When does a creator become a company? Who says that media companies — or venture firms — have to be organizations? How high is the ceiling on one person + the internet? Acquired has the answers and they are... Not Boring. 🙂
Big news!! All back catalog LP Show episodes are now free and available to anyone!! You can follow our new public LP Show feed here in the podcast player of your choice. It's already chock-full of 60+ great episodes like our VC Fundamentals series, interviews with founders of top early-stage startups, and master classes on pricing, marketplaces, SaaS investing and many more topics. Happy listening and happy holidays to everyone!!
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
We finally did it. After five years and over 100 episodes, we decided to formalize the answer to Acquired’s most frequently asked question: “what are the best acquisitions of all time?” Here it is: The Acquired Top Ten. You can listen to the full episode (above, which includes honorable mentions), or read our quick blog post below.
Note: we ranked the list by our estimate of absolute dollar return to the acquirer. We could have used ROI multiple or annualized return, but we decided the ultimate yardstick of success should be the absolute dollar amount added to the parent company’s enterprise value. Afterall, you can’t eat IRR! For more on our methodology, please see the notes at the end of this post. And for all our trademark Acquired editorial and discussion tune in to the full episode above!
Purchase Price: $4.2 billion, 2009
Estimated Current Contribution to Market Cap: $20.5 billion
Absolute Dollar Return: $16.3 billion
Back in 2009, Marvel Studios was recently formed, most of its movie rights were leased out, and the prevailing wisdom was that Marvel was just some old comic book IP company that only nerds cared about. Since then, Marvel Cinematic Universe films have grossed $22.5b in total box office receipts (including the single biggest movie of all-time), for an average of $2.2b annually. Disney earns about two dollars in parks and merchandise revenue for every one dollar earned from films (discussed on our Disney, Plus episode). Therefore we estimate Marvel generates about $6.75b in annual revenue for Disney, or nearly 10% of all the company’s revenue. Not bad for a set of nerdy comic book franchises…
Total Purchase Price: $70 million (estimated), 2004
Estimated Current Contribution to Market Cap: $16.9 billion
Absolute Dollar Return: $16.8 billion
Morgan Stanley estimated that Google Maps generated $2.95b in revenue in 2019. Although that’s small compared to Google’s overall revenue of $160b+, it still accounts for over $16b in market cap by our calculations. Ironically the majority of Maps’ usage (and presumably revenue) comes from mobile, which grew out of by far the smallest of the 3 acquisitions, ZipDash. Tiny yet mighty!
Total Purchase Price: $188 million (by ABC), 1984
Estimated Current Contribution to Market Cap: $31.2 billion
Absolute Dollar Return: $31.0 billion
ABC’s 1984 acquisition of ESPN is heavyweight champion and still undisputed G.O.A.T. of media acquisitions.With an estimated $10.3B in 2018 revenue, ESPN’s value has compounded annually within ABC/Disney at >15% for an astounding THIRTY-FIVE YEARS. Single-handedly responsible for one of the greatest business model innovations in history with the advent of cable carriage fees, ESPN proves Albert Einstein’s famous statement that “Compound interest is the eighth wonder of the world.”
Total Purchase Price: $1.5 billion, 2002
Value Realized at Spinoff: $47.1 billion
Absolute Dollar Return: $45.6 billion
Who would have thought facilitating payments for Beanie Baby trades could be so lucrative? The only acquisition on our list whose value we can precisely measure, eBay spun off PayPal into a stand-alone public company in July 2015. Its value at the time? A cool 31x what eBay paid in 2002.
Total Purchase Price: $135 million, 2005
Estimated Current Contribution to Market Cap: $49.9 billion
Absolute Dollar Return: $49.8 billion
Remember the Priceline Negotiator? Boy did he get himself a screaming deal on this one. This purchase might have ranked even higher if Booking Holdings’ stock (Priceline even renamed the whole company after this acquisition!) weren’t down ~20% due to COVID-19 fears when we did the analysis. We also took a conservative approach, using only the (massive) $10.8b in annual revenue from the company’s “Agency Revenues” segment as Booking.com’s contribution — there is likely more revenue in other segments that’s also attributable to Booking.com, though we can’t be sure how much.
Total Purchase Price: $429 million, 1997
Estimated Current Contribution to Market Cap: $63.0 billion
Absolute Dollar Return: $62.6 billion
How do you put a value on Steve Jobs? Turns out we didn’t have to! NeXTSTEP, NeXT’s operating system, underpins all of Apple’s modern operating systems today: MacOS, iOS, WatchOS, and beyond. Literally every dollar of Apple’s $260b in annual revenue comes from NeXT roots, and from Steve wiping the product slate clean upon his return. With the acquisition being necessary but not sufficient to create Apple’s $1.4 trillion market cap today, we conservatively attributed 5% of Apple to this purchase.
Total Purchase Price: $50 million, 2005
Estimated Current Contribution to Market Cap: $72 billion
Absolute Dollar Return: $72 billion
Speaking of operating system acquisitions, NeXT was great, but on a pure value basis Android beats it. We took Google Play Store revenues (where Google’s 30% cut is worth about $7.7b) and added the dollar amount we estimate Google saves in Traffic Acquisition Costs by owning default search on Android ($4.8b), to reach an estimated annual revenue contribution to Google of $12.5b from the diminutive robot OS. Android also takes the award for largest ROI multiple: >1400x. Yep, you can’t eat IRR, but that’s a figure VCs only dream of.
Total Purchase Price: $1.65 billion, 2006
Estimated Current Contribution to Market Cap: $86.2 billion
Absolute Dollar Return: $84.5 billion
We admit it, we screwed up on our first episode covering YouTube: there’s no way this deal was a “C”. With Google recently reporting YouTube revenues for the first time ($15b — almost 10% of Google’s revenue!), it’s clear this acquisition was a juggernaut. It’s past-time for an Acquired revisit.
That said, while YouTube as the world’s second-highest-traffic search engine (second-only to their parent company!) grosses $15b, much of that revenue (over 50%?) gets paid out to creators, and YouTube’s hosting and bandwidth costs are significant. But we’ll leave the debate over the division’s profitability to the podcast.
Total Purchase Price: $3.1 billion, 2007
Estimated Current Contribution to Market Cap: $126.4 billion
Absolute Dollar Return: $123.3 billion
A dark horse rides into second place! The only acquisition on this list not-yet covered on Acquired (to be remedied very soon), this deal was far, far more important than most people realize. Effectively extending Google’s advertising reach from just its own properties to the entire internet, DoubleClick and its associated products generated over $20b in revenue within Google last year. Given what we now know about the nature of competition in internet advertising services, it’s unlikely governments and antitrust authorities would allow another deal like this again, much like #1 on our list...
Purchase Price: $1 billion, 2012
Estimated Current Contribution to Market Cap: $153 billion
Absolute Dollar Return: $152 billion
When it comes to G.O.A.T. status, if ESPN is M&A’s Lebron, Insta is its MJ. No offense to ESPN/Lebron, but we’ll probably never see another acquisition that’s so unquestionably dominant across every dimension of the M&A game as Facebook’s 2012 purchase of Instagram. Reported by Bloomberg to be doing $20B of revenue annually now within Facebook (up from ~$0 just eight years ago), Instagram takes the Acquired crown by a mile. And unlike YouTube, Facebook keeps nearly all of that $20b for itself! At risk of stretching the MJ analogy too far, given the circumstances at the time of the deal — Facebook’s “missing” of mobile and existential questions surrounding its ill-fated IPO — buying Instagram was Facebook’s equivalent of Jordan’s Game 6. Whether this deal was ultimately good or bad for the world at-large is another question, but there’s no doubt Instagram goes down in history as the greatest acquisition of all-time.
Methodology and Notes:
Oops! Something went wrong while submitting the form
Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)
David: Okay, we got to get you over 100,000. This episode is a failure if we don't get you over 100,000 subscribers
Packy: All right. Let me timestamp where we are right now just so we know what we need to do. So we are at 88,460.
David: We can so do that.
Ben: We'll juice this. Welcome to season nine, episode six of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.
David: I'm David Rosenthal. I am an angel investor based in San Francisco. I am back, sort of, from paternity leave.
Ben: An abbreviated partial ongoing paternity leave.
David: Yeah, we're making it work.
Ben: We are your hosts. Today we have a first for Acquired. We are covering a business that is only one person, Not Boring, the newsletter gone media and investment empire run by Packy McCormick. I did some research last night. Not Boring is the number one substack newsletter on business. If Packy decided to switch to the technology category, from everything I can tell, he would be number one there too.
In fact, even in the crypto category, there are only two newsletters with more reach and they've existed much longer. Not Boring is only a year and a half old. The Not Boring story isn't just impressive because of its explosive growth. Packy is reinventing the media business model, and simultaneously, the startup investing business model.
He's done all this with a very distinct personal flair writing in a unique, whimsical voice that makes us all just want to have fun and play the great online game. We're very lucky that he is a part of our liquid super team here at Acquired. So he could join us today live to help tell the story. Welcome, Packy.
Packy: That was amazing. Thank you, Ben and David. Great to be here.
Ben: I was doing my best Packy impression, trying to write whimsically in the unique style you've cultivated.
Packy: It was beautiful.
David: It's some good buzzword bingo in there with Not Boring piece titles over the—I want to say years, but it feels like years. It feels like you've always been here.
Ben: I had two more. I cut them. It turned into just like a long series of Not Boring titles. Anyway, Packy, we do want to let you know, this is not going to be all softballs. We're going to actually do the full Acquired deep dive here if that's okay with you.
Packy: Acquired is, I think particularly for the first year when I wrote about SoftBank, when I wrote about Tencent, when I wrote about all these companies, the work that you did to go deep on those companies was hugely instrumental in being able to write those pieces. I would expect nothing less than the full Acquired treatment.
Ben: All right, let's do this. Listeners, we have a huge announcement, a gigantic, exciting piece of news to share with all of you today. For the 98% of you out there who have not joined the Acquired LP community, we are opening up every single episode of the LP Show back catalog to you today. We have created a new public podcast feed in Apple, Spotify, or wherever you get your podcasts, called the Acquired LP Show—very creative.
That is right. That includes our series on VC fundamentals and our startup deep dives on pricing, marketplaces, SaaS investing with top investors and founders. In fact, we are about to drop an episode right there in that feed where I interview the 15-year President of Blue Origin Rob Meyerson on how he sees the space landscape today.
Now, of course, members of the paid LP community still get great benefits like exclusive access to new episodes for two weeks before we drop it in the public feed, the ability to join LP calls, Zoom, book club, all this stuff. But if you aren't an LP and you really want to start getting these episodes, you can click the link in the show notes or go search Acquired LP Show wherever you get your podcasts and subscribe.
David: Thank you to all of our LPs for being on this journey with us. We are very excited now to share all this content more broadly. There's some good stuff. Ben, you interviewed Joseph Gordon-Levitt the other day on the LP show.
Ben: Super fun, yeah.
David: So fun.
Packy: You guys kind of look alike.
Ben: We've gotten that a few times. Since Joe is a professional Hollywood actor, I take that as a great unbelievable compliment, so thank you, Packy. David, take us into Pilot.
David: Yeah. All right. Before we dive in with Packy, I'd like to welcome our presenting sponsor for all of season nine, pilot.com. Pilot is the backbone of the modern financial stack for startups. They are backed themselves, as you know, by all-star investors like Sequoia, Index, Bezos Expeditions, and Stripe. They are truly the gold standard in startup bookkeeping, including maybe solo corporations that we'll have to dive into here on this episode.
Now over to our conversation with Pilot co-founders, Waseem Daher and Jessica McKellar. So for this episode, let's talk about how Pilot actually works. You have both software and a large team of human accountants and finance professionals. What does the software look like and how do the humans in the software interact together to help your customers?
