How Course Businesses Work & How Irish Pubs as a Service is Making Millions | My First Million #183

That alone is kind of like to your point here where if you're a creator with an audience with credibility, if you've done something, if you're actually good at a skill, yeah, you can get to $1 million a year of profit, not just revenue doing it as an individual course creator.

Yes. And the path is quite straightforward. The tactics are simple, but it's basically—

Yeah, I feel like I can rule the world. I know I could be what I want to.

I put my all in it like no days off on the road. Let's travel. Never look All right everyone, what's happening? We have a good episode, but before we get to it, please do me a favor, click the subscribe button on iTunes and the follow button on Spotify. Last week we got a ton more Spotify listens because they're doing something. I think there's like a popup right now that shows to people when you listen to the podcast that asks if you wanna follow. And anyway, I wanna see if that's working. So go ahead and click follow on Spotify and then click subscribe on iTunes. And the reason why is the more you click that, the higher we go up in the rankings, the higher we go up in the rankings, the more listens we get, the more listens we get, the more cool shit that we can do. So do that now. In this episode, we're gonna talk about course businesses. Um, the course business is something that a lot of people are interested in. I think it's one of the easiest ways to make a million dollars a year. Uh, but we're also gonna talk about how companies are making $100 million a year doing it. So go ahead and give us a listen. We're gonna talk all about the course businesses. It's gonna start in just a second. And make sure to click subscribe, click follow, and we'll talk to you soon. We got a lot of cool stuff going on, but how you doing?

I'm good. I'm still recovering from your sick burn about my sweatshirt.

They'll see on video. It's, it's, it's not that it's bad. It's just that it would have been a lot better if you wore it as like a 9-year-old in 1994.

I look like a skateboarder who got his birthday present. Oh yeah. You know, a 12-year-old skateboarder who got his birthday present. And then Abreu clapped back at Sam and told him he looks like a knight who's wearing the, like, chain link stuff that goes under your armor.

You look like the extra from the Disney movie Brink. Okay, I have not seen that, but you look like a '90s Disney movie extra.

Dude, I wish. That would be an upgrade from my reality.

Have you, um, do you read books?

I can't tell if this is another burn or if that's a transition to a real question. Do I read books? Do you know how to read? Yeah, I read books.

You— how many books do you read?

I'm not— this is like real.

This is real.

I don't know. How much do you bench press? I read like— I'm reading like a book all the time. Like, it doesn't have one book that's going at any given time. Probably read, I don't know, 3 or 4 a year.

Do you, when you're reading it, do you feel like you absorb it?

Yeah, I intentionally read slow and I reread and I take notes.

So that's what I'm doing now instead of like, you know how like, do you know who Ryan Holiday is?

I know about him.

Yeah, I love Ryan. He's cool, but he reads like 5 books a week and that's popular that people will say like their New Year's resolution, I'm going to read 50 books this year. Right. And I'm like, damn, that's hard. Just to do, but like, do you learn anything? And what I'm trying to do now is only read 2 or 3 books a year, but I'm, I'm like quizzing myself. I'm trying to master it. And it's been really hard.

So what I do is I get a bunch of books, like I'll buy a book every 3 days, probably. If anything looks interesting, I have an unlimited book budget for myself. And I've had this for a long time where I just decided, okay, I'm not going to be— I'm not gonna have a budget.

I do the same thing, by the way.

And so I just instantly buy it on my phone. I use the Kindle app on my phone to read. I have a Kindle. I have physical books sometimes, but the phone is always with me, so I like that better. I end up reading more there. And what I do is I will, I'll read like 5% of 50 books in a year, right? Like I will just pick up a book, I'll start skimming through it. And I just assume that most books are bad. And so I'm very, I do not complete 95% of the books that I read, that I start. And I think that's totally okay. The book has to actually like be interesting or grab me or say something interesting for me to try to finish it. But then once I do read a book that I like, I will reread that book multiple times over the years. Like I'll reread the book in a few years.

Same. I, I do the same thing. I use it as a reference book and I reread it a ton of times. Um, I wanna ask you, uh, so today I wanna talk to you about course businesses and I went down a rabbit hole and I called someone right before the podcast in order to get intel and get insights. It looks like you have a ton of ideas. But can we start with something really easy, which is you got into an argument with someone on Twitter. That's what you have listed here. And I am— you alluded to it a week ago. What happened? I don't know what you're talking about.

Okay. So, all right. I'm going to try to do this without getting— without restarting the fight. I tweeted out that I said, you know, I don't even know what I said exactly. I basically said, Elon Musk and Jake Paul have, um, yes, I said, I said Elon Musk, you know, sells cars and, uh, launches rockets and raises money and does all this stuff. And that, you know, Tesla never runs a commercial. Uh, Jake Paul is like, uh, does the same. He's gonna sell millions of dollars of pay-per-views for this boxing match that he has coming up, uh, without a commercial. And I said, the best marketers don't spend a dime, right? Just kind of like a, an observation. It's not like obviously—

And also like a cute soundbite tweet.

Yeah, just a soundbitey thing. Obviously many marketers spend money and they're great at it and it's a smart thing. I do, I spend money when I advertise too. It's great. So that's not really the point. The point was some people are able to hijack people's attention in the news and have done very well with it. Right. So I tweet that out. Doesn't even seem like that controversial of a statement to me. Um, move on with my life. And then a few people start commenting. A bunch of people were like, yeah, true, blah, blah, blah. And then a couple of people comment like, you know, yeah, but Jake Paul's an asshole. Okay, fair enough. Doesn't matter to me. And then one person who's a writer for the New York Times basically says, I can't believe you. I can pull up the tweet.

I should pull up the tweet because this is going to be stupid if I And while you're doing that, the person you're talking about, her name is Taylor Lorenz. She works for The New York Times. A lot of people in the tech world and a lot of people in general really dislike her. And I'm— I actually— let's be objective here. A lot of people really love her. So we don't always want to go the negative side. But sure, sure, sure. Okay.

So I have my stuff in front of me. And by the way, I don't have her tweet because she now has blocked me. But so that's the end of the story.

All right.

So I said Elon is pumping Dogecoin on Saturday Night Live while the Paul brothers are raking in tens of millions. Just by stealing Floyd Mayweather's hat while a camera is on. The greatest marketers don't spend a dime. By the way, did you see the hat thing? The gotcha hat thing?

So funny.

Yeah, so funny. Okay, so if you haven't seen it, Jake Paul's older brother Logan is scheduled to fight Floyd Mayweather. Logan Paul's a YouTuber. Floyd Mayweather, probably the greatest boxer ever. It's not even going to be close. It's not even a— it's not even a— like a real contest.

It's like 2000 to 1 odds.

Yeah, it's like Celebrity Deathmatch. You have two celebrities just agreeing to go punch each other, but like one of them is actually a professional puncher. Yeah. And so anyways, but they have to sell the fight. So in the press conference, you know, they have to pretend like, oh, I'm talking trash, like I'm going to beat you and you're talking trash like you're going to beat me. Anyways, Jake Paul stole the show. This wasn't trending very well because it's so one-sided. Not a lot of people wanted to go buy this because there's not much intrigue of what's going to happen. The only people want to buy it are just people who want to see a bit of a circus. And so Jake Paul goes up to Floyd Mayweather and they're talking shit like, you know, I could beat you up, you could beat me up. And then Jake Paul goes, got your hat, and then just took his hat and ran away like an absolute third grader on the playground. Funny as hell. Of course, you know, to ham it up, Floyd Mayweather tries to go fight him because he took his hat. And then there's like, you know, 70 people all holding their camera phones up recording the thing.

