Niche Collectibles and Future Business Ideas

Sam, we've been doing it all wrong. This whole business thing This building thing, we've been doing it all wrong. I feel like I could rule the world and know I could be what I want to. I put my all in it like a days on the road. let's travel never look. See, we thought you have to build a product, that product has to do something, has to add value, solve a problem And here I will read you this tweet. This is from nextext to TV. They say dopamine websites are the new trend in South Korea These services let users endlessly browse food, delivery menus, read reviews, filter their shopping carts that even track their shipment. The only catch None of it's real. You're not really placing an order for anything There are also virtual smoke breaks where you can join anonymous people in chatrooms to recreate the feeling of taking a smoke break without having to smoke a cigarette. The idea is simple, giveive people the familiar dopamine hit without them having to actually spend any money, leave the house, smoke or do anything else along those habits. And these are becoming incredibly popular in South Korea apparently Is this the same country that's having a massive birth rate issue? Unrelated. It checks out if they're gonna create virtual smokeer groups and fake buy stuff. What the heck guys? So the trend started, you know, this year and it's basically Korean Gen Z. They sort of realize that A lot of the fun in online shopping is just browsing. It's just putting things in the carts, hitt and checkout. You know, getting the actual product is you know, sure, that maybe that adds some value, but there's a lot of fun in just the other side of it. And so you can see here, I can pull one of them up Let me open so this is a app called Food never comes And all right, so check this out So you open up the app And you could select rabbit or turtle delivery. so fast or slow. Do you want to shouldould we pay for fast or slow? I guess we should pay for fast. I want to get to get my f Let's treat ourselves. Okay. so now there's a fried chicken restaurant so we can have the half and half crispy chicken, the cheeseballs. gott to go with the cheeseballs Baby the soy glaze chicken will go spicy. We'll add a cola add to cart And then we can go ahead, we could check out, we put in our info here and then we could watch this delivery make its way to our house, never actually come and u That's it. It's the blue balls of entrepreneurship, Sam, are you in or are you out? Dude, how can this group of people who have brought us such amazing things like the Kia Tleride? or Samsungop demon hunters. Yeah, like go and do something so stupid. They The Koreans, you guys really are like the Barbell strategy of life. They're bringing us such amazing wonderful goodness and such silliness. I guess I don't get this. Why are people doing this O behalf of our Huge, I'm sure, the South Korean followership I will defend this by posting a picture of the White House This weekend where there was a giant motorcy a motorcycle d a backfip in front of the White House in preparation for UFC two hundred fifty to celebrate the birth of America. The two dudes in their underwear beating each other up in the White House lawn. You don't think that a fistfight on the White House lawn is appropriate An organized fist fight where a Frenchman beats up a Brazilian Yeah, Yeah.e. Look, I didn't say that we both can't be stupid. I'm just saying that this is this is wild. Are these things actually popular Now, I can't tell so obviously this makes for an amazing headline. There's also a reason that I open up the show with it because it's just funny to talk about and make fun of. But there's not a lot of Korean people on Twitter. So they can't exact we can't exactly refute this. it feels like like like Japan It feels like Japan and America have like separate internets. Like have you ever gone to like a Japanese Like when I it's kind of challenging to use, obviously, just even if it's just translated, it's still like totally separate and it's quite hard. And so like are there any like proper Korean people on Twitter to refute this story? Or can we just make up falsehoods about like I think we just make it up. It's like the good version of like the Hunter Biden laptop story, is the South Korean fake doorash story Have you ever studied like Eastern internet. You know, people study like Etern philosophy. Have you studied Internet Yeah, like I Masa son from Sowbank. I believe he's a Korean guy who lives in Japan or is he Japanese who lives in Korea? Anway. Yeah, I've studied him and then I've studied like some of the Chinese websites or the super apps. They're like so like mega that it's quite hard to understand what they're about. Yeah, there's so many crazy apps and sites. so just for example, I remember when we were looking into live streaming. So my first company that sold Bibo, it was in the live streaming space. We sold to Twitch, which is the the big American player, but live streaming is far more advanced in Asia than it is in the West And if you go look at like I For forget which ones it was YY. com or whatever. There was a whole bunch of these where you would see somebody on video and then horizontally from right to left, streaming across the screen would just be the entire chat And it was the most bizarre experience ever because you would see that Seven thousand people are watching this girl eat noodles, while text flies across the screen and people are spending thousands of dollars sending her virtual roses And we were looking at this studying at like, you know, It's like, you know, when you study like a tribe and you're like so they they just eat it. And they were just like, yeah, this is what this is exactly what they do. And then we tried to recreate as many of those variables as we could because these sites were incredibly popular. Is there Isn't there one where like where it's like fat people eating? It's like bang bang or isn't this like a They don't need to with that. Oh, I thought there was one guy like named Nico Avocado or something like that. Yeah He got really fat doing it. And then he lost a lot of weight and came back. He wass kind of a weird guy But yeah, their mkmang is basically watching other people eat. Just like you watch other people play video games, you watch other people play basketball. Turns out, people want to watch other people eat and they like. Having that high definition sound, watching them solar. I get joy from that, by the way. I always I buy candy and sweets that I want to eat for other people and I'm just like I'll hand it to them. Yeah, I'll hand it to himem and I'm like eat it. Tell tell me how it feels. Like I definitely can get like secondhand like sugar highs from other people. Okay, so you're in. So we start it out and now you're in. Dude, there's this whole genre of Indian barbers who shave people's heads who have Dandruff and you could like, it's like the oddly satisfying like, o, we found it. let's wipe it off the head Yeah, the oddly satisfyied stuff is crazy. There's other sites that I think are like the kind of the current trend of like what's big in the east that's not yet big in the West. So So before there was live streaming, that was obviously a huge one. Mbile gaming. so Internationally, the biggest and most popular games were all on your phone. There weren't Xbox Playtation. They really didn't have like big console or PC culture. And so games like Freefire or PubG Mbile were huge. and then Fortnite became the version of that in the U.S soon after. And so you could sort of see these trends moving over. Live shopping has been huge in Asia for a long time. now what not is