E35: How Jason Lemkin Built SaaStr

27:51And so do you think you found the sort of final form factor of what Saster is and will be at the fund level? And it's just, hey, how do we rinse and repeat? Just do amazing fund after fund? No. I don't think I've figured it out yet. I just learned, I want, you know, there's the fund and there's Saster Inc. I would like to get Saster Inc. This year will actually be a tougher year, but I would like to get it to$100 million. That would be fun. That would be fun to get it to$100 million. And I have never fully figured out venture at all. But what I have learned is it's hard. but you just, if you, if you, you gotta be patient, there's no point in doing dumb deals.

28:36There's no point in forcing things. Um, there's no, there is point in going all in, like go all in on your best deals, like don't hold back, but there's no point in going further than that. Right. So, you know, if you can see one fall out of your chair deal per month and do a couple of those a year and end up with three or four fund returners per fund, you do pretty good. And I don't actually like the way I invest, but I know we will always make money. Like 0 % chance. Like if I only pick the best of the most high velocity inbound Saster fans that have good growth and good metrics and great CTOs, and I just pick a few of those a year, I may never approach the returns of the best of the best, but I think I can do top decile, right?

29:20It's like enough. Like it's, you know, I don't think, I don't think a venture is like a mitzvah, right i think being top decile is a good goal like forget about twitter but like i feel like i feel like and i also feel like this approach i i don't really believe that like doing 50 investments per fund is such a great thing like i don't believe the math diversifies risk but i do believe if you have enough good deal flow and picking you can almost guarantee you're going to make money in venture. You can almost guarantee it. You just need, again, venture is about making one great investment a year until you're a mega fund, right?

29:59One a year. And even 18 months is okay. Even 24 months is probably okay. As long as you have some good ones, right? It's not, if you have an engine, and I think I suspect all the best investors, one or another, it is stressful, right? But I think they all have an engine that at least sort of works so that they can get one or two great deals a year done, right? It's all that matters. Nothing else matters in venture except getting one or two. It doesn't matter if you add value. It doesn't matter if your NPS is low. It does. All that matters is every year you get into one or two good deals. And, and, uh, you know, maybe in a small fund, maybe even just one's enough.

30:33So the person who, um, joined the mega fund, instead of joining you separate the person, that decision, the, the, the economic calculus between, you know, co-founding something, smaller or joining a mega fund? Is it basically there's higher risk, higher reward? If you perform really well, you'll make more money in the earlier stage. What's the way of thinking? No, I think the interesting learning was that this person in particular just wanted the benefits of the mega fund and was okay with the downsides. Like, okay, if you go join a mega fund, you know what the one thing is for sure? You work for somebody.

31:14Whoever it is, people may not get it who listen or watch. The bigger the fund, the fewer the people that run it. The bigger the fund, the less democratic it is. Some of the biggest funds literally have just one true managing partner. Many of the biggest funds have partners, general partners, but the boss determines half or more of the economic distribution. This is a classic hedge fund model. Hey, listen, Eric, I'm going to pay you half a million a year and you're going to get a half million in this and that. And at the end of the year, I'll take the 50 million in profits and I'll just decide, you know, whoever, Steve Cohen, whoever, just decides who gets the 100 million.

31:49Venture funds are run this way too. The big ones are. So the good news is if you go to a megafund, you can make a million bucks a year easy in salary, right? And you can make more in carry. And actually the carry sometimes is very generous. It's surprisingly generous. If you have a small number of partners with a lot of dollars, the carry can be, you're not going to get half, but 5 % out of 10 billion might be better than half of 100 million, right? Do the math. But you'll never run the place. So you've got to decide who do you want to be. You want to run the place, right? And what I've also learned is, you know, there are CEOs going into venture is very different than like an SVP going into venture.

32:32the latter is usually more successful. Why is that? Because they know how to work for, for, for, for, for some jerk like me or you, or whoever it is, whoever's running the fund, whoever runs, you know, whatever, you know, they, they know how to, they, if you're an SVP, a successful SVP at a really good company, not only, you know, a little bit about technology and areas, you know, to work for whoever founder CEOs are quirky, right? They're great, but they're, they're not easy to work with. Are they? Even the nicest ones are hard to work for there. Cause at least we're demanding. Like we're demand.

33:06We don't even know we're demanding founder CEOs. We're like every minute of the day we're demanding, even, even when we're having a beer or, or just socialize, we're constantly, just, just our presence is demanding. Right? So, so founder CEOs don't even realize this. And so if you're a founder, a successful CEO and you go into venture, be careful. A lot of them, it's not well written, but a lot of them bounce. A lot of them bounce a lot. Like, okay. Okay. Cause if, if you're a CEO, you don't mind working for someone better than you, but working for someone worse than you or not being a real being a, you show up and you find, Oh, I'm not a real partner.

