One Chart Businesses Guaranteed To Make +$1M From Day 1

0:00All right. This is part two of the episode with Jeremy Giffon. He is the first employee at Tiny. He was there from the beginning when they turned$5 million of equity into roughly$500 million of business value and took the company public just by buying businesses. So last time we asked him about those early days, about the first business they bought, the mistakes they made, the lessons they learned. This episode is different. Now we're asking him, if I was doing Tiny today, how would I do it? How can I do the same thing that they did? What businesses would I buy? What trends, what opportunities does he see?

0:28and he tells us the single best investment opportunity he sees today and why he's putting his money behind that. So this is a fascinating episode, part two with Jeremy Giffen. Enjoy.

0:46I want to ask you about opportunities. So what business opportunities, trends, or ideas do you have that people who are listening can kind of expand their scope, right? I remember when I was trying to be an entrepreneur, one of the big problems I had was I only thought the world was this big, tiny little circle. And I was only looking for opportunities inside my tiny circle. And it was only when I listened to podcasts. And I kind of wish MFM is a podcast I wish existed at the time. But it's like only when I would listen to certain people talk or hang out at a dinner, I would hear some idea that was not something I'd ever considered.

1:22So my circle got bigger and bigger and bigger. And then the more that circle got bigger, the more opportunities I saw. So if I told you, what are the juiciest opportunities that you see right now that somebody could do or that you think a smart person could go for? The second most interesting opportunity, i.e. what I'd be doing if I wasn't raising a fund to do these buyouts, it would be finding people with audiences and either buying businesses for them or building businesses for them. So I think that I think it's like a anomaly, like the business is in its toddler stage, that the way most people with audiences monetize is through ad reads or sponsorships.

1:59I think it's kind of like Hollywood when you you know, you're a big star, you'd get paid to hold up a glass of Coca Cola or something. And I think every person with an audience will eventually the money that they make from equity in a business that they own, will massively dwarf the money that they make from ad rates or sponsorship reads. But the big problem here is like, generally, if you're a great podcaster or content creator, the last thing you want to do is buy a business for one, like that's risking capital, that's hard, or even start and run a business. And so I think there's a big opportunity to basically build a business around someone with an audience and come to them and say, I will be the CEO of this thing.

2:38I think this is the perfect product for you guys to really organically use and like and talk about for a long time and i will run it and you know we'll split the equity or something like that um you know joe rogan did this on it and sold that company for for a lot of money and there's other examples doug de miro with his um cars and bids and the people are starting to do this but it's still very early and i think that like if i was just going to start a business de novo i would say okay what's who are content creators that i really like and what is the perfect product for them and then just like make it easy you know it's a pretty low risk proposition for you guys, for example.

3:16But if you do it right, even with an audience of your size, you can have nine-figure exits over four or five years. And that'll obviously dwarf all the money you make from advertising. If anyone wants to do this, Sean at SeanPurry.com, feel free to hit me up. By the way, this is how Tiny's doing this. Matina, which is the drink they're doing with Huberman. They bought a Yerba Mate company. He loves Mate and he's been drinking it for a long time. It's the perfect type of product. So they did that for him where if Huberman was like, and now I'm going to take a break from my science stuff to go become a searcher and go find a business, a PE deal to do like that'd be crazy for him.

3:53But Tiny doing it makes sense. They also did it with James Clear. They built the Habits app, right? So, you know, another app versus ad read type of thing. So I think they're executing on it well. This is also how Congo Brands built Prime. So they did Alani New and then they were like, okay, cool, we're going to do Prime. they went and pitched logan paul and ksi and they were like hey you guys are going to be the promotion engine of this you get equity um you know significant equity in this and we're going to be the operational back end for this and we know we know how to do this we can build a in their case what's probably going to be a 10 billion dollar plus company off of that that brand yeah it's it's definitely starting but i think and like the churning group has been very good at it with um you know they did doug namiro and um steven ronella with the the hunting stuff and it's definitely starting to happen but i think like a more you know this is a little bit exaggerated but i think most people in a yc batch could find a podcaster and just say okay you're going to be the audience co-founder for this thing and we're going to give you 30 or something and we're going to work with you and it's going to be a product that you can sell very organically um and because the broad thesis is that these audiences are still super underpriced basically um that the equity you're giving up is you'll be more than compensated for and i think that'll last for quite a long time.

