Episode 15: Today, hosts Alex Lieberman (@businessbarista) and Jesse Pujji (@jspujji) are talking about their predictions in the business world for 2023—from generative AI to content creation, what will happen with Twitter (of course), and so much more. Then, Alex gets Jesse’s advice on the launch plan of his new lawn game, The Plunge. And finally, we wrap the episode with a question around recurring meetings—do they ADD value to a business’s operations, or do they do the opposite?
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Alex Lieberman (@businessbarista)
Jesse Pujji (@jspujji)
(00:32) - Intro
(02:39) - The Rundown
(03:45) - Predictions for 2023
(04:48) - Jesse’s predictions around AI for 2023
(09:02) - Alex’s predictions for 2023
(21:52) - The potential of the creator economy
(25:48) - Alex’s prediction for Twitter
(26:09) - Alex’s prediction for Pickleball
(27:59) - Alex’s TikTok prediction
(30:33) - Predictions made in 1923 about 2023
(33:18) - How Alex came up with the concept for his lawn game, The Plunge
(36:18) - Alex’s pitch for his new business
(40:03) - The production challenge Alex has discovered in the process of building The Plunge
(41:06) - Alex’s ethos around launch
(43:56) - Alex’s marketing plan for The Plunge
(49:53) - The big questions Alex has right now around launching The Plunge
(51:35) - Startup AMA: Recurring meetings—are they good or bad?
Alex Lieberman: I was realizing as I was trying to make predictions, I'm like, anything that is not in my very small universe of media...
Jesse Pujji: You have no idea.
Alex Lieberman: I'm like, I can't look at myself seriously making these predictions. So high conviction is generally the stuff that I spend time in. The first one is...
Jesse Pujji: By the way, that's one of my signs of a mature self-aware entrepreneur, is when a person says to me, "I know this really well, so I'm going to...but these things, I have no clue." And when someone has the same level of knowledge on everything, I immediately don't believe anything that they say.
Alex Lieberman: What's up, everyone? I'm Alex Lieberman.
Sophia Amoruso: And I'm Sophia Amoruso.
Jesse Pujji: Yo, this is Jesse Pujji.
Alex Lieberman: And this is The Crazy Ones.
What's up, Misfits? Welcome back to The Crazy Ones, the best startup show on Planet Earth. I am so excited for an amazing 2023. So let's do this damn thing. Few housekeeping items before we get into the episode. Number one, this year is going to be the year of experimentation. You're going to see us trying a lot of stuff as it relates to the type of content we're talking about, the format of content. So you may see the regular 45-minute roundtable style episode we do, but you also may see old school Founder's Journal-esque episodes where we do diary entries of lessons we're learning. We may also incorporate interviews with some of the best entrepreneurs in the world. So stay tuned for some of these things. And as always, we want to hear your feedback. So shoot an email to firstname.lastname@example.org and let us know what you think.
Second, I want to share that our co-host, Sophia Amoruso, is not going to be a regular host on the pod moving forward. Sophia has an amazing amount of really exciting things going on this year for her as it relates to her investing career, her entrepreneurial career. And it simply is just taking up too much time. And we're super excited for her. She's a friend of the pod. She's for sure going to be on this show in the future as she sees really cool things happening with her investing, with her businesses, like Business Class. But moving forward, it's going to be Jesse and I co-piloting the show, and we're going to miss Sophia, but we're excited for all that is ahead for her.
Jesse Pujji: Miss you, Sophia.
Alex Lieberman: We are definitely going to miss you. And by the way, I already thanked her in private, but I need to thank Sophia for the really thoughtful gifts she sent me. She got me a jacket, like a collegiate-style jacket, which I've never heard because I wasn't on a football team, so I didn't have one of those cool patch jackets. She sent me one of those and it says Misfits on it. So shout-out Sophia for getting the awesome jacket.
Once I figure out my light situation, going to have that shining in the background. Okay. With that out of the way, let's talk about today's episode. First, Jesse and I are gonna be talking about the big things that are on our minds as we head into 2023, from the latest developments in AI to business stories that have captured our attention, and also what specific predictions we have for the year ahead.
I'm typically not a prediction person, but my view is, these start a conversation. It pushes us to form points of view, and that's the goal for that section. The second is a complete 180. I've been working on a side business in the background. It's called The Plunge. It involves throwing plungers at a dart board. It's a backyard game. I'm going to take you all through the story and the genesis of this game. And then Jesse is going to do a good old business CrossFit, asking questions, poking holes in the business.
And finally, we're going to wrap up with Startup AMA, where we're gonna be answering a question about recurring meetings. And Shopify's, I would say, very contrarian change that they made as it relates to their recurring meetings. So let's hop into this thing.
Jesse Pujji: Here we go.
Alex Lieberman: Let's do it. 2023. Where do you want to start? Do you want to talk about the things that you're most excited about or thinking about? Do you want to talk about predictions? What's...
Jesse Pujji: Yeah, I think maybe one place to start for me is predictions. I think people are...they're polarizing.
Alex Lieberman: Yeah, for sure.
Jesse Pujji: And my favorite quote around planning for your business or predictions is "plans are useless, but planning is invaluable." And so I always relate to these things as, the predictions are going to be wrong, for sure. We're gonna get them wrong. But the thought process and the cycling around in your brain and talking through with your teams, that's where the value comes in. Because then when you do spot something or something does come up, you're ready to take advantage of it.
So that's just a little bit of my take versus the...obviously, it's a fun parlor game to predict stuff, but ultimately the value is in thinking through, and like...if, for example, AI becomes critical, what's going to happen to your business so you can be ready for it. That's the interesting part of the conversation, because even if you bat 20%, 200 on predictions, you're going to be wrong a lot, but it's valuable.
Alex Lieberman: Are you planning for under the assumption that AI is bigger this year, like within your businesses?
Jesse Pujji: A hundred percent.
Alex Lieberman: What does that look like?
Jesse Pujji: Yeah. I mean, it's showing up everywhere for us. I had a conversation with Adriane as we were thinking about value-add initiatives for customers and the offshore talent. I said, "What if we trained everyone on the top three to five, all the Philippines talent on the top three to five AI tools, and then we sold that into the market?" It's not that big of a lift for us to do, but imagine someone shows up and they go, "Oh yeah, I know how to use Jasper. I know how to use ChatGPT-3, just tell me what you need." And I say, "Oh, go write me emails."