33:43What's, what's this management company that I hear of, but I, but I don't get to go to those meetings. And what is the, how does this backloaded vesting over 10 years work? And why is Carrie deal? I thought you said I was a partner. Right. It's funny. What, one example of this without, I don't even know the details, but just it sounds like it's an example. Phil Libin was like CEO at Evernote for, I don't know, 15 years or something. And then he joins General Catalyst for like three to six months or something and then goes out and starts his own incubator again. And my guess, I'm not close to him, is just like he did some calculation of what you just described of, hey, I'm used to running the thing.

34:17I'm now. It just wasn't a vibe check. It just didn't work for him. No matter how much they pay. I mean, General Catalyst, not everyone knows him, but I mean, they're off, they're very, they could pay them whatever they want in salary, right? The mega fund salary doesn't even matter. It doesn't, it doesn't. I mean, it matters if you have a thousand people working at your fund, but if you're, forget all your, it's just, if your partner's title at a mega fund, it doesn't matter, right? If you're, if you have a hundred million in fee, people think these fees are not free. You have to return the fund.

34:46Like it's real work, but the short-term economics, the folks that run the fund, you know, if you're whatever, Who's the guy that runs Vista, Robert, whatever? I mean, he's making billions, right? And probably used to have the majority of the economics. But if he's got to pay you and me$2 million a year and we deliver, he doesn't care, does he? Right. He doesn't care. Hey, we'll continue our interview in a moment after a word from our sponsors. Let's get into the disaster media business, particularly sort of the business model and the different things you could have chosen but decided not to. why don't you talk about sort of the evolution of the business and then let's talk about how you get from 30 to how'd you get to 30 and then let's talk about how you get to 100 yeah well look it was all an accident i mean unlike folks today are much more intentional i think um because there's more people to copy i didn't have anyone to copy um other than that little bit of mark sister's blog copying the blog is it's copying but it's not really copying much more than that you built on top of it yeah a verticalized version it was just more an inspiration um but i mean the simple answer is look, I started writing this blog and then like the first day I wrote it, I wrote the, the first real post was called everybody lies.

35:54And it was about real revenue for a whole bunch of people before the IPO. And I wrote it and I got, I got a like from Aaron Levy. Okay. So I knew Aaron, but I didn't think he'd write. So I kind of got inspired. Right. And so it took off and I saw more things happen. And then I'm like a couple of months, I'm like, okay, well, I've never been to a meetup in my life. Like I'm not that social, but let's do a meetup with nothing, no content, no, know anything. And like, it sold out 400 people. And I'm like, Oh, that was cool. And they're like, okay, let's do another. That was, that was like in, in 2012 and like in 2013, let's do another meetup.

36:26And now I had like one session with my old VP of sales, like 800 people, 700 people came and I'm like, wow, that's a lot. I'm like, and so I said to a friend of mine who did these small events, I said, let's do a Sasser annual in 2015 for a day. And you know, it sold out. We had 1800 hundred people come and then we did the next year was three thousand so the point of that story is i did not intend to like be producing mass scale events with hundreds of sponsors and media and stuff it it was truly organic in a way that i don't think would happen today it was very innocent right it was literally like i don't like meetups but and like it was really born out of me being forced to go to like um parent events at school and not knowing what to talk to people about unless they were the sassios like i would hide in the corner and see the couple of folks at school who were sassios because i knew knew what to talk i'm not i just i couldn't just talk about like skiing or the grass or football it's just not i just i got like eight minutes of that right but i could talk about sass for two hours and so i so i'm like okay i kind of like like these meetups even though i wasn't that and so anyhow so this event thing took on the life of its own but then the problem was the problem was eric is that it all broke every year because events are so expensive and complicated that I just couldn't, I outsourced the first two years.

37:40Okay. First year we had 400K of revenue. It wasn't, I didn't even, I wasn't even paying attention. Okay. We had 400K of revenue without trying. It cost 200 ,000. I gave a hundred. So we had a 200K profit. I gave a hundred K to the guy that spent a day, you know, 10 hours, 20 hours putting together. And I gave a hundred K to the person that was helping me work part-time. I took zero, a hundred K to each of them. Great. Next year, 3.6 million. Okay. And I didn't do anything. And the great thing was, it's about a week before the second Sastry Annual 2016, we got 3.6 million revenue. And the outsourced person that's helping me says, good news, we got a$2 million surplus.

38:16Whoa, like, I didn't even look at, I didn't know how anything worked. Like, I didn't care. I had a life to live. He's like, yeah, you take a million, I'll take a million. I'm like, well, you keep your million. I will pay some of my millions to the team that's helping me and I'll put some away for next year. I don't actually need any of the dollars, but you take your million, great. That was like Thursday before the Sastry annual. On Saturday, we get an email. He's like, oh, I forgot to put food and beverage into it. He forgot to put 1.6 million into the budget. And then the mistakes compounded.

