So I started angel investing almost one year ago. Well, I I did it five or eight companies personalized

before that.

I forget and a couple of them have turned out to be, like, meaningful, like turning twenty grand into, like, three hundred, four hundred, five hundred thousand dollars. And I'm, like, Holy shit. This is how it works. And and, like, but, like, it it sucks for a while. Right? Because you just invest it, you're like, well, that's money's gone, and you don't ever hear about them. And then you're like, oh, Nice. It works. And so I'm like and some of those cases, those are huge markups. In other cases, I'm just now experiencing, like, two and three and four x markups. And I'm like, that's awesome. What would happen if that was had I invested in this company at a ten million dollar valuation instead of a fifty million dollar valuation?

That would have been wild.

I've noticed that your angel investing is on a tear. Our friend Sully just said, whatever Sean

what did he what did he say? Whatever Sean joke. He was like, I got this new brilliant investment strategy.

Sean invests in something, and then he tells me about it two weeks to two months later, and then I pay ten price for the same item for the same company. Yeah. It was great. Which is And he's like and he don't, like, the he was joking, obviously, obviously, that's not great. He's, like, making fun of himself because That's literally what's happened in, like, I think six or eight deals now, where

I'll I'll I'll even tell him about it, but he just delays responding for a couple weeks or I forget to tell him and I tell him or he tells me about the company a few months later. I'm like, oh, yeah. I invested in that. He's like, awesome. Can you make an intro? I make the intro and but the price has gone up. Like, dramatically because the company has more traction or more whatever.

So that's what he was joking about. But how are you getting such good shit?

I don't know. Like, dude, it's amazing. So I feel like there's I think the easy answer is,

cool. I do this podcast, and because of this podcast, people come inbound. Right? The bigger this podcast gets, the more people,

want you to invest. And there's this great, thing my buddy Vishal taught me when she goes, startups are the only asset class. Like, real estate doesn't work this way. Stock market, like, in real estate. If you wanna buy it, you go buy it. If you want stock, if you wanna buy it, you go buy it. Startups are the only thing where even if you want in, you don't just get in. The security selects you. The asset selects you just as much as you're selecting the asset. And that one insight is pretty important. It basically means you need to build your brand and your, like, reputation so that people want you in deals.

Because the best deals are all, like, kind of, like, super competitive to get into.

And you want people to win their first thinking of an idea to reach out to you. Because they know, oh, you know, like, for example, I did a great deal recently, and it's so funny you're gonna hate this. You're gonna it's gonna piss you off so much.

You've been talking about short term rentals

Somebody came to me with a short term rental startup idea because they thought I was you or something or somebody was like, hey, bro, why didn't you send it to me? Well, The by the way, the subject line that she reached out with was last one in. It was like, hey. I have I have the smallest bit of allocation left in this. Mother.

This is company called Hostfully. You'll love it because it's it's literally exactly what you're doing. You should get in. I'll I'll enter you. You you will get in,

But but basically what they're doing is you if you own a bunch of Airbnb,

which is kind of like a new market, it's basically, like, your property manager, so you're more than just renting out your home or one home. So you have multiple properties, but you're not a traditional property manager who owns a multifamily, you know, like, building of, like, thirty two units.

And so this is for people who run multiple Airbnbs, and it's just, like, it makes your life way easier as the as the owner of that. And they have, like, few million dollars in recurring revenue. The valuation was great. Foundor was really impressive. So I was like, oh, yeah. Great SaaS software. For people who manage multiple vacation rentals. And then you're over here building short, Sam, short term rental club, building this community, doing this thing, and I got the benefit because people thought I was you. That's that's one answer. The piss me off answer. That's ridiculous.

That is a piss me off answer. Whatever. It is what it is. Send me that. What I'll send you that. What's the company called? Can we talk about it? Yeah. Hostfully.

Host fully. Yeah. Well, then I can just email her. It's, is it, do they have a bunch of, VCs behind it? They're all angels.

I think this rounds a lot of individuals. I'm not sure. It was, like, I was kinda late to the party, so I was just pretty quick to just be like, okay. This makes a lot of sense.

Know, the re once once you have revenue and a few million dollars, that's recurring, and they really haven't even, like, figured out what their marketing strategy is gonna be yet. It's like, okay. That's a pretty good signal. That this is gonna work. And, it's a pretty indispensable tool for a property owner. So so I like that one. But I would say, okay, here's here's some of the things that have happened. One is

When I share deals with you, you share deals with me. My buddy, Julian Shapiroos, chairs, like, some of the best deals.

He's just very act he's very, like, consistent with meaning, like, every week he's sending me some good shit.

