Of the trust factor or because it's in health or wellness or medical. Is that the important factor there, the niche, or is it

22:27 just the level of trust that people have. It's if Huberman was doing the same Sort of podcast. But he was doing it about Candy. He's reviewing candy. And if you sell candy

22:41 It's the affiliate margins are not that good. The the candy company won't pay that much to do it. If you're doing health, like if you think about Huberman. is basically promoting athletic greens health supplements, that kind of stuff. Those things can be very, very profitable and the customer lifetime value is high. And so he can charge a hell of a lot for advertising. And then also, I mean, if you think about it, like Huberman, we own so we're friends with with Andrew. We own a Yerba Mate business with him. He is able to basically bring I would call it twenty million dollars of free marketing.

23:15 to any business he becomes a part of. And so if he takes equity in businesses or owns businesses, he grows them massively. I mean we took The Yurba Mate business, I think it's grown. Three hundred, four hundred percent since he got involved with us. All right. Next one. Um owning real estate. So buying properties. Uh either cash flowing them or flipping them.

23:37 Obviously, this is a big space, right? So this is there's like a thousand variations of how you do this. So I think it's a little bit of a tough one, but just give me your general thoughts on. Going into real estate. as uh whether it's multifamily, it's commercial real estate, and saying I'm going to try to buy these properties using some debt. Maybe I'm maybe I'm just gonna cash flow these properties, or maybe I'm gonna try to improve them and sell them uh you know for a higher

24:00 uh higher cap rate, you know, w when I when I exit. The beauty of real estate is predictability. I think depending on the sort of real estate, I think there's really a big distinction between Real estate ownership where you just buy something and you rent it out. And then there's real estate development where you actually

24:16 buy a piece of land or you buy something, you add value. I remember talking to your I think it's your brother in law who does the real estate where he he was like, look like I know all of the people that um you know need space And I just go and I acquire a strip mall. And before I close, I already know that I'm gonna put someone new in and you know, it's gonna be a way higher quality asset.

24:38 And then you can refinance it out or whatever. To me, that's kind of a no-brainer way to make money. Um, so I I would rate that a C probably. Right. Go and see. Uh and why is that not higher?

24:50 'Cause well if you're not doing the value add or you don't have that unfair advantage like my brother in law has. The reason I don't really do much real estate is because I don't like anything with a ceiling. You know, you if you buy um Let's say you buy a forty tenant apartment building or something like that.

25:06 The rent is gonna be let's say let's say that some old lady owns it. She hasn't increased the rent in, you know, thirty years or something like that. You're gonna buy the The building. Over time you can get an increased yield by increasing the rent. But there's a ceiling on that rent and you can't innovate.

25:22 To make more money. Whereas in a business, let's say a digital business like uh a web web design agency or a software company, you can take your profits and you can actually grow the business and you can increase revenue. It's very difficult to do that in real estate without massive capex. Yeah, I think well, I think they do the same thing, right? They just go buy a s and uh they take the profits or they refinance and go buy a second property. What's wrong with that? That works. Yeah, I mean you can do it. I don't know. It's just not something I've spent

25:50 Uh a lot of energy on. I don't I don't think it's when someone tells me that they're gonna go do it, I think like of all the things they could do, that's a pretty Solid approach. One of the things I've noticed I know a lot of uh you know really wealthy real estate people

26:06 And I've been fascinated by how illiquid it is. So you'll meet people who have Two billion dollars of real estate. Yeah. But the actual profits that come out of it are like twenty million dollars a year, which is amazing, right? It's made their family wealthy. The bank understands it, they live a good life, but they don't actually have that much liquidity and it's often tied up in

26:27 The next project and the next project and the next project. So I think it's a great way to make your kids really, really wealthy and uh, you know, ruin a few generations and then they'll buy an F one team and then lose all their money. Yeah. All right, we have nothing in the S tier yet. So I gotta try to get there. Uh I think this is the guy to do it, so I have a An icon here of Warren Buffett.

26:48 And this represents uh investing. So just being an investor generically, but I think maybe we'll the way I was really thinking about this, because I think Buffett is a little unusual in the way that he's structured his company. So really this is to me owning an investment fund or being in the money management business. Investing other people's money. And taking fees and a profit off the top of it. Is that

27:10 Well no, I would argue di a little bit differently. I'd I'd say um Investment management. Is an incredible business. Um, but I wouldn't put Buffett in that category'cause he doesn't actually manage other people's money. Yeah, I know. That's the thing. Sort of the exception here. So

27:24 The distinction I would make, uh, let's say you're hedge fund manager, uh, like my friend Bill Ackman. So Bill, for example, he went out, he raised hundreds of millions of dollars He bought a bunch of stocks. He would go and advocate for these companies to improve. And then he would take fees on that. And if you think about that business model You actually don't need to really

27:45 But that much money into it yourself. And you can make a profound amount of money if you perform the structure of hedge funds is typically two percent of managed assets. Plus twenty percent of the profits.

27:58 So let's say that you raise A hundred million dollars. and you triple it in a short period of time, you can suddenly make, you know, thirty, forty, fifty million dollars of carry and fees and stuff. So Those are really tremendous businesses, in my opinion. The problem with them is that

28:16 your investors can pull their cash out. And so what Bill has done that's so smart, and I would rank Bill as S and Buffett as S. And then other asset managers lower. uh they have permanent capital. That's the real distinction. And that means their investors can't pull their money out. Um they're gonna make those fees. No matter what. And they can literally I mean if you think about it. Sorry, why why is it permanent capital? I can sell my Berkshire stock today, I can sell my Pershing Square today. What do you mean it's permanent? What's permanent about that part? Is that or is or you're not talking about that? Is there some other money?

28:46 You're just trading little stock certificates of ownership between uh the businesses. But what I mean is Typically a hedge fund manager would say, um, let's say I give a hedge fund manager a million dollars. I can withdraw that capital. And the only way that they can uh give me that money back

29:04 is by selling stock. So let's say that you Uh, let's say you're the hedge fund manager, you go out, you invest in some company, the stock goes down, I lose faith. I say, Sean, I want my money back. You have to go sell part of your stake, potentially losing quite a bit of money. Whereas someone like

29:21 Um Buffett. or ACMAN, people are just trading the stock certificates. Right. Those are just ownership shares. Sure. Even when I'm out. Whoever I sold it to, they're in. So the the money's essentially there even if the stock price goes down.

29:34 Exactly. And they if you think about it just in terms of the beauty of their business model, Buffett's is more complex, but Bill's business, for example. He simply just goes out and he buys ten stocks. And he he has fifty employees. And he makes Hundreds and hundreds of millions. Sometimes some years I think he makes billions. Wait, wait, wait.

