How to Navigate the Upcoming Depression | My First Million Podcast | 03-24-2020

What up? Nothing, it's been a crazy few days. I got my car broken into last night.

Oh no, front, uh, was there something in it or you just, just a San Francisco break-in?

I, I have a garage, I didn't park in my garage and the back window was broken into and someone stole my little $200 like battery that jump-starts the car, but it was like $1,000 or no, it was $400 to fix it. Just sucks. Yeah, I'm also pretty sure I have corona.

Oh no, you're feeling it?

Yeah, Adam, my Adam Ryan, my coworker, he confirmed has it. He lives in Austin though, but I'm pretty sure I have it.

Were you in contact with him or you just think you have it in general?

I just think I have it.

Oh no.

I was going to the office up until Thursday, but I thought that that was okay because I was the only one in the office.

Right.

And I didn't, and I like, I, I didn't like see, yeah. And Alan was only there one of the days and I didn't see or talk to anyone even like I would, I drove in, I parked on the street and I just walked right up. But I feel like shit, but not that bad. Not bad enough that I can't do stuff, but I, you know.

That's a bummer.

What's going on with you?

Well, on the bright side for you, you got to talk to your hero.

Yeah, so the other day, for the listeners, me and Sean are extra UFC nerds. One of my favorite guys— is he your favorite? You like—

I like him, but he's not my favorite guy. I feel like you feel connected to him.

Yeah, so basically his name is Ben Askren. He's interesting because he's very polarizing. I I would say he has more people who hate him than loves him, but the people who love him love him and the people who hate him hate him. So on last week I gave a lecture on cold emailing and literally the day before I just cold tweeted at him and then we became friends in the inbox and then we just did like a conference call and we've been chatting and that was awesome.

And what was your cold tweet at him?

He tweeted out a podcast that he liked, and I tweeted, "Oh, hey, I was actually on that same podcast like 2 months ago." And then I DM'd him the episode. I go, "Hey, I was just on that. I see you're doing X, Y, and Z. I do this, this, and this. I just like you, but if you ever want to shoot the shit, let me know." That's amazing.

And then you had a call with him. He's a cool guy. You guys are going to hang out and be best friends or what?

I pray. I'm trying to convince Ben. Okay. So Ben Askren is, he's kind of like this. He's kind of like, I think the people who like him are like the Jordan Peterson crowd, like the people who never had good fathers and wanna learn how to be men. You know what I mean?

Yeah.

Like discipline, even though he is kind of a loudmouth and I'm like, dude, Ben, you have to like, you could cop— like you can like copy all, like you could like the same way Dave Asprey has built this huge thing. You could do that too by selling workout stuff, and I'm trying to convince him to do that.

Yeah, he has a very big brand, and he's a very— he has a very unique personality, so you— I could see that working for him.

Yeah, and I'm trying to convince him to do that. He's based in Wisconsin, so I don't know, like, if he has like a whole bunch of like internet nerds hanging out with him that he truly understands what he's capable of, and I'm trying to be his nerdy friend.

That's good. And fighters don't have a very long shelf life, like he's retired now, so You know, they have to figure out the second act.

Well, he told me he has a wrestling academy and that they're not in session right now. So he's like, I got, I got a lot of free time. And so I asked him if you wanted to come on here and he said yeah. So if you want him to come on in the next couple of days or weeks, we totally can do it.

Yeah, we should do a brainstorm with Ben on what Ben can do. Like, what would I do if I was Ben? I think it'd be cool to brainstorm those ideas.

I'm gonna write that down. I'll email him right after this.

Cool. And we'll research a bunch of things that other either athletes or celebrities have done to leverage their name, their brand, kind of like what we were talking about with Lance Armstrong.

Yeah.

And the same conversation we had with Lance, we should do a full app with Ben on that.

I'll, I'll set that up. Um, you want to talk about some new stuff that's going around?

Sure.

Okay. So first thing, um, Teachable, you see Teachable sold?

I did see that.

Okay. So Teachable is Udemy. I hate comparing things cause I don't want to be disrespectful to Teachable, but Teachable is like Udemy.

It's like Udemy with one core difference. So Udemy is like, you go to Udemy to find what you want to learn. Teachable is, hey, I can make, you know, you can make your website coldemailing.com and you can sell your course on your brand, on your site, and they make it easy. You don't have to know how to code to basically spin up an online class on your own website.

Yeah, and you and I are friends. Yeah, I think you are too, right?

I don't know the guy, but I'm really familiar with the thing and people know my education nerd. So I'm like, I kind of was very fascinated about their business and they did a pretty phenomenal job. They were at like $20 million or so in revenue. I think they sold for closer to $200, $250 million.

I talked to Ankur, that's the guy who founded it, and he said that it was very lucrative and it was a, it was a good— it worked out quite well. So I'm super cool. I'm proud of that.

I know their last round was at $250 million. So I don't know if it sold at the same price, which was recently. So I don't know if it sold at that price or above that even. That'd be kind of amazing.

I don't know. All I know is that it sounds, it was a good deal for him. And, uh, he is, he's an, he's an immigrant from India, came here at age 18. So love the, love the story. Yeah.

And I believe they have several teachers who use Teachable and make over like a million dollars a year or something like that. I think they have some, some real success stories. Maybe not.

That's what he told me.

It might not be a million.

I don't know exactly, but no, for no, there, there, there are 7-figure annual earners.

Yeah, they're mostly like affiliate marketer types, I think, but whatever. Let's not worry. It's like when you say teachers, people think like an English teacher, and it's actually like, you know, some—

Well, he told me, he told me the big— one of the top earners was a guy who has an Excel class.

Yeah, I've seen that. And you can actually Google— I've done this many times— you can Google, you know, most profiting or sort of highest revenue Teachable classes, and you can find the list. That I think they even have it on their website, the most popular classes. There's like a social media marketing, there's an Excel, how to do Excel class. There's a coding one. There's a bunch of those.

