00:07
Boom. We're here. Coronavirus
00:09
and all Yeah. The threes of San Francisco are empty. You could've walked down in the middle of the street, and, would've been fine. Yeah. And, we're in this studio, and Sam's just coughing up a storm, which is got concerned. Allergies. This may be my last podcast. You don't know. Allergies.
00:23
The type of allergies that you can catch and kill you.
00:27
So, this is for all the students of Stanford, Harvard, Syracuse, Syracuse, Syracuse,
00:32
that have been shut down. They're at home, certainly just listening to the podcast in quarantine.
00:36
Is for you. This one goes out to you. Yeah. Good luck. Alright. What do we wanna talk about? We got a bunch of words on the screen. They all look interesting. Where do you wanna start? Pick one. Can we about, I wanna do two things before we jump in. Yeah.
00:48
Are we doing a plug of Jordan Harbinger's podcast?
00:51
Yeah. But I think we wanna talk to him about it. Right? Like, we want him to talking to us as the plug. Okay. So we're gonna be promoting his podcast and he will be doing it to us. Yeah. Scratch our back. We scratch his back. That's what it goes. So if you hear a plug from him, go and podcast. He's actually helping us a ton. And the second thing is I re I read every review for the podcast.
01:11
We have six hundred reviews maybe. Seven ninety four. Check this morning. Well, seven so eight hundred. Let's say eight hundred.
01:17
I they're all five SARS except for, like, five. Yeah. And that's cool. I like reading the positive reviews, man. And those five were from early on when you weren't even on the pod. So really, I take those I take those else. No. There were two dot start reviews. And I like listening to negative feedback, and I don't like following all of it, but some of it I follow. The first was that the sound for the guests were bad.
01:38
Agreed. Fair.
01:39
We will listen to that. And the second one, and I hate this. I don't hate it in that it bothers me, but I I just don't
01:47
like, I don't think it's bad for which is we were called bros. Right. And I don't really care about that because I what's that mean? How is that supposed to be an like, people use that as an insult. I don't understand why that's an insult. Yeah. It's an insult, for sure, to be clear.
02:02
It used to not be an insult, but being called a bro is an insult.
02:05
And,
02:07
yeah, I don't know. Is it the way we talk? Is it what we talk about? Is it or we're using the wrong word? I'm not not exactly sure. Yeah. I don't take offense to that even though people mean it to be offensive.
02:18
So I don't care if people say that. Yeah. Not a bro. I'm a lover, not a fighter. You know, I I got multiple angles. I got gears. What does the bro mean?
02:29
Don't know, Henry, what's a bro? We we need the get get the get
02:33
you gotta go into the mic.
02:36
I don't think it's Come on, bro. Yeah. Come on, bro.
02:40
It's definitely not a good thing, especially if you're, like, over the age of twenty Maybe we have to replace Henry with a female, and then we'll get more credit for not being just a bro down.
02:50
No. I don't care about being called a bro.
02:55
So then it's a compliment.
02:56
Yeah. Kind of. I don't know. Whatever. I'm not gonna be liked. I'm just trying to be me. No. Well, here's what to do. I've tried to be b, and I'm trying to create stuff that people want. And if
03:05
predominantly,
03:06
people think it's broy, but they love it. I'm okay with that. Like, for example, I listened to the Joe rogan podcast.
03:12
Joe rogan talks about his carnival all all meat diet,
03:16
you know, working out
03:18
UFC fighting, cage fighting,
03:20
hunting. You know, these are cars. Like, these are his topics because that's what he's genuinely interested in. I like talks about. Any talks about other things everything else. And I like when people I like listening to stuff where people are interesting and they're interested in certain stuff. And so for me, the test with this podcast is would I wanna listen to this? And so at the end of the episode, I just sort of think, would I be interested in listening to that podcast? And if it's appealing to me, then I'm sure it's appealing to other people It's not gonna be be appealing to everybody for sure. And then the last bit of negative feedback we got, which is we focus too much on the San Francisco Silicon Valley scene.
03:52
And
03:53
I'm from Missouri by way of Tennessee. You're from everywhere, including Colorado.
03:59
I love San Francisco, and I hate it at the same time. I'll be the first to make fun of it, but also I love all types of cool shit going on throughout the country.
04:06
So Yeah. I'm that's fair. If it's interesting, let's talk about it. In fact, I actually think personally,
04:12
I think we skew a little too far in the kinda like low tech ideas I think there's a lot of interesting high-tech ideas that don't require a high-tech entrepreneur. For example, I don't know how to code, but I've started tech startups in Silicon Valley taking venture capital money, and worked with an engineering team where I'm the only guy in the room who doesn't know anything about engineering,
04:30
you could do that. So I actually think that there's plenty of cool stuff that we're not talking about that I'm gonna be bringing more of. So if you don't like the silicon valley stuff, I'm sorry. I'm gonna try to bring more,
04:40
interesting technology,
04:42
to the table because there's a lot of it out there. And I we haven't been talking about it as much. The way that I describe San Francisco and Silicon Valley is to me, it's kind of like Hollywood, but it's only only if you're trying make like a like a big blockbuster hit. Right.
04:55
I believe that you can make those anywhere.
04:57
Mhmm. It might be a little bit more helpful if you are physically in Hollywood because you'll not because
05:03
the chances are necessarily higher, but because you'll be around other people who have similar wants and dreams and your baseline becomes a certain thing. For sure. But you can certainly make it from anywhere. Absolutely. It's been proven. Alright. Let's talk about some of these things.
05:18
Let's start with let's start with the Sequoia memo. Okay. Did you read this?
05:22
No. I avoided the on purpose.
05:25
Thanks. Denial, the best the best approach. Yeah. I,
05:30
we haven't raised venture capital, so it's a little bit different. Applicable. Okay. So let's explain what it is. So Sequoia is one of the biggest French capital firms here in Silicon Valley. They're famous for back in two thousand and eight, I wanna say. They released this presentation
05:44
called RIP Good Times.
