Gumroad Founder Sahil Lavingia

And yeah, Naval, I think, was the first person in, in sort of the startup industry, I feel like, who really highlighted the power of observation, right? He says these things that are obvious the second you hear them, and they're using simple words and, you know, they're not really inaccessible to anybody, but he was the first one to like notice it and put it in that way. And he gets, I think, a lot of credit for that. And so I always try to keep that in mind. Like when I, when I try to tackle a problem, either I'm writing a book or writing a tweet or building product. Like, I always think—

Welcome to Innovation and Leadership, where I interview uncommonly high achievers like top investment fund managers, elite special operations soldiers, startup CEOs who sold their companies for billions of dollars, pro athletes, Hollywood filmmakers— really, as many different kinds of experts as I can. The whole idea is to hear how they did it and then what advice they have for the rest of us that can be applied to the organizations we're trying to grow and innovate. Thanks for listening, and I hope you enjoyed today's show. Today on the show, we've got Sahil Lavingia. Sahil, thanks for doing this.

Thanks for having me. Excited to finally be here.

So when we first met, I don't know what that was, a few years back at Amy Stellhorn's house, another previous guest, I hadn't heard much about Gumroad, but you guys have helped a lot of creators over the years. For people not familiar with Gumroad, can you give them the elevator pitch?

Yeah, yeah. Haven't been in an elevator in a long time, but it's It's been a year, but yeah, basically Gumroad helps online digital content creators sell their work directly to their audiences. So we help musicians, designers, writers, filmmakers, standup comedians, anyone that makes stuff, we make it really easy for them to sell that stuff directly to their audience, generally social media or blog or newsletter. I started the company in 2011, right when I feel like social media was really becoming a thing and I felt like there was gonna be this big shift where people would start selling, you know, D2C, you know, direct to consumer, 'cause you could now talk directly to your audience, which was kind of a new thing. And so I think, yeah, it's been, you know, 10 years in, we've sent, I think around $400 million to creators. So yeah, around $170 million of that was last year. So yeah, it's been, it's been a, it's been a ride, definitely ups and downs, but still around, still kicking.

And a forthcoming book of which I've pre-ordered. What made you, well, tell people about the book and then tell us why you decided it was time to write a book.

Yeah, yeah. So the book is called The Minimalist Entrepreneur, comes out October 26th. And why did I write the book? I mean, honestly, so I wrote this essay on Gumroad around 2 years ago in 2019 called Reflecting on My Failure to Build a Billion Dollar Company. And that was kind of the, you know, kind of like the origin story of Gumroad and then like raising money. We raised around $8 million in venture capital and then We failed to raise a Series B, so I had to let go almost all the staff and we kind of reset from zero. And actually part of it was living in Utah and talking to people and they're like, what do you do? And I'm like, oh, I failed to build a billion dollar company. And they're like, what? What does that even mean? What do you— that doesn't make sense. You're running a business, it's profitable. And so just having to kind of explain this kind of what startup ideology is over and over again, I was like, I'm just going to put this into an essay. Did that. And then this book is kind of like, well, that's not— it's kind of like what not to do, right? In a sense, like, don't do that, don't chase unicorns, or, or, you know, these sorts of things. What— well, you know, that kind of the, the corollary would be like, well, then what should you do, right? Like, how do you actually build a business? And, and so that's kind of what this book is about. It's like, I really believe that like entrepreneurship, uh, is like the greatest force for innovation. And not only is it great for humanity because of that, but it's also great for the entrepreneurs. Like, it's an incredibly freeing thing to be able to do. And it's like the power of software and social media is like, I think like basically anyone can do it. Anyone can build an audience and build a product. And every year it gets easier and easier and easier to do it. And so yeah, this kind of book is about, you know, kind of like how do you actually do that? Like how do you build a software business from scratch? What does that look like? You know, what tools do you need? What skills do you need? Who do you need? And trying to make it as kind of turnkey or playbooky as possible, right? Which is not to mean that like you can just pick it up and like you'll have a business in a year, but hopefully it gives you all the things like you need, right? So like, and every, every— I really wanted to reduce the fluff. I think it's, you know, business books kind of have this like, you know, kind of the trope of like they're just— it's like the first chapter is amazing and then you can like skip the rest, right? And so every single chapter I tried to basically make a book like The first chapter is on the minimalist entrepreneur. The second chapter is on starting with community. The third chapter is on building product, which would be a whole book in itself. Fourth chapter is on sales, which would be— could be a whole book. Then marketing is a whole chapter. So every, you know, and then what, what— I'll just go through the rest because I was done with it. Marketing, and then growth, like leadership growth, finances, hiring and firing, culture, and then purpose are like kind of like the, the 8 different And that's it. I mean, one of the things I really wanted to do with the book, and we'll see if I kind of did it, but I want to just really make it feel doable, right? Make it feel like anyone can start a business because I really believe that. And I think a lot of people when I talk to them, they just assume that running a business is like some crazy thing. Like you wear a suit and you have a briefcase and you're staring at monitors and all this crazy stuff is happening. And when I really describe what my job is to people, they're They're like, that's it, you know? So I just, I just want there to be more entrepreneurs. Like, I just think more people starting businesses would be really good. It's never been a better time. And so, you know, but the longer you wait, the more competition you're going to have because it gets easier to get started. So like, you should start now, right? So that's kind of some of the, the ideas behind the, behind the book.