Jessica: Our interface to you is that you have this really delightful and useful way of understanding your finances. You have a person who understands you and your business and engages with you on questions that we have for you, questions that you have for us, insights about your business. Under the hood, we're using software to ensure an exceptionally correct experience and consistent experience. Then we're also able to use software to surface key observations, insights, concerns about your finances so that you can engage on those in a really accessible way and also with a person if you want to.
David: I love that answer, Jessica. One thing I've heard Waseem say in the past about Pilot is that it's like an Iron Man suit for the finance professionals that you have working at Pilot. I just love that, Pilot is the Tony Stark of accountants for your customers. Thanks, Waseem and Jessica. You can learn more about Pilot and whether they can help your company—solo or otherwise—eliminate the pain of tax prep and bookkeeping by going to pilot.com/acquired.
All Acquired listeners, if you use that link, you'll get 20% off your first six months of service. Thank you as always for being with us this season. Go check them out.
Ben: Thank you, David. Before we dive into history and facts, we should say, this show is not investment advice, though David and I are both investors in multiple Not Noring entities. So not only are we conflicted, we want to be extremely open about that. We definitely have investments that we are discussing today. This show is for informational and entertainment purposes only, and I promise you, it will be both of those.
David: All right. We're going to do the whole Acquired treatment on you Packy. But the first place I went where I was like, all right, I will start researching, build the script here for the Not Boring story, I went to your LinkedIn. I know that's kind of a boomer thing to do, but I did. You are listed there as the "Founder of Not Boring". How on earth did you decide on what to put there?
Packy: It's a really tough question for me. Still, if I'm going on a panel, joining a podcast, or something, I get asked to send over a short bio.
Ben: Or CNBC.
Packy: If I'm on CNBC, I get asked for a short bio. Sometimes it's writer, sometimes it's author, sometimes it's founder. I don't really know what I do or how to describe what I do. Then if you mix that in with a Not Boring Cap, the whole thing gets very confusing. Founder feels like a catch-all. I did definitely start this thing. So anything else beyond that is subject to change.
David: I love it. You are definitely the founder of the Not Boring empire. All right, let's tell the story. I'm assuming you were born in either 1986 or 1987.
Packy: January 26th, the same birthday as Wayne Gretzky, Wayne Gretzky—a lot of the great athletes.
David: Okay. So January 26th, 1987 in Bryn Mawr, Pennsylvania, just outside Philadelphia, there's the birth of a baby boy named Patrick, also known as Packy McCormick. Urban Dictionary tells me that Packy is a very common diminutive form of the name Patrick that is especially popular amongst residents of County Cork, Ireland. Is that where your family is originally from?
Packy: I believe so. My dad has done kind of the ancestry.com deep dives on his side of the family. I think we're probably the fourth generation over here. So we think it's County Cork, but not 100%. positive.
David: Nice. All in the Philadelphia area?
Packy: All in kind of the Lehigh Valley. Allentown is where my dad grew up. We have a bunch of family in Scranton, so Joe Biden country.
David: Yeah. Billy Joel grew up in Allentown. What were you like as a kid? Any little glimmers of the future Not Boring empire that were popping up when you were growing up?
Packy: Yeah. I used to make these little books or newspapers on Post-it notes. My dad was a consultant at Arthur Andersen and luckily got out before Enron, thank God. But one of his early clients was the Miami Herald. So when I was six years old, I would make these little post-it note versions of the Miami Herald. I also have this one and it was called Golden Memories Of a Young Boy's Life.
So I had all these au pairs and they would take me in the women's locker room at the pool or something like that. I was a five-year-old kid, and I'd come home and draw stick figures of boobs in this little book called Golden Memories Of a Young Boy's Life. So that was probably the earliest version of Not Boring.
Ben: You could have taken a very different career direction after that.
Packy: I could have. I wasn't a particularly good artist.
Ben: Which actually has carried through perfectly.
David: Perfectly to today.
Packy: I'm still not a good artist. I think it's part of the charm. Even in high school or middle school, we had an eighth-grade teacher, Mr. [...], who would make you write a composition or an essay if you got in trouble. So for me, I would actually sometimes try to get in trouble.
David: Because for most kids, that's punishment. For me, if I have to write as much as you write, I couldn't do it. There's no way.
Packy: I did cross country and track in high school too. That was kind of a similar vibe where for most people that's punishment making them run many miles, and I love that. But Mr. [...], you'd have to write a composition. I would love to do it because I would try to write a composition that was so funny that Mr. [...] would let me read it in front of the class.
In high school, I would try to write essays that were a combination of very well-done, well-researched, and all that, but funny. Even my most serious teachers would have to laugh and give me a good grade, despite the fact that I turned them into a joke. So I think, always, a combination of the class clown with the backing of serious research.
David: It's pretty rare to find those two combinations together in one person—somebody who is both the class clown and has a work ethic.
Ben: And I think that comes through in Not Boring. All of us who read every or close to every one of your posts, I think that's the charm. That is the style. You're diligent, you've written many times about how the process works and how you go into your basement and spend the time, do the research, start writing, tear it down, and write something. There's real diligence there. For sure, you are the class clown of serious business newsletter writers.
Packy: If there are people who've read it every or close to every Not Boring thank you, I think it takes a work ethic to read all Not Borings. It's been probably close to a million words in a year and a half at this point. To get people to read that much, it has to be both informative and entertaining.
Ben: I think I'm using your phrase here when I say that the reason it works is because you don't put on your serious business pants.
Packy: I don't even own serious business pants.
David: So where does the work ethic come from?
Packy: That is certainly from both of my parents. My dad, as I said, was a consultant at Arthur Andersen. He literally would fly to Germany for a day and come home or fly down to Miami to go to Miami Herald, and then make it home by 4:00 PM to take us to the fair and then fly back out the next morning. So he was working all of the time.
My mom was getting her Ph.D., working, and raising two kids. They're both entrepreneurial. They both ended up starting their own consulting practices, both incredible work ethic. Then there was just the way that they parented. My absolute favorite story growing up was—when I was I think in fifth grade, I had told my parents everything was going really, really well. I was probably going to get straight As, maybe like a B+, but probably not.
Then I got my report card. I remember my dad was coming home from a business trip. He was a fancy consultant so he had a cell phone way back in the day in his car. We got our report card, and my mom made me call my dad and tell him the grades that I got. So it was like, Science, A, English, A, French, C+, blah, blah, blah, A. He's like, all right, Packy, I'm going to be home in an hour.
By the time that I get home, I want all of your certificates, all of your trophies. Anything that would suggest that you might be a winner, I want them in a box in the attic. We're calling that box the loser box because you're a loser.
Packy: My mom said that my dad went to the [...] school of parenting for this. I actually think it was awesome because what he was mad about wasn't that I got a C+, that wasn't the big deal. It was that I lied all semester and said that I was doing really well in the class. So I thought that was the best parenting lesson that I could have ever received because it was a really good lesson both in honesty and in work ethic.
After that, I actually started trying in French and I ended up taking it all the way through college and got pretty good at it. I can't really speak of it anymore. But it was a really good lesson that if you're not going to do well, at least be honest about the fact that you're not going to do well. So now I think, when I get things wrong in Not Boring, I'd blare it from the rooftops and probably come back to that moment.
Ben: Yeah, you feel an intense need to own the mistake. There's a tweet that you had around the Crypto Winter where you said, them's the rules, you got to play fair. I think you were owning the fact that a lot of things that you thought were going to go up did not go up.
Packy: Our ideas in our podcast, I think, are a testament to the fact that I get things wrong all the time.
David: Oh, we all do. So okay, so you go to Duke. You were on the debate team at Duke, right?
Packy: I was.
David: We were able to unearth some pretty awesome photos from that time, and maybe we'll link too in the show notes.
Packy: I was incredibly cool. I was in the debate club. I was in an acapella group. There are a couple of big all-male acapella groups, I was in the cool one. On the debate team, me and my partner who was my best friend from high school also, we were like the cool team. So I was like, in all the nerdy things and tried to be cooler than I was probably in all of those things, that was certainly my kind of college vibe was just getting involved in a lot of different things.
David: Okay. You graduated in 2009, which, I remember I graduated in 07, I sailed through, I was a French literature major, I got the investment banking job. I'm like, oh, this is great, and then, of course, I got my butt kicked when I actually got to Wall Street. But you got an investment banking job in 2009. Nobody got investment banking jobs in 2009. This was the middle of the recession.
Ben: Also, just to drive David's point home here, even French lit majors could get investment banking jobs in 2007. By the time the door slammed in ‘09, it took something special, Packy, for you to get there.
Packy: Yeah. I was, to be fully fair, kind of an investment banking light in public finance. But it started the summer before in 2008. When I got my internship, things were actually still pretty good. So I got an internship at Bank of America on the energy trading desk. That was a wild experience in itself because Bank of America's energy trading desk was all ex-Enron people. So they were not psyched to not be at Enron anymore and not psyched to be on a desk that didn't take physical delivery.
There are two types of energy trading desks. The bigger banks, Morgan Stanley, all of that, which will take delivery if they need to have barrels of oil or whatever else. Those are the serious desks, and then there are more of just pure financial desks like we had at Bank of America.
I worked my butt off that summer. There were the intern programs, there were strengths, and there were speeches. There were all these things that you do when you're an intern on Wall Street. My desk wouldn't let me go to any of those things. I had to sit there, and you don't do anything when you're a trading intern. You literally sit on these people's shoulders. You're not allowed to trade, you're not licensed to trade.
David: Wait, you're not licensed? You don't have Series 7, Series 63? Is that the other one you need?
Packy: Exactly right. So I asked them dumb questions throughout the day while they were trying to focus on these multimillion-dollar trades. It was like the worst experience. They didn't like me being on the desk, but they also didn't want me to have any fun. So they wouldn't let me go to any of the other things.
The summer before my internship, they didn't like the intern. So they took him out drinking until like 4:00 AM, and then when he came in a little bit late the next morning, they marched him to the HR team's office and got him fired. So that was the environment that I was coming into.
David: This is like Liar's Poker.
Packy: Totally, but there's definitely the work ethic there where I just didn't let it bother me. I got an offer to come back, Bank of America "merged" with Merrill Lynch. We bought them, but there were higher quality interns, quite frankly, at Merrill Lynch. When we merged, I guess the other problem was, we all got put at the Bank of America side in a rotational program. So you got your offer from a specific desk, but you came back and had to rotate around different desks, whereas Merrill got hired into specific desks.
All the Merrill kids, for both of those reasons, they're probably smarter than I was and they already had their desk placement locked in, they got their desk. We rotated around and about half the people in the trading program and ended up getting spit into public finance, which for those listening at home is municipal bonds. I worked on the state of New Jersey's bonds that were backed by their tax obligations or the Pennsylvania Turnpike when they wanted to build new roads and issue debt to do that.
David: Wow. That sounds kind of boring.
Packy: It was a little bit boring. Hopefully, that's the first of hundreds of funds throughout this podcast. But yeah, it was boring, but actually, I liked it. I was number one in my class each of the years that I was there. I realized very early on because I had friends who were—I remember a New York Times article came out about the fact that really top-quality investment bank analysts were getting their PE offers way, way earlier. I think they quoted two of my friends in that article.
I had friends who just loved this stuff and I just was not one of those people. So I knew that I wanted to get out of finance at some point. I was really just playing to be at the top of my class and go to business school.
David: So you applied to business school and [...] of your LinkedIn profile will note that you do not have an MBA. Walk us through that and what happened?
Packy: One other thing to add was while I was in finance, I started a company called ThrowGo, which was a terrible name. I bought the site for something else and then I applied it to building this company that essentially took people from New York down to the Jersey Shore and to The Hamptons every weekend. So the party bus ride was so much fun. It paid for my summers.