And it's just a shit show. Just a shit show. Yeah.

So that went viral. That goes— that gets on every blog and that goes viral on social media. Some people think Some people think it's whatever. It doesn't matter what your opinion is. They got a bunch of attention from it. So that's all I was pointing out. And in fact, Jake Paul then tripled down on it, which was he did the Gotcha Hat thing. It goes viral on social media. While it's going viral, he has his merch guy create Gotcha Hat hats, puts it up on his store, sells out of Gotcha Hat hats, and then he gets a tattoo on his leg that says Gotcha Hat. And post that, that goes viral, that Jake Paul got a tattoo of the thing that just happened. So he got a double pump, a second pump of news PR out of it. So I was just pointing out that these guys are good at marketing. They're good at marketing themselves. They're self-promoters by definition. You really can't disagree that the Paul brothers are not good self-promoters. They self-promoted themselves. Yeah, huge. Anyways, a bunch of people say yes, and then a couple of people are like, you know, These are pranksters. They shouldn't be labeled as great marketers. Don't set them up as anything to be emulated. Basically, like, don't say they're good because people— what they were saying was like, people follow you.

Well, they were basically saying, well, Sean, they're bad people. And you're like, yeah, I don't care. That's not the point. They could be the worst person on earth. I'm just saying, I'm just showing that they get eyeballs.

Yeah, they're effective at marketing. That's all I said.

Yeah. It's like saying like a cigarette company could be a great marketer. Who cares if you think cigarettes is good or bad?

And so this writer for The New York Times basically takes this as an opportunity to come in and promote her own article in The New York Times that says, I covered the story about the sexual assault allegations against him. So, you know, you really basically— I don't know exactly what she said because, again, she blocked me. I can't go read it. But it said something to the effect of, like, it's messed up to promote them or say something like to be saying that they're good or whatever when they're actually jerks. They're bad guys. They're assholes. Whatever. Say this guy's been accused of sexual assault. So I kind of, I don't even remember what I said back, but I kind of went back and forth and I was just saying what you just said. I am not saying that they're good humans. I'm not saying they're great citizens. I didn't say they should be president. I said they're good at marketing. I don't really see how that's arguable. And then, you know, they clap back again and said, you know, basically you're a jerk for saying that he's good. And, um, and so a couple things happen.

First is, dude, I, I like R. Kelly could be a great singer and also a horrible human being.

Yes. And so, so one of them was like, you know, is there really anything to learn from these guys? Um, blah, blah, blah. And so anyways, they're going back and forth. I, and I'm, I'm getting agitated at this point. And so the New York Times writer, um, she goes, she said something that was like, again, just like trying to like virtue signal. And I just replied, I go, she was, she said something like, I don't think he, I don't think he knows the point. He's, I don't think he's making the point he thinks he's making. Talking like replying to me, talking about me, but as if I'm like not in the room. Anyways, I thought that was just like a weird way of saying it. And so I just go, you are the Jake Paul of journalism.

Oh my gosh.

Got blocked instantly. And you know, a bunch of people were, that got a big reaction out of people. Now, I thought this was the perfect kill shot.

Why?

Because that's not an insult to me. I'm so— first of all, it's true. Her brand of self-promoting herself as a journalist is confrontation. She gets in confrontations with Keith Raboi, with Balaji, with Naval, with whoever, right? She just goes and picks fights on Twitter with Marc Andreessen. And so she goes to the biggest names, she creates controversy, picks fights, And then she also, like, then as soon as they sort of attack back, then she turns that into a story, which is big bad tech is bullying me. And so I was just pointing out that actually her form of self-promotion is the same as Jake Paul's. He went to Floyd Mayweather, agitated him, picked— gotcha, hat— and used that controversy and that confrontation to build his own brand. So I was, A, correct in the way— in identifying her own playbook of self-promotion. B, it's not an insult to me. Again, I have no problem with Jake Paul. Jake Paul came on the podcast. You know, I think this guy's a good marketer. I think that I don't take such a black and white look at people and say that this person is good and this person is evil and this person is, you know, like, I just don't think that the world is that black or white. And so anyways, I wasn't trying to insult her, but she took it as an insult, of course, because that's why it was the perfect one-liner. I was able to insult her without even insulting her. And so, so anyways, that was the confrontation. And then, yeah, I got, you know, a bunch of DMs from people and then, you know, people at my company were like, hey, can you not like pick fights with journalists? And I was like, okay, I'm sorry. I really wasn't trying to pick a fight with the journalist initially.

Well, that's pretty funny. That's a good story.

I still have no problem with her. I actually think she's a really effective marketer of herself too. Like, I know her name. I don't know anyone, any other tech journalist's name. I genuinely think she does a very good job at promoting herself by covering interesting and controversial topics. Like she was covering TikTok early on. And then also her brand of sort of like taking it to the powerful people in tech. I view it as an effective form of marketing. I also think she's good at it. So I really have no ill will, but I did think it was a cool one-liner.

I think that's a pretty good one-liner. I unfollowed everyone on Twitter. I've been spending less time on it because Makes me angry, but I wish I would have seen that because that's pretty wild.

By the way, by the way, this was the best part. All the white knights, you know what a white knight is?

Yeah.

So for those who don't know, white knight is like sort of a— how would you describe it?

Like someone who like they don't, they don't necessarily care about the topic. They're just trying to act like they're saving the day. So the girl likes them.

Yeah, it's basically dudes online who come to the rescue of women to virtue signal how they are, you know, such they're the good noble supporters of good and evil, whatever. So anyways, there's a bunch of white knights that were in the thread that were like, yeah, Sean, I can't believe you did this. I can't believe you would give someone this platform. First of all, Jake Paul has a 50 times bigger platform than me. Second of all, yeah, that's my— that is my platform. I point out things that are interesting or I point out truths. I'm not like trying to toe the politically correct line. And then I go to this guy's Twitter, I go to his Twitter. The second retweet is Conor McGregor has sold this many millions of dollars of whiskey. You know, he's promoting it. Guess who also has a bunch of sexual assault allegations against him right now? Conor McGregor. So he was allowed to promote that Conor McGregor.

Did you call that person out?

I called him out. I go, dude, I like you. We've, we've been friendly before. Like, but what a hypocrite. Look at your own timeline, dude. You're saying this guy's great at business. He goes, honestly, I just didn't, I didn't know that about Conor. And so it's blah, blah, blah. And then a bunch of people were eye rolling like, oh, you didn't know. Good. Yeah. Okay, cool.

Like, let's all know that everyone knows that that guy like punched an older guy in the bar. Like this has been on the news.

Yeah. Yeah. You thought Conor McGregor was sort of, you know, goody two shoes. Yeah, right. Like this guy's been in the news. He's been in jail. He's done all this stuff. And so I just thought that that was the classic hypocrisy of people on Twitter.

Well, I didn't see it. I'm happy I know the story. I'm— and I'm— what I love that you do that. I think that is great. And I think you should continue to do it. Hopefully you won't— you will not do that because you were asked not to. But we'll see. Do you want to talk about the course business? Because I actually— I didn't get into it, but I saw a company that I think is kind of silly for what they're trying to disguise themselves as. But I actually think it's good for what it really is. And I want to bring it up, but I went and did a ton of research. And I know that you're interested in courses as well.