Well, I'm looking forward to it coming out. And just some of your other things that I've read, I I don't know. I'm looking forward to your approach. I think I like— I'm such an audiobook nerd. I listen to multiple books per week typically, and I really appreciate your thoughtful approach to your writing and less of a, you all need to do it my way, that comes across so often in nonfiction business literature. It's— I feel like you give the reader permission to take what they like and leave the rest. And I think that's kind of a gift.

Yeah, that's fair. I mean, even when I read business books, for some reason, I'm not sure why. Well, I actually, going through the process, I feel like I've learned a little bit about why. But yeah, you pick up a book and it's kind of like a Bible more than it, you know, it's just like very much like, this is the way you need to think about this problem. And generally like, this is the right only way. Solution, right? And for some reason the solution is like one sentence long. It's like, this is the question you need to be asking of everything, or like, this is the way you need to be solving every single problem. And yeah, the truth is like, life is not that simple or easy, you know? And everyone has like, I mean, I can listen to like Naval and he'll say schedules are stupid and everyone should just do whatever they feel like and you should just, you know, kind of find the work that feels like play. And that works, clearly works for him. And then I'll meet Ben Thompson, who runs Stratechery, and he's like, I hate what I do. I have to sit down in front of a computer and do it. And he's like running the most successful business newsletter on the planet. So like, there's just options, right? Everyone is built different. And not only is everyone built different, but like you change it, you know, yourself, right? Like the way that you, like you might be an early bird and then you might wake up one day as a night owl. Like This happens. And so yeah, I just think it's really healthy to say, look, these are the options that you have. This is how I've done it. I really believe that, for example, I really believe that you should charge money for what you build. You should build software products and then you should charge money for them. But a lot of people would disagree. Zuckerberg would probably disagree with that. And Facebook is, I think, a valuable, useful company. And so I think people just have to say, okay, what matters to you? And I think it's, yeah, it's nice to be like, look, this is what I believe, but like, take it or leave it. Right? Like, just let these ideas, and even with my tweets, which sometimes are a little bit more prescriptive, it's the goal is to kind of say, look, just like think about this for a second and then leave it. You know, I never, I think trying to get people to change is such a difficult, impossible kind of stressful thing. Right? Like if you want someone to change, it's like, a good— it's a great recipe for, I feel like, being unhappy.

So yeah, well, let's talk. I want to talk about kind of how you've got a unique frame of reference for this stuff. And can you talk about the early days at Pinterest and kind of what you took away from that?

Yeah, yeah. So before Gumroad, I was employee number 2 at Pinterest. It was my first job. I was 18, I think, at the time. Yeah, and in some ways it was, it's kind of crazy seeing where, how far they've come.

We just had the global head of creator marketing on the show, by the way. So it was kind of fun.

Oh, that's awesome.

Fun thing to see you in the creator business and now they're finally embracing it more. Go on, sorry.

Oh, that's awesome. Yeah, the creator, creators finally, finally in. Yeah, I think, you know, one thing is, is it was just a normal startup, right? Like it just showed me that like The tools that you have are the tools that everybody else has too, right? Like you're built, you know, it's like a MacBook and an iPhone and an internet connection and a coffee shop in Mountain View. And that's how Pinterest— I built Pinterest for iPhone by myself, you know, has, I assume now at this point, hundreds of millions of users, obviously not my own code anymore, but it's just the beauty of software is that you can build something once and then millions and millions and millions of people can use it. And there's nothing really special. It's, you know, I used to think I grew up in Singapore and I moved to the US and I suspected that like Facebook had access to like supercomputers or like, I didn't know like what did a startup actually look like? Like what does, for example, like if you're like, what does a bank look like? I don't know. Like I would just imagine like, you know, like the scene from Batman or something, you know, like a bank robbery kind of aesthetic. I just didn't know what it was. And when I realized, oh, it was just a bunch of people in an apartment in front of some laptops writing code and that's it. It was very, I like to say, you basically, it's very freeing, but it's also incredibly scary because you just don't have any excuses, right? If you did believe there was like, sort of you couldn't do something. Or you didn't have enough money or you weren't in the right place, then you would have an excuse, right? But like when you realize like, oh, these people are just people who are building software because they want to, if I should say, like I can, you know, I can, I can do that. Like I don't have a, like, what's my excuse not to, right? Obviously you don't have to, no one forced you anything, but like for me it was very, it was very freeing to be like, okay, wow. Like I can start a company because like these people did. And like I was, you know, I joined like this much later, but I only got this tiny sliver of the company. I should go start my own thing. And like, but. But being there is what gave me the confidence and like, you know, to be like, oh wow, this is, you know, this is it. And that's a lot of what you need sometimes. And part of the book, honestly, like if someone reads the book and is like, this is it, I would be happy because it would just show them that like, yeah, that's it. Like there's, this is what a business is. You build a product, you ship the product, you ask money, people for money, you use that money to hire some people and pay some other fixed costs. And then you just do that, you know, over and over again. It's like, yeah, cool, like, please start a business, you know.

