John Coogan, EIR at Founders Fund, Founder of Soylent & Lucy

[00:00] my co-founder was quitting smoking, [00:02] And he didn't like any of the alternatives. He was very skeptical of vapes, but his, but our other co-founder, [00:10] was, [00:11] at Caltech and had studied the nicotinic receptor in the brain and understood the science behind nicotine and understood that while it was extremely addictive, it wasn't a carcinogen. And this was kind of like an unknown. It was just under discussed. And so we said, OK, this is a [00:27] It feels controversial, it sounds controversial, but it's actually not controversial at all. [00:41] Welcome to Sorcery. I'm Molly O'Shea, founder of Sorcery, a weekly top VC deals newsletter highlighting the top GPs, founders, and deal announcements leading the next innovation cycle. Today, we have John Coogan, PIR at Founders Fund, founder of Lucy, and former founder of Soylent. Yes, John Coogan. [00:59] Soylent. And also, he's kind of a famous YouTuber. He has over 400K subscribers and videos that have hit over 8 million views. He's a great storyteller, and this is a really fun conversation. I hope you enjoy. [01:14] Thanks for joining us. Thanks for having me. Well, to kick it off, I want to understand something. What does an EIR at Founders Fund mean and how did you get the opportunity to work with them? [01:26] Yeah, it's a good question. I get this one a lot because EIR is a super vague term and it means a different thing at a bunch of different funds. You know, some funds it's like you come in and it's kind of.

[01:36] guaranteed that they have a spot on the cap table of your next company. For me, it was much more just like I was a friend of the firm. During COVID, I think I started chatting with Mike Solana a bunch, who's the chief marketing officer there and was just talking about crazy stuff on Twitter. I wound up doing his podcast. Then I spoke at Hereticon. I gave a talk about how nicotine is [02:06] the classic, you know, Thelian secret where the reality and the science does not match the public perception. And so that was a lot of fun. And then I was making YouTube videos during COVID, just kind of bored, talking about big companies and whatever was going on in tech. And a lot of the companies that I wanted to talk about that were interesting were Founders Fund companies. [02:36] Varda, SpaceX, obviously, Palantir. [02:42] And just from there started getting introduced to more and more of the people. And they were like, hey, yeah, like you look like, you might be kind of thinking about what's next. [02:52] You want to come and hang out and figure out what's next and make some cool content and hang out with the team? And I was like, yeah, that sounds awesome. It's really, really tight knit. [03:01] uh, [03:02] firm. It's like 30, 40 people and everyone's kind of off doing whatever they want. A lot of people run companies. And so it was a really good opportunity to kind of go inside the firm, see the other side of the venture startup ecosystem, make some cool content and kind of plan out my next move. I love how you got bored and yet like all of your YouTube videos have

[03:32] activity. [03:33] Yeah, I think of it. I think David Perel has this term for it, like the serendipity engine or the serendipity machine. It's like if you're if you put content out on the Internet, it grows for a very, very long time, especially if it's evergreen. And and then people can just find it and then they know that you're interested in something and they can reach out and you just get weird, weird connections. [04:03] But you just meet a lot of interesting people. I'm pretty sure we could probably trace how we met through something related to YouTube. [04:10] Yeah, yeah. And I might have also fallen for the Founders Fund portfolio trap, having both Varda and Hadrian on and now you're on it. Yep, yep, there you go. But to get back to your experience as a founder and entrepreneur, so you also kind of ride the, if not create these cultural waves within Silicon Valley. You founded Soylent. I would love to dig into that further. How did you... [04:37] come up with this idea with your team? I know that there were a couple co-founders of yours. How did you guys band together? And what was kind of like the journey with Soylent? [04:46] Yeah, it's one of the funniest, like... [04:48] Silicon Valley startup stories just because, I mean, it started very normally. It was a bunch of guys who wanted to move to Silicon Valley, build the next technology company. They were writing software. It was a few software engineers, electrical engineers. The original idea was like a wireless mesh network.

[05:05] Kind of like there was a crypto company that did something like this later, Helium. But crypto barely existed at the time. Actually, Coinbase was in our batch at YC and was giving anyone who signed up a full Bitcoin, which is insane. It was like five dollars back then. So it was like their sign up reward. Like, here you go. Here's a Bitcoin. I'll send you one. Test this service up. But, you know, building wireless like base stations is really, really expensive. [05:35] financial model or anything. And so we knew a lot of VCs through the YC network, but no one wanted to pony up, you know, millions and millions of dollars to go build what were essentially 5G towers, like pre-Huawei. And we didn't really have any of the, you know, traction or anything to support that idea. We were just kind of tinkering. So that company, we failed to fundraise for it. We were working on a bunch of other companies too, but nothing was working. Like we weren't [06:05] was like 500 people signing up for like a free app. It was like terrible. We just did not understand distribution at all. And so just like I was creating content on YouTube, my co-founder was writing blog posts about mostly technical subjects, but he knew how to make them really punchy and go viral on Hacker News. So he did this one that's really controversial now, but at the time it was like R. Kelly had this trapped in the closet series. Have you heard about this? [06:33] So it's like his like opera and it's like 20 episodes, really crazy. And like all the different characters have all these weird relationships. It's like total like soap opera status. And he, he wrote a blog post about how to use like this graph tool to visualize like nodes in a graph, like a social graph, but using R. Kelly as like the, as like the, the date, the raw data that you would run this, this like, you know, couple lines of Python on top of or whatever.

[07:03] funny, but it taught you something. And so that went pretty viral. [07:08] He was starting to build up a little bit of following on his blog. And then he got really into nutrition. Rob, the eventual CEO, was a computer engineer, like real computer scientist type. And one of our other co-founders was a biology major and studying biology at Caltech. [07:29] And I think there was a kind of a cross-pollination there. And Rob started thinking about biology, but from a computer scientist perspective, [07:38] You know, what if we could just break down, you know, the bare nutrients and just consume, you know, exactly what we need. We could just live on this like this protein shake, essentially. And so. [07:50] He did this like stunt and when he was talking about it, I was like, this makes no sense. Like, why are you worried about this? But we were broke, like we were running out of money. Back then YC gave you like $170K and we were down to like maybe $50K or $60K. We paid our rent in advance, owned our laptops. So there were like really no expenses to just like keep hacking. [08:12] But we were spending money on food and in San Francisco, like food's really expensive. You don't have a car, so you can't go to Costco. You don't space, so you can't grow your own food. And if you're eating fast food all the time, that's really unhealthy. So like a very simple protein shake was actually a pretty material upgrade if you're living in squalor. [08:32] And as soon as he wrote about it, it just went mega viral because, of course, he like Brian Johnson, like click baited it totally. And the blog post was called, like, how I stopped eating food for 30 days. And like, that's just like viral fuel. And back then things weren't there weren't as many like YouTubers. It was kind of like a Ryan Trahan experiment type thing, you know, like living on a penny is Ryan Trahan's thing. Rob lived on this this new food for 30 days.

