We have this podcast called My First Million where we're coming up with all these complicated schemes of how somebody can make their first million. Meanwhile, in the relationship, Sarah made her first million before Sam with the simplest scheme of all.
Okay. So, we invited our buddies from TBPN, John and Jordi, here to do one of our favorite episodes that we do every year called Sarah's List. It's called Sarah's List in honor of the queen herself, Sam's wife, Sarah. You know, it's a classic story really. She just joined a company that was clearly already great as like employee 3,000, and the math was like this. She got a job at Airbnb, and I think it was, you know, her numbers aside, the general math is you get a job and they'll offer you maybe like a 40 or 50k a year stock package in addition to your salary. So you get your salary, you get your health care, they got a kitchen where they're serving you lunch, they got oat milk in the fridge. So you're not sacrificing anything. She didn't have to come up with the idea of Airbnb. She joined it. She wasn't the first employee grinding like crazy. She was employee 3,000. But that stock package, which over a 4-year period is, you know, you're granted about $200,000 worth of stock, 5x'd, and she made a million bucks before either me or Sam. And so we kind of wanted to honor the brilliance that is joining companies that are already clear winners, especially in tech, because the winners can run so far.
And so every, um, every few years me and Sam have done this where we come up with our list. We call it Sarah's List, which is the 10 companies you would join right now because as a person your time is essentially your investment, right? When you join a company, that's an act of investment. It's funny because I know some investors who made an investment in that unicorn round and they had the exact same logic. They were like, complete obvious winner, like just pile money into this, like easy investment, and then it worked.
She joined, I think, at the $18 million valuation, something like that. Okay. And then COVID happened and we were like, well, that was a good idea, sucks it didn't work. And then, uh, obviously everything changed in six months, and then I think it IPO'd around a hundred billion. And you guys remember that famous interview with Brian Chesky where he's told on air, he's like, the share price is this and it's worth a hundred billion, he's like, I didn't know that until just now because back then in 2019 or 18 when it was $18 million we were like, this could be worth like $30 billion, like, you know, like if everything works.
Yeah. Like if everything works. And so anyway, that was her story and it worked out great because she worked a normal amount, had great maternity, paternity, uh, package, had great benefits, all that stuff. And so we've done this for a few years, but you want to know something? We've actually haven't actually done this in like 18 months because it's been so hard these last 20 or 24 months with everything going on with AI. And so you guys are pretty cool to have because I think you'll know a lot more about some of the latest and greatest.
Yeah, we wanted you guys on because not only are you guys super smart, but part of your show is you're talking to the CEOs of these companies in these like 15-minute interviews every single day. And so you're getting a good sense for kind of like who's doing well, who do you believe, what companies excite you. So we wanted to hear what you guys have. By the way, last time, Sam, I went back and checked. I think of the 10 companies that we did in our last round, which was something like 18 months ago or two years ago, something like that, I think we got six out of 10 that are like already either there or pacing to be there. So, for example, like when we did OpenAI and we were laughing, we were like, uh, hey, here's a shocker, OpenAI, it was a hundred billion dollar valuation at the time. It's now like, you know, close to 800 billion now. And so, and we even said like, look, there's no bonus points for difficulty in life, in the game of business. Like, sometimes the best companies are just hidden in plain sight. They're right in front of you. And so, I think we've done pretty well.
The biggest one was, uh, was Anduril. We did Anduril in '21, I think, and that was four billion at the time, and I think it's 90 or I don't remember. And a lot of those companies should stay on the list, honestly. Like, I think, you know, even if you just done Anduril last year, like the valuation has increased so much that it still makes sense to include in the list.
Yeah. The biggest mistake that people make is not going with an obvious winner because it's already in the multiple billions and it just looks like, okay, what's the potential upside from here? And that's just been wrong so many times in the last, uh, 10 years.
I've talked before about the way that I know how to make money, about how to build a money-making skill, about how to leverage your time and energy, and the team at HubSpot actually went through the video where I explained all that and turned it into a free downloadable cheat sheet on my four rules of how to make money. Now, this is not, you know, get rich quick advice. It's just core principles, foundational principles about building wealth, things that I wish I knew when I was, you know, just getting started. And so, if you want to download it, it's in the description below. It's totally free. You can go get it. Thanks to the folks at HubSpot for doing the research, making this document, and making it available to all you guys. All right, back to this episode.
