#55 - Lead Gen Businesses, Islamic Finance & COVID-19 Virality

Boom, we're here. Coronavirus and all. Yeah, the streets of San Francisco are empty. You could have walked down in the middle of the street and uh it would have been fine. Yeah, and um we're in this studio and Sam's just coughing up a storm, which has got me concerned. So allergies. This may be my last podcast, you don't know. Allergies. The type of allergies that you can Catch and kill you. Allergies. So uh this is for all the students of Stanford, Harvard, Syracuse. that have been shut down, they're at home. Certainly just listening to the podcast in quarantine. This is for you.

This one goes out to you. Uh yeah, good luck. All right, what do we want to talk about? We got a bunch of words on the screen. They all look interesting. Where do you want to start? Pick one. Can we talk about I read every review for the podcast. Um we have six hundred reviews, maybe. Seven ninety four, just check this morning. So eight hundred. Let's say eight hundred. Um I uh they're all five stars except for like five. Yeah. And that's cool. I like reading the positive reviews. And those five were from early on when you weren't even on the pod. So really I take those f I take those else. No, there were two not five star reviews. I like listening to negative feedback and I don't like following all of it, but some of it I follow. The first was that the sound for the guests were Bad.

Agree. Fair. Uh we will listen to that. And the second one and I hate this. I don't hate it in that it bothers me, but I I just don't Like I don't think it's bad feedback, which is we were called bros. Right.

And I don't really care about that because I what's that mean? How is that supposed to be like people use that as an insult. I don't understand why that's an insult. Yeah, it's an insult, uh, for sure, to be clear. It used to not be an insult, but being called a bro is an insult. And um Yeah, I don't know. Is it the way we talk? Is it what we talk about? Is it

I'm not exactly sure. Yeah, I don't take offence to that, even though people mean it. To be offensive. Um So I don't care if people say that.

Yeah. I'm not a bro. I'm a lover, not a fighter. You know I am a I got multiple angles. I got gears. What does a bro mean? Uh I don't know, Henry, what's a bro? We we need the

You gotta go into the mic. Come on, bro. Yeah. Uh

Maybe we have to replace Henry with a female and then we'll get more credit for not being just a bro down. No, I don't care about being called a bro. Right. So then it's a compliment. Yeah, kinda. I don't know, whatever. I'm not trying to be liked. I'm just trying to

No, well here's what I'm trying to do. I'm trying to be me and I'm trying to create stuff that people want. And if it's Predominantly People think it's bro we but they love it. I'm okay with that. Yeah, like for example, I listened to the Joe Rogan podcast. Joe Rogan talks about

His carnival all c all meat diet, you know, uh working out, UFC fighting, cage fighting, uh hunting, you know, these are cars, like these are his topics'cause that's what he's genuinely interested in. Everything else. Um and I like when people I like listening to stuff where people are interesting and they're interested in certain stuff. And so for me, the test with this podcast is would I want to listen to this? And so at the end of the episode, I just sort of Would I be interested in listening to that podcast? And if it's appealing to me, then I'm sure it's appealing to other people. It's not gonna be pe p be appealing to everybody for sure. And then the last bit of negative feedback we got, which is we focus too much on the San Francisco Silicon Valley scene.

Um And I'm from Missouri, by way of Tennessee. You're from everywhere, including Colorado. I n I love San Francisco and I hate it at the same time. I'll be the first to make fun of it. But also I love all types of cool shit going on throughout the country.

So that's probably fair too. If it's interesting, let's talk about it. In fact, I actually think personally, I think we skew a little too far in the kind of like low tech ideas. And I think there's a lot of interesting high tech ideas that don't require a high tech entrepreneur. For example, I don't know how to code. But I've started m tech tech startups in Silicon Valley taking venture capital money. and worked with a engineering team where I'm the only guy in the room who doesn't know anything about engineering. You can do that. So I actually think that there's plenty of cool stuff that we're not talking about that I'm gonna be bringing more of. So if you don't like the Silicon Valley stuff, I'm sorry. I'm gonna try to bring more

uh interesting technology uh to the table because there's a lot of it out there and I feel like we haven't been talking about it as much. The way that I describe San Francisco and Silicon Valley is to me it's kind of like Hollywood. But it's only only if you're trying to make like a Like a big blockbuster hit. Right. Um I believe that you can make those anywhere.

Mm. It might be a little bit more helpful if you are physically in Hollywood because you'll not because the chances are necessarily higher, but because you'll be around other people who have similar wants and dreams and Yeah. For sure.

But You can certainly make it from anywhere. Absolutely. It's been proven. Um, all right, let's talk about some of these things. Um, w let's start with Let's start with the Sequoia memo. Okay. Did you read this?

No, I avoided it on purpose. Denial. The best the best approach. Yeah, I uh We haven't raised venture capital, so it's a little bit different. It's not as applicable, but once you explain it, so Sequoia is one of the biggest venture capital firms here in Silicon Valley. They're famous for back in two thousand and eight, I wanna say, they released this presentation called RIP Good Times. And they basically they called an emergency meeting of all their portfolio companies, they invited them to this dinner. Locked him in a room.

presentation up on the screen that was basically like, Hey, the good times we've all been experiencing are about to end. Here's why. Most of you entrepreneurs, you have not been a part of these cycles We've been investors through the dot com boom and the bust and then this new boom. And this was right before the sort of financial crisis of two thousand eight.

And they told him look Money is about to become Hard to come by. Um, we are going to have um a giant financial crisis that will have ripple down effects to you guys, to your customers, to your clients, to your investors. And so

You need to start tightening up. Anything you're wasting money on, you need to stop wasting it. Anything uh if you haven't raised money, if you don't have twelve months in the bank, you need to go raise money right now to sort of uh be able to endure a downturn. And they just released another one.