It's interesting that you describe your experience there at Pinterest and how it all of a sudden makes it feel so much more doable. I think that's been my experience too when I've been around some very successful folks and realize like they're not a different kind of person they have just taken certain behaviors and I don't know, like it shouldn't have been a mystery, but for some reason it was like really surprising to realize just like they're just people, which sounds really stupid to say on my outside voice, but it was kind of a revelation.

Yeah. Well, I think part of it is when you consume content, one, you're consuming it from people who are probably on the, on the fringe a little bit more, right? Like you're listening to Kanye and Elon Trump and, you know, Oprah and Kim Kardashian, like these more extravagant personalities, because those are the personalities that people want to listen to generally. But then two, I think everything is edited, right? So when you read a book, you're reading like the 15th draft of the book, and so you think, wow, this person must be like a savant because this writing is phenomenal, as if it's a first draft for you, because that's what you've written. So like, that's what you're comparing against. And so, yeah, I think, I think it just sort of, when you see the sausage get made, right? And you're like, what? This is how it's like a bunch of duct tape holding this thing up. And then it's like, yeah, this is, that's what the whole industry is like. It's kind of shocking cuz you're like, the whole, our entire civilization is like a bunch of duct tape, but it works. It seems, it seems like it's working. So, you know, like Steve Jobs has that great quote, right? Like your life will change like the day you realize like The world was built by people no smarter than you kind of thing, right? Like, it's a very— I think it can be very, very, very empowering. But sometimes that's what it takes. It takes like hanging out with someone who's done it and is willing to be real with you and be like, look, like, it's nothing special. It's just like, I buy these buildings and then I fix them up. And then I, you know, I do some work, like I do more work than the average person, but it's just work. Like, it's just, you know, just watching YouTube videos and applying, you know, applying it that sets people apart, you know, these days.

Yeah. I think that's such a great quote, that Bill Gates quote. I feel like I should maybe like get that stenciled onto my wall permanently. So I have to read it all the time. Can you talk about your rolling fund?

Yes, totally. Yeah. So my rolling fund, started it last year in August of 2020. It's now $13 million a year writing $100,000 to $250,000 checks into generally early-stage startups, though not always. And yeah, it was kind of this— AngelList launched this product offering last year, early last year in February called Rolling Funds. And they had a few people using it, but it hadn't really blown up. And I was talking to Naval and Naval was like, you should start a fund. And I was like, I can't start a fund. Like, I don't know how to raise millions of dollars. Like, I don't know even how do you pick a number? Like, how much money do you start with? And every number feels big. And with rolling funds, you basically start from zero and it grows every quarter. And I think they waive the fees for the first two quarters or something. So you can start at like $100 grand from your friend of friends network and see what happens. And so I started raising this fund. I just DM'd 50 people or 100 people I'd worked with in the past.

Can you explain a rolling fund for people who aren't even familiar with the format first?

Yes, yes, totally. So the way a rolling fund works is it's effectively an SPV every quarter, right? So a traditional fund, you raise, let's say, $10 million, and you say, I'm going to deploy this capital over 4 years and manage it over 10 and, you know, collect fees on that. And but that requires you to like raise $10 million. I mean, that's a big number. With a rolling— and it's a bundle, right? Like you raise all this money and you get all this money, and then you deploy the capital over several years. You deplete the capital and then you start another fund, right, which may be $20 million based on how well you've done or what have you. Whereas with a rolling fund, it's like, imagine if every single quarter was a new fund. So quarter 1, I'm on my 4th quarter now. I like, quarter 1 was $5 million, or like $5 million a year, so like around $1.2 million. And then quarter 2 was like $1.8 million, I think. And then quarter 3 was $2.1 million. And now quarter Q4 is 2.8 and my next quarter is gonna be 3.2, I think. So it just grows because, you know, I can constantly be taking in new LPs and the feedback loop is so much tighter because of that, right? You can kind of iterate on a quarterly basis. And the other really interesting thing about rolling funds is you can do it publicly. So that was kind of the innovation that I brought to AngelList and I think why it kind of, it got heated last year and it kind of entered the zeitgeist of kind of VC Twitter was, Generally, with funds, because of the SEC exemption, you can't talk about it, right? So you can't generally solicit. You can't say, hey, I have a fund. I can't go on Twitter, which to me, like, we've been talking about why does Gumroad exist? Well, it exists because, like, I believe that social media was gonna allow you to talk to your audience, and that's gonna change everything, right? And so rolling funds is kind of just like the application of that, which is like, what happens if you have an audience and you can talk about your fund and you can raise money on an ongoing basis? It means that I can do something that no one's ever done before, which is go on Twitter and in front of 100,000 people say, hey, I have a fund, you can become an LP and do this publicly in a way that has never really been done before.

And is the exemption a Regulation A+, so you can take it from anybody, or is it like a Reg D 506, so it's accredited only? Or do you know which one it is?

Yeah, it's a 506, so it's still only for accredited investors, unfortunately. I am very hopeful that in the next 10 years, we'll we'll see movement on that legislation-wise. But yeah, currently it's still only accredited investors, but at least you can talk about it publicly, right? That's the same.

That's the same with our real estate fund. We did a C so that we can talk publicly.

