Shownotes Transcript
Where were you when you were thinking about this? I have this room in my house where I have the best ideas. It's a cool room because if you need a shower, you're already there. It's just the bathroom. Okay, so I'm in the bathroom. All right, I got a business I can tell you a little bit about that. It kind of blew my mind. So I was on TBPN by our good buddy, John Coogan. I went on there and they asked me a question. They go,
So you're a creator and you've got this kind of like cool business, you know, business underneath your, yourself as a creator. Are you bullish on investing in creators right now? And I go, no, but I'm bullish on creators investing in businesses.
And they were like, what do you mean? I said, well, actually, like what I'm doing is it's not that somebody invested in me. I'm investing. I'm buying pieces of businesses that I think, you know, should exist or that I can accelerate in some way. And that's going really, really well for me. So I think that's going to be a model that people do. And so I started thinking about this and saw an example today that kind of blew my mind. So
Do you know who Nick Saban is? I smell what you're stepping in. Great. Not afraid. Yes. I love where you're going with this. Yes, I do know who he is. You tooting my horn? Yeah, beep, beep, my friend. I like Nick Saban. All right. So Nick Saban, he was the football coach at Alabama and LSU, and he's probably the most successful modern-day college football coach. The guy made probably $150 million as a coach.
Amazing money. Is that real? 150 million as a college football coach? Yeah, he's like in his 50s. So he's been doing it for a long time. But like his last contract was basically a 10 year, $100 million contract. He was making 10 to $12 million a year, his last contract. Wow. But Nick Saban is actually going to be a billionaire. And he's going to be a billionaire because of car dealerships. And I found this pretty fascinating. I couldn't believe what I was reading. So the story is pretty cool.
Here's how it goes. So Nick Saban has partnered up with this guy. I think his name is John Agresti. And the headline of the article was, The Man Who Will Make Nick Saban a Billionaire.
And it talks about how Saban, while he was coaching, was deciding like, you know what? I think I might go into car dealerships. And car dealerships have had like an interesting history with athletes. I remember growing up in Colorado, John Elway, all the car dealerships had John Elway's name on them. And he was our active quarterback at the Broncos. And I didn't really know this because I was just a kid at the time, but I went back and looked. I was like, what happened with John Elway's car dealerships? And it turns out Elway basically had this insane story where he
While he was a player, he started this car dealership brand selling Toyotas and like Chevys or something like that. And before he retires, he sells his car dealership group to AutoNation for $87 million, mostly stock. And so he gets paid out $90 million, which is more than he was making as a quarterback for, you know, professional quarterback in the NFL.
And he then also licensed them his face and his name so that they could continue using his brand all the way for like another 10 years. But he had a non-compete during that time. And two crazy things happened. One, because of that deal structure, John Elway, he made a bag and he lost a huge bag at the same time. So he made $87 million. But then when he retires, it turns out that the owner of the Broncos offered John Elway an incredible deal.
He basically told him, you can buy 10% of the team for $15 million today. And actually, I owe you this deferred salary because you're going to retire earlier or something like that. He owed him $21 million of deferred salary. He said, you know what? I'll let you buy another 10% for that $21 million. And John Elway is like, I don't know. That's a lot of money. And the guy goes, I'll make it even more of a no-brainer for you.
If you change your mind, you don't like it, you want to sell the team within the next five years,
I will pay you back everything you put in plus $5 million and 8% annual interest. So you literally can't lose money in this deal. You can only make money. Who owned the Broncos at the time? Bernie Madoff? Because this sounds like a deal too good to be true. Pat Bolin. And so Pat wanted John Elway to be part of the team. So he wanted him also to work as an exec with the team. Got it. And I guess he was like, I'm going to pay you this money either way. How about instead I trade you stock for the team? Okay. So...
Elway actually turns the deal down. He turns it down for two reasons. One, he's illiquid because he sold for $87 million, but it's auto trader stock. And so he didn't have liquidity at the time. Maybe you can sell right away. He didn't have the $15 million cash on hand because he had also just made an investment for $15 million. It's some guy named Sean Mueller.
who was actually just running a Ponzi scheme that ended up failing. And he lost, you know, half of his money in that. He got half of it back. He lost half of it. So he didn't have the cash. So he's like, ah, I can't do it. And then he's like, you know, also. Dude, he listened to the wrong Ponzi scheme guy. I thought it was the Bracco guy. Turns out it was this other guy. Exactly. And by the way, that stake, that 20% stake, that's about a billion dollar stake today in the team. The team just sold for $5 billion. So Eloy missed out on that. And after the non-compete ended, he then went back into the car dealership business.
And he he's built it back up. And now that car dealership business does like, you know, again, over a billion dollars in sales. And he's worth a few hundred million dollars from his second rodeo on the car dealership side. So I don't really I don't know. I didn't put enough respect on the car dealership name. Let me tell you about the the Nick Saban one. Now, what caught my eye is that a story came out saying that they bought two dealers, two dealerships in Miami to two car dealerships in Miami. Guess the price?
20 million dollars. I don't know. 10. You're only off by 680 million. Wait, what? They bought two dealerships for a reported 700 million dollars in Miami. Oh, my God. Oh, and they're Mercedes. I'm looking at the article. They're high-end Mercedes dealerships. I think they have like an exclusive. I think they're in like the prime ultra-rich area of Miami. But, dude, I actually spent 30 minutes this morning figuring out, is this a typo?
Because I was like, there's no way that individual dealerships can be worth $350 million. In fact, I'm still like 25% convinced that might be a typo and it might be 70 million. But I couldn't, after 30 minutes of digging, I couldn't find it. But it's pretty insane. Their dealership group, they now own like, I don't know, 10 to 15 dealers, dealerships across like Alabama, where he was the coach to now Miami. And he says that the guy said that they sell 22,000 cars a year, 20,000 Mercedes a year.
