Sam Rattner - From Startup to $40M Exit at 23

All right. Welcome back to the Casey Adams Show. Today we are joined by Sam Ratner. Thank you so much for coming on the show, Sam.

Thanks, Casey. Appreciate you having me, man.

Of course. So you've had quite the career, man. I'm excited to really just not only go back to where your journey all begun, but to talk about what you're currently building. But one thing that stuck out to me when I was not only learning about you, but heard about you on my first million and learned more about your story to you started a company that you sold to FuboTV that was in this online sports betting gambling space called Victory. What was Victory, for those that may not know. And what led you to starting a company in the world of sports betting? Online gambling?

Sure. So Victory was an online gambling company. We had sports betting products, we had table games, blackjack, baccarat, you know, stuff like that. We were an authorized gaming operator of the NBA Major League Baseball. So we had kind of gone through the process of working with the leagues and in turn a handful of the teams. I had gone through regulatory compliance and most at the time, most legal US Markets and had market access licenses in a few of them. Prior to the company, I had been a big poker player. So I kind of knew the community a bit, especially the online community, which at the time was mostly overseas. And so listening to people in Eastern Europe talk about the online gaming market at the time when I was whatever it was 18, 19 years old, I was like, oh, this is like a lot different overseas. So it's a part of the culture. People bet when they're 18, sometimes when they're 16 in certain jurisdictions. And so there's less of a stigma around it. You're betting, you know, you're betting at the games. And so everyone in these group chats, most of which were not really in English, but I managed to plug in some Google Translator plugin or something to figure it out. But essentially we're all talking about how there was rumors going around that the United States was going to repeal the federal ban on sports betting, online sports betting, that is across the country, still be a state by state regulatory process similar to cannabis and some other regulated markets like firearms, but relatively speaking was going to open up the floodgates. And everyone in these group chats was talking about how it would evolve similarly to how it evolved in Europe. And so after thinking about that, I thought there'd be a big opportunity. I think it made a lot of sense that the early players would, with some crossover like DraftKings and FanDuel would, of course, you know, have a. Have a big head start and likely dominate, but that there'd be big companies across media or the brick and mortar casino companies that would come in and want to be in this business. But it was a very technical business to build the product and get it through compliance. So I thought there'd be big opportunities given most of the media companies or brick and mortar casino companies really are not technology companies, which. Which turned out to be somewhat true. So that's a little bit about the background, I guess.

Yeah, no, that's. That's super interesting. It's. It's so funny because I. By no means do I have a depth of understanding of that business and industry, but probably about a month and a half ago, I went out to Nashville and it was this guy's networking event that my buddy put together. Just no real intentions, like, hey, we're going, meeting up in Nashville, come out. And Paul, one of the co founders of DraftKings, was there, so we spent the whole weekend together. And I'm asking him all these questions about the industry and their origin story and the beginning of everything, and just hearing the regulatory process and the challenges that they've really had to jump through to get to where they are today. It's a business that so many people, probably they stop before they even get started. Right. So for someone like yourself, when you were. How old were you when you started victory?

20.

20.

21. Maybe 21.

If thinking about that, it's a very. Just heavy lift of a business to start. What gave you the confidence and conviction to go pursue something that had so many regulatory challenges and more so just blockers before you even get to the start? Yeah, because I think there's a lesson in there, in my opinion, of just how you saw that and then how that's applied to different industries in the future as well.

Yeah, the regulatory process, whether it's online gambling or it's any regulated market, there's parts of healthcare, fintech, you know, crypto, you know, whatever it is. Usually as an early founder, it's frustrating, but you also start to recognize there's reasons for these things. You know, 1-800- gambler people have issues. You are handling consumer funds. And so it is a big responsibility. And so while some of the regulatory parameters at times feel like overkill and they get in the way of providing great products to consumers, at the same time they protect consumers. So they are important. And what you start to realize is there's so much value in regulated markets. And part of that value is from the fact that most people are unwilling to go through the regulatory hurdles to build the product and get it to market. Part of that is because it becomes capital intensive. It's a lot of legal work, it's a lot of state by state applications and it's also very dissimilar to a lot of other verticals of business, especially early stage startups where everyone's just in a rush to push code and they just want to get the latest version out. And unfortunately, if you change the color of the place back button, that hex code is going to the labs to get approved. And so embedded in these hurdles is actually somewhat of this value of most people are unwilling to go through it, which is actually we, I believe is part of the reason they're so intensive. They're probably more intensive than needed to be for consumers, but sets this bench that then people who aren't willing to do it well, then they're just not going to bother, which in turn actually is good for consumers. So then when you get through, you're sitting there and there might only be a dozen players in the whole market and you have a dozen players that must have been well capitalized and won for a reason and now they're, you know, you know, capitalized to move forward and build a great business for consumers. So it's somewhat of a hurdle early on, but if you're building a business for a decade, you're building a business for 20 years. It's kind of just the price of poker. No, no pun intended. So I think there's actually a lot of value in these markets.

Absolutely. And that's, you know, looking back in the success that you've had there, it's clear that that was the case. And before we really just like dive into where this all started with victory specifically, you built the company and really prior to, before going to build this whole platform to then like do the direct to consumer thing yourself, you were thinking, hey, how can I build something that I could not only potentially go out and get acquired, but everyone's outsourcing this, you know, tech development to overseas developers. Like was your goal starting that? I guess I should say it as what was your intention with starting it? Did you want to go out and get an acquisition more so in a short period of time because you saw the opportunity there? Or what was your thinking around the business itself?

