We found an app that lets you buy anything for $0

sam we've been doing it all wrong this whole is something this building thing we've been doing it all wrong i feel like i could rule the world i know i could be what i want to from at all in it like a days off on a road less travel never looked see we thought you have to build a product that product has to do something has to add value solve a problem and here i will read you this tweet this is from next to tv they say dopamine websites are the new trend in south korea these services let users endlessly browse food delivery menus read reviews filled their shopping carts to even track their shipment but the only catch none of it's real you're not really placing an order for anything there are also virtual smoke breaks where you can join anonymous people in chat rooms to recreate the feeling of taking a smoke break without having to smoke a cigarette the idea is simple give people the familiar dopamine hit without them having to actually spend any money leave the house smoke or do anything else along those habits and these are becoming incredibly popular in south korea apparently is this the same country that's having a massive birth rate issue i'm really it checks out if they're gonna create virtual smoke groups and fake buy stuff what the heck guys so the the trend started you know this year and it's basically korean gen z they sort of realize that a lot of the fun in online shopping is just browsing it's just putting things in the carts hit check out you know getting the actual product is you know sure that maybe that that had some value but there's a lot of fun in just the other side of it and so you can see here i i can pull one of them up let me open and so this is a app called food never comes and alright so check this out so you open up the app and you could select rabbit or turtle delivery so faster or slow do you wanna you want should we pay for faster or slow i guess we should pay for fast i wanna get a i get my face so let's treat ourselves okay so now there's a fried chicken restaurant so we can have the half and half crispy chicken the cheese balls gotta go with the cheese balls maybe the soy glazed chicken we'll go spicy we'll add a cola add to cart and then we can go ahead we could check out we put in our info here and then we could watch this delivery make its way to our house never actually come and that's it it's the blue balls of of entrepreneurship sam where are you in or are you out dude to how can the this group of people who have brought us such amazing things like the kia tell ride or samsung we pop demon hunters yeah like go and do something so stupid they're the koreans you guys really are like the barbell strategy of life they're bringing this such amazing wonderful goodness in such silliness i i guess i i don't get this why are people doing this on behalf of our huge i'm sure the south korean followers partnership i will defend this by posting a picture of the white house this weekend where there was a giant motorcycle a motorcycle doing a back in front of the white house in preparation for u two fifty to celebrate america's the birth of america the two dudes and they're underwear beating each other up in the white house lawn yeah you don't think that a fist fight on the white house lawn is appropriate an organized fist i where a frenchman beats up a brazilian yeah america yeah dude look i didn't say that we we both can't be stupid i'm just saying that this is this is wild though are these things are actually popular now i can't tell i so obviously this makes for an amazing headline there's also a reason that i open up the show with it because it's just wanting to talk it out and make fun of but are there there's not a lot of korean people on twitter so they can't exactly we can't exactly refute this if you it feels like like like japan it it feels like japan and america have like separate internet like if you're ever going to be like a japanese website like like when i it's kinda challenging to use obviously just even if it's just translated it's still like totally separate and it's quite hard and so like are there any like proper korean people on twitter to refute the story or can we just make up false it's about like i think we just make it out it's like the good version of like the hundred biden laptop story is the south korean fake fake door dash story have you ever studied like eastern internet you know people study like eastern philosophy have you're starting internet yeah like i'm masa son from soft inc i believe he's a korean guy who lives in japan or is he joke japanese who lives korea anyway anyways yeah i've studied him and then i've studied like some of the chinese websites or the super apps they're like so like mega that it's quite hard to understand what what they're about yeah there's so many crazy apps and sites so that so just for example i remember when we were looking into live streaming my first company that sold be it was in the live streaming space we sold twitch which is the the big american player but live streaming is far more advanced in asia that it is in the west and if you go look at like i forget which ones it was y y dot com or whatever there was a whole bunch of these where you would see somebody on video and then horizontally from right to left streaming across the screen would just be the entire chat and it was the most bizarre experience ever because you would see that seven thousand people are watching this girl eat noodles while text flies across the screen and people are spending thousands of dollars sending her virtual roses and we were looking at this studying it like you know it's like a you know when you study like a tribe and you're like so they they just eat in the there just like yeah this is what is exactly what they do and then we try to recreate as many of those variables as we could because these sites were incredibly popular isn't is it there is it there one where i like where it's like fat people eating it's like bang bang or is is this isn't this like something they don't need to be fat oh i thought there was one guy like named nico avocado or something like that yeah what's really fat doing it and then he lost a lot of weight and came back he's kind of a weird guy but yeah their mu meng is basically watching other people eat just like you watch other people play video games you watch other people your basketball well turns out people wanna watch other people eat and they like having that high definition sound watching them solar i get enjoy from that by the way i always i i buy candy in sweets that i wanna eat for other people and i'm just like i'll hand it to them people yeah hand it to him i'm like eat it tell me you tell me how it feels like i definitely could get like secondhand hand like sugar highs from other people okay so you're in so we started it out and and now you're in dude there's a whole genre of indian barber who shave people's heads who have dan and you could like it's like the oddly satisfying like we found it let's wipe it off the head yeah the oddly satisfying stuff is crazy there's other sites that i think are like the kind of the current trend of like what's big in the east that's not yet big in the west so so before there was live streaming that was obviously a huge one mobile gaming so internationally the biggest the most popular games were all on your phone they weren't xbox playstation that they really didn't have like big console or pc culture and so games like free fire or pub mobile were huge and then fortnite became the