Story
The most annoying thing in the world: an unhappy billionaire
Shaan relays Michael Birch (Bebo founder) on post-exit wealth: selling was anticlimactic, building was more fun, and the cruel twist is no one will let you be sad once you're rich. There's a never-ending chain of 'you have it all' that denies wealthy people permission to feel down.
“Nobody wants to hear it, right? Like, what's the most annoying thing in the world? An unhappy billionaire. And I think he said something like that. And I was like, wow, that's so true, actually.”
Story
The crypto exchange Shaan killed before Bitcoin hit $100
Shaan recounts his Idea Lab nearly launching a crypto exchange when Bitcoin was under $100, only for his billionaire backer Michael Birch to kill it over SEC/Silk-Road fears. They did nothing, Shaan bought no Bitcoin, and he ended up chasing it years later at $20,000 a coin.
“So let's put the kibosh on our crypto exchange that you guys are trying to launch tomorrow. And I was like, ah, shit. So I go tell the team and blah, blah, blah. And long story short, we do nothing. So we don't launch the thing. I don't buy any Bitcoin at that time when Bitcoin's under $100. And we move on with our life. And then now, years later, I'm just chasing that crypto dream the whole time, buying it at $20,000 a coin instead of when it was at $20,000.”
Story
Birthday Alarm: the address book that pivoted into a viral cash machine
Shaan tells how Michael Birch built a self-updating address book nobody wanted, then noticed the only loved feature was birthday reminders. He turned that into birthdayalarm.com and engineered a viral loop where each user recruited their whole contact list.
“He builds this product. It's really complicated. It's not really going anywhere. But he adds one feature to the address book, which is birthday. What's your birthday? And which is ironically the thing that doesn't change. You don't need a dynamic address book to do that. But he started sending a reminder.”
Steal thisWhen users only love one feature of your product, kill the rest and make that feature the whole product.
Number
Birthday Alarm: $4–5M/yr at 80% profit with almost nobody working on it
At its peak Birthday Alarm did $4–5M a year in revenue at roughly 80% profit, run by Michael Birch's wife, sister-in-law and cousin. It funded his next startup, Bebo, which he later sold for ~$850M while owning 70%+.
$5M
Annual revenue · USD/year
“And it was making at its peak $4 or $5 million a year of revenue with most of that being profit, like maybe 80% profit at that time.”
Story
Bebo's Red Button: The 100-Step Game That Cracked Funnel Psychology
Shaan tells how Bebo's Michael Birch put a mysterious red button in front of 1 in 1,000 visitors, leading to a silly 100-step cat game. The lesson: ~30% bounce on step one, ~20% more on step two, but anyone who reaches step three almost always finishes.
“He put a red button on the site for 1 out of every 1,000, uh, visitors. So imagine going to Facebook and just seeing a shiny red button in the corner for the first And you click it and then the whole screen just went clear and it was like, here's a cat, click the cat. And you click the cat. It's like, this is a bowl of pasta. Don't click the bowl of pasta. You clicked it. And then it's like, the cat's dead. We told you not to click the bowl of pasta.”
Story
The best-friend quiz: 0 to 1 million members in 9 days
Shaan recounts how Michael Birch seeded a new social network with a 'how well do you know me?' quiz: you answer questions about yourself, send it to friends to guess your answers, they get a score, then they're prompted to make their own. It hit 1 million members in 9 days.
“So you would answer a bunch of questions about yourself, which is your favorite topic. Then you would send it to your friends and it would say, hey, this is a quiz to see how well you know me. They're kind of intrigued. How, you know, let me see what I get. They would try to answer what you, you know, what your guess, what your answers are. And they would get a score at the end of You know, here's your best friend score, you're a 76% or whatever it is. And then it would say, by the way, you should do this too. You take your quiz and send it back to them. 9 days, 1 million members.”
Steal thisBuild a quiz where the result is only valuable once you forward it to friends, who then must make their own.
