My First Million
00:14:47 · Sam Parr, Shaan Puri
[00:14:47] S0: Oh, I love that kid. [00:14:48] S1: And... But I I don't know exactly how he's getting the code. Like, the the code's not public for somebody. So so there's something a little bit... My understanding is either off or he's a little [00:14:56] S0: bit off. I don't [00:14:56] S1: know exactly what's going on. But he's explaining, like, you know, for example, in these games, if you're a player who's paid before, but you haven't paid in thirty days, it'll optimize you to have this, like, run of success, and then you'll hit a wall. And that wall will be so frustrating for you, but it's optimized to get you to get... You know, click the button to pay again. Right? This is like when people say the greatest minds of our generation are sitting inside these companies trying to figure out how to get people to click ads. This is kinda what they're talking about. It's like some of the smartest engineers and builders in the world and designers spend their life trying to figure out how to get people to, you know, put a little more... Put a few more coins in the slot machine. Sad in a way, but also just from a pure business point of view, it is fascinating. [00:15:38] S0: I was just looking at when I'm... I DM'd the guy who ran this community business. The same thing. Wells Funded. He goes, virtually everything we do for... Is for free, and the top 1% or even the top point 001% pay to keep everything running.
00:15:51 · Shaan Puri
[00:15:51] S1: Hey. Let's take a quick break. You know that feeling when strategy is done, the brief is written, everyone's aligned, and you realize someone still has to sit down and actually create all the content? That someone is usually you, and it's due tomorrow. Well, the Breeze assistant from HubSpot can help. It works right inside HubSpot. You can draft campaign copy, blog posts, emails, all in your brand voice, all using your actual customer data. So you don't create just content. You create content that converts. Check out hubspot.com, the agentic customer platform for growing businesses. There's a a huge trend growing right now right now. Have you seen this trend around ripping? No. It's like going to a store, and you would buy a pack of Pokemon cards, you would open the pack. You would hope to find a holographic Charizard inside because that's gonna be really valuable. Right? That's the the the kind of the brick and mortar way of doing this. Well, these guys just reduced friction. So the Ev Williams quote of, you wanna build a billion dollar business, just find a universal desire, ideally one that's been around for a while, and remove friction. Well, this behavior already existed amongst collectors. And what these apps have done is make it where you open the app. There's a pack on the screen. You tap it to open the pack. You open it up. You didn't get anything. Maybe you got some junk. So let's say you paid $50 for the pack, then it'll say, you wanna sell back the pack for $43 right now? Yeah. You'll me $543 because I didn't get what I wanted. Let me buy again. This app has done a billion dollars in revenue in, like, the, you know, the last, like, last year. And so there's, like... I mean, just an app you've never heard of. An app you've never heard of that's doing a billion dollars.
00:17:22 · Sam Parr, Shaan Puri
[00:17:22] S0: How does revenue calculated? Because that's not... That... Would that be considered as a marketplace? So would that be, like, real revenue? [00:17:29] S1: It's a bit of a mix. So it is like GMV in that that they're spending to buy the cards, and and, obviously, the cards have a cost. You have to fill [00:17:36] S0: the cards. Reselling it. [00:17:38] S1: But the genius of the thing was the buyback. The buyback changed everything. And so the the the trick with the buyback is people want the... It's... They want the treasure hunt. Right? They're looking for the treasure. And what they realize is if I spend $50 and I get nothing, I feel like I'm out $50. But if I get $43 back, I'm kinda just like, I just got $43 of store credit. Should I buy another pack for 50? Yeah. It's only $7 more. Let's go again. Let me give me another shot. And for the company, what they did was they booked... So they got $40.50 bucks of revenue. They give 43 back. 7 is free. They never had to sell... To give you the card. They just put the card right back in the deck and shuffled. They'll sell that same card again to somebody else. [00:18:16] S0: Dude, the guy who started it was a quant at Citadel in Bridgewater.