the version of that in the us soon after and so you could sort of see these trends moving over live shopping has been huge in asia for a long time now whatnot is the us equivalent of live shopping worth ten billion dollars and so you can kinda look for these products that are over there and try to say when and how will they translate so right now the big one is we've talked about this before about the short drama so so serial drama so basically it's netflix but you watch on your phone vertically each episode is like thirty to sixty seconds and it's basically soap opera of all different types of genres that people get incredibly addicted to huge in asia so huge kinda like that china japan korea area now getting big in india only a matter of time till it's also just as big in the us is my my guess i just pulled up these notes that i have from my think two thousand and sixteen so there's this guy named kevin ryan he's been on the podcast friend of the pod and he founded a bunch of companies the biggest one being mongodb d multi tens of billions of dollars company but he also famously was the c cofounder of business insider and so i called him one time and he like gave me some tips on like how to start a media company because i like to know anything and i emailed him so many times that he re rented and i have these notes and i i something always stuck with me on this framework so we said on this show we have spent hours talking to some of the best investors alive well lucky for you at the team at hubspot they have pulled out the principles that matter most and turned it into a very simple easy to read wealth guide it's thirty five principles from the top investors we're talking guys who have been on the pod like howard marx man par bra morgan h cathy wood and a ton others so these are all the frameworks they're mental models their rules basically how to play the long game and how to avoid ruin you can get it in the link below he didn't he didn't use all these exact words this is me like typing this is before g existed so he goes he's like the business insider strategy is sort of what honda did in nineteen eighty five versus general motors he was like he didn't say this but this is my notes start with shitty quality and get traffic to our website it improve shake quality but will improve like he said his all hands inspiring he's all of his employees he didn't he didn't say it that way but he was like we're i i he said like honda in nineteen eighty five versus gm honda was considered sort of a joke gm cars were these like big like heavy duty vehicles that made a big fun when you like shut the door and honda were like rink dink but the difference is is that with honda as well as with business insider the quality of car that they were making increased but their cost they stayed the same which is why honda eventually won and business insider we make content a lot cheaper than wall street journal but we think that our quality is just gonna continue to rise and that was like his whole strategy and i always thought that was really interesting i thought that was a a really cool analogy which is you could start like kinda like so so and just slowly get better while keeping your costs the same and he always referenced he referenced in our call he was like honda did this toyota did this and i started thinking about this and i've always thought about this like strategy that a lot of asian companies did if you remember do you do you know tc tvs i've never even heard of that no t so tc if you were to go on amazon six years ago buy a tc tv they were the worst they were like per maybe ten years ago they were junkie tvs but you get a sixty five inch flat screen tv for like literally two hundred dollars and over i'm like a gadget nerd and so over time tc is now a baller tv company and you can still get a sixty five inch highest def fanciest tv for two hundred dollars it's actually i don't even know how this is possible and i've always thought about this strategy of like asian businesses and i've noticed i don't know if it's particularly an asia thing or because i he referred it to asian car companies now i always think of it that way they'll offer something where like the quality of so so but just good enough but over time like it's sort of like hyundai or kia or genesis like particularly you know asian car companies that's how i think of them is they're kinda like crappy at first but they just get so much better and then the prices stay the same what i like about this is it's the opposite of the normal white guy referencing asian culture thing or normally we take these like amazing zen practices were like the japanese use the word kai zen for the continuous pursuit of perfection and that's what we do here at our company or it's like w sa the beauty in imperfection it's like always like these high high and mighty things that like you were borrowing and he's like we use the term vacation we used to start with shit and it stays shit for quite a while but eventually the ship becomes a little less shitty and that's what we do it's like the first son white guy like would give him a award for like he's doing all of the like the tone and the hand gestures but he's just saying the truth and we did stop there we took the shit that we had and the year after just a little bit like less shitty because they they don't know the difference and we told yes there should just be like a whole service which just like honest business translation you know like google translate but just like next corp translation it's like take any company put their mission values and earnings call the generator it just tells you the truth yeah that's so funny what are the greats kevin ryan probably no longer fan of the pie no longer friend yeah former friend of the it right those are that confidence sam there was a statute limitations on notes by the way once it's been ten years i could talk about it so like anything that happened it or you for pre dozen sixteen i'm a lot to bring it up alright so i was nerd out on something for kind of related so i'll set way to that so you were talking about how for the tvs thing they're like they charge two hundred bucks and at first kind of a shitty tv but eventually it's kind of a great tv but still for two hundred bucks which is different than i would say most companies which assume you know over time the goal is to raise our prices increase our margins increase our profits so i was studying investor called nick sleep and for those who weren't there ever since you brought them up i've been on them yeah so you yeah his story in short is he was a investor basically raised money was an investor about fifteen years average more than twenty percent compounding billions of dollars he won the game shut down the fund and moved on and most of the fund was concentrated in three positions costco amazon and berkshire hathaway for the longest period of time he was just holding those and so the interesting part isn't oh wow here's a guy who picked right you know it's kinda like oh i'm lot i'm interviewing a lottery winner to ask how they how they guess the numbers like this is daughter's birthday it's not not really that it's if you ask what is nick's lei philosophies core investing strategy he this idea of consumer surplus so his his main realization well look there's many ways to invest you could do what buffett and ben graham are trying to do which is buy a company that's trading for less than it's worth or you could look at some of these companies that today look over undervalued like amazon at that time and