Now, all of a sudden they can throw it in a ChatGPT-3. Their English doesn't even have to be that great. And so boom, that's an entire value prop. We did it on the show with Unbloat, and started using it and now it's used constantly. You literally prototype...
Alex Lieberman: That's wild.
Jesse Pujji: ...a capability that the company now uses. And to me, if we launch more brands, we're absolutely going to be leveraging parts of this. And then literally something announced today; it's a genius idea. I just messaged the founder. I don't remember the name of it, but it's generative AI around product pictures. So a lot of brands, I know this from Unbloat, you always want new product pictures, but you gotta go pay someone to go take all these pictures.
Well, what if generative AI could take your product and put it in a pretty girl's hand or an old woman's hand or whatever. So now there's some guy launched it today on Twitter, and from Kahani perspective we reached out, because it's a huge issue for us of making sure the brands have content. Well, what if they don't have to do anything? What if generative AI just solves that problem for Kahani and all of a sudden everyone can have these very rich interfaces. So those are just tiny examples across each business. Look, I don't know, in a year we'll do the check-in and we'll say, "It turns out nobody wants offshore AI capability. As we did it, it wasn't as interesting as we thought." But the point again is, planning is really valuable. Thinking about this and how it may impact the business and inserting it is a big piece of it. Yeah, I think it's a game-changing technology you can use in every business.
Alex Lieberman: It's funny that you mentioned that second product. We're going to have to find out what the name is of it because we'll talk about it in a few minutes. But The Plunge, which is my backyard game, I'm in the thick of building a Shopify website for the first time. And obviously one of the things as I'm building my Shopify website is I'm getting product pictures. It's like you literally see me out here on a Saturday in Hoboken with my DSLR camera that I got as a graduation gift in high school, trying to take amazing pictures that have the right amount of light.
But then also if I don't want that background, I need to find a tool that takes out the background so I can put it on other things. So to have a product that literally just takes the perfect cutout of my product and puts it in any person's hands in front of them on any background would've probably saved me four hours this past weekend.
Jesse Pujji: Well, dude, you haven't run it yet. I've been running a brand for a year or two. You need more pictures. It's not like you just need 'em once. New things come up. All right, so it's called hellopebblely. Alfred Lua is the founder.
Alex Lieberman: Pebblely.
Jesse Pujji: P-E-B-B-L-E-L-Y.
Alex Lieberman: Okay.
Jesse Pujji: Upload a picture, upload a product image, pick a theme, voila.
Alex Lieberman: That's awesome. This also begs the question, by the way, and we can talk about this in a minute, of which companies are actually going to accrue value in AI. What is commoditized versus what is actually differentiated? I was trying to make a prediction on this and then I kept trying to, and then I was like, "Do I know nearly enough about AI to make a call on this?" But we'll talk about it in a minute.
I want to start by sharing my view of what's going to happen in the world in 2023. And I want to see if it lines up with you, and if it does line up with you, how you plan your business in accordance with or differently than this. So my view is, I always try to look at things as where are we right now. And if where we are right now stays relatively similar, what are the downstream effects that it has? So my view is, where we are right now is markets are down somewhere between 20% and 30% in the US. Interest rates are rising as the Federal Reserve tries to bring down inflation, which hit a decade high or multi-decade high at 9.1%. It's gotten down to 7.1%. I believe consumers are gonna be tighter with their spending as there's less money in the economy from government stimulus during Covid. Inflation is higher, so borrowing is more expensive. I think just the value of people's assets will go down, whether it's real estate, whether it's the value of companies.
So I just think overall, businesses are not going to perform as well in 2023. Consumers are going to be buying less stuff. Valuations are going to be repriced for higher interest rates, more layoffs are going to continue, I think, across the board. I think especially with venture-backed businesses that are getting pressure from their investors or they...
Jesse Pujji: They all overbuilt. They all overbuilt. That's a big part of why they're gonna keep doing layoffs, I think.
Alex Lieberman: Totally. But I also think it's going to hit big tech companies who have seen what Elon has done with Twitter and are going to get pressure from activist investors saying, "Guys..."
Jesse Pujji: There's the Amazon news that they're going to do 18,000 instead of 11,000 or something that leave.
Alex Lieberman: I saw a crazy stat by Scott Galloway. He said, he was like, "If you want to increase..." Oh, what did he say? Wait, I have to find this line. He basically was like, "If you want to increase the value of Amazon, Apple, or Google by some percent, you can either fire 25,000 people from your company or you have to increase topline by $12 billion." And he's like, "When you look at that math, these companies are going to make a very easy decision."
So I think that's part of it. I think just focus for companies is going to go from revenue growth to cost control. I think you're gonna see consolidations, companies trying to sell because either they see a storm ahead and they want to take chips off the table, or acquirers are gonna be looking for good deals. So that is the picture that's in my head that informs how do we think about the plan for the business moving forward. Does that line up with you?
Jesse Pujji: Broadly. I'd say it's gonna get worse before it gets better is what I...a high level version of what you just said. Look, I think the other thing to remember that you didn't say related to that is a lot of this is just psychology. It's just fear versus greed. And there was a huge period of greed and it's not like...the challenge with psychology is it doesn't flip overnight in either direction. And so even if things are fine in a year, if people don't feel like they're fine, and I think that's going to be a bigger challenge and it just, there's ripples that take place.
So I think it's gonna get worse before it gets better. And then the other thing I was saying earlier is, dude, it's overbuilt. I think that's really an important point for an entrepreneur is if you don't...none of my companies have done layoffs yet. Ampush had, I think, one of its best years ever during the year of Covid. And of course there was a discussion of, "Oh my god, it's a new normal. Let's build." Me and Nick were like, "Hell, no. We got lucky this year." We're gonna stay conservative. Let's plan to this run rate. And we haven't laid anyone off because of it. Maybe we didn't take as much as we could have on the upside, I don't know. But I just don't want people to lose sight of the fact that layoffs are a function of greed, and there was a moment where people were just overbuilding a lot and that's what leads to layoffs, and that's what leads to a lot of this stuff. Yeah, but I'm broadly aligned. Let's keep...what else?
Alex Lieberman: Okay. So that's overall prediction of the economy. Now, I'm going to share a few high...I've broken my predictions to high conviction and middle conviction, because I was realizing as I was trying to make predictions, I'm like, anything that is not in my very small universe of media...
