SPEAKER_02
All right, Sam, I want to play a game. I want to start this with a game where I'm gonna read you The 10 you don't know this by the you didn't know I was gonna do this We have that I'm gonna read you the most trafficked websites in the United States and as a simple test your business guy You studied the business world. I want you to tell me do you know? Who's the owner or CEO of these businesses? Okay? All right? I like this game number one google.
com
SPEAKER_03
Sergey and Larry Page Sergey something and Larry Page correct
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Next one YouTube
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Chad H and early yep, and Jared and one other guy Steve Chen exactly correct Reddit Huffman and Ohanian correct
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Amazon 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 Zuckerberg. Okay number six pornhub
SPEAKER_03
Bastion something a German guy incorrect sir
SPEAKER_02
So this is the number sixth most trafficked website in the United States Three billion visits in in like in a month. Is it called mine geek or mine freak or something? Mine geek is a name of a company that owned it 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 many fantasy Book series. There's this con.
There's like this this concept like in the Lord of the Rings. There's the ring or in Harry Potter There's the elder wand and it's an idea that there's something there's these assets that are so powerful That people want to own it, but whenever you own it your ownership is going to be very short-lived It's almost that the the item is too powerful. It sort of corrupts you and It puts a target on your back and other people start coming for you.
It's a real sticky situation one might say 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 want to share with you because I didn't know this story. All right everyone
SPEAKER_03
We have a quick ad for HubSpot, but I want to let you know I actually use HubSpot and I use their sales tool which is what this ad is for HubSpot sales platform It makes it just easier to sell stuff to do it faster to look at your pipeline to see what sales are gonna happen Just prospect to cold outreach and get more customers faster and easier plus it's easy to learn and free to start So you guys can check it out hubspot.com slash sales. So let me tell you let me tell you how it went down
SPEAKER_02
Okay, so we rewind the clock we go back to 2005 up until then, you know Internet's been out for roughly been been semi mainstream for 10 years 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 jugworld.com and it would just it would just show you a hundred links to places Where you could go watch videos Not the videos but to the other websites links to other websites or links to other photos and mostly photos at the time wasn't that much video So 2005 a big milestone happens, which is that YouTube launches and 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 and then also instead of just sending somebody that file you send them Just a link and they can 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 Roll up both his investment in YouTube if you want to see how like Uncertain and how like small and not obvious this was at the beginning So YouTube launches it starts to get popular now There's copycats that come out in the porn version of this red tube, right just off of YouTube red tube You poor whatever done bunch did bunch of these come out and they're all Flooded with pirated content.
So they're just like kind of like lime wire back in the day They just take you know stuff that you're supposed to pay for and they were just uploaded for free on here And they would have you know banner ads to make money and even though these were Kind of sketchy websites. They were 10x 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 It was instantaneous right the distance between the craving the fulfillment of the craving 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's 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 porn at the time was paid Because at the time there was Somebody who was called the king of porn. He's the guy who was sitting on the gate on the iron throne at the time And this was the CEO of vivid entertainment.
What is and what was vivid entertainment? They're like a Hollywood studio They're making like, you know porn or normal movies No, they're making more porn but they're making it like in the 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 by the DVD 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 50% and it falls 80% and it just basically goes down the drain How big was it? It was doing tens of millions in revenue But there were many studios like this So they were they were the biggest one but there was like, you know, just like in Hollywood There's many studios.
All right, so I don't if you remember Google's Google bought YouTube because YouTube is getting a had a huge lawsuit from Viacom these are like Parallel stories YouTube was also flooded with pirate 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 at the same time vivid copies that playbook They look at what Viacom is doing to YouTube They start suing the crap out of all the website and so the first owner of the throne Vivid goes down and the second owner of the throne, which was these like red tube and whatever They they start getting hammered as well because they're getting sued All right, so who's the third one to pick up the baton and where does Bornhub come into this? Okay, so at the time there's three college students in Canada and They realized that this is a that like there's a lot of traffic to these websites They meet of out of all things at a competitive Foosball tournament and the guy who's the best foosball player aka chief nerd Right like sir dork He happens to be the best programmer of the bunch and he creates a live streaming video website to stream their foosball Competitions 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
SPEAKER_03
For porn was the intention porn or was the intention something else and porn users use it use it most
SPEAKER_02
So these guys made the link site so that side I talked about jug world 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 Mac I think his name Matthew Keaser or something Keaser is the guy who built a video streaming site He's the best programmer so he's like I think I can make a YouTube For for this stuff and we can instead of having these directories where we send the traffic away we could just keep the traffic and At the time they had already kind of 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 and eventually they looked at vivid who was the king at the time and they were like we should make our own vivid and so in the same office They created porn hub the website that was gonna host all this stuff and they created a company called brazzers Which is a oh, yeah producer of content So they created a content producer and they created the platform the network like net like making their own shows Exactly or like you know FTX had this you know in the sister company that and by the way nobody knew these companies were linked So everybody thought these were to 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 Brazzers and porn hub were doing the same thing people just didn't know in fact the guy came out and was like quoted 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 interests as brazzers to do that We hate the platforms and meanwhile he was also the owner so 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 sleeping in the office. We worked every single day every every weekend. We couldn't hire enough This was now like 2007 or eight.
