10 Startups w/ Stock Grants That’ll Make You A Millionaire | Sara’s List 2024

All right. Today is everybody's favorite episode. It is the Sarah's List episode. So we're talking about ten companies that you can become wealthy with without having started it. or invested or joined early. I put my law in it like my day song on the road less travel never. Presentation for you if you're on audio. Get over to YouTube right now'cause I have slides that are

Gonna be fun. So Uh it's called Sarah's List. This is Sam's wife, Sarah. She is on hilarious. She's on the cover of My First Million. And the reason why is because she has an unlikely story, a story that I hadn't really heard. And when I heard it for the first time, it kinda shocked me, which is I think when I heard this, she was about thirty years old at the time. She was a self made millionaire. Uh but she didn't start a company.

She wasn't, you know, killing herself working a hundred hours a week like we were. She wasn't paying herself scraps. She was getting paid a nice salary with nice benefits. She worked at a great company that had good culture. She didn't have to make risky angel investments and get lucky. She was not a high profile exec that just got, you know, some huge pay package. And she wasn't lucky like the Facebook graffiti guy that just got a bunch of stock from from Facebook and you know made 70 million dollars. And so Херсторіво з амос. Incredibly boring. It was incredibly simple. And I just couldn't believe it. I was like, I'm trying so hard to make make a million bucks here. That was such a better path. And so just to recap, she knows self made millionaire, didn't start didn't have to start the business, didn't have to risk angel investing, didn't wasn't a high profile exec, wasn't the graffiti guy.

Uh, what she did was she joined Airbnb. And so if you look at this chart, this is Airbnb's valuation over time. And There was a period when Airbnb started. That was the high risk period. That's the flat part of this curve. And to join Airbnb then you had to see something that was not obvious. You had to believe something that was that took a huge leap of faith. You had to work like crazy in a tiny apartment. There's a fun video, by the way, of them taking like midday dance breaks where they just played a bunch of everyone stands up for the desk and there's Dancing. You had to do weird startup stuff. There's a guy with stinky feet probably. That's not even what we're talking about, right? She joined after it had crossed, you know, a 10, even right, Sam?$20 billion valuation.

Yeah, and if I remember cor like they already had that huge office. Do you remember that huge office at eight eight eight Brandon and I imagine there was like A thousand people plus working there. Like it wasn't small. And you and I were living in San Francisco at the time and it was Stupidly obvious. Like you could have slapped me in the face and said, What's a company that's a winner? And I would have been like Airbnb is a company that's a winner. It was like obvious at the time. I had friends at Uber, same thing. Uh Uber was obviously a winner at the time, where they were already multi-billion dollar companies, but

because of the space that they were in and how dominant they were, it was clear that they still had room to run. And what we call serious list is basically a a function of using your time as your investment. Most people don't think of their job as an investment decision, but Your time, your talent, where you're gonna spend four years working is a investment decision. You should be thinking about it.

Like a venture capitalist, and especially if you're working in the tech scene. And so these are all venture, you know, venture backed tech companies that we're talking about. So the criteria for Sarah's list. Uh it's a company that has product market fit. It's just a clear, obvious, successful company. Uh doesn't mean it can't fail, but it just means it has product. It's not in the scrappy figure it out phase and and and you know wandering phys of startups. It's funded, it's growing and you'd get a nice salary and benefits. They got oat milk in the fridge. Um

And that if you joined and you got a two hundred thousand dollar stock package, so that's like, you know, getting fifty grand a year of stock. So maybe you maybe you got a hundred fifty thousand salary and fifty thousand a stock. that could become worth a million plus in the in five years. So can it five X in five years? We're not looking for max upside, we're looking for lowish downside and enough upside. Where you can turn, you know, a two hundred thousand dollar stock package into, you know, one, two, three million dollars would be the would be the uh outcomes that we're looking for. So We did this once in twenty twenty one.

Three years ago. And before we tell you what we picked and how we did, we gotta time travel back real quick. So let's do this fast. So back in twenty twenty one, this NFT sold for sixty nine million. Those are the good old days. Tom Brady was a football player, SBF was a hero, people cared about whoever these people are. It was a simpler time. And the stock market was. running up. It was on a ten plus year bull run. It had its peak uh in twenty twenty one. For the listener People cared about quote these people. These people

Yeah, see. I don't even know who it is. Point point proven. Thank you. I rest my case. By the way, did you know this? Sesame Street and seven eleven launched VC funds during this time and so they had their own venture funds. Everybody was getting in on the game. But nothing lasts forever. And so since then, just to give you some data here, so Since then. About thirty six percent of startups who have raised money since then.

raised at a lower valuation. That's not to count the companies that died or the companies that are avoiding raising because they don't want to raise down. So this is like transactions that cleared, one third of them are clearing at a lower price of all startups. It's even worse if you look at late stage startups. So later stage startups, which are the ones we're talking about, series C, series D, they're down between thirty and sixty percent. On average. That's the that's the That's what you're seeing across the board. Um

Sad news. Two thirds of employees right now that are working at these companies working for options that are actually worth zero. And they probably don't even realize it yet. Meaning They gotta Pay package of stock options at a

twenty four dollar style strike price, that stock is currently trading in secondary for eight dollars. So all of their shares are underwater. Currently only thirty three percent of the shares are in the money, as they say. All right, so what do we pick? We picked about eleven companies. I think we shared one um company, but we had each picked uh around here. Here's how we did. So It's not great. All the stuff I just told you is basically our big fat excuses as to why it wasn't great. We both had two hits, so two things that did That did go up in a sort of s step change way, you know, sort of a three four X so far in the three years.

Uh I had two that were down. like valuation lower than it was previously. You had three that were down. And then there were some pushes. And a push basically is like has the same valuation as it had before. But that's actually sort of a win because you beat the market. So you didn't achieve the seriousless dream, but you didn't take the huge write down that a bunch of You're wrong about next health. Next health is wrong. Next health is wrong on here or but is it actually Well the word neck there's two companies. One is next One is next. So I think you you there was a little confusing. Uh but someone in the research department's getting fired here. No, just they're just missing a T. Uh Open Store and uh Wow, so open store is down?

It's un it's unclear, but I mark it as down. I don't think I don't believe that it has uh achieved its its It's uh it's status to be called up. I we have it as a TBD. I gave it a a a a less generous interpretation of of down just to make my own grading harsher. It's not about them, it's about me grading my own picks more more so. And you think Figma's down too? Well, Figma tried to it's not a down, it's a push here. It tried to sell for twenty billion And clear.

that the transaction didn't go through, so that would have been a in a a two X. But then the last I believe round of funding. And this by the way, this is not all very obvious. So companies don't always announce their valuations. There's leaked valuations to the media, which are not always true. There's valuations that come with a bunch of strings attached. So you maybe you got a a good number, but there's all these caveats and liquidation preferences. And a lot of this was we asked people who own secondary stock marketplaces, we said, Hey, what is this company trading at right now?

And so it's incomplete information, right? We're doing the best we can here with private stock information that you don't you don't always have. By the way, Sarah, my wife, what this is about. had a job offer at Figma. Like three months before their acquisition offer. Which like it had that gone through I It w I believe it would have been a two X return.

Based off the valuation. So we almost we almost had a mini hit again, but not quite. Yes, exactly. All right. Let's get to the twenty twenty four picks. Uh we're gonna try to do better now. The the good news is that The pick any picks you made, anything in the vintage of twenty twenty one. Like I said earlier, the the All the companies basically got shellac, everything got reunderwritten, everything got got corrected.

But now we're at I think we are at a a a less hype period of time. And so this cohort of picks, I think should be better. But again, not financial advice. Really me neither me nor Sam actually uh are trying to go get jobs. This is kind of like what we would do if we were going to get a job. Sam did this with Sarah when she was looking for jobs. So this is for fun. Uh let's just put that out there. We're not giving financial advice here. So I have like five or six, but then I got a bunch of other ones that were like it's like scrap, like I didn't quite get to. What do you think is the let's say we br each bring five to the table. I bet you there's gonna be at least three that we are overlapping on. What do you think? Yeah. Two I'm guessing two overlaps. And by the way, I'll say I think a good hit rate on this good hit rate would be six out of ten.

Six out of ten have a a step up where five years later, we're not even five years after the the twenty twenty one ones yet. We're only three years in, but five years later that there's sort of like a four or five X invaluation. If six out of ten did that, I think that would be a A great thing. I think uh three out of ten would be sort of the lowest bar that I would accept. All right. W you want to go first.

Alright, I'm gonna go first. I'll start with an obvious one. Probably one that you have too. Open AI. And by the way.

There are no bonus points for difficulty in business. The fact that Everybody knows Open AI. I'm not trying to give you a secret company, a secret stock tip you've never heard of. The point of this often is that the companies that are gonna be big juggernauts are hidden in plain sight. So open AI currently valued at 103 billion. It's doing about three and a half billion a year in revenue already. The bull case. So what do you need to believe if you're gonna join this company that you that you think it's a serious less contender? It's the first credible Google competitor in about twenty years.