Jesse Pujji: You have no idea.
Alex Lieberman: I'm like, I can't look at myself seriously making these predictions. So high conviction is generally the stuff like that I spend time in. The first one...
Jesse Pujji: By the way, that's one of my signs of a mature self-aware entrepreneur, is when a person says to me, "I know this really well so I'm going to...but these things, I have no clue." And when someone has the same level of knowledge on everything, I immediately don't believe anything that they say.
Alex Lieberman: Well, I'll share it in a second, but one of the predictions I wanted to make was around pickleball and what's going to happen to the game of pickleball in 2023. I was laughing at myself as I was trying to put it in the high conviction zone of me having conviction of, is pickleball gonna slow as a sport? So I will share that prediction, but I provide the caveat that I'm not the expert.
First high conviction prediction is that short-form video is gonna continue to grow at a record pace. And the belief in that is attention shorter than ever before; with tools like AI, creating short-form video becomes easier and easier. I think YouTube continues to invest heavily in it, especially as there are security concerns around TikTok and people are gonna need to diversify their audience. And YouTube, I think, has put the pressure on platforms to come up with solutions for monetizing short-form video. So I think it's gonna be huge.
Jesse Pujji: Yeah. I mean, I'd zoom it out a tick. And you know, Kahani, the entire bet is vertical media is going to take over commerce. And so we actually call it vertical media broadly, because if there's pictures, there's going to be GIFs. But the idea, as long as this thing looks like this, the phone looks like a vertical media landscape, that type of format is going to be super important. And I think it's not only going to become important in the platforms, which I think you were talking about, but I think websites are going to have to start leveraging it.
I think, I predict if we're right about Kahani, that sometime this year it's going to become a must-have thing, that your e-comm site has tons of vertical media integrated into it to have the right rich experience that a user demands. But I think it's going to happen everywhere. I think B2B is going to have it. I think that format is going to become the dominant internet format, the way that feeds were the dominant format maybe five years ago.
Alex Lieberman: Yeah. I also think it's interesting to think about, if that prediction is right, what's the downstream effect on other business opportunities? So I think about...there are a few agencies I know well related to creating short-form video. So there's Our Future, there's Clipped. And it's effectively what GrowthAssistant does, right? I would refer to it as geographic arbitrage for a specific need or skill. So a lot of these editors are in the Philippines, Sri Lanka, or in India and they're just high-skilled editors where the cost of labor is lower.
I think the opportunity for service-based video editing businesses, or just let's expand it, like you said. Vertical businesses, even like vertical websites, et cetera. I think the demand for that is going to be significantly higher, because I just think there's so few agencies relative to the number of people who are trying to create within this foreign factor.
Jesse Pujji: One of the cool things about being a little older and having experience is I get really excited. I've lived through the shift from desktop to mobile, and I lived through the shift to feed. Dude, you think about Sprout Social and Buddy Media and all these companies that came up around social and then mobile, how many software, how many services opportunities. And I think the same thing is gonna happen with vertical media and short-form video broadly. There's going to be software solutions. We've talked about it for Kahani is maybe we should actually be in a media management solution, because you're going to have to take vertical media and manage it across all of these platforms, including your website powered by us. So there's so many different versions of this that I think become really interesting.
Alex Lieberman: Yeah, I agree. I think it's also interesting to think about. We still haven't arrived at long-form vertical media in any way. If you want to watch YouTube video, you turn your video sideways and it's horizontal. Quibi was starting to try to do this and they didn't figure it out. I'm interested to see, how do the boundaries get pushed of intermediate or longer-form content that is solely consumed in a vertical format, because it hasn't happened yet.
A few more high conviction predictions, and then I want to hear yours. Decline in cohort-based courses. So I just think there was this massive boom during the pandemic in cohort-based courses. The idea that you can create digital courses. They have a beginning, they have an end. There's a few live sessions that some teacher does. You saw the advent of Section4, which is Scott Galloway's company; Maven, which is Godin and Wes Kao's company. I just think, not that there's not appetite for cohort-based courses, I just think there's oversupply right now. When you actually think about it, I think cohort-based is not flexible enough in nature for what consumers want. It forces you in a given week or given set of weeks to follow a certain schedule for a course.
I think this was a reaction to the stat that everyone used in their pitch decks, that only 4% of people finish their courses on Udemy. I almost think that in some ways, that part of it is like a feature, not a bug, where it's like people who actually want education are going to focus their time on doing it. There's always going to be a cohort within the world that just isn't motivated enough to get things done. So I just think cohort-based courses, we're going to hear a lot less talk about them in 2023.
Jesse Pujji: Yeah. That falls into my, "I don't know enough to..." The only way I think about those things is I try to pull things forward 10 years, then back into this year from that. So in 10 years, I think universities and the entire EDU system, other than maybe the top a hundred universities, is going to be pretty reimagined. So given that, I think we're probably going through this sort of volatile, "Oh, is Udemy the right solution? No, it's Maven."
Alex Lieberman: It's the figuring it out phase, where there's the pendulum swing, and the pendulum keeps just swinging back and forth until it finds the middle.
Jesse Pujji: Keeps swinging. All of a sudden everyone is going to realize credentialing is super important. I don't think universities are gonna die. Some middle-of-the-road school is going to become a brand that in its region still carries value that someone is going to turn into...already there's these...I forgot what they're called, but there's these businesses that take universities' IP and turn them into online courses.
Alex Lieberman: Oh yeah, like 2U.
Jesse Pujji: Like 2U, and there's a bunch of them. It's a big industry, but I think there's gonna even be more nimble versions of that, and credentialing. I don't know what's going to happen this year, though.
Alex Lieberman: Okay. Let's hear one from you. Do you have any predictions for the year?
Jesse Pujji: Yeah. One of the themes I have, I do a lot of bottom-up stuff at Gateway X, but then we quickly see top-down. I think one of the big things is, I'd say in the short term there will be a shakeout in the creator economy. But again, in the long term, I think that category of people and workers is going to continue to grow and explode. I think similar to all the rest of the economy, it's been overbuilt for what the demand is gonna be now. It's gonna pull back. There's going to be a flight to quality, but in the medium run, let's say two to three years, it's going to keep being a critical workforce. And I think there's a huge opportunity. One of our lists of ideas and items is selling, creating services for that category because they fall into this neither here nor there. I have a really good idea that I won't share, but just imagine that these aren't fully employees, they're not fully contract employees, they're not fully businesses, so they don't check any of the current boxes for all the various products. Payroll runs. One of the juiciest private equity businesses out there...I don't know if I've told you about this; maybe offline I've told you, is rights management for Hollywood people.