the US equivalent of live shopping worth ten billion dollars And so you can kind of look for these products that are over there and try to say when and how will they translate? And so right now the big one is, we've talked about this before, but the short drama. So serial drama. So basically it's Netflix But you watch on your phone vertically Each episode is like thirty to sixty seconds And it's basically soap operas of all different types of genres that people get incredibly addicted to. Huge in Asia So huge in kind of like the China, Japan, Korea area, now getting big in India, onlyly a matter of time tntill it's also just as big in the U.S as my guess. I just pulled up these notes that I have from I think twenty sixteen. So there's this guy named Kein Ryan. He's been on the podcast, Font of the Pod. He founded a bunch of companies. the biggest one being Mango DBi u multi tens of billions of dollars company, but he also famously was the co founder of Biness inssider. And so I called him one time And he like gave me some tips on like how to start a media company because I didn't know anything. and I emailed him so many times that he relented And I have these notes and I something always stuck with me on this framework. So we said, On this show, we have spent hours talking to some of the best investors alive. Well, lucky for you, the team at HubSpot they have pulled out the principles that matter most and turned it into a very simple, easy to read wealth guide thirty five principlals from the top investors. We're talking guys who have been on the pod like Howard Marks, Maniche Perbi, Morgan Housel, Kathy Wood, and a ton of others So these are all their frameworks, their mental models, their rules, basically how to play the long game and how to avoid ruin. You can get it in the link below. He' He didn't use all these exact words. This is me like typing. this is before Gunal existed. So he goes he's like, the business insider strategy is sort of what Honda did in nineteen eighty five versus General Motors He was like, he didn't say this, but this is my notes. St with shitty quality and get traffic to our website and improve shit quality, but will improve. like Hond He said all hands inspiring all of his employees. He didn't say that way, but he was like we're he said like Honda in nineteen eighty five versus GM. Honda was considered sort of a joke. GM cars for these like big Like heavy duty vehicles that made a big funk when you like shut the door and Hondaas were like Rinky dink. But the difference is is that with Honda as well as with Business Insider, the quality of car that they were making increased, but their cost, they stayed the same, which is why Honda eventually won. And Business Insider, we make content a lot cheaper than Wall Street journal But we think that our quality is just going to continue to rise. And that was like his whole strategy. And I always thought that was really interesting. I thought that was a really cool analogy, which is you can start like kind of like so so and just slowly get better while keeping your costs the same. And he always referenced, he referenced in our call, he was like Honda did this, Toyota did this. And I started thinking about this. And I've always thought about this like Um strategy that a lot of Asian companies did. If you remember do you know TCL TV's I've never even heard of that now. So TCL, if you were to go on Amazon six years ago and buy a TCL TV, they were the worst. They were like pretty maybe ten years ago. They were junky TV's, but you get a sixty five inch flat screen TV for like literally two hundred dollars. And over I'm like a gadget nerd. And so over time, TCL is now a baller TV company and you can still get a sixty five inch highighest de fanciest TV. hundred dollars. It's. I don't even know how this is possible. And I've always thought about this strategy of like Asian businesses. and I've noticed, I don't know if it's particularly an Asiaian thing or because I referred to Asian car companies. Now I always think of it that way. They'll offer something where like the quality is so so, but just good enough. But over time, like it's sort of like Hyundai or Kia or Genesis, like particularly, you know, Asian car companies, that's how I think of them is they're kind of like crappy at first, but they just get so much better And then the prices stay the same What I like about this is it's the opposite of the normal white guy referencing Asian culture thing where normally we take these like amazing Zen practices where like the Japanese use the word Kaizen contin pursuit of perfection and that's what we do here at our company. O it's like Wabi Sabi. The beauty in imperfection. It's like always like these high and mighty things that like we're borrowing. and he's like We use the term honification where you start with shit and it stays shit for quite a while But eventually the shit becomes a little less shitty. And that's what we do. It's like the first honest white guy.ike we give him award for like he's doing all of the like the tone and the hand gestures, but he's just saying the truth. And we didn't stop there. We took the shit that we had and the year after. just a little bit like less shitty because they don't know the difference And we told her it M justw There should just be like a whole service for just like honest business translation. You know, like Google Trlate, but just like corporate translation. It's like take any company, put their mission, values and earnings calls into this generator and it just tells you the truth. Yeah That's so funny. What are the greates? Kevin Ryan Probably no longer fate of the pot. No longer friend of the. Former friend of the pood if you. Tt that confidence, Sam There was a statute of limitations on notes by the way. Once it's been ten years, I can talk about it. So like anything that happened you know from pre twenty sixteen I'm allowed to bring it. All right, so I was nerding out on something kind of related, so I'll segue to that. So you were talking about how for the TV's thing they're like they charge two hundred bucks. And at first kind of a shed TV, but eventually it's kind of a great TV, but still for two hundred bucks, whichich is different than I would say most companies, which assume You know, over time, the goal is to raise our prices, increase our margins, increase our profits I was studying Z investter called Nig Sleep. and those who weren't there. Ever since you brought them up, I've been on them So ye know, his story in short is He was an investor raised money, was an investor about fifteen years, average more than twenty percent compounding Billions of dollars He won the game, shut down the fund and moved on and most of the fund was concentrated in three positions. Costco, Amazon, and Bercher Hathway. For the longest period of time, he was just holding those. And so the interesting part isn't Oh wow, here's a guy who picks for right, You know, it's kind of like o Oh, Im I'm interviewing a lottery winner to ask they how they guess the numbers. Like this is his daughter's birthday It's not really that.'s if you ask what is Nick Sleeps philosophies, core investing strategy. He had this idea of consumer surplus. So his main realization was, look, there's many ways to invest You could do what Buffet and Ben Graam are trying to do, which is buy a company that's trading for less than its's worth. or you could look at some of these companies that today look overvalued like Amazon at that time and you know, the two thousands was like, wow this thing got a crazy price to earnings ratio. and he realized that the best predictor of long term value for him was somethingomet they called shared