The Exchanges

Q have, like, a full ad revenue stream in addition to SaaS. One, um, one question, and then I want to kind of talk through what's gotten you to this point, is in your best case scenario, does the advertising business, because of the network you're building, end up being bigger than the, the actual SaaS revenue, or, you Do you, like, do you have a point of view on that?

A Yeah, I've always said from day one that I believe the ad network revenue should be significantly larger than the SaaS revenue. Right now, that's not the case. I think 80, 85% of our revenue is SaaS, but that's because a few things. One, the ad network we launched, I'd say about like eight months ago, we started off, the ad network itself had an MVP, which was an MVP for a while. We were basically running an agency internally, so we knew all the newsletters, we knew all of their metrics, we knew who was advertising. We then went in the market to advertisers being like, hey, do you want to advertise? Same pitch to the advertisers, but the way in which we were actually facilitating the ads was just our COO emailing the newsletter saying, here's an opportunity for an ad. This is how much they're willing to pay. If they said yes, we would just email them the copy and the link, and then we would manually go into their account later, pull all the metrics, send it back to the advertiser. So it's basically an agency with the advantage of we had all the first party data and access to the newsletters who were monetizing And I mean, again, the pitch to the advertisers was the same. We ran that for about eight months. So proof of concept, I mean, interest on both sides, very obviously. So that hypothesis was confirmed. Simultaneously, while doing that MVP, we were building the tech to faci…

AI assessment note: “I believe the ad network revenue should be significantly larger than the SaaS revenue.”

Q Totally. Um, okay, a few more questions for you, and then I'll let you enjoy, uh, Costa Rica. Um, what has been the hardest conversation you've had to have in the two and a half years of running the business? Single hardest conversation.

A Yeah, honestly, probably the hardest conversation I've had in my life was after Andrew Placken passed away. So our CTO, who I mentioned earlier, was our CTO for about eight months, and, like, genuinely, like, the greatest guy, so smart unicorn engineer. Um, Um, it's also really hard. I think obviously there's the emotional aspect and the personal aspect of having a friend pass away is the first time that's ever happened to me. And then it's very difficult to pull apart the personal aspect of that with like the business aspect as shitty as it is because he was like the most important person on our team. And so going from a small tight knit team of eight people, and like we finally started to hit product market fit and escape velocity. To him passing away on a Friday over the weekend, and then you kind of go back to work on Monday, business as usual, but it's not business as usual. So I'd say showing up to that first all hands on Monday, where there's like only eight of us on the team, and now we're seven. And there's also like a one, it's like, obviously terrible situation. But there's also a panic of like, now what, because there's so much confidence of, I mean, it's a classic peacetime wartime CEO to the extreme of like a small company that Is very limited in resources. We don't have, like, a ton of domain and expertise sharing across the company. Like, he owned mission critic…

AI assessment note: “hardest conversation I've had in my life was after Andrew Placken passed away.”

Q question for you is, For founders or future founders that are listening to this today, and they're wondering, okay, there's a lot of good stuff here, but if there was one or two specific things that I could do or implement today to improve the quality of my pitch or improve the probability that I'm able to raise money in the future, what would those one or two things be?

A I'm gonna give one that's super, just like specific and tactical. And this is one that is really challenging for people. It's how long should a story be? And I think a story when you're telling the vision story, it should be about three minutes long. Three minutes for anyone out there is about 600 words. Um, it's, it's a little bit less if you're speaking slower, but many founders tend to speak fast. So anywhere between 500 to 600 words is about three minutes. That's the first piece is like, that's very tactical. Don't, don't build a story that's going to take you more time than that. And what you should do when you build that story is go through the process of practicing, practicing it, refining it, internalizing it so that you can say it no matter what's happening around you. So that's kind of piece one that I would say. And piece two is remember the frame that you're wanting an investor to be looking at the deal through. And it's this, what if I'm right? And what I find many founders try to do in investor calls is they try to prove to the investor that they're right. They're trying to make them say with a hundred percent certainty, Robbie, you're right about the thing that you're saying in the future. And I tell founders, you can't know a hundred percent what the future is going to look like because things are going to change. Things are going to happen. Right. And the examp…

AI assessment note: “when you're telling the vision story, it should be about three minutes long.”

Q I'd say, I don't know if this is the same or different, but not like the big vision that you just say at kind of like, um, a PR talk track event, but like when, when you're running in all hands with your team and like, you're trying to just get them so focused on where you are headed as a team and as a company, what do you say?

