Billy McFarland on Fyre Fest fraud, failure, hacking, & the long road back | E1730

0:00welcome back to this week in startups everybody a little bit of a controversial guest here and some of you might agree about me having billy mcfarland a fire festival on the program some of you might be upset hey why not give this slot to a founder who is not a convicted felon i understand both arguments i'm taking a little bit of a risk here having billy on the program but he reached out to me and i think there's some lessons to be learned and having watched some of billy's interviews and social media. I think he's in honest reflection mode. So I thought I would take the chance and have the notorious Billy McFarland on the program, who is, of course, the co-founder of the Fyre Fest.

0:45This Week in Startups is brought to you by Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. Twist listeners can get$1 ,000 off for a limited time at vanta.com slash twist. Pilot, grow your business sustainably and operate more effectively. Pilot provides the most reliable accounting, CFO, and tax services for startups and small businesses. Head to pilot.com slash twist and get 20 % off the first six months. Hyperice, warm up and recover faster with the hypervolt 2 massage gun and normatec compression therapy boots save 50 off your order of 150 or more with code twist 50 at checkout at hyperice.com then as i said convicted felon billy when you hear me describe you as such what goes through your mind now that you have this moniker so what people have been trying yeah people have been trying to get at me emotionally over the past handful of months they refer to me as inmate mcfarland so i think at this point like i've been through everything and heard everything and it's like just think it reminds me of the mountain that i had to climb to just get back to being above water and that means so many things that it just could be a really long journey ahead you've been an entrepreneur you've been attracted to being an entrepreneur pretty much your whole life i was aware of you before fire festival but let's go right to fire festival and your reflections on what happened because i think people would be curious uh after that debacle disaster just knowing from your perspective what went wrong ultimately and then what have you learned from that you were convicted of wire fraud you got a six year sentence i believe just broad strokes you served some number of years uh four i think yes uh so broad strokes um you look back on it do you feel like you deserve the sentence and i guess it's a pretty good starting point and then what what did you get wrong about this whole um enterprise known as the fire festival yeah so it certainly deserved my sentence and i think that a lot of entrepreneurs listening can probably understand this thought process where you feel, especially with your first or second venture funding startup, where you feel that the way you view the world is solely to determine based on the success of your company at that point.

3:25And I had an inability to zoom out and realize that fire was just not the most important thing going on in the world. And if I failed, honestly, most people would have been okay with that. And I wrongly assumed that everybody cared as much as I did. And then I equated caring to this do what it takes at all cost attitude and that's totally wrong so there's just this mentality where your your startup at an early stage is not going to ruin the lives of a lot of people if you fail honestly and i just like wish i could have understood that and how did you come to this understanding uh because i think the public perception is you know you were i guess there's multiple public perceptions so let's try here to get to reality did the crimes you committed did were they uh ones where you found yourself committing bending the rules then breaking the rules then covering up you know a series of uh you know lies as sometimes people think maybe elizabeth holmes uh at theranos got into in other words you know you didn't start out and intend for fire festival to be a giant fraud you didn't intend to commit wire fraud you didn't intend for people to get bilked out of their money it was a sort of series of smaller lies that built on them or did you go to therapy or you know have uh some counseling when you were in prison and come to the conclusion like wow i i was sociopathic and i really need to work on myself as an individual how did you come to the conclusion that you just stated that's a great question and And in the four years I served in jail, I served 10 months in solitary confinement.

5:14And there was a point in that 10 months where it's like, what am I actually most sorry about? And when you're all alone after a month or two, you just can't lie to yourself anymore. I just thought back to all the critical decisions. And at the point where I started lying, the investors at that time were mostly venture funds, mostly seasoned investors. and whatever fire was, was a very small percentage of their portfolio. When I started lying, I brought more investors in, people maybe not as professional, people maybe who didn't understand their risks, people who maybe invested because of the lies.

