00:00
Alright, Sam. I wanna play a game. I wanna start this with a game where I'm gonna read you
00:05
the if you don't know this, by the way, you didn't know I was gonna do We have the I'm gonna read you the most trafficked websites in the United States. And as a simple test, you're a business guy. You studied the the business world. I want you to tell me Do you know
00:18
who's the owner or CEO of these businesses. Okay? Alright. I like this game. Number one, Google dot com.
00:24
Sergei and Larry Paige. Sergei something and Larry Paige. Correct.
00:29
Next one, YouTube.
00:32
Chad,
00:33
h, and Emily. Yep. And Jared and one other guy. Steve Chen. Exactly. Correct.
00:40
Reddit. Huffman and Ohelian.
00:43
Correct.
00:45
Amazon.
00:46
Bezos. Okay. Number five. Now we're getting we're getting to the good stuff. Okay. So first, This is I think you'll get this one. Easy, Facebook.
00:52
Zuckerberg.
00:53
Okay. Number six, pornhub.
00:56
Bastion something, a German guy. Incorrect, sir.
01:09
So this is the number six most trafficked website
01:13
in the United States.
01:15
Three billion visits,
01:17
in in, like, in a month. Is it called MindGeek
01:20
or Mindfreak or something?
01:22
MindGeek is a name of a company that owned it.
01:26
However, the founding story is pretty crazy. And I don't know if you're a sci fi guy or a fantasy guy, but in in many fantasy
01:34
book series. There's this con there's, like, this this concept, like, in the lord of the rings, there's the ring. Or,
01:41
in,
01:42
Harry Potter,
01:43
there's
01:44
the Elder wand. And it's an idea that there's there's these assets that are so powerful
01:49
that people wanna own it. But whenever you own it, your ownership's gonna be very short lived.
01:55
It's almost like the the the item is too powerful. It sort of corrupts you and
01:59
it puts a target on your back and other people start coming for you. It's a real sticky situation. One might say.
02:06
This is, like, it's game of thrones Right? Everybody wants to sit on the iron throne, but when you're on the iron throne, you're not gonna last very long. And so this is a game of thrones style story for tech that I went down a rabbit hole. I wanna share with you because I didn't know this story. So let me tell let me tell you how it went down. Okay. So we're rewind the clock. We go back to two thousand and five. Up until then, you know, internet's been out for rough been been semi mainstream for ten years.
02:29
And, of course, porn was popular right away. But the way that all porn sites worked was it was like Yahoo. It was a directory of links. So you would go to, whatever. I don't know. Jugg world dot com, and it would just it would just show you a hundred links to places where you could go watch videos.
02:46
Not the videos, but to the other websites. Links to other websites or links to other photos. I mean, mostly photos at the time. Wasn't that much video.
02:54
So two thousand five, a big milestone happens, which is the YouTube launches.
02:58
And the YouTube launches with a pretty simple proposition, which is we'll make it really easy to host a video online You don't have to host it on your own servers. We'll host it on our servers.
03:07
And then also, instead of just sending somebody that file, you send them a just a link and they could watch it here. And we'll just have all the videos here in one place. Which was mind blowing. Sounds so obvious now, but at the time was different. And if you haven't read it, go read the Sequoia memo of his investment,
03:23
roll off, both as investment in YouTube. If you wanna see
03:27
how, like,
03:28
uncertain and how, like, small and non obvious this was at the beginning.
03:32
So YouTube launches, it starts to get popular.
03:35
Now there's copy cats, like, about in the porn version of this. Red tube, right, just off of YouTube, red tube.
03:42
You pull or whatever. A bunch of bunch of these come out. And they're all flooded with pirated content. So they're just, like, kinda, like, limewire back in the day. They just take, you know, stuff that you're supposed to pay for, and then we just upload it for free on here. And they would have, you know, banner ads to make money. And even though these were,
04:00
kind of sketchy websites,
04:02
They were ten x better in every way. So it was more private. Right? You didn't have to go anywhere. You could just have it in your bedroom.
04:08
It was instantaneous. Right? The the distance between the craving and the fulfillment of the craving were were, you know, one click away. There was infinite variety. So you didn't have to pick and choose. You could just keep going till you find what you like. There was infinite niches. And so people discovered that people were into all kinds of weird stuff because now there was a long tail of content, and it was free, whereas most barn at the time was paid.
04:27
Because at the time, there was somebody who was called the king of porn. He is the guy who's sitting on the on the iron throne at the time. And this was the CEO of vivid entertainment. What is and and and what was vivid entertainment? They're like a Hollywood studio. They're making, like, you know porn or normal movies. They're making more porn, but they're making it, like, into Hollywood Way where there's, like, an actress, and there's a set, and there's cameraman, there's, like, and people buy DVDs. Yeah. Buy buy the DVD.
04:53
And so vivid at the time was the king. This guy was known as the king of porn. He was written up in all these articles. In fact, the year that he was written up in all these articles is the same year these new disruptive websites came out, and revenue starts to fall, and it falls fifty percent. And it falls eighty percent. It just basically goes down the drain. How big was it? It was doing tens of millions in revenue. Okay.
05:14
But there were many studios like this. So they were they were the biggest one, but there was, like, just like in Hollywood, there's many studios. Alright. So I don't know if you remember, Google's, Google bought YouTube because YouTube was getting a had a huge lawsuit from Viacom. These are, like, parallel stories. YouTube was also flooded with pirated content because of that, they were getting sued like crazy. And because they were worried that they would go out of business, they sold to Google for, like, a billion and a half dollars.