I think so 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 brazzers. They had their own content that was not 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 people And so they scaled up they go from basically like just three friends to like 80 people 150 people 250 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 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 bootstrap.
No no investors. No nothing
SPEAKER_03
so just growing because word-of-mouth traffic and Obviously people love what their their product and they're just coming back over and over again
SPEAKER_02
And the key is that this guy Keeser 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 that's 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 into 250 they make one of the guys Brothers the CEO they'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 It's just consolidating power 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, that's something to to fight with and so 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 VHS tape Exchange for like swinger couples right like the most like fringe of the fringe thing But this kid is a Stanford MBA student buys it his mom helps him raise the money And they do a they do like a leveraged buyout of this thing Like it was actually kind of sophisticated under the hood even though on the surface it looked like you know Do you these are you know really sketchy gray area things? What's like Stanford MBA is are buying this stuff. So anyways Fast forward to 2009 they've scaled it to 250 employees.
They're making millions and millions of dollars right there Making more money than they ever knew what to do with but they're getting paranoid because they know you're sitting on the throne That people are gonna come for you and so They start seeing some bad stuff right the government sees this nine million dollars out of one of their bank accounts Just just takes it and they're like shit. What do we do? They start trying to move money around the higher security 24-7 they're followed by you know black tinted SUVs The keys are guy the SEO guy. He just quit.
He's like 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 It's too stressful. We can't do this anymore Let's cash out Now there's not a lot of buyers for this thing right because his institutional investors can't really Buy 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 in this space So what he did was this guy was like a programming genius. So at 17 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 statistic, sorry So he's just a nerd. He loves the internet. So he creates a site that tracks Successful internet companies which which ones are growing the fastest however, you know I started this by reading you like what's the sixth most popular website in the United States He sees that the most popular websites are all porn websites.
And so he's like, huh? What if I create software for them? So he goes to music. What do you need and they're like well? You know, one of the hard things is we 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 on the internet and it's being used by these porn websites and He builds that company up. He's super young.
He's like, you know, 20 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 porn hub for 140 million dollars and then he just like Grows it like crazy. So he and I think I think 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 To solve the problems around the content licensing So he spends 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 a tries to do other stuff too.
He could he buys celebs calm 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 and so he's 30, you know, he ends up 32 years old this, you know, the company has 500 employees and he's the biggest porn tycoon on the planet now And this guy has sort of made it However There's one problem and this problem is that like I said this great power corrupts and
SPEAKER_03
People put the target on his back people start coming after him and he's hard to find too, right? If you look for photos of this guy Google like you actually can't see that many pictures of him, right?
SPEAKER_02
Well, he did a couple interviews at tech conferences later when they started to try to like branch out So similar to how only fans has tried to branch out and hire like Musicians be like hey show behind the scenes content of your music process or whatever. They're trying to branch out He tried to do the same kind of 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 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 Like and then by the way, he's hiring like data scientists and the data scientists are like sir We found it at the best way to get a free user to pay for content He's a video that is two minutes and 59 seconds And that is the point where a man is most committed and is willing like you know to impossibly buy something If we try to put a paywall before that or after that it's not gonna work Two minutes to 59 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. He's rolling up all these sites.