It is something that actually could displace, replace search which is like, you know, when people need an answer to something or they need help with something, where do they go? It's the fastest growing company ever. That's nice. So it took him, you know, two or three months to reach a hundred million users. Uh, it's five times faster growing than the next fastest product ever. it reached three billion in revenue in the last you know it's in like three years is pretty crazy.

And it's unique because it's an enterprise company, it's a consumer company, and it's a dev tools company at the same time. I think that's pretty uh pretty unique and gives it a lot of upside. What you would be worried about if you were looking at open AI is it's probably the most competitive market on earth right now. You are getting compet competition from every The most well funded startups are the most brilliant people, as well as the biggest tech companies in the world, Facebook, Google, Amazon. Everybody is coming after this market. So that's the downside is will OpenAI retain their lead or not. Yeah. Yeah. The the problem with open AI can you get a job at OpenAI, not only is it the most competitive like not only is it the most like competitive space, like I imagine they have to have one of the more competitive

uh like job applicant pools. Dude, I read some crazy stat that Tesla has something like fifty thousand people a day applying to work there. And I have to imagine that OpenAI, uh, it's somewhat similar, where they are just like inundated with applications. Well yeah, I mean but we're talking our listeners, the cream of the cre the cream of the crop here. This is the creme de la creme. So yeah, of course they can get a job wherever they want. So would o will open AI five X the current valuation? Yeah. I mean, yeah.

Yeah. That that yep. I agree with you. Um all right, you want me to do one? Mm-hmm.

All right, I've got one called Retool. Do you know what Retool is? No retool, I use retool and I wish that I invest in Retool. I tried to invest in Retool early on and I missed it. I'm not a user of it, so it actually would be best as a user uh explain what it is. So every

Technology company. has the same situation. that they would all homebrew a solution for. The situation is You need a backend admin panel, so You have this, I'm sure with Hampton, where

Uh oh, we need to add or remove a member or hey, ca this person change companies they're asking if we can update their their thing or hey, can we change their membership status from active to Suspended or whatever, whatever some admin function that you need to do. And It doesn't come out of the box with whatever, you know, you're using ten tools to run your business, but like this is the

What's the tool for your business? It's a retool is a simple way to make the admin you know, uh panel for admin system for your for your company where anybody in the company who's not a developer can actually go in and you know, add, remove, you know, make changes to essentially the database. That's like the simplistic way of saying it. It's basically a backend tool for any business that you can customize and your developers can build once. So that anybody in the t te the team can use. So it's a internal tool. And here's this crazy stat. So the founder, his name's David.

David uh David David's a baby genius. So Davis David started this when he was like at the University of Cambridge when he was like twenty one years old. And he's like he's got one of these like stories for he basically before this business he had a um A payments app that I think did okay, but whatever, he quit working on it. But like when you see like a nineteen year old kid do that, you're like, Okay, you this and you have a payments app at nineteen, you already want it. Yeah, and you're going to one of the best universities on earth, like all right, something is interesting here. He gets into the Y C comes up with this idea, and here's this crazy set. Fifty or sixty percent, or like fifty between fifty and sixty percent of all software in the world is internal facing tools. meaning employees who use uh internal facing tools.

That's a one chart business, right? That's a one chart business. And not a lot of people focus on that because you kind of focus on things that you see and use versus things on the back end that you maybe you kinda get you don't really touch that often. But the business has crushed it. And so They launched in 2017. Their latest valuation is 3.7. They've raised$150 million from Sequoia and a bunch of other great companies. Listen to this growth. First nine months,$500,000 in revenue. In 2018, they hit$2 million in ARR. In 2024, they hit around$100 million in recurring revenue. So it's gotta be one of the faster growing businesses out there. And I've been watching interviews with this guy David, the founder. Dude, he's amazing. Uh he's a he's an amazing company. So at a valuation of three point seven

Uh, I think there's room to run. I think there's a five or ten X potential here. Uh I mean that's gotta be a they gotta be be a huge business, but the market is just massive and I like the guy. I think that's w something we're gonna see in a bunch of these, which is that the CEO's seem to be remarkable in all these businesses and that's just if you're gonna make a bet on a private company, you wanna be That one with like

Mm. one of these a all star CEOs. My retail story, I uh two two lessons learned here. One, invest in your PL. So I had this problem. We had always we were always trying to build these things internally. the devs never wanted to work on it enough. Because it's an internal tool, so who cares?

And When we got retools like, Oh, this is great. This is a no brainer. And so I the first lesson I always I I always remind myself is the best place to invest. is in your PL, meaning look at your expenses and go figure out which of those companies you think other people like you you wouldn't want to cancel and other people are going to have is their expense too. Go invest in that company. Rear tool was one of those. And then second thing was I once we got acquired by Twitch years later. So the first one's probably twenty seventeen, twenty eighteen. The second one was uh twenty twenty.

Or twenty nineteen. I'm at Twitch. And Emmett, who was a Y C partner. What like I was at a meeting or he was coming to a meeting with me and he was running a little late.

And he's like, Oh yeah, sorry, I was doing a office hours with this Y C company that just had they just hit this point. It's like there's this thing that happens where you go through Y C, it's all good. Then you have after Y C where You know you're just like Back to being like a normal struggling company. He's like, and then sometimes you hit this inflection point and shit just really starts to work. He goes, Yeah, this company retool, this it's really starting to work. When you're you know, when a really smart friend tells you that something is hitting an inflection point, like drop everything and go go go hunt that down. I remember at the time thinking,

I shouldn't invest in this. And I saw the guy David in the cafeteria,'cause he had just met with Emmett wearing his retool shirt. And I went up to him and I was like, Nice shirt, love retool. And then that was it. That was my I all I needed was that third. How do you invest? He was young. I think he I think he was like a college kid almost. Yeah, he looked like he just could have been any employee at the at the company since he was wearing his own shirt. Anyway, so retool. I I like the pick. Valuation is high, so I think four or five X is tough from there, right? To become a fifteen billion dollar company is tough, but I think it's a good really good company. Um All right, let me give you my next one. The next one.

Mercury. You're nodding. Do you have this one? It was on my uh I had it on my a list and then I removed it'cause I thought you were gonna pick'em. I I did pick Mercury. So Mercury is a company that I use, so I'm a Again.

Look at you look at the tools you use that you w don't want to change. Um so I use Mercury for I think not one, two, but like six of my companies now. Um It's just a Amazing product. So the valuation is still in that sweet spot range where it's Uh one I think it's one point six billion right now.

So the valuation is Is there uh here's the bull case, here's what you need to believe. It has a rare combination. Well hold on. What what Mercury is just a bank that is built for small businesses and it's easier and simpler to use. It's basically just a normal bank, just easier and better. If you're a startup and you need to have a bank account, which every startup does Uh you can use a bank from like, you know, Bank of America or whatever, like a you know, some some traditional bank where you're gonna use their product and it's gonna feel

Like, you know, a bunch of 50 year olds hired some web shop to, you know, outsource this tool that they needed, like the second like second second class citizen. Whereas Mercury is like, Oh, a founder made this. I get it. It solves all of the pounders of all of the problems that a founder would have. I get it. And it's true, Imad was a founder. of multiple startups before he made this and now it's like the best product for startups. So Product's amazing. It has a r rare combo. It's growing fast and it's profitable, which is great because a lot of the companies that get written down or or the risk comes from they're not profitable, they're burning so much cash that if the growth ever slows, all of a sudden you get this huge discount in the valuation.

So the fact that this is profitable means there's a margin of safety here. Silicon Valley Bank used to be the bank of of choice for Silicon Valley startups. It imploded. It was a thirty four billion dollar company with seven billion in revenue. two years ago and it imploded because they mismanaged risk. Nobody has really replaced them. I think Mercury is the best position to replace them. So if you think about like what's the shoes they could fill, they could fill the SVB

Shoes as a thirty plus billion dollar company. They're the category leader. I saw this great quote from a Sequoia partner. He said the c category leader in any category tends to get something like seventy five percent of the revenue and fifty percent of all profits that are gonna be in a uh in a market, which I I don't know if those numbers are exactly right, but it's directionally correct, which is that The winners of every category. Take this lion's share of the rewards.

And I think they have a good moat. I think they have a great brand. It's g letting them get customers, you know, for free and regulatory moat as well, which is this is not a simple thing that any you know, any person could go start. There's a lot of obviously like financial compliance and regulation. Now one thing to Caveat? We called them a bank. That's'cause To the customer it feels like a bank. Technically they're not a bank. Who do they who do they use?