5:09And the long tail is really good too, right? Like you could do it with a very niche YouTuber and still sell a more expensive product or do it multiple times or whatever. And I basically just think everyone with an audience will eventually have some really tightly integrated organic product to sell. Love it. All right, so that's a great opportunity, which is go find a content creator who's got like a great audience, high trust, and basically buy or build the perfect business for them and have them be your audience co-founder. I think that's a, it's basically a really unfair distribution advantage you could generate for yourself by doing that.

5:42All right. Love that. What's another one? One other trend that I'm just really bullish on is basically the idea that everything in the modern world is like poison and toxic. I live in New York. Like the air is making me dumber. The water is like ruining my hormones. All the food that I eat at any restaurant is like full of seed oils. And you know, everything that I eat is like some combination of soy, corn, and wheat. and the wheat is all sprayed and glyphosate. Like, just everything is really bad for you. But it's like this huge, and I'm kind of a freak about it. Like, I have water filters and air filters and buy all this specific food and stuff.

6:17But it's really mentally taxing. And I really wish, I think you could even just take the form of like the wire cutter, but for, you know, these are products that are not going to kill you. And the thing is, it's such a nefarious problem that like it runs the gamut. It's like clothes that isn't made out of polyester, bedding that isn't bad for you cleaning products like you could do every single thing in the house i would love to have a wire cutter kind of thing which is a great business for just like this is the version of this thing that is not going to kill you um dude check this out so uh go to live oasis.com i found this website the other day uh my co-workers sent it to me and it's uh they say uh do you know what's in your water 90 of the water sources contain toxins microplastics and other contaminants and then they rank which water as in uh the cities but also which water bottles have oh yeah water the water brand i see one that i used to have uh it's very bad it says out of 100 it's a very bad penny well that's the thing right even you try you think you've done it and then it turns out the thing you bought doesn't even work like it's very complicated well i and i go to this and like i'm scared because i also see the thing that i have and it says bad and then you click it and they make you pay five dollars and this is uh definitely a thing that i purchased recently i'm like fuck i gotta see which water bottle like you click one it's like sad yeah horrible i just want like okay like i need a shampoo what is the one that like huberman and atia and ronda patrick all agree on and i'll just buy that one you know yeah um and i can i think that can exist for almost every single thing in your house ask sean why he's drinking that water i know why yeah we hosted this event this camp mfm event and it's we do it at mr b's house we're in like remote north carolina somewhere and we all show up and this billionaire shows up he's got like you know his security guard with him or whatever and i'll just fast it up like oh how does this guy travel he flew in private he's got a security guard but then the thing that really stood out was he's a security guard carries this case of waters so we had fiji bottles of water which was like it's in a plastic and you probably got that because you thought you're being fancy you wanted to make a good impression he'd be so impressed with my choice here a fiji like i went i went for it and instead he's got his own like aquapana glass bottles and he was just he'd always be drinking he didn't say anything but i was like hey what are you doing that except except he made the noise whenever you when he's when he saw you drinking out of that i switched to aquapana for my drinking water for my family i bought an afina showerhead filter so because the other thing is like oh you're drinking one thing but then you'll go shower bathe your naked body in tap and like the dirtiest tap water with like a 30 year old you know showerhead in my house and so if afina.com uh i bought the showerhead from there this like filters that water and so i'm just like one by one replacing different parts of my my house to try to try to get rid of some of the the bad stuff yeah the traveling with a crate of mineral water that's a that's a good that's a good way to spend money i like that all right so two good ones i I like the wire cutter for products that don't kill you, by the way.

