The headline here is, they made the investment.
So it's not like they passed.
They made the investment and their best case scenario they wrote was 400 million as an exit value, 400 million.
And now it's 140 billion.
Let me, uh, tell you about something that I've been thinking about and I thought it was really cool.
And our friend, Sheil.
Just shares the best stuff.
And so I'm going to be sharing something - The most interesting man on X?
The most interesting man on X.
The most interesting man, I know actually, he does a lot of amazing stuff, but he shared something.
So I gotta give him credit, but basically I saw this Jeff Bezos quote, and I wanna know what you think about it.
And he said something where he said, I think it's generally human nature to overestimate risk and underestimate opportunity.
And then he went on to say, and so I think entrepreneurs in general would be well -advised to try and biased against that.
The risks are probably not as big as you perceive, the opportunities may be a lot bigger than you perceive.
And so the interviewer was like, you seem really confident.
And he goes, well, you call it confidence, but maybe I'm just accepting that human bias and I'm trying to compensate against it.
And I thought this was interesting.
I've been thinking about this.
I saw this like weeks and weeks ago.
And every time I've been thinking I'm like, there's so many businesses or opportunities that I see where I'm like, I can't believe that that thing is that big.
And I, myself, fight this as well.
And where I think this thing can't be that big, I think I've said this multiple times for different products that I said, that will never work and it becomes huge.
And even Jeff Bezos, by the way, he fell victim to this.
There's this one quote where he was driving packages.
He says, when I was driving packages to the post office myself and typing up all the listings, I thought, maybe if I'm lucky, maybe this can be $100 million revenue company someday.
And so like, everyone has this, but I saw this amazing thing where it was Shield sharing a memo from Bessemer.
So Bessemer is a VC, I think they're a fantastic VC but they're a big VC.
So they created this part of their website where they release old memos and if you don't know what that is, a memo is where whoever wants to invest into a company who works at a VC, they make a memo justifying their thoughts.
And then typically the partners like agree on it.
They're like yeah that was a persuasive argument we're on board. And so they did a cool thing where they released the memos from past deals and they had this amazing deal, or this amazing memo on Shopify.
And this was when Shopify was raising $5 million at a $20 million valuation.
The company was doing 5 million in revenue.
And I wanna show how bad Bessemer who is a professional VCU, I think they have tens of billions in under management.
I wanna show how bad they are at predicting stuff.
So they said, this is straight, these are quotes from the memo.
So, they said in 2010, Shopify had $132 million in GMV, which would put Shopify in the top 50 online retailers.
And so at the time that is how small the category was.
Let's say the other numbers, because that sounds like a big number, right?
So they had 5 ,000, they had 10 ,000 customers total and they were doing 5 million of revenue themselves.
So the 5 million of revenue, that's the company's revenue.
and then all the shops on Shopify, their sales total was 132 million, right?
That's GMV. And now, do you know how many customers do you actually know how many they have now?
I know that they add more than 10 ,000 paid customers every week now.
I think there's multiple million customers.
They have multiple million, and I believe, so the company is now worth 130 billion, I believe, at 1 .2 billion.
I believe they do something like close to a trillion dollars in GMV.
So I can't even tell you what that math is, what the multiple is.
They're probably doing this amount like the 132 million like every hour.
Like an hour. Every hour, yeah.
You're saying we underestimate the upside of these things.
We underestimate the market size.
And the headline here is they made the investment.
So it's not like they passed.
They made the investment and their best case scenario they wrote was 400 million as an exit value.
And so 400 million and now it's 140 billion.
They said, if all things work out, we think in four to six years, this company could sell for $400 million.
And we will 20 X our money, something like that.
15 X our money. Obviously, that's wrong.
The company's worth $130 billion, but they had all these other stats that were wrong.
And in the memo, they even have updated quotes.
So the person who wrote the memo will give you an update.
And in the memo, he goes, a few months after we invested, Oracle had acquired one of Shopify's competitors for $500 million.
And I remember emailing Toby, who's the CEO of Shopify, about how great it would be if someday maybe we can achieve that outcome.
But I thought it was just a little bit too aspirational.
And then he has this other line where he goes, some of the other employees and advisors at Shopify, when we made our investment, they thought to themselves, I think this company at best is going to be worth around $50 million.
And so the associate at Bessemer who made this deal, he goes, look Toby, these guys are saying $50 million, can we put something in the contract that says you're not allowed to sell the company for less than $50 million?
Because this guy was like, that's all it's going to be worth.
And Toby was like, dude, I'm not agreeing to anything like that, but I'll give you a handshake offer.
I promise you I won't sell until at least $75 million." It's just funny that this is how best of the top 1 % are thinking about different opportunities that today are so obvious to us, but back then were really hard to predict.
All right, here's the deal.
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And if they tripled the price, I would pay more money.
And that's because the product is so freaking powerful.
My entire company is built on it.
And so if you're running a business and you want to grow faster, you want to grow better, you want to be more organized, check it out HubSpot .com.
All right, back to the pod.