Um, all right, so let's jump in. Uh, we each have roughly three each. We're going to try to get 12, maybe some bonus, some honorable mentions.
My first pick, this is a company you guys might not even know about, which I like. I like to surprise you, but I'm coming in strong here. Zuru Tech. Okay, Zuru Tech is a company that's based out of New Zealand, and they're the third biggest toy company in the world. So, they make, if you've ever seen Mini Brands, Sam's a big mini food collector, he likes the little mini toys. Uh, they make some of the most popular toys in the world. The bunch of balloons where you can fill up 30 water balloons at once, you know, that type of stuff. So, the founder, Nick, came on the podcast. He's the wealthiest man in New Zealand, and his story is insane. Like, probably the craziest grind story I've ever heard. By the end of the episode, I told him, I go, 'I think you're the closest thing to Elon Musk that I've ever seen. Um, people just don't know about you because you live on the other side of the world and you were in the toy industry, so kind of people overlook you.' Um, so he's got a new company, and his new company, uh, or it's actually based in there. They're building homes with a factory. Basically, here's what you do. He's got a three, you know, it's like ChatGPT. You just describe, you drop a pin where you're going to put the home. It automatically, no matter where in the world, any country in the world, any city in the world, any neighborhood in the world you put it, it automatically downloads all, it has all of the building codes and the permitting and the terrain. So, it knows if you're on an incline or if there's a hill there or whatever, right? It has all of that already built in, and it's called Dreamcatcher. So, you basically describe the home you want. You're like, 'Oh, I want this like kind of minimalist, blah blah blah, 5,000 ft. Make it cool, blah blah blah.' So, you basically describe like ChatGPT the home you want, and it renders it all using like Unreal Engine. Uh, so it renders the whole thing in front of you. It creates like an AI video of like a home walkthrough for you using kind of like a, you know, Midjourney type of thing. And then you literally like build the home. You click it, and he's got a factory in China that's like the iPhone building factory, but it actually builds all of the subcomponents for this home. And it's insane. Like they went and bought like, uh, when the Palisades fire happened and people needed to sell their lots, they bought like $80 million worth of lots in LA. And he's building, he's basically going to print these, I say print, just it's building with a robot. Like $50 million homes in LA. And so this guy, it was the most impressive demo I've ever seen, seeing the homes that they're building.
And it's real. Like this guy is, he's basically like, you know, manufacturing genius. Him and his brother. Uh, they have huge factories in China to be able to do this stuff. And the crazy thing about homes is homes is a space that's really never been touched by, definitely not AI, but really even most technology doesn't really, uh, go into construction and home construction. And when you're selling homes that are multi-million dollar homes, you don't have to sell that many of them to be doing billions in revenue. And so if there was one company that I could kind of empty the tank of my life savings into, I would be pouring it into this, which means it's a contender for Sarah's List for me.
Wow. Great case. Did he talk at all about why previous attempts in this category haven't worked? Because there's been a number, there's kind of like a, I like this, uh, I like this bet because there's actually like a graveyard of Silicon Valley companies that have like made efforts.
Yeah. Because he's not a Silicon Valley company. He's a guy, him and his brother have been basically been building factories in China for like the last 20 years.
So they're a manufacturing powerhouse. So, for example, they were in the toy space and they became the third largest toy company in the world. They do like over a billion dollars of pure profit a year just into the two brothers' pockets. Like, it's crazy. Then they went into, uh, the diaper space. They're like, 'Oh, you know what? Let's go compete in one of the most like difficult to compete with things against Procter & Gamble.' And he built the fastest growing, and now I think, I think it's, if it's not the number one, it's basically right up there with Huggies and Pampers now. Um, even though it's a brand new diapers company, uh, you know, they're selling in Target, Walmart like crazy, and they manufacture their own diapers. And the reason why was he found that in China there was like a different style of diaper manufacturing, different materials, and he basically brought that to market, um, in the US. And so he built the largest. Then they did the same thing in hair care, and they did it with, they have the fastest growing brand on TikTok for hair care, and now they're doing it for homes. And so I think the big difference is like, hardware is hard, and most software founders, you know, go in for a rude awakening when they go into hardware. Whereas these guys have been doing literally like not just hardware, but like the building of the factory is the hard part. The factory that makes the product is sort of secondary to it, but building a highly automated factory is the number one thing. And they've been building factories for a very, very long time. It's actually hilarious. When they went to China to start their toy company, they built like, he went there because he heard, 'Oh, all the manufacturing happens in China.' But what that usually means is you go find a manufacturer, you tell them what you want to make and they make it. He went to China, didn't realize that, like a naive mistake, and built his own factory there, like on the side of a river.