05:37
At the same time, vivid copies that playbook. They look at what Viacom's doing to YouTube. They start suing the crap out of all the the website. And so the first owner of the throne,
05:46
vivid goes down.
05:48
Then the second owner of the throne, which is these, like, red tube and whatever, they they start getting hammered as well because they're getting sued. Alright. So who's the third one to pick up the the the batana? Where does HornHub come into this? Okay. So
06:00
At the time, there's three college students in Canada,
06:03
and they
06:04
realize that this is a, that, like, there's a lot of traffic,
06:08
to these websites.
06:09
They meet of out of all things at a competitive foosball tournament.
06:14
And the guy who's the best foosball player AKA
06:17
chief nerd,
06:18
right, like, sir Dork,
06:20
he happens to be the best programmer of the bunch. And he creates a live streaming video website to stream their foosball competitions.
06:28
And there's not much of an audience for the foosball competitions, but he realizes as he's building all this video tech He's like, hey, I think we could do the same thing
06:36
for porn. Was the intention porn or was the intention something else and porn users use it use it most? So these guys made the link site. So that site I talked about Jugworld, that's their site. But they made, like, a hundred of these. They made, like, a hundred directory sites, just links to other websites. Then they see the YouTube thing. And they pick up this guy, Matt, I think his name, Matthew Keyser or something. Keyser is the guy who built a video streaming site, and he's the best programmer. So he's like, I think I can make a YouTube
07:01
for for this stuff. And we can instead of having these directories where we send the traffic away, we could just keep the traffic.
07:07
And, at the time, they had already kinda, like, you know, started to discover things. They're like, oh, people like, you know, people like this. People like this. They were just creating other directories.
07:16
And eventually, they looked at Vivint, who was the king at the time, and they were like, we should make our own vivid.
07:21
And so in the same office, they created
07:25
pornhub, the website that was gonna host all stuff, and they created a company called Brazners,
07:30
which is a Oh, yeah. Producer of content. So they created a content producer and they created the plat the network at the same time. Making their own shows.
07:38
Exactly. Or, like, you know,
07:40
FTX had this, you know, sister company that and by the way, nobody knew these companies were linked. So everybody thought these were two, not only unlinked companies, they thought they were enemies because at the time, all of the studios were hated the platforms that were giving away the content for free. People didn't know that one of the biggest studios, you know, was actually the owner of one of the biggest websites at the time. And so in the same way that there was FTX and Alameda living in the same house, you know, kind of sharing funds, browsers, and for now, we're doing the same thing. People just didn't know. In fact, the guy came out and was, like, quoted.
08:11
He was, like, That would be that would make no sense. Why would we do that? That would be a hundred percent against our core interest as browsers to do that. We hate the platforms. And meanwhile, he was also the owner. So
08:22
These guys start this thing, and it takes off like a rocket. They they're like, dude. We have no idea what we fell into. We were
08:29
sleeping in the office. We worked every single day, every every weekend. We couldn't hire enough. This was now, like, two thousand and seven or eight, I think. They weren't the first mover, but they were they ended up becoming the biggest mover. And here's why. So they basically scaled this thing better than anyone else could. And one of the keys was they had browsers, they had their own content. That was not,
08:48
not pirated or, like, it was pirated, but they owned it so they didn't care that they could use on the network. So even when other stuff got taken down, they still had more content than other Alright, everyone. A quick break to tell you about HubSpot, and this one's really easy for me to talk about because I'm gonna show you a real life example. So I've got this company called Hampton. Join Hampton Hampton dot com a community for founders doing between two million all the way up to like two hundred fifty million dollars a year in revenue. And one of the ways that we've grown is we've created these cool surveys. And so We have a lot of founders who have high net worth, and we'll ask them all types of questions that people typically are embarrassed to ask, but provide a lot of value. So things like how much the founders pay themselves each month much money they're spending each month, what their payroll looks like. If they're optimistic about the next year and their business, all these questions that people are afraid to ask, but, well, ask them anyway, and they tell us in this anonymous survey. And so what we do is we created a landing page using HubSpot's landing page tool, and it basically has a landing page that says, here's all the questions we asked. Give us your email if you wanna access it. And then I shared this page on Twitter, and we were able to get thousands of people who gave us their email and told us they want this survey. And I could see did they come from social media. I can see did they come from Twitter from LinkedIn. It's basically everywhere else that they could possibly come from, I'm able to track all of that. And then I'm able to see over the next handful of weeks How many of those people actually signed up and became a member of Hampton. In other words, I can see how much revenue came from this survey, how much revenue came from each traffic source, things like that. But the best part is I can see how much revenue came from it. And a lot of times, it takes a ton of work to make that happen. HubSpot made that super, super easy. If you're interested in doing this, you could check it out HubSpot dot com, the links in the description, and I'll also put the link to the survey that I did so you can actually see the page and how it works and everything like that. I'm just gonna do that call to action then.