I took it way too seriously and thought that this was going to be my ticket to a great business school. I applied to Stanford, got summarily rejected from GSB, ended up getting into Chicago, had my deposit down. I was going to go and then one I visited, and it was snowing and it was like April or May.
I also found a company called Breather on AngelList. I just started a conversation with the founder of Breather where there was no guarantee of even an interview or anything. But I asked Chicago if I could defer, they told me, no, I couldn't defer, your deposit is already in. If it were Harvard or Stanford, they would let me defer, but they know that people might try to say they want to defer so they can go to Harvard or Stanford.
They wouldn't let me defer. So I just said, all right, cool, not going to business school. I had already quit my job. I really spent the next four months, I think, in this weird kind of winding interview process just with Breather. We traded pretty actively and made some of the dumbest trades in the history of the world.
I think I bought Tesla during that summer at $29 and sold it. I bought Facebook at $19, sold that. I plowed a bunch of Apple options into earnings, which it's just not what you're—
David: You're admitting your mistakes here.
Packy: I bought bitcoin at $100, sold it at $150. I really had a fun summer where I was—
Ben: You've got some nice little returns here, nice pops.
Packy: Fifty percent pop, pretty good. So I had this summer where I had no job. I didn't have a future job lined up, but I was interviewing, trading, and making a bunch of dumb decisions that I think would make me a better investor later on.
Ben: I will say, it's hard to buy and hold when you're in that position in life where the cash is useful and a material amount of your net worth.
David: And you don't have a job.
Ben: Acquired wasn't around back then, but you could listen to us have all these people over the years saying how great it is to let compounding do its thing or the Berkshire episodes. Even if you're a deep student of all this on your own and you know this, you kind of can't at that point in your life when you're looking to a) learn, or b) potentially use the cash in a pretty short period of time.
Packy: The Bitcoin sale was a result of going to Oktoberfest with my friends while I was unemployed and they all had jobs and finance still. So they went out to the club and I was like, yeah, of course, I can do that, I just got my bonus. Then I woke up the next morning in the hotel and I was like, you know what, that was stupid. I shouldn't have done that. I should have conserved my cash. Let me sell the stupid Bitcoin so that I just kind of refill the coffers with USD. So that was why I sold all 38 of my bitcoin at $150.
David: Okay, wait. We can't let you gloss over a couple of things here. We got to rewind. Am I hearing you right that you wrote your business school application about starting a "company" to bus drunk people from Manhattan to the Jersey Shore and The Hamptons?
Packy: It wasn't about busing drunk people from New York to the Jersey Shore and The Hamptons, it was about community and bringing people together. People who had never met somebody going to the beach down that they were going to made friends. People got married who met on the party bus. It was about community. No, seriously, that is how I tried to spend my business school essays.
Ben: Wait, wait, wait. To quote a writer named Packy McCormick, the hard part about being a great writer is that you can convince people that a really bad idea is a really great idea, and you just did that to me.
Packy: That is another one of those formative experiences where obviously, it wasn't a startup, it was startup light. It was stupid, it was fun, it paid for my summers, and all of that. When I was applying to Breather though, I had done marketing, I had done operations, I had to deal with a bunch of shitty situations.
That company, in particular, the CEO is kind of an iconoclast. He runs a company now called Practice, Julien, a great guy. He didn't care at all about the finance background other than it proved that I could work hard and maybe I could help with some business stuff. But he really cared that I got my hands dirty and I had to deal with all of the junk in just being kind of a one person running this company. It was definitely a silly experience, but I think it also helped with the next chapter.
David: I'll say there, I have observed two experiences in my life with companies where people have gotten married as a result of meeting in the company's product. One was Facebook back when we were in college and two was Rec Room. Both of those are doing pretty well. I don't know, maybe you just threw in the towel a little bit too early. What was the name of the party bus company?
Packy: ThrowGo. I actually don't think I've actually technically shut down that LLC.
Ben: I have one of those too. Did you use ThrowGo to answer the question, what matters to you most and why?
Packy: I don't know. That was probably about something like a hike that we took through the wilderness in Costa Rica. They're all overwrought and corny. I use that to show look, even while I was working all these crazy hours in investment banking, I still had this entrepreneurial itch. That's why X school is going to help me start a company and blah, blah, blah, blah, blah.
David: So many people write those things. So many of my classmates in business school had come from finance and like, I want to be entrepreneurial, and their definition of what entrepreneurial is, it's funny, actually doing the gritty stuff of dealing with tour bus operators. You got to do that when you're an entrepreneur. So many people that go to business school think, oh, I'm going to get all this glory, start some internet company, and it's like, you got to be willing to shovel your fair share of manure here.
Packy: That's like the Chris Sacca quote about, he won't hire or work with anybody who hasn't had just a shitty job growing up. I washed dishes. I had my fair share of those types of jobs. I think that all helps because, we'll get to Breather, that was my first year’s experience. It was doing that exact same thing.
Ben: Yeah, so let's jump to Breather.
Packy: So that summer, I had thrown away my money in business school, as well, that deposit was gone. Terrible summer from a financial perspective. But the way that I was thinking about it was like, I'm either going to spend the next two years not making a single dollar, paying for business school, and racking up debt doing that. Or I can go somewhere, anywhere really, that will pay me more than negative dollars, learn on the job, and get that experience.
My interview process at Breather was doing a bunch of really random things. I don't think they knew what they're doing from a hiring perspective. I wrote the JD for the job that I ended up getting, which was New York City General Manager.
David: How big was the company at that point?
Packy: There were six people in Montreal. So I was going to be our first US employee. One of my jobs was, Julien said, there's a guy at Uber who does a job similar to the one that you want to do. Go track him down, then get him to interview you, and then he'll tell me what he thinks. So that ended up being Josh Moore, who was the New York City General Manager at Uber. I met him and he remained a friend. That was a lot of fun.
David: I think he works at Levels now.
Packy: Yeah, exactly. He's a Supersapiens competitor, Levels now. That was one. Our other co-founder, Caterina, was a designer by background. She was like, go to a Marriott business lobby, go to the Ace Hotel lobby, and then make a presentation on why they're different. They're obviously very different, but I'm not a designer, as everybody who reads Not Boring knows.
I had this whole thing about the vibe of both of the spaces. It wasn't particularly good, but the fact that I did it is probably what they wanted to see. I learned later that it came down to me and somebody who ended up working for the company later who's way more talented and smarter than I am. Julien and Caterina went point by point on both of us in the lobby, actually, of Ace Hotel the night before they made the decision. I won by one point and got the job, or else I would have had four months down the drain and absolutely nothing. So I ended up getting the job.
What Breather did was it rented out meeting and workspace, in the beginning, these very small meeting rooms for as little as half an hour at a time. My job was twofold. My job was first, to convince landlords to rent spaces to this random Canadian company that wants random people to come in and out of the building for half an hour at a time throughout the day. So that was challenge number one. I literally got on my knees.
In one case, literally, I got on my knees and begged one of the landlords to give us the space. They ended up giving us the space because Julien told me I was going to get fired if I couldn't get three spaces by X date.
David: And you're probably competing against WeWork for a lot of these leases, right?
Packy: Ours were really tiny in the beginning. So ultimately, we ended up competing with WeWork. In the beginning, we were looking for the 150 square foot, really quirky space, somewhere in the building where someone could come take a nap or maybe get a little bit of work done. But the idea was that your phone should be able to unlock all these spaces that are underused throughout the city.
It turns out, one of the challenges of that thesis is in Manhattan. There's really no underused space in the city. So we ended up just having to compete with whichever firm wanted to rent that space. I ended up figuring out how to make that pitch, so that was one side of it.
Once we made it, we had to design, furnish, and all these things with these spaces, and then we had to get people to clean them. So we worked with one cleaning company that ended up getting acquired by a company that got acquired by Google. The day after they got acquired, they're like, by the way, we don't want to do these terrible five-minute jobs that we have to run all over the city for anymore. You're on your own.
So some of that was me going and literally just cleaning Breather spaces. I'll leave dinners with friends and whatever kind of after-hours. The other was because I had met Josh during this process, I called Josh and was like, hey, you have that UberRush thing? Is there any chance that we could get Uber Rush messengers to clean Breather spaces since they're moving around the city anyway? Actually, I was the largest consumer of Uber Rush messengers in the world for a while.
Ben: We never had that outside New York, I don't think.
Packy: It was a New York test. It might have gotten to a couple of other markets, but really kind of a New York test where the idea was if you want to deliver documents from one place in the city to another—
David: Which is super common in New York.
Packy: It was super common.
David: From our banking days, we know you're always couriering documents around.
Packy: Exactly, and I think part of that is probably what became Uber Eats. Ultimately, these people are moving around the city on their bikes. But we had a slider in the Uber app where I would call. Hopefully, there was somebody nearby. I would hit the button, I would drop the pin on the space, hit the button, and then have to text with that person and be like, hey, by the way, this isn't a delivery job, you're cleaning a space.
To be fair, these people opted in. So we had our own viewer. It's all only people who opted in and they made a little bit more by doing that. But I'd be like, all right, so this particular space, you go into the room, there's a set of cleaning supplies under the couch, there are instructions there. If you have any questions, just text me, this is my number.
So seven days a week, 6:00 AM to 11:00 PM pretty much when we closed, I was just on my phone texting messengers who were going to go clean Breather. So talking about startups not being glamorous, there was absolutely nothing glamorous about this. The fun part on the flip side of that was, I had equity in the company. I was our only US employee. I designed the system myself. I chose to work with Uber.
So it's all on me. The fun thing about startups is it's all on you. All the crappy stuff is a product of the way that you designed the system. That was a really fun experience.
Then I hired a team, signed a bunch of leases, got promoted a couple of times, and ultimately ended up running our operations in real estate and design, which doesn't make any sense, but managed a really talented design team. A bunch of stuff that our COO didn't want to do, I did all of that kind of globally for us. Such an incredible experience at Breather, but none of it was particularly easy.
Ben: How big were your team and the company by the time you left?
Packy: In New York, my team grew to about 25 people. We were about half the revenue in the company, which was 10 markets. Then when I got promoted to VP of Experience, which is a fancy title for a bunch of junk jobs, not junk jobs, but not jobs that would normally go together.
Ben: It's a catch-all, yeah.
Packy: It was a catch-all. That sounded way fancier than it was. But that was about a 150-person team including our operations associates who were full-time employees at Breather and cleaned to maintain the spaces, all the way to our team of designers, our customer care team, our real estate team, operations team, and all that.
Ben: All right. I'm assembling sort of the cornucopia or the puzzle pieces that would become Not Boring, eventually. You started pure finance, pure analysis, pure spreadsheet jockey, so disconnected from what actually happens at any of the companies or even in the physical trading of the commodities that you're looking at. Then, of course, you have one of the most operational jobs one could possibly imagine.
Of course, you have the entrepreneurial moment before that of starting your own company. Now you have leadership. So you have that piece of the puzzle too of understanding, it turns out, actually, the hardest thing about any of these companies is the people.
Packy: That was the most amazing thing too. I probably stayed at Breather for two years longer than I should have because I really loved the team of people that I was working with. I'd say the last turning point and the last thing that contributed to Not Boring was we deeply over-expand our supply because we had been given advice by people on the board and others who said, you're pretty much like Uber. The job for Uber is to get as much supply on the map as humanly possible. You should also get as much supply on the map as humanly possible, which we did.
David: The catch was there was actually demand for Uber.
Packy: There was demand for Uber. Uber supply could come and go and Uber didn't have to pay them anything. We signed five-year leases and did construction, and so it's just a very different situation. So we added a space per day in 2016, 2017 for about a year there. Every day, we were launching a new space. So we were deeply oversupplied.
