The Secret to Building Companies That Last for Generations! w/ Sam Parr

Podcasts are one of the best ways to have influence. Once you capture someone in their ears for 50 or 100 minutes a week, you have real influence over them.

Newsletters are like a pirate ship, and every newsletter subscriber you get, it's like a little bit of a wind in your sails.

Huge growth and huge money. If you do it right, it should compound. And so a business like Hampton, I think there's an overemphasis on breadth of knowledge and not depth. I think depth is where real value is created. It's far better to be an expert at a very narrow thing than it is to be a generalist at a bunch of things.

We grew to 100,000 subscribers without spending one cent in marketing. One of the easiest ways to get popular for a newsletter...

What's up? How are you?

I grew up in Missouri, in St. Louis, Missouri.

I was. I was born in New Jersey. Yeah.

Yeah, I don't. [laughter] I knew as much about New Jersey as you probably knew about Missouri growing up, because Missouri, where I grew up, very blue-collar, and my parents owned a fruit stand, and that is how I learned about entrepreneurship. But back then they didn't call it entrepreneurship. It was just like making a living, you know, that's just what people did. And so for years I thought that I was going to own like a landscaping company or something like that, like some type of blue-collar thing. But when I was in college, well really maybe starting in high school, I started learning about the internet. I started selling stuff on eBay, and then in college I started like a couple e-commerce stores, and I was like, this is so much better than blue-collar stuff, because in college I started a hot dog stand. It was called Southern Sam's, wieners as big as a baby's arm, and it was really hard work. I worked my butt off, and it was so hot outside. It was awful. And then I started like selling stuff on the internet, and it was so much easier to be in the AC, and I could make money in my sleep. And so when I learned about it, I left school and tried to join an early-stage startup called AirBed and Breakfast, but now Airbnb, and that was kind of my start in the internet world.

Um, that's funny. Um, what did I learn? I learned that was what inspired me to get into copywriting because I'm now like a copywriter. That's kind of my shtick. And I read all these books on how to sell, like how to sell to people, when I had a hot dog stand, because like hot dog stands aren't particularly... one isn't particularly different than the other. It's about who could sell it better. And so I learned like all these stick tricks. Like we had a stick trick where you would get a free hot dog if you put your baby's arm in a bun and put mustard on it [laughter] and let me take a photo and post it on social media, because the slogan was wieners as big as a baby's arm. And like I would do all these stick tricks, like or I would just like riff with people, like I would ask them questions and I would like get them to laugh basically. It's almost like flirting a little bit. [clears throat] And I learned how to do that, and I would sell way more. And I was like, the cool thing about the internet is I can write a bit of copy one time and sell to an infinite amount of people, not just the amount of people that are walking down my block. How do I learn how to do that to an infinite amount of people? And that's why I got into copywriting. And that was my big thing from the hot dog stand: A, I don't want to be outside doing blue-collar work all day, it's very hard; and B, how do I learn how to sell but via the written word?

Yeah, I wouldn't even say say it better. I would say say it different. It's a lot better and easier to be different than it is better. And so like I really learned the effects of differentiation. Not exactly even just being better, because being better... I mean, all of business is like perception, you know. Like is one car particularly better than another car? I'm not sure, but we definitely perceive a Mercedes to be of higher quality than some other type of brand. And so I think it's better to be different than it is better, in my opinion.

