What's up, everybody? This is Cortland from IndieHackers.com, and you're listening to
the IndieHackers podcast. More people than ever are building cool stuff online and making
a lot of money in the process. And on this show, I sit down with these IndieHackers to
discuss the ideas, the opportunities, and the strategies they're taking advantage of
so the rest of us can do the same. All right, I'm here with my friend, Julian
Shapiro. How's it going, Julian? Great, man. For those who don't know, Julian's
been on the show a couple times, maybe three times now or four. You're my podcast co-host
for our other show, Brains. You're an investor at Julian.capital. You're a writer at Julian.com.
You are a tweet master with an unimaginable number of followers. How many followers are
up to you now? Man, it makes me feel cringe to give you the
answer because I'm like, I'm boasting about it, but I think a quarter million.
Quarter of a million followers. And like this time, two years ago, you're like 10 times
less than that, I think. Yeah, I think I was one of the first people
to realizing the power of threads for fast follower growth. Yeah. And now everyone's
doing it. So I think each one of us, unless you really want to lean hard into the clickbait
game, which I find a bit cringe and it's not something I want to do, but unless you lean
hard into that, the rate of growth for Twitter followers now, I think is declining. Yeah.
Everyone's doing these threads. Everyone's doing it. I'm almost never on Twitter. Actually
sent out my first tweets in a while, like a couple of days ago, but when I do go on
Twitter, half of what I see is people saying, I fucking hate Twitter.
No, it's like, it's like I made $4 million doing X and I lost 100 million doing Y. Here
are my 10 biggest. But my question for you is if you're not addicted to checking Twitter,
yeah, I'm sure you're addicted to checking something. I'm guessing it's Reddit. No, I'm
honestly, I check Hacker News probably every day, but it's not like I spend very little
time on it. I go, I browse the stories. I leave. I'm just living life, man. I've been
like living my offline life much harder than I have, uh, probably in the last 15 years.
You know, I was in Italy for a couple of weeks recently. I had a big party for my birthday.
I got an Airbnb, invited a bunch of friends before that, just stuff like that. And so
I'm mostly, if I'm at my computer, I'm working and if I'm not working, I'm doing other stuff.
So what gives you the greatest happiness these days? People, easily people meeting new people,
introducing them to each other, hanging out with them. Andy hackers is super fun to you.
I've been like rejuvenated because I was trapped in an Airbnb with my brother for a couple
of weeks in Italy. We both got COVID. And so we were just like jamming on Andy hacker
stuff and like work for me, I'm a very social person. So work for me is like way more energizing
if I'm working on a cool project with somebody else that I like. So it's like maybe a tie
between those two things. What about you? Interesting, really jazzed on investing nowadays.
Yeah, I find invest. It's interesting because I originally had the impression, which I imagine
a lot of founders do that investing is this sort of thing you do when you're out of ideas
and you're just kind of, you're just like, they're washed up. Yeah, maybe, but it's more
like you no longer want to be an operator or you don't have to be an operator like a
founder. Then I got obsessed with it. And someone asked me like, why are you doing this?
And I said, it's extremely fun to just work with the very best of the best founders and
ride those rocket ships without doing any of the work. You know, I get like a front
row seat to the coolest companies. And if you're actually making a concerted effort
to not just invest in like martech tools and, you know, a Twitter clone, I'm not saying
those are bad companies, or even that they're not good for the world, but they're not exciting.
What is exciting is when you're working with a climate change company, or you're working
with like a quantum computing company, which I'm not because I'd be in over my head. But
there are some types of companies, you're like, holy shit, this is actually the future.
And I'm looking five years ahead into the future. Like a great example is there's a
gut health company called microbiome company that I invested in that pioneered something
that is easily four years ahead of the market. And most doctors don't even know such a thing
as possible, like a supercharged version of probiotics that actually works as opposed
to being this transient marginal benefit through a bunch of ml work finding the best sort
of design of the ideal probiotic really interesting stuff. I'm riding that rocket ship, which
will be the future of gut health. That is so frickin rewarding, you know, and then I'm
trying to help them with growth. So
tech is cool like that. If you're an angel investor, like you say, you get to see all
these deals for companies that like aren't public yet, nobody knows about yet. It's also
really lucrative. Like when I think about making money in tech, I have a lot of friends
over the years who are like, Ah, I'm broke. I wish they made more money. And I tell almost
all of them, learn how to code, right? It's not easy to do, but it's 100% doable. Like
you if you put your mind to it, you can do it. And about a year or less, and get a job
at a company and keep getting better and work your way up and like make a lot of money make
hundreds of thousands of dollars and salary and equity. Uh, it's one of the easiest jobs
you could possibly get that makes that much money. And then beyond that, once my friends
have learned how to code and they start getting bored of that, I'm like, Hey, you should become
a founder. You know, as a founder, you can own a piece of a business. It's one of the
best ways to basically get wealthy and change the world in some way. It's more rewarding.
You work for yourself. You don't have to work for the man. And like if you fail, you can
always fall back on your coding skills and just go get a job somewhere making like two
or three hundred K like some big brand name tech company. So like why, why the hell not?
But like increasingly feel like there's a whole other level above that where like my
friends who are investors like you are like being, being a founders for chumps. Why don't
you become an investor? And it's sort of set up owning like a piece of one business and
spending all your time on that, you know, own a piece of like dozens or hundreds of
businesses or with lots of different founders and some of them take off on like a really,
really big way. And so like that might be even like a better way to make money in tech.