A We want to become the default platform for creators to build successful online businesses that are sustainable. Um, and we say that because, uh, there are a lot of different types of creators. Again, to your point, we're not focused on Every creator. So the creator economy is this, like, big amorphous thing. We put a pretty big delineation between people who are putting out, again, content around their knowledge, experience, and expertise, and not so much, I have a thirteen-year-old daughter, my daughter on TikTok, who's a creator. It's a very different entertainment vibe that we usually kind of veer away from, and we're in the business of actual value transfer. Um, and so when we think about that, the products that we power All are in service of that, that actually, when you think about what people are willing to pay for, people are very much willing to pay for valuable content and, and ideas and, like, experience or coaching that helps them get better. Like, essentially investing in themselves via knowledge commerce. Um, and so it's one of the reasons we've, we've powered over six billion dollars in creator revenue since our inception, two billion dollars this year, is because there's just a lot of value transfer there, right? Value for the customer because they're learning something and value for that creator because they're putting something out there that people want to pa…

AI assessment note: “We want to become the default platform for creators to build successful online businesses”

Q creators. And, um, we'll talk about it in a few minutes because I think you're very intentional in, in using the language knowledge creator. And I want to understand how you think about that and why this is kind of your, your core customer that you focus on. Uh, let's, let's just talk about a few more things with the actual business. How do you make money, uh, at Kajabi?

A So Shopify is a great example. Um, and that is, it's kind of an analogous for what we do, but for digital goods. So we, we charge people a subscription fee here. So the concept on Kajabi is that you can make a dollar on Kajabi. You make ten million dollars on Kajabi. We have people who kind of do even bigger than that on the platform, but you keep it all. And so our, our job in an honest handshake is like pay us a subscription fee and you know, like you do your business and we're the picks and axes that power that business. Uh, we are getting into the payment payments platform, but that's not in its way like a take rate. It is just be like helping us embed payments into our product. That then, um, you kind of pay the same rate to do for a stripe or anything, but we are able to provide that service a little bit better cause it's all embedded within Kajabi. Cause again, we're trying to be the one place you need to go to, to build your online business.

AI assessment note: “we charge people a subscription fee here”

Q Let's talk a little bit more about market volatility and specifically inflation. Obviously you alluded to it before, you know, sharing how some of the intervention from the fed appears to be having an impact on inflation, but from the retail investors perspective, What are the asset classes or investment vehicles that are best suited for an inflationary environment or an environment where there is more market volatility?

A Yes, and it's interesting, you know, that last year, obviously, stocks were down, bonds were down in price, but usually, when you have volatility, um, episodes, let's call it that, the bond market is the port in the storm, and that's the side of the market that acts very calm, while the equity side, the more volatile side, is acting up, and last year, the bond market was really the center of the storm, right? That was the eye of the storm, because yields were, had been so low, During the 20, 20, 21 sort of COVID, you know, lockdown days, and so that's where the reset came from. So when we think about the markets now, the good news is that valuations have reset quite nicely, and especially on the, on the bond side, right? You can buy a ten-year Treasury now for about 4.2% inflation expectations per the, what we call the TIPS market, the Treasury Inflation Protected Bond Market, Where you can buy treasuries, but priced in real yield terms. If you subtract the real yield of tips from the nominal yield of regular treasuries, you get an implied inflation rate, and that inflation rate is around two and a quarter, two and a half percent, uh, which is the market's way of saying that the Fed will be successful in taming inflation. And remember, the CPI has already gone from nine percent last year, June, To now three percent. So we have seen significant improvements, even though the core…

AI assessment note: “especially on the, on the bond side, right? You can buy a ten-year Treasury”

Q Totally. And so, given the context of, let's call it a softer landing or a no landing at all that we're sitting in right now, how would you describe what the key factors are that are driving the investing landscape at this very moment?

A So, ultimately, the markets come down to earnings, Interest rates. That sets valuation. Uh, it comes down to sentiment, and clearly going into the year, you know, since our last episode, the market was sort of on the wrong foot, right? I think that generally people were positioned defensively, expecting that earnings shoe to drop, and the earnings shoe has not dropped. You know, first quarter earnings season actually came in pretty good, and the second quarter has come in pretty good as well. So, Second quarter earnings season just wrapped up. 80% beating estimates by an average of seven percentage points. It's pretty good. Now, overall earnings are declining very, very modestly. They're, they're scheduled, uh, estimated to be down three percent this year, which isn't very much. So when I say that 80% are beating by a certain percent, it just means that earnings growth ended up being less bad than was expected. So This has been the year of resilience, really, in the economy, and if you think about it, right, 70% of the American economy is consumer spending. Consumers are spending, right? People are spending money because they have jobs. Unemployment is very low, and wages are, now that inflation has come down, it's still elevated, but it's a lot less elevated than it was, and now wages are starting to keep up with inflation better. So People have money in their pockets. They ha…

AI assessment note: “ultimately, the markets come down to earnings, Interest rates. That sets valuation.”

