CEOs Pay Him $10,000 Per Appointment?!

23:24And so that's how they caught the Silk Road, for example. They went and looked at message board posting, for example. But I just think that it's cool that there's a... There is the official agencies, but then there's this open-source community of internet sleuths, and I don't think they're... They're not necessarily better, but I just think it's cool in addition to what exists out there. Let me show you something that I saw recently that is actually related to indexes. So I got curious about... I was looking at... I saw an article about some of the most profitable companies in the world. Now, let me list a few that are very obvious.

24:01So Visa, of course. Visa is going to be one of the more profitable companies, something like 40 % income compared to their revenue. NVIDIA, Berkshire Hathaway, very obvious ones. Two less obvious ones, Public Storage. I think we've talked about Public Storage. They make something like 50 % profit on each dollar that they take in on revenue. Another one is Relics. We talked about Relics. They own the academic publishing industry. And it's a very controversial thing because it's a pay-to-play model. And it's a little weird. But there's two that stood out to me. The first one, I'll tell you because you may not know, but it's called the Intercontinental Exchange.

24:41Do you know what the Intercontinental Exchange is? No. Well, the second one that stood out is NASDAQ. So the Intercontinental Exchange owns the New York Stock Exchange. And so these two stock exchanges are some of the most profitable public companies in the country. Something like, I think in 2018, the Intercontinental Exchange, I think they call it ICE, I-C-E, 60 % profit for every dollar that it took in. And this company is worth something like, I think today it's worth$35 or$40 billion. One of the most profitable companies out there. And it makes, I think,$10 billion in revenue. So it's just like printing cash.

25:20And it kind of got me interested that these stock market exchanges might be the world's greatest business models. Because when you think about a stock market exchange, once a company lists on an exchange, they're basically never going to go away. and hopefully a great company like a Ford or something like that can last for 100 years. It's incredibly challenging to build a new stock exchange. There's actually only, I think, 15 of them in the world, like 15 legit big ones. And the barriers to entry are super big. But it got me interested. Do you know who started a stock exchange recently? Have you heard about this?

26:00It's called the Long-Term Stock Exchange. Eric Ries. Eric Ries from the book, The Lean Startup, one of the most famous startup books of all time. So I think he started this in 2010 or 2012, a while ago, and it's taken a while to get going. And the reason he started it was at the end of The Lean Startup, in the epilogue, he lists a bunch of ideas that are interesting to him. And he said on this talk, he goes, all of these ideas have been started. My readers have messaged me saying, I've started this, this, and this after this book. And he goes, the one thing that no one started was a long-term stock exchange.

26:35So I decided to do it. And one of the reasons he decided to do it was because... So the large index funds or a lot of the large traders, do you know how long they hold a stock for on average? No, I have no idea. 10 minutes. That's how long on average. I'm super bullish on this stock for the next 10 minutes. Yeah. That's like me at home with all my ideas. Yeah, it's for 10 minutes is the average hold time. And he was like, I think that's insane because nothing has changed with that company. And it really bothered him. And another thing that bothered him is there's this chart. You like one chart businesses.

27:14There's this chart that shows the average number of public companies. And it's been going just straight down. So I think 20 years ago, there was something like 10 ,000. I think today, there's like 4 ,000 public companies. So people just don't want to take their company public for a variety of reasons. One of those reasons being is that it's kind of a short term, like what does Warren Buffett say? In the short term, it's a, what does he say? It's like a measuring stick, but in the long term. Not the way we contest. Long term, it's a weighing machine. Yeah, that's right. And he's like, that has, a lot of people don't like that.

27:44They don't want to take their companies public because of that. So basically in 2011, he proposed this idea of this thing called the long-term stock exchange, where you get more votes for how long you've held the stock. So if he held the stock for longer than someone who just recently bought it, you get more votes into how the company is run, theoretically. And he actually raised something like$100 million to start this. I think Andreessen Horowitz funded it and a bunch of other... That wasn't the only thing, right? I think there was a mandatory one-year hold time, right? Wasn't there like a, if you buy, you can't sell within a certain period of time?