Yeah, I don't think it's ever. If the plan of starting a business is to sell it, you really shouldn't, you shouldn't, you shouldn't be building the business. I think that's a bad place to. To start from. But I think like anything else, when you're in a regulated market, opportunities come up and sometimes you just have to capitalize to an extent. You know, our plan was to always go to the market, you know, launch a book. We thought we had a really great product. We thought we had a good play. And the thing that's always important, I think early stage founders should think about is you need to be building a business that after you get to a certain level of product, that as you build the business, you're doing so by also somewhat building the asset, not just this concept around the asset. And then should you ever decide you want to sell it, it's sellable. It's kind of like a building. If you want to be in real estate and you want to be a developer, and you start building a building when you're done with it, whether you raise the rents, whether you rehab every five, whatever it is, you've built an asset. But a lot of people work for 18, 24 months, and they're almost like in business to raise money, not in building the product. And then all of a sudden, you look around and you feel like you've been in business for a while, but you don't really have an asset someone wants to buy. And then the only people willing to buy that are people who want to hire you, and they're getting the assets along the way with some stock. So I think it's important to never start a business with the idea of you're just trying to build it, to sell it. But like anything else, when opportunities arise, like, you have to consider them. So we definitely thought in my head it was the full plan was to go to market. But also in the back of my head, I knew I was always choosing when it came to products specifically or deals we were doing with leagues. I was trying to also, along the way, tee up assets that wouldn't be a waste of effort should someone want the asset, would increase the value of the business. And a lot of those licenses or deals with leagues or some of those things we did on the business development side, you know, were not. Were finite. They were not unlimited. Not everyone in the world, you know, they weren't like, the leagues didn't just take everybody. The states didn't just take everybody. So I knew if we got those things done, that would be pretty important. Should a buyer come along?

Absolutely. No, that's. I love that thinking behind that. Take us back to what were you doing when you were growing up? I know I heard that you had a snow shoveling or snowplow business as one of the earliest endeavors. But when you were growing up, was the plan to always get into entrepreneurship, start a business or what was your childhood early on?

Yeah, I would say definitely to get into business selling baseball cards, phone cases. I was the kid selling stuff. So I did have a snow plowing business I used to have to me and my buddy Ilya, we would have the old version of Google Maps had this way where you could, and it might have been some enterprise version we had to pay for where you could import routes and then import a secondary data set. And so we'd import the weather, you know, for the trailing twelve hours moving forward so we could figure out when we should tell which people to go to which property. So like you start to kind of learn, even if it's like a rudimentary business like, like plowing driveways, you start to learn about insurance, you start to learn about handling employees, you start to learn essentially how to run a business. So I was always, I was always running something and we built that up to a couple hundred properties. We did that for a few years and that was kind of my entryway into wanting to be in business. Although I knew pretty quickly that at least until I was 30 something, I wanted to try and focus on only working on things that until they weren't or until I no longer believed this to be the case, but that while I was building them, I thought they could be very big things. And if someone comes along, wants to buy that along the way, that's fine. But I didn't really want to work on things that I didn't think could have a big, big outcome was kind of my thought process when I left school.

I love that. And how old are you now? For context?

I just turned 27.

Oh, I love that. That's incredible. I remember. So Ilya, that's Did you grew up with Ilya. Ilya's like David Dobrik, that whole crew, correct?

Yeah, yeah, we all went to Vernon Hills, northern suburbs of Chicago.

Yeah, love that.

So I got some, I got some crazy pictures of Ilya and I, three o' clock in the morning in the basement organizing things. It was hectic. We definitely were very disorganized, but we got a ton.

That's so good. I went to one of his workouts here in LA that he did.

Oh, geez. Yeah, he's yoked now. I got to give it to him.

He's in great Shape, Absolutely. For sure. That's great. So when you're growing up, you're selling baseball cards, you do all these things. What were the influences in your life that led to that? Were your parents entrepreneurial? Did you have friends that were entrepreneurial or was it just this innate drive?

It's a good question. I don't really know. I mean my, my grandfather ran his own tax accounting firm that got pretty big. But no one was like super, super building big, big businesses on like an enterprise level. You know both, both my dad and my uncle are in real estate. So that's in and of itself somewhat entrepreneurial. You know, they don't work for a company. They flip properties developers Stu. So I think I always grew up with the people around me didn't seem to really be going to work. They were kind of working for themselves even though it was on a different scale to an extent. So I was somewhat familiar with it, if that makes sense. It wouldn't have been over. It wasn't out of the ordinary versus if your parents and everyone in your family works very corporate jobs went to very astute colleges and Princeton, Harvard, whatever. Everyone works for PepsiCo and Bain and McKinsey, whatever it is. I didn't grow up in that kind of environment. So I think it was just being familiar with it. There was just always kind of somewhat of a drive in an interest level.

Yeah, absolutely. I always like asking that question because even for someone like myself, I reflect on my journey and growing up in a small town of Virginia, my parents were the least entrepreneurial. My mom was a. She's been a special ed teacher for 13 years. She was a babysitter. My dad's. Well worked at Philip Morris for 30 years or so. And a part of my entrepreneurial drive when I was 15, 16, after I got injured playing football, I was in this neck brace for six months. Came from just these outside influences of social and really just trying to escape the current reality and more so seeing what the world has to offer. But it's funny because I even reflect on the entrepreneurial endeavors that I had early on. Selling bracelets at the local pool and even going door to door to shovel snow off driveways by any means did we ever get to a plow level but we had a good portion of a lot of the neighborhoods just unlocked myself just, you know, 13, 14, 15 years old. And just to see how that builds up over time for you like when you were going to start, you know, I guess to take a step back, you have the snow shovel business or you know, snowplow business, there's Victory. What's in between these two gaps of time in terms of experiences, knowledge, and just what led you to starting Victory prior to leaving school and going to this whole field of business?