scale economies. All right, so what do those mean? So scale economies is usually when, let's say you're Amazon. you have a large customer base, you're able to open warehouses in a bunch of different places And you get what's called economies of scale. which is that over time your cost to serve each additional customer go down because you're serving so many customers, you're able to like almost like amortize the investment cost across a large customer base. what What Nick Sleep identified was what' called shared economy of sales. Was that a word that he did he make this up? Yeah. So he I don't know if he made it if he invented really. Yeah, he really bet on it. you know, and he really like made it the foundation of his investing strategy. So he realized like, let's take Costco So Costco's Gal is to basically get economies of scale, meaning they buy in bulk They have tons of locations So they have a lot of pricing power. They're able to buy things in bulk at cheap prices. And instead of what most retailers do, which is they buy wholesale, sell retail, right? They buy cheap and they sell it at a markup Costco's goal was to make the markup as small as it could and pass all of the savings buying in bulk to the customer So he did the math. And he realize like, okay, let's say that a Costco membership costs a hundred dollars. Let's just use round numbers, right? And he realized that for the average person who shops groceries at Costco, they're going save on their grocery bill Let's call it thousand dollars a year just by buying Costco because Costco's passing on all those savings buying in buowl to the customer So the customer saves a one thousand dollars, they spend a hundred dollars And so the surplus that they they've generated this thousand dollars surplus and then they're only charging a hundred dollars for it. It's a no brainer proposition. And they basically take So what happens is instead of increasing their prices and increasing their profits and increasing the money to their shareholders They pass the profits to the customer which makes a juicier value proposition, which attracts more customers, which gives them more scale, which allows them to create even more surplus And so what he realized was that the companies that would do this, that would start early on and pass on the savings to the customer They would run away from the competition because they would have such a juicy value proposition. They would build so much trust with customers and have such an incredible offer to the customers that they would pick up all the customers. And so Costco, for example, they make no money essentially on any of the food that they sell. They make all of their money on the membership, which is like pure profit is the membership I'm just looking this up. I knew that it was a baller stock. It does three hundred billion a year in sales. How much in subscription in the membership sales do you know Five d five billion. Yeahes. So what he realized at that time was he said, Wow, everybody just looks at, I, let's just say, it was a billion dollars at that time is like when a traditional analyst will look at this company, they'll just see a billion dollars of profit But what I see is five billion of surplus that they're passing on. And they passed on four billion last year, five billion this year. It'll be seven billion next year, ten billion the next year. and they're just going keep passing on so much surplus that it's going to run away from the competition and it'll create so much trust and so much loyalty that they'll never have any problems attracting customers And so he's like, that's an invisible metric that doesn't show up on the balance sheet It doesn't show up on the PNL. You have to sort of manually calculate the shared economies of scale, how much of the surplus they're giving to the customers. And if you track the growth rate of that what you want is companies where that growth rate is increasing. And he said Amazon was the same way for twenty years. Bezos basically did not. try to extract profits. He just reinvested all the capital to give people wider selection, faster shipping, and lower prices And he realized that every year they're investing more money in giving people wider selection, faster shipping and lower prices. The three things that consumers care about the most, and they have the Prime membership, just like the Costco membership. And so he invested heavily in that. And I just thought, oh, wow, this is a pretty brilliant insight, a way of looking at businesses that I've never thought about. Yeah, that's actually, it sounds stupid, but that's sort of like a I don't know if I need a lesser word, but a groundbreaking like stat. you know, that's like a that's actually very interesting. I've never, ever I've heard of a company that measures that Like just how much savings we are passing on to you. That's pretty interesting Hey, let's take a quick break. You know that feeling when strategy is done, the brief is written, everyveryone's aligned and you realize someone still has to sit down and actually create all the content That someone is usually you and it's due tomorrow Well, the Breeze assistant from HubSpot can help It works right inside Hubspot. You can draft a campaign copy, blog posts, emails, all in your brand voice, all using your actual customer data So you don't create just content, you create content that converts. Check out hubspot. com, the Aentic customer platform for growing businesses But who else does that? You have to do it with a company that's huge and where mass appeal or mass and then you need like a membership, right? likeike a prime thing Well, it doesn't have to necessarily be a membership. There's other ways to do it. But you know the two biggest examples he did was the membership because it's the beautiful way to monetize, right? It's like, I'm going to give you so much value in the thing you're buying Giving me an annual recurring revenue membership is a no brainer for you. And that's what Prime is, that's what Costco membership is. And so it worked out beautifully for those two cases. But it's not it doesn't have to be that it's just that's so for example. like I was talking to AI today and I was trying to say like, well, what other study other companies, if there's these thousand companies Which other companies would Nick leap see as having a high surplus, and how would he look at it, right? And so it's AI is not great at doing analysis like this. But one of the examples it brought up was SpaceX. And basically it's like, look, SpaceX is going to lower has been it has already lowered the cost to orbit by one hundred x So it's reduced its cost by one hundred X, but it didn't keep the same prices to the government or anybody else. It also lowered it passed on the savings to the government which is why it now takes like eighty percent of all payloads. It took all of the business, it took all the market share by doing that And they're trying to reduce another one hundred x and they're putting up all these satellites and they're trying to againgain, pass the savings on to the subscribers for for Starlink Internet. And so here you're going to have, again, recurring annual membership a no brainer value proposition to a mass market of people, everybody on Earth wants the internet And they're getting economies of scale because as they improve their launch costs and their launch rates, They're not going to raise prices. they're going to pass it on and they're going to create a membership. So it's like SpaceX would be in a weird way. like again, same thing as Amazon. todayoday looked at as highly overvalued, but potentially undervalued. if you could figure out how to measure