The "Idiot Index": the simple math that made Elon Musk billions

the headline here is the three hundred million dollar butcher i'm in it's just a reminder that if you're the best at anything money will never be a problem for you i feel like i could rule the world i know i could be what i want to on from at all in it like a day's off on a road less travel never look alright pat f do you know who this is pat freda f i feel like you definitely know who this is because this is like this you know there's two things that you like it's red meat and denim of jeans so i feel like this this is right here alley it's a family owned business you do wanna hear the story here yeah oh my end i love the name of his website pat la freda meat p p prevail so good i'm changed this podcast name to my first million business premier years at my hotdog dog sand its first logo was southern sam p of fine winners once it actually p yeah yeah if you google southern san logo you'll see the logo oh wow i this is like a legit looking logo there's a fine wiener premium quality and then you have the smoking and hot dog with the smoke lines coming off yeah it's good right although there's something like wrong with like the bevel of these letters there's love i pay this my billy i it was billy from nashville i gave him fifty bucks and it gave me the slow so this is this is not bad though as a branding thing alright so here's here's this story of the the headline here is the three hundred million dollar butcher i mean it's caught my attention is i didn't think a butcher could be worth hundreds of millions but it's just a reminder that like if you're the best at anything money will never be a problem for you you're the best plumber of money will never be a problem for you it doesn't matter what you are there's a guy in dubai is just the best at trimming what's it called split ends that women have and people will fly to this guy it just to get them to cut their split ends you know you're the best at anything money with your problem alright so here's here's the story back of the day early nineteen hundred nineteen o nine there's a guy named anthony and he he migrate from italy comes to brooklyn and he opens up a book shop and he opens up a butcher shop and their idea is they don't wanna just do hamburgers like everybody else so the way a hamburger normally works i think a hamburger and hot dog but they're basically the worst parts of meat mashed together so it's like not the premium cuts of of meat that you could sell separately a steak and they they mash it together and that's what a burger was was the scraps and he said we're gonna use whole muscle cuts only and he had this great line which is you can't hide your sins in the hamburger and he reviewed that that's what the other butcher would do is it would just to take hide the sins as we all the bad parts smashed together here there you go that's your hamburger so that's the first la free blend and it was like you know parts of different parts of the of of the muscle so business is okay normal butcher shop nineteen fifty new york butcher go on strike and restaurants have no meat and he decides to seize the day so what does he do he drives out in new jersey he goes he buys up a bunch of the meat and and wholesale he brings it back he starts selling direct to restaurant and they open up la freedom meats in a meat packing district and it's going good but now nothing spectacular and in fact the grandfather then the father takes over the business it's not growing by the late eighties things are getting bad restaurants are switching to cisco which is like the sort of costco for restaurants of how you get food deliver and the company's is kind of dying and so the son was never allowed to be in the business this is pat junior and the the father was like son i wanna a better life for you don't don't stay here go go to college get a good job don't be a don't be like me don't be like me and he says specifically he goes why would you wanna do this you'll you're gonna be rubbing to the other pennies for the rest of your life and so he's he's forced out ed pat goes and he becomes a he goes to a good school and then he goes and becomes a a stock broker on wall street for nine months but he hates it and he just comes back he begs his dad let me be in the family business and he petitions with the sister and i think the the mom or the aunt or something like that like let pat junior into the business so the dad lens he says fine if you really wanna do it do it and so here's where we're at this is now like nineteen ninety four not that long ago i think like lion king came out in ninety four okay like this is not like hundreds of years ago and they had forty four customers they had five employees two drivers the mom did the books at the dad and the grandpa were still the only two butcher okay so that's when he took over the business alright so he's he decides i to start reinvest the business like crazy so he's buying new equipment he's hits the streets of new york he's just signing up restaurants manually door to door right because you know sometimes sometimes when you have a really like product focused organization the sales side just that muscle never got developed and so he decides to hit the streets and he has his genius idea to start creating branded labels for specific cuts and blends that nobody else was doing and so he takes a bet on an unknown chef named mario bat and mario bat patel was nobody at the time but he liked him and he desperately needed some viola lo and he didn't have any money and so pat convince the dad to give to sell the guy the meat on credit something they'd never done the dad was against it he's like i just i think this sheffield he'll be good for it i think we should support it let's do this and bat tal rewards this with loyalty so for the rest of his career they only buy la and as he's putting as he as bat reputation as a star new york chef grows and he becomes a celebrity chef he adds on the menu that he's not just serving meat he's serving la freedom meats and it helps him too because it sounds like it's a more exclusive premium high quality product and this was the key lesson that pad junior figured out which was don't sell a commodity create a brand and the create brand off just for him but for each of the chefs so that the chef had their own brand so we would create custom exclusive blends for every of every one of the hot restaurants in town and so fifty restaurants got their own custom blend locked under an nda that only they had and this was kind of like a key growing thing for the business now that is awesome somebody you might know becomes a fan danny meyer so danny meyer who's got the upscale restaurant union square cafe i think it is at the time he's using la and he says hey i got this idea for a more fast casual burger joint it's gonna be called shake shack and can you give me like a burger for that he's like sure he goes but here's a thing like you gotta make it where it's pre pre form patties and because we're fast we gotta have that in the and the the the grandfather and the father we're like no we don't do that that's blast miss so the sun secretly secretly does this against the parents will he had less sort of the the right the right amount of rebellion to pull this off he knew what to keeps sacred and he knew what to wear to rebel and he does it and now he he serves all of shake shack locations with his meat only right his and he took his dad to the to the first shake shack and they see two hundred people in line and he goes dad that's our burger and he said you know there's a classic you know a son trying to make his dad proud of like you know we did it they look at this and they just kept doing these counter of business moves so two thousand eight financial crash happens in new york it's you know blood is in the streets and everybody's hurting he does a pretty counterintuitive thing hey i wanna tell you about something pretty cool we have a database of all of the un sexy business ideas that have been discussed on this podcast so hundreds of episodes the team at hubspot went through they pulled out all the sexy ideas so not the super high tech ones but the simple relatable interesting profitable ideas that we have brainstorm and they're all available for download for free just click the link in the description below thank you to our friends at hubspot for sponsored this podcast and put together this free resource for you guys back to the show there's a chef who asked him to create the ultimate burger and he says alright i'll give to you it'll be a thirty percent dry aged new york strips steak burger but that black label burger it's gonna cost twenty eight dollars sounds is insane a twenty eight dollar hamburger but they said