Which is the new Sequoia memo. So that was two thousand eight. Now they released a new one and they basically were like, look This coronavirus stuff is a this is a once in a hundred year Virus. And There's this

It's it happened in China, which is like when you shock China, you shock the global supply chain. And also now that travel is gonna stop, a whole bunch of business is gonna come to a halt, that stock market's gonna go into a panic because we've been in a ten year bull run, and that's about to sort of end anyways. So They they told him the same thing. Change your spending habits, you need to tighten up.

Uh raise money if you ha if you have an offer out there, take it. Uh, don't worry about valuation, just take it and get the money in the bank and um And you know, you need to go into sort of survival mode. You need to change gears. And that's what just came out, which I think is very interesting. Have you made any adjustments to your business? Not yet. But

I live like this anyway. I'm kind of a cockroach in the first place. And And I actually think that Me living this way has kind of been a uh It has been it's hurt me more than it's helped me actually. I think it it it made it so I wouldn't spend enough money, which

If you have a machine that turns a dollar into more than one dollar, dump the Dump the truck. your money truck in the ad spend or what you mean. Yeah, I mean look if you have a a funnel where you or a product where If you just spend more on marketing or spend more on engineers or spend more on content creators and it turns that new customer into more than what you acquired them for. Right. Then

If anyone had a a little machine that turned one dollar into one dollar and one penny The name of the game is Throw as much money on into that machine as you possibly can. As fast as you can. And I've had those machines and I didn't capitalize on it. So I've lived this way all the time and I think it's actually hurt me a lot. But in times like these.

Bring it on. Yeah, you don't need to adjust. We haven't changed how we've done things just because we're always tight. Yeah, and your company's in a good position to like just now before this, we were looking at a company's um P and L And it was like cash in the bank. Two hundred twenty grand or something like that. It's like dude, you're couple months away from insolvency, you know, if that was the case. Um whereas you guys are in a much better position. Yes. Um I do I am I do have a little fear

I don't know how I feel about this corona thing when it m means what it means for business. I do think there I am on the side of um I think it's bad. But I don't think it will be as bad as I think.

Or as I originally thought. Right. I I guess I just have faith. I have a lot of uh blind faith that it will work out.

Which So I've been on the other side of the so So When we were doing our idea lab. Uh I worked with this guy, Michael Birch. Michael Birch was is known as, if you just Google, he's like one of the top growth guys in the world. He sort of

was doing and invented viral marketing before viral marketing was a word. Uh he did it because he didn't have money back in the day. So he built one of the first address book importers where Uh for this company called Birthday Alarm he had. He was like And I think he did it before that at um Rick Marini's company, I forget what that was called. Berthalum was before that. So Berthalum was the first one where he was like, Hey, I want people to send this to their friends. What if I just imported all the addresses from their hotmail?

And then I made it easy push this button to send it. And he's like he he literally told me at his house he was like I thought that ten days later Like I thought there's no way they let this go for more than ten days. And he's like, It's now been fifteen years and this thing still works. And he's like, um so he was working on fire marketing because he just didn't have a budget. So he's like, I gotta use my customers to get me more customers. And to explain that

You didn't explain it totally clear, but Someone signs up for your thing and says, Do you want to invite your friends? Here's your Gmail contacts. Click Select all and send an email to all of them. And so in this case for birth alarm it was I make a calendar where I'm s and I'll invite you I'll say, Hey Sam, can you add your birthday to my calendar? I I don't want to forget your birthday This is before Facebook existed, by the way. And so you would add your birthday to my calendar and they would hey it would say, Hey Sam, don't you wanna remember Sean's birthday? That'd be nice, like reciprocate.

And you'd be like, Yeah, sure. And then it would say, Hey Sam, you got one birthday on the calendar, but you surely got more friends than one. So why don't you invite some other friends? Here, let me make it easy for you. Would you like to import all your friends from Hotmail? And you're like, Yes. And then And he added one thing at a time to make it more viral. So he he would add

Um a pre filled message. 'Cause he's like, Oh, they're people are stopping because they can't think of what to say. Right. So here's a prefield message that I know works. And then I just say send. And so then uh he got this thing super viral. So You know, Birthday Alarm grew to fifty million members. With zero.

Paid marketing. Fifty million. And um and then he's done this again and again since then with his social network, Bebo and others. So when I worked with them The name of the game was Viral Growth. And so we did a charity campaign to try to raise money for charity water. Well, we made a story, a website that was just telling a story of this boy Jean Bosco with no water.

And then we said, Can we get this to go viral? So we did the same thing, import import emails, get people to send the story to their friends. And raise money for the cause. And we got it to go viral. So I've literally been been it where like nothing, nothing, nothing. You'd come into work, nothing, no growth, no growth, no growth.

And you would just tweak the right thing. And then all of a sudden the You know, between overnight something would have doubled. And the next morning. Doubled again. Next morning, doubled again. And I remember it just going from zero to five million people.

Uh signing up for this charity thing. Within like you know, two weeks. It was insane. And so I've seen viral growth and how counterintuitive it is. Like you don't think, you know, we well, yesterday we had four thousand people, so today we're gonna have I don't know, five thousand, six thousand. It's like no, you're gonna have sixteen thousand.

