The 3 Biggest Business Opportunities Of 2024 w/ Syed Balkhi

All right. We've got our buddy Saeed Balkhi on today. If you don't know Saeed, he is one of the few people on earth who has bootstrapped a company to a unicorn status, a billion-dollar company without ever taking outside money. The guy's a legend. He's in his 30s and he's done all this. What I liked about this episode is most people, we talked to a lot of guys who have made it, but they're kind of just like, you ask them, what would you do today? And they kind of just shrug. Like, I don't know. That's what worked for me back then, but good luck to you. And you're like, shit. All right. I got to figure this out myself. Syed's the opposite. He didn't close the door behind him. He kind of just puts a ladder down and he's like, hey, here's 3 specific opportunities that I see. And what I liked about these opportunities is he's very specific. He says exactly what he would do and actually that he's looked into doing some of these things. Uh, the second thing is that he, these are not like moonshot ideas. It's not like, oh, invent the next big AI thing. These are just ideas that will just work. Like if you do execute them well, they will work.

And this is one of those episodes where I actually was like writing down what he was saying. I was like, oh, I should do that.

I literally Slack Ben. I was like, @Ben, @Ben, call me when you're free. Call me. I gotta talk about some of these ideas.

And by the way, at the end we talk about money and we ask a little bit about what people's numbers are. You'll understand when we get to that part about what your number is. I want you guys to do me a favor. If you're listening on, uh, your, your podcast app, go to our YouTube page. Obviously you have to subscribe because that's That's the gentleman's agreement. You subscribe when you— when we create valuable content for you. All we ask is just for a subscribe. But tell us in the comments section what your number is. You'll understand when you get to that part. And also you can view what other people's numbers are. So this will be like a little bit of a social experiment.

Saeed, I don't know if you've seen this. Do you recognize this from the camp? I haven't seen Saeed since, since Camp MFM. I don't know if you see this. Yeah, aquapana. So Sam, when we were at the camp, um, first of all, microplastics, all the rage right now in rich guy circles. And so people are like, oh yeah, I had my gut tested, my microplastics are like off the charts. And they're like, what? But you're so like, you're so conscious about it. And the person was like, yeah, I know, and I'm conscious about it and I still have like a credit card in my belly of like plastic. And we were like, damn. And so then I noticed Joe Gebbia, the Airbnb guy, and we are all drinking water bottles, Fiji water bottles. They had like 1,000 Fijis. And I was like, dude, I'm living large. Everywhere I look, I could just grab ice cold Fiji. But Fiji comes in plastic. And I noticed he's only drinking from his own bottle that he sourced from somewhere. I was like, did this man bring his own water on the trip? And he's like, and he doesn't say anything, of course, not preaching to anybody. But I'm like, I noticed you're only drinking that. Like, is there something good about that? He's like, I just try to avoid, you know, plastics and, you know, everywhere. I was like, he only drinks glass water. I only drink glass water. Immediately, immediately went home, ordered it. And so since then I've only been drinking this.

And we, uh, we have to do an intro, Sean. Yeah. So Syed was on the podcast like 6 months ago. You were a hit. People loved you. Basically the gist of the pod is you have this empire that you own that you've not raised money for. It mostly started as a WordPress blog called WPBeginner, and then you saw which WordPress plugins among other types of businesses were most popular. You bought them or invested in them. Now your empire is doing something like over $100 million. I think you were somewhat vague, but I think you said over $100 million in revenue. The whole thing, you own gas stations, I think you own, um, a ton Tons of real estate. So you're just, uh, uh, you're, you kind of have your hands in everything.

The title last time, the catchy title, which I thought was really cool, Sai is one of the few, very few people on earth who is a bootstrapped billionaire, meaning, uh, or has built a billion dollar company, sorry, as bootstrapped. So not taking external money, um, and did it kind of slow and steady and in a really unique way where you, you really, uh, grew inside this WordPress ecosystem and WordPress turned out to be really big. Andrew Wilkinson came on and called this strategy the barnacle on the whale. So there's, uh, you know, a whale and it's a, it's a growing whale. And if you can be the right barnacle, you can actually just kind of grow with it and you can ride that. You could surf that wave and actually build a large business yourself.

And by the way, for the record, we have to protect Syed here. He never said billionaire. I think, I think we said that. So that's us. He could, he, he doesn't have to deny or confirm it.

I, I tend not to focus on the valuation. The, the goal is to keep building cool things that our users are loving. And with the team that I enjoy working with and have a good time.

And if you want Said's like backstory, you know, from we were talking about like when you were a kid, what you were doing in your teens to how you built this empire, like we did that episode. So this one we're going to do something different, which was just we were like, hey, come back on. You're like, well, I kind of told my story already, but we said actually just come in and just hang out with us like we do a normal MFM where we're going to talk about 5 different things. It'd be great to have you here just to talk about those whatever random things that come up. Along the way. So if you want the backstory, go there. If you want to hang out, come here.

So Syed, where you made this amazing document, you have another topic on here that I know that's just going to get, uh, that's going to, it's going to make Sean just super horny because he's going to be able to promote his own thing. Uh, what do you have here about this?

While you do this, go ahead. I'll stretch.

Yeah.

I see, you know, there's a massive opportunity in productized services. With offshore market, especially in industries where the TAM is really, really high. I believe this is greatly underestimated. Everybody's trying to go build this massive big idea business and spending years and years building software, which may or may not work. Or if you're good at sales and you have some sort of audience, taking this model and going to town works. As a matter of fact, I was evaluating a business earlier today that just came to my table that, that's doing productized services.

All right everyone, a quick break to tell you about HubSpot, and this one's really easy for me to talk about because I'm gonna show you a real life example. So I've got this company called Hampton, joinhampton.com. It's a community for founders doing between $2 million all the way up to like $250 million a year in revenue. And one of the ways that we've grown is we've created these cool surveys. And so we have a lot of founders who have high net worths, and we'll ask them all types of questions that people typically are embarrassed to ask but provide a lot of value. So things like, How much the founders pay themselves each month, how much money they're spending each month, what their payroll looks like, if they're optimistic about the next year in their business. All these questions that people are afraid to ask, but well, we ask them anyway, and they tell us in this anonymous survey. And so what we do is we created a landing page using HubSpot's landing page tool, and it basically has a landing page that says, here's all the questions we asked, give us your email if you want to access it. And then I shared this page on Twitter, and we were able to get thousands of people who gave us their email and told us they want this survey. And I could see, did they come from social media? I can see, did they come from Twitter, from LinkedIn, basically everywhere else that they could possibly come from? I'm able to track all of that. And then I'm able to see over the next handful of weeks how many of those people actually signed up and became a member of Hampton. In other words, I can see how much revenue came from this survey, how much revenue came from each traffic source, things like that. But the best part is I can see how much revenue came from it. And a lot of times it takes a ton of work to make that happen. HubSpot made that super, super easy. If you're interested in doing this, you could check it out, hubspot.com. The link's in the description, and I'll also put the link to the survey that I did so you can actually see the landing page and how it works and everything like that. I'm just gonna do that call to action then, and it's free. Check it out in the description. All right, now back to MFM. What's an example?

Yeah, give an example. Cause I don't think most people know productized service, offshore market. That's a lot of words.