I mean, it definitely is. I mean, it's a D so it's a much more dearest way to make money
because now you have a basket of startups giving you income as opposed to a future income
as opposed to one. I knew something was I knew venture was way more rewarding and intellectually
interesting than people let on when I noticed that all of the people who everyone points
at as the most successful and the smartest people in tech the unicorn founders. All of
them are investing on the side, like 100% of them, they either angel investing or they've
raised $20 million and have a side fund all of them. So people who could do anything in
the world with their time, Naval, biology, then you have of course, people who are full
time VCs like Mark Andreessen, who could be doing anything the world he wants to do is
already worth $1 billion. Yep. The founders of almost every unicorn company has been a
unicorn for a few years like the founders of Dropbox. Yeah, why are all of them all
invested stripe 100% stripe itself? Why are all of these people spending hours and hours
per week doing this even though they don't need more money? Because it's super intellectually
stimulating to play the game of trying to go and find the best possible companies to
help them. And then to on an emotional level, like I was speaking to earlier, be part of
that rocket ship. So it's the emotional level. And then I just mentioned the intellectual
level is it's fun to try to reverse engineer the mental models to identify what are the
very best companies that are most likely to succeed. And then playing a game like a competitive
game where you're trying to get into rounds with minimal allocations, that you're trying
to convince to take your capital, because the really good ones are hard to get into
typically, right? So like, one of the biggest hurdles, like if you want to become a software
engineer, it's like, all right, well, like, what do you have to do to do that, to do that,
you need time, you need ideally a mentor or a course or something to learn. And that's
you need to kind of smart. So that's it. To be a founder, okay, usually need like some
amount of money to fall back on, like some runway, some confidence, you know, an idea,
but still like not that much. Ideally, a life that supports it, you know, if you have like
a mortgage and a family and kids, it's like a little bit harder and scarier. But to be
an investor, it feels like you need a lot of money. Like I've never really I've invested
in a few companies, but it's like, I don't have like a lot of money sending my bank account,
like I'm not that liquid, right? Whereas most of the people that you're talking about
who are investors are like people who've already exited their companies, they have millions
of dollars to play with, and they can therefore like create their fortunes. And so I think
one of the toughest things like to get into this is like, Oh, how do you even finance
being an investor? And who can do this, right? Do you need $100,000 a million dollars? Can
you invest if you have, you know, considerably less than that?
Yeah, it's interesting question. So step one, I'd like to think, I mean, there's no there's
no rules, I'll just walk through what I think is is a smart way to do it. Step one, invest
with your own capital, because you really want skin in the game to learn lessons hard,
iterate on your mental models, try to pick the best startups, and then go through that
torment and those bad choices before you invest other people's capital. And so usually there's
a rule of thumb something like create an initial portfolio of let's say 30 companies, 3035
companies to have enough surface area, such that at least one goes to the moon. That's
an often sort of rule of thumb you might hear. And so let's just say we follow that let's
say we go for the 35 companies, the check sizes are actually relevant, insofar as proving
to yourself the good versus bad, obviously, the larger the check, the more skin the game,
the more you're going to learn a hard lesson, which is important. What's like the smallest
that looks like the smallest check size? Yeah, well, you can write into a company, but can
I invest, right? If I want to invest in 35 companies, that sounds like expensive, right?
So the there's a practical limit, of course, which is what check size can you write that
doesn't exclude you from the best companies, you don't want to suffer from adverse selection
and just be able to invest 1k where people like they need the money really badly, right?
So in practice, yes, most founders don't want to take tiny checks. So it requires extra
hustle if you don't have a lot of capital to start with. If you know, I mean, there's
no hard answer here. But usually people on the low end are writing angel checks on the
low end of like 2025 K, usually, that I've seen, I'm sure there's people are writing
lower. I'm sure there's a lot of 10 k's out there as well. And so I've done like token
investments of like 5000. Right. And so if you can get away with 5k, I would, and I would
couple that with your value add, and it's use VC speak for them to be willing to take
your 5k, which is small and kind of a waste of time, many cases, it's because they think
you provide value. And so the types of value that founders usually appreciate is help with
recruiting. I mean, if you can immediately make introductions to key people they can
talk to that shows a lot. It's helped with growth. So tactical advice for how to grow.
It could be a rolodex if they're if they're like a B2B enterprise company, and they only
sell it a few folks, and you know, a couple of them that could be huge, or distribution.
So you have a newsletter, kind of like Paki McCormick, or Lenny Rachitsky, and you can
promise them some distribution. So there are ways to to pad your 5k. But the point is,
let's say you do 5k times 30 ish checks, get that out of your system. And we can talk about
what that what does that process look like? How do we pick which ones to invest in? And
then to your point, if you don't have a lot of money, you're not super rich, that's okay.
Most GPs general partners of venture funds aren't super rich going in, from what I've
seen. And you take other people's money. This is the whole reason why Angel has created
rolling funds to make it as easy as possible for you to publicly solicit funds from your
audience, your family from your followers, and just get small checks, stitch them together,
put together a larger vehicle, and you keep raising overtime. Right. I think one of the
things that discourages me the most is that it's a lot of work, right? Like, it's like
being a parent, right? You can you can be like an absentee parent, and just have a lot
of kids with a lot of different people and then just disappear. Right? You can be an
investor and be like, I've invested in these companies, I don't care. Like, or you can
be like more of like a present parent or investor, or it's like, okay, I've invested in these
companies, I want to keep up with them, I want to follow them, I want to help the founders
when they email me and ask, you know, if I can help them hire somebody, like, it feels
good to be able to say yes. And like put yourself in their shoes and like sort of help out,
right. And personally, I've never had the time to do that. Because I'm so focused on any
hackers and other things that like, for me to be an investor, it just feels like I'm
gonna be a letdown to everybody. Like even when I get like emails asking me to do intros
and stuff, I'm like, this just feels like a chore. I don't really want to do any of
this stuff. It feels like you got to be kind of full time on it to be a good investor.
And to like, I guess deliver this value that you're talking about to founders. Otherwise,
it's just annoying. So I first of all, I agree. I mean, investing is it's increasingly important,
I think that you become a full time investor if you do not saying you have to be but that
you spend more and more time on investing if you are an investor, because of how competitive
ventures become, like everyone has a funded it feels like a lot of people with crazy good
value add and big audiences can squeeze into deals way before you do, leaving you with
kind of like the second pickings, which again goes to this adverse selection problem, which
is, if you're seeing a deal, you want to ask yourself, why am I seeing it is because no
one else wanted to go in. So if you want to minimize adverse selection, a lot of founders
started a lot of investors are doing no work to do so. Most investors that I've seen, at
least on the smaller scale, I'm not talking about the large, large funds, but people with,
you know, let's say 10 million to $20 million funds, they're lazily waiting for deals to
come to them. And that is if you're only investing in stuff within arms reach and not doing outbound,
not aggressively putting sourcing channels in place to find new deals, you will inherently
suffer from adverse selection, because there's going to be so many awesome ones that get
swept up that won't have come your way in the first place. So you're mentioning value
add scaling value add. Well, I don't think it scales well at all. And so the way I do
it is after I invest, I'll be very hands on for a short period of time to help set them
in the right direction, growth wise. But after that, I scale myself by writing memos. So
on Julian dot capital, I have a sort of notion looking website, that is these memos I've
written for founders to better grow their company. And what I do is I collect the incoming
questions from founders, and I sort of tag them. And when I get a question that comes
in very frequently, I'll eventually sit myself down and spend a full weekend writing a very
in depth, very tactical, very helpful memo in response. Whereas most investors might
just hop on a call for 20 minutes, and just give like an off the cuff response. But founders
would much rather have a memo that walks them through step by step what to do like, how
do we hire the best marketers? How do we actually pursue product that growth? How do we structure
marketing team? I'm not going to cover this verbally in 20 minutes and do it justice.