So I have a bunch of follow ups on this because this is a subject I've literally been thinking about.
I'll tell you why I was thinking about this simultaneously, but let me first just, uh, let's start with a little bit of humbling.
So, um, here's a list of products that I was totally wrong about.
Meaning they were already working, so forget the scenario of, ah, that'll never work.
But like, yeah, that's working, but that's probably small probably niche.
Okay. So here's products that I personally was wrong about over the last 15 years, um, calm and all the meditation apps, my buddy, Alex was doing it.
He was in my peer group.
He was in our mastermind group.
And I was like, that's cute.
Like, I hope, you know, I don't really understand what you're doing here.
Maybe you'll make some money.
It'll be like a job.
I didn't really fully understand it.
Meditations now, like there's multiple meditation apps that are billion dollar companies that seemed implausible at the time.
He was also really successful already.
Yeah, exactly. So, so I didn't doubt him.
I thought he was awesome.
And I didn't even think like it wasn't going to work.
It's like, oh it'll work, but it's just small.
It just seems like a suit too small of a market.
Okay. Other markets I thought were too small on Snapchat.
My username was like, has the word test in it still to this day, because I was like, yeah, cool, like, but this is never going to be a thing.
And I mean, this is just like a goofy kind of sexting thing though.
How big is the market for that?
Another one, Airbnb.
So I met the founder of couchsurfing before I heard about Airbnb and we hung out at my office and I was like, wow, couchsurfing, what a crazy idea.
Go sleep in someone else's.
just go sleep in their house." And they're in the extra, you know, couch or air mattress that they have, um, all right cool.
So Airbnb comes out and I'm like, wow, great, you're trying to be couch surfing.
How ambitious of you?
And, um, I think couch surfing topped out at like 50 million dollars or something like that.
Uh, like it maybe was maxed like 100 or 200 million, and, you know, Airbnb today say, 100 billion dollar companies.
I read that, I think, in America, One out of every $30 spent on travel is on Airbnb.
That's a cool stat.
I like that stat. It's insane, right?
It's insane. Absolutely insane, yeah.
In America. Yeah. One minute out of every day for every entrepreneur on average is spent listening to our podcast. I bet there's like a number like that that's true, right?
Yeah, like they said it in like one of their pitch decks But it's just absolutely astounding that you and everyone else me too thought that it was just couch surfing But it's just it's not ten times better.
It's not a hundred times bigger.
It's 10 ,000 times bigger uber was another one black uber was like black car limos I was like cool rich people in San Francisco who takes black cars small idea I don't understand why you know the founder of uh of stumble upon is like doing this but okay, whatever I guess rich guys just lose touch and they just start working on niche things that nobody know It's gonna be too niche.
Another one, Musically.
I remember we were at the office trying to build social products and Morgan, this guy who worked with me, he was like, hey, my daughter loves making these lip sync videos on Musically.
And it was actually even maybe even a different thing besides Musically.
But this idea of like, you record yourself on video, and then there's music mixed in, and you're kind of lip syncing, and dancing.
You make little dance videos.
And I was like, okay, cool, Morgan, but can we get to work now?
Like we're trying to build the next big thing here and like, you know, stop distracting us with this.
And, uh, you know, has anyone ever just like showed you a briefcase full of cash and then you like accidentally kick it into the gutter.
That's what that's what we were doing.
Um, okay. So those are things that I was totally wrong.
Well, let me tell you one more.
Alex Lieberman shared a DM that he got from the founder of cursor.
So cursor is a company that in two years or something like that he grew to $10 billion and the guy emailed Alex Lieberman asking for advice or like, what should do, left him on red.
Left him on red. Hey, we all miss.
In fact, Bessemer has a part of their website called The Anti Portfolio.
Have you ever seen this?
No, that's awesome.
They were the first VC, I think, that did this.
If you go bessemer .bvp .com slash anti -portfolio, it just says honoring the companies we missed, and it's just like Airbnb, Apple, eBay, Google.
It's all the companies they had the opportunity to invest in but passed for varying reasons, and they just humble themselves with this.
So this is the opposite of the, hey, let me show you our memos of how smart we were.
This is the other side of the coin.
It's crazy, man. Anybody who's worth a damn in business, your anti -portfolio is gonna be much bigger than your portfolio, which is just a bizarre situation.
If you're any good, and you're in the game for any decent amount of time, your anti -portfolio is much bigger.
Part of this is underestimating the size of markets, and there's many things here.
The other part is not understanding math.
because 10 ,000 times, or 1 ,000 times, whatever, that's actually, it's really hard to estimate.
And so like, to put it in really simple terms, I remember working with financial, my financial advisor and there was like this line item for $250 ,000 in 18 years.
And I was like, Griffin, what is this man?
He goes, well, that's, I just baked in like college expenses and I was like, but I'm not going to pay for all four years upfront what, or are you thinking we're going to have triplets?
What's the deal here?" And he was like, no, I just took the trailing 20 -year growth rate of college education and I assumed that they're going to go to like a top 75 percent like cost school.
And I just applied that number to the future.
