How to Start a Business in High-Risk, High-Reward Markets | The New Wave of Entrepreneurship

So this is the Green Mile.

It's very green.

It's very green.

It was just a thing to do on the weekends. Now there's million-dollar tournaments. There's $18 million tournaments. That's something we never saw years ago.

It was like Amazon was books on the internet, you know. eBay was like your collectibles, your garage on the internet. There's another wave, the internet going into the real world.

What's up, Believe Nation?

It's Evan.

My one word is believe, and I believe in you. I believe you have an amazing gift inside you that I want to see exploded onto the world. Now I started the Believe Life series to try to cover other topics that you might be interested in beyond just the typical content on my channel. So today we're gonna look at 4 edgy businesses that would scare most people to start. Enjoy! Business number 1 is the weed business.

But with being America's fastest growing industry comes growing pains. Marijuana is still illegal on the federal level, which has led to conflicting state laws, restrictive regulations, and endless problems for cash-only marijuana business owners and operators. However, market projections of over $11 billion in the next 5 years still have everyone coming to town for the green rush. We're outside the Cannabis Cup in Denver. It's 4/20 today. Basically like Christmas for anyone who smokes marijuana. The Cannabis Cup looks like a giant pot party, but with legalization, this bleary-eyed consumer base represents a huge financial opportunity unlike any before. With so much money to be made, 4/20 isn't just for stoners anymore. Meeting the political and legal challenges of this emerging market is a new kind of marijuana enthusiast who's getting into the game for a different kind of green. We just checked into the Marijuana Investor Summit, which has a completely different feel than the Cannabis Cup, and we're just gonna see the big players that are investing in this market today. The summit joins the growing list of conferences around the country dedicated to networking and investing in cannabis. But most importantly, entrepreneurs are here to learn how to become successful from the few who got here first. A clear example of the shifting attitudes towards legal marijuana can be seen in the demand for industry experts to navigate new money to success. Aside from the marijuana plant itself, consulting was one of the most popular profitable sectors of the industry last year. Trent Woolevec is the COO for American Cannabis Company, a consulting team that gives advice to businesses in the legal space and helps connect them with investors.

Yeah, it's cool to see the natural evolution of kind of what's been progressing over the last, you know, 6, 8, 12, 18 months for the space, and it kind of all culminates here at this event for sure.

One of Trent's most successful clients is Andy Williams of Medicine Man. So we went to their largest operation, where he both grows and sells marijuana.

So this is the Green Mile.

It's very green.

It's very green. So these are some of our mother plants. This is what we use to create new plants. And so when we look for genetics, we look for good, big, and fast. Those 3 things. And when we find it, we grow a big plant, and then we clone it, and we'll plant it, and it will be an exact genetic duplicate of this plant. Just gonna stand— let me make a little more room here.

This is so exciting.

Go back in there a little bit.

This is what it's like to be a marijuana producer. That's right, now all this green is reflecting from you.

We talk about when we look at our society in North America, there was prohibition. We understand what happened when prohibition ended and the opportunities that were presented in the liquor industry. So I see the industries being similar. I'm not proposing that alcohol is a good thing for society, and I'm not proposing that marijuana is a good thing for society. But the reality is that you can't stop them. Obviously governments are looking at this and saying, well, if we can regulate it, control the usage for our minors, and the almighty dollar in terms of taxation, that, you know, it's going to go there.

While there are now a handful of universities that teach classes about weed, Oaksterdam is the first all-inclusive cannabis college in America.

After Prop 64 has passed, what is the legal landscape in California?

It's not an accredited university, but for $1,595, Oaksterdam offers a 14-week semester where students take business, law, politics, and history classes, just like they would at a regular college, but it's all focused around cannabis.

And better that it has this color, but what's the downside of making it purple or blue?

How did you end up being the chancellor of a weed college?

In my former life, I was a manager, an entrepreneur, and a corporate trainer. And so I recognized immediately that there needed to be some type of training for the cannabis industry especially for patients and also for doctors, quite frankly, and it just didn't exist.

How is this whole thing legal?