29:53 So Bill Ackman's firm only has fifty employees. Yes. Fifty employees and I think he manages how much does Bill Ackman manage? So Billy. Sixteen sixteen to twenty billion somewhere in there. So y okay, let's call it fifteen billion. So he's

30:08 Got fifteen billion under management. You know what, we gotta break the rule and we gotta do a little public math here. I know. He takes the two percent fee or he doesn't take the fee? He takes a fee on I think he bl it it's a blended fee of between one and two percent, depending on the goal of capital. So he's taking one point five percent. So his firm

30:29 With fifty employees. Whose job is to go and analyze and find ten stocks to own is making two hundred million plus a year in cash flow off of just the fees. Well, you gotta remember so so that's revenue, cost, there's cost to it, transaction, legal, all the other stuff. And again, I think that number swings around based on the performance and stuff as well. Right.

30:51 But how high could that cost be? He's got fifty employees and his legal he's not doing M and A with private companies, he's doing public company investing. I believe I mean we don't need to do the public math, people can look it up, but if you look at Pershing Square Holdings, his public company, you can basically see what they pay him in fees every year. Okay, that's incredible. So that and that's let's not forget, that's no matter what. That's not that's not the reward. That's not the twenty percent reward. I remember I remember talking to him in twenty twenty. He

31:19 Um was freaking out about covet. And he had put twenty five million dollars into a derivatives position betting, kind of buying fire insurance against COVID, dropping the market. He made Two point four billion dollars of profit or something insane off of that. I think it was twenty five million dollar bet.

31:37 And you think about He got fees on all that. Like it's unbelievable. And he also owns, let's not forget, he owns like Six billion of that capital he manages. So that's his money. Okay, that's incredible. What about the other side of it where you talked about uh the hedge fund managers. So where are we putting them? So if if Buffett and Ackman are your first S tier

31:57 Where are you putting The general hedge fund manager. Money manager. Um, who's got a you know, assets under management, but not permanent capital, the way you're gonna I'd give it a b I'd give it a B. Just because of the nature of the swings. You can you're g you're pretty much guaranteed as a

32:13 Let's say you're a very you have a large venture capital fund or you have a large hedge fund. You're pretty much guaranteed over 10 or 15 years to make to become a DECA millionaire. Almost no matter what, which is kind of a a crazy thing about the model. Um but You might get blown up at some point.

32:31 But um explain the inconsistency'cause I believe also has like Blown up or almost got blown up. You know. A couple of times. What's the difference in your mind between

32:42 What you're talking about. Bill keeps getting shot. And then miraculous Getting back up. And I think one of the investment world I mean he has a great line. He just says the secret to success in business is just getting back up over and over and over again. And what happened to him was

33:00 Bill has made it So many incredible investments. But I believe in twenty fourteen he bet against Herbalife. Uh, which was an MLM. And then he also bet on Valiant Pharmaceuticals, which was a

33:13 pharmaceuticals company that was basically increasing prices. It was a very elegant, intel you know, very, very um smart model. But it was run in a kind of unethical way and the company blew up. So between Herb life and Valiant Pharmaceutical his investors Lost faith in him.

33:32 And a lot of them pulled their cash. And so suddenly He's His whole hedge fund is blowing up, and fortunately In twenty twelve or twenty thirteen. Bill had raised, I believe it was like four million dollar or four billion dollars of permanent capital in Pershing Square Holdings.

33:48 And Bill was able to basically bet on himself. He went to JP Morgan, he went to Jamie Diamond, who he's buddies with, and he got a five hundred million dollar or something loan. Two Bet on himself and buy more stock.

34:01 And he managed to come out the other end. uh absolutely killing it. And I think the big lesson for him was Don't short stocks. Uh'cause he was shorting stocks. And be a lot more disciplined about uh investing in businesses with

34:15 leverage or uh exogenous risks. I think There's this funny story, Bill. Went out and he bought these little um plaques and he puts them on every single person's desk at Pershing Square and it's the Ten Commandments. It's like thou shalt not short stocks. Thou shalt not invest in a business with too much debt, et cetera. Um, so Bill has really learned the lesson and been through it.

34:39 Do y you know how in venture capital the sort of the normal V C fund isn't gonna It's basically like a a pretty poor performing asset class,'cause you're You're illiquid for 10 years, and then the sort of you know, the IRR that you get out of it is less than if you just kept it in an index fund. So like venture capital on the whole. Is a pretty bad asset class. Of course, the top funds perform pretty well. Is h is b is basically hedge fund management the same distribution, or do they on average do better? So the uh warrant there's this great story. Um there's this guy, Ted Saids, who's uh

35:12 He's a fund manager, a fund of fund manager. And he had lunch with Buffett and he said, Warren, I'll bet you I think it was a million dollars that I can choose a basket of hedge funds and they'll outperform the SP. And I believe he lost that bet to Buffett. Buffett basically said, on average, Funds do not outperform, which is very true. I mean Uh most hedge funds, most venture capital. Do not perform and I think. That's kinda what's distinct about private equity. I think I don't know for sure, but I think most private equity funds at least have a reasonable return.

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36:39 I got the handyman icon here because it is, you know, something that's you that you do with, you know, a guy wearing boots and overalls. Uh that comes and does something in your local area. So I would say that's a C Um those are hard businesses. Um But if you can

36:55 dominate a local industry. Uh let's say like Let's say like um you're really good at internet marketing and you own an HVAC business and You're able to hire great technicians. There's only so many technicians out there. And so they're kind of fundamentally difficult to compete with.

37:12 Um And I think they're challenging. I know a lot of people over the last few years who have bought HVAC businesses or plumbing companies And they're like you know, guys that look like you and me and they you know, they come in and they're dealing with all these blue collar

37:25 Guys. And they're like, who the fuck are you? Why would I come and work with you? Uh and so I think I think they're They're good businesses if you're like let's say you're a very enterprising H VAC technician and you want to start one of these businesses, you can do phenomenally well. But I think they're actually quite

37:41 difficult to operate for a outsider. Alright, I got a couple more. Um venture capital slash angel investing. Although they're a little bit different. One's investing other people's money and one's investing your own. I bucketed them together here. I would pay angel investing and as an E. I think um I view angel investing a little bit like

38:00 Um playing roulette. I like to play poker. It has better odds. Uh, I look at private equity or buying businesses more like poker. Um and I I just know I think the classic entrepreneur story that

38:12 You know, we you guys have talked about a million times is You make some money as a founder. You want to pay it forward. You don't really get stocks in real estate and businesses or acquiring other businesses, or they seem a little too boring, a little too common. And you hear a Jason Calcanis, you know, I'm the first investor in Uber and you know, whatever. And so you wanna do that same thing. And it's a little bit like um

38:35 You ever been pitched by a founder and they have like a popsicle company? And they say like Well, I know we're like tiny right now, but there's this one company that sold to Procter Gamble for three hundred million. It just It's all story driven. Um and don't get me wrong, there's amazing Angel investors like Lockie Groom and people that do amazing stuff.