Did you do a podcast by your— I don't listen to any of our podcasts by the way, because you don't ever listen to your own stuff. Did you—

I don't even listen to my voicemail.

Yeah. That's hilarious. Let alone you talking for a long time. Did you launch your, your individual episode?

So I have 2 episodes. I did one on Thursday. I didn't launch it. I thought it sucked. And then the, uh, our editor, I think, has coronavirus as well. So he's been like in and out of the hospital, and, uh, he has like an underlying lung condition. So he's like trying to make sure he, he doesn't— I didn't know that, you know, get, get in a bad spot. Um, so he didn't publish it, and I was like, you know, I got cold feet. I gotta either ship it right away or I'll overthink it.

That's how I think you should do it.

And so, so he listened to me. He's like, what are you talking about?

This is good.

And so we're gonna ship that. I have 2 banked. And then I also, at the end of the last one, I had this idea during the podcast to do a like morning routine thing. So like you're in your house right now, right? You're in your kitchen and we're all at home and everyone's getting a little crazy and trying to figure out like, oh, I'm gonna work out by like opening and closing the fridge 50 times. Like people are trying to find a way to feel good and not go insane. And I've had this morning routine I've done for years now. That's a 9-minute morning routine. And so on the podcast, I was like, I should just make a podcast. It's just that— this is just the 9-minute morning routine. You can listen to it. It's just free. Just put it out there. So I recorded that last night. So I had 2 episodes in the bank plus the morning routine, like, thing recorded. And so hopefully all those will come out this week.

Are you working out?

Yeah, I'm working out. Yeah, so we have— we've had a home gym, or like a room that we turned into a gym, and now I'm using the shit out of it.

I have a home gym in my garage, like a nice one. Like, I've got like— it's like a 400-pound for squat, like a squat rack, heavy I have all types of shit. And I talked to a guy the other day who was a listener or something like that. He messaged me on Twitter and he said that their home fitness equipment is selling like crazy. He's like, we can't keep up.

Hotcakes.

I ordered 1,000 pounds worth of weights on Amazon last year with free shipping.

Yeah, the delivery on weights is insane. I felt so guilty because the guy bringing it up to my house, like up the 15 steps, is like, you know, breaking his back. For this thing I'm never gonna use. And so I bought those Bowflex dumbbells, which is like, it's one dumbbell.

That's what I have, PowerBlocks.

You rotate it and it like can be any weight you want. Those are actually pretty handy.

Yeah, I know, I have those. Those are my favorite. Do you wanna talk about Airbnb? So next week we could do the trend stuff. We wanted to talk about trend stuff, and it was a good one. But I think we have a lot here. Do you wanna talk about Airbnb now?

We have a lot. So we're gonna do two things. We're gonna talk a little bit about Airbnb, and then we're gonna start this thing that we teased last week, which is, Y Combinator had their Demo Day, and it's like a goldmine of new ideas. And it's sort of, you know, YC is Harvard. And so we're gonna take a look at this batch of companies, and we're gonna break them down. We're gonna do like 5 or 6 of them today, and if it's fun, we might do the rest. I mean, the list is like 100+, so I don't know how long we could do this, but let's do like 5 today and let's see what happens. So we'll do both those things in this episode.

Did you want to do—

let's talk Airbnb first.

Oh yeah, do it.

So Airbnb, some interesting things are going on. So Airbnb, you know very well, is awesome company, one of the sort of most successful startups of the last decade or so, and was about to go public this year and was preparing for it. And now with coronavirus, you know, travel has stopped. Hospitality, you know, hotels, casinos, they're all taking a total beating. And Airbnb, of course, is gonna get caught up in the the crossfire as well. And so, a couple interesting things here. So, Airbnb financially, you know, their revenue must have dropped by 50, 60, 70, 80%, essentially overnight, and with an indefinite time span. We don't know how long this is gonna last. The second thing is, Airbnb not only does have a huge, you know, staff on payroll, and now revenue drops, but all the hosts were essentially small entrepreneurs. So, some people did, you know, a traditional thing, they just rented out an extra bedroom in their house, But a lot of people, once they got a taste of that money, they started buying places, renting out places, and subleasing it, basically putting it on Airbnb. And so all those people now— there's this thing that was a moneymaker for a couple years has gone to zero. And so I think there's something very interesting that's gonna happen where what happens to all these hosts who got places just to Airbnb them, and now the Airbnb income has sort of totally dried up? Are they gonna default on their mortgages? Are they going to default on their rent payments if they're subleasing, or are they going to turn into just normal rentals? Like, I don't know what's going to happen. But what do you think about all this?

So you already know what's going on in Zillow. You're the one who told me, right?

Well, I did see some charts. Yeah. So I saw some charts that basically showed on Zillow normal housing. So just normal rentals, not a short-term Airbnb stay, but just here's an apartment for lease for 6 months. Is exploding. So like, it looks like the coronavirus is like— here's last month, one little blue dot. This month, 15 blue dots on the map, right? It's like the number of listings is exploding for rentals, which is also bad for Airbnb because in places like San Francisco where there's a housing shortage, and for years Airbnb has been saying, oh, we don't contribute to the housing shortage, we are— we're a different thing altogether. Well, now it's actually kind of a Whether it's, whether it's truly the proof or not, I don't know. But it certainly does look like if you're somebody who was anti-Airbnb, you have a lot of evidence, a lot of ammunition now to say, hey, look, when we turned Airbnb off, look at how much more housing supply came on the market. Look how that lowers rents for everybody here.

You know what Airbnb is doing now, though, is long-term rentals. They've been getting into that for a while where you could rent something for many months, maybe many years.

Right.

And that part is growing still, or it's growing a lot right now. Right.

And so I'm curious whether people in cities who are anti-Airbnb are going to take this and run with it.

And yes, the answer is yes.

Very sensitive to legislation, right? They changed some rules here in San Francisco where it's like you can only do 90 days out of the year and you have to live in the place, you have to prove that, blah, blah, blah. And that, you know, eliminated like 30 or 40% of the listings overnight when that legislation happened a year or two ago. So now I wonder if it's gonna get worse.