Then you can have thirty two thousand. And it's gonna you know, it's gonna go up to the millions within a few days. And so I've seen viral growth. when you're talking about it in the good sense from a product perspective. Now it's viral growth of an actual fucking virus. And so uh and it you can see actually in the US, somebody did a great graph where they mapped Italy where everything's on lockdown because

Italy has started spreading like crazy. And they showed. Italy day one, US day one. Italy day two US day two, number of cases. And the bar graphs are like identical. And the thing is we're just in like whatever, day six. And uh you can see by day twenty one where this thing gets to if you don't like lock everything down right away. So

I am very fearful because I've seen viral growth. I've seen viral spread. And I know that it doesn't work the way I breaks our brains. Our brains think things go linearly. But this goes exponentially and it's really hard to just comprehend an exponential spread.

And to take the story a different way than coronavirus, which is that stuff that you're describing, that Michael Birch thing. You can actually still get all these stup cool plugins that Auto uh automatically. Like allow people to share

a pre populated message to all their Gmail contacts. We used it. And People still share. Yeah and the the the math works out where you know, um'cause you would think I would never do that. I wouldn't email all my contacts. But people do it and what happens is you know, one percent or less will do it. But you look at the math. One percent of people do it and on average they have three hundred twenty six contacts.

So For every hundred people that come in, you get three hundred twenty six people blasting out. It doesn't work as good as that time because the email open rates are much higher than now people are like oh I don't know. I never talked to Sam, so if he's sending me this, this is junk, this is spam. Uh now people filter it. But in certain countries it works. Like we were growing like we could do this Like clockwork in India.

In India people still open it like they did in the US ten years ago and they forward even even higher rates. They don't care. They'll forward everything to everybody. And so India, Turkey All these little countries where we would see this ex crazy growth that you couldn't get in the US and or UK anymore. They kinda suck because the

monetary value ends up you know, the value per user is lower there. But It does still feel good to get like people are shocked by that. Yeah, we did one through SMS, I remember, and over the weekend it went viral. And like, you know, during the week, Monday through Friday everything looks fine.

Is growing but like not at a crazy pace. We didn't realize the viral coefficient was two. And so over the weekend it took off. um and started compounding on a big number. And we racked up a hundred twenty thousand in SMS a hundred twenty thousand dollar bill in SMSs. Going through um

Uh Kazakhstan. I was like, we didn't even know we're growing we're gonna grow in Kazakhstan and it went crazy and turns out texting in Kazakhstan is super expensive. And so one hundred twenty thousand dollars in two days we had to pay off. That's crazy. Sucked. Well w I need it we need to do the texting stuff, um, which we haven't. Uh you wanna talk about Zumper? Mm-hmm. They just raised uh Was it forty million dollars today at a four hundred million dollar valuation total, they've raised one hundred fifty million dollars in valuation. Uh

It's a cool That's a cool service. If you're a consumer, how does it work? So you ever use Zumper? If you're trying to find an apartment You'll probably run into Zumper'cause you're like it's a search engine to find apartments to rent. Yeah, and typically for these new guys, San Francisco isn't the major market. It's typically uh

more middle of a m more places where they have high rise buildings, which we don't have a lot here. But basically if you Google Chicago apartments or moving to Chicago or something like that. Zumper or apartmentless mile, the place where I used to work, or a bunch of other things like that will come up and be like here's eight hundred and forty three apartments available in Chicago. click here to get information and submit your information. Okay. Great.

Here's how they work, which a lot of people have no idea how they work. Henry, I'm gonna explain to you how they work, and you tell me if you've ever heard this. Okay, so they're lead gen companies. Do you know what a lead gen company is? Okay, the way it works is Uh and a lot of people are shocked by this. And it's actually way easier to start than most people would realize. So the way it works is There's I don't know how many

there are who do this, but I know that there are for sure four or five that do this. that are big names. And so Just in the apartment space. Just in the apartment space. So there's apartments dot com, I believe there's rent dot com and there's maybe two others that are quite large. And then there's Dozens that's a little bit more than you don't even realize exist, you'd have to Google'em and find'em. But what they do is they work with all the big apartment buildings. So

Uh there's Graystar, which has probably millions of apartments. Then there's um Co Star, which has a bunch, and then there's um Every apartment building that you have World Star. Avalon. Avalon Bay, I think they're called. There's a bunch of'em and they have millions of units. And what they do is they go to red dot com and they go

uh or apartments dot com and they go for every person who signs a lease with us Or who calls our our phone, we're gonna give you a hundred bucks. And so what Zumper can do, or probably how they start it out, or what anyone can do is they go, Hey, apartments.com, you guys are getting a hundred dollars per call. Well, you give us ten dollars per email that we give you of people who are qualified leads. So What Zumper m uh did, I imagine they did this when they launched, and I'll explain why I say when they launch, is what they did was they go to these places and they go, All right, give us a cut of the revenue per email and so the math works out that if we send you five emails Basically people who said, Here's my email address, here's my phone number, I'm interested in a two bedroom at this particular building Uh apartments will

We'll be like, All right, we'll give you ten dollars for that because we're pretty confident that that for every five of these we collect, one of them will become a lead. And so now we'd make fifty bucks in profit. Mm-hmm. And so what Zupper does is they create a different funnel where Uh they learn how to rank really high on moving to Chicago, finding an apartment, or they are able to have really good Facebook ads and they get all these leads, and that's what their margin is. And so the mar and margins for these businesses, I know this firsthand can be sixty to seventy percent gross margin, which means Um

Let's see, the w the what's the map behind that? Million bucks comes through the door, you paid, you know, two hundred fifty K on search engine marketing. Yeah. But you know, the rest is because there's no COGs. There's no there's no physical product you're selling. So you have a a very high margin product, sixty seven percent margin. plus whatever content staff you have internally, that's your other cost. So it's just a lead gen company. Yep. And the interesting thing I've known a lot of people who have these lead lead gen companies. I knew a guy who had a lead gen company for swimming pools. So if you wanted to buy a swimming swimming pool, you'd Google But um Swing pool repair man or Uh indoor ground pool. Indoor

Uh In ground pool setup California. Or something like that. He's number one. And he would he would be number one. You submit your information and he would sell it to these people who go and service them. You're a middleman when you're a lead Now there's pros and cons to this business. The first Pro is you could set these up really cheaply and you could start making cash flow very quick.