you know the two thousands is like wow these thing's get a crazy price to earnings ratio and he realized that the best predictor of long term value for him was something they called shared scale economies alright so what do those mean so scale economies is usually when say your amazon you have a large customer base so you're able to open warehouses in a bunch of different places and you get what's called economies of scale which is that over time your cost to serve each additional customer go down because you've you're serving so many customers you're able to like almost like am amortized the the investment cost across a large customer base now what he what what makes sleep identified was it called shared economy sales was that a word that he did he make this up yeah so he i don't know if he made it if he he really yeah he really bet on it you know and he really like made it the foundation of his investing strategy so he realized like let's take costco so costco goal is to basically get economies of scale meaning they buy in bulk they have tons of locations so they have a lot of pricing power they're able to buy things in bulk at cheap prices and instead of what most retailers do which is they buy wholesale sell retail right they buy cheap and they sell it at of markup costco goal was to make the mark as small as it could and pass all of the savings of buying in bulk to the customer so he did the math and he realized like okay let's say that a costco membership costs hundred dollars let's just use round numbers right and he realized that if for the average person who shops groceries at costco they're gonna save on their grocery bill let's call it a thousand dollars a year on just by buying costco because costco is passing on all those savings of buying and involved to the customer so the customer saves a thousand dollars they spend a hundred dollars and so the surplus that they they they've generated this thousand dollar surplus and then they're only charging a hundred dollars it's a no brainer proposition and they basically take the so what what happens is instead of increasing their prices and increasing their their profits and increasing the money to the shareholders they pass the profits to the customer which makes a juice your value proposition which attracts more customers which gives them more scale which allows them to create even more surplus and so what he realized was that the companies that would do this that would start early on and pass on the the savings to the customer they would run away from the competition because they would have such a such a juicy value proposition proposition they would build so much trust with customers and have such a incredible offer to the customers that they would pick up all the customers and so costco for example they make no money essentially on any of the food that they sell they make all their money on the membership which is like pure profit is the membership how much so but i'm just looking this up i i knew that they were it was a baller stock they it does three hundred billion in a year in sales how much in subscription in the membership sales do you know five billion five billion yeah so so what he realized at that time was he said wow everybody just looks at i think let's just say it was a billion dollars at that time he's like when a traditional analyst will look at this company they'll just see a billion dollars a profit but what i see is five billion of surplus that they're passing on and they passed on four billion last year five billion this year it'll be seven billion next year ten billion next year and they're just gonna keep passing on so much surplus that it's gonna run away from the competition and it'll do create so much trust and so much loyalty that they'll never have any problems attracting customers and so what he's like that's an invisible metric that doesn't show up on the balance sheet it doesn't show up on the p and l you have to sort of manually calculate the shared economies of scale how much of the surplus they're giving to the customers and if you track the growth rate of that the you what you want is companies where that growth rate is increasing he said amazon does the same way for twenty years bezos basically did not try to extract profits he just reinvest all the capital to give people wider selection faster shipping and lower prices and he realized that every year they're reinvest more money in giving people wider selection faster shipping and lower prices the three things that consumers care about the most and they have the prime membership just like the costco membership and so he invested heavily in that and i just thought wow this is a pretty brilliant insight a way a way of looking at businesses that i've never thought about yeah that's actually it sounds stupid but that's sort of like a i don't know if i need a lesser word but a groundbreaking like stat you know that's that's like a that that's actually very interesting i've never ever have heard of a company that measures that like just how much savings we are passing on to that's pretty interesting 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 but who else does that you you have to do it with the company that's huge and wear mass appeal or mass and then you need like a membership right like a prime thing well it you it doesn't have to necessarily be a membership there's other ways to do it but you the two biggest examples he did was the membership because it's the beautiful way to monetize right it's like i'm gonna give you so much value in the thing you're buying that giving me a annual member recurring revenue membership is a no brainer for you and that's what prime is that's what the costco membership and so it worked out beautifully for those two cases but it it's not it doesn't have to be that it's just that's a for example like i was talking to ai today and i was trying to say like well what other study other companies if there's these thousand companies which other companies would nick leap see as having a high surplus and how would he look at it right and so it's it's a ai is not great at doing analysis like this but one of the examples he brought up was was spacex and basically is like look spacex is gonna lower has been it has already lowered the cost to orbit by a hundred x so it's it's reduced its cost by a hundred x but it didn't keep the same prices to the government or anybody else it also lower it passed on the savings to the government which is why it now takes like eighty percent of all payloads it like it took all of the the business it took all the market share by doing that and they're trying to reduce another hundred x and they're putting up all these satellites and they're trying to again pass the the the savings on to to the subscribers for the for star internet and so here you're gonna have again recurring annual membership a no brainer value proposition to a mass market of people everybody on earth once the internet and they're getting economies of scale because as they improve their their launch costs and their launch rates they're not gonna raise prices they're gonna pass it on and they're gonna create a membership it's like spacex would be in a weird way like again same thing as amazon today looked at as highly over valued but potentially undervalued if you if you could figure out how to measure the surplus and see that the rate of the surplus was growing every year you it might look like one of those businesses now i'm not again i'm a new with this stuff so like i'm just sharing kinda like my beginner