We found an app that lets you buy anything for $0

Sam, we've been doing it all wrong. This whole business thing, this building thing. We've been doing it all wrong. I feel like I could rule the world. I know I could be what I want to.

I put my all in it like no days off. On the road, let's travel, never look back.

Is this the same country that's having a massive birth rate issue?

Unrelated.

It checks out if they're going to create virtual smoke rooms and fake buy stuff. What the heck, guys?

So the, the trend started, you know, this year, and it's basically Korean Gen Z. They sort of realized that a lot of the fun in online shopping is just browsing. It's just putting things in the cart, hitting checkout. You know, getting the actual product is, you know, sure, Maybe that had some value, but there's a lot of fun in just the other side of it. And so you can see here, I can pull one of them up.

Let me open.

And so this is an app called Food Never Comes. And all right, so check this out. So you open up the app and you could select rabbit or turtle delivery. So fast or slow. Do you want to, should we pay for fast or slow?

I guess we should pay for fast. I want to get it fast. I want to get my fix up quickly.

Treat ourselves. Okay, so now there's a fried chicken restaurant, so we can have the half and half crispy chicken, the cheese balls— gotta go with the cheese balls— maybe the soy-glazed chicken. We'll go spicy. We'll add a cola. Add to cart. And then we can go ahead, we could check out, we put in our info here, and then we could watch this delivery make its way to our house, never actually come. And, uh, that's it. It's the blue balls of, of entrepreneurship. Sam, are you in or are you out?

Dude, how can the— this group of people who have brought us such amazing things like the Kia Hollyride or Samsung, K-pop demon hunters. Yeah, like go and do something so stupid. They're the Koreans. You guys really are like the barbell strategy of life. They're bringing us such amazing, wonderful goodness and such silliness. I guess I don't get this. Why are people doing this?

On behalf of our huge, I'm sure, South Korean followership, I will defend this by posting a picture of the White House this weekend where there was a giant motorcycle, a motorcycle doing a backflip in front of the White House in preparation for UFC $250 to celebrate America, the birth of America. Two dudes in their underwear beating each other up in the White House lawn.

Yeah, you don't think that a fist fight on the White House lawn is appropriate?

An organized fist fight where a Frenchman beats up a Brazilian? Yeah, America.

Yeah, dude, look, I didn't say that we, we both can't be stupid. I'm just saying that this is, this is wild. Are these things actually popular?

No, I can't tell.

I—

so obviously this makes for an amazing headline. There's also a reason that I open up the show with it because it's just funny to talk about and make fun of.

But are there— there's not a lot of Korean people on Twitter, so they can't exactly— we can't exactly refute this. It feels like, like, like Japan. It feels like Japan and America have like separate internets. Like, have you ever gone to like a Japanese website? Like, like when I— it's kind of challenging to use, obviously, just even if it's just translated, it's still like totally separate and it's quite hard. And so like, are there any like proper Korean people on Twitter to refute this story or can we just make up falsehoods about like—

I think we just make it up. It's like the good version of like the Hunter Biden laptop story is the South Korean fake, fake DoorDash story. Have you ever studied like Eastern internet? You know, people study like Eastern philosophy. Have you ever studied Eastern internet?

Yeah, like I've, uh, Masa Son, um, from SoftBank. I believe he's a Korean guy who lives in Japan, or is he Japanese who lives in Korea? Anyway, yeah, I've studied him and then I've studied like some of the Chinese websites or the super apps, they're like so like mega that it's quite hard to understand what they're about.

Yeah, there's so many crazy, um, apps and sites. So, so just for example, I remember when we were looking into live streaming. So my first company, uh, that sold Bebo, it was the live streaming space. We sold to Twitch, which is the, the big American player. But live streaming is far more advanced in Asia than it is in the West. And if you go look at like I forgot which ones it was, YY.com or whatever. There was a whole bunch of these where you would see somebody on video and then horizontally from right to left streaming across the screen would just be the entire chat. And it was the most bizarre experience ever because you would see that 7,000 people are watching this girl eat noodles while text flies across the screen and people are spending thousands of dollars sending her virtual roses. And we were looking at this, studying it, like, you know, it's like, you know, when you study like a tribe and you're like, so they just eat it? And they're just like, yeah, this is what, this is exactly what they do. And then we tried to recreate as many of those variables as we could because these sites were incredibly popular.

Isn't there one where I like, where it's like fat people eating? It's like bang bang, or isn't this like a?

Mukbang. They don't need to be fat. Mukbang.

Oh, I thought. There was one guy like named Nico Avocado or something like that. Yeah, yeah.

He got really fat doing it and then he lost a lot of weight and came back. He was kind of a weird guy. But yeah, mukbang is basically watching other people eat just like you watch other people play video games, you watch other people play basketball. Turns out people want to watch other people eat and they like having that high definition sound watching them slurp and chomp away.

I get joy from that, by the way. I always, I buy candy and sweets that I want to eat for other people and I just like I'll hand it to them. Yeah, I'll hand it to them. I'm like, eat it, tell me, tell me how it feels. Like, I definitely can get like secondhand like sugar highs from other people.

Okay, so you're in. So we started out and now you're in.