And he says they do about $2 billion in revenue on that. That's insane. The partner is now worth a billion dollars on paper, and Saban will probably be worth a billion dollars after these deals. Isn't that wild? It's crazy. Did I not bring this up a while ago? I didn't know that he was a billionaire, but I read some stat about car dealerships. It's crazy. And you told me you wanted to cover car dealers. Interestingly...
Recently, Forbes, they did an article with another beautiful title. It was called The Car Dealership Billionaire No One Knows. And it's about this guy named Terry Taylor, who owns, I think, 120 car dealerships. And he also lives in Florida. But they came across him because they're like,
Well, this guy doesn't do any interviews. We've never seen a photo of him. We don't know anything about him. But what we do know is that someone recently bought Tommy Hilfiger. They bought his $30 million mansion in New York City. And it turns out the same LLC owns $250 million worth of real estate.
who's behind this? And they find out that it's this auto dealership owner who owns practically the whole thing. And he owns a bunch of them. And he's just making a lot of money. And they eventually get a hold of him. And he goes, I heard you've talked to all my associates. Fine, I will answer just a few questions for you. And the whole story is how he purposely is trying to be low key and under the radar. But they uncovered that he owns an $80 million jet. He owns all this amazing stuff. And so it turns out car dealerships
shockingly amazing companies if you shockingly amazing yeah like i think they get little local monopolies because i think you get like a territory you might become the only dealer for that brand in that area and then depend and then people tend to buy from you know a local radius if they're not buying online and i think the way that they work is like the car manufacturers basically do like floor financing or something like that they basically like lend you
they basically finance you to own the inventory. So you, I think you're, you're not out of pocket as much as it would sound like. It's very bank friendly. So, uh, in this article, they got the, they were talking about how once you've proven to Mercedes or whoever that you're a decent operator, they, you know, they, they're like, yeah, we would love to expand your trustworthy. Let's go. And then the banks will be like, yeah, like this is a very like, uh,
predictable business. Like we've seen this for a hundred years. We will loan you money once you prove it to be successful. So it's a very loanable business. And the way that this happened was Saban was sponsored by Mercedes. So he had just done some events, show up, take some pictures, kiss some babies. And so he goes to these Mercedes events and he's like, huh, okay. Like, I think like Mercedes is great. So he talks to them. He's like, yeah, I'm interested. Actually, like I might, I may be interested in like doing a dealership.
And they go, listen, you're not going to want to operate these things. You keep being Nick Saban, God tier football coach. You go obsessed over that. Let's enter. We'll introduce you to four or five of our favorite franchisees that we think do kick ass. We have all the data. We know who kicks ass. You might be able to partner with one of them. So he does a four hour meeting with the first guy they introduced him to this guy, John.
And he takes no more meetings. He agrees after the four hours, I'm going to partner with this guy. And he goes, it's like interviewing an offensive coordinator. When you know, you know, which is so romantic. Thought he would use like a love analogy, but he's like an offensive coordinator. And this guy, John, is a hustler. So in addition to the car dealerships, they had a new bourbon company that they started, a Kentucky bourbon company, him, Saban again. And he's like, I'm going to partner with this guy.
And then during COVID, they created a medical supplies business called Dream Medical Group. So they have Dream Auto Group and they created Dream Medical Group and sold over $100 million of PPE during COVID-19.
This guy's doing shit. By the way, whenever I hear that story of someone doing PPE during COVID... Always a hustler. Well, it can go one of two ways. You're always a hustler. You're in that circle, but it's like you're either full of it or... Good hustle or bad hustle. Yeah, like there's something about it. How fascinating. I did not realize it was that big. It seems like the key to this is two things. Partnering with the right dealer before...
You know, I own a Mercedes and it seems like Mercedes has been booming for the last 10 years. Like they're cool now. They were always, they were always cool, but now they're like, they have, it's like they have some accessible models that many people can buy. So they, I imagine they're selling a lot, but also he picked the right cities. So he picked Nashville in like 2016 or something like that. You know what I mean? Like picking like the right geos that are growing with richer people to be able to support a dealership. And where your name, if you're an athlete or a coach carries weight.
Like it's kind of silly, but like just the jump, the, what is, what is the Elway's one called? I think it's called John Elway Chevrolet. It's the number one Chevy dealer in the country because guess what? We like, we like our hometown kid. We like the local hero, you know, the local quarterback who brought us the Superbowl, right? Like that's a heroic guy. And John Elway Chevrolet, it does 50 to a hundred million dollars a year in revenue. Just that one, one, one dealership.
And, you know, that's pretty crazy. And so I think these guys have done a good job. By the way, here's a quote from this dude. Tell me what you think of this. So it says, they're talking about this guy, John. They go, he's even more obsessed with the financial details. He's a former accountant and he compiles his own monthly statement for every single store. Quote, if you say to me, how's March going?
I can look and say Cutler Bay sold 13 cars last night, eight new, five pre-owned. I can tell you who the salespeople were. I can tell you that Evelyn bought one. I know every name, every car we sold, how much money we made. And I tracked them on parabolic curves to make sure we're not overcharging or undercharging anybody. What a beast, man. The only thing is, what is he talking about parabolic curves for? What could that even mean? I tracked them on parabolic curves. Isn't a parabolic curve like at the beginning of when exponential growth happens? Yeah, but what does that mean? I tracked them on parabolic curves. What does that even mean?
Patrick Collison tweeted this thing the other day, and he used the phrase local maxima.