9:27It's just wire cutter is kind of like value-based. And in this case, it's health-based. And I think that's just such a simple model that somebody could do. It's probably like 10 years of awesome execution and real love and care. Only the right person should start this business. It's not like anybody can do it. But I do wish somebody did it. I mean, Examine did it really well for supplements. It certainly can be done. It's just... I would use it every day. Let's do a couple more trends and opportunities. you had talked I asked you a question when we were hanging out yesterday which was what are what's a business type that you really love maybe you guys didn't even make an acquisition in the space but like what are categories that you really loved and you mentioned I don't know like a regulation compliance type of category can you explain that one yeah for sure so like anytime a government anywhere introduces some kind of arcane rule you have to follow you if you don't fall you go to jail so it's like the ultimate kind of motivation to buy right and uh sometimes it can be really difficult so you know we looked at a bunch of examples one one was um there's this great company a software company in italy that just did banking regulation for all make sure all the banks are compliant with all these things and that's like an amazing business because first of all you're going long italian regulation which is probably a great trade in and of itself but like in the future, Italy is going to have more rules than it does today.

10:48And then aside from that, it's like a bank is not going to rip that out ever. And it's, you know, it hits that golden criteria, which is it's relatively cheap, but mission critical. That's like a really great one. And there's a bunch of these, there's all these, you know, for buying a house for, for vetting tenants for KYC and AML. If you start looking for it day to day, you see it a lot, Like I just rented a car and there's like a process there where they check my license against some database. And I'm sure that's a piece of software. Like those are great because I love it because it's like a low lift and the downside is super high and you don't really want to mess with it once you've got it working.

11:29And the other interesting thing about them is that exists for every country, at least every Western country. And so you can go find the software that does that for, you know, Europe or one specific country or whatever. and there's going to be multiple versions of those. Even Canada, like Canada has different rules than America and so either it's two different software products or two different companies. So I love those businesses as well and they're also fairly AI resilient, I think, because it's really, again, it's like medical stuff. It's really high downside so you don't want to trust it with AI and then it turns out you weren't in compliance and you're going to get a huge fine or go to prison or something.

12:06Yeah, I made a bet recently in the regulatory compliance type of space. And I was like, we have this thing on the pod that we talk about one chart businesses, which is like a business that you don't need a full business plan for. You can just put one chart up on the screen and you say, that's why I'm doing this. And the one in this case was basically that regulation only goes in one direction. It only goes up into the right. Nobody ever rolls back any of these needs. It's only going to increase. And so if you can become maybe the go-to provider or like a key piece of software in a space, Like that is, it is just such a bet, such a bet you want to make because you know that regulation only goes up.

12:45You know that like this compliance, compliance requirements, they don't just say, yeah, you know what? Forget them. We don't need all that compliance stuff anymore. Like this is never going to happen. It's only going to go in one direction. And like you said, you do it or you don't get customers or you get, you go to jail. It's like, well, that's a pretty strong motivator. So like, you know, I think people are going to want to either get customers or avoid jail. and it's just like the right type of space to be. And it's the type of space that 24-year-old me would not have known or appreciated that that's a better business to go into than what I was doing at that time, which was like dating apps, social network, like cool, new, sexy thing.

13:21And now I'm like, it's kind of like what's sexy now is like a knee-length skirt. It's like, show me a compliance business and I'll show you my interests. The other big opportunity for someone who's wanting to start a business is like you can front run these things, right? You can see what's going to pass. You can see what's just passed. And you can be the first provider for that and have a huge leg up, especially if it's a fairly niche thing. You could very well be the only option for a couple of years, which is a huge advantage. Why don't you start these things instead of just investing in them?

13:52I don't like operating businesses. I don't think I'm very good at it. And it's not what I enjoy doing. And so I think everyone should try and do like really stay in their zone of genius as much as they can. And I think that it's like personally very good and also good for the world if that happens. And so I'd rather like be allocate capital to the because I think I'm good at allocating capital to the person who maybe needs capital and is really excited about building something. All right. Two more things on here. The first, I actually don't have context on this, but I'm very interested just because the title, the boy versus the guy.