Story
The best-friend quiz: 0 to 1 million members in 9 days
Shaan recounts how Michael Birch seeded a new social network with a 'how well do you know me?' quiz: you answer questions about yourself, send it to friends to guess your answers, they get a score, then they're prompted to make their own. It hit 1 million members in 9 days.
“So you would answer a bunch of questions about yourself, which is your favorite topic. Then you would send it to your friends and it would say, hey, this is a quiz to see how well you know me. They're kind of intrigued. How, you know, let me see what I get. They would try to answer what you, you know, what your guess, what your answers are. And they would get a score at the end of You know, here's your best friend score, you're a 76% or whatever it is. And then it would say, by the way, you should do this too. You take your quiz and send it back to them. 9 days, 1 million members.”
Steal thisBuild a quiz where the result is only valuable once you forward it to friends, who then must make their own.
Story
Bebo's $850M sale: the last girl left at the dance
Michael Birch sold Bebo for $850 million at the absolute peak of social networking. Facebook was too expensive to acquire and MySpace had already sold for $500M, so Bebo was the only target left; a year later it might have sold for half or less. The lesson: that you succeed isn't luck, but how much you succeed often is.
“Sold that company for $850 million. The timing was perfect. Social networking was at its absolute peak. Facebook was too expensive for anyone to buy. MySpace had already sold for $500 million, so they were the only girl left to ask out to the dance. They got a very high bid from a big bidder. That same company a year later might have sold for half the amount or less.”
Take
Get 20 years of experience in 4 by joining a startup lab
Shaan joined Michael Birch's startup lab specifically to compress experience — a lab runs multiple ideas at once, so you get many reps rather than focusing on one thing, plus daily proximity to someone who's done it before.
“One was I had this idea was how do I get 20 years of experience in the next 4? Kind of like what you were saying, which was like by throwing yourself in the fire and being like, oh, you rose your hand, you raised your hand like, oh, press time, I'll go launch, you know, our Australia business or wherever. Like, you will go learn a lot more that way. So that's why I joined his startup lab, because I was like, oh, a lab has multiple ideas, so I will get multiple reps rather than just focusing on one thing.”
Steal thisChoose roles that give you many reps and proximity to a proven operator to compress a career's worth of learning into a few years.
Take
Get 20 years of experience in 4 by joining a startup lab
Shaan joined Michael Birch's startup lab specifically to compress experience — a lab runs multiple ideas at once, so you get many reps rather than focusing on one thing, plus daily proximity to someone who's done it before.
“One was I had this idea was how do I get 20 years of experience in the next 4? Kind of like what you were saying, which was like by throwing yourself in the fire and being like, oh, you rose your hand, you raised your hand like, oh, press time, I'll go launch, you know, our Australia business or wherever. Like, you will go learn a lot more that way. So that's why I joined his startup lab, because I was like, oh, a lab has multiple ideas, so I will get multiple reps rather than just focusing on one thing.”
Steal thisChoose roles that give you many reps and proximity to a proven operator to compress a career's worth of learning into a few years.
Tactic
Quizzes are the bacteria of the internet — use one as a wedge
Shaan argues a quiz is the cheapest way to onboard users and go viral: Michael Birch's Best Friends Quiz got a million members in 9 days. Launch products as a quiz to collect lifestyle data before building the full app.
“quizzes are like, I don't know, they're like the bacteria of the internet. They just spread like crazy. And you know, I was telling you about Michael who was the kind of CEO of The Lab. He had launched, he got big on a social network. It was like kind of as big as MySpace back in the day, as big as Facebook. And he had launched it with a quiz and in 9 days he got a million members.”
Steal thisLaunch a new product as a viral quiz to collect users and data before building the full app.
Story
Michael Birch invented viral marketing because he had no ad budget
Shaan recounts working with growth legend Michael Birch, who built one of the first address-book importers for Birthday Alarm because he couldn't afford marketing and had to use customers to get more customers.