38:54 But I think for laymen it's a terrible, terrible thing to do with your money. Yeah, it does feel a little bit like golf. It's a it's an expensive hobby, but if you enjoy it, fantastic more powerful. I mean, we we talked about this I think on the last episode or two episodes ago. When I first started out I got in the habit of angel investing. I have thirty million dollars or something tied up in angel investments, completely illiquid.

39:15 I have no access to it. I'd much rather own like stocks and real estate or something. Um all right. I have one more here that's uh buy a local sweaty startup. Oh, we have Cody Sanchez entering the chat here. I have I I couldn't find a good icon, so I just put Cody on here for for lack of a better term. She's it's a picture of Cody at a laundra bat. Uh and I think she's I don't know if I don't I I don't actually know, by the way, if Cody really pushes that you should buy launder bats, but I think that's a a a little bit of a narrative. I'll I'll use her as a a figurehead for this idea that You should p find a local sort of Brick and mortar, a sweaty business.

39:49 You know, go buy a boring Main Street business. And you're gonna cash flow, then you reinvest the cash flow, and you buy the second launter mat, then you buy car wash and you keep going in that direction. Um, where does Andrew Wilkinson rank that model? on the tier list. I mean I love

40:03 Uh I love Cody and I love Nick, uh Nick Huber. I think what they're advocating is basically look. Don't go and work for someone else when you can create your own job. And I think if you can be an owner operator, but they don't say that. I think if they said that, it would be a lot more of an oddest broker, right? Yeah, the way you just the you said one key word, which is What they say is own your own business. And you said

40:25 Own your own job. And I think there's a big difference between those two things. Well, I think that's a fundamental question. Are you buying your own job, are you buying a business? If the business returns more than the cost of uh the owner's salary, then I'd say that's great. I'd say that's a C. Chris and I always say, like, if you can skip the line

40:43 And instead of working up working your way up and starting businesses, you can just buy a already working business and just improve it. I think that's phenomenal. I mean, it's really a lot of what we've done. So, you know, my story, I started the the web design agency, MetaLab. Um, that business grew. I then took almost all my profits and I started like 10 other businesses and almost all of them failed. It was really exhausting. And at the end of that process, I had one business that I could sell. Another one that was kind of alive, but I started ten. And I'd put

41:17 Almost ten million or fifteen million dollars into all these terrible businesses. If I had just taken You know the a million, two million a year. and just boug businesses and just improve them, I think I'd be much farther ahead than I am today. Well that's what you eventually s started doing, right? What you what you did at some point was

41:36 You guys decided to switch into buying businesses that are already working as your main business to be in. And I believe you guys invested uh you can correct me if I'm wrong, but I think the initials kind of seed capital was you took Something like five or six million bucks from Meta Lab profits. And you were like, This will be the base, and then we'll try to find these sort of compounding businesses that we can hold for a long time, which you guys call wonderful businesses, great.

41:59 And that's what has become tiny the you know, the public company today I think the market caps something like two hundred something million dollars. Yeah, basically we just started buying businesses in twenty thirteen when we read about Warren Buffett and we're like, Oh my God, this guy's

42:13 Doing easy mode, why are we doing hard mode? To be honest. Buffett has this great quote, I'm a better businessman because I'm an investor. And I'm a better investor because I'm a businessman. And I think that

42:26 In order to be a good investor, you need to have run Or experience the chaos. behind the scenes at different businesses. And I think the beauty of what we did was We got really lucky. So we went to the gym. We didn't deadlift three hundred pounds. We got really lucky with Metal Lab and it worked. So that built our confidence to go try more stuff.

42:47 Then we tried Every bad business model, you know, we did drop shipping. Uh we started a restaurant, we did a skin comp skin care company, like all sorts of dumb stuff. We always joke we put forks into electrical sockets. We learned a lot. And then we started investing. And so what we could do is we could look at these businesses and say

43:07 Oh wow, this is actually a really high quality business. And I know that because I've operated a similar one. And uh do you remember how much capital you started doing that with? Once you s once you stopped starting new businesses, you said decided to go start buying. I think it was like four four or five million bucks. We we basically sat down and said Um okay, we're gonna start this thing called Tiny. Um, I'm gonna own eighty percent, you're gonna own twenty percent, and that was only because I had more capital because I was the one who owned most of Metal Lab.

43:35 And Uh Chris put in Five hundred K or a million bucks and I put in the rest and that's it. We never put any more money in. So that's what I was gonna ask you, d was that just a seed or did every year oh we found a new business, let's take more Metal Lab profits and put it into tiny or no? No, nothing.

43:53 I mean we merged So it was interesting. So I actually own Meta Lab. Myself, I own ninety percent of Metal Lab and then my brother and Chris and a few other people are small shareholders in it. And so um that that's what basically I diversified with. So I went off and in my family office did all the venture investing and bought some real estate and private you know, bought newspapers and restaurants and other dumb stuff, but Tiny itself.

44:21 really just grew from that original Amount. So that's pretty incredible. I I feel like I gotta ask you this because I think you get a lot of shit nowadays. Uh, I think a lot of people go look at the tiny stock.

44:33 And basically you see I think you guys went pa or you like did this reverse merger and so then the stock basically like shoots up in twenty twenty one at the kind of like peak. uh era at that time. And then basically it's just a downward trend. Uh since then. I see on Twitter.

44:50 want to kinda look at that and say, Oh, this guy calls himself the Warren Buffett of the Internet. And he says he buys these great businesses, but what's going on? Look at your stock. And so they see that and they say Man, is this guy like many other people on the internet who maybe either overstate their claims or or whatever, right? That's a common problem on the internet, I would say, just on the whole. is that you don't know who's real, you don't know who's actually good. And so you have this public company that's a little bit of a public scoreboard in a way.

45:20 And people get really riled up about that. On the other hand And this is kind of like, you know, the two parts of the trial, right? You have the prosecution and the defense in a way. The other hand you say.

45:30 Look, there's a guy who took four or five million yeah first created this design agency that was really successful as a business was has generated, you said, o h over a hundred million dollars of profit lifetime. And then you took, you know, four or five million bucks and you compounded that into a Uh, 200, between 200 and 300 million dollar business that holds all these interesting assets. And, you know, cool, like the stock stock prices go up and down. That's not necessarily.