It worked out well. So I don't know if I would change too much, but I went through years of pain. So basically, starting maybe around the age of 20 or 21, I developed... I think I was always born with an addictive personality, and I started getting into like drugs and alcohol, mostly alcohol, but like I definitely liked to do some drugs, or I did. And I kind of spiraled, and there was like a three-week period where I got arrested like two or three times. I spent time in jail, and it was awful. And I lied to Airbnb, or at least I thought I wasn't lying. I think like on the application they were like, 'Have you been convicted of a misdemeanor?' or something like that, and like I was in the process of going through court and I hadn't been convicted at that time or something like that, where I was in fact wrong, but I was hoping it was a gray area, and they called me out on it. And so the day before I was supposed to start at Airbnb, they were like, 'We don't hire liars. We're calling it.' And so I learned during that phase, I think for a lot of young men, you know, I was 21, 22, like you really... you know, women are a little bit different in that they sort of have a different rite of passage. For a lot of young men, there's not really a rite of passage. There's no official period where it's like you were a boy and now you are a man. And when I was 20, 21, 22 years old, I was like, I still feel like a boy, but I'm supposed to act like a man a little bit. I don't know how to do that. And I felt incredibly not confident with myself, particularly when meeting other girls, which is like what every 21-year-old guy cares about. And so I used a lot of alcohol to like cover that up. And then I realized I had a lot of issues that I was still working through as a kid, and I used a lot of alcohol to cover that up. And so, once I got sober, it took about 12 months of being sober to where I started to get very confident in my own skin and confident in myself and thinking that I'm good enough, good enough to like be loved by a girlfriend or good enough to like succeed and make money. Because I always thought I had some type of special sauce, that I was like, I have something in me, but I don't know how to express it, and I don't know how to reach or fulfill my potential. And I had all these demons that I would use alcohol to help cover up. And I just realized that being sober kind of forces you to face reality. I think that when I was, you know, you kind of have like beer goggles on where you see the world blurry. And once you take those goggles off, you can finally see the world more clearly, and you have to face stuff more head-on and more direct and face the consequences of your actions. And you have to like face fear. It could be as small as like approaching a girl, and like a lot of times you want to have a drink in your hand or something like that to make you feel cool or make you calm. And like just doing little things like that, like talking to a stranger, doing that sober got me to start flexing this muscle of being confident and facing my fears, and it kind of made me feel fearless after doing it for a couple years. It kind of became like a high. And so for a lot of young men, I think that they shouldn't avoid fearful things. They should acknowledge that they are fearful of doing a variety of things, and they should do it anyway. And I think that using drugs and alcohol is a great way to hide those fears and to make it so you have fake courage. But it kind of creates like a horrible cycle.

Yeah.

You know what's funny is my process of getting sober. Like it keeps going back to like meeting girls, but I swear that's just like whatever a 21-year-old cares about. But basically like I wanted to meet people. I wanted friends, men and women friends. And I read a book, and the book basically talked about how in order for a man to attract other male friends or potential girlfriends, you need to work on yourself and become like an interesting person and bring people along with you in your life. And it was like, this is how you become attractive. You become an attractive person by living an interesting life and sort of bringing others along and guiding them along this life that you want to live, because now you will be associated with good times and all that. And so I started hosting events for that reason. And so like for example, I had a book club that would meet every week, and I became the leader of the book club, and all I had to do was read one chapter in advance of the club and then lead the conversation, and you get like power through that, but really I got all these friends. Like I had all these people looking up to me, and they came to me, and I was like, 'Oh my gosh, I am the center of attention, and I get to pick and choose my friends, and these people admire me. I finally feel loved and accepted.' And that's why I got into hosting events. The reality is I'm pretty introverted. I actually like to be by myself a lot now, but at that time I was like, in order to meet friends, I want to host events. And so I had previously had a different startup that was like a roommate matching app. It was basically like a roommate matching app, but it was set up like Tinder where you would swipe, which is obviously really dumb, because I should have just launched Tinder for Tinder. This was like Tinder for roommates. So it was like a much smaller market, and I sold it, and I made not that much money. But I was like, I'm going to host this event called HustleCon, which is basically like a TED Talk for entrepreneurs. I'm going to host that to kill time until I figure out my next big idea. And that's why I hosted the event. I hosted it because I knew that events was a great way to become like the node of a network and to meet all these amazing people. And I wanted friends. As desperate as that sounds, that's the truth.

So some of my best friends to this day, the guys who were in my wedding and the women who came to my... my best friends who are men and women, in fact, the woman I was with, my friend Lily, when I met my now wife, I was like, 'Lily, this girl is beautiful. I'm going to go talk to her.' And I met all of them via my book club. I created an ad on Craigslist and on... I think I bought... where did I put it? I put it like on the San Francisco newspaper, and I was like, 'I'm starting a business book club. Who wants to come?' And I had 2,000 people over the course of a year sign up to learn about the book club, and I met all of my now best friends via that book club.

Yeah, it's the best.