Did you see that? Love that. Love breaking through a local maxima. I had to go and figure out what all this meant. He said, I think worry about local maxima comes from imaging the 3D world, where it is in fact easier to get trapped. I didn't know what that meant. I had to go figure out. Each word had to be individually looked up. I did not know what that sentence meant at all. And then he goes, but company space has many more dimensions and assumptions
And so most critical points are, as you say, just saddles. There's almost always a positive gradient. You can trundle along. I did not know what any of that, any of those sentences. Did not or do not? I did not. And so I had to, I shared, I said, could somebody explain to me? And they, and he explained what it said. And it's actually brilliant. I totally got into this. What does it mean?
It means people often worry that they're gonna grow their company a bit and hit a ceiling and get stuck, like reaching a small success and thinking that's as far as it can go. But the original quote says that business isn't like climbing a simple hill where you can easily get trapped on a small peak.
Business has many moving parts, product team, market pricing strategy, et cetera. And that creates lots of directions to explore. So even if growth stalls or slows, it's rarely the true limit. There's almost always another path forward, something you could tweak, improve, change to unlock more growth. Most stuck points in business are just temporary plateaus, not dead ends. And the saddle thing is,
Kind of blew my mind. It's a mathematical, it's like a, it's like a mathematical thing. But if you Google, like if you, or if you look at, you could, you could, I could show you this, but. Oh, I see the picture of a set. You see the photo shape. Yeah. It's kind of, it's kind of mind blowing. Actually, when I like saw this photo, it's hard to explain to the listener. We'll put, we'll put the, uh, the photo up, but it's basically looking at a normal like X and Y axis. But now there's a third and it's 3d and it shows that you can go forward or back up or down. Okay.
And it actually kind of was mind blowing. I felt like Tom Haverford in the show Parks and Rec, where he like sees like a piece of art and he's like, this makes me feel something that's so strange. And someone actually explained to him that's like, yeah, that's what art does. Like it makes you feel something. And I remember seeing this this weekend and I just sat there and I'm like, I feel I feel I feel special after reading this. Like I've just learned and it was kind of cool.
I think you got reality distortion fielded, my friend. He just RD'd my ass hard. Telling somebody they're at a local Maxima is always one of the like, pat you on the head. It's like, wait, are you patting me or are you like telling me I'm a little boy? Right? If you ever use that on somebody, it's a great backhanded diss. Just says like, you're
You're doing great, but you don't realize you're still at the kid's table right now. And there's this other game. That's the global maxima. You got to throw in a bud there. Like local maxima, bud. Local maxima. In fact, this article with the car dealership guy says an article on Forbes. And at the end of it, they go, Joe loves deal making so much. He, you know, in the middle of our interview, I had to apologize. Sorry, pal. Don't mean to be rude. I just really got to close this deal. And I was like, oh, damn. He just pals you? And you put that in the article? Yeah.
Joe sounds cool, but also like a douche. He's got into the whiskey business, too. Check, check, check. Did you call him Joe? His name's John also. I'm just local Maxima, bud. I don't remember names. That's hilarious. That was the virtual version of slapping someone on the ass and say, go get them. Calling them by the wrong name.
All right. What else we got? I have some other stuff. All right. So in AI, there's been these like waves where four or five of the same company will get started and they'll all get like an incredible amount of traction. So a few years ago, this was when chat, maybe GPT three or 3.5 was out. It was like a copywriting thing.
services. So Jasper copy AI, there was a whole bunch of companies that just exploded past 10 million in revenue very quickly with a, with the same idea, which was like, Hey, we'll help you write blog posts and marketing copy, right? Marketing copy written for you. That was like one idea. Yeah. And that, and then they got kind of wrecked by, uh,
Just chat GPT just became good enough where you could do all those things. You didn't need a separate tool. So they ran into trouble. I shouldn't say they got wrecked, but they ran into some headwinds where the explosive growth didn't last forever. And then the current batch of AI companies that's doing this is these website builders. So Lovable is one of them.
Replit is another. Bolt is another. And so there's these website builders, which is very simple. Like just the way you had Squarespace and Wix, you go drag and drop and make a website without code. Now you don't even have to drag and drop. You just say what you want. You're like, hey, I want a website for a law firm. And then it just gives you a beautiful website for a law firm. You're like, ah, make the hero thing a carousel. And it makes it a carousel. Like you don't have to
You don't have to code and you make these sites. And so these businesses have now exploded. They're some of the fastest growing companies. I don't know the latest revenue numbers. Is Cursor one of them? No, Cursor is a little different. Cursor is a tool for existing developers, but like,
you know, lovable hit 4 million. It was doing basically a million dollars of ARR every week for the first four weeks. And it's now at 20 million plus. That's insane. Bolt is at 20 million levels at 20 million. It's crazy, right? So like they're, they're growing really, really fast. And so those are there now, but I also kind of predict that that's going to,
be a very shaky space to build on. I don't know how much... Yeah, it's going to be like Groupon, you know, like... Could be. It might be that they're the next Squarespace. Squarespace, you know, eventually became a public company, but I don't personally think so. I think that that's going to be just like a feature inside of ChatGPT. It's like, make me a website. And I think they're going to be able to do that. Something like Replit's a little different because it's got a whole backend or whatever. Anyways, that's all nuance. What I'm saying, what I'm trying to get to is...
It got me thinking, what would be a more defensible AI business? So what's a simple business that's about AI, but is not going to get just wrecked by the next chat GPT update? And so I started thinking, I was like, okay, well, some of the most defensible businesses are marketplaces. And nobody's really built a good AI marketplace yet.
What would that even be? You know, why not? We all know that marketplaces are super, super valuable when they get built, right? eBay, Amazon, Airbnb, etc. Uber, these are all marketplaces, supply, demand. Where were you when you were thinking about this? Tell me, walk me through like, when you're having these, these very strange conversations with you, where? I have this, I have this room in my house where I have the best ideas.