Sure, sure. So look, we took an investment stake in a company called Seahawk Media. And they offer custom WordPress development, website maintenance, basically other webmaster-related services at affordable prices. And we can also do it white label. So this is like if you're a small business and you can't afford to hire a full-time developer, you can go here, you know, basically get a developer for hire kind of thing at very, very low rates because the team is based out of India. And, you know, there's a white label offer there as well. So other agencies, web hosting companies, businesses can add like add-on revenue you know, by reselling Seahawk. But other example could be take like very large market like bookkeeping, right? There's this company called Bench.

I use them.

Yeah, they charge you between like $299 or $499 and then more, right, per month to do your bookkeeping. And they're really, really slow. One of our portfolio companies were using it and super annoyed and we brought this thing in-house. But I know that many accounting firms now have offices in Pakistan, India, LATAM, etc. Where they're doing this fractional CFOing task, like very, very basic tasks like bookkeeping and basic P&L at super low cost. So someone can go in and say, hey, we will do the bookkeeping for you at this rate. I know, of course, like Shepherd, right? This is one of the companies you can go in. I think that there's a large opportunity here where you take a market where TAM is really high, especially a services market, and then you turn it into a productized service. You offshore the talent, and then you add like a reseller or a white label model. I think the, uh, the one that I was looking at was bookkeeping, and I think the, the TAM there is so, so large. And the key is, is, is the reseller and white labeling model, um, which is what we learned from Seahawk Media. So let's talk about Seahawk, right? Because you have a tactical example here. So Seahawk is basically your outsourced WordPress development agency.

And how much does it cost roughly?

Let's say it costs like $1,000 to build a website. I'm just making this up. And you are a web hosting company and a bunch of your clients are coming to you and saying, hey, I want you to maintain my website. And you're like, well, we just do hosting. I don't want to build a services department. So they will go to Seahawk, partner with Seahawk and say, hey, can you manage these clients for me? And we do a ref split. So now there are many web hosting companies that are effectively white labeling Seahawk Media's team and offering add-on services to their customers like custom website design, maintenance by the hour, you know, site optimization, hacked site repair. All sorts of these services have been productized and delivered without you ever building your own team. So in that same way, by the way, this is something that we're going to do on WPBeginner. I know the team is working on it and it's going to go live is we will start offering professional websites. So anybody who comes to WPBeginner can get a website done and so on. But you can do the same exact thing in every space. So let's say bookkeeping. I can go to all the smaller CPA firms that don't have the economics to build on their own bookkeeping and just say, why don't you just white label my services? And this is like, you know, now Joe's CPA bookkeeping. You're getting all the clients, you charge whatever markup you want, you're paying me X. So on the back end, it still works the same way. So if you're like, for example, Shepherd, can, like, instead of doing a traditional affiliate model, you can do this white label model where other people are, or just becomes like your lead source.

I have a question for both of you guys, Sean with Shepard and Syed, I'm sure you know a bit about this as well. When you guys are out, so I think Sean, you guys have people in Latin America, I think you also have people in Asia.

Yeah.

When you are going out and I don't know how many people you guys have, but let's just say hundreds. When you're going out and you're like finding these people, how hard is it to find them? How hard is it to train them? And how hard is it to keep the quality high?

I mean, it's the main thing, right? If you don't provide quality talent or if you're not able to provide higher quality talent than somebody could just easily search for, then you don't really have a business. So for example, with Shepherd, they have 100 recruiters. Like, I remember when I was doing the investment, I was like, hey, what's this like giant payroll thing? I thought there's like nobody here. Like, what's the— What are these 100 people? Who are these 100 people? Where, where's your office? He's like, we have an office in the Philippines, an office in LATAM. And what's in that office is just recruiters who are constantly searching for talent and then basically testing them, filtering them and trying to, cause you're like, the whole game is people want to hire overseas. They want the cost savings, but what you don't want is the average person in the Philippines or the average developer in LATAM. You want the top 1%, the top 5%. And so who's going to do that filtering? And that's the, that is the whole service of what Sheppard does is goes to find that. So in order to do that, is it hard? I don't know if I would say it's like, it's not like rocket science, but it did take somebody on the ground in the Philippines who started an office, has 100 recruiters there, and then they have a whole system and process how they intake talent. And so they're getting thousands of resumes and then they're trying to filter down. Okay. When somebody comes to us asking for a designer or a bookkeeper, how do we give them the best and not the average person. So you do want to have that. So that's the, like, that what Saeed's saying is you've already built that hard infrastructure. Now you could go to Joe the CPA and say, you need a bookkeeper. Well, I actually already have the good bookkeepers here. Um, you already have a customer relationship. Why don't you create an add-on service? It's extra revenue for you without extra work. That's really smart.

Right. Yeah. Uh, and for, you know, same to echo Sean's point, quality is very, very important. If you can't deliver quality, it doesn't work. But the good thing over the years that we've seen is that talent across the world is getting better. So if you go 10 years ago and you were trying to hire overseas, whether it's Philippines, India, you may not have had that same level of talent, but the new generation, much better English, you know, more technologically adept and so on. So when we're hiring in Seahawk, for example, this is, you know, super vetted talent. We know they can build WordPress website. Or say, you know, if you're a business owner, you're like, how do I know when I go to Upwork that this person actually knows what they're doing? Because anybody can go make a profile on Upwork. There's not a lot of vetting being done here. You know that this is a vetted person who can do it, and it's in Seahawk's best interest to vet that person because if that person is working on a client's website for some big hosting company, you're not just going to lose that one client. You might lose the contract. Of white labeling the service for that big hosting company.

And so are you, Syed, are you gonna start this for accounting, the productized service of accounting or bookkeeping?

No, I'm not actively looking to start it, but I'm studying it right now. And I talked with one of the influencers in the accounting space to see what, if there's a JV potential.

I bet that guy's just a thrill to be around.

Accounting influencers.

Yeah, it's like, ooh, he's got his, He's got his top buttoned on button.

Do you like to party?

Like that guy's just a thrill.

So you have another one here, which is ecosystems. Now this is the kind of barnacle on the whale idea that we were talking about earlier. So you were like, here's what you wrote. You go, I'll be the first to admit I've benefited tremendously off WordPress and the growth of WordPress. And I'm grateful for that. Andrew has talked about how he, with WooCommerce, benefited from the growth of Shopify. He got in early, started making Shopify themes. And then as Shopify grew, his themes business grew and then they bought more Shopify apps. And you said there's gotta be more of these basically, that there's not just those two, there are more. So what are some other ecosystems that you see that you think are exciting?

The one that I'm excited about is QuickBooks and the Xero apps. So these accounting platforms are very, very sticky. I missed a deal here. It was a really, really good business. They're doing like $3 million in revenue, extremely profitable. And I believe there's a lot of value in someone acquiring multiple one of these QuickBooks apps or Xero apps, or maybe QuickBooks apps, and then you port it over to Xero and so on. And then you cross-sell. So it doesn't matter if the user switched from QuickBooks to Xero or vice versa, you're still keeping that customer. You can even multiply that effect by going and tying multiple ecosystems. So you can say QuickBooks and Shopify or QuickBooks and WordPress and so on. I think there's serious potential here when you're looking at those businesses.

Dude, this episode, I know this episode is good because Saeed is saying ideas and I'm literally like opening up an email thread being like, we gotta do this, we gotta do this right now.