Yeah. So once Ilya and I were pretty much done with being in the snow business, he went and worked for his dad, who had a plumbing company, very successful plumbing company in the suburbs. And I went to college for a year and loved my time there. Some of my best friends are my friends from college. But college was not for me. I thought that first year felt like 30 years and I couldn't imagine staying for another three. So I knew college wasn't for me. So there was this gap between. I kind of felt like I was going to college to get a degree that would get me a job that I didn't want. So then I didn't really understand why I'd be going there. And conversely, had already been in business, knew I was good at business, wanted to build a business, didn't know exactly what I wanted to do yet, but kind of felt that racking up student loans to go get the degree that I didn't need or want, that wasn't the right answer. But in between those businesses was kind of just trying to figure it out. Like, I left school and, you know, like, on the side while I was trying to figure out what I wanted to do. Like, I got my real estate license, I was selling properties for my uncle or my dad or whoever needed things, and, like, just trying to explore the market to figure out what I wanted to build. And growing up, I had always, like, my partner in Showroom, Michael Bilstein, who was at Victory and managed the engineering team at FUBA after the merger. Michael and I had always been, like, building things when we were younger, engineering related. So I had a pretty sound. I'm not an engineer, but I had a pretty sound understanding of how to build a great product. So I knew I wanted to do something in technology. And Michael and I had always just kind of built whatever we, we, we. We probably built 20 things over the course of high school. And so it had been one of those things where I left school. It was funny. I went to school for a year and dropped out. He pretty much graduated in a year because he went in, like, as a second semester sophomore. So, like, we were kind of done with school. Not. He was done with school not too long after I dropped out. Funny enough, he went to Purdue. So then when he had heard that I was starting this online gambling company, we hadn't reconnected yet and it had been a year or so since we chatted and then I raised the money. So then it kind of got real. But there was like an 18 month to 24 month period. I was trying to figure out what the hell I wanted to do.

Yeah. And I think there's personally just after interviewing so many founders, but also being a founder myself and raising capital for my last business and going down that path, having that time of thinking time, more or less. I think those are pockets of life that could just create the opportunity to really decide to test things. Versus when you're in it, you are in it. And wholeheartedly for you, when you said you went out and you raised money, that's when it became real. I'd love to talk about that process. Was that your first time raising capital for a business and what did that process teach you?

Yeah, so one of the things you mentioned that I don't think I would have been able to pull it off if I didn't have was were those few years where I was on an island, all my friends were in college, no one's home. There's no excuses. It's very challenging in your late 20s once you have potentially you're married, you have kids. The years between 19 and 21, 22, those two or three years that I had were, were very important to be able to get stuff done that candidly set up the trajectory for the rest of my life, probably so. So I think that was important. And you have to. I'm trying to think of a good way to. Or maybe that's. Maybe I've said enough on that. I think the years are important because I think as you get into your late 20s, if you no longer have the ability to be on an island, not only is it mentally challenging to go do it, but you then are leaving an island with other people that were on it. So it didn't feel like I was bailing on anything because everyone had to be somewhere they were in school for the next four years. Versus when you're 29, if you're quitting your corporate job to go start something. Now there's a public, now there's a public perception issue. Now I could care less about that. So that wouldn't have affected me. I don't think If I was 30 years old, starting a business for the first time would not affect me. But, but for a lot of people, that's also mentally challenging. So. So my advice is do it early. The bigger risk you can take the earlier in your life the better because you have no responsibilities, you're not married, you have no mortgage, you have no kids. You don't. You're not 10 years into a career you might not like. Just take the risks is my opinion. Remind me of the second point. What was the second point you brought up?

Yeah, no, I'll get to that again in a second because these are just creating thoughts in my eyes as well, I think too, just for my journey, I didn't go to college, I graduated high school, I moved across the country with some good friends of mine, was running a media company in Arizona for 18 months and that's when we ended up starting My last company, mediakits.com, which is this tech platform for creators to aggregate all their cross platform social data. And I was 19, 20 when I started that. And to be 19 and 20 to go raise like one and a half million that we did from, I like to say about 80% of the 37 angel investors we had were previous guests on the podcast. So it was like putting in these reps of the podcast as a, excuse me, in the aspect of building relationships and brand meeting, great people led to this moment at 19, 20 years old to go raise money and just go for it. And I think, as you said, there's so much just special time that now being I'm 23, for context, that 18 to 21 window, it seems like yesterday for me, but it felt significantly different in my life compared to now. I'm 23, I'm engaged, I have this incredible fiance, we're building a life together. And just the short amount of time that it's been over the last two, three years feels like night and day in terms of my thoughtfulness and approach to life and business. And I think it's obviously different for everyone, but I totally agree and align with that. And I think a lot of young people, at least from my understanding, that are in this world and want to start stuff, hopefully they get that. And if they don't get it today, then this is a great reminder to just embrace that and fully again, take the risk there. And that led to what I was getting to. Just when you went out to go raise capital for the business, how much money did you need? What led to going to, as you said earlier, that regulatory businesses can be very capital intensive, how did you think about raising capital and what were some of the first conversations you had? As a founder that wants to go create something in this highly regulated industry, what were some of those early conversations with investors when raising.

So raising for the first time, especially when you're young, while not out of the ordinary to the funds, right, they're used to 20 something year old men and women walking in asking for capital. So the process of, oh, are they going to think, I don't know what I'm talking. That immediately goes out the window. But it's still very challenging, especially in a regulated market because there's these incumbent businesses that have an existing audience in this market that has now become legalized. And so if they already have an existing audience, why do you think you have a shot? Is essentially the problem that you're solving for. And I think one of the things that carried me pretty far, even though it took a long, I met with every fund like it wasn't like, oh, I had to pitch 1500s and hundreds of every fund, every angel, every person. But once you do that, you start to not only refine the pitch, but what you're really doing is refining your actual knowledge of the topic. And so you'll leave a meeting going. You know what, I didn't really know the answer to that question that Steve asked me, so I better find out. And by pitch 92, you actually are the most informed person on the topic that you're talking about for the niche opportunity that you think exists within that topic. Because who else has spent 90 something meetings in eight months doing that? So, so I actually think raising money is very difficult. When people usually tell me it takes them a year, I said it really took you three months, but it took you nine months to know how to, how to pitch because you didn't actually know the answers to the questions candidly. So, so I think that you know, when anyone sets out for if, if, I guess if the, if this was for people who are listening that have not raised money and they want to start a business, know that it probably takes three months to raise a round of funding. That three months starts when you know more about your business than anybody could know about the business. And however long it takes for you to get there, that might be through pitching, that might and should be actually just through building the business. But whenever that time comes now, when you are in a meeting with someone and you leave the room, they all look to each other and go, whether we want to write the check or not, we have to consider it. But two things. One, he's building that business with or without us. And two, I learned a lot in that meeting. No one's taught me more about that business than that person did. And once you do that now it's a coin flip. Now it's just do they want to participate or lead the round or not? It has nothing to do with what do we think of this? What do we think of that? So I think it's a three month process from the point where you actually know what you need to know.