“so he was working on viral marketing cuz he just didn't have a budget. So he's like, I gotta use my customers to get me more customers.”
Number
Birthday Alarm hit 50 million members with zero paid marketing
Shaan describes how Michael Birch's Birthday Alarm grew purely through a viral address-book-import loop, with a pre-filled message and one-click invites, reaching 50 million members on no paid spend.
$50M
Members acquired · members
“Birthday Alarm grew to 50 million members with zero paid marketing. 50 million.”
Framework
Earn, Learn, or Legacy: pick which one each chapter is for
Shaan's framework for choosing what to work on: every phase of life optimizes for one of earn (cash in chips), learn (gain reps and experience), or legacy (build something you'd never want to exit). When he moved to SF he optimized for learning by joining Michael Birch's idea lab to 'pack 20 years of experience into 4 years.'
“So the framework I offer up here is earn, learn, or legacy. Which one are you going for right now?”
Steal thisBefore picking your next project, name whether this chapter is for earning, learning, or legacy, then choose accordingly.
Story
Shaan's investor talked him out of a Bitcoin exchange in 2013
At Monkey Inferno, Sam's team started building a Coinbase competitor in 2013 after an engineer mined Bitcoin on company servers. Billionaire investor Michael Birch came to lunch and shut it down over legal risk; Sam admits he lacked the conviction to push back and missed it.
“I didn't have enough knowledge or conviction at that time to stand up and be like, no, we need to be in this game. This is real.”
Steal thisIf you believe in a contrarian bet, build the conviction and knowledge to defend it before the room talks you out of it.
Story
Michael Birch sold for $850M and went to a $10 movie
Shaan recalls a guest, Michael Birch, who sold his business for around $850 million and, not knowing what else to do, went with his wife to a $10 movie (Forgetting Sarah Marshall) the day the deal closed.
“I remember talking to Michael Birch. He was probably the third or fourth episode. He sold his business for crazy money, like $850 million. They went to a movie. Him and his wife went to a movie, $10 tickets movie because he was like, "I don't know what to do. We haven't seen a movie in a while."”
Story
Shaan won Bebo out of bankruptcy at $1,015,000
Shaan and Michael Birch bought Bebo back out of bankruptcy in a back-room auction. Sensing the rival's ceiling was a round $1M, their lawyer jumped to $1,015,000 — and the other side immediately folded, revealing $1M had been their exact max.
“And at a million, our top was supposed to be a million. It was at 900-something and she just, our lawyer just jumped and went 1 million and 15,000 and just threw 15,000 on top. And they were just like, take it. And we were like, great. And they were, I was like, what was your max? He's like, a million was our max.”
Tactic
Buy yourself 24 months of runway before quitting
For people with obligations like a mortgage or family, Shaan's approach is to calculate your monthly burn rate and save enough to go 24 months without income, giving yourself that much runway to build a business.
“what some people do is they, they pile up enough savings where they say, okay, we can— I can go for 2 years without earning money now. And so you just, you figure out what is my monthly burn rate, and then how do I get to 24 months where I could not have to I'm willing to dip into savings during that time to build a business. And they give themselves that much runway.”
Steal thisCalculate your monthly burn rate and save 24 months of runway before quitting your job.
Number
Bebo sold for $850M to AOL, bought back for $1M, resold to Amazon
Shaan recaps Michael Birch's arc: Bebo sold to AOL for $850 million, then Birch and team bought it back for $1 million years later, then sold it again to Amazon.
$850M
Bebo acquisition price by AOL · USD
“That company, Bebo, if you've ever heard that before, sold for $850 million to AOL. And when I met Michael, we got back together and we bought it back for $1 million. Years later. And then we actually sold that again just now to Amazon.”
Framework
Set the bar at 'replace my salary,' not 'get rich'
When Birch quit his job, his entire goal was simply to earn as much working for himself as he had as an employee, not to make a million. A modest, achievable target kept him going.