14:25Yeah. So the boy versus the guy. So it could go a bunch of ways. It could go a bunch of ways. Yeah, and there are a lot of different readings, especially depending on what coast you're on. Yeah, basically, it's the idea of being a lieutenant or being a protege, effectively, would be the classier way to say it, I guess. And so, generally, there's the trusted lieutenant who is just the solid number two, really important. but their whole identity is being like a lieutenant to the number one person and then there's this other genre which is like um on the west coast it takes shape as a chief of staff a lot um where it's just you're kind of this like you're this young rising superstar there's this sense of like you're really gunning for number one um and and the idea like the the what made me notice this originally was, especially in the Valley, every like billionaire has one or two really young, smart boys generally who just kind of like float around them.

15:35And there's this kind of task agreement of like, you come work for me for two or three years, you shadow me, you're my apprentice. And then I will back you and like open doors for you. And it was kind of funny, like at some point, you know, I was in like social situations where it's like, oh, like, it's kind of like flying under the flag of a Lord or something like everyone is, you know, everyone is like, you know, going on the private jets of these principles or whatever. And they themselves are probably broke, but like they very much live this lifestyle because they're like under the protection of a Lord.

16:05And so I think it's like, there's another, a new kind of piece of information that I've figured out about this is it's also an age gap thing. So if you're within 20 years of the founder or the number one person in the organization, you're almost always going to be a guy. And if you think of like all the great firms or even, you know, companies where someone has become the new number one, there's almost always at least a 20 year gap between the person just because otherwise you're too close. And so I think that dictates it a lot as well. But it's these two different things. The other way to put it would be that like the principal really sees something in this young person and wants to, you know, can tell they're like on a rocket ship, they're not going to be an employee forever or whatever.

16:49But it's like, you give me two or three years, and I can really accelerate things for you. And I think like that pairs very nicely with the cold email thing, which is, you know, I generally think like, if you want to start a company, you should just start a company, don't go like work somewhere to get experience or whatever. But I think this might be the sole exception, which it can really open doors of either investment or vouching or connections or whatever. And you know, there's lots of examples of this. I know Ben Casanocha wrote very publicly about being Reid Hoffman's chief of staff. Blake Masters with Peter Thiel.

17:24Sam Altman was this to Paul Graham. There's all these examples of it that I think are really instructive. I just recorded an episode with Joe Lonsdale, who was this for Peter Thiel. He was basically Peter Thiel's protege and now has started, I don't know, more billion dollar companies than anyone else in the country. And I think he's a fascinating guy because when he was 18, 19, 20, he was an intern at PayPal. Then he was at Peter's family office. Then he started Palantir with him and then eventually went on to do his own thing. And Joe's done this for a bunch of people. One of my close friends was one of his chief of staffs and it's an amazing launching pad.

18:01And if anyone out there, I'm looking for a boy. Never thought I'd say that. But under this context, I am sure enough looking for a young boy. We need to start a community. We'll call it We Dem Boys. I don't know if you know this, but I've had four people who are kind of in this bucket. I hired them when they're, let's say, between the ages of 16 to 20. And that have gone on to either become, you know, that have gone on to become millionaires. and in some cases millionaires and like successful content creator, podcaster type of folks as well. And it's happened four times already. So I'm looking for my fifth.

18:36Yeah, I think apprenticing is really underrated. You know, you think about it in the context of being like a blacksmith or a carpenter or something. But I think for a lot of these things, it's the single best way to learn. Hey, I've got a question. I noticed that you studied, do you study philosophy at Columbia? Yeah. So I remembered as a kid, I saw this crazy stat that I think it was the majority of people who scored really high on, not the bar, but the test to get into law school. They actually, most of them, the LSAT, most of them were, they studied philosophy. That was their undergraduate degree.

19:09And then I saw you studied philosophy. And that's kind of an interesting way to go because now you're raising this massive 100 million plus fund. What did you learn in philosophy that you think is going to help you make a good business person? Yeah, I don't know. It's a big club. Leave it to a philosophy major to know every philosophy major, but there's tons of names, you know, Reid Hoffman, Peter Thiel, Peter Fenton, Stuart Butterfield. It's like this weirdly overrepresented thing. My favorite stat about philosophy majors is that it's something like in the top 10 % of earners, they're the highest earning of all people.