let's do this we wanna have the best burger and that as a marketing thing played well everybody thinks he's crazy but they sell like fifteen thousand of the black label burgers versus they had a cheaper burger they it it outs sold the cheaper burger by two x which restaurant was this this was i tavern tavern something like that but i i feel like i feel like i remember like headlines this is always an easy headline which is like wait it's a forty dollar bagel what the hell and they're like well let's we should see like hype yeah see you gotta know what makes this this happened with strawberry usually you know these like japanese strawberries is like a fifty dollar basket of strawberries and you're like why i must know we buy that company sometime it's killing there's a company behind it that's doing really well yeah by the way i it's i think it's great i think there needs to be more premium like somebody who just says i'm gonna make the best thing for people who aren't cost conscious and i think there's always a there's always a market for that so these guys did people would go to that restaurant they would order it and share it as an appetizer the burger or they'd like chop it into six and feel like this is amazing we had to try it so today fast forward today the the company does two hundred seventy million dollars a year they bake like wonderful like they feed like a hundred thousand people a day or something with their with their food they bought their own facility in and they're like they they have huge like the world's largest dry aging room and their facility could hold ten million dollars of meat every night it's like sitting in there like a swiss bank account they basically are just been scaling up scaling up to the point where new york i think designated them as no actually not even york a presidential mandate that they are an essential service that they cannot close down and so they're essential food infrastructure at this point and it's this lesson of like how you can take something that's just a commodity product and totally differentiate and build a a multi hundred million dollar business that by the way in the world of ai seems like the place to be i'd rather own this meet meat business than you know tech businesses today and so i just thought you to get a kick out of that that's a great story he i'm looking at the guy he seems like a guy who talks like this like you know with his hands this looks awesome i know what that means i don't think i've been new york and i've done that chad say what is this what that like hey hey what do you doing this my me you know what i don't know this is awesome we should like do like an in person thing with this guy and like go and like look at his his meat packing set up because this is we and feel the meat this is really all i mean this is i think it's near where you're at it's in your i stunned you don't know this name i'm not like a food guy you know like like i i like mcdonald's you know i'll be fine going anywhere it's all it's all great to me i always like have this joke that like when it comes to mexican food i'm like it's all the same to me it's either a yes or no it's mostly like avocado and like beef like it's all the same i don't know man either yes or no and it's yes yeah i i don't have like i don't have like a a a a wonderful palette but this is pretty cool i also think that like there's a romantic feeling about these things that obviously is not fully true like it was not fun to do that when it was not going well and now that things are going great it's probably only fun part of the time but i do think that there's something like soul about things like this like you and i actually talked about this justin mayer was i think he's in a investor or helping get going or advising a justin is like one of our health conscious friends who started kettle on fire he loves like these healthy things and he talked about like ace he's like i wanna do a better butcher and i and he has one going in austin i it sounds like he was great he came on the pod and talked about it i didn't know he he launched one yeah the first location is down the street from my old house and they there's a it's a butcher i know how it's going but i just know that there's a butcher there but what my point is is that it's kinda cool and there's actually been a lot of these large meat things so for example butcher box the guy who started butcher box he's pretty active on twitter it's a bootstrap company that i believe is mid nine figures i think like north of five hundred or right around there a million a year and there's a bunch of really cool ones there was a guy who joined hampton that who had bootstrap a hundred million dollar plus farm to like farm to the consumer's door butcher and i think they're really awesome and in omaha steaks you know the story about omaha steaks no similar story where it had been around for a very long time but they really took off because them and stamps dot com were one of the early early early innovators of internet marketing and so omaha steaks i believe it north of a billion dollars year in revenue because they were one of the first people to advertise on google and d stakes steaks mailed to you oh you've never had a one a stake in the mail no omaha steaks it's like one of those it's like one of those gifts that if you can't think of what to get your parents you like elm house like stakes gift i don't think you indian people do that yeah there's maybe a cultural divide here yeah that's a that's a great call it's like hey harry and david like gift basket i think i've like defaulted to that many times just because like i that's what you gave me when i had my first kid who who doesn't like huge pairs yeah yeah or like edible arrangements yeah i mean it's just like i don't know it just works and omaha steaks they were one of the very first people to advertise on google and now if you listen to a lot of like a lot of the early podcast podcasts do you remember early podcasts it was like stamps dot com me on these and in like omaha steaks these are like the early advertisers and at this point the company i think they're they have this massive marketing operation and it's incredibly sophisticated it's very very fascinating to watch these guys grow maybe the best thing to do is just to follow omaha and stamps into what just go look at their revenue like their marketing mix and then just go follow them because they just seem to find the new channel every single time and literally just copying their playbook is better than hiring like a great cmo who's gonna come up with their own playbook it's sort of like i remember when we were trying to do this the sushi restaurant we were looking at location if we're trying to run like these analysis on population and foot traffic and you know the the how many business how many high income households are within two miles and i was like oh wait chipotle has a three hundred person real estate team why don't we just go next to where wherever there's a chipotle like they did all the work and turns out that's actually what like that's how burger king chooses locations they just go if mcdonald's does the research they just go piggyback off mcdonald's and go go near there and you know you can you could sort of save yourself some breath my other takeaway from hearing stories like this there's so many people who are just building amazing amazing amazing companies they're not particularly in the mainstream they're not vocal about it and it's just fundamentally a pretty solid product and pretty solid marketing fundamentals so for example i just hung out with this a friend of mine who works at element element salts you know is that yeah yeah element t but but i don't know how you say i think it is i think you say element or i don't know if you say but that's how it's spelled l m n t i remember seeing this business get started like it's only four five years old and i remember seeing it get started and i'm like this is silly like who on earth is going to buy these like little packets of salt it's basically electrolytes and salt well they did a like they let their their customers like invest in them and so a lot of the financials are public you can like see the numbers i think it's close to two hundred million dollars here in revenue and they have a small team like thirty forty fifty people and it's just like good fundamentals like i was reading the ceo puts these blog posts out on how he runs his company and he's about james he's he's he awesome oh great he's he's like one of my favorite i i've only met him once he came to our basketball i was i literally love this guy he's so lovable he's like super thoughtful super well meaning really smart obviously just like a killer good basketball player also yeah