[09:02] And anyone can click on that because everyone eats food. Everyone has opinions about it. And there's just like this inherent drama of like, will he survive? What's going to happen to him? Who knows? And then it was also... [09:14] like a really great stress test in the sense that if this guy says that he can live on this for 30 days, like you could probably like try a sip of it or you could like have one of these shakes and see how that works. So people were really, really like interested in trying it. And just like overnight, I said we had like 500, you know, signups for like our first thing. We had like [09:36] 10,000 people that filled out like this really, really long intake form where we asked them, like, would you send us your 23andMe data? Would you send us your blood? They were like, yeah. It was like super fans immediately. And so we were like, okay, we got to drop everything. And like we did like a Kickstarter type thing, a crowdfunding campaign. And that was just like off to the races. Like the news is picking it up, like tons and tons of organic media. Vice made like a whole documentary about the company. [10:06] And Rob went on the Colbert Report, like mainstream late night TV, which you don't see from a lot of tech founders. The only tech founder who had done Colbert's show before Rob was Brian Chesky at Airbnb. And that was like a $10 billion company at the time. And it was insane. Anytime we do one of these press hits, we just make a million dollars in a day. And so the growth was just nuts. [10:30] grew [10:32] to like $60 million in like a few years in revenue. Uh, and then just like,

[10:39] over-raised and, you know, brought in bad team. And it was just like a disaster. And then everyone just laughed. And then the company sold for like, not a great outcome last year. [10:49] But – [10:50] It led me and my co-founders to launch a new company in 2016, which we have become much more optimistic on because it has a few... [11:00] like fundamentally different characteristics from Soylent. Like one of the biggest problems that we found with Soylent is that in the nutritional supplement space, there are very, very few barriers to entry. So the companies that have done well have done a really good job of like, you know, kind of cornering influencers and getting exclusive deals. And so if you're the exclusive partner with Joe Rogan or with Andrew Huberman, that can create a lot of value because none of your competitors can advertise on that channel and that can drive a lot of growth. [11:30] have a short [11:31] short shelf life because eventually Amazon creates the generic. Eventually people want us to save money. Every person out of an MBA program says, oh, what should I start? The latest hot DTC thing. Let me call up Red Antler and get a fancy looking brand and raise a couple million bucks. There was a DTC industrial complex that popped up. We were on the cutting edge of that with Dollar Shave Club [12:01] and scaled pretty significantly, but very quickly, the market got super, super competitive. But at the same time, my co-founder was quitting smoking,

[12:10] and he didn't like any of the alternatives he was very uh skeptical of vapes but his uh but our other co-founder was at caltech and had studied the nicotinic receptor in the brain and understood the science behind nicotine and understood that um while it was extremely addictive it wasn't a carcinogen and this was kind of like an unknown it was just under discussed and so we said okay this [12:35] feels controversial. It sounds controversial, but it's actually not controversial at all. And if we can get into this space, there were new laws going into effect that would make it extremely highly regulated. And so you could either you could basically launch a company in 2016 or you would never be able to launch a new company because the door was closing on this regulatory situation. And and anyone who wants who wants to launch one of these products now, it's, you know, [13:05] get started. And so that's very, very difficult, especially to underwrite as a venture capitalist, because you have to put all this money up front, wait maybe five years for the FDA to get back to you before you can sell a single unit. So how do you know if you have product market fit? You don't know if the product's better. It's almost like developing a drug, like a cancer drug, but at the end of the tunnel, you're in a consumer market. [13:28] And so you still have to win. It's not like if you, you know, get Ozempic approved, like it's going to work and it's going to sell. So it's worth the, worth the upfront investment. So we were attracted to it because it leveraged all of the, all of the consumer experience that we had, you know, shipping, DTC, Shopify, like all the basic stuff that we knew, but it had kind of a monopoly, monopolistic, oligopolistic market structure at the end of the, at the end of the tunnel.

[13:58] awesome. But what do you do in that five-year period? Because we launched in 2016, we were able to continue selling our products. So we were doing a ton of sales. And I mean, it was still slow. It took a long time to introduce this product to people. We started with a nicotine gum product. And I mean, I think we did a great job with formulation and branding. It is a better product, but we would constantly get compared to Nicorette. Nicorette's very cheap. There's also generic [14:28] Amazon has a Nicorette product or a Nicorette competitor. So we would get compared to that all the time. And it wasn't really like a growing category, like the overall NRT spaces is called nicotine replacement therapy. That whole space, [14:43] is, you know, under a billion dollars revenue. Hey, we'll get right back to the conversation after a word from our sponsor. [14:51] Sorcery is brought to you by Archer. I'm genuinely amazed at what Archer has been able to accomplish. Archer's goal is to transform urban travel, replacing 60 to 90 minute car commutes with estimated 10 to 20 minute electric air taxi flights. They are safe, sustainable, low noise, and cost competitive with ground transportation. Archer's Midnight is a piloted four passenger aircraft designed to perform rapid back-to-back flights with minimal charge time between flights. [15:21] for passengers by providing safe and efficient access to people, places, and events across the communities they live. Visit Archer.com.

[15:30] But during that time, just shortly after we launched the company, we saw Zinn launch and we were like, okay, this is going to be big. [15:40] And so we almost immediately started working on pouches and products that could kind of directly compete against Zinn. And so that's been like the major, major driver of growth. But along the way, we've been fortunate to be in this regulatory environment where we can continue selling our products. [16:00] creating new products that would go through the regulatory pathway and we wouldn't start selling them for five years or something. But we haven't really moved the needle on that because it's a big investment. It's like millions and millions of dollars and then you just have to wait and wait and wait. [16:14] Yeah. [16:15] So I guess I'm really curious, like, what are the biggest misconceptions for this product, for nicotine products in this market? What are you constantly battling if it's in terms of, like, public perception of maybe, like, let's say, like, the Jules and all of these vapes out there and all these crazy products? Like, how do you differentiate people? [16:37] against that and then what is the kind of like the strategic advantage you have? [16:42] I mean, the Juul story is super informative, and we're very lucky that they kind of went first in this space because there's a ton of lessons, even from day one. I mean, when we started the company, Juul had barely launched, and we knew a lot of the team, and we saw some of them, and it was crazy. Like, some of the early employees were like...