He's buying more and more sites 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 362 million dollar loan from Unknown secret investors and it turns out that basically there was two guys who 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 and it turns out he raised from 125 secret lenders They know 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 or 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 that we have to just leave our jobs Quit our jobs raise money and just lend it to this guy They've lent it at a 20% interest rate And so even though he was growing and making all this money He had huge like monthly commitments because he raises
SPEAKER_03
360 million at 20% interest. Yeah, so his his his debt payment or his interest payment is 80 or 100 million dollars a year
SPEAKER_02
The 60 million a year exactly and and they're and they're also under attack like the CEO He owns a 16 million dollar house. It gets burned down by arsonists and Bill Ackman comes into the fray. Do you want to know how Bill Ackman comes into this into this story? So in the game of Thrones now Bill Ackman comes in from Westeros 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 article in the New York Times and it's about a girl a Teenage girl who's sent nude photos to her boyfriend The boyfriend then leaked it on to one of these websites and Ackman's like that's so wrong and she couldn't get it taken down Hey, and she's felt so bullied and whatever. He's got daughters He's like this is terrible and so he's like he's and so you know how right now He's on a crusade to take down Harvard take down business insider He goes on a crusade to take down porno and so he's he tries to find it He's like dude. This is like some offshore company by this German, 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 easy 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 sanctioned porno by cutting off their flow of money? So he's like hey, they need payment processors And so what Bill Ackman does is he goes and he immediately texts the CEO of visa and he sends him the article He's like your company is enabling this these guys are making money off of this You better do something about this and the CEO of visa is 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 them back. I'm on it like within five minutes. I'm on it
SPEAKER_03
All right, everyone a quick break because I want to fill you in on a little experiment that I'm doing I've got a new project. It's called money wise It's a personal finance podcast for high net worth people or young people who are on their way to becoming high net worth When I made a little bit of money, I didn't even know how much money I should be spending each month should be 10,000 30,000 50,000 and I didn't really have a lot of people to ask So I created a podcast called money wise because I wanted to figure out what are some of the things that people who have a lot of Cash and who have a high net worth. What do they do with it? The first episode is with a friend of mine He sold his company for 200 million dollars when he was 31 years old He gets super transparent about his monthly expenses his portfolio how it impacts his happiness everything And so I want you guys to check it out.
It's called money wise. That's one word. You can find it on my Twitter bio I'm the Sam Parr or you can just type in money wise on Apple Spotify and YouTube.
All right back to the pod All right, everyone this episode is brought to you by the product boss It's a podcast hosted by Jacqueline and Mina their friends of mine They're part of the HubSpot podcast network and it's a podcast about taking your physical product sales and strategy to the next level And they deliver the podcast in an hour-long workshop style strategy Some of their most popular episodes are debunking the myth of daily social media Obligations which dives deep on how you can grow your social media presence from an audience perspective and get audiences Eager to buy your products without feeling overwhelmed. They give a comprehensive playbook That's filled with tips and strategy for building a big audience that align with your business objectives So if this interests you check it out the product boss wherever you find your podcast one day later visa cuts off
SPEAKER_02
Pornups so does MasterCard so does you know, so they lose their ability to actually process payments until they later like you know Kind of change all their policies They like now verify everybody with their license and shit like that in order to
SPEAKER_03
Bill Ackman has this old tweet because if you've been victimized by porn hub or any of their affiliates You may be eligible for a large amount of compensation and I encourage you to email this person who consoles 70 plus victims Who can help you pursue your claim? So he like puts all his weight behind this thing This is this is pre-Israel pre-Harvard pre-business. That's right. Yeah
SPEAKER_02
The porn hub is is who he's going after hell hath no fury like Bill Ackman scorned right like yeah He is crazy. He goes after you so the crazy part is the story doesn't end there So you I thought and you thought that born up is owned by a company called mine geek And mine geek is run by this guy Fabian Tillman However a few years ago or sorry three or four years into owning it. He's grown the company like crazy However, he gets in trouble trouble for tax 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 on a fire sale. He sells it for 77 million dollars. Oh, wow The value has gone down somehow the sixth most trafficked website in America sells for 77 million dollars That's how much morning brew sold for
SPEAKER_03
This is the only time where I'm allowed to go on porn hub on my work computer so I can look at their stats So according to similar web porn hub gets two billion visits a month average 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
SPEAKER_02
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 140 million what are they doing now?
SPEAKER_03
I'm curious about them and I'm curious about who who bought porn hub to for 77 million dollars
SPEAKER_02
So which one do you want? Do you want to know about the shadowy businessman who bought it? Or do you want to know about the original founders choose your own adventure?