Alex Lieberman: I think you've like vaguely mentioned it, but walk me through it.
Jesse Pujji: So in a movie, 200 people run on the credits and each of them has a different deal with the studio to get paid. And every time that movie shows up on TBS or someone quotes it, there's some mathematical compensation that needs to be calculated and paid to that person. It's crazy complex. So guess what? There's a bunch of private equity-owned now, because they're such great businesses, payroll companies that run the gamut on that and make, I think, 45% EBITDA margins. There's software companies with payroll components. I think something like that. That's actually a very good idea too for the creator economy. But there's just all these things that I think you can build around that economy over time.
Alex Lieberman: Yeah.
Jesse Pujji: But in the meantime, I think it's going to have a pullback. I think you're going to see a lot of people getting out of it this year.
Alex Lieberman: I agree with the analogy. Now I remember the payroll companies you mentioned that basically true up the payment of everyone who gets pieces of movies. I guess one question I'd have there is, creator economy still feels like a fraction of the movie industry. And so the question is, how big can it get? I don't know. I go back and forth on how big it can get. And I'm saying this as someone who is the biggest proponent of the creator economy, but I've just watched in the last year, like you said, there's just this overfunding of creator businesses, because the more time that I've spent just in the startup space, the more that I've learned that venture investors are far less independent thinkers than I thought they were. I always assumed it was the smartest people with the most contrarian views who didn't give a shit what other people were doing. And it's like the exact opposite. My thought on the creator economy is...
Jesse Pujji: Everyone's human.
Alex Lieberman: Yeah. Creator economy funding is gonna dry up this year. And my view is there are lots of businesses to build in the creator economy still. There are not a lot of businesses that are what I would call venture scale creator economy businesses right now. I think the only venture scale creator economy businesses that I can think of at the moment are what I would call electricity businesses or utility businesses—businesses that get a piece of every transaction of creators.
The funny thing about this, and we don't refer to them as creator businesses, is like, those businesses are Facebook. They are Instagram, they're TikTok, they're OnlyFans. They're getting a piece of every creator. I haven't seen a business yet other than maybe like Cameo, which has an X factor talent that people already have affinity for that I think has venture upside. The only other business I can...or type of creator business I can think of are creator-founded businesses that are built with top 0.1% creators. So businesses that are built with the MrBeasts of the world, where Feastables is doing a million dollars a month in just Walmart, businesses like that. I haven't found a...
Jesse Pujji: I think in the short term we tend to underestimate the scale of things. It's crazy, dude. When we started running Ampush, Facebook was doing less than a billion in revenue. In 2015, I was like, "Oh, I don't know. Should we sell this thing?" $24 billion in revenue. Today, it's doing $110 billion in revenue. I totally missed it. I was like, "Oh, Facebook is petering out in 2015."
Alex Lieberman: It's wild.
Jesse Pujji: In many ways, most of the devalue creation. I don't know. I think the creator economy ultimately is going to be much more verticalized. The creators are going to get bigger.
Alex Lieberman: What do you mean by verticalized?
Jesse Pujji: The verticals are going to get more pronounced. Right now it's a free-for-all. It's like, "You endorse my supplement. You also endorse my blender." That's not the future of that. It doesn't take much when you think about the value of an endorsement. Like Michael Jordan. What percentage did he get of Nike? He's the first influencer, really. What if that happens broadly across the entire economy, still?
Alex Lieberman: I totally agree with that. I guess the one nuance there, though, is you're talking about Michael Jordan, who is the greatest athlete of all time. How many...
Jesse Pujji: Well, just take the percentage of what he got over the revenue he generated and apply that to a $20 trillion GDP economy. Now you have, I don't know, say five, 10%. It's a huge economy that then, by the way, has to get organized, has to get verticalized. They're going to be top percent. There's going to be all kinds of a system built around that, in my opinion.
Alex Lieberman: Well, we'll get to it in a few minutes because I'm thinking a lot about how, if at all, do I incorporate creators into this backyard business I'm building. So I'm going to be interested to get your thoughts on it. I want to just throw out a few of these middle conviction predictions, just for shits and giggles. And then we'll talk about the plunger business.
So the first prediction is that Elon will no longer be the CEO of Twitter by the end of 2023, but Twitter as a platform will be thriving. What does thriving mean? I don't know the answer exactly, other than that revenue is trending up, cost base is still low, and it feels like they are innovating on the platform a lot. Do you agree?
Jesse Pujji: Yeah. Nine out of 10. I mean, I agree.
Alex Lieberman: Okay. Pickleball growth slows. So I just...this is...
Jesse Pujji: Do you play pickleball?
Alex Lieberman: Yeah. I mean, I've played. I don't play it regularly. I think it's a very fun game, but it just feels like one of those things where the hype to reality ratio feels like it's off. I would say in AI, there's a lot of hype right now, but reality also feels very high. Pickleball is a professional sport right now. I just don't view it as a high skill-enough sport to ever be a big sport like the major four sports. I can tell you're someone who really likes pickleball and you're taking it...
Jesse Pujji: No. Dude, I've never played pickleball until the holiday season.
Alex Lieberman: Oh, really?
Jesse Pujji: But I'm a super competitive tennis player and so I was immediately very good. Not surprisingly, right? I know how to move the racket. What I was actually just thinking about is the Big 4. Like, is pickleball entertaining to watch? Because it's clearly very entertaining to play, and easy. It has this huge just top of funnel, because I was playing with my 70-plus-year-old father-in-law and then my brother-in-law's sister-in-law.
Alex Lieberman: Yeah. The top of funnel is everyone. Everyone who's interested in a workout or a sport.
Jesse Pujji: Well, me and my brother-in-law were playing. And we're both competitive tennis players; we're good. I would beat 95% of people on the tennis court, random people. But we were playing a pretty competitive game with the four of us. And so that was interesting. It was just like it just has a very wide funnel. I think that's premature. Maybe five years, you're right. I think it'll keep growing.