So I scale myself by not doing calls religiously, and instead using memos as as the means to
spread advice back with all the founders, not just one on one. Who do you think like
you're a very systematic guy, right? Like, again, like I watched you grow your Twitter
account from like nothing to a quarter of a million followers just by being very systematic,
and like sticking with the process. You're doing the same thing with investing. I'm pretty
sure you're gonna make a ton of money through investing, because you're just gonna apply
your Julian frameworks to it. I'm sure like our other podcast brains, if we wanted to
blow it up, like we do the same thing if we put in the time. Who else do you think is
killing it with investing? Like when you look out into the tech investing world, angel investors,
like who's inspiring you and like, also like how well are they doing? Are people making,
you know, millions of dollars, tens of millions of dollars? Like how, what's kind of like
the pot of gold at the end of the rainbow of being a good angel investor?
I guess maybe the folks who are inspiring are those who have phenomenal reputations
among their existing founders. And then when they're, when their existing founders friends
start companies, they go, you have to take money from blah, like Hadley Harris at ENIAC,
Leo Polovets from SUSE Ventures are people who founders just absolutely, Ryan Hoover
from Weekend Fund. These are people who founders love, and they're preferential, they're sort
of, it's like the opposite of adverse selection. The best ones are hearing about them and saying,
Hey, let me start with Leo as the first person I'm going to tell this idea to because I really
want him in. So those are the people who I think are inspiring in terms of who's making
the most money. Well, what's crazy is the way the fund economics work is you get it.
I mean, many people listening will know this. I apologize. But for those who don't, you
get a percentage of the profit made from your funds investments. So beyond when you return
your own investor's principal capital, but you also get paid a management fee. And the
management fee is sort of like an annual salary. And that management fee is tied to how large
is your fund. So if Andreessen Horowitz just raised, I think collectively $9 billion worth
of funds just recently, I think, I don't, I think that's right. That's such an insane
number because the management fee adds up to hundreds of millions of dollars.
Yeah, it's like $200 million. And just fees they get for free every year to do whatever
they want, which are people build cool offices. Yeah, I mean, talk about like, that would
be that would be more than a unicorn company. You know what I mean? That would be an enormous
multi billion dollar company. And they don't have I mean, they do have a lot of expenses
because they've hired a lot of people and Andreessen Horowitz case, but you can really
minimize the streamline expenses. So it becomes wildly lucrative when you raise a lot of funds.
Which is a little bit weird, kind of a weird perverse incentive. I'm actually not a big
fan. I really think almost all of that money should not be management fee, but should be
incentive aligned, quote unquote, carry, they call it, which is your take of future profits.
And so the point is, the other reason why rich people do venture is because quite frankly,
and I don't think that people realize this, it can pay better than the crazy high salaries
they were already making. Or even if you take however much they sold their company for,
let's say they sold a billion dollar company, they had a certain percentage of ownership
that left them with $80 million. And let's say it took them 10 years to build a company
quorum. So we spread that over 10 years, they made $8 million a year, they can make $8 million
a year from a large fund, man, that's actually kind of pushing it, maybe I'm being a little
bit crazier, but it doesn't pay way off, it's not like orders of magnitude off, we can become
as as lucrative, but de risked, because all your eggs are not in one basket of your own startup.
And it keeps you intellectually simulated and emotionally simulated, because you don't get
tired of your one idea, you're now riding a bunch of rocket ships, and it's just a blast
if you're skipping between cool sectors and climate change and quantum computing and stuff.
Yeah, yeah, I think this whole incentive thing is very interesting, because it's like, okay, well,
ideally, if you're giving somebody money, like you want them to be working their ass off to invest it
in the right companies. And so you want the incentives to be aligned such that they really
only make money when they're making good investments and making you money as their
investor. But, you know, if they've raised this humongous fund, and they're collecting 2% fees
every year, and they're just like, that's enough for them to make millions of dollars, then it's
like, what incentive do they really have to try that hard? And I've seen like a lot of this,
like, there's almost like this, like, ND hacker version of an investor that's arisen in the last
five or 10 years where it's like, okay, you can be Ryan Hoover, make a really successful,
you know, company like product hunt, get your name out there, or Sawhill,
Lavinia has done the same thing, and then just start raising a huge fund from your audience.
Like, I know Syles raised millions and millions of dollars, just by being active on Clubhouse and
Twitter, and then just tweeting out like, hey, anybody can be part of my fund, right? And if he's
like, if he's able to raise like 10 or $20 million, I don't think he's gotten there yet. But like,
if he is, then like, that's a ridiculous salary for him. Whereas I think sawhill, by the way,
is doing I think $10 million a year exclusively off his Twitter audience. Right, which is crazy.
It's probably the best way I've ever seen of monetizing a big Twitter. You know what the
craziest part is? He wanted to help his friend he I think he admires Austin Allred, the founder of
Lamb School. And so he tweeted on Austin's behalf one day and said, Hey, my friend Austin starting
a fund as well, fill out his Google form if you're interested in indicate your desired check size.
And sawhill for Austin also raised Austin $10 million a year fund off one tweet.
I hope you got a cut. I mean, how crazy is that that sawhills? Well, it's interesting. It speaks
to one, the affinity people have for him, meaning the degree to which they trust and like style to
speaks to him having an audience that is of the correct persona. And three, it speaks to him
having built basically intellectual and career credibility in investing, so that people believe
he'd be the right person to back. So, you know, I mean, years and years and years in the making,
but still pretty phenomenal way to leverage a Twitter audience. Yeah. I hung out with sawhill
actually like a month and a half ago, and we were walking around Seattle, talking about like the
meaning of life, like what you want to do. And he's like still trying to figure it out, like what
brings him happiness. And investing kind of sometimes is it, you know, sometimes he invested
a company that's really cool, and he gets really fascinated about it. But sometimes it's just not.