So you and I, I don't know how old you are, but like what we are to the young 20-somethings, like people watch us. This guy named Andrew Warner was that guy to me, and Andrew Warner had this website called Mixergy.com where he would interview entrepreneurs, and I would watch that every single day. It was like crack to me. And I noticed that he had a bunch of people on who had started newsletters. One of them was Ben Lerer, who started a company called Thrillist, which went on to become like Group Nine. It's like a huge billion-dollar media company. And I was like, I'm pretty good at writing. This newsletter thing seems interesting. And it was a bunch of magical things that came together at once. The first thing was that A, I liked writing. The second thing was I saw people talk about newsletters on Mixergy. And the third thing was at the time people were building these large media companies on the backs of Facebook. And it was very evident that... and if you're like 19 or 21 years old listening, you don't even know what I'm talking about. Basically like BuzzFeed got huge because they would have a Facebook page that would get all these likes on Facebook, and they would share articles on Facebook, and a lot of people would click the articles and go to their website. But over time it started decreasing the reach. Zuckerberg would kind of change the algorithm. And I learned... I was learning this, and I made a very, what I felt was an obvious prediction, was that newsletters are like a pirate ship, and every newsletter subscriber you get, it's like a little bit of a wind in your sails. And basically I can build this massive media company just doing email. And the model was so much better because... and this proved to be true. I was like, I could have two writers reach millions, literally two, three, four, five million people a day, because all I'm doing is sending 1,500 words in a newsletter, and I could put ads in that, and I think I can make $100 million a year doing that. That was my math. I was like, if I get like five or six million subscribers, I think I can make $100 million a year and potentially keep going and build a multi-billion-dollar, but for sure a multi-hundred-million-dollar company doing that. And so I did all the math, and I went and told all these media people, these media execs who I would call email. I told them this idea, and they were like, 'That's the stupidest thing I've ever heard.' Like newsletters are dumb. And I'm like, 'Guy, why does it matter if I'm looking at this phone? Who cares if I have to click the Gmail app and read the news versus go to Chrome and browse a website? Like why does it matter? Your attention's there or it's not. It doesn't matter.' And they're like, 'Well, advertisers don't want to advertise in newsletters and this and that.' And I was like, 'But why? This does not make sense to me.' And so, in the first year, I got 100,000 subscribers to sign up to The Hustle. The second year, I think, it went 100, 500, a million, and then like when we sold it was like I think 1.7 million, something like that. And then revenue went I think 300,000, 2.2, to five, 12, and then 18. I think we were going to do $18 million the year we sold. And along the way, we got really lucky on a couple things. One, all the people who said we were stupid for doing this, it became true. People were like subscribing to these things. And so we got lucky. There was no competition. It was us, Austin Rief at Morning Brew, who's now one of my best friends, and the founders of The Skimm. We were the only three people in this whole industry doing what we were doing.

And so no one was catching on. It was insane. I'm like, are you guys watching us do this right in front of you? How do you guys not see us doing this? And then the second thing, advertisers started buying into it. And so now huge companies, they have this massive budget, you know, where they advertise all over the place. They purposely deploy money now in newsletters. Back then they didn't do it. And so we had to convince them it was a good idea. And every year it got easier and easier and easier. And so we started just gobbling up all this advertising budget because they wanted to advertise in newsletters, but there was only three of us in the whole field. And so like all of this, we captured this beautiful momentum. It was like we just grabbed this tidal wave, and it was awesome. So we got really lucky in that regard. But it was so funny. Austin, like I said, he's now one of my best friends. His company, they're doing close to $100 million in revenue now. I sold my business early so I wasn't able to get there, but the premise was right. So what's funny is Austin lived in New York, The Skimm, they lived in New York, and I lived in San Francisco. Us three, we didn't know each other, but we all had the exact same insight all around the exact same time, and we all had the exact same predictions, and those became true, but very few people believed in us early on.

They're way different in terms of skill set. So my skill set, I don't think of myself as a great podcaster. My partner Sean on the podcast, MFM, he's fantastic. He is built for that. I am built for writing. I'm a great writer. They're different skill sets. And so, but I do think that in order of like if I had to rank the order. So the power of a media business, or like if you're like, you know, Rare Beauty or whatever, that you know, what's the Bieber who had the makeup business...