Sonder, you know Sonder? I'm Googling them right now. You know them? No.

Oh, that's the like, it's the hotel. Or explain Sonder.

It's basically if you are traveling for work and you want to go stay somewhere, you'll stay at a Sonder often. Let's see, I'll go to sonder.com. It's also if you want to stay somewhere for like 3 months, like let's say you're going somewhere for 3 months and you want to, and you have to make a lot of money in order to do this. It's high-end shit. Like in San Francisco, it's like 5 or 6 grand a month. Right, need a place to stay or work? We know it's time. Uh, here, the bet— yeah, the best parts of home and hotel. So it's like a— it's like a— an apartment that you can rent for 2 months, right?

So the corporate housing but done well.

Yes, but they just laid off 20% of their company, it looks like.

Oh wow.

Yeah, today.

Yeah, breaking news. Um, so I think this is going to be very interesting how these different companies get affected. You know, I'm rooting for Airbnb. I think it's a great product. I think it's a great company. I hope that they have, you know, a war chest of cash that lets them endure this time. But, you know, we'll see. It's a— I'm keeping an eye on this.

If you could invest a little bit of what you can, you can go and buy secondary shares. If you're going to invest money at Airbnb's previous valuation, I think they raised money at a $30 billion valuation. Would you invest in that right now?

Well, I need to know more, right? I need to know about how the company's financials look.

And let's say that revenue drops. Let's say revenue drops 70%.

For this, I'm not so concerned about the 70% drop because that's— that I think is, is more temporary. So I just need to know, do they have enough cash in the bank to endure this, or they think they have $3 billion? Okay, so $3 billion, you know, they're probably burning several million a month, but like, okay, $3 billion should still last you through this time. And then the other question is, were the fundamentals good to begin with? So a lot of times these companies don't have great unit economics or fundamentals to begin with, and And so when the downturn comes and people start looking for things that are more stable, more sure bets, these high growth but poor unit economic companies, they struggle.

They were profitable in 2018.

Ah, dude, I love this. It's like an analyst call.

And I think they're also profitable in 2019. This is all public information, right?

So yeah. So if they're— if they're profitable right now, even with this explosive growth, then yeah, it's probably a pretty good bet. To pick up a little secondary there.

Okay, I guess we'll see what happens. You want to talk about some Y Combinator stuff?

Yeah, so, so we're gonna go through a couple of the companies in the batch. You know, these are— well, we won't say anything that's too, what I'll call, too private information. So we'll do what's mostly public information about these companies. So we'll start with the first one.

Wait, Sean, before we get into that, dude, can you— can I tell you something that was striking about this list? How many lists were there? 150? Yeah, uh, shockingly, uh, Africa— African and Indian based.

Yes, this has been a trend in the last year or two for Y Combinator. They did two things. They went and did a road show. So Michael Siebel, who was the CEO of YC for a while— actually, he might still be— so he went on a road show through Africa, through India, and met a bunch of entrepreneurs. They had a bunch of events and they sort of opened up the doors to those applicants and really got people excited about coming to YC, and their bet was that, hey, look, a lot of the growth opportunity and the best companies are, you know, we can go fish in this pond where not everybody else is fishing, and, you know, certainly 500 Startups did this many, many years ago where they just, they invest in companies all around the world. This has not been the sort of way that most Silicon Valley investors have been operating. They're not actively going and hunting for great companies in India or Brazil or in Africa.

But yeah, it's pretty amazing about how, like, there's— I see a lot of Latin America, a ton of India, and a ton of Africa.

And what's funny is a lot of them are just, you know, Flexport for Brazil. It's like this other successful YC company, or it's like same exact one says—

one's tagline is Smile Direct Club for Latin America, right?

Yeah, that's literally it.

Um, yeah, Flexport for India, uh, or sorry, Flexport for Africa. Yeah, it's pretty crazy, and I think that's a great move.

Yeah, for sure, because a lot of these companies that, that work when they're not purely software-based, they're going to scale slowly. They're not going to expand everywhere overnight. So same thing happened to Airbnb. Airbnb got cloned in Europe and in all different parts of the world. Sometimes they, they were able to catch up and beat them. Most of the time they weren't, and they had to buy a piece of them or acquire them, or they just lost and they said, okay, I guess we're not gonna be the number one player in the UK, we're gonna be two or three, or—

and it works. Yeah. And so you want it— you want it smart. You want to start it off?

Yeah, so let's do Cron. So Cron is an app. The website's just cron.app, C-R-O-N.app. And what these guys are trying to do is essentially Superhuman for your calendar. So that assumes you know what Superhuman is, which is this really slick and very hyped email client. I used it for a while. I stopped. I don't know about you. Have you used Superhuman?

I'm still using it. Verdict's still out if I love it. But their tagline for people who don't know Superhuman is the calendar for professionals.

Right. So their thesis is, look, the market for calendar users, for just— if you just take Google Calendar, is 500 million people. And what they're trying to do is take the top, you know, set of prosumers, right? So professionals, people who really care about efficiency, people who are heavy power users of the Calendar app, and they're trying to say, can we get the top X percent? They said top 20%, but really it's gonna end up being the top 2% of people to pay $19 a month to have, you know, their Google Calendar on steroids.

What's 1% of— what's 1% of 500 million? Wait. No, that's 5 million.

Yeah, that's 5 million. Okay, so 5 million people paying $19 a month, not bad. So, so they're trying to go after that. They basically made a very slick-looking calendar, so it's got all, you know, aesthetically it looks better. They have hotkeys and little short commands. And oh, you want to set up a meeting and it's hard to sort of say, oh, I'm free Tuesday from 1 to 2 and Thursday from 3 to 4. It's like you just share your availability and and make it really easy. So they have a bunch of these features, and they have 1,000 users on the waitlist who are sort of ready to pay, and they've onboarded the first 50 paying customers so far. So they're doing that thing that YC companies do, you'll see this a lot, is big idea, and then good traction, but over a very short amount of time. So you can't really judge if this is successful or not yet.