Our gross margins were awful I think, -25%. Then me and Ben Rollert, who now runs a company called Composer which just launched—congrats, Ben—who was kind of our head of data science at the time. He decided to spend a Christmas break just figuring out how we could fix this thing. We had always had this thing where we only did short-term rentals, we only did meetings, whatever. But we just went deep into the content.
We read a bunch of Ben Thompson and we read Good Strategy/Bad Strategy, and we're like, we're going to turn this company around using strategy. So we wrote this detailed memo full of his data science and my crazy ideas on how we can actually turn the company around by adding monthly space and competing more at the margins with companies like WeWork and Knotel. Then we sent it out to the company and we got back. We got the blessing of the exec team. We sent it out to the company.
David: Did it have gifs and Taylor Swift references in it?
Packy: I actually don't think it had Taylor. We took this very seriously.
Ben: You put on your serious business pants for this.
Packy: We put on serious business pants for once. The company was really on the line. It was going to be really hard fundraising or doing anything when we had negative gross margins and too much supply. The craziest thing that happened was one, everybody bought in and got really excited by this vision, even though it was a ton of work. We had to flip spaces.
Part of the thesis was, we have this crazy thing that nobody else has, which is that we can rent spaces out for as little as an hour. We have this data science team that can price space for as little as an hour. So if somebody wants to rent a space for one month and then we want to put it back online for hourly bookings, in three days, we'll flip it back and forth depending on what the market is telling us, which meant that for the [...] team, it was an absolute nightmare. For the design team, having to design between the two types of spaces, absolute nightmare.
But everybody bought in. We turned the thing around, and we went from -25% margins to +25% margins. Things were going really, really well. Ben and I were both like, wow, the strategy actually matters here. Having a plan, getting people to buy into it, and having something that makes sense and fits within the market, all of that actually, it's not just BS. It's a really meaningful thing. So I think that was probably also part of why I ended up writing a newsletter that was about strategy.
Ben: To foreshadow, I think, at one point early on, you described Not Boring as if Bill Simmons and Ben Thompson had a baby. Clearly, this is where the Ben Thompson side comes from.
Packy: A hundred percent.
David: There's a quote from your first newsletter post, which is not called Not Boring. It's about this course that you're taking, this writing course. It says, "The first piece I wrote," for the course "was an introduction to Ben Thompson. If you check it out, I would love your feedback."
Packy: It was.
David: The Spiritual Godfather.
Packy: The Spiritual Godfather. The fun thing about that course was, I took the course because then we brought in a professional management team. The strategy was less valued, my brain was dying, and so I decided to take a writing course. I'd written about Ben Thompson because they're like, you know what, instead of starting from scratch, and I think this actually just showed up in my last piece like, go remix other people who you respect, go remix their ideas, and just get a sense for what it feels like to write about and to write the people that you respect. So that's how this whole thing kicked off by writing about Ben Thompson.
David: So that was David Perell's Write of Passage course, right?
Packy: Exactly right.
David: You also did OnDeck at the same time.
Packy: I did OnDeck at the same time after I left Breather. It was a little bit later that I did OnDeck. But after I finally left Breather, I tried to quit a few times in 2019. I took a sabbatical and I went to Japan. While I was there, I called our general counsel and I was like, get me out of here, please.
Ben: Whoa, you quit from Japan?
Packy: The sabbatical was like the last-ditch effort to get me to stay. It was like, all right, go take a month off and see if there's any way that you'd want to come back. While I was there, I just realized that I did not want to stay there. So I quit from Japan by calling our general counsel.
Ben: Does that ever work? It feels like when people get to disconnect and they're already emotionally disconnected, all it does is make them more sure that they're ready to be done.
Packy: For sure. I think it's also valuable to give the team. I had a 150-person team that I think I got along really well with. So I think the sabbatical is also useful in being like, look, Packy is away in Japan right now, the company hasn't fallen apart, and your life is not miserable. So everything will be fine when he leaves.
Ben: That's a good point. Okay, when you did leave, you didn't start Not Boring as we know it today right away. Am I right that you started two things concurrently with the Not Boring club—this social in-person experiment—but also a different email newsletter?
Packy: I had had Per My Last E-mail going. That was really a link roundup where it was an assignment from the Write of Passage course to start a newsletter and to get 20 people to sign up. While I was at Breather, I was writing that and I realized, I like writing, and occasionally, I would do an essay. But for the most part, it was like, here are the five things that I've read and listened to this week that I really liked.
David: And they're all still on the Not Boring Substack. You can go read them.
Packy: But if you go to permylastemail.substack.com, the day that I took it down, somebody else took the site over and I think it's maybe an advertising shampoo. It's some scam that is now in pemylastemail.substack.com.
Ben: Everything turns into a link farm eventually.
Packy: Exactly. So I had that going, and then I used that to just think through and write about different ideas that I had for a company that I wanted to start. Even while I was at Bank of America, when I was in college, when I was at Breather, I always knew that I wanted to start what I thought would be a really big startup. I had just managed a big team. I was actually interim CEO for a little while at Breather and I thought that I did a fine job there. So it was like, I can do this.
Every level that you go up in a company, I thought that they were these godlike people above you who had all the answers and realized that they're all as dumb as me. So why not start something myself? I used writing as a way to think through in public a bunch of these different ideas. Somehow, despite that tool, the best idea that I came up with was a social club that combined Soho House and college extracurricular.
I was a debater in high school and college. One of the tests that I ran was starting a debate club in New York and got 20 friends to come and debate. People loved it. I had a blast. People really enjoyed it. So I was like, that's a really good thing. It's going to be a huge business because 20 people like the debate club.
David: This was the NYC Debate Club, which you can go read about in the Per My Last E-mail archive.
Packy: Yes, you can. All of this stuff is a blast. I think it all comes from the same spot as the name Not Boring comes from, which is, I had dinner with my mom and her business partner one night in New York while I was still at Breather, and her business partner asked me what I like to do outside of work. I just did not have an answer other than I like traveling and I like hanging out with my friends.
I had no passion, which is crazy because in college, that was all I did. I spent a lot more time doing other things than I did, actually, probably studying. I think that just put a bug in my head that I wanted to figure out how to get some of that back.
Then I've talked to a bunch of other people and they realized that they had the same thing going on, that once you got out of school, it was work, then it was your tight group of friends, whoever became your significant other, and then your family, but you didn't have those small groups that were bonded around a particular passion or hobby. So I was like, oh, cool, that plus Soho House? That sounds like the coolest thing in the world. Let me go start that.
David: Of course, you're coming from a physical real estate company that you just spent six years at.
Packy: That was part of the thing too. I just thought that if I tried to build a software business, I'd have a lot less credibility even with investors than if I said, look, I know how to do all of this. Here's the model, all the numbers work. I wrote a bunch and you can see these essays too, trying to justify how this could be a venture scale thing if you added a bunch of stuff on top and started community first. Maybe that would have worked. I don't know.
Today, what Not Boring Club would have been is really a DAO probably with physical locations. I think, actually, that model works really well for what I was trying to do. At the time, it was a real stretch.
David: Did you pitch any VCs or investors about investing in Not Boring Club as it was coming together at the end of 2019?
Packy: Yeah. I had a few early conversations with friendly VCs that I knew from Not Boring. Some people were actually like, cool, when you actually start raising, let us know, this is actually pretty interesting and like, we'll be back and you'll figure it out.
David: Oh my god. If any of these people had actually invested in Not Boring, like, wow.
Packy: I know. I might have shut that one down and started fresh. It was more of, I think, we’ll back you this idea of maybe you can do something with it if it gets interesting at some point, but we’ll back you.
But I got a bunch of advice from a bunch of other people who were like, don't raise money and don't sign a lease. Please, for the love of God, don't sign a lease before you actually try to build a community because it sounds like the other stuff is hard, but what's really hard is actually building a community around this kind of stuff.
So I started a Slack group. I used the newsletter that had 400 people at that time to try to get their early applicants. We got the community up and running. We were doing some book clubs. We did Debate Club. There were about 150 of the first people.
Before we had a club to welcome people in, I was like, great. We're going to do a bunch of small group dinners starting in February of 2020. Late February, we had our first four 10-person group dinners. It was a lot of fun. People were really enjoying getting to know each other. Then I think it was March 10th, we had these separate Slack groups for each one of the dinner groups.
Somebody was like, you know what, I'm not feeling particularly good. I'm going to just bow out tonight. Other people were like, you know what, I'm going to bow out tonight too because I'm hearing a lot about this COVID thing. So I was trying to start Not Boring Club in the middle of this COVID thing. We put it on pause and canceled that dinner. Out of an abundance of caution, I canceled the next night's dinner and the next night. So I was like, guys, we'll be back in two weeks here.
David: Do you remember that? We're all going to be back in two weeks.
Packy: We're all going to be back in two weeks. As soon as this blows over, we'll be back.
Ben: I'm going to put a pin in here. I was trying to figure out, listeners, how to do the thing that I did during the Uber episode where I bring in the share price at every moment throughout history. I don't have Packys internal number so I don't have the newsletter count. But what I do have is his personal Twitter following as of every month along the way. So here we are today, where Packy has 105,000, 110,000 something like that followers. Here in February of 2020, taking us back to the story, 956 followers.
Packy: That was good. That was like a triple from earlier in the air before I started writing Per My Last E-mail. We can talk about this. One of the things that I wanted to do, from very, very early on, I would say, welcome to the new X subscribers. Now there are Y of us here.
David: Such a good growth hack.
Packy: It wasn't even meant to be a growth hack. It was really kind of like, just in case this works out and becomes a big thing, there are all these people with a big Twitter following or big audience. Certainly, you were in that conversation whereas there are all these people that seem, again, godlike and it was just like preordained that they were going to be successful. In case this newsletter becomes anything, I just want to show that I was just a random unemployed idiot who started writing this thing. So we can track the whole progression of the number of subscribers and all of that throughout the journey.
Ben: It's so funny, you had that impression of us because I had zero credibility before starting Acquired. I felt exactly like you did. I had the startup experiences and I've worked—
David: To be fair, there was a front-page Seattle Times article about you before you started Acquired.
Ben: One day, one moment in time. Yeah, but Packy, I know that exact feeling. It's so funny how at some point—and there's no clear moment in time when it changes—then people look at you like you're on the other side of that valley. And you're like, wait, how did I get to the other side? What?
Packy: It's crazy. I tried to be the same idiot that I was then. It is, as you know, I still tweet dumb stuff, and maybe that's good, and maybe the SEC is going to knock down my door at some point. But I'm really trying to just be the same person that I've been the whole time. Not in any fame hasn't changed me, but really it's just like, I don't want to care that I'm going to get responses from a bunch of trolls now if I say something.
I really think this breaks when I let that change me and I get a little bit safer in what I write about, what I tweet about, or anything because there are more trolls out there, more people who are paying attention to what I'm writing, and all of that. So that's been important to me the whole time—remaining the same idiot that I was in the beginning.
Ben: I think it's super important. This is the Not Boring episode, not the Acquired episode, but I've had a few conversations recently with people who have grown a personal brand very quickly online. I think a lot of people make a lot of trade-offs to do that, where they play a part on the internet and play a character rather than being themselves. You have this magical thing, at least my perception, knowing you personally and following your work, is that they're pretty much the same person.
But you've managed to grow very quickly by being yourself, which is remarkable. Because I think in three conversations that I can think of recently, people have told me, I really wish I could be more myself, but I played a character on the internet so that I could quickly grow.
Packy: It's easy to make that trade-off. I probably did a little bit of that, frankly, early on, where I would do more threads and different things to try to boost engagement and all of that. But still, it was so small that nobody was paying attention. By the time that I had anybody following, I've just decided to be myself because I'm spending so much time doing this—both writing, tweeting, meeting people, and all of that—that if you're not yourself, it's not like a be true to yourself kind of thing. It's like, you're going to have a miserable experience.