my learnings with this just with you i'm not saying that this is is is not the case not financial advice or anything like that but i do find this idea to be pretty interesting idea i hadn't really heard popularized before this guy is so interesting to me he's she's got everything that i want and because he have like long hair nice cat yeah like he you google has named does he a alive beautiful he's got a beautiful set of hair and only one photo if you google him it's the same heads shot used for everything nick leap come on the podcast i mean how many times are you gonna let me podcast make out with you before you just finally get on here okay yeah do you wanna break decades of being anonymous it's come on todd there's literally only one photo of them i'm it's real it's like i got to this hotel and i paid like disgusting about buddy but they had free snacks when i walked in and i was like honestly love this place great value they gave me this thing they gave me like you know cake pops for free when we walked in this is incredible i can't just know happy and i feel like that our pitch to nick's sleep it's like yes you've been anonymous for twenty years and you value your privacy and you've turned down you know every opportunity under the sun but we got peanuts and snacks if you wanna come on our pod it'll be great he he's fifty eight years old he's he's not old this guy's is cool it there's an article called how to retire at forty five and it's about him so i guess he's taking it easy but i would love to have this guy on that would be so fascinating him and paul graham so there's something so mysterious about people who who claim i've had enough and they like opt out i i think that's interesting but what one of the other takeaways real quick is you only need one or two forget the word insight i'll call it secrets in the peter t terms right you only really need to understand one or two secrets in your lifetime to become fabulous rich and this is one of them first example this is a good example of one i think peter till did this with network effect businesses so understanding you paypal facebook early on and just understanding like the power of a network effect at how un those those mono monopoly become and then you know the other you know another example is you know buffett for example he doesn't invest in network effect tech companies or or anything like this what he looks at is what's not gonna change and he's basically like the mo which is a pricing power you know he gives an example of i don't if saw this exchange but elon was talking about how lame mode are like all i don't like the idea of moat if you need a moat that's lame you should be innovating faster than everybody else that's how you win if you think of moat is gonna protect you you that's not what protects you fast innovations protection this is elon like you're like elon i don't think that word moat means what you think it means can definitely have a mo buffett replied and he was like i don't know he's like let's say you go to a corner store and you asked for snickers and they say hey i got a must bar for for ten cents less he because i don't think anyone's buying the must bar and he's like in fact if you go test this if if one place doesn't have a snickers and they have an branded unlabeled chocolate bar with with peanuts in it but the place across the street has a snickers bar the customer will just walk across the street and go buy snickers and he's like so yeah he's like i i look for coca cola snickers you know gillette american express i look for these brands and apple i look for these brands and franchises where you'd have to pay someone to switch and even then they they wouldn't want to i mean he's like he's like that that was his core inside of like he just need to find these great american franchises and invest in them did you see i wanna bring up a person who we talked about somewhat recently we would dive into but really quick did you listen to the lloyd blank fine interview that we did that i did with and he talked about like his family finances and stuff like that no i only wish i've i've listened to the first five minutes but i'm on vacations i hadn't hadn't had time to like get my phone and and listen to well i what do what did he say about his family by the way did you know this guy before i'm i dumb i never heard of this person and then yeah i knew him all about this guy suddenly well when you and i were younger probably high school that was like his peak prime and so like during the wall i knew him back then or only i i knew him as a famous like he was like the face of banking he was like the jamie got of oh eight particularly when occupy wall street was the thing he was like the face of evil because like the next goal is like and and and there was this funny line that he told me where he was like yeah they like protest protested outside of my house and everything and i was like how does that feel he's like well two things like one like go and try to get a mortgage from goldman like you can't so like i didn't call the mortgage crisis so i don't know why they were so angry at me and second of all they you know we're camping out outside of my house protesting but like that's what doorman metaphor for he's like i shouted out from the window on the fifth fifth balcony in my house we wouldn't give you a mortgage even if you tried me that didn't seem to help no dude he was super likable he was so charming and charismatic basically lloyd is i like you could look up his career earnings at goldman because when goldman went public he was like forty three years old and i think at that the time his he told me he told me his shares were worth like a hundred and sixty million dollars and this was when he was forty two he's seventy two i think now so thirty years ago and then he the course of his his earnings all public while there it was public it was many many many hundreds of millions of dollars a year and so presumably i would have to imagine he's worth like two billion plus but he grew up in a poor brooklyn family and he somehow and he's very self deprecating his father was a post office worker his mother i think was a state at home mom he's like a pretty like because himself the blue collar ceo and he was like i wasn't even that smart but somehow i got to harvard and they paid for my school and he's like one time when i went to harvard i had to go to the like the office or whatever they call it the the financial aid he was like i don't have any money to eat like can i please have money and then they're like they gave me five hundred dollars back then and it like changed my life because i had food and so he goes to harvard and he gets a job as a lawyer he's like this sucks i don't wanna do this and so he gets a job at a rag tag like subsidiary of goldman and he's like know what goldman is i don't know what banking is but they thought that i was this like hard nose blue collar guy who went to harvard and they're like you check the boxes because he what's a commodities trader at this little like rag tag group which at the time was considered a very low brow thing and so he slowly over the course of many years who worked his way up to eventually become partner and then ceo of goldman and when he was in my office he had this very blue color vibe where i could tell that he it it felt very authentic he like looked me in the eye and like knew how to like r on like silly stuff but also i'm like dude your like acquaintances with putin like you know like he's like like i could see my in your phone as pretty pretty