And it says like 50% month over month growth. But it's been like 6 weeks.

But it's been 6 weeks and, and 100% of those companies were other— 100% of the customers were other companies in the YC batch, right? So it's like, you know, it's hard to really get a sense of these things. But I thought that's a pretty interesting idea. What do you think about this?

Okay, so if I was this guy, I would bet my life that this could be a company that makes a shit ton of profit. So there's— the nearest competitor that I could think of is Calendly. Calendly is a plugin for Gmail. It's a $30 million a year company that's bootstrapped out of Atlanta, started by a guy who moved here from, I think, Nigeria. Cool story. Andrew Wilkinson, a guy I respect and like, thinks that Calendly is— or I think he thinks it's total bullshit and that Google could totally clone it. I disagree with, I disagree with that assessment. I think that Crone can for sure be a very, very profitable software company. I'm not convinced that it— that they should raise venture capital because I— yeah, I wouldn't raise venture capital if I was them. If they needed money and just to start, I would say raise $1 million and just make this make like stupid— make it stupidly profitable.

Right.

Yeah.

I don't think that's the route they're going because they're in YC. But yeah, I hear that. I think that's a valid path. I don't think they're going to need a ton of capital. There's not a big They don't need a huge engineering force. They don't have to buy a bunch of assets. You know, this is a software play that really a motivated team of 6 to 10 people could, could knock out the park.

If I was listening to this podcast, I would say, and I was technical, I would be like, oh, that is a great idea. Their website, if you go there right now, kind of shows how the product works. And I would just completely rip it off and scale, but be far more scrappy because I don't think these companies out here are scrappy. And I think that someone could build it and be able to pay themselves $5 million a year in net income.

Yeah, you know, the— so I think this is a good idea. I also like this general genre of company. So our friend Sully tipped me off to this a while ago. He goes, I just think superhuman for X is a good investment thesis right now. And so he loves Superhuman. He loves the business. It's doing really well. And, you know, we were looking at this company called Linear, which is a It's like a bug tracking software. So every big software company tracks their bugs, usually using Jira or some like old-school ticketing system. Nobody loves using Jira. It's just like, uh, you know, you— it's a must. You have to be organized around your bugs. And Linear just made like a slick-looking Jira. And, um, and so we, you know, we talked to them, thought about investing in them.

Did you?

And I didn't end up— it was like a bit of a competitive round, and then I could have got in at the end, but I sort of cooled on it because when I tried to bring it into our company, there was a lot of security concerns. Not that they were doing something wrong, but you just have to do a lot of work to be enterprise security compliant and pass those checks, and they hadn't done that work yet. Now, in reality, they're gonna do that work. It's gonna be fine, and they're gonna get there. It's just it got out of sight, out of mind for me because I stopped using them. I forgot about the— are you—

and you're making investments right now?

Uh, no, now I'm on startup investments. I have, uh, cooled off for, for the time being.

There's a freeze. So, okay, so verdict on Cron— how do you say it?

Cron.

Cron. Verdict for me is great company to own. I think it will work. I don't know if it's good to raise money on.

Yeah, agreed. I think it's a good idea, good product. I think there's other products like this. If you just take, uh, Superhuman for X and you take any work tool that's massively used, and you just make an extremely slick UI/UX for, for that. This can work with to-do lists, this can work with email, this can work with calendar, this can work with—

well, you know how I would do that is I would log into Gmail. I'm going to log into Gmail right now. I would log into Gmail, I would click that little, uh, the dropdown arrow, the dropdown— no, the Google Apps thing on the top right, right? I would look at Search, Gmail, Calendar, Docs, Drive, Sheets, Slides, Sites, Groups, Contacts, Hangout. And I would just, oh wow, there's way more. YouTube, Maps, News, Translate, Photos, Admin, My Business. I would, and you just put that on a, a bullseye or a dartboard. Just close your eyes and just, there it is. That's the one you do.

Airtable did this for Excel. Notion did this for Docs. Superhuman did it for email.

There's a new one that's doing it for presentations.

Yeah, so let's talk about that.

I don't know much about it. It's called pitch.io, right? Or pitch.co?

I think it's pitch.co, if I remember correctly.

Is it awesome or something? I don't know, like, why are people talking about it so much?

No, it's pitch.com, dude. They got the com.

That's like—

that's how you know it's legit.

That's like a $100,000 domain name. Yeah, but, uh, what— why are people talking about that so much?

So I saw this the first time. So this is again You know, just like Airtable did for Excel, these guys are trying to do for PowerPoint. So PowerPoint also has hundreds of millions of users. It's a critical business function. And, uh, Microsoft does not make the UI/UX better over time. Uh, they do not do smart things in the cloud. And so you have on the low end, you have Google Docs and Google Sheets, Google Slides. And on the high end, you have right now Microsoft, uh, you know, PowerPoint. And these guys are trying to do a better job of making a sexy PowerPoint. And I'm down with sexy PowerPoint. I always love their website. It looks great, pitch.com. And it looks like it's ready to come out now. I've seen this thing— this has been like for over a year, I believe, maybe 2 years that I've seen this website like this.

Based off the people who are recommending it on their homepage, I feel like I know the people behind this.

Yeah, it's like you're friends with all the testimonials.

Yeah, uh, great. I'm very— yep, I like that. I don't know anything about it other than what I'm seeing on this website. And yeah, awesome.

And so this is one where I think, um, great market to go after. Uh, your execution obviously has to be good, but like, you know, but, but that's okay. It's better than going after a bad market because then even great execution doesn't do jack shit for you. I have another one that's like this on the Excel side. That's called Causal. So I've been talking to these guys. I'm not quite— I don't think I'm like an official advisor, but I just give my— give these guys a lot of opinions. So Causal is, um, it basically tries to give everyone the ability to do like data modeling, like an Excel wizard or like a data scientist.

That's awesome. That sounds hard, but that's awesome.