[17:01] I'm, this is the, this is the most insane rocket ship I've ever seen. I'm going to work here for four years and then start a family office. [17:08] So like, like that was something I actually, and that's like not something you hear from a lot of like early stage people. [17:12] you know, startup employees, not founders, employees. And like it happened, like they're billionaires now. And it's like, this actually played out. Yeah, it's like one of the most insane financial rises, because at their peak, I think they were valued in like 60 ish billion dollars. And Altria bought 30% of the company for like $13 billion. And so the majority of that went to pay a dividend to the investors and employees. So I mean, there were people that started [17:42] like, you know, a month before the dividend happened and got a check for $120,000 on like day one, basically. Like there were lots of people that made a ton of money. But there were also a bunch of mistakes made. The two main ones that people really, really worry about that aren't like misconceptions at all. The first one's youth initiation or advertising to kids. Juul gets a lot of heat for this. They weren't actually that bad, but it sounds really bad when you like dig into it. [18:12] program where they went to schools and where they were trying to pay like public schools to do education about how bad smoking is. But because it was paid for paid by Juul and like the people that were doing it were like using Juuls and stuff. It just kind of looked like they were just marketing Juul directly to kids, which is crazy. I mean, you could see how potentially their heart was in the right place about like, hey, if we if we keep the next generation off

[18:42] named like there's never been like a whistleblower or like a bombshell email where it was like they said they were deliberately going into schools to hook kids it seems like it's more like they wanted to be seen as like the good guys and so they did this like non-profit thing but then it looked really bad on them once the kids actually started using it uh so that was like a big one so from day one we were just like okay how can we like age gate more aggressively like advertise to even older people it helps that like we're all like older like dads at this point and [19:12] So I think there's a little bit less of an inclination to just like, [19:15] Even if we like call our friends, our friends are like, you know, like watching Barstool and not like on TikTok. So like we've never advertised on TikTok, any of that stuff. So there's a lot of lessons there, but it is like tricky. Like you, you have to manage it a lot. A lot of this happens at point of sale too. Like, [19:31] And before, during the Juul era, tobacco was 18 plus. So you could be a senior in high school. And if you're on the old side, you could just go buy a Juul or cigarettes and just be ripping cigs like on your lunch break at school, which is insane. Like now that we're living the era of tobacco 21. So like tobacco is 21 plus now. So you actually need like a fake ID. Like it's the equivalent to buying alcohol. So it's a lot harder to buy. But I mean, of course, kids are going to figure it out. [20:01] really, really vigilant with like how the marketing and branding appeals to kids. There's like all these different, um, aspects to like keep the products out of the hands of kids. And like the fundamental reason is that, is that.

[20:12] When you're when you're an adolescent, your brain's still developing. You're much more likely to become like hardcore addicted to something. So that's why people are really, really worried about youth initiation into really any psychoactive drug, even even the pharmaceuticals. It's very, very questionable if if, you know, the under 21 crowd should be using really anything psychoactive because your brain's still developing and your brain's just going to think like, oh, this is how it's always been. [20:42] a lot easier to like toggle on and off. So that's one thing. [20:46] And then the other thing was like, like, you know, uh, there was this thing called EVALI, the e-cigarette and vapor acute lung injury, like fiasco. It was, uh, identified by the CDC and I mean, people died. Like there, there, there were multiple people that, that, that actually died. Um, and everyone thought it was because of Juul. It turned out that it was actually because of this, these weed vapes. Uh, this, there was an ingredient in there, vitamin E acetate that basically made the, I'm pretty sure it made the, the vape liquid look clear. [21:16] which is kind of sketchy. But it was an ingredient that was... [21:20] It was maybe safe, maybe to eat, but not to put in your lungs. And so the people that were making this, like, I think, like, the government, like, raided someone. Like, literally, I kicked down his door, and it's, like, a guy with a syringe plunging vitamin E acetate into, like, vape pods, like, with marijuana in them or cannabis juice in them to, like, go and sell to the corner store. It was, like, a very, like, roughshod, like, sketchy, sketchy mom-and-pop operation, like, basement operation thing.

[21:50] was the actual cause, but everyone was wondering, well, like, oh, you haven't studied... [21:55] vapes like we don't know and so all of that kind of created this like storm and then simultaneously like like youth vaping just generally was like skyrocketing like it was already at i think like 10 or 20 percent when jewel was introduced but it went up to like 30 or 40 percent very very quickly and the government does these annual reviews where they have pediatricians ask the kids like um [22:20] Like, have you used marijuana in the past three months? What products have you used? Have you used nicotine, all these different things, cigarettes? And then they're able to compile all that into a really, really comprehensive data set that informs where how they legislate these things. [22:35] And and Juul was just like driving like massive, massive, massive, massive, massive vape adoption. Interestingly, they were also driving massive, massive cigarette like declines, like cigarettes were no longer cool and not used by anyone. [22:50] so that was a positive sign but you always have to weigh that against you know the youth initiation problem so jewel went through this like crazy crazy rise and fall eventually the the fda uh uh they issued them what's called like a marketing denial order saying like you can't sell this product anymore we reviewed your application we've said it's not sufficient um and it's not suitable for the protection of public health and so [23:14] Juul wind up fighting that in court and getting a stay so they technically can continue selling, and the company is now kind of rebuilding. But watching that company go through that was very, very informative, and it's kind of why we've taken a much, much more conservative and much less aggressive strategy. But, yeah, I mean, it's fascinating. And then the Zinn story is like a completely different story. We can go into that, but I don't know if there's any questions that come up from the Juul story.

[23:44] you [23:45] Well, yeah, a lot of them. I just I distinctively remember Jules back in the day and everybody just doing it because it was the coolest thing possible. It was so huge. [23:56] It was huge. It was a huge moment. And then there were like lots of misconceptions on that because the flavoring come out and then that was like selling candy to kids. And there were lots of kids in high school. [24:08] vaping or doing jewels. I don't know what they called it, like ripping jewels. [24:14] I think, I mean, to speak to the penetration, like they just call it jeweling. [24:20] Jewel became a verb, and that was what people, you know... [24:24] years. [24:25] But yeah, I mean, it was like, [24:28] The financial markets loved it because it was the razor and blade model in the sense that you sell this device and then the pods, you have this recurring revenue stream coming in that's very high margin. [24:41] All of the aspects of the business were just phenomenal from a financial perspective, but very, very difficult from a regulatory perspective. And I think they just kind of played it a little too fast and loose. There's a lot of anecdotes and stories out there about. [24:57] you know, Jewel people kind of like saying that they didn't want it to be, you know, they wanted to fight big tobacco, but then they took a bunch of money from big tobacco or they said, you know, oh, we're not going to do this. And then like they actually would when they were corresponding with the FDA. And so it seems like they kind of made some enemies over there. And then also, like, I think under discussed is like they were also selling a like what is essentially a cannabis product in their packs, like vaporizer, which was I think legally it was

[25:27] but most people don't use that product for that. And so you have this kind of like true, like wild west, like, you know, product portfolio, moving very, very quickly. Now I personally think like, [25:42] A lot of the fear-mongering about vaping is frustrating because it's, [25:46] Like, [25:47] When you dig into it, like the scientific consensus or the message from the government is never is never like. [25:55] Cigarettes kill about 50% of people who use them. They kill almost 500,000 people every year just in America. It's like 8 million globally. It's like it's a terrible, terrible product. [26:04] It'd be great if the government just came out and said, like, look, like like we think Juul's bad. It kills, you know, it kills you. Twenty five percent of the time. Cigarettes kill you. Fifty percent of the time. Like here are the facts. We studied it. Here's here are the risks. Like make your decision. Instead, it's always this like framing from from public health groups and from the government. That's just like we don't know. We don't know. And that's reasonable. Like if you don't know, you don't know. But like in other in other areas, like this is not how things work. [26:34] Thank you. [26:35] the you know the safety and efficacy of vaccines within a year and like no one everyone thought oh we vaccines take like a decade to do but like we got it done and so you know it's like why can't we apply the same like warp speed mentality to that category because it'd be so much better if we just said oh yeah like we actually did we saw this crisis coming we did all our research and like here's what