10:27
And it's free. Check it out in the description. Alright. Now back to MFM. And so they scaled up. They they go from basically, like, just three friends to, like, eighty people, a hundred fifty people, two hundred fifty people, and they're hiring friends and family. And they're like, dude, they're like, where do we we have an office? They're like, no. No. No. Just they started buying houses next to each other. Just created a neighborhood. And they're all just working out of that, like, that one area. Bootstrapped. Bootpped. No. No investors. No nothing. So just growing because
10:53
word-of-mouth traffic
10:55
And, obviously, it's people love what their their product, and they're just coming back over and over again. And the key is that this guy Keizer was an SEO Savant. He came out later and he goes, we were the number one rank for porn and sex on Google. He's like, do you know how hard how competitive that is? He's like, I he's like, what I did. I pulled that off. I became the number one search. That's how we defeated all of the other things. And then we had content that wasn't getting taken down. So they grow it to two hundred fifty. They make one of the guys brothers, the CEO. They're, like, you're the CEO. You have some business experience. You do this. So that guy starts doing a roll up, like a private equity roll up. So he starts buying up all the other ones who are afraid of getting sued. And so he's buying them up for cheap. And he's just consolidating
11:33
power,
11:34
and just creating one big mega behemoth, because then he could fight whoever was gonna sue them because now they owned all the traffic. So they had something, you know, they had something to to,
11:44
to fight with. And so
11:46
he starts building this thing up. And by the way, there's this whole, like, industry is so funny because you think of it as a sketchy thing, but, like, one of the sites, for example, that they bought. It was called homegrown. It was started as a a VHS tape exchange for, like, swinger couples. Right? Like, the most, like, fringe of the fringe thing. But this kid is a Stanford NBA student, buys it. His mom helps him raise the money, and they do a they do, like, a leverage buyout of this thing. Like, it was actually sophisticated under the hood, even though on the surface it looked like, you know, do these, you know, really sketchy gray area things with, like, Stanford MBAs are buying this stuff. So anyways,
12:19
fast forward to two thousand and nine. They've scaled it to two hundred fifty employees.
12:23
They're making millions and millions of dollars. Right? They're making more money than they ever knew what to do with. But they're getting paranoid because they know you're sitting on the on the throne that people are gonna come for you. And so,
12:33
they start seeing some bad stuff. Right? The government sees this nine million dollars out of one of their accounts. Just just takes it. And they're like, shit. What do we do? They start trying to move money around. They hire security, twenty four seven. They're followed by, you know, black tinted SUVs.
12:47
The keyser guy, the SEO guy, he just quits. He's like, I I can't take this anymore. It's too stressful. They're like, dude, you're walking away from so much money. He's like, I don't care. I can't handle this. So they finally just decide, look.
12:57
Too stressful. We can't do this anymore.
12:59
Let's cash out. Now there's not a lot of buyers for this thing. Right? Cause institutional investors
13:04
can't really
13:05
by this type of asset. And now it's big. How big? Like, it was worth over a hundred million dollars. So they sell it to that guy you were referring to this guy, Fabian Tillman. Hundred so a hundred forty million is what they sold it to him for. Well, what was what was his background? Fabian's background was I think he had also he was already,
13:22
in this space. So what he did was this guy was, like, a programming genius. So at seventeen,
13:26
he basically started he created a website that was just for internet traffic. So it's like Alexa. Right? Like internet traffic sites. Just that statistics. Sorry. So he's just a nerd. He loves the internet. So he creates a site that tracks
13:38
successful internet companies, which which ones are growing the fastest. However,
13:42
you know, how I started this by reading you, like, what's the six most popular website in in the United States? He sees that the most popular websites are all porn websites. And so he's like,
13:52
what if I create software for them? So he goes to them, he's like, what do you need? And they're like, well,
13:57
You know, one of the hard things is we,
13:59
we make money off of affiliates, but our affiliate tracking sucks. So he builds an affiliate tracking tool that becomes the number one most used, piece of code for affiliate tracking
14:09
on the internet. And it's being used by these porn websites.
14:12
And he builds that company up. He's super young. He's, like, you know, twenty years old or something. He sells it. He's super rich now. He's got hundreds of millions of dollars. And so he then goes and he buys
14:25
pornhub for hundred forty million dollars.
14:27
And then he just, like,
14:29
grows it like crazy. So he and, I think in, I think in, like, three to six months, he doubled the profits of the business because he's this guy's just a better better operator. He knew how to monetize better. And he also knew how to, like,
14:42
to to solve the problems around the content licensing. So he spent a million dollars buying content licensing rights so that they don't get, sued anymore. He changes the name. He launches like a PR campaign around safe sex, And he starts, like, you know, getting in with politicians and all this stuff. Right? And he's doing and he tries to do other stuff too. He he buys celebs dot com and tries to create a TMZ. He tries to create, like, a bigger media empire, but nothing nothing can keep up with the growth of the core asset.
15:07
And so he's thirty you know, he he ends up thirty two years old. That's you know, the company has five hundred employees, and he's the biggest porn tycoon on the planet now. And this guy has sort of made it.
15:19
However,
15:20
there's one problem. And this problem is that, like I said, this great power corrupts,
15:25
and people puts a target on his back. People start coming after him And he's hard to find too. Right? If you would look for photos of this guy at Google, like, you actually can't see that many pictures of him. Right? Well, he did a couple interviews at tech conferences later. When they started to try to, like, branch out similar to how only fans is trying to branch out and hire, like, musicians, be like, hey. Show behind the scenes content content of your music process or whatever. They're trying to branch out. He tried to do the same. Kinda hard when your name is porn hub though. Well, he created other websites. Right? So he created separate websites altogether that he wanted to use the same team and cash to to to start. But crazy stuff is happening. Right? So, like, he he's on one hand. He's figuring out how to monetize it way better. And he's, like, Oh, like and there's by the way, he's hiring, like, data scientists, and the data scientists are like, sir, we found it.