Alex Lieberman: Okay. We'll check January 6th of '24. But my guess is the growth rate is lower than 2022. Let's do two more. TikTok is sold to a US company.
Jesse Pujji: I agree.
Alex Lieberman: Okay. The only caveat in this is...
Jesse Pujji: Microsoft.
Alex Lieberman: You think Microsoft? I don't know enough about US politics, honestly, to know how deals this are timed based on different political agendas and what the election cycle is. So I know there's a 2024 election cycle. I don't know how that impacts whether this ends up getting pushed out to 2024, right before the election.
Jesse Pujji: Yeah. Here's my cockamamie theory. There's some real stuff that the CIA and whoever else is thinking about. They're really doing a true countrywide risk assessment. Now, there's one version of it where they're like, "It's not really a risk. This is all overblown." I don't know if that's...then there's another one where it's like, "No, no, holy crap. This is a huge problem. This can't exist. It's a national security threat." Then in that scenario, the Biden administration goes, "Is it good for us to push this? Is it a great thing to get reelected on?" to your point. If so, he's going to go super public with it the way Trump did. If not, he's going to still make it happen, but they're going to kind of like..."Look, guys, I'm sorry. We're going to block you in the country." But it's not going to be very headline-y type news, but a deal is going to happen. The government is literally going to broker a deal, and Microsoft is the right buyer for so many different reasons. And then if it's not actually deemed a threat, then I think it's a little bit more a typical strategic process. I don't think the government, necessarily. Unless again, politically, they go, "I don't care that it's not actually a threat. It's a great thing to get reelected on."
Alex Lieberman: I saw a prediction by Adam Ryan that he thinks Disney is going to acquire TikTok.
Jesse Pujji: No chance.
Alex Lieberman: He thinks Disney will acquire TikTok and they'll sell off ESPN to be able to fund it. You don't think there's any chance?
Jesse Pujji: No chance.
Alex Lieberman: Why?
Jesse Pujji: Dude, because we read...what's his name's book.
Alex Lieberman: Bob Iger's?
Jesse Pujji: The Ride of a Lifetime.
Alex Lieberman: Yeah, Ride of a Lifetime.
Jesse Pujji: He talked about why they didn't buy Twitter, ultimately. TikTok is way worse version of Twitter, man. Disney is Disney. They don't want UGC, man. They have the real assets. Why on earth do they want that? Microsoft, on the other hand, this is the asset they've been waiting for for two decades.
Alex Lieberman: Yeah. They're drooling over it. It's interesting. We'll see. Okay, before we hop into The Plunge, I just wanted to share, there was this Twitter thread that we'll put in the show notes that I thought was freaking hilarious. It was this guy, Paul, Paulie? Paul. He did a tweet thread of predictions made in 1923 about 2023. Did you see this thread?
Jesse Pujji: No.
Alex Lieberman: Okay. So I'll just read some of the predictions that were made. What I learned from this is like, some things were scary right. Other things were scary wrong. But the things that are wrong, when you extend the time, it's like the magnification of being wrong gets blown out. Right? It's almost like how the value of companies that cash flows are 30 years in the future gets really impacted. Same thing. Okay. So “the workday will be four hours long. All people will be beautiful. Life expectancy will be 300 years. Men will curl their hair. The US will have a population of 300 million.”
Jesse Pujji: Whoa.
Alex Lieberman: “Utensils will be made of pulp. Flights from Chicago to Hamburg will only take 18 hours.” I looked it up before. A direct is like 10 hours. “Newspapers will have been out of business for 50 years. Cancer will be eradicated. People will communicate using watch-size radio telephones.”
Jesse Pujji: Wow.
Alex Lieberman: There're some really freaking right things in there.
Jesse Pujji: That was said a hundred years ago?
Alex Lieberman: Yeah. I'll send you the thread after. It's literally pictures of old-school clippings.
Jesse Pujji: That is amazing. It makes sense that they extrapolated. I mean, the life expectancy was probably changing at such a high rate at that time. Right?
Alex Lieberman: Totally.
Jesse Pujji: So you just extrapolated that.
Alex Lieberman: Yeah. I mean, my favorite one...
Jesse Pujji: What hasn't changed? That's an interesting question.
Alex Lieberman: Yeah, that's true. Human greed. Human...
Jesse Pujji: Yeah. People were still playing the stock market.
Alex Lieberman: People were...
Jesse Pujji: Leading up to the...
Alex Lieberman: I don't know. It wasn't the creator economy or Web3. People were over-investing in tulip bulbs.
Jesse Pujji: But dude, the stock market got run up during the roaring '20s. It was literally the last 10 years. Great Gatsby. People were ambitious and wanted to build things. Crazy ambition was there still.
Alex Lieberman: It's pretty wild. It would be fun to go back and just read. I haven't read enough nonfiction history. It's probably really striking how little has actually changed in just how people interact and think and behave. Okay, let's hop into The Plunge. I've given you some background on what I'm building, but you don't have the full picture. So interrupt me whenever, but I'm going to explain to you and to the Misfits out there what I've been working on. So just to provide some...
Jesse Pujji: And let's pretend that you're an entrepreneur coming to me for advice, because that's a conversation that happens a lot.
Alex Lieberman: Well, I am. Yeah, I am coming to you for advice. So the context here, by the way, is...I've shared this on the show in the past, but we sold a big chunk of Morning Brew in October of 2020. I stepped out of the CEO role in April of 2021. I spent probably four or five months trying to figure out what I want to do with the rest of my life. I would suggest to anyone who asks that question to make the question a little bit more approachable and not say what you want to do for the rest of your life. Ask maybe like for the next six months.
At some point I just started feeling the creative juices flowing again. And so I just wanted to start building something. I very intentionally was like, "I want to just build something that I really enjoy building and I don't want to think at all, like, is this going to be bigger than Morning Brew, smaller?" It doesn't matter. So one thesis that I've had for a long time, going back to our creator conversation, is that I believe that there's going to be a Berkshire Hathaway for creator businesses.
What I mean by that is I think that there's going to be someone who sits at the center of launching many businesses with creators. And when I talk about creators, I really mean internet creators, YouTubers, TikTokers, et cetera, right? Twitter personalities. There's gonna be someone who helps them launch businesses, takes them their product market fit, finds operators, and then is the chairman of many businesses.
