MFM #92: The Three Month Old Company Profiting $90k Per Day

Funding talk 💰

• Ford, the startup: The Ford Motor Company was founded in 1903 with just $28k, and by 1905 was issuing dividends to investors. Similarly, Andrew Carnegie’s bridge company returned dividends within 1-2 years. This is in stark contrast with today’s reality where millions are needed to fund ambitious startups and profitability can take a decade to happen.
• Sam’s experience: Can profitability and quick growth be achieved today? Sam’s own experience says yes. He started The Hustle with no funding, and never needing the $1m he raised.
• The only thing that matters: Marc Andreessen’s famous essay argues that the market that a company is in is the single most important thing. If the market is big enough, he argues, the team and product matter little. The success of Ford and Carnegie is maybe the result of being in the right market at the right time. However, no matter how big the market, capital requirements today are still quite different.

Made in America 🇺🇸

Manufacturing in America is becoming increasingly important to consumers. Companies, like Lloyd Armbrust’sArmbrust, are going all in on emphasizing their made-in-America status.

• Mystery mask business: Sam brings up a mystery company launched in May 2020 doing 2k-5k orders per day for masks. The company is spending big on Facebook, and netting $30k-$90k per day in profits. Shaan and Sam warn anyone thinking of entering this business: 1) don’t sell low quality masks that may endanger someone; 2) don’t be the 3rd or 4th man in the supply chain and have to market prices way high; and, 3) this isn’t a business that will last.

The business of covering your a** 🍑

• The CYA industry: Companies that provide reports and information for professionals to make better decisions. Often used as a crutch for justifying decision making and nicknames “CYA (cover your ass) companies”.
• CB Insights: Provides data for companies in industries like venture capital and private equity. Can charge companies upwards of $200k for a subscription. Self-described “CYA” business.
• WGSN: Fashion forecasting consultancy for businesses.
• Scentair: Scent marketing and consulting business.

The modern Agora? 🦛

Sam brings up a mysterious company spending massively on ads. Listen to episode #92, to get the full details on this company.

• A mysterious DTC?: An internet marketing company that has spent over $1B on online ads.
• Secret sauce: Similar to The Agora, they focus on great copywriting. The company is a major advertiser on Outbrain, often sending paid media to long form landing pages.
• Is this a legit business?: It’s an interesting business model that seems to be working as evident by the company’s growth. Sam believes the company to be legit, and describes them as “Dr. Oz-like”.
• Outbrain and Taboola: The company uses ad networks like Outbrain and Taboola. Sam and Shaan note that although sometimes overlooked, there is a reason people spend money on Outbrain and Taboola: It works. Other top spenders on there include, Edmunds, Editor’s Choice, Health Grade, and Healthier Patriot.

Ideas💡

• 👨💻 Idea: Allow “developer artists” to create a piece of software and then have another company provide distribution. In industries like music, books and video games, there is a separation between talent who create and those that distribution and sell. In software, idea, creation, and distribution are all provided by the same company. This model existed in the 1980s and 1990s with companies like Felix Dennis’ MicroWarehouse and Softbank.
• 💸 Idea: Agents for top engineers (like sports agents). Sports agents are able to secure clients better pay than they otherwise would. With fierce competition in the tech space for talent, the sports agent model may translate well for tech talent. There may arguably be just as many engineers on multi-million dollar salaries in the business world as there are athletes.
• 🐦 Idea: Private Twitter. Shaan had a Slack channel where he dumped random thoughts for coworkers to see. These were thoughts Shaan wanted to share, but not super necessary pieces of communication. This was the idea behind Yammer — the defunct social media network for companies. There is a need for a new Yammer.
• 📰 Idea: Internal company newsletter. Similar to “private Twitter”, an internal newsletter aims to improve communication and dialogue within organizations. It creates a space to aggregate all the happenings in a company and provides for a low-pressure forum for employees to express opinions. Axios and Washington Post are working on this idea.
• 🧒 Idea: Etsy for kids. Marketplace for kids to create and sell objects to other kids. Gives kids a space to be creative, but also teaches business principles.

Other companies mentioned

• TrackReddit: Get notified whenever your company is mentioned on Reddit. Similar services exist for other platforms, but this has been harder to do on Reddit.
• Bubble: Allows anyone to create an app, also provides back-end. It’s complicated, but easier to use than coding. Shaan built an app using a similar service called Adalo.
• Tempo: Home workout device similar to Peloton and Mirror, but for weight training.