Dude, there's this whole genre of Indian barbers who shave people's heads who have dandruff, and you could like— it's like the oddly satisfying, like, oh, we found it, let's wipe it off the head.

I just pulled up these notes that I have from— I I think 2016. So there's this guy named Kevin Ryan. He's been on the podcast, friend of the pod, and he founded a bunch of companies, the biggest one being MongoDB, multi-tens of billions of dollars company. But he also famously was the co-founder of Business Insider. And so I called him one time and he like gave me some tips on like how to start a media company because I like didn't know anything. And I emailed him so many times that he relented., and I have these notes and I, I, something always stuck with me on this framework. So he said, on this show, we have spent hours talking to some of the best investors alive. Well, lucky for you, the team at HubSpot, they have pulled out the principles that matter most and turned it into a very simple, easy-to-read wealth guide. It's 35 principles from the top investors. We're talking guys who have been on the pod like Howard Marks, Mohnish Pabrai, Morgan Housel, Cathie Wood, and a ton of others. So these are all their frameworks, their mental models, their rules, basically how to play the long game and how to avoid ruin. You can get it in the link below. He didn't, he didn't use all these exact words. This is me like typing. This is before Granola existed. So he goes, he's like, the Business Insider strategy is sort of what Honda did in 1985 versus General Motors. He was like, He didn't say this, but this is my notes. Start with shitty quality and get traffic to our website and improve. Shit quality, but we'll improve. Like, he said it in his all-hands, inspiring all of his employees. He didn't say it that way, but he was like, we're— he said, like Honda in 1985 versus GM. Honda was considered sort of a joke. GM cars were these like big like heavy-duty vehicles that made a big thunk when you, like, shut the door. And Hondas were like rinky-dink. But the difference is, is that with Honda as well as with Business Insider, the quality of car that they were making increased, but their cost, they stayed the same, which is why Honda eventually won. And Business Insider, we make content a lot cheaper than Wall Street Journal, but we think that our quality is just going to continue to rise. And that was like his whole strategy. And I always thought that was really interesting. I thought that was a really cool analogy. Which is you can start like kind of like so-so and just slowly get better while keeping your costs the same. And he always referenced— he referenced in our call, he was like, Honda did this, Toyota did this. And I started thinking about this and I've always thought about this like strategy that a lot of Asian companies did. If you remember, do you know TCL TVs?

I've never even heard of that.

No. So TCL, if you were to go on Amazon 6 years ago and buy a TCL TV, They were the worst. They were like pretty, maybe 10 years ago, they were junky TVs, but you get a 65-inch flat screen TV for like literally $200. And over, I'm like a gadget nerd. And so over time, TCL is now a baller TV company and you could still get a 65-inch highest def fanciest TV for $200. It's actually, I don't even know how this is possible. And I've always thought about this strategy of like Asian businesses and I've noticed, I don't know if it's particularly an Asian thing or because I, he referred to Asian car companies. Now I always think of it that way. They'll offer something where like the quality is so-so, but just good enough. But over time, like it's sort of like Hyundai or Kia or Genesis, like particularly, you know, Asian car companies. That's how I think of them is they're kind of like crappy at first, but they just get so much better and then the prices stay the same.

What I like about this is it's the opposite of the normal white guy referencing Asian culture thing where normally we take these like amazing Zen practices where like the Japanese We use the word kaizen for the continuous pursuit of perfection. And that's what we do here at our company. Or it's like wabi-sabi, the beauty in imperfection. It's like always like these high and mighty things that like we're borrowing. And he's like, we use the term honfication where you start with shit and it stays shit for quite a while, but eventually the shit becomes a little less shitty. And that's what we do. It's like the first honest white guy. It's like we give him an award for like he's doing all all of the, like, the tone and the hand gestures, but he's just saying the truth.

And we didn't stop there. We took the shit that we had and the year after, just a little bit less shitty because they don't know the difference. And we told our kids we were just off.

There should just be like a whole service where it's just like honest business translation, you know, like Google Translate, but just like corporate translation. It's like, take any company, put their mission value news and earnings calls into this generator and it just tells you the truth.

Yeah, that's so funny. Uh, one of the greats, Kevin Ryan, probably no longer a fan of the pod. No longer a friend of the pod.

Former friend of the pod, Kevin Ryan. Told you that in confidence, Sam.

Um, there was a statute of limitations on notes, by the way. Uh, once it's been 10 years, I can talk about it. So like anything that happened, it, or, you know, from pre-2016, I'm allowed to bring it up.

All right. So I was nerding out on something kind of related, so I'll segue to that. So you were talking about how for the TVs thing, they're like, they charge $200 and at first it's kind of a shitty TV, but eventually it's kind of a great TV, but still for $200, which is different than I would say most companies, which assume, you know, over time the goal is to raise our prices, increase our margins, increase our profits. So I was studying this investor called Nick Sleep, and the short version for those who weren't there—

ever since you brought him up, I've been on him. Yeah.