38:45And we went from a$2 million surplus to nothing out of the 3.6 million. It was all wasted. And then everyone that worked on it quit because of that. They didn't want to own up to their mistakes. So they all quit. So after the second one, I got no help. And it's like, oh, you're, well, it's zero for 400, 3.6. I got no one to help. I start interviewing everyone on the planet. I've never met a less ambitious industry than events professionals. I interviewed a hundred people. I've never, I've never met less ambitious people. And every year until we kind of have a CO SVP Amelia that runs things now until she took over, which was really during COVID.

39:24Um, it never functioned each year. It was so hard to find anyone good. Um, then there's like these agencies that help you produce these mass scale events. I mean, we have 12, 13 ,000 people in SF. These agencies, they're all basically built on ignorant clients and ripping them off. This is an industry of rip offs. And so what would happen is someone would come in and they would be like, well, you have to use this terrible AV company that's$2 million a year and be like, I don't think I have to. And it turns out it's their cousin's company. And it turns out of the 2 million, they're taking a 500K kickback themselves.

39:57And it turns out for one year, they're only willing to record audio. One year we didn't even get video off three stages because the captive person that was a cousin was only willing to do audio. So you know how much time it takes to work through that level of mediocrity and all the other, and like, and this whole industry is based on every bigger event you've been to at like the bigger ones. They're all basically, no matter what anybody says that when you interview these folks, they all lose 2 million bucks. They all lose 2 million bucks. And I didn't want to lose 2 million bucks every year. Like it It wasn't fun for me, Eric.

40:26Like if I had to, to like save the world from COVID, I would lose$2 million, right? Or save people's lives. But I really didn't want to lose$2 million every year putting on this after annual, you know, with 11 thank yous. So anyhow, maybe that's much more than you asked. So it's very interesting, but we can talk about the business itself. A meta life lesson is I'd never been in an industry before. And I've done all, as a founder, I've done hard tech. I've done software. I've done, uh, you know, crazy stuff. I never found an industry where I couldn't find like these incredible people. Like, even if there's only like five, like you hunt them, like heat seeking missile, find the best scientists in your industry, the best technologist, the best developer, the worst at like, you know, do whatever it takes, give them whatever they want.

41:16Like just ask them. And, um, but in this, for this mass scale events thing, and trust me, I know, now i know the people at shop talk money 2020 um so many places a few folks at website they don't exist there is no there is no there are no gurus interesting but i mean aren't these businesses massive like money 20 didn't sell for like 300 million dollars money 2020 does about 100 million revenue today it's sold for 100 um yeah you know a lot of the stories on the internet are always inflated aren't they yeah yeah hooray our startup sold for 400 million we raised 600 uh you know The stories, there's always some asterisks and daggers against the operator version of most stories.

41:56But Money2020 is very successful. ShopTalk sold for$150 million at about$25 million in revenue. So there are stories. If you're really interested in the business model, if you really want, I consider SaaS a community plus events plus digital media. We do about$2 million a year of digital media. We should do more. But we do about$2 million of podcasts and newsletter and other stuff. and then whatever the balance of the 30 is ultimately events related, primarily, not entirely. But the real play of these events things is the unit economics are terrible until you break through massive fixed costs.

42:32So, for example, SAS to annual cost$10 million to put on to turn on the lights. So if you bring in$6 million, it stinks. If you need 500 people, it stinks. But if you can have a small team and do 20, then actually you can make 10 million, right? So what the handful of public companies in this space do is they aggregate three or four properties. And the operating margins are pretty good, right? They find folks that are at scale that have 30 plus percent real operating margins, real free cash flow. And maybe Money 2020 can only do 100 million and ConLion does like 150 and ShopTalk does 80. But if you buy one every couple of years, you can have a business that deserves tech-like multiples, doesn't it?

43:21If it can do hundreds and hundreds of millions growing 30 % or more a year with 30 % to 40 % operating margins, that's a tech-like business with some recurring characteristics, some recurring characteristics, right? And so getting from 30 to 100, is it you're doing more events or just the events get bigger or are you adding different business lines or what's the biggest lever there? Well, look, the last 12 months have been hard because we were – this will be our first year without – we'll be lucky to be flat. We'll probably be down because of the unicorn implosion because about 30 % of our sponsors just don't exist.

43:59Okay, you can't make that up. We're making that up in some extent with better folks. We have a bigger partnership with IBM, bigger partnership with Oracle, bigger partnership with Cisco. And that's great stuff, but you can't make up for the willful abandon of marketing spend of 2021. It'll take a few years to get back there. But the simple answer is just this, is look, and people don't get this, 40 % of all marketing spend goes into field. 40 % of all marketing dollars go into field marketing. Field marketing is annoying. It takes a lot of work. It takes humans. You got to fly places. You got to have a popcorn machine.