[26:57] We know like the science, the science, the scientists came together. Instead, it's been a lot of like, well, it's like just delay and see. And I think that's probably because kind of both sides benefit from a delay in the sense that, like, if a big tobacco company can continue to sell a product for longer and longer and longer while the government's like studying it, the government doesn't have to deal with potentially getting sued for banning it, which like always happens. But then also, you know, the company gets to keep selling it. [27:27] But the public is really the one that suffers because it'd be so much better if we just had, OK, yes, like here's the definitive line. And that actually did happen in other countries, like even during the Juul thing, which is kind of crazy. But I think the government of the UK, like the National Health Service, came out and said that they believed that Juul was 95 percent safer than cigarettes, which is like. [27:48] Kind of a crazy thing. I mean, that's like, you know, I would definitely based on that, if that's true, I would definitely recommend anyone I know who smokes to switch immediately to Juul. But, you know, but the US government's like never like said anything. They have now approved multiple e-cigarettes, which is interesting. They approved NJOY. [28:07] which was actually a former Founders Fund portfolio company, a long time ago. And they were one of the first e-cigarettes. They were the reason that all this stuff happened with the government because they were originally selling this just as like a nicotine enjoyment device. [28:25] The FDA said, this is an unregulated medical device. You're making medical claims. You're claiming that people can quit smoking. They said, we're not. But the FDA put an import ban on the company, so they couldn't bring it in the country. And so they weren't able to sell it. So the revenues went to zero. So they basically went bankrupt. They wound up taking that case, I think, all the way to the Supreme Court, and they won.

[28:47] Wow. [28:48] The FDA legally did not have the regulatory authority to police vapes, and that allowed for the next generation of vape companies to kind of get going. But then in 2009, the Obama administration passed the Tobacco Control Act, the TCA, and that gave the FDA proper authority over nicotine containing products. And then the FDA slowly built out what's called the Center for Tobacco Products, CTP. [29:18] to effect in 2016. And so 2016 was like the last date that you could like start one of these companies. It's very, it's very fascinating. It's like a huge, it's just like, it's such a fascinating industry. Like big tobacco is crazy. They did so many insane things like decades ago, like crazy stuff still happening. Like the Zen story is insane. I don't know. There's just, it's just such a fascinating industry because no one talks about it mostly because none of [29:48] New York Times interview and it was in like the 90s, like right before there was going to be a big settlement. And they were like, oh, maybe we can make everyone like us for a second. It's so funny. I was going to say, like, are most of these conflicts due to lobbyists and like large corporations pushing certain things away or just, you know, hushing people or do we not know? Yeah, a lot of different things come up.

[30:18] like really do care about public health and they think about it from first principles in a very, very smart way. Um, there, there was a guy, um, Scott Gottlieb who was the head of the FDA that Trump appointed and he's like a former venture capitalist and he's been at NEA and he's extremely sharp was like talking to the press, tweeting, like really like, like just laying his cards on the table. And it was very, very strong. Um, and, and he acknowledged this idea of like the continuum of risk, [30:48] Cigarettes on one side and then a product like Nicorette on the other side. And we know that Nicorette is really safe because it's been on the market for 40 plus years. People have been using it constantly. We don't see any problems. There's a list of side effects, but it's like hiccups, you know, or like sore throat or something. It's not like cancer. And so and then on the other side, you have cigarettes where it's like we have, you know, 100 years of data. It kills half of people that use them over their lifetimes. Like it's just like the worst product ever invented. And so he acknowledged that, like, look, there's going to be products that are in between. [31:18] Like a good example would be like a dip, like, you know, loose leaf tobacco that you pack in your jaw. Like it's not, it doesn't go in your lungs. So it doesn't give you lung cancer, but it can give you mouth cancer and that's terrible, but it doesn't give you mouth cancer at the rate that cigarettes do. And so since then the FDA has actually approved one of those moist snuff products, which was actual tobacco leaves that has carcinogens in it and nitrosamines in it. They proved it as what's called a, [31:46] modified risk tobacco product, which allows the company that owns his Swedish match. It's called General Snus. I don't know if you've ever seen this. This is like,

[31:53] Bro lore, but, but, uh, [31:57] But they approved it, and it lets Swedish Match put on their labels that this is less harmful than cigarettes. So Scott Gottlieb was kind of integral in bringing this idea forward that, like, look, there's this continuum of risk, cigarettes and nicotine patches over here. And, look, we think that, like, Juul's probably in the middle. But once the youth epidemic came into the picture, it was just a completely different conversation. [32:27] addicted to it, like that all of a sudden takes away so much of the value that you're getting from actual like converting adult smokers off of cigarettes. And so so he kind of like changed his tune. Then like he left and a bunch of other people came in. But there are a bunch of other reasons why like weird stuff happens. Like right now, the Biden administration just rolled back a ban on [32:50] menthol cigarettes. Have you seen this at all? No. Are you familiar with menthol cigarettes? Yeah. Like Newport Scamble Crush. So, um, so those products, um, [32:59] were [33:01] were, you know, like, obviously just as harmful as other cigarettes. Like, and there was kind of a, there was kind of a narrow moment. So it's very, very hard for the government to just outright ban cigarettes, because in 90s, all of the all there was a master settlement agreement. So the government sued the all the big tobacco companies collectively. And basically the argument, it wasn't it wasn't that, like,

[33:27] "Look, you're killing Americans and that's bad, so we're suing you." It was that, but really the economics of the lawsuit were that by addicting Americans to cigarettes, which caused lung cancer, those [33:40] those cigarette users go into the hospital system and they put an undue strain on public resources. And so the cigarette companies are actually having a negative externality. [33:53] that is causing, you know, a... [33:56] uh, like an economic loss to the American taxpayer, to the government. And so we need to account for that. That was basically the, the, the framework for the master settlement agreement. And so the, the master settlement agreement happens. And it's, it's, again, it's a wild story. There's like movies about this. The insider's really great, but there was all the, all the big tobacco companies were kind of sticking together and being like, we didn't do anything wrong. Like nicotine is not [34:26] I guess it's less ridiculous than saying, you know, cigarettes don't cause cancer. But then there was one company that broke from their coalition. And it was like, if you give it to the government, like if you give us like a little carve out, [34:40] We'll give you the dirt on all of them, basically. And so, yeah. And so the government got regulatory authority. [34:50] or made this master settlement agreement where the big tobacco companies need to pay massive, massive fines. And there were a bunch of other things that they couldn't do. They couldn't advertise anymore. But because of that, the money flows into the government and and pays for, you know, anti-smoking education, all these different all these different things. But it just creates these like these like weird incentives where now you have people that are are basically getting paid by big tobacco from the master settlement agreement to run anti-tobacco advertising.