And it's like we have tile on the floor. It's a cool room because if you need to poop or pee, you're already there. If you need to shower, you're already there. It's just the bathroom.
Hey, Sean here. A quick break to tell you an Ev Williams story. He started Twitter and before that he sold a company to Google for $100 million. And somebody asked him, they said, Ev, what's the secret, man? How do you create these huge businesses, billion dollar businesses? And he says, well, I think the answer is that you take a human desire, preferably one that's been around for thousands of years, and then you just use modern technology to take out steps. Just remove the friction that exists between people getting what they want and
And that is what my partner Mercury does. They took one of the most basic needs any entrepreneur has, managing your money and being able to do your finance or operations. And they've removed all the friction that has existed for decades. No more clunky interfaces, no more 10 tabs to get something done, no more having to drive to a bank, get out of your car just to send a wire transfer. They made it fast. They made it easy. You can actually just get back to running your business. You don't have to worry about the rest of it.
I use it for not one, not two, but six of my companies right now. And it's used by also 200,000 other ambitious founders. So if you want to be like me, head to mercury.com, open up an account in minutes. And remember, Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank and Trust members, FDIC. All right, back to the episode.
Okay, so you're just sitting in the bathroom thinking about defensible AI companies. Exactly. As one does. As one does. And so I'm thinking, I'm like, why isn't there like a high end? One of the hardest things about AI right now is just keeping up with the tools and being able to do something. And I was thinking somebody should make a Upwork or Fiverr that is just for highly skilled AI doers.
So a place where I can go and I could just put up a task that I know probably somebody with AI can either do it, build it for me or show me how to do this on a recurring basis.
and make a very skilled marketplace where people can go earn a ton of money for their own AI enthusiasm. Because I know a bunch of people that are like really enthusiastic about this stuff and they build their own pet projects. They try every new tool that comes out, but they don't really have like businesses where they need to use them because they're just like AI enthusiasts. They're just like kind of bored on Twitter all day. And I think that you could, if you even just had like 150 people on the supply side for this, I think every, a lot of businesses know that they could probably benefit from AI.
And I think if you went there and you were able to just like state your problem and then have people sort of like tell you what they could do with AI to solve your problem and you just pay them to do that, I think you could build a marketplace around skilled AI practitioners right now. I think that could be built. It's like the upscale version. You know, you go to like the top kind of like 1% level of quality of job on Upwork or Fiverr or 99designs.
Dude, I always thought that like somewhere, your company somewhere or something like this should just make it where I can hire an expert and they could come and they could spend three or four weeks looking at my company and saying, I can make this better, this better, and this better. Because that's what I want. Because I see online that everyone's like, you know, I think Shopify made this announcement. They go, instead of hiring, you first must say, can I hire AI? And if you can't, then you can hire a human being. And I see these things like this and I'm like,
Oh man, I feel left out. I don't know how to do any of this. Like, I want to automate all this. Like when you say AI, to me, I'm still on level one. It's just me talking to chat GPT. But then I hear about all these other things and vectors and all this stuff. And I'm like,
I know it's important, but I don't know how to do any of it. Do you know what I mean? It's like saying like, Sean, do you want the V6 or the V8 car? And you're like, I don't know what any of that means, but I know that the V8 is better. That's how I am with AI. And I wish I could pay someone to just come and do this. So I think this is an excellent idea, by the way. So you can. There are consultants that will do this. They'll shadow your work.
They'll come into your company. They'll do a discovery phase. I mean, all the way up to Accenture, I think, is going to do a billion dollars this year in AI consulting. Like big companies are hiring McKinsey and Accenture to do it. And then small companies can hire these like indie shops to basically say, all right, I'll pay five to ten grand to come do a like six week program where you kind of figure out where you can optimize and then optimize.
But a lot of that's so speculative and like, what if, what if you don't find anything that sounds like work on my end? Here's kind of how I want it to work. So what would you call this? What would I call it? I'd call it cute name.
Up Slice, Top Slice. I call it Top Slice. Do you remember? That's not bad. Do you remember? That's actually kind of cool. Do you remember when we talked about A-Team? I thought that name was so good. A-Team is fantastic. It was a fantastic name. A-Team, I want that name for everything. Let me just give out some marketing, some absolute marketing gold here. Have you ever heard this phrase? I'm almost scared to say this because I love, like the marketing genius of this phrase is so good. Nobody ever talks about it. And I really want to use the same principle on something, but I'll give it away here.
Have you ever heard of marry me chicken? No, I don't know what that is. Is that a nursery rhyme? No, it's a chicken recipe. And it's like, you ever, it's like, Oh, if you want to learn how to make my, like this is, this chicken dish is called marry me chicken. Cause if you make it for a man, he will be like, marry me right away. And it's this thing that women say, it's like a,
It's a way to say the recipe. And it's like, if you just think about that, there's a thousand ways they could have described like this creamy chicken recipe, right? Creamy chicken. It could have been like the name of the ingredient. It could have been the cooking process. No, marry me chicken recipe.
I love that phrase. Love the idea of marry me chicken. I think for any business, you should come up with like a marry me chicken level description of like what the person really would want. Like how good must it be that they say marry me at the end of it. Right. So I love that. So I would love to come up with something like that for this. But yeah, I think that there's an opportunity to create something like this. Here's how I would want it to work.
So I have a buddy who invests in this e-commerce company. I was like, why'd you invest in that? And he goes, he's doing really interesting stuff with AI. And honestly, I wanted to invest just so that I could like see what he's trying. He's trying to build the company, the whole company AI first. So he's trying not to hire anybody. He's trying to do AI for pretty much every job. It's e-com in the sense of they make a product and they sell it or it's like Amazon. Like it's like a, it's like a platform. It's like a brand. Like you buy the supplement and then you, and then they, they sell it on Shopify.