And I wonder like what it is for you, you know, assuming you do this investing thing,
you make a lot of money for yourself and for your LPs. Is it something you do for the rest
of your life? Is it that intellectually engaging? Or is it something where you're like, I'm gonna
make a bunch of money, retire to like a cool place, and then, you know, start a company or do some
other project? Is it a means to an end for you? Right. Well, someone once told me that investing
is about like playing golf. It's something you can still do even decently well into your 80s.
90s man. Charlie Munger, 98 years old, just gave like some sort of talk on Bitcoin,
resigned from a board he was on like last month, like still active as an investor,
his business partner, Warren Buffett 91. Still active as an investor,
even McDonald's every day going in make it spend billions of dollars to invest. So you're right. I
mean, you can do it forever. Yeah, I mean, I'm sure your your edge in the degree to which you're
tapped into startups, and like the current trends probably decreases. But there's still ways to
remain competitive. And that's actually really comforting knowing that I'm building something
that will compound over time. One of the things I'm sort of obsessed with is the nature of what
compounds outside of your bank account. It's like it feels like a glitch in the matrix. Like it
feels like you're cheating the system by putting money in a bank account and allowing interest to
create compounding returns. And the dollar turns into like insane amount over time, right.
But similar ways of compounding exists outside of your bank account. That I've always found
fascinating, where it feels like you push a small domino and it just hits a chain reaction,
you build on this leverage. So like, building an audience is a phenomenal form of compounding
access. Because as you get bigger, it becomes easier to keep to get even bigger than you
currently are. And it's not like this rich get richer phenomenon. Yeah, the bigger you are,
the easier it is to keep getting back. Absolutely. And then it feels like investing
follows the same sort of dynamic. It feels like the more you invest, the more founders hear about
you. And the more you get first look access to great deals, if you're good to founders, and it
starts compounding, and you start getting better access. So me in 20 years from now, if I remain
on the cutting edge of what's happening trends wise, I should be in even better position. So
I'm always so there's a couple dynamics there. One, I like that you can do for a long time.
And this is, of course, the fact that I really enjoy it, which is already covered a bunch of
times, but and the fact that it's an accruing type thing. So I like that about it. But to answer your
question in terms of is it a mean student? No, it's something I want to do for a long time.
And in terms of what sort of gets me excited? What do I enjoy doing? I'll just tell you broadly,
what are the things I enjoy doing? And I don't know if it's the meaning of life for me or anything.
But I love reverse engineering, things that people think are overwhelmingly complex,
and teaching them very simply. So people are overwhelmed by learning piano,
overwhelmed by learning how to write well, or tell a story. That's what I'm doing on join.com.
I feel like I'm unlocking the keys of how the world works. I'm sitting there banging my head
against the wall, experimenting. So I love figuring out those secrets of how to do really
good work in a new domain than sharing with people. There's almost like an entire class
of things people can do, where the common wisdom is like, Oh, this is just a natural talent. You're
just a naturally good writer, just a naturally good singer or naturally good artist. And it's
like not true. Almost every one of those things you can learn and break down 100%.
100%. That is what drives me is people coming to realize that that thing they think is out of bounds
is not out of bounds. There's being sort of intellectually lazy to reverse engineer how it
works. And I'm obsessed with reverse engineering how these things work. Yeah, most things I think
are actually quite doable. I really do believe that meeting people I find fascinating, like on
our pod brains when we get Eric Kripke, the guy who created the boys on Amazon, which I love,
I think you like as well. Awesome show coming out, coming out soon. Yeah, we have Tim Urban,
who's one of my favorites of all time from white, but why calm who I absolutely look up to.
James Clear, the author, Mark Manson, the author, Tim Dodd, who's everyday astronaut, so on. And so
all the content work I've done, the audience I've built, the podcast we've done, this is all in
service in large part of meeting people who I find just lovely. And then with the way it all comes
together, if I can do some sort of retreat with them in person, this is why I want to go build a
ranch somewhere, have a bunch of guest homes, where I'm like, hey, why don't you come by for
two weeks for even a month? I know you have that film coming up. I know you have that blog post or
that book you're working on. Let's just do it here. And it'll be silent. I won't bug you just
enjoy the beauty of wherever we are. And that I find super, super rewarding. And just brainstorm
an environment with all these people making cool shit at the same time. There's this guy, I think
his name is James Hurst. I stopped by his castle during a road trip I did from LA to SF a couple
years ago. It's called the Hurst castle. It's like in central California. And it's massive.
And this dude was like a media mogul, like 100 years ago, you know, and all that you've bought
up all the newspapers, he just owned everything. He controlled public opinion, because he was
basically not only super rich, but like super in control of basically the media. And he built this
castle. That was like, it's like a spectacle. Like you go there, it's like the most like no one does
this anymore, because you would be like canceled immediately and like raked over the coals and the
front page of the New York Times. But it looks like this like giant Roman villa with this crazy pool
and like dozens and dozens of like huge guest houses that are like way bigger than anyone's
house today. And like this just like palace. And he would just be up in his attic like working.
And his office was like also amazing to look at. While he had a bunch of celebrities and
intellectuals and thinkers just like living on his property, because he always wanted to be
surrounded by them. So it wasn't even like a two week retreat. It was like a permanent
state of affairs or his place is like a hotel for like the world's like best and most interesting
people. Yes. Yeah, man, there's something being in person with a bunch of smart people all working
toward a similar goal, but independently, like we're all writing something. And then at the end
of the day, we kind of sit around the fire and we always chat about what we're working on with
bounce idea. That's what I want. And this infectious. Oh, my God. Yeah. And there's
there's a version of this that I find just as interesting. It's outside of my wheelhouse of
talent, which is I want to go find the most talented indie musicians on YouTube who have like
50,000 subs and like they're not super well known and they're on Spotify and not a lot of
listens, but they're super talented. I love their music. And I want to get them and bring them all
like a few at a time into the same type of environment and give them recordings to their
property. They can use to go record their next album, get some solace and like just enjoy
enjoy the beauty of the place. Yeah. I just want to be there and like listen to them play covers
and stuff like that. For whatever reason, that is what my brain is wired to. That's cool. Love.
Yeah. If you create a place where it's basically it's got all the tools necessary to have like
an amazing creative experience and then also like crucially, like you said, the people,
right? Fellow musicians or writers or founders, like something to get them to all come together.