[35:20] kind of won the battle against cigarettes like everyone knows cigarettes are bad so now they're kind of looking for a new target and so they kind of go around and look for whatever's next um it's just all like very very complicated incentive structures like states have actually like every state got a payment because they have the local hospital systems uh and so these states were able to take these revenue streams and then uh create derivatives against them and like sell those as bonds and then like pull all that money forward and stuff so there's like there's like whole like [35:50] that are dedicated just to trading these settlement bonds and there's people that oversee all the cash flows and stuff. It's just this massive shadow economy. I mean, tobacco is America's first cash crop. [36:04] Like, this is, like, what America was built on. It's crazy. [36:06] Yeah. Holy crap. That is a lot. And you're definitely an expert in this. I can tell you've done your research. Yeah. It's been like every day for the last year. Okay. So I want to like separate the two tobacco and nicotine a little bit further. Can we debunk nicotine a little bit more? Like I'd love to learn more about it. I recently learned it's in potatoes because I [36:36] Like I'm cool. [36:40] The potatoes and the nightshade thing is like so ridiculous because it's, it's like in such trace amounts that you would need like, you know, a million potatoes to feel any effect. It's like, it's just like a, that's almost like just like a fun fact. I think the, I think the biggest, I mean, I mean like the, the, the biggest, you know,

[37:01] Cognitive dissonance publicly still remains just the idea that nicotine is what gives you lung cancer, which is just not true. And the government's acknowledged this. Everyone's acknowledged this. But it just hasn't – it really hasn't worked its way into the public consciousness. And still, if you poll, like, Americans broadly, they will say that nicotine gives you cancer on average. It's like 50% or something. [37:31] . [37:31] If all these products are just as bad, I might as well use the cigarettes. Right. And so so so that's like the biggest thing. I think there's almost like a new a new narrative that needs to be debunked, which is like nicotine is this like limitless pill. Like people think that like because so like like we're saying that. Yeah. Yeah. Yeah. The 10 IQ point thing is like, OK, hey, like no one studied effect on IQ. [38:01] to like [38:03] caffeine, if you were sleepy and you took a, you know, a general knowledge test and then you were on a stimulant, you'd probably do better on the stimulant. But nicotine builds up like a really, really quick tolerance. And so if you're using it every day, it's very much like, don't talk to me until I've had my coffee. Like you're really not getting some incredible benefit from just like having a, you know, a nicotine pouch in all day long. Like people still do that and they like it.

[38:33] kind of a habit or something that, you know, kind of like, [38:37] breaks up the time. That's kind of what smoking did. Like, that's why a lot of soldiers like smoke and like the trenches because it's just like, [38:44] I don't know. There's like a great New Yorker article about this, how it like, it like breaks up like the modernity of like life or whatever. But, uh, but, but in terms of like it being this like super genius pill, like that is such a ridiculous thing to me because it's just like, [38:59] It's just not true. Like, it's just it's just not true. So like I think like certain segments of tech have like kind of overcorrected because they're like, oh, it's so edgy and it's so different. It's like, no, like really, it's just like like these products are are are mild stimulants, highly addictive, very easy to lose their potency in a meaningful way. [39:29] for cigarettes if you're already smoking. Like that's always the message that you want to come back to. And there's still like, [39:36] it's still insane to me, like how much work there is to be done on the smoking front. Like more people died of, of, [39:44] of cigarettes and smoking related diseases during COVID than from COVID. [39:51] Like I think the COVID deaths were 430 deaths. [39:54] 430,000 that year and smoking killed [39:58] 460 that year. [40:00] It's crazy. [40:02] And I'm sure there's like a ton of like overlap. Yeah. Isn't that like long duration usage versus a very violent virus? Yeah. But it's just like, we've just become like totally numb to it.

[40:13] And we're just like, yeah, like half a million people die of this. Whatever. And it does feel like it's like, well, they're choosing to do it or something. But I don't see it that way at all. I think it's like it's such an easy unlock to get all of it. [40:27] all of the smokers to stop. [40:30] Like we just have better products. We have so many, so many resources, but there to your point about like the, the incentives, like there really are a ton of incentives to, to keep cigarettes like regulated in this, like, ah, you know, like, yeah, we'll tax them. Cause that's good for tax revenue, but we'll never actually shut them down. And the thing that I hate the most is like, is like, [40:55] I don't mind if the, if the playing, if the, if the playing field like moves up in the sense that like when, when, uh, all nicotine products went from 18 to 21, that affected all companies equally. Like, [41:06] That was that was fine. The problem is when you do something selective, like you ban vapes, but you allow but you stop a ban on menthol cigarettes, which are clearly worse. Like, that's very weird. I think in general, we should have not a level playing field. We should have a tilted playing field and and everything that you do for like to that continuum risk, like everything that you every every new regulation that you put on the industry, you should just double it and put that on cigarettes.

[41:36] 25 to buy and the taxes should be doubled and, and the restrictions on flavor should be twice as worse or twice as bad. And there's, and there's all these things, but, but in general cigarettes have just been like kind of grandfathered. They're there. The, the voters like them. And so you, you can't really touch them. It's like a political hot button. And then it's also like this libertarian thing of like, you know, why, why is the government coming for this? Why is the government coming for that? But it's like, [42:02] It'd be so much easier if we just actually created the right incentives and studied these products so that people could make the correct claims. We sell four products. One of them is approved as a smoking cessation aid. So we can actually say our nicotine lozenge helps you quit smoking. But we can't say that about the other products because they haven't been studied by the FDA yet. And it's a different FDA pathway, much more expensive. And so it's just like. [42:25] There's so many barriers to being able to really, really attack big tobacco. [42:31] Big tobacco loves that. [42:33] It's very unfortunate. [42:35] Wow. Yeah, no, it's been like a wild... [42:39] Absolutely wild category to watch because there are so many misalignments with – [42:44] politics and government and big tobacco and large industries. I'm curious from your experience starting different CPG companies in different categories, they definitely have different product profiles and you create like a suite of products. Like in your mind, how do you construct or build that type of company and how did it evolve from like Soylent to Lucy? And do you think about it differently or the same? Like what were your biggest learnings shifting from one category to another?