And that just what it came out at, $250 ,000 a year.
And I was like, it's just, it's, it's really hard to understand what like five percent growth is per year or whatever it is.
And a really good way to understand this though, that I'm trying to like get beyond the math is I've been really obsessed with Thrive.
So Josh Kushner, and one of the reasons why I'm into it is you hosted this event and we had the founder of Oscar come.
You had Mario come, and I thought he was, I thought he was like the most impressive, smartest guy there.
And so I was like, go down the rabbit hole.
I'm like, are you partnered with Josh Kushner?
And Josh Kushner is now leading all these amazing things and Josh Kushner recently invested in OpenAI at a $250 billion valuation, which is astoundingly expensive.
That's just that number's hard to comprehend.
And someone was questioning Josh Kushner, and he was like, what I learned was in the real estate days, you know, his parents are real estate tycoons in New York City.
He was like, I've learned that you can't really overspend on Park Avenue Real Estate so Park Avenue is on the Upper East Side.
That's where like the Louis Vuitton store, the Tiffany's Store.
He was like, there's just been so many examples where someone said in the fanciest part of New New York city, that this building is way too expensive.
But when you buy the best, typically it's never too expensive.
Like there's always going to be someone in 10 years who wants to pay more for it.
So my logic is I'm going to find the Park Avenue of startups.
So open AI, cursor, whatever it is.
And I'm willing to spend what people think is at a crazy amount of money.
I don't care about the valuation because I just think that those will outperform those, the other ones.
And I've been really trying to like embrace that, even though it's very challenging to actually do that.
This is Michael Saylor's argument about Bitcoin.
So, his argument about Bitcoin is basically that, of all the digital assets, Bitcoin is digital Manhattan.
And there's only 21 – there's only 21 million blocks?
That's the real estate, that's the land.
You want to get as many of the 21 million as you can at basically any price because this is digital Manhattan and over the next hundred years, that's all that's going matter is basically like how much of that did you own, you know, not, I shouldn't say, that's all that's going to matter.
But basically you don't look for the third best thing you buy Manhattan, right?
Like you don't go try to figure out what's going to be the seventh thing because it's cheaper right now.
Like, no, no, the move is always you buy the Manhattan thing and you just plan to hold it over the long haul when, you know, it's a scarce rare asset.
And like that's the whole thing was crypto is like, there's a scarce rare asset.
Which is conceptually, that is way easier to understand than 1000x you know like because I see Manhattan real estate I'm like yeah this is like bump and this is great then it goes to the next stage which is having the courage to believe that your opinion is right yeah and so like for example someone like you who's in the Bitcoin or it was or is in the crypto industry and you do believe in it it's like well if you believe that to be true why aren't you borrowing every dollar you can to do it and that is where courage comes into play and that's really hard to buy into this concept so I say I buy
into this concept conceptually, but I'm not truly acting on it, at least not in a hundred percent type of way.
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All right back to the pod There's also other factors so for example, I have a very funny goal my last goal on my like, you know annual goals is Just call it just says avoid ruin because my life is great and so actually like one key thing at all times is avoid ruin like do not do extremely dangerous things take care of my health and don't make disastrously risky financial investments that like, even if I believe even if I have conviction even if the upside is there I really just don't need to I just don't need to risk ruin at any given time I think the Kelly criterion just do not risk ruin keep
yourself in the game is always important so like you don't need to borrow every dollar even when you have conviction right there's like there's but I think that's what separates uh not all the best so I don't think Buffett has ever like risked uh you know he famously has said uh don't risk what you have or what you don't need or something like or don't risk what you need for what you don't want or I forget exactly the quote wherever it was like risky needlessly risking things yeah but my brother John who I'm visiting in Missouri he's not into startups and he was like why do you why are you still
doing this like why don't don't risk anything I was like well I don't really risk anything but he's like but dude the really successful like the Elon's risk everything and I was like a lot of them I think do I think that like there are like the 10 out of 10 the best of the best the crazy Elon's of the world I think that when they say I was sleeping on couches I think you don't really want to believe that because their friends are billionaires or whatever.
Yeah, I've been around enough of these yeah it's a really nice couch but I've been around enough of these like crazy crazy crazy like 1 % of the 1 % the freaks amongst the freaks.
Some of them I actually do think don't avoid ruin.
Correct. I just don't think that's wise.
I don't think a lot of them are very wise I think they're great achievers and but they're not necessarily licensed folks.
I don't think they're that like have you who have you met do you think.
Some people do definitely take it to that extreme right like there's there's levels right so like Buffett actually has been very concentrated at many times I think you know recently had 50 % as a portfolio just in Apple stock right so like that's a very concentrated thing he believes in concentration but concentration is not the same thing is like you know risking ruin in a way even somebody like Elon you know the ruin for him isn't losing his money because he's a money -making machine he's an achievement machine.
At any given time, he could have, even if he had lost it all through SpaceX and Tesla and whatever, he'd be rich again in 10 years.
And I think he knows that deep down too.
Right? So like the risk of ruin for him might be reputational.