That's. How much did you set out to raise in the initial round of funding?

I want to say it was two and a half or three. I think we raised two and then just called it in and called it a day and got moving. Or we might have started with a little bit more. We started with a million something and I think we raised a small bridge somewhere along that. Right. Or we just closed the node or something like that, but got a lot down with a couple million bucks, to be candid. So, yeah. So I think that was also. This is pre Covid. So it was a different market environment. It'd be very challenging to raise a $3 million seed round today in a regulated market that's become saturated. So I think it was. Part of it was market timing, but part of it was also just like pure will. If you're going to do it, you're doing it. And Quentin's not an option. So. But raising money is always challenging for the first time.

Yeah. I love the perspective. Before we dive into what you're building now at Showroom. I heard you say something or more so just something that you think about when it comes to pitching. You say you'll never pitch twice, you'll never pitch a VC twice. Where does this thought process come from and what do you mean by that?

Yeah. And before I give you the founder side of the feeling on the investor side too, no one wants to be pitched twice either. They don't know how to tell you they're not interested and they'd much rather you come to the conclusion of that yourself. But never pitching twice is. I came to this conclusion that whether it was investors or potential employees to join the company, advisors to the board, partners in a business development relationship, most people initial. Most first impressions are pretty permanent impressions. And within five minutes of meeting someone, you have a pretty good. You have a pretty good feel for whether or not it's going to be a good partnership or if you'd like to work with this person for one reason or another. And never pitching twice is this idea of everyone, whether, like I said, investors, employees, whatever it's been who wanted to work with me, wanted to work with me immediately. Like immediately. And most people who didn't End up working with me. Didn't have that. Didn't mean they said no right away. But I didn't feel like they were jumping out of their seat and shared the excitement with me. And building a business is tough. So whether it's employees or it's investors, you want people that are jumping out of their seat to want to work together. And so my whole thing is it is a very informative process. It is not a persuasive process. You know, just like a girl at the bar, if she doesn't want to talk to you, she doesn't want to talk to you. And there's no amount of persuading that's going to change that matter. And so in my opinion, you go in, you give your full attention. I actually try and avoid 30 minute investor meetings. Once I usually do a couple, I do some pre screening. So if you're not in the market for whatever reason or the round's the wrong stage, you know, maybe we'll reconnect at a later date or whatever it is. But once I feel like there's been some mutual diligence on both sides, that the round fits, the market fits and we're interested. I almost never like to do 30 minute meetings because I actually think all it does is lead to follow up questions. I think, you know, they should have gotten the materials and been prepared to have a one hour meeting. And then I go in and I give the full 55 minute meeting, five minutes of questions. That way there is no quote, unquote diligence on the opportunity left to do. You might have some follow up questions and you could call that diligence, but there's no more things you don't know on the opportunity, whether it's the actual round dynamics, whether it's the business, the stage users, revenue, whatever it is, you get through everything. And once you do that, if they're not jumping out of their seat, then in my personal opinion you should move on because they probably want you to move on too. And they don't necessarily because they're in the business of writing checks and they also don't want to lose out on deal flow. They're not necessarily going to tell you no right away. The best funds do, which is great. Yeah, but you have to kind of, you have to dissect the message when there's a couple follow ups and they really haven't asked that many follow up questions, they just don't know how to tell you they're not doing it. And so I always think it's an informative process. You're informing them of what you're building. You're building it with or without them. And if they're the right partner for the business, it's going to be great. And if they're not, that's okay too. So all the funds have the things that they have to look out for. So I just think that a lot of founders, I almost said first time founders just now, but I've seen a lot of founders I know who've even sold and they're still pitching and they're meeting with these funds. And they also know, I think they think to themselves, you know what, it's kind of right. Everybody who's ever done this deal, I knew they were doing the deal moment I got off the call and I had a term sheet by Friday. And if it's not like that, it's challenging to get there. And even if you get there, sometimes they're getting there. They check a box and then the terms aren't great. And it's in my opinion. The other thing too is our investors at Showroom are a lot of the investors who are in my last company. And so I didn't know this at the time, but now I also think of venture as this 50 year game of you're going to build a lot of companies in your life. Some may last two years, some might last 20, but you're building relationships. So even if it's not the right time for an investor now, whether it's stage related or market sector, you know, the partner of that fund might start another fund three years from now and you should have kept in touch and built those relationships because it's a relationship thing or they see that the business is doing well and even if it's not for them, you know, they're calling their buddy, you know, who might share an lp, so they keep up with each other. They go, hey, did you see this play? So I think of capital as like a networking relationship. And if during that networking relationship someone's interested in starting dating, then you go and do that. But you can't go in there with that kind of intent every time.

Very well said. Love that perspective. So you talk. I want to talk about Showroom now. I know you just mentioned it. What is Showroom? For those that may not know, this new venture that you're working on, I think you launched it about a year ago. Is that right?