45:53 And they'll be all and even if you said look, that's how big it was. That's still fantastic. I don't know a lot of people who are listening to this that have done anything that's more impressive than that. You know? So I I admire even if that even if your worst case least generous interpretation. is the today's current s you know, stock price that's still pretty damn impressive. So I guess like what's your reaction to this? You're you're sitting there. You don't want to go out there and you know, fight all the internet trolls or anything like that. But like how do you see this? What's your take on this?

46:21 It's pretty funny'cause like, you know, we started in two thousand six, basically twenty years ago. Bootstrap this business. Until twenty three, twenty twenty three when we went public. And like over the last ten years, I think since we started Tiny

46:37 We've compounded it like Twenty five per our earnings at twenty five percent. We do almost Two hundred and fifty million dollars of revenue. We have sixty five million of ARR.

46:48 Uh we do over forty million dollars of IBITA. And Chris and I still own the majority of the public company. And all these are these are all things, you know, you can look at the public filings and see If you Also, we talked about asset management. I mean We also

47:02 uh own or we manage a$200 million fund. managed um by the public company. With forty million dollars of it, our own capital. And that owns Aeropress. Uh letterbox.

47:15 All sorts of other businesses. If we include that, that adds another sixty five million dollars of revenue. So we're over three hundred million in revenue across thirty businesses. And all the businesses in the fund are profitable as well. I don't know. I'm kind of like if that's failing, like sign me up, right? And and I don't know what to say to the trolls. Like, you know, don't feed the trolls. Right. Well, well, let's take the the the vulnerable side a little bit, right? Because I I I always ask myself this whenever I get criticized. And my first reaction is like, What the hell are you guys talking about? Like do you not see

47:46 Do you not see that and I wanna like kinda defend myself, but at the same time I always ask myself this just for my own learning, which is basically like What about this is fair? Ma what is the fair criticism? And I I think that's always been an important question for me. Keeps me honest. Because you know Look, either I'm just gonna ignore it.

48:02 I got nothing from it. I'm gonna get mad about it. And think they're stupid. I get nothing out of it. Yeah. I mostly, you know, disregard what I think is the sort of like off base. uh line of thinking.

48:13 But maybe there's you know some things that some part of it that's fair. Oh, it it is fair that I said this. It is fair that I didn't I didn't do this, or it is fair that I thought it would be X and actually it turned out to be Y. You know, those are some things that are fair, right? So what would you say is fair criticism? About you. First of all, I just wanna say I really empathize with people I remember watching like Shark Tank.

48:33 And I'd be like, Oh wow, Kevin O'Leary, you know, he sold his business for billions of dollars and then you go read the juicy gossip that, you know, he he got ten million dollars or whatever out of the out of that deal. And I think it's very easy to kind of have the one blurb and then judge someone. And I think before I went through this Experience.

48:51 I would just believe what I read on the internet and And you know. And you kind of enjoy it, to be honest. Like I think there's this dirty horrible part of humanity, myself included, that loves when somebody who's a on an upswing False.

49:07 Like talk about Bill Ackman. Like Bill Uh Bill's an amazing investor. But he's loud, right? And I'm loud too. I'm extroverted. I like talking what I'm doing. I like I like talking about our company is and everything. And it's really, really fun. To watch someone loud.

49:22 Like me. Fall in the mud. Right. And I I see this in myself. uh, you know, you kinda cheer and enjoy it. Like celebrities go through this too, where it's like they're awesome and everyone loves them, and then all of a sudden, you know, they like to shit on them for a few years and then they love them again. Like Justin Bieber, everyone hated him for the last five years. Now everyone loves him again.

49:42 I I just kinda think that's the course of things and I think it's kind of uh I just gotta eat humble pie and There's a lot of great things I get out of Being loud on the internet. uh and talking about this stuff. I've connected with so many incredible entrepreneurs. I get to I've made so many new friends. Uh you know, I I love talking about this stuff and teaching people about business and stuff.

50:03 But this is the price. And I'm willing to pay the price and it sucks. Um and and for me it's a button, right? Like when I was a kid. I was always I have ADHD and like I'd always fuck up. And I'd always be the one in our family that was blamed for everything. And so Being misunderstood is a big button.

50:20 And I really have to resist. Getting on the horn and trying to argue with everyone because it really doesn't help. So I think for me We're just focused on delivering good results and building great businesses, which we're continuing to do. And people on the internet are gonna twist it however they want to.

50:38 The reality is Sixty percent of the businesses that went public in twenty twenty three when we did are still under their IPO price. So Asana, Sweet Green, Coupang, like all these other businesses. They're all under IPO. Does that instantly mean that what the founder has built is invalidated and they're a moron? No.

50:58 Um and I think that you know the fair The really fair criticism, though, of us is Our business is a bit confusing. Right. Even our stock chart, like Starting businesses. So I made all this money from the

51:10 Web design business. started a bunch of companies. One of those companies became The dominant seller of themes in the Shopify ecosystem. And Chris and I always had it in our head, we're like

51:22 Let's let's take a business public. We'd love to do that. And so we actually went and we partnered with Bill Ackman. We we had sold the business we uh to a family office. We bought it back. And we took that business public.

51:35 And we took it public in January twenty twenty one. Do you remember what was happening in January twenty twenty one? Every stock was Going to the moon. And so you have this business That's doing

51:46 Forty million or something in revenue and like seven million of eBa. And it goes to literally the day we took it public. It jumps From a two hundred and fifty million dollar market cap. to one point two billion.

51:58 And so We didn't take it public at one point two billion, but that first day, that's where the chart starts, right? And then the mania is over and the charge starts going down. And as the charts started going down. We ended up deciding hey, let's take tiny public.

52:13 So we merge into it. So Really, like the tiny story is this. Right, we've been compounding it twenty five percent from almost nothing. And what people see, unfortunately,'cause that's what's in the public market.

52:25 Is this little You know, this little dip. Down here. And to be honest, like I get it. I think it's like you really have to take the time to understand

52:34 the business and the story and why the you know why it looks like that. But I'd encourage people to do their research and actually dig in and understand what we own'cause From my perspective, I think we own a lot of Pretty incredible businesses. And you, um you still own the majority of the business?

52:51 I do. And is that still, you know, the majority of your net worth, basically. So you're like skin and how much skin do you still have in the game? Yeah, this is what's so funny is like people I mean I I've even people have said like, Oh, you did a pump and dump and I'm going like

53:06 What are you talking about? Like I've sold Almost no stock and the only stock I did one large Transfer I think of eight million dollars, I moved it to my foundation. So I could start doing philanthropy.

