The #1 Most Underrated Quality in an Entrepreneur

18 Dec 2024 (9 days ago)

Revenge businesses and other green flags (0s)

Josh Wolf's phrase "chips on shoulders equals chips in pockets" suggests that entrepreneurs with uncurable identity wounds can be highly successful (1s).
Sam Altman, an early Facebook employee and investor, tweeted about "revenge businesses" started by people seeking revenge, citing Parker Conrad as an example (35s).
Parker Conrad started Zenefits, which was successful but had a "bro culture" and compliance issues, leading to his firing, and later started Rippling, which has taken off (42s).
Sam Altman invested in Rippling and has a diligence checklist that includes whether a company is a form of "deep revenge," and if so, he invests (1m20s).
Having hate or revenge in one's heart can be a useful feeling for entrepreneurs, and emotions like guilt and shame can also be useful for improvement (1m45s).
Paul Graham's concept of "fierce nerds" refers to overly competitive and slightly unrefined individuals who can be successful entrepreneurs (2m28s).
Some investors look for "fierce nerds who love money," which can be a multiplier on the fierce nerd concept (2m50s).
Certain characteristics, such as growing up in a Slavic country or being a Mormon missionary, can be seen as green flags for entrepreneurial potential (3m5s).
Being a Harvard dropout can be a stronger signal than being a Harvard graduate, and there are other unconventional signals that can indicate entrepreneurial success (3m30s).
A person's ability to drop out of a prestigious institution like Harvard against social pressures can be a good filter for identifying entrepreneurs with conviction and strong ideas (3m37s).
However, such signals can be gamed if people realize what investors are looking for and try to fit a certain pattern (3m46s).
A "Revenge company" is a great signal or green flag for investors, indicating a strong motivation for success (4m10s).
Ted Turner is an example of an entrepreneur who embodied this spirit, having inherited a billboard business and going on to start a local TV station, buy the Braves and Hawks, and eventually launch CNN (4m28s).
Turner's biography is notable for his constant pushing of boundaries and willingness to take risks, often being on the brink of bankruptcy despite having successful businesses (4m46s).
Turner's approach to business was characterized by a sense of paranoia and a desire to make everything seem more important than it was, which motivated his employees to work harder (4m59s).
Turner's documentary on HBO showcases his grand sense of purpose and motivation, including his desire to launch CNN as a 24-hour news network to provide Americans with an option to stay informed (5m29s).

Chips on shoulders = chips in pockets (5m55s)