44:37You got to do a lot of things that feel very old school, don't they? A booth. But the thing is, it works. And the reason field marketing works, which took me about eight years to figure this out. I didn't know when I was doing field marketing. I didn't know when I was doing this. Look, it's really basic. The best events, the best events in business. We could talk about Coachella and some other things that I've learned about too. But the best business events do something very fundamental. they bring by their nature the best buyers and sellers together they are a marketplace it is a weird marketplace it is not ebay right or whatever but the best buyers go to one or two events a year and they go and they go either to meet their existing partners or they go to meet ones in the pipeline or they go to ones they are interested in buying oh you know hey drada or vanta or whomever.

45:24I need to do this SOC too. It's good to see you here. Tell me a little about it. That's super valuable. Hey, I'm a little bit on Google Cloud. I'm a little bit on AWS. I'm thinking about doing this. AWS, I can't talk to anybody, but Google Cloud's a five-year SaaS or annual sponsor. If I can talk to someone good there, it can tilt the deal. So my point is not everyone's good at this stuff. You and I probably aren't good at field marketing, but it's 40 % of spend. So that's the thing that's not obvious, right? So how could Sastra get to 100, well, how much is cloud growing each year? Significantly.

45:58Significantly. So the simple idea is, look, if you have a top brand and you attach to something that has certain macro growing characteristics, if you can even increase market share a little bit over three or four years, if Sastra overall is growing 20 % of your group much faster the last couple of years and you do that for five years and you increase your market share, you should be able to go from 30 to 100, shouldn't you? Not in a week. It's going to take five years. It can't be done in a week like OpenAI. But you have been a strong brand where you create that marketplace and you have the macro trends.

46:33And these macro trends, in investing, it takes us a little while to see them. But I've got a couple of investments that are in the Shopify ecosystem. You can literally see them accelerate as Shopify accelerates. It's like high correlation. So that's how you get to 100. It's just that cloud is a for even with this last year being weird with a lot of budgets being cut but so much money going to ai it's like a weird year it's still a force of nature right it's it's sass is 200 um billion but um overall business software will cross a trillion this year a trillion in spend right so but there's 40 percent of field marketing i did like six sass triangles till i even knew this yeah it's fascinating i've been trying to study these businesses like industry dive or informa is kind of like vertical specific.

47:20Yeah. Informa is one of the ones that does these roll ups and other things, right? Some do it better than others, but, but yeah, but you got to have, some of them used to have like an old, if you study and I haven't, you've probably studied informa more than I have. Some of the old model was have 200 events, right? I think the old informa, the oldest central, the other model was look, we're going to have, we're going to have the, the oncologists of the Florida panhandle and we're going to have the, whatever the hematologists of North Saskatchewan because we can make a 500K or a million on these and we roll them up.

47:51But I think the margins got so compressed in these subscale events that I think all of them abandoned this broad category. And they're like, hey, we want some$100 million type properties. Yeah, totally. There's more of them than you think if you really dig. There's more of them than you think. You mentioned at the beginning of this interview kind of offhand that Harry might make more money than you with his media business. No, I think he'll make more money investing and will invest. I think Harry will invest an order of magnitude more than I will, at least an order of magnitude. And that's because he just wants to?

48:23Well, he's starting earlier. One. Two, I love my portfolio companies. One, he started earlier. Two, he has more passion for investing as an investor. And three, he's going to raise a lot more money. Harry will raise billions of dollars. He will raise billions of dollars before you know it. And he will ultimately be, whatever he builds on his team, he will be a very successful managing general partner of billions of dollars. I'll never manage billions of capital. I'm out before I, it's not my passion. But Harry will manage billions and the LPs love him. And he's a good capital. He has a very specific model and he's a good capital allocator.

49:04Yeah. It's interesting. I'm trying to figure out my passion with this stuff too. And it's interesting because I helped start Product Hunt. I started on deck. So that's community media stuff. I helped start Village Global, sort of wide ranging seed firm. And I'm figuring out in 2024, kind of like, what's the combination of my passion and the best business model for it? Because in some ways, it's been kind of like a hybrid or intersection between... And so right now, it's trying to build this media company. There's something like a Lenny or Harry for X, trying to find what you were able to help Harry do in terms of build his, his brand.

49:43I mean, in some ways I used to say Saster for X, right? Like you, you know, vertical media, you, you went really deep, able to create a both media business and event investment business. If we could help other people do that for their areas of expertise and, you know, help them get started, give them a platform, you know, pay for their salary to, to leave their job and go do it. Maybe there's some roll up there. I'm curious for your reaction to that idea or your broad advice for me. You know, we're just, you know, chatting for the first time in person. Well, maybe two things. First of all, a lot of these things, like when you really get to know them, they're more nuanced than they look.