So, you know, his story in short is he was an investor, basically raised money, was an investor about 15 years, averaged more than 20% compounding billions of dollars. He won the game, shut down the fund and moved on. And most of the fund was concentrated in 3 positions: Costco, Amazon and Berkshire Hathaway. For the longest period of time, he was just holding those. And so the interesting part isn't, oh, well, here's a guy who picked right. You know, it's kind of like, oh, I'm— I'm interviewing a lottery winner to ask how they, how they guessed the numbers. Like, is his daughter's birthday? It's not, not really that. It's if you ask what is Nick Sleep's philosophy, his core investing strategy. He had this idea of consumer surplus. So his, his main realization was, look, there's many ways to invest. You could do what Buffett and Ben Graham are trying to do, which is buy a company that's trading for less than than it's worth. Or you could look at some of these companies that today look overvalued, like Amazon at that time. And, you know, the 2000s is like, wow, this thing's got a crazy price-to-earnings ratio. And he realized that the best predictor of long-term value for him was something that he called shared scale economies. All right. So what do those mean? So scale economies is usually when, let's say you're Amazon, you have a large customer base, you're able to open warehouses in a bunch of different places, and you get what's called economies of scale. Which is that over time your cost to serve each additional customer go down because you've, you're serving so many customers, you're able to like almost like amortize the, the investment cost across a large customer base. Now, what he, what Nick Sleep identified was called shared economy of scale.

Was that a word that he, did he make this up? Yeah.

So he, I don't know if he made it, if he invented it, but he was the one who really, yeah, he really bet on it and he really like made it the foundation of his investing strategy. So he realized like, let's take Costco. So Costco's goal is to basically get economies of scale, meaning they buy in bulk, they have tons of locations, so they have a lot of pricing power. They're able to buy things in bulk at cheap prices. And instead of what most retailers do, which is they buy wholesale, sell retail, right? They buy cheap and they sell it at a markup. Costco's goal was to make the markup as small as it could and pass all of the savings of buying in bulk to the customer. So he did the math and he realized like, okay, let's say that a Costco membership costs $100. Let's just use round numbers, right? And he realized that if for the average person who shops groceries at Costco, they're going to save on their grocery bill, let's call it $1,000 a year on just by buying Costco because Costco is passing on all those savings of buying in bulk to the customer. So the customer saves $1,000, they spend $100. And so the surplus that they, they've generated, this $1,000 surplus, and then they're only charging $100 for it. It's a no-brainer proposition. And they basically take the— so what happens is instead of increasing their prices and increasing their, their profits and increasing the money to the shareholders, they pass the profits to the customer, which makes a juicier value proposition, which attracts more customers, which gives them more scale, which allows them to create even more surplus. And so what he realized was that the companies that would do this, that would start early on and pass on the savings to the customer, they would run away from the competition because they would have such a, such a juicy value proposition. They would build so much trust with customers and have such an incredible offer to the customers that they would pick up all the customers. And so Costco, for example, they make no money essentially on any of the food that they sell. They make all their money on the membership, which is like pure profit is the membership.

$5 billion. Yeah. So, so what he realized at that time was he said, wow, everybody just looks at— I think let's just say it was $1 billion at that time. He's like, when a traditional analyst will look at this company, they'll just see $1 billion of profit. But what I see is $5 billion of surplus that they're passing on. And they passed on $4 billion last year, $5 billion this year. It'll be $7 billion next year, $10 billion the next year. And they're just going to keep passing on so much surplus that it's going to run away from the competition and it'll create so much trust and so much loyalty that they'll never have any problems attracting customers. And so he's like, that's an invisible metric that doesn't show up on the balance sheet. It doesn't show up on the P&L. You have to sort of manually calculate the shared economies of scale, how much of the surplus they're giving to the customers. And if you track the growth rate of that, the— you— what you want is companies where that growth rate is increasing. He said Amazon was the same way for 20 years. Bezos basically did not try to extract profits. He just reinvested all the capital to give people wider selection, faster shipping, and lower prices. And he realized that every year they're investing more money in giving people wider selection, faster shipping, and lower prices. The 3 things that consumers care about the most. And they have the Prime membership just like the Costco membership. And so he invested heavily in that. And I just thought, oh wow, this is a pretty brilliant insight, a way, a way of looking at businesses that I've never thought about.

Yeah, that's actually— it sounds stupid, but that's sort of like a— I don't know if I need a lesser word, but a groundbreaking like stat, you know, that's, that's like a— that's actually very interesting. I've never ever have heard of a company that measures that, like just how much savings we are passing on to you. That's pretty interesting.

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But who else does that? You, you have to do it with a company that's huge. And where mass appeal or mass and then you need like a membership, right? Like a Prime thing.

