How to find your arbitrage (from the guy who’s done it 3x) ft. Nick Kokonas

if you wake up everyday feeling great you're not taking enough risk if you wake up everyday throwing up you're taking too much risk you need to feel a tingle of uncomfortable miss i started with sixty grand i can't express you how under capitalize that is on the trading blur essentially you were looking for arbitrage you're looking for some sort of mis price seeing i am now convinced that every ar is just about time scale i was money we making doing this well i drove to my dad's house and i showed it to him and he was kind of like oh shit he's like is what you're doing legal i genuinely believe that geo fence meaning localized dynamic and variable pricing for time slot businesses is something that someone's gonna make hundreds of billions of dollars with how does a guy who goes from trading and no restaurant experience create best restaurant america knowing what great is is make mostly shit ninety nine percent of time is it that you're actually seeking the anxiety fear it's exciting to be uncomfortable in the sense of i feel like i could rule world i know i could be what i want to all in in like a days off on a less travel never so we're hanging out with my friend nick ko he is one of the most interesting founders you have never heard of this is the guy who started off trading options and then went and started one of the best restaurants in the world and started a software company and sold for hundreds millions of dollars so an entrepreneur who's played many different games that really he had no business playing and somehow found a way to win so i came here to hang out and find out how he doesn't it gonna read you quote i'm motivated by fear fear of not living up to the possibilities if you wake up everyday feeling great you're not taking enough risk if you wake up everyday throwing up you're taking too much risk you need to feel a tingle of uncomfortable yeah our nausea was the actual quote yeah that was i i have to give credit where credits to keith go good friend of mine former business partner we were traders back in the nineties early odds and we had this ridiculous short position on plug power still a company weirdly but he he told me that like he said that to me because i was like really on the verge of throwing up in the morning and he was like perfect that's right where we need to be that's right where already need to be he's like haven't thrown up yet correct correct yeah we we're good yeah and so i i i do think that i internalized that at the time because then when i got comfortable i was like oh we're not taking enough risk now we're not learning we're not pushing the edge of what the possibilities are and the phrase in my own household from my wife also someone who pushes me is at and you know what at and a is so you i was at your you know said that i told you said it but you said it in a hilarious way you're like you said it like a cop with it's like we issued an and a this morning yeah yeah right but yeah you have an at and yeah and so i mean fine what is it what is at and means i'll talk no action so you but you'll do it to your kids well we'll do it to anyway each other yeah right and you know with this place where we're sitting right now for thirty years this was a like a north star kind thing we came here every year since probably like ninety five or ninety six when we were very young and we kept finding our way back here like a couple times a year why not like it's beautiful it's like a blue zone feels amazing the weather's is great you know all that and you had the dream you're like the dream we adjust the dream and the dream is useful dream without the credit score yes yeah but that's that's really useful you know you do have to have goals and in many ways this was an unrealistic goal i think and then we were here three years ago and rented a house and we had friends and this place was for sale and i kept looking at it and i why say i kept looking at it i mean like looked at the video of this they had like people in the pond you know the the real estate like i like for teddy like you lived here with a ka canoe and and i watched that video a thousand times right and at some point my wife just looked at me and go like you gonna pull the trigger or are you're just gonna be at and on this one like that it's like a slur it a slur derogatory it is a very much slur and and i put in a super low ball bid and they called me fifteen minutes later didn't counter and they they hit the bit mh which also gives you concern so because you know it's kind of like the know persian rug sale like where they price the rug super high and then you go low and then they go like okay here you go you know here's have more tea and we're we're good and you've been like three times too high even though you got seventy percent off kinda of thing so you had buyer's remorse why i don't know that i buyer's remorse i had fear because i didn't know how any of this worked i know nothing of agriculture i know very little of vi i certainly didn't know how irrigation works you know i don't know pond management like these are all things that we've learned in the last couple years but between the acceptance of that offer and the closing on this i lost sleep because this is a real commitment i was fifty five at the time and it was like okay is that that's your next three decades right you can't half ass this and i mean i there's a lot of people who do actually i shouldn't say that you can half ass it it just feels wrong like it just feels like some people just buy a place like this and so i wanna say two ideas and you tell me if these apply to you or what you think about these the two brothers actually he told me so the first brother is the guy who started native deodorant mo za yeah and you he decided he's gonna go start a deodorant company his friend was like more weird yeah we be great no offense yeah right when i think deodorant owner you're not the guy that comes to mind like if you know anything about the deodorant industry yeah yeah and he goes i know nothing about the deodorant industry but i'll tell you what in six months i'll know everything there is to know about the deodorant industry yes and he just had this sort like you know a self belief but also a bit of a practical approach to if i just ob upset over anything for six to eighteen months i can get to the top of a of any of almost every field yeah of knowledge just through sheer brute force so that was one brother and the other brother has his where you know he's been very successful i said well why are you doing this new thing and he said you know i think a lot of life is finding it's like a jerry seinfeld like finding the torture that you're comfortable with yeah so you know being in the a prison of my own making yeah and he's just he's like every decade or so i set up a new prison of my own choosing and it's painful and weird and and uncomfortable lots of ways but that's the only way i know how to live is that i relate to that i mean we're done where it we're not off the cameras right like like that is absolutely the case every ten years i've done an entirely new career and we should say with someone more so you had a finance career you a trader was a trader on a trading floor on a trading floor do the do the trading floor yell last the most here you're like if twenty eight three two fifty up you learn how to do that you know like we had like a vocal coach come in really and teach people how to do that yeah literally like we're right next door to the lyric opera in chicago because now it's not like that now you just come i don't no just the way but you actually needed to communicate to a guy oh yeah like you know from here twenty yards away and you know like the old this is bid that sell this is price this is quantity this is tens this is singles i still do yeah yeah yeah yeah but like to me that was like i knew nothing about that i was a philosophy major in college i i knew what i didn't wanna do and i didn't wanna sit behind a desk and i didn't wanna limit my upside earnings potential i thought that like having a salary was the wrong kind of prison mh like that was a prison of like predictability right my dad's dad died when he was like fourteen or fifteen and my dad was what he called entrepreneur by necessity he got out of the army and the navy drafted twice and worked at the grocery store that he grew up working at from the time was twelve and he bought that store when he was twenty eight or twenty nine wow and you know he was like yeah no one would hire me but he didn't want me to go through that struggle so he wanted me to go to law school or something like that but i was looking at someone modeling behavior where he could come to my baseball games he could come to my basketball games like he was one of the only dads there if it was at a two o'clock game he could leave work right and his person let him out there yeah i mean well you know look if you own your situation you have known to blame there's no boss man that's gonna you know say no you don't get a bonus this year we've had a bad year or whatever and so i just wanted to own my own situation best way to phrase it i didn't know how to articulate that at the time i just knew that when i went in for interviews at goldman sachs or soc jenner any of these firms you could get a contract and you kinda knew not what your work would be because you kinda didn't even know what that really entailed right but you had you kinda know what you're gonna make for the next five years i was good like it was a lot of money in one sense in another sense it was like really boring because you knew exactly what you're gonna right do and to me that felt limiting and scary in the other way but at the time i was just i i flounder about for years because i i was i knew what i didn't wanna do but i had no idea what i wanted to do right which seems common i mean i that's course most common state of course but when you're in that state you don't think well this is common and normal you feel like but you're an idiot who doesn't know what to do and you feel uncertain and everybody else around you seems like they know a little bit more about what they wanna do than you i just kinda had a little bit of a trip on my shoulder but hadn't earned any reason to have that right which is the worst like that's you the hu hub of being like twenty three years old and you know testosterone field male with nowhere to put it right and so if you grew up in chicago you you know people who were traders that was a thing you know new york was investment bankers chicago was traders those are not the same like you said finance career i do not consider to finance career it's it's a trading career which is very different especially back then i expect what's the difference i think the best way to becomes successful is to see how other people did it whether you're gonna to copy them or just use it as inspiration because then now you know what's possible so starting at the age twenty four i did this relentlessly and i was very methodical about it and i created a spreadsheet where i tracked roughly fifty people who were uber successful and i looked at the year that they were born the year that they started their apprenticeship and then the year that they started the first thing that made them successful finally the year that they broke through and i aggregated all this data along with the stories of what they did to be an apprentice and what they did to finally break through and i put it together in a database and hubspot went and found this thing that i frankly even forgot about but it did change my life and they resurfaced it they made it even better and they put it into a thing that you can download for free right now so if you click the link in the description or click the qr code right here you can see this database that i made when i was twenty four and it changed my life and so if you're looking to become successful or you're already successful and just want some more inspiration check it out in finance like you were working for investment banks and obviously like they they had trading desks but they also you know do you know deals on companies and and and you know ipo ipo and all that sorts of you know stuff and as a trader you're basically especially as an independent trader you basically have like a core nest egg you know whatever a couple hundred thousand dollars in those days i started with sixty which is grand sixty grand like you know forty from twenty from me forty from a back i can't express you how under capitalize that is on the trading floor and you know like you would make trades all day long just like you know now there's day traders but then you would lease a seat and you'd be on a trading floor get one those colorful coats and it was all written down and you'd make a trade and you trade futures options on commodities currencies you know yield curve whatever it may be cattle and just to set the table so you have this trading career you then start what became the best restaurant america at one point some people called it the best restaurant in the world you created a software company that you sold you've done on and on and on right and yeah each one of those all these interesting little sub stories that we're gonna go to so if we're looking at the trading side my understanding is you basically applied to a job that you were over qualified for in dad's right i mean so explain i wanted to get on the trading floor and if you had my academic career and you went to the like a clearing house to get a job as a runner for five dollars and twenty five cents an hour they would go like go work for soc go work for goldman go work for mer like they'll hire you and so i did that and then i looked at like the contracts and they you i wanted to be a floor trader and they'd be like no no you're gonna be on a a bond desk somewhere selling bond i was like no that's not what i wanna do so in order to get that first job as a runner which is exactly as described you would take a piece of paper someone would call you'd call you know your broker the broker would call the floor the floor hand the the order to the runner the runner would physically run it walk it fast and weren't technically all to but you'd have to walk fast and you would hold it up in the air for a broker who would grab it read it call it out to the pit trade it write it hand it back to you you'd go back i mean there's room for arbitrage it was like a thirty second process forty second process so i had to fake my resume in the wrong direction in order to get the runner done what you do i you eliminated at all college you know like you know and and you know they hired me for five dollars and twenty five cents an hour and did you have the mentality at that point like okay i'm gonna take this job i like you know sort of like i'm over educated for over qualified i must take this runner job but i have my eye on the prize like i'm gonna be here in a certain amount of time like did you have had a goal my goal was i wanna be trading in a year so i need access to the arena and this this is like you know some of the bill early says like you know like move to the place where the shit happening right so in this case the arena was literally like an arena like you know it was like there's was an octagon like thirty octagon this is in the trading floor chicago american exchange but they all work the same you know i needed access to the arena and you get down there and it's very opaque like you can't figure out how it doesn't matter if you're smart you know we're dumb or what you just don't know how it works and then after like running for a little bit they were like oh you seem sharp like we'll put you on the phones and then i became a phone clerk right so now i'm the guy writing on the ticket it is absolutely sol phenomenal work right like there's no nothing to it and so what i start doing is taking open out outcry classes from a guy at at after the close just learning the hand signals and this and that which might get you to a pit clerk position next right now you might get eight dollars an hour at that point but i was starting to meet people that were independent traders and i was very much like i wanna find someone who can teach me how