Travis Kalanick, the founder of Uber, had a negative experience with his first startup, Red Swoosh, a peer-to-peer file sharing service, where he didn't make a lot of money due to being "screwed" by Michael Ovitz and others (5m56s).
Naval Ravikant, the founder of Epinions, also had a similar experience where he was kicked out of his company by venture capitalists (VCs) and didn't make any money from the company's public exit, leading him to sue his investors (6m23s).
Naval Ravikant created Venture Hacks, a blog dedicated to helping founders not get "screwed" by VCs, after realizing he didn't know how to read term sheets and contracts, and was misled by VCs telling him that certain terms were "standard" (6m56s).
Venture Hacks eventually led to the creation of AngelList, a platform that took power away from VCs and gave it to angel investors and founders, creating a more transparent and competitive marketplace (7m21s).
Elon Musk is currently on a "revenge tour" against the Democrats, who he feels have been attacking and demonizing him, and is now supporting Trump and trying to disrupt the bureaucracy (7m40s).
Josh Wolfe has a phrase, "chips on shoulders equals chips in pockets," which suggests that entrepreneurs with a deep-seated chip on their shoulder and an unhealable identity wound are more likely to be successful (8m10s).
Having a "chip on the shoulder" can be a driving force for entrepreneurs, and it's not something to be dismissed or judged, but rather something to be acknowledged and leveraged (8m34s).
Recognizing and embracing the "chip on the shoulder" in oneself or others can lead to greater success and opportunities, rather than trying to convince them to let go of it or distancing oneself from them (8m57s).
A person with a unique and potentially profitable idea is often sought after by investors who want to be a part of their venture, as they see the potential for financial gain from the person's "crazy psychosis" (9m22s).
An example of this is a person who had built a $25 million net worth through real estate development, but went bankrupt after a business partner got in trouble and was unable to fulfill their obligations, leaving the person with a series of distressed properties that couldn't be sold or used for any other purpose (9m35s).
This person had a traumatic experience, going from a $25 million net worth to being back in their childhood bedroom with their wife, but was determined to "fight back" and make things right, giving their wife a motivational speech that ended with them both laughing at the absurdity of their situation (12m1s).
For those looking to start a company but unsure of what idea to choose, HubSpot has put together a list of resources to help find and validate market opportunities, including a market size calculator, tools to identify market trends, and a list of business ideas (10m21s).
This list is completely free and can be accessed through a link provided, making it easier for entrepreneurs to find and pursue their next business idea (10m41s).
A successful entrepreneur built a billion-dollar real estate portfolio using only his own money, with no outside investors, and has around four or five million dollars of his own equity in these deals, after coming back from a difficult past, including bankruptcy (12m21s).
The entrepreneur's motivation for success is rooted in a desire to prove his dad wrong and overcome past struggles, including a period of financial hardship where he had to sleep in a twin bed with his wife (13m28s).
The chip on his shoulder and desire for revenge have driven him to succeed, and even though he is now wealthy, he will never stop striving to prove himself (13m33s).
When selling a company, conversations with potential buyers revealed that their motivations for success were often rooted in past traumas or rejections, such as being rejected by a girl in ninth grade or feeling undervalued by friends (14m17s).
These experiences, although seemingly insignificant, had a lasting impact and fueled their desire for success, with one person stating that they still felt motivated by the same feelings 15 years later (14m57s).
The key takeaway is to bet on people who are driven by a desire for revenge or to prove others wrong, as this motivation can be a powerful force for success (15m23s).
Emotionally healthy individuals tend to be more productive and successful, but may not be driven by the same emotions as others, such as rage or guilt, which can be helpful in certain situations (15m29s).
Past experiences, especially those from childhood, can have a lasting impact on a person's life and behavior, such as a fear of flying or claustrophobia, which can be rooted in a specific incident (16m12s).
The speaker's fear of flying is attributed to a childhood experience where their brother put them in a full nelson and dunked them underwater, making them feel like they were drowning (16m21s).
This fear has led to other phobias, such as a fear of elevators, subways, and being constricted, which can be overwhelming and difficult to overcome (16m46s).
Through therapy and hypnotherapy, the speaker has been able to understand the root cause of their fears and develop coping mechanisms to deal with them (17m6s).
Figuring out the cause of a fear or phobia can help alleviate it, but it may not completely go away, and it may require continued effort and practice to overcome (17m26s).
One coping mechanism is to "walk to the Gallow," which means facing and experiencing the thing that triggers fear or anxiety, and telling oneself stories to help overcome it (17m37s).
The concept of "walking to the Gallow" involves acknowledging and accepting the fear, and using self-talk to reassure oneself that they can get through it (18m2s).
The phrase "walk to the Gallow" refers to the structure where people were historically hanged, and is used metaphorically to describe facing one's fears (18m20s).
The concept of using negative experiences as motivation is discussed, with the example of a Medium post about losing weight in four easy steps, which includes having one's heart broken into a million pieces as a driving force for change (18m48s).
This idea is compared to how heartbreak can fuel artists, fitness, and business, with the example of Adele's music being driven by bad heartbreak (19m5s).
The effectiveness of heartbreak as a motivator is acknowledged, although its healthiness is questioned, with the example of Taylor Swift's hit songs being written during times of unsuccessful relationships (19m19s).
The idea is further illustrated with the example of Travis Kelce, an athlete, and the potential impact of his relationship status on his performance (19m25s).
The concept of using negative experiences as motivation is also applied to entrepreneurship, with the suggestion that it can be a powerful driving force for success (18m59s).