[43:13] Yeah, that's a good question. In general, I think there's like this dance... [43:20] around, I call it like there's dimensions of complexity in a business. So when most like, you know, direct to consumer companies start, it's like they have a single SKU, single product on a single channel, like their Shopify in a single country, America. And then over time, they add more SKUs, they add more countries and they add more channels. So, but every time you add like an extra dimension, you're multiplying the amount of work that you need to do for [43:50] have if you have [43:51] two SKUs on Amazon and Shopify. Now every revenue breakdown needs to be four cells because it's two by two matrix. And then, then all of a sudden you expand to Canada and now you have two by two by two, that's eight cells. And, and that, and that just multiplies like crazy as you get more and more product lines, more flavor variations. So picking your battles feels very, very important. And so for, uh, for Lucy, we, we went, uh, [44:19] Um, [44:19] We went pretty aggressive on the product side when we could from a regulatory perspective. So there's a very narrow amount of time where we could really do a lot of product innovation and a lot of product development. So we tried to get the product mix ready really early. And then we chose to really expand into multiple channels. And now our channel analytics is insane because it's like Shopify, Amazon, other third-party e-commerce sites,

[44:49] direct to store deliveries and chains and retail partners. Like there's all these different structures that you can use. So it's really, really hard to track all that, but thankfully we're only really doing this in America. [45:00] And so we don't have to split that off and look at, okay, all of those metrics for the business. Also, let's now do Canada. We sell a little bit in Canada. We've experimented with the UK. But most of the time, if we're going international, it's like just with a partner. [45:15] But if you try and do omni-channel, omni-product, omni, you know, going global, like you can really hamstring like your FP&A function and your reporting and you just have to multiply everything out. [45:30] tempting because you're like, oh, well, like Canada is 10% of the U S population. I could get a 10% revenue bump if I just expand into Canada. But there's a ton of fixed costs going into a new market. There's a ton of overhead. And so that eats into your margins. And then there's all this complexity. If you don't have a huge staff that can be really, really expensive and really slow you down. And then also, [45:51] Like it's just usually it's like it's often fine to leave something as like the next phase. Maybe it's like, oh, we'll do that at the next round. Or, you know, if you're if you're in I know the guy who sold Vitacoco, he he launched his product. It was a coconut water company. He launched it just in New York. [46:12] like yoga gyms or something like that yoga studios and anybody got like insane penetration and like everyone loved it and it was the hottest product right there and so then what he did was he went into like

[46:23] New York CrossFit gyms and Austin, Texas yoga gyms. And so all he did was just prove that the product worked in a, [46:33] in different markets in the same cat in the same like narrow channel and then also in the same market in a slightly different channel. And then you could easily extrapolate like, OK, well, if it works in every yoga studio in America, the company's worth this much. And if it also works in the CrossFit gyms, then we have to multiply that out by everything. And so we left so much. [46:54] like easy expansion, but all the metrics looked amazing in like the narrow area. And I think he sold the company to Pepsi for like hundreds of millions of dollars, even though he had like pretty small revenues because it was just so obvious that it was working. But he was just doing the really, really important thing, like really, really well, instead of doing a bunch of things poorly. And then there's a million things that someone can pick into like, oh, well, like, it looks like this will never work because you're, you're, you know, you're, you're already, you're failing in this thing. But it's like, no, no, maybe that's just like, [47:22] priority number seven in this company. So I, that's usually how I think about like, you know, picking your battles. [47:29] Yeah. And by the way, you are a remarkably good storyteller and it sounds like your co-founders are as well with like very pointed articles and headlines and that kind of thing. How do you think about the storytelling of the business and like the marketing component of that in the consumer world? You ride with trends, you kind of like try to drive your own narrative. What is the mechanism there? Yeah.

[47:54] Yeah, it's very tricky for this company in the nicotine space. We did one TechCrunch article earlier, and they were just like, this is the next jewel. Very negative. And so we've mostly just tried to let the product speak for itself and just work with people who are in our demographic and have podcasts and can talk about the product and are just genuinely excited about it. Some of the biggest press we've gotten has just been... [48:20] people who use the product talking about how much they love it. And that's been, uh, been the best. We haven't really done a lot of like business storytelling. I think we should do more. Um, I think it would probably help with like the, like the FDA advocacy and, and, you know, like, like, [48:39] really helping us frame the company is like, hey, look, we're like the one company in the space that's not Big Tobacco. A lot of people don't know anything about Zinn, but started by a Big Tobacco company from day one, sold to an even bigger Big Tobacco company just a couple of years ago. Literally all of the competitors that are directly above us are owned by Big Tobacco. [49:03] It's good that they're moving people to new products. I'm happy for them, but there is [49:09] good story that it's like, yeah, we, we, we want to take a run at these people in a way that, you know, Jewel kind of tried and then kind of back down from at the last minute because the check showed up and it was so big. Um, I think it'd be really, really fun to like build this for a [49:22] And really take a shot at some of the some of the big tobacco companies because they are not well run. They are not hiring the best people, really, really sharp people. They go to work at SpaceX and Meta. They are not going to big tobacco anymore.

[49:36] And so the quality of the companies has really, really degraded. [49:42] But the revenues haven't because it's such an addictive product and cigarettes are so easy to make and put on a truck and it goes to the convenience store and people buy them. But they're weaker than people think. [49:55] Interesting. That is a good story. And it does sound like between the marketing and the actual creation of the company, you guys do. [50:02] You lead with authenticity and just like remaining true to your core product and your core customer, which is great. And like those are the elements you want for a sound and enduring business. [50:15] Yeah, it's interesting. Like we looked at doing some like own media stuff. Like we were thinking about starting a podcast, but we were like, I can't really talk about nicotine for like, you know, an hour. You're just going to interview different golf players? We wound up we wound up like interviewing people that are all in like any psychoactive like entrepreneur. So anyone who's who's doing anything like caffeine or alcohol. And like there are a bunch of interesting stories, you know, like the George Clooney story of, you know, Casamigos or Terra Mana. [50:45] to feed off of, but it wasn't like great and it wasn't really something that we wanted to focus on. So yeah, now, now we just focus on, on, [50:54] like effectively like storytelling to like retailers. So more than like a TechCrunch article, like we were, I saw we were on the cover of some like retail distribution magazine that no one outside the industry has ever seen, but it sold a ton of product because it's like convenience store owners get this in the mail and they're like, oh, this is the one on the cover. I should order this. And like, so that type of storytelling and, and, and, and that storytelling is much more dollars and cents, just like this product outperforms, it makes you more money. Therefore,

[51:24] profitable you should keep this one in stock and like that's a very like it's not a very dramatic story but but but it is the one that we need to be telling right now that's so interesting yeah yeah okay it's like wildly different than like the the the stuff we see on twitter of like you know some some founder like yelling at the sky being like i'm going to change the world it's more just i mean this this you will make 15 more cents per per product if you stock us instead or [51:54] but it sounds like you're, you're selling a very good business. This is a good product, right? But it very much is like a real business, which is like, I don't know. It's, it's, it's, it's fascinating. Like after the market crash, like we were thinking about raising money. We, we, we can that. [52:10] And we right sized the business and, and like we got super profitable and now it's, it's been growing a ton and it's just, it's so much. [52:19] different as a founder, like just actually opening up a P&L and being like, this is what matters instead of like some wishy-washy KPIs. Like we I still do like cohort analysis, but I'm like, oh, [52:31] I don't care about that. I just want cash in the bank. It's very funny. Have you guys bootstrapped a date? Have you received any outside one day? Yeah, we raised a seed round. And, I mean, we also went through YC with this company, which was really cool because, I mean, it was the second time through. But also it was a cool signal to be like, hey, look, YC is taking a bet on something that's quote-unquote controversial.