Yeah, it's awesome. It's really amazing. And it was funny because when I launched it, like, all of these VCs were like, you can't do this. This is illegal. And I'm like, actually, in 2015, the JOBS Act made this new thing possible because guess what? The internet kind of requires you to be able to do this, right? Like YC Demo Day and AngelList syndicates. This is a thing that's happening and there have not been any scams to date. We should probably allow this, right? And so, yeah, it's a pretty amazing innovation that for whatever reason, it's funny because, yeah, real estate, I feel like other groups of other people have adopted it and VC is supposed to be like the innovative class and we were like the last. I feel like is we love backing innovators, but actually innovating on venture itself is kind of scary, I think, to a lot of VCs.

And can you talk a little bit about your thesis and what you've decided to pursue?

Yeah, totally. Yeah. So my simple thesis is I believe software is one of the greatest changes since the printing press. I would say money and then writing, And then software, like other kind of like 3 stages of, of sort of, you know, hyper-scalable, you know, kind of fungible idea generation and sales and all these sorts of things. Like it just, it's just so much better. Every, every sort of civil— and it's like civilization is also kind of unrecognizable, right? Like before and after money, before and after writing, before and after software, I believe like civilization just looks very, very different in terms of government, in terms of in terms of transportation, in terms of supply chain, in terms of manufacturing. Everything changes because just the building blocks that you're building society with are just fundamentally different. It's like electrons instead of bricks. I believe startups are the best application of that. Startups are basically, you raise some money and then you build a bunch of software and there are phenomenal returns for investors. The problem is that just most people can't invest in startups. Like, trying to diligence a startup is very, very difficult because unless you've been early at a company or started your own, it's very difficult to vet. You also don't have the relationships with these kinds of people. They previously were located in a very specific part of the world. Now that's changing, changing a lot with COVID And so yeah, my thesis was really simple, was like, I have a big audience on Twitter and other social media platforms. I have been a founder. I've written things founders like. So like, I They ask me to be on their cap table a lot. I don't have the personal capital, but I can raise money in this new way from a couple hundred, at this point, LPs like Naval and Marc Andreessen and Chris Dixon and Tim Ferriss and a bunch of other folks. And that gives me $13 million right now that I can go give to startups, you know, $100,000, $250,000 at a time, and basically let them continue to do whatever they plan to do, right? Like, as a founder, I know what's important, which is like, I need your money so I can go hire some people, and then I need to go build stuff for a while. And so, you know, it's a really simple model. I don't really have a thesis in the sense of like I'm focused on a specific sector because I just think software is going to change everything. So you kind of need to go broad. Otherwise you just kind of say no to deals that you shouldn't say no to. But yeah, I think that's sort of like the baseline thesis and it's super people-driven, right? At this early, early stage, pre-seed, seed, pre-revenue, often pre-product, it's like a bet on the people. It's a bet on like, can these people build stuff? Can these people sell? Can these people hire? And luckily, if you've been in the Valley and you've met a bunch of these people and you've started companies, things like that, you have a pretty good mental model, I think, of like, okay, this is a founder personality, right? This is someone who can build, can storytell, can hire, et cetera, et cetera.

Yeah. Can you talk about a few of these people on your track record? You know, HelloSign, Movable Ink, Lambda.

Yeah, it's not too bad. Figma, Notion, Clubhouse. What else is there? Yeah, there's quite a few. I mean, I think— go ahead. And it's a small portfolio, you know. So my first— my— what I— when I started, it was 2011. I was at Pinterest and I was like, I need to— angel investing is the way that I can like learn faster. I can like— I had— I was no longer paying for college, so I had some money saved. I could go deployed into startups. My parents weren't super pleased with that, but I ended up investing in 5 companies, and then 2 or 3 died. And then HelloSign sold to Dropbox for $230 million, and Movable Ink, still private, and it probably 50x that investment. So like, that portfolio is probably up around 18x, I think, in 9 years. And then, and then this new— yeah, my new track record, I mean, it's super young, so it's hard to say. I just started investing in 2017. My first investment then was Lambda School, and then I've since done— yeah, Notion, Sigma, Clubhouse, Republic, On Deck, and a bunch of other ones. We'll see. It'll take 5 to 10 years.

Republic's interesting to me. We had Ken on the show.

I like it. Oh, awesome. Ken is great. Ken is, he is that person, right? He is a founder. Like you talk to Ken, I feel like for 2 minutes and you're like, okay, this, I don't wanna be on the opposite side of this person. Like he's going to change the world. And, you know, I hope I agree with him because it's gonna happen. Yeah, Republic is a phenomenal company. It's the company we used to do the Gumroad crowdfunding around. But yeah, it's not, it's not a bad track record. The, the first quarter— one of the other nice perks about the rolling fund is it just makes me sort of more diligent because it gives me quarters to think about. So it's not like I just invest for 2 years and then I have to look back. It's like every quarter I can, I can see how that vintage is kind of doing. And that first quarter is Q3 of last year, so it's been around 10 months, is up 2x so far, mostly because I did 12 investments and 2 of them I've done Series As from Andreessen and Sam Altman. So it's not bad. It at least shows that I'm investing in companies that some of them raise money from top-tier investors. So I have good deal flow. And venture is kind of this interesting A lot of people try to get into venture and it's really hard when you have zero track record. And it's not to say you need to be insanely connected, but you need something that sets you apart from everybody else. And everybody is like, I want to raise money to start a fund to invest in startups. But it's like, what startup? All you need is one. Just name me one startup you've invested in that either has raised money from a top-tier investor afterward or has returned you some capital. And it's a hard game. I think it makes you really think like, oh wow. It's easy to write checks into startups, but to actually get into the right ones is not easy and it's not hackable. A lot of people, I think they saw my rolling fund and it was kind of an overnight success. They're like, oh, anyone can do this. And that's true in the sense that anyone can do the software component of it, but building the relationships, having a track record, building a company is really what gave me a lot of that. And there's no way you can really skip that part, right? It takes years and years and years to build a company. And there's— I have yet— I wouldn't, you know, if you know any shortcuts, let me know, but I have yet to find any. Unfortunately, no shortcuts are in my book. No shortcuts and no secrets that I have found.