Q was, and they'll hear what this does is it takes away purchasing power from the money that they have in the bank, and they get concerned of, are they going to be able to live in the same way? What are strategies that they should be employing given where inflation is? How would you be thinking about this if you were A retail investor that you were providing guidance to?

A Yeah, so one thing to remember is that stocks, equities, historically have been a good hedge against inflation, right? Stock prices follow earnings. Earnings are measured in nominal terms, right? Because if a company sells more stuff, it's measured in price and volume, and so the stock market, generally speaking, not always, but generally speaking, has been a good inflation hedge. So Your compounding returns over time and those returns in nominal terms, generally, historically speaking, have been above the inflation rate, right? So if you go way back in time and you look at the average compound annual growth rate for the S&P. 500, it's about 10, 11% in nominal terms. That doesn't mean that that's what you get every year, but that's over the long term, like a 50 year, 20 year period. And in real terms, it's about six and a half percent. So that's over and above the inflation rate. And again, a lot of it comes down to whether the market is correct in expecting inflation to be under control going forward at about two and a half percent. And remember, as I mentioned before, the CPI has already gone from nine back down to three. So three is pretty close to what the TIPS market has been saying. I think the, the lifting will be a little heavier going forward because what we call the base effects, you know, that rate of change calculation where you add in the current month and you drop…

AI assessment note: “stocks, equities, historically have been a good hedge against inflation”

Q we've spoken about inflation and how inflation has changed over the last nine months. We've talked about the feds policies around rates and how rates have moved over this period of time. We've talked about earnings and kind of like the modest change in earnings we've seen from companies relative to what the market anticipated. What are other current market trends that investors should be paying attention to right now?

A Well, as I mentioned, you know, earnings, interest rates, valuation, sentiment for the stock market, I think, are the four sort of pillars, if you will, and I would say the most noteworthy thing to mention that's happened between when we last talked in November to now is that the market has priced in a very specific scenario. It has priced in a soft landing, and We don't know if that soft landing is going to materialize. It has so far, right? I think this year, certainly the economy has been firmer than most people expected, and you see this if you look at economists' growth projections for GDP. At the beginning of the year, the economies were expecting basically no growth for the year. Now they're expecting close to two percent real growth, so clearly those expectations have been reset, and the market has, you know, probably correctly Basically pivoted to that scenario, but the market has priced it in, right? So the market always discounts the future, and so the PE ratio for the S&P has gone from 15 to 20. That's a pretty big move. That's an almost 30% move in the market, and so now this soft landing has to continue to materialize, or the markets might be sort of on the wrong foot. So I think that really becomes the main issue, I think, for the next Six to 12 months is will the scenario that the market has already priced in now come to fruition? And if it does, the market can …

AI assessment note: “the most noteworthy thing... is that the market has priced in a very specific scenario. It has priced in a soft landing”

Q Okay, let's go. We have two more. Terrence J asks, what's your ultimate goal with StoryArb? You probably touched upon this a little bit already.

A Yeah, I would say there's three ultimate goals. One personal, two professional. Personal, very, very honestly, it's, you know, at some point in the future, I don't know when it'll be, when I'm no longer at Morning Brew, I will no longer be making a salary from Morning Brew. I think at a personal level, as how can StoryArb be a lifestyle business, That cash flows off enough money for me to provide for my family and supplement the salary that I get from Morning Brew. There's two professional goals. The first professional goal is I just deeply believe that audience is like one of the greatest untapped assets for people on the internet. I have seen the value it's given to me, and I know it can bring value to so many subject matter experts online. From a mission perspective, I feel very excited about the idea Of untapping the potential for tons of really smart executives to have this asset, to build this asset online. The second professional goal is I actually see StoryArb as the foundation for other businesses, and what I mean by that is, let's just use an example. We have 12 clients right now for StoryArb who are subject matter experts in different industries. One in self-storage, one in buying agency and content businesses, One in CPG and product development. The way I think about it is they are paying us to help them build authority within their niche online. Let's say we get th…

AI assessment note: “I would say there's three ultimate goals. One personal, two professional.”

Q It's like life size, right? Like, five foot six, two arms, two legs.