28:17Wasn't that the rule? Yes. And there's a few other rules where the companies, in order to get listed on the stock exchange, you have to do what you just said. you also have to have a plan as to how your company is going to be great for the next many decades. And so it's all about long-term stuff. And so yeah, there are a whole bunch of rules about this. Now, the story isn't exactly going well, because I think there's only like two or three or four companies listed on his exchange so far. I think it's Twilio, Asana, and ThredUp. I don't think there's that many companies listed there. And those companies are also listed on the NASDAQ.

28:56So I don't know why you would use Eric Ries' long-term stock exchange. However, I thought this idea, I didn't understand it when I was younger. I'm like, why do you need to do that? Now I'm growing to understand that is pretty badass. And this is an epic idea that has not played out yet. But I was researching these exchanges and they're so fascinating at how they work. It's this weird... It's a little bit crony capitalism because they're in bed with the SEC. So they're in bed with the government. And there's a lot of regulation around this whole thing. But it's so fascinating. And Eric Ries was talking about starting it.

29:29He was like, in order to start it, you have to file paperwork. And it's called SEC 0001. So when you file paperwork with the SEC, even for a startup, it's all these paperwork. This is literally paperwork number one. It's their first document. And he filled out all this paperwork. And now he's finally starting to get a little bit traction. But I found this to be so fascinating, these stock exchanges and how they're probably one of the best business models I could think of. All right, I have a bunch of short stories related to this. Number one, I met the CEO of, I think, either the NASDAQ or NYSE.

30:05He came to my office once and he came to meet Michael Birch, who was our main investor. They were hanging out and he's like, oh, come in here and join. And so I'm sitting there and I'm like, I didn't even know the exchange was a business. I was like, why would it have a CEO? So it's a business? And he's like, oh, it's not only a business. It's a phenomenal business. And he's like, basically, we have the exchange. And the exchange in the US obviously is the big one. But what they do is it's a software company, actually. So what they do is they power the stock exchanges of a whole bunch of different countries.

30:35So it's like, oh, I mean, Finland needs a stock exchange. They're not going to build their own thing. They'll just take the US's battle-tested, super military-grade exchange, and they'll just be a customer of it. And so that was the first line of business is basically that countries will use their software to run their own exchanges. The next is that they basically fight for IPOs. So he's like, yeah, big deal is basically how do we versus the NASDAQ compete to get Facebook's IPO? How do we get the next big tech IPOs? So that's why he was in Silicon Valley meeting people. He was like, these are long-term relationships.

31:11And when the time comes that they're deciding which exchange to list on, that's a big deal for us. And it's a network effect. The more great companies you have on your exchange, the more valuable your exchange is. But it's like a network effect married with enterprise, super enterprise contracts, married with complete defensibility, literally regulatory defensibility. So you get the defensibility of network effects and of regulations, and then you get the business model of enterprise sales. And so pretty phenomenal business. Actually, it's also a marketplace, right? Because they can take fees on all the different transactions that exist.

31:49So pretty phenomenal business. You're absolutely right. And I was surprised to even learn that this was a business. It's just another reminder that everything you see around you, it didn't just show up. It's there because somebody somewhere has a motive and a profit in order to generate that product or that service or that thing that exists. And once you see that, you can't unsee it. So that's my first story. Second story is about Eric Ries. So I love Eric Ries. His blog was one of the key blogs that shifted my entrepreneurial journey. I was like, oh, this makes a lot of sense. That's why we failed.

32:25We should have been doing this shit. And I got to meet Eric. I went to his house in San Francisco. Nicest guy. nice guy, but also wasn't just like pleasantries. He was nice, but he was so helpful. Like I was like, oh, we're planning on doing this. It's, and he's like, okay, that's an interesting idea. I was like, yeah, we're doing this big launch, blah, blah, blah. He's like, don't do the big launch. And I was like, but I just told you, I told, I like talked for five minutes about my big launch plan. He's like, not a believer in big launches. Uh, here's why. And he's like, basically here's what you're going to do.

32:52You're going to take the worst version of the product that you've ever made and will ever make that you have no idea if there's demand for, and you're going to completely blow your wad telling everybody how great this thing is and you have this like, you're going to put all this energy into that and it's going to completely like the odds of you just getting it right and your initial product being good enough is so low that you're actually like lowering your odds of success by doing that and that now it's like pretty common this like fallacy of the big launch. This is like 10 plus years ago and at that time like big launches were still kind of a thing that people tried to do and he talked me off that ledge and then also I was like I came to him and I was like, you know, we have this idea.