05:46
And they, basically, they called an emergency meeting of all their portfolio companies, invited them to this dinner, locked them in a room, put this presentation up on the screen that was basically like, hey, the good times we've all been experiencing
05:57
are about to end. Here's why. Most of you entrepreneurs, you have not been a part of these cycles, We've been investors through the dot com boom and the bust, and then this new boom, and this was right before the sort of financial crisis of two thousand
06:09
And they told him, look,
06:11
money is about to become hard to come by.
06:15
We are going to have,
06:17
a giant financial crisis that will have ripple down effects to you guys, to your customers, to your clients, to your investors.
06:24
And so you need to start tightening up. Anything you're wasting money on, you need to stop wasting it. Anything, if you haven't raised money, if you don't have twelve the bank, you need to go raise money right now to sort of, be able to endure a downturn.
06:37
And they just released another one which is the new Sequoia memo. So that was two thousand eight. Now they released a new one, and they basically were like, look, this coronavirus stuff is a this is a once in a hundred year virus.
06:49
And there's this it happened in China, which is like, when you shock China, you shock the global supply chain,
06:56
And also now that travel is gonna stop, a whole bunch of business is gonna come to a halt, that stock market's gonna go into a panic because we've been in a ten year bull run, and that's about to sort of end anyways.
07:07
So they they told him the same thing. Change your spending you need to tighten up,
07:12
raise money. If you if you have an offer out there, take it. Don't worry about valuation. Just take it and get the money in the bank. And,
07:19
and, you know, you need to go into sort of survival mode. You need to change gears, and that's what just came out, which I think is very interesting. Have you made any adjustments to your business?
07:28
Not yet, but I live like this anyway. I'm kind of a cockroach in the first place. And and I actually think that
07:36
me living this way has kind of been a a consequence. It has been it's hurt me more than it's helped me, actually. I think it it it made it so I wouldn't spend enough money, which if you have a machine that turns a dollar into more than one dollar dump the dump the truck your money truck. Like, what ad spend or what do you mean? Yeah. I mean, look, if you have a funnel where you or a product where if you just spend more on marketing or spend more on engineers or spend more content creators, and it turns that new customer into more than what you acquired them for. Right. Then if anyone had a a little machine that turned one dollar into one dollar and one penny,
08:10
the name of the game is throw as much money on into that machine as you possibly can. As fast as you can. And I've had those machines, and I didn't capitalize on it.
08:18
So I've lived this way all the time, and I think it's actually hurt me a lot. But in times like these,
08:23
bring it on. Yeah. Don't need to adjust. We haven't changed we've done things just because we're always tight. Yeah. And your company's in a good position, like, just now before this. We were looking at a company's,
08:33
P and L, And it was like, cash in the bank,
08:36
two hundred twenty grand or something like that. It's like, dude, you're a couple months away from insolvency, you know, if that was the case.
08:42
Whereas you guys are a much better position. Yes.
08:46
I do. I am I do have a little fear.
08:48
I don't know how I feel about this corona thing. It went means what it means for business. I do think there I am on the side of,
08:56
I think it's bad, but I don't think it will be as bad as, I think, or as I originally thought. Right.
09:04
I I guess I just have faith I have a lot of,
09:07
blind faith that it will work out, which So I've been on the other side of this. So
09:13
so when we were doing our idea lab,
09:16
I worked with this guy, Michael Birch. Michael Birch was, is known as, if you just Google. He's, like, one of the top growth guys in the world. He sort of, was doing and invented viral marketing before viral marketing was a word. He did it because he didn't have money back in the day, so he built one of the first address book importers where
09:32
for this company called Birthday Alarm, he had. He was like And I think he did it before that at, Rick Marina's company. I forgot what that was called. Birththalarm was before that. So so Bertthalarm was the first one where he was like, I want people to send this to their friends. What if I just imported all the addresses from their hotmail? And then I made it easy. Push this button to send it. And he's like, he he literally told me at his house. He was like, I thought that ten days later,
09:54
like, I thought there's no way they let this go for more than ten days. And he's like, it's now been fifteen years, and this thing still works. And he's like, so he was working on viral marketing because he just didn't have a budget. So he's like, I gotta use my customers to get me more customers. And you explained that you didn't explain totally clear. But someone signs up for your thing and says, do you wanna invite your friends? Here's your Gmail contacts. Click select all and send an email call them. And so in this case, for birthday Alarm, it was,
10:20
I make a calendar where I'm, and I'll invite you. I'll say, hey, Sam, can you add your birthday to my calendar? I I don't wanna forget your birthday This is before Facebook is listed, by the way. And so you would add your birthday to my calendar, and they would, hey, it would say, hey, Sam, don't you wanna remember Sean's birthday? That'd be nice. Like, reciprocate.
10:34
And he'd be like, yeah, sure. And then he would say, hey, Sam, you got one birthday on the calendar, but you surely got more friends than one. So why don't you invite some other here, let me make it easy for you. Would you like to import all your friends from Hotmail? And you're like, yes. And then and he added one thing at a time to make it more viral. So he he would add
10:50
a prefilled message. He's just like, oh, there people are stopping because they can't think of what to say. Right. So here's a prefilled message that I know works. And then I'll just say sent. And so then, he got this thing super viral. So, you know, birthday alarm grew to fifty million members with zero paid marketing.
11:06
Fifty million. And, and then he's done this again and again since then with his social network, Bebo, and others. So when I worked with him, The name of the game was viral growth. And so we did a charity campaign to try to raise money for charity water. Well, we made a story, a website that was just telling a story of this boy, Jean Vasquez, with no water. And then we said, can we get this to go viral? So we did the same thing. Import import emails, get people to send the story to their friends, and raise money for the cause. We got it to go viral. So I've literally been been it where like nothing nothing nothing. You'd come into work. Nothing. No growth. No growth. No growth. And you would just tweak the right thing And then all of a sudden, the, you know, between overnight, something would have doubled. And the next morning, it double began. Next morning, double began. And I remember it just going from zero to five million people,
11:49
signing up for this charity thing within, like,
11:53
you know, two weeks. It was insane.
11:55
And so I've seen viral growth and how
11:58
counterintuitive
11:59
it is. Like, you don't think, you know, well, yesterday, we had four thousand people. So have, I don't know, five thousand, six thousand. So, like, no, you're gonna have sixteen thousand. Then you have thirty two thousand. And it's gonna, you know, it's gonna go up to the millions within a few days.