Because we teach in California, we're able to do hands-on, and we're the only hands-on lab in the world where you can do what you did downstairs. The differences between, say, California and New York, or when we go to Las Vegas, is whether or not we can be hands-on with the students. So oftentimes we do things like video when we go out of town, or we'll use alternative plants like lavender or rosemary.

Business number 2 is esports.

Many people would call competitive gaming or esports a subculture, but is it really when it packs this stadium for 2 days? 15,000 people, all here to watch their favorite players compete in the North American finals of League of Legends, currently the most played video game in the world. Being a professional gamer, I never thought that I could make a career out of doing something that I love and that I'm so passionate about, which is video games. It was just a thing to do on the weekends. Now there's million-dollar tournaments. There's $18 million tournaments. That's something we never saw years ago.

I can't tell you how many calls I received. I mean, north of 50 phone calls from pretty significant executives saying, "Okay, tell me what you're doing. Explain to me again what it is." And most importantly, who do I call to try to get engaged?

Esports are starting to look more and more like regular sports. Last year, the Philadelphia 76ers became the first North American team on the scene. They bought the UK-based Team Dignitas.

This is an organization that is not done growing, so I think it fits really nicely in the portfolio. It's a very, very young demo and the space is exploding.

Owners of other major sports franchises are investing in esports and creating teams of their own.

We want pros to be able to have long, successful careers, and we felt that bringing some stability would allow that to happen. We want teams and sponsors to be able to invest for the long term. If they want to build a practice facility or invest in infrastructure, knowing that they can do that with an investment horizon that will allow them to get a payback on that investment is important. And we think all of those things will help to make North America more competitive, because if you look at the best leagues in the world, they're investing for the long term. They've got the infrastructure, they've got the additional coaches and nutritionists and facilities to really make a run at it.

Esports revenue is growing. Last year, revenues reached $493 million and is projected to reach $1.5 billion by 2020. Could esports' next big move be to the Olympics? The organizer for the 2024 Paris Summer Games is bringing the case for the inclusion of esports to the IOC.

I think that the best sports in the world tend to make it into the Olympics, and if we're lucky enough for that to happen, and for it to happen in the right way, we don't want it to be forced, it should be organic and not like a novelty, but something that is part of the Olympic Games because it's a meaningful sport for a lot of people around the world, which it is and we believe will continue to be, then I think it could make a lot of sense.

Business number 3 is Airbnb.

Some people have described this as the worst idea that ever worked. A lot of people build something because they had a great idea. We built something to solve a problem, and our problem was very simply we couldn't afford to pay rent. And I think this is something that millions of people can relate to. They have space, they can't really afford to completely pay for it, they'd like some extra income, they want to meet people. That's what we thought. What if there was a way to book a home anywhere around the world? And that's basically what's happened. One of the most common things people say when they hear about the idea of Airbnb now, and they see people all over the world doing it, is, why didn't I think of that? It's such a simple idea. Why didn't I think of that? You might not have thought of that. It's because when we thought about that years ago, the most common thing people said is, are you nuts? We always thought, you know, design isn't how something looks. Design's how something works. And we had this really simple idea. What if you could go somewhere and feel like you live there?

That simple idea was born of necessity. Chesky had quit his design job and joined Gebbia in San Francisco. Between the two of them, they couldn't pay their first month's rent.

It turns out that weekend there was this international design conference. All the hotels were sold out, and we had this idea, like, let's just create a bed and breakfast for the design conference. We pulled the air beds out of the closet, we inflated them, and we called it the Air Bed and Breakfast.

A light bulb went off, but early skeptics of their idea didn't believe people would invite strangers into their homes. In 2008, without big investors, Chesky and Gebbia began covering their costs by selling breakfast cereal.

And so Joe and I and Nate were totally broke. And one night, we're in a late, late night in a kitchen, we're like, we're airbed and breakfast, airbeds aren't selling very well, maybe we'll go into breakfast cereal. And then we ended up selling Barack Obama-themed cereal. We called it Obama Oats. The Breakfast of Change. We also did John McCain-themed cereal, Captain McCain's, and that was actually how we funded the company. In fact, today we say we're like cereal entrepreneurs.