And so they have some cool things. You should just— if you just Google Causal's rent versus buy calculator, you can see what the end output looks like. They make this like calculator of rent versus buy.

How do you spell that?

C-A-U-S-A-L. That's Causal. It's causalapp.com is their thing. And then if you just Google Causal App rent versus buy, you can see it. It's a cool tool. I don't think they've quite got it to work. I'm telling them they're trying to make it too— they're basically too smart. So they're trying to do like data modeling and data science, like, oh, look how easy it is to make a linear regression or Monte Carlo. It's like, yeah, but you don't do that frequently. You should just make it where it's really pleasurable and easy to do simple formulas and spit out awesome charts.

Like, I love—

just do that. Because what Airtable did was Airtable took the part of Excel that's just rows of information and they made that sexy. But what they didn't do is calculation. People use Excel for calculation and charting, and Airtable doesn't do that. So if you did the calculation and charting and you made it beautiful and sexy, you could win. And these guys aren't doing that.

I'm looking at Causal now. It's awesome. And Pitch.com, I changed my opinion. They're gonna fail.

Okay, why?

I went to their about page and they have 9 employees and they're all founders.

Oh yeah, that's a, that's a bit of a red flag.

Um, yeah, literally, dude, on their about page they have 9 people. It says co-founder for all of every employee. Yeah, that ain't gonna work.

These are also like amazing headshots that they took for themselves. Yeah, so there's one guy that's a co-founder and a QA engineer.

It says co-founder next to all of them.

Yeah, uh, they're pretty, pretty legit investors. Okay, so, so yeah, Andrea is an investor in them. Um, yeah, okay, I'm excited to see what they got. I want to see it. It's been 2 years. Okay, so let's go to the next company. Um, the next one is Art in Res. Art in Res. So the idea here is you can buy fine art in installments. And, you know, I personally didn't know too much about the fine art market. I think my hunch is that you know a little bit more. I think you like to look into these things. So tell me what you think about this idea and what you know about the fine art market.

Yeah, so MasterClass is one of our partners. We work with MasterClass. I went and met with the founder, his name's Scott, in New York a couple weeks ago, a couple months ago, and I learned a lot. So, uh, fine art is one of the largest asset classes in the world.

But Masterclass is not about art, right? Or what do you mean?

Sorry, Masterworks. So Masterworks is a website where you can purchase pieces of a Basquiat or a Pablo Picasso in the same way that you buy stock in publicly— in the publicly traded markets. So, but art, fine art is a massive, massive asset class, but it's incredibly illiquid, as in you either have to have $30 million to buy a Basquiat or you don't get any upside. And so what Masterworks is doing is allowing people to purchase it with a minimum, I think, of $1,000. And what I learned meeting with those guys was how great that— as an asset class, how great it could be. So for example, David Geffen from Geffen Records, a big entrepreneur, during the financial crisis, he was famous for saying that his fine art went up 30% while his normal equities went down significantly. Um, um, let me see what else. I have a bunch of stats here. So I think, I think, I think that's really interesting. If I wanted to look at how this company could do, I would look at Etsy. So Etsy has traded at a 50 to 80 price to earnings ratio, which is really, really good. Um, I would— eBay right now is, is in the gutter. But I'm really— I think that marketplaces can be quite large. And I think that I personally was shocked at how large, like, fancy art is. I thought it was like— I thought that there was only like a couple paintings sold a year that made a difference. And in reality, it's not. It's not that way. So what's your takeaway? Are you— Okay.

So let me explain a little more about ArtRes from what we know. So here's what they say. The value proposition is that you can buy fine art in installments. So you were saying Masterworks lets you buy a piece of art. Sort of fractionalize it. These guys say it's yours, but you can— you're on a monthly payment plan. This has been a big trend in e-commerce. Anybody who's been paying attention to Affirm or Afterpay, these are multibillion-dollar companies that are just saying even low-priced items, right? Here's a $40 item, but you can buy it in 4 easy installments of $10.

And Affirm is doing quite well. Both of those companies are going to go public, or it's looking like they will.

Right. Afterpay is actually already public, and Affirm is, I think, going to go public. And so there— and there's— there's more. Sezzle.

There's—

there's others that are doing this too. That's a very good business to be in, I believe. And so, so that's what these guys are doing. They say they've sold $36,000 worth of art in 3 weeks. This is unlike Affirm and unlike Afterpay. They're not a payment option on other marketplaces, other websites. They are their own marketplace. And so what they're trying to do is they give artists the ability to sell their work. They say most artists don't even sell their work. So they say list it here. We offer people the ability to buy in installments. So more people can buy, so we have more buyers in our pool. And they get the artist to put their link to their store, just like an Etsy store, in their bio. So they put their Art in Res link in the bio, and that's driving a lot of users because these are, you know, Instagram artists, or artists with an Instagram who have, you know, 100,000 followers, and they're getting into the bio of all these different artists, and that's gonna drive traffic. That's how SoundCloud grew early on, was going for these independent artists and then saying, cool, we'll give you an easy way to host your artwork— in that case, music— but, you know, here, share your SoundCloud profile. And that's how they got tons of traffic and built up their marketplace. And so I think that's what these guys are trying to do. I think this is smart. The art market is one of those markets that's bigger than you think because you don't even— you don't even learn about it till you're already rich. And once you're already rich, you don't start a company in it. And so I think it's one of those big invisible markets to most entrepreneurs who are scrappy and don't own, you know, like a pencil, let alone a piece of art.

I, uh, so I would have agreed with you, and before you start talking, I, I agreed that it was great. But then you— the way you described it, if— okay, so I would, I would be against it if, if Etsy is competent, they can destroy these guys.

Yeah, I think it's going to be hard though because Etsy's niche is handmade crafts, and I think that's just fundamentally different than fine art. I think when you— it's like putting a bottle of wine next to a Budweiser, right, in the aisle. It's a little bit— I don't think the people who want their art to be sold, or fine art to be sold, or want to buy, want to be next to somebody who's making bracelets. That would be my— that'd be my bear case against that.