12:12
And so I've seen viral growth when you're talking about it in the good sense from a product perspective. Now it's viral growth of an actual fucking virus. And so
12:20
and you could see, actually, in the US, somebody did a great graph where they mapped Italy where everything's on lockdown because Italy has started spreading like crazy.
12:28
And they showed
12:29
Italy day one, US day one, Italy day two, US day two, number of cases. And the bar graphs are like identical. And the thing is we're just in, like, whatever, day six. And, you can see by day twenty one where this thing gets to, if you don't, like, lock everything down right away. So I am
12:45
very fearful because I've seen viral growth. I've seen viral spread,
12:50
and I know that it doesn't work the way it breaks our brains. Our brains think things go linearly But this goes exponentially, and it's really hard to just comprehend an exponential spread. And
13:00
to take the story a different way than coronavirus,
13:03
which is that stuff you're describing that Michael purchasing, you can actually still get all these two cool plugins that auto, automatically,
13:10
like, allow people to share a pre populated message to all their Gmail contacts. We used it. And
13:16
people still share. Yeah. And the the the math works out where, you know, because you would think I would never do that. Wouldn't email all my contacts. Oh, we had a lot of people doing it. But people do it. And what happens is, you know, one percent or less will do it. You look at the math. One percent of people do it. On an average, they have three hundred twenty six contacts. So for every hundred people that come in, you get three hundred twenty six people blasted out. It doesn't work as good as that time because the email open rates are much higher than. Yeah. But now people are like, oh, I don't know. I never talked to Sam. So if he's sending me this, this is junk, this is spam. Now people filter it. But in certain countries, it works. Like, we were growing, like, we could do this, like, clockwork in India. In India, people still open it like did in the US ten years ago, and they forward even even higher rates. They don't care. They forward everything to everybody. And so India,
14:00
Turkey, all these little countries where we
14:03
would see this crazy growth that you couldn't get in the US and or UK anymore. They kinda suck because the monetary value ends up you know, the value per user is lower there, but it does still feel good to get like And it definitely works, and people are shocked by that. We did one through SMS, I remember. And over the weekend, it went viral. And, like, you know, during the week, Monday through Friday, everything looks fine, is growing, but, like, not at a crazy pace.
14:27
We didn't realize the viral coefficient was two. And so over the weekend, it took off,
14:32
and started compounding on a big number. And we racked up a hundred twenty thousand in SMS, a hundred twenty thousand dollar bill in SMSes. Holy crap. Going through,
14:42
Kazakhstan.
14:43
It's like, we didn't even know we're growing we're gonna grow in Kazakhstan, and it went crazy and turns out texting in Kazakhstan's super expensive. And so, hundred twenty thousand dollars in two days, we had to pay off. That's crazy. Sucked. Well, I need to we need to do the texting stuff, which we haven't.
14:57
You wanna talk about Zumper? Mhmm. Okay. You wanna scroll up for me or down whatever you wanna okay.
15:04
Okay. Zumper. I think it's zumper dot com. What did it they just raised,
15:08
was it forty million dollars today at a four hundred million dollar valuation? Total, they've raised a hundred and fifty million dollars in valuation.
15:14
It's a cool it's a cool service.
15:16
If you're a consumer, how does it work? Yes. So you ever use Zumper?
15:20
If you're trying to find an apartment, you'll probably run into Zumper because you're like, it's a search engine to find apartments to rent. Yeah. And typically, for these new guys, San Francisco isn't the major market. It's typically,
15:31
more middle of a more more places where they have high rise buildings, which we don't have a lot here. But basically, if you Google Chicago apartments,
15:38
or moving to Chicago or something like that. Zumper or apartment list, mile the place where I used to work or a bunch of other things like that will come up, and it'll be like, here's eight hundred forty three apartments available in Chicago.
15:49
Click here to get information and submit your information. Okay. Great.
15:54
Here's how they work, which a lot of people have no idea how they work. Henry, I'm gonna explain to you how they work, and you tell me if you ever heard this. Okay. So they're lead gen companies. Do you know what a lead gen company
16:04
Okay. The way it works is, and a lot of people are shocked by this, and it's actually way easier to start than most people would realize. So the way it works is there's
16:13
I don't know how many there are who do this, but I know that there are for sure four or five that do this, that are big names. And so Just in the apartment space. Just in the apartment space. So there's apartments dot com. I believe there's rent dot com, and there's maybe two others that are quite large. And then there's
16:29
dozens that you don't even realize exist. You'd have to Google them and find them. But what they do is they work with all the big apartment buildings. So
16:37
there's gray star, which has probably millions of apartments, then there's, co star, which has a bunch. And then there's,
16:45
every apartment billing that you have world star. You're up.
16:49
What are what are the other ones? Greystar. And then there's,
16:52
Avolon
16:54
Bay. I think they're called there's a bunch and they have millions of units. And what they do is they go to red dot com, and they go, or apartments dot com, and they go for every person who signs a lease with us,
17:03
or who calls our our phone, we're gonna give you a hundred bucks. And so what Zumper can do or probably how they started out or what anyone can do is they go, hey, apartments dot com. You guys are getting a hundred dollars per call, will you give us ten dollars per email that we give you of people who are qualified leads? So what Zumper
17:23
did. I imagine they did this when they launched, and I'll explain why I say when they launched. Is what they did was they go to these places and they go, alright, give us a cut of the revenue per email. And so the math works that if we send you five emails,
17:33
basically people who said, here's my email address, here's my phone number. I'm interested in a two bedroom at particular building.
17:40
Apartments will we'll be like, alright. We'll give you ten dollars for that because we're pretty confident that for every five of these we collect, one of them will become a lead. And so now we'd make fifty box and profit. Mhmm. And so what Zumper does is they create a different funnel where,
17:53
they learn how to rank really high on moving to Chicago an apartment, or they are able to have really good Facebook ads, and they get all these leads, and that's what their margin is. And so The mar and margins for these businesses, I know this firsthand could be sixty to seventy percent gross margin, which means,
18:11
Let's see. What what's the math behind that? You A million bucks comes through the door. You paid, you know, two hundred fifty k on search engine marketing. Yeah. But, you know, the rest is because there's no cogs. There's no there's no physical product you're selling. So you have a a very high margin product, sixty seven percent margin plus whatever content staff you have internally, that's your other cost. So it's just a lead gen company. Yep. And the interesting thing, I've known a lot of people who have these lee lead gen companies. I knew a guy who had a lead gen company for swimming pools, So if you wanted to buy a swing swing pool, you'd Google,
18:41
buy,
18:41
swing pool repairman or,
18:44
indoor ground pool, indoor,
18:47
in ground pool set up California.
