The Exchanges

Q you were kind of, let's just say, in, like, chapter one of Gumroad building for, you know, again, this, like, billion-dollar valuation, this hypothetical IPO down the road, Do you, do you think like a lot of this was just kind of driven by your own story of, of how you attributed self-worth to yourself and kind of those end points you just associated with importance, i.e. self-worth for Sahil?

A Yeah, totally. I mean, I think everyone has a level of insecurity in terms of like, I remember as a kid, like learning about Like just being a professional, you know, like the difference between someone who plays tennis and like a professional tennis player and being like, holy shit, you can be so good that at some point you just make, start making money. Like people just start paying you for that. And that became my goal. Like I started freelancing doing web design when I was like, 13 years old because I was scared. I was like, what the hell? Like I have to be good enough that like people will just like pay me money to like make pixels. Like that seems weird, you know? Uh, but it was possible. It worked. Uh, so I do think a lot of people have that, and I, I honestly do think, like, even the billion-dollar outcomes are often driven by just, like, this desire to be, like, can I do it? Like, is it actually possible? Um, you know, and I think it's good, like, it's good for society that we have this, these impulses.

AI assessment note: “Yeah, totally. I mean, I think everyone has a level of insecurity”

Q We're actually hiring the person who values a high growth startup may become impossible because they want to work at a high growth startup. The second piece to it is, okay, that's your, that's kind of your model for who you want to hire. How do you actually put that into practice? What do you, what are like the spidey sense or things you look for to get that person?

A So I actually think, and I saw someone say this and I totally agree. I think the movie social network kind of Changed the entire world of startups. Before that, right, like, when I graduated college, and I'm a few years older than you, startups were a slightly weird thing to do. It was kind of strange to want to go work at a startup. It wasn't a thing everyone did. At some point, I call it the social network effect, may be related, may not be related. Startups became trendy. They became cool. They became the place for random people to go, and a lot of people would approach a job search whereby, you know, they may work for Deloitte, They may work for Facebook, or they may work for a startup. Those are exactly the kinds of people I realized were not a good fit, because they don't specifically want all that a startup entails, which is, at times, it can be the most exhilarating work of your life, but it can also suck. And you want someone who really, really wants to be at a startup, because otherwise, when things get hard, they're not the people you want to be in the trenches with. So a great way of sussing that out is, whenever I'm talking to candidates, finding out Where else they're interviewing? Like, if there's an executive who is seriously weighing us versus Facebook, it's likely not a good fit. Like, we're not going to be able to pay anywhere near as much. We're, like, they'…

AI assessment note: “finding out Where else they're interviewing? Like, if there's an executive who is seriously weighing us”

Q like masquerading as As one of those talks when it really should have been a more structured, uh, talk that actually had an outcome and an agenda. And one last question on meetings is, uh, do you have a cutoff on number of people to have in a meeting? Do you think, like, once you get to a certain number, just ever the marginal benefit, uh, continues to go down?

A Yeah, we, I would say there's not, like, a strict rule. We try to limit it to three is really the number, but there were absolutely meetings where it's useful to have more. Like, we have a weekly, uh, The whole engineering team meets once a week to go over anything relevant to the whole org, and right now our engineering team is only 10 people, so it's not a huge meeting, but these things can become really onerous. I, I have a friend who runs a larger company than I do, and the problem is once somebody gets invited to like the exec meeting You, you, it's really hard to then uninvite them. They feel like they've been demoted by not being invited. And this is weird to me because like, if somebody told me I don't have to go to a meeting, I'm thrilled. I, especially cause I know I can always watch the recording later, but there is a poll to like being in the meeting where these things are happening. I think it becomes less important as people get used to our culture. Cause all of our meetings, including our one-on-ones are recorded and shared by default to the whole company. So our board meetings, generally speaking, are shared with the whole company. And so people can see what we're talking about. It's not a secret. So people don't feel like they need to be there necessarily because they can still see what, what's being discussed. So, uh, I would also add that we, we do have water…

AI assessment note: “We try to limit it to three is really the number”

Q Um, I should have asked this in the beginning, but I'll ask it now. Why did you decide to start tracking things so methodically by the 15 minute end? For, for people who are listening that maybe want to, uh, embark on this maniacal journey like you, how does one actually go about tracking by the 15 minute over an extended period of time?