So they use like Choice Bank, I think, and Evolve Bank under underneath. Um so they're c what we we call like a Neo Bank, you know, just like a finance platform, basically. And the bear case, the other thing that you know, the worry would be can they grow with their startups? So some products are great because you get them while they're young and you grow with them. And other products you get them while they're young and then they graduate off you. And as soon as they become really valuable customers, they take their business elsewhere. I think they're gonna be able to grow with startups, but that would be the risk here. I didn't find honestly much of a bear case. Do you I don't know if you have a Yeah, I've got a bear case. I think I I I almost always ba banquet Chase because I've just always been afraid of Can I access that mon my money? And it happened recently where a lot of people were using Mercury as I mean, not to shit on Mercury, they were using lots of different things. Uh and they couldn't get their payments out or their payroll out uh because of the bank uh the bank were working. And S and S F was one of a

They're they're they're no longer in business because they're this huge company that mismanaged a bunch of stuff and it did work out. And so uh yeah, I think that's a massive bear case. I think that the reason I bake with Chase is because if Chase were going out of business and have the issue that S uh Silicon Valley Bank had, America would basically go under. Too big to fail. Yeah, and I always knock on wood when I say that, but a a little bit like that, where it's like, you know, ch I think Chase is like I I don't have to look at the stats, but it's something like five percent of like Americans use it. So it's like a a pretty big deal. And so yeah, I think that's a bearish case uh as to why. So I I don't think that's necessarily a bear case because First of all, they have like I think five million dollar FDIC insurance now. Like they offer like twenty times more FDIC protection than than they than they need to or than the average bank does.

So I think they've they've got some features that help with that. But the other thing is like I think the proof is in the pudding, which with this, which is that If uh while it's understandable to say, Oh I you know, I I choose to go with a too big to fail bank. If you just look at kind of where the startups are voting with their feet, this thing is growing so fast that Obviously.

people are making that choice already. So it's not like a future scenario. It's like today that choice exists. And people are making the choice to go to Mercury. So I don't see a reason why that would change later necessarily. Like usually when I think about a barricade like what could go wrong in the future, whereas what you're talking about, which is Maybe people just prefer to use a a traditional kind of hundred year old bank. Because of the track record.

They have that choice today and people are vo like choosing to do the other one. So you know, I think that's less of a bear case. Last weekend Because I'm a client at Chase, they gave me box seats to the US Open. Yeah. And it totally worked. I'm gonna big with Jake's for as long as they'll have me. So long as I get tickets to the US open. So as soon as Mercury like starts doing these wide eyed perks, they ain't shit. Like I want I want a fucking fruit basket. I want a gift basket. If I don't give a gift basket, you don't get my business. I'm changed, man. I mean I'll take a twenty piece nuggets from Chick-fil-A. Like it I don't I'm not I'm a simple man. I don't need the US Open. This is easy. Oh my God. I they took me I I got these like amazing seats to the US Open. Uh and

It worked. It worked. Look like it worked. I get it. I I fell for the trap. And I and so but yeah, no, I think Mercury's a great business. I think the founder uh is pretty badass. So yeah, that one's good. All right. So you said that uh you were gonna look at like the founders and in or no, sorry, you said you're gonna use your P and L. So uh where you spend some of your money. I like that. I also do like where do I spend some of my time and where do people spend some of their time. And so a tool that I'm playing with. It's called Cursor, and I think Cursor is pretty amazing. And so and I'm gonna tell you not my story, but

The reason I've been using it, but There's this little girl, she's eight years old. Her father's on Twitter and her father's a developer, I guess, and her father tweeted something out saying, I'm trying to teach my little girl how to code. And we're using cursor and here's a FaceTime of her, like a loom, like a screen record of her learning how to code. And within twelve minutes or something like that, she's built a website. And she used Cursor. So Cursor is this really cool tool tool. It's got a lot of hype right now. It just kinda the easiest way to describe it is it's sort of like Squarespace Wix or any of these other website builders, but it uses AI and you talk to it a little bit like a person and it makes it really easy to edit code. Now there's a bunch of pros and cons to this business. The

Pro is I think it's amazing. Like I think that this tool is awesome. I've been playing with it. It's super good. Their latest valuation is four hundred million dollars. I don't think that that's insane. So that's like There's opportunity there. I think that the con, and this is a big con, which is These website building tools Dude, their PE multiples are shit.

So you look at like Squarespace, Wix, Weebly, do you remember all these like They don't trade that well. So they can do billions. I think you're pigeonholing it as a website builder. It's not a website builder. It's a it's a IDE. You can code anything in the city. You can code anything in it. But it's still, I think, in that category in terms of uh you don't think it's in that category in terms of you like the competitors. replit category where it's a You we're it's a coding environment where a programmer can become now an AI assisted programmer. So

However good you were, however efficient you were, however productive you were as an engineer, as a pro as a programmer. you can now be, you know, some multiple more. Maybe it's one and a half X more more productive. Maybe it's ten X more productive as the AI improves. And so I don't think'cause you know, Wix and Weebly, these are like You know, my sister needs a website for her pre school so she goes to Squarespace and makes a website. She's not gonna she's not gonna go to Curs well, today she's not going to cursor for that.

And also Those tools. could never do what a cursor could do where it could build full Applications, yeah. Yeah, I feel you. I feel you. I still think that like all right, so uh we use I use bubble. You know bubble?

Um a bubble's like an app builder. Uh, this is a little bit of a competitor to bubble. And in my head as an investor And a potentially as a user, I think it comes into like it uses it's like the same churn as a small bus or a a website builder where you spend ten dollars a month and there's not always a massive reason to stay on the platform versus all the other competitors. Like it's pretty easy just to like up and try different ones. Do you know what I mean? And so for that reason I think it's a little bit similar in the terms of in terms of valuation. Right.

Um, okay, I have a I have I was g I looked at Cursor very close. In fact they were on my first draft of companies to be on here, but then as I did more research, I went with another company that you'll see at the end of this. So Okay, but what do you think about Cursor? Uh for a four hundred fifty million dollar valuation, what do you think? I think I mean I think you're getting high upside, high downside there, because uh you know that valuation's not based on it's not based on revenue. Um It's it's based on like, you know, this this vision of what the future light might look like. And that's great. And I think cursors awesome right now. If I could invest in Cursor, I would totally invest in Cursor right now.

But I think it is more risky than some of the other ones we've talked about so far. I think That's true. They're at a ten million dollar run rate, I believe. Or uh I don't know if it was run rate or that's actually what they did in revenue, but yeah, it's tiny compared to their valuation. What do you have then instead? What's your competitor do it? I'll I'll show you. It's uh it's my last one, but I um can't rearrange the slides here, so you're gonna have to wait on that. Um When you told that story about that little girl, I thought you were

Pulling a Camilla Harrison, you were gonna say that little girl was me at the end and I was pretty ready for that emotional landing. Instead you were like That was just somebody's daughter. I just follow grown men's daughters on Twitter. I don't know. Where are you getting your tech advice? Dude, it was are you are you did you see that video? I did not see that one, but I've seen some kind of amazing things. Cursor demos right now, all the rage. Dude, all the rage. All right, keep going.

Alright, my next one. I don't even know if you heard of this company. Everest, do you know this company? No. Okay, so I don't like that name. Eparus.

Yeah, Eparis. So this is a Joe Lonsdale company. It is a weapons company. a defense company and I don't know enough about Eperis because it's very secretive company, um, and it's very private to tell you that this is the pick. What I actually did was I put this here as a placeholder as a general strategy. So one thing I would do if I was interested in this kind of seriousless concept, finding a company I can go join.

that the stock is gonna be my s my stock package is gonna be appreciating, you know, rapidly. I'll get a five X in five years. I think that the way Anderil hit for us last time. There are now like ten more Anderil type of companies that exist that are inspired by Anderil. that are worth checking out. Andril itself might still be a contender, by the way. Um but there are more companies. So Epirus is basically a long range, you know, like defense weapon or whatever. Dude, if you go to their website, it's Eperus Inc. It basically looks like some type of like electromagnetic thing that shoots like radio waves into the sky and brings down drones and planes. Exactly what it does. It's an EMP pulse that will take down

You know, a drone or a missile or something like that. Without being a bomb. Like you don't have to like you don't have to bomb something, you could just disable it. It's just magic. There's a great story, by the way. But like when I see like invisible rays. I'm gonna use that next time I'm trying to like talk to a founder and be like, but are you related to David Blaine? Because this is magical. Is he your cousin? Um it does look like magic. So he told a story where He's like I was like, dude, how do you sell to these like three letter agencies? And he's like, It's very hard, you know.

There's like decades long relationships and with the the traditional companies So I'm like, how do you do it? He goes, Well the the big thing we always try to do is get to a bake off. He's like we have to get to a point where They're willing to do a contest of our product versus their product because we can win on product. We have better product than engineering.