Like if you were able to spend one month just building the site and creating the relationship with this person, you could next day go out and start making cash so long as you were profitably acquire a customer. Right. So that's great. The second great thing is you could do this for most anything. The best way I think to figure out how to do this is you figure out what has the largest total market size. with also the largest possible Cost per lead. Um with also the least amount of competition. And you do like a uh grid. Yeah, like a grid. And so for example

I've been bullish on truck drivers. Um, the reason why is I think that there's a whole lot of truck drivers in America the average truck driver makes a a good salary, fi let's say fifty thousand dollars a year, therefore recruiters would be willing to pay like a hundred bucks per lead. So I was like, can I send leads there? Or you could do it for uh local services. So

I need a uh landscaper or I near need irrigation work done at my home right my home and someone will buy those leads for I don't know fifty bucks. So you can do this for anything. Right. You just have to optimize for what So my father in law's in the senior living business. He owns a couple of facilities and the biggest thing for them, like his business looks great when he has high occupancy rates, and it looks terrible if he gets high vacancy. So low occupancy. And um So there's companies out there that do this for seniors. If you start Googling like, you know

You know, um memory care And Alameda, California. There's a company that will pop up right in the top of surge and say, Hey, we've reviewed the top fifteen um you know facilities here and come read about them. Or hey, are you looking for this? Talk to our consultant. Just put in your email address here and we'll we'll help you get land in a spot. And so then they'll pay

these Legion services a high amount because You know, somebody who goes into a senior senior facility, they're paying eight thousand dollars per month and they're usually there till end of life. And so you get, you know, the very high lifetime value of that customer. So you're willing to pay a thousand dollars per qualified lead who's looking in your area. I don't know if it's that exact number, but high high price. And I have firsthand knowledge. I know someone personally and I know the financials of a senior

home living or senior living lead gen business. It made hundreds of thousands of dollars a month in revenue and a very good profit. I know someone who did it for rent to own properties. I know people who have done it for like I said, swimming pools. I know people who have done it for apartments. I know a guy who did it for local home services and did about sixty to seventy million dollars a year in sales. Right. And so that's the name of the game. I also know people who have done it for jobs. Jobs is another good one. Now like Rig Up has done this. They've raised money at two or three billion dollar valuation, and they've done it for oil workers. And the way the math works is there's actually way more oil workers in America than you think, hundreds of thousands, or can be hundreds of thousands. And those oil workers

uh the barrier to entry is relatively low. You don't have to have uh like a master's degree in something, so anyone can do it or a lot of people can do it. And the salary is quite high, a hundred grand a year in some cases. So they're willing to spend a lot of money. And so it's a really interesting company. B or a business, rather. And a lot of people don't know that's how it works. Now here's the downside. The downside is lead gen companies can be very transactional, which means as a business, you only capture value and make money the more leads you're coming in through there, and often that means you only make money when you're spending money.

a lot of times you uh they suck at building brands. So like I said, you could spin something up really fast, that means it can likely go away just as fast because let's say that um Like if you create a URL that's like Home uh senior home living California dot com That is not like maybe maybe someone was just going to Google that and they're going to see it one time. Yeah, and then they're going to get their and they're done. They're never going to think about you ever again. You have to pay for them again. And so if you want to more customers, you've got to pay again. And so that's quite hard. So if you can build a brand around it, then that's where it's really interesting. And the second thing is that you are dependent on the person buying the lead. So

In my case, I worked for a a person who was doing lead gen and they go, All right There's a cap on this. Like we can only make a certain amount of money giving leads. The way that we become a huge business is we get we make a relationship directly with the apartment buildings. And Um go straight there. Go straight to them. Now the reason why that sucked is because the person buying the leads was like, Oh

You're our competition now. Right. You're out and they cut it off and their revenue goes away immediately. Right. And so what Thumbtack did, I like Thumbtack, what they've done is they've built a direct relationship with the people. So if you Google San Francisco wedding photographer and you see a wedding um photographer on thumbtack, they've built that relationship with them and thumb and that wedding photographer will pay thumbtack directly for a lead. That's great because there's no middle band to cut out. Now the downside with that is it costs a ton of money to do. This is like a really big thing. To build a marketplace. Likely have to raise money or figure out some scrappy way to get it done.

That's my rant on Zumper. Yeah, and the the big version of these, if you take it to its absolute max, is like Expedia or Booking.com. Right. So what they're doing is they're saying, Okay, cool, you want to book a flight? I will become the best at ranking for how to search for flights, find a good flight, here's some recommended trips. And then we just the airlines pay us a a commission and affiliate fee. for every lead we're we're sending them. And that is a notoriously difficult niche. Yeah, th they they've done well, but they're hyper competitive and they're you know, um

It's always contentious. Um and then uh hotels is another one that's quite challenging. If I wanted to make money really fast, I would find a relatively boring one like trucking jobs which I find interesting, but most people do not, so they will not enter that. But flights And travel is a lot sexier and so it's can be a lot harder to do it. I'll give you another niche one. Um I have a friend who created this business called Applyboard, and what he was doing was

Uh international students. people you know, I went to high school in China and when I when I was graduating in China, everybody wanted to come to the US to study. Everyone wants to come to US colleges. So internationally, India, China, Indonesia, Malaysia, the best students all want to come to the US if they can. So they wanna come to the US but they don't know where the hell to start. They don't know what the schools are. They don't know w how to apply. They don't know how to translate their They're scoring on all these like, you know

aptitude test in Malaysia to like what the US schools want, et cetera. So there's a there's a barrier there. And the US schools love foreign students because they pay more. Like I think a st a foreign student who international student who's going to school at Berkeley will pay double the tuition as a local student. Not just an in state student, like a US out of state student versus international, the international student pays double. And uh Alan, was you? Uh you paid double?