5:49Then I realized when everything failed, the professional investors who were there when I started lying, their biggest loss was not the money. Their biggest loss was the trust that I violated. A number of them had been backing me for five or six years at this point. And I think that hurt them more than one of their 50 portfolio companies had failed. It's like, wow, how could I have led to believe that this is a good person? How could I have had dinner with him 20 times? How could he be playing with my children for so many years and then me? And so when I was alone and realized if I had just failed honestly and didn't bring in the non-professional investors and failed honestly, meaning these professionals lost their money, they probably would have been okay with that.

6:32had it gone honestly. And that was like a really weird awakening for me, which is like, wow, it was okay to fail. And it wasn't the money. It was the honesty and the trust that I abused. And that makes me sickest today. And sure, I am fully motivated to pay everybody back, but I feel like I will finally be able to look them in the eyes when I pay back the trust, which is, I think in my opinion, at this point, way harder than the money. What was your childhood like? I guess when people behave this way, when you see a crime, at this scale when you see trust broken at this scale people say hey what's the origin of this and you are an undeniably charismatic individual you're an incredible communicator so you happen to have the skill that people look for in a leader you're charismatic you communicate well and you swing for the fences so as an angel investor and as a seed investor i'm looking for people who are charismatic and can get people behind a crazy vision who can think big and who want to take risk so you check off in an investor's mind a lot of boxes and i think you know that were you always this charismatic were you the class president the class clown you know star athlete take me back to your childhood where'd you grow up and when did you first realize that you had uh some super power around charisma and communication so i've been asked by like every prison related therapist over the years how to answer this question and i'm actually like thinking of a different answer now that i probably haven't been able to answer before um i started programming super young and like i am by no means an all-star programmer at this point but i was good enough as like an 11 12 and 13 year old in the early days of cable internet to bring you know an early teenager's idea to reality and i kept feeling like these websites I was building and, you know, selling to a certain level, making a couple of dollars to a certain level, I kept feeling like I was breaking the rules because I wasn't focused on school.

8:32I was focused on programming. And in order to justify breaking the rules to everybody around me, whether that was family or friends or school administrators, I felt like I couldn't show any kinks in the armor and everything had to be perfect. And obviously that was a small scale and we're dealing with small dollar amounts and like small risks from some, you know, social media website from my middle school bedroom. But I think for the first time, like literally right now, I'm kind of realizing that since I was always kind of breaking the rules, and even though it was harmless in a certain way, I felt like when the stakes were higher and I had a venture funded startup and I had a hundred in place that I was afraid to show weakness.

9:11And therefore, when things weren't perfect, I felt like I had to lie to keep up the mirage, things were perfect. and like looking now i think a seasoned investor would realize that no startup is like this right you're going through like circles of hell yeah and the fact that i was too naive to admit that it was just like crazy and silly and so in your youth people rewarded you for being technically able to manifest things in the world uh at that period of time you're you're in your 30s you were born in 1991 1991 yep so you're a millennial you you get rewarded early in your teens uh for being a programmer being able to be an entrepreneur people are patting you on the head maybe or kind of excited to hear about your exploits but you know inside you realize hey i'm this maybe isn't that big of a deal but maybe you start getting a little obsessive about the the image you have as this entrepreneur and you want to keep that up you want to keep up this image that you are a great entrepreneur?

10:14I think there were two sides to the equation. There was like, socially, I was 100 % reaping those benefits where I was trying to live the rewards of being a successful young entrepreneur. And the other side, there was family and school who was like, you should not be running a business. You're 13, you're 15, you're 18. You should be in high school. You should be in college. You should be focusing. Got it. So I wanted to prove to the naysayers that I was a successful entrepreneur. and to the people who believed I was a successful entrepreneur, I certainly was basking in that image at that point.

10:43Were your parents entrepreneurs or one of your parents entrepreneur? A little bit. Just like grew up in a regular family in the suburbs of New York City. Whereabouts? They were not. A small town called Short Hills. It's like 40 minutes west of Manhattan. Yeah, the Short Hills Mall. Very famous. Yeah, right there. That's New Jersey. New Jersey, yes. Short Hills, yeah. No, I'm from Brooklyn. So New Jersey is like the six bar up. uh so and what did your parents do if i may ask uh they're real they're in real estate so just like small real estate stuff in new jersey got it so they flipped houses or developed stuff or uh brokers developers in new jersey yeah got it and so uh you got to see some entrepreneurship up close and personal from them uh and and that led you to want to be entrepreneurial i feel like i was really lucky or unlucky to get a computer when i turned like 10 years old and i I think we just got high speed internet in our house and there were just like no safeguards online at this point.