Yeah, okay, I'm fully teased. Go for it.

What is it?

What's the company?

Okay, so today for this little segment, let's talk about the course business, the education business, whatever. I broke it down into 4 different categories, but there's this company called, I don't know if it's called Beyond Deck or On Deck.

On Deck.

Yeah, it's called On Deck. The URL is beyonddeck.com. It's actually really confusing what they advertise themselves as. If you go to beyonddeck.com, frankly, I didn't know what it was. I didn't understand it. I did some research. I think I understand it now. And the way that I see it is it's a course business. So basically you pay— I don't even know the price actually. Is it like $500? It's like hundreds of dollars, I believe. And you sign up for—

it's over $1,000.

It's over $1,000. Is it under $2,000?

Yeah, I think it ranges between $1,000 and $2,000, something like that. $1,000 to $2,000, maybe $1,000 and $3,000.

$1,003 and you sign up to a cohort-based class, meaning there's a start and an end and they have got like 15 different classes probably at this point.

I got to stop you. These aren't— it's not a class. Why are you saying it's a class?

Yeah, that's what it is. You can call it—

there's no teacher. There's no— okay, so it's— here's how I would describe it. Right. So, so we, you know, Eric Thornberg, right?

He's— I don't know him.

Oh, you don't know him? Okay. Eric's a good guy. He was early on at Product Hunt. He left and he's created a bunch of things since then, one of which was On Deck. So the way he thinks about On Deck and the way he talks about it is On Deck is basically like a modern-day business school. So why do people go to business school? People go to business school because they want to build a network. They want to maybe learn about business and they're looking to kind of like pivot their career in a different direction, right? They were doing one job, they want to go to the next job. They don't know what it is. They want to change industries, change roles, change whatever, change careers. So business school is this great pivot point to do that. So what On Deck did was they sort of made an unbundled and digital version of that. Um, actually not even digital. There's a lot of in-person components to it. So what it is, is you, um, let's say, and they have a bunch of different tracks, but let's say you want to go into, let's say you want to become an angel investor and you're not an angel investor today. So On Deck is your pivot to do that. You apply to join, you say, great, I'll pay the $1,500 to go to the On Deck Angels program. And yes, there is some education. They bring in speakers who are angel investors. They'll talk about angel investing, that sort of thing. But it's basically an X-week program for you to, you know, go from where you are now to that track that you want to be on. And it can be with angel investors. It's a little bit more like a course, which you're talking about, which is you're going to learn about a thing and then by the end of it you can do it. But they— it started with just people who were on deck to build their next company. I was like, all right, you don't know what you're going to do next. Why don't you join a group of other people who are also thinking about their next opportunities? Maybe they have a great idea. You could join their team. Maybe you could find a co-founder and do this here. And it was just people who were looking to make a change. And, and you would pay to basically to join this, to get a good network. So The network is all kind of like other— kind of like, just like if you go to Harvard, you're getting other people who have a certain caliber of, of, of person who's going to go on to do a certain caliber of things, and you pay to go be a part of like an 8-week program or whatever to go do that.

Yeah, that sounds like a class to me, an 8-week program where you're learning and talking to other people.

It's just a lot less about the learning content side, and it's a lot more about the network that you want to build?

Then in that case, I would say the likelihood that they're going to be quite huge, I think, is actually lower. It would actually be better if they were a course business, because the problem with that is they're either going to have to raise prices to be tens of thousands or hundreds of thousands of dollars a year, or they're going to have to decrease the standards of who they let in and keep the price low, and thus ruin their network.

So, so let's talk about some of the programs that they have, right? So they have On Deck Founders, that's I want to go start a company. They have On Deck First 50, which is I want to become— I'm a talented operator. I want to go join an early-stage company in the first 50 employees. That's gonna, that's gonna be the next Airbnb, the next whatever, right? There's On Deck Investors where you learn about angel investing. There's On Deck Podcasters where it's like, if you want to start and kind of grow a podcast, join a batch of other people who want to join to start a podcast, listen to speakers who are existing successful podcasters. And by the end of it, you'll have like built up some momentum of now going down this new path that you weren't on before.

So let's just say, who cares about On Deck? Because it got me thinking about the course business. I think it's a course business. You say it's not. It doesn't really matter what it is because that is what got me interested in the course business. And the problem with the course business is when we say the course business, oftentimes people will categorize anything that's even remotely related to course into the same category. And that's actually false. That's not, that's not how it should be. And so what I wanna talk about is the 4 categories and let's talk about what, why each one is interesting. And so I'll just briefly list what those are. So the first one is basically one person or a smallish company making a handful of courses. That's like our friend Jack Butcher, right? That's like Ramit Sethi, our good friend, or my good friend Ramit Sethi. This, and we're gonna, I'll go back and we'll actually talk about what makes that what it is. The second are platforms. So things like Udemy, um, things like Teachable. A lot of people say this is the course business. That's not a course business. That's a tech company that, uh, makes technology so people can create and sell courses. I'm not even gonna talk about that because that's a totally different category, even though people do sometimes refer to it like, uh, this category, uh, or with courses. The third one is the MasterClasses of the world. These are another example is this company called The Great Courses. These are businesses that create hundreds eventually of different courses and they go and sell to consumers for $100 to $200, $300 a year. And the fourth one is B2B companies that sell education to companies. And so a company like that is Pluralsight, which sold for $3 billion and does something like $500 million in revenue. There's a, there's a, a few other, there's Coursera, there's, um, there, there's actually a handful of 'em that I didn't know about, but in researching, there's a handful that do. $300 to $600 million a year in sales, multibillion-dollar business. Now I wanna go through each one and explain what makes them tick, or at least what I think makes them tick. And, and I, in order to do this, I went and talked to my friend Ryan Deitz. Ryan Deitz runs this thing called digitalmarketer.com, and he, he's been in the game for 20+ years, and we kind of talk through this. So, uh, the first category is these like single-person creators. I think you're like that. Um, I'm not like that at the moment. I could probably easily become that. And, um, I, I enjoy that. And I actually think that the path to making $1 million a year this way is incredibly straightforward. And it's a very high likelihood in term— all, all relative to starting a business, but it's like a really high likelihood of making like a million bucks a year. It's very high likelihood that you can make $200,000 a year. Um, and so these are companies like, uh, I Will Teach You to Be Rich. Uh, is that what it's called? I will teach you to be rich.com. It's, uh, what you've done. What, what was your newsletter called?

The All Access Pass.

That wasn't quite a course, but it's what I announced.

I don't know if you saw this. I tweeted out that I was doing a course.

Yes. Yes. Yes.

And I said, hey, I'm going to do a course on power writing, basically writing for the real world. And I just tweeted out like, would you be interested? Here's what this has helped. This skill has helped me. It's helped me get jobs. It's helped me, you know, get investment. It's helped me grow my companies, help me make money. So writing in the real world, emails, tweets, blogs, ads. Landing pages, that type of writing, you know, going from good to great is a big difference. Would you want to learn this? I said it would cost $400 for the first batch of people, whoever was like kind of the guinea pigs. Let me know if you'd want to do this. And I got, I think, I don't know, 1,200 replies of people filling out the survey saying they want to do this. And so, yeah, just that alone is kind of like to your point here where if you're a creator with an audience with credibility, if you've done something, if you're actually good at a skill, yeah, you can get to $1 million a year of profit, not just revenue, doing it as an individual course creator.