Okay, I buy that. I buy that. But— oh, okay, I get it. So I see a painting on here, it's $3,000. I can pay over time for, for 24 months for $137. Okay, so my question is this: is this pay over time feature even that unique enough to build most your company on top of? Why not just like have a normal art store and just install Affirm?

Yeah, that's a good question. I don't know why they're not just using one of the existing installment plans, uh, you know, why are they, why are they owning that piece of it? It's like an art marketplace, but then also this financing program when they could just use one of the existing financing programs.

So I'm looking at it now. Yeah, I'm changing my mind. It's stupid.

Okay, well, we'll see. Jury's out on Arden Res. I'm not an expert in this area, but what's your bet? Something there? My bet would be I think marketplaces are really, really freaking hard to start. And, and so for that reason, I think that it's going to be incredibly difficult, and they definitely haven't shown that they've done that yet. But, um, you know, so I would say odds are always against any marketplace being successful, but I do like the fundamentals of what they're trying to do. I don't think this is a stupid— I don't think this is a stupid bet to take if you're an entrepreneur, but I do think still likelihood is that it doesn't work, like most startups.

I think that it— okay, but there's a difference here of working and just building wealth, and then working By raising money?

No, I mean the business working. No, not the raising money. Lots of companies can raise money.

Yeah, but what I mean is, should— I think this, it for sure can make a living for the owners. The question is, is if they raise money, then will it work or will it not? My prediction is if they raise money, it's going to fail.

I feel like that's your prediction with most things. I think you just don't like when people raise money for the most part.

No, the next one that we're going to talk about, Carrot. I think that could work.

Okay. All right, let's talk about it.

Okay. So, uh, Carrot, uh, it's, they provide loans and a line of credit for influencers. Um, and that's interesting. And the reason it's interesting is I use, I have a million dollar line of credit with a company that provides line of credit for, um, for, uh, media companies. Um, this, clearly works in some cases. Influencers, can it work? Maybe. But the, so the company that I use, it was started by a DreamWorks exec. It has over 100 employees and they have billions of dollars in, in, in, in, I don't know what, how do you describe billions of dollars in credit?

Yeah.

They have billions, a billion, over a billion dollars to deploy. I think it's great because I'm totally hooked on their company and I don't plan on leaving. And I think I pay them like $1,000 a month What do you use it for, your company expenses or personal? Yeah, company. Yeah, so we don't really use it, but when a rainy day comes and we need money, I have that set up, right?

And so, and so the other example here is ClearBank, where they're basically providing credit to e-commerce companies, and they're saying, great, you don't, don't go raise money for this. If you can show that you're creditworthy by looking at your Shopify data, then we will front you the money you need for inventory or for Facebook ads or whatever else. You shouldn't go raise venture capital to pay for Facebook ads. And so the interesting thing here is, um, the big ideas, the real big ideas that come out of Y Combinator don't always sound like big ideas to start. Airbnb is a great example of that. Yeah, you know, when it was, when it was on YC's list like this, it would have been called Airbed and Breakfast. It would have been like, you know, rent out an air mattress in my apartment, and it would have seemed like a small idea. And, um, this is one of those two where it's like Do influencers really need credit? Do they really need loans? What do influencers need this for? And it just turns out, I think, that there's a lot of influencers, and this might be a hidden big market. It might be something that influencers really actually do need this capital. They are not— the traditional banks and lending institutions don't know how to assess an influencer for creditworthiness in the same way that they didn't do it for e-commerce. And The question I have is, how does the influencer use that capital to invest and grow their business? Like, for e-commerce, I get it. For your business, I get it. You're gonna invest the money, you're gonna grow your business. What does an influencer really do to grow their business? Is it ads? Is it to pay for stunts that's good content? Like, what are they doing with this money?

That's a good question, and I don't think anything. But let me, uh, go— let me go a different angle here. When you bought your house Was, was your wife listed as an earner?

Yes.

Was she listed as self-employed?

Yes.

Well, what do you mean listed by, like, when, like, for example, when you got your mortgage? Sorry. When you got your mortgage, did she, did she say she was a sole proprietor? Yeah. Did you say that you are a 25% owner of a business?

Did I say that? No.

Okay. When she was getting approved for the mortgage, was it hard for her?

No, she— well, it was a lot of paperwork, but it was— it wasn't hard. Like, she had the income to show it, but it just required— like, mine was simple. W-2, submit. They are like, yeah, got it, we understand your economics. For her, she had like, you know, this roller coaster history and a whole bunch of different entities and like all this different stuff that like was very, very hard for them. In fact, we— I just refinanced because the interest rates have dropped like crazy. And we didn't even use her this time because the lady at the bank was like, if we can, let's just do this off your income. Like, I don't want to do all that paperwork again for your wife.

That's what I think the opportunity is when I try to buy a home because I'm an entrepreneur. I told them I own— I think the threshold's 20%. They go, they said, do you own more than 25% of a business? I said yes. And they go, okay, we need to see the last X amount of years in P&L, and I showed it to them, and it was profitable or whatever, and they still gave me a hard time. I think that if I was this company, Carrot, I would— I think that there's a big opportunity who can provide home loan for— home loans for small business owners. I think that's the real opportunity here.

Yeah, and maybe they had to do it. So here's some of the stats about them, right? They've loaned out $1 million in the last 6 months. The average payback period is 45 days, extremely fast payback. Uh, that the APR is very high because of that. So even on a low APR, because of the fast payback, it annualizes at 40%. And, uh, now they're rolling out a credit card. After they do a credit card, I'm sure that they would want to get into other financial services. And if they can be sort of the financial services for influencers or the bank for influencers, that's very interesting because this will always be a niche market that is overlooked and misunderstood by the traditional banking system. And so that's the bull case. The bear case is I don't know. I don't know what the influencers need this money for. I don't know if they can actually pay it back. And I don't know how creditworthy they actually really are.