A You know, it's, it started out of necessity. I was doing a lot of consulting work, software development, contracting work, and I just had to keep track of what I was spending my time on in order to build the right people, and so it came out of necessity. Just, I spent 30 minutes on this project, I spent 90 minutes on this project, and being able to retroactively go back and build those people the correct number of hours was ultimately what started this, and then I started to realize I started adding more and more of what I was doing to my list, and so knowing how I'm spending my time, some of these things, like, I keep track of how much time I spend with my wife, and some people find it weird that I have that in my calendar, but it is a real priority for me to know that I'm spending an appropriate amount of time, and I mean that in, like, the positive way. You can get a whole week and see, holy cow, I only spent three hours with her this week. That's really bad. I need to change my priorities. So knowing how you're spending your time and having a record of that allows you to just live the values that you, you have.

AI assessment note: “it started out of necessity. I was doing a lot of consulting work”

Q a podcast of, uh, Keith Raboi, who, uh, Turner Novak was interviewing him about, uh, open store and Keith's perspective is he is super anti hybrid or remote work, uh, where his view is founders fund. We'll only invest in companies that are almost entirely in person. Uh, and I would say that is a relatively contrarian view than kind of what people talk about today. What's, what's your perspective?

A So, um, I think all things being equal, if you were to ask me, I would be like, yeah, I would love to be at an in-person company. Like I, I would think, I think there's something to that, especially at those early days, which are an early stage company. I think it's almost impossible to do it remotely, though. There are a lot of examples of companies who have, like, I think GitHub from day one was remote all the time. Um, the, the, for us, the situation we're in is like, we also have to look reality in the face and be like, 80% of our workforce is not here. So how do we build, what is reality and how do we build toward making that reality as productive as possible? Um, and so while I, I would never shirk from it, I do think in person is it. We also have like a lot of our teammates who we have to make sure we have awesome experience. And that's kind of what I was looking to before. Um, I do think over time, but it seems to be shifting to like People are kind of getting back in the office. Um, the nuance there though, is companies like us, the, the advantage of remote work is that we can kind of hire anybody anywhere, right? So all of a sudden that you open up this really big workforce, we're able to hire people. I'll use myself again from Cleveland, like some awesome engineer sitting in Cleveland. You can go get her.

AI assessment note: “if you were to ask me, I would be like, yeah, I would love to be at an in-person company.”

Q All right. Next question is from Jessie P. Uh, she asks, what's it like launching a new business and being the chairman from day one?

A I think to answer this question, I first need to provide context on like why I wanted to be a chairman day one and not be a CEO again, at least for now. And the reason is, is first of all, spending five years as the CEO of morning brew and eight years on the business. I would say I had a pretty good perspective on just the amount of time and effort it takes to run a business and the amount of trade-offs that you have to make in your life in order to do that, and I think where I'm at in my life today as, you know, someone who's married and I guess settled down in Hoboken with a dog, it looks very different than my willingness to make trade-offs for the other things in life when I was a senior in college, so that's one piece of it. The other piece of it is After stepping out of the CEO role of Morning Brew and reflecting on how I wanted to spend my time, I generally got a sense of the buckets that I want to spend most of my time on. I wanted to spend time starting or operating businesses at just the early stages and then getting hands off. I wanted to spend my time talking to founders and potential founders. I wanted to spend my time consuming content and creating content to build up my distribution online. And I think the only way To actually do those things well is to not run the day-to-day of a business full-time. So that's the first piece. The second piece is, as I've become …

AI assessment note: “as I've become chairman for StoryArb, it has made me start to think”

Q and I see a Uh, human, AI, uh, humanoid robot business, and I, the question I ask myself is you talk about being driven by having a large impact that when you're 80 years old, you look back and you're like, damn, I did some, like, pretty awesome work that helped the world. How do you figure the, the through line of these three businesses that plays into that motivation?

A Yeah, I mean, I think there's some, like, um, escape velocity needed for any entrepreneur to get into hardware. I think that's just, like, really tough. Like, I think ever since a kid, I was like, I wanted to work in hardware, wanted to work in more challenging areas of AI development, and I feel like, for the longest time, I always felt like I needed, like, a substantial, you know, capital injection personally. I needed, like, a long runway. I needed credibility to raise a lot of capital, to do big partnerships, have, like, a big group of people join me. Um, so like when starting vetery, I, I ultimately really excited about how much time we spend in the workplace. Like outside of spending time with loved ones, you're, we're at work most of our lives. Not everybody has the most Enjoyable experience at work. Looking for a job is, is just like, uh, it's a terrible experience. Like it's so hard for both sides. Like if you're employer trying to hire, if you're like a job seeker, it's like applying to a black hole. It's hard to, I guess, hard to know who's hiring. It's hard to get in there. It's, you know, generally historically has been very, like not been a very, uh, it hasn't really been a meritocracy in so many ways. So ultimately wanted to work on Kind of that labor problem when starting, you know, when starting Veteri, I think it's like, was, is and still is a really important…

AI assessment note: “I think there's some, like, um, escape velocity needed for any entrepreneur to get into hardware.”