33:29It's not really working. So I'm thinking about pivoting to this. He's like, okay, here's that. He's like, how are you planning to pivot? I was like, oh, I think we're going to make these like changes feature and start to test this and blah, blah, blah. He's like, cool. Here's what you need to do. He's like, you need to take your old idea. You need to bring it to town square. You need to shoot it in the head. And I was like, what? And he's like, your team is going to be so confused unless you explicitly tell them that, hey, all the shit I've been saying for two years, it's changing. like the old assumptions turned out to be wrong.

33:57We learned this by doing this. And now we know that's not the path. We now know that this is a more viable path or that this is a better path to be trying. That old idea is done. That old assumption we had is done. And he's like, you need to take it in the middle of everybody and you need to do a public execution of the assumptions and the ideas that you no longer are married to because nine out of 10 CEOs are too afraid to sort of admit that they were wrong or to be really explicit that like, no, that was a dead end. We need to go back and we need to try something new. It's like you try to blend it together and just kind of keep iterating in the shadows, basically.

34:33And you're kind of like your team is always half confused and they don't really know what they're supposed to be doing. Is that the thing we've been saying or this new thing? Or do we just bolt this new thing onto the old thing? And then that doesn't really work either. And he's like, you know, when Instagram pivoted and they became Instagram, they basically were like, Like, look, this other thing, bourbon, this idea of location-based check-ins, we're not doing that shit anymore. Locations suck. We used to say location means everything. Location now means nothing. It's photos with filters. Okay?

34:58And we may have a new app with a new name, and it's photos with filters. And they're like, but the old app had photos with filters in it. He's like, yeah, but the old app was about the old shit. And this is not about that anymore. This is now about this new thing. And that was very, very valuable advice that, I don't know, nobody else had ever told me. And I bet nobody else would ever tell me. And I'm saying it here on the pod because there's probably 100 people out there that need to pivot. And this was good advice. It really helped me. That's such a good metaphor too. That's a very sharp metaphor.

35:28Yeah, exactly. I needed to be punched in the face because like most founders, we ask for advice. And really what we're asking for is, can you please affirm the things I want? And anything you said that I don't want, even though it's important, I'm going to ignore to my own detriment. And then three years later, two years later, when it's all failed, I'll be like, huh, maybe there was some like wisdom in that. If only I had listened. And, uh, I thought it was really good that he just like punched me in the nose so that I couldn't ignore the advice. And most people that that's actually very generous.

36:00Most people won't put themselves out there to do that. Most people don't need it. It doesn't didn't help him. You know, I went to his house that changed my life. He never heard from me again. Right. Like I've never bumped into him again. And so, you know, I, I paid back nothing, uh, for that, but he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, kind of went out on a limb and was like, look, I'm going to be direct with you, bro. And I really appreciated directness because that's actually what I wanted. Do you think his new company is going to work?

36:22Well, it's his old company because it's 10 plus years old now, dude. Yeah. I mean, as much as I love the guy, it just seems like this idea has not come to fruition. You said Twilio, Asana, and ThredUp. Twilio delisted voluntarily. So now there's Asana and ThredUp. They have two companies listed on the exchange. So in terms of objectively, it's not working unless there's some other momentum. I know that for a long time, they really couldn't do anything. They needed the regulatory approvals. And that was a multi-year thing. So it does seem like they crossed that, but it doesn't seem like they have a lot of traction at the moment.

36:57I wish they did. I think it's a great idea. I wish they did too. I wish they did too. In the words of, what's his name? Gary Halpert, never has more money been lost than trying to convince the market what they should do versus what they want to do. Maybe long-termism is what you want the market, you think the market should do, and not necessarily what it wants to do. Maybe that's not what companies or investors want. I think when I was thinking about this, I'm like, how do you make this work? And I'm like, well, I think the biggest way to make it work, but this has to do with the SEC, is to get rid of quarterly earnings calls.