the surplus, and see that the rate of the surplus was growing every year it might look like one of those businesses. Now I'm not again, I'm a new with this stuff. so like I'm just sharing kind of like my beginner My learnings with is just with you. I'm not saying that this is or is not the case.'s not financial advice or anything like that. But I do find this idea to be pretty interesting. is the idea I hadn't really heard popularize before This guy is so interesting to me. He's She's got everything that I want in Does he have like a long hair, nice cat? Yeah, like youoogle his name. Is he a Beaiful He's got a beautiful set of hair and only one photo If you Google him, it's the same headshot used for everything Nick Sleep, come on the podcast. I mean, how many times are you gonna let me podcast make out with you before you just finally get on here. o? Yeah, Do you want to break decades of being anonymous? come on pod. There's literally only one photo of them real. It's like I got to this hotel and I paid like disgusting about a buddy, but they had free snacks when I walked in and I was like, honestly, love this place. Great value. They gave this they gave me like cake pops for free. when we walked in. this is incredible. My kids are so happy. And I feel like that's our pitch to Nick leap. It's like, yes, you've been anonymous for twenty years and you value your privacy You've turned down, you know every opportunity under the sun But we got peanuts and snacks if you want to come on our pod. It'll be great. He's fifty eight years old. He's not old This guy's cool. There's an article called How to Retire at forty five, and it's about him So I guess he's takaking it easy, but I would love to have this guy on. That would be so fascinating. him and Paul Graham, just there's something so mysterious about people who who claim I've had enough And they like opted out I think that's interesting. But one of the other takeaways real quick is You only need one or two Forget the word inside, I'll call it secrets in the Peter Tial terms, right? You only really need to understand one or two secrets in your lifetime to become fabulously rich And this is one of them For example, there's a good example of one. I think Peter Teal We did this with network effect businesses. So understanding, you know, PayPal Facebook early on and just understanding the power of a network effect and how unbreakable those monopolies become. And then the other you know, another example is, you know, Buffett, for example, he doesn't invest in network effect, tech companies or anything like this. What he looks at is what's not going to change. and he's basically like the moat, which is the pricing power. So he gives an example I don't know if you saw this exchange, but Elon was talking about how lame Mes are. He's like, Oh I don't like the idea of modotes. If you need a mote, that's lame. You should be innovating faster than everybody else. That's how you win. If you think a moat is gonna protect you, you, that's not what protects you. Fast innovation protects you. This is Elon. You're like Elon, I don't think the word moat means what you think it means. you defite only have a moat Buffett replied and he was like, I don't know. He's like, let's say you go to a corner store and you ask for a snickers And they say, hey, I got a musk bar for ten cents less because I don't think anyone's buying the musk bar And he's like, In fact, if you go test this, if one place doesn't have a snickers and they have an unbranded unlabeled chocolate bar with peanuts in it, But the place across the street has a snickers bar, the customer will just walk across the street and go buy a snickers And he's like, so yeah. he's like, I look for Coca Cola Snickers you know, Gillette, American Express. I look for these brands and French Apple. I look for these brands and franchises where you'd have to pay someone to switch and even then they wouldn't want to 's like he's like that was his core inside of life, you just need to find these great American franchises and invest in them Did you see, I want to bring up a person who we talked about somewhat recently but we didn't dive into, but really quick Did you listen to the Lloyd Blankfein interview that we did that I did with and he talked about like his family finances and stuff like that No, I only I've listened to the first five minutes, but I'm on vacation. so I had hadn't had time to like get my phone and listen to it. Why what did he say about his family? By the way, did you know this guy before? amm I dumb? I never heard of this person and then I knew of him. All about this guy suddenly. Well, when you and I were younger, probably in high school, that was like his peak prime. And so like during the W. So you knew him back then or only now? I knew him as a famous like he was like the face of banking. He was like the Jamie Diamond of zero eight partarticularly when Occupy Wall Street was the thing. He was like the face of evil because like the golden is like and there was this funny line that he told me where he was like, yeah, they like protested outside of my house and everything. And I was like, how does that feel? He's like, Well, two things. one, like go and try to get a mortgage from Goldman. Like you can't. So like, I didn't cause the mortgage crisis. So I don't know why they were so angry at me. And second of all, they, you know, we're camping outside of my house, protesting, but like that's what door metaphor Oh It seems like I shouted out from the window on the fifth fifth balcony in my house. We wouldn't give you a mortgage even if you. That't seem to help. No, dude, he was super likable. He was so charming and charismatic. Basically, Lloyd is like you could look up his career earnings at Goldman because when Goldman went public, he was like forty three years old. And I think at at the time he told me, he told me his shares were worth like one hundred sixty million dollars. And this was when he was forty two. He's seventy two, I think now, so thirty years ago. And then the course of his earnings are all public while it was public. It was many, many, many hundreds of millions of dollars a year. And so presumably, I would have imagine he's worth two billion plus but he grew up in a a poor Brooklyn family and he somehow and he's very self deprecating. His father was a post office worker. His mother, I think was a stay at home mom. He's like a pretty like he calls himself the blue collar CEO. And he was like, I wasn't even that smart, but somehow I got into Harvard and they paid for my school. And he's like, one time when I went to Harvard, I had to go to the like the office or whatever they call it, the financial aid, he was like, I don't have any money to eat. L, can I please have money? And then they're like, they gave me five hundred dollars back then and it like changed my life because I had food. And so he goes to Harvard And he gets job as lawyer. He's like, this sucks, I don't want to do this. And so he gets a job at a ragtag like subsidiary of Goldman. And he's like, I don't even know what Goldman is. I don't know what banking is, but they thought that I was this like hard nosose blue collar guy who went to Harvard and they're like, you check the boxes because he was a commodities trader at this little like rag tag group, which at the time was considered a very low brrow thing And so he slowly, over the course of many years, worked his way up to eventually become partner and then CEO of Goldman. And when he was in my office, he had this very blue color vibe where I could tell that he it felt very authentic. He like looked me in the eye and like knew how to like riff on like silly stuff, but also I'm