You know, I think over the years as we've talked a bit here and there, one of the things I I kind of appreciate about you is I feel like you're a very observant person. You know, I'd be interested in your thoughts, you know, like let's talk about Naval for a minute. I feel like he's like the Oprah of startups because he's like the only guy that doesn't need a last name, you know? But for anybody who doesn't know who he is, can you tell him just like the tiniest bit about his background and AngelList and then maybe make an observation of why you think he's been as successful as he has?

Yeah.

Yeah.

So Naval started a company called AngelList, which is basically, I would say, besides Y Combinator, the startup accelerator and incubator, the most disruptive sort of force in venture capital, like syndicates, rolling funds, a lot of their AngelList talent stuff, Product Hunt. Like they've just done a lot of stuff. And, you know, before that he started a company, I believe called Opinions in the sort of the the first wave of startups back in the '90s. I think he went to Dartmouth for a CS degree before that, before moving out to San Francisco. And he's just really good at Twitter. Like everyone should go follow him on Twitter, check out his tweets, N-A-B-A-L. And especially in the last, like I met him 10 years ago, he invested in Gumroad. I met him through AngelList and he's definitely changed. Before he was like super, we've had a feel like a similar life trajectory where you're like, you start out, you're like, I wanna change the world. I wanna build billion dollar companies. And then you realize like, life is a little bit more than that, you know. You want to have a family and like spend time with loved ones and like learn skills and write and observe. And I do think observation is like a really important skill. I learned this painting when— like, one of the first things I learned painting was that painting is not about your ability to paint, it's about your ability to observe what's in front of you. And if you can observe what's in front of you accurately, Anyone can paint, like that's the easy part. Writing is similar, right? If you think about writing, writing, typing on a keyboard is not that hard. You learn how to do that in middle school, but actually like having interesting, clear ideas and thoughts are, that's the hard part, right? So I think a lot of what I think about is like, how do you observe better? How can you pay attention more? And it's kind of counterintuitive because you're obviously paying attention, like the things are happening in front of you. Like you are seeing what's in front of you, yet somehow you're missing a lot of it, right? Like there are things that you just don't notice. There's just too much information in front of you. There's just sensory overload. We're sensory overloaded all the time. And so your brain is always shortcutting. You know, a really simple test that I sort of, a thought experiment that I use with people is to draw a $1 bill. Everyone thinks they can draw a $1 bill. They know the shape of the bill, but no one can draw a $1 bill because you never needed to. You never needed that information. Your brain has simplified this symbol in your head, just like almond eyes that you draw with little 3 eyelashes or a sun with rays or a house with a triangle on top. We just can't help but think in these symbols because we need to basically save information and save RAM effectively. And yeah, Naval, I think, was the first person in sort of the startup industry, I feel like, who really highlighted the power of observation, right? He says these things that are obvious the second you hear them, And they're using simple words and they're not really inaccessible to anybody, but he was the first one to notice it and put it in that way. And he gets, I think, a lot of credit for that. And so I always try to keep that in mind. Like when I try to tackle a problem, either I'm writing a book or writing a tweet or building a product, I always think that the more time I spend in my head thinking about the problem and getting to a solution, like the better, the better off I'm gonna be. And, and very many people move very, very quickly and you just, you basically just go in the wrong direction for a year. You know, I think if you can plan well, if like, I think it's just a really, really important skill and it's really, uh, transitive, right? Like you can take observation and you learn it with writing or cooking or painting or filmmaking or standup comedy and you can apply it to anything. I really believe you can take Dave Chappelle and say, "Hey, we need you to do this other totally different thing." But the core fundamental skills of observation, of clarity of thought, kind of moves perfectly through. He might have to learn how to strum a guitar, but once he gets past that hurdle, he's going to shoot right past a lot of other people because he has the fundamental skills that he's been working on for decades. I think investing is like this too. I think investing is generally the power of observation, right? Like, I love the job of an investor because you're literally just paid to read and listen and meet people and like meet smart people and give them money. Like, your job is to give people money. Like, it's a pretty, it's a pretty nice gig. But yeah, I think, I think if I, if I am a good investor, if you think about all the things an investor has to do— raise capital, find startups, vet the startups, help the startups, or win the deals, right? Win the deals against other investors and then help the startups— the 5 kind of things In my view, the 99% of the job of investor, the thing that sets up apart like the top 1% is the judgment. It's the picking of the right startups, right? Like once you solve the deal flow and the raising of the money and the helping of the startups, I think the hardest thing is why did you pick Instagram versus Pick Please? Or why did you pick Pinterest versus Supply? Like that's really, really, really hard.