That's correct. Like did it all from scratch because he didn't understand like, oh, when people say they manufacture in China, it doesn't mean they go manufacture in China. They find an existing manufacturer. He missed that part and just went the hard way from the beginning.
Shaan, uh, sounds like you don't like this guy at all.
Did I say I'm a fan? I'm a fan of this guy.
But will this actually work as the bear case? Like what, unpack that a little bit.
Well, the demo is so insane that you just have to ask the question like, is this like many AI products that demo well, but production sucks? And so basically the demo was so good that, you know, you just kind of got to see a home first before you, you know, you fully believe. Well, I mean, I would put, uh, like tariffs as more of the bear case. Like if China-America relations degrade further, then it's going to be harder to get stuff across the border. It's going to get hard.
Well, here's the craziest part of the whole thing. Um, I thought, you know, you try to find cost savings when you do stuff like whether you do it in China or you're like using new technology. And so the question was, is it 10%? Uh, is it 20%? What, how much is it? It's basically like more than an order of magnitude. It's more than 10 times cheaper to build the homes this way.
Um, which I think is kind of the exciting part because if you can bring the cost of building down, you know, that's actually like very, very meaningful for like, I don't know, progress in the world.
But this breaks the whole point of the list. This does not sound, I don't want to work with a person that sounds like Elon.
There was no caveat that said the founder is completely sane. We didn't add that. It just said you join a company that's already got an existing, these guys have a hugely successful business already, but it has a chance to 5x because there's a pathway there. All right. That was my first company. Uh, let's switch to somebody else.
Yeah. Let our guests go first.
Okay. Quick caveat. So, uh, we were under the impression that we had to be picking companies under a billion dollar valuation. It's a good kind of exercise, uh, and actually like understand that early stage today still means sub-1 billion basically.
Are you carrying like a $5,000 handbag in that photo?
Uh, it's not, it's a duffel bag.
Can we do the origin of this?
Well, so the origin of TBPN is, uh, other people have described it as, you know, uh, ESPN for tech and business. Uh, what's funny is that John and I do not watch any of the traditional American sports, football, basketball, baseball, etc. Anyway, first one, Varda Space Industries, helmed by none other than Delian Aspar and Will Bruey, uh, former SpaceX. Uh, valuation 726 million, but like one of those multi-decade projects that, uh, could have really, really large TAM, really, really large expectations. They do, so they manufacture things in space. So they do not build the rockets. They partner with SpaceX to launch a capsule, and then inside that capsule they effectively have created a manufacturing environment where gravity is an off switch. And so for certain things, imagine you're trying to grow a crystal or you're trying to grow a drug or heart tissue, or there's applications for, uh, certain types of fiber. They're doing a lot of biomedical work right now. And then there's also defense applications. If you can get things up into space and get them down, there's a whole bunch of interesting things you can do there. And so the company's maybe four or five years old at this point, 150 employees based in Los Angeles. Obviously, you know, very hardworking environment, but especially with the new NASA administration, things are moving much faster. SpaceX, there was a lot of uncertainty last year. They started landing the Starships and launch costs are starting to tick down again. And so it gets easier and easier. And when they first put up their first capsule in space, this is the real question with a space company is like, how long will it take them to actually do something in space? It used to be 5, 10 years. Uh, they got their first capsule up in just a few years. They're already on their fifth or sixth capsule. People, they got it back. A lot of space companies put stuff up into space, but that's kind of the end of the story. And so I think our framework for Varda is like if you get a group of ultra talented people together, ultra hardworking people together, uh, that can develop the capability of simply putting stuff up in space and bringing it back down, it's going to have a really wide range of applications over the long run.