he's just like a he was so nice so kind so humble and yet had built like not only this killer business but other color killer businesses too in their portfolio he is he is such a winner i love that guy he so i've only heard about it for my friend esther he was sent she was telling me what it was like working for him and she only said good things and then i started researching him and there's always these cool blog posts where he like writes about how they do these things where they run they run the company by doing three weeks sprints one week of planning you know most companies run off quarterly plans he was like no we do three weeks where we go hard and then one week where we go a little bit easier and we could rest for them the way that one week is really specific it's three weeks like you're working like a i got a out an office for really like you're online and then the one week is everybody's in think rest reassess plan mode quietly by yourself do whatever it takes for you to kind of step what and he's basically shown that like that works really well for them but like giving people time and space to think and plan you can have a high performance team with that it's not about just constant burnout of like pushing as hard as you can with no breaks whatsoever it sounds amazing and he has a blog post where he talks about like this process that he does he has all these other blog posts where my takeaway was like this guy's incredibly well intention or not well intention thoughtful which i think you actually described him as so that's funny that way came to the same conclusion you hung out with and i just bread about them amazing entrepreneur and they don't see mainstream in the sense of like in our little like silly marketing like loud about it online internet world but they're just kinda building a amazing company that solves a real need customers seem to absolutely love they have like all these weird like avatars i think they have like a nurses avatars so there's like a nurses who actually use their product and then they have like a a military wand and then like a construction worker want or something like you know they have like all these i then of course like endurance athletes and all this amazing stuff it sounds like an amazingly well run company run by a guy who's not particularly loud but is incredibly successful and thoughtful about running his business there's other guy i named jason cohen who i like he had a blog post somewhat that wasn't entirely addressing this but it the phrasing is perfect and it was a bit similar called b king or b rich and he was like do you like do you wanna be rich if you wanna be rich that there's like all these things that oftentimes the kings are unwilling to do so the kings are oftentimes like the allowed ones he raise all this money and do this for this and then there's like the b rich which is like boot trap and just quietly do it for a long time it's like at yourself do you wanna be king or you wanna be rich because they require different things i think naval has a funny one like that guys if you wanna be rich and famous try getting rich first and just see if that does the trick it's so good 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 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 here's on on that idea so i saw his tweet today but this guy renee sal he was talking about nick sleep new next sleep is he's a basically like a legendary value investor he's kind of in the warren buffett charlie mu like lineage of investors and i i'll butcher the the long story but there's a the the simple way to understand nick's next leap is that he he crushed it so hard for like a very long like for for a period of time made so much money for himself and his investors that just like was like i think we're good let's just like the basically like shut down the fund it was just like like it's we won and they had won by just holding like a very small number of obvious sounding position not like he found some niche thing and not like he was super head of the curve he owned costco he owned amazon and he owned like one other thing are he owned four stocks he just held them is it berkshire hathaway was that the other one he owned i i think i think he had berkshire i don't remember what was he had four stocks like that were the core of his portfolio was super concentrated but it was like four winners and they'd held it for a long time and that's all you needed to do the game wasn't more complicated than that and so he he put this in in one of his and he has great letters to go read it's like you'll be a smarter investor if you go read the the next sleep letters and so here's here's one of his thing it says empty vessels and a quieter approach so i'm gonna read this it goes upon reflection it is curious that this quiet attitude extends in its own way to the company so he's talking about his own quiet attitude but he's like this actually extends the companies we invested in that we've entrusted your dollars amazon and costco do not advertise no shouting here berkshire hathaway and games workshop do not provide earnings guidance which is popular to give to fund managers and stock amazon costco air asia and carpet right and parcel berkshire share give back margin to the customer and we would argue this a pretty humble strategy too in other words around two thirds of the portfolio is invest in firms that in some major way shu the commonplace promotion like activity and yet there are no less successful as a result so like amazon and costco not advertising tesla famously does not spend any money in marketing amazon is a huge advertiser at i think at this time and they weren't they were i don't know if they're doing like the google performance advertising but i think he's talking about like kinda of brand advertising anything like that and then he talks about bezos has this quote which is that advertising is the price you pay for having an un unreasonable product or service and he goes if you look at the he goes on the other end of the spectrum is the ra of general motors now this was written a long time ago but he says which has the largest advertising budget of any company whose annual report we read this year and he went not that title went to gm this last year the year before and the year before their advertising spend was five point three billion in two thousand eight or six hundred thirty dollars per car that they that they shipped you like if you just took the advertising spend it would have retired half of the company's debt it seems easier to call madison nav than build cars that sold themselves in our opinion gm is very much the empty vessel making the most noise in that regard our portfolio takes a different approach so i i thought that it was interesting like the idea of like people but also companies that like almost as a negative signal which company's advertise the most like i wonder if you'd actually like back test that idea how many of them actually have you know either worse performance to their peers or the like least durability which is why they have to constantly be advertising because they have a commodity product and they have the least durability in the market or they have the the least the smallest smoked at which forces them to continue to pay this tax look just to be a little devil's avocado on this one i feel like berkshire hathaway biggest company is geico and they're like the biggest advertiser yeah or coca cola ulta so i don't know i mean i think that this guy is significantly smarter than me and significantly more successful than me that said i'm not racist but this is that's like what that statement which just was i don't know i feel like all many of those companies are like huge advertisers but i do think the sentiment is cool and one would say that like even though tesla doesn't advertise advertise elon musk bought a thirty eight billion dollar social media platform and i would say that that has benefited tesla greatly no come on that that one that's not that's not i don't think that's fair i don't think he he didn't buy it for that nor i think is that if anything tesla tesla car sales have slowed down since he bought twitter i just think that like i just think that like there are a lot of outliers of course and maybe you could say tesla is the outlier but contra are often more often than not wrong and if you look at some of the other best companies in the world like apple like they are or or you know many most all actually they are notoriously wonderful advertising yeah i don't get saying they don't advertise at all but i think the percentage wise matters so for example elon has one mental model caused the index the idiot index and the idiot index basically is something he kinda figured out with tesla and