SPEAKER_03
Let's I want to go in both but I want to go with the original for now
SPEAKER_02
So if you go look at their LinkedIn's now, which I did their name So one guy's name, I mean the set and so one is Stefan Manos another one is Usam Yusuf and then there's the guy Keizer all of them if you go to their LinkedIn's now there is a No mention of any of this. They're like, yeah, we it's all about their philanthropy. It's whatever But here's the interesting thing.
So the guy Yusuf he sells and he's like, okay I just want to get away from all this that was too stressful too sketchy It became way bigger than we started it like we didn't intend to do that It just sort of one thing led to another I need to reset and in his reset year He's like, well, what how do I invest all this money? I have it so he starts reading and he reads 150 books about investing and he comes away a Warren Buffett disciple He's like, you know what? I'm gonna go into value investing and he creates a Berkshire Hathaway for internet companies called Valseff and Valseff is basically like constellation software They're just buying up profitable cash flowing Internet companies didn't they're killing it. They're killing it. They're now they're now It's a billion dollar company now.
They have over a hundred million in EBITDA every year Just from they've acquired like whatever 50 companies or so they have like 500 million in revenues and then they have like 20 to 30 percent at profit margins and Just listen to the guy so they create this thing called the Valseff group and they're like, all right 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 OG's of this and he's like, huh? 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 10 times better because there's only there's like 30,000 of these companies and there's no competition to buy them What year what year is this? 2016 and so he he starts copying their playbook and he's like look this market is opaque. It's inefficient I think you could deploy a high rate of capital and Get economics similar to what you know the moguls of the previous times where he's like Murdoch You know he rolled up cable and newspapers back in the 50s and 60s He's like that's what I think I'm gonna be able to do with these you know profitable software companies example
SPEAKER_03
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 this called mal Mac practice since 2004 it started in Lincoln, Nebraska It's created best-in-class software for chile practice exactly
SPEAKER_02
so the first company they bought 2016 is something that sells software to small hotels and The next year they buy three the next year they buy eight now They're buying 20 to 25 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 but like Thousands of companies during the last few years think the average size
SPEAKER_03
Constellation software business is three million dollars in revenue isn't it exactly exactly and so I don't feel revenue rebuttal
SPEAKER_02
But it's small. 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 and they're just studying constellation Like it's great. Basically you buy them you need them to run on their own individually so that it doesn't add more bloat to headquarters And they're just buying stuff all over Europe.
He's like he goes right now My problem is I'm trying to decide between a great opportunity a good opportunity
SPEAKER_03
Great did he partner and I think he partnered with some of the other the other founders, right? Yeah
SPEAKER_02
Yeah, it was two. I think two or three of them that I know it was the two of abusive and the man has one
SPEAKER_03
I don't know what the keys your guy does that they don't even mention porn hub on so if you go to valesoft.com our history
SPEAKER_02
Like that that words that I even mentioned anywhere. Yeah, there's parts of my history. I don't mention either, right? Like we all get it These guys are planning to go IPO which is pretty pretty crazy.
So that's where these guys went which is insane Now what happened to the site who bought it? So the story that came out was That the you know, who's the next person on the throne? They said that actually the employees bought it out for 77 million like the two executives bought it out But that doesn't smell quite right. Where do these things where these employees get 77 million dollars to buy this right? Like how much were these employees making 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.
It's like the word Bernard, but it's missing some letters It's just burned bergahmare and He's an Austrian businessman, which is just already sounds fucking like sick and he's He owns the majority of this He owns the majority of 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 2013. He sold it to mine geek originally 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 kind of thought it's a kind of a dead asset Because when you look at the reported financials or not makes almost no profit and they're like, geez How are these guys making hundreds of millions of dollars in revenue with no profit? 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 they shift revenue around all these subsidiaries. So there's all these shell companies So you don't actually they've completely obfuscated how much money this this entity makes it That's who currently owns it but even he's going down now He's getting a divorce his wife who 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 And do you want to know the name of the private equity group that bought born hub? Yes? I do ethical capital partners Do you want to know how many companies they own? one This is the whole they formed just to buy this they named it like ethical capital partners is I mean That's the the subway eat fresh 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
SPEAKER_03
Great story that was a great story. I was in thrall the whole time second look up this guy Bernard 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 badass photo Yeah, he's just smoking a sick. He looks like like if you told me that he was part of the mob
SPEAKER_02
I believe it he looks like either a mob guy or like a soccer Okay, you know the Manchester United coach after a loss What are the two?