Likely will start in a single vertical and then move horizontally as they get proficiency in that vertical. I've talked about it in the past, that the reason it'll be done is marketing costs are going up. People follow people. Creators are like athletes, and they don't want to just trade their time for money. They want to actually build equity in something. So those are the reasons.
So all this to say, I started thinking, what's a creator business I could build? I started looking at creators that I thought would be good to partner with. One of the first creators I looked at was Dude Perfect. You do you know Dude Perfect?
Jesse Pujji: Mm-mm.
Alex Lieberman: Okay, Dude Perfect, your kids would love Dude Perfect. Dude Perfect is a sports YouTube account that's been around for probably 15 years now. It's a group of friends that do basketball trick shots.
Jesse Pujji: Cool.
Alex Lieberman: They just do a bunch of different sports trick shots. Their third most viewed video ever I saw on YouTube was them throwing plungers. It was a plunger trick shot video where they were throwing plungers at plexiglass, at boards they had made on their campus and had 50 million views. So I watched this and I was like, one, this video crushed it. So clearly there's some interest in what they're doing. Two, Dude Perfect doesn't have a product or a business that they've launched yet, so maybe they'd be interested in partnering with me on something. And three, throwing a plunger looks a lot like throwing an ax, and ax throwing is going through a very real moment right now. So the first thing I did is I went to Home Depot just to see how the plungers they were throwing would actually stick. I have a video I'll send to you after of a drain and sink plunger, throwing it in a Home Depot and getting it to stick. I got connected to a guy who has relationships in China.
Jesse Pujji: I feel like I need to make you do 60-Second Startup here so that we can get the whole idea out.
Alex Lieberman: Okay, fine.
Jesse Pujji: And then I'll [finance] it.
Alex Lieberman: Okay, fine. Okay.
Jesse Pujji: 60-Second Startup. I don't know all the questions. Okay. What is the name of your startup?
Alex Lieberman: The Plunge.
Jesse Pujji: Okay. What problem does your startup solve?
Alex Lieberman: Boredom at home.
Jesse Pujji: I don't know all the questions.
Alex Lieberman: Okay. I'll just finish it in 60. So the goal is, it is the next big game in backyard sports. The Plunge allows people to get the satisfaction, enjoyment of ax throwing without a trip to the hospital. The game involves throwing four plungers at a board. You go head to head against one person, up to eight people. It can be played in your backyard or it can be played at a sports tailgate, or it can be played on the beach.
My goal is to launch this business for pre-orders in the next few weeks and use short-form social content of people playing the game. Put it on TikTok, YouTube, Instagram, and any other short-form platform to drive demand for the product. If I hit enough pre-orders, I will end up pushing forward with the business. If I don't hit enough pre-orders, then I will have to change strategy. And that is the game.
Jesse Pujji: And how much does the game cost?
Alex Lieberman: So the game costs...
Jesse Pujji: What do you charge? What's your price?
Alex Lieberman: Yeah, so I'm going to charge $149.99.
Jesse Pujji: Okay. And what does it cost you, landed?
Alex Lieberman: As of right now, cost, if I wanted to get it to Jesse Pujji's house from China, so the whole process to get it to you is $68.
Jesse Pujji: Okay. So what is that? You make 90 bucks?
Alex Lieberman: I make whatever...this is really embarrassing how good we are at math.
Jesse Pujji: 150, 60, 90.
Alex Lieberman: Yeah. $81 over...yeah. So 81 bucks.
Jesse Pujji: Okay. So what's the market size, or how do you think about market size?
Alex Lieberman: So I would say it's so funny because I've never actually thought about market size ever in building businesses. But if I had to think about this out loud, I would say my immediate target market is 18- to 35-year-old men who want to play this game with friends.
Jesse Pujji: You know one of my favorite hacks for market size, by the way?
Alex Lieberman: What is it?
Jesse Pujji: It's just to find a comp business that is close enough and see if it's really big. So I actually know the founder of Spikeball. This reminds me a lot of Spikeball.
Alex Lieberman: Yeah, Chris. So in doing kind of this game, I've talked to Chris from Crossnet and I'm talking to Chris from Spikeball. I know that he has sold Spikeball. Wait, one second. I was on their site. I think they've sold 2 million sets. Let's see.
Jesse Pujji: Okay.
Alex Lieberman: About us.
Jesse Pujji: So $150...
Alex Lieberman: Oh sorry, 4 million players. But that's not necessarily the amount of sets. So let's just say that they've sold 2 million sets.
Jesse Pujji: Right. What do you think is a reasonable goal for you for this year? Just for fun?
Alex Lieberman: Yeah. My goal, it would be a success this year if I can do $500k in revenue.
Jesse Pujji: So what is that? Selling...
Alex Lieberman: So how many sets, you're saying?
Jesse Pujji: 4,000 of these? 3,000 of these?
Alex Lieberman: Yeah. It's 3,000 of these sets.
Jesse Pujji: And production, you feel comfortable you can scale to that? That's not an issue?
Alex Lieberman: Correct. If anything, honestly, the big thing that I've had to realize is warehouses only want to do big scale. So I've had to deal with the issue of, I don't want to manufacture $250,000 worth of product until I know there's demand, but yes.
Jesse Pujji: All right. You found someone who will do...but I think that's a real issue, MOQ, right? That's the lingo: minimum order quantity.
Alex Lieberman: Exactly.
Jesse Pujji: You found someone who will only make a couple thousand for you?
Alex Lieberman: Yes, I have.
Jesse Pujji: Okay. And do you have a 3PL?
Alex Lieberman: I don't have a 3PL yet.
Jesse Pujji: Okay. I can refer you to the one that we use for Unbloat.
Alex Lieberman: Okay.
Jesse Pujji: They're in Michigan. They're very centralized. They're a little old-school. But that's an important part of this, is a good one that you can trust.
Alex Lieberman: Yeah. So I need a 3PL.
Jesse Pujji: What about packaging?
Alex Lieberman: Haven't done that yet. Just been literally focused on getting the game in perfect shape.
Jesse Pujji: By the way, I didn't do any packaging or shipping. I sent my stuff in an ugly box. Still do, until...
Alex Lieberman: Did you?
Jesse Pujji: ...to a certain scale. Yeah. I mean, it's an example of validation. To me, you validate it. It depends a little bit on your taste, of course. But maybe you get...