50:21So what Saster is, is very different than Lenny or Harry. Both of whom, you know, I just got to know Lenny. I've known Harry since literally he was 18 years old or 17, I think. but um saster is a trusted resource for first party knowledge first and foremost harry is an interviewer and now a truly an expert in venture like off the charts expert when he started he was just a student of venture now he is he still has you know we all have more to prove as investors our whole life but as a but he is an expert in every part of venture lenny i think is a classic curious mind um he's like to me and i only know him a little bit but having now interacted with him a bit he's like the talk show host of product like he has this curious mind which you you too many people do podcasts and they talk about themselves or their product they don't have curious so he's great but he is not like a trusted subject matter expert for scaling the product of your company is he he's a creation of media around it right and harry is like that for venture.

51:26So I actually think you can build Sastras, but I don't think they're like that. I think they're more like freight waves and other things like this where you have deep knowledge and they're better than Sastras in some ways. I think you could build that. My point is it looks similar to those, but it's not. People go to Sastras. It has to be incorruptible. It has to be unimpeachable. it has to be honest it has to not be a game it has some primary 95 of you know 90 99 of saster is free no one's ripping anybody off no one's trying to over monetize you right not that harry or lenny are doing that but it's it's but it's different right and so there aren't that many trusted sources of knowledge that aren't selling you crap right um so but i do think you could build those you could find the subject matter experts that are able that have passion around producing and creating lots of knowledge and package those up very thoughtfully, but it's not the same as the podcast thing, I don't think.

52:26I think the podcast is just one way to distribute that knowledge. Yeah. Right. So the other point you said, for what it's worth, I really think pursuing your passions is profoundly dangerous. I think it's a sucker bet. And even worse, I think it's become almost toxic on TikTok in 2024. It's terrible advice to pursue your passions, right? Pursue what you're frigging good at. I, I have done so I have built implantable batteries that have saved hundreds of lives. I have done so many things. I have helped founders be make hundreds and hundreds of millions of dollars. I've created jobs. Like I don't have passion around any of that, Eric, but it's what I'm good at.

53:11And I'm driven to do it and I'm driven to do it. But passion, I just feel like passion. And I don't, I I'm being, I'm not being facetious. I don't mean to, to, to, I know that's not exactly what you said, but I just think for folks that if this part goes out, be wary of your passion, do not pursue your passions, pursue what you're good at. I don't, you know, I don't, you know, I, I do, you know, I, um, there, there's a lot of this stuff. I just don't enjoy that. I do. I don't hate it or anything. Like I don't do the stuff I hate anymore. Like I'm done. Like I have enough success in this world.

53:45I can do anything I hate, but I do what I'm good at. Not where my passion is. Not where I don't do where my passion is. It's a good dose of, of, of, of realism there. Yeah. Because the world is in 2024. Everyone's a quitter, Eric. Everyone's quitting. Everyone's a quitter and everyone just wants to be a manager and not do work. And I can't stop this, but I just want people not to pursue their best. Yeah. You got to do the hard work. Do no, just do what you're good at. And you will become passionate about it, but it may not be your passion. And then the question is, if you're good at building community and networks and media stuff and a little bit good at investing, it's kind of like, what is the…

54:33You can't be a little bit good at investing. It's not worth it. No, no. You want to know their lesson? It's not worth it being a little bit good at investing. Oh, you do it if you're great? No, it's more like, listen, there are exceptions. Okay. There's the classic Uber angels, right? But in today's world, if you're a little bit interested in investing and you can't lead deals because you don't have a lot of money and you're whatever, and you're putting 25K or 50K checks into companies, even if they exit for a billion, you don't make enough money. It's not worth it. It's not even worth it, frankly, to invest in, unless it's a decacorn or better.

55:09It's not even worth investing if you can't own 8 % of the company. right? Really more because there's so much dilution today. And so a little investing a little bit looks good on Twitter and it can make you, it's something to talk about at cocktail parties in Miami or Austin or wherever. But I, I, I mean, I literally will not write, I will not write any small checks ever. The worst. Yeah. They're, they're like, they're, they're also a sucker trap because you're asked to help the company a lot. But, but no, I don't think, I think you gotta like, you gotta be, you can only win in venture. If you're, you got to be relentless, you have to win large positions in iconic companies.

55:51It can't be a side hustle. Right. And so if you were advising Lenny, then he said, Hey, how should I grow my business and assume I'm equally excited about any path? Should he take the Harry path in raising a bunch of capital and using the content as a sort of, you know, the gen or distribution for it? Or should he, what should he do? Listen, I don't have access to Lenny's financials exactly. Or if I did, I certainly wouldn't share it with you. But to answer the question more in a hypothetical, let's, you know, Lenny's done some things saying that his business does half a million a year, maybe it does more now grow.