18:49
Right. Or something like that. He's number one. And he would he would be number one. You submit your information, and he would sell to these people who go in service Who actually do the thing? Who actually do the work. You're a middle man when you're a lead now there's pros and cons to this business. The first pro is you could set these up really cheaply, and you could start making cash flow very quick. Like, if you were able to spend one month just building this site and creating the relationship with this person, you could next day go out and start making cash. So long as you were profitably acquire a customer. Right. So that's great. The second great thing could do this for most anything. The best way I think to figure out how to do this is you figure out what has the largest total market size
19:26
with also the larger possible
19:29
cost per lead,
19:31
with also the least amount of competition. And you do like a, a grid. Yeah. Like a grid. And so, for example,
19:37
I've been bullish on truck drivers.
19:40
The reason why is I think that there's a whole lot of truck drivers in America.
19:44
The average truck driver mix a a good salary fit, let's say, fifty thousand dollars a year. Therefore recruiters would be willing to pay, like, a hundred bucks per lead. So I was like, can I send leads there? Or you could do it for, local services.
19:57
So I need a,
20:00
landscaper,
20:01
or I need irrigation work done at my home Right. My home. And someone will buy those leads for, I don't know, fifty bucks. So you can do this for anything. Right. You just have to optimize for what So my father in law's in the senior living business. He owns a couple of facilities. And the biggest thing for them, like, his business looks great when he has high occupancy rates, and it looks terrible if he gets high vacancy. So low occupancy.
20:21
And,
20:22
so there's companies out there that do this for seniors. If you start googling, like, you know, you know,
20:28
memory care,
20:29
in Alameda, California.
20:31
There's a company that will pop up right in the top of search and say, Hey, we've reviewed the top fifteen,
20:36
you know, facilities here, and come read about them, or Are you looking for this? Talk to our consultant. Just put in your email address here, and we'll we'll help you get land in a spot. And so then they'll pay these lead gen services a high amount because You know, somebody who goes into a senior senior facility, they're paying eight thousand dollars per month, and they're usually there till end of life. And so you gain you know, the very high lifetime value of that customer. So you're willing to pay a thousand dollars
21:02
per qualified lead who's looking in your area I don't I don't know if it's that exact number, but high high price. And I have firsthand knowledge. I know someone personally, and I know the financials of a senior
21:12
home living or senior living LeeGen business. It made hundreds of thousands of dollars a month in revenue and,
21:19
very good profit. I know someone who did it for rent to own properties.
21:22
I know people who have done it for, like I said, swimming pools. I know people who have done it for apartments. I know a guy who did it for local home services and did about sixty to seventy million dollars a year in sales. Right. And so that's the name of the game. I also know people who have done it for jobs. Jobs is another good one. Now, like, rigup has done this. They raised money at a two or three billion dollar valuation, and they've done it for oil workers. And the way the math works is there's actually way more oil workers in America than you think. Hundreds Right. Thousands or can be hundreds of thousands.
21:49
And those oil workers,
21:51
the barrier to entry is relatively low. You don't have to have, like, a master's degree in something, so anyone can do it, or a lot of people can do it. And the salary is quite high, a hundred grand a year, in some cases. So they're willing to spend a lot of money. And so it's a really company
22:04
or a business, rather. And a lot of people don't know that's how it works. Now here's the downside.
22:08
The downside
22:09
is lead gen companies can be very transactional which means as a business, you only capture value and make money, the more leads you're coming in through there. And often, that means you only make money
22:20
when spending money. Mhmm. A lot of times, you, they suck at building brands. So, like I said, you could spend something up really fast. That means it can likely go away just as fast because let's say that, like, if you create a URL that's, like, home, senior home living california dot com,
22:38
that is not, like, maybe maybe someone is just gonna Google that and they're gonna see it one time. Right. They don't think they do. Yeah. And then they're gonna and they're done. They're never gonna think about you ever again. And so You have to pay for them again. And so if you wanna add more customers, you gotta pay again. Right. And so that's quite hard. So if you can build a brand around it, then that's where it's really interesting. And the second thing is that you are dependent on the person buying a lead. So in my case, I worked for, a person who was doing lead gen, and they go, alright, There's a cap on this. Like, we can only make a certain amount of money giving leads the way that we become a huge business is we get we make a relationship directly with the apartment buildings.
23:12
And,
23:14
go straight there, go straight to them. Now the reason why that sucked is because the person buying the leads was like, oh, You're our competition now. Right. You're out, and they cut it off, and their revenue goes away immediately. Right. And so what thumbtack did, I like thumbtack. What they've done they've built a direct relationship with the people. So if you Google San Francisco wedding photographer and you see a wedding,
23:34
photographer on thumbtack, they've built that relationship with them and thumb and that wedding photographer will pay thumbtack directly for a lead. That's great because there's no middle man to cut out. Now the downside with that is it costs a ton of money to do. This is like really big problem. To build a marketplace. And so you likely have to raise money or figure out some scrappy way to get it done. Right. But,
23:53
That's my rant on Zumper. Yeah. And the the big version of these, if you take it to its absolute max is like Expedia or Booking dot com. Yeah. Right? So what they're doing is they're saying, okay. Cool. You wanna book a flight? I will become the best at ranking for how to search for flights, find a good flight, here's some recommended trips,
24:08
and then we just the airlines pay us, a commission, an affiliate fee for every lead. We're we're sending them. And that is a notoriously difficult niche. Yeah. They've they've done well, but they're hyper competitive and they you know,
24:20
it's always contentious.
24:22
And then, hotels is another one that's quite challenging.
24:25
If I wanted to make money really fast, I would find relatively boring one, like trucking jobs, which I find interesting, but most people do not. So they will not enter that.