Q a house. It takes a very specific type of brain to be willing to do that when two sentences ago you said how, like, it was brutal, you weren't making any money with Vetteri, you had to borrow money from friends and family to pay for your rent. How did you rationalize at a point in time where you could have easily de-risked yourself, basically risk-awning with your next business?

A At a point when we sold Vetteri, I really at that point had Maybe built, like, 10 or 12 companies. Some failed, some worked, and I, I, at that point, I felt like I knew how to build a business. I knew how to recruit talent. I knew how to do the engineering work. I knew how to ship products. Like, I knew how to fundraise. I knew how to exit. Like, basically, across the board, I felt, um, Yeah, just much more capable, and I, last five years, seven years, I was conditioned to eat nothing but like peanut butter and jelly sandwiches, and like, have like no personal burn. So, And I realized, kind of, post-acquisition, I, I didn't really care about the money. Like, I don't have a fancy car. Like, I don't wear fancy clothes. Like, I just, I don't go on fancy vacations. I love, like, building stuff. Like, I really love, like, you know, I don't play golf on the weekends. Like, come to the office. So I realized that, like, my favorite thing to do in life was to work on really hard problems. And so, um, one of the problems that I experienced dead on and with Hard tech, deep tech, is there just not a lot of people that fund that. Like, there was no, there was no real venture groups. Prior to, like, Tesla and SpaceX demonstrating, like, you know, fourth rock in orbit in a Tesla model, you know, Model S, there was, like, there was no venture groups really in there. Uh, and, you know, same for…

AI assessment note: “I realized, kind of, post-acquisition, I, I didn't really care about the money.”

Q of it as like these three or And the business before that you thought about it as these like three lines of revenue. Do you think about things in the same way with prey where it's a media company that can be monetized in a number of ways? Just give me a sense of like snapshot of the business today with kind of the metrics that matter most to you.

A Yeah. So today we've got three primary lines of business, right? So, you know, pray.com right in, in the meta version, pray.com digital destination for faith. We are this magnet for people that want to consume incredible faith content. And then within that, we've got our consumer subscription business, which is our premium content that we sell subscriptions to. And that's about 10% of the content in prey. Then we have a bunch of free content that is powered by ads, right? Ad supported is, is what this is often called. And these are original podcasts that we produce. So one example of a podcast that we produce is called Bible in a year. You could go listen to it at Bible in a year.com and Bible in a year is inside of the pray app, but it's also on Spotify. It's also on Apple podcasts. We put ads in there. So we get ad revenue. That's this kind of third part of the business.

AI assessment note: “today we've got three primary lines of business”

Q What are the signals you have to yourself?

A For me, well, when I, like, really feel anxious, I, I actually feel a weight. Like, I, I feel pressure on my chest. I wouldn't say that I'm actually there. I actually, what's creating stress for me, and we've talked about this in previous episodes, is that I like Feeling like I'm in a routine where the day before, or the night before a work day, I've like listed out what I'm gonna do, I have my full schedule, I do the things I say I'm gonna do, and I feel like I haven't had the ability to really do that in two or three weeks, which feels really shitty, because I, almost like the feeling of disorganization, when I feel disorganized, I don't feel good.

AI assessment note: “when I, like, really feel anxious, I, I actually feel a weight.”

Q Because people pick up on what is currently novel. So I think that makes a ton of sense. Okay, so let, let's fast forward to today. Today, give kind of the summary on the business. Uh, how big is the business? Like, what, what will, what are you hoping top line will be for the business in 2023? How big is the team? And how big is your YouTube now?

A Sure. Um, so let's start with the views. Last month we had three hundred million views. We added about 200, give or take 200,000 net new subs across our platforms. Um, and our big achievement, our second YouTube channel finally got 200,000 subs. Um, so that's fun. Um, yeah, like revenue is our number one. Target. It's always like views and followers. Um, and what we really look at is how many followers we're getting for those views, because that means people are really committed to you now as a creator. Um, so like that's starting off there. And then for revenue, our target for this year is 15. Um, like we're barely above 10, just so everyone out there knows we're not huge. Um, I think there's a real cap to our market though, because we're such a, we're a niche business no matter what we do.