Right? There's a great leaked email where OpenAI is talking about their path forward and this is like when this is when Elon eventually got like sort of kicked out slash left the project of OpenAI, right?
He's a co -founder. He put the first 40 billion dollars in.
But along the way they realized they need a lot more money.
And the leaked email basically shows the brainstorming that they were doing.
Sam Altman, Greg and Elon.
And basically Elon's idea was...
So they all came to the realization, holy shit, this kind of works but we need way more money.
Like this is going to need way more money to train these models.
Like we're talking hundred million dollars plus just for a single training run, like let alone operating the business from operating the project and paying all the salaries.
And now it's for what like servers or something like that like?
Like literally the GPUs and the compute and the electricity to train one model And then you're not gonna stop there.
You're gonna train a better model right so once they realize shit We need 100 million and we're a nonprofit This is not going to really work who's gonna just Elon's giving us this but like are you Elon are just gonna give us like Billions, that's probably not gonna happen But that's where this is going and so when they realize that they're like we need a way forward so Elon's suggestion was Let's make open AI a part of Tesla Tesla will be the commercial machine and they will take some of that profits as R &D and put it into OpenAI.
We'll fund it that way.
Now Sam and Greg didn't like that cause they're like, well, yeah, but then like you control everything and we're just kind of like your little bitch and we don't really love that idea.
So what if we— and they were exploring other idea so they had a Microsoft idea, which is what they ended up doing.
So he's like Microsoft is really interested in giving us, you know, like, you know, potentially like, you know, multi billions of dollars and free compute.
But then, you know, we'd have to work out a deal of what's for Microsoft, and then Elon basically replies being like, ew, like lame being a part of Microsoft. That was in his reply, basically.
He's like, why not Tesla?
And then Sam Altman.
Then there was an email that referred to, Sam has been exploring the idea of an ICO, so to do a token launch. And like, what if we, it was during the crypto heyday and they're like, ah, I guess you could just raise a ton of money for kind of nothing, like a promise, if you just do an ICO.
and Elon's reply is basically like, I am against the ICO.
It is, I think, reputationally disastrous and I will not be a part of the project if you guys pursue that path.
I will take my name off this project because even if that would succeed, I just do not - I don't think the risk is worth it.
And so it's interesting because the guy is willing to risk certain things, all of his money, but not necessarily others.
You may not - there may be other risks.
It's weird that without weird. I mean, it's just like intriguing that he thinks the ICO thing It's the risky thing, but not like the political thing or not like well Initially, he was saying I won't endorse a candidate and I won't be donating to them That wasn't his initial stance because same thing.
It's like the Michael Jordan, you know, oh you'd like my opinion on this Sorry, no comment Republicans by shoes too.
Yeah, and like one of the great lions in you know in in history And so additionally Elon did have that stance.
He got pushed over the edge, you know, dude of a number of factors that maybe only he can truly describe.
Some people think it's because his companies were getting like overly regulated.
And he just was like, we can't do SpaceX and Tesla if there's this much regulation.
Some, you know, people were basically pushing back on, on, you know, capitalism, or attacking him.
So like, you know, it's unclear what all the motivations were of why he decided to then throw his weight into it.
But when he did, he throws all his weight into it.
But he initially did not want to take that risk, because it seemed unnecessary, you know, you take, you only take as much risk as you see necessary.
What's cool about Elon is once he sees it's necessary he's willing to do it.
Whereas most people will still dilly -dally or hesitate to do it.
Which is the gap that I was talking about you know it's like courage is a hard thing.
But I also think that we underestimate how different the outliers are in terms of personality to the normal people.
And so what I mean is is you and I are live on coasts we are work in a weird tech world with it's pretty fringe but then there's people that are 50 times that do you know what I mean in terms of how strange and unique thinking they are so for example the Collison brothers of Stripe I'll hear like their opinion on things and I even to me I'm like wow that's just like way different that's like he's so out there in terms of how this framework or how you believe that it's just so logical and you totally buy into that.
That's really challenging for me to understand, but imagine to someone who is right in the mean, like just like of understanding how different the different people are in terms of their thinking.
Yeah, there's levels to this.
There's levels to everything.
There's levels to intelligence.
There's levels to crazy.
There's levels to risk -taking.
I think there's levels to all that, that it's pretty hard to comprehend until you get closer and closer and closer to that edge.
And you realize, like, oh, what I thought was level 10 was not level 10.
It was seven. And this is what 10 is, right?
Just imagine what Brian Johnson, the extent Brian Johnson goes to for his health.
There are people who live, you know, 30 miles in my radius here that are doing that in just ways that they're just not publicly broadcasting at, but not in just health.
They'll do it in finance.
They'll do it in their obsession over specific technology in a lifestyle choice that they make whether it's you know A polyamorous lifestyle or it's a you know The extent to which they delegate extreme delegation like we were laughing when we were hanging out with mr Beason he had a he had his runner outside it's like wait, so you got kind of like a personal door dash guy that just waits around in case you need something but like Yeah, there's that like there's a lot of people that have these like lifestyle quirks where it's like wait you Peter teal when he flies to a place has a mattress shipped
that hotel so that he gets the right sleep because that's his favorite mattress and he just, actually some hotels store the Peter Thiel mattress in the lobby or like in there's like storage facility in case he's gonna come because that's his demand and so yep there's people that do that and so wow I thought taking, I thought taking my sleep seriously was like wearing this whoop band.