Bhutan's Gross National Happiness (19m38s)

Bhutan, a small country located between India and China, has a unique approach to measuring success, prioritizing Gross National Happiness (GNH) over Gross National Product (GDP) (19m48s).
The concept of GNH was first introduced by the King of Bhutan in the 1970s during a diplomatic trip to India, where he stated that Bhutan's biggest export is happiness (20m22s).
The King's comment gained international attention, and Bhutan began to implement policies focused on increasing national happiness, which has become a defining characteristic of the country (21m14s).
Every five years, surveyors in Bhutan travel the country to gather data on factors such as education level, salary, material possessions, negative thoughts, positive thoughts, work hours, prayer time, and sleep patterns (21m26s).
The data collected is used to inform policy decisions and rules in Bhutan, demonstrating the country's commitment to prioritizing happiness (21m49s).
Despite Bhutan's focus on happiness, the country ranks average in the World Happiness Report, which may be due to differences in measuring happiness (22m12s).
The story of Bhutan's emphasis on GNH serves as an example of how a leader's vision can shape a country's identity and values (22m35s).
The prioritization of happiness in Bhutan contrasts with the strong work ethic and emphasis on productivity in many Western cultures, including the United States (23m5s).
A pairing metric is a combination of two metrics that work together to ensure that optimizing one metric does not negatively impact the other, such as revenue and profitability, or growth and customer satisfaction (NPS score) (23m21s).
Tim Ferriss emphasized the importance of having a pairing metric when discussing the growth of subscribers, suggesting that it's not just about the number of subscribers, but also about their engagement (23m42s).
The concept of a pairing metric can be applied beyond business, such as in government policy, to ensure that multiple factors are considered when making decisions (24m1s).
The country of Bhutan uses a pairing metric, where they measure both GDP and the happiness of their people, with a focus on the latter (24m10s).
Bhutan's happiness index is a weighted score that takes into account various factors such as psychological well-being, health, time, education, and more (25m52s).
The country's happiness score is currently 7.81, which is an increase of 3.3% from the previous year, with 9.5% of the population being deeply happy, 38% extensively happy, and 45% happy (26m17s).
The interest in Bhutan's unique approach to measuring happiness stems from the idea that countries can be viewed as large companies with their own mission, business model, and way of doing things (25m17s).
The 60 Minutes TV show featured a segment on Bhutan, which highlighted the country's focus on happiness and its unique approach to measuring it (24m28s).
A unique case of a king voluntarily giving up power to establish a democracy is mentioned, which is rare in history as power is highly addictive, and most people, including leaders like Biden and Trump, do not want to relinquish it (26m29s).
This instance of a king giving up power for democracy occurred in a time of peace, which is unusual as democracies often emerge after periods of violence or war (27m25s).
The country in question had a bartering system until the 1970s, and people paid taxes in the form of goods or labor, which contributed to the construction of impressive buildings (27m58s).
The community service-based tax system allowed people to donate labor hours to pay their taxes, resulting in the creation of remarkable buildings (28m17s).
A friend of the podcaster visited the country and met the king, who was introduced to him by a former prime minister who is now a surgeon (28m33s).
The country has a unique cultural aspect, with penises painted on buildings in artistic ways (28m55s).
The country has invested heavily in Bitcoin, owning more than the total market value of their stock market, which is around a billion dollars, and uses hydroelectric mining to mine Bitcoin (29m10s).
The US has approximately $20 billion worth of Bitcoin, while China also has around $20 billion, the UK has $6 billion, and El Salvador has been buying and holding Bitcoin. (29m45s)
El Salvador's approach to wealth and happiness was highlighted in a 60-minute show, where the speaker emphasized that being prosperous can contribute to happiness. (30m9s)
El Salvador offers free education and healthcare, and 60% of the land is dedicated to nature, with a focus on preserving the environment rather than conquering it. (30m23s)
The country has a unique approach to nature, with a focus on reverence and enjoyment rather than conquest, as exemplified by the restriction on mountain climbing. (30m28s)
The speaker was inspired by the country's approach to happiness and wealth, and noted that prioritizing happiness can come with trade-offs, such as underdeveloped roads. (32m4s)
Bhutan, a country that prioritizes happiness, has a unique culture and approach to life, with a focus on mindfulness and reverence for nature. (30m58s)
The country has a national outfit and a strong Buddhist influence, with a focus on wisdom and a relaxed vibe. (31m16s)
Bhutan is working on building a new city, the Mindfulness City, which will feature green spaces for meditation, walking, and cycling, and was funded by a $100 million bond. (32m21s)
Bhutan is building a new city with its own cultural values, aiming to attract people to the country through ecotourism and mindfulness-based education (32m35s).
The architect behind Bhutan's new city is also involved in a proposed monument in the Bay Area called American Classus, which is backed by some individuals in the crypto community (32m56s).
The project in Bhutan is a 50-year plan that prioritizes environmental sustainability, with the architect embracing the idea that the project will outlive him (33m52s).
The approach to building the new city in Bhutan is inspiring and encourages thinking about the world in a more malleable way, challenging the idea that things are set in stone (33m31s).
The story of Bhutan's new city is a contrast to the pursuit of wealth and material success, highlighting that there is more to life than money (34m15s).
The concept of making a lasting impression, like the project in Bhutan, is compared to the idea in boxing that the last 10 seconds of a fight are what judges remember the most (34m26s).