A Yeah, it's, uh, it's got, yeah, two legs, two arms, has hands. Um, we, we have a head, but it's not, like, we're not trying to mimic the human The human bodies. We don't have like eyes or a nose or ears. We have a screen. We have a lot of sensors like cameras and other things in the head. Um, the goal for the, for the form factor and the aesthetics is just to be a tool for humanity. So we want We want to, we want to deploy these into the labor force to help people. And I think one of the larger deterministic things that I, that I realized when starting this business or reason why I did this, we're having this huge labor crisis in the world that is really not well reported. Uh, so, you know, demographically the, the baby boomers are retiring and we haven't had as many kids as possible as we, as we wanted to probably. And so the, the, the amount of people in the labor force is basically flatlining. And we'll start to shrink worldwide. And this has caused now what? Eleven million jobs in the U S that are just unfilled today. Um, so we're walking into clients in retail or manufacturing or warehousing. The questions are not like, how are you going to replace our people? Like how are we going to roll? It's like we have. 85% of our employees show up to work today. 85% will show up to work tomorrow. We are seeing two and a half percent weekly attrition. We have nobody that wants to wal…

AI assessment note: “Yeah, it's, uh, it's got, yeah, two legs, two arms, has hands.”

Q So Alex, is this live right now? I say we do something that's present right now.

A Yes, it is present. It's going to provide a little bit of backstory and then come right into the present of like a present question I'm asking myself. So October of 2020, we sell the majority of Morning Brew to Axel Springer. April of 2021, I step out of the CEO role out of being, after being in the role for, it's called five and a half years. The moments after stepping out of that role were some of, I would, I would say the most difficult times of my life. I felt purposeless. I felt directionless. I didn't know what I was going to do with my time. I felt like a lot of the things that had motivated me prior for Morning Brew, namely money being, I would say, 70% of what contributed to my drive of Morning Brew was no longer there. And I also had a lot of guilt of feeling like I was inadequate in the CEO role. Uh, I told myself the story of that is why I'm no longer in the role because I wasn't good enough to scale with the business. Uh, I told myself that I was only good in zero to one. But I didn't have enough focus, uh, in order to like actually continue to build out as an operational CEO versus just a builder in chief. And I had the story of myself that it was a lot of luck and my co-founder just kind of pulled me along for the ride. And so then push the story forward. Uh, you know, I am basically staring at the sky for six months straight, reading a lot of books on stoicism, …

AI assessment note: “Yes, it is present. It's going to provide a little bit of backstory”

Q this. And then by the end of the day, go, oh no, let's do something different tomorrow. Most of the time that doesn't work. I mean, There's certain examples where it might, but generally that you need some period of time of activity, and then some period of time to kind of zoom up for a second and go, did that, did that work, or should we make a change?

A Yeah, I mean, the, it's like, I, I think the There, the answer is there's no right answer, but there's the, probably like the wrong answer is not having any mechanism that allows you to, to step back and reflect. And so for me, I mean, we do something very simple with the plunge where it's just my partner and I just have a weekly meeting. We have a weekly one-on-one right now, uh, Thursdays at four o'clock and we answer the same exact questions every time. It's what worked this week? What did not work this week? And what are our priorities next week? And at the very top of this doc, it has what are our goals, which is VIP reservations is, is the, the goal that matters right now. And it's like a template we have on Google docs. Like I'm even happy to attach it to the show notes just to have that template for weekly meetings. But for me, it's, it is just a force function where I have to go through now and set aside time for a 30 minutes or an hour to say, What worked this week? What didn't work this week? And, um, what am I going to spend time on next week? So just to give you an example, like what, when we did this last week, I wrote like, what worked is that we are now fully running our ambassador program, which by the way, we could talk about that more. Cause I think ambassador programs are not used nearly enough. Ambassador programs have to be kind of like this, like cheap, v…

AI assessment note: “wrong answer is not having any mechanism that allows you to, to step back”

Q write that one up. And then that, like, I started a series of it. By the way, the other thing I'll throw out, and this will happen, I'm sure you've seen it too, is like, now I post them and people aren't that interested in them anymore. It's kind of been played out, right? And I'm sure your second startup is going to have the same issue at some point.