spacex as they bought parts from provider so we need this that we need this turbine we need this this this this valve and basically if the valve cost five thousand dollars it's like well that's the market price for the valve we can't find anyone who's who's selling it for less than that and what he would ask is basically what is the cost of the raw ingredients on the london metals stock exchange for the valve and then what is the markup relative to the actual raw materials cost and that's the idiot index it's the price you're it's the idiot tax you're paying because you don't know how to make the part yourself and found that the space industry had essentially the worst idiot index of all the industries that he had seen where the idiot index was like you know hundred x plus on almost every single part and why he realized that he could do spacex without having a nasa level of funding was because nasa was buying things at the idiot prices and spacex didn't have to and that he could bring the cost how did he know he could bring the cost down so much was because he knew he saw how high the idiot index was dustin does the same thing another version of this was i was listening to palmer lucky from and talk yesterday and he was talking about the other defense contractors you know if you think about what andrew did was pretty crazy they went into like a space that no real modern tech company had gone into defense he was talking about he goes if you look at lockheed martin or you know these kind of other defense prime the first thing is they all operate on the cost plus model ko model basically just says cool if for me to win this contract let's say it's whatever this contract is ten million dollars or whatever i i'll bid ten million dollars because i'm saying that the the cost to do it is nine and i wanna have a or you know it'll be let's call it eleven million dollars the cost do is ten and i'm gonna have a ten percent market so he goes guess what happens do does that company have any incentive to find a lower cost way to do things no because they make ten percent in fact the incentive is to to say that everything is more expensive because if it cost twenty million and i got ten percent i would make two million instead of saying it's ten million and making ten percent i make one million because it's a cost plus models i'm i'm always just whatever the cost is i make a little bit on top so the higher the cost the better same thing with going faster if i say i could do this in half the time which is you know half the people cost or the labor cost i have no incentive to go faster so what's the result the military is buying from from providers whose entire incentive is to make everything cost way more and take way longer and so he goes the first slide on the and pitch deck and our seed investment said we are gonna save the american taxpayer hundreds of billions of dollars a year and we are going to make hundreds of billions of dollars and so he's like that was the entire premise from day one and he goes i think that's exactly right because he would go in bid he goes we're not a cost plus model we will we will basically say hey we can get you this we're gonna sell products to the american government so we're gonna sell you the best product at the lowest price and we're gonna try to get it to you the fastest in that way we're like amazon or walmart right or costco we're trying to give you the best product at lowest price and the fastest delivery and our incentive is to do that we get we get we win contracts the more we do that and he goes then you see that play out in the business he goes just look if you don't believe me go look at lockheed martin they'll invest one percent of revenue in r and d we've we have invested one hundred percent of revenues into r and d every single year of existence and people think palmer how long are investors is gonna let you do well i don't know i've i've been able to do it for eight years or whatever it's been and i think i'll at least be able to do it for another five he goes amazon was able to do the same amazon was able to convince investors that they should be able to invest this all of their profits and more back into amazon for like twenty years and that's what gave them this incredible durable advantage and and allowed them to take so much market share that's what we're doing so in some ways i think it's pretty cool to almost look at like a simple heuristic like the idiot index or like what percentage of your revenue do you put in r and d and it's like i can't hear your words because the action speaks too loudly is one way of of looking at businesses i think that we've talked about like eddie murphy and he was like i'm a great comedian because i'm extremely sensitive if the valet takes my car and there's like the tiniest scratch i'll notice it and i'm good enough that i can make a joke about it and that's what makes comedian great is they're sensitive that they notice small moments and that's what's funny and when i hear this story about palmer i don't really care about the his business or the industry but what i care about is his personality and his attributes and it seems like there's this venn diagram where you have to have all three it's like the sensitivity to say that this is ridiculous and to like question why is this the way it is same thing with what you're talking about with elon of the idiot tax like that that you have to be very sensitive to like notice these things and then the other thing is you have to be audacious enough to actually think that you can fix that problem and then there's this final circle which is like logic you like these guys are really interesting at logic their way into these problems where he'll say like so this problem exists and why shouldn't it be this other way and there's this weird like through line of like how you can do something that seems logical when he maps it out on paper but virtually one hundred percent of all people are like there is not a chance that doesn't make sense and it's like well no it does like here's the math like and it's very simple math that you would use to explain this stuff but you need to add in the audacity and then you need to add in the sensitivity to even recognize it in the first place i admire those people greatly so the three audacious ness logic or first principles thinking yeah was the third one the sensitivity sensitivity well he had said something that's kind of a combination of all three in this interview so he said he said two things i didn't know one was that he was home school i don't know if you knew that i i didn't know that that he was home i think in general i think homeschooling one of the possible advantages i could suspect of homeschooling is that because you are out of the crowd you are less likely to have heard heard like thinking and so so i think that's that's interesting all already and maybe there's some selection bias of the type of parents who would choose to homeschool might also raise you differently to think differently in many other ways too that's the first thing second is he said his first job was using virtual reality to like light things for veterans so he's kind of the combination of the two companies he built oc and so he's like i worked at this place where veterans were coming back with ptsd from war and and we were using a vr like thing to help like mitigate their symptoms in some way i thought that was interesting i didn't know that either the third thing he said was logic experiment he goes after i sold oc yeah know i think at nineteen he started or sold oc at twenty one he a basically sold for two or three billion dollars to facebook and when he left facebook he basically left a place where he noticed that the smartest people in the world were all focused on increasing advertising revenue or you know basically getting you addicted to mindless entertainment and he saw that silicon valley culturally had decided that war defense weapons was like taboo bad your bad guy you're evil for doing it and that was not the history of silicon valley that he had read about that was not the approach that they had and he talked about how certain companies i for oh like bill packard from he packard there was some story like how either he did a tour of duty with the government or like somebody said like you this general and bill packer they're basically the same guy once one guy just doing in business but they have the same values they have the same beliefs and he's like i just don't think that that was true over time in the tech role and he said is it a bad thing for america if all our smartest technologists and engineers go work on entertainment and advertising and refuse to work on defense like that seems like a bad thing how would we change that like