AI assessment note: “for revenue, our target for this year is 15. Um, like we're barely above 10”

Q book. Like a lot of people are doing this now. And he's like, I have no idea what I'm going to write about. And they were like, just look at what your most trafficked article is ever. So I think just to me, an interesting lesson there is how do you just keep sizing the bet with time or money more and more as you get some level of signal?

A I think the whole back to the newsletter thing, like I, I, every time an entrepreneur says I have this idea for a B to C thing of blah, blah, blah. I'm always just like, cool. Why don't you start a newsletter around it? The, you'll learn your customer better. You'll have some basis to launch something off of you'll validate whether or not people care about this issue or not. The other thing I like about it, by the way, is, and I don't say this, but I'll say it here is it's going to prove to you how hard shit is. Cause getting a newsletter, getting a, uh, 10,000 people to sign up for a newsletter about whatever you think is a really big problem they have in the world and topic. If they, if they weren't going to sign up for that, you'll see how hard it is to get Twitter people out there and, you know, and Twitter signing up. You'll see how hard it is to get people who they're going to unsubscribe from your thing. So it actually puts you through the ringer, especially for first time entrepreneurs who haven't experienced like how challenging the stuff can actually be to get going. And that's the other reason I love it. I think my favorite one for B to B businesses is like make a 10, 15 slide deck. And set up 10, 10 to 20 meetings and pitch it. Pitch the thing, sell it, and see if anybody wants to buy it. And even if at the end of the call, they go, yeah, I'm in. You go, okay, cool.…

AI assessment note: “Why don't you start a newsletter around it? The, you'll learn your customer better.”

Q And how does that work, by the way? How do you actually get organic traffic from their audience?

A Yeah, so like this is the whole game. I would say it's very similar to like the Product Hunt game or, you know, there's probably other analogies for where you, for, uh, Hacker News, etc. So the whole idea is, and I'm actually, I decided to work with an agency that is like a Kickstarter agency. Uh, it's, uh, they're 8800 bucks that I'm paying them. Uh, for the next four months. And basically the, the whole trick is building up an email list. So you want to build up a really qualified email list before you launch your campaign. And what they actually have you do, this agency, is they have you build a landing page where you send people to your landing, the landing page with your product. They first put their email address in, and after putting their email address in, it prompts them to ask if they want to reserve a spot to get their Kickstarter product, your, like the Kickstarter product, At the biggest discount possible.

AI assessment note: “basically the, the whole trick is building up an email list.”

Q founders who are listening to this are wondering is like, how do you know when is the right time to sell? So it seems like in the context of your business, John, who was the CEO of the business, like, He was ready for, for a change. It was that the primary driver for why you guys were looking to sell and push? Was there anything else contributing to it?

A Yeah, I think it's a great question. I mean, you know, in, in, in, in, I, I think what I will say is I think most founders undervalue how important it is that they, it's a personal, it's such a personal choice. So in the case of John, I mean, John was like, Hey guys, you know, we're going to sell this business or, or I might, you know, I need to, I need to change the scenery one way or the other sort of, right. That was kind of, and we're, we're best buddies and trust. So that it wasn't like he was going to surprise us with anything, but he was also raising a flag going, guys, I'm, And that was the CEO version, professional CEO version of the founder version, which maybe happened to me in 2015, 16, which was like, I've worked really, really hard for a long time and I'm ready for something different. And I think like way too many founders who are great tacticians and try to get the answer right all the time, go, what's the right time? Is it optimized? Is the valuation optimized? All these other things optimized. And you, with enough years under your belt, you realize that stuff is far less important than am I ready? And is it the right thing for the people in the company? And so I think in our case, it was Everybody was ready. You know, like it's, if it was going to be the holdco, we would have probably owned it for a really long time, but now that it wasn't, it no longer made s…

AI assessment note: “most founders undervalue how important it is that they, it's a personal”

Q So on that note, my understanding is first two years of Thumbtack, you slept in a closet and you were rejected by 42 VCs. What was the biggest reason people gave no's?

A Uh, I mean, all the reasons we weren't making any money. Um, there were lots of dead bodies. Lots of people had tried to start a local service marketplace and failed. And, um, we, you know, had a process for signing up lots of service pros at scale. That was pretty, pretty cool, but we hadn't figured out payments or invoicing or, you know, how to make money and all these things. And Um, yeah, the first few years were really tough. We didn't have any money and it was just a small team of 10 of us working out of a house and it's kind of the like do or die and you work All day long, all night long, and just hope you can survive to fight another day.