More than double. So I went to school in Australia. I think the average Uh semester is like five and six thousand for like a Not always.

Mm. I pay Wait. Okay, so all right, great. So so you paid like nine times as much um going to going to school. That's insane. So basically what he was doing, so he went to colleges and and You have all these small colleges that just need applicants because they don't have a brand name. So yeah, a lot of Stanford and Harvard, they don't really care because they're getting so many applicants anyways, it doesn't matter. But like

San Jose State. You know, they were like, Hey, we will pay you a thousand dollars per admitted student. three thousand dollars per admitted student. So he was getting three grand per admission. uh in contract with all these different schools, and then he just had to do lead gen on the other side for students who want to go to school in America, which was actually a big market of people who were searching for it. And what happened to it?

Uh he's still going. I don't haven't checked in with him lately, but Hope you're doing good. Martin, I hope you're doing all right. They were making so much money for it. They'ren't stay afloat. Yeah.

So if you go to Campus right now it's literally just like international students every yeah. Yeah, I went to University of Sydney as well for a little while. It was it was crazy. So did I. We should we should actually talk about that uh on another time because that's an i there's an interesting thing there. But to uh get back to the lead thing to wrap this up. There's actually a lot and this is way bigger than people think. And one of the biggest ones is credit cards. Credit karma. I don't know what they do in revenue, but they still sold for eight billion dollars. I bet they did one or I bet they did a billion in sales. And what their hook was, we're gonna get you to sign up for a report. A credit a free credit report and we're gonna recommend credit cards for you to use and they'll make a hundred dollars per credit card affiliate. We get you they get now think about credit cards, huge market, huge referral fees, very competitive. Nerdwallet does the same thing. Uh they're they bootstrap I think

I don't know if Multi hundred million around. Yeah, I mean, but I think they bootstrapped to like fifty or sixty million in sales, then raised money. So it's quite Good. Now here's another company and here's one more interesting thing. You know the penny holder? Mm-hmm. No, I don't actually I don't want to be a good thing. The Penny Hoarder.com. Kyle spoke at HustleCon, he's a cool guy. He he's a g was a great success story, still is, but he uh started the Penny Hoarder and what it did was he would write about when he was

he would say, I didn't have any money, I was I was trying to pay my bills and so I would do things like drive Uber or I would um do coupon clipping and he would blog about it and w any time someone s saw an article that he wrote about driving for Uber, he would make two grand per Uber driver. And so he was like, Oh, this is cool. I should I'm gonna blog about all the ways in which I can save money or make extra money. And so he did that Like through uh like there's websites where you can fill out surveys and make dollars. I make a few bucks and he would blog about it and m mostly middle America moms would see and be like That's great, I'll make money on the side and I'll sign up and he would get an affiliate fee and he scaled this thing from zero to sixty million in sales, completely bootstrapped in like

Six years. I love this. And but here's the problem. There's this other company called Fluent Media. Fluent. I think it's called Fluet. Fluent is a publicly traded company. And They are performance marketers, which means they do what I'm describing, but across

Tons of niches. So someone will say like Direct TV will come to them and be like, Hey, uh we'll give you eighty dollars for every customer you send us and they go great and they spin up these landing pages and Fluent Media does this with trucking as well. They do a bunch of stuff. It's a big business, publicly traded. They saw Kyle's website and how much he was killing it'cause he talked about it a lot for PR, which I mean it's good and bad. Good and bad. And they just

They created like the dollar saver or like something like very similar like the penny hoarder. They just copied the website, copied the articles, and then they threw it on Facebook and they drove traffic to an article that said, Here are the hundred best ways to save money and they m did the math so they could get a click for a penny or they could get a click for a dime And each person who came, they would make twenty cents because that's the conversion rate of which people would sign up. And so Kyle at Penny Hoarder, this is all public, you can Google it, sued them. And what they found out was fluent media

According to the lawsuit hired one of the penny holders Employees And they said, Yeah, here's how we did it. And th so they just spun this up and it made a ton of money right off the bat. Yeah. And so these are the pros and he win the suit?

Uh I think it's ongoing. It's ongoing. But uh For Kyle. But this is why this is interesting. Um because I and the penny holder amongst its crew, amongst its audience, I think has a great brand. And um and Nerdwall actually at this point has a great brand. At first Nerdwall was a simply a You're just gonna Google our Google best credit card and we're gonna show up one and you're not never gonna remember us. But at this point they're doing all this advertising and commercials and people like turn to the nerds like it's working. That's their commercial. So really interesting business model. I l I like Lee Gen um

But a lot of people didn't realize how that worked. Henry, was that interesting did you learn how it worked? That was great. Yeah. Uh all right, I got another one for you. Um, Manzil. So this is cool this is one of my favorite reasons to do the podcast is that interesting people just reach out and tell me about their business. So Uh Manzil is uh this so this guy Sam reached out. He listens to the podcast. What's his last name?