Ruthless PE rollup: International schools (34m48s)

The founder of a company attended high school in Texas for two years before moving to Beijing in 10th grade, where they finished high school at The International School B, an experience that was taken for granted at the time but later realized to be part of a significant business (34m53s).
The International School B turned out to be a great opportunity, but it wasn't until later in life that the founder realized the magnitude of the international school business (35m54s).
International schools are a massive business, with companies like Nord Anglia creating a 14 billion dollar conglomerate of over 80 private schools (37m11s).
Nord Anglia started in the 1970s by creating materials for teaching English as a foreign language and eventually expanded into Eastern Europe, creating their own schools to teach international students (36m34s).
Over time, Nord Anglia grew from one school to multiple schools, creating a business that eventually became a large conglomerate (37m3s).
Nord Anglia acquired IMG, a sports-focused brand, for a billion dollars with the intention of expanding the brand internationally to cater to the children of wealthy families living overseas (37m36s).
The goal of expanding IMG internationally was to provide students with the opportunity to get into top US colleges (37m52s).
The business in question started as a slow-burning, privately-owned company that focused on teaching materials and had a daycare, but it eventually hired a CEO and began expanding by opening its own schools and buying other school chains (38m25s).
The company's expansion included buying a six-school chain with a presence in France and another with a presence in Latin America, as well as acquiring five schools in India for $200 million (38m52s).
The company went public, received a take-private offer, and is now valued at $14 billion, with the Swedish private equity firm EQT making significant profits from the business (39m18s).
The company's timeline includes teacher training and language programs in the 1970s, pivoting to owning and operating international schools in the 1990s, and receiving a private equity round from EQT in 2008 (39m34s).
At the time of the private equity round, the company had $40 million in EBITDA and $200 million in revenue, and it has since grown to do $1 billion in revenue with hundreds of millions in EBITDA (40m5s).
The company's schools are profitable, with a case study showing that a school in Dubai broke even in year two or three and achieved 55% net cash on cash once it reached maturity and had 1,400-1,500 students (40m48s).
The company convinces parents to enroll their children by highlighting its track record of getting students into top-tier colleges, with a high graduation rate of over 90% (41m29s).
The school attended in Beijing had a 100% graduation rate, with 98% of students going to college, which is significantly higher compared to a normal school in Houston with a 75% graduation rate and less than 50% enrolling in college the next year (41m54s).
The school in Beijing was a first-grade through 12th-grade school, with an annual tuition of $40,000, which was often paid for by companies as part of relocation packages for employees working overseas (42m20s).
Many students at the school had their education paid for by companies, which was a common perk for employees relocating to China for work (42m40s).
International schools make their money by charging high tuition fees, which are often paid for by wealthy individuals or companies, and by receiving government funding through student loans (43m5s).
The business model of international schools is to cater to the top 1% of wealthy individuals who can afford high tuition fees, which can create a perception of prestige and exclusivity (43m28s).
In contrast, for-profit universities in the US, such as the University of Phoenix, have a reputation for being less prestigious and more focused on making a profit (43m35s).
Despite the potential for abuse, some for-profit schools can be done well and maintain a level of prestige, as seen in the case of international schools (43m54s).