What are you saying?

It looks like I'm sitting, I'm almost like on my toes up, ready to like go sprint because I like, he's saying things that immediately I could see the opportunity. This, this is good.

Sean, do you know how many users, this is shocking. Do you know how many users or how many customers QuickBooks has?

I would guess like 2 million. I would just guess a crazy number.

Saeed, do you know?

Go ahead.

I believe 30. I think it's 30 million people. Wow. 30 million. 30 million customers QuickBooks has, which is insane. What does Xero have?

It's smaller, but it's in the millions as well.

Am I right? Is it about 30 or is it even more? I— my number could be old.

I think you're, you're, you're, you're spot on there.

And what do you think's the play? Is it software plugins or is it agencies that manage service?

I think the, the software play, the one that I was looking at was software play, and I've seen like other software plays in this not like the one that I really wanted. I missed it. It's so stupid. I can see the regret in your face, dude.

I've never seen you have like FOMO. This is amazing.

But like, you know, there, there are other, you know, implementation partners, um, around these that have built adjacent apps, uh, that you can go in and then use that as distribution. This is a very essential tool. Like, you're not going to not get rid of it.

So he's had two great loves of his life, his wife and then whatever this app is that got away. He'll never stop thinking about about this app?

No, I'm studying the ecosystem, um, and I think this ecosystem, you can find like wonderful businesses that they're not going to be venture growth, right? They're not going to have venture growth, but they're going to be extremely profitable. And you know that people are going to keep using, uh, QuickBooks or Xero because they— as long as they have a business.

Okay, so I'm— what you're talking about is the QuickBooks— I just Googled QuickBooks plugins. So you're just talking about something like that? So there's like, um—

that's right.

There's a variety of plugins that you can buy. I imagine they cost money.

Yes.

How much, uh, are you the biggest WordPress plugin business on WordPress?

I think collectively when you look at it, um, after Automattic, we would be the biggest.

Who, okay. And I, we promised that we're not going to dive deep on numbers. Can you say like the second or third place, like what, how big of a business would they have? Also tens of millions of dollars.

Yeah.

Um, and so how big of a business do you think you could build just on the QuickBooks, uh, platform or the QuickBooks ecosystem?

I think if you look at the App Store, because, you know, just like Shopify has an App Store, QuickBooks have an App Store. Um, and if you take a couple of apps that might be doing $3 million, $4 million, $2 million in, in that range, and you active by 5 and you buy 5 of those, $2 million doing $2 million, you just built a $10 million ARR business that may not be cross-selling enough so you can unlock more value. They might be mismanaged gems. By the way, if someone wants to do it, reach out to me. I would like to invest in it. Yeah, yeah. I was studying this and if you have a, if you're listening and you have a crypto startup, shaun@hoshimori.com, I'll forward you to Sayeed, don't worry.

Yeah, you're gonna be like the mafia, like where's my cut, bitch?

Yeah, yeah, yeah. There's no direct access here.

Yeah, yeah, yeah.

What a, What, um, so like when you do, I imagine that there's a, so there's software like Jungle Scout, I think for, or there's a bunch for Amazon where you could see which services or products are selling the highest. I imagine there's the same for Shopify. When you're studying QuickBooks, I can't imagine that that software exists. What does studying mean?

I think you're, you're looking at the number of reviews that the, a specific app has, you know, all, all the signals that they might be featuring something that's in the popular Looking at what's in the new, you can Google or search in the QuickBooks like category, you know, the tags they're using and see how many solutions show up in that and gauge by, okay, if only 3 or 4% of users are gonna leave a review, that's probably how many users that they actually have. So if somebody has like 100 reviews, that's only 4% of their user base potentially. Um, so you can, you can sort of make a hypothesis there and say, okay, this category or this keyword, uh, maybe it's receipt management or whatever it may be, um, has 20 apps and that's, that's how big the market size is for a receipt app in QuickBooks.

Dude, you're gonna, you're, you're basically a billionaire building these like plugins basically. And I think that that's, I mean, that's, that's awesome. Like, that's just so funny because the people listening to this, you guys should actually go to the YouTube because you're smiling as if it's like too good to be true. You're like, no one's talking about this. I can't believe why is no one talking about this? Like, that's kind of the vibe I'm getting from your facial expressions.

I enjoy the game of business and I enjoy finding these opportunities that allows us to compound. And that's what's exciting.

Dude, anytime I hear a billionaire talking about where he's compounding, I'm like, Talk dirty to me, baby. Yeah.

Like, like you're— you keep saying billionaire, which, which is not—

by the way, I'm completely making that up. I want to, uh, I want to respect that. I'm— I was being, uh, hyperbolic there.

It's a state of mind, baby. It's a state of mind. It's not a—

it's a state of mind.

So, um, yeah, let's do open source because I was reading today, uh, Y Combinator put out a like request for startups. They like kind of update this once a year. And one of the things, one of the top requests that they had was more for-profit open source companies. And they were like, we funded GitLab and they named like 5. We funded 150 of these and we want to do more. Like, we like this model. This is a good model. And I was reading it and I was like, I think I, like, I know what it is, but I don't know why it's in, why it's like particularly interesting or why it's unique and special. And so tell us about the open source stuff. What is intriguing to you about open source?

I believe that open source is one of the most powerful ideas of our generation because it gives you many freedoms. So anyone from anywhere in the world can look at the code and learn from it. Imagine like, you know, having some of the best programmers in the world writing code and then you, some new kid in India or Pakistan or US, wherever you are, be able to read that code. And then when you see something that maybe there's an idea that you have, you want to contribute back to it, you can just write a patch and commit that patch. And then the project maintainers can say, okay, this is great. Um, they can adapt your code and all of a sudden your code is now being used on millions of websites.

Can you explain? Because this is a kind of counterintuitive idea, right? Like normal business would be, it's our product, we hire people, they build the product. We would never want others to see our secret sauce, our code, or be able to use it or fork it, which means it's basically remix it for themselves. And so like, I do, I don't know, is there anything interesting about the origins of this? Like when it came out, was this a controversial idea? Because it, to me, it's pretty anti the way you would normally build a business. Can you paint that picture kind of from first principles?

And why would anyone want to contribute?

So, so, well, one, it's just very, very controversial in the beginning, right? It was copyleft. You have copyright and this is copyleft. Like, hey, everything we're building is for the good of society, for progressing technology for innovation. So there's a lot of people that get behind that vision, the freedoms that it offers in countries like a lot of people can't afford some of the more expensive enterprise software. Maybe they're in Pakistan or maybe they're in Africa somewhere where they don't have the resources to have those kinds of tools to build their business. And now you have this open source platform. Let's say WordPress. It gives you the freedom to publish anywhere. Maybe there's censorship happening on any other social media platform or publishing platform, and you can self-host your own WordPress site and put your take out there. So that vision becomes really, really important. I think when you look at long-term, anybody can write code, you can hire developers anywhere. So most markets will get competitive and your vision becomes a USP. Okay. And, and that's what open source brings to, to the table. And it's going to disrupt basically every established market that exists. And, um, there are startups that are coming out. Uh, I was, I was looking at this guy. I talked to this guy named Joseph. He runs OSS Capital and he's deep into the open source communities looking at, you know, various GitHub projects. Uh, and he's, he has a pretty cool method, right? He sorts them by the number of stars. That means how many developers are really liking that code. And then he gets behind them. So one of the things that he invested in was AppFlowy, which is a Notion competitor, but open source and affordable. So now I can make my own Notion and use it. Maybe I can self-host it and significantly reduce costs in my business.