And then you can just be in the room while these brilliant people work together would be awesome
because then you're like a magnet. And you know, what's interesting is I hear whispers often,
but how this already happens. Like if you see five people you love in the book writing space,
the odds of them having gotten together by themselves and gone on a retreat somewhere
is actually really high. And they do already do this. There's there's versions of this for like
unicorn founders and so on. And I mean, when we had James Clear and Mark Manson on on brains,
like, oh, it'd be awesome to pair these two guys together. And we get on and they're like, oh, yeah,
when we, you know, talk to each other at our writing workshop, right? And they're like two
of the best nonfiction authors who just already swapping ideas, et cetera. Like they're already
like old friends by the time we like pair them together. Exactly. Exactly. Man, the pod though,
I mean, I love talking about that too. I mean, of all the things that spending time on the podcast
we do together, brains, it's interesting because if I think about what are the things people bring
up to me most frequently when they chat with me or meet me for the first time, there's basically
two things. One is, hey, I saw your thread on Twitter about how you're building a ranch.
That's super cool. I've always wanted to do that. The other one is our podcast, like, oh, I was
listening to the episode between blah, blah. I think what those two things have in common is
they're personal. They're things I want to do, or you're hearing my voice, or it's me having a real
human conversation with someone. And so it really got me excited to realize that what actually
connects with people, perhaps more than me writing these long form guides and how to do some
some skill, how to pursue some skill is injecting the personal into it, which isn't a surprise
in hindsight. So I just love that there's a deeper connection with our pod. I love that it lets us
meet these awesome people. And we have a relatively high quality bar. So I'm just also proud of the
work. Yeah, I'm doing the Andy hackers podcast in a different way than we do brains. It's like, for
me, it's a kind of an experiment. So with brains, it's like, it's almost like our episodes are
they're almost like blog posts, like essays, right? Like we find these experts are these really
interesting people, we put them in a room together. And then they just like, it's like hard to listen
to a brains episode without wanting to take notes, right? Because you're just getting like all this
amazing, high quality insights at a crazy rate. But it's also I think on the back end, it's like a
lot of work for us. Because it's like, all right, well, how do we how do we get in touch with these
experts? Like, how do we get them to agree to come on? Like, how do we get like the best episode
possible? Because it's kind of stressful if you get like two world famous people. And then you
have an hour to record something good with them. Like, if it doesn't go well, you can't be like,
hey, let's do it again. You know, they're gonna be like, fuck, you have got other stuff to do. So
it's like, on one hand, like the best possible quality on the other hand, like maximum possible
stress and work to put it together. And then on any hackers, I'm trying to go the other route.
So like, my goal right now is to convince my brother to be my co host, because there's
literally no one else on earth that I'm more comfortable just talking to you and shooting
the shit with my brother, the twins even talking to each other for like 35 years now. And so for
that, I just want to crank out episodes, have it be super chill, have my brother and I talk to
different any hackers that we've met, or just talk to each other about like any hacker trends
and news and stuff, and have it be the opposite where it's like ideally high quality. But it
feels like there's almost no work that has to go into the different episodes. And then like compare
the two and see how it goes. Yeah, I this is the problem with our pod, you've hit the nail on the
head. It's a lot of work. It feels like we're sitting down to do homework. It's not like Joe
Rogan, you turn on the camera, you just start riffing. And so the downside is we figured out
is we have we can't do a high volume of episodes. And so with podcast growth, as you know, you have
to have a very high volume in order to give yourself a real shot of growing because growing
pods is notoriously hard. Like the best way to do it is you anchor off a YouTube channel, so that
you pick you back on YouTube's own clip virality to bring folks over to your pod on Spotify or
Apple or whatever. But because we don't have a video component, we've already shed ourselves in
the foot on that criterion. Second, we're doing low volume, and our buddies who host my first
million are doing super high volume, which is really helpful, right? Like the episodes a week.
Yeah, and they're topical. So they're covering trends that you want to get it you want to get
the hottest take on. We're doing non topical evergreen stuff. So everything we're doing
is crafted to grow this thing slowly. But it feels so rewarding to have this evergreen content
library that I can point to it'll be as useful in a decade from now. And I know that for sure.
Yeah, and that just makes me feel good. Because I don't want to spend time on fleeting stuff people
only care about in the moment. It's not what gives me I don't get any kicks from that. But then the
problem you and I have had is it's hard to put out enough episodes to be consistent and really grow
the listenership. Yep. And so I think what I'm starting to believe as the last like month while
you're way traveling, is that we should just whenever we have a good episode, we just release it
and trust that people stick with us over time, whatever the cadence is, doesn't have to be every
two weeks. And the reason I have the confidence in that is because we had this enormous like four
month gap between episodes just now people still were with us. Yeah. So like whatever, let's just
do it without the pressure of trying to hit this frequency, which we can't hit. And just when we
have fantastic episodes, we just do it. It's a good trade off. And you and I have talked,
we talked about this, we kind of theorized about it before we started brains, which is,
there's some shows where the quality is so high and it's so evergreen, that they don't have to
be consistent, right? Like Dan Carlin's Hardcore History. I love that show. Sometimes he doesn't
release a new podcast series for like nine months, right? But he doesn't lose his listenership. In
fact, it just grows over time. Because it's like, when they drop, you're like, Oh, shit,
this is what I want to hear, right? Or a musical artist, right? Like if you like enter Radiohead
or any other band or something, it might take them years to come up with a new album. But like,
you're still there for it when it happens. Whereas if you're doing this more like topical
sort of daily show or every other day show, if you take a break, you're going to lose your audience
because the value you're providing is something that they can get on a daily basis from other
people, you know, they might want it from you because they might like your personality more,
but I think you're a little bit more on the hook. So it's this balance between like,
do you have a really easy, fun to record show, but you got to keep recording it? Or do you have
like a harder show that takes much more effort, but you can take long breaks. And I think if you're
on either one of those extremes, you're fine. But if you're in the middle, you're dead. Like,
you don't want to be in between. Exactly. Let's go back to talking about investing,
because I got a few questions. I want to I like stuff I want to learn from you about investing
and like things I want to like push on. So one of the things that you're pretty, I would say
bullish on is like the market. How do you figure out which companies are worth investing in? Well,
as an investor, you only have so much money, or you can invest in every company, you don't want
to because you'd lose money. And so you can like figure out like what's important. And I think you
subscribe to the theory of like, what matters more than the founders or the team is, or the
founders basically building building in the right space. This is something that I think investors
think about, but founders don't think that much about founders are just like, I have a cool idea,
I'm gonna blah, blah, blah, I'm gonna do, you know, I want to build this product. But they don't think
about like, well, what market is this product? And is this growing? Is this getting more popular?