Started the company a year ago. We just launched a beta with a few thousand users on our waiting list last week. We'll probably be fully in the market, end of Q1, maybe going into Q2. But showroom is a vertical specific search engine for fashion and E commerce. So think clothing, footwear, jewelry, accessories, health and wellness beauty products. We think that there's a big opportunity to build vertical specific search engines and more or less vertical retailers with language models that provide a 1000x experience to traditional search, which is right now. You know, Google and the brands themselves, if you're on Google, it's kind of like very rudimentary, non conversational search, somewhat embryonic. You don't get a lot of details in. You can't have back and forth conversations. And then with the retailers and brands, you know, the functionality of the search bar is single input, single output. Those outputs are really unrelated from one another and you're kind of just going back and trying to explain what you're trying to find. So Showroom's not a brand, we're not a retailer. We are an ecosystem of all the best brands and retailers in the world. And think of what Expedia has done in the old version of product discovery for hotel and travel. That's what we are for fashion, footwear, jewelry and accessories. And we think that the conversational ability to find products, it's been incredible in every other vertical. No one's done it in shopping. And I could go down a rabbit hole of why we think that's the case. But we think that Expedia, Kayak, Travelocity, they've dominated hotel and travel for a reason. Pinterest has dominated product discovery for visual or visual inspiration. And those companies compete with Google flights and compete with Google Images. But no one's really the $20 billion public gold standard competitor to Google Shopping. And we think these language models, while our 1% of what you need to actually be able to pull this off, if you do it right, can be an exceptional experience, much better than what exists today. So we have thousands of brands, tens of millions of SKUs, and you have the ability to have an ongoing conversation with the full ecosystem of products and find exactly what you want as quickly as asking ChatGPT to fix your grammatical mistakes. So we think future of shopping is get on, find exactly what you want and get off. Which might be a little bit counterintuitive to or to what a lot of people think with this live shopping stuff with TikTok and TikTok shop, in my opinion.

I was just gonna bring that up. I was gonna say like, what are your thoughts on live shopping? I'm seeing it everywhere. Obviously you've Seen it everywhere.

Live shopping has its purposes. I think I said this on maybe it was with Sam and Sean, I'm not sure. But we used to walk up and down Michigan Avenue for an hour or two to shop. And then Google came along in the early 2000s, late 90s. And now instead of taking an hour to walk up and down Michigan Avenue to hope you find what you want to find, you can just go on Google, search it, you find it in two seconds. Well, now you fast forward 20 years and Google's essentially become just big box brands for the most part because no one's outbidding Tommy Hilfiger for the word, you know, winter jacket. So yet there's more brands than ever before in history. And with Shopify, everyone and their brother stands up a brand. And, and, and rightfully so. Because consumers have never been more brand agnostic than ever. We're willing to buy a product from a brand we've never heard of in some 3 second Instagram reel from some creator we've never seen in our for you channel. So, so we'll buy products like never before, yet we can't find them. Because on Google you're going to see this the same couple hundred brands. And so when you have all these consumers looking to buy product, it's natural to put them in the form of TikTok shop, where they already are. The problem I have with it is people are scrolling through products on TikTok shop and before you know it, it's been an hour and a half. You could have walked on up, up and down Michigan Avenue. And I think a lot of people who get into the weeds of TikTok shop and then like all of a sudden they don't realize it's been 30 minutes, it's actually entertainment more than it is transactional. And you might stumble into buying something but you rarely have brand equity now with that brand because you don't really care about it. You thought it was interesting enough to buy it. If I had to throw a dart at a board, I'd say less than 5% of all those transactions lead to long, long term customers that you can actually put into the LTV of your forecasting as a brand. And it's much better for TikTok than it is for their brands. And I think it lies the problem. The platform to buy should be better for the consumers and should be better, better for consumers and better for essentially better for buyers and better for sellers, whether that's a marketplace, whether that's a retailer or brand. And it seems like TikTok shop is significantly better for TikTok than I think it is for any brands and for consumers. They might find product through that, but I think that's through more. It's like QVC esque. I think it's more entertainment. I actually think. I don't really think TikTok competes with Facebook. I think TikTok competes with Netflix. I think it's more of entertainment than it is social. I think social media is about connecting with people and they've stumbled this into merging it with, you know, TikTok shop, which they get their transaction fees and stuff. So I don't think, I always think like, what will never change? What will never change is where I said in the beginning, which is people want to get on, they want to find exactly what they are looking for, whether they know exactly what that is yet or not and get off. And that might mean a couple percentage of people continue to stumble down TikTok shop 10 years from now. But I think people have limited patience when they're trying to find what they want to find.

I love that. What about you as a consumer? What is your approach to. I'm someone. I've never bought something on TikTok shop. I rarely give ever. Have ever bought something from like Instagram Shop. Like, I'm just very like a. I don't want to say bad consumer but you know, I don't buy a bunch of clothes and do all that stuff. If I do like, I'll do it specifically and I know what I like or it's a friend's brand and I want to support. But how does that look in your life as someone that's building for this space? Like, what are your shopping habits personally?

So I'll tell you how most people dissect the different transactions and I'll tell you where I sit. There's really three core transactions in online shopping. There's the what we've been talking about, which is see now, buy now. The social companies will always dominate that. I'm seeing a video, I like what I see. It's linked out. I want to buy it right now. You're buying it right Now. That's about 20% of transactions at this point. I think there's the I know exactly type of item I want to buy and I know I buy it from the same brand. So I buy a lot of Peter Millar. I've recently started buying some products from Collar and Company. I think those are great brands. They have great products. If I'm buying a quarter Sip or I'M buying a dress shirt, you know, I'm probably going to go to those brands. That's another about 20, 25% of transactions is I know pretty much if not exactly loosely of what I want. And I have three or four brands that I shop at the most. The other 50% of transactions are where I need something, whether it's super specific or it's for an event or an occasion or I don't know exactly what I want and now I need to figure out what I want or I do know what I want, but that's not something Peter Millar or Collars and Co sell. And now I need product discovery. And then you know, you've got men and women. Women primarily go to Social or Pinterest for inspiration. They're trying to loosely describe what they're looking for. They see a bunch of photos and then they go back to the Google search bar to more or less try and describe what they see in this photo. Because most of the products on Pinterest don't leak out to the actual checkout cards. And men, while maybe less on Pinterest still do similar things. I kind of fall in the, like I said for, for quarter zips and dress shirts, I'm going to the couple brands I like the most. For everything else I'm usually on Google and I have nine tabs up. I don't know exactly which one I want. I don't want to lose them because I don't remember the names of these brands. There's no place for me to all save them at once. And even when I'm trying to find them to begin with, it takes me 18 minutes because I'm trying to describe something to Google and, and I'm getting products that aren't matching what I'm saying because someone bought those keywords. And so I think a lot of people for those 50% of transactions that aren't senile, buy now or they're not going to the Lululemons or Peter Millar's that they know it's all product discovery. And whether it starts on Google or you end up on Google from Pinterest or Instagram or wherever you are with written copy, with language trying to describe what you're looking for. And I think traditional keyword based search engines don't do that, don't do that very well. So that's kind of, you know, the market and where I sit.