SPEAKER_03
Yeah, he just he just just rip it a sig in this in this photo and he worked at Goldman So he's also an acquisitions guy like he's a deal maker. That's what he does This is insane. First of all, I Would never trade places with any of these people and maybe the original owners that is kind of cool But the last two and the new owner I would not trade places with any of them for any amount of money I would not want to 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 want to know is what is it like to work there? How do you stay professional like in the speed try to be objective about certain stuff? Like, you know when you're talking about 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 What are the conversations like at at porn hub or mind geek 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 they do?
SPEAKER_02
Right, it's 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 other day We were in these meetings that felt like life or death high stakes Everything is on the line like the world is gonna end and I'm like This is like 21 year olds playing video games in their bedroom like who cares like none none of this matters and like you hire people from Harvard and MIT like The brightest of the bright and they're optimizing like, you know, the the midroll ad pop up of you know 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 and you come up with all these terms for community and content and whatever and Nobody is I feel like nobody looks at the fact that we're all just making hot dogs anymore
SPEAKER_03
Well, you lose sense of it. I my wife worked at Facebook out of college. So she went to Ivy League school It's a smart woman.
She had all these who made 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 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 it was like looking down. It was like Yeah, yeah, that's it You know what I mean? Like 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 visual people It's like, oh you create a thing that when I stick my tongue out like the cartoons tongue goes out. That's cool In reality, you're doing it just to get people addicted more to posting and sharing stuff.
Yeah, you know, that's alright
SPEAKER_02
It happens when we were at Camp Mfm and we're talking to mr. Beast team And he's giving us a tour of the facilities and our group is like billionaires and philanthropists 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 14% and look at how many thumbnail tests we're doing like ah 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 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 tie used to do this shit You're locking yourself in a room for seven days like I actually know an idiot named Jake who did that without you Like when you're in it You can get in this reality distortion field where you feel like you're doing God's work out there And that's what happens at all these companies, dude
SPEAKER_03
It is still cool like like I remember Elon Musk Elon Musk gave us talk and he's like, you know You're doing someone was like you're doing all these amazing things You're sending people to Mars you're building cars saving the 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 want to just discount this stuff, but it is fun to put perspective on this and I think you just can't take
SPEAKER_02
Yourself too seriously right it's cool to do do do your best. It's cool to try to win a game How many people are gonna watch the Super Bowl next Sunday? And it's you know a bunch of guys chasing around a ball than the arbitrary set of rules Right like if you if you look like 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 says it's a game or it's something fun or it's something light-hearted
SPEAKER_03
I've met three guys who run porn sites some are popular some aren't popular one of them is very popular
SPEAKER_02
Imagine running a not popular porn site
SPEAKER_01
Your friend who's running the unpopular porn site imagine how bad you have to be an execution
SPEAKER_03
Like this guy launched one and it like within three or four days It was doing like 80 or a hundred thousand views a day But he was like yeah, we don't make any money because the ads are horrible Like 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 borderline autistic probably on the more autistic 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 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 look at that spreadsheet 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?
SPEAKER_02
Yeah, yeah, exactly. Yeah, you once you get in you start operating and by the way, I remember reading once So max Levchin 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 you could probably say for a couple people but specifically anybody at PayPal will tell you that max's technical brilliance in fighting the Fraudsters odd. Yeah kept PayPal alive when any other money transmitting service 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 So brilliant programmer right chest whatever master brilliant programmer blah blah blah Creates PayPal.
This is like monumental thing. His next act was a company called slide and slide basically made like virtual pets for my space It's like what it's like. Yeah, you know like on your my space profile your Facebook profile We're gonna make little apps like so you can 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 and so they got even lamered in it
SPEAKER_03
It like be him an ad tech company
SPEAKER_02
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, it was stuff to go on your my space at Facebook profiles 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 And I think they ended up selling to Google for some small amount and they were like max what you learned from slide small
SPEAKER_03
For him it was still a multi hundred million dollar exit, but I think they had raised a lot of money
SPEAKER_02
So I don't think anybody really made too much. So I I'll never forget this guy read this quote and I realized oh shit this describes my life And so I've read this like 15 years ago. I've still never forgot it They go, what did you learn from slide and he said what I he goes I realized you got to be really careful what you what projects you pick because anything can be in optimized to infinity And it was like what do you mean? He goes? 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 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 He didn't say but the implied thing is like kind of like what a waste like be careful Because everything can every knob can get optimized to infinity.