Let's do some examples. So there's Windows, the operating system. Then you had Linux, the open source counterpart. And Linux is like a, what, like $20 billion or something like that? It's like a big, very big like kind of enterprise and they make their money off just the services, right? Because the product is free. That's kind of the whole point of open source is you could just use this self-hosted for free. But if you want the, like, is that all that they do with Red Hat? Is it just services that generate so much revenue?

Services, add-ons, uh, you know, premium versions of that. So like NGINX, for example, there's a free version of NGINX and then there's the pro version of NGINX, which gives you a lot more features, et cetera, um, to save you time and convenience. Same thing in WordPress. The core of WordPress is free and does many, many things. And there's, then there's plugins and many of the plugins are free, which gives you a lot of cool things. But then if you want more convenience, you pay for additional updates and support.

So you have WordPress, which is the free, you know, open source publisher. I don't even know what the closed source version of WordPress is. Maybe it's just social media. Um, but then you have like, uh, Android open source, iOS, the Apple, you know, operating system closed source. There's always this kind of like, dual winner. And so people have this strategy of just like X but open source, like Slack but open source, Notion but open source. Is that generally like a good— like, I like blueprints when it comes to business. Somebody told me about a blueprint. They were like, just Superhuman for X, the way Superhuman just took one piece of work software and was like, pay $20 a month, but I'm going to make it like really slick and like incredible UX and just way better design. And like, uh, Linear was a good example of that. Linear was basically Superhuman for Jira, for the ticketing system. And it worked. It's like a very successful company. Is a blue— is a successful blueprint in your mind like popular thing but open source? Does that work?

Absolutely. I think you take something that has a large TAM, uh, and then you make open source version out of it that is cost-effective, affordable, and now you grow with the community over long term. Like I don't think anybody could build what WordPress did as a proprietary software, but the reason why WordPress was so successful was because all the other website building platforms or all the other hosting companies, I should say, that didn't want to have their own website builder, they started contributing to it. So GoDaddy, instead of building their own website builder, I mean, they have one, but they went in WordPress and started contributing to WordPress. And many other hosting companies did too. So Shopify, which is essentially a hosting company, same thing with Wix, at the core of it, they're hosting, they have their own proprietary platforms versus WordPress is built by and built on top of by many, many, many other hosting companies. And the sheer number of contributors are a lot. And you see the same thing in Chrome as well and others.

But can't you say that, okay, so WordPress powers how much, 35% of the internet?

Probably a little more, like 40%.

Okay, so 40%. Okay, so Shopify has a— today they're worth $100 billion. I don't know what WordPress is worth. I don't know what their revenue is because they're a privately held company. But for controlling 30 or 40% of the internet, you, you should be making many tens of billions of dollars a year in revenue. Do you think WordPress does over a billion in revenue? I would think no.

So I think when you think about WordPress, WordPress is a community project and there is a proprietary company that the founder of WordPress, Matt Mullenweg, started called Automattic. Automattic has good-sized revenues. They're a private company, so I don't know what those revenues are, but it would be fair to say that it's not as high as Shopify. But when you look at the collective ecosystem of WordPress and all the companies that are in it, you take GoDaddy, how big is GoDaddy? You take many, many, many other hosting companies or WP Engine and so on, and you put collectively together, I would say that the market cap will be bigger.

Yeah. So Automatic was valued at $3 billion and it was valued at $7 billion at some point in its private— these are, I don't know if this is rumors or confirmed, but it's like published in a bunch of different places. And so that's what the Automatic is kind of the company that like kind of, I don't know, what would you call it? The steward of the open source program or the open source project. I'm not sure what you would call it. They're essentially the Red Hat, What Red Hat was for Linux, Automattic is that for WordPress, right?

They have the same founders. Yes.

Yeah.

And plus, Sam, you, you get all the developer street cred, bro. Like, I mean, Matt Mullenweg, that guy's right. He's a made man. He's untouchable.

There's no doubt that it's awesome. I think actually when I think of like internet heroes, I think Matt Mullenweg is, is, is up there. I actually used WordPress. So check this out. Let me explain the difference in business models. I used WordPress for The Hustle. The Hustle ended up being worth tens of millions of dollars. It reaches hundreds of millions of people. And we are small compared to many of the others on WordPress, you know, so I know I had a friend that had a WordPress site that was doing 100 million monthly uniques. And so there's no doubt that it's the best, but check this out. I bought WordPress's software called WooCommerce. WooCommerce was $300 a year. I had a business on there that was doing $5 million a year in recurring revenue, and I paid them $300 every single year. If this were Shopify or something else, I would have been paying them, I believe, $50,000. I think, is it 10% or 5%? So I'd have been paying them $25,000 to $50,000 a year. And I was like, this is a fucking steal. I'm stealing from these guys. And I was like, I don't understand this business. I'm getting all of the value and they're getting virtually none.

Well, I think the value is disproportionately favored in, in, in for the consumer. And that's what you want in a business, right? You want your users to have disproportional value. Coming from you. And I think like if when you look at products and this happens when you're studying long term, then your product can't be 10x better in a specific space. It really becomes all about the brand and the value that you're delivering when customers are using your product like actively. So having that value being so disproportional makes your business far more stickier than your competitor who might be charging an arm and a leg.

I have a bad idea for you, Saeed. So where, where else have we seen this where, oh, the customer's just getting an incredible deal? Uh, one idea that comes to mind is Costco. And Costco's basically like, hey, we'll sell you the goods at cost plus 10%. And that, that's just gonna cover the kind of the carrying cost of putting these items on the shelf. So like, if whatever that bag of rice actually costs, it's that plus 10%. That's the, that's always the price. And we're gonna negotiate the shit out of these vendors, by the way, to get the lowest possible version of that price. And we're gonna use our scale to do that. And all you gotta do is pay us $120 a year. It's like $120. I'm saving that in one grocery trip, two grocery trips. This is a no-brainer. And they've built a, like, you know, huge subscription business off this. Do you think somebody could do that in the software world? Because I've, I've seen a couple examples of this where I bought this, um, screenshotting tool that's really good. It's called CleanShot X and, uh, free, free shout out for those guys. They, uh, so it's really good, like screenshot tool. but one of the ways you can buy it is off some, some service that like, it's like it has all the random software tools put there on the shelf, like a Costco or like an Amazon for random software tools. And it's usually at a lower price than if you go buy direct than on the site. And I think it's, if you have a, if you have a membership to the overall thing, then you can just get these tools for free. I kind of wonder if somebody could do this with the open source community and just say, all right, pay us. $1,000 a year, and then you're gonna get, you know, WooCommerce, you're gonna get all these things at the lowest possible price. Or you're just gonna get, go round up all of the software and say, hey, you're gonna be selling at cost plus 10%, and we're gonna have this, uh, um, uh, you know, the subscription revenue to, for our members who, who wanna shop there. Is that a, how bad, how bad on a scale of 1 to terrible? What, where is that idea?