Uh, Will Bruey is like completely like super sharp, by-the-book SpaceX engineer background who has been able to talk to big pharma CEOs and get them to sign up. And then Delian's, you know, Delian, who's like obviously quite a character, very, very loud, has, uh, but the company in general has been very like anti-hype. So there's a lot of companies in space that are just hype businesses. They will get all the way to the public markets without having accomplished much if anything at all. Yeah. And, uh, Varda, uh, has been, uh, doesn't chase the hype. They weren't coming out this last year having like a new pitch around data centers just because that would have gotten them, uh, and so for being a space company, they're extremely, I would say, grounded, focused on developing, uh, capabilities that are going to be like John said, uh, very, uh, valuable in a wide variety of applications. And there's like one, it's a very difficult space, capital intensive. There are not a lot of, there are some, there are a decent amount of companies that are sending stuff up to space. There are many fewer that are bringing stuff back down. Uh, and it hasn't been a hugely competitive space where there's like 10 players.
We had someone, Shaan, on the pod I think like last year explain this company, and they went through this huge thing about why it was cool, and we were like, why do pharmaceutical companies need to make drugs in space? Like why? Like we didn't, like they forgot to explain.
They didn't explain that part. They were like, 'Oh, it's great because you can manufacture like a thousand times more expensive than doing on Earth, but there's just specific chemicals, like very rare things.'
Uh, but again, you have to view this as, you know, a multi-decade thing. If you believe in space, if you believe that, you know, launch costs are going to continue to fall, it's going to get cheaper and cheaper, then there's like this interesting trend that you're on the frontier of. And the company's been very good at weathering storms, whether there's like some slight, you know, selloff in the market or the narrative changes, like the company's well managed. And so if you can just keep getting through those and just always be the best company that like does stuff in space basically, like that's good.
You know, I do like that you're riding the wave of basically like, is Elon going to get better at doing rockets? Yep. And if he does, the cost per whatever, cost per gram to take something up into space is going to keep falling. You just keep, your business keeps getting better. Yep. The more hard work Elon does. I kind of like that in general as a thesis.
So last year, Blue Origin landed their heavy rocket, and so now there's actually two companies, and so that means real pricing pressure, which is like very, very good.
By the way, I have two tangents. Yeah. I was reading the, uh, Elon biography, which I'm late to, but I kind of like it because, you know, everybody's done with it and I'm the only guy, you know, still in there poking around. Um, there's an amazing section. I don't know if you guys have read this, but it's about the tweets back and forth between Elon and Bezos. The sort of rival, this passive-aggressive rivalry around the launch thing. Sam, I don't know. Have you seen this?
Well, there's no recent ones. Bezos just posted the tortoise.
Said, 'I'm the tortoise.' He's going to mode. Slow and steady.
Who's the passive-aggressive one? Both of them. So first, Blue Origin was like the first to do a reusable launch, which Elon wanted badly, right? But Blue Origin up, but he was basically like they didn't go up very high. So they, and so he was just like, he's like, uh, Bezos posts a picture be like, 'Oh my god, we did it. I'm standing next to one of the perhaps the rarest item on Earth, a reusable rocket or a reused rocket. A reused rocket.' He's saying basically that's so rare. You never see a reused rocket. And then Elon, congratulations, but perhaps not the rarest because SpaceX has done that six times if we're counting suborbital hops. And then it was just like kind of like your rocket doesn't go high enough. And then when Elon did it like a month later, Bezos's like, 'Congratulations to Elon. A really excellent suborbital launch. One of the best suborbital launches.' And Elon was like, 'Fuck you, dude. It was so high, but technically, yes, was still suborbital.' And they've been basically going back and forth with these like congratulations but, and I just kind of love it. I love it. I love the pettiness.
Yeah. All right, let's move on to the next one. What do we got?