37:28I think quarterly earning calls should probably go away. I think that this is actually something that I think Trump proposed this, but many other people have proposed this. He's like, no audits. Never check anything.

37:43I think that's something he proposed, but I think earnings is ridiculous. Every three months is kind of crazy. But that's beyond, I think, long-term stock exchanges per view. I think that's some SEC bullshit. But anyway, I thought it was interesting. It doesn't sound like it's getting the traction that I wish it would get, but I still think it's intriguing. The coolest innovation in this space was actually from crypto. crypto basically yeah they had the token ftx no no no like like crypto tokens that it wasn't uh this they didn't clear this for regulatory wise but the idea was actually really good which is that a app should be able to issue tokens to the users or members of its community that are helping build it we've all been a part of things early on where without that user contributing without them being a part of it without them them actually participating whether it's airbnb or it's the drivers on Uber, like for them to not get anything or like, you know, Reddit, for example, Reddit after like 20 years was like, we're going public.

38:43We made billions of dollars. And the mods who, you know, have made this place what it is and who actually created these communities and run them. They're like, you, we're going to go, we're going to do the thing no company does. We're going to let you buy the stock at the, at the price 20 years later. When in reality, like the proper way to do this is what crypto was trying to do, which was let any app create an incentive mechanism that will reward early participation of people who bring value to the network. So that if the network actually becomes valuable, you, by being there and putting in work, that was like the equivalent of an investment.

39:14You were able to invest energy. If you do that, it actually gives you a chance to spin up new networks or new things. Now, of course, all these things have the other side of the coin, which is you might attract the wrong person, the person that's just there to get the early coins, right? It's like the worst customer is the one who's like the coupon clipper who's just there to just redeem their early thing and then quickly cash it out and bounce. And so there's all kinds of things you have to get right to make this work. But a lot of them are evangelists. Yeah, like the idea that you could allow your early adopters, early evangelists, and early contributors to own a piece of the upside in something I thought was a really good idea and a big step forward.

39:54That just simply doesn't exist in the traditional system today.

40:00Well, guys, when it comes to banking, the only time I feel truly happy is when I'm using Mercury. And that's today's sponsor for the show. That is the banking product I use for not one, not two, but actually eight of my businesses. I have eight Mercury accounts. I just went and counted. I use it for every one of my companies. It's an absolute no-brainer. Over 200 ,000 other fast-growing, ambitious companies use Mercury. It's one place you can go where not only you can, of course, have your money there, but you can send invoices. You can pay bills. You can create reimbursements for your team. Pretty much all of your financial needs can be housed under Mercury.

40:31And the product is beautiful to use. And the reason why is because it's a product that was not made by finance people. It was made by a founder, Ahmad. He's been on this podcast before. And he used tons of products as a startup founder. And this is the one that he wished he had. And I actually reached out to them to become a sponsor for this show because I'm such a big fan of it. So if you need a banking product for your startup, use Mercury. You will not regret it. It's amazing. For more information, check out Mercury.com. Mercury is a financial technology company, not a bank. Check show notes for details.

41:01All right. Well, that's my bit on stock exchanges. I'm going to be paying attention. I think this will make it to Eric. Eric, you got to reach out to Sean, man, and let him thank you face to face. What do you got? All right. This is my hustler of the week. So we got the blue collar side hustle. We got the Billy of the week. That's for the billionaire of the week. I don't know what we call this lady. she's the hustler of the week which is just somebody who's just making shit happen her name is Danielle Baskin which I thought was the same name as the Tiger King lady but maybe it's not here's her story I saw that this lady is doing a fruit swag company go to brandedfruit.com basically imagine you're a company and you're hosting some conference you're HubSpot hosting inbound and you want to have something cool something unique for like 10 ,000 attendees they got enough t-shirts how many koozies can one have oh great a pen how thoughtful of you and so what she does is she's like I got it put your name on fruit baby let's do a sales force avocado let's do a lift banana let's do a mailchip pineapple or whatever it is I guess it should have been a mailchip banana but basically she prints corporate names onto fruits and charges five bucks per fruit to the companies and companies pay for this for their conferences and she's made a bunch of money doing this.