Yes. And the path is quite straightforward. The tactics are simple, but it's basically build an audience. That's all has—

that's the hard part—

that mostly has. Yeah. But even that, there's a process to that. I mean, it's not, it's not easy, but it's simple. but you build up an audience where people rally around one type of thing, and then you eventually create something that costs $100 all the way up to thousands of dollars and you sell it. Um, my good friend, one of my best friends, Neville Medhora, has done this with copywriting. He probably, I don't know what he makes, but I, if he said $1 million a year, I would think that sounds about right. Um, there's Jack Butcher, like we said. My wife Sarah is actually launching one. Sean has one. I've launched one at The Hustle before, but it's not live now. But it was, and it's pretty interesting. It's, it's the easiest path probably to make a million bucks a year, I actually think. And the way that you scale, it's really hard though. Now here's the downside. It's pretty hard, I think, to get past $10 million a year in revenue on that. Not that like that should be the goal necessarily, but like it definitely caps out relatively low. Um, but you could, if you, as long as you don't base this on your personality, it's a pretty good business that you could sell to like private equity or something like that for a bunch of money. And after you've created the course, you then create a consulting or coaching service that costs $10,000 plus a year. And you could potentially have like a pretty good $10 million to $20 million a year company. I like that.

I'll give you an example. My uncle does this. He's in real estate. He himself has like, I don't know, a $200-something million real estate portfolio. So he created a basically how to get into multi— how to do multifamily apartment investing. And he creates a course. The course I think is like $5,000. He sells a bunch of those. And then out of that, some people pay him $25,000 for like the more one-on-one in-depth coaching because they're like going at it. And for them, it's not hard to justify $5,000 or even $25,000 because the economics of even a single apartment building that they're buying are such that that's—

who's your— what caused that?

Pippa Ma? That's my uncle.

Oh, which uncle?

My uncle. I mean, you don't know him.

You want to, you want to pip him out though? I'm trying to.

Oh, I don't even know what his course is called. He's my, he's my Uncle Vinny. We should have him on. He's got a kind of incredible story and his personality is amazing. He's the most joyful person I've ever known, almost to the point where people think he's like, are you high or something? And he, but he's just like that 24/7. He's high on life 24/7. It's kind of amazing.

So Uncle Vinny is a great example. There, there, there's a good one, uh, example of this. Now the second one that I mentioned is like these masterclass businesses. These companies, there's a pretty clear path to get to like $100 million a year in sales. And what you do is you create something that is in the $200, $300 range for an annual subscription, and you scale fast by buying a lot of ads. Um, but before you do that, you have to create a pretty big library of course content. Which can take many years.

I know quite a bit about MasterClass. Do you want me to give you kind of like some of the interesting bits? So MasterClass, they started by this guy, went to Harvard Business School, I believe. And then he, you know, one of the core insights was he wanted to create what he said was the Library of Alexandria for Alexandria or Alexandra, basically whatever the library was of like kind of like all the best of human knowledge at that time. He basically was like, I want to create that of today's time. And so he— they spend upwards of half a million dollars per masterclass just on the production value alone. Even their first one was over $500,000. And so the production value is like kind of insane. It's like a Hollywood shoot that they do. Personally, I don't even know if that's necessary. I think that's— that's totally overkill, but that's their shit. The bigger part was that they got the biggest brand name. So they go, if you want to learn business, Well, here's Howard Schultz from the CEO of Starbucks. You want to learn basketball? Steph Curry's MasterClass. You want to learn comedy? Here's Steve Martin. You want to learn, I don't know, writing? Here's Aaron Sorkin. And so they took the, the A++ talent, which is a key differentiator, right? Because most of these online courses are like you said, it's me, it's Ramit Sethi. It's like these like niche, you know, I'll just make fun of myself here, right? We're nobodies in the, in the world compared to, compared to what MasterClass went and did. And then Masterclass was like, great, I can take, you know, Chef Gordon Ramsay's cooking course. I can create a hype 30-second trailer and I can blast that on Facebook ads. And basically Gordon Ramsay has enough brand pull that I can profitably acquire customers. And so they do this with a bunch of creator, a bunch of different course creators, Serena Williams, whoever else. They cut a rev share deal with them. So they give 'em an upfront kind of like minimum guarantee. And then they have like a rev share on every course sold, you know, you get X. And then they turned it into like a ClassPass-style subscription where now you pay the $15 a month, you get access to all of MasterClass. And I actually talked to the founder, the CEO, and I was like, he's a great guy. And I was like, you know, do people— I took one and, you know, but like, do people— does a person really want to go learn cooking from Gordon Ramsay and then basketball from this person, then tennis from Serena Williams? Like, it seems like Do I need the all-you-can-eat buffet? And like, do I come back? Is the retention high? And he just showed me the numbers. He was like, look, we're making X hundreds of millions of dollars a year. It's growing at this pace. And look at the churn. The churn's not so bad. I said, how do you keep the churn so low? Like for an education product like this? And he goes, when people take a masterclass, it's, they keep their subscription even if they're not coming back and taking a course every month. Why? Because it's aspirational. They, they have a dream of like learning photography. They want that hobby to exist. They buy the masterclass. And if they have one experience where they feel like their hero or their idol kind of shared a real nugget of wisdom with them, that's enough to keep them hooked. So that was pretty interesting.

And that's the thing that we should discuss. That's the downside of this business as well as every other category that I mentioned is And this is— this freaks people out. I wouldn't even say it's retention, but it's completion. So our good friend Nick Huber launched a course and he goes, dude, 200 people bought this. Do you know how many people finished and did the whole thing? He was like, I, I— the number is, if it's not this exact number, it's close. He's like, 3, right?

It was like 8 or something.

Yeah, it was like, he was like nothing. And I was like, yeah, man, that's really normal.

Um, well, he was being— he was like, he was legit. He was like, dude, did I make a shitty course? It's like, no, this is the, this is the standard percentage completion. If you go to Udemy, I remember with Udemy, I think they had said at one point in time, um, 6% of people complete the course. 6%, right? 100 students come in. Imagine on the last day of the semester, 6 people are left in the class. And so, you know, for Nagus, it's pretty much in line with like this single-digit completion rates. That was a big problem with education online.

And that sucks. And Actually, I would say two things. One, for people getting in this business, just know that it's so weird that you're gonna make all this money and you're crushing it, most people don't even use the damn thing.

And by the way, they're not pissed. It's not that they used it 'cause they didn't like the product. Often it's just life happened, they got busy, they didn't follow through. If they're upset at anyone, they're upset at themselves for not actually taking the full action on the course. They're not upset with the course, which is counterintuitive.

The second thing here is like, is that even important? Is this even a problem worth solving? And the answer I actually think unfortunately is no, this is not a problem worth solving. People aren't going to take it. That is just how people are and we should move on and just make money off of it because just the fact that they buy, that's interesting and that kind of helps them in a weird way. So just like you with books, just like you with books.

It's like me with books. Yes, that's true. But I would disagree in that I do think it's the fight worth fighting for because if people aren't actually taking the course, ultimately they didn't get the real value of the product, which means they're not going to come back. They're not going to tell friends to do it, which means your business is going to suffer. So can it be done? Can you get above 6%, 10%? Can you, can you get 30, 40, 50%?