56:27It's certainly gross. I could see it doing more, right? I could, let's say it does 700 ,000 gross and 500k net to him just for fun. So he makes$500 ,000 a year. And he's actually an angel investor in some pretty good companies. So let's say, but he's not, doesn't own 10%. He doesn't own 10 % of linear or whatever. So let's say he's made some good, I know he's made some good ones. So let's say, you know, adjusted for time. Eventually he, he gets a couple$2 million checks back, 1 million, 800 ,000. So he's making four to$500 ,000 a year from investing and four to$500 ,000 a year from his media business.

57:02Um, really just getting to know Lenny, you really have to decide how ambitious you are in this world. If he can make half a million dollars a year in current income and then half a million dollars a year in qualified small business, untaxed income that takes years to come but produces itself over time, I think 98 % of the world is happy with that. I know Harry is not. Harry is an empire builder to his credit. to his credit. Harry is, I feel like I'm one of the most driven people on the planet, but Harry is more ambitious than me. I'm not even that ambitious. Harry is very ambitious. I don't know if Lenny is.

57:41I just don't know. I just don't know. But let's assume he is. Most people would cut off their left ear to have Lenny, what Lenny has today, but he didn't get it overnight, did he? No, no, no. And I think he makes a bunch more. I'm not sure, but I think he's absolutely crushing it. He might make a lot more. There was just an article that like a year and a half ago that said he made 500 that he was on. Listen, if Sastra Digital Media does$2 million, he could make more, right? And it's literally none of it. If I knew, it's none of my business. I'm just having fun with the published thing that said it was$500K, whatever, two years ago.

58:13And I'm just using him as a stand-in for Paki. Just any business creator who is an expert on a sector or a position and does investing on the side is the best way for them to make money. Because I'm kind of in this position as well, to some degree, just going all in on investing. or is it building? I don't know. Listen, I've never talked. I don't even know. I've never read anything he's written. I know people love him. But I do think he's raised like$400 or$500 million, right? It's a lot of money. He's raised a lot. But I know he's raised hundreds of millions of dollars. I think we have an LP in common.

58:47I think he's raised hundreds of millions of dollars. Okay? So if you raise hundreds of millions of dollars and a lot of these small managers charge 2.5 % in fees per month as a solo GP, yeah, it's hard for your podcast ads to keep up. But probably if he had, my guess is he really is a full-time investor with this media on the side. Lenny is a full-time media guy that is brought in, that great investors bring into the cap table. It's a different model. And being brought, if you have a brand, like it is something I thought about in the earlier days of SaaS, or do I want to be the guy that's brought into the cap table?

59:25Do I want to bring the, because I would get these deals in the early days brought in. right? Harry was that guy in the beginning too. And you know, I, what I quickly realized is they all want me to like hire their whole sales team for them. Like I can't do that for a 25 or 50 K check. I just, I blow my brains out. But, but, but someone like Lenny who has, who people love and has great distribution, he might provide just the right amount of value for a 50 K check. Like that might be the perfect, going back to our conversation, I'm just hypothesizing that could be the perfect match to his, where he's good, his strengths, his business model.

59:55Um, and maybe Packy's got to write $10 million checks, given this fund size, 5 million, I'm guessing, right? He can't write 50K checks. He's got to write seven-figure checks, right? And Kerry writes 5 million. Kerry's average check size is 5 million. Kerry's average is 5 million. That works his model. What do you think about the Tegas business model or sort of this business model of like, or pitch book or crunch book, like paywalled data product that sells to investors late stage or hedge fund, private equity, et cetera? Well, listen, I mean, I've gotten a few pitches over the years and I haven't taken them far enough to really be an expert.

1:00:32I guess, here's the thing, but I'll tell you my somewhat informed opinion. So what, PitchBook sold for like a couple hundred million dollars a ways back, right? I think CrunchBase may have been on the block, but it's got a real, it's had its episode, but it has a real business. It has a real data business, right? I think the thing, I know when you're thinking through all these models, okay, in today's world, it's a weird world. People are mixing up so many things. Can a solo entrepreneur have a trillion dollar business per Sam Altman? But then we have BuzzFeed, which needs a thousand people to fuel the engine, right?

1:01:08I think we're not, we need to be honest about the amount of humans that a model takes. And for anything that is like you're talking about, anything that is media or data related, is there a ceiling? And anytime I talk to someone trying to sell things to PE and VC, there's clearly a real market, right? But no one, no one I've talked to has, has told me how this, their businesses are going to accelerate after 200 million in revenue. So, and you know, I, I, I, for, you know, if, if I, I just would not, I just think people, you gotta be in the right box. What was the media company that raised 40 million to collapse after a year the other day?

1:01:46I can't remember. Some veterans, some veterans of whatever, Business Insider or whatever, raised$40 million for their next generation and they spent it all, it's gone, right? Because they needed 80 reporters and all of this. So I don't know, I'm interested in those models if they can clearly accelerate after nine figures of revenue, like clearly accelerate. But too many things, like I want Sastra to get to 100, but Sastra itself cannot get to a billion. It is not possible. I'm not trying to be pessimistic. I could actually build you a PowerPoint that says it. I could build you a Google slide, but it can't happen.