Hi, I'm Brian Chesky.

I'm a co-founder of Airbnb.com.

Their scrappiness caught the attention of one of the company's first investors right around the time the economy was crashing.

We haven't made any money, and Paul Graham said that it's like an investment nuclear winter, and I'm looking for people the world that won't die. He said, in fact, you guys are like cockroaches, you just won't die. That's when it started taking off. And the idea literally spread city by city, block by block. It grew as a network. What Airbnb is a part of is a wave of the internet. It was like Amazon was books on the internet, you know, eBay was like your collectibles, your garage on the internet. There's another wave, the internet going into the real world. And so I think this is the beginning. So many people in 60 seconds can become entrepreneurs, they can start a business, they can build a reputation, and Airbnb I think is just the beginning. Now you see so many companies in what people call the sharing economy. This is just like the first chapter of it.

Airbnb recently launched a new division called Experiences. Travelers can book a stay that comes with a local experience like surfing with Adventureman in LA, finding Zen in San Francisco, or or learning from a samurai artist in Tokyo. I think one of the things you and others have found is that especially younger customers are seeking these experiences.

Yes.

They don't want to accumulate things as much as life experiences. How did you tap into that?

I think there was this shift that happened where when I was a kid, the American dream was to have like a nice house and two cars. I think the rise of social media changed it. Because suddenly people started valuing experiences more.

A new experience launching this month in New York, a partnership with an urban farm called Harlem Grown. Rent a room and spend a day helping out. Have you seen your research, Brian, that customers want more of this kind of experience?

They don't want to just see the Eiffel Tower or like they don't want to see the Statue of Liberty. They want to meet people like Tony. And then you leave and the memories you have are of people.

What do the next 10 years look like for Airbnb?

And I think where this is going is, is not going to be just a place to stay. We are going to design the end-to-end trip for you. Travel is never really about where you go, it's about who you can become and the memories you can make. And I really want us to be in the business of creating these magical experiences, not just a place to stay.

Business number 4, the last one before my special bonus clips for you guys, is the space industry.

You'd made some money from the sale of PayPal. You decided to build a space company. Why on earth Why would someone do that? Got that question a lot, that's true. People would say, did you hear the joke about the guy who made a small fortune in the space industry? And he obviously started with a large one, is the punchline. And so I tell people, well, I was trying to figure out the fastest way to turn a large fortune into a small one. And they'd look at me like, oh, is he serious? And strangely, you were. Well, it was a close call. I mean, things almost didn't work out. We came very close to failure, but we managed to get through that point in 2008. The goal of SpaceX is to try to advance rocket technology, and in particular, to try to crack a problem that I think is vital for humanity to become a spacefaring civilization, which is to have a rapidly and fully reusable rocket. 'Would humanity become a spacefaring civilization?' So that was a dream of yours, in a way, from a young age? Or, like, you dreamed of Mars and beyond? I did build rockets when I was a kid, but I didn't think I'd be involved in this. It was really more from the standpoint of, what are the things that need to happen in order for the future to be an exciting and inspiring one? And I really think There's a fundamental difference if you sort of look into the future between a humanity that is a spacefaring civilization that's out there exploring the stars on multiple planets, and I think that's really exciting, and compared with one where we are forever confined to Earth until some eventual extinction event.

Musk decided that the only way to get an affordable rocket was to build it himself, and he started SpaceX.

The odds of me coming into the rocket business not knowing anything about rockets, not having ever built anything, I mean, I would have to be insane if I thought the odds in my favor.

Why even begin?

When something is important enough, you do it even though the odds are not in your favor.

How much of your personal fortune have you poured into this?

$100 million.

$100 million into something that you did not believe would work at the beginning?

Yes.

How did you get the expertise to be the chief technology officer of a rocket ship company?

Well, I do have a physics background. That's helped as a foundation. And then I read a lot of books and talked to a lot of, a lot of smart people.

You're self-taught?