00:18:16 · Sam Parr, Shaan Puri
[00:18:16] S0: Dude, the guy who started it was a quant at Citadel in Bridgewater. [00:18:21] S1: Yeah. No no surprise. But there's a bunch of these, dude. Like, Logan Paul launched his own called Rip It. This is like a mega mega, like, you know, fad right now. Collector Crypt, what he did was he he kind of was... I think they might have been the first, but definitely they they benefited from this, what they call the vending machine thing where they they buy it back. They were doing something like $50 a month, and now it's 25,000,000 a month now. [00:18:45] S0: How did you hear about this? [00:18:48] S1: I was at a dinner and somebody was talking about Triumph doing a billion dollars in revenue. Now for an app to do a billion dollars in revenue is extremely rare, especially an app I've never heard of. You know what I mean? Like Snapchat does what? Like, 4,000,000,000 something like that? And, you know, it's not... Like, this is like the size of the social apps that you can count on your, you know, on two hands that you've... We've all heard of household names. And so I was like, how is this app I've never heard of doing this in a year? And then when I heard, oh, they're basically doing the gotcha mechanics. So have you ever heard of gotcha games? [00:19:20] S0: Mhmm. No. But And [00:19:21] S1: and it's not gotcha like gotcha, but it kinda is. It's gotcha, g a c h a. It's a Japanese term. [00:19:29] S0: Oh. And
00:19:30 · Shaan Puri
[00:19:30] S1: so, basically, what they would do is they had these kind of mystery unboxings. So you would buy, like, a mystery ball. You would unbox it. You would get something, and then you would kinda go again, and you try again. And it... It's a sort of, like, toy form of gambling. And gotcha got so popular in Japan that they had to ban it. I think it's, like, outlawed by law at this point. Now American games started to steal this. So if you've ever played, like, Overwatch or different things like that, they would have loot boxes. Same thing. You open up a box. You might get the rare skin. You might get the common skin, but it's very easy to... Very addictive to just put in some credits into the machine and start opening up a bunch of packs. And FIFA started doing this. A bunch of people started doing this. All these games started copying this gotcha mechanic. Well, the mobile games have figured this out even more, and the the thing with the collectors is they attached real money to the other side. Because if you happen to get a real thing, it's not like getting a skin in Overwatch where it's this purely aesthetic. Like, you kinda know to some part of your brain that this is somewhat stupid. Right? There's no real value to it. But when you do it with collecting and you say, well, I could get this rare card that's worth, you know, like, I I... Like, the top Pikachu card will sell for, like, $15,000,000. Right? Like, they... These cards could be worth a lot. And so they attach the kind of gambling mechanic of I might make money to the... A very addictive gotcha behavior. And so that's like the, you know, the underlying psychology that's worked in many, many different form factors. Toys do this now all the time. LOL Surprise Doll. Right? What is it? It's a... You know, all of the squishies that are super popular right now. I don't know if you've... I don't know if your kids are old enough to be in this squishy craze.
00:21:02 · Sam Parr, Shaan Puri
[00:21:02] S0: No. But my wife is. [00:21:03] S1: The dumplings and the the squishies and the mystery boxes. Like, my daughter just loves to open these dumplings. Right? And, like, you'd have tried to get a rare dumpling. Right? It's like this crazy thing, but it's the mystery ball mechanic that gets you to spend way more. I actually have a friend who's in the toy business and showing me the data of before... When they're in Walmart or Target, they were just selling where you pick what you want. And, like, here's a shelf. Here's all the different things. You could pick what you want. And then they just took the same things and put it in a mystery box, and it was seven x the revenue. And literally, like, with... Which sounds like the opposite. Right? Like, well, the consumer gets less choice. They might get something crappy. And I heard him on the phone. He was talking to one of the major IP holders in the world. [00:21:46] S0: Wait. This guy just called you while he was negotiating?