AI assessment note: “we weren't making any money. Um, there were lots of dead bodies.”

Q uh, first of all, how, are there any things that you do to your calendar to try to make context switching easier? Like, are you working on all of these things all days of the week? Are you blocking out certain times for the type of work that's most annoying in your day to get that done first? Like, do you do anything to help yourself with all this switching?

A I put on my calendar, you know, after this, I'm going to record content. Uh, if I, if something's due to a brand that I'm creating, uh, for a partnership, like that's on the calendar. And if I have to create content for that and it's due on Wednesday, Monday, it's on my calendar and my assistant's here. And he like is amazing Tyler and helps me kind of organize myself, prepare for that. We're looking at, you know, Hashtag, you know, add all the things that you have to draft. There's such a level of detail for that stuff. But right now I would probably ask advice of you two on how I could better optimize that because as an ADD entrepreneur with a lot going on, I think I could use some inspiration.

AI assessment note: “if I have to create content for that and it's due on Wednesday, Monday”

Q Was it, uh, was it Ampush bought it? Got it.

A Yeah. Ampush bought it. And, uh, the, her story was in 2012, she got obsessed with Birchbox and all these subscriptions. She just started writing about them online and, you know, just purely passion. I'm going to write about this category. I love this. I'm going to order them on a review them. And like everything like that, it started to snowball. Other people who love them started following her. To the point where she had a multimillion dollar EBITDA business, but it started as a side hustle. Um, and so I, I think like pick a category again that you, that you love, that you know of, and just start writing about her or, or some way contribute to content. I think you could totally do it on the side, but then it gets the scale of media over time.

AI assessment note: “Yeah. Ampush bought it.”

Q It's, uh, it's nice foreshadowing for us talking about your domain story in, uh, in, like, 30 minutes. But, Sophia, what's your view on side hustles? Like, are, do side hustles work for you? Do you have the same definition as Jesse?

A Everything is not everything, but a lot of what I start is not as it could be more strategic business class was actually a really strategic effort to build a side hustle, but it has kind of after a year and a half become a bit of a front hustle, which I'm trying to figure out how to change. And even though we only launch it on a cohort basis twice a year, the amount of push and prep that that takes and promotion And ad creation and ad strategy creation is a lot. Um, and so I'm putting business class on evergreen, which I haven't talked about or announced, but that'll happen at the beginning of next year, which, you know, I'm going from, wow, I have the summers off. I only launched this twice a year to, okay, it's on all the time, but it's on drip, right? Someone can join. It's a rolling enrollment period. Um, it's a little, maybe more passive, but We have to keep onboarding people and keeping them happy in the first several weeks as they join. Um, and so it became a bit of a front hustle.

AI assessment note: “business class was actually a really strategic effort to build a side hustle”

Q And what is that? What does that look like look like? Is that literally like, you know, digital, uh, is that digital files of all marketing materials? Is that Language you use with customers. Like, what does that actually look like in practice?

A Yes and yes. So we're big into scripting things to not have anyone sound robotic, but to know the framework within you, with how you play. Here's how we show up to the customer. Our sales center agents, when they're answering the phone, the customer can't see them, but we still teach them to smile because you can hear the smile. So it's how we train people. It's how we recruit people and it's how we operate the business. So again, we're not absent of innovation. But we err on the side of let's build momentum on what we know works really well. Let's do more of that. We're a PR centric business. Let's continue down the storytelling track. We're in a guerrilla marketing business. We park our trucks, all 2000 of them in high profile visible intersections for people to see. Let's do more of that. We're trying, we always try consciously not to be all things to all people. Let's pick what we're great at. And go do more of it. And, um, and it's worked for us. You know, it's business, as you know, is, uh, it can be a simple formula, a simple recipe to get it right. But the execution of getting the alignment of all those people over and over and over to do it the way that we want to do. So storytelling, you'd commented before we went live on my background and there's sort of a whistlerish, uh, mountain cabin scene with snow and, um, We've got storytelling in our office like you wouldn't …

AI assessment note: “Yes and yes. So we're big into scripting things to not have anyone sound robotic”

Q You did a thread on finding operators for your businesses and what makes great operators great. And I think for entrepreneurs listening to this, even if they're not operators of say a laundromat or a carwash, I still think there's probably a lot of through lines they can take. So what. What similarities do you find in the best operators that you've placed in businesses that you've bought?