Two-sided marketplaces are generally a tough business to, to build. So look how nice there are challenges and challenges in the model. But, but, you know, you can try it. And I think there, there are companies doing it. I think if you focus it on maybe a subset, let's say agencies, and you say, hey, development agencies, we can get you access to these softwares at a lower price. Probably that's where I would start. And then you try to make it broader versus saying we have every software under the sun. Because you have to do some backend integration, the SDKs. A lot of indie softwares don't have the ability to have reseller models and versus like, hey, here's, here's my thing, take the payment, give me money in the backend. That's generally not how software provisioning works. So there's a little bit more nuance there than what Costco has.

So what is this OSS Capital doing? They basically, you said they go through GitHub projects and they look at like which things have like some combination of engaged users, large TAM, and what do they do? They invest in them or they add, they build products for them?

They're investing in them. And I think they're investing in—

The open source community, he's like, what, they just give them hugs and shit? What, where's the money in this whole business? What's going on?

They invested 5 high fives.

No, no, actually they're investing capital in those businesses and helping them come into market. Like, I mean, if you look at GitLab, for example, it's like $11 billion market cap right now. So like AppFlowy going after the Notion market, uh, or, or like Cal.com going after the scheduling market. I think we're going to see many of these established, uh, companies that might be unicorns right now in the project management spaces and such get disrupted by an open source solution. Uh, and then what's going to happen is like you and I can take AppFlowy and say, we're making Notion for doctors and we can take the code, fork it, make it better, and then contribute back to it because the way the licensing is done. So there will be flavors of these open source softwares that, that will get created. Like there are flavors of WordPress that are created. Um, and that's what makes it so disruptive. Uh, because like a doctor who might be using Notion will say, well, actually I want to go use this tool because it's, it does like the extra 5% that Notion won't do.

Well, which categories and products do you think, you think this model would work for where you're like, you see a particular product category, you say, if we, if we did, if we attacked that category with this open source blueprint or framework, I think that could be a winning combination.

I think, uh, the open source CRM that, that does a well enough job will be, will be quite disruptive. Um, and perfect segue to our sponsor.

Play the ad, baby.

But I think, uh, you, you take, you take any, you know, large, uh, TAM market and software and you add open source component to it.

Like Sam, do you know Stability AI? They're basically OpenAI, but open source. They're the ones who make Stable Diffusion, right?

How big are they?

They're multi-billion already. AI hype cycle, they're very big, right? But people actually use, you know, Stable Diffusion a lot, right? It's like a, it's a big project. Um, we invested, I think Sam, you invested with me, right? In Cal.com, which is like the Calendly, but open source, uh, competitor. Cause Calendly is like really expensive and the Cal.com guys have done a good job of of building the open source version of that. I really like this thesis. In fact, I think this OSS Capital thing is really smart. Like, there's a few, like, strategic venture fund ideas that I really liked. This is one of them. Um, another one that I had heard was somebody who's just taking pro rata. So they're like, oh, you do all the work of finding the company. Uh, you know, 30% of them are going to die or whatever before they raise their next round. But of the ones that raise the next round, you have pro rata. You could top up and keep your percentage. but most investors don't want to do it or don't have the capital to do it. So these guys are just pro rata and, uh, that's pretty smart. I think there's a few like strategic venture funds. One I really wanted to do was just a flipper. So you basically, you would say, hey, I want to invest, but I'll be out when you raise your Series A. I'm going to do, I'm really helpful in this 0 to 1, but as soon as you get to your Series A, I'm out. Because a normal venture fund is like 7 to 10 years and you're hoping for this like 1000x outcome. but the seed to Series A valuation lift is like 3x and it's usually in 12 to 18 months. And so if you could just pick well of like what seed startups are most likely to get to a Series A, or you're just in an environment where a lot of companies are able to raise their next round, you can flip. And for the founder, it's great because you're like, cool, I could take this capital today, but it's actually non-dilutive. Like they're going to be out by the next round and that same, those same shares go to the next investor. So it's actually less dilutive than normal capital.

But wouldn't you be accused of, uh, like a pump and dump?

But you're not pumping it though.

Like when somebody buys a home and, and then sells it a year later, is that a pump and dump? Like, no.

Like, well, no, because the, well, I would argue, uh, a, a home has, uh, like realized value, which is, but that's what happens from a seed startup when you invest or pre-seed startup, 18 months later, they've now built a product.

They have customers, they have some traction. They, their story is so much better, right? Like they are a de-risked startup in some way if they're able to raise.

Theoretically, but not always.

Usually.

You're right. You're right. But, but the risk goes a little bit lower. Um, and you, you were in the, you entered the riskiest stage at seed.

So the problem is it's just like a faux pas. Like, uh, startup investing is supposed to be this like true believers. Uh, I, I was in and I'm here for the long haul and like, you're gonna change the world. Whereas when you sell at the Series A, you're like, oh, you might change the world, but probably not. Uh, all I know is you changed my bank account, you know, by 3x if I, if I sold this right. And so I think that's the problem is it's so like, it's an anti-signal. Like nobody wants to see that your first investor wants out right away. It's such a bad signal. So you would have to first build your brand of this is what we do. It's not like for any company we do this, it doesn't mean anything about them. We do this with every company we invest in. And you'd have to frame it not as like a quick flip, because that sounds like self-serving. You'd have to phrase it as like non-dilutive. It's like, we're the early stage guys. We're really helpful early. We don't know anything after that. And like, we want you to not dilute yourself so much. So take our capital because we're going to basically give you back those shares to sell to the next guy rather than just losing more and more equity as you go.

Yes, still very, very high risk. You have to be a very good picker and say, yes, this is going to go from C to A.

But like, I looked at my portfolio, so I looked at like 100 companies. I don't remember the exact numbers off the top of my head, but basically it was like out of 100 angel investments that I did, uh, then I looked at what percentage of them raised the next round and what was the average multiple of the companies that raised the next round. You just multiply those together and it'll tell you like what's your expected value. And the, the math math when I did it last time, which was basically that enough companies raised the next round at enough of a multiple where you would be getting a good return. I think it was like 30%. I was, the math was basically that I would be making 30% on my money, which was fantastic and better than almost every venture fund out there. But I didn't, I didn't actually do that strategy because I thought of it later. And also it's really hard to get around that perception problem. I thought of it when one of my pre-seed companies raised a Series A and I was like, this company's not going to work. I wish I could just sell right now.

And, uh, bro, that's, you're proving my point. You've just proven my point. Uh, what's the point?

There's no point. No, that proves my point that you could, you could—

Well, you're not pumping. You are dumping though. Yeah, you're dumping.

Yeah, exactly.

Yeah.

Uh, that's what you should, that's what you should call it.

Your dumping scheme.

Speaking of numbers, I tweeted this out this morning. I want, I'm curious what you guys will guess. So I asked a question, uh, I'll tell you, like, I guess I'll give you the background. So I was talking to, I heard this like coach, like an exec coach or whatever. And I was telling him, I was like, yeah, I'm trying to do, he's like, what are your goals for the year? So I was like, yeah, I'm trying to do this, this and this. And one of the things I said, I was like, yeah, if I sell this business, I think I'll make, and I don't know what I said. I was like, I think I could make $20 million. And I was like, and then I was like, that'll be great because then I paused. I was like, I was like, I don't actually, I'd have no idea what, I have no idea what will change. And I was like, I was like, cause no, it'll be cool. Cause then I can, then my life will be better because I'll, what will change? And I was like, wait, what am I doing? What is there any benefit to incremental? And so I, I started thinking about this. I was like, I do want this. However, I do think it's a little silly that I can't point to maybe an area of life that I want to improve using the money. Money's a tool. I believe that, but I have no idea what I'm going to use this tool for. I'm just going to Home Depot trying to get a tool and it's like, you know, what do you need this drill for? And I'm like, I have no idea.