That's, I would say, forty to fifty percent of the portfolio is relationships with friends who themselves

are experts. And specifically, people who are experts in one niche. So it's like, we've been doing a bunch of, like, sales person software.

And it's because we, like, have a relationship with Craft Ventures who started by David Sachs. He's kinda like the enterprise SaaS guy He built Yamers, hold it for a billion dollars. His funds specifically just focuses on SaaS companies.

And and what you're you'd you talked to so David sends you stuff? David, not not me particularly. So partner, Romin, who runs my fund, he basically has a good relationship with somebody at Craft. So for example, when they're seeing something good, they're just trading notes all the time. And so we're getting to get in on a lot of their deals. So If even if I are they giving you the deal?

But do they are are they giving you the deal because they like Sean or they like Romine?

In this case, is Romine, because, he has that relationship. He's catching up with that guy every two weeks. He goes to get coffee or whatever it is. And but then I do the same with my guys. Right? So I do the same with the people in India. Or the people in Southeast Asia, because I'm like, I think that's where a lot of opportunities, and that's where I have the right relationships. So we're sharing stuff,

just amongst that.

So, and then the other thing is like themes. So for example, once I decide that a theme is correct,

like worth worth betting on, What I learned from Sully actually is the level of aggression you need to have. Once you decide,

x is a good idea. You need to go invest

in that company, and then, like, the five other companies that are, like, adjacent to it. So, for example,

there's this trend of, of, of banking, of, like, Neo Banks. Right? So this started several years ago,

where people basically were like, look,

banks are something everybody uses, but has super low customer satisfaction scores, like,

their apps sucked, their marketing sucked. So, basically, people are like, look,

we can create, like, a digital first bank. And this started, like, New Bank is is probably the best example of this. It's in Brazil. They're like, oh, look. Yeah. And they're about to go public. People are under bank there. So they started a new bank.

Friend friend of mine, was, like, led their investment. And now it's a ten billion dollar company, and it has, like, millions of customers in Brazil. And then the same thing happened in the UK with Revolute and Monzo or whatever. So this idea of neo banking, basically, of can you make super slick cuss like slick app for customers, digitally market to go get customers. And basically, you're building,

you're actually not building the banking part. You usually go partner with, like, some bank, like BBVA or something like that. Under the hood, it's BBVA,

but the customer relationship is with,

with a company that's really good at at taking care of customers and building good user experiences. Anyway, so that's the the short answer is, like, okay, decide that that's a good idea.

And that takes many forms. So, like, we talked about this before, like, ramp or, Brex. These are, like, Brex, I think, was the fastest growing YC company in the last few years. And you look you say, is this a good idea? You say, well, what are they actually doing? They're basically giving credit cards to some group of people that were dissatisfied with current credit card providers, Brex did it for startups.

And they get a portion of every time that card swipes. Oh, interesting. So if a million people are spending a thousand dollars a year on it, and they're keeping one point three percent of the interchange fee of the debit card or whatever. You can come up with some number. You say, wow, this company's gonna get big pretty fast. So we did that math of Neobanks, how much is a Neobank customer worth, and how much is a credit card customer worth, and then we went and did it in every niche we could think of. So we We invested in Keep, which is doing this for Canada. And then we invested in, Pluto, which is doing this in the Middle East. But but did you holler at them? Yeah. Then we go search and destroy basically. Like, how do you go hunt for the best companies that are doing this in and either this geography or with this customer base? So for example And you just DM them on Twitter probably. Yeah. Exactly. We just reach cold DM and say, hey, I'm a believer in this for this this and this reason, what you're doing looks super interesting. We'd love to invest. And sometimes it comes inbound Sometimes it's, oh, you got a hundred things inbound, but you know what you're looking for. So you quickly pounce on the four that fit your your your fit. Aren't you out of money at this point from the fun, though? Raised more money because I was like I was like before I thought,

dude, you know, will I get a million dollars worth of deals every quarter that are good deals? I'm not just trying to invest in crap. So I need to invest in good deals. So I I I was like, I don't know how many high quality deals I'll have. And now,

I realized that, like, whatever I whatever I had before was too low. So now we're doing almost two million a quarter.

We raised more money because we just had better deals.

Man, I because I'm starting so I started angel investing almost one year ago. Well, I I did it five or eight companies,

before that, I forget and a couple of them have turned out to be, like, meaningful, like, turning twenty grand into, like, three hundred, four hundred, five hundred thousand dollars. And I'm, like, Holy shit. This is how it works. And and, like, but, like, it it sucks for a while. Right? Because you just invest it, you're like, well, that's money's gone, and you don't ever hear about them. And then you're like, oh, Nice. It works. And so I'm like and some of those cases, those are huge markups. In other cases, I'm just now experiencing, like, two and three and four x markups, and I'm like, awesome. What would happen if that was had I invested in this company at a ten million dollar valuation instead of a fifty million dollar evaluation? That would have been wild and like How do I do that? One of the re so I hated startup investing for for a while because I was like, you know, is this the best use of time and money? Did it feels like a a expensive hobby? I'm just spending money and not getting anything in return. Yeah. And then I then I realized two things, which is Bezos has this quote, which I believe he goes,

of the biggest competitive advantages you can have is being long term oriented.