But we don't have better you know. good old boy relationships here. So we have to get to a bake off. He's like, so we did a bake off for Eperus. And basically everybody went to this field and they're like, Cool, I'll line up and then uh you're gonna go first and we're gonna see how far away you can You know, disable this and how effectively you can disable this drone. Uh that was the test.

And they lined up and he's like handing out binoculars and they're like, What was this? He's like You're gonna need these to see how far away we're gonna be able to disable this thing. And then they like won the bake off, won the contract and all this stuff. So I don't know about this company specifically. I don't know enough. But I would go interview at the top ten like defense slash weapons companies.

Go talk to all of them and then use your judgment on which of them is the winner. I know in that basket There's definitely one or multiple winners. That are that are in this. I but I uh from the outside here. So let's say you're Joe Lonsdale, which like I guess that's kinda answered the answers the question because he's a big shot. But if you're not a big shot and you want to get like Some CIA buyer.

into a field in Texas to like show up like to to wow him Like who do you even phone call, you know what I mean? Like who I I think there's a multiple answers to this, but I'll just give you a couple of data points. So the the very first thing is that there are bids, there are like RFPs that you can participate in. There are there are like con you know, uh the government has a process of procurement where They need to be able to go solicit. proposals. So you can go look at those, you can go talk to those. The second thing is

When we were at his house, after we recorded the podcast with Joe. We were walking out and there was like Ten like Senators there for lunch.

And it's like, oh, this is how you build your network. You you he's like hosting a lunch for like 10 years. Well, because E Elon was coming over and he was like, Hey, it might be easier for you if you just want to go this way. And we were like, Easier for you or easier for me? Like uh maybe for both of us. All right, good. Fair fair enough. Uh because I'm literally in my back. Basketball short. Did he hand you my box? He's like, Don't forget your lunchbox. And then I I wandered off to a bus. Yeah, was there apple juice waiting for you at the doorway out? Truly how it felt. And by the way, I couldn't have been happier with the arrangement. I did not want to be a fish out of water year. So I think that's one way. There's also a great story told on the pod about like how Peter Tia was telling them like dude because when they started Palantir. He was like a couple years out of college. Like it wasn't that old yet.

And he had like a lot of like Kind of like the pride in hubris of like uh Like a tech. kind of like genius type of person, and he is. Yeah, a genius type of type genius level person, but

Going in and saying you guys are dumb, we're smart is not the answer either to sell to these things. And so they hired this guy, Alex Carp, who's still the CEO of Palantir. And one of the reasons why I was like this guy was just like very, very good with relationshipability with networking with being accepted by these buyers and then he recruited like Ex government people to be Like door openers. Like warm handshakes to help them get in the room. And I think that that's how they got to the book. I wanna do a um an entire podcast next time just on the New York Times article on Alex Carp.

Very funny. Very good. Very interesting. Very good. Uh all right. I buy into that. I it's uh to me, working at Eperus or any of these national or these uh defense businesses, it's sort of like working at a porn company where like you like probably most of the work uh might be like tell your mom you work in video entertainment. Well yeah, like most of the work is like normal, like just a normal job, it's boring. But then like you see the output and it's like fuck like Death or destruction or like Like pretty like raunchy shit if you're with fair their tool, the Semper's tool, just in this case Is like

a non death tool. It's disabling the electronics without without bombing anything. But yeah, yeah. Definitely some of the other ones are are are a lot more like, Yeah, this is war. Yeah, where like the output of this, whether it's right or wrong, uh it's still like a you y it's You go to bed every once in a while, I imagine, with a heavy heart. Even if you're doing everything right. Um all right, I have a n I have another one. And I am You know that what is that called that uh midwip meme where there's people who are on like the s the dumb guys are at the far end where they just don't

Think things are how does it go? You're on one of'em, let's just put it that way. You're showing that you got one of those sides nailed. There's the begin the kind of the beginner of the caveman who should be you know Build product. Talk to customers, right? And then the Jedi's also like, you know, I should just build a good product, talk to customers. And then the guy in the middle is doing like over analysis, overthinking, over everything. Like like a mime. You like acted out the beam. It was great. I am what I am. Uh I took that approach with a couple of these. Dude, have you heard of this company called Wiz?

I've heard of Wiz. I don't know what Wiz does. I looked at it and I was like, I don't understand this enough. Dude, all right, so check this out. So it was um Wiz is a cybersecurity company, uh for enterprise uh companies. So or enter enterprise customers. So basically if you have if you're using like large cloud tools, it the tool the Wiz is tool like scans it and be like, all right, you have a potential threat here, here, and here for cyber cybersecurity issues. It's the fastest company ever. to get to a hundred million in annual revenue. It took him eighteen months. The guy who started it, now this is why where like the mid uh that meme comes into play here, because he's kind of amazing. I read this article about him a couple years ago. And the opening line is I guess his n his his first name's Asaf, so he's Israeli. Um and he was like a Israeli um defense guy in the military. And it said, Don't mistake asaf's gentleness for someone who's willing to play by the rules.

That was the opening line. I was like Okay. What does that even mean? Yeah. It's like a tender bio Jesus. All right. I'm interested. And so basically this guy, uh he previously had another company. that he scaled and sold to Microsoft. It was also a cybersecurity cloud company. Sold to Microsoft for a billion dollars. He uh gets through his um His warm up company. Yeah, his warm up company. He's only thirty ears old. He gets through his non-competeer ever, spends his time at Microsoft, things go well, and then he starts his next company called Wiz. So far, they've already raised two billion dollars, of which a uh one billion of that came in one round. And the company's only 18 months old, which is absolutely ridiculous. Uh they've done something, I think they're already at Yeah, uh three hundred and fifty million dollars in revenue in just three years.

Three and fifty uh annual recurring. revenue in three years. Something like eighty percent of the Fortune one hundred companies are already using the tool. So they've killed it already. Now here's where uh things get interesting. Their last valuation was twelve billion dollars, but There was a rumor that Google was gonna buy them for twenty three billion dollars. And so

There's all these rumors that this was happening. And so he sent an email to the entire company. And then read you a quote. He goes The first line. Let me cut to the chase. Our next milestones are a billion dollars in ARR and in IPO. And he explains how they aren't accepting this offer from Google because they want to like make it big and be this huge thing.

And I love this guy. I think he is just one of the coolest Like in most interesting CEOs out there right now. What are you looking at? What do you think when you look at'em? Well, he looks not like what I thought. Um Actually your first line about like don't let my gentle whatever fool you like I'm here to I don't know what he said, but like something like that. That's what I heard. He's

He just looks like a good ol he looks like a Midwest nice guy, uh when I look at these photos. I was really expecting a a a lot more hardcore looking of a guy, which is Just for my Google I'm a search. Dude, when you see a guy Wearing a T shirt who sells to like suits or the NSA or whatever, like these like big big shots.

I think that like you're secretly Very dangerous. Like the the y you know what I mean. Um Let me tell you something here. So um Okay, so check this out.

There's a f part of the whiz story that I think is pretty interesting. First of all Interesting pick. I think they have such a high valuation that you're really betting this is like one of the mega cap. tech companies to do this. Okay, fair enough. The the thing that scares me is anything that grows this fast, you know.

W what goes up must come down in a way. This is not it's not as Lindy. It's not as Yeah, when something is a slow compounder, you actually trust it more than a uh explosive, but not like Doesn't have a long track record. Dude, but that's the goal of this thing. It's things that could five X in three years. That's fast growth. Five years, five years. Yes. Whatever. Uh Yeah, true. Uh true. But I guess what I'm saying is like I it might be priced in. I don't know. So let me tell you something that's uh interesting about this. So when I saw this company's growth so fast, it's a natural question of Well how?

Uh, have you heard about the story about this guy named Gilly? That's associated as associated with whiz. No, but I'm in. All right, so who is Gilly I don't even know how you say his last name Ranan, Rananan, something like that. Gilly Rananan, let's call him. Dude, is it all these guys, by the way, they're Israeli like special force guys. Yeah, so they'll ex guy's ex Israeli military intelligence, yes.

He also invented CAPTA. He invented WAF, which is web application firewalls. He did a bunch of other stuff in cybersecurity. He was a partner at Sequoia. Very well respected in the cyber security world. And he started a V C firm called Cyber Starts and they're the first investor in Wiz. Now check this out. So

Let me just read you this excerpt. The numbers For the V for the V C fund cyber stats are phenomenal. The fund that specializes in cybersecurity, funded by Gill. Only six years ago, uh here's here's how it goes. So twenty two companies combined value, thirty five billion. Five of the twenty two are unicorn, so a higher hit rate than Y C.

First and foremost is Wiz, who's breaking all the records. Four of them were sold in the last twelve months. So, you know, like successful exits. For a total amount of one point five billion. In the last three months their companies have raised one point eight billion, blah blah blah. His c his Portfolio shows at IRR of more than a hundred percent.