So the, the strategy here is you get into a market, you get a ton of— you buy a ton of share, you— people like you and trust you and you're profiting. And then you start launching more and more stuff to them, which I personally love, which is the Brex model in this case, right? Well, yeah. And it's what I do. I mean, it's what I did for a living. We're built— we built up a free email list that we sell more stuff and the more and the more and the more. I mean, yeah, a lot of people do it, um, and— but you got to get them locked in early, uh, and you got to get enough people. So I think that that's cool. And that actually brings us to a good point, uh, of our— of the next one. How do you pronounce this? And I'll tell you why. There's a— there's an angle here. What's this one called? How do you pronounce that?

We're just going to call it Leela. I don't know what it is. It's Leela. I don't know.

I don't know. They need to change their name because that's hard to pronounce, right? So it's— it's stupidly simple. It's a product that helps women freeze their eggs. Pretty straightforward. But what I think could be cool with these folks, as well as Carrot, is once you get this customer on the hook, there's loads of products that you could sell them. In the same way Hims started with Viagra and now is doing hair loss, and then now they're thinking about doing testosterone and doing X and then doing Y, whatever. I think you could do the same thing for both Carrot really well and this egg freezing one. Hello, Lil— Lilia.

Yeah, yeah, Lilia, I think. I think how you say it. So bad name, great idea, great business. You know, this is one of those you just close your eyes and invest is how I would treat it.

Yeah. So the— so here's some stats that I went and found. This is not from their deck. I just went and found this. Okay. And this number was shocking. Do you know that only according to CNBC, only like 11,000 people freeze their eggs a year?

Is that right?

It's not a lot. Yeah, not a lot, but it's growing at 25% a year. And I actually buy that. I think it's going to grow significantly. Gen Z, I think, are going to put it off more and more. I also think that so large companies like Facebook, and Google actually subsidize it and pay for it. So to get your eggs frozen, it costs between $5,000 and $20,000 a year. If you're in San Francisco, it could be $18,000. If you're in a smaller city, it could be $6,000. So it's really expensive. It's very invasive. It takes 4 to 6 weeks where you got to give shots in your arm and it's like huge needles. It's a, it's a, it's just a, it's intense shit. Um, but you know, it's about having children, so it's a pretty big deal and you're willing to put up with all that. Um, it's a pretty big deal. My question is, um, will they be able to con— will they be able to— so first of all, there's not that huge of a market right now, 10,000, 12,000 people. What would this new company be able to convince a young woman to use them as opposed to her doctor?

Right. And the other, other existing services that surely exist around this, right? Like, I don't know the competitive landscape, but I do like where all the trends are going. So I think that You know, the data shows that people are having kids later, they're getting married later, and that this is becoming less fringe and less taboo over time. And so that's what's going in the favor of this, is that more people— the market for egg freezing is growing and it's becoming more serviceable. Now, do they— what I don't see here is some unique go-to-market strategy. Oh, here's how they're— here's how they're going to acquire customers differently than how anybody else would. I also don't see them really talking about their expertise and how they— why they're going to be able to build trust in a way that's better or different than anybody else. So that's what I think is missing from this limited information we have here.

So you know how you and I talk about distribution and product, right? And how oftentimes product isn't an issue. Sorry, dog barking. We talk about product and distribution and how a lot of people, particularly first-time people, think Well, if the product's good, it's gonna sell itself. In reality, that's not the truth because there's way more great— there's a ton of great products that die because they have no distribution, and there's a ton of shit products that crush because their distribution's amazing. And so in this case, in the same way that Hims is just reselling other people's shit, right? Like, Hims isn't interesting. It's just generic Viagra. Their product's nothing good. It's just that they like smacked cute branding on it and they made it so men can call their call and get it, and young men don't have to be embarrassed about going to the doctor. You need to see something like that from this company, I think, to more— in order for, for it to work. Because what the service they're offering doesn't seem particularly different, right? Right.

Yeah, exactly. They haven't made it less invasive, less painful, less cost. They haven't innovated on the product side. So that means they need to have innovated on the marketing side of the go-to-market side. So that's what I don't like about this. But I love the space that they're in, and I think there's going to be a winner. I don't know if it's this company or another, but Uh, that's what's great about this one.

Yeah. And let me see, do they have— I don't know what— okay, here it is. I got some information on them. Um, uh, we charge— okay, so it looks like what they're doing is they're not actually doing the work. They're just a middleman for the clinic. So in reality, they're almost like lead gen. Yep.

So they have a $500 concierge service that they offer first. So how do we educate you, handled you, through the process and basically qualify the lead.

Yeah, so what they're doing is they are not, they are not actually providing the service. They're just a marketing company for the service providers. If that's the case, I like this. I think it's cool.

Yeah, I have a friend who does a company called Yoderm, and what they do is The same thing around dermatology. So it's telemedicine, but in reality what they're doing is they said most people who need to see a dermatologist are going because of acne. Most people who have acne get the same prescription. That prescription is, you know, something that they can just get quickly from a doctor. The biggest bottleneck is getting an appointment. It takes, you know, 27 days on average to get an appointment with the dermatologist. So what they did was they built a marketing company that basically says, hey, do you need to see a dermatologist? This is a faster, easier way to do it. Just do it from like FaceTime your doctor. And then they have a bunch of doctors who just write these same prescriptions all the time for the same acne medicine, because that's what people need 80% of the time. And 20% of the time they say, you need to go see a doctor, it's not acne, it's not just the generic thing. And, uh, and then they're white labeling the actual acne medicine and they're the ones delivering it. And that's the—

how big is that?

Uh, they're doing well.

Fuck, I love that. Okay, so we talked about Cron, Art and Res, Carrot, and Lil— Lilia. That's a stupid name. You have $100,000 to put in one. Which one you gonna do? Hmm.

All right, let's take a look. Um, it's not gonna be Cron for me. I'm also gonna say it's not gonna be Lilia because even though I like the market for all those reasons we mentioned, I don't know why this is the winning company. I don't see them doing anything special.