What are your thoughts on that? Because that's something founders should think more about.
And why do you care more about that than the team? Yeah, I care about both. I care about the team
and I care about market. But I care about the market more. And so to be more specific, what I
care about is market pull. And there's this framework that Sean Purry, our friend came up with,
which is like a two by two grid. And one of them, one of the sort of criteria is how good is the
founder, and the other criteria is how good is the market. And so if you have a founder who's,
who's amazing, and the market is pulling the idea out of the founder, that's what we call market
pull. That's the best possible scenario. But if you have a market pull scenario, meaning the market
badly wants this product from you, but the founder is just competent, they're not amazing,
that still can be an excellent investment opportunity. Now, if we flip that around,
if it's market push, which is the opposite of market pull, meaning like it's going to be a
slog to grow this product, because people don't realize they want it. Or if they do want it,
it's too high friction to start using it, it's a real push into the market to get adoption.
If you have a market push scenario with all that friction to go to market,
and the founder is only competent, no way would I invest. And if a market push scenario, because
it's so hard in the first place, I need a killer founder. But if the founder is killer, and it's
a market push scenario, right, then it's still going to be a long slog, even if the founder is
amazing. Yeah. And so then going back to our deal scenario, founders amazing and market pull,
the markets pulling us out of them. That's what I'm looking for. So if we use this framework,
I can try to give you some examples of what is market pull actually look like.
And so market pulls, basically, you create a product, and people are dying to use it. So it
either means when you bring it to their attention, sales and conversion is through the roof, because
like, of course, of course, I needed that there's a waiting for some something like that to even
exist didn't even know that thing could exist. So that's one little taste of you know, you're
experiencing some market pull. Another taste is you build a product and it sucks. It's broken,
it's hard to use, but people are using it and staying anyway. That's a pretty good sign there's
some serious pull happening here. Yeah. And so I love that one, because I think a lot of founders
get stuck in the strap with it. Like, let me just put like, if I just like round the corners of this
budget this button, and I add this one more feature, I can make my homepage slightly like doing all this
work to make their product absolutely perfect. And like no one's using it. And there's so many
products where it's like, this sucks. You know, like, I had like a very, very mediocre sandwich
from like this restaurant the other day, but it was in the middle of this crowded venue. And guess
what? Like, the line was out the door. Like the product wasn't that good. But it was like in the
right market where it was like people just needed this. Yeah. Well, here, let me let me dive in a
bit further to add even more color to this. So what I've noticed, so demand curve is a company I
founded for listeners context, and we help other companies grow. And there's about 60,000 folks in
the community. So we teach them growth marketing. When you have as much purview on startups as I've
had historically, what I started noticing is that the companies most likely to be worth a billion or
two, regardless of founder quality, were those who had market pull. But what you needed in order to
go from, let's say a billion to 50 billion, was a killer team, or a team that became killer over
time, they grew into those shoes. And so the way I like to think of it, this is very broad strokes,
I'm definitely, you know, smoothing out the nuances. But I think of it like this, you need
market pull to get to a billion or so for the most on average. And then you need an amazing team to
get to 50 billion. That's how I think about it. So when I'm investing in a founding team, I'm not
looking for a team that's necessarily capable of building a $50 billion company today. I'm looking
for a growth curve, just like you're betting on a startup with a growth curve, where is the founder's
ability to keep learning. So I want to give you guys some examples of what are those companies in
demand curve that became worth a billion or 2 billion the fastest? And what did they have in
common? So what I realized is when I started breaking it down in the spreadsheet, the companies
growing the fastest due to market pull, basically categorize into maybe four or five categories.
So the first was companies like Webflow, or Zapier, or softer, which is one I invested in,
that makes an annoying problem, like four times easier, such that it feels like magic,
like with a Webflow to make a website from scratch without Webflow before Webflow was like,
all right, that's a two to four week process, Webflow, I can do in two days, or I can do it
in a couple hours. So you're removing a quantifiable huge amount of pain, and making it
magically quick. Zapier, same thing, integrating tools before Zapier was a huge pain in the ass
with Zapiers. Now I just do some visual no code drag and drop. And I can connect the Webflow to
customer IO or MailChimp in seconds, I literally I literally am saving a month's worth of work.
And I'm only paying 80 bucks a month or whatever for the software. That is insane. You know,
an engineer normally costs what per month 10k plus mean is an insane, magical like experience.
So that was the first category, any company that made something that was a huge pain in the ass,
feel like magic. What was the first category I saw where there was a high likelihood of there
therefore being market pull. Another one was where I saw companies that were making something
that's very desirable, that everyone wants, but is expensive, less expensive. So Airbnb made hotel
stays less expensive when it came out. Robinhood made trading less expensive because they removed
trading fees. So people were already going to stay in hotels, they were already going to trade in the
stock market. But those two products made it cheaper. So why would you not choose the cheaper
option? So that was the second condition where founders listening to this are like,
what are some mental models I can have for deciding which of two startup ideas I have,
should I prioritize? I would like to think that this framework I'm sharing, where's the market
pull is the best way to prioritize. Well, I want to make a comment here, because I think,
like one of the common sort of themes between both of these, I think everyone should pay
attention to that strikes me as like, both of these sort of, I guess, criteria for success,
hinge on like, you take something people already want, and then you do something,
and you make it easier, you make it cheaper, you make it whatever, right? But you're starting with
something people already want, which means that you're not really being that creative with which
problems you solve, you're being more creative, like all the work is going into like your unique
way that you solve it. Does that make sense? So like, people have been building websites forever,
people have been like writing code forever, like Zapier isn't helping people solve a new problem
that they haven't had for the last 20 or 30 years, right? Webflow is like a website builder,
there's been website builders before, like softer, the same thing, like Airbnb, like people, people
have been wanting to stay at hotels and houses for like, like millennia, you know, and I think
one thing that a lot of founders get wrong is they try to be way too clever with the problem they
solve, you know, they try to solve some problem that no one has ever solved before. But like all
of these huge companies that are killing it are solving problems that like people have already
solved a whole bunch of times before, just in different ways. You know, like some of the biggest
companies I see are like, helping people get educated, like teaching people, you know, helping
people transport each other and get from place to place, helping people build websites, helping
people like helping companies hire engineers, like the most like straightforward boring problems ever,
even any hacker companies, like most any hackers are not trying to become the next billion dollar
unicorn, they're just trying to like, you know, build something that can make them a few million
dollars, you know, so they can survive on their own, or, you know, $10,000 a month is great for
most single any hackers. But like when I see people on the any hackers forum talking about crushing it,
like, often they're just like, it's like pure levels, he's like a job board. You know, it's
not that crazy, right? It's there was someone on the any hackers homepage. The other day,
you just raised like $27 million Series A app, right? And they're like, okay, they're helping
developers host their code on like, it's like not that new, you know, one company I invested in
Riverside, that's what we're using to record this podcast, right? Like they help people record
podcast episodes, people have been recording podcast episodes for 20 years, you know. And so
there's already like this very strong market pool where people already have this problem. And that's
not the risk. And ideally, you're solving this problem that people are already really want to
solve. And an increasing number of people want to solve that problem every year, like every year,
more people want to build websites, more people want to record podcasts, etc.