53:18 Right. Like I haven't taken any cash out. I still own all the stock. And like people say like oh you're a pump and dumper or something. Like I I don't know. It's just It's kinda sad. Yeah.

53:29 And so you uh you hear all this and you've also talked about this idea of uh the courage to be disliked. You've y I think you know, maybe that was the right the right book at the right time for you during during this Period. I haven't actually read the book. It's a killer title. What is the thing that I can learn, you know, uh from that book? So Sam just did that great I love that episode he did where he basically said

53:50 Here's the recipe to a miserable life. Uh and let's invert And one of my favorite inversions is that you actually want people to hate you. You do not want to be liked by everybody. I think that's a great signal that you're doing life wrong.

54:05 And I think if you told me this ten years ago, like I would think that's insane. I remember I read this Warren Buffett quote. It takes twenty years to build a reputation and five minutes to ruin it. And for me, I really internalized that, I was like, Oh my God, I need to make sure that

54:20 You know, everyone thinks positive m of me and I better protect this reputation then. Every founder I meet for coffee, I have to, you know, woo them and make them like me or whatever. And I really felt That I had to be like consistent and predictable. So for example, like You know.

54:36 I buy companies and I'm you know, I'm a Warren Buffett. uh like a wanna be value investor kind of guy. But I also really like startups. I like starting restaurants and all this other chaotic stuff and People don't like that. Uh, and I remember the moment like I kind of realized what was going on.

54:55 Uh my dad retired. My dad was an architect and uh He retired and I took him out for a beer. And I said, Dad, what what now? Um, you know, w what are you gonna do with all your time? And he was saying he didn't really know.

55:10 And I said, Well dad, I've got I've got money. Why don't we team up and you can become a real estate developer. You can build the things that you've always wanted to build. And he goes. What do you think someone's gonna say? If I suddenly call them up, they know me as Architect David.

55:25 And all of a sudden I'm pitching them on a real estate development. People don't like it when you leave your box, Andrew. And I was like, Oh my God, like I I know that feeling. Like have you ever had like a a restaurateur friend who like pitches you on a tech startup they're starting all of a sudden or you know, your yoga instructor gets their real estate license, they want to sell your house or whatever it is.

55:47 My mental reaction, I hate this about myself. My mental reaction is stay in your lane. Yeah. I don't like it. It makes me uncomfortable. I don't know why. And it's incredibly hypocritical because like I'm I'm a flip flopper. I love jumping around. I'm an inch deep and a mile wide. And so It's like I hate in others what I hate about myself. And I realized We're all like uh

56:09 Prison guards. You know, like We all have these labels like For me it's like You know, I'm an investor.

56:16 And an entrepreneur. But then it goes deeper. It's like I'm in tech, not real estate. You know, no real estate allowed. I'm bootstrapped. You can't do venture. That's weird if you do that. I'm pro crypto or anti crypto. And

56:28 These labels kind of lock you into this identity. And I've seen this In a lot of Um big public figures. So like Do you remember when the CEO of Goldman Sachs, David Solomon uh it came out that he was like a DJ. Right. He loves to DJ, right? This guy on the weekends and evenings, he DJs

56:45 And the press Went crazy. There's article in The Economist about how, you know, is Goldman Sachs suffering because he's you know teaching. W do you think they would have said that if he was playing golf? Right? Uh or like, you know, we see like Kim Kardashian get passionate about prison reform.

57:02 We're like, fuck you, Vanity Project. Right. Jonah Hill starts surfing. Let's make mean memes about him. Michael Jordan plays baseball, you know, betrayal. And so like I realized like our brains are just prediction machines. And they get upset when things don't match. And so for me, like I realized like I don't fit. Cleanly in a box.

57:21 And it's It's messy like everyone else. And so I remember like I was s I and I started like asking all my friends about this and stuff.

57:30 And I was sitting up at my lake house with a group of entrepreneurs And I talked to the the these guys and I said, Look, what would you do if no one was looking? And one of my friends runs this massive uh industrial business, like you know, billion dollar business. And he says.

57:46 You know, my happiest moment. is behind the oven. Cooking for people. And I actually would want to start a restaurant. And I said, Oh, would you want you just wanna own a restaurant? He said, No.

57:57 I want to be the chef. Of like a Michelin star. Restaurant. And He said I I feel like I could never do it though because I've so much of my ego.

58:06 tied up in being a business person. And everyone would think I would that you know I'd gone insane and and and at that moment I was like No, like I wouldn't. But when I think about it, I would definitely be gossiping and going, Oh my God, he's lost his mind. Right. You know? I a and so He you know, he's escaped the prison and we need to beat him with our uh batons.

58:28 And you know, you see this with like legal degrees, bad marriages. disappointing your parents, uh, you know, the industry you've spent twenty years in And the issue is like All these promises

58:40 were made by the person You were before You know, not the person you are now. And so I realized like I'm in this quick stand, I don't know what to do about it.

58:49 And in January I found this book called The Courage to Be Disliked. And it's one of these books where You see the cover and you just instantly kinda know. Yeah. You're like, Okay, like this I kinda get it. And it's really interesting. It's written in this very odd way where it's a dialogue between like this wise old man and a a young A young guy.

59:08 And The core idea is just like Seeking recognition is a trap. It's impossible to make everybody happy. And if you try, you're gonna end up living somebody else's life.

59:18 And so you have to be hated. You have to have the courage to be disliked. And reading this book It was like someone gave me the keys to my cell. You know, I'm in this cell. And there's no walls on either side.

59:30 They're like, by the way, there's no walls. You can walk out. And so My New Year's resolution this year was I'm done with the likeability game. I'm gonna have the courage to be disliked.

59:40 Uh, and I'm gonna say what's true for me. And so you might have noticed, like I've I've been writing a newsletter, I'm talking about all sorts of stuff, I'm talking about you know, having ADHD and you know, all my weird businesses or whatever. And I'm just saying Fuck it. If people don't get it. That's fine. And you know, I'm gonna keep buying businesses and doing great stuff. And on this side I'm gonna have a bunch of hobbies.

1:00:01 Mm. Yeah, I like that. When I was in uh high school I used to wear mismatch socks. I still wear mismatch socks, but I would like I would leave the house and I would be wearing two different socks. And I to me I didn't even think twice about it because I don't know, I was just not even who cares, it just sucks.

1:00:17 But Everybody would comment on it. My mom would comment on on it about out the way the way out the house. Like, what are you doing? She was like horrified. Like, I can't believe you're doing this. And I was like, What do you mean? It's just they're both socks. It does yeah, the pattern doesn't match. Who care who gives a shit Um, and at school people would make fun of me for it. Um

1:00:33 But w oh, they sort of realized like, oh, we made fun of him and he just continued doing it. But also I wasn't even doing it really as like some statement. I just didn't care. Like I just didn't dis I just decided not to care about socks the same way everybody else did. And I decided that the idea of matching stocks really didn't matter to me and maybe it matters to other people, more power to you. But it just just didn't matter to me. And I don't think I realized at the time. How important of a like mini lesson. Or trait that would be.