24:34
But flights and travel is a lot sexier, and so it's can be a lot harder. I'll give you another niche one. I have a friend who created this business called a ply board. And what he was doing was
24:44
international students,
24:46
people, you know, I went to high school in China. And when I when I was graduating in China, everybody wanted to come to the US to study. Everyone wants to come to US colleges. So internationally, India, China, Indonesia, Malaysia, the best students all wanna come to the US if they can. So they wanna come to the US, but they don't know where the hell They don't know what the schools are. They don't know how to apply. They don't know how to translate their their scoring on all these, like, you know, aptitude test in Malaysia to, like, what the US schools want, etcetera. So there's a there's a barrier there and the US schools love foreign students because they pay more. Like, I think a a foreign student who international student who's going to school it at Berkeley will pay double the tuition as a local student, not just an in state student, like a US
25:26
out of state student versus international, the international student pays double.
25:30
And, Alan, as you,
25:32
you paid double? So I paid more than double. So I went to school in Australia. I think the high average, for semesters, like, five to six thousand for, like,
25:39
some local student, I paid, like, forty five
25:44
Okay. So, yeah. Alright. Great. So so you've paid like nine times as much,
25:48
going and going to school. That's insane. So, basically, what he was doing, so he went to colleges and and you have all these small colleges that just need applicants because they don't have a brand name. So, yeah, a lot of Stanford and Harvard, they don't really care because they're getting so many applicants anyways. Doesn't matter. But, like, San Jose state,
26:03
you know, they were like, hey, we will pay you a thousand dollars per admitted student. Three thousand dollars per admitted student. So he was getting three grand per admission,
26:12
in contract with all these different schools, and then he just had to do lead gen on the other side for students who want to go to school in America. Is actually a big market of people who are searching for it. And what happened to it? I still going. I don't know. I haven't checked in with them lately, but hope you're doing good. Martin, I hope you're doing alright.
26:27
Work at the university of Sydney as a part time job, and I remember getting an email one time when they're describing the strategy for the year and how they're trying to pivot away from a so many international students, but that was they couldn't do it because that was their financials revenue. Like, they were making so much money for international students. They couldn't stay afloat, but they didn't target.
26:44
Go to campus right now, it's literally just like International since ever. Yeah. I went to University of Sydney as well for a little while. It was it was crazy. We should we should actually
26:52
talk about that, on another time because that's an inter there's an interesting thing there. But to,
26:57
get back to this lead thing to wrap this up, there's actually a lot in this is way bigger than people think. And one of the biggest ones is credit cards. Credit Karma. I don't know what they do in revenue, but they just sold for eight billion dollars. I bet they did one bet they did a billion in sales. And what their hook was, we're gonna get you to sign up for a report, a credit, a free credit report, and we're gonna recommend credit cards you use, and they'll make a hundred dollars per credit card affiliate. We get you they get. Now, think about credit cards, huge market, huge referral fees, very competitive. NerdWallet does the same thing.
27:27
They're they bootstrap. I think I don't know.
27:30
Multi hundred million. Yeah. I mean, but I think they bootstrap. To, like, fifty or sixty million in sales, then raised money. So it's quite good. Now here's another company, and here's one more interesting thing. You know the penny hoarder? No. I don't actually. I don't know why that. I guess sort of the penny hoarder, the penny hoarder com. Kyle spoke at Hussicon. He's a cool guy. He he's was a great success story. Still is, but he, started the penny hoarder. And what it did was he would about when he was poor. He didn't have any money. He would say I didn't have any money. I was I was trying to pay my bills. And so I would do things like drive Uber or I would,
27:59
do coupon clipping, and he would blog about it. And anytime someone
28:03
saw an article that he wrote about for Uber. He would make two grand per Uber driver. And so he was like, oh, this is cool. I should I'm gonna bog about all the ways in which I can save money or make extra money. And so he did that, like, through like, there's websites where you can fill out surveys and make dollars and make a few bucks and he would blog about it and mostly middle America moms would see and be like, that's great. I'll make money on the side and I'll sign up he would get an affiliate fee. And he scaled this thing from zero to sixty million in sales completely bootstrapped in, like, six years. I love this. That's great. But here's the problem. There's this other company called Fluent Media.
28:37
Fluent, I think it's called Fluent. Fluent is a publicly to company,
28:41
and they are performance marketers, which means they do what I'm describing, but across tons of niches. So someone will say, like DirectTV will come to them and be like, Hey, we'll give you eighty dollars for every customer you send us, and they go, great. And they spin up these landing pages, and Fluid Media does this with trucking well. They do a bunch of stuff. If it's a big business, publicly traded, they saw Kyle's website and how much he was killing it because he talked about it a lot for PR, which, I mean, It's good and bad. Good and bad. And they just and and and they they ripped them off completely. They created, like, the dollar saver or, like, something, like, very similar to, like, the penny hoarder. They just copied the website, copied the articles, and then they threw it on Facebook, They drove
29:21
traffic to an article that said, here are the hundred best ways to save money, and they did the math so they could get a click for a penny or they could get a click for a dime And each person who came, they would make twenty cents because that's the conversion rate of which people would sign up. And so Kyle at Pennyhooter, this is all public. You can Google sued them. And what they found out was fluent media, according to the
29:42
lawsuit, hired
29:43
one of the penny hoarders in employees, and they said, yeah, here's how we did it. And the so they just spun this up, and it made a ton of money right off the bat. Yeah. And so these are the pros that got it. Did he win the suit?
29:54
I think it's ongoing. Ongoing. It it's ongoing. But,
29:58
For Kyle. But this is why this is interesting.
30:01
Because I and in the penny hoarder, amongst its crew, a bunch audience, I think has a great brand. And, Yeah. And and Nerdwall, actually, at this point, has a great brand. At first, Nerdwall was simply a
30:11
gonna Google artists through. You're just gonna Google best credit card, and we're gonna show up one, and you're not never gonna remember us. But at this point, they're doing all this advertising and commercials, and people like, turn to the nerds. Like, it's working. That's their commercial.
30:22
So really interesting business model. I I like Lee Jen,
30:26
But a lot of people didn't realize how that worked. Henry, was that interesting? Did you learn how it worked? That was great. Yep.