A That's the huge thing is these platforms move so quickly that even if you get a great concept, you have to change it after some period of time. So like, if I look at my TikTok right now, My last three, 62nd startups got 2000 views, a thousand views, and 3800 views. And just for context, like my most watched 62nd startup had 600,000 or 700,000 views. And so, again, like the, the, the issue with content is you just never know, is it not getting a lot of views because it wasn't an interesting story that was told by the founder, or is it because This is just now a tired format and you need to evolve it. And so I think one of the ways I think about it is how do I keep doing 62nd startup and find ways to up the stakes of it? So for example, I mean, I think I told you this, like one of the ways I'm trying to up the stakes is literally have founders pitch their businesses in absurd ways. So I have a guy who's set up to go skydiving while pitching his business. But on the other hand, how do I try a format that's totally different from that? That basically is almost like my R&D in the event. This is just a tired format and I do need to pivot it. And so, for most of the content journey, you feel like you're in this, like, purgatory, where you're just trying to figure things out, and I think my formula has always been continue to stick with it, continue to put, continue to put content out,…

AI assessment note: “these platforms move so quickly that even if you get a great concept, you have”

Q So obviously you're not a professional football player today. You're a serial entrepreneur, um, and so many other things other than just a business builder, but did you anticipate trying to play in the league? Was that your goal?

A I did like, like millions of other, uh, American high schoolers out there. Um, I got to play sports and I was really good at sports and I had the opportunity to go play in college. And my dream was to become a professional football player. I grew up and I was obsessed with two things, computers and football. And, uh, turned out that football was going to be a great path for my life. So I spent my entire college career really focused on football. There were no internships. There was no entrepreneurship. And my senior year of college, I ended up with two fully reconstructed shoulders. And after coming back off those injuries, that was really the first time I realized, like, there was no chance I was going to go to the NFL. And for all the people that have played college sports that have gotten injured like that, like they know what that feels like coming off of that.

AI assessment note: “I did like, like millions of other, uh, American high schoolers out there.”

Q team? Like how was the, How was the company set up, said differently? Like, did people look to Alan as kind of like the guiding light of this business, and you were just the operator of the business? Or did they really, did they have trust and belief in whatever you thought? Because like, to me, that means very different things in how you engage the team after this tragedy.

A Alan was the figurehead of the company. People did not have trust and belief in the new boy King CEO. Like that was not at the top of their list. And when Alan died, There was no other option. So I had to come in and be a strong leader and say, here is what we are doing. This is not a democracy. I am not asking for a vote. I am not looking for consensus. I am making decisions on the business and we're going to focus and we're going to execute. And if you have a problem with that, we're going to help you transition and find a new role at a new company. And so I had to switch instantly from like, we're having fun. We're in Jamaica. My guy got kidnapped. Like we're making stock footage to like straight up wartime CEO.

AI assessment note: “Alan was the figurehead of the company. People did not have trust and belief”

Q of questions from our listeners. Most of our listeners are entrepreneurs, whether they're multi-time entrepreneurs or first time entrepreneurs or aspiring entrepreneurs. And I have a, a really interesting question, um, for today's episode that I want to get your perspective on. So Anna Pawsey emailed in and she asked, How do you manage being the boss and cultivating a friendship with your employees? What are your thoughts on this?

A I struggled with this in my first company. I hired all of my friends and definitely burned some friendships that I really miss and I feel bad about. So, uh, if you're listening to this and you're one of those people, I'm sorry. And Um, if you're one of those friends that let me experiment with you on my leadership style and you're still friends with me, thank you so much. Like, thank you. Um, and I think that where I've landed with Prey.com, because I have three other co-founders who are all best friends to me, is just really setting the expectations that we're a team and this is a performance-based organization. I think you have to be upfront and over index on the tough conversations with people. And especially if you're a nice person that really cares about people, like some people, they don't care too much about other people. They really are unaffected by, you know, these relationship, uh, strengths sometimes, um, or strains. I don't know if that, I don't know if strengths is a word, but I think, um, if you're really kind, You have to over-index on hard conversations before they happen. For example, one of my co-founders, Matt Potter, one of my best friends, he let me speak in his wedding. I walked Matt through when we first linked up, because Matt left as the CEO of his own company that was super successful. Shout out to Homestack. Matt left his company to work with me, and…

AI assessment note: “setting the expectations that we're a team and this is a performance-based organization.”

Q I'm sure your cameraman is very grateful for, uh, for the money you paid for him. Um, okay, so that's R.E.P. That's your first business. Now talk about, you said, The agency business was a great start, started really organically with this class at school, but the idea of trading, uh, your time for money was, was a flywheel that you wanted to get out of. So what was next?

A So, um, you know, I, I sat and I thought about it and I was kind of stressed out. I was like laying on the floor in my room and I'm, I'm looking over under my bed and I had all these hard drives, like these one terabyte hard drives, which were like super expensive at the time. And it had all of the extra footage that we hadn't used from all over the world. And I'm just looking at it. And a guy calls me from a TV show and he says, Hey, I know you guys were in Costa Rica last month. Can I buy some footage from you? From Costa Rica. So we don't have to go down there. And I was like, yeah, sure. No problem.