Alex Lieberman: By the way, my whole ethos here, and I don't know if you approach things in the same way, it's like my whole ethos is, how can I spend as little as humanly possible on this until I know that there's demand and that there's money coming in the door? So on this whole thing so far...
Jesse Pujji: How will you know that?
Alex Lieberman: It's a great question. It's one of my biggest questions right now, which is what's enough pre-orders to justify moving forward with production. I think if I can in the first few months get 500 orders, that feels pretty good. That feels pretty good. But I've only spent...
Jesse Pujji: By the way, why are you doing it this way, though? If you don't care about the size, there's some demand. I mean, dude, there's 330 million people in the US. Why do you care? If you don't mind if this is a 2,000-unit-a-year business forever, why do you care? Why are you even creating that thing for yourself? Go figure it out. Go figure out how to find those 2,000 purchasers per year. You know what I mean?
Alex Lieberman: Yes. I agree with that. So wait. When you say just go figure it out versus doing what?
Jesse Pujji: Well, you're creating some...and it's normal for entrepreneurs to create a stage gate, let's call it, before they double down. But that's typically normal of a business where you're like, "Should I invest my time into this? Because my time is worth a lot and I care a lot about the scale that this will become." In your case, you said you don't care. So there's some number of people who will buy.
Alex Lieberman: I guess the big thing that I'm doing to stage gate is I'm doing pre-orders. So you pre-order the product on the website versus buy it. And the reason is that I want to get to a batch size that I can order from the manufacturer, because I think that what the manufacturer won't do is I get an order on Friday and then I get an order next Wednesday.
Jesse Pujji: Of course.
Alex Lieberman: They're not just going to fulfill that.
Jesse Pujji: You could order a few thousand in the beginning.
Alex Lieberman: Exactly. I don't know if I'm going to get to a few thousand.
Jesse Pujji: $68 bucks, or say $50 because you said to get it to me; there's shipping. So you don't want to spend a hundred grand until you think there's some demand.
Alex Lieberman: Exactly.
Jesse Pujji: But I don't know. If you don't care about the size, there's a big enough business here. You could go sell it to schools or something if you really...I mean...
Alex Lieberman: Oh, yeah. I guess what I'm saying is I don't want to, unless...so your view is you think there's enough demand where you would just eat the $100,000 cost and have a few thousand games sitting in a storage unit and then just...
Jesse Pujji: If I don't care about the size of the business.
Alex Lieberman: Yeah, but do you care about losing $100,000?
Jesse Pujji: I do, but...330 million people in the US, 100 million households, I very firmly believe...
Alex Lieberman: Math makes it sound easy.
Jesse Pujji: Okay. Let's talk about, what are your top marketing initiatives? How are you going to go out and market this thing?
Alex Lieberman: Yeah. So there's a few things I'm doing. One is I'm planning on creating basically daily TikTok or vertical video content that's going to drop. It's going to be people playing the game. It's also going to be a lot of competition-type content, where I sit outside in Hoboken with a board and it says hit a bullseye, win $100 or $1,000 bucks. I'm going to do head-to-head videos where I'll get two friends; they'll bet each other either money or an act, and the winner gets to do something to the loser.
So that's like the organic content I'm creating. Now, bringing in the creator piece of this, I'm talking to a few big time creators and I'm trying to decide if it makes sense to work with them. So I'm talking to a YouTube...
Jesse Pujji: It feels premature to me. So here's a couple thoughts. One is, are you going to do any kind of...you said you're going to...from a marketing, are you going to do any kind of...what are they called? Kickstarter or anything like that?
Alex Lieberman: No. So basically what I'm doing is the equivalent of Kickstarter. I just did it on my own website, where I'm having pre-orders. I just don't get the benefit of Kickstarter's distribution, which what I'm trying to build up through TikTok videos. I don't give Kickstarter 8% to 10%. That's kind of the trade-off.
Jesse Pujji: I can see that. I mean, those can be valuable ways to gauge demand because they have built...
Alex Lieberman: I agree.
Jesse Pujji: ...communities that respond to different products.
Alex Lieberman: And by the way, games are supposed to be one of the best categories on Kickstarter.
Jesse Pujji: Yeah, I mean I would not take it off your list so forcefully. I would keep it in the views. And then on Facebook, one thing to think about, that's an easy way to gauge demand, is early on there's like this thing I learned actually, because I had been running huge campaigns and then I started running new stuff and I sucked at it and it's called "seasoning the pixel."
And so what happens is if you spend too much money too fast on Facebook, their signal is not dialed in yet. And so you waste your money and you don't actually figure out demand. So the playbook we ran on the second brand we launched that you should look at is, create five static ads and spend 50 bucks a day. What you're doing is you're actually letting Facebook...and you'll notice every week, click-throughs get a little better, the conversion gets a little bit better.
And dude, for this business, during that phase, you got the CAC below 50, it's a fucking massive idea. If you got the CAC even break even based on your gross profit, it's a very bona fide idea 'cause you haven't layered on good...
Alex Lieberman: Haven't optimized at all.
Jesse Pujji: At all. Right? You layer on email marketing. You layer on these videos that are gonna become viral. And anything that's viral and organic becomes amazing as a paid ad. Right?
Alex Lieberman: Yeah.
Jesse Pujji: So I would set that up as soon as you can, as soon as today or whatever, and get that up and running and five static creative that show what the game is, explained in very basic terms.
Alex Lieberman: I'm going to try to do it before next episode.
Jesse Pujji: Yeah. Five ads to the outset. And then, here's the math. Let's think about the math. It's $150 product. The higher demand, there's AOV things to think about. So the higher the expense, the higher CPMs you're typically paying, because there's less demand, there's less click-through conversion. What the math you have to think about is, let's call it a $20 CPM and you serve 10,000 impressions. So that's $200 in marketing expense. How many sales do you get? Ampush calls it APM. It's a made-up metric of acquisitions per 10,000 impressions. It's really click-through and conversion mixed. But in your case, we would love to see a three APM, which means for 10,000 impressions we sell three product. And then you could do the math of, I get a click-through of...with shitty static ads, you'll get a 1% click-through maybe, if you're lucky. That'd be a good sign. And then we'd have to do the math on the conversion rate. But let's actually do it for everyone. So you get 10,000 impressions. You get a 1% click-through rate; that means a hundred people click. So you need 3% conversion rate to get the...