1:02:22This is my life learning from Saster. It can't. There are certain businesses that cannot get to a billion, right? And pros and cons, I think keeping them lightly capitalized and lightly employed sometimes is, well, it's always the right place. Sometimes the economics can be favorable, right? I mean, sell a company for 100 million, you own 100 % of, is that better than selling a company for a billion, you own 10 % of? It's actually an existential question. It's an existential question. It's because it's what journey do you want to be on, right? But anyhow, I'm rambling, but I see too many data businesses decay.

1:02:56I see too many that have trouble scaling. And so that's why this is my really long-winded question of saying I'm not sure. I'm not sure. But VCs are cheap. Yeah. Yeah. So maybe you only do that business if you own 100 % of it or something. Yeah, but you can't invest. If you're going to be a VC, you can't own 100 % of the company. It might be nice if management owned any of this. I'm also a skeptic. The other thing, okay, everything we've said so far, I feel like I have some life experience and some good knowledge. I'll add one other thing, which I do have some life experience on, but maybe I'm wrong on this one, this next one.

1:03:32But I'll give you my opinion. Way too many people are trying to build too many income streams, too many compound businesses, too many charlatans on Twitter or X are claiming, hey, I'm going to build too many income streams. I've got 11$2 million SaaS businesses, each putting out 500K a year. So I'm making 6 million personally for my 11 SaaS businesses. Bless their soul. I don't know anyone that can run 11 businesses at the same time. I know Harry and I are both struggling to do what we do. Harry's struggling. And Harry's wildly successful. We're both struggling just to do what we do. That's like one and a half.

1:04:06Right? Now, you could hire 100 people, right? But way too many people want to do 11 pitch books or 12 data plays together. And, you know, the folks that really do that well, the PE firms have armies. They have armies. So I would caution people to pursue their passions. I see so many folks these days, and I see it with mediocre founders, and I see it with a lot of sales executives now. I can't say how many VPs of sales I interview that have two or three jobs now. And you know what? Some of them do fine, Eric. Some of these VPs of sales do fine, but they never do great. how can you run how can you be vp of sales at two different companies and run a real estate business and do another business all at the same time how can you if i when i write this on linkedin or anything i get i get lit up as toxic or whatever but how can you run three maybe with 30 people how can you run three full-time businesses right so that's why i just and so the my point is i think i'm right about this my point is i'm just i'm wary of these seemingly easy to aggregate businesses I'm wary of it.

1:05:10Now, I do think if you can do it, and maybe you'll do it with these vertical SaaS-shirts, I do think if you commit 1 ,000 hours a week and figure it all out and do new things, I do think it's a superpower if you can do this. But it is not to be done lightly. Combining 10 full-time jobs, it can be done, but it should be done intentionally. 10 lifestyle businesses do not equal one great lifestyle. I think they create instant decline in all 10 businesses. They instantly all go into decline, right? Yeah, that's a good cold open. The last question I'll ask is, if you're an empire builder like Harry, do you end up building sort of this massive fund of funds?

1:05:53Or like, what is an empire builder in VC to do? He's already started with the sales and his product thing. I think, I don't know. We'll watch, I love Harry. We'll watch where he goes. He has a long run ahead of him. I think it's funny. If you go to sasterfund.com, I have some dated testimonials on it from when I raised the first fund. And one was from Josh Stein, who now runs Threshold Ventures. And for the first one, he's like,$60 million, that's jaw-dropping for a first fund. And it was. This is just 2016. It was jaw-dropping. $68 million,$70 million, okay, whatever. That was, um, now Harry is part of an avant-garde of, he has help, but solo GPs that manage hundreds and hundreds of millions.

1:06:40How much does Elad Gill manage? Bill, he manages billions of dollars as a solo GP. Who's the trip actions guy that hangs out at Cafe Vero in Palo Alto? He manages billions. That is really American VCs. He's in all the good ones. He manages billions, billions. Elad manages billions. I believe Harry will manage billions. and maybe these other guys that I don't know packing those, they'll manage billions. They will manage billions. Um, and will this model break at some point? Maybe. Um, is it efficient though? It's very efficient. Is it attractive to LPs? It remains attractive to here's maybe the last point.

1:07:17It remains attractive to LPs in 2024. It remains very attractive to LPs to pick their manager, not their fund. LPs still want to pick the best manager. They don't want to be forced into a fund they don't want. And LPs have gotten to grips with that, hey, I may have to write a larger check into a solo GP than I used to. There may be risk, hit by the bus risk, gets tired risk, doesn't have a team risk. But my learning from the last 18 months is they're willing to do this with very large checks. They're willing to take, and it's a risk, right? LPs all have a portfolio themselves, right? They don't have one man.