Dude, even that sounds fucking crazy to me.

I've asked people who charge $5,000 per course. They said under 30% is still what they get as a completion rate. It's insane because that's such a big financial commitment for people individually, not out of their company's pocket, out of their own pocket. Just to spend that money and not complete it is insane to me. But that's what happens.

Now, I will say, though, but when we had cohort classes like a live cohort class, it was like 75% completion rate.

Exactly. That's exactly what I was about to say. Lambda School switched to live cohort-based and with a clear, like, sort of high bar for entry. So Lambda School, most courses, right, when Nick Huber, Ramit, myself, when you sell a course, you want pretty much as many people as you can to take the course. That's how you make your money, right? You're like a college. You want to admit as many people as you can unless you're the top college where your brand is really about not accepting everybody. And so similarly with Lambda School, because Lambda School doesn't get paid until you get a job, their incentive is not to let any Joe Schmo in. Their incentive was, dude, we only want a student if they're— if we think they're actually going to finish this course, if they're serious about it. And so because of the filter on the front end, plus the format being live and in a peer group, they had like 75%+ completion rates. And then I invested in this company Maven for the same reason, because they were saying, hey, we're going to make it easy for you to teach a cohort-based course. That was appealing to me because I was like, so far cohort-based courses is the only thing I've seen where people actually finish the course. So we'll see.

So, but that is something when we're going through this process, we are— this discussion, we have to acknowledge that like most people don't buy your stuff. And if you're doing really well, like, what did you say, 70%? Yeah, do it. So it's like kind of crazy that that's a pretty nutty, nutty thing. Now, to wrap up the masterclass, I don't— we have to call this like Mass Consumerism Course. Category. I don't know what—

like, Lynda.com would also be in this at the time. Now Lynda's more B2B, but when Lynda started, it was a place to go learn anything, right? And, and so Lynda.com, MasterClass, there's a bunch of MasterClass for X. So it's like, there's a masterclass, but instead of Steph Curry and Gordon Ramsay, it's famous YouTubers, and they're called Monthly, I think monthly.com. They're trying to do the same thing as MasterClass, but they're stars are social media stars. And I think they were doing actually pretty well. There's another one that's MasterClass for athletes. It's like, okay, we're just going to take the vertical of sports. And it was, you know, started by—

that sounds neat.

Shit, I just talked to him the other day. This would be a perfect shout out for him. I apologize that I don't have it off top of my head, but, but basically he was a— he's a trainer. He's a trainer for Kyrie Irving. He's a trainer for a bunch of NBA stars. And so he's able to, Carmelo Anthony, so he was able to say, hey Mello, create a, create your course. Hey Kyrie, create your course, et cetera. And, and so he's able to access top flight stars in basketball because he himself is a, is a basketball trainer and create a masterclass just of that group, just for that audience, which I thought was actually a pretty interesting model.

Was his name Aden Raben?

No, I'll find the name. Let me ask Ben real quick. But yeah, go on. I'll, I'll get the name.

So anyway, um, in order to make that style of business work, what you have to do is create mostly evergreen course content. And the name of the game is get like basically as many as possible that meet some type of quality bar. Um, and you just go big and try to create hundreds of them or thousands of them. How can you— what the Great Courses is one example. I think they do like $150 million a year in revenue. I don't know what MasterClass is, but I bet you they're at 200 to 300-ish. Yep. All right. And then the fourth or the third cat— so I had 3 categories. I had like the small creator, I had tech stuff, but we're going to get rid of the tech thing like Udemy.

Solo, solo teacher platform like Udemy and Coursera. And then you had high-end, you know, library of courses like MasterClass. What else?

Now here's the fourth one and most interesting one, which is B2B education, corporate training type of stuff. Easily the biggest one, hands down. Now, an example of this is Pluralsight. Have you heard of Pluralsight?

I've heard of it, but I could— I've heard the name before, but I couldn't have told you what it did until this.

Beautiful, lovely name. It's geared specifically towards engineers and it just teaches like the latest and greatest tech stuff that you give to your engineers and they go through this and Pluralsight is one of them. There's actually a bunch more, and there's many of them that do $300, $400, $500 million a year in revenue. But this is where it gets kind of shitty. These businesses are based on one thing, salesmanship. So you just hire a fat sales team and you go out to these companies and you sell. And I went and asked the people at HubSpot, I go, why do you guys buy this stuff? And they actually told me all about it. and they're like, well, basically we're ranked really high on Glassdoor and we recruit a ton of people. And one perk that we have is that we give you $5,000 a year, uh, for education. Now we could have bought Pluralsight, but, and that would've actually solved the same thing, which is we want to be the best place to work. We offer loads of perks, like we'll teach you X, Y, and Z. Um, another example of why these courses are important is something like Cisco or Microsoft have tests and exams that they want you to pass certifications. That they want you to pass in order to either get a promotion or just, you just put it on your resume that you have this interesting thing. Pluralsight teaches you how to succeed at those, at those, what am I saying? At those certifications. And they charge something like $600 a year per head. And you just gotta hire a sales team with the, you give each salesperson like a $300,000, $500,000 quota and you go, Here's the Yellow Pages, start dialing. And, and that's why the Pluralsight's based in Utah, because the Mormons are like some amazing salespeople because they've been— they had to spend 2 years selling a religion to people. So they're really good at it. But this business is probably the biggest. But I oddly, it's really not so much about the—

it's not about education.

It's not about education. It's about salesmanship and the way that you win this. Is you go down a very narrow niche, you hire subject matter experts. So people who know their stuff, you pay them a flat fee, sometimes royalty, but you prefer to do a flat fee because your gross margins will be really, really a lot bigger. And then you go very niche, you go very role-specific, and then you go and you sell into the HR and then learning and, or learning and development budgets at large companies, which sucks because those are typically the budgets that are slashed first, but they're there and they have to get spent. And so pretty much it's a game about getting inside with these people and selling to them. Kind of lame, but there's money to be made.

Yeah. I wonder if somebody could do so. So that's the way that most corporate software was sold to until Slack and some others started this like bottoms-up sales process inside companies where they basically—

still how it's sold though.

It is and isn't. So bottoms-up SaaS became its own category where the model was you make your software useful to even if the whole company doesn't adopt it. You let an individual person kind of in the front lines or the middle ranks of a company start using it. They use it with their team. They're kind of like their sub team. Other sub teams start using it. And then you go to the CIO, you have a meeting with them and you say, hey, by the way, a bunch of your employees are using this thing. You need to buy the enterprise version so that you have security stuff, like secured, you have oversight over what's going on, and that anybody in your company can get access to this. Right now, it's everybody's putting down their own card and trying to make this happen. And so that became a pretty popular model. Yammer was one of the first to do it, then Slack and others. I wonder if this would be the only way I would want to do it if I was an entrepreneur going in the space, because I wouldn't really want to do the enterprise sales path where It's not really about the content, it's just about the sales, how good you are at sales as a company. Because if you go bottoms up, you're really going off of making stuff that the individual employees actually want to learn from. And then secondly, you're only as good as them sort of retaining or actually wanting to use this. So I think that's a healthy thing in the end, although it is harder actually than the other path. So I wonder if there's a way to do that. The hard part here is just like there's 6% completion rate for hobbyists trying to learn. I think similarly, you know, for example, I know that when the learning and development team sends out an email at Twitch, I asked my team, I said, hey, do you guys do any of these courses that there's a bunch of free stuff available here? They pay for it. You can just go take it. Like, could help you. And they're like, yeah, that's a good idea. But like, I just don't have the time. Like, everybody feels overworked. So the amount of time an employee's gonna carve out to just do optional education is so low that I just think that most of the things that live in the, what's it called? The learning manager, whatever, like the LMS, learning management system inside companies is untouched, right? It's just Twinkies sitting on a shelf.