to do this and for like six months i didn't find anybody you know or i found some people but i was like that's not the guy i need someone that can exploit the things i'm good at like i was a philosophy major in college i studied philosophy of language and logic i grew up programming you know and i was watching this system that i felt was going to become digital really in an analog world at the time and i was looking for a guy that would take me to what i call now the smallest highest tubes like the smallest highest hoop yeah yeah like so you know like if you got a big hoop on the ground it's easy to jump in okay if there's something thirty feet in the air and it's tiny you know and you gotta figure out how to get up there not a lot of people are gonna follow you up there so that you want what high a good prize and less competition basically isn't yeah and all difficult to understand like i felt like i was capable of understanding options and swaps and exotic option right and as i was reading book like there is not a good option and either like one or two but there all the options books that you get our academic books on like this is the right but not the obligation to buy by a certain time and like yes you have to under stand all that but that doesn't get you anywhere in terms of actually why do i buy this one or sell that one this how of making money or yeah or how do they all inter relate and all that so i read all those books and i felt no closer to understanding of it and i finally met a guy who was super geek and he had like a little hp calculators right that had macros in it like super forty eight k in it kind of thing and he had just hired a clerk and i was like no no you're the guy like you are the guy like he went to the university of chicago he studied you know quantitative finance and he had worked for chicago research and trading they didn't wanna put him on the floor they thought he was a quan they thought he was too geek so he quit and he you know put himself up on the floor trading very small and very yeah and as soon as i met him i'm like you're my guy and he's said like i hired someone and i was like no no but you're the only like you're the only guy here that understands what i'm trying to get at and can teach it to me and i literally said i'll pay you to work for you and that got his attention like because he was like that's weird why and i explained it and he was like okay i'll pay you like two fifty bucks a week like totally illegal i'm sure you know but standards right and that was awesome like six months later like i had a rudimentary understanding on how to make markets and options and i put up twenty thousand dollars he put up forty thousand and i started training swiss frank options it was almost a year to the day which is a theme that will come back to you asked at the be beginning of the question did you set a goal and the answer was within a year i need to be on a badge and trading and it was i was a week late but i was in process so i knew i counted it you know but like it was terrifying there's nothing harder i mean i taught thirty forty people how to do that after the fact and the rule was on your first day in the pits you had to make one trait i cannot express to you how useful that is because you have to go into a very zero sum hostile competitive environment which was physical loud chaotic and you have to open your mouth in front of all those people and risk looking like an idiot yeah what is it about that day want so i think facebook had this two day one any engineer you will ship code to production they died know that long time i didn't know that but that's wonderful blast for me back then yeah my very first job was at a very first business had it was a sushi restaurant where i went out to la the train with the chef yeah and sushi famous for this thing where you like spend year year mob rice right right like yeah you're not gonna get eight you're know be incredible if you got rice yeah it would do all this men work before you were allowed yes the chef that i was gonna work under he's said like we're gonna open this restaurant up can't do that so the very first day daryl from the office walked in came in as a customer sat down at the bar and he goes you're up i just watched him do like you know for an hour i've been watching them like try to pay attention you know i don't know you know how to make sushi you dip your hands and water yeah yeah flat it's hard then you do the the seaweed the rice etcetera yeah yeah so i didn't understand at that time the clap so shouldn't be a hands so i thought it it's just like a celebratory pit why are they clapping they're just i don't know it's just a ritual but it's to get all the water off leave only the perfect amount of moisture too little water rice is stuck to you yeah too much water soggy soggy sushi yeah i didn't clap i gave daryl from the office some soggy sushi but it was actually very beneficial to just absolutely up yeah you have go right away you have to just you know break the seal break the seal and you know there was like a guy who ended up becoming a very good trader very good friend and he went like three weeks performance anxiety yeah i mean frank if you're out there like you know i remember and every day like he'd come back and i would just be like dude you know you're a capable human just right do it and he would freeze he'd lock up you know and everything else every ten years i kinda did something different because it didn't produce that same anxiety is it that you're actually seeking the anxiety fear or are you seeking something else anxiety fears is like the signal to you around it yeah the latter what is what is it what are you looking for it we're here for whatever decades if we're lucky and in order to keep learning and keep young and wake up like you guys were coming today they showed up at what six thirty six fifteen something like that i get excited by that it's exciting to be uncomfortable in the sense of hey we're doing something today mh we're making this little thing here and who knows what that'll lead to and and all that and if you just put yourself out to pasture essentially once you get good at something it's very very easy to fall into while making good money and i know what i'm doing and i'm kind of an expert in it now and expertise is such a trap right it's such a trap and you know that a non expert is gonna come after you like once you get to expert level you're screwed because somebody who's younger hungry or pressurized eyes more willing to break convention to find the new way through is going to kick your ass so before your ass gets kicked you should quit yeah it's really hard to do and then go find something new and it's really hard know the older you get the slower you get it doing that the less incentive you have to do it right right like there's very little incentive financially and otherwise if you've had some success to break it to quit to go do something new and lose money for a while you know what's the quote you know most meant diet at twenty five they're buried at seventy five or yeah you know i think all says this well like the great the great ones to truly great ones they're great because not because they've reached the top of a mountain is because they are willing to go back to the bottom of the mountain and starting in and find a new path nobody does that of the things my dad head on his desk goes a little sis i've got that like you know always on my desk i've had it on my desk forever and and for me like the sis thing is like shit we gotta wake up and you know i'm building a wine bar here like i got out of the restaurant but we'll get back to that i'm sure but i got out of the restaurant business i was here for you know half the time for two years and also i'm walking by i'm like oh shit i gotta rent that place build a new restaurant yeah bring out the boulder yeah right right yeah how to do hill yeah yeah and and i was very much like you know do i want to do this and everything in me said no i i don't want to do it so that's why i should probably do it well you're you're a philosophy i if you might know this the story of sis is about like it's a it's the ultimate punishment right he's gonna push the boulder up the hill yep and then somebody i forgot who but they were like we must imagine sis if as happy yes meaning that the the work is the win that and so yeah this sort of alternate take on the the idea that this is like the cruel punishment and instead it's like no he's in his element he's doing exactly what he wants to do and must be doing and where man is kind of at its back is is work is the win the work is the win yeah hey let's take a quick break you know that feeling when strategy is done the brief is written everyone's aligned and you realize someone still has to sit down and actually create all the content that someone is usually usual you and it's due tomorrow well the breeze assistant from hubspot can help it works right inside hubspot you can draft campaign copy blog posts emails all in your brand voice all using your actual customer data so you don't create just content you create content that converts check out hubspot dot com the agent customer platform for growing businesses so you talked about trading how you started as a trader and you're my understanding is that you're essentially you were looking for arbitrage you were looking for some sort of glitch in the system you're looking for some sort of mis pricing where you can come in and take advantage and i think trading is a very pure way to do that but even in your other businesses i feel like in some ways you found an ar can we talk about ar so like yeah what excites you about an ar and then explain to me some ar so so here's so i've said no to every podcast for like three years until i got to this one idea right and i said yes to this because because of you and also because i'm am now convinced that every ar is just about time scale like this is not something that i've come up with or whatever but like it's it's evident especially with ai coming in now and and everything everything is timescale scale so at the time we started talking that like that piece of paper took like thirty seconds to go back and forth right and i was a good trader not a genius trader i was certainly capable and i was quasi decent at bringing what i called corporate refugees so i'd meet someone like at a dinner party who was certainly bright capable outgoing could probably do mental math quickly and then i'd see that they're miserable be an attorney right and be like i got a thing for you come with me i'll i'll i i'll pay you seven dollars an hour and in eight months you can you can trade and i did that dozens of times that scaled kind of linearly and made i went from making you know five dollars an hour to thousands of dollars an hour in five or six years but i was looking around and there were companies making ten million dollars a day down there more you know the crazy money and i was like what we really need to do is figure out a way to bypass that piece of paper going mh so if you're in new york trading what was then nascent etfs triple queues spiders all that those are just the basket of the nasdaq hundred stocks we know what those are and we know their ratios so if you have a thousand triple queues you can figure out exactly how many shares all that is the natural hedge for that is the futures in chicago and nasdaq futures and then it all comes down to an the triangle a cash position you don't really need to understand it okay in detail beyond that but what i wanted to do is you know the guys trading the triple queues in new york would have to pick up a phone or be on the phone constantly with someone who would give someone a piece of paper and if i could just talk directly to new york from inside the pit i've got a twenty second time window on goldman sachs they can't beat me what what does twenty seconds actually mean and what does that worth what does that allow you to do how does it well so a trade would take place in the triple queues and then the way you know if you just bought a million dollars notion in triple queues you would sell eight futures roughly in chicago against it okay and you'd lock in a little profit there and you'd be left with a long position in new york in a short position there but it's all one company and now that thirty seconds if i make that trade there and i can talk to the guy who's actually in the pit bypassing that i know the pricing information instantly and with like the first day it took me like a year to get this all done so here's here's another thing okay read the rules okay it sounds like most people don't read the rules it sounds like a dumb thing but read the rules there are laws and the cf ftc had regulations that were like this there and all of the people on the board at the mer and the am x and all these institutions probably never read them did lawyers right and lawyers probably never read them they went out case law they went on practice they went on what they're used to and i went well if we're on the same tax id in new york and chicago it the same firm why can't i talk to somebody there like i don't see the rule like i've read the whole damn thing i mean i really did it's really long and this is not when you can just throw it in a computer and be like find the thing you know and i'm like man i can't find this and so i was like great i need to put up partial t one line for a dedicated phone line between new york and chicago and the merck wouldn't run you know underneath this these pits was like cabling back then it wasn't wi and i needed at and t to run fiber and i put in permitting and they wouldn't let me do it because they kinda got that this would be bad for the broker groups and who owned who on the mer the broker groups so i bribe the union guys who did the work with cases of jameson for real i can say that now i'm not gonna get trouble anymore do you remember the day kinda had that idea or you were like i remember the date when we turned it on the first time and it was basically like saying like let's say you know there's apples here and there's apples on the other side of that pond and that guy there's someone who rolls up over there as was worth and pay five dollars an apple and this guy over here is well sell me apples for three dollars and there's a guy about to run to the pond going like do that trade over there but meanwhile we can we can talk we got you know the string in the in the tin can so we made a trade i went oh my god and we made i don't know a couple a hundred thousand dollars like instantly and you're taking no risk at the steroids yeah yeah and i immediately that feeling just orgasm would you find it was terrifying it was terrifying and the reason it was terrifying was because it was so good that the powers that b would kill you and i don't mean that as not fig i don't mean that as fig off like yeah it really was it really was at that time i also knew that if we picked the pockets of the big investment banks and we made two million dollars that day that'd be the last two million dollars we ever make so in one sense i was going like stones yeah it is as i thought it was you know it's there's this gap here right but then i went shut it down and everyone was like shut it down i'm we you know we've been working on this for seven months what do you mean shut it down like we can't be so blatant we're much better off picking their pocket a little bit for years right than we are just destroying them on day one right so i went back and reap reapply for hey here's all the evidence that were the natural hedge in chicago and these are growing really fast this product classes this etf new innovation you're gonna wanna do this kind of thing so they gave me a pilot program thinking that it would take me six to eight months to get everything wired up you're not no and then once they give me the pilot program then i could do it in the open and i could do it in a couple different pits and i had partner the guy the nausea guy that right that he was in the new york side and he we went to college together and he was a spreadsheet guru you know just great math mind and we crank that thing up so you started where and at its peak when it what were you doing we were doing a couple percent