I guess there's levels to this, right I guess there's like an infinite level, of levels to this.
It's a Honda Civic versus a NASCAR or it's Making the JV like I was telling my brother he was like he was comparing me to someone and I was like I don't think you understand.
I'm one of the best on JV at a big high school and These guys are Olympians like this, right?
That is the gap but the the you know I think the guy from you told me this story about The redhead basketball player in the Celtics.
What's his name? Scallop Scallopini.
Yeah, and he was like he was like joked as being the worst NBA player But he would go to, like, uh, you know, Blacktop gains and just crush everyone.
And he was like, you don't understand that I'm closer to LeBron than you are to me.
And that made that, that's sort of like what we're describing here.
You want to do something else?
Well, I do. I have one other thing, but I want to go back to the market size thing.
Cause I have, I have something that I think is a pretty sick example of this.
All right. So. There is an amazing story about this from Uber.
So I remember when I was living in San Francisco, Uber had like, just come out.
I think I moved there 2012.
And I was like, it was all pretty new then.
And I think that was such a fun era.
That was such a fun era.
Wasn't it? Yeah, that was like, you know, our version of like the dot com boom, right?
It's like mobile. It was so exciting.
And so I remember getting in, I got there.
My friend who lived in San Francisco was like, yeah, here are rides here.
And then we got into the stranger's car and I was like, what the hell is this?
It was actually a sidecar, which was the third company after Uber and Lyft that just died.
They didn't make it.
I remember Uber started getting like a pretty big investment and it just seemed pretty crazy and they just kept getting crazier and crazier they would raise it like you know first of all tens of millions, hundreds of millions and billions of dollars valuation and I remember reading this Bill Gurley blog post that really changed my thinking and the blog post is called how to miss by a mile is the name of the blog post. And Bill Gurley Gurley was one of the early believers and early investors.
Right? Yeah. He's, oh, he's a legendary VC and now retired.
And he was one of the main investors in Uber.
Um, and like, you know, famously at the end, like, you know, they ended up kicking Travis out and you know, it got, it got messy at the end, but he was one of the early and biggest believers.
Okay. So basically he talks about this guy.
Um, I don't know how he says him exactly, but it's, I think it's a swath demorod Don or something like that.
This guy's, he's like a, he's a well -known.
Thinker on valuations.
He's a professor at NYU stern.
and he teaches like, you know, finance and economics there.
And so he had wrote an article that said Uber is not worth 17 billion.
This is when Uber raised at a $17 billion valuation.
He was right, by the way, Uber was not worth 17 billion.
It is actually 10 times more than that, but he was making the opposite argument.
He was like, I think Uber is vastly over -valued and Bill Gurley sort of breaks down this argument and this totally changed my thinking and how you think about startups.
So what he said was, he goes, uh, this professor just did this, wrote this article, I wrote this blog post and it seems really well thought through.
And he's a very like, you know, respected expert and I don't, I'm not saying anything about the guy, but I think his analysis is wrong.
And he starts with, he goes, the funny thing about any analysis with hard numbers like this, is that it gives you a false sense of security.
And he talks about like anyone who's in math knows the difference between precision and accuracy.
Precision would be, you know, oh, wow, you've really forecasted this down to the second decimal.
And accuracy is like, yeah, but it's just wrong.
It's precise, but wrong.
It's not on target.
He was basically saying, he's like, he makes two arguments, so he makes one argument about the TAM, so the total addressable market of what Uber's market potential is.
And then market penetration, so how much of Uber will get.
And he basically is like, he goes, the TAM mistake is the mistake of thinking that the future will look quite like the past. but the arrival of a new product or service will have a non -zero impact on the overall car for higher market." So he goes basically, it's a new offering, it's got new levels of convenience, new price points, which will open up new use cases.
And he gives a story, he goes, once upon a time, AT &T paid McKinsey a million dollars to forecast how big will the cell phone market be.
AT &T wanted to know, should we become like a cell phone maker, manufacturer, or like, should we care about that market or not?
And McKinsey's top, you know, analysts who are getting paid predicted that the market in 2000, in the year 2000 would be 900 ,000 people using cell phones, which was less than 1 % of the actual number.
It was 109 billion.
And they were predicting 20 years out, which is really freaking hard. Correct.
But it was, it was look, it was hard numbers.
They gave you a false sense of security.
And so AT &T decided not to go, not to invest in that area.
They ended up to make, you know, once it was, once they realized they were behind the ball and you know, actually cell phones were going to be a big deal.
They ended up having to buy the cell company for $12 billion.
It was like basically a $12 billion mistake.
And by the way, now like five or six billion people have cell phones.
It's just absolutely ubiquitous.