like ude you're like acquaintances with Putin U like, you know, like he's like like I could see my in your phone as Pie Potie call. Yeah Yeah. Like I could see how this guy is charming and how he worked his way to the top And can you imagine Be the shark in the sharks, like how how much how insane it is to work your way up at Goldman amongst all the sharks and become the CEO. Can you what does that even that's sort of mind boggling level of difficulty. Like I know people that have made more money just building a company, but that's actually not as hard playing the the corporate game inside Goldman and rising up amongst all those kind of like corporate chucks He's wild, but he came off like during the podcast, I told him, I'm like, man, you are making Goldman seem likeable, which like is not easy. Like you're making it seem relatable and likable. That's a very hard thing to do. And for some reason after talking to you, I'm like, oh, I can do this, even though obviously I can't. He told this story, I asked him about personal finances. I was like, hey, how does your personal finances work? Because he told this story about how he grew up poor and he's still cheap. He was like, I buy the is there like a cheaper tier of Netflix that has ads? He's like, I won't even pay for that. I do the cheap one because there's something about it that like because I grew up poor, it still bothers me. He was like when he said I think he said eighty percent of his net worth is in public equities, of which ninety percent of that eighty percent, something like that He still day trades. and he was like, I day trade. I'm obsessed with it. I love the game so much and I want to check my phone all the time But like when I do research on different stocks, I'll get to like a Bloomberg publication or a Wall Street Journal or something like that. and I don't buy the subscriptions because like it kind of hurts me to like pay for it. And I just thought that was incredibly fascinating to hear like how a billionaire manages their finances How a billionaire mismatchmanages his finances is what I heard. he did the right. None of that makes any sense. O top I wasn't there so I could talk shit. If I was there, I would also be like blushing and saying how great he is. But you know, just hearing it from the outside just to be the outsider for his second. your're day trading a billion dollars Well, not paying for Netflix because you you're cheap. Like why don' you understand what youre t You don't pay for you know premium news. The point being it's not It's not a logical thing, but it was like he was kind of like saying, like, here's all like how I'm messed up just like the average Joe. And it was so fascinating. And at the end of the interview, did I tell you what I tried to do with him I was like, hey, like I have this like Instagram. Do you want to me? like I was gonna be sicker handshake Well like I was like, I have an idea. I can like act like I'm reviewing your book and I'll just be like,h, screw it. I'll just bring Lloyd in. Lloyd, just tell me what your book's about, will you? And he was like, he goes, I'm too old for that stuff. I'm not acting cute on Instagram That's the most likable thing you've said so far about him. I was like, Oh, Loyd, it's not like none of them billionaires they're just like us, but just that would have like, I'm not gonna do that. I was like, I wouldn describe it as cute. I mean, it is cute, but it's more like fun. You don't like Fwn goes like, that's too cute, dude I'm not doing that. And I was like, Yes, sir I will walk you to the elevator It was pretty good But he was fascinating. And then another guy who we had a guy on the other name, Barry who talked about David Rubenstein. Had you ever heard of him before David or Barry told you about him? Carlle Group. Yeah. Do you know anything about this guy? Yeah Oh only surface level stuff. yeah. I want to fill you in a little bit about a story because I've actually always been a fan of his, but I mostly knew him as an author of history books notot particularly of like a business guy. And I was researching him. It's pretty fascinating and he's kind of like my new man crush a little bit. He kind of like got his foot in the door because when he was in his twenties and thirties, he he was a lawyer, but he quit being a lawyer because he wanted to work for the Jimmy Carter administration And he like made a joke where he was like when I joined Jimmy Carter, he was up by like thirty one points and then he eventually won by one point and Jimmy Carter went to David and was like So what contributions did you make Uh so he like has like this kind of like funny um depicating humor, but he like worked for Jimby Cutter and And eventually, Jimmy Carter was a one term president. He doesn't get it reelected. So David Rubenstein, he's thirty one years old. He's like do I do now? And there was this amazing article that I found written by Michael Lewis. You know, Michael Lewis, the famous author. He wrote this amazing article in nineteen ninety three called The Access Capitalist. And it's a ten page or so article written about David and it's from a while ago. and I love that. And he said David got his star using what people are calling the Great Eskimo tax scam of nineteen eighty seven Tell me. So the story is basically David had this amazing Rolllodex. He was really well connected. In Washington DC, he was known as being likable and a really good networker and reliable. And so he just like knew a little bit of everyone. And so he's out of work at the age of thirty one. and he's like, what do I do now? And he hears about this like weird tax loophole where If you were a native of Alaska you were given a certain amount of tax losses automatically. I don't know why I think it was like to incentivize people to live there. And so what he did is he organized a bunch of buyers and sellers, meaning if you wanted they could sell ten million dollars in tax write offs to willing buyers for seven million dollars in cash And thus, the buyer got a reduced taxable income of three million dollars. And David like heard about this and he's like, that's interesting. And so him and a couple friends organized roughly two billion dollars in these like and like or in transacting these tax losses And after doing that for two or three years, they had made something like twenty million dollars. and that's the money that they used three years later to eventually start Carlisle Group, which is now one of the largest PE firms in the world. I believe they have five hundred billion dollars in companies that they own. And David was like I thought I had a pretty good IQ myself I was seeing a lot of people make a lot more money than I was who I thought maybe weren't as smart as me. And so I decided to try this PE firm. And so he raises a little bit of money, uses the money that they made from the tax saving scam, scam. sorry, No longer, I guess he just canceled his booking with us. Sbe.ver friend of the pod. Sib. I meant to say Scabe. It was cold outside. I meant to say Skebe And he used this thing and he started in the peE business, which at the time in the eighties was like killing it. like it's felt like that's when all the big PE firms were built because this idea of a leveraged buyout was brand new And so he raised a little bit of money and he like did a couple deals. It didn't really particularly work that well I think he said his first deal that they tried to buy was a Mexican restaurant called Cich's. And he's like, yeah, It wasn't going so hot. He went from the Eskimo camp to CCis. right Yeah He's like not doing so hot. But then he had this idea where he was like, well, like I know everyone in DC and I