16:09
The best way to get a free user to pay for content is a video that is two minutes and fifty nine seconds. And that that is the point where a man is most committed and is willing, like, you know, to impulsively buy something we try to put a paywall before that or after that, it's not gonna work. Two minutes to fifty nine seconds is what we've found is the optimal time in order to, like, increase revenue. And they do. They increase revenue a lot. Oh, there's one other thing I didn't mention, which is along the way, people start to get curious. They're like, okay. He's building this huge empire.
16:38
He's rolling up all these sites. He's buying more and more sites. But, like, how much cash does this guy have? How did he generate so much cash? And what later comes out is that he got a three hundred and sixty two million dollar loan
16:50
from
16:51
unknown secret investors. And it turns out that basically there was two guys who were he went to all the big banks. And the big banks were like, look, we can't do this. We can't lend the money. So he goes to private. It turns out he raised from a hundred twenty five secret lenders They their names have not been revealed except for one group, their names have been revealed. It was a bunch of x. I don't know if it was JP Morgan or Morgan Stanley, whatever. Some some big bank, two bankers from there spun out, created their own, like, lending firm, specifically to lend just to this one play. They're like, this is gonna be so lucrative.
17:21
That we'd have to just leave our jobs, quit our jobs, raise money, and just lend it to this guy. They've lend it at a twenty percent interest rate.
17:28
And so even though he was growing and making all his money, he had huge, like, monthly commitments because he raises three hundred sixty million at twenty percent interest. Yeah. So his his his and his debt payment or his interest payment is eighty or a hundred million dollars a year. Sixty million a year. Exactly. And and they're and they're also under attack. Like, the CEO, he owns a sixteen million dollar house. It gets burned down by arsonists.
17:50
And, Phil Ackman, comes into the frame. Do you wanna know how Bill Ackman comes into this into this story? So in the game of Thrones, now Bill Ackman comes in from Westeros.
17:59
And he's like, He's reading an article one day. This is the story. I don't know how true this is, but the story is he's reading an article in the New York Times. And it's about a girl
18:07
a teenage girl who's
18:10
sent nude photos to her boyfriend. The boyfriend then leaked it onto one of these websites.
18:14
And Aqman's like, that's so wrong, and she couldn't get it taken down. And and she's felt so bullied and whatever. He's got daughters. He's like, this is terrible. And so he's like, how he's and so you know how right now he's on a crusade to take down Harvard, take down business insider?
18:27
He goes on a crusade to take down pornhub.
18:30
And so he's he tries to find it. He's like, dude, this is like some offshore company by this German
18:36
you know, single owner. I can't pressure him. He's not a public stock. I can't become an activist. What can I do? He's like so he thinks about it. He's first, he's stumped. Then he's like, wait a minute. What if I, like, you know, when the US government sanctions Russia? He's like, what if I sanction pornhub by cutting off their flow of money So he's like, hey. They need payment processors.
18:56
And so what Bill Ackman does is he goes and he he immediately texts the CEO of Visa, and he sends them the article is, like, your company is enabling this. These guys are making money off of this. You better do something,
19:08
about this. And the CEO visa's like, dude, I don't want any trouble from Bill Ackman. Agrees that it's the wrong, you know, it's wrong. It's not a huge portion of Visa's revenue. And he texts him back. I'm on it. Like, within five minutes, I'm on it. One day later, Visa cuts off, pornhub. So does Mastercard.
19:24
So does, you know, and so they they lose their ability to actually process payments.
19:28
Until they later, like, you know,
19:31
had to change all their policies. They, like, now verify everybody with their license and shit like that in order. And he's got this. Bill Ackman has tweet. He goes if you've been victimized by pornhub or any of their affiliates, you may be eligible for a large amount of compensation. And I encourage you to email this person who will consult seventy plus victims who can help you pursue your claim. He, like, puts all his weight behind this thing. This is this is pre Israel, pre Harvard, pre Harvard, pre Business, etcetera. Yeah.
19:52
Pornhub is is is is who he's going after. Hell hath no fury like Bill Ackman scorned. Right? Like, yeah. The the he is he is he goes after you. So the crazy part is the story doesn't end there. So you I thought, and you thought that pornhub was owned by a company called MindGeek,
20:09
and MindGeek is run by this guy, Fabian Tillman.
20:12
However, a few years ago,
20:14
or sorry, three three or four years into owning it. He's grown the company like crazy. However, he gets in trouble trouble for tax,
20:21
tax fraud or tax, like evasion or something like that. He and he's in Germany. I don't know all the details around the tax thing, but I know that he gets a trouble on taxes. He's forced to sell in a fire sale. He sells it for seventy seven million dollars. Oh, wow. So the value has gone down somehow. I mean, the sixth most traffic website in America sells for seventy seven million dollars.
20:41
That's how much morning brew sold for. Like, come on, do this. This is the only time where I'm allowed to go on foreign hub on my work computer, so I can look at their stats. So according to similar web, pornhub gets two billion visits a month. Average,
20:53
visit duration, ten minutes, which is a lot. And ten pages per visit. So they just get a ton of traffic. So it's just huge. And by the way, now let me tell you so this is a choose your own adventure story. Aren't you curious what happened to those original founders who sold it for the hundred forty million? What are they doing now? I'm I'm curious about them, and I'm curious about who who bought pornhub to for seventy seven million dollars. So which one do you want? Do you wanna know about the shadowy businessman who bought it, or do you wanna know about the original founders? Choose your own adventure. Let's I'm gonna go in both, but I'm gonna go with the original for for now. So if you go look at their LinkedIn now, which I can. What's their name?
21:28
So So one guy's name, I mean, the so one is Stefan Manos.
21:33
Another one is Usam
21:35
Youssef and then there's the guy keyser.