Yeah, well, self-taught, yes, meaning I didn't— I don't have an aerospace degree.

So how did you go about acquiring the knowledge?

Well, I, like I said, I read a lot of books, talked to a lot of people, and, and have a great team.

Now I've got some special bonus clips from Mark Cuban and other investors talking about the esports industry, but before that, my question of the day for you is, I want to know, have you thought about doing any of these businesses, or is there a 5, 6, 7 that you want to add to the list of edgy businesses? Let me know, leave it down in the comments below. Thank you guys so much for watching. I believe in you. I hope you continue to believe in yourself and whatever your one word is. Much love, I'll see you soon, and enjoy the bonus clips.

So we know you're a business guy, you're the owner of the Mavericks, you're huge on Shark Tank, so I think that people kind of want to know what's bringing you here? Are you gonna be buying a team? Are you investing into this?

You're just gonna have to stay tuned. I mean, look, one thing I will say is I love Colin, but he's an idiot when it comes to esports, right?

And we're of course talking about my co-host on Fox, Colin Cowherd, who calls e-gamers nerds. No, and I have to disagree with them completely. But what do you have to say to guys like Colin who just hate on the e-gamers?

It's—

look, I'm a noob. You know, I'm still getting into it, but I love it, right? It's like playing 5-dimensional chess against the world, right? It's like one of the smartest games I've ever played. You've got to have dexterity. You got to be quick. This is a real sport, and people are going to figure it out really, really quick.

When and why did you get involved in esports, and what was that moment for you when you were like, this is what I want to do?

Well, I've been a gamer for some time. Since I was a little kid. And I have to say, one of the big crossroads for me is when I got involved with Twitch. 'Cause streaming services and gaming changed everything. I started seeing this link between potential fans of mine or fans of mine that are gamers and realized that I want to get more involved in gaming, in live streaming in general. Beginning of this year, I started looking at the teams. I started looking at how I can get involved in any possibility. I was trying to game myself and I just realized I'm just a shit-ass gamer compared to these guys. So the better that I'm— I'd rather be an owner or someone that could be part of, you know, more so the marketing angle than, you know, the operations, obviously. And it's a lot of fun. It's like, you know, for me, I always follow my passions And my passions lead me outside of music in different forays. And now I'm in the bed with everyone, with all the gamers.

I tell people I'm involved with esports, and I'm sure we all hear it quite a bit. And it's their disbelief that people actually pay to watch other people play video games. So what do you say to that?

Yeah, for me, I like to joke, people watching people play video games is the dumbest thing I've ever heard. Which is exactly what I said. I see people shaking. It's exactly what I said myself 7 years ago until I saw it and I was immediately enchanted. I was drawn into the world and I thought, you know, I'm 32 years old. I've never experienced this feeling. This is what must feel like an NFL fan seeing and understanding football for the first time. But much like Jace, I think the common thread for all of us is we were always gamers. Everyone's a gamer. That's the common thread. So it's not a big leap for us to seek out the stories of these esports athletes. And I call them athletes because they are in terms of, you know, their journey through a season up to a finals. You know, we're doing things to fight a lot of the preconceived notions that gaming is bad. IMG Academy, for those that don't know, IMG Academy is a school for worldwide athletes, like fantastic athletes. Athletes from across the globe. So Venus, Serena Williams, you know, Cam Newton, and esports is going to be our 9th sport there. So we're going into the metrics behind what creates and makes these people so special. And, you know, there's injuries, you know, there's high player turnover because they're just not as fast anymore, cognitive thinking and things of that nature. So we're looking to change sort of the misconceptions behind gaming and show a lot of the positives.

As well. So let me give you the one word secret to happiness. One word. This is all you need to be happy.

The most important word ever.

If you had to think of one word that's most important to you, or that sums you up, or that would be kind of like a little beacon.

Hey, Believe Nation, if you want to know what the most important one word is for Tony Robbins, Gary Vaynerchuk, Oprah Winfrey, Will.i.am, and Howard Schultz, I have a very special secret video for you. Check the description for details.