11:42So this is like late, you know, late 1999, early 2000, right around then. And cable internet was coming to your average like suburban household. And I just kind of got lost in this world where I can interact with adults and no one knows I'm 10 or 11 or 12. And I can start making decisions and like see how these decisions actualize themselves in something tangible. so i think it was like this like playground for a young kid to live beyond his years from an early age i had a similar i had a similar experience in 1982 83 when my dad bought me an ibm pc jr and i had a dial-up modem and you do get this sense that you're part of a world that other people don't get to see and then entrepreneurship you become aware of this concept of entrepreneurship or technology entrepreneurship and venture capital all right founders if you're a sass or services company that stores customer data in the cloud you need to be sock to compliant from third parties in order to close big deals and you need to use vanta if you want to do this quickly and easily vanta makes it so easy for you to get and renew your sock to on average vanta customers are sock to compliant in just two to four weeks compare that to three to five months without vanta well they partner with over two dozen audit firms, and they have been trained to file those SOC 2 reports directly within Vanta.

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13:46so well you you had a company before um what was the spling or something so spling so yeah one one quick story for you i just graduated high school and this is i think i just signed up for twitter so this is like late 2010 i wouldn't say may or june of 2010 and i became a fan of yours then so this is 13 years ago wow and uh you were competing in the world series of poker and i I was like obsessed with trying to learn how to play poker. And I think I PayPal'd you like$150 to try to get some action 13 years ago. Yeah, I'd offer people if they wanted to be part of, and I was trying to remember how we had crossed paths, but I'd let people if they wanted to free roll, be part of like my buy-in.

14:28So that was fun times. Yeah, so that was 13 years ago. Now you bought me a mic, so thank you. There you go. Well, yeah, anybody who's on the podcast. It pays off. Yeah. Yeah, one of the big payoffs of coming on the, as we send people a professional mic, because we want everybody to not miss a word. I've always thought solitary confinement was cruel and unusual punishment. Describe for the audience what solitary was like on a day-to-day basis. When do you wake up? When do you see humans? And what was that first night like in prison? People always talk about in the movies, like people crying for their mom, or just maybe some people kill themselves.

15:04It's supposedly super intense. You had some time to prepare for this. drawn out trial, all this stuff. Take us to day one and then those 10 months in solitary. So you're basically in a long concrete hallway behind a metal door and there's maybe a half an inch slit on the bottom of the door. And that's how you communicate with other people. You can't really see them, but you can kind of scream through. If you get on all fours, you can scream through the door to communicate with others. And I think what scared me was seeing people who by all appearances were tough individuals and maybe they're like leaders of a gang they had like the intangible traits that would make them you know self-sufficient human beings but after a certain period of time seeing them totally break down and go from tough leader to primal child whether it's the screams or the cries and as you kind of think about that that led to this idea where there is a certain period of time where if you were here for that long and you passed your breaking point, you were just done and there's no coming back.