And this is the— what we have to tell people is once you meet the person behind it, that could totally change your decision.

For sure, right?

This is not based on the people at all, because you could meet someone and you're like, they're so formidable that it's like, dude, I don't care what you sell, I'm in, right?

Um, I think if I was gonna do this, if I was gonna— this is crazy to me that I'm even saying this, but I think I would be putting it in art and res. Uh, I think I would put it in because I think if they can get the marketplace spun up, it's going to be valuable. And I think that this is an overlooked marketplace, so overlooked market. So I like that it's a marketplace as a model, not lead gen, not, not anything else. And then on the other side, I think if they can get— I have a feeling that the sort of fine art marketplace has not been affected by technology in the same way as all the other industries have. And so I'm curious to see what they can do. So I would bet the $100K on Art in Res, and I would write it off as a loss. Because I would assume it's going to be a loss.

All right, I would do, uh, Cron.

Okay, why Cron?

Um, I just think it's, it's super easy for them to be in default survival. It's so easy. Um, like, I think that they can get to like $100,000 in monthly revenue like really fast. I think their churn might be high, but I, I think that it's just because of the market size and because it's an impulse buy, and if this just saves you a little bit of time, I, I just think that they can get to $10 or $30 million in recurring revenue inside 3 or 4 years with very little capital. And so they're default alive pretty easily. And, uh, depending on how creative the entrepreneurs are, they could expand beyond that. Um, so I'm gonna go with Cron.

Okay. I like that.

I don't know who would buy them though.

Uh, well, like for example, Microsoft bought Sunrise Calendar, I believe, uh, it was, it was a calendar that people really liked. It was a pro professional calendar, and they got bought for— I don't know how much, but I know like Inbox got bought for $100 million for making a slicker inbox, you know, by Google, and then sort of thrown away. Sunrise got bought. So, so I think that there's potential for an acquisition there by one of the, you know, big companies that cares about, you know, enterprise and productivity and whatnot. So there's a, there's a chance there.

I just want to be evil and just clone half of these things on this list.

Yeah, that's not evil. That's, uh, that's not evil.

That's just capitalism. But I, I do like— I— some of these ideas I think are really stellar. I don't know how it's—

I, I tell you the one that I would invest in. It's not even one we discussed. Uh, I know we got to go. I'll do it in 30 seconds. Company called Duffle. They're doing fast deliveries on college campuses.

And so what they do— horrible idea, but go ahead.

Not horrible. Not horrible. I'll tell you why. What they do is they buy the popular stuff that kids want, like Ben Jerry's and chips and whatnot, beer. They put it in an apartment and then they deliver it to you on scooter when you order it. So average cart is $16. They make $5 per delivery and they're delivering in a very lightweight way on the same— in a very tight geographic boundary. So they don't have a bunch of logistical issues. There's a company called Puff or GoPuff. Have you heard of those guys?

No. What's that?

It's this, but it's basically— it's this. And they're doing over $100 million a year right now. And they're just two kids out of, I don't know, Penn State or something like that. I don't know where they are, but somewhere in Middle America. And so I've seen this model work. I think that this is a good business idea. Yeah, Puff, or it's good, I think the website's gopuff.com.

You're saying they do $100 million in sales?

Yeah, more than that, I believe. And so they're in, you can see all the different campuses that they're in.

So then how profitable are they?

I mean, I don't know all that, right? I don't have all their financials, but.

I mean, is $100 million like their net profit, like their, after they pay the driver, I mean, Or is it like where the driver gets most of the money and most of—

so they're, they're at $163 million a year, um, is the, is the thing. And I don't think they even raised that much money. Like, let me look at their fundraising for, for GoPuff. I don't think they raised too much. Oh no, they have now raised a lot.

How much?

$866 million.

Oh, you described it as two kids.

Well, it was— SoftBank invested in them and, uh, recently and is a huge round. So SoftBank backed up the truck in them. But anyways, I think this market works, and I actually think it's great that SoftBank backed up the truck and put the touch of death on this company. If I'm Duffel, I, I believe in what I'm doing. There's a lot of college campuses out there to make this work.

Can I give you two that I would do right now? Yeah, okay. This is just purely off of reading about their market and like a description of the company. The first one is buildplane.com. Project Automation for Commercial Construction. I think that with the recession, this can make this company a ton of money. Uh, their previous companies were acquired, so they're solid. But, uh, just, I love software that is in boring industries like commercial construction that can help people just save a little bit of money. It's called, right, Build, Buildplane. Like, I, I, I, that, that will take off and be big. I like that. It's not sexy. And then the second one is True North Fleet. Did you see that one?

I didn't see this. No.

We give independent truckers the resource, the resources of large fleets. And so basically what they do is, you know, a lot of truckers are just small business owners, right? They're just like Uber drivers, but they just do truckers. My dad is in that industry, so that's how I know about a lot about it. And they're pretty raw. They just— you like, up until recently, they didn't use Twitter or anything like that. They would just have their CB radios and their cell phone, and my dad would call them and be like, hey, I got a load for you to go pick up in Bakersfield, and then I need you to drop it off at the Walmart in this place. Like, that's just how it would work. And, uh, this company is, is building bits of like software for small, small trucking businesses. And I don't— I think people vastly underestimate how trucking is like the backbone of America and how big logistics is in our country. And so I, I'm very bullish on that one.

I like it. Okay, cool. Uh, yeah, if you like this, let us know. We're going to do either more of these YC sort of company deep dives, uh, since this batch list just came out. There's like 100 companies we could go through if we wanted to. Um, and if you don't, let us know, be like, that was boring, don't do it again.

And, um, yeah, we can go through a few more next week. Sean, did you— you had topics already that you wanted to go over. We can do these next week, huh?

Yeah, we'll do them next week, or we'll do them on Thursday.

Thursday. Okay, uh, well, thanks for listening. This one was a little ghetto because we're all at home. Hopefully the quality was sufficient enough.

Yeah, I for one enjoy the ghetto pod, but I fucking hate it, dude.

I hate it.