Well, that was a little silly.

So I tweeted out a question today. I said, how much money do you think you need to live your desired lifestyle? Because I think I'm, very close to just living the exact desired lifestyle I have. I don't really have any more like desires of what I want to change. So what is money good for in that sense? And so I asked people, I said, 0 to 1 million, 1 to 10 million, 10 to 50, or more than 50, 50 plus. And I said, how much money do you think you need in your bank account in order to be living your desired lifestyle? One of the answers got 47 or 48%. Which one do you think it is, Saeed?

And what's your answer?

Yeah.

Well, I think if you're looking at between those 4 choices, most people probably said 10 to 50.

That's what I would've guessed.

Okay.

That's what I would've said myself also. I think that's like the, like kind of my, nothing is per— not utopia where somebody's feeding me grapes and shit like that, but like what I actually want, what I actually care about, I think is totally achievable in that range. So do you, and so Sam's question was a good one. What would your answer be? Like, you've surpassed all these, great. But what do you think actually made a difference in your lifestyle where you're like, oh, I now have the money to live the lifestyle I want?

I call it the threshold number.

You know, I have a very simple life. I don't have these crazy desires of wearing the fanciest clothes or any of those things. For me, the $10 million number was more than enough. To have a good life. You know, I do what I do because I enjoy it. What would— I want to be productive member of society and this is fun for me. But, you know, people might say their number is more.

Do you think anything changes? Like maybe like as you go, as you go up, what gets unlocked at those levels of the game? The only ones I could think of, I'll just give you my answer. So I was like, I think if you go above 50 or go above 100, I think, you know, private travel is like, you know, the big unlock where, you know, you don't have to think, you just fly private everywhere, do all that. I think that's the biggest one. And the second one is if you really care about you being the one to give to charitable causes, I think that's the other thing that you could do is you could make large charitable donations. I don't really know what else gets unlocked past that, but you know, you might have other ideas. Am I missing anything? What gets unlocked over 50?

I think it's just the level of convenience that you get. Whether it is through private travel, whether it is through private help at home and so on. And then the level of that that you can access just get elevated. Also—

Do you think there's a difference between 50 and 500? Like, is there like a number where you think the level of convenience is mostly quite similar? Is it more convenient to have a significantly larger plane than a smaller private plane?

Uh, yeah, yeah. I mean, it makes a difference on how far you're trying to go.

Uh, yeah, the poor rich guy in a small plane just puttering out, couldn't make it across the Atlantic.

I mean, yeah, yeah, like, you know, you can spend any amount of money that you want. If you have money, you can spend it. Do you really need it? I don't know. Um, and that's debt based on each person, but Even if you look at Taylor Swift, right, she had to take— she took a private jet, but it was not hers. Like, she contracted a service to fly from Japan or wherever she was to Super Bowl because her own jet can't fly that far, right? Um, now does that mean that she, she can't afford a bigger jet? No, I'm pretty sure she can. Um, but it just doesn't make financial sense for her to maybe have a Global 8000 or something like this.

What was your number, Sean?

Mine was in the 10 to 50. I thought 10 to 50, like that's, that is past that. There's, there's very few things that are as appealing or just like big diminishing returns, but this is not range.

It's too big.

My, my number, my perspective 10 years ago would've been 1 to 10. Um, you know, I would've been like, oh, 10 past 10, what does it matter? And now past 10, you're like, eh, it kind of matters. And maybe that same thing happens again. I'm not sure. That's why I kind of like, I say, I want to ask other people's opinions. Um, because again, I think A, it doesn't get talked out, talked about much. Uh, but clearly we're all acting on it. Everybody who's listening to this podcast, everybody on Twitter, you're all playing a money game and you're spending a huge portion of your life earning, earning money. And it is probably worth knowing what's wor— uh, where does money really improve the quality of your life? And what are those thresholds? Where, what are the things you can unlock? And so you could decide for yourself if it's really worth devoting this much energy and this much time to accumulating more?

I think 10, 10 gives you a, a, a base. You've got your fortress of solitude. 10 is enough that you could tell most people to fuck off because you don't need much from anyone. Um, I actually still think you can lose 10 if you make a handful of bad investments. Um, uh, what, Syed, you gonna look at me stupid? Because I—

you can lose 100 if you make a handful of bad investments. No, no, no number you can't lose.

That's true. And I think, I think a threshold is 10. I think another threshold is 50. That's my current thinking.

What do you think happens at 50? What's the difference?

I think at 50 you can fly private safely. Like with that, like it's no big deal. You can fly private most every time you want.

And that, and that's the only difference.

Well, you could have a, you know, at with $10 million liquid, I wouldn't buy a $5 million house.

A certain number. Your nanny speaks Spanish. At the next number, she speaks English and Spanish. At the next number, she speaks English, Spanish, and French, right? That's what else changes.

But like, Sean, where you, where you live, you live in one of the most expensive, like, 50-mile radius parts of the world. Uh, like, a really sick house is probably $6 million, right?

Yeah.

You're not going to buy that if you're worth $10, but you would buy that if you're worth $30, probably, right?

Challenge accepted. So, so like, tell me I won't do something, I will.

But you know, no matter how big your house is, you can, you'll only ever be sitting in one seat at a time. So it's important to have like perspective to not let the, let the goalposts keep moving, you know, forward. And then for what? Like, I mean, there's a house here that's $170 million for sale. Like, you know, not too far away from us.

Somebody who was at the camp with us, I won't say their name, but they, they have a, like a probably like a $15, $20 million home. And they called me yesterday and they were talking and they were like, oh, sorry, I've been on, like, I was, 'cause I called them, they were like, oh, sorry, been house hunting all day. Like, house hunting? You just bought, like, your dream home last year. And you told me, like, we went crazy on this house because it's our dream home. And it's, it's what we've been working for all these years, why we made all this money. And then they were like, he's like, God, he's like, yeah, but he's like, our HVAC broke. And he's like, he's like, you know, that's 50 grand to fix that. He's like, my, the guy fixing our AC, he's got, like, engineering degrees. I pay 2 grand a month to our pool guy. Our pool guy's making 2 grand a month. He's like, and another 4 grand for landscaping. He's like, it's It's just annoying. He's like, everything that's— it's all my problem. He's like, he's like, yeah, it's great when we entertain people. But most of the time, I'm like you said, I'm just sitting in one chair. I'm sitting in the same chair and I have whatever, 10,000 extra square feet or 20,000 extra square feet of like empty house. And so it was just like such a visceral reminder of the, like the age-old wisdom of like, first you own your things and then they own you. And it was like, he was just explaining all the ways that his thing now owned him. And he had this like reaction where he's like, I gotta change this because like, this is not my dream. Actually, I thought this was my dream. It is not my dream actually, because I don't want to be owned by this where now my monthly nut is so high. I have to stress about, you know, about all these things or when things break, it's such a colossal break. I feel so wasteful, you know, that I'm spending this much just fixing our whatever pool or whatever it is. When in reality that money could, like, I remember what that money could do for me. I used to live a whole year off that money and now it's just, you know, going to one little thing.