know that like A lot of jobs in DC are pretty cyclical. like after four years, you're like quit and you're like, what do I do? And I know a bunch of interesting people and I know those interesting people know a bunch of interesting and powerful people, but you don't want to like sell access that would like be borderline, unethical and sometimes illegal. And he's like, well, what if I just like got all of these like powerful people who no longer have jobs in the government to come and like work at this PE firm? And we when we start buying companies where it would help to have like friends in government so you can get meetings to like big powerful companies. And so Carlyle eventually specializes in defense contract style companies. And so that is sort of how it took off. But the more interesting part about all of this is what he's done while he was building the company So he has like five or six books, which is how I've met him or know of him. So he's got a book called like The American Stories about like where he just interviews historians. He's got a book called How to Lead The American Experiment, How to Invest, The highest calling, which is conversations about different presidents. He has a show on Bloomberg called the David Rubenstein show. He's got Yeah, that's what I've seen this amazing thing. But listen to this shit. he owns all this amazing stuff. He owns one of the I think it's one of the last privately owned copies of the Magna Carta, which is the historical one of the most like historical documents of all time for twenty one million dollars. he bought it. He owns one of the last pieces, one of the last. bits of the D decclaration of Independence. He owns a Lincoln signed emmancipation proroclamation. He funded the Washington Monument when it needed to get rebuilt. He funded the Lincoln Memorial when it needed to get rebuilt. He funds all these amazing things. So like the Kennedy Center he helped do. He help he helps produce a lot of Ken Byurns documentary. He funds him. He's just like this crazy guy that does all of this interesting stuff And his side hustle is basically like buying these documents, meeting the people who are like around the documents, writing books about the documents, becoming on the board of the museum in which he loans the documents to. And he just has this like crazy fascinating. That's an epic Tacuterie board career, you know what I mean? Like a little bit of this, a little bit of that. they work well together. You know, he's kind of like the white knight of Washington, D.C. I kind of love it, you know? Like I always love people who are not sort of one dimensional and the way they operate. You know the one dimensional people I appreciate for their laser focus and obsession and I take inspiration from it, but I don't take guidance from it, you know? I take more guidance from people like this who I think have a more interesting, varied career. Personally, I find that like just really compelling I love this guy. Google or go to his Wikipedia page and like look at the things that he's contributed to. I mentioned just barely any of them, but it's David Beckham's wisdom teeth' play a game. Things two truths of a lie. Rubenstein's collectibles. Dude, it's so awesome what he does. And I just think that guys like this are really cool He's actually coming on the podcast in August And so You know, sorry David I didn' mean I didn't mean to insult you if I got any details wrong. But he's coming on. Okaykay, I'm so excited now. That's amazing. Yeah, it's amazing. I think that he's been doing this kind of like baller giving philanthropic stuff and like history stuff I think he's been doing it along the way and not just like in the end of his career, which I find really fascinating. And he like makes this joke we First of all, he says like my whole stick is I love self deprecating humor because it disarms people and like He's kind of like a a self deprecating guy, which makes him very likable But he was like, I'm not really like that good of an investor. I just like work pretty hard and I know kind of everyone and I'm pretty good at connecting people. And I also have really good business partners who help me start Carlisle. And that's one of the reasons why it's the way it is. And I thought that was really fascinating I like that a lot. It also sounds like he had, you know, a cool second act to his career, mayaybe a second and a third act to his career. Today's podcast is brought you by my friends at Mercury. They make the world's best banking product. I think you know this already. I use Mercury for all of my businesses. I think I have like maybe seven or eight businesses. We use Mercury as our business banking across all of them And now they actually just launched a personal bank account. So I have my personal account there. I moved off of Wells Fargo in Chase. I'm just all in on Mercury. Why I like products that are easy to use I like products that get me and the problems that I have, so like very easy to make a joint account with my wife, veryery easy to spin up virtual cards, One click and I get savings yield. It just has all the stuff that I need in one place So if you're looking for the best banking product on the market, it's definitely Mercury. I will fistfight anybody who disagrees with me on that. Go to mercury dot com slash personal and learn more. Mercury is a Fintech, not an FDIC insured bank. Banking services are provided through Choice Financial Group and column N A, members FDIC Can I tell you about a business that I think is really cool that is someone's second act. And I think you know I think you know the person, but I don't know how much time you spent thinking about this business And so the business is PSA. And PSA is if you ever want to go by a rare you know, Charizard. Well, you want to know the PSA grade of that card and got to ey on Yeah, so Natt Turner bought this business and Nat Turner I think I think his last company was like in healthcare, something sold it to Roche and He's always been a nerd, a collector and He raised some money and he took private or he bought this company I think it' calledollector's Universe or something like that. They own PSA And I just found this category of business to be pretty fascinating. So let me tell you a little bit about this business. Here's one way of looking at it. It's a business that controls something like seventy percent of its market, so absolutely dominant in its market. They have four hundred million dollars of orders just sitting in the queue. Have you even got to it yet? four hundred million But If I'm wrong, we' fire a researcher. but that's what we that's what we have here. caner your cld subscriion Oh you Claude I a nasty talking to. Basically they've dominated this space of grading cards. And if you think about what that is, the broader category of problem that they solve is something called credence goods. And so I was kind of nerding out on this. what a credence good is basically It's a good that even after you've consumed it, even after you have it D don't really know the quality of it. So like medical care is a good example. You have surgery Oh how'd you like your surgeon? I don't know. I have no idea. I have no way to assess The efficacy of my surgeon, if they were if they were You know, I could probably tell if they're terrible, but I can't really tell the difference between good, great and world class. And the same is true and the same was true for collectibles. So let's say somebody had a original, I don't know, Sami Soa rookie card and big kind of home run boom was happening when him and Mark Ri were hitting a bunch of home runs and people were buying up these cards. And the problem you