21:38
All of them. If you go to their LinkedIn's now,
21:40
there is a
21:42
no mention of, of any of this. They they're like, yeah. We it's all about their philanthropy.
21:47
It's whatever. But here's the interesting thing. So the guy, Usif, he sells, and he's like, Okay. I just wanna get away from all this. That was too stressful, too sketchy.
21:56
It became way bigger than we started. And, like, we didn't intend to do that. It just sort of one thing led to another.
22:01
I need to reset. And in his reset year,
22:04
he's like, well, what do I how do I invest all this money I have? And so he starts reading, and he reads a hundred and fifty books about investing. And he comes away a Warren Buffett disciple. And he's like, you know what? I'm gonna go into value investing. And he creates
22:18
and
22:19
Berkshire Hathaway for internet companies called Valsev.
22:22
And Valsev is basically, like, constellation software
22:25
they're just buying up profitable cash flowing,
22:28
internet companies, dude, and they're killing it. They're killing it. They're now they're now a billion dollar company now. They have over a hundred million in EBITDA every year. Just from the they've acquired, like, whatever, fifty companies or so. They have, like, five hundred million in revenues, and then they have, like, twenty to thirty percent at profit margins.
22:45
And he just listened to the guy. So they create this thing called the ValSoft group. And they're like, alright. We're going to, you know, first, they start buying up, like, other content websites because that's what they know. And then they start studying constellation software, which is the same thing that Andrew Wilkinson did and several many other people have done because Constellation is like, what are the OGs of this? And he's like,
23:06
I read the stuff that Warren Buffett was doing on the stock market, but this private private software companies is even better. He goes, it's ten times better because there's only there's, like, thirty thousand of these companies, and there's no competition to buy them. What year? What year is this? Two thousand sixteen.
23:22
And so he, he starts copying their playbook. And he's like, look, this market is opaque. It's inefficient.
23:28
I think you could deploy a high rate of capital
23:32
and get economics similar to what, you know, the muggles of the previous times were. So he's like, Murdoch you know, he rolled up cable and newspapers back in the fifties and sixties.
23:41
He's like, that's what I think I'm gonna be able to do with these, you know, profitable software companies. Example of the companies are Nevitar, a cloud based car rental software company designed to automate a bunch of the stuff. Or it's like, construction software business. Just like things that you don't even know exist, but, like, this one has been around, it's called mal Mac practice. In two thousand four, started in Lincoln, Nebraska. It's created best in class software for chiropractors.
24:04
Exactly. So the first company they bought, twenty sixteen, is something that sells software to small hotels.
24:10
Then the next year they buy three. The next year they buy eight. Now they're buying twenty to twenty five a year, and they're just buying them that are, like, they're small. And the same thing that Constellation does. So I think Constellation bought, like, thousands of companies during the last few years. I think the average size constellation software business is three million dollars in revenue, isn't it? Exactly. Exactly. And so, I don't know if it's revenue or even though, but it's it's small. So they they're not like it's not huge PE deals. It's the same thing. These guys are looking for companies that are five to ten million in revenue. And so they go,
24:37
And they're they're just stunning consolation. They're like, it's great. Basically, you buy them. You need them to run on their own individually
24:44
so that it doesn't add more bloat to headquarters.
24:46
And they're just buying stuff all over Europe.
24:49
And he's like,
24:50
he goes, right now my problem is I'm trying to decide between a great opportunity and a good opportunity.
24:55
Which is just a great Dude, this guy's great. Did he partner? And I think he partnered with some of the other
25:00
the other founders. Right? Yeah. Yeah. It was two I think two or three of them I know it was, the two of abusive and, the Manas one. I don't know what the Keiser guy does now. They don't even mention porn hub on so if you go to valves off dot com, our history, Like, the that that words that I even mentioned anywhere.
25:16
Yeah. There's parts of my history. I don't mention either. Right? Like, we all we get it.
25:21
These guys are planning to go IPO, which is pretty pretty crazy. So that's where these guys went, which is insane.
25:27
Now what happened to the site? Who bought it? So the story that came out was
25:32
that the, you know, who's the next person on the throne, they said that, actually, the employees bought it out for seventy seven million. Like, the two executives
25:39
bought it out.
25:41
But that didn't smell quite right. Where do these ex where do these employees get seventy seven million dollars to buy this? Right? Like, how much were these employees making?
25:48
And it turns out that there was actually somebody who was the money behind it that didn't want their name associated with it. And it was this guy. I don't even know how you say his name. Like the word Bernard, but it's missing some letters. It's just burned
26:02
Bergamare.
26:03
And he's an Austrian businessman, which is just already
26:07
sounds fucking, like, sick. And he's,
26:11
so now he heals the majority of this. He he owes ordered this. He worked in kind of, like, finance for a long time, Goldman Sachs. He worked at Hong Kong and London and blah blah blah. He bought red tube in twenty thirteen. He sold it to MindGeek originally,
26:24
and then now he bought the whole company back. And so he is the principal owner of this thing. And nobody saw it, and most people kinda thought it's a kind of a dead asset because when you look at the reported financials,
26:36
Ornam makes almost no profit. And they're like, geez, how are these guys making hundreds of millions of dollars in revenue with no profit?
26:42
One of the reasons why is this guy basically lends money to the company and takes out two million a month in just debt payments himself plus
26:51
they shift revenue around all these subsidiaries. So there's all these shell companies. So you don't actually they they've completely obfuscated how much money this this entity makes. And so that's who currently owns it. But even he's going down. Now he's getting a divorce. His wife had came out and is like, she wants him to cut ties with the company. Blah blah blah, and I think it's about to exchange hands again because now a private equity group bought it.