cold yeah yeah like i could see how this guy is charming and how he works his weight at the top and can you imagine being the shark in the sharks like how how much how insane it is to work your way back goldman almost all the sharks and become the ceo can you what does that even take like that that sort of mind boggling level of difficulty like i know people that that have made more money just building a company but that's actually not as hard as playing the the the like corporate game inside goldman and rising up amongst all those kind of like corporate charts he he's wild but he he came off i like during the podcast i told him i'm like man you are making goldman seem likable which like is not easy like you're making it seem relatable and likable that's a very hard thing to do and for some reason after talking to you i'm like i can do this even though obviously i can't he told the story i i asked him about personal finances i like hey who how does your personal finances work because he told the story about how he grew up poor and he's still cheap he was like i buy the is there like a cheaper tier of netflix that has ads he's like i won't even pay for that i do the cheap one because there's something about it that like because i grew report so bothers me he was like when i he he said i i think he said eighty percent of his net worth is in public equities of which ninety percent of that eighty percent something like that he still day trades and he was like i day trade i'm obsessed with it i love the game so much and i wanna check my phone all the time but like when i do a research on different stocks i'll get to like a bloomberg publication or wall street journal or something like that and i don't buy the subscriptions because like it kinda hurts me to like pay for it and i just thought that was incredibly fascinating to hear like how a billionaire manages their finances how billionaire miss manages his finances is is what i heard well get the right none of that makes any sense the the the are top i wasn't there so i could talk shit if i was there i would also be like blushing and say how great he is but you know just hear it get from the outside just to view the outsider for a second your day trading a billion dollars well not paying for netflix because you you you're cheap like why don't you understand what you're talk you don't pay for for for you know premium news point being not about it's not a logical thing but it was like he was kind like saying like here's all like how i'm messed up just like the average joe and it was so fascinating and at the end of the interview did i tell what i to do with him i was like hey like i'm i have this like instagram do you want me like gonna be a secret well i was like i i was like i have an idea like i can like act like i'm reviewing your book and i just be like oh screw it i'll just bring lloyd in lloyd just tell me what your book's about leah and he was like he goes i'm too for that stuff i'm not acting cute on instagram but that's the most like multi thing you said so far about it them i was like oh boy it's not like none of the billionaires they're just like us but just that i would have like i'm not gonna do that i was like i went describe it as cute i mean it is cute but that's all it's more like fun you don't like fun was like that's too cute dude i'm not doing that and i was like yes sir i'll walk you to the elevator yeah it was was pretty good cool but he was fascinating and then another guy who we had a guy on the other name named barry who talked about david rubin had you ever heard of him before david or barry told you about him from carly group yeah do you know anything about this guy yeah only only surface level stuff yeah i i wanna fill you in on a little bit about a story because i've actually always been a fan of his but i mostly knew him as an author of history books not particularly of like a business guy and i was researching him it's pretty fascinating and he's kinda like my new man crush a little bit we kinda like got his foot in the door because when he was in his twenties and thirties he he was a lawyer but he quit be in a lawyer because he wanted to work for the jimmy carter administration and he like made a joke where he was like when i joined jimmy carter he was up by like thirty one points and then he eventually won by one point and jimmy carter went to david and was like so what contributions did you make and so he like has like this kind of like funny self deprecating humor but he like word for jimmy carter and it eventually jimmy carter was a one term president he doesn't get it reelected so david rubin he's thirty one years old he's like well what do i do now and there was this amazing article that i found written by michael lewis you know michael lewis the the famous author he wrote this amazing article in nineteen ninety three called the access capitalist and it's a ten page or so article written about david and it's from a a while ago and and i love that and he said david got his start using what people are calling the great es tax scam of nineteen eighty seven tell me what so the story is is basically david had this amazing ro x he was really well connected in washington dc he was known as being likable and like a really good network and reliable and so he just like knew a little bit of everyone and so he's out of work at the age of thirty he's like what do i do now and he hears about this like weird tax loophole where if you were a native of alaska you were given a certain amount of tax loss losses automatically i i don't know why i think it was like to incentivize people to live there and so what he did is he organized a bunch of buyers and sellers meaning if you want you could they could sell ten million dollars and tax write offs to willing buyers for seven million dollars in cash and thus the buyer got a reduced taxable income of three million dollars and david like heard about this and he's like that's interesting and so him and a couple friends organized roughly two billion dollars in these like like oregon and transact these tax law losses and after doing that for two or three years they had made something like twenty million dollars and that's the money that they used three years later to eventually start car carly group which is now one of the largest pe firms in the world i believe they have five hundred billion dollars in companies that they own and david was like i thought i had a pretty good iq myself but i was seeing a lot of people make a lot more money than i was who i thought maybe weren't as smart as me and so i decided to tried this pe firm and so he raises a little bit of money he uses the money that they made from the the the tax saving scam scam sorry no longer i guess he just canceled his booking with us steve ever a friend of the pod steve i'm meant say scheme it was called outside i'm meant say scheme and he used this thing and he started in the pe business which at the time in the eighties was like like just killing it like it's felt like that's when all the big pe firms were built because this idea of a leveraged buyout was brand new and so he raised a little bit of money and he like did a couple of deals it didn't really particularly work in that well i think he said his first deal that they try to buy was a mexican restaurant called chi cheese and he's like yeah like it wasn't going so hot it went from the es camp cheat cheese alright yeah he's like not doing so hot but then he had this idea where he was like well i know everyone at dc and i know that like a lot of jobs in