because he goes other countries aren't gonna do that like other countries are not gonna have their most brilliant minds not working on these things and if they have their most brilliant minds working on weapon systems and we do not like doesn't really matter how much money or clout you have like that's not gonna end well at some point the slope of their line will cross over the lead that we have and is that kind of like simplistic big picture zoom out sensitivity thing you're talking then multiplied you know plus the logic then multiplied by the audacious to go do something about it right like that that's kind of what you're talking about like this like formidable triangle that that gets created and it's sort of like this thing where sometimes hard things are easier than easy things because when you have this grand emission it like makes it where you can work harder and you could inspire people and you could recruit better better the best talent for less pay when you can't afford it at at the time there's this book that i just started reading last night about the manhattan project the creation of the atomic bomb and they're like i'm creating violence that's not good but hitler's doing it and we need it before him and it created the sense of like excitement in a weird way i don't know what what better word to describe it where they purpose and extra purpose judy as a a sense of duty where they were able to w up all the best scientists and get them to quit what they were doing which was their dream jobs of teaching math at berkeley and like they were happy they got them to move to new mexico for a year two and they worked like crazy and they invented things like in this book they explained how splitting it adam works and it's just impossible for me to understand but it's like that is just some crazy stuff to invent in a very short amount of time but there was a sense of duty and i kept thinking these big meaty problems in a weird way seem easier or more exciting to go after than some of the small meeting small problems that might be significantly more lucrative but in reality the first one can be way more lucrative and so like the best of all worlds but there's like this this seems hard this seems impossible i don't wanna do that you know it seen the imitation game the the movie the imitation game is that with the touring is that touring yeah it kinda has the same thing right it's like during the world war germany's kind of blitz screening and bombing and you know the the uk and they basically hatched the secret project to try to crack the the german and en web machine to be able to to crack their correspondence and alan turing and a small group of like brilliant people figured out how to decode the messages is how to decrypt i should say the message is so that they could understand but then they couldn't i was like it was huge this kind of impossible thing how do we how do we break the en machine this encryption that we can't break right now basically for the listener a machine that the germans were using to relay messages to one another and the british wanted to crack the code so they could figure out where the germans wanna go where are their ship where are they gonna attack where are they how how are they doing this what's the quote what's real you know like where is the where is their leadership right now all those things and so they want they couldn't do so they basically it's like you get the brightest mind you take them out of universities and businesses and you say look it's your duty like every day that we don't crack this you know your friends and family are a risk of dying basically and we could lose this war to you know this bad guy and so they worked you know for a couple years to crack this thing they cracked it and that was extremely helpful at like swinging the tide towards defeating germany and and i everybody's it's just like these like the movie is great right it's like entertaining in that way because it's like a very romantic idea of like the brilliant minds secretly fine and then they couldn't tell anyone either i couldn't even tell anyone that existed once they cracked it they couldn't show how much they knew so they had like this was part of the one like the moral dilemma i don't know how real this was but in the movie they're basically like they know they crack the thing they know one an attack is happening but it's like if we if we prevent that attack on that civilian boat they'll know how the hell did we know that was coming they'll know this they'll they'll just change the encryption we're gonna have to be really selective about where we use our knowledge of this and i just oh that's like another layer of game theory on top of this whole thing when i was twenty four i took a cross country motorcycle trip for six weeks i traveled the country on a motorcycle and i had this distinct feeling when i got back where many of the things that i thought were normal or like the routines that i was in before that trip were broken because i did a lot of camping and i met a lot of different people from all walks of life and i've noticed that whenever i travel i don't know if you've noticed this but whenever i travel particularly to another country i come back with more perspective not in the like woo way but like i seek frame breaking moments and it's significantly easier to find those moments when you're out of the country and on place that's this is why wanna go to japan so badly i wanna see like all the weird i think about japan i wanna see all the weird stuff they do because wanna be inspired we had kevin ryan on the podcast he's one of my favorite entrepreneurs and he said that either him or the one of his c cofounder was originally inspired to start guilt which was like was it like an auction luxury auction yeah they had like this weird mechanism where they like made people wait in line i forget exactly how it worked but he was like i went to france and i saw this and i'm like we should just do that in america and that's a very simplistic way to to a really simple example but i've noticed that whenever i travel i come back with that feeling of where i ask myself what why am i living this way and to bring it back to palmer i think that is what makes people the great really special if is they're able to be sensitive enough to find these small insights and are they're open to having their opinions changed right i'm i'm totally with you on that i think coinbase kinda started for this reason by way i think brian armstrong went down to argentina and which is working out of argentina and if you've ever been argentina it's a local currency has been like hyper inflated away you if you have if you have dollars it's not only just the normal increase purchasing part of the dollar then there's something called the blue dollar which is basically like there's a blue dollar rate so it's like it's like two x what the actual dollar rate is because they're that desperate to have dollars so your your dollar just goes so far there and you know if you see something like that it's a frame breaker because you know if you're here you just take it for granted money is essentially like it's like a in water you don't even see it you just assume a dollars a dollar and you know we now have out two to three percent inflation people get it but it's over such a long time period if you go to a place that's in twenty percent a year you realize very quickly like oh wow these people need a different solution and then you hear then you connect the dots when you hear about something like bitcoin which is mathematically impossible to inflate as a currency system as a saving system you could see why that might be really valuable to people because of your argentinian experience and so there's so many examples of this you know all all around the world and i'm i'm i'm with you fact i i think that's the one thing i missed the most since having kids is that my travel has dramatically slowed down and has safe up i'm like convincing myself that we have to go travel i have to go travel we gotta get yeah it's like one of these things that like it's sometimes a pain the ass to do and then i look at like two year old i'm like i guess we'll just go to the resort gonna be pretty tough to oh i really gonna am i really gonna venture out there right now let's see yeah give a few more years this was my for years this is for the folks out there who have a business that does at least three million dollars a year revenue because around this point that's when you're able to look up after being heads down for years building your company and you realize two things one you've done something great but just do a long way from your final destination and two you look around and you realize i am all alone i've out run