27:12
And do you wanna know the name of the private equity group that bought pornhub?
27:15
Yes. I do. Ethical Partners.
27:20
Do you wanna know how many companies they own?
27:23
One.
27:24
This is the whole they formed just to buy this. They named it, like, ethical capital varders is I mean,
27:30
that's the, the subway eat fresh
27:33
of,
27:34
of private equity. And so these guys are now the owners of this thing, and who knows where it'll go next. First of all,
27:43
great story. That was a great story.
27:45
I was in thrall the whole time. Second, look up this guy Bernard.
27:50
It's he has a really weird spelling There is only one photo of him that I could find, and he's smoking a sick. Badish photo. Yeah. He's smoking a sick. He looks like like, if he told me that he was part of the mob, I believe it. It looks like either a mob guy or, like, a soccer, like, you know, the Manchester United coach after a loss. It's, like, one of the two.
28:10
Yeah, he just he just just rip it a sig, in this in this photo. And he, worked at Goldman. So he's also,
28:17
an acquisitions guy. Like, he's a deal maker. That's what he does.
28:21
This is insane. First of all,
28:23
I I would never trade places with any of these people. Maybe the original owners, that is kinda cool. But the last two in the new owner, I would not trade places with any of them for any amount of money. I would not wanna go through this. If you Google this guy's name, it's pictures of his wife and them fighting over this stuff. This sounds miserable. Can you imagine being married to someone who runs this company? What I wanna know is what is it like to work there? How do you stay professional,
28:47
like, and just be try to be objective about certain stuff? Like, you know, when you're talking about,
28:52
at a shepherd or one of your companies, and you're like, hey, this skew is doing a little bit better. Maybe we should try it in red and blue. You know, we have black. Let's just do it in red and blue as well. One of the conversations, like, at at porn hub or or MindGeek when they're, like, talking about, like, oh, this category is doing well. Let's explore that one a little bit further. Do you know what I mean? What they do. Right? It's the chuck e cheese tokens thing. So, like, if you ever just had to take cash out of your wallet and keep putting it into chuck e cheese machines, you'd be like, what am I doing? This is terrible. But what they do is when you walk in, they exchange money for these fake tokens and then they rename everything, and it feels like it's all, like, you know, fake, you know, it's just it's, like, abstracted away. That's what happens because I felt this even when we were at Twitch. And Twitch is a lot more reputable than this, obviously. But the end of the day,
29:38
We were in these meetings that felt like life or death,
29:42
high stakes, everything is on the line. Like, the world is gonna end, and I'm like,
29:47
This is, like, twenty one year olds playing video games in their bedroom. Like, who cares? Like, none none of this matters. And, like, you you would hire people from Harvard and MIT, like, the brightest of the bright, and they're optimizing, like, you know, the the mid roll ad pop up of, you know,
30:02
stupid energy drink in the middle of this stupid video game stream, but none of it still feels stupid once you're in there because it becomes abstracted away and you're playing with the data, the numbers, and the revenue, and it and you come up with all these terms for community and content and whatever,
30:18
And nobody, is I feel like nobody looks at the fact that we're all just making hot dogs anymore. Like, you lose sense of it. I, my wife worked at Facebook out of college. So she went to this Ivy school. It's a smart woman. She had all these to make job job offers, whatever. And she starts working at Facebook. And I'm like, oh, Sarah, what are you working on? And she started explaining it to me in a really complex way. I'm like, Oh, you're just trying to come up. You're just you guys just created, like, a little sticker emoji that you could put on photos so more people share photos. And it was, like,
30:45
it was, like, looking down. It was, like,
30:48
yeah.
30:49
Yeah. That's it.
30:50
You know what I mean? Like, you you go to that moment where you think of, like, Facebook is this amazing thing of which it is, but then you, like, start talking to individual people. It's like, oh, you create a thing that when I stick my tongue out, like, The cartoon's tongue goes out. That's cool.
31:03
In in reality, you're doing it just to get people addicted more to posting and sharing stuff. Yeah. You know, that's alright. It happens when we were at Camp MFM and we're talking to mister Beast's team, and he's given us a tour of the facilities. And our group is, like,
31:16
billionaires and philanthropists, you know, and we're walking through and we're like, wow. This is this is incredible. These people are geniuses. Tell me, How do you get people to click the thumbnail and they're like, you know, we increase brightness and saturation by fourteen percent and look at how many thumbnail tests we do, and we're like,
31:33
incredible work, and we're so wrapped up in it. And it all feels so real. And then you come home and you click on his video, and it'll be like train versus pit, and it's like, this train is gonna drive into this hole, or is it gonna jump over? We don't know. It's like, oh, wait, dude. I had a friend named Ta used to do this shit in his backyard.
31:49
Taut, like, Oh, you're locking yourself in a room for seven days. Like, I actually know an idiot named Jake who did that without YouTube. Like, he just did that. And we were like, dude, fucking Jake still in his room. He's like, yeah. That's what he's doing. But, like, when you're in it,
32:02
you could get in this reality distortion field where you feel like you're doing god's work out there. And that that's what happens in all these companies too. It is still cool. Like, like, I remember Elon
32:12
Musk gave us talk, and he's like, you know, you're doing so someone was like, you're doing all these amazing things. You're sending people to Mars, you're building cars, saving a planet, whatever. And he's like, yeah, but it's also cool just to make a game that, like, entertains people. Like, that's cool too. So I don't wanna dis discount this stuff. But it is fun to put perspective on this and be like I think you just can't take yourself too seriously. Right? It's cool to do do a do your best. It's cool to try to win a game. Many people are gonna watch the Super Bowl next Sunday, and it's, you know, a bunch of guys chasing around a ball, then the arbitrary set of rules. Right? Like, if you if you look, like,
32:41
It's cool to be into it. It's cool to be great at it, but let's also not take ourselves too seriously. Let's remember, like, you know, what this what this is. It's a game or it's something fun or it's something lighthearted. I've met three guys. Who run porn sites. Some are popular. Some aren't popular. One of them is very popular. Dude, imagine running a not popular porn site.