And I was like, oh, fascinating. So like, what's he doing? I really want to know. I got an e-comm brand. And I think actually that's a kind of a good hook, which is instead of saying, let me study your business, or you come in and you describe the problem that you know AI can solve, because that already presupposes you know quite a bit about what AI could or couldn't do for you. But if I just subscribed, I was like, hey, I want you to tell me once a week what somebody paid somebody to build for their e-comm brand here and show me kind of like how it works.
I then as an e-commerce owner would be like, oh, you can just I don't have to do product photography anymore. I could just use this thing to do all my photography. It actually works like, wow, that's great. I didn't even realize that. And then, oh, the next thing. Oh, they set up this agent that manages the supply chain. So it takes every freight forward invoice and it puts it into the sheet and then it checks that sheet to make sure that there's no overages. And then it and then it posted in Slack.
That's great. I have a person doing that today. That's awesome. I'd like to take that task and sell it to AI instead. And so I think the problem with most businesses adopting AI is a problem of imagination, not capability. Like you could sit down and figure it out or you could hire somebody to do any of these things. It's an imagination problem for most people. They don't even really realize where they could be doing things. So for you with Hampton, for example,
You might, maybe it could be as granular as like memberships or paid communities or something like that. Or it might just be like somebody who's doing sale. It's like you subscribe to the sales feed. It's like, cool. Anytime somebody comes in and pays for an AI job that improves their sales process, I want to know what they did. Like, I'll give you an example. In one of my companies, this company is growing really fast. It's so fast that we literally can't get enough proposals out the door. Like customers want to pay, but the sales guys have too many proposals to create.
And so what he did was he created this, our CTO created this little agent that will listen to the sales call and it knows what our capabilities are. And it just, it's, it's listening to the sales call and it knows our capabilities. So it auto generates a draft invoice of what services we should package to this customer. And there probably wasn't like a good plugin and he just customized it for you.
Yeah, that didn't exist. In fact, I think this is a whole startup idea somebody should build. But like he built that internally and now our sales guys, as soon as they get off the call, the draft proposal is ready. They just need to tweak three things. And I was like, wow, this is genius. And again, like I think that should just be a startup idea altogether. It's like a tool for salespeople that like by the time they get off the call, the AI agent has already figured out the follow-up email, the draft, the proposal, the CRM thing that it needs to input, et cetera. This is kind of a 10 out of 10.
Yeah, I think so. I think this might be a 10 out of 10. Which one? The AI marketplace or the sales thing I just said? Because they're both kind of dope. Well, I don't know anything about the second one, but yeah, that's cool. But the first one, because I'm like thinking, like I guess like I would easily give money to someone right now if like, because a lot of times AI, it feels like I don't know what I don't know, but I know it's important. And it's like, just give me all the examples of how this is helpful for me and just do it.
You know what I mean? Now, the hard part about a business like this is, of course, marketplaces are incredibly difficult to spin up, right? It's a chicken and egg problem. How do you get supply when there's no demand? How do you get demand when there's no supply? How do you figure out, are you supply constrained or demand constrained? That initial cranking of the crank is really hard. So this is not something that, like, I would say a B-minus entrepreneur can do.
You know, like I think you basically have to be an A-plus entrepreneur to do marketplaces. That's just like maybe a personal belief because I think the initial cranking is so difficult and takes so much kind of skill and hustle to do.
But I think it's a great opportunity because when you build them, they're very valuable when you do build them. And so if anybody wants to work on this, feel free to email me, shawnashampuri.com or DM me. I want to hear if anybody tries this or is interested in trying it. Well, how is Fiverr taking advantage of the AI stuff? Have you seen anything? Dude, I used to use Fiverr so much. I don't use it at all anymore. We'll know from the homepage. It's still the same old junk.
And I feel like if I had to imagine, a lot of their business was graphic design. And now it's basically just taking advantage of people who don't know that ChatGPT exists. And they're like, hey, can you, like, oh, I can just pay this guy to make an image. He gets back to me so fast. It takes a lot of iteration, though. But you know one thing I heard people do? I think there's people who are rolling up the top Fiverr accounts.
Because they're like, cool, you have top real estate under graphic design on Fiverr. So you're just automatically getting, you know, hundreds of jobs a week inputted to you. So they're buying them and then they're just replacing the creator with AI and like an AI managed service underneath it. And I thought that was pretty fascinating. It's like buying, you know, beachfront property on the world's shittiest island. That sounds like a horrible idea though.
But this is, yeah, this sounds like a horrible idea because that's like, you know, what happened to the Thrasios? Beachfront property, like right where the hurricanes keep hitting in Louisiana or something. Yeah, I mean, this sounds horrible. So, you know, the key with any roll-up is like,
Yes, either you're going to get extreme durability, in which case you pay a higher multiple, or you get unknown durability. But if you're buying it like 1x, for example, or you're buying it like 1.5x or 2x or something like that, you can make it work, right? Like you can end up looking like a genius if you buy at a low enough multiple. So in something like this, I bet these people have never been offered anything before. It's like, oh, you'll pay me like a year of earnings or two years of earnings if I just walk away right now.