AI assessment note: “a guy calls me from a TV show and he says... Can I buy some footage”

Q where you were like, shit, like I pay a lot for rent and it just keeps getting more expensive. Like, were you talking with friends or did you go the other route and you were like, let me go down my credit card statement or whatever of like, what are the biggest expenses in my life? And then think to myself, how could it be better with these big expenses?

A I mean, so it was actually, it actually came through first, my experience with security deposits, uh, when I was coming in. So I would move from California to New York and like, California rents are expensive. New York was just like a totally different level, and I couldn't believe how much money it cost me to move into my first apartment here in New York. And at the time, the part that really annoyed me was the security deposit that we had to put down to move in. I mean, I remember telling my landlord, I was like, I have good credit. I've never like not paid a rent payment. You can, you're asking me for references on my past landlords. Like you can check and you want me to put down thousands of dollars.

AI assessment note: “it actually came through first, my experience with security deposits, uh, when I was coming in.”

Q You, you talked about, uh, focus and selfishly, I'm just curious, uh, about how you spend your time. Like look at your week this week. How would you say if you had a pie chart of that showed the different ways you could spend your time from managing to strategy, whatever, you know, all the buckets, how are you allocating it right now?

A So I, I happen to be, I think there's like two different types of CEOs. I am very much of the like, get my hands dirty, really in the weeds and actually build and create. So the way we've organized the company, we have essentially different business teams, if you will, that own different parts of the company, right? Whether it's the loyalty team that owns the rewards and benefits part of the product, whether it's our marketing team that owns our acquisition and brand, Or our growth team that works with our Belt Alliance real estate partners. I spend very little of my time managing people because we have such rock stars that lead each of these teams. What I do is at any given day or any given week, what are the three most urgent fires or priorities? And I spend my time going deep and actually executing and solving those. So it's like right now we are rolling out a payment solution for every apartment building to collect all rent payments through built. So whether you pay by check or ACH or credit card or the built card, we collect a hundred percent of payments. That is my number one priority because that is our long-term distribution advantage over anybody else ever entering the market. So that is like number one. And I spend a good amount of my time personally on phone calls and in meetings with every real estate team, whether it's with their accounting teams, the technology te…

AI assessment note: “what are the three most urgent fires or priorities? And I spend my time going deep”

Q Totally. So that's what I'm getting to. Let's just say you've raised around two hundred million, like in that vicinity. Why raise money? Why have VCs breathing down your neck when you had the freedom to control your destiny exactly how you wanted to?

A To be clear, we didn't allow a single VC into this company up until actually just a little bit recently. Um, I, I think entrepreneurs should do everything in their power to not allow venture capitalists to come into their business. VCs don't generally understand how to run a business. They generally don't understand what your business needs are, and their incentives are not necessarily aligned, especially in the early days. I think as you get later stage, it's a little bit different as you prepare for IPO type markets. For us, we asked a really simple question. Who are the most important stakeholders for us? It's the consumers, and it's our real estate partners, and it's the banks. So we went out and the reason we raised money was to create aligned long-term incentives with all of our partners. And so all of the money we raised was from real estate owners, the banks that we work with, Wells Fargo, Mastercar, the payment networks, And that was it.

AI assessment note: “the reason we raised money was to create aligned long-term incentives with all of our partners”

Q So, so let's just use like you as the example, but I think this can be extrapolated to other founders that that million dollars from ampush that's kept in escrow. What happens now?

A Yeah, so, you know, we, we left a million bucks, uh, there. We tried to wire it today, uh, after that announcement, and it's not getting wired, obviously. What, what, you know, I don't know, is a short answer, no clue. I think the smart people I've spoken with said, well, look, 250,000 you'll get, and you'll probably get it next week, because it's insured by the government, which is nice. And then the other seven 50, like, you're in line, you're, you're, now you should be a senior creditor. To whatever this, you know, receiver, when someone says receivership, that means bankruptcy. It basically means you've been put into bankruptcy so that somebody else can over watch the, like, liquidation of something. I think there, I've heard lots of rumors, unsubstantiated, of course, that, like, they will get bought over the weekend, like JP Morgan or somebody's going to come in and buy them because now that the government stabilized it, someone could finally.

AI assessment note: “250,000 you'll get... and then the other seven 50, like, you're in line”

Q So let's talk about how did that end up happening? I don't know if you paid attention to it, but you can take it on because I've been talking a while.