IDEA: $500M YouTube University (43m58s)

The idea of creating a modern-day film school has been considered, as traditional film schools like USC and UCLA may not be as relevant in today's content creation landscape, where credentials are less important and anyone can publish content on platforms like YouTube, TikTok, and Instagram (43m58s).
With the rise of content creation, it has become the number one aspirational profession among young kids, creating a high demand for people who want to learn the necessary skills (45m1s).
A proposed concept for a modern-day content creation university would offer a two-year program that is project-based, providing students with access to top-notch equipment and mentorship from industry professionals like MrBeast (45m20s).
The program would cover a range of creative arts, including videography, photography, script writing, editing, sound production, and music production, with students working together on projects and receiving real feedback along the way (45m26s).
The university would generate significant revenue, with estimated earnings of $500 million per year from 10,000 students paying $25,000 per year for a two-year program (46m40s).
The idea of creating such a university is considered logical and has the potential to be successful, but it requires further development and planning (46m48s).
Traditional business school does not teach entrepreneurship, but rather management, and is more like a middle to senior management training program, whereas a trade school style education is more effective for learning entrepreneurship skills (47m4s).
Entrepreneurship involves a bundle of around 15 skills, including strategy, negotiation, marketing, building, and managing, which cannot be learned in a single class or program (47m30s).
Full Sail University is an example of a successful trade school style education, with 25,000 undergrads and an annual revenue of around $650 million, offering programs in areas such as game design, music, and sports broadcasting (47m42s).
Full Sail University has notable alumni, including Jason Citron, the founder of Discord, and Chris, who bootstrapped and sold his company for $800 million (48m37s).
The university's programs are designed to provide practical skills, such as music record engineering and video game design, rather than just theoretical knowledge (48m49s).
The concept of a for-profit university like Full Sail University could be applied to other areas, such as content creation, which is a valuable skill in today's economy, but is not typically taught in school (49m31s).
Every company needs media creation talents, and there is a huge demand for people with these skills, making it a potential multi-billion dollar business opportunity (49m55s).
The idea of creating a trade school style education for content creation, with a physical campus and practical training, could be a successful and lucrative venture (49m27s).
Creating a prestigious educational institution with tangible value can be a compelling pitch, offering students hard skills, employability, and a reputable brand, making it highly attractive to potential students and employers alike (50m20s).
Accreditation is crucial for securing government funding and allowing students to access loans, but it can be obtained through various means, such as buying an existing accredited school or going through the accreditation process (51m8s).
Running a high-quality educational institution requires significant capital, energy, and a strong entrepreneurial spirit to provide excellent education and build a reputable brand (51m48s).
The initial investment for creating a physical campus-based institution can be substantial, with examples of similar projects costing between $50 million to $100 million, and even up to $200 million in funding from billionaires (52m10s).
Building a prestigious educational institution is a long-term play, aiming to create a legacy and reputation similar to that of Harvard or Stanford, where the brand value is the primary asset, attracting top students and companies willing to pay a premium for the institution's label (52m47s).
The goal is to create an institution that peaks in brand prestige 50 years later, requiring a significant upfront investment and a strong vision for the future (53m6s).
The entrepreneur energy and soul are essential for creating a successful educational institution, but finding the right operator to run the institution is crucial, as the founder may not be the best person to handle the day-to-day operations (51m57s).
Investing in a university education can be compared to investing in a stock, where the goal is for the brand name to elevate in value over time, such as after 10 or 15 years, making the initial investment more valuable. (53m16s)
However, there are instances where a university's brand can be negatively impacted, such as through protests or controversies, which can decrease the value of the investment, as seen in the example of graduating from a university like Columbia during a time of controversy. (53m42s)
Building a university brand involves increasing its value over time to justify the investment made by students, who essentially buy into the brand at a lower value with the expectation that it will appreciate in the future. (53m57s)