Sam Malako, Halako, something like that. So he was like, Hey, I got this business, you know, would love some help with it, um, or just would love to chat. And so I said, Okay, let's let's chat. So I get on the phone And I end up blown away by what these guys are doing. So they teach me about something I've never heard of. And is now very finance uh very, very uh Uh fascinating to me.

So what they do is Manzel does Islamic financing. Oh, we've talked about that. We talked about it not on the podcast, but we talked about it offline'cause I was So

Um Henry, do you know what Islamic financing is? If you didn't know Legion, I don't think you'll know this one. Definitely not. So Are are you Muslim? I'm not. I'm Hindu. Well I'm n I'm neither, but like my Uh my family is in the Um

So I didn't know about this, but basically In the Muslim faith. There's um Actually uh sort of Uh the advice is against

Um Traditional loans. So Uh uh interest which is known as like riba I think in the in in their faith. Is

uh frowned upon in these uh a traditional mortgage where you go to the bank, you have your down payment, you take out a loan and you're paying interest is actually not compliant. With um with their with their faith and their law. And Which is c actually common in a lot of other different

religions. Is that true? Yeah, so I'm I'm Catholic, Christian, and uh R was raised that way. And there's definitely rules regarding handling money and interest and things like that. Yeah and I think the the fundamental basis and I'm gonna kinda butcher this, so I apologize, but I'll I'll I'm just trying to explain as best as I understand it. Uh so So apparently uh you know money uh sort of fiat currency, which is just not uh pegged in anything. It's just a made up concept. Uh the the belief system is that money has no value, inherent value in itself.

And so you should not be charged interest for borrowing money, which is this sort of abstract concept. So they have loans or they have uh sort of um agreements which can work as long as both sides are taking shared risk. and um getting sort of shared shared upside, shared return in some way. Um

So there's Sam Islamic? I believe so, yeah. And his p his partner Mohammed is is also. And so they were explaining to me that hey, there's this big thing called Islamic financing and there's these exl uh Islamic challenger banks. And so if you've ever heard the word challenger bank Uh check this out. It's pretty pretty cool. We know that banking's been around forever. There's these big bank brands that are you know, in every country there's there's big banks that are worth billions of dollars. And recently over the last let's say five to seven years, there's these things called challenger banks or neo banks they're called. And so in Brazil there's a bank called New Bank, NU Bank. And br and New Bank is worth ten billion dollars. It's one of the most valuable startups in Brazil.

In uh the UK there's Challenger Banks. Oh my god, I'm gonna forget the channel. Challenger just means a new one. That's a startup bank. And they're they offer different things. So what what these guys did was Better digital access, so mobile apps, uh quicker ability to get sort of credit cards and and debit cards spun up. Um and so there's you know, there's a couple of them that are huge now. Um few different multi billion dollar start ups done this. What these guys have done is uh they've done this for a faith based uh bank, which is basically saying there's a set of customers out there, in this case Muslims, who are not being served well by the generic banks and we can make a bank that serves them better.

And the way we're gonna do it is you wanna take a mortgage out, you can either take a sort of a mortgage out tr a traditional mortgage which is not compliant, or you can m take one out that's compliant with your faith. We've come up with a mechanism that is blessed by sort of the the village elders, you know, the the sort of leaders in the f in the community. uh that says yes, this is you know, sh I think Sharnia Law is what it's called. It's compliant with Sharnia Law. And then on the other side, this is Um this will this works as a mortgage, you can actually buy your home. And so these guys have this have this concept and in other countries, this is apparently really big. So in Africa, Indonesia places where the Muslim population is the dominant population. They've already solved this problem.

But in places like US, Canada, where it's just a minority of the population is is Muslim They don't have these banks yet. So I love this start up idea because How are they doing? So w how they're doing so they're g they've uh they've spent a lot of time making sure that they can actually get it to be compliant and actually get the financial mechanism to work. That took them a while, over a year, maybe two years Now they've gotten that to work and they have Uh basically

they have two sides of a marketplace. On one side they have people who are investors You know, if you're gonna issue mortgages, their average mortgage is like five hundred thousand dollars. So it takes a lot of capital to start this business. They don't wanna be the one They don't want to go raise a billion dollars and then start issuing these loans. They want on one side to have investors Who uh will put in the capital

to fund these loans and on the other side they wanna have the borrowees who are trying to buy a home who can pull from this pool of you know, sort of halal financing. You know, this uh bl this financing that's compliant. And so they have ten million dollars committed on the on the investor side, one point two million in their bank, ten million total.

And then um and they're just c every week they're trying to close more of those checks. I think Which is a small amount, but th this is like just inbound interest. This is not like they've they haven't really done anything yet. But ten million will let you s let you do if you just do half million dollar loans. That means they can do whatever twenty mortgages um w uh right now. And every mortgage has a certain value. So it's about worth about, I don't know, twenty K a year to them. is that mortgage just in their fee that they get on top of it. Um And so and on the other side they have all these applicants, I think you know, about a thousand applicants, and these are what they call superprime applicants because these are people who are doctors, lawyers, they have good jobs.

The they have the money, they have the means to to to afford their homes. They're just looking for a solution that doesn't force them to compromise their faith. So I really like this business. Cool. There's a working model in the UK, there's a working model in um in Africa, there's a working model in Indonesia. There's nothing in Canada where these guys are, and there's nothing really in the US uh where How many Muslims do you think there are in in America? Think there's uh look this up. I think there's like a couple of million, only two two million I wanna say.