1:01:00 In the future. I remember moving to San Francisco. And we were self funding or not self funding, but like I had basically like a billionaire backer. So Michael Birch was funding m like the lab we were using to do startups. We didn't take any outside funding. But one of our companies started to pop. And we got I don't know, like m million users, two million users, three million users and

1:01:19 You know, VCs got a little bit excited. So there's an investor at Founders Fund that reached out. And I took the meeting because I was always intrigued by Peter Thiel. And I thought I don't know, maybe this will somehow lead to me Meeting Peter Teel, so let me take this meeting, even though I really didn't want investment. And we go in and I start ask, you know, he's supposed to ask me about the business. I'm just asking him questions about founders fund because again, I don't really care if he invests in me or not.

1:01:40 I'm just here to like learn about them. And you know, I'm asking all these questions that if you ask a normal V C what stage do you normally invest in? Answer. Pre seat. Yeah. What's your typical check size? Answer, you know, five hundred K to a million dollars or whatever. Well, you know, everybody's got like these predefined boxes, labels. What what what industries are what categories do you invest in?

1:01:58 B to B Sash, Enterprise, blah blah blah. They have these labels that they were like You know. And I went to the founders fund guy, I'm asking the same questions. He's like we just I don't know, we just try to find the, you know, singular businesses and then we I don't know, back up the truck. Like how much money do you need? How much money can we put in? Let's get put it how much money do you need it now? Then we'll put more money in later. What se what stage? Who cares? Just go. And so he was ta and he said that when Peter started Founders Fund

1:02:21 He had almost like a fight club style rule. And the fight clip style rule was The only rule is that there are no rules. The rules that we set as a fund are going to limit our ability to find the singular business. And this is why. Founders fund was one of the only VCs to own a shit ton of bitcoin in you know starting twenty fourteen, twenty fifteen.

1:02:41 Most VCs couldn't even Like by crypto, like by their bylaws, basically. And they didn't even see Bitcoin as a like They were so blinders on to like We need to find the next Facebook, right? We need to find the next Mark Zuckerberg.

1:02:54 But they didn't think that this Anonymous Soshinakamoto open source project creating a currency like it broke all the rules. That was the thing that mattered. And um, and so Founders Fund has had a few of these really contrarian bets. They backed Anderl when Silicon Valley, like at the time. It was completely unpopular.

1:03:12 Two back a weapons company. It was like so like the the the time the the the narrative at the time was that that was a bad thing. In fact Google had to shut down Their weapons project. Uh they were doing a pr they had a big contract with the Department of Defense and Google just turned it down because their own employees were like, This is not right. I don't wanna sign up to be part of making weapons and killing, you know? And so the companies, you know, bowed down and the venture capitalists bowed down and there was only a couple of investors and

1:03:37 Elod Gill came on this podcast and he he said The day I saw that Google shut that project down, I knew there's a huge opportunity. If anyone was willing to go against the grain and actually build a weapons company, they were gonna do phenomenally well. Like it makes total sense for Th with US we're gonna have a defense department.

1:03:53 Right. I think everyone agrees in that. And the defense Department is gonna need weapons. And if the weapons are built by a high tech company, that's gonna be better than building low tech old school weapons. Like this all makes sense. And that's when he backed Anderil and Founders fund backed Anderil. And so I just saw the payoff.

1:04:09 You know, in Silicon Valley they call it being contrarian, but what does it feel like in practice? I think it's what you're talking about. The courage to be disliked. The courage to look stupid, right? Uh the the ability to think differently, right? All these terms that have been floating around, they all sort of apply to this thing. And I I'll share one more story that kind of reminds me of this, which is one of my business heroes is uh Jesse Itzler.

1:04:29 And he came you came to one of our hoop group events, the the basketball camp we do. So Jesse was there and Jesse was laughing. Uh we were at the table, he was just laughing. He's like All these guys He's like they're all talking about their like crazy ambitious plans. Like this guy's building a city, this guy's building a religion, this guy's building rockets, this guy's building this. And he goes, I'm literally selling a calendar.

1:04:49 Because his his project right now is called the big ass calendar. Calendar you put on your wall so you could be a little more intentional. About how you're gonna spend your time this year. And he's like I think it matters, but like in the grand scheme of this, I sell a nineteen dollar calendar. You know, it's just funny I'm even funny I'm even here. And here's the guy who reinvented himself ten times, did not stay in any box, right? Started as a white guy rapper.

1:05:12 Then became wrote and that wasn't really fully working out. So he writes us a jingle, it becomes the New York Knicks song. He sells a sports jingle company. When when he sells the company, he gets to ride on this guy's private jet. He's like, This is amazing. Starts a private jet company, gets involved in a coconut water brand. But you know, he now hosts a big running event because he loves running. He has a sauna company because he loves sauna. And he's basically just like almost productized himself and none of the labels That you w you try to whatever label you try to apply to this guy. Like

1:05:38 Oh, he must just be a bus a brand builder. Then he tells me about how he you know Invest in this like He he decided that water was gonna be really important. He bought he invested in like land that produced really pure water. And so it's like, Oh wait, so you're an investor. He's like Well no, I don't really I don't really care about investing, I just

1:05:55 Yeah, and so he was unlabelable. And so I I really find a lot of inspiration in people like this. And the the thing that he said that really stuck with me, I was like, So what are you gonna do after this? And you know, in this room when you're surrounded by these hyper ambitious Hyper talented people. It's very tempting to just be like, Oh, I need to ratchet up.

1:06:14 the how big my thing sounds, you know, that I'm working on. Otherwise I'm sort of low status in this room. And he told me, he goes Oh, I think I'm gonna go be an assistant basketball coach with this like local like uh like uh like this all black college that's nearby. Like I wanna go be the assistant coach. Like I love basketball. He's like, but dude I was like I was like, What are you why assistant basketball coach like Clearly not for the money.

1:06:35 Like You know, because you want to get into basketball? He's like, No, dude, I just want to be on the bus. It's like some of the best times of my life were on the bus going to a game. He's like if I could just be on the bus Oh, dude, that's gonna be good for the soul.