Because all of your interactions are going to be other people wanting to interact with this persona, or if I were writing from a different voice, everyone would expect me to write from that. It would just make it twice as hard to both figure out the content and the voice every week. So I realized really early on that I just needed to be as close to myself as humanly possible, or else it was just going to be too much work.
Ben: Once you admit that, you're kind of like, okay, well, if it works, it works. If I don't have product-market fit with some sub-segment of the internet who can discover me, then shoot, I'll take my ball and go home. But if it works, it's actually remarkably scalable for a one-person operation.
David: We can debate when you cross this valley, but certainly at this point in time, you have not. What are you feeling now in March 2020? You're unemployed again, but you're older, you're married. Your wife is pregnant at this point, right?
David: You are working on—I won't say harebrained, but maybe—a startup idea in a physical real estate space with maybe some issues with the business model.
Packy: Not particularly venture backable business.
David: Not particularly venture backable. What are your emotions like right now? Are you just, I'm happy-go-lucky, it's all going to work out; or are you tearing your hair out?
Packy: To a fault, everybody has their double-edged sword and mine is optimism. Never once was there a time when I was like, my life is absolutely over. When I joined Breather, took a lower salary, and it was a risky thing. My mindset was like, my absolute worst-case scenario here is that I move back to my parent's house. I can still eat meals, I can still sleep in a bed, and there's a roof over my head. So the floor is not that low.
Certainly, this time around, there's a 100% ego piece of this because I have a bunch of friends who are doing really, really great things. When I tried to bring Not Boring Club online, I was sitting there. I had trivia nights that I spent all day writing trivia questions and making slides, and seven people showed up. I was like, this is with my Duke education, my expensive high school education, all my experience, this is incredibly embarrassing.
So I decided to just let Not Boring Club, the digital version, fall by the wayside. In early February, Puja and I had learned that we were pregnant. COVID hit and I remember just probably April when I decided to really go on it. It was like a bunch of soul-searching conversations with Puja, with my mom.
Talking to my mom and being like, I don't know what to do. She's like, well, I like the name Not Boring Club. Maybe you should just apply that to the newsletter and just go all-in on the Not Boring thing. So that was my mom's idea to port the name over.
David: Wow. Thanks, mom.
Packy: Thanks, mom.
David: We should all thank our mothers more. Thank you, mom.
Packy: Totally. Thank you, mom. My dad has always been kind of like, don't close off doors and just be serious about me making sure that I did the best that I possibly could. He was super supportive of this whole thing, maybe just because they saw that there was nothing else on the table.
To be fair, I could have gotten a job somewhere, but I just didn't want to get a job, and I didn't want to quit on the idea of being an entrepreneur and doing my own thing. So I went to the beach with my brother for a week and was just like, all right, what if I just start writing this newsletter? What if I start writing essays? It needs to be different from Ben Thompson. So I came up with this idea to do a mix between business strategy and pop culture.
So my earliest essays were like, creative destruction and the Mickey Mouse Club to explain why COVID was actually a really good thing because it meant that people were no longer going to be stuck in bullshit jobs and were going to be freed up to go do the things that they actually wanted to do.
Ben: Which is ironically, also, the subject of your most recent piece.
Packy: A little bit.
Ben: It's a different twist on it, for sure. It's more about the community and societal impacts of that, but of the same impetus.
Packy: Totally. There are definitely some throughlines through a lot of the pieces. I wrote about, Amazon had a fashion show. I tried to examine Amazon's strategy through the lens of this fashion show. Did a bunch of those like direct pop culture X business strategy type essays. That also, pretending to be a character became too much, where I'd have to both think of the business side of it and then also figure out what movie that business was like, and that became too much.
So I kept the tone and I dropped that direct thing. But yeah, I asked Puja if I could have three months to grow the newsletter and see if there's anything there. Maybe one day, I'd start making money. But for now, let me just see if I can grow this. A friend of mine, Tommy Gamba, who was in Airbnb and getting ready to leave, helped me out on the growth side of things. He had this brilliant idea to launch a landing page so that we could launch on Product Hunt.
That alone, I think, took us from something very small, like 1000 subscribers to 2000 subscribers. So that was a huge leap. I remember sitting with Puja at dinner and being like, oh, my God, this newsletter could be a full-time thing. I have 2000 subscribers now. This is amazing.
David: You got seven people a trivia night, now you have 2000 people on the internet. Maybe this internet thing is a good idea.
Packy: I would like to say, we're talking orders of magnitude difference here. That's a VC firm. So yeah, things started looking up from that point and weren't making any revenue for a long time. I still remember having conversations deeper into the pregnancy where it was clearly going to be a thing. I had planned to turn on subscriptions and decided to keep holding off on that because I really liked the growth.
I had conversations with Puja, where she was like, are we going to do a revenue thing here? Mind you, now we're living at my in-law's house in New Jersey during COVID and I was writing—
David: With her parents?
Packy: With her parents and I was writing from a basement. So none of this is glamorous. But she's like, at some point, we'll need health insurance and blah, blah, blah. You can turn on revenue and I was like, no, no, trust me. If we can keep not having subscriptions turned on for a while, then we can grow to a point where like, I'll be able to turn on subscriptions, and if I convert 10% of the audience at $5 a month, then we could be making a couple $1000 a month.
David: Subscriptions work as a business model. If you architect the right way, there's nothing wrong with it. Obviously, our friend Mario Gabriele is doing great with it at The Generalist, but, oh, that's such a fallacy, that way of thinking of, oh, if I only get X percent to convert. I'm so glad you went in a different direction.
Ben: There's also the dirty secret, which it seems like you kind of intrinsically knew, which is even 10% is going to be a pretty big stretch. Creators can typically convert, at best, 2% to 3% to a paid offering, unless they're significantly handicapping the main content where you'd say sorry to every other main post just behind the paywall or something big like that. But even then, I think it's like 10%, 15% if you bring out your big stick.
Packy: That prevents growth. It's hard to model out exactly how that's going to play out. But my big thing was, I was just addicted because I've locked myself into this thing where I was telling people how many I grew every week. I was addicted to that number continuing to go up. So I just kept pushing off turning on subscriptions so that that number would keep going up.
Mario did it well. Lenny Rachitsky, obviously, did really well and has a great business. There are ways to do it. I think a huge difference between someone like Lenny and someone like me is that Lenny's audience is so specific. You know exactly who you are and who should be paying for that, which is people who do product or people who do growth.
Not only do they know that they should be reading that and that they need to pay for it, their companies are going to be willing to pay for it for them. Whereas I could not imagine a company that'd be willing to pay so somebody can read about the Mickey Mouse Club. So that was the other thing that kept me from going to the subscription model. I just don't know if companies will be able to pay for Not Boring.
David: That was the secret when I was at the Wall Street Journal. This was in the days of paid content was such a thing. Everybody thought, oh, the Wall Street Journal, they did it so right. The New York Times was wrong. It was like, yeah, this is the dirty secret. Most people who pay for the journal, it's their companies that are paying for the journal.
Ben: And it's hyper-specific. It's business, finance. It's the most reputable of them.
David: Yeah. If you're going to go the paid subscription route, it's great, but you need to architect your whole business and content strategy around that. Obviously, you had taken a different path.
Ben: Packy is just going to be Packy on the internet.
Packy: Yeah. It sounds too lazy to do the subscription thing too and think about which should go behind the paywall and what shouldn't. Could I possibly double the amount of content that I was doing so that I could still grow, have some things behind the paywall, and keep the quality? I just frankly couldn't figure all that out. So that was one of the reasons that I decided not to go that route too.
Ben: Okay. What month was your baby born?
Packy: Our baby was born on October 4th. I remember I had my laptop in the hospital. He was supposed to be born a day later. I was going to be able to finish a piece. I was writing about reliance. I was almost done, that piece sitting in the hospital while we were waiting for him to be born. I just couldn't get it finished. He was born Devin, who is the absolute best. Shout out to Dev if you're listening to this in the future.
Ben: Okay. I asked for our tracker here. You were talking about later into the pregnancy when Puja was asking you like, hey, are we going to do this revenue thing? I'm going to assume somewhere, end of the second trimester, beginning of the third trimester, you’re at 3500 Twitter followers when you get that question. Then we fast forward to when Devin is born, this big moment in your life. You're already up to 12,000 Twitter followers.
So you're starting to feel like, geez, I'm assuming that this maps similarly to newsletter subscribers/ You're looking at this like, well, if it's going to keep growing like this and it's actually going to grow geometrically, not linearly, we could be in good shape pretty soon. But I imagine you're probably also pinching yourself and going, this can't continue, right?
Packy: In the late summer, somebody was nice enough to reach out. Chris at MarketerHire was nice enough to reach out and be like, hey, I like your newsletter. Are you thinking about taking advertisers? I was like, yeah, I'd love to have you advertised. He's like, great, send me your deck. I didn't have a deck. So I surveyed the audience and I asked them for their characteristics. They all came back exactly like you want 25 to 34, high-income households, leadership positions at companies, well-educated—
Ben: Owning big budgets, decision-makers.
Packy: Yeah, exactly.
David: This deck is amazing, by the way. It's still on the internet. We'll link to it in the show notes.
Packy: It's still on the internet, which haunts me actually because people reach out and they're like, wait, I'd love to do a sponsorship at $1000 or whatever price I put in the deck at that point. But after I made that deck, I was like, you know what, this internet thing has been pretty amazing and Twitter has been pretty great. I'm just going to tweet the deck out. So that filled up, and Public came in, MarketerHire came in, and a few other sponsors came in from that, but that filled up pretty much through the end of 2020. All of my sponsorship slots, which was great and I was like, oh, wow.
Then I remember having a conversation with Puja and it was like, if things go really well, I think maybe there's a chance that in the future we could do $300,000 or $400,000 on this newsletter on sponsorships.
David: You're an optimist.
Packy: Yeah, optimist and I kept relying on the math. I had some sophisticated formulas here. It's purely math. It's just a CPM thing. So as long as we have enough readers, the rates will grow. This will be something that at least I can make what I was making when I was a 24-year-old in investment banking again.
David: So before Chris at MarketerHire reached out to you about sponsorship, had you been thinking about advertising, or were you totally focused on, one day, when we get to a certain point, we're going to flip to subscription?
Packy: No. I think the other thing about me is I have an addictive personality. I think we had probably crossed a point where I just realized that I like the growth too much and I realized that I like the fact that if I was going to be spending all of this time, 40, 50 hours to write an essay, I didn't want 1000 people to read that essay. I wanted people tweeting about it, talking about it, and all of that.
So at some point, I realized it was probably going to go on because I just hadn't made the leap because I thought even ads were slow growth and the people wouldn't like me doing ads. I was trying to hold off on that for a little while too. But a few companies pushed me in that direction and proved that I could actually make a dollar doing that, which is great. There was another moment where I wasn't allowed to buy an iPad until I actually made money from Not Boring. So finally, I'd made like $10,000 and Puja let me buy an iPad. So a bunch of little wins, late 2020.
David: How proud were you at that moment? It’s quaint now looking back on it, but these are the things along the way that I'm sure you remember.
Packy: Totally, and it is a glorified Kindle for me. I've read books on it. Occasionally, I'll draw something and throw it in the essay. In this last week's title image, I actually drew myself. It's horrendous. That was like, I'm going to be Ben Thompson. All I need is an iPad.
Puj, can I please dip in the savings here and get an iPad? She's like, no, you don't make any money on this newsletter. You cannot buy yourself an iPad that you don't need. You have a computer, you're fine.
Ben: Okay. Two questions for you. One, did you experience the thing where the period of time where, hey, this isn't going to cover our lifestyle is long. And then hey, the period of time where, whoa, this is going to more than cover our lifestyle is long. But the period of hey, this is great, we're right at breakeven sustainable is remarkably short, so you blow by it, and then you're like, whoa, holy crap. I expected that to be a longer period of the journey?