Rhode, whatever, sorry. Hailey Bieber, I forget the name of your company.

Yeah. If you're like her or you're a Kardashian, the Kardashians, if you're what I did with Hampton, the order of influence, like the most powerful channels in my humble opinion, number one is podcast because you're in someone's ear oftentimes many hours a week. Number two is YouTube. Number three might be newsletter, and then number four would be like a blog. That's like the order of influence because the equation for media value is like the quantity of people times the power you have over them, meaning how influential you are, times their buying power. And so what that means is like if you have... so like there's a world where like having low influence over 10 million moms who live in the Midwest is equal to having a newsletter that impacts 1,000 people who work in the buying department for the parts department at Boeing. Do you know what I mean? Who buy like, you know, a billion-dollar or $10 million deals for like parts. And so that's the equation. And so in my opinion, podcasts are one of the best ways to have influence. It's also one of the hardest. They're like the hardest thing on earth to grow in my opinion. But once you capture someone and you're in their ears for 50 or 100 minutes a week, you have real influence over them.

We grew to 100,000 subscribers without spending one cent in marketing. It was all through writing blog posts that would go viral on Reddit or Hacker News. And so one of the easiest ways to get popular for a newsletter is to make a decision on where your market already exists and what content can you create that gets popular on that channel, and then you siphon them off into your newsletter. So for example, we knew that a lot of people who were in... I don't know if you remember, do you remember what Soylent is? Do you know Soylent?

Yeah. Yeah, I... kind of like SlimFast for nerds. It's like a meal replacement for like engineers. And The Hustle was a tech and business newsletter. So I was like, well, a lot of like nerdy engineers are going to want to subscribe because that's who I am and that's who I'm writing for. And so I wrote an article about how my friend... I paid him $2,000 to live on Soylent and only Soylent for 30 days. And I was like, 'Okay, so this is content that those types of people would like. It will go viral in the subreddit called Soylent on Reddit.' And so I would create content that would go viral there. And that's how I got my first 100,000 subscribers. So if you want to kickstart, you have to find out where is the audience already living and what are they consuming, and how do I break into their attention and bring them over to my platform.

The second thing that works really well is we took an unserious game, which is newsletters, very serious, and because of that we crushed it. No one at the time, other than The Skimm and Morning Brew, and arguably, I know how Austin operates, it was really just him and I or our companies that were taking it the most serious, because what we did was we calculated how much money each subscriber is worth to us, and then we went and spent money on Facebook ads to acquire a customer to bring them onto our platform. And at the time, no one was doing that. And so I would highly recommend if you can dial... So first of all, you should get to like tens of thousands of subscribers organically so you know that your content is good enough to keep someone. Then you do a bunch of calculations to figure out what's your customer worth. Then you decide how much can I wait to get my payback from buying ads, and then you go and buy ads anywhere you can where you can acquire a customer for the value that you have already predetermined. Does that make sense?

We monetized... we got our first probably $15 million in revenue from one source only: ads in the newsletter. And my theory, our theory was we could get to something like $40 or $50 million in revenue via ads in the newsletter. That was wrong, by the way. The number is way higher. You could definitely get to like $100 million just on advertising. And then I was like, once we get to like, I don't know, hundreds of thousands or a million subscribers, we can launch different paid newsletters and paid communities. And that's what we did. We owned this thing called Trends that I totally screwed up. I charged $300 a year for it. I should have charged way more money. That's not a good pricing structure. And so we were making millions through that. But the year we sold, we were probably going to do $18 million in revenue. We were probably going to do 12 or probably 12 to 13 million just in advertising and then like another six via subscriptions.

We made no money, by the way, on podcasts.

So The Hustle owns My First Million. And so...

How much?

How many sponsorships?

400,000.

Yeah. This year?

Okay. That's really... So you're killing it at monetization.

We were not good at it. So when I sold my... I sold My First Million to HubSpot.

I think we were doing 300,000 downloads a month.

370,000, I think we did the month we sold. Now we do many millions a month. We were doing something like $10,000 a month in sales.

It's so crazy how you could specialize. We specialized in newsletter advertisements. We did not specialize on podcasts. And my team, we did not know how to do it. We still had to learn how to do it.

We didn't know. I didn't know.