A Oh, yeah. I mean, a couple things. First, I really like to hire people that have done it before. I know this sounds obvious, but it's not obviously done, actually. Lots of people hire operators that have never done the thing before, and for the first hire that you make, that's really not what you want to do. You want to do the opposite of that. Um, the second thing I think is these people really have to have a pretty high pain tolerance, because you have to assume that if they need to be able to take the work off your plate, you don't want to do. And so that means that there has to be a level of humility And grind and hustle that, um, that that human's going to have, and it'll feel weird for you to push the stuff that you really don't want to do, you know, for that individual. You know, some of the other stuff I've found with the best operators overall is the best operators are typically those who are super systems and processes oriented, because these aren't starters, you know, you're a starter, Alex. A lot of people listening are probably one of the two, a starter or an operator. Um, And the best starters typically aren't the best operators. We have to like morph into that. It's been a struggle for me over the years. I have to hire people to be my operators because I'm not detail oriented enough or, um, you know, relationship management of the business enough to kind of see i…

AI assessment note: “First, I really like to hire people that have done it before.”

Q And, and just in that point, like when you say the language of deal making, what does that mean? Is like that the actual, like the, the idioms and phrases you use in deal making, do you mean something else by that?

A Multiple things. One, terms. Really, really important. And the terms are complex. You know, it's what's the periphery to return. It's who has the rights to the IP, who licenses it for certain amount of time. What is the difference between licensing and royalties? Um, you know, what's a liquidation preference? What's a one X versus a three X? All of those things are actually pretty intimidating to people. And like, if you're not in our world, you're probably going to have to Google it, you know, unless you subscribe to the morning brew and you're reading their financial terms stuff, right? But, um, but for the, for most people, they don't even know the language. So if you don't speak with the right words, then you can't master anything, right? You're not going to be able to give a Ted talk if you can't speak English in, in English format. And so I think that's first, but then you have fun with like the two Oh two level, which is, we haven't talked about this. I was like, all right, if I was Alex, you were like trying to, you wanted to like renegotiate a lease or something somewhere. Remember? And I was like, oh, You were like, I'm just going to pay into it. I'm like, whoa, whoa, whoa. Like, no, we got to negotiate this, and this is how we should play this game, and here's what he cares about, and here's what you might say back to him, um, and here's why I think you could get tha…

AI assessment note: “Multiple things. One, terms. Really, really important. And the terms are complex.”

Q You, one thing you failed to mention is that you were a journalist first. I'm not sure why you failed to mention that, because it's a very important point. How did you decide to go from journalism to finance, and what are a few skills you picked up in journalism that you actually think helped you in a unique way as you entered finance?

A One of the smartest things I, uh, have heard people talk about from a formula standpoint is Scott Adams' skill stack. Um, and what I didn't realize early on is that I couldn't have better picked a path for me to be a private equity investor, to run a media company, to be on the internet talking about things, then to stack the fact that I was a human trafficking and drug smuggling journalist on the back of investing at one of the largest companies, Vanguard, To then being at Goldman, to then doing all the PE stuff, to the whole time having that ability to write, ask questions, um, and really be curious about the world around me. And so most people in finance, you know, there's almost like a downside to being curious. People think, well, your intelligence must be lacking because you don't have all the answers, and that's how a lot of financial people think. And instead, what I realized is, oh man, I don't know the answer to this, and that has nothing to do with my IQ. It just has to do with the fact that I do not have this particular piece of input. And so I think that took me a lot farther than most because I was never scared about looking stupid. And then now that I run this media business, I realized, wow, in order to invest, you have to ask the right questions so you don't lose your money. And in order to build a media company, you have to ask the right questions and know the…

AI assessment note: “having that ability to write, ask questions, um, and really be curious”

Q to play roulette, we're going to look at interesting startups, and we're going to analyze them as both investors and entrepreneurs. So let's hop into this thing. Generative AI. It's something that you hear it, and I feel like I just get a bad taste in my mouth. They really need to figure out a way to rebrand this. What do you guys think about just this space in general?

A I think it's super fun. You know, I took a, not the deepest dive, but a deep dive yesterday and came up with some really fun stuff on Dolly and have been thinking about all of the incredible applications of it. And it's something that I understand that can be applied in a way that's, that the metaverse doesn't. You know, there are other technologies being built out there and gold rushes happening. And what I love about generative AI is that There aren't any clear kind of financial reasons for pursuing it. Like there is, but also it feels like people are pursuing it because it's an important and interesting technology and not an opportunity to sell real estate to Gucci in the metaverse.