of the daily volume of the american stock exchange within six months what does that mean in dollars that like how how much money we making doing this well we that i think that year we made over a hundred million in a year in a year back with a hundred million was a lot of money and i and i and i had like not i had a small hundred million is not a lot of them why apparently not i mean like it is for me but it's not for know the world yeah i yeah it's nothing right you know it's like oh a hundred million yeah but like that's profit that's revenue what does that mean well there it's trading there it's not like a gm that's like your tape that's what you made yeah that's arbitrage arbitrage profits i mean the overhead on that was relatively small and obviously we we hired a lot of people and you know paid out a lot of salaries and did you call home like hey mom dad had a good year i i money this had so i had you didn't grow up rich no no i had a a minority a tiny little percentage of that company because i needed the capital the one thing i didn't have then was i probably had you know my first million probably happened i was twenty eight or so and all that money was at risk what we talking about or right now when you figure thirty one okay right but all that money was at risk right so i had it but it very much felt fragile right it was a bank role was the bank to trade yeah and as we grew the company yeah my first employee became my business partners still my best friend jim hanson and we grew the company and we hired the corporate refugees and we built like thirty five guys but in order to do this ar at scale we needed capital so we merged our firm with a firm in new york that had some more capital no knew how to run a company like let's just be clear like i had no idea how to manage people all like back then an asshole i don't know i was trying to come with a good way you woke up every day at five thirty in the morning and i i you know got on the floor at six thirty and it was game day and i was fueled by espresso and and ag toss and you know like i was just like yuck you found this thing let's can go right right and one of the things that you know my dad was still around then and you know you asked like you know did you call the parent i remember like whoever says rich people don't pay taxes trust me if people have figured it out i have not that year i remember that i had like a giant tax bill multimillion million dollar tax bill and had to then figure out like well i need to remove money from the trading firm and pay the taxes and all that and i remember writing a check you know the the biggest trick i'd written before that was probably like three thousand dollars for like down payment out of car or something so i write this multimillion million dollar irs check and i i drove to my dad's house and i showed it to him and he was kind of like oh shit he's like is what you're doing legal first question like y greek guy grew up like you know at a grocery store fair question fair question i said of course it's of course yes and he went okay it won't last like you know he was a product of of the great depression and he was like it won't last put it away no boats no women no drugs like you know give me that like we'll talk and then he said just like remember that this is like the great country that your grandparents came to pay that it's your pay patriotic duty to pay that that's why i sacrificed that's why they sacrifice and i went shit i was hoping for a little a little sympathy at the other attack but i remember it vividly we for that it's like we have the birds and the bees speech yeah yeah what's the irs some money son no no pay your taxes yeah no boats no liquor no ladies yeah yeah i mean really that's that's what he said and then he like i will allow you to take me out to there this time you and and that was it like there was no like congrats it was more just like a cautious tale of of optimism in a way of like save it don't do stupid shit go home and wake up the next day and do it again like one of the other thing that my dad really taught me was like at the beginning you were kinda like you have this great mind and all that stuff and that might or might not be true but what's really the case is that you show up like my dad was just like show up every day on time early early you know the old the old adage like early on time on time is late and the late means get out of here and i literally feel that way most people don't show up most people don't follow through yeah yeah and showing up means not just showing up like look there's two kinds of showing up they're showing up unprepared and then there's showing up unprepared but admitting that you're unprepared both of those count by the way like but then like show up late don't show up cancel move it like when when you text me how long does it take to get a text back almost instantaneous was instantaneous because if you consistently do that it's not very hard right like i don't need to plan something three weeks out like when you text me it's get our phone right now let's hash it out and if you do that consistently it accrue so many benefits over time right so you've learned that from your dad yeah a thousand percent and you have this amazing gear i assume these things don't last forever well so the following year you know of course any arbitrage is gonna be a window that closes and they close quickly or slowly but they're always gonna close so the time that kept getting shorter all the people figured it out we started adding computation onto it what it happened is that some of the older partners in new york made so much money that year that they went this is what i've been waiting for it for thirty years i'm out yeah and at that time we were taking like we'd see like a small trading company that was distressed in boston it's boston stock exchange we'd be like how much do they need to like keep them in business okay next thing you know i'm amount of a plane to boston and some thirty year old dude with a computer is telling these guys who've been there for forty years like here's how we're gonna run your business now right that did not go well like you know i need like so there is over expansion not because of anything other than like yeah well we'll take what we've learned and we'll apply it to new things but we didn't know how to build the business we didn't know how to build a layer of management and accounting and we we're terrible at that and some of the guys the following year made half of what they made in call it two thousand two thousand one so two thousand two comes along trading volumes go down we're not doing anything wrong we're just making a lot less money so a guy that made two million dollars know he's making fifty grand when i met him and he makes two million dollars like athletes or something deals and you get poverty yeah and then all a sudden it's like they make eight hundred thousand dollars to later and they're like yeah this is bullshit right and then you get the rock band syndrome you know where everyone's starting to you know get a little salty and all that but we're all super fortunate and i just got i like i i've said eight times and the began i was a terrible manager of people i probably still am and i just didn't enjoy it like i got to the point where i had run really hard for ten years my dad died no one i was very close with him nine eleven happens we had people that worked on wall street everyone was okay but i definitely knew people who were not and i left that year going what am i doing like i need to dial dial this back and i wasn't a good parent i wasn't good husband i wasn't yeah i just wasn't being a good person i go to dinner parties and i'm like can we just move shit a lot people like yeah good it's like it just felt like there's not the trading floor yeah yeah i mean the world felt slow yeah and i grew up cad i'm a lifelong golfer so all of a sudden i would find myself playing golf with ex professional athletes who were in their thirties who were famous big time guys and they were like miserable and like they took golf way too seriously and they played for big money and i was like there's no edge like why are they gambling on golf like you know i don't understand what's going on i didn't consider myself a gambler i consider myself an arbitrage and i just looked at them and i got the nudge from the wife like hey you're you're not pleasant to be around and all that i wasn't really nudge it was a you know slap i slap in the face to her credit like you know right and deserve it yeah and i just remember one day going waking up going i think i'm out like i think i need to like take a sa bad it sounds i i remember i called keith and i was like i i think i need to take six months obviously that he'll get six months off like you wanna take six months off and get paid and meanwhile the options group that you're building is not doing as well is that you know x y z you i was like man i what am i doing here you know like i i kind of figured something out i'm not enjoying it anymore i should quit and i and i did i walked into like a group and out and they were all in fighting one morning and i was like guys just so you know like this is my last week here and you're all getting paid out and some of you will get some equity and i'm i'm gone and people are like what are you talking about like this is bizarre you know and in hindsight i probably didn't do a good job of of that in terms of like i was with my partners i was super comm but like also like you can't go hey i might be leaving in the month right you know that's just not something you can do and so i did and you know we had a a young son and and now there's no game to play mh right and all of a sudden i was thinking about those athletes don't wanna be done and i'm going like you know what do they all i'm gonna ask you what do they all say when they retire they say i'm retiring too i don't know spend more time with my family more time with family yeah class know michael jordan retire he's gonna spend more time with the fact is the best ceo resignation alert i've decided to spend more time with the family yes the board has decided you're not the ceo anymore it's right yes yeah i mean you know when i when i left talk like you know it's or when i sold the group what he the statement you put out is i'm allowing more opportunity for the people like in the organization whatever but the reality of course is that either like you sold for good reasons because something was not you you were no longer a good fit or you got your ass kicked out of it did you ever read the group on ceo's letter when he did i don't think so he's a chicago guy left ka yeah that mesa andrew mason oh yeah yeah yeah yeah he's like decided to spend more time with my family just kidding i got fired i got fire yeah the second line of a big that's yes that sounds like it i i've met him a couple times yeah by the way when you're you told the storage we want see about how you cross with the early chain street folks yeah yeah you were doing and they were the smartest guy can you tell that that's where i thought that was all yeah i mean in ninety nine we started doing ad arbitrage american depository receipts and i was not hugely involved with it was out of new york but the guys who had built the best robo box of doing that were the early jane street guys and my partners were like these guys are better smarter faster you know have these dell boxes on a desk that are doing things and of course now like you know you could see the do ish podcast and they've got you know the data center this is the public you know i i i can't really say much about about the great thing about jane street is that you know it's like fight club and and i've honored that for thirty years you don't say much about james street but i will say that they are incredibly smart incredibly dedicated fiercely independent of thought and high integrity and i know some of i people are gonna watch this and they're gonna go but the india thing that's public or this or you know it's like yeah okay well you know again read the rules yeah you had an idea at the beginning you said three years haven't said you yes any podcast but i have a new kind of like thought idea around everything would you say everything's in arbitrage but it's just a question of the timescale yeah what you yeah roughly what do you mean by that once i was in the restaurant business the slow thing became how do people make reservations that was the equivalent of the the thirty second piece of paper right and people still call restaurants it's so weird there's nothing worse experience at a restaurant and going up to host stand carry a phone ring and getting this i'll be right with you and you're the customer and the first thing you see is right might as well be the middle finger i'm out of the phone right and then they hang up and they go essentially who are you and do you belong here that's terrible hospitality but that's every restaurant so we got into starting to build millennia and i was like we get rid of that and then okay well how do you get rid of do you know who's walking in the front door without them tell you who they are not not that hard right you know how do you get rid of the host stand so it doesn't feel off putting how do you then get like i the analogy i use at time was like it's like going to a sweater store and you see all these different color sweaters and tile styles sweater you're like hey i want that blue cardigan cashmere sweater can't have it what can i have i don't know guess it one of the other three hundred sweaters and that's what open table was like in two thousand five that's what the software was dismal they wanted to intermediate the relationship between the customer and right restaurant that's how they that was their arbitrage and so you know talk was born out of my frustration with not knowing the customer it was a was a ky thing you know and know your customer then it was overlay the value of that customer which is different on a tuesday night at nine pm in chicago when no one goes out to dinner than it is on a saturday night at seven pm whenever everyone goes out to dinner right those two things should be priced differently and they're not that was obvious to you but was not obvious to the world it's still not obvious to the world right you know i don't wanna get political here but elizabeth warren a couple months ago tweeted we need to make a law against dynamic pricing everything's dynamically priced this table is dynamically priced it's just really slow this is dynamically priced this water everything is dynamically priced like it's not nothing nothing's priced forever yeah and what she's really saying is is that we don't wanna squeeze people when bad things happen agreed but the best way to do that is to dynamically price things as fast as you possibly can right and so like uber when uber did surge pricing that is the dumbest way you could possibly name something right and they gotten a lot of trouble for it chose the wrong word they the right idea correct and travis tried to explain it he was they were like how you know on new year's eve you guys are gonna be gouging yeah people with this surge pricing and he's like we need to get more drivers onto the road to meet the demand we need the supply rise to meet the demand how do you get the supply to rise you give it an incentive that you're gonna make more money i will say that i i it was a little too like travis was on that yeah like i remember that and i was like dude just call it dynamic like get rid of the surge word like you know just and you know my original pitches to restaurant was like look you're you're paying people to sell to your rivals like if you're full and you're really busy on a wednesday all they're gonna do is say well you should go this restaurant down the street you know which is terrible like you should just change your pricing right but people like well we print our menus once every quarter so that time scales off you should print your menu in some respect every day or every hour every minute so used to even after talk and selling talk for a hundred million you still see that this problem is like you know just fundamentally not solved across the economy i i genuinely believe that geo fence