It would be interesting, you know, when you think about, you know, AngelList and, you know, Uber and Twitter and Clubhouse and all these ones. It'd be interesting to hear what he observed back before the rest of us knew about them. You know what I mean?

Yeah. And you know, it's funny, like I've, I've talked to him a little bit about, about some, some of the deals specifically, right? Like Clubhouse we're both in and he was in earlier than I am, which is the case in basically everything. But, you know, the crazy thing is how every single one is different. Every— the rationale and reasoning behind every startup and every investment is like, it's a set of 15 different variables and it's unreplicable. The reasons you invest in Clubhouse are going to be different than the reasons you invest in the next thing, which is why the job is so difficult to copy. You really can't copy someone. You kind of have to build your intuition from the ground up, which is, I think, why it's so valuable is because you cannot copy it. You can't sit down and read Naval's tweets and invest like he invests. You had to have gone through his experiences and his reflection on those experiences in order to invest as well as he can. And because it's based on such a tiny amount of data, it's like an hour-long meeting, a prototype, maybe a conversation over coffee with somebody, and then it's like, here's $100,000, here's $250,000. Joining Pinterest for me, or making iPhone apps back in the day, or getting into crypto or whatever, like, you just kind of have to, like, you, you develop your intuition by making a lot of bets. A lot of those bets are incorrect, but your brain— I really believe your brain just operates on a subconscious level and, like, starts to figure this stuff out. Like, I can meet with the founder, and this has happened where I'll meet with the founder, it'll be a great conversation, and I can't invest. Like, I'm just like, I'm sorry, there's something feels off to me. And twice in the last year this has happened to me. Where like 6 months later there's like some big scandal or like there's this startup shuts down or there's like some weird tweets and they disappear off the face of the planet Earth and stuff like that. And it's like, I just, you know, I'm not super, I don't know, I'm not into voodoo or whatever, but like I do believe that like everyone is operating at like these kind of lower level frequencies that you just can't pick up on. And you have to just do it.

You know, there's some empirical evidence to support that. I remember being in a law enforcement training. I was teaching about this idea of like, you know, thinking about humans as humans instead of as problems, you know, or as objects or whatever, right? And this other guy was teaching about how to help officers write police reports. And it's like, you know, some guy gets stopped in the alley and the cop stops him in this alley, arrests him, ends up he's a really bad dude. And in the court case, The defendant's lawyer's like, well, he never should have been stopped, and you know, you shouldn't have even known that in the first place. You know, they're like, you know, they're trying to get anything they can to get him off. And so they had to go back to the cop, and they're like, well, why, you know, why did you stop the guy? He's like, I don't know, I just had a bad feeling, you know. And what's funny is this guy is like an expert at helping cops break down what happened and where the signals were, and it's like Okay, well, where were you and where was he? Well, I came around this corner and he was there. Okay, was he looking at you? Was he looking away? Well, no, he looked away as soon as I looked at him. And like, he starts— he like just knows all these questions to help the cop identify what were all these signals, you know, that triggered your intuition of being in dark alleys for 15 years as a cop to know like, ooh, I don't think this guy's supposed to be here, right?

Yeah. It's, it's no, you're exactly right. Like you, you and I do believe at some point, like, you know, you maybe you have a sophisticated enough supercomputer, like you'll be able to figure out truly why you came to that conclusion. But yeah, you just, you know, we're not going to get there for a while. And like, there's a great book, Moonwalking with Einstein, where he talks about chicken sexing, which is like, you know, you basically have to pick up a chicken. If it's male, you put in this bucket. If it's female, you put in this bucket, right? And they're doing it basically without even knowing. Like, they can't even tell you why they decided it was— how they were able to make that designation, but they were— they're just— they just do it. And you just— your brain is picking up on stuff faster than you can even notice that you're picking up on that stuff, right? Like, if it's like— if I, you know, if I, if I like scream at you, you're gonna react before you have a chance to monitor your reaction. You're just gonna do And I think investing is often like that. And I've talked to so many investors and I feel like one thing I've noticed with almost all of the top, top, top investors is that they make a decision almost immediately. They make a decision on, am I investing in this company in seconds sometimes? It's really fast. It's Brandon Sanderson, a writing teacher of mine, what he said, He said this really, really, really well. He said, how long does it take you to know how good someone is at playing piano? The answer is around 5 seconds. And that's mind-boggling. Like, you can demonstrate competency, mastery at a skill that might have taken decades to get to in seconds, right? And it's impossible to fake, right? Like, I could not even fake it for 5 seconds. And so, you know, it's just the muscle memory, like all the, all the things I don't have. And so I always try to keep that in mind of like, how can I get good at this skill that I'm doing? It's not time-based, right? How do I actually just improve my judgment, improve my intuition? And, and if it takes me 5 hours to prove that I'm good at something, it probably means I'm actually not that good at it yet. I need to work on, need to work on that.

Yeah. You know, let's talk about other folks like, like Ben at Pinterest. What, tell me, tell me an observation about him.