1:07:50No one has one manager, but you've got to have a couple of outliers in that portfolio where the math breaks, right? And they're willing to take this risk that, hey, I'll fund a solo GP with 400 million. When in 2016, a solo-ish, not even solo, a solo-ish GP with 70 million was seen as very risky. Very risky. 400 million is not seen as risky, right? So I don't know if that's exactly what you're asking, but that's the world we're in. And it's not so much that I think Harry's going to build an empire and he may. He already is sort of building a mini empire. But what I think Harry is doing and a few others are doing, which I just don't care about, is they're hyper attuned to the markets and the landscape and what the, what LPs want and where venture is.

1:08:30And I haven't changed. I want to write one to$4 million checks when things are just taking off. I wrote those checks in 2013 and I wrote them in 2021 and I wrote them and I didn't write them when the world ended in March, 2020. But other than that, I've, I've read the same checks, Mr. Fuddy Duddy here. I've written the same checks, even as the world has changed, but Harry, Harry and the others you described, they play the, they play the market as the market has evolved. Right. And I think, uh, that's, that's the right. I think that's why when we started this, I, it's one of the many things I think I've done wrong.

1:09:01I haven't changed. I don't, I'm not interested in changing. Right. It's not that I don't recognize the power of it. It's just, I, it's, you know, it's, it's, it's, it's my mistake because it's, it's not where my passion is, Eric. So I'm making a mistake. Well, you've, you've stayed true to, to what you're good at and how you want to spend your time, which is for, for better and for worse, as you, as you've described in this episode, I, uh, let's, let's wrap on this. I appreciate you sharing your learnings and your wisdom with us. I've really learned from watching you build Sastr and the content you've put out for all of us entrepreneurs.

1:09:33So thanks so much, Jason. The only one I'll add, you can end it. The one I'll add, I always want to be positive and helpful. I would just caution people. You asked all the right questions, I think. You know, I wouldn't have even gotten this 24 months ago. Media businesses are hard. Not only are the BuzzFeeds hard and the Lenny's hard, but, you know, even just selling courses is hard. It's hard. Media business, the funky thing about media business that I don't get is like, look, if you have product market fit, you can scale fairly quickly. But then you hit a point and then we can break. You hit a point.

1:10:07And I didn't really get this until 12 months ago after all this time. At some point, the fact that it's not truly software recurring revenue. At some point, no matter what you tell yourself, no matter what you blind, at some point it bites you. it bites you because the way these software businesses scale is with north of 100 % NRR that's the way they scale because it gets harder and harder to get customers and you deplete markets and you have to expand you do this and these media businesses can seem to have very similar characteristics but just be thoughtful about where the headroom is and where they hit in that if I had my biggest investing mistake of 2021 I made quite a few I still did okay in that batch, but I could have, I'm still, I'm also going to have my two biggest losses ever, even though they're not that large.

1:10:54My two biggest mistakes was confusing pseudo recurring revenue with recurring revenue. I asked David Sachs, the same question as Sass Tranquil this year. You can watch the session on him. He said, me too. He said, I did a bunch of these. He's like, for example, I invest in a real estate brokerage that we thought was Sass. Turns out it's just a real estate brokerage. And there's elements in media. So just be, don't be suckered in by the, the small amounts of easy money in the earliest because there's small amounts of easy money right they have there are issues that don't exist in software you don't get these you don't get the scale benefits you don't get the lift right at some point at some point in software it never gets easy but it gets a little bit easier when you have 120 nrr right if you have 120 nrr and you're at scale we know we're going to grow 20 this year don't we but a media business could go from 100 million to 10 million in one year right unless you're freight waves and you figure out how to convert media to data or media to SaaS.

1:11:51Yeah. But even there, it's interesting that they're dumping the media business, right? And they're converting to data. So there are, there, you know, there's crunch space too. There's a few other examples like that. Um, but, uh, but, but, but my, but, but I don't think that challenges my point. I think it reinforces it is that they, he hunted to find ways to do more with this. Right. Um, but if he'd left the, if he, if he, if he just enjoyed his$20 million a year media business or whatever it was, it sounds good, but I think he'd hit the ceiling for it. Right. That's the, that's the thing. And just be, just be thoughtful.

1:12:21Cause, um, it's, it's just, I, I, the, I think it's just, it doesn't, when you're growing, you don't see the seal, you don't feel the ceilings. So anyhow, sorry to add, to tack that piece on if it's helpful though. I appreciate it. It's a, it's real talk. Jason, thanks so much for coming to the podcast. All right, man, let me know what else you need. I'm here. Perfect. Hey everyone, Eric here at Turpentine. We're building the first media outlet for tech people by tech people. We're the network behind the show you're listening to right now. We have a slate of hit shows across a range of topics and industries, from our AI and investing cluster of podcasts, to shows that drive the conversation in tech with the most interesting thinkers, founders, investors, and influencers, like Econ 102 with Noah Smith.

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