42:27I think it's awesome. And what I liked about her was I looked her up and she's like this, like kind of this opinionated artist. And she's done a bunch of these random businesses. So she was like, bike helmets are ugly. So she painted her own bike helmet and then she kept getting stopped at places for her bike helmet. And so she's like, okay. And so she created a bike helmet company that just does like cool looking bike helmets. And then that was like her first business. And so she was doing that. She like made us she's like I don't know anything about tech but like she went on like I don't know Squarespace and then like got like a you know put Stripe on there or PayPal on there and started taking payments so that started to work then she's like all right where do I sell these helmets and so she bought a vintage tricycle that has a wagon attached to it like a three-wheeler with a wagon and she just piled up all the helmets into the wagon and made like a cool little stand and the people like yo I love your stand and she's like huh all right I'll start selling these stands and so now she sells the helmets and then she built the stand for the helmets and then And then people loved her stand so much that she started selling stands.

43:28I think the fruit thing started the same way. She was like, oh, yeah, just to be funny, I created this fruit thing. And then people were like, hey, can you do that for my brand? And it was just a great example of this awesome quote from the founder of Geek Squad. He said, marketing is the tax that you pay for an unremarkable product. And this lady has such a remarkable product. She just builds remarkable products, products worth remarking. on that she never does needs to do marketing. And she actually just spins up new businesses because she'll do, she'll make something for herself and then 10 people will talk about it.

44:02And she's like, okay, that's business. That's a thing. And she'll make it. She has another thing called mask alike, where you upload a picture of your face and it makes like a COVID mask, but the bottom half of your face on the mask and on her branded fruit website, she needs some, her copy's funky. She needs to move this part up. This is actually good. This should be the tagline. Go bananas. and it says how they work with local farms to source produce and they put these like stickers on the produce. It's pretty cool. This is pretty cool. If we do a MFM meetup, we need to have this at one of them.

44:36I don't know what our fruit would be, but like I'm a beet guy. I like beets. Big, big fan of beets. You eat beets? How do you eat a beet? Dude, I think I told you this. My buddy Sam Soley from college one day sent me a PowerPoint deck. He's like, oh, I was listening to the podcast. I haven't talked to this guy in years. And he's like, oh, I heard the podcast. You're talking about health. Here's my Beats presentation. I was like, what? And he just has this slide deck of all white slides, no design. And he just says, Beats. Want to have a longer life? Next slide. Beats. Want to have better sex? Next slide.

45:09Beats. Want to feel good every morning? Beats. And he's just like, everything you want is on the other side of just a few Beats. And he's like, you need to buy raw Beats. You need to put them in a smoothie. Here's my recipe. Beets are amazing for you. How do you eat them? I just blend them up in a smoothie. Like what's that mean? What part of blended up in a smoothie is unclear? That's incredibly unclear. Do you literally take a bunch of beets and put them in a smoothie and like you juice it? I make a smoothie and one of the ingredients is beets. Okay, that's what I was asking. You just said, but what you said was you just put beets in a blender and make it into something.

45:46So what do you put? What is your beet smoothie recipe? His recipe will be spinach, beets, water, I think like a splash of OJ. He puts like olive oil, salt. He puts like different stuff that I never put in smoothies, like olive oil. I never would have thought of hemp seeds. He makes like a killer, like super healthy smoothie. And I'll try to, I'll publish the recipe. I got to go find the exact recipe. I haven't done it in a couple of years, but for like a year and a half, I was all on the beets train. And now... Did it make you feel better? Yeah, it feels great. Well, mostly because his presentation was very convincing.

46:16And so I got placebo pretty hard there. But the hard part is that raw beats are the worst for cleanup. You have to peel them. And then everything is red. Your hands are pure red. The cutting board is red. Your whole kitchen is red. These things are just pure ink. And so that's the only reason I stopped was for a period of time. I was like, I'm just tired of having red hands for all day. So I need to figure out a way to do this. I need some gloves. is the answer. Dude, what a dork. I love this guy. Yeah, you made a face like it's gross, but this is everything you stand for in life. Doing weird, overkill stuff for health.