33:01
All of the downside
33:03
with none of the upside.
33:05
You you love that choke that you just made. Whoever is your friend who's running the un killer course. Imagine how bad you have to be an execution.
33:13
It's like,
33:14
like, if you can't sell movies, you can't sell anything, dude.
33:18
It's crazy.
33:19
Like, this guy launched one. And then, like, within three or four days, it was doing, like, eighty or a hundred thousand
33:25
views a day, but he was, like, We don't make any money because the ads are horrible. Like, there there's no way to make money on this shit. And so they had, like so they had traffic. And all three of those guys, I knew who did it, They're all
33:38
borderline autistic,
33:39
probably on the more autistic
33:42
part of that line, and they were like I remember, like, thinking and talking to them. I'm like, yeah. But doesn't this make you feel weird? This, this, and this? And they're like,
33:50
yeah. But the spreadsheet said this number, and tomorrow, it's gonna say this bigger number. And so all I'm just trying to I'm just looking at that spreadsheet
33:58
that just in trying to make that number bigger, and it just so happens that it's on this website. They were all pretty black and white about that. You know what I mean?
34:05
Yeah. Yeah. Exactly. Yeah. You once you get in, you start operating and by the way, I remember reading once, so Max Levchin,
34:11
who is one of the most, you know, brilliant people in Silicon Valley. This guy, you know, one of the co founders of PayPal, And without Max, you know, there is no PayPal, which could probably say for a couple people, but specifically,
34:22
anybody at PayPal will tell you that Max is technical brilliance in fighting the,
34:27
fraudsters Fraud. Yeah. Kept PayPal alive when any other money transmitting service
34:33
just died because the fraudsters just had too much to gain and they were too sophisticated and as a young company, it's really hard to defend against it. And Max, like, went to war with them and actually, like, fended them off enough where they succeeded. It's a brilliant programmer. Right? Chess, whatever, master, brilliant programmer, blah blah blah.
34:49
It creates PayPal. This is like monumental thing. Is next act was a company called Slide.
34:55
And Slide basically made, like,
34:58
virtual pets for MySpace.
35:00
It was like, what? It's like, yeah. You know, like, on your myspace profile, your Facebook profile, we're gonna make little apps, like, you can,
35:07
you know, engage with your friends and interact, like, interact how it's like, Well, we just invented this app called bitch slap, where you could bitch slap any one person a day on your on Facebook. It's like, what? Yeah. But only one. So they were, but then it got even lemered, didn't it? It, like, became an ad tech company. Well, how do you monetize? Right? Like, with all these things, how do you monetize his ads? And so they were creating slide shows and music video tools. But, anyways, there was some stuff to go on your MySpace and Facebook profiles.
35:30
And they go, you know, Max, you built slide. It got really popular. Then the platforms kind of shut it shut down some of the capabilities.
35:37
And I think they ended up selling to Google for some small amount, and and and they were like, Max, what'd you learn from slide? Small for It was still a multi hundred million dollar exit. But I think they had raised a lot of money. So I don't think that anybody really made too much. So
35:49
I I'll never forget this. I read this quote, and I realized, oh, shit. This describes my life. And so I've read this, like, fifteen years ago. I've still never forgot it. They go, what did you learn from slide? And he said, what I he goes, I realize you gotta be really careful what you what projects you pick
36:06
because anything can be in optimized to infinity.
36:10
And he is like, what do you mean? He goes,
36:12
you know, we picked that we were gonna do these, like, widgets on top of profiles and guess what? Like, the smartest people in the world can spend every moment of every day optimizing that to make that more engaging, more viral, more addictive, higher monetization.
36:27
And that's what we did. We spent years of our lives doing that. And I think that was, like, his big takeaway was, like,
36:32
he didn't say it, but there's anything implied thing. He's, like, kinda like, what a waste?
36:36
Like, be careful because everything can every knob can get optimized to infinity. He he became, like, the best Pogo stick player in the world. Yeah. Like, and I've felt this many times in my life. And I I don't really even know how to deal with it, to be honest, because when you have the realization, you're like, shit, should I stop, or I don't know, because I don't wanna stop. This is, like, my job is success successful business, should it? Like, with my e com store, I feel this. Like, you know, you change the color of this. And then you run this a b test. You do it's like, dude, what are we doing? Like, is this, like,
37:05
Is this what we should be doing with our time and our life and our creative energy? And and I do have that, like, kind of existential crisis, you know, every few years. Just think about this quote. Let me be your therapist for a minute as well as anyone else is in the situation, which is your product doesn't have to change the world. Your product as a CEO or owner, could be I create jobs for wonderful people, and I give them a great place to work. And like most people just want a nine to five and they want to play softball on the weekend. And they wanna make sure they've got good health insurance, they wanna see their kids raised and be healthy.