Yeah, Ben has always been insanely focused on product. Like he, and it's, you know, I had a, you know, I guess we should tell everybody Ben Silverman, CEO of Pinterest.

Sorry, go ahead.

Yeah. Ben CEO, CEO of Pinterest. Sorry, Ben Silverman, CEO of Pinterest. Yeah. I mean, he was one of the first people I met in Silicon Valley. So I just assumed everyone was like that brilliant and thought that for months until I realized I probably should have stuck around at Pinterest for a little longer. But yeah, he just, you know, I was maniacal about product. Like, that's always what I get excited about. And he was too, you know, he was just like, we would always just talk about product and like, how do we make the product better and better and better in very incremental ways? Not like we're gonna big picture redesign everything and it's gonna be crazy, but like, this button is too confusing, or like this, you know, just like the, the The, again, observation, right? Like his ability to pay attention to the product and improve it and, and, and fix what didn't feel broken at the time, but the minute he notices it and points it out to you, you're like, oh, of course that's broken. It's, it's, yeah, I think I really took that away from him. He also was just, he, you know, as a new person, I wanted to build stuff, right? I wanted, I cared about product, but I wanted to ship product. I wanted to build a bunch of stuff and, and he was, he would basically say no to everything. Every idea I had, he was like, no. Not that the idea was bad, and a lot of these things ended up getting built years and years later, but the simplicity of the product, the simplicity of Pinterest, the fact that you can probably even today describe it in a sentence, basically it's like visual bookmarking. It's like scrapbooking on the internet where you just pin stuff and then organize that stuff into boards and people can follow you or follow your boards and that's it. And that's a $50 billion company.. And so I think that really, that focus, I think it took me years actually. I don't think I realized how important it was, but your ability to ship a ton of features is not competitive. Again, it's not what separates you. It's the intuition. It's the building of the right thing. And that's really, really, really hard. So yeah, that's a big thing I picked up from him was he was just like, if this doesn't fit into the sentence of Pinterest, we can't build it. Because otherwise we're going to have to explain Pinterest in 2 sentences. Every single new person is going to have to take 2 sentences to understand this thing. Again, power software. You can build this thing and it solves the problem. Turns out hundreds of millions of people have this problem. It's a valuable company.

In our conversations over the years, I don't think I've ever told you I'm a totally obsessive pinner. I have like 28,000 followers. I have like— I have like, you know, 60,000 pins or something. So my, my, it's like how I deliver on my inner art school dropout. It's like pinning like crazy for my ideas. So then when I do have like a Saturday to do a painting, I don't have to think of an idea. I just go peruse and go like, do a mashup. Ooh, I wanna do a mashup of these 10. You know, it's my efficiency. I, I gather all year long and then my few times that I'm doing art, that's where I go for it.

That's awesome.

Well, listen, what's— I know we're kind of winding down here. What's one of the best pieces of advice you ever received?

Oh man, what? I don't even know. I don't, I don't keep— maybe I should keep better track of this. I mean, you know, one thing I've heard over and over and over again is how important kids are. Like, people just, you know, it's, it's just, it's just profound to me how I've met some— I don't know, people who are, who've changed the world, who built amazing things that they would be incredibly proud to have built. And like, they're like, oh yeah, the, the most important thing in my life is this thing that, by the way, everyone else does too, right? Like, it's kind of weird. Like, you're the only person who did this, but actually the thing that you value the most is this thing that anyone can do, you know? And to me, I don't know, it's just like amazing. And it just like, it gives me that perspective. Like, it's so easy, I think, to get caught up. And even after going through the ups and downs, like, you can't help but sometimes be caught up Oh, we're going to change the world. We're going to build this amazing thing. And when I sit with Naval or somebody else and they're like, yeah, the most important thing is my children. And it's like, okay, I don't have kids yet, so I'm not sure. I don't know yet, but it seems like I should probably not take my work too seriously. And I have a lot to learn. And so, yeah, I think just staying humble and realizing that The things I think are important, I know historically I used to, Gumroad at one point was life or death and it felt like life or death for me and it wasn't. And I suspect that is probably a trend. It's probably true for a lot of things. A lot of people feel like things feel really dire when you're in middle school, right? And you have those moments every week where you feel like your life's going to end. So yeah, I think just having perspective and I feel like just realizing that you have a long life ahead of you. I was 18 at Pinterest. I was like, how do I become a billionaire as fast as possible? You just set yourself up in all these very, very strange ways. And nowadays I'm like, I have time. I'm not in a rush. I have decades. I actually want to take more time because I think Gumroad, if I'm having fun, wouldn't I want to have fun for a longer time? Like, why would I, you know, try to have fun in a year? And then, you know, then I have to manage a bunch of people. Like, that's not fun. So yeah, I just try to really optimize for like what I want to do. And even Naval recently, like, we raised like a small crowdfunding round, and he, he was one of the larger investors. And, you know, I was like, hey, there's all this stuff we do differently. Like, we don't have meetings, and we, we work async, and there's like really no intent for me to ever see any of these people in person ever. And he's like, look, like The way that you built Gumroad, no one else would've stuck with it for as long as you stuck with it and made it successful in the way that you made it successful. And so your ideas, a lot of them are weird and not copyable by anybody, but you should keep doing them because it seems to be working and it would be a shame if you raised a bunch of money and then you just did the thing that everyone else does. So that's, I think the other thing is I really, with this book and with everything else, I'm like, I really wanna do things my way. And again, this isn't to say that my way is the right way, But that like, I just believe so deeply that like in experimentation and like, I'm okay being wrong, but I'm not okay. Like never having tried the weird thing because just, I don't believe most people try them. Like I think more people need to try the weird experiment. And a lot of people are like, don't you think that's gonna fail? And my answer is always yes. Like I assume it's going to fail. Like everything I do, I assume is not going to work. I'm lucky and grateful that I can be in a position where I can basically do that where I don't, these things don't have to work, but I just think it's important. I think it's important to kind of like, I call it like take a new walk to work every day. Like you should always be trying out new stuff. You might never know what cool thing that you find or person you run into or coffee shop you see or whatever. Like, and then for the rest of your life, your life is now better because you had this new observation or new experience. Right. So I just, I really try to keep that in mind. Like what, what new thing can I do today that I didn't do yesterday that no one else has ever done before, which sounds audacious, but then you realize like the world has never existed in this way. So it's actually not that hard. To do something totally different and new. You just have to be willing to go out and find it and do it. And be willing to—