How many square feet was this place?

I don't know, it's probably like 15,000 square feet or something like that.

That's fucking insane. That is so insane. Is it 15,000?

It's more than 10, less than 20, I think.

Dude, that's like, you need— that's a commercial property basically. You need like a property manager. That's insane.

I think it's important. One of the things that a lot of people don't think about is the holding cost of anything that you're acquiring. Whether it's a property or a business or what, you know, understanding the holding cost, the real holding cost may help you not make certain decisions.

There's other hidden costs too, right? Holding cost is one, opportunity cost is another that people usually discount. There's a great tweet that was going viral. I don't know if you saw it yesterday, but the guy said, he goes, I think making between $150K and $250K is the worst. It's like, what? He's like, is they think it's the worst because it's too much money to just say, fuck it, I'm just going to go do this thing I really want. So it's like too much money to walk away from, but it's not enough to ever like actually get escape velocity financially because you're paying like a huge amount of taxes and then you probably live in a, your lifestyle creeps up. And so, and I, and I saw like, I see this so often, which is that there's some range. I don't know what the numbers depend on where you live and what industry you're in, but something like 200 grand to 500 grand is like the, it's, that's the real golden handcuffs. And that's the real like danger zone. That doesn't sound like a danger zone. It's a hit, but it's a hidden danger usually. Cause if you're making that much, you're probably very talented. However, it is so hard to walk away from that amount of money. If you, once you get to that and take a risk, maybe start a business or take another job that might give you all kinds of other things, but maybe have less certainty or less annual guaranteed pay. Um, and I could see that tweet going viral cause I think it resonated with so many people. The guy had like no followers. But the tweet had like 20,000 likes.

You know, I mean, it also depends on your personality. My uncle who moved to US 40 years ago, he's a teacher. And, you know, teachers in America don't make a lot of money, but he's still retired a millionaire. So I think it's all about how you invest that and compounding.

I think that tweet is really fucking stupid. Why do you think that? I think that if you make $250,000 a year, You can live a very rich life. I think that you could have a beautiful rich life. I think you can retire by a certain age. I think that that is an out-of-touch tweet. I think that tweet is true if your goal is to make tens of millions of dollars or be your own boss at a young age.

I think it's true for the people it's true for, right? Which is if you want to be an entrepreneur or you want to be financially free and not have to trade your time for a salary, right?

No, you can be financially free on $250,000 a year if you—

$260,000. And I don't know, I live in California. I'm using California as my frame of reference here.

Then yeah, where you live definitely changes things and what your burn is. But you definitely—

New York, California, like a lot of places, like stuff, I don't know, like what's the amount of money you need even if you're living in Texas? Like what do you think is the real amount of money? You make $250,000 a year and then you have taxes. So you're taking home, I don't know what the math is, but like something like $175,000 or $180,000, something like that. And then you pay for life and you might be stashing away $100,000 a year. How many years do you have to stash away $100,000 in order to like be financially, be financially free? It takes a decade plus.

Yeah, a decade, a decade, right?

And even to get to $250,000, that takes you usually 7 to 10 years to get to making that much, right? 7 years to get to that. That salary threshold too, right? So now you're 17 to 20 years in. That's a lot. That's a long time.

Syed, what are you going to say? You don't like what Sean's saying right now. I can tell.

I think it's— there's certain something about the guaranteed payment and it really depends on your personality. Like the folks that are going to become an entrepreneur, they don't need to walk away from $250K. A lot of times, like, I mean, when I started, I had nothing, no salary. Right. So a lot of folks start out and they don't have a salary and they just kind of go and pursue it. If you, if that's what you want to do, you go do it. You have to have conviction. And I think that's, that's key to the success anyways. Especially as an entrepreneur. I'll clarify one thing.

I'm not giving advice to other people for what they should do or what the average person should do. I'm saying from my perspective of what I would want in my life, which is the only thing I can really speak on is the things that I know about myself. And I know that most of the people who listen to this podcast are going to be people who are like-minded, otherwise, how did you get to episode 500 if you weren't into entrepreneurship or you weren't like-minded in some way with our ethos? And for people in our world, I think then it's a valuable message, right? Like, I think there's a lot— I know I have a lot of friends personally who are in this situation. I know what they actually want out of life. I know where they live and the lifestyle they desire. And for them, that is a very dangerous thing. Of course, if I'm just speaking generically, that advice totally doesn't apply. It's totally out of touch and it's, it's a total overkill. I get that.

I think that's fair. I wanted to give you an alley, I wanted to give you an alley-oop.

It's like I shot myself in the foot and then I put a bandaid on at the very end. So it's all good.

Where do we want to go from here?

Let's do a couple other ones that you have on this doc. So you have, let's go to the bottom here with the strong, strong opinions or philosophies. And so you talked about acquiring a business versus paid marketing. I think this is kind of interesting. I think most people don't really think about this. I know when I was running my company, I never thought like, hey, let me grow through acquisition. That wasn't, it wasn't on my radar. What's your point here? What do you, what do you, what do you think is the takeaway?

I think when you think about growing a subscription business, there's only 3 ways to grow it. You get new customers, you expand existing customers, you reduce churn. And in the new customer bucket, most of the people are always looking at PPC, and especially a certain scale, you might be spending a lot of money in PPC.

Pay-per-click.

Pay-per-click, exactly. Pay-per-click advertising. And your CAC might be high, especially in a very, very competitive market. In that sense, it makes sense to just go pay a revenue multiplier to buy a business that has the customers that you, that you're targeting anyways, and then cross-sell. And I would say that that's something that more CEOs need to think about when they're thinking about growth.

You know who knows about this? Ya boi. I sold The Hustle to HubSpot because I actually didn't know about this.

They knew about it. They made the right— I know about it in that I know a guy. I know a guy.

No, I know a guy who did this and they bought my business. That was the whole point of HubSpot. That was the whole point of this podcast. Now I don't have too much information. I haven't been part of it forever, but I think it's working. So are you talking about buying other like products or like content sites?

Anything and everything. I was looking at this publicly traded company and where I was looking to potentially establish a sizable stake and their revenues were growing steadily, but not exponentially because they couldn't compete with the larger competitors. But the reseller side of their business was great. One of their resellers were actually making more money than this company was.

What's a reseller? Like, can you give an example that isn't related to this company?

Sure. So like I could, for example, resell HubSpot or any other, you know, hosting. I can be a hosting reseller. I can make my own hosting company selling Amazon. I can be Amazon reseller and so on. And so for this business, they basically just acquired one of their resellers and boosted their revenue. So it's just like the same customer that they had that the reseller and bringing it in. I wanted to work with the management and just kind of fund their acquisition of the reseller because the margins, if it was in-house, would be much, much better.

How can a reseller make more than the main thing if you're just reselling and then presumably giving a cut back to the mothership? How does the reseller ever make more money?

No, it all depends on the pricing and how you're licensing and what you're charging on your end. Okay. Yeah. So like, let's say we both could be dropshipping the same thing and I could charge like 5 times premium because I know how to market better and you're charging only 2x.

Okay.