Absolutely. And it's not to say that you have to pursue something that's very obviously in demand.
But it is to say that if you follow that advice, the odds of you succeeding are way higher. And
the odds of you getting funding from investors is also way higher. Because of course, you'll have
some weird anomaly companies who pioneer something no one even knew they wanted. But even then,
they're usually actually satisfying what people already wanted just in a very clever solution.
Like people didn't know they wanted randos to drive them around. But Uber made sense and blew
up because people already needed transportation and taxis. So it usually comes down to something
that's already hugely in demand, you know. The solution is creative, right? We're getting
at random people driving around. The solution is creative, the problem should not be creative.
That's exactly right. The problem is super boring and straightforward. I want to get from place to
place. That's exactly right. Here, we can actually use the framework that you just shared to go
through a couple more examples of categories here. So another company I invested in is called
republic.com. It's crowdfunding for startups and so forth. And it's kind of like GoFundMe for
startups, you can think of it that way. And crypto and real estate. And they're another
example of a category of business that almost guaranteed has some market pull, which is
republic made access to a certain asset class, more available to everyday people. So republic
is making is allowing everyday people who are not accredited to invest in startups,
even though they don't have a large amount of net worth. If Robinhood introduces crypto
into the product, and people otherwise found it too hard to use non Robinhood alternatives to
getting access to crypto, they're making new access available to an asset class,
that is almost always a surefire bet for market pull. Because if it's an asset class people wanted
but simply lacked access to because it was too high friction, or they didn't have the net worth
requirements, let's say, to engage in the asset class, then they're going to be like, fuck, well,
let me diversify some of my money into that asset class. Another example is equi equi.com. I also
invest in that one. I just keep saying that so people don't think I'm, you know, secretly
shelling. But equi is giving is trying to give people hedge fund like returns. So they're making
the democratizing hedge fund as an asset class for everyday people who aren't worth $100 million.
Of course, they're going to have market pull. Because you're saying here's a new way to make
money, people are going to diversify into it. So that's another category. One more. And this is
this, this speaks exactly to what you said a moment ago, Cortland, which is things that are
already in the market that people already want already proven. So this is the ultimate example
of that. If you invest internationally, so if you're a company in Pakistan, and you're doing
a unicorn business model proven elsewhere in the US, like if you're doing door dash for Pakistan,
well, guess what that exists, it's called airlift. And they're maybe they've raised the most funding
ever for a Pakistani startup, or at least it was in the top two or three, I believe.
Or like the the postmates of Venezuela is called yummy. And they also are growing crazy fast and
raise a ton of money very easily. So this sort of analogizing across geographies, not every unicorn
in the US or Europe or wherever will be unicorn in an emerging market. But if it is a culturally
and economically relevant product to that geo, and the timings right, then it has a very high
chance, relatively speaking of being a unicorn, again, of having market pull. So these are the
frameworks I've been thinking of. It's like, are you making something way easier, like Zapier?
Are you making something that people are already spending money on cheaper than it's ever been,
like Airbnb or Robin Hood? Are you giving people access to new asset class? Are you analogizing
unicorns proven elsewhere and new geographies or even as new sectors like the Zapier for
enterprise, or the web flow for developers? Like there are analogies all over the place.
Actually, there's one one last one, I keep saying, there's like Lord of the Rings,
you have like five endings. This is the last one. The very last in my notes here is product led
growth as a as the say the final category of market poll. So this is how Dropbox and Slack
and PayPal grew, which is where this actually something we touched on in our last podcast
together on indie hackers. So I won't go into it fully is does the use of the product naturally
grow the product. And so if I use PayPal, and I'm paying someone 1000 bucks, there's no way
they won't make a PayPal account to receive their $1,000 or same thing with a Venmo account.
Or if I'm using slack, and it's the only way I talk with my team and my vendors, I'm going to
invite all my team members and all my vendors and contractors onto slack. So the use of the product
inherently gets existing users to invite other people on to the product. And so that's product
led growth. That's the dream. And when that kicks off, that can just be insane market poll, because
the users are doing a growth for you. And I'll wrap up by saying, I started realizing there's two
ways product led growth actually happens. And I'm probably broad strokes in this way too much. And
I'm sure there's a ton of nuances I'm glossing over. But the two ways I see it happening,
are when you are settling a debt, so you're paying someone, like deal or remote or PayPal or Venmo,
you're paying someone money and they have to take the GoFundMe Republic, you're transferring money
and someone wants to claim that money. That is one of the scenarios where product led growth will
kick off. And the other one is when you're facilitating critical communication. So slack
or telegram or WhatsApp grow crazy fast, because there's a group there, you have a telegram group
with your friends, or on WhatsApp or signal, where you're going to want to be part of your friends or
your colleagues. And the only way to be part of it is for you to join the group where they already
are. So facilitating critical communication and facilitating the transfers of monies is
are the two conditions that I've seen where the odds of product led growth to kind of shoot through
the roof. Yeah. And that's like the dream that every indie hacker wants, right? I want to not
have to do marketing for my product, just watch it just grow automatically with the product.
Just grow automatically without me having to do everything, anything. It's a product that grows
itself. And it's so rare. It's like so hard to engineer that everybody's trying to engineer that.