[52:54] And then we raised a Series A before the pandemic with RRE. And, yeah, it's been great. [53:00] It was enough. Like this is definitely a capital intensive industry to like get set up because you have to do all that, all the regulatory stuff. There are like hard costs to get started. But once you get set up, then it's more of like a working capital problem. Like what's your cash conversion cycle? As long as we can place a bigger order with with our co-packers and manufacturers, get the product made and then send it to the retailers and then get the money from them as fast as possible. [53:30] monthly revenue roughly equals inventory. [53:33] And so if you're doing, you know, 5 million in monthly revenue, [53:37] Like you really only need 5 million in inventory. Maybe, maybe like, you know, some sort of slight cushion on top of that, but it's not huge. It's not, it's not something that just grows and grows and grows. And it's not like there's some massive R and D expense. It's not like, Oh, we're going to be charging people for the product in five years or something. Like the product is what the product is. And we just need to make as much of it as possible. [53:57] not bad. Yeah. It's a widget business. When we hired our first CFO... [54:04] at Soylent. She was like a real like hotshot had been CFO of TiVo, like public company, like, you know, like very, very strong, like operator. And, and she was just, [54:17] trash talking us because she was like, this is the least complicated business in the world. [54:21] You just make this and sell it. Like you let me run this thing. I will have this thing profitable in like two months. Like it's so simple. And of course we were all like, Oh, you've got to try do crazy things. You know, crazy. We were like totally startup brained at the time. Yeah. You're like, how do we overcomplicate this and make ourselves? Exactly. Yeah. Just so many own goals for that business. It was like just terrible, but learned a lot of lessons. I mean, there's a lot worse ways to spend your time as a 22 year old than like

[54:48] building a pretty sizable business and learning a lot of hard lessons. [54:52] Yeah, and an iconic one, that being. Yeah, I still get, like, messages like, oh, I used the product, or, oh, like, I saw this thing. Or we were just in some crazy, like, yeah, like, you know, like, tech trend, like, meme that someone sent me. Like, it's just like, we were in Silicon Valley, like, that show and HBO. Like, there's just a bunch of things where it's like, it has a moment in Silicon Valley. It's still like a call-in card. [55:16] You don't have like a wall of Soylent in your house or like a framed picture. I don't. Since we sold the company, I'm just like, I'm not. It was a good time. I mean, also like the products changed a bunch. I don't even know. [55:32] But it was a good time [55:34] Wow. Okay. So as we close out, I put this in our notes and I don't know if you thought about it, but I want to know, John, what are your hottest takes in tech right now? You're a very online person. You're in the Twitter sphere. Like, you know what's going on and you've seen these trends come and go. Ever since the start of the year, we've had like a couple of narratives flying around. What are your hottest takes? [56:00] I mean, like, Tri Stevens, a partner of Founders Fund and co-founder of VanderRoll, just posted this good essay in Pirate Wires about how, like, by the time that there's a market trend that you can, like, build a VC fund around, like, it might be too late because the power lock company has been established. And I really liked that. I thought that was very thoughtful. And I liked that.

[56:23] I liked that direction, but that's not really my hot take. I mean, I'm trying to think of like more, more timeless hot takes, but I mean, I think the, I think the current one is just like, [56:35] the hot take industrial complex on [56:39] On... [56:40] X or Twitter right now is like, you really got to turn that thing off. Like people were freaking out about this Apple ad and like, and like, [56:49] I don't know if you ask someone on the street, like, I don't even know if they know that Apple launched new iPads. Like, I don't, I don't know if this is like a real thing. Like it might just be a culture war that's happening on your phone. And like, maybe you should log off and just go play an actual instrument if you're like upset about like some ad. I mean, it is fun to like armchair quarterback, like Apple's PR, like they could have handled it better. I don't know, whatever. But [57:13] Uh, yeah. I mean, I think like, [57:16] The logging off is undervalued right now, for sure. Honestly, it could be a negative signal if you know the cultural significance of this ad and why people are fighting about it. Yeah. Why are people fighting about it? [57:32] I don't know. I mean, I it does seem like it's it's struck a chord. You know, it's like it's compressing down all these like big things into this iPad. And it's like destroying all of our cultural significant things. And it's like it is accurate. It's like what Apple is actually doing. It's what technology does. It's like this is accelerationism. But at the same time, it's just like, you know, yeah.

[57:55] Like the stock didn't move, you know, it's like it's not it is isn't like a real thing. Like, I don't think it'll affect sales. Like, I think it's just like, I don't know. [58:05] People in tech just want something to talk about. [58:07] And so they'll just pick the, whatever the thing of the day is. And like, [58:12] Right now the algorithm seems to really, really, really reinforce, like, there's a video and anyone can quote tweet it. And then so you see just like 20 people quote tweeting it, and there's a little bit of like a... [58:24] Like, oh, you got to get your... [58:26] quote tweet on that video because if you come up with something pithy, it's going to go viral and you'll get a bunch of internet points. But the actual discourse around these things is just so, [58:36] so surface level and so like meaningless. Like, like I, there's probably a version of discussing that Apple ad that I would want to engage with. Like, I want to know, like, [58:47] what does that hydraulic press normally crush? Like how many, how many takes do they have to do? Oh my gosh. Do you ever watch those videos on Instagram? I get them in my Instagram feed and it's amazing. They just put different objects in them. So I'm sure that they were playing off of that, but like, uh, there's this one amazing creator who does like side by side videos with the hydraulic press and like different objects. And if it doesn't crush things perfectly, she's like, Nope, Nope. Not a good one. [59:17] Yeah, definitely leaning into the Mr. Beastification of content. Yeah. For sure. Just like, oh, what can we do that's really over the top?

[59:27] But, yeah, I don't know. It was just like... [59:31] meaningless. Filling the void. If you're in tech and the founder. Just truly, truly meaningless. And then there are crazy things happening. It makes me want to do more stuff on Twitter because no one's talking about this menthol ban on Twitter. This is going to kill lots and lots of people who smoke menthol. It's very, very bad. And for some reason, that's just not a thing that we talk about and instead we're talking about some stupid ad. [59:58] Okay, so we're going to talk about it. So that will help. Yes, yes. It starts here. It starts here. But more importantly, I need to make like a viral video where I like crush like menthol cigarettes. And then I can go viral. I need to really like clickbait it. This is like, yeah, content, the algorithms, it just like it kind of poisons you after a while. It gets very, very disheartening. You're probably not there with the podcast. You're probably still in like the honeymoon period. But you'll get there. [1:00:28] from the algorithms and stuff. At one point, I was definitely juicing them because I was in the growth period. And I was like, okay, well, what's trending? How can I make something a little bit spicy on this? But now I'm just going to make good content with people I admire. The founders fund EIR calls out a venture community. Yeah. You'll get there. [1:00:49] Terrible. Yeah, this is going to be a really twisted headline. Who knows? It's fun. I mean, podcasts are great because it's just a conversation. Like, we'd have this anyway. Yeah. So it's great. But when you're trying to, like, distill and compress the information, compress down, and, like, what are the four words that can be the most incendiary?