He became like the best pogo stick player in the world Like and I felt this many times in my life And I don't know really even know how to deal with it to be honest because when you have the realization Like shit should I just stop or I don't know is I don't want to stop. This is like my job This is successful business. Should it like with my e-com store.
I feel this like, you know You changed the color of this and then you run this a B test you do and it's like dude. What are we doing? like is this like is This what we should be doing with our time and our life and our creative energy and I do have that like kind of Existential crisis, you know every few years just think about this quote
SPEAKER_03
Let me be your therapist for a minute as well as anyone else's in the situation Your product doesn't have to change the world your product actually 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 They want to play softball in the weekends and they want to make sure they've got good health insurance They want to see their kids raised and be healthy You don't need a life-changing thing all the time to have a badass thing And I don't think that it's fair to compare all these products to the Teslas or whatever like these existential crisis things Because like just having a piece of clothing item 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 that you could say oh we inspire people Sometimes we just jerk around and it's just funny like that is also awesome It's not the right thing to say this compared to this other thing is so stupid when it's like no You could 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
SPEAKER_02
I mean, okay, I feel better. Thank you. That was good.
I feel better now. I'm creating jobs out here, dude
SPEAKER_03
No, that is the truth or like, you know what I mean?
SPEAKER_02
You're providing for your family office with the number of jobs I've created. This is great. Yeah
SPEAKER_03
We have created literally half a dozen jobs this last quarter
SPEAKER_02
I might have to become the governor of the Philippines because I've created all my jobs in Can I just show you one thing off this list though because I had this list pulled up of the internet sites dude Look at this list. Just tell me the first thing that stands out to you and I bet you it's the same thing that stands out to me I'm looking at the list of the 20 most popular most visited most used websites in the United States
SPEAKER_03
Well, the first thing but this is not what you're referring to duck duck go is number seven That's what I'm referring to do that's that what you're very do that go
SPEAKER_02
It's more popular than Yahoo and Wikipedia and Twitter. So here's the background duck duck go
SPEAKER_03
So duck duck go was started probably 20 years ago. I think I mean or maybe maybe more but like it's not new Sorry about this guy named Gabe I think Gabe was a mildly successful entrepreneur successful by any means but like a monk Silicon Valley It was all like a base hit. I think he wrote this book called traction with Justin mayors 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 50 episodes We're like this is so cool because what they used to do is duck duck go comm slash like stats You can see all their web traffic and it was small at first.
It's basically Google But you but for some it's Google 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
SPEAKER_02
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 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'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 and throw on and we talked about these guys a while ago
SPEAKER_03
Because it's kind of weird which is like this is a significantly 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 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 they need the fifth so it was started in 2008 by the way
SPEAKER_02
I am blown away by this. I might have to go read that damn book then which book traction. Yeah, this is real traction Okay, I mean I believe you This is crazy
SPEAKER_03
Yeah, it is pretty wild and I've been I've been interested in duck. Go but I never Fully got behind it because I was like this is just an inferior Google but this is amazing So they say duck that goes an independent privacy company for anyone who's tired of being tracked online and wants an easy solution And actually recently they raised a hundred million dollars in funding or maybe 200 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 stake 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 a 100,000 they but like if you fired everyone but 50 or 100 or 200 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 duck goes so Such a good business, but this is amazing that they're what is it number seven number seven most popular website ten years
SPEAKER_02
They went from point oh one percent market share to now Point six three They're still tiny according to their own You know measurement of market share Which I don't know exactly how they measure that because if you look at the The you know Alexa rankings with the SEM rankings. They're getting ten times less traffic than Google or a little bit less than 10 But they're saying they're only point six percent of search
SPEAKER_03
So I don't know they had a hundred billion searches in Q3 of 2022
SPEAKER_02
I'm gonna go on the street. I'm gonna ask a hundred people. Do you use duck duck go? I need to know what's going on here?
SPEAKER_03
This is crazy. I think we should I'm not gonna go through my other topics I think that this this you did a wonderful job. You had me in thrall the whole time What's the title of this one gonna be like a shot box for 94 minutes straight? That's every episode this one's gonna be this one's gonna be the story behind the fifth most popular website in the world All right, that's the pod