And then I know that I can kind of increase the earnings or the cost potential, you know, the cost savings by, you know, 30%. And as long as it holds for, you know, two years, as long as Fiverr doesn't just go under the next two years,
Every year after that, it's profit, right? So, you know, you could make it work. It's not like, it's not, it's not a horrible idea is what I'm saying. My mother-in-law has this pillow business and it does many, many hundreds, close to seven figures a year in revenue. And it's quite profitable. Like she's paying herself a good salary. And, you know, now that she's got some, a bunch of grandkids, she's like,
"I guess I'm just going to shut this down." And I was like, "You know, Smithy, I don't know anything about ecommerce, but I'm pretty sure you could sell a business." And she was like, "What do you mean?" I was like, "Well, someone will pay you something like
It could be one times. It could be eight times. I'm not sure your salary. They'll pay you that or your owner's earnings to buy your business. And it blew her mind. And she was like, someone will buy this? And it was amazing to hear this woman who's killing it just on Etsy realize...
that someone will pay her money to own this thing. And I have no idea what it's worth. I don't know if it's one times, if it's five times what it's worth. But it was pretty cool to see her go through this exercise. Are you actually using AI in a meaningful way in anything in your company? Or I'll ask differently. Are your employees using it? I'm sure you use it as a thought partner. Are you using it like... Are your staff using it on a daily basis where your company has gotten significantly more productive? Yeah.
Well, the example I just gave you on the sales side, that's probably the most impressive example. I would say other than that, it's like chat GPT plus, you know what I mean? It's kind of like, oh, review this email. It's like, hey, we need to write this thing. We need to like research this thing. We need to draft something. Stuff like that is like the daily stuff. I don't, we haven't like replaced job functions yet with AI. That's what I'm waiting for is like,
Basically like, oh, we don't need to hire this person because an AI agent or this person with AI is better than this person with another person. But that's where something like this service, this actually plays like an interesting part here because you know it's important, but you, for a variety of reasons, haven't implemented it. Then there's all these other people. Well, I don't operate anymore. So I'm not the CEO of any of these businesses. So the people who run these businesses are...
their heads down the business they're not as ai curious as i am and yeah but they have the same mindset which is either i'm either too busy right now or i don't exactly know how to do this or this sounds like a project that i i'm a little bit ignorant on but i know that this is interesting and then you have all these guys who have like in the past three years been like raised on this stuff and they're like are you a fool why aren't you doing it this way this way this way you know what i mean and they're that connection would be very valuable
New York City founders, if you've listened to My First Million before, you know I've got this company called Hampton. And Hampton is a community for founders and CEOs. A lot of the stories and ideas that I get for this podcast, I actually got it from people who I met in Hampton. We have this big community of 1,000 plus people and it's amazing. But the main part is this eight-person core group that becomes your board of advisors for your life and for your business and it's life-changing.
Now, to the folks in New York City, I'm building a in real life core group in New York City. And so if you meet one of the following criteria, your business either does 3 million in revenue, or you've raised 3 million in funding, or you've started and sold a company for at least $10 million, then you are eligible to apply. So go to joinhampton.com and apply. I'm going to be reviewing all of the applications myself. So put that you heard about this on MFM. So I know to give you a little extra love. Now back to the show.
I remember, so we both did the newsletter business and the workflow for the hustle was probably similar than the, of the workflow for the. Dude, it was so janky. So like,
What's the output? The output is we got to write an email. We got to write an email that's going to go to, you know, hundreds of thousands or millions of people tomorrow morning. And it's got to basically say, here's the most important stories that you should care about. Here's what happened. Here's our kind of quick commentary of what it means. And let's,
Let's make you laugh, right? And let's entertain you along the way. And let's put in the sponsorships and all that. And there needs to be the right ads, the right ads that need to be in the email. I had a full-time person whose job was to do that. And when you say the right ads, what do you mean by the right ads? Just explain the complexity for somebody who's like, why do you need a full-time person to make, what do you mean the right ads? Just put the ad in. Because.
Because if you're sending an email to, let's say, 3 million people and you make $100,000 every time you hit send, sometimes, like, let's say, Target will say, I want to spend $1 million with you over the course of the next three months. And then Warby Parker will say, well, I want to spend $20,000 with you over the next three weeks.
You have to figure out how to mix and match. So today's email to 3 million people, 500,000 is going to see the Warby Parker ad. 2.5 million is going to see the Target ad. And then next week, it's going to be swapped. And you have to make sure that not the same people are seeing the same ad. And no technology, at least when I started, did any of that. So I had to one person manually do all of this. And it's not crazy complicated. But when the stakes are high, and it's like my whole business...
And you have people giving you- AdOps was kind of the name of the job, right? Like you're not the salesperson, but you're the AdOps person in between. So, okay, great. So I met a guy who was doing a new- And there's multiple ads per email. But even if you take the ads out for a second, if you just take the content itself,
Okay, so what do you need to do? That means every day somebody's figuring out what are all the top stories today? So there's like a search and then there's a curation. And then you have to like, so you find all the top stories, you make a judgment call on which ones are worth talking about. Then you have to research those topics and then you have to write about, you have to summarize them and then you have to maybe add some commentary, some value add. Okay, so we had to do that every day. And, you know, we did it with one or two writers. I think you did it initially with a few writers. And so let's say that the cost of production there was like, you know,
let's just call it on the lowest end, $250,000 a year. If both of us weren't so scrappy, like another person running that business. In fact, when we sold the business, it became like
closer to a million dollars a year of cost to like do the editorial. Yeah, we were definitely spending seven figures. And so I met a guy who's doing this entire workflow with AI. So he just did that thing and he was just like, cool, I'm going to do this. So he's like, he was using AI to scan specific sources to figure out what stories are hot.
Then he would use AI to summarize those articles. Then he would use AI to check which influencers were reposting those articles on Twitter as a signal for like social signal of what's important, what's generating buzz, etc.
Then he would take that final thing and then he would send it to a human dude who was living in Japan who would just like proofread it overnight. And they'd be like, yep, this all is like legitimate fact check. Just kind of like make sure the AI didn't hallucinate. He's paying that guy like whatever, $50 an hour to spend two hours on it, like 50 or 100 bucks a day on this, on the editing. And then he never wrote, he never wrote it and he never had a writer.