So that's exactly another, or that's another thing. So not only is it about salesmanship, but basically these courses, the truth is it's not actually about teaching your workers something good. It's about offering it, and if they use it, fine. But the fact that you offer it, it makes you look better and you could hire more people. Um, as I don't own my company anymore, but when I did, I would never have bought this shit. I would have been like, look, if you want to take something, we'll buy you any book you want. I'm not— but we're not paying for these stupid courses because no one's going to use them. But that's not how a big company thinks, because they want me to put it on their perks and benefits, and here we are. But that is my my very high-level summary of this course business. I was very curious as to how they work. If I was— well, I am— I'm not gonna launch any of this anytime soon, but the first one, the creator one, that's a no-brainer.

It's a no-brainer once you have an audience, right? That's the— if you don't have an audience, it's not really gonna work, then you're more in one of the other buckets. But I think you correctly identified, if you have an audience, it's a no-brainer business model for people with audiences. but it also has a cap and it takes up time. So you got to like, you know, choose accordingly. All right, let's talk about some other ideas. I have one that I saw today that I think is pretty interesting. So it's called the Irish Pub Company. Did you see this tweet?

No.

So we got tagged in this, which is, by the way, that's the best signal that we're doing something right is now people just tag us in shit that they know is the type of stuff we want to talk about. Like we've built the brand of like when you hear about a cool niche business, that's crushing it, that's like so simple and you would have otherwise just never heard of this. It's like, this is perfect for My First Million. So somebody tagged us.

Oh, this is awesome.

Our friend Chris, Chris J. Backe is his like handle. I don't know if it's Backe or Bach. I don't know how you say it. I think it's Bach. He tweeted this out. So shout out to Chris. He was on the podcast a while back. He's a super entertaining guy on Twitter. You should follow him. So one of the things he said is he said the Irish Pub Company is one of my favorite companies. They charge $1 to $4 million for an Irish bar in a box, which basically means it's an Irish bar as a service. So here's how it works. They give you, you know, like they have like 6 styles to choose from of which style of Irish bar. And they give you like the Guinness signs, the right bar tap handles, you know, the kind of like all the decor, the seats, the stuff like that. And they, they ship it all to you and they install it for you and like, bang, now you have an Irish pub. And I think this is such an amazing business. So they've done over 2,000 kits and it's about $1 to $4 million per kit according to him. So I haven't— this happened like 2 minutes before the pod, so I didn't research too much more. But that's over 30 years. That's $2 billion over 30 years that this company has generated just selling the Irish bar in a box. And, and what they say if you go to their website is like, you know, hey, like, here's the stats, right? Like the Irish pubs produce, you know, X more revenue than a traditional bar and has this much more foot traffic. And basically it's saying, hey, if you, if you throw this kit onto a generic bar, your bar is more successful, it'll pay itself back. What do you think of this business?

So the owner's name is Mel McNally. Which is like the perfect, perfect— got him. He's the founder of Irish Pub Company, is the creator of the Guinness Irish Pub concept. So he launched this in partnership with Guinness Brewing, which is basically— I'm just reading the about page. Sounds to me like Guinness was like, hey, we need more Irish pubs to exist in this world so we can sell more Irish beer and Guinness beer. Can someone come and help us figure this out? And that's what he partnered with. Or that's how we started this. Awesome, awesome, awesome. This is so cool. I love this. Right.

It's crazy. They're making— I mean, I think just looking at the numbers, if these numbers on their website are accurate, I think they're doing like $50 million plus a year doing this. Just like the consulting, the brand identity, then the like, install, the shipping, then the installation, and then the service after that. It's pretty, pretty awesome.

How'd this guy do it?

They do it inside airports. They do it in, you know, just different cities, hotels, different stuff like that.

How did your buddy find this?

I have no idea. He just tweeted it out. So it's great. I don't know. I think this is such a cool concept. And then you can think about like, okay, how many more concepts are there like this, right? So like, I can think of, if you take any sort of like subgenre, the question is, is there a market for that? So I'll give you, let's just brainstorm for a second, right?

Well, there's one great example that you brought up a long time or a year ago that I think is probably killing it, and that was Bathroom in a Box.

Yes. Made— made renovations.

Yes. All they do, you select one of 5 different bathrooms and they come and make it. You can obviously do this for every single room in the home.

But then we talked about the guys who came and set up our video conferencing setup. You know, this good-looking setup that we have right now with the lighting, the audio, the DSLR camera, have the whole tech is set up. The wires are, you know, taped to my table so I don't have a wire mess. I told the guys, I said, hey, you need to turn this into home, home video conferencing, home studio in a box, right? You could, you could do just like the bathroom guys did. You could do this in every city in America right now, especially with remote, with podcasters and Twitch streamers and YouTubers. A lot of people want a cool video setup. And if you just have 4 to choose from on your menu, now you have simple operations. You have scale as you buy parts in bulk, that sort of thing. So I think that's another version of this. But just in the bar concept, I think that there's a few more. So I think that any brand with licensed IP, so like, okay, you can't, like, you, could you do, could you do this for basically Disney? Could you do a Disney diner? Right. So you take IP that people love and you create a bar restaurant out of it. Right. So like sort of Rainforest Cafe style. And you just sell that as an in-a-box concept for any common thing. Coffee shops, diners, pubs.

Yes, but aren't you confusing this, whatever this in-a-box concept is, compared to franchises?

So it's not franchis— so this, the idea would be you would partner with, um, let's say, I don't know, let's call it The Simpsons. You partner with The Simpsons franchise and you say, hey, look, for every one of these, wouldn't it be great if you could have, you know, I forgot what the bar is called in The Simpsons, but like whatever the name, you know, wherever Mo works or whatever.

Yeah. Or do Paddy's Pub.

Yeah, you do. Yeah, exactly. You go to Always Sunny and you could basically have Paddy's Pub in a box and every city should have a Paddy's Pub and whatever. And so you go and you say, every one of these we sell, you guys get 10%. You got to do nothing more than let us use the name Paddy's Pub and, you know, the same items we're going to source. And now you go to bars and you say, hey, look, you as a generic bar, you're only— you have no, like, differentiation of why tourists should come here, why the locals should choose you. Can you upgrade? And so I think that there's a bunch of different concepts that would work with this. So I think one is gaming. Gamers have like a deep passion. And, and so there's been— I lived in Denver and there were some bars like this where it was like the bar had like some old school retro arcade machines. All the drinks and menus looked, you know, like video game, like, you know, old Nintendo stuff. And then they had like, you know, life-size Jenga or whatever, right? But it was a place to go hang out. You could play skee-ball, you could do whatever. And they just got way more foot traffic than a normal bar. Why? Because this one you would go to and you would have Instagram-worthy experiences, right? You would post in your story that you're drinking, you know, the Mario drink while playing whatever, Duck Hunt or skee-ball or whatever it is. And so I think gaming is one niche that's like an Irish pub that you could show that, hey, if you, if you kit your bar out with this, you're going to get more foot traffic and more sales.