Great perspective. So you guys at showroom and you have the specific areas of categories, but it's clothing. You said jewelry can you remind me.

Of the key elements of it's fashion across the board. Think of it as clothing, footwear, jewelry, accessories, eventually health and wellness and cosmetics. We're in our beta right now. Hopefully within about a month we'll have all clothing products and then later this summer we'll move into other things, whether it be footwear, jewelry. We'll try to figure out what we want to do next, but the goal is within a year or so have every product category that makes sense from all of our brands and partners.

Love that. And I know in the podcast you did on my first million, an example that you used was think about someone searching Toyota blank. If they do that in Google, they may be looking for a logo or just like a picture of a car. But if someone searches Toyota on Cars.com, and they're a buyer, a potential buyer, significantly more than someone that's just looking on Google. In the case of the platform and the beta that you've launched thus far, when you say building these relationships with partners, what are the conversations that you have with these partners when describing something like showroom in this new age of AI and you know, being a startup? Like what, what are the conversations that intrigue them and have really gotten you in the door there?

Yeah, the conversation's really easy. I usually start with sending them a one liner and I am sending them a link to the product. I think pretty quickly they understand exactly what we're doing. And the reason why they the brands love love it is because they're used to their marketing teams having to figure out where they want to allocate capital in hopes of some conversion that they may or may not know right now or that they know changes with scale. Whether it's paid ads, whether it's influencers or with keyword bidding on Google, you're kind of shelling out capital with the assumption of some conversion rate which over time you can get pretty good at that conversion rate. But the one constant variable is you have to shell out the capital to get to realize the revenues to get that conversion. Agriculture and farming is the opposite. It's why there's futures contracts, it's why there's commodities traders. The farmers aren't waiting until they're not putting up all the money to make all the agricult or you know, or you know, let's say you harvest wheat, you know, you don't necessarily have to put out all the money. You sell the wheat before you've put it in the ground maybe at 90 cents on the dollar because there's a market maker there, but then you get the capital and then you operate your business that way. No one's buying clothes before they've been made. And so, so most brands, their whole marketing, although they have different verticals, whether it's paid and creators and affiliate whatever stems from shelling out capital and hope for a return. The reason they love Showroom is because we're not charging them anything until they've realized revenue because we're getting a checkout fee on the transaction, it's a revenue share. So they might have to pay revenue shares to us, but they don't have to pay them until we've driven them a sale from a user on Showroom. And so that's why they love it. They love that, they love the product and they also love the idea of, you know, we don't just have any and everybody. It's not the kitchen sinks of brands and products. We're not sending a user on Showroom to a merchant that we don't think has good checkout policies or return policies, that don't have good customer service and that don't have quality product themselves. So it's a little bit of this curated list of a few thousand brands with incredible product. So they know they're being associated with that which is good and that they don't have to play this bidding word key game on Google when there are products showing up from big brands ahead of theirs that are not as high quality. And I think that's what a lot of consumers, at least in our target audience have issues with with Google is the actual quality of some of the products. It's either big, big, big box brands or it's brands you've literally of because they're candidly probably some arbitrage opportunity with some product from overseas that they're selling and they got really good at SEO.

Yeah, no, I love the perspective there. Speaking of Showroom, you said you're in beta now, you're expecting to be fully in market by end of Q1. What does the team look like right now and how has it been this coming off of this success of victory and raising capital for this new venture and just having that experience. There's as this true second time founder. How are you thinking about it differently? I know on my first million you said you don't want to do things unless you can have a billion dollar potential within a five year perspective. Walk me through your thought process. The exact business aside. But just coming to a new venture with the experience you've had as someone that has built something, sold something, and understand that process.

In regards to why I chose Showroom.

Yeah.

Okay. So I took almost a year to after leaving FuboTV to just figure out what I wanted to do. What I did have and I did know is I had a lot of confidence in my ability to build a company, to raise capital, to capitalize the business. I have time, I'm young, so I'm willing to spend the 15 years building an incredible company. So I have all these things, but I don't know exactly what I want to do. I had been exposed to E Commerce over the years from some of my old investors as well as @FuboTV. A lot of our advertisers are, I think direct to consumer brands in E Commerce and so started really, really looking at the E commerce market. Obviously it became a big conversation over the last five years on Twitter. Seemed like everyone and their brother thought building a brand was the best thing in the world. So I was like, I beg to differ. So let me look into this business and try and figure out why that's the case. But kind of came to, you know, you have to pick something, it's better to be right on people and adjacent on market and pivot the business over time, then think you have the best idea in the world and go aggregate a bunch of average talent because really the value in building the business for the first three years of the business is actually trying to figure out what business are you building. The business model changes, the product changes, everything changes. And you need the talent and the horsepower of, of the team versus thinking you have this grand idea and you can just hire a bunch of part time people to kind of go and build it and because especially with contractors versus full time employees of the business. I don't know who said this, I have it in my bookmarks. I would have loved to shout them out. Maybe I can find it after, send it to you and you can put their little tag in. Someone tweeted, I think it was like six months ago and they said something along the lines of if you're paying for work to be done, hire a contractor. If you're paying for brain power, you have to hire an employee and you have to hire someone who wants to be a part of the team because the contractor is only incentivized to do the tasks at hand. They wake up, there's tickets in Jira or in GitHub and they're hammering them out. It's five o', clock, their day's over, they're not thinking about the business at 7 o' clock at night, they don't really care to think about the business. They're not incentivized to think about the business. When someone has equity and they're a full time employee, they're a part owner of the company. And so inherent in the incentives is their not only ability but their interest level to actually try and figure out how to make this work. And if the founder has to constantly be the only person who's problem solving in the business, in the very, very trenches of these engineering issues every day, you're never going to build that great of a product because those people, contractors aren't incentivized to do that. So in my opinion, you know, without going down the rabbit hole of why Showroom, E commerce, big opportunity, I think product discovery is very broken. I think live shopping is more entertainment than product discovery. And I think people want to get on, find what they want and get off. And right now a lot of people sit around on Google and they'll have tabs open for a week on end not knowing exactly what they want to do, but they don't want to lose things. And to me that's broken. So then the thought is like, okay, can you assemble the right team? You know my partner and CTO Michael Bilstein, someone I can send you our baby pictures. We've known each other since we were two years old, so we've known each other forever. We've built a lot of things growing up together. You know, after selling to Fubo, Michael ran the entire engineering division at FuboTV for gaming at our Chicago offices. So you know, him and I are very aligned with like the first 10, 15 to 20 employees of the business.