meaning localized dynamic and variable pricing for time slot businesses is something that someone's gonna make hundreds of billions of dollars it and i simply got tired of convincing people of it they're not right you know it's like trying to convince a restaurant owner who everyday is game and i understand why everyday game day there's not their core business that is what they self selected out of when they got into the restaurant business they wanna do accounting you need a a big dumb button that you hit once that says make more money right and then the whole back end needs now with ai maybe we have that big dumb button you do have that big dumb button so let me ask you a question how does a guy who goes from trading and no restaurant experience create the best restaurant america that that's a mind blowing sentence that that happened yes what is the explanation for that part of it is grand rapids great great young chef who i met part of it is the willingness to go man like it's really weird that like no one seeing that like you know chicago should have the next charlie t truckers was don't know open fifteen years at that point or whatever he put chicago on the map and i was just like that thing i said earlier you know every fifteen years someone's gonna come along and kick someone's ass mh and i met grant and i was like we have the ass kicker we have the guy who can do it and the this is kind of the same thing you said about trading where you meant that guy and you were like you're the guy you're the guy and you had this moment with grant where the guy you're the guy right and i asked you go how did you know you go you said something like every bite of food the i put in my mouth was the best thing i'd ever tasted yeah yeah but there might be more to it where like there was something either entrepreneurial or creative or something about the person the showing up part it's it is the showing up part because look i mean for good and bad he was me when i was a trader he would show up and he would stay there four in the morning and he would come up with the next thing and he would do the stuff the hardware and grind it out everything's grind like if you are a great song writer you write songs every day you throw out ninety eight percent of them i met you know i love wi i love those guys and i met jeff once in the the loft in chicago and he doesn't like people being there much and i he was writing a song and it was honestly not good you know what i mean yeah and it was a wonderful thing for me to see because one of my favorite song writers and so finally i must up the courage to ask him like why do you come in here every day and he was like i'd have to write like two or three songs every week because otherwise i wanna have twelve good ones at the end of the year right and i was like oh man like you want that artistic thing to be you wake up in the middle of night yesterday is just done you know and the answer is like that might happen once in a while but most people are picasso and what you do is you you grind out a lot of shit to get to something that's great and when you find people that do that those are your folks chris rock has a great quote on this he he was talking to some young comedian and the comedian was like hey like any advice for me to make it this is chris rock you know so he says what are you doing today hey he goes i got two shows tonight big day you got two two two shows one at seven one at nine so i'm just getting ready for that he goes nice i so that's tonight i said what are you doing today goes well i'm just get you know get food know and whatever it he goes you want the advice the advice you write jokes every morning the money is made in the day we just happened to collect it at night yeah yeah and he you know the stuff you're doing on stage is the byproduct of the daily writing of bad jokes if you're not do the daily writing of bad jokes like that's the whole racket that's the whole there's nothing else to it besides doing that and that sounds simple but guess what even amongst the professionals most are not doing that i gave the commencement address at the culinary institute of america and hyde park years ago and i was like what do i tell like you know these people are all they all are chefs and it's in the era of tv chefs right and you know i always liked the the commencement address where they you kinda tell three stories right like you don't really they don't even need to seem to connect people will try to connect jobs jobs yeah perfect so i watched you know a couple of great commencement speeches and i was like okay and i finally thought of it like the morning of and the day we were gonna open next which is a restaurant that the idea was every four months we're gonna have entirely new cuisine entirely new menu entirely knew everything we were opening with this paris nineteen o six menu time and place you don't the great thing about that concept was as soon as we had that idea paris nineteen o six i don't need to tell you anything more right it's it's like already has aura it's scott didn't wanna go like what it was like like i like french food what was it like in the sc nineteen o six so there was a sauce on the lamb that was off in the practice thing and i had to go back early in the morning at like six am to like i don't know do vinyl tile in the basement to pass the inspection or something like that and on the pass where like twenty small sa pans this big with blue tape in front of them labeled like you know a through p or whatever and i was like what are you doing here and grant was there and he was like i'm fixing that sauce that you emailed me about like i knew it was off like know i didn't make it and so in my head i'm like well of course he just knows how to make this classic sauce and the reality was he made the base of it in the middle and then he made these a little sweeter and these a little more like salty and and at pacific and somewhere along that spectrum was the right one but no one knows what's supposed to taste like was from nineteen o six right and also like no one really knows how to make it those recipes were kinda miserably you know they went down to the gram that's better and that was what i told the commencement mh i was like if you wanna be a great chef you show up at six am and you make twenty five sauce yeah i'd better see twenty something dollars i'm the counter with tape you don't simply go like well here's the recipe and it should taste like this you have to know what great is and knowing what great is is making mostly shit ninety nine percent of time and then you go like oh well this one's right kinda i don't hate this one that's probably actually really good right you know and i get a lot of people at blind email me my emails out there in the public and i'm fine with it and i get a lot of like young entrepreneurs going like hey i've got this idea and i wanna do this or that and i was like cool go do it come back to me five weeks i don't care about your logo right like everyone wants to make the logo right you know logo first name for i got a great name for a restaurant awesome that's terrific make the fifty sauces right know have you read that book art and fear yeah i think they use this the pottery class example do you know the story don't it's perfect example for this so that story is this professor in florida at university i think he was actually teaching a photography class and it changed it to pottery but story is the same either way splits is class in two and basically tells the first first group when they come in hey for this pottery class i'm gonna grade you on your pottery but it's really simple at the end of the semester you turn in your best pot and i will grade you only on your best work and you pick you you get to pick which one is your best you get you submit that one i'll give you a grade they leave group two he says you'll be graded based on the volume of pots that you make so at the end of the of the year at the and especially you're gonna give me a haul based on volume i will give you your grade yeah easy enough i feel like i know so you know where at the end of the semester obviously the volume people made more volume they also made the better pots of course and like you know basically this is like this principle is just everyone it's so obvious and yet even i who esp this stuff wake up trying to make a great pot when i well no and also when i met you know jeff that time i left going god of i an idiot of course that's what he does every day right like of course that's what he's doing and the weird part is he's doing it after thirty years because for him that's that's the process you know i like to do that and i like to change it and i get miserable when i don't have pots to make i guess like i'm i'm fearful of not finding more quest side quests so i've gotta know you a little bit one thing i think you're very good at is you're good at having an inspiring vision which sounds obvious but that that's a skill to like be able to do that a vision that's compelling they get people excited a story that you wanna be a part of that we'll get you to jump out of bed every day and like do hard things go do my new ship bullshit make twenty sauces yeah you're really good at the vision part and you really good at working backwards and i think the story of millennia you told me that i knew it was this great three michelin star restaurant what i didn't know was that before you made it you declared this will be yeah through this will be a michelin star rush restaurant but michelin wasn't in america michelin wasn't even in america yeah you said something even better you go if we need to make it so that it will look bad for michelin if they're not even coming to america like us not being there will be bad on them that's right which is a it was a stated goal which is a stated goal that is i would say unusual and you said you posted this on some forum on the internet year before you even launch can you tell i sorry i don't think a well told story yeah i so like so there was eagle at the time like there is the you know the the what do called boards you know like bb form yeah yeah foreign boards there's a foodie one called eagle at the time you can still look at i mean like the archives are and i was kind of fascinated with open source software at the time and i do what i do and i start like reading how to run a restaurant like restaurant for dummies and i'm reading all these books i'm like just like with the options i'm like i feel like none of these actually is they're they're not teaching me anything on how to run a restaurant okay so i'm now building a restaurant but i don't know how to run a restaurant i wrote this one spreadsheet that was i i call it the universal restaurant calculator it was literally one tab with like eighty cells so any input that i could think of like cost of insurance like that to sell right and i couldn't think of any more cell like at the end of the day like anybody listening to this could probably if they sat in a restaurant long enough and really thought about it you could come up with the cells it's not that not that big and that's why restaurants fail because the actual barred entry is really kind of pretty low you know anyone who has a good dinner party or thinks they can cook something can start a restaurant so i just started like going okay what how can we learn from our customers and maybe there's someone else out there that i can learn from and so i was like let's just open source the whole business plan so i created this thing called the ali project on eagle and it was like hey here's here's how we're thinking about naming the place and here are all the names we didn't take and here are the ones we did take here's the menu development like these are foodie these are chefs who's in this forum so it turns out it was a lot of people i mean we got hundreds of thousands of views so suddenly the press was interested so you know food and wine and gourmet magazine and and you know the new york times the wall street journal we're all like oh this is interesting like these people are building restaurant and did you say openly like we're trying to build a michelin star restaurant in chicago i didn't say i don't think i said michelin star i think we're trying to build the best restaurant in america trying to build the best restaurant be yeah yeah and you it needs to be profitable start building a public or open source your ideas yeah you're saying you're doing it because you kinda want spark smart people to be i wanna back things i wanted i wanted feedback from people that might come across it and then i wanted to drum up future customers because when people have an engagement where they feel like oh i watched that and now it's open right i feel like a little bit like the origin story is already known right it's like one of my favorite documentaries of all time that i literally watch once a year is hearts of darkness it's the making of apocalypse now you wanna talk about fear every time i'm like i'm doing too much i watch francis ford cop like yeah with the with the philippine you know like navy and air force like actually going you know for named marcos or whatever going to like you know you know get that his hop out there they're actually gonna start shooting you know he mortgage his house twice all that stuff right so i'm not really taking much risk by doing a vineyard here compared to that so it's very comforting and i felt like by putting that out to the world people would have this engagement of like they see the process they see how we're thinking about it like we would write i i re i look back at some like there's so cringe always oh yeah it's cringey now like you know the purpose of bread like is you know and the why do you think the most restaurants give you bread well it fills you up they can give you a less of everything else like way that could've have been the whole post it's americans like fat and bread is a good vehicle for butter right or oil and we can cut down on our portion size if we give them a big basket of bread right that is literally why they do it and it's delicious bread delicious you know but like we wrote like four thousand words on the purpose of bread but it yeah we had hundreds of thousands of people on and one of the cool things was at the sean brock who's a very famous chef now he was the first customer through the door of the first day wow and he wrote on there so did you have like a wait list by the time you launched or yeah we had we had like opening night we had new york times there head food critic michael roll told us like that guys is the head critic in new york time so you know anyone looked like back then you couldn't know this but if you hadn't been put publishing that stuff but you opened the same restaurant there's no chance it would been as good no chance that was like such a marketing feat how do you think about product marketing storytelling like what's your kind of fear thesis or philosophy on this the more open you can be about why you're doing it as long as it's authentic you win mh period like you can also lose on that like look like you win period you could also well i'm thinking of dark i'm thinking it's da and sam right now like you know it's like there are real concerns around ai and you know if you run around saying everything you think everything you think might not be the best thing all the time fair you know at at the end of the day like a restaurant is a pretty benign thing no one's gonna liver die based on me opening a restaurant and but so why was i opening it we had really pure reasons like you know do we have ambition for sure at the time there was a real culture of people finding these things and there wasn't instagram and there weren't you know the social media outlets and so this was novel to have that now like one of the problems i think is that you know if you're going to paris you're gonna email hey where i eat okay i i love le jean you should go there you're gonna go on and look you're see all of it before you get there it's really hard to be surprised in life right now and so you know a lot of what we were doing was creating desire and enough engagement that you felt like you knew people people i always wanna buy from people you always want to have an engagement