I would need to think about which, which of these could work, but this, whatever this in-a-box thing, it's kind of interesting. I had a friend that did Book in a Box, and they would write a book for you. I think it was making 8 figures in revenue, but it sounded like a real pain in the ass because it was, it was far too customizable to be in a box, whereas a pub thing probably isn't. That's way easier. That's like saying like You got running water, you got, uh, you know, this many dimensions.

Well, this is basically just a set, like, as one interior decoration, like, theme that you just slap on and boom, you got an Irish pub. Now you don't— you had a pub, now you got an Irish pub. And so I just wonder, you know, A, could you just compete with them? Or B, are there other themes that are— even if they're not as popular as an Irish pub, like, what's the second most popular? Kind of like, is it German? Is it You know, an Asian-style pub? Is it a Russian drinking bar? Is it—

I don't know. I think like—

Is it a Mexican tequila bar? Is it a— you know, what is it? That— is it an Italian wine bar? I don't know.

I don't know. You're asking a non-drinker. I'm out of the loop on this one.

I do have a different idea.

What's that?

That I think is kind of interesting to chat about. So Clear Ice. Have you ever heard of Clear Ice?

What is it?

This to me feels like if you're— I'll find you the URL. Go to cleareyes.life. So cleareyes.life. So this is not something I would do. But I've learned that these things that I just shake my head, I'm like, who the fuck wants to do this? I learned like the hard way that like 3 years later, it's like, yeah, this is like a hobby that a lot of people have that's like growing like crazy. So here's the other examples of this, you know, like SodaStream. I think you probably do SodaStream, right?

Dude, I have a video on TikTok, one of the only videos I ever posted. It got like 200,000 views because I attached a, like, a scuba tank size CO2 thing. I rigged it to my SodaStream so it could last like 3 years versus having to constantly replace the thing. Yeah, I love SodaStream.

So the first time I heard this, I was like, oh, you like make your own sparkling water at home? Like, what's the fucking point of that?

Like, SodaStream is like a $5 billion a year company or something. I know.

That's my point is that when I heard, I was like, who would want to, why is this a hobby? Who wants to do this at home? Why is this a DIY category? But it was, it was a huge category. And like, you know, it got bigger and bigger. Craft beer, same thing. I remember like a decade ago, these guys were like brewing their own beers. And I was like, why? There's so many beers. I don't just go buy some. And then like over time, more and more homebrewers and craft beer.

Dude, have you ever met a white guy before? Like, that's like, like there's two things that you, you, There's two jokes about white people. They always have bottle openers on them and they love making their own beer at home.

Yeah, basically, actually, this category is just shit I observe white people do and I'm confused about. So another one, like there's this, there's a bunch of these like with pour over coffees and like these like really extreme coffee habits that people have. Anyways, there's a whole bunch of these, these little niche hobbies of DIY things that I don't understand, but they definitely are big. And then they create a whole ecosystem of businesses around them. So Clear Ice is the latest one I saw that was like this. Basically, what is Clear Ice? Clear Ice is basically like, I might not even fully understand this. It's, that's how white this is. Okay. So you translate this for me. What I understand is it's like an amazing piece of ice. So not just the shit you get out of your fridge or your little tray or the stuff you buy in a bag, but it's like, this is high quality. It's like super clear. Like there's no impairments or like kind of stuff in it, so it doesn't flavor your— if you're drinking whiskey, it won't like affect the flavor of your whiskey. It's also one big cube, so there's less surface area, so it dilutes less. It doesn't dilute your drink less.

Well, you knew that, right?

I didn't think about this stuff. I don't care. I just put the ice in. I drink my drink. When it gets diluted, I drink it. It's kind of gross.

Haven't you— so like they sell these like—

I've seen whiskey ice, yeah.

Yeah, they like sell these like cubes or balls and they— yeah, it involves surface area and melting and diluting your shit.

Slower, right? And so, so anyways, this hobby, this is like some shit that you would find in the Hustle Trends thing. This is my own little contribution to trends. Uh, you know, Steph Smith, if you're listening, put this in the news, like go research this. My spidey sense is tingling that this is one of those little niche hobbies that you could sell products, information, courses, whatever. And there's a lot of people that want to make their own homemade ice. Again, I can barely understand why, but it's a thing that people are doing. And I bet you that there's a movement to be had or a sort of a wave to surf if you want to build a business around this super niche, but a hobbyist business.

Dude, no, I don't. I'm not on board with this. I think this is stupid.

I think—

why? First of all, is this even that big? Is clear.

I saw it as part of like a growing trend. I don't know if it was a subreddit or where I saw it. but I saw it in a way that I was like, oh, this is one of those that's like popular and I don't understand why. Like it's like ASMR. It's like, what is that?

Uh, ASMR is awesome. So don't, you better be careful.

That's how all those felt to me at the beginning where I'm like, this is weird. People do this. And then like, yeah, a lot of people want this and do this.

Yeah. Look, I am, I'm looking around on Google. I get it. To me, this sounds like a pretty tiny thing, but like Tiny enough that you could make like a pretty good living doing it though. Like I knew—

Yeah, well, all you want to do is you want to catch these early, right? Like you want it to— you want to catch it when it's somewhat tiny, but like very passionate because the bet you're making is that that passion, the tiny— the passion will stay and the tiny will not, right? That's pretty consistent is that when you have the passion there, passion stays and tiny becomes medium-sized, becomes large over time.

Yeah, I guess it could work. I mean, I'm looking— I'm trying to like look it up. I mean, there was this other one. There was a home brewing company that I, that I, I, for a long time I didn't know that like people, basically beer nerds, like track all the beers that they've ever tried. And I interviewed a guy to work at The Hustle, and he worked at one of these companies, and it was like a tens of millions, maybe even close to hundreds of millions of dollars revenue business. And all it was was an app where you could track all the beers that you drink. So put that in that category of things I have no idea exist. And also kind of, they don't excite me.

All right, let's do, let's do one more real quick. Okay, here's one that I'm just curious. I don't have ideas around this just yet. But let's, let's do an off-the-cuff brainstorm. So there's this article that came out that was about, I'll share it with you here. It's about the amount of space that is now available in San Francisco because of like work from home. So there is some absurd amount of vacant space. So there's like companies that are taking tens or even $100 million write-offs on their real estate just to like get out of it and move on. And so they're just, they're just writing it down. So like, here's some of the numbers. Um, let me, so there's $200 million of real estate impairments in the past year since COVID It's almost a billion if you add in the lease-related write-downs from large companies like Salesforce, Dropbox, Uber, PayPal, Zendesk, just getting rid of their, their, uh, real estate. And so, um, Dropbox itself has $400 million of impaired real estate right now. And so they think that by, you know, in this quarter, the first quarter of I'm sorry, the last quarter of 2021, the amount of vacant and sub-leasable space was 10 million square feet in 2021. In 2019, that was 3 million, right? So it's tripled the amount of available sub-leasable square footage. And the companies are basically saying, hey, this is— it costs us $90, we'll take $20 for it. So you're able to get real estate for, you know, one-fourth of the traditional cost.

Now we're talking. This is a good— yes, this is an interesting real estate.

So what comes to mind? What do you think of when you hear about kind of this, this opening that's in the market?