A Well, yeah, yeah. So like, basically, just, just to sum up what you said, basically, Silicon Valley Bank Their deposits grew threefold over the course of three years. There was only so much that they could do with their increase in deposits. There weren't that many, there weren't three X the number of startups that they could lend money to. So they had to invest in something to get their yield so that they were making more yield than the, uh, basically the, the, uh, yield that they were giving to their depositors. Those were mortgage backed securities. The rates of mortgage-backed securities moved up a ton, which basically means the value of eighty billion dollars worth of mortgages went down significantly. They sold those mortgages or twenty-something billion of them at a, I believe, a two billion dollar loss. And, but, but my understanding here, and correct me if I'm wrong, is that actually isn't what created this whole issue.

AI assessment note: “Silicon Valley Bank Their deposits grew threefold over the course of three years.”

Q Do you remember any of those early ideas that you didn't push forward with?

A Oh, we had lots of them. I mean, like dog rental, uh, we, we had one that we had dog rental entrepreneurs out there. We had, uh, one that we started moving forward with. It was a financial accounts aggregator. They would connect all of your financial accounts, put it in one place. So you could track in one place. Um, you know, some of you may have heard of mint that launched and it launched, like we've been thinking about this for a couple of months and we saw that thing launch and we're like, whoa, they've nailed it. There's like no chance for us. And so we went back to the drawing board and fortunate for us, uh, we came back to this idea of local services, which turned out to be a 10 X bigger idea. And the motivation there was, you know, Amazon's making it trivially easy to buy any product and the same should be true of any service. And so we, you know, were ambitious and naive and just jumped in and started working on it. And it's certainly harder than we ever expected. Uh, but we've made great progress and yeah, we're, we're closer to bringing that vision to life than we ever have.

AI assessment note: “I mean, like dog rental... one that we started moving forward with. It was a financial accounts aggregator”

Q Jonathan, I've listened to you tell, um, a pretty amazing story. I want to say it was like seven years ago at this point, the story of, uh, McCann. Um, can you share just the, the journey of your experience with McCann and the impact it had on you? Because I also think it's an amazing bridge. Between what you built at Thumbtack, but also what you're doing at Athena.

A Yeah. Uh, so. You know, when Thumbtack was scaling up, we had all these service pros, a handyman, a DJ signing up and they would create profiles where they describe their services. And, you know, it turns out a plumber is great at plumbing, but not very good at writing marketing copy about themselves. And so. Marco and I would rewrite all these profiles by hand to help them put their best foot forward, and we did this for the first few hundred service pros thinking that there's this, like, broken window theory where if we did the first hundred then, like, everyone would raise to that bar, but that turned out to be totally wrong, and it was clear we're just gonna have to proofread these things forever, and so I put a job ad up on a site called Odesk at the time, it's now Upwork, and we had, for proofreaders, and we had Applications from all around the world, from Philippines, India, you know, Jamaica, the United States at all price points. And so I thought this was cool. Uh, I'll run a couple dozen people through a practice test and we'll see who wins. And to my. Absolute amazement. This woman in the Philippines named Mikan beat the Americans and everyone else, not just on price, but on quality. She was a better English proofreader than Americans. And so this just like was a jaw dropping moment for me where it opened my eyes to this world of talent outside of America. And obviou…

AI assessment note: “This woman in the Philippines named Mikan beat the Americans and everyone else”

Q I need, um, I need you to talk about one more. Sorry. I'm just, I can't stop thinking about it. Is your, your, your interest in and your delegation of things, uh, containing phthalates?

A Uh, sure. Yeah. So, I mean, uh, the first thing I, like with our EA, we, we had our first create a digital health record. I've always wanted like all my health stuff in one place. And so I was like, Hey, can you reach out to every doctor I've ever worked with for the last 20 years? Um, from my email and asked for all our digital health records. And so we pulled all of those in and had them in one place and that felt good. Um, and then I was listening to this podcast, uh, by Shanna Swan on Rogan. And some of you may have heard of her. She basically, um, there's this mystery. There has been a mystery about testosterone falling one percent per year for the last couple of decades and miscarriage rates increasing one percent per year. These are like bad trend lines and people weren't sure what was behind this. And her theory is that it's a phthalates, which are this chemical in plastic. And basically, uh, it's in plastics and cosmetics and chemicals. It's like Everywhere. And this chemical disrupts your endocrine system, which lowers your testosterone, which means bad for you as an adult, but really bad for, um, babies and kids. And so, you know, if I didn't have an EA, I probably would have honestly like listened to this podcast and be like, well, we're screwed. What am I going to do about it? I mean, it's like, I've got lots of other things on my plate. Um, but since I have, you k…

AI assessment note: “I said, Hey, here's a book on this topic. Will you go read it?”

