Oct 6, 2022 · 1h 23m · my-first-million
Asking A Billionaire Investor How To Prepare For The Economic Collapse (#371)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of My First Million, hosts Sean Puri and Sam Parr interview Tiny co-founder Andrew Wilkinson to unpack his contrarian strategies for navigating economic downturns, allocating capital, and acquiring cash-flowing businesses. The conversation spans recession stress-testing, asymmetric risk hedging, internal venture incubation, and counter-intuitive philosophies on personal wealth and real estate.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 55.7% of the talking time here. How this is scored →
The hosts as informed peer 6.0 Guest teaching 4.5 Guest disagreement 2.0 The hosts pushing back 2.6
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 25:32 Andrew rejects venture valuations as anchor bias
Andrew strongly pushes back on Shaan's venture buying thesis, arguing that a drop from 2021 valuations is deceptive anchoring and comparing early-stage VC to roulette.
Hardest push from the hosts ▶ 15:02 Sam challenges Andrew's incubation spending in a downturnSam refuses Andrew's premise of spinning out new business ideas during bad economic times, arguing that downturns require extreme focus and cost containment rather than added payroll.
Biggest teaching moment ▶ 1:09:40 Andrew explains hedging private businesses with market putsAndrew educates the hosts on using out-of-the-money index put options as an insurance policy against customer payment defaults during market crashes.
The host holds their own ▶ 1:04:47 Shaan details corporate salary band negotiation tacticsShaan demonstrates deep domain expertise by detailing how he systematically dismantled HR compensation bands and out-of-band exception memos at Twitch.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Electric Vehicles, Tesla Road Trips, and Niche Product Ecosystems | 6 | 3 | 2 | 2 | Shaan analyzes the peripheral business ecosystem created around Tesla owners, comparing them to Rolex and Apple communities. Andrew shares his experience switching from Tesla to a BMW iX, noting legacy automakers are catching up on EV features. | |
| Stress Testing Businesses and Recession Strategies with Andrew Wilkinson | 5 | 7 | 2 | 4 | Andrew details his framework for stress-testing businesses during a downturn and incubating low-risk businesses out of P&L expenses. Sam pushes back, questioning whether launching new ventures during a recession distracts from core focus and adds payroll. | |
| Managing Net Worth, Public Market Volatility, and the Mr. Market Mindset | 5 | 6 | 2 | 3 | Andrew discusses holding cash, T-bills, and Pershing Square stock, as well as coping emotionally with WeCommerce's market cap drop via Benjamin Graham's Mr. Market concept. Shaan adds to the conversation by citing Dharmesh Shah's principle that valuation oscillates around underlying value. | |
| Venture Capital vs. Buying Cash-Flow Businesses in a Bear Market | 7 | 6 | 5 | 6 | Shaan argues that falling startup valuations make early-stage venture attractive on a 7-to-10 year horizon. Andrew forcefully pushes back, claiming venture investors suffer from anchor bias and comparing venture capital to roulette versus buying cash-flowing businesses like poker. | |
| Get-Out-of-Jail-Free Phrases and Conversational Tactics | 6 | 2 | 1 | 1 | Shaan explains his personal catalog of conversational get-out-of-jail-free phrases and transition formulas inspired by Neville Medhora. The hosts and Andrew casually exchange effective idioms used to de-escalate awkward business situations. | |
| Why Write a Book and Sean's Butterfly Effect Story with Neil Senturia | 7 | 2 | 1 | 1 | Andrew mentions signing an agent to write a book about Tiny's journey. Shaan tells a long story about meeting Neil Senturia in college, demonstrating how a book functions as an evergreen tool to convert casual acquaintances into lifelong believers. | |
| Monetizing Access vs. Surface Area for Serendipity and Validation | 8 | 3 | 2 | 4 | Sam brings up charging high-ticket fees for meetings while traveling, which Andrew rejects as trading hours for dollars and exhausting performative energy. Shaan shares Brad Feld's concept of creating surface area for serendipity and frames content creation as aiming to be known well rather than well known. | |
| Powerlifting, Physical Transformations, and Social Media Humility | 4 | 1 | 1 | 1 | The group banters about Andrew's powerlifting routine and changing physical appearance. Shaan humorously mocks entrepreneurs who post thinly veiled humble-brags and thirst traps disguised as mental health vulnerability. | |
| Launching Dealmaker.co and Masterclass in Salary Negotiation | 8 | 5 | 2 | 3 | Andrew presents Dealmaker.co, a service that negotiates non-software corporate expenses for a cut of savings. Shaan demonstrates mastery in corporate salary negotiations, detailing how he interrogated HR salary bands and approval exceptions during his time at Twitch. | |
| Hedging with Put Options: Andrew's 2020 Stock Market Insurance Story | 3 | 8 | 2 | 2 | Andrew recounts using $500k of S&P 500 put options as business insurance during early 2020, which spiked to $7 million before being wiped out after re-betting the gains. He explains how founders can use public market derivative hedges as insurance against economic shocks. | |
| Why Billionaires and Founders Prefer Renting Over Owning Real Estate | 7 | 6 | 2 | 2 | Shaan and Andrew break down why high-net-worth founders prefer renting homes and taking interest-only debt over locking capital into real estate. Both articulate that personal primary residences act as liabilities rather than productive yielding assets. |
Statements from this episode (21)
Tesla's Competitive Advantage Is Overestimated Due to Apple and Google Software
“I just think that everyone overestimated their competitive advantage. And then at the end of the day, you've got all these legacy manufacturers and, you know, ultimately if Apple and Google are providing the interface that most people use, it barely matters, r…”
Puri: Passionate High-Net-Worth Ecosystems Like Tesla Enable Lucrative Niche Businesses
“It's like Rolex owners or things like that. Like these high net worth communities that are super passionate and they're locked into that ecosystem. You know, Apple being the biggest example of this, like the big, like the Apple blogs that's that were out early…”
Tiny Pivots $12M Rolling Fund to Secondaries and Minority Buyouts
“We have an Angelus rolling fund. We invest about twelve million dollars a year there, and I'm pivoting it to totally focus on secondary and minority buyouts.”