Well, it doesn't have to necessarily be a membership. There's other ways to do it. But, you know, the two biggest examples he did was the membership because it's the beautiful way to monetize, right? It's like, I'm going to give you so much value in the thing you're buying that giving me an annual recurring revenue membership is a no-brainer for you. And that's what Prime is. That's what the Costco membership is. And so it worked out beautifully for them, those two cases. But it's not it doesn't have to be that. It's just that. So for example, like I was talking to AI today and I was trying to say like, well, what other— study other companies. If there's these 1,000 companies, which other companies would Nick Sleep see as having a high surplus and how would he look at it? Right. And so it's a— AI is not great at doing analysis like this, but one of the examples it brought up was, was SpaceX. And basically it's like, look, SpaceX is going to lower— has been— it has already lowered the cost to orbit by 100x. So it's, it's reduced its cost by 100x, but it didn't keep the same prices to the government or anybody else. It also lowered them. It passed on the savings to the government, which is why it now takes like 80% of all payloads. It like, it took all of the, the business, it took all the market share by doing that. And they're trying to reduce another 100x, and they're putting up all these satellites, and they're trying to again pass the, the savings on to, to the subscribers for the, for Starlink internet. And so here you're going to have, again, recurring annual membership, a no-brainer value proposition to a mass market of people. Everybody on Earth wants the internet and they are getting economies of scale because as they improve their, their launch costs and their launch rates, they're not going to raise prices. They're going to pass it on and they're going to create a membership. So it's like SpaceX would be in a weird way, like, again, same thing as Amazon today, looked at as highly overvalued. But potentially undervalued if you, if you could figure out how to measure the surplus and see that the rate of the surplus was growing every year, it might look like one of those businesses. Now, I'm not— again, I'm a noob at this stuff, so like I'm just sharing kind of like my beginner, my learnings with this just with you. I'm not saying that this is, is or is not the case, not financial advice or anything like that. But I do find this idea to be pretty interesting. It's an idea I hadn't really heard popularized before.

This guy is so interesting to me.

He's He's got everything that I want in, uh, does he have like long hair, nice calves?

Yeah, like he— you Google his name, is he alive? Beautiful. He's got a beautiful set of hair and only one photo. If you Google him, it's the same headshot used for everything.

Nick Sleep, come on the podcast. I mean, how many times are you gonna let me podcast, uh, make out with you before you just finally get on here? Okay.

Yeah, do you want to break decades of being anonymous and come on the pod? There's literally only one photo of them. I'm for real.

It's like I got to this hotel and I paid like a disgusting amount of money, but they had free snacks when I walked in and I was like, honestly, love this place. Great value. They gave me this. They gave me like, you know, cake pops for free when we walked in. This is incredible. My kids are so happy. And I feel like that's our pitch to Nick Sleep. It's like, yes, you've been anonymous for 20 years and you value your privacy and you've turned down, you know, every opportunity under the sun. But we got peanuts and snacks if you want to come on our pod.

It'll be great. He, he's 58 years old. He's, he's not old. This guy's cool. There's an article called How to Retire at 45, and it's about him. So I guess he's taking it easy. But I would love to have this guy on. That would be so fascinating. Him and Paul Graham. It's just there's something so mysterious about people who, who claim I've had enough and they like opt out. I think that's interesting.

You're like, Elon, I don't think the word moat means what you think it means. You definitely have a moat.

Buffett replied and he was like, I don't know. He's like, let's say you go to a corner store and you ask for a Snickers and they say, hey, I got a Musk bar for $0.10 less. He goes, I don't think anyone's buying the Musk bar. And he's like, in fact, if you go test this, if one place doesn't have a Snickers and they have an unbranded, unlabeled chocolate bar with peanuts in it, but the place across the street has a Snickers bar. The customer will just walk across the street and go buy a Snickers. And he's like, so yeah, he's like, I look for Coca-Cola, Snickers, you know, Gillette, American Express. I look for these brands and franch—

Apple.

I look for these brands and franchises where you'd have to pay someone to switch. And even then they wouldn't want to. Um, he's like, he's like, that was his core insight of like, you just need to find these great American franchises. And invest in them.

Did you see— I want to bring up a person who we talked about somewhat recently, but we didn't dive into. But really quick, did you listen to the Lloyd Blankfein interview that we did, that I did with— and he talked about like his family finances and stuff like that?

No, I only was— I've listened to the first 5 minutes, but I'm on vacation, so I hadn't had time to like get my phone and listen to it. Why? What did he say about his family? So, by the way, did you know this guy before? Am I dumb? I never heard of this person.

And then, yeah, I knew of him all about this guy suddenly. Well, when you and I were younger, probably in high school, that was like his peak prime. And so like during the Wall Street—

So you knew him back then or only now?

I knew him as a famous— like he was like the face of banking. He was like the Jamie Dimon of '08, particularly when Occupy Wall Street was a thing. He was like the face of evil because like the name Goldman is like— and there was this funny line that he told me where he was like, yeah, they like protested outside of my house and everything. And I was like, how does that feel? He's like, well, two things. Like, one, like, go and try to get a mortgage from Goldman. Like, you can't. So like, I didn't cause the mortgage crisis, so I don't know why they were so angry at me. And second of all, they, you know, were camping outside of my house protesting, but like, that's what doormen are for.

He's like, I shouted out from the window on the fifth balcony in my house, we wouldn't give you a mortgage even if you tried. That didn't seem to help.