Q OK, let's talk about what what are your top marketing initiatives? Like, how are you going to go out and market this thing?

A Yeah, so there's a few things I'm doing. One is I'm planning on creating basically a daily TikTok or vertical video content that's going to drop. It's going to be people playing the game. It's also going to be a lot of competition type content where I sit outside in Hoboken with a board, and it says hit a bullseye, win a hundred or a thousand bucks. I'm going to do, like, head-to-head videos where I'll get two friends. They'll bet each other Either money or, like, an act, and the, the winner gets to do something to the loser. So that's, like, the organic content I'm creating. Now, bringing in the creator piece of this, I'm talking to a few big-time creators, and I'm trying to decide if it makes sense to work with them. So I'm talking to some- It feels premature to me.

AI assessment note: “there's a few things I'm doing. One is I'm planning on creating basically a daily TikTok”

Q You just mentioned this idea of charging more, and I feel like you'll have a good story about this. How did you decide, uh, what to price one 800 got junk services at?

A Yeah, so I looked in the papers at the time, the classifieds to see what the competitors were charging, and I came up with sort of a middle rate fee of a 130 dollars a truckload for a pickup truckload. We ended up on the front page of our local newspaper, and there we were, the rubbish boys, a phone number, the whole bit, and it was unbelievable. We got a hundred phone calls in 24 hours, and it was so awesome to, to get to first experience that free press. The only thing I was upset about with that media hit, and it drove me nuts, is they got our pricing wrong. They said it's only a 138 dollars a load, so they were off by eight bucks. Which, for me, as an eighteen-year-old kid, I'm like, oh my gosh, this is awful. This is gonna destroy our business. And then I realized, well, no, everybody called. Everybody was still interested. So we kept the rates at 138 instead of making it a mistake. That was our new rate. Then we realized over time that to be positioned in the market as the best junk removal company in the world, which we then became, It was to price accordingly. The cheapest in the world of Walmart, big box retailers, it's the ones that are super hyper efficient, that can run a massive business with very, very tiny margins. In services, it doesn't work that way. The biggest and the best in every market, let's call it HVAC or window washing, doesn't matter, is usually gene…

AI assessment note: “I looked in the papers at the time, the classifieds to see what the competitors were charging”

Q role as CEO of Morning Brew in April of 2021, and, um, my co-founder Austin, who was the COO of the business took over at that point, I found that to be very difficult, um, because I, I found myself to feel insecure About not being good enough at certain things to continue doing those things. Did you ever feel those feelings, or how do you think through that transition?

A Yeah, I mean, getting vulnerable here, it, it is hard on the ego, right? So, as an entrepreneur who, me, built things to a hundred million dollars, and I had a COO in place that didn't work out, and I had to get that person out, my franchise partner said, Brian, you're, you're not, like, with all due respect, you got rid of this person, but you're not it either. You can't grow it, you can't scale it, and while I was looking to find this next person, Eric Church, who we found, Everybody kept telling me what a terrible job I was doing. And I just felt crushed and hurt. I'm like, nobody believes in one 800 got junk more than me. I bleed blue and green. I love this business. And everyone's like, yes, we know that, but you're not good at getting it to the next level. You've hit a ceiling and you can't do it. And they were right. So I had to accept it and it was hard. But once I accepted that someone can, can do it better, my role became as the leader to find that person who can do it better. Allow them to do it better. Get the hell out of my own way. And that's when things started to grow. Eric took the business from a hundred million to the combined family of the three brands doing seven hundred million. I couldn't, I couldn't have done that. We would have lost the business. We would have bankrupted it. I just, it's not me. And so that's been the gift in that sort of ego reset for …

AI assessment note: “it is hard on the ego... I had to accept it and it was hard”

Q What sort of structures have you created for yourself and your business so that you're effective with your time? Because clearly you figured something out that works.

A Yeah. So ADD is real, as you know, and I don't know to what level my ADD is other than off the charts. Like I, I mean, even like, I'm glad you're in a little box right now so I can stay focused on you, right? Like it's, it's hard. And so I've got these life hacks or whatever you want to call them that are systems, structures, you said, that allow me to stay focused, that kind of gamify my own life. So here's a couple of them. Number one is I'm a big believer in screen time. On my phone. So Apple's screen time. I set it up with all these limitations. I give my phone to my assistant and I say, can you enter your password? She has the password to my screen time. Not me. I can't make changes.

AI assessment note: “I give my phone to my assistant and I say, can you enter your password?”