And then it auto formatted it for him. So it created an HTML email for him and it inserted the ad and then it sent it out and then it tracked the results and it sent him a report.
To take it even a step further, this sounds like I'm going to one-up you. I know a guy who is doing the same thing, but it's for local newsletters. And the thing about local newsletters is it's a fantastic business, minus the fact that the profits are totally destroyed because you have to have local ad sales and...
local writers for everyone. But if you could just have like lots of newsletters, uh, it for Raleigh, for Nashville, Louisville, but not have the writers, it would be a very great business. Right. And he's doing what you're describing, but for local news and it very quickly spins up a place, a newsletter that says like, Hey, and it makes an ad and it says, Hey, Danville in California.
Do you want news just for Danville? And it goes to a danville.com or whatever. And he's built this whole local newsletter empire all automated. How's it doing? It does six figures right now a month in revenue, and it's just him doing it. And so it's him and it's buying ads on Facebook, targeting local people to get subscribers.
That's awesome. That's great. Very cool. Dude, our business is like, oh my God, thank God, right? Thank God we got out. But why are you saying that? You're saying thank God because it's- It's just way different. It's just way different. It's way more competitive now? Or what is the underneath that feeling? I have the same feeling, but I think maybe for a different reason. I think, okay, so when I started in 2016, people laughed at us. And I know you hear that story a lot, but people were literally like,
You, you were that person. Yeah. You said, why are you doing this stupid drink? Yeah. She said, people left. You were like, why are you doing this silly thing? And I was like, no, it's like, if you run the math, it could be big. Now, like I, like I, I know these like hips, like hipsters have newsletters. Like, it's like,
It's everyone has a newsletter and it's way more complicated inside of it someone's inbox to stand out and so it was I think I succeeded because it was a silly business that I took seriously and There weren't that many serious operators in there and you could say I wasn't even that serious of an operator But I still succeeded now. There's actually really smart people trying to win the game and makes it much harder for Just like you know, it's just harder
Let's say you were motivated to start the hustle this year. What do you think would be the outcome four years from now? So the caveat is you're committed to doing it. You're going to work hard on it. Does it have to be the same genre of content? No, it could be different. I think I could build a significantly larger business. I think it would look a lot closer to industry dive. So where
where it would be lots of different newsletters built for job titles that are kind of forgotten and ignored. And then to monetize it, it would be newsletter, it would be advertisements, but then also it would be community peer groups, sort of like Hampton would be on the back end. And I think it wouldn't grow as fast and I could own it forever. I think it would be very, very hard to grow as fast as I grew it, the hustle. And what if you did the hustle idea again?
I don't think it would succeed. I think that it would, I would not succeed. Dude, I got to, I got to like 300,000 subscribers organically in like two years. Like it was so easy looking back on it. That would never happen again. It's, there's too much noise. I think that to buy subscribers on Facebook, it's actually shockingly the same price. Uh, I don't know if you know anything about the market. I don't, but I hear it's still like a dollar 50.
But we grew organically because we got popular on Reddit, on Hacker News, places like that. And it was considered outlandish and silly and remarkable what we were doing. It was noteworthy, rather. It's not noteworthy anymore. So it's too hard to have something spread virally now. Do you agree? Yeah, I think all the things you said are true. But I do think you could do it again and you...
I think you could do, I think you could do it again and win because you're good at that type of content and that type of business. So I think you would, I think you would figure it out again. And I think you'd have other advantages, which is that like, you know, newsletter advertising is a lot more sophisticated and like available than it was back then. So it's also cheaper now though. So we used to charge, I forget what we charged, but I think it was 25 to $40 per 1000 cents. I'm hearing now it's much cheaper because there's so many options. Yeah.
Interesting. I didn't know that when we were doing Milk Road, I think we were charging that or more. And that was only two or three years ago. So maybe it's changed or maybe it was crypto. So it was like financial financial newsletters, I think definitely command a premium. So I'm not sure. But I would never do it again. It's hard. It's a way harder business than people realize. It's fucking hard.
Can we wrap up with me telling you something funny? Okay, let's do it. Go to this. Go to spermracing.com. Have you seen Sperm Racing? What do you mean go to it if it's my homepage?
Yeah, I mean, you see him like a sperm racing. Yeah, they were trying to figure out who to send the sponsorship deck guy. They're like, Sean seems like a sperm guy. Guys, two words, blank check. All right, so the world's first sperm race and...
One of the most epic little videos behind it. Okay, so what is this? So click manifesto and just read the first couple lines. All right. So sperm racing. When people hear it, they ask me the same thing every time. Wait, is this really happening? And the answer is always, hell yeah, it is. But here's the thing. Sperm racing is not just a joke. It's not just some viral idea for the internet to laugh at. It's something much bigger. All right. Let's see. Let's see if they could pay off that promise. Man.
Male fertility is declining like a lot. It's happening quietly, steadily, and nobody's talking about it. And then there's a diagram of the average sperm count in a man from the 1970s to today. And it's basically cut in half. So we have half as much sperm per milliliter of semen. Wow. A metric I didn't even know existed.
I didn't even know you could measure that. I didn't even know that existed. All right. T-I-L. All right. And sperm ability, which is how fast it moves, which is a massive factor in fertility and getting pregnant, is a measurable, trackable thing, just like running a race or lifting weight. It's something you can actually improve.
And nobody's cared about it until now. So we're turning health into a sport. And they built a racetrack for sperm. Two competitors, two samples, one microscopic finish line. And then they have a MS paint diagram of the track.