Bill Ackman's Harvard takedown (54m11s)

Harvard University's motto is Veritas, which means "forever truth," but its mission has changed over time, with its current mission being more focused on diversity, equity, and inclusion rather than seeking truth and wisdom (54m25s).
An analysis of Harvard as a business shows that its enrollment has been flat over the last 20 years, while its faculty growth has been modest, but its administration growth has increased by 40% in the same period (54m42s).
The cost of attending Harvard has doubled in recent years, with the university growing its revenue by increasing prices rather than increasing the number of customers served (55m1s).
A breakdown of Harvard's revenue streams shows that a significant portion comes from donations, while the university's operating margin would be a negative 40% without distributions from its endowment (55m29s).
Harvard's original mission, established in 1643, was to encourage students to seek wisdom and truth, but its mission charter has changed over time, with its current mission being more focused on diversity and inclusion (55m37s).
The university's faculty growth has been skewed towards certain fields, such as African-American studies, which has grown significantly compared to fields like economics and computer science (56m24s).
Despite the growth in faculty, the number of degrees awarded in certain fields has not kept pace, with only one degree recipient in African-American studies in 2023, despite having 57 faculty members (56m51s).
The verdict on Harvard as a business is that it is a "hold," with many positive attributes, including a strong brand and a large endowment, but also many challenges, including a deterioration in the quality of education and increased competition (57m8s).
Many people are misallocating resources and making poor decisions, which can be seen in various aspects of life, not just finances (57m27s).
A useful approach to decision-making is to create a PowerPoint presentation with three options, where one person presents and argues for each option, and the other person selects the preferred choice (57m45s).
This method is used in personal and business decisions, such as choosing a restaurant or a baby's name, and ensures that both parties are happy with the final decision (57m50s).
In the case of choosing a baby's name, Sarah created a PowerPoint presentation with three options, including the background and meaning of each name, famous people with the name, and its popularity ranking (58m34s).
The person presenting the options should select three choices they are okay with, allowing the other person to choose the one they prefer (58m21s).
This approach can be applied to various decisions, including financial ones, and is a great way to make decisions in a partnership or business setting (59m29s).
Regular reviews of financial decisions and unresolved issues can also be helpful in maintaining a healthy partnership, similar to a business partnership (59m39s).
The concept of running a marriage like a business partnership, with regular reviews and discussions, can be effective and beneficial (1h0m2s).
Before getting married, it's a good idea to discuss and align long-term goals, values, and expectations, including where to live, how to raise a family, and deal-breakers (1h0m10s).
Having open and honest discussions about goals and expectations can help ensure a strong and healthy partnership (1h0m24s).
Having regular, formal discussions can be an effective way to maintain a healthy relationship, with set times each month to discuss important topics, and it's suggested that everyone try it at least once, as it has been proven to work (1h0m52s).
These discussions can be as simple as having a family meeting, which is a common practice in some families, but taking it to the next level by making it a regular and formal event (1h1m24s).
The idea of having a formal discussion or meeting is not just limited to families, but can also be applied to other relationships, such as business partnerships or marriages, with the example of creating a "vows PDF" before a wedding (1h1m35s).
The key to making these discussions effective is to keep them calculated and systematic, but not to the point where it feels cold or unemotional, with the goal of keeping everything "on the up and up" (1h1m6s).
The practice of having regular, formal discussions can help to prevent misunderstandings and conflicts, and can be a valuable tool for maintaining a healthy and successful relationship (1h0m58s).