“and so the goal, like, when we left, it wasn't even to make our first million. Like, when I left to do my entire 100% goal was to earn as much money doing my own thing as I was earning working for someone else.”
Steal thisSet your first entrepreneurial target as simply replacing your current salary, not getting rich.
Framework
Build only what fits your distribution edge
Birch realized he kept building products that required marketing budgets and sales skills he didn't have. The lesson: pick products that are inherently viral so growth becomes a technical challenge you can actually win.
“And so I was coming up with these ideas that then needed marketing and marketing was not my forte. Like I'm not a sales marketing guy. And so I was like creating products, but then unable to convince people to use them. Right. And didn't have the budget, even if I knew how to spend that money really wisely, I just wasn't going to be very good at that. So I do a little bit of Google AdWords and like that was sophisticated for me. Right. So had I focused on viral, I could have, you know, only becomes a technical challenge. Right. But then you've got to focus on products that are inherently viral.”
Steal thisPick products whose growth matches your unfair advantage; if you can't market or fundraise, only build things that spread on their own.
Take
Don't optimize for the finite moment of arrival
Birch warns against the 'once I've done this, then I'll be happy' trap: the moment of arrival is finite while the journey is long, so optimizing for a single payoff moment is a mistake.
“And then I'll be happy. And of course, yeah. And the moment of arrival is, is very finite. The journey is really long. So don't like optimize for that one moment where you're like, oh, I'm ecstatically happy because that worked. Yeah. Then like, well, then what? And what do you do next? Something after that, you know.”
Steal thisOptimize for enjoying the daily journey, not the brief moment of arrival.
Idea
Birthday Alarm: a website whose only job is reminding you of birthdays
Birch's breakthrough was a dead-simple site that just reminds you of birthdays. Because almost nobody knows their friends' birthdays, the only way to use it is to email everyone asking them to enter their date, baking virality into the core action.
“now we were thinking viral, viral, viral, like, can we do a website? And all it does is just remind people of birthdays. Like, that's it. Super simple, simpler than LemonLink by far in many ways. And we knew it where we thought it could be inherently viral because the reality is if you think about whose birthday do you really know by heart, you know, you're like children's, your parents, siblings. You probably don't know your cousins. You may know one or two best friends, but that's it.”
Steal thisDesign the core use of your product so the only way to use it is to invite other people.
Story
The copy-paste tweak that took Birthday Alarm to 10,000 signups a day
Instead of sending invite emails from their own server (which got blocked), Birch's brother suggested a text-area box letting users copy a pre-written invite and send it from their own email client. Overnight signups jumped from a handful a day to hundreds, eventually 10,000 per day.
“And then we're like, why don't we just do a text area? I think it's my brother's idea actually. Why don't we just do this, uh, text area box thing and let them copy and use their own email client rather than us sending and getting blocked because our mail server's not listed.”
Steal thisRoute invites through users' own email clients so messages land in inboxes instead of spam folders.
Story
Scraping Hotmail/Yahoo address books added 150,000 users a day for a year
Birch copied address-book importing (which his acquirer Tickle had built but couldn't make work) onto Birthday Alarm over a weekend. Signups jumped from 10,000 to 100,000 in 24 hours, peaking near 200,000/day and holding at 150,000/day for a full year.
“So I worked the weekend, put it live Sunday night, and then looked at the data like 24 hours later and we'd added 100,000 new members. So we were still adding 10,000 a day and then 24 hours later we just added 100,000 members.”
Number
$13.95 greeting-card subscription took revenue from $10K/month to $10K/day
Birch added a $13.95 annual all-you-can-send greeting-card subscription to Birthday Alarm. The first day alone brought in $10,000, taking the business from $10K/month to $10K/day.
$13.95
Annual greeting-card subscription price · USD/year
“So we added a subscription, was $13.95 for an annual subscription, all you can send greeting cards. And, um, so we went live with that whilst I think we were still working at Tickle. And then this was, uh, everything's always a very round number in zeros for us for some reason, but the first day we made $10,000. So we went from $10,000 a month to $10,000 a day.”