Which is un you know, unusual for even the best performing funds. Not a single company has failed so far in its portfolio. And it is currently ranked in the top five of all V C funds in the world due to these achievements. Okay, so then you say well Hold on. What is What's working? What's what's actually happening here.

And then you say then it there's something called the Gil running on model. And basically what he does is he's got this mafia of the chief The CISOs. So the the chief security officers, um at all these enterprise companies and they're all in his pocket. They all respect him. They think he's got the mightest touch. He's done so much in the space. He builds a relationship with them, but then he makes them essentially partners Like I think like Carrie Partners in his fund. And so what he does is he basically has this like a bribery network, is why my understanding of this is not what they called it, but like corruption was published.

Corruption's awesome. Um. It is referred to as the Gil Ranon model. It is causing more, I gotta stop saying this guy's last name because I'm probably butchering it. Cause more discomfort amongst Israeli competitors and portfolio companies, which are all jealous for obvious reasons. It has reached the US where company executives who are purchasing cybersecurity systems are as committed to Gilly as they are to their own company.

And basically what he does is he goes to them and he, you know, wines and dines them with dinners and conferences. But According to several sources, he promises teams of fresh graduates, graduates from tech units, not only investment support in the startup, but initial revenues of two million a year. This is usually their first year of revenue, which is intended to boost them above their competitors and help them get the next round of funding. And the way he does that is by using

His network of Uh loyal s loyal CISOs. And so The first sales come from the loyal CISOs who work with the fund. It might be considered small money, but the jumps in the uh uh the jumps in fundraising for cybersecurities is difficult. If you can get to that two to ten million range. You've like

You have escape velocity to get to the next round of funding and all that. He creates a mechanism that is diffic difficult to compete with because the companies immediately jump to a valuation of a hundred to two hundred million, raise more money and have more resources to compete later. This seemingly s small purchase of$100,000 to$200,000 by the CSA will increase the startup's value dozens of times. This is known as the Gilly model. And I think what he says there's something here about like the kickback that they get. So there's some

Here's what he emailed them. It is difficult to predict the formats of the fund, but according to our forecast The points you have accumulated in the funds so far are valued at X dollars. You can expect additional allocations in the coming years and in the new funds we will raise later. So it's kind of a uh you scratch my back, I'll scratch yours model. I pick winners. I just thought this guy was awesome because he wrote Cool emails and he's got a dope smile.

Yeah. Turns out. You know. There's a wolf backing them, yeah. Well, a lot of them are from uh I think it's called the United eighty two hundred, something like that. It's like the NSA of Israel. And so if you look at like some of the largest security companies, so it's like uh I don't want to Talk.

totally out of turn here, but I think it's like Palo Auto Networks and all these like multi-billion dollar companies. They all came from that unit. And so I it turns out with this guy it's more of a they're they're they're definitely working together, but be I thought they were just working together because they were all from like the same crew. You know, it's like they all went to high school together. Turns out there's like a blood oath. Neither you nor I know jack shit about this, but It sounds like a movie and we're pretty fascinated. That's I think that's what's happening here. So it sounds like some oceans loving shit. And a big dummy like me came to the great conclusion as uh this Fucking smart.

Yeah. All right, what do you got? Alright, my next one is a quick one. Neuralink. So

Neuralink is currently valued at five billion dollars. It's got like pretty much no revenue. Here's the case. Elon They put a chip in a guy's head and he's like playing video games on a Twitch stream now. Uh it's pretty crazy. The first patient, they have a huge technical milestone. Was he paralyzed or he had MS? Yeah, he's a quadriplegic. Um so he can't I think he can't move his o his arms or his legs, I believe.

And now with his brain, he's just playing chess and using he basically can use a computer with his brain now, just by thinking. Okay. And he's like, wow, my life just got so much better. This is amazing. Um and they successfully implanted the chip in the guy's brain and he can now use computers. It is incredible. I cannot believe more people are not talking about this. I'm gonna do a whole deep dive on Neurlink just because I think that I'm blown away by the videos I've seen and the the the Nerdy rabbit holes I've been down for it. Um to me this is a question of when, not if, meaning The next platform shift is probably glasses.

But the one after that or the you know, the big one is just put the computer in the brain. That will happen. It's just maybe it's Ten years, maybe it's a hundred years. I have no idea. The other bull case is look, even if this doesn't five X in five years. You're gonna be helping a lot of people out'cause all their initial customers are people who are, you know severely disabled can't see and they're gonna make them see. They can't hear, they're gonna make them hear. They can't

uh move their arms, they're gonna make them be able to use computers. It's it's really incredible. So I think they're doing incredible work and that you're probably working with really smart people on a mission that matters and you're probably gonna make a lot of money doing it. Bear case, of course. Revenue, uh question mark, question mark. I know they have like one customer right now, right? So like it's gonna take time, long path to success. They're kind of at the uh they made the first Tesla Roadster. That's where they're at. In the uh the Tesla journey right now.

Dude, but you're missing the whole point of this list, which is like how do you like not like stress out all the time. And like Things like that and have a good job. These companies need the they need the personality hire. They need the guy who's bringing smoothies to the office. They need the guy who's a good time to be around. They need the guy who's the w willing to do the dirty work and uh Go clean up the files and go re organize. Do you think that Elon has a personality hired?

Yeah, I think he does, dude. I think he's got like literally like meme lords that work for him. I don't know, man. I uh agree with you on so many things. I know some dummies that work at Tesla, let me put it that way. I I have some like Who's this guy? Oh, my cousin works at Tesla and then you meet the cousin. It's like does he work like In the tire shop? Like who's this guy? Um Yeah, I feel that, but Neuralink's not that. How many employees do you think they have?

Uh I have no idea. I guess like probably like a hundred is my guess, or s somewhere like a plus or minus fifty. I have no clue. You're assuming I didn't say Sarah's list is the chill life. It's not the best rest in Vest life. I I think maybe we have a misunderstanding there. Maybe Sarah wasn't doing as much work as I thought. No, it was like a forty hour work week. I d I don't know if Neuralink is a forty hour work week. If it is, then I'm on board. Okay, fair enough, fair enough. Um all right, uh I'll do I've got two more, maybe. All right, you had open AI. Now I wanna I wanna vote with my attention a little bit. I use open AI every day, but you know what else I use a ton is perplexity.

Um do you use that? Me too. Yeah, I use perplexity as well. Now, how would I explain the difference between the two? I think perplexity is when you need the answer to be right. Yeah. Chat GPT is when you have a variety of random things in the thing. If I'm doing research for this pod and I need to say a number that's not gonna Be be wrong.

Um Perplexity is a better bet than chat GPT. So perplexity, I think their latest valuation was three billion dollars. They've raised four hundred and fifteen million bucks. Uh so it's already like very big, but I think the market's huge. I also think when I I find like interesting stories about the founders and I love it. So what's the CEO of Perplexity? I know how you spell it. Uh Arvind, I think is his name. Uh Arvin. Alright, so there's a funny story about Arvin. He grew up in the same area as um the Google CEO and he grew up vegetarian and his mom wouldn't let him eat eggs, the the perplexity CEO.

And uh he like grew up and like, No, you can't have eggs and he's like, I need more protein. She's like, You can't have eggs. So he sees a YouTube video of uh Sundar uh from Google saying, Yeah, I introduce eggs to my diet Um in order to like get more protein. And then the mother's like Okay. You may have eggs. And so the fact that and he goes on where I thought you were going with the story. Dude, listen. He goes on to like have this story where like they're like, dude, Sandara and my household was like God. Where it was like

Well if he does this, then you must do this. And so imagine being raised in such a toxic environment where y you are either him or Or you are a failure. And So far he's doing pretty good. So like that's again, that's like Sam being a dummy and voting on a company just because the uh the magic the the founder is trying to like prove his mother uh you know make his mother proud. That's a strong that's a strong motivation. No, but I do think the the company is going to get significantly larger.

Like the episode of like Always Sunny where Charlie's trying to date and they're like, Charlie, what about her? She's great. She's got a good job. She's nice. She's he's like, She doesn't like milk. It's like Charlie's like No, she's like just a star. And it's like you know basically it's like, What are your what is your criteria, Charlie? What are you doing here? Is this a ridiculous pick or what? No, I don't I think a lot of people would say perplexity, so I I don't think Your your logic I think is ridiculous. I think you're you somehow are landing at the same conclusions as the geniuses, but the way you get there is uh unique, uh I would say. No, I I I picked it because uh I use it. I I've uh like it in terms of getting uh in terms of evaluation right now? Uh three. Three billion bucks.

Uh so a lot, but I mean, I don't know. It it's like a a fast project. Complexity also seems like a company that could get bought. So like you know Open AI, Chat GPT is like aligned with Microsoft. And

Google's trying to do Gemini and all this stuff, but like if perplexity keeps executing You know, it's the way that Facebook bought WhatsApp for twenty billion, right? Like At a certain point. If you are a better version of their core product of one of these large companies, Um Google being the the kind of the main one.