37:33
You don't need a life changing thing all the time to have a bad ass thing. And I don't think that it's fair to compare all these products to the Teslas or whatever or, like, these existential crisis things because, like, just having a piece of clothing item or an item of clothing that you can give to someone or that, makes you feel good about yourself or a game just to play time. I mean, we just have a podcast I you could say, oh, we inspire people. Sometimes we we'll just jerk around and it's just funny. Like, that is also awesome. It's not the right thing to this compared to this other thing is so stupid when it's like, no, you can have all those things. And, like, I get inspired listening to music, and then there's a lot of music that's just silly dumb stuff. And there's some music that actually changes me. There's some movies that changed me, and then there's stupid vine skits. Like, it's all in the same category. And that's okay. We can have all of that. And my product could be creating a workplace that people love coming and I inspire them or it could be I just have created a future for my daughter. You know what I mean? Like, so I don't think that your product necessarily has to be the thing you're selling, but the thing you're building. I'm okay. I feel better. Thank you. That was good.
38:33
I feel better now. I'm creating jobs out here, dude.
38:36
No. But that is the truth. Like, you know what I mean? Or you're provided for your family. Office with the number of jobs I've created. This is great. Yeah.
38:43
Yeah. We have created
38:45
literally Hapa does it jobs this last quarter. I might have to become the governor of the Philippines because I've created all my jobs in in the Philippines, but that's alright.
38:56
Can I just show you one thing off this list though? Cause I had this list pulled up of the internet sites.
39:01
Dude,
39:01
look at this list. Just tell me the first thing that stands out to you, and, eventually, it's the same thing that stands out to me. I'm looking at the list of the twenty
39:09
most popular, most visited, most used websites
39:13
in the United States.
39:14
Well, the first thing, but this is not what you're referring to. Duck dot go is number seven.
39:19
That's what I'm referring to. Is that what you're referring to? Duck dot gov.
39:23
It's more popular than Yahoo and Wikipedia and Twitter. So here's the background. Duck dot gov. So duck dot gov was started probably twenty years ago. I mean, or maybe maybe more, but, like, it's not new. Sorry about this guy named Gabe. I think Gabe was a a mildly successful entrepreneur, successful by any means, but, like, among Silicon Valley, it was all like a base hit. I think he wrote this book called traction with Justin Mayor, our friend. And then he had this whole premise of privacy search where he said privacy is gonna be important to people. We brought this up on the pod in the very first fifty episodes. We're like, this is so cool because what they used to do is duck dot go dot com slash, like, stats, you could see all their web traffic. And it was small at first. It's basically Google, but you but for some it's it's Google,
40:04
But somehow they don't show you targeted ads. So I don't actually know how they make money or what the promise is entirely. You know? It's it's just ads that are targeted I think it's ads that are either not targeted or it's ads that are targeted only on what you search, like, the term you just search for, but nothing to do with you as a person. So they're not Got it. Cooking and collecting info on you and hyper personalizing it to you. It's just here's an ad because you're searching or here's an ad about, you know, you're searching for a car, here's a car ad. But we it doesn't have to be Sam, you know, that that we're tracking info on. And we talked about these guys a while ago because it's kind of weird, which is, like, this is a significantly
40:40
less good Google or at least that's, like, what it appeared to be. And but we're, like, their traffic's growing like crazy. What the hell is going on?
40:49
And now, apparently, they're huge. I didn't realize they were this big. I knew the trajectory was really, really good. I had no idea that there'd be the fifth. So it was started in two thousand eight, by the way. I am blown away by this. I I might have to go read that damn book then. Which book? Attraction.
41:03
Yeah. This is real traction. Okay. I mean, I mean,
41:06
I believe you.
41:08
This is crazy.
41:09
Yeah. It it is pretty wild. And I've been I've been interested in Duck dot gov, but I never fully got behind it because I was like, this is just an inferior,
41:18
Google, but this is amazing. So they'd say, Doctor. Go is an independent privacy company. For anyone who's tired of being tracked online and wants an easy solution. And actually recently,
41:27
they raised a hundred million dollars in funding or maybe two hundred million, but it was over a hundred million And I heard that none of the money actually went to the company. It was simply early employees selling some of their estate, meaning the company does not need cash. They're very profitable. Which makes sense because Google is, like, if, you know, I don't know how many employees Google has,
41:47
a hundred thousand. They but, like, if you fired everyone, but fifty or a hundred or two hundred people, it probably could work pretty great. I mean, their main thing is, like, the most efficient best business model of all time. So it makes sense why Duck dot gov is so
42:00
such a good business. But this is amazing that they're what is it? Number seven? Number seven most popular website.
42:06
Ten years. They went from point o one percent market share.
42:11
To now,
42:12
point six three.
42:14
Is that insane? They're still tiny according to their own
42:18
you know, measurement of of market share,
42:22
which I don't know exactly how they measure that because if you look at the
42:25
the, you know, Alexa rankings or the SEM rankings, they're getting ten times less traffic than Google or a little bit less than ten.
42:34
But they're saying they're only point six percent of search. So I don't know. They had a hundred billion searches in q three of two thousand twenty two.
42:41
Gonna go on the street, and I'm gonna ask a hundred people, do you use duck, duck, go? I need to know what's going on here. This is crazy. I think we should I'm not gonna go through my other topics. I think that this this the you did a wonderful job. You had me enthralled the whole time. What's the title of this one gonna be? Like,
42:56
Sean talked for ninety four minutes straight because that's what it felt like. That's every episode. This one's gonna be
43:02
this one's gonna be, the story behind the fifth most popular website in the world.
43:08
Alright. That's the pod.
00:00 43:31