No, dude, he was super likable. He was so charming and caring. Charismatic. Basically, Lloyd is, um, I like— you could look up his career earnings at Goldman because when Goldman went public, he was like 43 years old. And I think at that time, he told me, he told me, uh, his shares were worth like $160 million. And this was when he was 42. He's 72, I think now. So 30 years ago. And then he, the course of his, his earnings are all public while it was public. And it was many, many, many hundreds of millions of dollars a year. And so presumably I would have to imagine he's worth like $2 billion plus. But he grew up in a poor Brooklyn family and he somehow— and he's very self-deprecating. His father was a post office worker. His mother, I think, was a stay-at-home mom. He's like a pretty— like he calls himself the blue-collar CEO. And he was like, I wasn't even that smart, but somehow I got into Harvard and they paid for my school. And he's like, one time when I went to Harvard, I had to go to the, like, the office or whatever they call it, the financial aid. He was like, I don't have any money to eat. Like, can I please have money? And then they're like, they gave me $500 back then. And it like changed my life because I had food. And so he goes to Harvard and he gets a job as a lawyer. He's like, this sucks. I don't want to do this. And so he gets a job at a ragtag, like, subsidiary of Goldman. And he's like, I don't even know what Goldman is. I don't know what banking is. But they thought that I was this, like, hard-nosed, blue-collar guy who went to Harvard. And they're like, you check the boxes. Because he, um, was a commodities trader at this little, like, ragtag group, which at the time was considered a very lowbrow thing. And so he slowly, over the course of many years, worked his way up to eventually become partner and then CEO of Goldman. And when he was in my office, he had this very blue-collar vibe where I could tell that he— it felt very authentic. He like looked me in the eye and like knew how to like riff on like silly stuff. But also I'm like, dude, you're like acquaintances with Putin. Like, you know, like he's like, like I could see—

he saved in your phone as Pooty, Pooty call.

Yeah. Yeah. Like I could see how this guy is charming and how he worked his way to the top.

And can you imagine being the shark in the Sharks? Like, how, how much, how insane it is to work your way up at Goldman amongst all the sharks and become the CEO? Can you— what does that even take? Like, that's sort of mind-boggling level of difficulty. Like, I know people that have made more money just building a company, but that's actually not as hard as playing the, the, the, like, corporate game inside Goldman and rising up amongst all those kind of like Corporate sharks.

How billionaire mismanages his finances is what I heard.

Well, he did the right thing.

None of that makes any sense.

The, the, the top—

I wasn't there so I could talk shit. If I was there, I would also be like blushing and saying how great he is. But You know, just hearing it from the outside, just to be the outsider for a second, you're day trading $1 billion while not paying for Netflix because you're cheap. Like, I don't even understand what you're talking— you don't pay for, for, for, you know, premium news.

The point being, it's not, it's not a logical thing, but it was like he was kind of like saying, like, here's all like how I'm messed up, just like the average Joe. And it was so fascinating. And at the end of the interview, did I tell you what I tried to do with him? I was like, hey, like, I have this like Instagram. Do you want me like—

I was going to do this like a handshake.

Well, I was like, I was like, I have an idea. Like, I can like act like I'm reviewing your book and I'll just be like, screw it. I'll just bring Lloyd in. Lloyd, just tell them what your book's about, will ya? And he was like, he goes, I'm too old for that stuff. I'm not acting cute on Instagram.

That's the most likable thing you've said so far about him.

I was like, oh, Lloyd, it's not like—

None of the billionaires, they're just like us. But just that one of like, I'm not going to do that.

I was like, I wouldn't describe it as cute. I mean, it is cute, but that's not— it's more like fun. You don't like fun? He goes like, that's too cute, dude. I'm not doing that. And I was like, yes, sir. I will walk you to the elevator. Yeah, it was pretty good. But he was fascinating. And then another guy who we had, a guy on the other name Barry, who talked about David Rubenstein. Had you ever heard of him before David or Barry told you about him?

From Carlyle Group?

Yeah. Do you know anything about this guy?

Yeah. Uh, only, only surface level stuff.

Yeah. I want to fill you in on a little bit about a story because I've actually always been a fan of his, but I mostly knew him as an author of history books, not particularly of like a business guy. And, um, I was researching him. It's pretty fascinating. And he's kind of like my new man crush a little bit. He kind of like got his foot in the door because when he was in his 20s and 30s, he was a lawyer, but he quit being a lawyer because he wanted to work for the Jimmy Carter administration. And he like made a joke where he was like, when I joined Jimmy Carter, he was up by like 31 points. And then he eventually won by 1 point. And Jimmy Carter went to David and was like, so what contributions did you make? And so he like had like this kind of like funny self-deprecating humor, but he like worked for Jimmy Carter. And it eventually— Jimmy Carter was a one-term president. He doesn't get reelected. So David Rubenstein, he's 31 years old. He's like, Well, what do I do now? And there is this amazing article that I found written by Michael Lewis. You know, Michael Lewis, the famous author. He wrote this amazing article in 1993 called The Access Capitalist, and it's a 10-page or so article written about David, and it's from a while ago, and I love that. And he said, um, David got his start using what people are calling the Great Eskimo Tax Scam of 1987.

Tell me more.

Never friend of the pod.

Scheme. I meant to say scheme. It was cold outside. I meant to say scheme. And he used this thing and he started in the PE business, which at the time in the '80s was like, like just killing it. Like it felt like that's when all the big PE firms were built because this idea of a leveraged buyout was brand new. And so he raised a little bit of money and he like did a couple of deals. It didn't really particularly work that well. I think he said his first deal that they tried to buy was a Mexican restaurant called Chichi's. And he's like, yeah, like it wasn't going so hot.