Well, before my last question, tell everybody the name of the website for the book so they can go preorder it too.

Yes. Yeah, you can check out the book at minimalistentrepreneur.com, which I understand is not the most minimal title. So if you want to find it another way, you can just Google S-H-L which is my Twitter handle, @shltwitter, and then, you know, click the URL there and you'll find it too. But yeah, minimalistentrepreneur.com. Love it.

Well, maybe my last question here is, when, when you're deciding who's going to be your mentors, like who you're going to listen to or who you're going to go back to repeatedly, what's on your criteria? How do you, how you, how do you decide who you want advice from?

Yeah, I mean, well, one of the, one of the beautiful things about the era we live in today is you can learn from everybody, right? As long as they're sharing their thoughts and some, like, you can listen to this podcast and I just think I learn more from people I've never talked to than people that I would consider mentors, right? In a more official, quote unquote, official capacity. But yeah, I think high integrity. I think people who've actually built stuff, people who are willing to tell you what they think. I can say, hey, what do you think about this idea? Like I do this all the time where I'll write up a Notion doc. I'm like, this is a crazy idea I have. Literally 9 outta 10 times somebody is like, this is stupid. Naval or someone on the Gumroad team or like people are always telling me that my ideas are stupid because they are like most of my ideas are bad, but I have them and then I sit down and I try to write them out and I try to, I even will sometimes like design something and then someone will tell me it's stupid and it's great cuz I don't have to go. I don't have to think about it anymore. I got it out of my system, you know? But very few people are willing to actually do that. Like, the vast majority— the amount of startups I've invested in— this happened recently, a week ago. This startup is like, has 50 or 60 customers, and I gave some feedback, like, a customer of theirs. I was like, hey, you know, I think, you know— and they explicitly asked, like, me, like, they asked everybody else, like, do you have feedback? We want to get better. And I'm like, yeah, here's 5 things I, you know, here are a bunch of things that I think you can do you, you can think about, you don't have to do any of these things, right? Obviously it's your company, but this is what I would think about. And they were like, you're the first person to bring that up. And I'm like, what? Like, it's no offense, but it's pretty obvious as a person who's trying this thing out for the first time. Like, that's one of the first things I would think that many people have had that suggestion. But the truth is, like, it's— there's such a— for some reason, certain industries or certain jobs, like, you know, you're just not supposed to tell people their wrong or they can get better. Like, it's just uncomfortable. It is uncomfortable, right? It's like, hey, you could have done this better. And it sort of triggers that fight-or-flight response in you, right? Where you're like, I could tell them or I could just run away, uh, never see that person again, right? And so I just try to really— what, for myself, but also when I try to meet people and find people in my, my sort of inner circle, like, I try to find people who are like really going to be willing to tell me. Like, one time I remember I wrote a chapter of this science fiction novella I've been working on for way too long. And I wrote a new draft of it after getting a bunch of feedback from my writing group. And this guy Amit was like, this is worse than the first draft. Like you're— and I was like, oh my— but that's better than not telling me that, right? Because then I'm gonna stick with it, right? It's way better to be like, hey dude, like you, you miscalibrated on this, right? Because again, like what I'm trying to do is train my intuition. Not be— not produce amazing things, but actually make the system of production, like the factory. Like, imagine like Tesla versus the factory, right? The car versus the factory. I, I'm the factory. I want to improve the factory. I don't care about what I produced, the cars. Like, tell me the cars are crap, because like, that's how I make my factory better. And just, yeah, very, very few people are, I think, really willing to, to put themselves out there and say, hey, you need to get better at this, you know, if you want to succeed. But you— I think people, people need that. I think beyond the stuff we've talked about, intuition and trying and doing these things, like I think getting really good feedback can be really, really key in your personal and professional development.

Yeah. Solid advice. I think that's a great place to end. Thanks for making the time for this.

Awesome. You're welcome. You're welcome. Sorry, I don't know if you saw my emails rescheduling a bunch, but I'm glad it finally happened.

Yeah, me too.

Yeah. Okay.

Bye everyone.