Roughly. Um That's pretty interesting. I like that. I think that there's a bunch of weird rules around banking. I mean, they're not weird. They should be there, but Um

And so starting a a starting a bank I think it's It's almost like nearly impossible. It's very difficult. So what all the neo banks do, all the charter banks do. They're not real banks. They sit on top of BB VA or they sit on top of these other banks and they're just the applic they're the consumer facing layer, but the banking happens with their underlying partner. And it's sort of like the lead gen model that you're talking about. They go to these banks and say, Hey, I can get you a whole bunch more customers. I'm gonna spend all the money doing the marketing. They'll be banking with you, but we own this sort of relationship. Yeah, and that's actually pretty common. I use this thing, my debit card is simple.

I've heard of it, yeah. Um this is my debit card. It's pretty cool. I like it because the customer service I can just text and they're like easy. These like young guys in Portland and they un they're easy to chat with and they answer twenty four hours a day. They were acquired for a hundred million dollars and I was like

Freaking bank, that's it. Yeah. And I did read. And it was what's it called? BBVA. Yeah. That's who they use. BBVA compass, I think it's. Exactly. They're under they're under there's a few that are underneath all these now The very first there's uh now one of the challenger banks got their very first banking charter banking license which is very rare. I I forgot their name, but they just announced a couple weeks ago, last two weeks that so the f so now it's very interesting. Now once that seal broke,'cause it was so hard to apply for this. Yeah, I think we all want it. Robin Hood wants their license. Brex wants their license. It's just very hard for them to get the I think you need five per what is the number you I think you need ten percent In reserve. That's not even the problem. It's just that there's no incentive for the government to give these out. They're like ah you you kinda highfalutin, you know, tech startups, do I really want to give this to you? You've only been around for so long. I don't know if I have the trust in you. So now the seal's broken. The first one got it. We'll see what what that means.

Um, but what I like about these guys is they're not a bank. They're not taking your deposits. They're just doing loan issuance. So on one side they have the reserve cap the the investment fund. But they're using other people's money? OPM on one side, yeah, other people's money to make the the loans and they're the broker and they take one to two percent of the transaction fee. Uh and people are willing to pay a premium to have halal financing. Just like people willing to pay a premium for halal meat or for vegan or kosher meat, you know, whatever, like people are willing to pay a premium for things that are Compliant with their faith.

So I think this could be big. And you know what's interesting? I think that they've had a hard time raising money from traditional VCs because this is hard to understand. Yeah. You have to like You know, most VCs are old white guys and you know, it's uh the sort of cliche and you know, I know they do look into it, but I think that there's N there's the natural challenges of any high aspiration startup They have those.

They they have the problems that any any startup that's really ambitious. But then they also have the problem of like First, they need to educate you about this problem. Like you saw how I stumbled through this explanation, and I talked to these guys for an hour, you know, and that's where I am after an hour of really trying to understand it. But you all and you ran this by Furcon, your your best. So I ran Yeah, I ran it by him. I introduced them yesterday, I said, Hey, Furcon understands this. He's Muslim, he's an investor, he's a technologist. And he's an entrepreneur. If he doesn't like this, I don't like this. And what did he say? And so he so he d he's like I've looked into this. He's like a lot of my friends really wanted this. I tried to look at what options are available in the US. They suck. They're really super high premiums. Is he practicing? Um yeah, like You know, to an to an extent. Like what I wanna know is do really like he doesn't pray five times a day, but he doesn't eat pork. Right. So he's like culturally. He drinks, but like his dad runs the mosque in San Jose and you know, like the it's

So even people who are like Culture who aren't incredibly devout are into this. If he had the option, he would prefer halal financing over not. If it was convenient. And he's like the problem with all the existing options, they're not convenient, they're not easy to use, and they're very high premiums. He's like, If these guys did it conveniently, I think this could be big. So he's gonna talk to them. We'll see. Like I'm I'm not a practicing Catholic anymore. Are you are any you guys Catholic? You're Catholic for sure, right? Yeah, I've been bad about it, honestly. I went to like all boys' Catholic high school, so Me too. I went away. Catholic school. I don't practice anymore, but that's another thing. I don't eat meat during Lent on Friday, so I try not to.

So it's kinda it sounds like that's what it it's kinda like where it's like it's a You prefer it, but not Yeah, you prefer it, especially if it's convenient for you. You you you know, the way Henry just said that a lot of guilt there of like Yeah, I should, but I don't. So there's you know, if you can make it where people do what they want to do Without lifting a finger, then they'll do it. You know, that's great. I like that I like that uh thing or I like that angle of finding'cause I don't know anything about Muslim culture. I don't know anything about Hindu culture, which is you w where you're from. You

I don't know, you probably don't know too much about Catholics. Yeah. It's kind of an interesting way to like look at how other religions do things. Um Another thing that we should talk about Not today,'cause I don't think we know what we're talking about. We definitely don't yet.

is building things on top of banks. I think that's super interesting. But what do you mean by that? So like what Simple did and like what the what what's the name of this company? Manzel. Man spell it. M A N Z I L

Manzel. Okay, kinda like what Mansel did, a building Up building a front end on top of someone else's back end. Right. Which is the bank. Um, I think that that's really interesting. Simple dot com is my uh card. I didn't know they did this at first. This is kinda what drop shipping is?

So where you build the layer that says, I'm gonna get the customer to a landing page and they buy. Yep. But it's just gonna place an order with this other manufacturer and they'll ship it directly to them. Um like simple They did this all I mean, it's it's a little different. The card is all white and it's a slick looking. Yeah. Um and their app is really good. And so it's kind of interesting. I I think this is kinda what Brex is doing. It's uh Bricks. Totally what Brex card. They're layered on top of MasterCard.