19:46So if you take the top 10 % of every major, they're the highest earning. In general, they're not the highest earning, but like there's that kind of like group at the far end. I don't know exactly what it is. I mean, I can speak to my own experience. I think it's just like, if you're gonna spend four years thinking about a set of questions, thinking about the most fundamental questions is just really appealing. That's certainly what it was to me. I don't think I really learned anything that's super, it's funny, like, you know, I'm Canadian, I had to get a visa to be in America. and a big thing with visas is like, is what you studied relevant to what you're working on?

20:29And, you know, the answer for philosophy as far as the US government is concerned is no, it's not relevant to anything. But I'm always like, well, no, it's relevant to everything. It's like, how should I live? What should I, you know, what should I hope for? What can I know? These are relevant to every field. And I think maybe the other way, maybe the other cut at it is it's just like being interested in the most fundamental and the most abstract versus like learning uh you know something more applied it's something about that just kind of draws these very kind of curious uh i i guess like intellectual and i don't really mean that in a complimentary way just like people who think like to think a lot um but there's also a big difference between people who study philosophy in undergrad and then move on and people who study philosophy for their whole lives like those people are really people who just like they thought they think like you know what i actually want to think about like what is a good way to live for the rest of my life and I think that's a little crazy, right?

21:20Like at some point you want to go, okay, I've like explored this. Now it's time to go, go move on. I wanted to ask you about hold codes, which seem to be the new trend or people buying businesses. I think a lot of them take inspiration from Tiny and what you guys did. What's your take on the hold code trend or influencers out there who are like, I own 500 businesses. What's your take on all that? Bragging about how many businesses you own is really weird and probably like a contra-signaled how good you are. And by the way, anyone who owns a lot of businesses will and should tell you that. I know Andrew would certainly, if he could have tiny one business, that would be much better.

22:00And so it's always a weird thing to say, oh, I've acquired 100 businesses or whatever. I guess unless you're a constellation or a shore capital or something where the whole point of it is that you buy a million businesses. Because yeah, it's always better if you could have the results from one company that would be way better than than having to own a bunch of them and that leads to the point about holding companies which is the thing that people don't understand about holding companies there's two like there's two real reasons why you would start a holding company versus a fund or some other structure one is because you want to hold everything forever and i think that's a fairly faulty premise so usually when people think because so people look at generally they're looking at two places when they think about the merits of holding everything forever they look at buffett or they look at venture capitalists um you know you don't want to be the person who sold google at the ipo or whatever and and and buffett famously owns everything although that's like not actually true buffett sells stuff all the time um to your point sam about him being a little bit different than his public persona um but like okay so both of those groups buffett is talking about railroads and insurance companies and energy companies.

23:06These are companies that ostensibly will exist for 50 or 100 years. And venture capitalists, even more than that, they are looking specifically to find the one in 1000 company that will be a 50 year company. But most companies are not 50 year companies, especially not$5 million software companies, you know, like, it's kind of crazy to buy a Chrome plugin and say, like, yeah, I need to own this thing for 40 years. It's like, no, is first of all like software is really difficult my kids will inherit this chrome plugin yeah you're not buying one of two railroads in canada you know like you're buying the chrome plugin and so um first of all just thinking like oh i need to hold this forever i think is a bit flawed and then second of all if you get the chance to sell it for a great price like that is probably the way that you maximize returns um if you're actually interested in just making the most money.

23:56And so that's one thing with holding companies. The other is that I think when the more investor-y type start them, they really don't appreciate a holding company is, part of it is your holdings. The other half is a company. You just run a big operating business. Tiny has, I can't remember, it's like north of 1 ,200 employees across the portfolio. That's a big business that you're running. And for most investors, that is a completely conscious skill. If you're a good investor, the last thing you should be doing, when you meet a great investor, you're not thinking, oh, you'd be great as the CEO of a 1 ,200 person company.