my peers which means you're now making ten million dollar decisions alone by yourself and that is when mediocrity can creep in my company hampton we solve this problem by giving a room of vetted peers of other entrepreneurs who are gonna hold you accountable call you out on your nonsense and help show you the way because the fact is is that there's only a tiny number of people in your town who know what you're going through and who have been there and they're hard to find and if you can find them it's hard to have this explicit time this explicit place where you sit down where the rules are clear that we are here to help each other and to be one another's board of directors the biggest risk is not failing you have a company in it's working you're gonna be fine but the biggest risk is waking up ten years from now and saying shit i barely grew in business and in life and for people like you who are ambitious wasted potential and regret is what we want to help you to avoid we have made so many of these groups and we have a thousand plus members and i know this stuff actually works whether you work with hampton or you get your own group on your own but having a group like this of group of people you meet with in real life once a month it can change your life it changed mine and i know it will change yours so check it out join hampton dot com i did something the other day that i wanna tell you about i got a babysitter went out my wife on like a thursday it was a big deal and we went to this thing called the webb awards have you ever heard the webb awards well as a one time webb award winner yeah you know we we know about the webb awards but we do know the origin story though it's it's basically the oscars for internet nerds minus all of the prestige i have a love hate relationship with the webb awards because it was actually quite fun but it's it's a circle jerk but the business behind it is kind of cool and i think there's a lot of opportunity here and i and i think you you dig this so basically it started in nineteen ninety four as a website called the cool site of the day the internet had just started i don't know how many users there were on the internet but potentially only hundreds of thousands and there was a website dedicated to showing off the cool websites every single day and it was almost like dig or reddit it but like one website and this lady had this idea where she was like we should turn the website of the day the cool website of the day in into awards show and the first webb awards i think it was in nineteen ninety six and so the early web was actually quite cool they called it the oscars of the internet and it was total nerd stuff so check this out i want you to see this video so they played this montage video when i went to this award show and it was so cool because it was like internet history first shot the founders of google larry and sergei wearing giant foil capes and it looks like they're roller bla i can't see their feet but they're gl are on the state it's said he said they said a hundred million times a day and then searches a day and then he goes do you get a penny every time they search and he goes i wish turns out that wish came wishes do come true he got a lot more than a penny per hollywood has the oscars tv has the emmy the internet has the web piece okay so you're you're back in on the web because they gave you free food go on three to six cents per search so good job it make three to six cents per search yeah that's insane it sounds too high that sounds crazy right okay so webb awards it was bay it was really cool early on because it was internet culture this was when google was a company that was still almost like a nerdy project it was awesome because there was like kim kardashian before she was like super famous and she was famous for like she i think it was like nude photo of the year like they had like goofy categories like do you remember when will ferrell did e bombs world where he did like the the angry landlord yeah it was awesome it was like nerdy stuff but it carried over into pop culture like when the food fighters like really famous they were there david bowie was there it was awesome and it was so cool and the when i went there the other day it was also awesome because the famous thing is every single speech can only be five words some of the people who won the awards for like a lot of like instagram stuff that you see online like nerdy niche shows but it's a total pay for play scam so in order to get into the web they have something like thirteen hundred or sorry thirteen thousand entries per year and it costs like six or seven hundred dollars in order just to enter and they have so many categories that they have a blog post on it called how to pick the right category or like how to find your category and at this point the reason i didn't wanna like it even though it was quite fun is because so when you went was it like pageant like were you blown away by the production or was it kinda like boot leg like what what was the was these these hosts of yours but no it was great there was a red carpet and everyone was taking photos and like everyone dressed nice my wife and i you know we dressed like as famous were you famous there i was quite popular there yes i yeah it was there was like actual famous people like for example the big award went to is it dr you know dress or was it t k i think yeah and jack harlow like gave him the award so there was some like proper famous people there but you know i i was a favorite because we're a business podcast and so a lot of these influencers who are way more famous they actually listen to us sometimes because they wanna get like business content but the company is crazy because it's been around for thirty years it's now owned by private equity which is hilarious because the bulk of the people there it was a very brooklyn hips like woke people right and if i started like researching where the web is based it's based at a kentucky so it was bought by a pe firm and now the headquarters are in kentucky so it's not even like this like necessarily like cool internet brooklyn night business but that's what everyone there it's that's what they were i think that someone can start a cool back to end indy award show that is properly the oscars of the nerd internet like i don't think that twitter's mainstream up but it that might work where you could have like nerdy twitter stuff but i went to this other one coincidentally called the ship mall trent you know ship malt trent is yeah he has a gala which is hilarious so it was a black tie gala and it's just all of his twitter real estate friends so it's just like real estate twitter has an event and it was awesome because it was all the all these guys who i'm friends with on the internet but i never actually see they were all there it was amazing but i do think that a proper indie oscars of the internet type of stuff like the nerdy stuff start extra small would be epic would be so cool this model this business model of basically create the award create the event create the list i call it the king maker move yeah so you you basically can go into any industry any social circle and simply by making the winners list by making the awards by making the list you can insert yourself at the center of any network or any market dax actually jason cal han did this back in the day in new york and i think he's talked about how i remember hearing this like fifteen years ago he was explaining this he goes i was in new york and i was we you know nobody was reading our publication and nobody knew me but i knew i wanted to be in the tech seen in new york and so what he created was the silicon ally one hundred which was gonna be the hundred power players of tech in new york which at the time was a small a small which is a a smaller market back in then is like in the nineties i think or maybe early two thousands specifically what he did was let's say everybody knew that ariana huffington in the huffington post was like you know she was like this power player and but he wouldn't put her one he put her at four and so immediately she's like what who are the three people that beat me because if she got named one it's kinda like oh whatever but if she got named four she's like i gotta know who are the three that were above me it had created controversy and he's like i intentionally would place people at certain parts of the list to maximize the controversy and the sort of word mouth with which this thing would spread and he goes and it worked they would call me immediately and they would wanna know who we are what we're doing and all this traffic came to the site because when you win you share because it's good for you to win and when you lose it kinda pisses you off and you