Aaron Levy, the founder of Box has this tweet where he said, sizing the market for a disruptor based on the incumbents market is like sizing the car industry based on how many horses there were in 1910.
And so Gurley's talking about this.
Now, of course, you might say, well, is this always the case?
Like, you could always say, Well, forget the past. You're just stuck in that old way of thinking about the bright future.
And of course, no, that's not always true.
In fact, it's probably usually correct that the near future will look like the near past. But the funny thing about entrepreneurship or any tech investing is that it's a hits -driven game.
So you only need one.
And you can actually be wrong eight or nine times out of ten, as long as you get to one right in a really, really big way.
And that's not true in other businesses.
Like that's not true in school.
You can't pass a test that way.
It's not true at your job.
You can't just like have one great day and then like have nine duds.
Like you can't do that in private equity.
Warren Buffett famously was like, you know, picking stocks rule number one, don't lose money.
You know, VCs lose money all the time.
Entrepreneurs get it wrong all the time.
That's a very distinct difference.
And so like, and this is actually a distinct difference oftentimes you and I's personality which is Buffett is predicting that the future will repeat itself and that the past is the past won't change for the future.
VC investing, tech investing is doing 100 % the opposite.
Correct. Both are valid games, but you have to know - And both are right.
You have to know the right in their game.
So in the stock market, that's probably the right way to think about things.
In value investing, that's probably the right way to think about things.
And private equity is probably the right way to think about things.
In entrepreneurship or tech investing, It's absolutely the wrong way to think about things.
You won't make any money doing that other way.
And so in our business, I have this phrase, which is that in our business, you know, the cynics get to be right and the optimists get to be rich. And so it's like the cynics will be right and you get to be right eight out of 10 times, that might feel good, but the optimists are the ones who get, who get rich and you have to just know that going in.
What do your employees reply to all that?
Like Sean, I'm just asking if you want pizza or hamburgers for lunch, like Can you just tell me like how to order it but I have a podcast. I think you nailed it.
I talk to hundreds of founders a week, and when I talk to founders, everyone says the same thing.
That's one thing they need the most is not funding.
It's not more resources.
It's just having more time.
The goal here is to win.
And the way to win is you get yourself free time to do stuff that's high impact.
How do you do that?
you need to get yourself an assistant, the best place to go is Somewhere .com.
Somewhere sources the best assistance from low -cost areas for you.
So you can get an amazing executive assistant who's got, you know, business experience and has supported other CEOs for seven, eight, nine, $10 an hour.
And so, go ahead and go to somewhere .com.
Tell them I sent you, they hook you up with a good deal and get yourself an assistant and you can thank me later.
All right, back to this episode.
This is a great, a great blog post, the guy who's like the anti -hero on this, like, where's he now?
He's still there. He's still a professor.
He is, of course he is.
Because you know skin in the game, you can never really be wrong.
And so he, that guy had estimated the global taxi market to be a hundred billion.
So, anyways, let me zoom it in.
So, I remember living in San Francisco.
And when this happened, Gurley pointed something out, which was that in San Francisco, there the taxi market size, whatever it was, let's just pretend it was like $150 million.
Uber didn't just have some percent share of that market.
It was actually three times bigger than what the total taxi market was in San Francisco.
It was a total market expander of a force.
And you see that over and over and over again, any new product that's creating a new category, it doesn't just eat some share of the existing category.
It just explodes and becomes bigger than that thing.
So let me kind of like fast forward to another area that this came up.
So I was watching these videos from Sequoia.
Sequoia recently had an AI event and my invite must have gotten lost, but I was able to catch it on YouTube afterwards, luckily.
And so I was, uh, I think Darmesh was one of the speakers.
Yeah, yeah, I know.
So again, I, maybe my speaker invite also was lost. I'm not exactly sure what happened.
Uh, but, but it's all, it's all love amongst, amongst me at Sequoia.
So. So the very first speaker, this guy, I think it's Pat Grady.
He's a partner of Sequoia and he has a slide on the screen.
I'm gonna show you the slide.
It's maybe a top five ugly slide.
Like this might be the worst slide I've ever seen in my life.
Like not only is it ugly, it doesn't even make any, it's illegible.
Like you look at this, it doesn't even mean anything.
But he explains it.
Okay, so check out this slide.
You see this thing right here?
Yeah, so like, I remember taking the ACT where it was like, showed you like three shapes or three numbers and you had to predict the fourth one based off of the pattern, I cannot do this with this.
OK, exactly, so if you look at this slide, it basically is like a bunch of pie charts, but the pie charts have no annotations, just random numbers, and then there's an arrow and there's a question mark, and it just says, so what, at the top.
All right, so let me explain what this is, because it's actually kind of insightful.
So what he was saying was basically, like, if you look at the, let's say the three most recent waves of tech. So you had software, which was like, I buy CDs.
I put the CD -ROM inside my CD or I install software on my server at our office.
That was like Software 1 .0.
And then 2 .0 was like the cloud.
It was like, oh, the software just lives in the cloud.
It's a SaaS, it's a service.