You know, you're a a very good acquisition target, even if you're standalone business may or may or may not reach her. I have no idea, but like it gives you multiple outs. The downside is like it seems like no tech company could do big MA anymore. So maybe that path is not as realistic. Um But I I don't think it's a bad pick. I think perplexity is an interesting pick.

Do you want to do your your other one and then I have one last one? What my last one is Trava. Have you heard about Trava? I've heard a lot about Traba because there's like a Traba Uh, there's like a trauma PR mafia that's out there. And I uh it's I'm not all right, so let me start with I don't I'm not part of that mafia because I do not want to work there. I think it sounds miserable. Um but there's a bunch of freaks who do want to work there. And if you are one of these freaks, th this is a a place to let your freak flag fly. Um I'm not a fan of it. And can you explain that? So I think it's kind of like here's a simple explanation of the culture.

Most tech companies are like We value diversity. and balance and we want, you know, well rounded people. And Trop was like, Yo, we're doing China in America. Like, we're working like the Chinese over here. Like we're doing the nine nine six model. We're here to create a trillion dollar company. We are gonna just like compete ruthlessly to get there and That's pretty awesome. Let me explain what it is and then we're and then I'll I'll I have some of their uh I have a little bit from their deck on when they onboard employees. But basically Traba is uh software. I guess you it would you we it's not just software. You wouldn't categorize it as just software. It's it's a little bit of everything, but it's uh uh it's software and a way to get part time or fast workers when you are a manufacturer or or a big company like that. Staffing. Industrial staffing. Yeah. So it's software plus like actually getting the people to show up uh to uh to if you're uh a big factory, if you're

Something where you need uh, you know, a hundred new employees or something like in in a week to do X, Y, and Z. They make it really easy to find and get those people to actually show up on time. I think they're Traba dot com, their website. I think it like that's their tagline, which is get workers to show up on time tomorrow or something like that. Traba dot work. Yeah. Travel at work, sorry. Now here's the part where they're they're kind of interesting. So Founder's fun.

Who I do respect, they're like, this is probably our highest potential startup. And they've said that th these crazy stories, like they've showed up at the office at 10 PM. And what we've noticed is like the office is still buzzing with people and it feels like The golden days of PayPal. And they have these values. These values are dream big, have an Olympi Olympians work ethic, which is inspired by Chinese uh China's nine nine six mentality, which I'll talk about, have a growth mindset and be customer obsessed. And so basically they say, Dream big. We want you to be the number one percent in terms of ambition. Plus the number one percent of attitude, which is gonna allow us to get the number one percent. outcome. We want you to have an Olympian's work at work ethic and they basically

I think they explicitly said this on their website. We have a nine nine six culture, which means working 9 a.m. to 9 p.m. six days a week. And there's like these interviews with these employees that are like, I really wanted that type of work culture. And I Googled where can I find that? And you guys had it on your website. And so that's why I decided to apply and work there. And so they're pretty fucking insane. Suckerborn every day. It's like I Googled where I can work the most hours and I found you guys. Yeah, they're pretty insane. I think they only have like 150 employees. I think the valuation is something like uh a hundred and fifty million dollars, I think. Uh no, it's gotta be higher than that. I I I don't I I I only saw a handful of numbers uh on their valuation. Is it higher than that?

Maybe I'm wrong. Maybe maybe it is. The the valuation isn't public. I think I was trying to like triangulate a bunch of old uh articles and I don't know if there's a current one out there, so I can't say exactly what it is. Uh just Th yeah, all I'm seeing is the founders fund twenty two million dollar round, which yeah that would probably be more like what you're talking about. So it could be worth more. I don't have the information. I just am doing a bunch of guesswork out of uh just articles that were live. Uh but People say that it's growing like five X per year, which is like huge.

And a lot of smart people who, even though I think they're douchebags like Keith Reboy, they're behind uh the company and they're definitely smart. Yeah. Uh okay. All right. I like uh I like the pick here. I didn't realize their valuation was what it is. Looks like it's around two hundred million. Yeah, yeah, I think this is a bet on people, right? So I think the people behind this company are pretty remarkable. They do seem like the Olympians of founders. Now the market opportunity is difficult here because

There's a lot of companies that get valued as tech companies that are actually something else. We work was valued at a tech as a tech company, but it's actually a real estate company. There's e-commerce companies where they're val you know, D to C companies where they were valued Like they were tech startups, but they were actually You know, selling suitcases and shoes and things like that. And eventually those corrections do come. And so I think the question here is like is this a tech

Is it a tech company or is it a staffing company that uses tech and started by tech people? Um You know, I'm not In the weeds enough to know, but I do know what you said, which is that they seem to have a very unique culture. It seems like s very smart people are very bullish on them.

And it seems like the founders are in that elite, elite level of Both ambition. And um Drive and That's those are good things to bet on in general.

But you did definitely just hypocritically uh tell me that like two of my picks were were too too hard to work at. And then you picked like literally the one that's like, yo, our thing is that we're the hardest to work at. Yeah. My top pick. My finale. Drum I don't want a drum roll because it's gonna seem anticlimatic.

'Cause it's the same company I picked last time. That is not That was not a winner in the last one, meaning it didn't five X in the last one. It's Rapplit. Oh man.

I think I am more bullish on Replit than any Uh Any tech company. Right now. Are you so bullish on it that if you could bet all of the money that you have into that company, you would do it. No, I'm not foolish, but I would I did

Invest in the company. And I then on top of my fund investment, I wrote a personal check on top of that, which is probably the only one I've done that with. So you know My actions do line up with this, but I wouldn't d bet all of my money on this because I don't Need to do that. So here's here's w my case. So three years ago when we did this episode.

Replit was at a about a one billion dollar evaluation. It had five million developers. At the time it really had no like AI story or tailwind. And revenue was small, um, to non existent.

What was it then? Um they don't announce they don't say. It's because it's It wasn't it wasn't a priority and it wasn't meaningful. So now everything has changed except for the price. So the five million developers has become twenty million developers.

Th no AI tailwind has become a huge AI tailwind. And small revenue has become scaling revenue. He Omjad came out and said Twenty twenty four is our basically like has been our commercial year. Like revenue is scaling rapidly. Dude, what's it do? Okay, so what does repa by the way, here's the the do you know the repla story? It's kind of amazing, to be honest. So the repla story is Amjad grew up in Jordan, which is a place I've never been, and it's sort of this like, you know, the world is very large and there's people, there's talent everywhere, but the opportunity's not as evenly distributed. And so

He used to co he used to love programming. But he didn't have his own computer at first. And so he would go to internet cafes, basically borrow a computer, and he would Pro code, you'd learn to code. But the problem with that was that uh Every time you go to an inner cafe, you're going to a different computer and you're not s like none of your stuff is saved from last time. And and if you ever learn to code, like one of the first things you do is you first have to like

Set up your environment. And so you need like Your IDE, you need to install all the packages for the language that you're gonna be using. If it's Python, you need to install those files on your computer for it to work. And you need to save those somewhere, you need to host it somewhere. There's all these things that go into coding. And so He had this unique problem, which was he wanted to code, and he was so disenfranchised where he didn't have his own computer that he was doing it at internet cafes for a while. And then even after that, You know, he worked at Yahoo briefly, like once he, you know, kinda graduated.

And he was uh still just sort of always annoyed with this like this like Friction that it takes to get set up. And so He as a side project created this thing. That was um

It was called something else, REL something at the time. And uh REPL is this like programming term, but basically what he wanted to do was he's like, Can I make a cloud Cloud based programming environment. Basically like my environment, but instead of it being local to my computer, have it be in the cloud. He it's because he saw Google Docs. He's like, Oh my God. Google Docs is amazing. This is Um, instead of having to have Microsoft Office but have the software on my computer, have the file on my computer.

I can just go to any computer anywhere. Go to a doc. The whole editor is built into the website, which is amazing. I didn't even realize websites could do this. And wow, multiple people can like edit the same Google Doc at the same time. This is incredible. Can I do that for coding?

So that's where he started. And so and so he built it as a side project for many years. So he worked at Yahoo as a side project. Then he worked at um Facebook and it was a side project. He worked with the guy at Facebook on the team that the infrastructure team and the the guy who created React, which is like now like you know the huge programming framework of React. Um And somewhere along the way, like rep uh replit basically starts to get a little bit of momentum. Gets like a hundred thousand users as his like side project. And

It was he worked at Code Academy and Code Academy was teaching people to code online and they discovered his project. They're like, dude, some random guy from Jordan. Created a programming thing that like All of our customers who are coming to learn at Code Academy. They could just code in the browser. They don't need to have like their own thing. And so

It's a side project for many years, and he wants to make it a main project. You know, he's not taken very seriously. He can't raise any money for it, and he applies to YC three times, it gets rejected three times. And After getting rejected a third time, he's pretty, you know, discouraged. He's like, All right, man, whatever, FYC, who cares? And But the thing was that developers really thought this was cool because it was like kind of a technical achievement to do this. To do this, he had to like write his own compilers and write his own shit that like would work in the browser. It worked with any language.