Tiny Incubated Software Negotiation Service Buyer for $50,000 Before Selling to Ramp
“When we started buyer, which is our negotiation service for software that we launched two years ago and we ended up selling it to ramp. So I think we started that business for 50 K”
Pershing Square Holdings Is Andrew Wilkinson's Only Public Stock Holding
“The only stock I hold right now is Pershing Square holdings.”
Wilkinson: Pershing Square Holdings trades at 66% of net asset value
“So it's a holding company that owns a bunch of blue chip stocks and it's trading at about 66% of the net asset value.”
Wilkinson: Pershing Square benefits from rising interest rates via swaptions
“They own a very large position in interest rates swaptions. So as interest rates go up, the fund actually does better.”
Approximately 90% of Andrew Wilkinson's Net Worth Is Invested in Tiny
“Yeah, I'm like 90% in tiny, but what I have done is I've had liquidity and other things outside of tiny.”
Venture Capital Investing Is Totally Random and Functions Like Roulette
“I still think ventures totally random. I do it for fun off the side of my desk.”
Market Panic Will Let Cash Buyers Acquire Businesses at 20-30% Yields
“You're about to enter an environment where anyone with cash who has a large sum of cash is going to be able to buy a business at say a 20 or a 30% earnings yield, meaning you can buy a business and pay yourself back in two or three years, maybe five years, and…”
Wilkinson: Tiny evaluated acquiring Chess.com before Queen's Gambit boom
“We looked at chess.com that ended up obviously blowing up with everything that happened with Queen's Gambit.”
Writing a Book Pre-Sells You So You Never Have to Pitch
“I think a book you get to exist in someone's brain for like 20, 25 hours. And it's exactly that, right? You can actually get someone to truly understand who you are. And then when you meet them, you don't have to do your preamble. You don't have to your pitch.…”
Puri: Brad Feld held unfiltered monthly open-office hours in coffee shops
“Brad Feld did this, Brad Feld's a VC in Boulder. He's probably like one of the main, most well-known venture capitalists in Boulder, Colorado. And he used to have this one day on his calendar every month called the random, random day or something like that. An…”
Tiny Incubates Operator-Led Businesses With $50,000 for 50% to 70% Equity
“We basically find really scrappy operators where we can basically say, look, we've got all the back office, all the structuring legal, it's ready to go. We'll build the website for you. You just need to take it and run with it. And we go typically like 50, 50 …”
Wilkinson: Strategic silence forces counterparties to concede in negotiations
“Well, so often it's just silence. Just being silent. Saying, like you said, throwing out one of those open-ended statements and then just staying silent and holding the discomfort. And then often they will start to, you know, give on the price or whatever. And…”
Tiny Bought $500,000 in S&P 500 Put Options in February 2020
“And so what we did is we basically said, okay, in late February, we said, okay, if this, if the S and P 500, the index of the 500 largest companies in America goes down by 20%, we will get a big payout. And so we bought for 500,000 dollars, put options that we…”
Tiny Turned a $500,000 COVID Put Option Hedge Into $7 Million
“And so what ended up happening is we bought these put options. They went from being worth 500,000 dollars to seven million dollars. All of a sudden.”
Tiny Lost $6.5M Reinvesting Pandemic Hedge Profits When the Fed Intervened
“And so we take all the money except for 500 grand. We took 500 grand out. We took all the money and we re-bet it and we lost everything because the Fed came in and the markets rebounded.”
SaaS Founders Can Hedge Concentration Risk by Shorting Public Competitors
“Let's say that you own a SaaS business. And your entire net worth is in the SaaS business and you currently you know, you've raised money at 20 times revenue or something. You might want to find a SaaS business that's publicly traded, that is a comp to you. An…”
Wilkinson Uses Interest-Only Mortgages to Keep His Capital in Operating Businesses
“I hate real estate so much that I don't build equity in my own houses. So I do interest only mortgages because I want everything in businesses because businesses, a business can earn a million dollars of revenue and then the next year do a hundred million doll…”
Smart Investors Should Rent Homes and Put Their Capital Into Equities
“If someone's completely, if they're not an investor at all, then sure, go buy a house all day, whatever. It's a reasonably okay investment. But if you're even remotely smart and you know how to read and you go and read investing books and stuff, I think it's c…”