16:10And you just kept internalizing like, hey, have I crossed that point yet? Like, has it been too much? Am I going to be able to come back from this? And that was kind of like the nagging fear. So you had a fear that this would break you as a human? Yes. And I'm like, oh, this guy who I saw in the prison yard leading a hundred men who is super tough is now in the fetal position crying for his family and crying for this like if if that could happen to him and he's way tougher than me like it can happen to me too and like when's it going to happen and that was just so scary why did they have you in solitary were they concerned for your safety or did you opt for that i i kept trying to be an entrepreneur in prison and that was arguably as bad as my crimes um i tried doing a podcast over the payphone and that did not go well so it was for punishment so it was punishment yes because even when you were in prison you kept making bad choices yes correct yeah and so at some point these bad choices got you in solitary yes and then you talk to some therapist or something or counselors there and you finally start to have some self-awareness or breakthroughs i think you just kind of learn the the real purpose right and when you're stripped i think for me when i was stripped of everything i'm like what's important and i had a couple of friends who really stuck with me and the letters i would get from them whether it was every seven days or every 10 days that allowed me to survive 10 months and i got out it's like the most valuable thing i've ever had wasn't an experience it wasn't a dollar figure it was these handful of relationships i had and if i hadn't lied i would have had so many more of those and they would have been so much deeper and so much more impactful like that kind of helped me reevaluate like what actually mattered what was the original idea of fire festival when did you have this inspiration to do a music festival because we remember seeing this marketing video and getting the influencers and so it does not seem like an unreasonable idea for uh you to want to do a music festival there's plenty of successful ones out there um doesn't seem like a crazy idea to do it on an island necessarily i mean there's no facilities as somebody who produces a sure sure yeah kind of important to have like bathrooms and water and electricity but putting all that aside you decide you're going to do something that is comparable to burning man but with the aesthetic of maybe coachella or some vip club doesn't sound crazy to me you pitch this idea to your board of directors at the time or to investors and they thought yeah why not so maybe take us to the origin story yeah so i had a company at the time called magnesis and i was trying to build a more relevant credit card for young people who live in cities and what that meant was access and experiences that were outside of your typical day-to-day life and i had a number of thousands of members at this point and as a way to get back to them i started booking music artists to do private concerts for my magnesis card holders i had booked you know upwards of a couple of dozen music artists and realized like how bad and awkward that process was there are so many middlemen and people who claim to be managers or agents and promised a fee at the end of the day it was all smoke and mirrors it was totally opaque and you would pay somebody who'd pay three people and then the artist would get a fraction of the money and i was with one of the artists i booked and basically said to him like hey man why did it take so long for you to accept this he's like what do you mean like i said yes right away like how much did they pay you and the dollar amount he got paid was you know maybe a third of what i had paid interesting we started talking and forming a relationship and like this makes no sense what if we just make an app where you know every idiot with 10 grand like me could contact every artist in the country and make them an offer and the artist can quickly scroll through every morning and say yes no yes no so fire started cameo for personal appearances correct so fire another great idea honestly like you pitching me that idea i'm like reasonable idea yeah it's disruptive uh i could artist benefit the audience benefits and it's not going to be that hard to make and you're charismatic so seems like you're the person to build it uh and so did you wind up building that app and then how did this become fire festival built the app and then literally a couple weeks after launching the app i had been taking my 90s customers to the bahamas for a number of years.

20:34I just kind of love the outer island ventures and the ocean, scuba diving, and things like that. So I had to bring a small number of customers there in a manageable scale for years and started bringing the talent that we were assigning to FIRE on these trips as a way to basically ingratiate them within our app. And on one of those trips, I had a high school buddy who said, you should totally do a music festival here for all your Magnesis cardholders. And FIRE was born. And I think we just got really lucky or unlucky that we hit an island music festival at the right time where Coachella had proved itself as a business to investors.

21:07However, the influencer attendees were looking for something new. So we piqued both the interest of the influencers who could sell tickets, as well as the investors who were intrigued by missing out on backing Coachella a number of years prior. At this point, were you involved in any criminal activity or doing anything that was, let's just say bending the rules in a way with this uh magnesis card we were already starting to you know cut corners let's say to be generous it started happening very quickly after the festival got announced and i think like deep down i knew that i didn't have enough money to actually execute this festival so subconsciously i started trying to pull money from wherever it was and i I started over-exaggerating the number of customers Magnesis had.

21:55I over-exaggerated how much backing fire had or what her revenue was. And it was this whirlwind period of four to six months where I felt like my entire existence was based on the success of fire in the fire festival. And for lack of better terms, I was lost in the sauce of the entertainment world as well, too, where I had the who's who coming to the island every other weekend and felt that it'd keep upping those experiences. is and it just like totally lost you know sight of reality and lost my ethics more importantly you got high on your own supply yep you you you realized hey this i mean when that video came out it took over it went viral it took over the entire i saw it and i was like maybe i want to go to that looks pretty good an island music wow sounds like a great party i like a good party uh so you did capture the world's attention you did have all these influencers who you paid to promote it and you had artists so you got you got a little excited but then you knew you couldn't pull it off and now the great charade the cover-up starts to happen is that the sort of um how you've reconciled this in your mind that that that was the the moment at which you tried to keep up this farce?