And so um there was for example a uh Atlassian created a competitor to this called Glitch. And Atlassian had like a good track record of like Trello and Jira. Like they built like developer friendly tools. So glitch comes out, huge PR move, raises a bunch of money. And they said

It's coding in the browser. He's like, Oh no, they're doing it. He goes, but they're like, it's all JavaScript because JavaScript is everything. He's like Well, I made this choice, this technical choice, to support any language. And these guys are saying it's all JavaScript. And initially they got this huge boost, but he started to notice that like this little language Python started to get really popular on Replit. And he's like I think they're missing the boat. I think Python is the thing.

And Python became the language of choice for Machine learning. It became the language of choice for backend development. It became the the language of choice for a bunch of like big waves. And he was the only one that could support Python. So glitch ends up dying. That Lastian company ends up ends up failing on uh in it. He just keeps chugging along. And so along the way, he he had this like kind of indie support. So it's used by a lot of students, a lot of teachers, a lot of coding boot camps. But that was kind of looked at like a toy, like oh that's cute, but those are just like beginners who have no money, who whatever. Yeah, I'm reading about him on Hacker News. Like he was

uh controversial there, but a lot of people loved him, some people disliked him. Early on he was really loved on Hacker News. Not him, but like Replit was really loved'cause it was like kinda cool that you could do this and it actually worked really well because he's you know a great programmer. And one person who was reading Hacker News really liked it. And that person was Paul Graham. Paul Graham had retired from Y C. He was living in the UK in this like mansion. And um He's not a part of Y C anymore and Amjada got rejected from Y C three times. But Paul Graham was like, dude, I think this is awesome. And he tells Sam Altman, who was running YC at the time, he's like, You gotta talk to this company Replit. So

He goes to meet Sam at at the time was a hybrid office of open AI and Neuralink. Before OpenAI was a big deal. Back when open I was just a research nonprofit. And he meets Sam and Sam's like Hey, um you know, I don't know anything about you, but Paul really likes your thing and he wants me to check this out. And um you know what?

You should just like talk to Paul. He told me but like I'm not the guy for this. You should talk to Ball here's his email. So Amjad ends up trading emails, like long emails. He he said, like, I should turn this into a book someday of like my emails back and forth with Paul. Like the philosophical Foundation of Replet, which was like

What if you could enable like 10 times more programmers in the world because this whole thing was about opportunity. So how do you make a programmer who doesn't even have their own computer, who doesn't know how to start Who doesn't know how to like get everything installed and their environment, all the stuff. How do you decrease all the friction? And eventually in even in his initial like plan was like, We'll have AI that will help you code. It'll be your pro your programming assistant. This was back before AI was a thing. It was like twenty fourteen, right? Like people weren't even talking about AI back then. And it's in his original slide deck. I have a a slide here for you. Let me show you. This was his master plan for his C Dick.

We're gonna grow by building tools for signing up teachers and students. We're gonna build a simple network and an AI assisted interface that blurs the distinction between learning and building. And eventually we'll become a platform where people come to learn how to code. Code. Explore and host their code. Um

This is exactly what they've done. It's like the Tesla master plan ten years later. This is his master plan. Ten years later they've done exactly this. The company's ten years old now. More than ten years old, basically. He I think he started this stuff like before twenty fourteen. And so it was again, it was a side project for a long time. Only became like a full time project. And there's like he shared the email like, hey, got rejected again from YC. Um And he's emailing Christina. who was his first investor. Christina is the founder of Vanta, another company I was gonna put on this list.

She wrote the first check into Replit. Um as a scout. And uh Vanta is a company that you know, in five years has reached a hundred million dollars. She wrote Y C, but the way she did it was she just YOLO'd it. She just like Move to a city and he he writes this email to Christine, he's like

Got rejected again. Hard to raise money right now. I might just YOLO, just move somewhere low cost, and just start building this thing. Um, that's that maybe was uh what I'll do. And so Look at this chart now. So this is

Replic developers year over year. It's literally like a Perfect hockey stick. And Paul Graham posted this. And he's like, the crazy thing about this is that This is a this is an impressive chart for any company.

Let alone a company where the users are developers. Meaning All of these developers are gonna build things that that has their own user base. That is crazy. Um, and so This is the growth. So back when we did this in twenty twenty one, we were here.

And now we're here. Developers are there. Uh so GitHub has about a hundred million. Wow, wow, wow, wow. By the way, GitHub. Some crazy stats on my research of GitHub. GitHub is used by ninety percent of the Fortune five hundred. It probably has like the most enterprise.

penetration of anything besides Microsoft Office. Um like Salesforce is eighty percent. Git Hub is up ninety percent, which is pretty insane. Uh get sold for. So GitHub sold back in twenty eighteen for seven and a half billion dollars. And at the time they were doing about two hundred fifty to three hundred million in revenue. GitHub now does about two is about a two billion dollar run rate.

And by the way, the fastest growing feature, the thing that makes up forty percent of the growth of GitHub's revenue growth is Copilot. is the AI assisted coder. that now does, you know, a few hundred million a year in revenue already after, you know, just a couple of years, profitably. And so that is the most successful, you know, AI. Uh

Implementation in any in any company so far is GitHub's co pilot. Three hundred, four hundred million a year. Product. Why do people dislike this guy? Is he aggressive? Well he said something which is just like you know Uh hacker news is, you know, when you're the underdog, they love you. And then as soon as they hear your big funding round, they they go and they just say how terrible you are. There's also there's other there's, you know, whatever. There's people I've I actually included uh

This is part of my bulb case is they got the case of death. Yeah. So it says they raise this money and then here comes this guy, B Feinman, who says, This is another company I felt is going to implode. They don't do anything that's that's interesting, let alone proprietary. Uh the CEO is an ass and everybody knows it. He acts as if a browser a browser repo is gonna change the world. I have no idea how their valuation is so lofty, but the core technology is so easily duplicated. Yeah, go go ahead, go try it. Um since the uh since the heavy listing the lifting they used to do has become obsolete. So Classic high the you know, go read the s the launch of Dropbox and Airbnb and other companies like this. This is like uh you know, there's always one of these comments at the top of their their their post that you want to frame. So check this out. This is the AI growth. So th the thing the criticism of Replit would have been

Great. You're getting a bunch of developers, but they're all young. And how are you gonna make money off of students, teachers? And I think the The misunderstood part of this, right? Because If you want to find something at a low valuation

It's not that Low valuation is just another way of saying misunderstood and mispriced. So what uh what would be misunderstood here? What what would you need to believe? Then you need to believe is that This is a leapfrog technology. So like I don't know if you've ever seen those graphs of like In Africa, it's like landlines.

Like landline adoption of mobile of phones in the in your home was like really, really low or bank accounts was really, really low. It was like, you know Some ten percent of the population had bank accounts and land f landline phones. But then And so you would think, Oh, if this is linear, you start with a landline phone, then you get a cell phone, or you start with a bank account, then you start getting uh mobile pay like Venmo or whatever. Um

Actually, those are easier to adopt and'cause they're on your phone, they're quicker, they're lighter weight. And so cell phones and mobile payments became this like huge adoption. And Africa actually has a higher rate of mobile payments than America. It has a higher rate of cell phone adoption than America did at the time because It was e it was a leapfrog technology. It was easier to adopt the smaller thing, the or the newer thing than it was to adopt the old thing. And so Um, one of the things that Hamjad said I really liked, he goes

Um You know People will all the criticism of replica is great. Beginner people use repli'cause they learn how to code and it's just really easy to get started. And the criticism is that like you're not gonna get like big developers to switch, you know, you know, twenty year vets to switch to to Replit. And he goes, that the better question is

If I have twenty million Uh You know, sort of earlier on in their their coding career coders right now. And this is a place where they can

Get started with no friction. build in any language that they want. They have AI co-pilot built in. They can host it. They don't need to know how to set up their servers. And there's a community of other people that they can like, you know, borrow code from and share f from and and answer questions with. Why would they ever switch? Like you're saying people will never switch from that to this. These people will never switch back to Oh, actually go make your life harder.