You just kind of like use what you need.
You don't need the servers and the CDs.
And then he's like, now we have AI.
And so he talks about like basically the software market at the time when cloud came out, when like Salesforce came out, the entire software market was $350 billion of revenue.
Cloud is already 400 billion, right?
Like just like the top cloud players are like more than 400 billion.
So basically he's like cloud didn't just take some percent share of the software market.
It wasn't like, oh yeah, maybe like 10 % of these applications will now go to the cloud or become SaaS.
It was like SaaS became bigger than the entire software market before that.
And it became bigger by, I think, I don't know why the numbers here are like, again, the Pytra's very confusing.
But there's basically some order, like it was like, you know, two or three times bigger and then he's talking about like AI and he's like, AI actually is interesting because AI replaces software, but AI also replaces labor.
Like you just, you don't need people to do those tasks.
It's services and software.
And so, um, he's like, the labor market is basically like whatever, like 10 trillion.
This is some, some ridiculous number.
And he's like, we don't even know how big the AI market is going to be predicting that, like with any accuracy would be foolish.
But it's probably a good bet that AI is going to be bigger than the entire cloud market today and the labor market in the future.
And so, um, Isn't the labor market like the market?
It's like the main market.
Like isn't that everything ever?
Yeah, kind of. And so in the same way that when Gurley was talking about Uber, he's like, it's going to be bigger than taxis because it's more convenient than taxis.
If you call it a taxi, you didn't know when it was going to pick you up.
You didn't know if it was going to pick you up.
With Uber you got precise timing, it'll pick you up anywhere.
Before taxis didn't really go to rural areas.
Uber had more drivers.
So it was available everywhere.
Because it was available everywhere, you got lower price points.
there was more liquidity in the system.
So when it's a lower price point, maybe I wouldn't have called a taxi just to go from here to my friend's house.
But if it's an $8 Uber, I'll actually do it.
And because you get the price points, now you get new use cases.
So people use Ubers to help their elderly parents travel or kids or like...
And the big one was basically, he's like, the big use case, I think people are missing is that some people just won't buy a car because they'll be like, I'll Uber when I need it.
So I just don't need to own a car, which is exactly what happened to me.
I sold my car in San Francisco because I was like, why would I with this car, parking issues, get broke into insurance, gas, all that.
I'll just Uber one, I need a ride.
And so he's like, it unlocked part of the rental car market.
It unlocked part of the car ownership market.
And once you've calculated those, you're like, Oh, shit, this is a trillion dollar market, not $100 billion market.
And so you're off by 10x if you had done the calculation wrong with the wrong assumptions.
And so AI is going to do the same thing, because I won't hire a person to do these little things that I'm basically like telling AI agents to do in my life, right.
I'll build a little app for piano tracking, for my piano practice, or for my health tracking.
I don't hire a concierge doctor, but I'll feed my lab results to ChatGPT, and I'll pay it to analyze all my blood results.
And so things I wouldn't have otherwise hired people for, I'm willing to pay AI a little bit for it.
And so there's a new market.
How many hours a week are you consuming information on just staying in the know on this topic on AI specifically yeah we had Greg Eisenberg on the pod and he was telling me things where I was like I was almost I found myself having fear I had fear of like oh this is clearly the future and if I'm not like in the know of this it's gonna come and destroy me therefore I owe it to like that's how serious it was it wasn't like I'm missing out an opportunity to make my business better I'm missing on him it So it was like, oh no, I gotta protect my family.
Like, this is like my job.
And so I felt extreme fear over, he was saying like Magnus.
Have you heard of Magnus?
Is that like the new Chinese?
Yeah, like agent platform yeah.
Yeah, yeah and he was - There's no G, he's just like, I think he's like Manus.
Manus and he was, but he's like three things where I'm like, how do I not know about this?
Like, do I need to sign up to like an AI trade magazine?
Like what's going on?
And his answer was horrible.
When I said, Greg, how do I, how do you know?
He's like, I just do.
Or he said something like that or he's just like, I just hear about it.
Like, I was like, well, that's like extremely not actionable for me.
Thanks a lot, Dick.
So how much time are you spending learning about this topic and where are you turning to?
Look, there's two minds about it.
One, I would say, I have no risk of over -investing my time in this.
I have pretty big risk of under -investing my time in this, but no risk of over -investing my time and paying attention to what's going on with AI and being able to play with the tools, understand what the companies are doing, really think through where this puck is going.
At the same time, I'm not trying to drive myself insane.
So, you know, I do think there's a very unproductive version of this, which is the constant whiplash of new demo, new model, new this, new that, new whatever.
And so what I'm doing is basically an intermittent fasting style model where it's like, I'm mostly not paying attention to it, as in, I'm not actively trying to react to everything I see, or go seek out, or go read every single thing out there or sign up for every single tool.
What I'm doing is I'm trying to make it very useful for me.
When I have a problem, I now add it into my solution list. Like, oh, do I think AI could solve this?