23:10Yeah, I think that the narrative that I believed was that no matter what the costs are of anything today, we are leveling up at such a fast rate that today's dollar amount doesn't matter. So let's say we're a million dollars in the hole today. Oh, it doesn't matter because next week our company is going to be worth 2x. So what's a million dollars? And it kept getting to the point where the numbers kept getting bigger and the hole kept getting deeper. And it got to the point where it just wasn't practical to dig ourselves out of that hole. And sure, having the trust of investors for five or six years you know they'll happily give me an extra million dollars or even five million dollars but when it got to 15 20 25 30 i started reaching the limits of you know what was feasible for a lot of these investors and just push people past their comfort zone and that was like my true violation and you had no experience running a large-scale event oh zero had no idea and so there's also a certain uh naivete which we in the industry celebrate sometimes we say listen if you want to create airbnb or uber if you hire somebody who owns a taxi company already or owns medallions or you hire somebody who runs a hotel that's a bad idea because they're not going to come to it with fresh eyes on the problem they're going to have some sacred cows they're not going to think innovatively but here doing some basic level research on how to run a music festival or how to transport people to a remote island you had neglected to do any of that diligence after you fired the starter's pistol.

24:41Yes. So I think very good point there. I think there's two distinct skill sets. One is the work that you need to do to get on base. I think our video got us on base. And if I was smarter, I would have realized, okay, we are on base now. It's no longer time to keep tethering the line of what's acceptable. Now is the time to get real help. We did a video. We came together in a way that most established festivals probably wouldn't have taken that risk. And now we've done that and we're still alive. Okay, let's pause. Let's call the investors who are supporting us and be like, guys, four months is not practical.

25:13I need help. What can we do to make this vision a reality? And I just didn't have the confidence to make that decision. I think me trying to appease people ended up hurting them in the long term. You gave yourself four months to pull this holding together. Yes. That's an incredibly stupid decision in hindsight. Ridiculous. It's terrible. Okay, in the early days of a startup, you need to be focused on your product and your customers, right? You build a team, you build a product, and then you embrace a customer base and try to delight them. But we can't forget about getting your accounting dialed in.

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26:25Pilot's seen it 100 times. So they're going to get your books tight from the start. And some big news, Pilot's annual virtual founder conference is happening on June 8th. And I'd love to have you join them. The vibe is 100 % about actionable, concrete advice from seasoned operators and investors. And this stuff is really designed to help you run your startup perfectly. And they have an amazing speaker lineup. Folks from Stripe, Mercury, and Sequoia are all coming. So go to pilot.com slash summit. You want to get 20 % off your first six months at Pilot? Yeah, very easy. go to pilot.com slash twist so pilot.com slash summit for their summit pilot.com slash twist to get 20 off the first six months i asked this not in a uh insincere way but in a in a way to maybe help people who are other founders listening have you ever been diagnosed with a mental illness or a substance abuse problem you know by during this time no i think i think one of the hardest things to believe to almost every podcast i've gone on is like i've never done drugs and i think i've smoked weed like 10 times in my life but never had any other drug never drank coffee until i went to jail so it's like and it was just nobody mistake and i suppose coffee and jail not too great but you were not high or you don't have you ever been have you ever you know you did some therapy in uh in prison uh i guess and yep did they ever diagnose you and say hey listen you have some sort of borderline personality disorder you have a manic disorder because it it reminds me of friends i have who do have uh some manic behavior it you you in addition to your charisma i do wonder if you have a little bit of mania to you uh or if maybe you're just had a moment of delusion uh delusions of grandeur there so what are your thoughts i think it's a good question and i guess to directly answer i've not been you know diagnosed with any mental disorder i think one thing i've noticed just in the change of behavior on pre-jail and post-jail is that i think the highs and lows now are way more centered than they were before i think i had that moment where it's like i can pull off the world in four months and you know get really excited and then like when things go bad they're like a negative 10 on the scale i think like my post jail thing is nothing is as good as it seems and nothing is as bad as it seems so i think i'm a little bit more boring now and more measured but i certainly you know fell into that trap whether it was mental disease or a period of delusion i'm not sure what it was but i think like i recognize what the traits of that were and you started collecting um you started selling tickets and from fans is it in the first 48 hours how many tickets were sold what was the pace of the money coming in from the people who wanted to come to the festival i'm curious what kicked everything off was this orange tile and our idea was we called it the fire 400 where we had 400 people who really wanted to attend the festival all post this orange square and instagram at the exact same time.