He went from the Eskimo scam to Chichi's.

All right. Yeah. He's like, not doing so hot. Uh, but then he had this idea where he was like, well, like, I know everyone in DC and I know that like a lot of jobs in DC are pretty cyclical. Like after 4 years you like quit and you're like, what do I do? And I know a bunch of interesting people and I know those interesting people know a bunch of interesting and powerful people, but you don't want to like sell access to these people. That would like be borderline unethical and sometimes illegal. And he's like, well, what if I just like got all of these like powerful people who no longer have jobs in the government to come and like work at this PE firm and we start— or when we start buying companies where it would help to have like friends in government so you can get meetings to like big powerful companies. And so Carlyle eventually specializes in defense contract style companies. Um, and so that is sort of how it took off. But the more interesting part about all of this is what he's done while he was building the company. So he has like 5 or 6 books, which is how I've met him or know of him. So he's got a book called like The American Stories about like where he just interviews historians. He's got a book called How to Lead, The American Experiment, How to Invest, The Highest Calling, which is conversations about different presidents. He has a show on Bloomberg called The David Rubenstein Show. He's got—

Yeah, that's what I've seen, his interviews.

Fascinating. I mean, that's an epic charcuterie board career. You know what I mean?

Like, exactly.

Just a little bit of this, a little bit of that. They work well together. You know, he's kind of like the white knight of Washington, DC. I kind of love it, you know, like I always love people who are not sort of one-dimensional in the way they operate. You know, the one-dimensional people I appreciate for their laser focus and obsession, and I take inspiration from it, but I don't take guidance from it. You know, I take more guidance from people like this who I think have a more interesting, varied career. Personally, I find that like just really compelling.

I love this guy. Google or go to his Wikipedia page and like look at the things that he's contributed to. I mentioned just barely any of them, but it's like David Beckham's wisdom teeth.

Like, we should play a game. Things, you know, two truths and a lie. Rubenstein's collectibles.

Dude, it's, it's so awesome what he does. And I just think that guys like this are really cool. And he's actually coming on the podcast in August. And so, you know, sorry, Dave, I didn't mean to— I didn't mean to insult you if I got any details wrong, but—

Wait, he's coming on? Okay, I'm so excited now. That's amazing.

Yeah, it's amazing. I think that he's been doing this kind of like baller giving philanthropy topic stuff and like history stuff, I think he's been doing it along the way and not just like in the end of his career, which I find really fascinating. And he like makes this joke where first of all, he says like, my whole shtick is I love self-deprecating humor because it disarms people. And like, he's kind of like a self-deprecating guy, which makes him very likable. But he was like, I'm not really like that good of an investor. I just like work pretty hard and I know kind of everyone and I'm pretty good at connecting people. And I also have really good business partners who helped me start Carlyle. And that's one of the reasons why it's the way it is. And I thought that was really fascinating.

I like that a lot. It also sounds like he had a, you know, a cool second act to his career, maybe a second and a third act to his career. Today's podcast is brought to you by my friends at Mercury. They make the world's best banking product. I think you know this already. I use Mercury for all my businesses. I think I have like maybe 7 or 8 businesses. We use Mercury as our business banking across all of them. And now they actually just launched a personal banking account. So I have my personal account there. I moved off of Wells Fargo and Chase. I'm just all in on Mercury.

Why?

I like products that are easy to use. I like products that get me and the problems that I have. So like, very easy to make a joint account with my wife, very easy to spin up virtual cards. One click and I get savings yield. It just has all the stuff that I need in one place. So if you're looking for the best banking product on the market, it's definitely Mercury. I will fist fight anybody who disagrees with me on that. Go to mercury.com/personal and learn more. Mercury is a fintech, not an FDIC-insured bank. Banking services provided through Choice Financial Group and ColumNA. Members FDIC. Can I tell you about a business that I think is really cool? That is someone's second act. And I think, you know, I think, you know, the person, but I don't know how much time you spent thinking about this business. And so the business is PSA. And PSA is if you ever want to go buy a rare, you know, Charizard, well, you want to know the PSA grade of that card.

And so we got to get this guy on.

What?

If I'm wrong, we'll fire our researcher. But that's, that's what we, that's what we have here.

What are you gonna do, cancel your Claude subscription?

I'll give Claude a nasty talking to. Basically, they, they just— they've dominated this space of, uh, of grading cards. And if you think about what that is, the broader category of problem that they solve is something called credence goods. And so I was kind of nerding out on this, and what a credence good is, basically, it's a good that even after you've consumed it, even after you have it, you still don't really know the quality of it. So like medical care is a good example. You have surgery. Oh, how'd you like your surgeon? I don't know. I have no idea. I have no way to assess the efficacy of my surgeon if they were, if they were, you know, I could probably tell if they're terrible, but I can't really tell the difference between good, great, and world class. And the same is true and same was true for collectibles. So let's say somebody had an original, I don't know, Sammy Sosa rookie card and the big kind of home run boom was happening when him and Mark McGwire were hitting a bunch of home runs and people were buying up these cards. And the problem, you know, the problem without a third party, a trusted third party here is that one, you know, the owner says it's in excellent condition and then they show it to a buyer and the buyer says, "Ah, I don't know, it seems fair." And then the buyer owns it. Then he says it's mint condition. And there's all this arguable, and you don't, and that's just the condition, let alone is it even authentic? Is this real? Was this actually a first edition? Is this a second edition? Does this actually have this?