But if you get it, it's crazy. It's the holy grail. And if you look at the top sort of tech
companies in the public markets, like Dropbox and Slack and PayPal, all this, almost all the huge
ones follow this pattern, not all of them, but most of them do. Yeah. Yeah. I like your other
factors too. Like, for example, if something's working in one market, take it to a different
market. Like it's, most of it is just de-risking, right? You start a startup, you start a company
and there's so many unknown unknowns. You have all these hypotheses and guesses for like why it's
going to do well, but you don't actually know that those things are true until you put your
products in the market. And so if you can de-risk it by basically saying, well, like,
I know this is true for this other website of this other company, like people liked DoorDash,
right? Like it's not in Pakistan. So like, maybe I should try that. And I think one of the danger
zones is like, when you, when you like try to do too many risky things at once, you know,
like if you're like, I'm going to have this completely innovative problem that no one's
ever solved before and a completely innovative solution. And I'm going to have an innovative
culture for my team. And I'm going to have like different work hours. And like, if you just like
try to innovate in like 15 different areas, like, okay, well, like your dad, if even one of them
fails. And so it's like much better if you can just like de-risk as much as possible and have
like maybe one or two things that are new or different or unique, because you need that to
stand out. But like beyond that, I think it's probably overkill. Yeah. A good framework for
founders to start thinking about is the risk framework for when they're putting together
pitch deck or they're choosing what to work on is investors are often thinking about your company
broken down by a few categories of risk. One is market risk. Will the market want this product?
And this is what this whole spiel about market pull is in service of addressing.
So you can have market risk. Another one you can have is you can say team risk,
is this team the right team to execute this idea? Or do their backgrounds prove they know what to do
here? Do they impress me on the call? Have they really studied and so on? Are they emotionally
tied to to just solving the problem? Another type of risk is business model risk. Will the economics
even make sense? Like a lot of these quick commerce companies that are delivering food all around the
world in like 10 minutes, their unit economics suck. And they're not profitable. And they have
business model risk because they're not sustainable. And they're burning cash. And so there are other
types of risk as well. And but the risk that is most for me, I'll just speak for myself as one
investor, that is most valuable for you to attack in a pitch and make me feel really good about is
market risk. Because if you can convince me of the potential for market pull, I'm willing to forego
my concerns for risk on almost all the other ones to some extent, I believe that where the customer
demand is, you'll be able to solve the rest of the problems. But where customer demand is not,
you will not be able to solve that problem. I think that's what you want to do for yourself
as a founder to if you're like, Okay, I'm going to quit my job and work on this company that I think
we're going to be able to use are going to want to use. But like you don't actually have any signal
that like de risks like does the market care? Like that's a huge risk for you to not just for
investors, right? And so I think it's much easier, like for any hackers, for example, the example I
always share is like, it wasn't that like much of a mystery to me, whether or not people wanted to
consume these stories about bootstrap founders, because they already saw it happening on other
websites. You know, like it wasn't taking a huge risk, like, Oh, you know, does anybody want the
solution? It's like, no, they do for sure. I just need to make it better and make it more concentrated
than it exists elsewhere. And so I think that's also like why investors like seeing, you know,
hey, you already have traction, people are already using your startup, like that makes it way easier
for me to want to invest. Absolutely. And once you once you've established that traction, you've
conveyed that the next thing to think about is how much how bigger how much bigger can this be?
What is the journey from making this de risk from a market pull standpoint to something that could
be huge? So that's the other thing you want to focus on usually. So that's something that like
any hackers won't have, for the most part. And I'm curious, like what your take is on this and let
you go. Like, does it make sense to be an anti hacker? Does it make sense to put like hours and
hours every week, you know, your blood, sweat and tears into building some sort of online business
and not trying to make it a billion dollar unicorn? You know, is it is it essentially the
same amount of work just to go for the gold? No, I would generally not go for the gold,
probably. I mean, it depends. Okay, let me I would start with where your heart is. What do you
actually want to do? And if the idea you want to do is one that necessitates a bunch of venture
capital and can be enormous. Fantastic. But if you'd rather do something that is likely smaller,
perhaps do the smaller thing because it's no worse. I mean, when you do the economics of you
raise all this money, you get a bunch of dilution, you're only left with x percent of the company.
And you can't really pay yourself anything huge, you can take some money off the table
during secondary transactions and blah, blah, blah. But for the most part, you're not going to see
money for maybe a decade. So that's the venture path. Right. Now, the indie hackers path is you
are paying yourself an enormous salary as much as you possibly can every year, which is amazing if
you're making a million dollars a year after year three or something like this. You don't have VC
pressure. So you can do what's healthy for the business and what's healthy for your mind. And
that's what you can be optimizing for. And you can still sell it when you're done and you have
almost full ownership of it. So let's say it's making two million a year and you sell it for x
many millions, that all becomes yours. So you get this payday at the end too. So from a financial
standpoint, no, I don't think there's any reason to go for gold if the idea that you're obsessed
with doesn't already lend itself to that goal for gold. And so personally, I would probably
generally prefer an any hacker type approach. It just depends on the idea. Yeah, I might start
investing at some point. We'll see. I like this idea of having like trying to build a portfolio
of 35 companies and writing super small checks, because even that's enough to learn. And like,
I think that I have the sort of the cloud and reputation to do that. Like people will let me
into their companies, even though you know, I'm not necessarily providing that much value at small
amounts to some degree. And then we'll see we'll see how it goes. Maybe I'll have you on again,
and I'll report my progress to you. Yeah, we'll do Episode 900 together. Episode 900. All right,
dude. Is there anything you want to plug like any last sort of tips or resources for any hackers out
there who might want to learn how to invest or build better companies or invest with you? Like,
what do you what do you think people should know about? Yeah, I would say with carveout.com. So we
made a private email list for folks in tech who want to start investing in some of the fastest
growing startups that we come across. It's kind of like an angel of syndicate if folks have heard
of that. So it's a bit hard to get on the list. But if you get on, you'll see some really,
really good deals in my opinion. So that's carveout. That's where I'm spending a bunch of my time.
And then we also have hyper.com, which is sort of like a founder program like accelerator,
where we invest in founders and then pair them up with some phenomenal unicorn founders to give
them advice and help them just do distribution better, do product better and do hiring better.
Cool. hyper.com and with carveout.com. Thanks a ton, Julian, for coming on the show.
Yeah, thanks, man. Loved it.