29:31And the concept was they weren't seemingly related. It might've been an NFL athlete, a comedian, a model, a musician who didn't really know each other. So if you're your average fan scrolling through your Instagram feed, you're like, why are all these people posting an orange tile? And there was nothing about fire on the tile. You had to kind of click through their bios and see the link. So we created this like confusion as to what was happening, why the orange was taking over. And we've launched the video, we launched the orange tile, and I had brought 15 of the bigger talent to the island is to make sure they did it.

30:01And I literally kept them all in one room and said, all right, guys, here's what we're going to post. We posted it and nothing happened. And I hit that low point where it's like, we went all on to this video. I went to bed all depressed. And then I remember waking up a handful of hours later in the morning. It's like, Billy, we sold thousands of tickets. How can we fit these people here? So it was just like - Thousands of tickets. Millions of dollars worth of tickets came in. Yes. Literally overnight. And it was this weird lag where nothing happened for a couple of hours. Sure. People were trying to understand what it all meant.

30:29And all it took was a couple of people figuring it out, recreating their own content about what they thought was happening, and waking up to what became four months of hell and trying to pull this off. Did you have a board of directors at your company at the time? I did. And board meetings? I had a board of directors, and a lot of them were by backers from my previous company. So they had seen me operate for three or four years. And I certainly had a leash, and i abused that leash and you know pushed things off pushed off oversight and basically said don't worry guys i got this and pushed away the help that i obviously needed so you had built up massive credibility with your board of directors so they trusted you you violated that trust yes um if you and this is a tough question to ask but if you had just said you know what uh to everybody who tickets we're going to refund your money if you want or we're going to set this for q4 of next year because there's been so much demand it's gotten so much bigger but you have your reservation and uh this will be uh this will be 14 months from now i'm adding 10 months to schedule just because demand was so great what do you think would have happened and did you consider that or did anybody pull you aside and say hey bill four months not enough but you got the money in the bank maybe 20 will ask for a refund the rest it's probably going to create more demand if you say because of overwhelming demand we're going to do this in 14 months did those conversations or thoughts ever come into your head they did and like obviously i would do anything now to go back and have listened to those people i think they're and i didn't don't know why i didn't know why i didn't listen.

32:15And I think like looking back now, I think I secretly knew four months was impossible and I was going to kind of die on the sword and try to make it happen. And I believed that I'd oversold something that wasn't practical. So my only chance at making it practical was to just create this vision of reality and make it happen. And I was afraid to show any kinks in the armor. And I thought that if I postponed it 10 months or a year, which would have been the right move, that people would have started asking questions that I couldn't answer. so i think like my insecurity stopped me from making what was the obvious business call to anybody with any kind of operational experience yeah i mean if we had any kind of relationship where i was on your board i would have said okay um tell me about the toilets and how are you gonna get toilets there and who is responsible on the team for making sure five was it 5 000 people ultimately yes 5 000 people got to use the loo four times a day it's 20 000 flushes tell me about 20 000 flushes how many do you need you wouldn't have been able to answer that question would you no and then i would have said uh there is there running water on this island and in this location and what would the answer have been uh no okay is there electricity and how much electricity is there on this island?

33:36Would you have been able to answer that question? So I think at that point, no. And I think what I was doing, and it was like so silly, is that, say you brought up one problem, electricity. And I would go find a way and get electricity there in three days and bring you there and show it to you. And be like, look, this is impossible three days ago, and now we pulled it off. Okay. And the idea was I kept climbing like one boulder that I shouldn't have been able to climb, not realizing there's an entire mountain. So sure, I can pull off 12 miracles, but I can't pull off, you know, 2000 miracles. And that was like the entire issue.