1:06:46 And I just admire this guy having the courage to be like, Yeah, I'm gonna go do this thing that sounds completely random. But as soon as he says it, it instantly resonated. And like I'm actually now uh an assistant coach for a high school basketball team near me because I was like, dude, I wanna get on the bus. That actually makes total sense to me. That was a huge part of my childhood. I would have so much fun doing that, even though I don't know how that fits with like the rest of the stuff. It doesn't really need to fit. It just needs to be something I want to do. All that totally resonates. I mean I think um

1:07:14 Do you ever listen to Invest Like the Best? Amazing, amazing podcast. He has some great guests. But there's definitely an archetype. And the archetype is The like autistic super genius investor who's like I You know, I buy laundry or not laundromats, let's say um you know it's like Brad Jacobs. He's like I just you know, I choose an industry and then for five years I buy every company in it and I take it public and then I make, you know, I compound at thirty percent and then I go do it again and again and again. And

1:07:41 There's a very clear Formula. And I have never I've never had a formula and I think The benefit of

1:07:49 Like There's okay, like I I was on Kauai, the Hawaiian island. And someone goes, You gotta go to this donut place. They fry their donuts in coconut oil, and they're these purple donuts made of sweet potato. And I'm like, okay, so I go I go and I you know, it's dil amazing delicious donuts and I start talking to the guy. Behind the counter

1:08:08 And uh He says, Oh yeah, we're we're expanding. We just we just did one in LA and I said What? A little tiny donut shop on Kauai. Like how did that happen? And he goes, Do you know Kevin Rose?

1:08:20 And I'm like, Yeah, I know Kevin Rose really well. What what are you talking about? And he goes, Kevin came and he ate these donuts. And he loved them. And so he invested like 10 million dollars in our business and now we're scaling it across the country. No. Kevin is a a fascinating guy. I mean, last time I talked to Kevin, he's like, Yeah, I did the donut company and then I'm flying Sweden tomorrow and I'm meeting with uh Teenage Engineering, which is like this audiophile company or whatever.

1:08:46 And then, you know, he told me about this Alzheimer's comp this company that's doing an Alzheimer's drug he invested in. None of those things fit together in a box. And Kevin is a great example of When I see Kevin on a podcast, I jump. Like I have to listen to it. Like The Random Show with Tim Ferris is like my favorite show in the world. And both of those guys have been so good at not allowing anyone to put them in a box. And as a result, they've created this magnet. Like the guys on if if like I had two options. Let's say

1:09:15 I can be Value investor, Andrew, with my formula. It'll be very good for raising money. I can go and invest like the best. I can tell my clean story. I'll look like a duck and cack like a duck, right? There's a lot of positives to that. You get less hate. Easy to raise money. You know, investors like it, whatever. But if you're just interesting.

1:09:33 And you share what you're doing like Kevin Rose does. Really interesting things. Come to you and I would argue like most of our That's

1:09:42 Businesses. Come from me. It's like you know, I was a barista and I got obsessed with coffee. And I bought Aeropress. I love movies and I I tried to invest in film. So I actually like had this period where I was like flying down to Hollywood and meeting people and looking into investing in movies and stuff.

1:10:00 And I looked at it and I was like, I'm gonna lose so much money. And at that same time, I happened to be in Auckland. with Tim Ferris randomly. And I um I was I was in town and I went, Oh, there's this guy who runs Letterboxd there. I should have a coffee with him. And that coffee literally that I had coffee with Matt. And I made an offer for the business within four hours. So like

1:10:23 These things happen randomly, and I think you need to create that magnet. for interesting people and entrepreneurs to seek you out. And I I don't know that Anybody listens to Um You know, the autistic super genius talk about his formula and spread sheet for buying a type of business and goes

1:10:42 I wanna do business with that guy. I wanna sell my business to that person. Maybe there's a certain type. Where that is appreciated. But That's not my jam, you know? And and and you know, I'm gonna get my two to three percent hate quota for that. And that's just fine by me.

1:10:55 Well you're gonna get the hate either way. You think the the ASG crowd doesn't get the hate? Of course they do too, right? Uh you're gonna get the hate either way. If yeah, if you're not getting the hate, you probably haven't You know, it's just a signal you haven't really Done enough, yeah. You haven't made it. How how jealous are you of you of are you, by the way, of those guys, right? I l I wish that I could be that focused. I wish I'd get that excited about buying you know, waste management businesses. I I do it's but it's just not true. You know, it's not true to me or you. Exactly. Why would I be jealous of something that I would be miserable of? You imagine my first million if every time you just talked about one vertical be the most boring podcast of all time. Dude, the greatest hack in the world.

1:11:34 Is If you're gonna be jealous, be jealous of the inputs, not the outputs. All right, I just said something profound, so I'm be pull over your car, write this down, okay, listen. Mo everybody looks at the result that somebody has in their life and they get jealous of the result. And that leads you astray.

1:11:51 Because you don't even really know what it takes to be that, to get that, to have that, right? If you're gonna be jealous It's hard to so most people try to just turn off the jealousy knob. I'm just not gonna do it. Well, good luck with that. It's a pretty tough thing to do to really truly kill envy inside you, right? There's a certain level of enlightenment and wisdom you need to reach to truly just never feel that envy again. So instead just redirect it.

1:12:15 True. Inputs, you're jealous of their day to day the th the work that they do. And if you're like, Man, I would love for my day to look like that, I would love to work like that. Not the not the results of the work, but the work. And so for example. Bill Simmons is a guy like this. I don't know if how much you know about Bill Simmons, but he's a sports podcaster, but before that he was a

1:12:35 He was a blogger, you know, he tried to get hired by a newspaper, they rejected him. So he starts his own Boston sports guy blog. And he's just sitting there writing about his hometown sports'cause you know, since he was four years old, his dad's been taking her to Boston sports games. And he somehow like blogged his way literally to like ESPN ended up giving him his own section. Then when he's at ESPN, he's like, I'm not just like and he and by the way, they're like he's a call he's a journalist. No, well he doesn't do journalism. He's just writing as a fan. So I guess we'll call him a columnist. No, he's not really a columnist. I guess he's a blogger. We couldn't by the time they were trying to figure out one label He goes and creates thirty for thirty. He reinvents the sports documentary space.

1:13:09 And he pulls that off. And then he gets fired at ESPN for for speaking his mind. And he goes and he leaves and he starts the ringer and it's a podcast network and now he's build a podcaster. He sells it to Spotify, he makes hundreds of millions of dollars. And there's this great clip the other day that came out of like this big trade happened in the NFL and there's this clip uh clip in the ringer office and Bill is carrying a microphone in one hand and a chair. And he's like basically like jogging through the hallway because he wants to go join

1:13:33 one of the other ringer podcasts to come talk about this trade that just happened. Like that's not his podcast. He doesn't need to be there. He's got all the money in the world. He could be on a yacht. He could be on an island. And he's sitting there running with a chair and a mic because he really wants to go talk to friends about what's going on in the world of sports, because that's what he loves to do. So I'm jealous of Bill Simmons, not because he sold his company for hundreds of millions of dollars or has a popular podcast. But because the guy gets to talk to his buddies about the thing that he loves all day.