Does it actually have that?

With this business, so I'm just looking it up. So like it's called collectors.com now. It's like a, it's like a portfolio. I think they own like the ones you mentioned plus like 3 or 4 other ones. And the, like they have this cool Jackie Robinson card like on their photos and it's created by Topps, Topps cards. And I was like, you know, I bought so many of those and Topps is owned by Fanatics. Because it's not like a regulated thing. It's not like money or gold or anything like that. What's to stop Fanatics from making more? Like, it's not like a limited supply, do you know what I mean? And it's not like— it's not like—

Tops is what stops them. So, so yeah, it is a limited supply. If, if Tops can't be trusted to not flood the market with more cards, people will stop buying Tops. The more supply there is, the less valuable each card is. So Topps has an incentive to control the supply tightly, to manipulate the supply artificially. And so Topps has an incentive to do that. That's in line with the incentives of the buyers and the holders, because they, we need, they need scarcity for this to be valuable. And then PSA sits as a layer underneath both, which basically grades and authenticates that this is, this is real, it's not a fake card, and that it's, it's in good condition and it's valuable. And they also, because they see so many cards, they know the absolute scarcity. So they know how many of these cards really are out there circulating in the market. They know the liquidity of each card market. So there's like a, there's like a market cap for like Charizards. There's a market cap for Jackie Robinson cards because they know how much, how much liquidity there is, how much circulating supply there is. They know the relative value of a card because they know, wow, this is in mint condition versus this is in good condition. And so they're all kind of in cahoots with each other, and in a way that is symbiotic.

It's sort of like, um, have you ever, like, seen how McDonald's does the, the, like, Monopoly game? Like, the way the Monopoly game works is there's only, like, 4 or 2 winning pieces, and, like, they guard it, like, kind of like crazy. Although they were scammed once. There was a whole documentary. They were like, one of their, like, janitors, the guy on the inside.

Yeah, yeah.

They, like, took— they, like, took them. And so it would be very interesting, like, they found the like the corner of the office where they kept them and they're like, you know, yoink, it's mine. I would have loved to know, like, when they're making these cards, they must know in advance which ones potentially might be valuable and how they place them in a pack because they're just like in little like bubblegum, like $5 or $5 card packs, right?

Yeah, I would love to see that. Yeah.

Dude, Nat Turner was 35 when he did this. So he had recently sold Flatiron Health. I think that's what it was called for. I think like $2 billion in 2018. So he must have sold. So I think he sold one company for $40 million when he was 23.

Kind of like a media company.

Yeah, it was an ad tech company. I forget what it was called, but it was like a cool thing, whatever. He sold it for $40, I think $40 billion to Google. Then he starts this cancer thing because someone in his family, I think, was sick. And him and his partner, I think his partner is Zach, they're like whip smart. Like you could— I could just tell, by the way, Zach is like kind of a feisty guy online and he like, he's very sharp with his words. Where you see guys talk like this and you're like, that's not someone I want to argue with because not only is he sharp, he's argumentative and he won't back down.

He calls bullshit. Yeah.

And so this guy Nat seems like a little bit more of a nicer version of that, but still has it. They— he seems so smart and wise at a very young age. I've been very fascinated by him as well. And I also thought when he did this, I was like, huh? Like it was like totally like, I don't like—

that's—

and then you go to the website and you're like, this is, this is awesome. This is good for the soul.

I mean, the, the math on the, just the queue alone, right? 14 million cards in the queue. The price, the cost to grade a single card is, you know, $20 on the low end, $1,000+ on the high end. Let's call it like $30 on average. So 14 million cards in the queue times $30 is $400 million sitting in the queue. It's probably more if you, if you think the average cost of the card is higher. And so that's, if that's just their backlog, and by the way, this is one of the reasons he bought it was because there was a 1-year wait to grade cards. He's like, dude, this is terrible. And so he bought it to try to modernize it with technology, with efficiency, with just intensity, and say like, we have to be able to do better than that. And I'll take it public again once we've implemented like a more tech-forward approach to doing this, because you can't just have like a multi-year backlog and cards waiting to be graded.

If you go to his Instagram, um, it's called @natturnerscards, and it's just photos of him showing off his card collection. Like he owns like what looks like a Yao Ming rookie collect— like a rookie card, and it's just him showing it off. This is so cool. I wonder what their office is like. This is awesome.

The Yao Ming rookie card just for some reason got me. Um, yeah, I don't know. I don't know what their office is like. I don't know what they're— I don't know what any of it's like. I just think this is—

have you ever talked to him?

Kind of an amazing move. No, I've never met I would love to have him on. I think this would be really fun to—

Yeah, I think this would be great.

Dude, but there's also— I mean, you're just scratching the surface with different collectibles. So if you want to get really nerdy, I'm part of like all these like vintage denim communities online and people will post. Yeah, look, if we're going to—

there's tens of us.