34:07It's like, Oh, Jason, you don't believe I can get power. Like, let me show you. And then I'd find somebody to do it, but it didn't matter because there was so much else that needed to happen. Which I'm just going to point out for the audience here is absolutely delightful for an investor to have that moment with a founder. When you say, Hey, you know, how are you going to get electricity there? And you're like, you're not going to believe this, but i called this company and they have the generators they also have solar and they have battery packs and i gave them 10 grand they put them there look we already have enough for 500 people and i did that in 24 hours i got 120 days to get the other 4500 people electricity we can get this done this is not rocket science now you have that dialogue with me i'm like all right let's move on to the next issue let's talk about bathrooms and so what you're saying is you got lucky on four or five or six of these in other words you're not a great rock climber you're not alex honnold whatever that kid's name is who goes up without a rope but you make it a third of the way up el cap and now you think i can climb this whole thing without a rope but you actually didn't have the skill to do that you you actually look back on and go oh i got some early wins and that deluded me into thinking I would just be able to thread the needle.

35:28Is that correct? Correct. And it's time too. If I had two years, maybe I could have figured it out. But I think there's also a deeper issue where I was at this point where I was starting to take shortcuts. I was getting distracted by the attention of the celebrity world. And I was attracting people who also desired those things, who wanted to click money, who wanted to click fame. and I wasn't building the proper team. I was hiring other young people who wanted shortcuts. So it was like me, and that's all my fault because as the CEO, right? Like your entire job at this level is hiring when you've raised tens of millions of dollars in whatever position we were in.

36:04So I was hiring a bunch of kids who wanted the same shortcuts as me, but didn't have the ability to pull off the small miracles. So it was like basically just me trying to climb a mountain with a thousand people cheering me on and me not understanding that my downfalls at that point were attracting other you know bad people too so it was just it was a mess you know we call this diy syndrome and diy do it yourself is a skill set for founders and you were rewarded early in your career so i can actually who knows like maybe you're a complete sociopath and you're snowing me on this interview but i'll put that aside because probably some people are thinking that right now we'll get to that at the end like is this all put on but knowing what i know about entrepreneurship and specifically hacking culture uh i was a did some hacking and phone freaking and you know and breaking into i should say breaking into i will just say exploring online services when i was younger exploring nice we were exploring things that you know people maybe had used the password password on or you know uh first name as their password or the dog's name so um what hackers do sometimes is uh they figure out how to hack things together and that is a huge dopamine rush when you're able to hack something together and you came up with this brilliant you know fire tiles you came up with this brilliant uh location uh which has limitations but it was also quite captivating on the video you figured out so many things then you hire people who are not bar raisers they're actually completely inexperienced and now they're a liability because you don't have time when you're short on time you need people who are bar raisers you need somebody who did coachella who worked at coachella and saw coachella fail these three ways so they can tell you like hey don't take this turn at 100 miles an hour you'll flip the car and then that's just another massive strategic strategic era um but we've seen a lot of entrepreneurs who diy it changed the world we've seen people who cut corners um make mistakes but there's time correct the mistakes so i don't think actually the strategy of hiring young inexperienced people and trying to figure out things in a new way is bad unless you happen to be making a blood testing machine managing people's money or you're going to fly them halfway around the world and charge them ten thousand dollars for a tent and a slice of cheese or whatever that famous photo was for a sandwich yeah like when people get hurt uh financially or their health or whatever the stakes are that's when you get yourself in a little bit of trouble i think you know i'm trying to parse here what are good entrepreneurial lessons there are some things that you did if i'm being honest that are great entrepreneurial achievements your ability to hire great people and listen to them was your downfall as well as you know just abusing the trust of these investors as far as I can tell.

39:02Yeah, I think the trust issue is it's what ate me alive when it most mattered. And I think both selfishly and in every other way, because selfishly when you're alone and you just need that human interaction and you've severed 90 % of the relationships you've had, you just feel alone. That sucks. And you start realizing, how can I not feel alone? And like, wait, why do I feel alone? And you start analyzing the situation.