Okay. Uh, I'll do one. Okay. My next one is Suno. Okay. I've talked about before. If you don't know, Suno is basically an app or website you go to and you can make music even if you've got no musical talent, right? So, you can just go on there, describe the type of song you want. Maybe you bring your lyrics, maybe you don't. Maybe you just give it a vibe, and you basically are vibe coding music. It's amazing. I'm addicted to the app. I use it all the time. I've probably made, I don't know, 40 or 50 songs. I've burned tens of thousands of credits on this thing. Like, it's crazy how addictive it is, how fun it is to do. And I just think this company has a long way to run. So, right now, valued at two, two and a half billion, something like that, they have 200 million in ARR. So, it's not like an AI app that's like 300 million in ARR now. 300 million. All right. Crazy. Well, breaking news. We got 300 million now already. And so, I met the founder. You know, I really like kind of what they're all about. And they also just struck a deal with a licensing company, with a music label, which is important. Basically, here's the upside because I was like, okay, this is already at two, two and a half billion. Does this have that 5x potential? And I was doing some math and I basically, SoundCloud has 40 million music creators. Okay, so that's 40 million people around the world who actually have musical talent that are publishing, uh, on the platform. Suno only have 2 million, uh, users on their platform. So they still, and that's people who don't have to have the musical talent part, the skill. And so the market for number of people who will make music that don't know how to make music is going to be something like 10, 20, possibly more than that, possibly 50x the number of actual musicians who create music. So I just think this thing has an incredible long way to run. I would not be surprised if there were hundreds of millions of weekly active users of people who are making music on this thing. And when you do the math of what that turns into, because people are willing to pay, right? Like imagine not having to like practice or do music lessons or any of that, you just pay 15 bucks and boom, you're a musician, right? Like it's kind of an amazing trade to make. So, I think this thing has a long way to run. I think Suno becomes a $50 billion plus company. It would be also a really fun company to join if you joined right now because you'd be doing something that's both on the frontier, but it's not like manufacturing in space. It's not like actual like rocket science and you're just a part of culture. It's going to become a big part of culture, which is always fun if you're going to work.
What do you guys think about these companies that are, we were laughing, I think we said they were launched two years ago and they're at 300 million in revenue. Does that have longevity?
You have to ask a couple questions. One is, is it a fad, right? Do I think this is just like, is it like, I don't know, whatever, Dubsmash or like, you know, one of these things where it's like everyone's going to try it once, like the yearbook photo thing, and then there's really no reason to come back in. I don't think this is a fad. I think people are going to want to keep creating stuff. The second thing is it's going to have too much competition, and I do think that they're kind of on an island where all the big model companies are probably not going to, this isn't the kind of primary warfront and they have so many like bigger battles that they're fighting right now. I kind of think Suno is going to go uncontested for a little while longer where it's not the main thing that OpenAI or Anthropic is going to try to roll out and make mainstream. And so I think by focusing and specializing, you know, they have a lot of other stuff built in, like if you make the song, they have like an editor where you get the stems and you can actually like remix the song and they have like a discovery platform, like there's a lot more depth that they can go into. So I think that why it would be around is because it's not in the crosshairs of all the, you know, the highest-elo battle in the world, the genius battle, which is like, you know, what OpenAI and, you know, Grok and Anthropic are all doing.
Yeah, I think what you're getting at is basically like Suno is the front door to AI music in the way that ChatGPT has been the front door to large language models. That has a lot of value. I made a pretty similar case to a friend who had worked in the music industry for the last decade. He's a real musician, you know, has gone on tour all over the world. He had the opportunity to join Suno at around the same valuation. And I said, you know, I think like you've worked in the music industry your whole career. Where's the growth going to be in the industry over the next 10 years? It's going to be in AI whether or not people, uh, like it. And I think what Suno's tapped into is the same thing that the vibe coding tools have tapped into where billions of people have an idea for an app, but like very, very few people relatively can actually build an app. And now with vibe coding, anybody can build an app. Same thing with music. Everybody's had an idea for a song or could come up with an idea for a song that would, you know, create, uh, even in the most simple way, you know, creating. And we've heard stories from people that, you know, every single night they make a new bedtime song with their kids, right? To kind of like motivate the kids to settle down or go to sleep or whatever. And so there's so many magical moments. It's the kind of thing that can have these sort of viral moments where people like realize it's available, create all these songs, or there's like memes that could form, but it has this like kind of like, I think people will continue to come back to it. So I'm with you.
What happens to, uh, Spotify's market cap then?
Spotify's market cap should be resistant to this because it's a tool for creating music and music will be distributed on Spotify. And so Spotify never created an Ableton competitor, Fruity Loops competitor. They never sold guitars. They never sold any tools to create music. They might wind up launching some competitor, but I...