What if a great point what evaluation did you invest in? Think like nine hundred million. Um How'd you meet him? I've never met him in person. This is a company I kind of admired. I used it and I

Wait, you know, just look at him and read about it and it it just immediately was It it ticked my boxes. Um by the way, this is kind of interesting. So Jet Brains, which is another one of these, like the the probably the most popular Coding. Uh

environment for like Java developers. It's a bootstrapped company that does two hundred and seventy million in revenue. Hundred million in profit, hundred thirty four million a year in free cash flow with six million users. Um zero dollars raised since it started into in the year two thousand. And so like

I think You know, when you look at what is Replet's revenue potential, I think it's it's a lot bigger than this, because this has multiple things. So what do you think they're worth right now? What is Rapit worth? What do you think they're worth today? Well, their last valuation was one point one billion. I know, but what do you think is like if they were to raise again, it would be uh at what valuation?

You couldn't buy my stock. You'd have to pay you'd have to pay like a fifty billion dollar evaluation to take my stock right now. Like I would rather just hold the stock and see where it goes. Why? Because You're looking ultimately in in tech investing for giant winners. Uh, I think a VC once he told me he's like, Ever's talk about unicorns, I want Godzilla. And he's like, basically a Godzilla company has a you know. A company that becomes worth fifty to a hundred billion plus. And he's like, Those are the ones that make your career. And so

I was like, cool, cool branding. Um He but but what do those companies have? Network effects. This is a network effect business where it's a network of developers. It's growing like a staph infection at spring break, so it's growing really fast. Like

Since the last time we did the Sarah's list, it's grown four X. In terms of the number of developers who signed up. Looks like you got a real ringrim on your hands. Congrats, dude. Exactly. I think it's mispriced and misunderstood. I think it gets discounted for being just something for beginner coders when I think actually it's like a Snapchat or whatever. It's It's a product where Y that's the generation you want is the people who are gonna be using this thing for the next, you know, twenty, thirty years.

Uh it's riding a huge tech wave in that like Uh it is perfectly positioned. Two uh ride the AI wave because AI programming is a thing. Yesterday Sergey Sergey Brin was at the all in conference and he's like Yeah, I code with AI. Like he's like he's like, Yeah, I got back into coding.

I use AI. Basically I just kinda tell the AI what to do. It's like dude, the founder of Google It's like Yeah, I wanted to build this thing, but I just It's easier actually just for me to just tell AI to do it. It kinda wrote all the code for me. It was awesome. He's like Then I showed it to my team At the like Google like AI thing. He's like He's like I told them, I said, more of you need to be using this. He's talking to like the top programmers in Google, um, uh, which is kind of amazing.

Dude, this is awesome. I think you gotta ask this guy out for prom. I think I just did. I think he just did. Is this like you asking Taylor Swift, you know, like someone's better this is um you've convinced me. What's the downside? I mean what what is the downside? Uh let's I mean you had that for every company. That they're not gonna be able to make as much revenue as you think, that people will graduate off of Repli and decide that. Are they remote? Are they a remote company?

No, actually another another Sam bull signal. They're not remote. And not only that, they move from SF to Foster City to like build their own cult there. And he's like, Why wouldn't we? Why wouldn't we move forty forty minutes out and uh just make be like the kings of this little area and have like The best the best environment. Without the problems of San Francisco, but still being in uh still being close enough to the t talent density. I think that um You used all this great logic and all these silly arguments and all these numbers and facts and data

You should have just told me that he wants to build a a commune in Foster City and I would've been on board. I do Any deadlifts? You like that? I know you like that. Does he really deadlift? Yeah, he's a power lifter. Yeah, I mean power lifter power gains, like it makes sense. I think my my simpleton strategy can almost be as effective as yours. If you look at the our last um

I think our lives would say yes, it does. Right? Like I there's no knock on that. I I strive to be more like you. I think you you have it right. No, but I'm only teasing. It's part of me is being simpleton just because I literally don't understand that. Like when you're explaining that to me, I'm like I have to learn what all this means as we go. Um yeah. It's fucking complicated. Dude, these guys are geniuses, by the way. These guys are geniuses. To like and be able to invent things like this, I just think I just like I'm like We're not the same.

Well I wrote two words that I would almost never write in a T slide deck, I wrote mission driven and visionary. Full replet and Those are so cringe, you can't you're not even really allowed to say those.

Unless there's an exception, which is the same thing. This dude from Jordan who was like, God, I really want to increase access to for kids like me. Built us as a side project when there was no money on the line, there was nothing for years. Just kept kept tinkering away, building it, building it, building it. Um in his master plan from ten years ago in the seed deck was talking about how he's gonna have an AI assistant in your coding terminal that's gonna help you write the code.

Um And did exactly what he wrote. You know, ten plus years ago. That is mission driven and that is visionary to me. Well, mission driven to being into mission driven and and and visionary stuff. That's only cringe when it's not true.

When it's true, it's awesome. Well it's'cause it yeah,'cause it gets abused, right? It gets it's like gets used and abused by everybody. There's no like There's no um There's no earning that badge, right? You just get to use it if you want, which bastardized it. But like, you know, you look at something like Neuralink or whatever. Um

You gotta give credit to these people, like you know, when There's there's videos of Elon talking like, you know, decades ago about the four or five like most important things to do. And he's like, you know, the the advent of the internet. you know, um creating clean, you know, sustainable energy future. Uh

Creating artificial general intelligence safely. He literally been saying these things for for so long. You don't need to be mission driven and a visionary on world changing things to be intoxicating. Like that that makes it awesome. But you can like if I meet someone who's into something uh like relatively trivial and they're they're passionate about it, I still I get like turned on. You know what I mean? This guy His

His rockets to Mars is like the two hour cocktail party, right? It is helping people toot their harmonica and have a good time for two hours and much strangers and make some friends. And He is more into that than anybody I know. Then Um probably anybody that there is.

Uh he wrote a book about the thing, for God's sake. And then on top of it Even though I literally don't want to do that. Like I would Hate if I had to host one of those things. I love being around Nick because that energy is so, like you said, intoxicating. It's the perfect word for it. Yeah, when I um and so when I see a guy like this reputing, I'm like, I don't really care about any of that stuff, but I care that you called your shot and I'm into it. Uh during COVID, when we all had to work from home, I got to hear Brian Chesky give these um like monthly or uh weekly meetings.

And he was like in his bedroom and he looked horrible. He looked like shit. Uh because like his business was like on top of the world and then it's like I don't know if we're gonna be in business and I have like three thousand employees and like Travel is literally the worst thing on earth. Like Air Baby has paused. Uh and I remember seeing his talks and I thought like Dude I will

I wanna fight for this guy. Like if if I was on his team, he has got me bought in. Um and that and so my point being is that mission driven and uh uh visionary attitude. That is actually really important when it comes to a value uh uh how valuable a startup can get. D uh I think it is if you're making your bet, which is what we talked about, basically take taking your time and your talents and betting on one company, a super concentrated portfolio where you're gonna

And you basically are getting a hundred to two hundred thousand dollar bet that you get to make on a company when you when you take a job at one of these tech companies. You might as well Bet on the most talented, most driven Yeah, mission oriented. Sees the future more than anybody else type of founder because

It's their decisions that are gonna trickle down. Um I remember I made a Ethereum and well Ethereum's probably one of the best investments I ever made and I made it more on the same criteria. I was like This gangly Ultra nerd saying words that I barely understand. The spawners got the thinnest neck I've ever seen. I'm in.

And everything I read about the I was like so at like sixteen he's like or whatever, eighteen he's writing articles for Bitcoin magazine because he was so enthusiastic about it. And he was getting paid for Bitcoin, which at the time was like twelve dollars per article. And that's kind of like how he, you know, um he he is he's truly like of this. He didn't come when it was time to get rich. He was there before. And then I remember when Ethereum hit an all time high. And everybody on Twitter was basically like Lambos and Yachts and you know, like pumping their bag. He posted a Twitter thread that was like, Hey, this is great, but like How many of the unbanked have we banked?

How many people have we actually helped? How much of the mission are we actually doing? Like, yeah, the price went up, but who gives a shit And That is you know, the the best founders do that when morale is low, like the Brian Chesky example, they give you that conf they never let you get that low. They like bring you up. And when hype is high They bring you back down to reality.

Of like what are we here to do? And that that I when I saw that and I was like This guy is Crypto is full of potential, but it's full of pumpers. It's full of, you know, people are gonna take advantage of this. I at least trusted that the person who was stewarding that project was not Yeah.

to use bachelor terms, they were here for the right reasons. Vitalik is here for the right reasons. Uh he was there to actually You know, like help humanity and build build a free economic system. To use what terms? The Bachelor.

You don't you don't know that the every contestant. I play sports. I don't watch Bachelor. Do you like I have triceps and biceps. My T levels are over three hundred. I could tell you the difference between a barbell or a dumbbell bench press and why w why each is good. You could tell me all about uh the Golden Bachelor. Yes, I can. Priorities. Um all right, that's the pod. That was good. Thank you, Sean. Thank you, Ari. Thank you to uh everyone listening.

I feel like I can rule the world, I know I can be what I want to I put my all in it like my days off On the roadless travel, never looking back

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