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40:07You can customize it however you like. It's lightweight. It's super quiet. Hyperice also makes heat and massage wearables for your back. That's what I'm getting next. And we all know a bunch of people they're suffering from that back pain, right? They also have these Normatec air compression boots. These things are insane. Here's a really important call to actually get 50 bucks off your order of 150 or more with the code twist 50 at checkout go ahead and go to hyper ice that's h y p e r i c e.com and use the code twist t w i s t 5 0 twist 5 0 for 50 bucks off your purchase of 150 dollars or more sincerely my wife got me into this and then all of a sudden they showed up to be partners on this program i was like i used that product what so it's amazing you're gonna love it get out of jail two years early they let you out for good behavior or COVID how'd you get out early everybody in the federal system gets 15 % of their time off it's called a good time so six years becomes five and then there was Trump passed a bill at the end of 18 called the first step act and that essentially allowed non-violent offenders to earn up to one a year off their sentence for doing programs in jail so i i earned a year off through you know basic jail programs and classes so i need for four years out of six take me to uh what do they call the day when you leave prison your wake up it's like you got 10 days in a wake up is how they say it in the military what do they say in prison for the day you get released what do they call that the end.

41:50So my last facility was outside of Detroit in Michigan. And my family flew in, rented a car and picked me up to bring me to the Brooklyn halfway house. So it wasn't quite for yet. And it was like the 12 hour car ride or whatever it was to New York. But you're out of prison. And at that point, so many things have gone wrong in jail. I keep getting in trouble. I'm in solitary confinement. I'm getting transferred across the country to worse and worse prisons. I just kept thinking that there would be some point where like, hey, Billy, this is a joke like back to your cell so i literally did not believe it was real until i have my mesh bag over my shoulder in the parking lot like running towards the rental car and i was just convinced there'd be somebody there saying ah get back like you're not going so you had a fear that hey it's not going to actually happen but take me to the moment you're walking i guess there's this moment we see in movies where they're handing you back your watch and your keys and you're putting on civilian clothes is that literally what happens and they give you 100 bucks for a sandwich on a bus ride?

42:47I think I had like$17 left in my commissary account. They put an epic card and I'm in my prison gray sweatpants and sweatshirts with all my belongings, which were essentially journal entries I'd written for four years over my shoulder and ran to the car and wanted to spend the first five or six hours talking with my family. And then my next need after that was getting back on the phone. It's like reconnecting with friends I hadn't seen and heard from in years what's it like to see your parents after all that because you obviously you must feel some shame or feel bad for the fact that hey their promising son uh from shore hills who they were so proud of who was a great hacker and had this brand raised money how do you how do you deal with that relationship with the parents so it sounds cliche but it's true that the punishment is worse on the family than it is on you.

43:42I think anybody who's probably gone through something traumatic themselves would probably agree with that. And when you're going through something really bad, you at least know what's happening in real time, but your family doesn't know what's happening in real time. I think it's like human condition to assume the worst. So for four years, they're assuming the worst is happening, whether it's getting raped or getting killed or spending your life in jail. And while it seems silly, like now looking back, that's where their mind goes so you just like yeah trust me 100 of people who are listening to this interview are thinking that where you're raped or beaten in jail you're like considered this like white white collar criminal you're highly notable what was it like were people gunning for you or did people want to be pals with you because you had a little micro celebrity and listen you're not a murdering child abusing person uh or you didn't kill a woman all those things that they will kill you for in prison.

44:37So did people embrace you or did? One rule that I think really helped is that a lot of people go to jail and they try to make money in jail. And my entire rule was all of my entrepreneurial pursuits will be stuff that happens outside of jail. And I'm not going to make a single dollar off anybody in prison. So whether it's cooking for them or cleaning for them or cutting hair, I'm not going to do anything that allows me to charge anybody. So I stayed out of the way at people's hustles, as they called it, which I think really helped. I also think which is interesting is that the people who are leading gangs while on paper are bad people doing bad things, some of them, if they had different exposure, they would be leaders in different sense.