30:34
Alright. I got another one for you.
30:36
Manzil. So this is cool. This is one of my favorite reasons to do the podcast is that interesting people just reach out and tell me about their business. So
30:43
manzul is, this so this guy Sam reached out. He listens to the podcast. What's his last name?
30:49
Sam Malaco, Hallaco, something like that. Too. And,
30:54
so he was like, hey, I got this business. You know, would love some help with it. Or just would love to chat. And so I said, okay. Let's let's chat. So I get on the phone,
31:02
And I end up blown away by what these guys are doing. So they teach me about something I've never heard of and is now very financed, very, very,
31:10
fascinating to me. So what they do is,
31:13
Manszel does Islamic financing.
31:17
Oh, we've talked about that. What's that mean? Yeah. We talked about it. Not on the podcast, but we talked about it. Offline because I was pretty interested in it. So,
31:24
Henry, do you know what Islamic financing is? If you didn't know Legion, I don't think you'll know this one.
31:29
So Are you are you Muslim? I'm not. I'm Hindu. Well, I'm I'm neither, but, like, my, my family is Hindu.
31:36
So I didn't know about this. But basically,
31:39
In the Muslim faith, there's,
31:41
actually,
31:42
sort of,
31:43
the advice is against
31:46
traditional loans. So,
31:49
interest, which is known as like Ruba, I think, in the in in their faith, is, found upon in these, so a traditional mortgage where you go to the bank, you have your down payment, you take out a loan, and you're paying interest,
32:00
is actually not compliant
32:02
with,
32:04
with their with their faith and their law. And Which is actually common in a lot of other different religions. Is that true? Yeah. So I'm I'm Catholic Christian and, where I was raised that way. And there's definitely rules guarding handling money and interests and things like that. Yeah. And I I think the the fundamental basis, I'm gonna kinda butcher this. So I apologize, but I'll I'll I'm just trying to explain as best as I understand it.
32:26
So so apparently,
32:28
you have money,
32:29
sort of fiat currency, which is just not, pegged in anything. It's just a made up concept.
32:34
The the belief system is that money has no value, inherent value in itself. And So you should not be charged interest for borrowing money, which is this sort of abstract concept. So they have loans or they have, sort of, agreement
32:47
which can work as long as both sides are taking shared risk
32:51
and, getting sort of shared shared upside shared return in some way.
32:55
So there's there's Sam Islamic?
32:57
I believe so. Yeah. And his his partner Muhammad is also. And so they explaining to me that, hey, there's this big thing called Exlamic financing, and there's these ex Islamic challenger banks. And so if you ever heard the word Challenger Bank,
33:09
check this out. It's pretty, pretty cool. We know that banking's been around forever. There's these big bank brands that are, you know, in every country, there's there's big banks that are worth billions of dollars And recently, over the last, let's say, five to seven years, there's these things called challenger banks or neo banks. They're called. And so in Brazil, there's a bank called New Bank, and you bank. And and new bank is worth ten billion dollars. It's one of the most valuable startups in Brazil.
33:32
In, the UK, there's challenger banks Oh, my god. I'm gonna forget the name. But just ch challenger just means a new one? That's a startup bank. Yeah. And they're they offer different things. So what what these guys did was better digital access. So mobile apps, quicker ability to get sort of credit cards and and debit cards spun up.
33:49
And so there's know, there's a couple of them that are huge now. Few different multi billion dollar startups done this. What these guys have done is, they've done this for a faith based,
33:59
bank. Which is basically saying, there's a set of customers out there, in this case, Muslims, who are not being served well by the generic banks, and we can make a bank that serves them better And the way we're gonna do it is you wanna take a mortgage out. You can either take a sort of a mortgage out traditional mortgage, which is not compliant, or you can take one out that's compliant with your faith. We've come up with a mechanism that is blessed by sort of the the village elders, you know, the the sort of leaders in the in the community,
34:25
that says, yes, this is, you know, I think Shawnia Law's called. It's saying it's compliant with Sharni law. And then on the other side, this is,
34:32
this will this works as a mortgage. You can actually buy your home. And so these guys have this have this concept. And in other countries, this is apparently really big. So in Africa, Indonesia,
34:42
places where the Muslim population is the dominant population. They've already solved this problem, but in places like US, Canada, where it's just a minority of the population is is Muslim, don't have these banks yet. So I love this startup idea because How are they doing?
34:55
So how they're doing? So they're they've, they spent a lot of time making sure that actually get it to be compliant and actually get the financial mechanism to work. That took them a while over a year, maybe two years. Now they've gotten that to work and they have basically, they have two sides of a marketplace. On one side, they have people who are investors
35:11
because, you know, if you're gonna issue mortgages, their average mortgage is like five hundred thousand dollars. It takes a lot of capital to start this business. They don't wanna be the one they don't wanna go raise a billion dollars and then start issuing these loans. They want on one side to have investors
35:25
who, will put in the capital to fund these loans. And on the other side, they wanna have the borrowees who are trying to buy a home who can pull from this pool of you know, sort of halal financing, you know, this, this financing that's compliant. And so they have ten million dollars committed on the, on the investor side, one point two million in their bank ten million total. And then, and they're just every week, they're trying to close more of those checks. I think, which is a small amount, but this this is, like, just inbound interest. This is not, like, they've they haven't really done anything yet. But ten million will let you let you do if you just do half a million dollar loans, that means they can do whatever twenty mortgages.
36:02
Right now, and every mortgage has a certain value. So it's about worth about, I don't know, twenty k a year to them is that mortgage just in their fee that they get on top of it.
36:12
And so, and on the other side, they have all these applicants. I think you know, about a thousand applicants. And these are what they call super prime applicants because these are people who are doctors, lawyers, they have good jobs. They they have the money, they have the means to to to afford their homes. They're just looking for a solution that doesn't force them to compromise their faith. So I really like this business. There's a working model in the UK. There's a working model in, in Africa. There's working model in Indonesia. There's nothing in Canada where these guys are, and there's nothing really in the US. Where where How many Muslims do you think they're in in America? I think there's look this up. I think there's, like, a couple million. Only two two million, I wanna say, roughly.