dc are pretty cyclical like after four years you're like quit and you're like what do i do and i know a bunch of interesting people and i know those interesting people know a bunch of interesting and powerful people but you don't wanna like sell access to these people that would like be borderline unethical and sometimes illegal and he's like well what if i just like got all of these like powerful people who no longer have jobs government to come in like work at this pe firm and we start or when we start buying companies where it would help to have like friends in government so you can get meetings to like big powerful companies and so carly eventually specializes in defense contract style companies and so that is sort of how it took off but the more interesting part about all of this is what he's done while he was building the company so he has like five or six books which is how i've met him or know of him so he's got a book called like the american stories about like where he just interviews math historians he's got a book called honolulu to lead the american experiment how to invest the highest calling which is conversations about different presidents he has a show on bloomberg called the david rubin show he's got yeah that's what i've seen his that's amazing thing but listen to this shit he owns all this amazing stuff he owns one of the i think it's one of the last privately owned copies of the magna carta which is the sort historical one of the most like historical documents of all time for twenty one million dollars he bought it he owns one of the last pieces one of the last bits of the deck declaration of independence he owns a lincoln signed emancipation proclamation he funded the washington monument when it need to get rebuilt he funded the lincoln in memorial need when it need to get re rebuilt he funds all these amazing things so like the kennedy center he helped you he helped purdue he helps produce a lot of ken burns documentary he funds them he's just like this crazy guy that just all of this interesting stuff and when in his side hustle is basically like buying these documents meeting the people who are like around the documents writing books about the documents becoming bored on the board of the museum in which he loans the documents too and he just has this like crazy like fascinating i mean that's an epic board career you know what i mean like exactly a little bit of this a little bit of that they work well together you know he's kinda like the white night of washington dc i kinda love it know like i i always love people who are not sort of one dimensional and the way they operate you know the one dimensional people i appreciate for their laser focus and obsession and i take inspiration from it but i don't take guidance from it you know i i take more guidance from people like this too i think i have a more interesting varied career personally i i find that like just really compelling i love this guy google or go to his wikipedia page and like look at the things that he's contributed to i i mentioned just barely any of them me but it's almost david beckham wisdom teeth like he's play game things that you know nutrients of the lie rubin collected collectible dude it's it's so awesome what he does and i just think that guys like this are really cool and he's actually coming on the podcast in august and so you know sorry david i didn't mean i didn't mean to insult you if i any details wrong but he's coming on okay i'm so excited that's amazing yeah it's amazing i think that he's been doing this kinda like baller giving philanthropic stuff and like history stuff i think he's been doing it along the way and not just like in the end of his career which i find really fascinating and he like makes this joke we're first of all he says like my whole shake is i love self deprecating humor because it disarm people and like he's kinda like a a self deprecating guy which makes them very likable but he was like i'm not really like that good of an investor i just like work pretty hard and i know kind of everyone and i'm pretty good at connecting people and i also have really good business partners who helped me start caught carly and that's one of the reasons why it's the way it is and i thought that was really fascinating i like that a lot it it also sounds like he had a you know a cool second act to his career maybe a second and a third act to his career thanks podcast is brought to you by my friends at mercury they make the world's best banking product i think you know this already i used mercury for all my businesses i think i have like maybe seven or eight businesses we use mercury as our business banking across all of them and now they actually just launched a personal banking account so i have my personal account there i moved off of wells fargo in chase i'm just all in on mercury why i like products that are easy to use i like products that get me and the problems that have so like it very easy to make a joint account with my wife very easy to been up virtual cards one click and i get savings yield it just has all the stuff that i need in one place so if you're looking for the best banking product on the market it's definitely mercury i will fist fight anybody who disagrees me on that go to mercury dot com slash personal and learn more mercury is a fintech not an fdic insured bank banking services are provided through choice financial group and call them an a members fdic can i tell you about a business that i think is really cool that is someone second act and i think you know i think you know the person but i i don't know how much time you spent thinking about this business and so the business is psa and psa is if you ever wanna go by a rare you know charizard well you wanna know the psa grade of that card and so we gotta guy on yeah so matt turner bought this business and that turner i think he i think his last company is like in healthcare or something you sold to roche and he's always been a a nerd a collector and he raised some money and he took private or he bought this company i think it's called collectors universe or something like that they own psa and i just found this category of business to be pretty fascinating so let me let me tell you a little bit about this business here's here's one way of of looking at it so it's a business that controls something like seventy percent of its market so absolutely dominant in its market they have four hundred million dollars of orders just sitting in the queue haven't you even got to it yet four hundred million what if i'm wrong we'll fire our researcher but that's that's what we that's what we have here to get cancel your cloud subscription okay give claude a nasty talking to basically they they just the they've dominated this space of of grading cards and and if you think about what that is the broader category of problem that they solve is something called credence goods and so i was kinda nerd out on this and what but what a credence good is basically it's a good that even after you've consumed it even after you have it you still don't really know the quality of it so like medical care is a good example you have surgery oh how'd do you like your surgeon i don't know i no idea i no way to assess the efficacy of my surgeon if they were if they were you know i could probably tell if they're terrible but i can't really tell the difference between good great and world class and the same is true and same was true for collectible so let's say somebody had a original i don't know sammy sos a rookie card and the big kinda