you know one of the successes of of this podcast is you people see you and you're genuinely curious that's authentic that that's that's a secret right we can do so many bad things like making dumb questions or dumb answers are and as long as you're authentically like engaged and so that's the marketing yeah finding that and being willing to put it out there is a little bit scary a little bit invasive a little bit you know like not everything you do is good you know you might not like the way you look or sound on camera all that but you have to keep doing it you you told me another big thing that i thought was really awesome because i've never been to doing india most of people who listen will have never been there right so like for ninety nine percent of us we've never actually experienced what made it the best restaurant in america but you've told me a little bit about like kinda every detail so you know how are you greeted at the door you know what was the experience like you know the balloon for dessert you know where you're eating this this candy apple or this green apple balloon for dessert and you've talked about like all the different elements of the experience what are like three or four things where i where you are proud of like how you kind of re thought reinvented or just even a small touch like i think there are dozens of those and what i would say is that we looked at it like a theater like you know if you write a great piece of theater or read a great novel or whatever the term art would be a callback right so like you write a your time about chris rock like the great thing about great comedian and whatnot is that they they they'll set something up at the beginning of their set and then they go through a whole bunch of unrelated stuff and then somehow there's a satisfying callback there's a callback which makes the beginning and the end funnier right right and when you leave you're going oh you know i so we viewed the experience from the time you got out of your car so you walked down a hallway to you're at a table which was a complete cop of david byrd like you know like stop making sense i saw it in nineteen eighty i was at harvard summer schools as a teenager and i haven't seen that where what i've yeah stop everything are you kidding oh my god when you said the name i had to decide oh dear god you're generational league make like oh my dear god well talking i know what your last i know i i know what i'm giving you for your birth okay so the great thing about stop making sense that concert was that david byrne walks out no one else is on stage he has a boom box which just plays dump up you know this before drum machines and all that and so you cassette tapes and then he you know he starts playing the guitar and then the stage builds the stage builds and then pretty soon he gets smaller and smaller because you starts wearing in the bigger and bigger suit you've seen the diet in that suit that big suit is as the world around him gets bigger he gets literally smaller by stage kraft right it's brilliant and i remember when we were building millennia grant had said like why do why do fancy restaurants have table bottles and the answer is because the table underneath is a piece of shit and so he was like we want great tables because you'll feel it you know and you'll see it and all that and then we were like well start with nothing you know you you go to a fancy restaurant you got like eighteen different right forks and knives and that's stressful because you're like i don't even know like how to use them i'm not i'm not like a nineteenth century french democrat and then you and even then they have somebody with so should probably use the fish right right like fork or whatever yeah yeah yeah right right for being right yeah yeah have soup away like we didn't want any of that and i remember thinking of of stop making sense and going like let's start with a empty stage and so when someone comes you get you know something that hits the table what's the point of that let's the callback for later so it could be you know a honeycomb or it could be you know what looks just like a flower arrangement but as it turns out there's edible things in there but you don't find that out until flower two right so these were all intentional things now none of this sounds particularly revolutionary now because there's tons of restaurants to do that i mean that's the influence of not just millennia but like a lot of other restaurants that push that envelope and so it's we we worked really really hard to hone all of the little things that would make you feel something right so if i said to you i'll ask you not your favorite meal on a restaurant necessarily but what's your like most memorable meals you're life you know i i know what came to mind right away i remember when i was twenty one twenty two years old we were doing the sushi restaurant thing or we wanted to start sushi restaurant we went to las vegas and my my buddy trevor girlfriend her dad was wealthy he said take the boys out to no and say the word o casa when you go yeah yeah yeah we didn't know with twenty course why would you have school in north carolina yeah not a great sushi scene right not a lot of o casa going on there so we go to no boobs and we and we say the word magic word at o casa and they say we got you we got you yeah and they start bringing dish after dish we don't even know what's happening we're trying this like miso glaze cod it's like wow they every bite tasted you know unique and and great and the whole bill was paid for by this other guy by you know the the her had and if the whole thing just felt like totally taken care of and new and novel i just remember also where we were at in life like it just like a relief from like the stress of trying to build something and being broke so now how do you make that happen every night for people like you know and then so that that's a real thing so we would ask staff like guest experiences best experiences what okay we're coming to fall what does that mean well what means something very different here like we're in october here we filmed really early today because it's gonna be a hundred degrees in chicago the leaves are already down and it smells different it's wet and so as you're trying to craft these experiences we just ask those very simple questions mh and when we built software there's a lot of different theories of software building i like to build dead ends and software that every software designer hates if you could hit every button at every page i can't take you on the journey where i want you to go right right so i kinda build like dead in caves that every every software designer hates right like you know ux designer because they want like the microsoft version of i want every every option at every time right my older son is very much like windows guy because he can tinker with everything right but like in a great experience like that cost that you had you had no choice right it's a defined it's a defined thing yeah and sometimes it's great to have a lot of choice and sometimes it's great to just be taken on a journey you know and so studying that was fun you and that's what we did you also study is so as i'm kind of d what you do one of the things you do is you you learn but not from only within the industry you steal from the sort of adjacent yeah yeah you don't look at a restaurant say well how do the best restaurants do what restaurant you know you say in fact you try very hard not to do that you say what do they do and what's the how do we invert some expectations or what are they rules like i'm fine with stealing the best stuff how what are they missing right and then what do if this was theater how would a theater guy do this if dinner was was like a theater show what was feet right right so like taking these adjacent you also told me about magicians and how you were studying magicians and this kinda of some of this new stuff that we're doing but you told me the story of selling a bottle of wine to a table yeah and you were able to go at and you're able to sell a bottle of wine that maybe the waiter wasn't gonna do and he was kinda asked you like you know how to do 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choice financial group and call them n a members fdic so when i was a kid like every kid you get a a box a magic box that has like the rope that with the little peanut in it that like holds thing yeah the the hidden coin thing that the the roller that does the dollar bills on and there's somewhere exists a video of me that my mom put me in a little tuxedo and i did the show for like the the relatives and everything went wrong that's why you know it's so great but of course i'm like doing the tricks and i like oh don't worry about that big right you know and i'm like five for whatever right and so like almost everyone that sense of wonder and awe and all that is something that as you build out experiences for people magic is a wonderful thing to study but it's also a wonderful thing to study in everything else marketing sales and all of that because you know for sure that i can't change a ten dollar bill into a hundred dollar bill right you know that everyone knows that and then when you do it if you do it really well it will appear though you did it even though intellectually you have to suspend your disbelief and so how do magicians do that well you know that they control your attention and where they stand where they look at you where they look you know not at you all those things are cues that are incredibly practiced they know exactly when they're working and when they're not mh and as you're building out experiences for people in restaurants anywhere else if you read the books on restaurants i just hate them i don't like them at all but if you read a book on written by a magician to say the effect they always start with the effect the effect is that the bill will become a hundred dollar bill okay that's the effect and then they go through the method the method is well you've already got the hundred and you're gonna fold it like this or it then there's beyond the method the craft of like of what you're doing so the presentation the yeah yeah if you read hundred and fifty year old books on magic from anywhere in the world they have all of these wonderful things like well if you wanna gain people's trust you don't sit across from them or stand across from them you will stand next to them so if i present this to you and i'm standing here and i just go this is the best water in the world you know what like you're gonna be going like guys sell me water if i go around the other side and stand next to you so we're both looking at it first of all i can be doing a lot of different things there i can be signaling someone that they bring more water he's little low i can be doing all sorts of stuff in a restaurant you know your attention can't be on the water and behind me at the same time right so i kind of own that space back there so in in reading these things and thinking about millennia it wasn't just the callbacks and it wasn't just hey we need to make a dish that trans into something else or whatever we're going to start doing service in a way where we are on the side of the diner we're gonna present some weird stuff we're gonna present a dish that look that's hanging at the end of a skewer that makes you uncomfortable because you know you're supposed to kinda right to do that and one of the things that we kinda realized was if you if you're gonna have people eat something it looks like glass you should put it on plate and if you're gonna have something at the end of a skewer that's bobbing around it looks like you have to give it head you probably should make it taste like cherry pie you can't like challenge people in two directions right but the way that you describe that should also not be cereal it should be like you're on the same team hey and the waiter comes around to the side they look at it with you and like look at he's putting out today oh we might have been putting it out for three months right right but it you know it's like and that was a very sad thing you have to be on the team not team restaurant team customer team diner right and with that story with the wine you know this one table of six like we did wine pairing mostly of one table six wanted to buy all the wrong wine k so big red wine don't really go with their food you're probably not gonna sell more if you're some and you just go like oh you're they're gonna buy a thousand dollar bottle of the wrong wine well you wanna sell the thousand dollar bottle but where we're at we're like well yeah you probably shouldn't get that right it's not really appropriate for the food you don't wanna say that don't wanna embarrass the person you wanna say that and so you know i'm looking and i'm looking at their shoes and the wife's wearing brand new levi do you know the brand new while the red is absolutely perfect those things cost about twelve hundred bucks and that guy over there got a watch that's a fifty five thousand dollar watch that guy who's actually ordering this stuff is aspirational because he didn't have any of that so he's either the really rich guy because the really rich guys don't do any of that shit or he's trying to impress these people and it felt like that so rather than say to them you probably shouldn't get that i walk over like hey nick i love wine i'm the owner of the place what did you order and i go what would you drink on tuesday with a pizza now i know he's probably not gonna answer honestly right right i go all that what goes really well with the pizza i said you know like we've got a couple like you know you could probably get two or three bottles for what you ordered but they'll pair wonderfully just like that at super tuscan with that pizza you'll get like a better vote and i didn't make it about him i didn't cut down the spend at all right and then the waiter is like that's amazing like how'd did you do that i'm like she's wearing le like guys got a fifty five thousand like you have to know what you're looking at right and that's what magicians do all the time mh they they they look at their environment they assess their environment and then they put themselves into that environment in a way that accomplishes the effect and so i got really into reading that stuff the theme here of going okay i see an effect that i really like i i'm gonna reverse engineer how i would do that not because i want to perform it ever or i want to like know the trick right but because i wanna know how he got to understand all the positioning you needed the site angles the psychology of of the person seeing it and then how can we apply that to our sales team at talk selling software or how can we teach our waiters that standing in front of a table is not nearly as good as standing alongside a table and these little things like you know it's so like i would not do training very often because a lot of the training is literally like you don't backhand someone like you know if you're pouring wine and i'm pouring from here i'm not gonna do this i'm gonna use my right hand and open hand it's in the labels there like small things and at that level i'm not the person to teach at but then i would show them a darren brown video you know and i'd be like hey we're gonna watch a magic trick and it doesn't look like a magic trick the great thing about aaron brown is he's on the street and it doesn't look like magic so i would then walk them through the anchoring and the wrist and the hold and if you watch this is what he's gonna do every time and it seems like it flows like water it just flows perfectly out of them so it never feels like you know when he backs up and they're walking with him hey they're engaged it's easy to assess engagement with people so all of those things are studied in practice and when you when you kinda ga that for your team whether it's a marketing team a sales team whatever it may be it becomes really fun you know and you could do that in a smart way like the jordan be way right you know tell me to yeah you know and all that like y how long has you been in the market for a pet like that's not what i'm talking about and so the great thing about magicians is that there's a suspension of disbelief