Okay. For the sake of discussion, let's just assume that they— like San Francisco has a bunch of wacky laws, like, right? I mean, like, can't do with things. Yeah. And they also have like some really crazy tenant or what's it called, rent-controlled stuff. So let's just assume that like we're going to research these laws later and that isn't that big a deal.

Let's assume we're never going to research these laws. That's what it's really—

But so what could you do with this arbitrage? I mean, the obvious answer is like WeWork can make a killing right now if they believe in their model. Can they, can they just go ahead and like do the thing where they lease a lot of it upfront and hopefully they can fill it? But what else could you do with this? I don't know, man. That's a hard question. What would you do?

I don't know. I think you have to see what, what you— I think you want to think about it this way. Where is demand growing for space that being central in a city would now make a very big difference?

Cloud kitchens.

Cloud kitchens, cloud grocery and convenience, uh, like cloud, cloud corner stores, basically like, um, um, Fridge No More or something like that. I think those are kind of interesting because GoPuff, because you have a whole bunch of people in the city and now when they push the button, they get their thing in under 10 minutes. Because it was— they took a floor in the bottom of the Salesforce Tower. You know, the second floor is now all, you know, robo convenience stores that will just quickly deliver to you. So I think you have to find something like that. Maybe it is WeWork style, you know, kind of coworking spaces, but there's got to be something else that you would do with this primo real estate. Maybe there's something in education that, you know, you create a distributed campus or something like that, um, across a whole bunch of different cities. And so, you know, you take a business school, uh, you know, take Harvard Business School online, which they have, and you basically say, great, you can attend Harvard Business School online in San Francisco downtown, in LA downtown, in all these places, because that's where that type of clientele wants. And now you get a once-in-a-lifetime opportunity to lock up that real estate at a fourth of the cost. I don't know. Those are some just random ideas off the top of my head.

That is a— I think that's quite an interesting idea of That's actually a good idea because that would, yeah, it's almost, you know, like the equivalent of a study abroad, but you're just going to do it in San Francisco. Right. Um, which prohibit was prohibitively expensive for the longest time. That is actually kind of an interesting idea. Um, so what, what, you know what the price per square foot is right now?

Is he saying in this, they were saying $25, they were saying $20 a square foot. Um, which is like, that's an annual number, right? So it would have been $90 a square foot annually. And now $20 is kind of what's quoted in this. CNBC article.

Do you know how that compares to like an Austin, like a more like a C-level city?

I don't know. I think that is like what I think that would be like what a mid-level city would have been without the pandemic. That's my guess is something like that. I think San Francisco was 4, 4 to 5 times more expensive per square foot than, than, you know, a B-level city.

You know, I think that I've been living in Austin now for just a handful of months. I miss San Francisco dearly. I do think that if you're starting a company now, um, and you have like a good-sized workforce, it would be interesting to try to kind of sign a lease now that you can book out for 5 or 10 years. I do— like, it's gonna roar back, I think, eventually. Um, I mean, I think that's the opportunity.

Here's another one. Let's say you're, uh, it was random. Let's say you're a venture fund or a late-stage venture fund. What if you took the real estate and then basically any of your companies can just use this and pay you the, you know, pay you market rent or slightly above, maybe slightly below. So all your portfolio companies now have their real estate problem solved and you know, you could place them because of that.

Dude, people were shitting on WeWork, myself included. I think now it's like this, this makes sense in a lot of these cities, these, these, the WeWorks of the world. And not only that, I think that they're just going to come back like crazy. Because every employee says the exact same thing. Well, I would love to work from home for a few days a week.

Yeah, exactly.

It's like, well, dog, I can't pay rent a few days a week, uh, if I have my own lease, right?

I'd love to diet a few days a week.

Yeah. So I think that like the, the Saunders of the world and a bunch of these other companies that didn't do so hot, uh, for the last 2 years, I think they, they absolutely can be started right now. And I think it sounds crazy, crazy to start them right now, but I don't think it is even a little bit.

Bro, I loaded up on Airbnb stock today.

Oh my gosh, I'm devastated. I, I'm seeing it go down. What is it at now?

It's going down because the lockup period ended. I don't know if you guys sold your shares or not, but the lockup period ended so people could start selling. So it put a bunch of downward pressure on the stock, plus the market in general.

Wait, did it end? I thought— oh, did it end? I didn't even know. I thought it ended in June. I think it ends in June.

I think it's 6 months for some— for, for— I think for some insiders at least. They can dump today.

Why on earth would you ever dump Airbnb stock right now?

But I bought it because, A, I just— I'm stupid. I just buy stocks when I feel like it. But B, I saw some data that was showing how a huge amount of Airbnb bookings, I think 28-30% are— actually, I don't remember the percentage. It's a very large percentage of Airbnb revenue or bookings was coming from stays longer than 30 days now. Which means that it's actually not vacation rentals only, you know, it's actually millennials just saying, I want to stay here for a little while, which is like, I think, a pretty big trend of I don't want to be— I don't want to buy. I don't even want a 1-year lease. That's too much commitment. How do I hop from place to place similar to what you did last year? So many 28-day-plus stays.

I think that is actually an interesting trend that people should take advantage of. And we actually have a guy coming on the podcast um, named Bill Smith. I think that's his name. It's like a real generic name. He started Shipt, which sold for like $600 million, based out of Alabama. It was like an Instacart competitor. He's got this new company called, uh, Landing. Is— you know what I'm talking about?

Yes.

Uh, what's the URL? It's called like Landing Home or something. Homelanding. Uh, but anyway, what it is is they lease out apartments in different places and they take the whole lease and then they sublease it because for people who want to stay for a month And the thing about Airbnb is that they actually charge— what's the fee? 10%. You're staying for 2 weeks. If you're staying like in New York, like I'm going to be staying, I'm moving to New York for 3 or 4 months. It's prohibitively expensive. So if my rent is $10,000 a month, I'm paying $1,000 a month just in Airbnb fees. And so if they can figure out how to reduce that fee to something that makes sense for the longer term, I think that in the future, people like us and maybe a little bit younger, I think it's going to be incredibly normal to live somewhere for 9 months and somewhere for 3 months. Right. And so if they can figure that out, it's huge. But do you agree that like, if you— would you consider living somewhere for 3 months out of the year?

For sure. I plan to do that. Yeah.

Where are you going to go?

Like, I got like a little baby right now, so it's just a little bit tricky. But yeah, that's, that's the lifestyle I'm going to live is living in one place and then the other place for 2 to 3 months out of the year.

Without sounding like a total douche, is this a rich guy thing or do you think that like lots of people are going to be doing it?

Well, you could do it. You could do it economically. Like, I know a lot of people that did this and made money doing it, right? It wasn't a rich guy thing. They went They live in San Francisco predominantly, and then they sub— they Airbnb their San Francisco place for a month and they go live in, uh, uh, you know, Mexico or South America. And actually they make money for traveling because their San Francisco Airbnb costs more. They're able to charge more for that than they pay in South America.

My lease, or not my lease, my, uh, mortgage and insurance and everything at my house costs about $4,500 a month. And I think that we're gonna get about 10 grand a month when we rent it out. Amazing. And we're going to use— and then we're— we've already booked a place. We're living in Brooklyn. I'm living in Brooklyn from July to September. And so— and I plan on doing that indefinitely. And I think a lot of people are going to be doing that as well. Cool.

I got to run. I got to get out of here. But good episode. We're out. I put my all in it like no days off.

On the road, let's travel, never looking back.

Life.