of home run boom was happening with him and mark why were hitting a bunch of home runs and people were buying up these cards and the problem it you know the problem without a third party a trusted third party here is that one you know the owner says it's an excellent condition and then they show it to a buyer and the buyer says i don't know it seems fair and then the buyer owns that then he says it's mint condition and there's all this ar and you know and that's just the condition let alone is it even authentic is this real was this actually a first edition is this a second edition does this actually have this does it have actually have that and so you need third party trust in these systems where there was no structure and so coins was like this cards was like this pokemon cards sports cards and so there was this like entire like industry of in of collectors who are very passionate but it had no structure and a needed third party trust and this exists in many industries so for example if you ever go through an m and a process you'll have to go get a a q or you'd have to get a a third party audit it you know deloitte ernst and young they built built multi billion dollar businesses just doing an attest station just saying yes this company's financials are sound so that the seller and the buyer can do a trusted transaction because the buyer knows that they don't have to go and verify themselves that the the company's books are actually what they say there and so at attest station credentialing these are are huge businesses that are just some of the most beautiful business models because you become at basically a trust tax on an entire industry you don't have to be the best buyer or seller you don't have to own anything it's super capital light all you have to do is become the trusted third party and that's hard to do but once you do it it's an incredible position to be and i think what nat turner did buying this company is absolutely brilliant i think they bought it for eight hundred nine hundred a million this is gonna be a multi billion dollar company because being the dominant market share and there's a network right like if i have a card that i think is valuable am i gonna go to the third rate greater because i can save a little bit on my on grading my card in a way i'm gonna go to psa because if it's psa certified psa ten that makes my card more valuable and so the trust sort of compounds and it becomes the known unit of account on the street do you see everywhere you go you're just gonna keep seeing psa which means when you need to get your cards created psa and then they added it on top of grading they have a vault so they store a million cards in their vault because they're basically like you know a hybrid it's like you know one part moody's or they're they're grading asset class and on the other side they're fort knox where they have this giant vault storing a billion dollars worth of cards or whatever it is in their in their vault with this business so i'm just looking it up so like it's called collectors dot com now it's like like a portfolio i think they own like the ones you mentioned plus like three or four other ones and the like they have this cool jackie robinson card like on their photos and it's created by tops tops cards and i was you know i bought so many of those and tops is owned by fan because it's not like a regulated thing it's not like money or gold or anything like that what's to stop fan from making more like it's not like a limited supply do you what mean and it's not like not houses what stops them so so yeah it is a limited supply if if tops can't be trusted to not flood the market with more cards people will stop buying tops the more supply there is the less valuable each card is so top has an incentive to control the supply tightly to manipulate the supply artificially and so top has an incentive to do that that's in line with the incentives of the buyers and the holders because they we need they need scarcity for this to be valuable and then psa sits as a layer underneath both which basically grades and authenticate that this is this is real it's not a fake card and that it's it's in good condition and it's valuable and they also because they see so many cards they know the absolute scarcity so they know how many of these cards really are out there circulating in the market they know the liquidity of each card market so there's like a there's like a market cap for like charizard there's a market cap for for jackie robinson cards because they know how much how much liquidity there how much circulating supply there is they know the the relative value of a card because they know how this is in mint condition versus this is in good condition and so they're all kind of in c with each other and in a way that is s it's sort of like have you ever like seen how mcdonald's does the the like monopoly game like the way the monopoly game works is there's only like four or two winning pieces and like they guard it like kinda like crazy although they were scammed once there's was a total documentary they like one of their like jan guys side yeah they like took they like took them and so it'd be very interesting like they found the like the corner of the office where they kept on them and they're like you know y its mind i would have loved to know like when they're making these cards they must know in advance which ones potentially might be valuable and how they place them in a pack because they're just like a little like bubble gum like five dollar or five hour i see that yeah dude nat turner was thirty five when he did this so he had recently sold flat iron health i think that's what was called for i think like two billion dollars in two thousand eighteen so he must've have sold so i think he sold one company for forty million dollars when he was twenty company yeah it was an ad tech company i forget what it was called but it was like a cool thing whatever he sold it for forty i think forty billion to google then he starts this cancer thing because someone in his family i think was sick and him and his partner i think his partner is zach they're like whip smart like you could i could just tell by the way zach is like kind of a feisty guy online and he like he's very sharp with his words where you see guys talk like this and you're like that's not someone i wanna argue with because not only is he sharp he's argument and he won't back down yeah calls bullshit yeah and so this guy nat seems like a little bit more of a nicer version of that but still has it they they he seemed so smart and wise at a very young age i've been very fascinated by him as well and i also thought when he did this i was like like it was like totally like i don't like that's i then you go to the website and you're like this is this is awesome this is good for the soul i mean the the math on the just the queue alone right fourteen million cards in the queue the the cost to grade a single card is you know twenty bucks on the low and thousand plus on the high end let's call it like thirty bucks on average so fourteen million cards in the queue times thirty bucks is four hundred million sitting in the queue it's probably more if you if you think the average cost of the card is higher and so that's if that's just their backlog and by the way this is one of the reasons he bought it was because there was a one year weight to grade cards he's like dude this is terrible and so he bought it to try to modernize it with technology with efficiency with just intensity and say like we have to be able