that you're being sold a bill of goods you know that it's literally called a trick and yet you're fine with it that's where you wanna get to right you know and that's why we studied it and that's why i studied it and that's why i'm still fascinated with it so how would you use your brain on a podcast so let's say you let's say you're me and you're gonna try to do something and whether it's this podcast or a new podcast what are some of the questions or some of the oh my god think about this i'm just curious that's a really great question and i i don't know the answer yeah that's okay you don't have good answer i'm curious yeah i don't you know i feel nervous also sudden it's stuff that's a good knowledge that's a good question yeah that's a good question so i listen to podcast i listen to your podcast a lot and i think one of the things i would do is i would never send any questions ahead you did not with me right i don't know if you ever do or if people request it but i have on a lot of podcasts at where someone sent me a list of the questions before an interview i never look at them right like if you're running a podcast do not send out any information ahead you know because it will not feel real and authentic like i didn't know you're gonna ask that right my response is is much better because of that you've done a very good job of being yourself and then the the thing that i would say next is what's the next format like i don't know what that answer is but podcast podcasts that's a thing you'd be thinking about i need to know like mh how are how do you get this down into something that's gonna be consumed in the next format because it went it went from listening to podcast podcasts i mean all in like the last ten years to now we're visually doing it to something here will be a sound byte that we'll get down to like the the clip fifteen second short video that'll probably go like i do better you know i a couple of pockets have done and have been long form and they've helped me immensely in business simply because people who i think wouldn't listen to it did right and then they feel like they know me because it's authentic have you seen the hot ones i don't think oh yes yeah you mean the wings yeah i love it so says a simple mickey mechanic where the guy basically says well for celebrities coming in and every celebrity p he uses like real hollywood with yeah seen it they're all p trained in know yeah to do a thousand of these things it's like actually not that novel to have access to them anymore but what what do you not have access to in that person it's like you get to see him sweat yes it's like but in a likable understandable way you're not like putting them under so much pressure right and it's it's also like and it's relatable to it's relatable it's a spice yes everybody can kind of you can imagine what it looks like and there's a progression so you kind of wherever they start there's all built in no coming you also know it's coming you know coming and you wanna see what the finale is how bad does it get and they can use clips of them like drinking milk gas you know man they're gonna it gets back yeah yeah so already it's like that guy took interviews and with one mechanic yeah change it and if you look at our space for example like in the business page nobody does that i i nobody has i will say that i wanted to because i'm a golf fan it would be really fun if we were walking up the hill behind here like one of the things i thought of and got rid of was like and i didn't know that you'd have like a production so it wouldn't have worked anyway but like like doing some activity like that is super cool right i've been very fortunate to golf with amazing people not just like professional golfers but just amazing people and four hours on a golf course is a great filter right because their golf is game of utter failure like no matter how good you are you're gonna do bad you're gonna do poorly how they react to that is fascinating and human and human and all of that yeah and some people are really enjoyable to golf with and some people are not and it's unpredictable like i can't so one of the things i wanna do is like you know bill gates loves to golf if i was gonna interview bill gates i'd be like cool let's go to the mu golf course right and we're just gonna go and there's gonna be like a little handheld camera around and we're just gonna play golf and we'll interview you about your history of software and ai or whatever but we're gonna we're gonna make watch you look miserable in the middle because he's not a very good golfer from what i hear that's a really human patronizing thing like it's great to talk about all the things i'd i do well like thank you but like there's a lot of things i'm miserable at like like let's let's put a little trouble in the way which i guess is what your point is with the hot ones put a little trouble with i think that's a good like principle how how might we yeah put a little trouble in the and you can come up with ten ideas yeah another one would be you know you you talked about like if you wanna learn how to manipulate let's say attention or make immediately disarm people or be suggestive we can learn from magicians or if you wanna create a three hour experience we can learn from theater yeah so i wonder like who should i have been studying like should i i've been studying you know how does a kind of inter for the you know the cia what do they do to really get somebody to be honest yeah and i'm not gonna inter somebody but it'd be very useful to go to that level of stream thousand percent just listen to how podcast like me do what you do right but also you're trying to break down like for the audience like oh you've had like four different careers how and why right how did that work why were you successful at it what can people get out of it it's a show don't tell thing like here we're forced to tell right it'd be cool if we just could show it somehow right like a steve bartlett from dia ceo early on effect of every episode was the guest was gonna cry and so how do we achieve that effect your method was i'm gonna surprise you at some point with a photo of your mother who has passed away recently but it's a yeah yeah wonderful thing and then i got your third grade teacher to write this letter yes and i want you to read it here live and then the fact was the guest would always get emotional and you never used to see that yeah that person person the high achieve get emotional yeah and that became a calling card for his show and then there's like this flywheel thing where the guest kinda know oh i better open up i watched i watched behaving i watched that baird grill show you know you know he's like that outdoor survivor man guy survivor man kinda of thing and he he did a a series where he takes celebrities and in the wild takes them somewhere and talks about their career and and i love the concept of it but the execution of it even though i love when he does it obviously they can't put these people in actual danger it feels dangerous but like you know they they can't they can't really suffer you know like oo thurman is not gonna go i mean she was one the people i'm a big uber fan i gonna say i was random reference i don't know it wasn't rated if my wife's to be like yeah okay but all scuba so but like you know i watched that and i went like oh it wasn't like that wasn't all that interesting because she never felt actually right like emotional i don't think yeah i guess the thing i'd take from it is i consider myself a creative person and it sounds like when i'm hearing about how you go to the restaurant industry or how you did you found arbitrage or you know with talk how you did talk you know i've i've heard you tell some of these stories and i realized oh wow there's levels to this game of how to truly live in that kind of creative mindset and you know there's common patterns like where can we go what ad or like to totally unrelated spaces could we go learn from and pull one or two things that might be really active i mean and that's the philosophy training to me was like figure out the first principles thinking when we were building lin it was great customer experience great business because then you've got a flywheel where if the restaurant making money you can reinvest in the customer experience which makes you an even better restaurant which means that you're making money that you make more money yeah and i think that there's a lot of the garage band mentality among chefs even some of the famous ones i mean i almost broke my my tv in my basement with covid started and they had famous chefs on cnn going this is the kind of business where at best you make two or three percent and you pay you know this month's bills with next month's revenue and all that and this very famous chef was on tv all the time saying that and that we need to print two billion dollars for the restaurant industry and all that and i was like this guy i mean i literally emailed him i was like a stop saying that that's not true he's like what part of it's not true like my restaurants make two percent i'm like was because you don't actually you haven't figured it out like you should be the last spokesperson on there but he was a very successful tv chef not a very successful restaurant owner and those are two different things and the press doesn't get that they're two different things you know but for a lot of these industries that are like kinda art craft based openly desi running it as a good business is sort of low status it's low status you lose some it's like that's what i mean by the garage thing like oh you're sold out like you know it's like for me i'm really really proud i sold the group three years ago our investors got quarterly distributions from the time i started it in two thousand five all the way to when i sold in two thousand twenty three and then they got eight x extra initial investment walking out the door right so i think overall i was like twenty seven or twenty eight x right so if you put in a hundred thousand dollars in two thousand five into a restaurant that you thought was an art project in two thousand nineteen you got about a quarter million back see this is why i got mad at you i was like dude i used to always just say restaurants are our horrible business and i realized no no the i bad at that is at the office and it's a ski issue and well and you know look i mean we could have gotten lucky but like at the at the end of the day like the end of whatever is relatively small like you could say like well you caught the right thing and this and that but you know the first year we did a linear it did about five million in sales and made like eight percent seven percent i was considered really good and i'm going like well as a giant downgrade from my previous career and a lot more work and then at the peak like it was doing twenty some million dollars a year and making you know eighteen twenty percent and like that was i need to build a software company to do that we need to get rid of all the phone lines to do that you know steve be our cfo came up with mer mech charts to do to do all of the food costing that wasn't me that was you know a guy that i helped the mentor and right then i learned from him and you know it's like all of those things we dis freely to the industry no one want to do them right and so like you find yourself during covid looking at the tv going oh my god like it's so broken the information that comes out and then the thing that happens to me is i go what else is like that and as it turns out probably everything like you know if i i do know awesome food reporters i know awesome economic reporters and all that but chances are that if you're gonna write a book about trading i a pick up michael lewis here great writer great writer love his books love reading him when he finally wrote about something i actually knew about i went us this is all wrong right flash boys is all bullshit because if you show up and start asking traders hey how did you do that and you en their trust in order to be trade because they know you're gonna write a book what do you tell well you tell them the shit that worked five years ago if my arbitrage between the am mx and the mer was working right now we would not be sitting here talking about right i'd be going like oh really hard stay state work you're like no no that's gonna work right and so like you read that and then you go oh man that's you know and i think that's a lot of where the current frustration with the press comes from is that when you have all of these people who can see information freely in each of their silos where they're really learning all of a sudden you go that's not what i said or that's not you know i i love doing these long form things because if i put my foot in my mouth everyone can see it but it's really hard to take it out of context or if you did take it out of context you go like well go look in there yeah look at that correct it wasn't filter tabs so you know i i i feel like that's part of the disconnect politically these days that's part of disconnect with all of that is that you have again different timescale scales of information and i have a really good friend that gets all of his media consumption for lack better term filtered through three things and i get it from the unfiltered messy versions of x and reddit it and boards and like i'm a geek right so i'm in all that and by the time he reads it i'm like it's two weeks ago man right like and also it's wrong that's actually not what happened or not what was said you're not getting the context of that thing and so i'm like oh my god i'm cons you know for sure i'm also consuming it wrong right because i'm not close enough to it to really fully get it so what i try to do is i'm fortunate enough being fifty eight years old that i just try to like get to the person like if i see something and i'm like that probably doesn't seem right i just email the person that wait one of my favorite stories you told me was when you were selling talk and i've gone through m and a and i think every entrepreneurship tried to listen to more m and a stories if you ever get to that point it's gonna be basically your life's work yeah you know five fifteen years however long you've been doing this company and then in this like three to six months span you're gonna have this huge swing in the outcome that you're gonna have price yeah maybe the deal falls apart which happens all the time and you're doing this thing with your other side of the table knows a hell a lot more about this has done this ten times more than you have yeah and so you're gonna go into the gun fight with a you know butter knife trying to do this and you told this great story that resonated me about when you were selling talk and how you treated the lawyers and the diligence process where you kind of like took control of it entrepreneurial rather than being a passenger to the process we we had incredible growth during covid and the trader in me was like we are gonna lap this growth and we're still gonna do well but we're not gonna go at two hundred percent next year right this is my moment like it looks really good right now and with technology you know you could have something that that's you know growing two hundred percent a year and then all of sudden you grow fifty percent one year and even though that's amazing the world of m and a and vc just goes oh tri that like you you are you are your way down and pretty soon you're gonna be like a legacy your comcast pretty soon you know even that's it's not true so steve be jeff cap on my coo myself the lawyers would go like well we just got the diligence list eight hundred and ninety six questions and we would convert it from excel into google docs and then steve would go through and he would color code it all and and we would assign it to the people that can answer all the questions and of course like the investment bankers and lawyers kinda thing would go okay well this will take like four to six weeks right and i was like we built dashboards for all this i could have it like two days but then they realize they get paid if it's a two days right right know it's like they're bill hourly and there's four of them but they're so you're at yeah you're at thirty two