wanna figure out who are these people and like why don't i have status in their mind and you kind of like you become in there on their radar where you weren't before and i thought that's pretty smart and i've since then seen this done many many times over in different different ways in different spaces and i think actually you could do this really in any industry i'll give you one other example my brother he's based in vegas and he does real estate he's come on the podcast once before i told him you know he doesn't like ever go out pitching like investors or whatever but like because his returns are really high he's you know probably had like i don't know couple hundred million of investor capital put into his deals now but he's never picks up the phone he never does any networking events and i was like dude why don't you just create the vegas one hundred and of what is that and i go basically decide to throw a one black tie gala kinda like what you're saying the real estate trent guy did and just honor give awards out to the hundred most influential business people in las vegas and you invite them you let them know they've been they they won this award and that they are one of the most influential people in in las vegas as deemed by you random person and you rent out this car dealership because you already have really fancy cars there and that's just how he already adds to like the luxury aesthetic of vegas being really flashy i was like just rent out your buddy's car dealership host it there cars on the floor and then at the dinner you're gonna network with everybody because you're the host everybody has to meet the host and those will become investors for you you'll never have to go on a road show because you can get everybody to come to you and if you if you create a honey pot like this i think it's awesome and i do have to add an asterisk so i did go to the trent black ty gal it was amazing and i saw a bunch of friends but i have a rule that i don't go above fifty fifty floors in a building and i got to the lobby of the event and you had to get into this elevator to go to the hundredth floor on the top of the hudson yards and i had my black tie shit on that i rented and i found out it was on the hundred floor and i said not for me you guys have a good night and i only stayed for having home i'm not go to the hundredth floor you gonna be we don't if these changing at four forty nine that's just not gonna make that jump point wait loading what anything happening go going going to a weddings that are more than an hour away and going above four fifty not for me not pretty me i just have a rule all the way anywhere i was all the way there not for me i man principal i i actually appreciate that you live by such a code i don't know if there's really any rule that i live by as much as you do oh yeah i got there and i i was like you know so i went to the bar and got like a a glass of water to calm down i was like can i and i and i went to the the tenant of the elevator was how long is the elevator up and he's like about a minute and i was like not i'm i don't i don't think so guys have a good night i hope the gal is great it was nice seeing you in the lobby he just like went to a bode day and a black tie yeah just went home and my wife was like what are you in home i was like it was on the hundred floor she was like get it have you heard of dude and some of these could be big businesses by the way there's institutional investor which is like a magazine and they ranked the best investors and it's like a two hundred million dollar business is that the midas list or minus a separate separate institutional investor it's like a super niche publication for institutional investors people who raised money from institutions and then we talked about j power you know j power and their associates that's this is why it's funny who is power and who are these associates i think is what was his real name james david power that was his real name and the associates was his wife and kids he started the business in nineteen sixty nine and he went to wharton he was a really smart guy and i think he worked at ford in advertising and he had this like brilliant insight which is like no one actually speaks on behalf of the customers i don't think ford i don't think they're asking the customers if they're truly happy with their purchase and so he gets this idea to go in survey a bunch of customers to figure out what they liked and didn't like about ford and a variety of other cars that they purchased and he went and sold the research to the car companies which at the time in nineteen sixty nine there weren't that many car companies and eventually he gets see idea like let's create an award and so he creates an award called the jd d power award and this is like ten years later and he starts giving out these awards and the people who he sells research to was like i'm angry why am i not higher up on the list and he was like well for an extra fee i can teach you how to improve at swine z to so you can get higher in the list and that was the jd d power award and then like twenty years into it he creates the trophy everyone knows like the trophy it's like this weird no i haven't seen anything like a stanley cup i was like this little arch yeah everybody knows was this maybe who knows there's nobody knows this you see the when they show the commercial they show like ranked best in safety by j powell and they like show that little emblem and that's when things really took off and he ends up selling the company to mcgraw hill for like five hundred million dollars and then they sell a few years later for a billion dollars and now it makes i think over a billion dollars and it ranks and does these awards and what they do is they have all these different categories so they can continually give awards to a variety of car companies and people pay for their research and i was thinking this can work across a variety of categories where there's something where you need to do a lot of research in order to buy what's necessary and where you can license the award to the company and they can use it to attract more revenue for example a really niche idea would be like old people homes senior living it's like a ten or twenty thousand dollar month decision and right it's like a huge decision and you wanna research the best one do think that you could have these like award this award business this research business for a variety of categories and it's quite interesting to me if anybody wants to do these like you create the award you create the list and then you piggyback an event off of it hit me up because i have two specific ideas i wanna actually bring to life that are like this i'll give one of them out and i'll save the other one the one that i'll give out sam have you noticed that probably more than ever there are teenagers you people who are twelve to twenty years old that are just doing amazing things doing stuff that like you know we're just picking boo when we teens compared to them even now we're picking burgers compared what we're doing out the average team nowadays does seem way further ahead of where you and i were well maybe not even the average maybe it's just the outliers because the outliers have the internet to show that they're outliers i think the outliers kind of always existed but there's two like there's more there's more it seems seems like there's more i think because they're visible you know i mean back before the internet how would you even know and then secondly i think they got inspired like they got access to better information so they're growing up mentor essentially by elon musk and of ball and mark injuries they have access to the best knowledge the best founders they see what the call center brothers and so there's a almost like roger ban foreman minute mile type of thing going on where the really smart people see what other really awesome people do and it breaks their frame of what they thought was possible for themselves and then they do more but here's a weird thing like sam do you think those the people i'm talking about the ones who create like they invent things they create world changing companies their hackers they're you know they're they're just really really brilliant in ways that are important in the business and tech world let's say what do you think that person looks like when they are a teenager do you think they're on the on role taking six ap classes with high sat scores and class president or do you think that they look a little bit different well the second one obviously yeah and so because they look different where do they show up right so because you know how how what do you think might be signals of somebody who is brilliant they have this kind of like sean and sam