[1:01:08] It's just, like, exhausting. It's just exhausting. Yeah. And then you have headliners protesting things, but we don't need to go into that. Yeah, lots of protests. Yeah, the culture war bleed-over is, like – [1:01:20] popular, but I don't know, seems like kind of insignificant. I'm trying to think of other like tech hot takes. Oh, I mean, I have a hot take about that Rabbit R1. I really think that would be good for kids. I really like that. I want to get one for my son. I think it's all about like the frame of mind that you come into it with. People came in thinking like, this is going to replace my phone. I saw people trying to order DoorDash with it or play Spotify with it. It's like, I want to get one of those. It's bright orange. My son will love it. And I'll say, [1:01:50] Rabbit R1. [1:01:51] All you can do with it is ask it facts about rabbits. [1:01:55] And he will love that. And he will just talk to this thing and learn prompt engineering, essentially, and ask it, oh, like, how big are rabbits? And it'll tell him. And who cares if it's wrong? It'll be fine. By the way, kids don't care about latency. Yeah. No, they don't care about latency. They're fine. And so I think that's actually, like, an amazing thing. And I want more specific, like, even more niche AI gadgets. [1:02:25] I mean, there's one guy who's making like a million dollars a month with like a Riz app that like helps you talk to girls. So you copy your Tinder text and put it in there. Is that person Nikita Beer? Oh, yeah, yeah. I'm sure he knows. But there are a few of these. But they're all like really young people. One of them called me and was like, should I raise money? And I was like, sounds like you can just make a ton of money with this. Like just monetize this thing. And he was like, oh, he texted me back like a couple weeks later. He was like, I turned on monetization. I'm making $100,000 a month. Like this is incredible.

[1:02:55] you will go on to start a great company one day probably. Because if you're doing this at 18, like, you know, you've learned so much and you can accumulate a bunch of money and, like, set yourself up to take more risks and go after the crazy thing. But I think there's a real weird, like, the whole, like, chat GPT rapper meme is like a total psyop by VCs who have scaled up their funds too much to, like, ruin fun for young entrepreneurs. [1:03:25] build some chat GPT wrapper and make a hundred thousand dollars a month. Who cares if he's going to get wiped by GPT six and like put out a business, like in that time, he's going to make a million dollars, learn a ton of things about building products, dealing with consumers, like doing all these things. Like the skills are going to be super valuable. And somehow we've like, psyopped our psyopped ourselves into thinking that that's low status. And like, maybe it is, but it doesn't matter. We shouldn't like, we shouldn't like dissuade that type of entrepreneurship. [1:03:55] like totally valid. Like it just means like, yeah, if you're going to do that and you're going to build a business that's like fragile and doesn't have a strong moat, like, yeah, you probably shouldn't go out and raise a ton of VC, but you can still build a great business and have a great life and do cool things and make money. And there's just like, there's, there's like this whole other path that, that VCs are like completely like, you know, D status because like the funds are too big. And like, unless I can put a billion dollars in it, [1:04:20] It's bad. [1:04:21] Yeah. Well, it's very easy to reduce things down to a pulp and say, oh, like that's been overlooked and that's like overdone. But then there's always people within those cohorts that know how to turn on profitability and like,

[1:04:35] make really efficient businesses and do very, very well. So it's like the longest in the end survives or something. Yeah. But back to your point on the rabbit, because I think that's great. I think you found them product market fit because that's like the perfect product for kids. It's so amazing. It's like a new age Tamagotchi, and that was exactly what they were like compared to in the beginning. So why don't you just sell this to kids? And at the price point, you can sell a ton of them. Yeah. [1:05:05] It's not a moment of Christmas. I was really disappointed that last Christmas there were no, I wasn't getting any ads for like AI products that I could buy because I, and I heard people talk about this and then they stopped going after it because they were like, oh, like opening, I was going to kill me or whatever. But, but I wanted like, like, like a custom storybook or something like that. Like, you know, oh, I, I described, I tell you a little bit about my son and you know, [1:05:35] and there's some dolly images. And all of a sudden it's like, I have a story about my son with these specific characteristics that he will really vibe with. And yeah, I'd pay like $50 for that like custom printed book. And what I also know that like every grandparent would love to buy that. And yeah, that's probably not a power law company. That's probably not a billion dollar business. But like, I was disappointed because there wasn't even somebody trying to build like a $10 million business. I didn't even see I didn't see any of that. Maybe it was like a

[1:06:05] iOS, like app tracking transparency, like Facebook doesn't work anymore. So like maybe they just couldn't get the economics of the model to work. But like I haven't seen that many things. [1:06:17] like even like moderate success stories, like lifestyle business success stories in AI. And that seems like a really, really low hanging fruit. [1:06:25] And then we've also seen like tons and tons of like really, really well-funded, overfunded companies that are like going really big. And then they're actually getting wiped out. And it's like we're kind of missing this. It's like we have some power law companies and Fang is going to do great here. But like, let's have some fun with this and like get some cool consumer products. [1:06:43] I think we will. I think we will. They'll just come out every so now and like just trickle in because people are going to be like, you know, whatever. I'm going to build the company anyways. And like I know how to build a good business. So here are some elements of that. And it makes it easier. It makes it more efficient. It's more fun. And so I think it's too easy to get VC pilled and be like, oh, well, like if I change my story a little bit, I could raise a bunch of money. [1:07:11] Well, [1:07:13] Hopefully more people just go out and do the thing because we need more things. Yeah, we need more fun stuff. [1:07:22] Yeah. Well, John, it was a pleasure having you on. This was like such a fun conversation and we've really gone through the round of everything we could possibly talk about. So I appreciate it. Thank you so much for coming on. Yeah, this is great. I'm looking forward to it.

[1:07:46] There's no shortage of podcasts and deep dives into the secrets of VC. But the truth is that the world's best venture firms and GPs at their helm still remain an enigma. VC is as much of an art as it is a science. [1:07:57] Other shows focus on the now adventure, or even the last 10 years. But what separates the most enduring and generation-defining firms is the subject of a podcast called Turpentine VC. [1:08:06] from the Turpentine Podcast Network. On this season of the show, you'll hear from Ben Horowitz, Alfred Lin, Mahmoud Hamid, and more. Subscribe to Turpentine BC for the rare and revealing conversations that can only be had investor to investor. [1:08:19] you