Right? So, but that's just one example that you can look into your own ecosystem and start acquiring your resellers and bring that customer in-house. But also what HubSpot did with the content site makes total sense. What Zendesk just recently did with Klaus makes total sense and so on. So I think that when you're looking at, you know, acquisition and growth, like, you know, I'm talking about acquisition from like new customer acquisition, think about M&A as a viable option, especially when your PPC budget is high.

Could your WordPress empire have existed without you owning WPBeginner? So WPBeginner, for the listeners, by the way, it's like a blog. If you Google how to set up an email service on WordPress, WPBeginner, which Syed owns, always shows up number one. So would your empire have existed without WPBeginner?

Well, no, the answer is no, but for many reasons, no. I think you can't build solutions to solve problems that you don't fully understand. And for me to be able to build the best solution in the market, I had to communicate with the audience. I had to understand their pain points. And that, I believe, was our biggest advantage. Of course, the marketing and having the audience is very important too. Very, very important. But I think that understanding of the pain point is crucial. Like, for example, in talking to their customers and also my various company founders and GMs, I realized that we were not happy with our help desk software. So we went and acquired a stake in Groove, right? Which is a help desk software that will drastically reduce cost for anybody who's using Zendesk, for anybody using Help Scout. But now I know that like certain customers that are using Groove may also want our other solutions. And I know that many of our customers and agencies and so on, they're all using a help, you know, help desk software. So I can, you know, cross-promote Groove to them and say, hey, if you switch from, uh, Zendesk or whatever, you'll save 40%. If you, if you're an agency, you're using Front for your communication, switch here and you'll save 80%. So that level of synergy, um, gets unlocked, um, and can be quite lucrative.

Can we finish with these two, like, life, uh, life lesson type things? I think they're both good. I know we're on time, but I want to do it anyways. Compounding goodwill is the best form of compounding. What do you mean by that?

I think too many times we are very transactional in the relationships that we're in. We're doing something nice and saying, hey, do something back in return for me. I think just giving with no expectation in return. A lot of us are very smart and sometimes in that we can be kind of, you know, a-hole-y, you know, and not so nice. So I think intellect is a gift and kindness is a choice. And if we choose to be kind, Over long term, this comes back multi, multi, multi-folds. So not letting your ego or the keyboard warrior get to you and, you know, I'm smarter than you, you're 100% wrong. Just going along and trying to help out wherever you can.

Even if you feel like you're in the right, sometimes it's better to just be kind anyways.

Yes.

You know, sometimes I get stuck on that where I'm like, this is, but this is right. That's what we said. And actually it doesn't matter what we said. I should just, in that moment, it matters more to them than it does to me to just let it, to just be kind and just go their way rather than mine. I've learned that lesson the hard way a couple times.

Absolutely. Absolutely.

You wrote this guy's name, Guy Speer. I've seen this guy around, but I don't know him. Who is this guy? He's got something special. He goes to some conference thing, right? That people really like. Who is this guy?

Yeah.

Why is he the example of that?

Yeah. So he's a really good friend now. and we're in a forum together. So his conference is called ValueX, very well-known value investor, um, has a book as well. And, you know, he talks about compounding goodwill, um, in his book, uh, and The Intelligent Investor, uh, Educational Value Investor, actually. Um, and I'm always really, really amazed by his level of generosity, the amount of like, hey, you need this, let me just connect you with X and Y and Z. And long-term, what he's been able to do is build this amazing network of super duper talented people that like, you know, if he rings, they'll pick up and help out, whatever. And nothing in return. So I think he is an amazing example. And I learned a ton from him, even, you know, we were in Chicago a couple months ago and he gave me an idea to acquire, like a very cool deal idea. Of doing acquisitions. And then long story short, I was able to actually use it. A deal came and I used that exact tactic to make a purchase in a very tax-efficient way. So I think his ability to just do that is really good.

But I don't know you that well. We're friends, but we don't hang out too much. If I had to guess, I would say that you're a very shrewd negotiator. And I would say that you're probably a very disciplined and firm manager. I think you're probably quite nice, but I think that like you're a very disciplined person, which sometimes people would say, well, you're just being an asshole or something like that. You know, if you have enough employees, some of them are going to think that about you. How are you balancing being a nice person and also like trying to get the best of a deal or, uh, trying to capture, uh, a little bit more value for yourself than for the other person?

I think not all juice has to be squeezed if you think about value on a very long-term way. So part of the discipline is to say, okay, well, we don't have to squeeze all the juice today. You know, that's the whole point about compounding goodwill. You know, if I acquire something from a founder and I'm gonna let go of a few percentages because that helps me have a great long-term relationship with this person. That's a worthwhile decision rather than saying, you know what, you're down and I'm gonna like, you know, kind of crush you. And that's not good for reputation long-term.

But do you go into a negotiation saying, here's my threshold of I can no longer do, or I won't do it at this number, but I will do it anything below this. And then you go with like, a number and you leave room for that negotiation or for that threshold, and then you just don't ever cross that particular number.

Like, you're like super calculating about it.

Well, because I know that, I know that he's a value investor and a value investor, they like, at some point they're like, you make money on the buy, you make money when you buy something at a low price. And so like, there has to be like a threshold of like, it doesn't make sense after this. And so I just can't be a nice guy anymore.

Just because you're winning, it doesn't mean the other person has to lose. And I think that's a very important aspect of compounding goodwill. You know, that's also the example of like, you know, just because, you know, you're very smart, you don't have to prove the other person wrong. You can agree to disagree or move on and just saying, okay, you know, this is fine. Maybe it's worthwhile considering this and, you know, letting that conversation be and going away. But of course in business you have to be very, very disciplined if especially as a capital allocator. And that's that.

Let me tell you guys a quick story as we wrap up here. That was like the best good guy story that I heard. I heard it on another podcast, but apparently Adam Sandler, Adam Sandler was in New York. He was taking acting classes and the teacher was like, hey, I want to take you out for a beer. Let's talk. So teacher takes him out and he goes, look, Adam, you don't have what it takes and I just want you to quit. Doing it now, because I don't want you to waste 2 decades and it's just not going to go your way. I want to show you love and respect by telling you now. Obviously, 10 years pass. Adam Sandler's still doing this. He's an epic star. He's at the top of his game. He's at a bar in New York. He's with his friends. He's with his buddies. He sees that professor, that teacher out, and he's— and I imagine in his head he's thinking like, well, should I go rub it in this guy's face and be like, told you, I win. He walks over to the guy and he brings his buddies with him. And Adam looks at his buddies. He goes, hey, I want to meet you. I want you guys to meet Professor Blankety Blank. They were the only professor that was kind enough to take me out and buy me a beer. And I heard that story and I was like, that is one of the best stories I've ever heard about treating people respectfully, even though, you know, you may be a little bit angry or you didn't like them at the time. But Sean, did you—

I saw that clip. I love that story. Uh, it's Brad Pitt telling the story, by the way, which just makes it even better. You did good, but Brad Pitt telling the story was a little bit better, I think.

Just, hey, no, I saw Andrew Santino say it.

Oh, okay. Maybe it was somebody else.

I think Sam did an excellent job.

Yeah.

You're my Brad Pitt, Sam.

Both hot guys from Missouri. I'll take it. Yeah. Sayed, thank you very much. That's the pod.

Thank you.