46:54I'm not that overkill, but beats are like... How long is that race you're running right now? How long is that race you're training for? A mile? Two miles? What are you doing? You're not that overkill, right? How long is it? About 50 of them. About 50 of them miles. Oh, okay. So like a marathon wasn't enough, you needed two. but you're not overkill for sure. Uh, all right. Well, congratulations to Danielle. How'd you find her? I honestly have no idea. Are we like the Chris, you're like the Christopher Columbus where it's like you discovered America. It did not exist before you, before you, it was, it was not a thing.

47:32You came across it. Now it is a thing. Uh, yeah. By the way, she, to me is like the female Peter levels in real life. So you know how he's like the indie hacker, just spins up cool-ass projects online, makes a bunch of money? I feel like she's the female real-life Peter Level. So that's how I think about her. I also have a couple of her ideas that she's had that she's been tinkering with. So Baskin has been tinkering with other applications for this idea. For example, what if companies sponsor produce that's at the store? So you can buy discounted fruits or vegetables if it came with the brand's logo on it.

48:05What if Taco Bell sponsors some tomatoes or avocados, for instance? And then you can think about the brand as you make your Super Bowl guacamole. These are the thoughts going through the mind of Daniel Baskin. Dude, she has a whole website full of crazy things. So she's done drone sweaters. Sweaters and clothing for cold drones. She's got the helmets thing. Oh my God. She has an escape room for your baby in your womb. Womb escape game is an escape room kit for newborns complete with a tiny we escaped sign for baby's first photos. She hosts funerals for expired domains. Oh my God. This woman is, she is something.

48:51She has touch base, collectible and rare trading cards of venture capitalists, including stats, a foil pack and a stick of gum. She has SF Sign Maker, a sign making company doing painted and printed signage for local businesses in New York and San Francisco. She's got the Trillo box, a phone mounted compatible with irregular handlebars for bike share companies. This is funny. She has a stained glass window for airplanes, a removable window decal that transforms your flight into a place of prayer. This woman is really good. Yeah, she's got some other ones. Founder Fitness Club, a service that will print your pitch deck onto a yoga mat.

49:29So if there's an investor at the yoga mat, at the yoga club, they will be attracted. Last Chance Tours. an immersive scanning service that will tour a place that's about to be demolished that you can later revisit in VR. She has Blue Check Homes, which is a satirical service that offers verified, like a Twitter verified, blue chest crest that goes on to your home if you're a public figure.

49:57She literally has more on here than we have time to say. Pretty impressive. She's awesome. Is this stuff making a living? Surely it is, right? You have 20 of them. Yeah, I'd like to believe that that's true. She must be doing well. You can't be this talented to not do well. Yeah, I'm a fan. Danielle, you're awesome. Is that it? Is that the pod? That's it. That's the pod. All right, that's the pod. Hold on. We had to come back on. Sam found Danielle Baskin's best one of all. It's called Moonlight, moonlight.world. What tagline did you just say, Shine? It's sass for witches. All those witches out there who've been needing a sass tool to let them do their tarot card readings, she made it, finally.

50:47Up for transformative social rituals. Experience interactive and deep, illuminating tarot card sessions right from your browser. Sass for witches. Beautiful. I'm all about it. Danielle, you're awesome. I feel like I can rule the world. But I know I could be what I want to. I put my all in it like my days off. On the road, less travel, never looking back.

51:12All right, this episode is brought to you by Mercury. They are the finance platform of choice for over 200 ,000 companies. Shouldn't be surprised because I use it myself for not one, not two. But I have eight different Mercury accounts. I have seven for different companies that I'm a part of. And then I have my own personal account because now they have personal banking, which is a really cool feature. I highly, highly recommend it. Like I said, I use it myself. And the reason why is because the way that Mercury works is beautiful. It's very intuitive. And you could tell that it's actually made by a startup founder.

51:39It's an entrepreneur. You could tell it's made by somebody who used other banking products in the past and didn't like all the different rough edges and annoyances and decided to actually fix it himself. And really, any type of entrepreneur you are, let's say you're an agency, well, one of the things every agency has to do is be able to send invoices, easily create them, send them to customers, and stay current on your balances with all your customers. Well, you can do that inside Mercury. And so I think that Mercury is great. Highly recommend you check it out. And thank you for sponsoring the show.

52:05For more information, check out Mercury.com. Mercury is a financial technology company, not a bank. Check show notes for details.