Are.

The first 15 or 20. Someone said this too. I think it was like the first 15 or 20 hire the next 150 or 200. So if you can get the first call a dozen employees, right, you have a big shot. And, and, and you have to recognize of I don't think there's a founder that's built a really successful startup that hasn't found themselves laughing at their seed round deck. Not because it didn't look very good, but because they're running a much different business than they thought they were raising money for five years ago. And I think that happens a lot. Yeah, you know, we pivoted a bit at Victory, we've pivoted a bit at Showroom. But once you get in lockstep, I think, you know, that's when you can, you know, build some really Special stuff. But you got to have the right talent.

I love that. Focus on the talent, hearing that too. And just even the founder dynamic, knowing you're a co founder for quite some time. That's great to hear. Two years old. I want to pivot and talk about the uniqueness of thought that you carry into things outside of what you're building at Showroom. I know. Just regarding even the my first million podcasts, what you post on LinkedIn, and what you've talked about online. So you bought a former riverboat casino vessel and what was it, restored it into this whole entertainment venue. Talk to me about this process. It's something that if someone's listening right now and listen to this whole show, this just came out of left field. You bought a former riverboat casino. You were obviously in the gambling business before, but why did this come up on your radar? And why did you actually choose to pursue it and do it?

All right, so we'll tell the riverboat story. All right. So I mentioned earlier, I think, in the podcast about how at Victor, you had to go through, like, the state by state regulatory requirements. The other thing you have to do is you have to get what's called market access. Market access is the licenses to operate an online casino. In most states, they're actually called casino service industry licenses. They're the same licenses you need to build a brick and mortar property. Less the zoning and real estate and capital and whatever. But technically, those licenses would get you that the only people who have them are the actual brick and mortar casinos. Not to go off on too much of a tangent, but the reason that they have them is because essentially we took land from Native Americans in response to that. We gave them the ability to have casinos on reservation property. Once the government legalized online gambling, everyone was like, whoa, whoa, whoa, no one's coming to our casinos anymore. They can just go on draftkings from their couch and watch the football games.

Yeah.

So that became a problem. So then they gave that, they said to the tribes, okay, we'll give all the Native American tribes licenses and you can sublease them to the online operators, because they had no interest in an online asset. They just didn't want to ruin their brick and mortar property. And that way, even if people maybe come to the property a little less, you're sharing the revenues of DraftKings. So it works pretty well for them. Well, then the MGMs and Caesars and Hard Rocks and all the massive brick and mortar casino companies that are huge tax drivers, state by state, said, whoa, Whoa, whoa. If you're going to give them to the tribes, then you have to give them to us. So, long story short, every brick and mortar property in America was given a license. Every state's different. Some get one license, some get a few licenses to lease out. But the example I always use is, it's like if you wanted to open up a grocery store and you had to cut a deal with Whole Foods to get the license. Seems a little backward, but rightfully so. Along the process at Victory, we had a license with a company called Casino Queen, which is out in Iowa. And riverboat casino vessels counted as brick and mortar properties. And the reason why there's riverboat casinos is because in the early, before the 90s, when they legalized land based gaming to build brick and mortar properties, even though they didn't have sports betting yet, they still lost. They were about like, I think a dozen states, maybe a little less legalized brick and mortar casino gambling. Up until then, it had been on marina law, on state river lines like the Mississippi, because it wasn't legal. And that really started because all the trade happened up and down the Mississippi. Truckers would pull over on the highway, they'd have makeshift card games, just like truckers pull over on the highway, they would pull over in the water. Makeshift card games on barges all of a sudden turned into, you know, the local card shop. And then before you know it, it was like a full blown casino operation on random parts, parts, you know, or harbors off the Mississippi. So finally the 90s come around, I think for purposes related to the mob and a bunch of other reasons, I think the government said, all right, enough is enough. Let's legalize online or let's legalize brick and mortar casino properties. So then the question is, what happens with all these vessels? Because no one needs them anymore. You can build a, you know, $2 billion property in Chicago. So. So before every state did this, there was still a market for these casino vessels because you were buying an asset. I mean, the casino vessel that I own used to do 50 million in EBITDA. So these were big businesses. So in fact, I have the clear. When you buy a vessel like this, there's coast guard involved, there's a lot of things. And you get the clear title like you do any kind of property. And I become, I wouldn't say friends, but I know the company that used to own it. There were some hands traded or whatever when it was operating his casino. I've talked to him a couple times, and on the clear title that I Have the person who bought it before me paid $120 million. Now they were buying an operating casino vessel. But it's definitely funny to look at. So essentially, there used to be a market for these things. If you're doing 50 million EBITDA, it trades for two and a half times and you're selling a casino. And so once the market died for anybody wanting to buy them because they were building regular properties that could have more people on it. I mean, there's a million parking, there's locations, There's a million reasons why you'd rather a brick and mortar property than a casino vessel. The market for people buying them as an operation died. And so a lot of them ended up in junkyards or, you know, they were sold for parts to marina construction companies. And long story short, a buddy of mine had made a joke. I had already left the company, hadn't started Showroom yet though. And I was on the phone with a buddy and he made a joke. He was looking at old photos and he had a picture of his dad and his grandfather in Atlantic City in front of some vessel in Jersey. And he said, what do they do with these things now? And I didn't really know the answer. And I had done a deal with a casino company that owned one for the license. And I was like, I don't know what they do with them. I go, I heard that company was maybe selling there. So I called the general counsel and he kind of told me, like, yeah, like, you know, they either get junk for parts or whatever. And long story short, there was a rumor that, you know, someone had the vessel that I now own. No one really knew where it was. I was unemployed. Thought it'd be fun to try and track down. I did track it down and ended up buying it. So I have, you know, I did explore for a period of time opening up a casino in Southeast Asia that. That for a few reasons, didn't make a lot of sense. I'm also very friendly with the chairman of one of the largest gaming companies in India. He pretty much controls Goa, India, which is on the western side of the country. It's essentially a river line with about, I think it's like six to eight casino vessels. He's half of them. And so he, you know, is interested in maybe having another one, whether there or somewhere else. Long story short, running showroom, a lot of other things going on, trying to open up a casino. Not in the cards for me anymore. Plus, I think it's also capital intensive, regulatory. It's not the right move for the ship anyways. So now exploring opening up a restaurant or doing a joint venture with somebody for whether it's a restaurant, nightclub, some kind of entertainment venue, likely some that were in the south, where you get 365 days a year. There's a lot of great markets. I'm in Chicago. There's a lot of great markets between us and call it Florida, but they're cold half the year. You got Lake of the Ozarks, you have Nashville. It's a little difficult, but the moment you go down south, you have hurricane issues, you're on the water. So a lot of the commercial ships for entertainment that are in like Tampa or other parts of Florida or Baton Rouge or New Orleans, you know, when they. When they know these storms are coming, they move these vessels up to Mississippi. And so it's just a big logistical thing to handle. Plus you're dealing with the local cities and zoning and planning. So I have. I have some other guys that are on it. They're kind of running the process and we're going to find something that makes. That makes sense for it. But I do own the thing.