Alex Lieberman: Which sounds pretty high.
Jesse Pujji: Sounds high, so maybe it's a one and a half and a two or so. But you start to play with those. By the way, the math I just did would be a wonderful sign. So if in the first two weeks, you're at one in one or 0.7 and one, that's okay. You want to see it over time after...and you don't have to invest that much. $50 to 100 bucks a day for two months, and you gotta see if it gets better over a period of time, so you get close to that $50 CAC. And then...
Alex Lieberman: I wanna try this out. Honestly, the first thing that I have to accomplish, which I'm getting close to, is finishing the website. I haven't built a website in like eight years and I'm building on Shopify for the first time. Actually, what it makes me want to do, as I'm thinking about...and this will be another episode, the idea of a personal holding company and building many of your own businesses is like, I want to take several courses or read several books in copywriting and in design, because I just think being able to throw up really intriguing brands up front is such a powerful skill. So anyway, I need to finish the website, but then I do want to test that. It's something I just want to leave you with.
Jesse Pujji: By the way, I have a Shopify developer you should just hire and use. It's cool for you to figure this out on your own to a point, and then at some point it just becomes silly.
Alex Lieberman: It's just stupid.
Jesse Pujji: Pay him a few thousand dollars and just get your site.
Alex Lieberman: Well, just for everyone to know, just to be totally transparent with costs, I've spent $12,000 on this game so far and $11,500 was on R&D. And the remaining $500 was on materials, like stuff I got for the game from Home Depot. I finally found a TikTok editor that's gonna make my videos. This is just another lesson in how valuable distribution is, and also why businesses like GrowthAssistant or service businesses that have talent in other countries, I think is such a good business.
The only reason I found this developer, his name's Vipul. He's, I think, like 18 or 19, in India. Amazing short-form editor, is because he saw my post, because I have 230,000 followers that I put it out to. No one would find Vipul if they didn't have that audience. And so I feel very grateful to have that distribution. Last thing, I'll...
Jesse Pujji: Can you intro me to him?
Alex Lieberman: Yeah.
Jesse Pujji: I need some people.
Alex Lieberman: Yeah, a hundred percent. Last thing I'll leave you with is, the biggest questions I'm asking myself right now to push the game forward is how do we bring down costs enough to have enough margin, especially if I end up going into retail, enough to sell wholesale prices to them. Is the price too high? Is $149.99 too high? It's on the higher end of games. How do we get to a place where I feel great about the board? There's still certain things in terms of the durability of the board I don't feel good about.
And then if this works, what do I look for in an operator to run this day to day, and what do I want this brand to be slash the portfolio of products to be? I have some ideas that I'll share in the future, but I'm still working that out.
Jesse Pujji: My parting thoughts for you on this. I think one is, come up now with the December P&L or August P&L. It's going to be a summer-oriented seasonality of this business. So dude, I want you to get to a thousand sales in August at $150 per...let's say it'll be $125 with discounting. So $125k. We said $70 goes out the door, so whatever. And then aim for a $50 CAC. If you're going to use paid heavily, if not, then $25, but your top won't be as big. And then build backwards from that. I think it's really important to set that somewhere as a bogey and then build backwards from it.
Alex Lieberman: Top in next episode, let's like...I want to hold myself to account. We'll set the goal at the top of the episode and then I don't know, every month we'll do a revisit on the business to see how it's doing.
Jesse Pujji: And on the operator thing, one thing I would just share with you, having now spun up three things, having someone from day one is much more critical than I thought, I think I realized. And so I would try to find that person now. I would start the search now.
Alex Lieberman: Okay. That's good to know. Last thing: Startup AMA, best way to finish the episode. We got a question from Emily. Emily brought up this article that came out in the last few days about Shopify. Shopify announced that they are going to do away with recurring meetings that involve three or more people, starting this calendar year. Emily wants to know, "Do you believe that this was the right move?" Jesse, what do you think?
Jesse Pujji: A hundred percent. I mean, Twilio does this every quarter. Jeff told me that many, many years ago and I tried to institute it.
Alex Lieberman: Oh, really?
Jesse Pujji: Anything standing gets deleted every quarter. I think one thing you don't realize in business is how fast inertia sets in and how most people are...we're all creatures of habit. Even you and I. I shared my weekly schedule. I consider myself this amazing entrepreneur, like challenge the convention. And yet most of my weeks are very routinized, as you said. And so when you allow that to set in for your company...Ric Elias at Red Ventures, he would never set a standing meeting with me. He refused outright. "Jesse, when you need me, call me. I'll get on the phone with you in the same day. You don't need me, don't bug me."
And he does. The guy runs a multi...tens of billion dollar company. If I text him and I go, "Do you have 10 minutes today?" He will find that 10 minutes to talk to me. I think it's great. I think a hundred percent.
Alex Lieberman: I agree. And if anyone wants to build the idea that I had posted on Twitter in December of 2022, I would love for someone to build a Chrome plugin or Zoom plugin where basically it keeps a tally of how much money is accruing in meeting cost, as a function of the number of people in the meeting and their hourly rate. So you know when you call a meeting, basically the price you are paying for calling that meeting. I would love using that. I think it's such a good accountability holder.
Jesse Pujji: There's this funny Chris Rock...did you see the new Chris Rock?
Alex Lieberman: No.
Jesse Pujji: He's got this hilarious scene where he talks about...he's like in divorce court with his wife and he sits down for a second and he looks around at the proceedings and he was just like, "Every single person in the courtroom, I am paying for. I'm paying for the judge to be here. I'm paying for my attorney. I'm paying for my wife's attorney. I'm paying for her. I'm paying for the clerk." He pauses and he goes, "This is how I know I made it."
Alex Lieberman: That is incredible. That is hilarious. Great way to end the episode. And Emily, thank you for the Startup AMA question. If you're a Misfit and you have a question for Jesse or I, shoot us an email to email@example.com. Again, we are super excited for 2023. We are going to be trying a bunch of different shit, but all with the same goal: to help you build better businesses, and to be the best startup show on Planet Earth. Jesse, any parting words before you go?
Jesse Pujji: No. I'm excited for '23. Let's go. It's gonna be great year.
Alex Lieberman: Yeah, man. Let's do it. Okay. Have a good week, everyone.