Packy: One hundred percent. Yeah, that happened really quickly. Again to be fair, covering our lifestyle was not particularly difficult when we were living in my in-law's basement. We had a baby and so that was a really meaningful thing. But when you have a baby, David, you know this, people send you, probably the first at least six months worth of clothes, diapers, and all of that kind of stuff.
You don't really start incurring expenses on the kid for a bunch of months. We were living in a basement and my mother-in-law is a phenomenal cook. I was maybe paying for a Wawa Hoagie every once in a while.
David: Wawa Hoagies, yes.
Packy: It's the best. You guys need to do an Acquired on Wawa at some point.
David: We totally should. Total digression. One of my proudest moments in business school, I was in this super boring class. I forget. The title was something like board management or something like that and I was like, oh, I'm a VC, this will be really helpful. It turned out it was about public company board compliance. It was so boring. So I just zoned out the whole quarter.
One day, I just completely zoned out and I heard Wawa. I'm like, oh, I know all about this. The professor was like, I don't know why it's called Wawa. My hand goes right up in the air. I can tell you exactly why it's called Wawa.
Packy: When I was a freshman at Duke, during freshman orientation, they did the thing where they had improv, comedy, or something. All the freshmen went to it and they would call a couple of people up on stage. They'd ask you questions that are like, what do you miss most about your hometown? I was like, Wawa. The six people from Pennsylvania, New Jersey cheered, and everybody else, what is this guy talking about? So that was the beginning of my college career.
Ben: For us Ohioans, that is Swensons.
David: What is Swensons?
Packy: Probably not quite as good but...
Ben: It's a little bit of a different thing. It's a drive-in burger joint, but unbelievable.
David: Like Dixon, Seattle?
Ben: Yeah, yeah, yeah.
David: Got it.
Ben: Wait. Okay. Let me get to question number two then. I asked question one because, as I've talked with other creators who experienced that moment, there's this really weird thing where you feel like because phase one was so long and you've been looking forward to phase two, the breakeven phase, I mean it's great to be in phase three, but it's weirdly unsatisfying how fast you blow through phase two because you've been looking forward to it for so long.
Packy: I guess it's the optimist thing. Because I set the first three months up as an experiment, knew that I could go find another job somewhere, and that hopefully, maybe the newsletter would have introduced me to somebody who might be willing to hire me because they like what I wrote. That wasn't a revenue desirous period. Then there were those months in between after that where it was growing and I was like, this is going to happen.
So probably everybody around me was relieved that it happened, but for me, it was kind of like, no, no. Again, it's math here. This will happen and as long as it keeps growing, then it'll become like a number that is really exciting. I didn't think it was going to go as well as it did. But there was no point where I was like, I really hope that I'm able to eat and that I can scrape things together. Again, probably because we're living in my in-law's basement. But I think that probably would have made it a little more satisfying if I was, every month, dreading the rent check. But fortunately, that was not an issue for us.
Ben: Yeah. Okay. So then that leads me to question number two, which is, you have pioneered a pretty unique sponsorship format. We thought we pioneered a unique sponsorship format and the presenting sponsorship where we really throw our lot in with the presenting sponsor for three months. Shout out to Pilot, album art, website, everything, interview on the top of the show.
Then here comes Packy McCormick and says, you know what, every week, one of the two posts that I do is going to be pure unadulterated, I'm getting paid by the subject to write this. I am doing the thing that is going to make classically trained journalists freak out. I'm just going to own that. How did you come to this and what were your fears around it? How did it come to be all that?
Packy: I'm going to get the origin story somewhat wrong. I had started talking to Nick Abouzeid, \MainStreet. If you use Twitter, you've probably gotten a sponsored tweet from him about using MainStreet. He also happens to be a phenomenal guy. I love Nick. Thank you and he was like, by the way, these posts that you write on companies, you can write those on startups and I bet people would be willing to pay.
He had just come over from Shrug Capital to run marketing at MainStreet. He's like, we'll be the first ones who will do this. I was like, all right, cool, let's try it. I'm going to caveat the hell out of it and tell everybody right up front that it's sponsored, but I think MainStreet is really cool. So I would actually love to write about MainStreet and explain.
My audience is a bunch of entrepreneurs and founders. I bet my entrepreneur and founder audience would love to make money back from the government that, otherwise, they might not have, and so MainStreet will get your tax credits back in an easy way.
Ben: By the way, what month was this that you're having this conversation-ish?
Packy: This was actually pretty early in the sponsorship journey. This was probably the August, September range.
Ben: Okay, so still 10,000-ish Twitter followers,
Packy: Still at 10,000-ish Twitter followers. My fears were obviously, this is not what you're supposed to do. You're not supposed to use a newsletter to shill. Sponsored content is a dirty word because, in a normal journalistic institution that has integrity, there's a wall between the people who write the actual journalists and the people who write sponsored content. It's this thing that is optimized for SEO, clickbaity, and all that kind of stuff.
Sponsored content does not have a particularly great name, but I was like, all right, so if I do this, really, my bar for myself has to be as high as it would be writing a normal piece. I'm only going to write about things that I'm actually bullish on and companies that I would actually invest in myself. This is before there was a fund or anything that I'd put my personal money into. So that was the bar that I set for myself.
I was like, you know what, I'm going to ask the audience even like, did you hate this? Please let me know if you hated this. One or two people, every time I write a sponsored post is like, you're shilling, this is sponsored, no sponsored content, please. But the vast majority either don't care, although the open rates are actually fairly consistent, maybe a little bit higher on the Monday pieces, or they get something out of it.
MainStreet had a bunch of people, went and got a bunch of money back. So they love that. It's interesting because I serve a bunch of different audiences. When I talk to founders for Not Boring Capital now, a lot of their favorite pieces actually end up being some of the sponsored posts because I get behind the scenes access into some of these really fast-growing successful startups, and get to write something more detailed on them than anybody else has written before.
Ben: Yeah. I am an investor in Modern Treasury. I learned a lot about the company from your recent sponsored post on Modern Treasury.
Packy: Even Ben Thompson on his podcast, I think it was back in February, without calling me by name was like, there's somebody who writes a newsletter who does this thing where the startups actually pay him to write about them, but it's actually good because he gets more information for these companies that aren't publicly available. He was saying that he doesn't write about private companies as much because he doesn't have as much material to analyze. But if I actually worked with the company, I have a bunch of stuff to analyze.
I'm very honest with them that I will talk about what I think isn't great if there are things and I will talk about competitors in a positive light. I will never say just like, do a hatchet job on competitors in the piece, unless the competitor is like a straw man. I talked a lot of [...] on passwords when I wrote about Stitch, and that's fine because nobody loves passwords. But as long as I keep that bar high and I'm very honest, I say upfront every time, this is a sponsored post, this is how it works, here's a link to a doc that I wrote about how I choose them, people end up liking the post.
So what I'm saying is founders end up liking those because oftentimes, they're either at the same spot in their journey or they're a little bit behind where those companies are. So they're learning how to be practical on the ground things that those companies are doing and can take lessons from that. So those actually feed, in a lot of different ways, really well into the fund.
David: I want to pause for a second in the action movie story of the Not Boring story. I think this is a good point to talk about a few things just going on in the world around you doing this. One, obviously, what you're doing wouldn't be possible without all the platforms and infrastructure—Substack, Twitter, all of the things that we take for granted now, but 10 years ago didn't exist. It just wouldn't be possible to have a solo corporation like Not Boring to be doing what you do. Even when Ben Thompson did it, he had to roll his own for so much of this.
Ben: You are operating a venture fund with no other employees. AngelList makes that possible.
David: But it's interesting. Like you said, a traditional media organization would have journalistic integrity and would never do this. What is journalistic integrity? Post-2016, Donald Trump, and everything, this is one of those second third order effects of the last five years in the world in this country. Maybe mainstream journalism still has a great place, but maybe it's okay to also do things differently.
Maybe they don't have all the truth. Maybe you can think differently about what journalistic integrity means. Then you kind of look at this like a ghetto of sponsored content, and it truly was a ghetto. Was it a ghetto because it didn't have integrity or because nobody put the work in to make it great? You made it great.
Packy: Yeah, there's a lot to unpack. First of all, the platform is I'm all in on Web 3.0 now. I certainly rely on Web 3.0 platforms in a really big way. The most beautiful part about Substack is because they've taken such a strong stand for subscriptions and against advertising, no one on their team has ever even reached out to me. I’ve paid $0 for my main platform because they want to pretend like ads don't exist. I hope they don't hear this and start charging.
David: They've never reached out to you?
Packy: Never reached out.
David: Oh my God.
Packy: Yeah. So that is just this happy accident where my main platform ends up being free. People will pitch me new newsletter platforms all the time and they're like, I bet you're pretty bummed that you're paying 10% of your revenue to Substack randomly. I actually haven't paid anything in Substack. Twitter is free and I've written about this before, but actually, I pay for Twitter Blue now just out of a thank you.
It's a garbage product so far, but just out of a thank you for all that Twitter has done, I paid $299 a month for that now. So that's a cost, but these platforms have been hugely helpful in making Not Boring what it is and they’re low cost. On the other side, the point you're talking about journalistic integrity, we're catching me at a time where I'm like in this mini self-proclaimed, nobody cares, but war against all the cynicism that's happening out there.
I think everybody has incentives and motives. At least if I'm saying, I am sponsored and this company is paying me right now to write about this, it is just very out in the open what I'm trying to do, if I say I invested in this company, or whatever else. Everybody can go into the piece knowing that that is the table stakes. I don't know what the incentives are for traditional tech journalists. They're not certainly all this bad, but I think a lot of the reason that Not Boring works is because there's so much snark about tech out there for all of these companies that are one, just groups of people not making a ton of money, and now, maybe salaries are a little bit better and all that.
For the past decade, people of these small companies not making a ton of money ended up actually trying to change the world. That's like a corny phrase, but that is how you can recruit people to come work somewhere and not make a lot of money. Trying these new things, taking different pieces off the shelf, going and trying to build something, and then there are snarky 50-year-old men sitting back and being like, oh, no, I've seen something like this before, this is really stupid, or X, Y, and Z.
This is not well thought out enough even for me to be saying this publicly, but it feels like a lot of journalism is leftover from an era where journalism was really needed. Because not everything was out in the open, and you needed journalism to expose corruption, take down Tammany Hall, and all this stuff. Then you apply all of that to these little tech companies that have raised $5 million, and you try to dig through the garbage.
There was an article in Business Insider on spring health about their work culture the other day that was trying to be a hatchet job, but there was nothing bad in there. They’ll be like, people worked hard at the company. A marketing guy said his team was working too hard and so he wanted to lower the goals. The CEO said, no, we're not lowering the goals, but I'll hire more people for you. It is a tale as old as time in startups that there's a battle between the CEO and the marketing team about what the goal should be, and the CEO sets an overly aggressive goal.
The fact that somebody thinks it's worth investigating for four months this story about this company, or the hit job that they just did on row, which was also a total BS. You can always find someone who's unhappy in a company when you're not making that much money and when you're working a lot. Then to use these people who have gotten fired as sources for these hit pieces that are poorly done and nobody believes, that is just abysmal.
I think when the market turns and when we enter a bit of a bear market in tech in Web 3.0, it'll be really easy to throw stones at me. I am unabashedly optimistic about all of this and things are going to turn on. I'm going to be like, the tide is going to go out and my pants are going to be down. I'm also totally fine with that because I do think that the overall tone of tech journalism, it's like, what's wrong with these companies? They're making too much money. So if somebody has to be on the other side saying, no, this is awesome, I'm happy to be that guy.