36:49
That's pretty interesting. I like that. I think that there's a bunch of weird
36:52
rules
36:54
around banking. I mean, they're not weird. They should be there, but,
36:57
and so starting a starting a bank, I think it's it's almost nearly possible. It's very difficult. So what all the Neo banks do, all the Charter banks do is not real banks. They're not real banks. They sit on top of BBVA
37:09
or they sit on top of these other banks, and they're just the applic they're the consumer facing layer, but the banking happens with their underlying partner. And it's sort of like the lead gen model that you're talking about. They go to these banks and say, hey, I can get you a whole bunch more customers. Gonna spend all the money doing the marketing. They'll be banking with you, but we own this sort of relationship. Yeah. And that's actually pretty common. I use this thing. My debit card simple. You're simple. Right. I've heard of it. Yeah. This is my debit card. It's pretty cool. I like it because the customer service, I can just text they're, like, these, like, young guys in Portland, and they,
37:40
they're easy to chat with and they answer twenty four hours a day. They were acquired for one hundred million dollars. And I was like, this is like a freaking bank. That's it. Yeah. And I did Not a bank. Yeah. And it was what's it called BBVA? Yeah. Who they use. BBVA Compass, I think it's Exactly. They're under they're under there's a few that are underneath all these. Now the very first there's a now one of the challenger banks got their very first banking charter license, which is very rare. I forgot their name, but they just announced a couple weeks or last two weeks. That so the so now it's very interesting. Now once that seal broke, because it was so to apply for this. Yeah. I think we can And they all want it. Robinhood wants their license.
38:15
Brex wants their license. It's just very hard for them to get this. I think you need five per or what's the number? I think you need ten percent
38:22
in reserve. Yeah. You need a certain amount of reserve. But that's not even the problem out. It's just that there's no incentive for the government to give these out. They're like, you you kinda highfalutin, you know, tech startups. So I really wanna give this to you. You've only been around for so long. I don't know if I have the trust in you. Now the seal's broken. The first one got it. We'll see what what that means.
38:39
But what I like about these guys is they're not a bank. They're not taking your deposits. They're just doing loan issuance. On one side, they have the reserve cap, the the investment fund. But they're using other people's money. OPM on one side. Yeah. Other people's money to make the the loans. And they're the broker, and they take one percent of the transaction fee. And people are willing to pay a premium to have halal financing.
38:59
Just like people willing to pay a premium for halal meat, or for vegan or kosher meat, you know, whatever. Like Right. People are willing to pay a premium for things that are compliant with their faith. So I think this could be big. And what's interesting thing. I think that they've had a hard time raising money from traditional VCs because this is They didn't understand. Hard to understand. Yeah. You have to, like, you know, most VCs are old white guys. And, you know, it's,
39:21
the sort of cliche and, you know, I know they do look into it, but I think that there's
39:25
not there's the natural challenges of any high aspiration startup,
39:30
they have those. They they have the problems that any any startup that's really ambitious. But then they also have the problem of, like, first, they need to educate you about this problem. Like, you saw how I stumbled through this explanation, and I talked to these guys for an hour, you know, and that's where I am after an hour of really trying to understand it. But you and you read this by furcon. Your your best Yeah. I ran it by him. I introduced them yesterday. I said. Hey, furcon understands this. He's Muslim, He's an investor, he's a technologist, and he's an entrepreneur. If he doesn't like this, I don't like this. He's And what did he say? And so he so he he's like, I've looked in. He's like a lot of my friends really wanted this. I tried to look at what options are available in the US. They suck. They're really super high premiums. Is he practicing?
40:08
Yeah. Like, you know, to an to an extent. Like, what I wanna know is do really, like Like, he doesn't pray five times a day, but he doesn't eat pork. Right. So he's, like, cold really. He drinks, but, like, his dad runs the mosque in San Jose. And, you know, like, the it's it's so even people who are, like, who aren't incredibly devout are into this. If he had the option, he would prefer Halwell financing overnight. If it was convenient. And he's like, the problem with all the existing options, they're not convenient. They're not easy to use, and they're very high premiums. He's like, if these guys did it conveniently, think this could be baked. So he's gonna talk to him. We'll see. Like, I'm I'm not a practicing topic anymore. Are you are you guys Catholic? You're Catholic for sure. Right? Do you eat meat on Friday?
40:44
About it honestly. I went to, like, all boys, Catholics high school. So Me too. I went to an all boys Catholic high school. I don't practice anymore, but that's another thing. I don't eat during, like, on Friday. So I try not to. So it's kinda, like, it sounds like that's what it it's kinda like where it's like. Yeah. People it's a spectrum. It's a you prefer it, but not Yeah. You prefer it, especially if it's convenient for you. You'd you'd you know, the way Henry just said that lot of guilt there. I'm like, yeah, I should, but I don't. So there's, you know, if you could make it where people do what they want to do, without lifting a finger, then they'll do it. You know, it's great. That's pretty cool. I like that I like that thing, or I like that angle of finding because I don't know anything about Muslim culture. I don't know anything about Hindu culture, which is you where where you're from. You I don't know. You probably don't know too much about Catholic. Yeah. It's kind of an interesting way to, like, look at how
41:28
religions do things.
41:30
Another thing that we should talk about, not today, because I don't think we know what we're talking about. We definitely don't that is building things on top of banks. I think that's super interesting. But what do you mean by that? So, like, what simple did, and, like, what the what what's the name of this company? Manzel. Man
41:46
spell it. M a n z I l. Manszel. Okay. Kinda like what Manszel did. A building a building a front end on top of someone else's back end. Right. Which is the bank.
41:56
I think that that's really interesting. Simple dot com is my,
42:00
card. I didn't know they did this at first. This is kinda what drop shipping is. So where you build the layer that says, I'm gonna get the customer to a landing page and they buy. It's just gonna place an order with this other manufacturer,
42:11
and they'll ship it directly to them. Super effective. I like that with banks because,
42:16
like, simple they did this all I mean, it's it's a little different. The card is all white, and it's just slick looking. Yeah.
42:23
And their app is really good.
42:25
And so it's kind of interesting. I I think this is kind of what Brex is doing. Right. That's the totally what Brex is. Yeah. They're layered on top of Mastercard. I
42:35
I love these things. I I really like that.