I just find it so fascinating because I know, I heard it personally when you talked about it on my first million, but obviously for those that didn't know and are getting familiar with you, I just find it. It's such a fascinating thing that you never heard of before in terms of someone that goes out, finds this, buys this. And it's actually interesting. When I was coming back on, when I opened up a conversation with. When I was in Nashville, we were at the DraftKings sports bar. Paul was there, one of the co founders. And I kept seeing there was a couple of these riverboat casinos in Nashville. And that was for me, at least one of the first times I saw some of these. And when I found out you bought this, I was like, oh, my God, this is hilarious. So very not only unique story, but excited to see how it, you know, how it evolves and what you do with it.

Yeah, I usually, if I'm trying to figure out whether if I think there's a good opportunity for something, and maybe this is like the. The values in the current, the contrarian or however you want to say it. But it's like after I told people I was thinking about doing it, and every person essentially, essentially the response was and excuse my French, but like, are you out of your fucking mind? And the moment you get 18 people who ask you if you're out of your fucking mind probably means no one else is willing to do this, which means there must be some value there. It's at minimum an incredible story. So I'm a very like, screw it, I'll figure it out. Always do. Buy the vessel and we'll go from there. So that's kind of where we are with it.

I love that. I appreciate the context there. I want to be respectful of your time today, Sam. One more question before we wrap up. Just you're someone that not only I have so much respect for, but to experience the success that you've had at such a young age and to now be building something that is, as you said, a part of this billion dollar vision of what you want to create. It wasn't too long ago you were raising the first round of capital for victory and the amount of knowledge that you've learned. And everyone has their own journeys. But I'm curious if you could go back to that young Sam, 18, 19 years old, what would be your advice to yourself and why, given the industry or the experience or just a particular reason in terms of the feedback and advice?

Yeah, I think one of my favorite quotes, and I have a laundry list of them on my phone number one by far is a Ray Dalio quote. And it is pain is nature's reminder that there is something important for me to learn. No matter what happens to me in my life, no matter how painful, there's always some lesson buried in it. And so I wouldn't do it any different. Used to work till 4 o' clock in the morning in the lifetime yoga studio. Didn't have 50 cents to my name, $50,000 in credit card debt. Sometimes you just gotta say fuck it in life and figure it out and it's gonna be painful. If it wasn't painful, everyone would do it and everyone would be successful. So in my personal opinion, if you have, if you're young and you have the drive, this isn't. This probably can't possibly be true. But in my. I have this reason to believe. If you just refuse to quit, quitting is not an option. Doesn't matter how long it takes, quitting is not an option. More times than not you end up figuring it out. And even if figuring it out might have meant been you gave up on something because some other opportunity approached you because of what you've done, well then it wasn't a failure anyways. And so if you just don't quit, you more times out of not end up on the right side of things. And so no matter how painful there is a lesson in the pain. And you just kind of got to push through it. So I wouldn't change a thing. I would do it again. Maybe I would drop out a little sooner, but that's the only difference.

Wow. I love that I have four words on this. I was in a neck brace for six months and it was a symbolism of when I got injured playing football. And I had this artist, he turned it into a trophy and it just says, keep going, never quit. And it's sort of the thesis. And it's funny you say that. The thesis of all the conversations I've had, the 500 plus interviews, like five words to summarize it. It's exactly that. So hearing that again from you, it's.

Only over when you quit the line?

Yeah, absolutely. Well, Sam, this was. I just want to say thank you so much for coming on the show today. Again, I'm so inspired by your story and to hear what you're building is not only exciting, but just I'm stoked for you and the team and for those that are just coming across you and that have listened this far in the podcast. Where's the best place for everyone to stay connected with you, learn more about Showroom, and just to stay in touch as you continue to build out this.

Yeah, my Twitter is great. Twitter is Amratner. It's where I give a lot of updates on myself and the company, so that's a great way to find me. And we have a waiting list going at Showroom Store, so if you guys want to check out and get on our waiting list. We unlock a couple thousand people a month getting through this beta, so can't promise when you're going to get on, but it'll be soon and we'd love to have you as a user so that's where you can find me and appreciate you having me on it. It's been great, man.

Of course. Yeah. I'll be sure to link down everything below. So thanks again.

Awesome. Thanks, Casey.