David: It's exactly what you said. It's incentives and its audiences. You planted your flag from the very beginning that you are going to be an optimist, and your audience is founders and people who are also optimists about this whole industry. There's a viable audience of people who are pessimists out there and who don't like it. That's what the other media outlets can write for and to, but nobody was doing what you're doing.
Packy: The other piece of it too is, I want to be optimistic because that's naturally what I am. It goes back to doing the thing that you actually are. There's a reason I worked at a startup. Even though that startup didn't do well, I'm still optimistic about this because I think a lot of really great stuff has come out of this.
I also want to be realistic. I'm not going to just be like, this is always the greatest thing in the whole entire world. My favorite kind of audience is the people who come in and they're like, I was frankly really skeptical about crypto, about Web 3.0, or about tech in general until I read this piece. It explained it really well in ways that it makes sense. So I still try to tie this stuff back to business principles.
We're both huge Seven Powers fans. I'll try to actually tie back to what is the competitive advantage of this protocol or of this company. I don't want to just be like a pie in the sky optimism. If I can convert people who were either pessimistic or skeptical to at least being thoughtful about it, that's all I'm going for. Be thoughtful about it. I think if you're thoughtful about this industry, you're going to come away at least being like, wow, they've done a lot in the past few decades.
Ben: You seem to operate under the same primary principle that we do, and David and I text ourselves this phrase all the time or text each other this phrase when one of us is straying from it. But rule number one in Acquired is to assume the audience is smart. If you assume that, the cool thing is, long-term, it means you'll get a whole bunch of smart people. As long as you keep doing your thing and you stay true to that, that'll pay attention.
It comes with these interesting trade-offs where you can never allow yourself to hide the ball, or else, you're compromising that long-term goal. To the extent that you are assuming your audience is smart, you have to write well-reasoned stuff or else you are just going to take an enormous amount of [...] for what you put out in the world.
It's not like you can say, hey, here are my incentives, this thing is sponsored, and then write a total fluff thing with zero serious analysis in there because everyone's just going to look at it and go, well, yeah, you told me that your independence was compromised, and then it wasn't useful, then it wasn't something that I enjoyed thinking about.
Packy: You can't waste people's time, certainly. One of the tests that I always run for myself, and I probably actually would have failed this test is, if Theranos would come to me on a sponsored post however many years ago, chances are frankly, I would have written something positive on Theranos because I assume the best and I'm not technical. I'm not digging into that machine and being like, actually, do you know that science doesn't make any sense?
Ben: That seems impossible. With that small of a blood sample? How could you possibly?
David: And that's where investigative journalism has a very valid role.
Packy: A hundred percent. There are goods to both and there are bad things to my approach. I don't know which company, probably none of them, but maybe there's a company that I've written about that ends up being a total House of Cards in five years, and I look like an idiot for writing that piece.
I probably would have written about Theranos. That's an okay trade, as long as nobody's expecting me to analyze the science behind Theranos if I can analyze the business side of the business, at least, and do the work, and maybe somebody learned something that is not just about Theranos, but about some other concept that I'm using to analyze the company, then that's okay. So I guess that's the risk.
David: It gets back to this, frankly—I don't know if it was intentional or not, but this brilliant sort of jujitsu you did with sponsored content that was a ghetto and sucked because nobody actually gave a damn, put any effort into making it great. You've done that, but you do have to put the effort in to make it great
Packy: A hundred percent, yeah. The worst thing that could possibly happen is if I did one of those and wasted people's time because people would unsubscribe, people wouldn't read the next sponsored post. The whole thing falls apart if I lose my integrity throughout this process. The lucky thing is that I've been pretty open optimist the whole time. So no one's like, that's so weird. You rip apart tech on Monday, and then on Thursday when people pay you, you're really generous to this whole industry. So it's all consistent, at least.
Ben: I told you at the beginning, this wasn't going to be all softballs. I don't want to pretend that every Thursday piece is exactly as interesting as every Monday piece. Again, I think this is okay, but there are a lot of Thursday pieces that the headline that doesn't sound interesting to me. I end up either not reading it or just skimming it to make sure I didn't miss some huge piece of information where it would be good for me to know this.
However, when the Monday pieces come out, I'm like, oh, this could be the next great online game. This could be the next Cooperation Economy. It's rare that I think that a Thursday piece is going to be that. Actually, except for Solana Summer, that kind of was that, but I do think that that's probably in line with your sponsors’ expectations. It's going to appeal to a group of people that they particularly want to appeal to who want to know about their company and happens to be a subset of your audience. But it's probably not going to be like, hey, let's all close our eyes, pray, and do Kumbaya that this is exactly the same thing as the non-sponsored content.
Packy: That's totally fair. I try to make it as good as I possibly can. I'm often writing though about either a specific company, which is just like a smaller design space than something like a great online game would be. I'm also writing, I guess, about a company that has less of a history and less complexity to it, maybe, than some of the larger public companies that I write about.
My goal is to write the best thing that's been written on that company every time I do a sponsored deep dive. Chances are, in a lot of cases, it's a two-year-old company. The best thing that's ever been written on that company isn't going to be as interesting as breaking down Tencent over 20,000 words because Tencent is a sprawling business that has this crazy, innovative business model.
While I wanted to be as close to Monday as humanly possible, my real bar for myself is, can this be the best thing that's ever been written about this particular company? Plus, is this a company that I would invest in and all that? So if the open rate is 37% instead of 45% on Thursdays, I'm totally fine with that. Everybody's come away very happy from the sponsored deep dives on the company side.
David: Yeah. To my mind, the right question to ask isn't necessarily, is every Thursday piece going to be as good as every Monday piece? It's, if I'm the company, if I'm your customer, is this blatantly obviously the very best thing that I can do to get something written and a great deep analysis done about my company? That is so obviously yes.
What are their alternatives? I'm sure there'll be more people like you who pop up and that's great. It's not a zero-sum game. But if I'm a two-year-old company, I'm the founder of that company, and I think I've got something great, but I need to cross the chasm to have people know about it, it's not like you're going to write a Monday piece about it otherwise necessarily.
Packy: The other fun thing too is companies can almost choose how interesting they want it to be. I think the best example of the sponsored deep dive that I've done was, and this was early on but it was Ramp and they're double unicorn round when they raised at a $1.1 billion valuation and $1.6 billion dollar valuation in the same transaction.
The reason that one worked so well was because Eric, the CEO there, was like, dude, completely open kimono, ask us anything. I will give you the timeline of how this round game came together. I will give you exactly how we think about cap table construction. You tell me what you need to make this the most interesting piece possible and I will give that to you.
A lot of companies make the trade on the other side, which is also totally fair. They want to keep some information private that they think there's an advantage to keep in private. So that's the trade that I think you make there, but there's a reason people refer to that piece often when they're reaching out to me about sponsored posts. Then a lot of companies aren't willing to make that trade-off when I'm like, cool. The reason that one worked so well is because they told me everything. I'm like, cool, do that but maybe 90% of the information.
Ben: Before we move on, I want to cover one final topic of journalistic integrity. Because David, I think your take may come across when we go back and listen to this as a little bit too—and this is when the downfall of democracy started. We can point to this moment where David Rosenthal said that journalistic integrity is not important.
David: I don't mean it that way.
Ben: Hey, I don't think that's really the right takeaway, but it could be heard that way. I think there were two pieces when you really unpack it like, why is journalistic integrity important? The first one is that the reader is fully disclosed on the incentives and knows what they're getting. We've covered that topic.
Packy waved your arms around all over the place and everyone knew what they signed up for. So that's almost like the micro economy or like the micro to your business. But then there's a macro one too where it could be a bad thing for the state of the republic if every journalist looks over at what you're doing Packy and says, I could do that.
You have the very best writers from the New York Times, Forbes, or Wall Street Journal that are just like, I could go make 5–10 times as much and have a much more independent lifestyle with control over my life. Okay. By opening this up, this independent "journalism", I think it’s important to not call it journalism, independent content creation that is entertaining to read and fully disclosed, incentivized, do we chisel away at the third estate?
Packy: One of the things that I think has been really interesting is that people have jumped over the fence from working for a publication to going independent, and then now have started to jump back. I couldn't do what they do. This is not a lack of respect for those people. My brain wouldn't work. If someone hired me to be like, you have to go be an investigative journalist, it wouldn't work. That's one part.
I do have respect for that, particularly, where it's applied the right way. My problem is when it's applied to a one-year-old startup that maybe "overworks their employees" a little bit, as startups occasionally do and as a lot of companies occasionally do. When you apply the same rigor to that as Watergate, that's when I have a bit of an issue with it.
So going back to the piece on people jumping over and back, there's a lot that goes into that. I think it's really hard to do that kind of journalism independently because you need lawyers who have your back, you need editors to make sure that you get everything right, and you need all the stuff to protect you when you're doing this really brave work that I think it's tougher to do on the independent side.
So I 100% think that there's a place for that kind of journalism. It's just like, don't apply that to a startup that makes hotdogs and came in over budget one quarter that shows how stupid startups are. That kind of article is what really gets me.
David: I think it also works the other way too, which is that it's hard to do what you're doing. The goal of this episode has been to tell your story. I think one of the takeaways that I'm not surprised by is your whole life and career led to this. So if you were an investigative journalist at XYZ Publication doing very much not this, and then you're like, oh, I'm just going to jump over and do what Packy does, you wouldn't be equipped in the same way that you are. You worked for six years at a startup from employee six through hundreds of people.
Packy: And through failure, which helps.
David: Through failure. Yeah, exactly.
Packy: I think that's right. There's definitely empathy there too. I go into this knowing full well that it's wild that I was an employee, not a founder, at a startup that sold for $3 million after raising $120 million. Unless the content stands for itself, nobody should be listening to me because there are many more successful people to listen to out there. So all of that has led in, and I think it gives me great empathy for what founders are doing, but the content has to stand for itself.
Ben: Okay, so taking us back to the story. You mentioned February was when Ben Thompson mentioned you as some guy who writes a newsletter whose name I can't remember or something like that. Of course, the funny thing about compounding, you went from zero, Ben Thompson mentions your whole life, to now it feels like every few newsletters I read from him, I'm like, oh, there's Packy again. But that first no-name name mention, I think, was in February when you had 22,000 Twitter followers.
You also sent out a tweet in February that you wanted Not Boring to make $1 million this year, which as David has in the notes, sounds effing crazy. I'm curious, what happened in your brain as you formulated that tweet? Was it that the sponsored posts had been going well? Were you already contemplating Not Boring Capital? What was that moment like?
Packy: Yeah, I'd been thinking a little bit about Not Boring Capital. That was there, but really I was talking about just purely making a million dollars off of the newsletter. A couple of things that happened around that time, me and Ben from Composer wrote this piece on Excel that got picked up, I think, by two separate New York Times articles, got to the top of Hacker News, and all of that kind of stuff. So I was like, whoa, that was my first taste of this thing really going mainstream.
I had written a sponsored post, I think, probably, either that week or was in the middle of writing the post, and the company was really happy with it. I was in Miami and the weather was nice. I could have been in New York in the middle of February and I probably wouldn't have tweeted the same thing. But I woke up, the sun was shining, and I was like, you know what, life is pretty good. I'm probably making it this point, call it $10,000 or $15,000 a month or something like that. Not close, maybe $20,000. I don't know.
I just woke up feeling really good and I was like, I'm just going to say this. People will probably think I'm an asshole, but I've struggled on $0 for the past X number of months and I'm just going to say it. Then as it happens often with those tweets, the support was actually huge. Nobody reads that as a cocky signal because first, I didn't say like, guess what I just did. It was more like, it'd be wild if this happens. But also people want to see other people take risks and succeed at them, I think.
Ben: It's like if Packy is making it, maybe I'm kind of making it in a way.