Steal thisLayer a cheap recurring subscription on top of a free viral product to monetize without killing growth.
Number
Birthday Alarm made ~$4M its first year with just two employees
In the first 12 months of charging, the business cleared just under $4 million in revenue while expenses stayed flat: still just Birch and his wife in a tiny office with the same colocation costs.
$4M
First-year subscription revenue · USD/year
“Yeah. And so with that first year, we made just shy of $4 million, like the first 12 months of charging. And our expenses were the same. It was still myself and Sochi in this little office. Our colo costs were the same.”
Number
Bebo hit 1 million users in 9 days with a 3.5 viral coefficient
Built in a couple of days by reusing prior code, Bebo hit a million users 9 days after launch. Its K-factor was 3.5, meaning every new user brought in 3.5 more on average.
$3.5
Bebo viral coefficient (K-factor) · users invited per user
“we went live and we had a million users after 9 days of going live. Okay. It was the most viral website we'd ever done by far. The viral coefficient, the K-factor, whatever you want to call it, was 3.5.”
Story
Bebo signed up 100,000 people in Singapore in a single day
On its 9th day Bebo added 350,000 members in one day, and bizarrely 100,000 of them came from Singapore, a meaningful slice of the whole country. But it was the least sticky product Birch ever built: he jokes only two people came back, one being himself.
“And so I think on the 9th day, we added 350,000 new members on one day. And bizarrely, 100,000 of those 350,000 were from Singapore. So I had to look it up on a map. I looked up the population. I was like, Jesus, we just like in one day got a meaningful percentage of the entire population of one country to join.”
Fact
The non-self-updating self-updating address book
Birch's verdict on self-updating address books: they fail as standalone products because only ~10% of friends ever enter their details, so nobody keeps using a 10%-complete contact list, and it never updates. They only work if Apple or Google bakes them into the OS.
“they don't work as like a standalone thing because you end up getting 10% of your friends entering their address book, their contact details, but then they don't continue using it because who uses an address book with only 10% of your contacts in it? And because they're not using it, they don't update it. So we ended up sort of calling it the non-self-updating self-updating address book.”
Story
Why Bebo lost to Facebook: real identities and the messy middle
Birch pinpoints two reasons Facebook won: Facebook insisted on real identities while Bebo let users pick symbol-filled names that made friends unsearchable, and Bebo tried to occupy a middle ground between MySpace self-expression and Facebook quality. They were also always in catch-up with far less funding and ~10x fewer engineers.
“They insisted on real identities and we didn't. We were more sort of, we were trying to be the kind of self-expression of MySpace, but with kind of product quality of Facebook and engineering of Facebook. That's where we were trying to kind of position it. And we thought that the middle ground would be the winning ground.”
Number
Bebo sold for $850M on ~$20M revenue, valued on potential not multiples
Birch says Bebo did about $20 million in revenue the year before it sold for $850 million, so the price wasn't a revenue multiple. It was about potential, and the fact that Bebo was essentially the only third-place social network left to buy.
$20M
Bebo annual revenue at time of sale · USD/year
“I think we were doing last year, we did $20 million in revenue, I believe. So it was a multiple of revenue. It wasn't gonna work. Mm-hmm. Right. It was all about the potential of what it could be. I mean, you're right in your analysis that we, we were kind of the only one you could buy in many ways. Like we were basically, we were the third place, like we were in the medals, but only just.”
Idea
One unified hospitality software stack instead of 5-7 stitched tools
Birch's post-Bebo venture builds a single integrated hospitality platform, point of sale, reservations, membership, events, and finance, because most venues run 5-7 separate tools that don't integrate well. Owning the whole stack lets you ship cross-system features no integration can.
“But the problem with hospitality software is most businesses use like 5, 6, 7 pieces of software and they try to integrate them and they don't really work.”
Steal thisIn a fragmented software category, win by owning the entire stack so you can ship cross-system features competitors can't.