Spotify is in kind of a tough spot if you think about it. If they, what would all the biggest artists on Spotify think of Spotify coming out with an AI tool that is competing for listening time with those artists? So, it's like they're kind of in a position where, uh, Spotify can't jump into this without infuriating a lot of the artists on the platform. So I think it's possible that could eat into the listening time of Spotify, but it's hard to imagine a world where I subscribe to Suno and I don't subscribe.
I would just see it similar to Sora and Instagram Reels or Veo 3 from Google and YouTube Shorts. Like people will be scrolling these feeds. Most people don't want any AI. Some people are okay with just like the best AI and so they want one out of a hundred reels to be actually great AI, funny, inspired. And people on Spotify will want to listen to the hits and the songs that everyone knows, and then they might want to listen to that one breakout AI-generated song. But it's just going to take one minute for whoever creates that banger on Suno to export it, upload it to Spotify, and Spotify will be able to instantly monetize it. So I wouldn't see it as like a major threat to Spotify. There's also some interesting like downside protection here that if you think about Suno at two and a half billion, who could possibly acquire them if they don't make it to escape velocity? And like Spotify has the market cap, but also Amazon could put in Amazon Echo. It could be an Apple thing. It could be a Google thing. It could be an OpenAI thing. Like there's so many other companies that have the market cap and scale to just pick this up and make it a good outcome for...
The other thing is I know the industry, like the traditional music industry is using it, but they don't want to talk about it because it's still controversial.
I heard from a friend that their friend was a backup vocalist for different artists. So like a studio vocalist, their job would be to go into the, somebody would write a song, their job would be to go into the studio and sing the song, and then that sample would be taken around to artists that would effectively like bid on it. And so the vocalist would like sing it in the style of one artist, sing it in the style of another artist to give people a feel for it. And they said that that person's revenue went from, you know, humming along for the last, you know, 20 years and like effectively to zero because you can now just generate any, you take the lyrics, you generate it in the style of any artist. And so the challenge for that individual in their career is nobody, people that don't hire a backup, like a backup guitarist can go and tour with a band, right? Because people are there to see like the front man or whatever. But a backup vocalist, there's not really like touring demand because imagine you get a ticket to your favorite artist and then there's just like someone else singing. You're like not really getting your money's worth. So certain, like already disrupting certain corners of the internet, and I think that part of what's holding Suno back right now is just that the main artists will not talk about it because they know they're going to get blowback, but that'll eventually work.
Yeah. Interesting. All right, you guys want to do one next pick?
Yeah, let's move on to TrueMed because I think it relates to hone health interestingly. Hey, we have a couple other hard tech stuff, but TrueMed is a fintech company founded by Justin Mares. I think we all know him.
Former guest of the show. Uh, I think we all have a, well, I don't want to speak for you guys, but he's in the man crush category. He's kind of...
Yeah, he's a killer. Um, Chad.
So, TrueMed adds a compliant pay with HSA, health savings account or FSA button to online checkouts by handling eligibility through embedded telehealth. So, uh, when you go to whether it's peptides that are going to be popular or Eight Sleeps or supplements or whatever you're doing to improve your health, if you're going to do it online, there's an economic advantage, a tax savings from paying for it with pre-tax dollars through your HSA or FSA. And so, TrueMed is this like layer on all of that. So, you don't have as much like individual trend risk like, oh, is protein more popular than creatine this month or this year. Like as long as health continues to be a trend, you're sort of like the rise and...
This is like buying, like investing in an index fund for wellness, right? Like they're going to be taking a cut of a huge amount of the volume going towards wellness products in the US.
We, uh, I started a company called Aurora with my friends Brian and Charlie and we're a happy TrueMed customer. TrueMed has a very meaningful take rate, a bigger take rate than a traditional kind of payment provider. Uh, but it's a great trade because you're able to sell incremental product because people are able to buy it in a tax-advantage way. And I'm just like an incredibly firm believer in the entire mission of the company. I think that we know that running, uh, is going to increase your health span, increase your lifespan. You should be able to let people purchase products like this as a form of preventative treatment. So, uh, incredible founder, like very, very strong tailwinds and, uh, great experience as a customer.