to do better than that and i'll take it public again once we've implemented like a more tech forward approach to doing this because you can't just have like a multi year backlog and cards waiting to be graded if you go to his instagram it's called nat turner cards and it's just photos of him showing off his card collection like he owns like what looks like a y ming rookie collect like a rookie card and it's just him showing it off this is so cool i wonder what their office is like this is awesome the albumin ming but he albumin rookie car just for some reason got me yeah i don't know i don't know what their office is like i don't know what if they're i don't know what if it's like i just think this ever talked to of an amazing move no i never met him i'd love to have them on i think it's be really fun yeah i think i be great i also just think this is my my sickness my disease so there's anytime i discover a great business model the the envy in me is it's like oh how do i have one i want one and so there's a question of like where else are businesses like these or where could you build a business like these and you know my brain goes into like human capital so like how do you like for example could i create a psa grading system for the top one percent of ivy league graduates like could i basically score them in some way could i do this for sports right just like they do with the combine and the nfl or an nba like could you do this with youth athletes like basically where would there be an aligned set of incentives the demand for it they want to have structure and a sort of a scoring system that can be trusted by all parties and where's the economy big enough like you know collectible was a big enough economy i don't think it's like a whatever ten billion ish industry it was big enough to support the these types of revenues and so i wonder where else you could build one of these like third party trust third party grading systems dude but there's also i mean you're you're you're just scratching service which different collectible so if you wanna get really nerdy i'm part of like all these like vintage denim communities online and people will post yeah luck if forgot of us if if you're gonna say this guy who's got an instagram who's thirty eight years old dedicated to his cool and easy time but when you said it i well you don't like lee eats from nineteen forty seven but there are all these like they like they they do this for purses tell me when you when you appreciate denim is it a like with wine you're tasting it with you know cologne usually your smell like it what what do you do is it a feel is it a smell is it a look what do you even look at what what is the what traits do you even evaluate the the premium the best stuff or for there's all types of terminology you wanna look at the honeycomb combs which is the fading that's on the back of the knee you wanna look at the the back patch near the butt you wanna see does this patch is it made out of cardboard and paper or is it made out of of leather and has it shrink a little bit or not you wanna look at are the are the copper rivets just a little bit green so you know it's real copper are they hidden or it was of a famous pair like of jeans like the harness wagner baseball card or like the the rare charizard are what what is the most valuable collected denim yeah so levi strauss was invented levi strauss was a man he invented it in the eighteen hundreds to help gold miners in san francisco so california and nevada and so if you can find it's called buckle back so would they have the buckle on the back to like it's called like a cinch if you could find any of those in an old mine and assume that's and you you can date it to the eighteen hundreds those could be worth twenty grand and so collectors particularly japanese collectors love them but then there's this whole sub genre of people who make reproduction predominantly asian companies japanese companies they're the ones who make the best ones japanese replicate american shit so good i'm wearing a pair right now of levi levi's stand for stand let's see him let's see him looking at this high give us a high rise look at the roping the roping this beautiful roping fades that's what you're looking for you're looking for that chain stitch hem that's not made by a normal sewing machine that's made by a union machine they don't even make anymore you gotta mind you're gonna you're gonna buy died hem that yeah you gotta find that cost seventy dollars to get hemmed okay you gotta find that good good and it's actually quite challenging and so like is the most expensive denim art art piece you've bought are you are your buyer or you just a casual no a employer i'm a con i'm a v but i like five hundred dollars for like a a vintage jacket have you considered have you been tempted to be like oh fifteen sarah do we need that fifteen grand do we need vacation i have so there's like like a ninety a pair of nineteen forty seven levi's that use like the green for the pockets because back then we are like provisioning out materials and so every material was green for the war and getting some of those real deal you know the real deal hole field once yeah i want those stuff but my point is is that there's this whole subreddit dedicated to two things one looking at the fade of your denim it's called the reddit raw fades is what it's called so it's raw denim that fades nicely i swear to god it's literally just photos don't your would be hard case is beautiful but i do know there's people who do this for other types of clothing which are far more desirable like purses so you're saying you could do niche psa yeah you if you if you specialized in different yeah clothing you know clothing of bags yeah denim is too niche but like but maybe there's long tail of things like denim yeah well particularly handbags i've seen this all the time on handbags like on ebay and stuff like i bought my wife like a vintage one for like two or three grand and i'm just trusting the person's ebay profile that they have like five out of five stars but yeah there's like a bunch of like cool collectible like genres that are still really prying for some of this stuff yeah so by the way like i know it's amazing that like a woman has decided to marry me even though i'm still into this stuff but we exist guys oh my god i'd matt turner obviously we're nerds as well if you'd like to come on we love next week rubin matt turner come on the podcast guys don't we seem like a good look what salt we've insulted ourselves just as much as we've insulted you so it's like we're good that's something you should wear a white tank top more often i think that it brings out something special in you should i just go skim beer and skim beer with each of so i just saw the flex on the shoulders congratulations it seems like by the way for the past two years everyone is commenting about on your body every single episode that's great love it yeah alright so coming go to spotify farming in india who is continue to comment on how how how how much better i look at how how i'm getting in great shape and it shows keep it up yeah psa it's gonna grade you they're gonna give you a oil they're gonna give you a it's fine their condition yes it's it's fair alright that's it that's a pod i feel like i could rude to world i know i could be what i want to put at all in it like a days off on a goal less travel never looking back alright let's take a quick break just 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 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