know, the problem without a third party a trusted third party here is that One, you know, the owner says it's in excellent condition And then they show it to a buyer and the buyer says, I don't know, it seems fair And then the buyer owns it, then he says it's mint condition. And there's all this arguable and you dont and that's just the condition, let alone, is it even authentic Is this real? Was this actually a first edition? Is this a second edition? Does this actually have this? Does it actually have that? And so you need third party trust in these systems where there was no structure? coins was like this, cards was like this, Pokemon cards, sports cards. And so there was this like entire like industry of collectors who are very passionate but it had no structure and it needed third party trust. And this exists in many industries. So for example, If you ever go through an M andA process, you'll have to go get a QOE or you'd have to get a third party audit. you know, Deloitte, Ernston Young They built built multib billion dollar businesses just doing an attestation, just saying Yes, this company's financials are sound so that the seller and the buyer can do a trusted transaction because the buyer knows that They don't have to go and verify themselves that the company's books are actually what they say there are And so attestation. credentialing. These are huge businesses that are just some of the most beautiful business models because you become It's basically a trust tax on an entire industry You don't have to be the best buyer or seller. You don't have to own anything. It's super capital light. All you have to do is become the trusted third party. And that's hard to do. But once you do it, it's an incredible position to be in. And I think what Matt Turner did buying this company is absolutely brilliant. I think they bought it for eight hundred nine hundred or a million This is going to be a multib billion dollar company because being the dominant market share and there's a netwk effect, right? Like If I have a card that I think is valuable, am I going to go to the third rate Ger. because I can save a little bit on grading my card. in no way. I'm gonna to go to PSA because if it's PSA certified PSA ten, makes my card more valuable And so the trust sort of compounds and it becomes the known unit of account on the street. you see everywhere you go, you're just going to keep seeing PSA, which means when you need to get your cards graded, PSA. And then they add it on top of grading, they have a vault. So they store a million cards in their vault because they're basically like you know, a hybrid. It's like, you know, one part Moodies or they they're grading asset class. and on the other side they're Fort Knox. where they have this giant vault storing a billion dollars worth of cards or whatever it is in their vaults With this business, so I'm just looking it up. so like It's called collectors d. com now. It's like it's like a portfolio. I think they own like the ones you mentioned plus like three or four other ones And the like they have this cool Jackie Robinson card like on their photos and it's created by TOs, Tops cards. when I was like, you know, I bought so many of those. And TOs is owned by fanatics Because it's not like a regulated thing, it's not like money or gold or anything like that, what's to stop fanatics from making more Like it's not like a limited supply. Do you know what I mean? And it's not like it's not TOs is what stops them. So So ye it is a limited supply. If if tops can't be trusted to not flood the market with more cards, people will stop buying tops The more supply there is less valuable each card is. So TOPS has an incentive to control the supply tightly, to manipulate the supply artificially And so TOs has an incentive to do that. That's in line with the incentives of the buyers and the holders because they need scarcity for this to be valuable And then PSA sits as a layer underneath both, which basically grades and authenticates that this is real. It's not a fake card and that it's in good condition and it's valuable. And they also because they see so many cards, they know the absolute scarcity. So they know how many of these cards really are out there circulating in the market. They know the liquidity of each card market. So there there's like a market cap for like Chizards. There's a market cap for Jackie Robinson cards because they know how much how much liquidity there iss, how much circulating supply there is They know the relative value of a card because they know, wow, this is in mint condition versus this is in good condition And so they're all kind of in cahoots with each other and in a way that is symbiotic It's sort of like, have you ever like seen how McDonald's does the like mononopoly game? Like the way the mononopoly game works is there's only like four or two winning pieces and like they guard it like kind of like crazy although they were scammed once. There wass a whole documentary about they were like one of their like janitors guys side Yeah, yeah. And so it would be very interesting like they found the corner of the office where they kept telling they're like, you know, Yink, it's mine. I would have lo to know like when they're making these cards, they must know in advance which ones potentially might be valuable and how they place them in a pack because they're just like in little like bubblegum like five dollar five doll I' love to see that. Yeah. Dude, Nat Turner was thirty five when he did this. So he had recently sold Flat iron Health. I think that's what it was called for I think like two billion dollars in twenty eighteen. So he must have sold So I think he sold one company forty million dollars when it was twenty company. Yeah. It was an ad tech company. I forget what it was called, but it was like cool thing, whatever. he sold it forty, I think forty billion to Google. Then he starts this cancer thing because someone in his family, I think was sick And him and his partner, I think his partner is Zach They're like whip smart. like you could I could just tell by the way, Zach is like kind of a feisty guy online and he like he's very sharp at his words where you see guys talk like this and you're like that's not someone I want to argue with because not only is he sharp, he's argumentative and he won't back down. calls bullshit. Yeah. And so this guy Nat seems like a little bit more of a nicer version of that, but still has it he seems so smart and wise at a very young age. I've been very fascinated by him as well. And I also thought when he did this, I was like H Like it was like totally like I don't like that's And then you go to the website and you're like, this is this is awesome. This is good for the soul I mean the math on the just the queue alone, right? fourteen million cards in the queue. The cost to grade a single card is twenty bucks on the low end, thousand plus on the high end. let's call it like thirty bucks on average So fourteen million cards in the queue times thirty bucks is four hundred million sitting in the queue. It's probably more if you if you think the average cost of the card is higher And so if that's just their backlog, And by the way, this is one of the reasons he bought it was because there was a one year wait to grade cards dude this is terrible. And so he bought it. to try to modernize it with technology, with efficiency, with just intensity, and say like we have to be able to do better than that. And I'll take it public again once we've implemented like a more tech forward approach to doing this because you can't just have like a multiyear backlog and cards waiting to be graded If you go to his Instagram It's