1:13:58 When he doesn't have to be, right? And so I'm jealous of the inputs. And so, you know, I think that's a a thing that if more people did You could kinda use your jealousy as more of a compass to figure out what do you really want to go do. I think if more people knew The behind the scenes of a lot of these super wealthy people. They wouldn't want that life. Like the there's a lot of

1:14:18 There's a lot of sad very wealthy people, as you know. I think the trick is How do you figure out what you're great at and you actually enjoy? Cause there's things I'm great at that I just don't enjoy, like sales. I Love pitching and selling and talking to people.

1:14:33 Or or sorry, I'm very good at it. But I I actually it drains my life force. I it's It's misery, right? And so I think like, you know, for me I started out Uh headphones on, coding, making websites.

1:14:45 Twenty years later I've realized I can write and talk about things I'm passionate about and that creates opportunity which I can then funnel into all my various businesses. Like I think Being a human router.

1:14:57 And just doing the thing you're great at. You're doing this too. I mean, it's like Ben might run all the day to day operations. You just get to go and do the thing you've you're amazing at and it benefits your business in a profound. And I think that's the trick. Well, I I would even push back. It's not even that oh man, there's all these wealthy people who are miserable. There's a lot of weather people who are happy doing something that you would be completely unhappy doing. I remember when we got bought by Twitch and I was like, Oh you know, I get to meet Emmett, he was my boss He's the founder of Twitch. He did the thing that I had been trying to do. He started a tech company. It like took over the space that he was in. It became like one of the few social networks that was out there. That's what I was trying to do before that.

1:15:34 And you know, the guy sold his company for a billion dollars and here he was running this thing. And it was like a big part of the internet. I think Twitch was like the Oh, the second biggest consumer of bandwidth or something that year. Like it was crazy. And I saw his day. And he was happy doing it.

1:15:48 Which was basically he sat in the boardroom on the ninth floor of the office at a long table. And he sat at the front and the COO sat next to him and then teams would come in thirty minutes at a time. And they would sit down, they would put a memo in front of him, he would read it, he would ask them questions, he would grill them, and sometimes he'd be like, This sounds fantastic, can't wait to see what's next. And sometimes he'd be like This doesn't make any sense to me. And he would kind of rip them apart. And then they would be like, leave, go back. They would do a week of work and come back again the next week for their weekly 30 minute meeting with him. And that's what he did all day. And I just remember looking at that and being like

1:16:18 Thank God I saw this because this is not what I would want. I thought this was my dream. I thought like literally what he was doing, what he had done was the dream for me, dream outcome. And I realized like that would be kind of a nightmare of a life. And so wait, what if that's the nightmare, not the dream, then what's the dream? And then you start asking and you start looking around and you start thinking about what would be really interesting. And that's when I started the podcast'cause I looked at Tim Ferris and others and I thought That sounds pretty fun. And so a easy hack.

1:16:43 'Cause I'm starting a new content project. My first new kind of big content project since my first million. And the ha the the trick is instead of asking instead of trying to think about What would be really popular? What would get millions of views? What would get s millions of subscribers? The better question is What would I have fun doing three thousand times?

1:17:00 'Cause if I do it three thousand times, I'm probably gonna get good at it and I'm probably gonna stick with it and I'm probably gonna get a good result. Sure. But like more importantly, like I'm gonna go do it three thousand times. I better really be like, let me optimize for that instead of Optimized for what might work. Let me ask you this. Are you leaving your your uh your cell? Are you breaking out of your cell? Is it something that people go, wow, this is like crazy. I it's like when Tim Ferriss launched uh his card game or he wrote his like he made that weird crypto. Is it one of those?

1:17:27 Uh it's it's I've explored that wide, like Totally we totally weird. Mo go make a movie, create a Broadway play. Like I've explored all that. Uh and there's like Things, but that's not the active thing I'm working on. Um One of them is, I would say, v uh different in that it's a different mode to be in. So for example, this podcast.

1:17:47 It's live, it's improvised, it's unedited. I get on here and I just do me. And then I don't really think about it after the fact there's a team that basically takes it, they edit it, they title it, they package it, they set it out there. And I don't really think about it again. Whereas the thing I'm doing right now is a little bit more of a craftsman approach. It's like

1:18:03 I'm not just gonna improvise it and it's this like You know, three weeks later, that's kind of gone. I'm gonna make a new one. It's like no, I'm gonna make one thing, it's gonna be great. But that means I'm gonna really, like, have to be a craftsman about this. And I'm gonna really have to go and take a take a scalpel to this and try to like Make it as great as I possibly can, which is not a mode I'm normally in. That's awesome. I mean, it's like uh the happiest I've been in the last

1:18:24 Ten years is writing my book. Just headphones on. doing something and and actually shipping something that will be relevant, hopefully in twenty years that you can go back to. Yeah. There's something so ephemeral about podcasting and tweeting and all the other stuff. So nice to zoom out. Totally.

1:18:40 Well, Andrew Thanks for coming on again, man. It's always good to good to hang. And uh Yeah, you want to shout out anything, your newsletter, anything you want to shout out? Uh yeah. I mean that's mostly I haven't really actually been tweeting very much. I've been um posting on my newsletter and I really love it. I sit down like once a month. And I kind of do like what Tim Ferris and Kevin do. I just like write about all the random things I'm excited about. Sometimes it's about business, sometimes it's about other stuff.

1:19:06 Um, but yeah, people can sign up never enough.com. uh the newsletter's there. And I I love it. Like it's It's been so it's some been so much more enjoyable to just sit down and actually write something. formally and take my time instead of like tweeting out toilet thoughts randomly and then fighting with trolls. Yeah, great to see you dude.

1:19:26 I feel like I can rule the world, I know I can be what I want to I put my law in it like my days off. On the roadless travel, never looking back. Hey let's take a quick break. I want to tell you about a podcast that you could check out. It is called The Science of Scaling by Mark Robert. He was the founding CEO of HubSpot, and he's a guest lecturer at Harvard Business School. The guy's smart. And he sits down every week with different sales leaders from cool companies like Clavio and Vanta and OpenAI. And he's asking about their strategies, their tactics, and how they're growing as, you know, head of sales or chief revenue officer. If you're looking to scale a company up, if you're a CRO or a head of sales that's looking to level up in your career, I think a podcast like this could be great for you. Listen to the science of scaling wherever you get your podcast.

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