Is this a real thing or is it a joke? It's 100% real. Can I watch this live? Can I pay pay-per-view for this? So listen to what they're doing. So this is from an article, thetimes.com. So once the samples are taken, which I assume that means they have to go backstage because it's got to be ready to roll right away.
It's going to be placed into the middle of the stadium and a live video feed that's magnified 40 times to display the sperm will track the sample's progress. And the sperm are going to swim through a, they typically swim five millimeters per minute.
Meaning this race is going to take 40 minutes because they're going to have them swim through this course. The event will run over three races in front of a crowd of 4,000 spectators and feature play-by-play commentary, instant replays, and leaderboards. And this company, according to this article, is run by three 17-year-olds, and they've raised $1.5 million. Wow.
This is incredible. Everyone else out there who is working on a product that isn't working, take notes. All right. The hype video was amazing.
I genuinely think we should be sponsoring this and or we should be the presenting sponsor. Yeah. Presenting podcast of the – Or a spy, baby. So, okay. So what are they really trying to do? Okay. So they're going to sell out this venue, 5,000 attendees, to watch this, which is hilarious. Yeah.
They're trying to raise awareness, but is this just an awareness? Is this an offshoot of a bigger brand or so they want to make this a sport?
I don't know. It's hard. They haven't like, they've done the right thing so far, which is they haven't relieved the tension from the joke. Like, you know, that's, I think the way to go about it. But look at the photo that I posted on here where this guy wrote a tweet about the photo of him. Eric. And it says, the future of technology. Yeah.
How beautiful is this? And so I assume that this is all about like content marketing for some type of male fertility startup. But they've done the best thing ever, which is they've not acknowledged that it's a joke. And you might and apparently the founder is Eric Zhu, Z-H-U. But that's like a pretty common name. So you probably know. No, I know this guy. I did a phone call with this kid. He was doing a different startup before this that I didn't think was that.
Did you advise him? Did you advise him? You're like, I got an idea. Hear me out. I said, just dream about the future you want to build. And this is what he came up with. What's the secret, Eric, that you know that no one else knows? We wanted flying cars and we instead got sperm racing. Wow, this is crazy.
A fun project, though. You know, I've talked about this before, actually, but I think that silly projects like this, and not to be insulting because obviously this is actually greatness, but things that to others might seem silly are amazing starter businesses. And I think that one mistake a lot of people make when you're early on as a founder is you –
Try to do a what you think will work. So you end up doing some like, I don't know, some a boring business that you're not really you don't really understand very well, but it sounds good on paper or you try to, you know, shoot for the moon where you're not, you know, you shoot for the moon, but you don't have a rocket. Right. You don't have the skills, the capability, the network, the whatever.
And of course those can work and there's no, I'm not saying don't do those, but I think another path that I did, which was like my first business was a sushi restaurant chain, right?
like most outlandish idea yours you were doing like i don't know what your first verse was but like you did a hot dog stand you worked for the american pickers guy right you did like a bunch of random things that the business itself isn't great you know opportunities of sort of three out of ten four out of ten but at the time you don't know any better but the important thing is that you're going to build a bunch of like random skills and so like for example with our sushi restaurant
I learned because we were trying to make stuff. I learned how to pitch investors. I learned how to do, I learned Photoshop. I learned how to use After Effects a little bit. I learned how to use iMovie. We created a YouTube channel. We'd learned how to do, uh, you know, door-to-door sales. We learned a bunch of random, random experiences that I wouldn't have got had I just, A, had a traditional job or B, if I had done a startup that was just like more serious in nature, I guess because the startup was like a little bit fun, I was willing to do things that, uh,
or it felt normal once the first idea is a little bit fun, then your marketing idea can be a little fun and out there. And then your hiring practice can be a little fun and out there. You can just sort of stack on from there when you kind of have like what feels more like a sandbox where you could be creative versus when you feel like you're on tight rails of what you're supposed to do. I don't know if that makes a lot of sense. That makes a lot of sense, and I agree with it. It reminds me of me. We didn't do something anywhere near as interesting or cool as this.
But like we've talked about Henry and Dylan, those guys who were doing clip, they were making content. They have this like little like animation. What's it called? Like a service business, like a funny newsletter. They'll do like they came to our house and they built our podcast studios. They're just doing a bunch of random shit that was like,
building little skills for them. They weren't experts in any of those things, but they became expert level doing them. And they started pivoting from one idea to the next and to others, it might look like they're sort of lost, but I've seen it work out very well for myself and my friends who I was doing it with. And so I don't know if you could advise people to do that, but if you're already doing that, I would say, don't sweat it. That can, it can actually pay off.
And Eric Zhu is listening to this podcast right now, and he's saying, I need to clip this and send this to my Chinese immigrant parents who are like, it's like they still, you know, they're not on board with sperm racing. And imagine being 17 years old and selling out a 4,000 person stadium. I mean, that's pretty, it's pretty baller.
Yeah, although they're just saying it's sold out. Is it actually sold out? When you go to the Ticketmaster to buy a ticket, there's a lot of blue. There's a lot of open seats, so I don't know. I'm not exactly sure, but I could see this being a pretty fun thing for a bunch of college kids. Like, are you going to go watch the sperm event? The sperm race? Even the logo is so good. Everything about the branding is extremely well done. Oh, no, event canceled.
What? Oh, no. All right. Update from the sperm guy. He's I go, is the event canceled? I don't see it on Ticketmaster. He goes, no, we got effed over by the Palladium. I guess the venue. They weren't happy with the TMZ interview and some other stuff. And then he goes, it's still the same day, but we move into LA Center Studios. Tickets will redrop Tuesday. Oh, my God. What is what is asking what the other stuff is?
Sounds like a sticky situation. I don't think I want to know. Yeah. All right. That's it. That's the pod.