Um I I love these things. I I really like that. Um Let's talk about uh Well how how many minutes are we in? Uh we're we're about an hour in. Okay, you wanna wait to.

We can um answer some questions or what do you want to do? Uh let's do one of these fun ones. So let's do the rebranding words. So this was in the hustle group hustle trends the trends hustle Facebook group, which is like a source for for entertainment and gold. Which go to trends.co And sign up and if you use the phrase Million? Million. You'll get fifty percent. I believe that's it. Is it is it slash million or is it promo code? Both. Both will work. Trans.co slash million or trends.co. And you guys have this thing where you can sign up for a dollar, which is pretty dope. I love it. I love it. Um okay, so uh so so somebody in the group, uh can you scroll up? I don't remember if I have their name. I I I I should have their name to

Uh Your other up. Up yeah, there you go. Okay, we don't have the name. Uh we should We should uh Alan, will you find the the name of the guy who who wrote this because I wanna give him credit. Um

So somebody was just talking about like Hey, isn't it funny how people just rebrand stuff and like give it a whole new meaning? So he's talking about uh MSG? He's like, Oh, MSG, which was like got this really bad reputation for being a food additive, whatever, and just rebranded as umami. And now it's this like foodie word that like is good. And somebody came into the the comments with like a bunch of really funny ones. You want to know another food one, Aeoli. Aoli?

Ha ha ha. Only if mayonnaise has a little garlic flavoring. Look it up. I don't think that's true. I'm pretty sure it's better for you than mayonnaise. Look it up. Aeoli is flavored mannace. Look up Aeoli versus the case. Google is Aeoli Mannace? I'm telling you, Aeoli is manna's but there's like way more. Yeah, you have to do it in a separate tab. Yeah, you can't you can't do this because we have to do it. Well we'll hear it right there. What's the answer say? It says it right there. What's the top result? What's it say? Is Aeoli any different than mayonnaise?

Yeah, Am I off? Alright, Henry Wins. Okay. It's not it's not exactly Mayo, but I like the intent. Alright, so let's go back to the doc. Yeah. Yeah. Yeah, that's awesome.

Yeah. I love it. So so this guy had a bunch of'em for business, which I like. So Or Nerds. Um when you skip you know I I don't know, I'm I'm like this. I skip breakfast for years'cause I'm just lazy and didn't wake up early enough. Um and now it's intermittent fasting. It's like this health trend. It's like oh I'm fasting till noon. It's like yeah, you skip breakfast.

Okay, Marlin Uh Marlin was the original post and then who posted all these comments in it. So Logan Jeffrey. Logan had a bunch of them that were fire that I like. That's the reason I put it on here. Okay. So uh when you just quit your job'cause you want to travel, now that's called dispersed retirement. Which I like. Um when you're a grossly underemployed writer or marketer, now you're a digital nomad because you have to go live in some low cost area. Or a coach. Um When you just like to eat beef and cheese'cause it's delicious, and now that's called the carnivore diet or keto. I used to call the salami and cheese uh redneck charcuterie. Um sleeping around?

Online dating. I don't agree with all these. I'm just I'm I'm relaying Logan's good ones. Um When you quit your shitty business idea that was bad all along and everyone told you it was bad. It's called pivoting. I like that. Um failing fast. When you have a fear of commitment. And therefore do not own anything and do not settle down. You're now.

Practicing minimalism. I love that. Uh so these are great. And uh in general You know, funny shit aside, um I think there's a lot of power to this. I think as a leader you often have to rebrand stuff. So that it's more palatable to your team. Um and I or to your customers? Packaging.

Yeah, you have to frame things. package them up in a certain way. Uh we did this with our sushi restaurant where Um, we realize that if we just describe things better or differently with m with it with better words. um people would buy more and sh we could charge more because people wanted to have sushi that was more sophisticated. So when we called it, you know, whatever. Um you know, Atlantic salmon with uh blah blah blah. Rather than just saying salmon, that was better. Or if we would create a whole new word altogether and put a little trademark next to it, that was even better than

uh using common words. Every once in a while I like there's certain things that they use the positive phrase and just generally accept it. I like to use like a word that means the same thing, but is generally regarded as a negative just to fuck with people. So for example Instead of saying like well we're gonna um get the customer to do this. Like we're gonna get them to buy by doing this. Or we're gonna influence them by doing this. I like to use the word manipulate. So like Yeah, let's manipulate them and get'em to do this. Like like where's that by definition work? Right. What happens if we call it what it is. Yeah. So we're gonna manipulate them.

Like I'm gonna manipulate this person to liking me. They're like, Well how are you gonna do that? Well I'm just gonna be nice and charming and uh listen to what they say. But if you use that word manipulate instead of influence, it fucks with them. And I love using that just to screw up people. Like yeah, or like Um when political people say like Well they have an agenda. I'd be like, Yeah, well so look, guys, I'm here to talk to you about my agenda, which is to do like Of course I have an agenda. I'm trying to get you to do stuff. Uh yeah, you're you're targeting like someone has a political agenda.

They should, right? Yeah, they should have a political agenda. I love using those words. So Henry, if you scroll up for a second, so all right, that's the end of this episode. Uh thanks for listening. Tell your friends, make it all happen, leave us a review, we like that. Uh give us the real talk in the reviews because we read all of them and we like it. Or tweet at us. Sam's got twelve thousand Twitter followers now. He has surpassed me in the Twitter ranking. Eleven thousand three hundred. Eleven thousand three hundred. So so he's winning. Um great. All right, we're out of here. Thank you.

What you see above is a preview of the first minutes. One unlock costs 3 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.