AI assessment note: “I think it's super fun. You know, I took a, not the deepest dive”

Q Apps that lean into authenticity, being real, positivity, whether it's Be Real or whether it's, uh, paparazzi and other apps like it, um, it clearly is something that works. So I think the timing of this is great. What, uh, Sophia, what are some lessons that you think entrepreneurs who aren't building in consumer social but want to learn from gas's success thus far can take away from this story?

A Yeah. I mean, I think creating, uh, any kind of product that people want to share, that they want to engage with, you know, I've spoken about this a little bit. I did it with products. You've done it with your newsletter, creating, uh, you know, habits, right? You, with the morning brew, someone has a certain amount of time to open their email, see the most important news, you know, with nasty gal, it was like a lot of, like, it was like new arrivals constantly. Things sold out quickly. So there's, I think scarcity is a really big mechanism, which Be Real is capitalizing on. I think with TikTok, even the trends, um, are a bit of a scarcity model in terms of like, you need to get on this now. It's going to become outdated. Same with fashion, same with news. So engineering those habits, obviously, you know, a newsletter is probably a little bit healthier of a habit for somebody to build, um, Then, you know, clicking on TikTok and seeing what dance someone is doing, and there's a lot to learn on TikTok. I don't want to shit on TikTok, but this is something that I would say exists across both social apps and media businesses and fashion businesses at the same time.

AI assessment note: “creating, uh, you know, habits, right? ... I think scarcity is a really big mechanism”

Q Well, you need to lead this off, because you're actually doing it. For Jessie and I, it's just hypothetical, so what are you doing?

A All right. Well, I did it. So in twenty-twenty, um, I mean, I've done it three times. All of my business, no, no, no, no, I'm sorry. Nasty Gal did 20, 75 K its first year, but, uh, Business class. I launched it in the middle of COVID. We shot it in my house. It's a digital course for entrepreneurs. Um, it's like, it's, it's incredible. It's super comprehensive. It's like nothing out there. It's an amazing brand. And I think that's part of why it's been sticky and also people were at home. So there's very much a formula for building online courses and I had been watching it for awhile. I decided, you know what, the third time around, I'm not going to try to invent a business model. Uh, I've did it with my second business. It was kind of a media company that was called girl boss. And with this one, I'm using all the existing tools available. Um, and anybody can really do this if you have the knowledge to bring and you can leverage your audience or build an audience and share with people what it is that you have to teach them. Um, Um, it's an amazing way to go. And for me, you know, I was like, all right, I've been feeding these beasts for now, 13 years, uh, that are businesses that have, you know, with Nasty Gal, it was 200 people. We were at maybe 25 people at our largest with Girlboss, and I'm like, I don't want stakeholders. I don't, I want something nimble. I want something c…

AI assessment note: “Business class. I launched it in the middle of COVID... It's a digital course”

Q So I think you're spot on. And the interesting part is that those are all celebrities. You know what I haven't seen yet, which seems like it's your thesis, but maybe to push back on it is We haven't actually seen pure creators, like not celebrities, but creators do this yet. Like we've seen Mr. Beast, but like, is anybody still buying Beast burgers? Is that like still a thing?

A It's a great question. You know, I invested in Feastables, which is Mr. Beast's chocolate brand. And I think the whole thesis is that they'll go from chocolate into literally becoming, you know, the next Hershey, like hold co of candy. I know that the business absolutely crushed it. In the early days, in the first few days, they sold a shit ton of chocolate. Um, I don't know recently, but I also think this comes down to a question of, one, are you finding the, the right creator product fit? Meaning, is it a product that the creator's audience naturally is looking for and wants? And second, and I think this is the biggest risk, some creators, especially really big ones, they have so much shit going on, and they like the idea of building a business. And making money off that business more than the actual work that it takes to build that business. And so that's why I think at the end of the day, something like Terramana has been so successful because the business has been out, you know, now for over two years and still religiously, the rock is posting videos while sipping his tequila in his house every single week, multiple times a week. And I think that's actually the biggest risk in this model is you're putting a ton of faith in someone that could decide that A month into doing this, there's the next cool, hot thing that they're going to go jump on.

AI assessment note: “I invested in Feastables, which is Mr. Beast's chocolate brand.”

Q your paid newsletter. You'd have to be spending a shit ton of money borrowing audience from platforms that own that audience in order to possibly have a chance of driving the revenue you're driving today. And it, it both is not sustainable. And also it's not building for the longterm because it means if you haven't built this audience, How do you have affinity with the people you're selling to?