Basically, if you prioritize,

like, if you have a ten year view, you're like, okay, I'm gonna maximize what I could do in ten years. And the other guy is trying to make the most they can make,

you know, for their quarterly earnings call. Right? This is what this is how Amazon worked. Right? Amazon was basically like we're willing to lose money

to invest

so that we provide two day shipping instead of seven day shipping. Or free two day shipping, or a larger selection, but it's gonna cost us more because we're gonna have more inventory or whatever. So we're gonna go into all these other verticals, books, CDEs, whatever.

They basically said,

like, his strategy was long term, this is gonna be the most valuable strategy, short term gonna get punished by the market because our quarterly earnings are not gonna look great.

But that turned out to be the, like, magic, you know, the the sort of, like, the the biggest competitive advantage Amazon had was their ability to be long term oriented. I think this is true just in general, which is if you're competing at somebody who they need a result in one year, and you're willing to be patient and get this result in five years, seven years or ten years, you can make bets that they can't make. So that means you get to have lower priced bets

that will pay off bigger just over a longer time horizon. So I think if you have the luxury of a long term time horizon, that's a competitive advantage. That's how startup investing works is if you need money or you you need to see positive growth in one year, start investing sucks. If you're willing to play a ten year game, this can be an awesome game to play. And so Do you think that well, but do you think is you at you told me you're like, man, I think I could three and a half x my fun because that's average. Now it seems like it's gonna be significantly more. Yeah. Like, you know, you think about kinda like what's the floor. You know, I think a three and a half x would be you know, a a a solid outcome, but, you know, nothing to write home about.

But, like, with a small fun like ours, you could see things where you can get a a fifteen x. You can get a twenty x. They're literally crypto small funds like ours that that have had a hundred x. The hundred x the fund. In, in, in the period of time. Right? So so, you know, you shouldn't really the ceiling is high.

But but the floor is is is pretty reasonable.

The first thing was, okay, long term oriented is a competitive advantage. I I like start confessing for that reason. The second one is,

You wanna do things that compound.

So for example, if I wanted to beat the market in the stock market, right, I wanna beat the s p five hundred. I need to have

proprietary, like, intelligent. I need to be smarter than anybody else about something. And I think just being smarter at a game where money's on the line is just really hard to do.

Whereas if you do, if you basically say, hey, my advantage comes from

my

putation or my my my network of people that I know, that's just gonna compound every year. The more deals I share with you, the more deals you're gonna share with me, the more companies I have that are winners, that's gonna make it easier for me to get into the next winter or for founders to come reach out to me because they'll say, oh, I saw you did these five Indian unicorns.

I'm an India. I wanna be the next one of them, so you should can you invest in me? So compounding also comes into play here in a way that doesn't happen in the stock market and doesn't even really happen in real estate. Real estate has it to an extent, but not in the same way as how fast your reputation can compound and start up investing. So anyways, those are my two reasons why I now actually view start up start up investing as a as a game worth playing because it it uses two of the superpowers that, that I believe in, that I think most people undervalue.

Is it gonna what do you think we'll earn more? The ecomm thing or this angel investing thing?

Probably the for me, personally, the ecomm thing because I just own the majority of that company. So, you know,

if it sells for fifty million dollars or a hundred million dollars, you know, I'll own the majority of it. But, whereas a startup investing, you know, it's like my fund invests a hundred thousand dollars. We own point eight percent of this startup

I personally have twenty percent of the carry, but then I share with Ramin and Ben and Zach. And so I personally own fifty fourteen point something percent of the carry or whatever. Sure. Sure. Sure. Yeah. So it's not like, you know, you're owning a slice of a slice of something big versus owning the you know how it is. The owning the majority of something that sells for a decent chunk is is just better financially.

It's so much better. And Yeah. I I think that whenever people raise money, I'm like, are you sure, man? You might be able to sell us for fifty million dollars, and you'll make more money than if you raise money and sell for five hundred. Yeah. Exactly.

Now, you know, but I have to operate that other business whereas startup investing is like, you know, a joy. Right? You just read about cool ideas. You meet awesome founders and you say, yes, you write the check and then they go do the hard work. So it's a, you know, just a different thing.