hundred dollars an hour or whatever every time you get out of zoom call with them and then you know the investment bankers want whatever three percent to four percent or whatever so we just went we don't need investment bank like there's nothing here that we can't figure out on our own and of course the board hated that idea but still had a controlling interest and so i just said like awesome we'll do it for two percent does that make you feel better for real and they for you your own your own investment bank yeah and i'm like i wasn't gonna do that but they were so adamant that it was hard and i said well know like look they're getting paid four percent i'll save you two percent we'll take it and that way we'll be behold if we don't get it done like you can you know we won't get paid which is weird be they should just say no to that but they didn't say no they said yes and we did that whole list for three days just stayed up k just locked yourself in a room like yourself in a room did the whole thing in three days there's was like you know there's a lot of questions that were like unclear what this what you're asking here you know or you're irrelevant but and then they just went what is this or we're like that's your diligence you gotta tell the sp the spa story god there was there was you up yeah there's a guy on the other side and we won't use his name or the firm but you know there'd be this is during covid too so they won't be in person and there'd be like thirty people i mean i have screenshots zoom call zoom call thirty people all lawyers all lawyers are their side a couple people from squarespace and then the three of us basically and we knew the answers to all this stuff because we did it ourselves there's no one to parse it through whatever and so then i would just ask a question or steve would ask a question or jeff would ask a question and the lawyer would literally go i will take that to my clients and i'd be like your clients are in the fucking i can see here potato like we're here we've got two weeks left let's not leave it till like and it had to be done one critical things and and the reason it got done is because they were gonna go public the following quarter and all of their s one information went whatnot need to be locked down end of q one which happened to be on march thirty first k like it will it actually followed the calendar year so march thirty one we had to be done otherwise it was good not gonna happen for six months to a year and maybe never right and finally i just looked and i was like hey sp shut the and everyone even if some people at his o were kinda like you know kinda tried not to giggle but you could see them you know and i was taking screenshots the whole time because it's guy i takes cuts to say that to the other was so angry because like if even wonder why you were calling him spot no no no this was his entire strategy was simply to close at noon on the last day possible right because that's how they could get the most out of it right and that one of the you know you were we were talking earlier like one the superpower is not a superpower it's just what what is this person's motivation if they're on your team even are they are are your incentives aligned i learned very quickly at millennia that my managers incentives on a wednesday night were not to be full and i learned it because this one guy said to me nick if every day was saturday we would be so tired and burned out that'd be like we have a hundred and forty person in waitlist list we're doing eighty people tonight ninety four people saturday why is every day not saturday why are we not doing ninety four people every night right and he's so i'm holding back those because otherwise we'd be too tired and i'm like but you don't get that like we could hire ten more people and you could work four days a week instead of five and get paid more right he did not last much longer like because i literally went in to the primitive pre talk talk and opened up a hundred and ten seats for every day for the next two weeks and we sold a hundred and ten and i went in the kitchen and i told grant we're doing a hundred and ten every day for the next two weeks he's like okay and then i knew that they would make it happen and then the guy just kinda walked off like you know and so you just go like okay like i that was my fault in a lot of ways like in hindsight i did not align the incentives i did not sprint explain that every day should be saturday and you know it's like there's a certain group of people that'd be like you know yes every day is saturday like it's game so i have this phrase that intensity is the strategy and what i mean by that is i spent a lot of my life searching for the better way the better strategy to have yeah the shortcut the whatever as i hang out with enough winners you realize like the difference is not that they knew something i didn't know or they yeah some magic formula but like they applied a greater level of intensity to a pretty visible strategy that i could have seen and actually the intensity almost changes the strategy over time just like yeah and also when you're wrong you go like oh i was well was really wrong i mean i just said in hindsight thinking about it i did that wrong he did not know why that was important to the business right or why it could make his life better that was my fault but at do you think that you had was the trading floor like the formative period where you you i will tell you a great year i will tell you an exact thing that that is a ton stupidity that is in a book called market wizards so this this book called market wizards it's one of the rare trading books that's great now everything in it's out of date in terms of the the process of like the floor traders and not it but what's not out of date with the market wizard book the mentality of the people that he profiles in their and interviews is great and one of them was called one lot wonders and so this guy would just trade one contract at a time really small and one of the questions i remember this and i think about it all the time is that he asked the trader what should a failing trader do to become a successful trader k and he goes what's a dumb question because a successful trader will figure that out and it sounds stupid right and all he's saying is like well no like if you're a if you're gonna be a successful trader you will stop doing all the stupid shit and i don't know what stupid shit you're doing you know i can't know right and i can't put it in this book and in this interview but it's a mark of a successful person that they will at the end of every day like kind of like you were saying about chris rock at the end of every trading day you do the post mortem or whatever you it's the the google version of it post mortem you know like something goes wrong you analyze what went wrong one of the things i tell people is like no one likes getting punched in the face but there's a certainly a lot of people that when they get punched in a face a lot instead of saying like maybe i should learn to bob and weave a little they blame the punch or they blame the referee or they're like maybe i shouldn't be in the ring or whatever it is right and you know that's why you know the that's the flip flipside of the mike tyson quote right you know everybody's got plan he'll be get punched the face well it's true you gotta be plan tyson and impression thank you you know and i love that too you know i used to show that to people because i'd be like yeah like we have a plan our plan is changing right because we we are absolutely getting destroyed right now and i was wrong and one of the things i hate about managers and when i have worked in other organizations you know i'd be sitting in a meeting for two hours and like i'd be like can we just all admit that this is stupid like we should not like i don't care who's who owned it or whatever like it's just not working right kill it like this one company bought this other small company and i'm like you have fourteen different competitors now and they'll never be monetized right can we admit that that's never gonna make a dime now you could keep it for strategic reasons but you probably shouldn't spend ten million dollars you're developing and everyone's like everyone who had ownership of it no one would just go like yeah right we screwed that up we shouldn't bought that i love that the successful trader will figure out how to be a successful trade successful trader which is that he will edit out the stupid shit he's doing yes it just over time every night edit out snip out some of the stupidity until there's not enough left yeah and he'll be successful i mean look at like everything around us here i'm not a a list at all i am i don't know agriculture i'm learning but i got this place and got here and was very scared i didn't know how to shut off the sprinklers in this lawn today because it all changed in last couple weeks and you learn you know you start going around you start learning and i i got asked to be the keynote speaker at the napa valley great growers association this past spring and i said oh you've you've got the wrong person you know i i don't know anything about great growing really and i'm learning and but some of my heroes in this industry are the people who started that thirty forty years ago right and so i'm like i'm not i'm not going in there and telling randy dunn like anything about grape growing right and they said no you're the only optimus left here like you're building you're planting grapes and you're building a wine bar in town and your you bought property whenever everyone's selling property we just wanna know your why so i i was like okay i'll show up and the first thing i said is i know nothing about grape growing i i hope to learn from all of you they all big smiles on the face because they thought i was gonna get up there be like new new rich guy comes to da and tell people how to grow great right and then the software guy because they all use talk the software guy gonna tell us that the tasting rooms are doing great now even though we know they're not right okay and all that and what i said was you had thirty years up into the right you thought you weren't gonna get kicked in the face at some point prices weren't gonna go down really who told you that was it the hippie that came here in the fifties right you know it's like they come of imagine thirty eight thousand dollars a ton makes you think that you're you're owed that walked out and people are like yep yeah like let's go you know and this cycle is gonna be like any other cycle this timescale scale is really long these grapes won't be good until i'm seventy and so like that's weird you can't yell the grapes and have them grow faster but the way that they run their businesses can feel different right and i think i just gave a little hope in that like you're you have opium or opium and i'm more of a opium like figure out you know kinda guy right it's like the the matrix red pill blue yeah yeah yeah yeah yeah choose one of these yeah we gotta talk about strange house so you gotta tell the story because this is one of the coolest projects that i hope it happens sean we're gonna make this happen it's gotta happen i mean you know how can you list you should listen to this podcast it'd be like that guy would make that happen you know what mean yeah if anyone's listening to this i'm gonna look at the camera if anyone's listening tell the barrel we are building the weirdest coolest thing i say we i yeah we are now after like a couple conversations okay like where to we get and it's it's just another one of these you have no business doing this a thousand but i'm gonna do it anyway yes and i'm gonna shoot to the very top when i try to do this and because of that i'm gonna like i'm gonna go figure this out alright i'm gonna i'm gonna figure this out one step at a time so so tell the back okay the backstory is i was doing what i do on like a wednesday night at ten o'clock and i i open up a bottle of wine too late and everyone's like going to bed and i start watching some random youtube magic thing you know and there was a guy who had never seen you know comes up on the feed and each stand forth does the lottery trick and the effect is that he's in an he's in a a theater they throw around you know a beach baller or like a little cr piece paper in this case and six people call it a number and at the end the last person comes up and in the wallet that's been sitting you know at the at the beginning he put on a stool out of the stool there you know that comes up on stage and he opens up the wallet and he pulls out the lottery ticket from whatever state they're in and the guy reads off the numbers of of the what the random people random and they're they're genuinely random like you can tell that they're are genuinely random they're not s they're not place ball's bouncing around and and the people are clearly you you'd see the audience going by the time they name the third number like you know that the lottery trick right and nate gives such it's kind of like that that stop making sense empty stage just one stool very elegant he's very quiet about a big fog machine there's no praise and boy i like this effect a lot but the thing that i didn't like was that he called out the numbers in the order that the audience called them out and every lottery ticket i thought and then i had to look it up if you buy and i played lottery for no edge so they're an or number right so if you go in and scratch off a lot ticket or call it in or whatever always gonna go from one three seventeen whatever but in his would go seventeen three whatever the audience called it out so this upset me greatly right you know i was like watching going like this is like one of the greatest delusions ever given my disorders bothered me to know end this bothered me to know end because i thought he he did such a wonderful thing and at the end he just messed it up just like a hair you know and so i reverse engineered how i would make that lottery ticket appear in that wallet and starting at the end working backwards which is kind of like like i look i think of everything like you know those maze as a kid and there's like the mouse in the middle and the the cheese in the middle and the mouse and the end you have to like do the maze you know i would always like you're you like you're not supposed to in the classroom but of course you start start with the cheese and work your way out right so that's that's it a nutshell start with the cheese and work your way to the mouse right and so i did that with this and you know had a reasonable solution i thought for how it would happen but i was really bothered by this thing so i'm like well you know i don't think i'm giving you anything away that like everyone knows that the ticket couldn't have been in there the whole time so clearly it's getting printed at some point here i don't think nate gonna get angry with me on that so i was just like well i write like a little or do we know algorithm or however he's doing this for him and so i wrote him this long cold email you know as i want to do say love your stuff of of i've watched all the stuff now and like man i love that effect so you gotta get the numbers right and much to my amazement like five minutes later my phone rings i expect to never hear from this sky because magicians also are kinda like yeah who are you that you're reverse engineering my my own youtube yeah yeah something yeah right and nate was who are you and what what's going on and i was like well you know i own restaurants and i'm i'm i kinda like look at magic because he's like no no this is this is a great email this is a great like this is weird like only one other person ever noticed that and i was like and he's like one the best magicians in the world like you're not magician i'll go no this this is really weird and then he said something to me that i was really mad at myself for not noticing and that was hey i did it that way of course but the audience couldn't follow along and because two people out of five million noticed the or numbers wrong it doesn't matter matters to you kinda mattered to me too when i first did it not the best way to do the effect and i went of course it's not like i just went