A Yeah. And it also feels a little, I mean, thankfully, since we never did it, and I know you didn't in the beginning either, is like, when you have to start that way, I think it also leads you to, you know, users. It's not just affinity. It's almost like disaffinity. It's almost like there's a negative correlation to ad spend. And so what if in fact, it's not only that you're stealing time. So you have a shitty click through rate is, as Chen says, but also that Every time you put an ad out there, you're also kind of pissing somebody off instead for every person, or I don't know what the actual ratio is that you get in. It's really hard to do stolen audiences with creative enough ads where they feel like you're not stealing your adding value. Damn hard.

AI assessment note: “It's not just affinity. It's almost like disaffinity.”

Q to do that. But you know, what you've talked about is consumption, right? You got obsessed with consuming personal finance content because you had no idea what the fuck to do when you started getting paychecks. What shifted for you to end up thinking about creation, right? You mentioned helping your friends, but did you have a passion for creation as well? Was that something that came naturally to you?

A Yeah, absolutely. I do think that that was kind of the flip side of the coin to where this became kind of a perfect storm. I have a very obsessive personality. I've always been that way. I get into something and then I, I cannot stop. I get very singularly focused on it and want to know as much as I possibly can. And I think that's why personal finance and some of the topics that are associated like healthcare are so intriguing to me because I almost get anxious when I feel like there's something important to know that I don't get. I'm like, no, I need to get this. I need to understand that. I need to know everything about it. And so I've always considered myself a pretty good writer too. That was like the one skill in school that English class was always very easy for me. I didn't really love math and science, but English lit. Like, I loved reading and writing, and so the transition to creating that type of content was pretty natural for me, fortunately, but it was more so focused on the blogging side of things and writing longer form content, and especially with personal finance, these are topics that I give creators that only do short form video a lot of credit because it's really difficult to convey a lot of these topics in Diving into the topic and getting into the nuances and the loopholes and, and things that I feel like are easier to do and kind of more fun to do in tho…

AI assessment note: “the transition to creating that type of content was pretty natural for me”

Q start another business, uh, how bad would it look to fail with the second thing after the first thing went well with morning brew? And so like, I don't, I don't think that ever goes away, but I guess my question would be, how did you break through that? When you knew that it was a very real anxiety that you had as you were going about starting this project.

A Um, we all have big dreams when we start something and seeing what you've built with morning brew is super amazing. And like, you know, really has been super inspirational, but something that I know that you talk about often is just really focusing early. So again, we want to tackle these huge obstacles. We want to sell our companies eventually and do big things, but you got to focus on the day to day. Uh, you got to focus. And one of my, um, guests, I have Williams, the founder of Twitter told me this, that If you focus on solving a small problem for a small group of people first day by day, that's how you're able to accomplish big things over and over. So yes, of course, we continue to want this to become a big podcast and, you know, speak with bigger guests, you know, every single time that we have an episode, but I'd say every single day, every single week, we've had these specific things that we've wanted to accomplish. They don't have to be big things. They can be small things like reach X amount of listeners, produce X amount of pieces of content on socials. Don't get turned down by this many guests in one week. So just by having these small little things that we can cross, you know, think about a marathon, you know, it's not just one small race. It's kind of continuing to have that focus. Um, that's been helpful in, uh, kind of removing a lot of that fear.

AI assessment note: “having these small little things... been helpful in, uh, kind of removing a lot of that fear.”

Q has lived up to some of the expectations you've had, but I also, I'm sure that you've learned a ton of lessons that you didn't even realize you could have learned before starting this thing. What has been the biggest challenge related to having this podcast? Has it been related to actually just, like, putting the content out constantly, or has it been balancing the podcast with your full-time job?

A I think the biggest challenge was, uh, something that I kind of overcame as I kept going and wanting to create this consistent content. But whenever we start things, I think there's a huge fear of failure, fear that this is not going to work out, fear that, you know, this can be a huge embarrassment to my credibility, et cetera. But we started out with this, you know, really strong. I say we, I started this with my best friend, Michael, Michael Holmes, who unfortunately did pass away last year. And it feels good to keep this going for him though, in his memory. Um, but yeah, we started this in A lot of guest rejections. A lot of people were curious, like, what the hell is this? And everybody wants to start a podcast, but pushing through that, the fear of embarrassment, the fear of failure was how, you know, we've been able to reach 80 episodes and have a wonderful time doing this so far.

AI assessment note: “I think the biggest challenge was, uh, something that I kind of overcame... fear of failure”