42:38
Let's talk about,
42:39
how how many minutes are we in? We're we're about an hour in. Okay. You wanna
42:43
We can answer some questions or what do you wanna do? Let's do one of these fun ones. So let's do the rebranding words. So this was in the hustle group hustle trends
42:51
trends hustle Facebook group, which is like a source for for entertainment and gold. Which go to trends dot co and sign up. And if you use the phrase,
43:00
million? Million. You'll get fifty percent. Trans dot co slash million. That's my plug. I believe that's it. Is it is it slash million or is it promo code? Both. Both will work. Trans dot co slash million or trends dot com. And you guys have this thing where you can sign up for a dollar, which is pretty dope. Yeah. And it's working.
43:12
Great. I love it.
43:13
Okay. So so so somebody in the group, can you scroll up? I don't remember if I have their name. I should have their name to,
43:20
your other up. Up. Yeah. There you go. Okay. We don't have the name. We should we should find Alan, well, you find the the name of the guy who who wrote this because I wanna give him credit.
43:29
So somebody was just talking about, like, hey, isn't it funny how people just rebrand stuff
43:34
and, like, give it a whole new meeting. So he's talking about, MSG.
43:37
He's like, oh, MSG, which is like, got this really bad reputation for being a food additive of whatever. And just rebranded as umami. And now it's this, like, foodie word that, like, is good. And somebody came into the the comments with, like, a bunch of really funny ones. You wanna know the food one aioli.
43:53
Aioli? It's mayonnaise.
43:56
Aioli is mayonnaise. It has a little garlic flavoring. Look it up. I don't think that's true. I'm pretty sure.
44:02
Look it up. Aioli is flavored mayonnaise.
44:05
Look up aioli versus Google is aioli mayonnaise?
44:08
I'm telling you aioli is mayonnaise. Case.
44:11
But there's, like, way more. Yeah. You have to do it in a separate tab. Yeah. You can you can't do this because we have to do this. Oh, we hear you right there. What's the answer say? It says it right there. What's the top result?
44:20
What's it say? Is aioli any different than mayonnaise?
44:26
Made from egg yolks and canola oil. Am I off? Alright. Henry Winz. Okay. It's not it's not exactly mayo, but I like the intent. Alright. So let's go back to the doc.
44:34
Chilean Sevas is actually patagonian toothfish.
44:38
Yeah. That's awesome. Yeah. I love it. So so this guy had a bunch of them for business, which I like. So or nerves. You know, when you skip, you know, I I don't know. I'm I'm like this. I skipped breakfast for years because I'm just lazy. It didn't wake up early enough.
44:51
And now it's intermittent fasting. Like, health trend.
44:54
It's like, oh, I'm fasting. Tell me in. It's like, yeah, you skip breakfast. Is it by Marlon Montgomery? Okay. Marlon, marlon was the original post, and then who posted all these comments. And it's a Logan Jeffrey. Logan had a bunch of them that were fire that I like. That's the reason I put here. Okay. So, when you just quit your job because you wanna travel, now that's called disperse retirement, which I like.
45:15
When you're a grossly underemployed writer or marketer, now you're a digital nomad
45:21
because you have to go live in some low cost area or a coach.
45:25
When you just like to eat beef and cheese, because it's delicious, and now that's called the carnivore diet or keto. I used to call the salami and cheese. Redneck charcuterie.
45:35
Sleeping around. Online dating. I don't agree with all these. I'm just I'm I'm relaying Logan's good
45:41
one.
45:42
When you quit your shitty business idea, that was bad all along and everyone told you it was bad, it's called pivoting. I like that. You're failing fast. When you have a fear of commitment, And therefore, do not own anything and do not settle down. You're now practicing minimalism.
45:56
I love that. So these are great. And, in general, you know, funny shit aside.
46:01
I think there's a lot of power to this. I think as a leader, you often have to rebrand stuff so that it's more palatable to your team.
46:08
And or to your customers? Packaging.
46:10
Yeah. You have to frame things,
46:12
package them up in a certain way. We do this with our sushi restaurant where
46:17
We realized that if we just describe things better or differently with with with better words,
46:23
people would buy more and we could charge more because people wanted to have sushi that was more sophisticated. So when we called it, you know, whatever,
46:31
you know, Atlantic salmon,
46:32
with, blah, blah, blah, rather than just saying salmon, that was better. Or if we would create a whole new word altogether and put a little trademark next to it. That was even better than,
46:41
using common words. Every once in a while, I, like, there's certain things that they use the positive phrase and just generally accepted, I'd like to use, like, a word that means the same thing, but is generally regarded as a negative,
46:52
just to fuck with people. So for example, instead of saying, like, well, we're gonna,
46:56
get the customer to do this. Like, we're gonna get them to buy by doing this, or we're gonna influence them by doing this. I like to use the word manipulate.
47:03
I'm like, Let's manipulate them and get them to do this. It's like, like, where is that
47:08
by definition work? Right. Just a just to kinda throw it. What happens if we call it what it is? Yeah. Let's just say we're gonna manipulate up. Like, I'm gonna manipulate this person to like you me. They're like, well, how are you gonna do that? Well, I'm just gonna be nice and charming and be listen to what they said. But if you use that word manipulate instead of influence, it fucks with them. And I love using that. Just a screw of people. Like, yeah, or like,
47:29
when political people say, like, well, they have an agenda. I'm like, yeah. Well, so, like, guys, I'm here to talk to you about my agenda, which is to do, like, of course, I have an agenda. I'm trying to get you to do stuff.
47:39
I'm like, yeah. You're you're targeting, like, someone has a political agenda.
47:43
Duh. They should. Right? Yeah. They should have a political agenda.
47:46
I love using those words. So, Henry, if you scroll up for a second. So does that say end of this episode? Thanks for listening. Tell your friends. Make it all happen. Leave us a review. We like that. Give us the real talk in the reviews because we read all of them and we like it. Or tweeted us. Sam's got twelve thousand Twitter followers now. He has surpassed me in the Twitter rankings. Eleven thousand three hundred. Eleven thousand three hundred. So so he's winning.
48:07
Great. Alright. We're out of here. Thank you.
00:00 48:18