24:31Generally, those are very far apart. And so what can end up happening is you spend a ton of your time actually just operating a business and you're not able to invest, which is the thing that you're probably the best at. And so yeah, in general, I think they're quite overrated. And you also actually said you're like, most Harvard guys who are trying to buy a plumbing business, they shouldn't buy a plumbing business. They just go and start a plumbing business. Yeah, this one always cracks me up. It's like your resume is Harvard, Goldman Sachs, Harvard Business School, Bridgewater, and then it's like Ohio Plumbing Company.

25:02And I always think like, I get it. The math works. It can be lucrative, whatever. But I always think like, imagine if you're this brilliant young person, if you had just moved to Ohio when you were 18 and started a plumbing company, you probably control all the plumbing in the state. You know what I mean? Like you just wipe the floor with them. And it's always weird that people want to go through all these loops. I think a lot of it is just to make themselves feel very fancy. Like, oh, you know, I set up this deal and it's acquisition, these investors and stuff. But a lot of these businesses, I think if you just started them, you could really wipe the floor with the existing competition.

25:38You have one more thing that you're known for, which is something like the pre and post fall. I don't know what this is. Can you explain this? Somebody texted me this. They go, oh you got to ask about pre and post fall so i define fall it's like a pseudo biblical idea but i really define it as like a period in your life where you've really been brought to your knees by whatever it could be a death or a breakup or you know a health scare or or bankruptcy or all these kinds of things that like really just kind of humble you um truly not like how most people say humbled which is like oh i just got on the cover of forbes i'm so humble it's like no yeah It's actually the exact opposite.

26:15But truly, truly humbled. And I really think that that changes someone for the rest of their life. And I think it happens to everyone. I think it happens totally at random times. It could be early in life. It could be late in life. But you can just kind of see it. The extreme example of this would be a veteran who's been in a lot of combat. Nothing is really going to shake someone who's been in a bunch of firefights. you know and um and i think that applies too is if you've been through really hard really dark experiences i think a lot of entrepreneurs they have their fall while they're building their business you know it can get really difficult and hard and lonely and um yeah the best way to describe it is like after someone someone's post fall you can just kind of see it in their eyes that they've been through worse and so they're not gonna it's just not gonna shake them that much versus somebody's pre-fall and by the way you can become very successful you can be late in life but nothing bad has ever really happened to you.

27:12And I view that as kind of a liability in some sense of if you're going to partner or work with them of like, boy, like when something goes off the rails here, this might be a really big blow up. Cause of course, like, you know, if you're a broke kid, it's one thing, but if you like a high flying person, the way in which you can blow up is far more spectacular. And, um, and yeah, it's really just like, have you really been humbled by life in like a true way? And, uh, and I think when you look at it that way, it's quite evident that people either have or haven't. And I think it makes a big difference.

27:43Do you want to talk about the special situations, distressed venture stuff, or do you want to save that? Yeah, we can talk about that. Okay, tell us, what is the opportunity here? Yeah, so the opportunity is, this really combines a lot of the factors that I love, which is effectively there's this whole class of venture-backed companies where they raise too much money. especially in 2021. And so you get this like strange phenomenon where you can have a business that's doing$10 million a year of revenue and growing 30 % a year, but maybe it raised$40 or$50 million and such that like the founder is probably not going to make any money because the pref stack is so high.

28:27And then the other part is the investor is really not going to make any money, not in the sense that they want to. So a venture investor, they want a good investment to return the fund. generally. And so it's like this weird thing where you have this great asset, you know, if, if, if you guys owned a business that was doing 10 million of revenue growing 30 % a year, you'd be very happy with that. But if it's owned by a venture investor and run by a founder, who's got this pref stack, the founder is not gonna make any money, the venture investor doesn't really care about it. So it's kind of this, like, in some sense, it's actually a worthless asset.

28:59And so, you know, we've done these deals at tiny before. And, and what I'm really interested in is doing a lot more of them personally. And so I've been talking to a lot of founders and talking to a lot of GPs about this. And there's just this huge opportunity. And the opportunity is really to take a business that's because of its cap table, it's just broken, it's not working for anyone, and turn it into a business that works. So like, say the founder owns 10 % and, you know, the prep stack is 50 million, turn it into a business where they own 30 % and they can run it profitably. And it can be like a great business.