that's it that i thought nothing more of it right but we exchanged books he sent me a book he wrote called finding real magic he went to india i read it after he was unbelievable but wonderful guy like great thinker great everything and then he was working as was a consultant building magic for david blaine and i went and saw the vegas show because i i don't go vegas i don't gamble but my wife and i happened to have to go there and then we got stuck there for a night and i was like oh i know that guy i know the guy is working on that and we went to the blame show and that version of it i didn't love but when i had breakfast with nate the next morning and he said how'd you like the show what am i gonna say two choices it'd be nice i was nice okay it's not it's not typically me but i was like it was great and he just looked at me he goes nick i read people for a living what didn't you like but instantly and i said well i had done another email but i didn't send it and i pulled it out and he looked at it he said did blaine put you up to that and i go no because blaine had been to linear a couple times i'd never met him but you know and i go no no no i i just i wrote that like when i got back from the show last night so it was fresh in my head but i felt like sending it to you and he goes hey show you something and he had written almost the same email to all the production team like a week earlier and he was like that's extraordinary and then we started talking about the business of magic which i'd never really thought about before k and he was kind of lament the fact that the next david blaine is is not gonna get mint that kind of tv doesn't happen and he's gotten tons of views on youtube and it doesn't monetize and you know he's been doing magic and looks as an arc form and a love of his like many magicians and there's this guild of people that do it but they're kind of seeing his outsiders right you know it's like you're either the the weirdo that does the kids you know birthday party with the balloons at the end or whatever and a lot of people don't see the art of it and i think he's saw that i did see the art of it and the complexity of it and then i just said to him and like yeah i an idea years ago for a restaurant that would have a narrative arc through it and people would move through it like disney's haunted house because one of the problems of the restaurant is you have fifty seats they're gonna sit there for two hours you're gonna get a turn a turn and a half maybe you do a hundred and twenty people at those fifty seats maybe you can only do seventy five they're capped by the turnover right but i don't know you like caps very much but the wonder how correct and one of the cool things though about disney is that the haunted house you get thirty people they're very intimate experience they go to the next room they're having another cool experience next thirty people come in and three ten minutes whatever is whatever it yeah it is and i was like you know i wanted to do a restaurant that way but the cogs were terrible like to me variable cost too many servers too many rooms too it just is not gonna work and we talked about it for years i analyzed it to death and i'm like economic you'd have to charge way more than it's worth to have it work and that's true of all the pop ups like unless you get an under writer like american express or whatever the pop ups tend not to work either even though they're famous and they pop up all over the world and people pay five hundred dollars to go to what x y z pop up they don't really make money that's the weird secret of it because it's the production is too high k but then i was sitting there going it would work for magic the theater scale needs to be different you know it's like when you go see sig fried roy or whatever an lion pops out it's not that surprising because there's a giant stage and they could hide a lion but if we're in a little room and a line pops out holy shit that's something right because you that's new and also the the kind of magic i like the best is close up magic because i know exactly what they're doing i know i know how all it's done at this point in my life a really great close up magician is a thing of beauty it is an art form it's like watching a great musician or a great baller arena or something like it's awesome mean i'm getting choked up thinking about some of these people and what they do to make it happen it's amazing so i say that nate and leave and then he starts calling me with questions how much does insurance cost what kind of room how many square feet do you think we would eat you know all these things and we email back and forth and the day i closed on this and my wife was running she runs women's hiking groups all around the world she was on a hike somewhere i think portugal me i'm somewhere in europe and i was terrified of this whole thing and i get a fedex package and it's from nate and it says hey nick thank you so much this is what i've been working on for the last eight months thanks for your inspiration thanks for the questions mh and here is my proposal for how to do that thing that you told me about and i think it's the solution to everything and take your time reading it i'm on a ten day trip to canada with my family that i take every year and i'll be completely off the grid so i'm sitting up there and i got a lot of shit to worry about here and i read the whole thing and every like tenth page there was a qr code and you'd look at it and it would be him in his studio with a scale model of a room and at the first one when it first came on and i just assumed like oh these are videos he's done and but it would be a hay nick okay room three is the car and i would be like oh my god he made all of the video for me and then i got to the spreadsheets and the insurance on it and a lot of that was like verifiable like kinda wrong but here he was doing it all like it wasn't just like a business plan of like the thing he was great at it included all of the things to do a proof of concept that this would indeed be a great business and i had put a limit a bottom line i said look if you build something like that it can't gross under twenty million like it sounds like a big number but like when you do the throughput in the math it's actually not that big of a number and a hundred and twenty dollar ticket price or something and that's what it is you know and i start going through like whenever i go to like the sphere i'm like or the economic know i cannot watching show i can't help myself right so it was a great business plan and by the time he got out of a canadian wild i'd read it like three times and my first thing i said jim i was like this is the last thing i need in my life right now but there's no way we can't do this right and that was three years ago and in the past three years we have scour the world for real estate because the real estate is the thing you get married to it's like the ray cro story like they're not in the business selling in amber they're in the business of real estate i learned long ago that the deal that you make for a restaurant or for a show or whatever in this case you are not renting a theater on broadway you are building a purpose built theater that is a small high hoop right there are very few people that are gonna do that and i knew the guys for years who did sleep no more and sleep no more was a similar idea where traditionally the theater is you sit in a chair it's happening on the stage you watch the thing shows over sleep no more was like you go to this hotel motel yeah and the play is happening in and around you and it makes no sense it's not linear like because you had to a different room a different scene is going on yeah and know the hell happening they're dancing not talking in a hamlet and like but the thing was like it was sold out made like hundreds of millions in revenue yeah yeah and it also like the first time i did it it was like nothing i'd ever seen and while this is different because it use it utilizes illusion to create that sense of child like wondering awe that we were talking about earlier right and that's what we were trying to do with cheese that's the cheese that's the that's the customer's cheese that they yeah a moment of and i would i would say that as much as i love ai and i love i'm am i i live mostly here i would like to connect my body more to my mind like you know like yeah like i'm not as disciplined about exercise as i should be and things like that but theater great theater great music is about human connection and utilizing illusion now in an immersive thing that you cannot get any other way feels like it's gonna be more important two years from now than it is less important two years from now yeah because more and more and more things are gonna go the ai route gonna go in the non person right you know they don't need to be person to person anymore agents are gonna be doing things i love all that i am all in on all of it i still believe that sitting down to a table is important i still believe that growing the wine in ten years is important and i want to create human connection among complete strangers because you don't meet people don't meet each other anymore and all the discourse is that's an other that person's an other and i guarantee you you could take any two people and put them in the environment that we're creating they could hate each other politically they could be from opposite ends of the earth and at the end of that we need to make them love each other right that's it and so how do you do that well creating moments of awe and wonder where you feel like you're five years old again is what strange house is about and it's gonna be really hard to build and really expensive to build and we found a space ninety thousand square feet underneath wall street in manhattan six months of of negotiating the lo on the lease because when you go to reit and you go i've got just the thing it's kind of a magic show but not really right in fact there's no magician and there's no stage and it's kinda more like disney's haunted house but there's nothing haunted and it's about human connection nothing like this has ever existed yes and it's no comparable and they just go yeah well we've we've listened to your podcast and we've seen that you're successful but like what do you know about doing this right and so then they go like well nate yeah and they're like yeah you know he's got some youtube views he's a magician like we don't really wanna lease out ninety thousand square feet to a magician so then you start talking to the powers that be in other things so like lee who's a friend of yours who connected us did exploding kittens i actually play tested that at a thing called org camp that was run at google and you meet these creators these builders and the people who build are the people like that that one lot wonder trader guy who you know i sent this to elon and elon was like this is what i've been waiting for my entire life and he goes he tells the same story about magic that i told and when you watch his videos on how to build games and all that they are about human connection and about getting a small group of people together and a family together and my my family my wife and my younger son do new york times cross puzzle every day they do british cryptic cross that i can't remotely get to and my wife builds puzzles for family thanksgiving to like do things like that not so you meet on and he has passionately thought about these things and built amazing things so we're trying to put together the dream team on this and we're running out of time because real estate only sits for so long yeah so i don't know if it's gonna happen is it gonna happen sean it has everything it needs except for a lot of the things that you talked about earlier in this episode which is basically if you look at when you were talking about building the arbitrage and you had to run fiber into the thing and they don't let you have the permit he bribe the guy with the jam you figure out the way you know like okay you do with lillian we got no experience or whatever okay we're gonna start posting about this we're gonna open source everything that we're doing we're gonna build this waitlist list so that on day one we have the right people who understand the story and are bought in you found the way it's so like to me the question of is it gonna happen or not it's always like a self preferential differential question it's like well you it can happen it or not right it's like a thing it's a the dumb trader will the like the dumb theater producer will we'll not get it done and the good one obviously it's gonna get done right exactly i i think voice more than it is and like a yeah question yeah i i think what we're trying to do that's challenging for people wrap their heads around is it works at scale and not at not scale can't do a small you can't play test it right like a board game and this is not a launch problem i'm just using it as a as a an analogy you know it's like some of the illusions that we've crafted and that nate has done a technical guide that's hundreds of pages lying that we don't wanna really show it that many people really smart people will look at it and go how do you know it will work and it's like well we've spent last three years working on it like we have the best people in the world who build these sorts of things building it like the people who built taylor swift stage are gonna build room three for real like that's literally true but until you spend a couple million dollars to build room three you don't have room three yeah so you could you could make walk through videos and vr things and all that and you know pardon of me is is a little bit piss in that like well i didn't know anything about restaurants they got twenty eight x you know and the tech people that i talked to go oh yeah well you know technology but you don't know theater and i'm like you said no to me eight years ago and said i didn't know how to build this after a company so you know and i get that like that's part of human nature and then they're kinda like what's the point and the point is it's gonna be great business it has the throughput of disney it could be like cirque du sole you can build five of these things right but the point is it's hitting the market at the right with the right thing at the right moment it's the g ski skate to where the puck gonna be in person experiences are gonna be more important every single year from now till we hit deep like the holiday right like you know and this is a different one it's not a concert it's not a theater it's it's it's is its own thing which makes it really hard to reproduce yeah i think people get i mean i you got it in in five minutes yeah yeah like oh this is amazing there's is gonna be a one in a one in the world type of thing that exists yes you read nate book you're like alright yeah it's doable and this guy like yeah you know you spent this whole life face preparing for this see you sort of figured that part out i think it's gonna happen i think we gotta figure out the way but yeah i agree i still feel that way i'm like last thing i need and then every time i pick up the phone which is every day and we nate and i talked through something i you know i'm often walking up the hill up there or whatever with the dog and i got off the phone i'm like man i need to like we need to start we need to get the the next step yeah because if we don't get the next step we're not gonna get it done and it deserves to exist yeah like it's a great enough thing that deserves to exist you found your next boulder for we we found the next we found the next boulder nick thanks for coming on thanks appreciate you man oh always he's good see you i feel like i could rude world i know i could be what i want to from at all in it like a day's off on a road less travel never looking back alright let's take a quick break i wanna tell you about marketing school it is a podcast that's part of the hubspot podcast network and it is run by neil patel and eric too these guys are both marketers who are running businesses and so if you want real world tactics from practitioners who are actually out there in the field doing it this is the podcast for you check it out wherever you get your podcast and