would wanna invest in them we'd be tripping ourselves to invest in them because we just know that this person's a winner what do you think we would be the signals that we would care about we would see them on the internet or if like they have like a weird hobby like they're the best video gamer or something like that you would like catch little bits like that they're great at something that's competitive and nerdy but not necessarily business that's a good signal they might be like running a like a some weird like sneaker flipping franchise or empire like but like update the grand theft auto skins or some shit like that and they're making a lot of money doing something that we're just like what you you own instagram handles or like you sell minecraft like mods yeah whatever that is a third would be really hardcore in math and science so math olympia science you know doing you know actually if writing papers that are published in nature like doing some weird shit like that that like the average team shouldn't have specialized in that way yeah like being being passionate in world class at things that don't matter that actually in itself it does matter being passionate and obsessed with things that are specifically low status when you're a teenager like you get you get bullied do you get a wed for doing this you know you don't get stop status points for doing this in school so i think that it would be really interesting to find a hundred kind of of these like hacker kid out out cast mis go find the number one yu gi player in the in the world go find he was like figure out how to hack google maps or like he hacked his tesla and you're like what and he's like yeah i kinda gotta slap on the wrist for it but like it was fun and you go find these kids you bring them together and you let him know two things one i see you everybody likes to be seen i've learned and the second thing is hey the set of skills you're you have right now that is not really celebrated by parents and teachers where or other kids and your your thing we celebrate it and legit people that you admire like go get you know the kind of the founders of red hidden and airbnb and all these things to come to this event and give these kids like time attention like you their flowers and be like yeah i used to do that when i was a kid too so you could be like me and let them know if they ever shift that laser beam from doing dumb stuff to doing like something that might create value you could be you know you could be here and create a network of those people so i really wanna create this that's cool it just needs a name a brand i have the network to pull it off and the money to pull it off i just need somebody who's got the energy to come like build this brand and then host the event with me i think it'd be amazing to cook to you know corral these folks are all of around the world the ernst and young of the world like these huge mega corporations that are kinda like do they would be just chomp at the bit to sponsor things like this and we would reject them to only raise our profile as we pull it just imagine there's some kid in the in the philippines who's like you know playing around with like whatever lasers and he's figured out how a laser laser etch something you're like well i know what that means but and then is another kid in in the ukraine who's doing something and then there there's this wiz in canada who's just like the number one star craft player he kills all the all the the koreans car star craft servers he's just dominating who are these kids we gotta know who they are and if you identify them in that golden window that like eleven to nineteen year old window you can actually be such a meaningful like trajectory razor for them you can you can actually shift the course of their life just by giving them a a network of other weirdo like them at the at that level i think would be amazing that's pretty cool i do you remember how i started that website sam's list it was like a a ranking for accountants yeah yeah i gave the i gave it to this woman named kim so she's used the the majority owner and it'll do like maybe five hundred thousand in revenue this year explain what it was for people who don't know so give have the battery three years ago i needed an accountant and i tweeted out who has a good account and i got probably three hundred replies and i was like this would be a lot to go through i still don't know who's good and i was like you know this would be interesting what if i called all three hundred of them and i aggregated the result so for example what services they specialize in how much they charge and what if i could even get reviews on them and so i ended up calling like thirty of them and i was like this is this is interesting i know how much each person charges and if they're right from me or not but i don't wanna go through the rest of them is too much work so i two tweeted out who wants this website i i don't want this but this seems like it could be cool and so this woman kim be replied and she took it over and she not only went through i think all two or three hundred of them but she convinced them to send the website to their clients and they would give reviews and the way that the business model works i think it needs a little bit of tinkering because accountants or cpa they're not exactly the best salespeople and so for example she's had problems where like she's like hey you know these five people just inquired to use your service and they haven't heard back from you and they're like well emailed them one time and they didn't reply she's like dude you gotta like follow up many times like things get lost and things like that and then all these financial planners whatever right they they're more like these alpha sales because unlike at an accountant you can have tons and tons and tons of clients because you don't really service them like to the same amount of quantity or the same amount of work and you get fees so the business model is far better and they're like clamoring to like use this website and i'm telling her after this podcast i'm like you should host an award show for accountants and also you should offer the service to financial planners but she's done a good job she has a bunch of followers on tick tiktok out where she interviews like these accountants who are nerds but they kind of do it in an interesting way and so she's like actually gotten this following of like nerdy accountants and people who want in accountants an account so it's kinda cool but i think she can do an award show too yeah that's a that's interesting one i don't know awards show but like some some sort of like recognition it does an ey do like entrepreneur of the year like some insane but there's a hundreds of them and it's like they there's there's thousands of them it's literally like and whenever i think about this i actually do like here's the event for the non winners because there's too many winners we did the event for the people we didn't win because they do it like every city has multiple per every industry and every size of business so it's like congratulations you are the houston texas best oil and gas midsize company you know or well that at the webb they gave like the awards to all these people i've never even heard of i'm like when the podcast of the year just go to like joe rogan or theo von or like just caller daddy like but it didn't that didn't fit the narrative i love this type of shit i love talking about this stuff this like esoteric weird stuff so this is cool that was good he had like a thousand hours of conversation with each other and it's still just as good as the first my friend that's unbelievable when we were on episode twenty or thirty or fifty or something andrew wilkinson messaged me and i think he messaged us in a group chat and he was like aren't you worried that you're gonna get nervous or aren't you nervous that you're gonna run out of stuff to talk about if we were like kinda but i guess we'll approach that when we get there and thankfully it hasn't happened yet alright is that it that's the pod i feel like i could rule world i know i could be what i want to from at all in and like a days off on a goal travel never looking back alright let's take a quick break to talk about a podcast because if you're listening to this you like podcast and what's better than one podcast another podcast and let me tell you another podcast you just should check out it's called success story if you like hearing about different success stories and hearing q and a sessions with successful business leaders or hearing keto presentations or just checking out conversations about sales and business and marketing tactics this is a great podcast for you so check it out wherever you get your podcast