called Nat Turner's cards And it's just photos of him showing off his card collection Like he owns like what looks like a Yao Ming rookie collect like a rookie card and it's just him showing it off. This is so cool I wonder what their office is like This is awesome. This the Yao Ming rookie cart just for some reason got me Yeah, I don't know. I don't what their office is like. I don't know what they're I don't know what any of it's like. I just think this ever talked to kind of an amazing move. No,' never met him. I' love to have him on. I think this would be really fun to Yeah to kind of be. I also just think This is my sickness, my disease. anytime I discover a great business model, the envy in me is like, ooh, how do I have one? I want one And so there's a question of like where else are businesses like these? or where could you build a business like these? And u You know, my brain goes into like human capital. So like how do you like for example, could I create a PSA grading system for topop one percent of Ivy League graduates. Like could I basically score them in some way? Could I do this for sports, right? J like they do with the combine in the NFL or NBA? likeike could you do this with youth athletes? Like basically Where would there be an aligned set of incentives? The demand for it, they want to have structure and a sort of a scoring system That can be trusted by all parties And where's the economy big enough? Like know, collectibles was a big enough economy. I would think it's like, whatever, ten billion ish industry. It was big enough to support these types of revenues. And so I wonder where else you could build one of these like third party trust, third party grading systems Dude, but there's also, I mean, you'rere you're just crsion and surface, which different collectables. So if you want to get really nerdy, I'm part of like all these like vintage denim communities online and people will post yeah. lookook if fors of us. If you're gonna say this guy who's got an Instagram who's thirty years old dedicated to his magic c When you said it, I fget oy, you don't like Lee Jeads from nineteen forty seven There are all these like they like they do this for purses. What. tellell me when you When you appreciate denim Isn't it with wine, you're tasting it. with you know, colognees,' smell like it. What do you even do? Is it a feel? Is it a smell? Is it a look What do you even look is what traits do we even evaluate? The premium, the best stuffers? There's all types of terminology You want to look at the honeycombs, which is the fading that's on the back of the knee. You want to look at the back patch near the butt. You want to see, does this patch is it made out of cardboard and paper or is it made out of leather? And has it shrink a little bit or not You want to look at the are the copper rivets just a little bit green so you know it's real copper? Are they hidden are like the famous pair like of jeans like the Honas Wagner baseball card or like the rare Charsard. what is the most valuable collected denim Yeah. so Levi Schrauss was invented Levi Schrauss was a man. He invented it in the eighteen hundreds to help gold miners in San Francisco, so California and Nevada. And so if you can find it's called u buckle back. So where they have the buckle on the back to like it's called like a cinch. If you could find any of those in an old mine and assume that's and you can date it to the eighteen hundreds, those could be worth twenty grand And so collectors, particularly Japanese collectors love them. But then there's this whole sub genenre of people who make reproductions. Predominantly Asian companies, Japanese companies, they're the ones who make the best ones. Japanese replicate American shit so good. I'm wearing a pair right now of Levis standand up for Stand up. Let's see in. Let's see. Look at this high rise. us a twirl. Give us a twl. High rise. Look at the ropeig, The ropeing. This this beautiful ropeig fades. That's what you're looking for. You're looking for that chain stitch hem. That's not made by a normal sewing machine. That's made by a union machine they don't even make anymore You got to find you to find died hemming that. Yeah, you got to find that costs seventy dollars to get hemmed. Okaykay? You gott to find that good good and it's actually quite challenging. And so like a what is the most expensive denim arrtifact art piece you've bought you arere you a buyer or are you just a casual a voyer ' I'm a vwoyer, but like five hundred dollars for like a vintage jacket. Have you considered? Have you been tempted to be like, oh, fifteen, Sarah Do we need that fifteen grand Do we need to get? I have. So there's like like a pair of nineteen forty seven Levis that use like the green for the pockets because back then we were like provisioning out materials and so every material was green for the war and getting some of those real deal, you know, the real deal holyfield ones. Yeah, I want those stuff. But my point is is that there's this whole sub dedicated to two things one Looking at the fade of your denim. It's called Reddit Raw fades is what it's called. so it's raw denim that fades nicely. I swear to God. It's literally just photos. I. It would be hard for beautiful. But I do know there's people who do this for other types of clothing, which are far more desirable like purses. So you're saying you could do niche PSA Yeah you if you if you specialized in different clothing, you know, clothing and bags. Yeahah Denim is too niche, but like But maybe there's a long taail of things like denim. Well, particularly handbags. I've seen this all the time on handbags, like on eBay and stuff. like I bought my wife like a vintage one for like two or three grand and I'm just trusting the person's eBay profile that they have like five out of five stars. But yeah, there's like a bunch of like cool collectible like genres that are still really prime for some of this stuff Yeah. so by the way, like I know it's amazing that like a woman has decided to marry me even though I'm still into this stuff. but We exist, guys Oh my God. Nat Turner Obviously we are nerds as well. if you'd like, come on. We love next week. Rubenstein, Nat Turner Come on the podcast, guys. Don't we seem like a good hang? We've insulted ourselves just as much as we've insulted you, so it's like, we're good U That's something. You should wear a white tank top more often. I think that it brings out something special in you Should I just go skimpier and skimpeier with each episode? I just saw the fleux on the shoulders. Congratulations. It seems like by the way, for the past two years, everyone is commenting about on your body every single episode love it Yeah. All right. go to Spotify farm in India who is continued to comment on how much better I look and how I'm getting in great shape and it shows. Ke it up's PSA is going to grade you. They're going give you They're gonna to give you a u It's fine. fair It's fair. All right, that's it, that's a pod. I feel like I can rule the world and know I could be what I want to. I put my all in it like my day's on the road. Let's travel never looking back. All right, let's take a quick break to talk about a podcast Beuse if you're listen to this, you like podcasts. And what's better than one podcast? Another podcast. And let me tell you, another podcast you should check out. it's called Success Story If you like hearing about different success stories and hearing Q and A sessions with successful business leaders or hearing keynote presentations or just checking out conversations about sales and business and marketing tactics, is a great podcast for you. So check it out wherever you get your podcast