If you're going to say this guy who's got an Instagram who's 38 years old dedicated to his magic cards—

for some reason it was cool when he did it, but when you said it, I felt differently.

What, you don't like Lee jeans from 1947? But there are all these like, they, like they do this for purses and handbags too.

Wait, tell me when you when you appreciate denim, is it like with wine? You're tasting it. With, you know, colognes, you're smelling it. What do you even do? Is it a feel? Is it a smell? Is it a look? What do you even look at? What is the— what traits do you even evaluate? The premium, the best stuff, or the worst?

There's all types of terminology. You want to look at the honeycombs, which is the fading that's on the back of the knee. You want to look at the back patch near the butt. You want to see, does this patch Is it made out of cardboard and paper or is it made out of leather? And has it shrank a little bit or not? You want to look at, are the, are the copper rivets just a little bit green so you know it's real copper? Are they hidden or are they visible?

Is there like a famous pair like of jeans, like the Honus Wagner baseball card or like the rare Charizard? What is the most valuable collected denim?

Yeah. So Levi Strauss was invented. Levi Strauss was a man. He invented it in the 1800s to help gold miners in San Francisco. So California. California and Nevada. And so if you can find, it's called, um, uh, buckleback. So where they have the buckle on the back to like, it's called like a cinch. If you could find any of those in an old mine and assume that's, and you, you can date it to the 1800s, those could be worth $20 grand. Um, and so collectors, particularly Japanese collectors, love them. But then there's this whole subgenre of people who make reproductions, predominantly Asian companies, Japanese companies. They're the ones who make the best ones. Japanese replicate American shit so good. I'm wearing a pair right now of Levi's.

Stand up, stand up. Let's see it. Let's see them.

Look at this high rise. Give us a twirl.

Give us a twirl. High rise.

Look at the roping. The roping. This is beautiful roping fades. That's what you're looking for. You're looking for that chain stitch hem. That's not made by a normal sewing machine. That's made by a Union machine they don't even make anymore. You gotta find— you gotta find these.

Died hemming that.

Yeah, you gotta find— that costs $70 to get hemmed, okay? You gotta find that good good, and it's actually quite challenging.

Um, and so like, what is the most expensive denim artifact art piece you've bought? Uh, are you, are you a buyer or are you just a casual? No, are you a voyeur?

I'm a, I'm a voyeur, but I like $500 for like a vintage jacket.

Have you considered— have you been tempted to be like Ooh, $15,000. Sarah, do we need that $15,000? Do we need to go on vacation?

I have. So there's like, like a pair of 1947 Levi's that use like the green for the pockets because back then we were like provisioning out materials. And so every material was green for the war and getting some of those real deal, you know, the real deal Holyfield ones. Yeah, I want those stuff. But my point is, is that there's this whole subreddit dedicated to two things. One, looking at the fade of your denim. It's called Reddit Raw Fades is what it's called. So it's raw denim that fades nicely. I swear to God, it's literally just photos and photos and photos.

I don't think you're lying. It would be hard to make this up.

It's beautiful. But I do know there's people who do this for other types of clothing, which are far more desirable, like purses.

So you're saying you could do niche PSA if you, if you, if you specialized in different clothing, clothing and bags. Yeah.

Yeah. Denim is too niche. Uh, but like, uh, but maybe there's a long tail of things like denim. Well, particularly handbags. I've seen this all the time on handbags, uh, like on eBay and stuff. Like I've bought my wife like a vintage one for like 2 or 3 grand and I'm just trusting the person's eBay profile that they have like 5 out of 5 stars. But yeah, there's like a bunch of like cool collectible, like, uh, genres that are still really, uh, prime for some of this stuff.

Hmm.

Yeah. So by the way, like, I know it's amazing that like a woman has decided to marry me even though I'm still into this stuff, but we exist, guys. Oh my God. I— Nat Turner, um, obviously we are nerds as well. If you'd like to come on, we would love to have you.

Rubenstein, Nat Turner, come on the podcast, guys. Don't we seem like a good hang?

Look, we've insulted ourselves just as much as we've malted you, so it's like we're good. Uh, um, that's something. You should wear, um, a white tank top more often. I think that it brings out something special in you.

Should I just go skimpier and skimpier with each episode?

I just saw the flex on the shoulders. Congratulations. Um, it seems like, by the way, for the past 2 years, everyone is commenting about— on your body every single episode.

That's great.

Love it. Yeah. All right. So keep it coming. Go to Spotify.

My farm in India who is continuing to comment on how much better I look and how I'm getting in great shape and it shows. Keep it up.

Yeah. PSA is going to grade you. They're going to give you a— they're going to give you a— it's fine.

Fair condition.

Yeah, it's fair. All right. That's it. That's the pod.

I feel like I could rule the world. I know I could be what I want to.

I put my all in it like no days off on the road.

Let's travel, never looking back. All right, let's take a quick break to talk about a podcast, because if you're listening to this, you like podcasts. And what's better than one podcast? Another podcast. And let me tell you another podcast you should check out. It's called Success Story. If you like hearing about different success stories and hearing Q&A sessions with successful business leaders or hearing keynote presentations or just checking out conversations about sales and business and marketing tactics, this is a great podcast for you. So check it out wherever you get your podcasts.