Then whatever research I'm doing, it's actually a just -in -time solution to a problem I actually I have versus just like the kind of intellectual jacking off of just keeping up with everything, just trying everything, just wanting to know everything, watching every podcast, listen to every YouTube video.
It's like, no, I'm mostly trying to like, if I have a problem, I try to see, could I solve this AI?
Well, maybe yes, maybe no, but that's interesting.
I learn a little bit each time I do that, but at least I'm trying to solve a problem I have. The second thing is I am carving out three times, so last year I think I told you I did this.
I did like an AI hack week, a think week, where I just basically say, clear my calendar.
The only thing I'm doing this week Is just going in -depth and the beauty of that is it's kind of like checking your email You're like if you want you could check your email every three minutes and you might find a new email But you'll just consistently like it'll just keep tearing your attention away Whereas if you just batch your email and you just check your email once at noon and once at you know 8 p .m. Or something like that You're totally up -to -date on email, but you didn't have to like have this nervous energy.
Just constantly doing it And so I'm treating it more like that.
I agree with you. That was nice to catch up with you I'm getting all pumped about all this stuff I I'm currently in St. Louis Missouri I'm about to go to the zoo so I'm gonna go to the zoo I'm gonna go see some family tonight but I was happy I was able to do this podcast from this hotel and potentially reach hundreds of millions or hundreds of other hundreds of thousands of people and hundreds of millions of red blood cells what are we what are we counting here because like you just started talking about this AI stuff and I'm like literally staring out window right now.
Whenever you talk about this shit, I have note pads here, and I get flustered where I'm like, sometimes I think and I'm like, What should I say next?
But then other times I'm like oh, he's talking about this AI shit, what am I going to do?
I gotta do this thing, I gotta do that thing.
Like that's how I feel right now.
Yeah, yeah. I definitely feel that.
By the way, I have a couple of things I forgot to say on the Uber thing.
They're great. This is the funniest part of the Uber thing.
At the end of that professor's blog post, you know what he wrote after he wrote this huge valuation tear down of Uber.
He goes, as I attempt to attach value to Uber, I have to confess, I just downloaded the app and have not used it yet.
I spent most of my life in the suburbs where I go for days without seeing a taxi or if I'm in New York, I just use the subway.
And so, it's like the experts who are literally like, not only are they not betting on this, they don't have skin in the game, literally never even use the product.
He should've just ended it with like, PS, but what the fuck do I know?
That would have saved him a lot of reputation there.
There are some great quotes, by the way, from CEOs who underestimated their market size.
Iancum, CEO of WhatsApp, he said, we're just trying to make messaging better, not build some big business.
Sells for 20 billion.
Somebody said, I thought I'd make a little side money, enough to quit my job.
That's Sara Blakely, founder of Spanx.
Oh, Sara Blakely. Wow.
So, you know, female billion, you know, one of the, like, first female billionaire entrepreneurs of this like generation, mobile gaming.
So one of the first mobile games ever was Snake on the Nokia phones, if you remember.
So the head of Nokia, Nokia's mobile gaming division.
So this guy is in charge of mobile gaming.
Here's what he said.
I think mobile games are just a small add on.
It's not a real market.
Mobile gaming turns out to be $120 billion market.
Here's another one.
The Domino's CEO in 2010, the year I graduated from college, he said, delivery is a convenience, it's not a game changer.
At the time delivery was $10 billion a year across food delivery.
It's now more than 10 times that, more than 15 times that.
In fact, I read a crazy stat that some, I don't know if this is legit, but some study came out or somebody was doing some analysis and they said that for most local restaurants now, 70 % of their order volume is delivery orders.
They're no longer restaurants that do delivery.
They're delivery machines that also happen to have a restaurant table, you know, like a table to sit down on if you want.
I go to restaurants all the time where I feel like I'm the only person there and drivers are coming in and out the whole time.
Yeah. Brian Chesky, we didn't know the size of the market because we were inventing it.
If we listen to market research, we would have just made a better couch surfing app.
And now the last one is Elon.
I don't care about the market size.
I Care about if we can make something fundamentally different because if you make something great, the market will come.
It is sick. This was like a little impromptu topic that turned into a whole thing that was awesome.
I feel like I can rule the world I know I could be what I want to I put my all in it like my days off On the road less traveled never looking back Alright so when my employees joined Hampton, we have them do a whole bunch of onboarding stuff.
But the most important thing that they do is they go through this thing I made called Copy That.
Copy That is a thing that I made that teaches people how to write better.
And the reason this is important is because at work, or even just in life, we communicate mostly via text right now, whether we're emailing, slacking, blogging, texting, whatever.
Most of the ways that we're communicating is by the written word. And so I made this thing called Copy That, that's guaranteed to make you write better.
You can check it out, copythat .com.
I post every single person who leaves a review, whether it's good or bad.
I post it on the website.
You're going to see a trend.
This is a very, very, very simple exercise.
Something that's so simple that they laugh at.
They think, how is this going to actually impact us and make us write better?
But I promise you, it does.
You've got to try it at copythat .com.
I guarantee it's going to change the way you write.
Again, copythat .com.