Packy: And the other thing is like you said, there's like a tiny buffer between just me saying, I'm going to make a million-dollar salary this year and saying, Not Boring will make a million dollars because it's still a business. For a business, a million dollars a year is fine. You could probably raise a seed and maybe a Series A in this market on that, and certainly not the media company. It's not like anything crazy from a business perspective, but that was where that came from.
David: All right, so give us the update. It'll be December by the time this comes out. How are we trending?
Packy: I think, wag me. We're talking about Pilot and I certainly probably need the help of bookkeepers. I just pulled my Mercury account that I do all of my banking in. I think that probably has about $750,000 in revenue. There's a bunch of invoices outstanding. Some people send checks, some go to my personal banking. This is not a well-run business by any stretch of the imagination. I have a few pieces coming up. So I think, chances are, we're going to just cross a million dollars in 2021.
David: So great.
Ben: Would you have put the percentage chance when you sent that tweet?
Packy: I would have put the percentage chance that we got to a million-dollar run rate pretty high. I thought, probably, given that I knew what my sponsorship calendar was for the next couple of months at that point and that it wasn't the right run rate to get me there, I probably would have put it at like 20% that I actually hit a million this year.
It is the power of compounding happening where the numbers just keep getting bigger to the point where it's like, what would have taken me10 sponsor deep dives that I can now do in one sponsor deep dive. So that just all grows and compounds, I guess, but still, absolutely crazy.
Ben: Speaking of compounding, you had gone from a few 100 followers to 20,000 followers or 22,000 followers by February when you sent that tweet. You had already doubled that then by June to 42,000. It's crazy that you're now over 100,000. You definitely have this thing where you're growing somewhere from 20% to 40% per month, it kind of bumps up and down. But at this point, it's probably, for you, more of a market saturation question of like, when does that top of the S-curve start to hit, or when does this thing linear out a little bit?
Packy: There's a little bit of a bummer in those Twitter numbers, which is a point of pride for a while that I had more subscribers than I had Twitter followers. Now I have more Twitter followers than I have subscribers, something like 105,000 or something on Twitter and 88,000 in the newsletter.
Ben: Let's change that.
Packy: That probably means that I should spend a little less time tweeting.
David: Everybody, we need to help Packy out here. Go subscribe if you haven't already.
Ben: In some ways, it would shock me actually. I know, numbers-wise, there are people who listen to Acquired who aren't subscribed to Not Boring, but in my head, I'm like, who are those people? We're a little bit less—and this is something I wanted to talk to you about—ethereal, theoretical, abstract. Frankly, a little bit less future-looking.
One question I have for you is, at what point did you skeptically walk up to the Web 3.0 cliff and then just jump off it without a parachute? Because you did way more of that than we've done here at Acquired. So I can imagine maybe that's a difference in audience. But let me bring it back to if you're not subscribed to Not Boring, oh my God, go subscribe.
Packy: Thank you. Notboring.co. I think the Web 3.0 was a turning point. I wrote about, for a lot of 2020, a lot of companies that are super fascinating and that I've always wanted to just dig really deep into, and frankly, that you all have done way better work on than I have, and was able to build on the back of what you've done there.
Ben: Thank you. Not true. Different approaches, continue.
Packy: You were first. I can tell you for a fact that without, again, we'll get to the Tencent episode, but without the Tencent episode on Acquired, there wouldn't probably be that Not Boring two-parter on Tencent. Either way, that is just foundational stuff. I think probably something that I realized when I was in finance in the first place is that there are people who are just so much better at digging into public companies than I am and analyzing public companies than I am.
It wasn't really that clean of a choice to say, you know what, instead of public companies, I'm going to do this Web 3.0 thing. But when I started writing about Web 3.0, I remember there was one essay that I wrote, The Value Chain of the Open Metaverse back in January where I was really apologetic almost even in the intro to that piece that I was writing about crypto and the Metaverse. I was like, everybody, this is really weird. My audience had become fairly FinTwit and finance heavy.
Ben: That's this year. That's Packy McCormick writing in 2021 apologetically, I'm sorry, I'm talking about crypto.
Packy: Right? It shows how much the world has changed since then. This was before Beeple's $69 million sales and a bunch of stuff that I talked about some of the early Beeple’s.
David: Before you tried to buy the US Constitution.
Packy: Before I tried to buy the US Constitution with a bunch of friends. But that piece ended up being, I think, really well-received because it was again, an optimistic take I guess on crypto. It was like a non-dismissive take, at least, on what was going on. But it was really back to the basics of like, all right, take a value chain, what happens when you take the middleman out?
I didn't like the language that was used around crypto at the time, and I think it scared me away where it's like, we're going to take down the institutions, we're going to remove the middleman, and we're going to blah, blah, blah. I was like, no, no, all right, so just taking a step back, if you take out somebody from the transaction and you let the consumer and the creator interact directly, more value accrues to the consumer and the creator. Everybody out there reading is more likely to be a consumer or a creator than you are likely to be Facebook or Twitter.
This is actually probably a pretty good thing for most of us that there's just more value that can accrue to both sides of this equation. That was, I think, my jumping-off point into it when people were like, oh, this is actually really interesting, and I didn't understand this stuff at all before. Now I really don't understand it still, but I understand it a little bit better, and I understand that maybe it's worth looking into.
I even set myself a rule that I would just do maybe one Web 3.0. I'd probably call it crypto back in the day before it was even called Web 3.0. One crypto piece a month and then something else interesting happened and so then it was two, and then other ideas that I was thinking about.
I wrote this piece called Power to the Person, which wasn't ostensibly about crypto, but it certainly was partially about the things that crypto lets a solo creator, solopreneur do. Then there were a few more articles like that where I wanted to write about something else and crypto just kept creeping back into it. Then I wrote a piece that we discussed on a previous Acquired episode about Etherium and then dove into Solana.
I actually need to keep myself honest because I'm getting so excited that I might actually lose some of this. But I really want to give somewhere between this is a scam and this is going to save the world and take down the institutions. I want to be able to give that take in the middle that is like, here's where it's good. So I think the thing about the Solana piece maybe that worked is that it's like, here's what this thing is. It's a blockchain and that's crazy.
It's a platform and it needs to attract developers to build on top of the platform. Those developers need to attract users. If that happens, then Sonala will probably be in pretty good shape, and like, here's maybe one way you'd think about valuing the blockchain and go from there. But really, that's the approach that I'm trying to take to all of this. It's like, this is amazing and let's tie it back to some sort of business concept that you're familiar with.
Ben: I like that. That is a thing that doesn't exist. There's a clear divide between the, let's look at regular companies world and invest in regular companies world, and the people who have, for lack of a better phrase, going down the rabbit hole. That divide is really around business fundamentals and structure fundamentals. Because a lot of people are like, oh, well, with DAOs, we throw everything out. So no one even has a manager.
Of course, there's no board, there are no shares, there are no contracts, and there are no employment agreements. But this way, everyone gets to do what they want. I liked your point when you were writing about the Cooperation Economy where you're like, well, at the end of the day, humans are still humans and do need to organize in ways that if our goal is to ship a product, we do have to figure out some structure to ship a product.
Packy: Yeah, nothing is a panacea. I think this is a really amazing new toolkit to have. I just probably had spent too much time in tech and VC, and so I say design space now too often, but it opens up this new design space, where you just have a new set of tools that you can build with. DAOs, I think, are really great in certain situations.
I think 8 out of 10 DAOs might totally fail because they have that leadership issue or who is the final decision maker issue. But I think those other two are going to do things that you might not have ever thought to do with a traditional corporation, they'll spin up faster, and they'll be more responsive. So I think nothing is all good and bad, but I think there are going to be some emergent properties to DAOs that are really interesting and probably previously would not have been possible.
That's a really good thing. So I don't want people to just dismiss DAOs outright because sometimes they can be a little bit chaotic or whatever else. I got involved in the Constitution DAO, which was trying to buy the Constitution this week. It shows both the amazing things, which is you can rally a group of people around this shared mission and raise almost $50 million to go fight to win the Constitution and bring it back to the people.
Then it's also very hard to make huge decisions in a seven-day timeframe and to organize a 20,000-person Discord, all of whom have been told that they're a part of the DAO and have a voice.
What's the right balance there? Then you go into the idea of progressive decentralization, which I think makes a lot of sense, which is a start out a company. Particularly, if you're building a protocol or something that is not as consumer-facing maybe, then over time, you can progressively give up control and cede more control to the users and the owners.
So I guess, again, the whole approach is like, here's where it's good, here's where there are issues, and here's something that might kind of work, and let's go try it. The worst thing you could do is just dismiss something.
Ben: Do you get blowback from people who were really into what you used to write about and are now like, you got to spin something off or I'm not buying it?
Packy: Before I had, and I still have it on but I just don't read them. I had my unsubscribes turned on and would literally go through every time someone unsubscribed and be like, ugh, someone unsubscribed. Now, I don't care as much. I think this is to your point earlier about getting the audience that you deserve. I'm not comparing myself to Jeff Bezos here, but like a little bit of the Amazon shareholder thing where like, he had to work his ass off to get the shareholders that would actually appreciate what Amazon was doing. But then when he did, that puts you in a really great spot as a company, when you have shareholders who have bought into the fact that—
David: I think that actual quote, it does make sense. The actual quote is not, you get to shareholders you [...]. You get the shareholders you asked for. In the long run, you get the audience you asked for.
Packy: Exactly. What I don't want to do is alienate everybody who has some sense of the fundamentals [...]. Those are people that I really want to read Not Boring and I want to keep myself accountable. But if people are just like, hey, you're writing about Web 3.0 and I think it's stupid, and they leave, then that's totally fine. The people who were like, hey, you're actually losing all sense of fundamentals here, then I'm out. That's when I'll know that I have an issue.
There was one. There was somebody who DMed me after I wrote the piece on Solana actually that was like, man, I missed the old Packy when you would give us alpha and you'd be early on things like Snap or whatever. Then, of course, Solana like 3.5X’d in the next two months.
David: You're like, here, I just gave you a truckload of alpha.
Packy: But that still hurts. I don't want to not do the thing that I'm promising to people. I've never had a very specific focus. I've always been honest that I'm going to follow whatever I think is the most interesting. It makes my schedule miserable because I pick each week what I want to write about based on what I think the most interesting thing happening is. But I do want to follow whatever I think is the most interesting thing going on.
Ben: And look, that has attracted an audience that includes CEOs of FAANG companies that are active subscribers to your newsletter. So unless they've unsubscribed, it seems like it's working.
David: Did Jeff Bezos send you that email?
Packy: Yeah. The thing about Jeff is—
David: You're not giving him the alpha anymore?
Packy: No, I'm kidding with Jeff. Jeff Bezos and I have never spoken. He doesn't subscribe. Someone I think signed up with Satya Nadella's email address, but it certainly wasn't him, and that email address has never opened an email. So I think that was a prank. But I do know CEOs of big companies and all of that.
David: It's actually Puja.
Packy: That would be messed up. I'm so excited.
David: All right. Speaking of Web 3.0, you wrote in your Power to the Person piece another sort of crazy-sounding prognostication that you predicted that within a decade or two, there would be multiple trillion-dollar market cap organizations that were run "by just one person" that you called solo corporations. Your point was, hey, it already exists. It's called Bitcoin. Nobody works for Bitcoin and it's a trillion-dollar market cap.
Back to Not Boring itself, it's so awesome. It's incredible. Ben and I are 100% in the camp that is cheering for you, that you made it to your goal of making a million dollars in revenue this year. A kind of old-school way of thinking about that would be like, Packy is the head of the distribution in the creator economy.
One of the few people that have really broken out, you're going to be like an NBA player level, a professional player in the creator economy. Another way to think about where this could go though is no, you're building a solo corporation. It's not just that you're going to make a few million dollars a year writing a newsletter. Not Boring can be something a lot more. What do you think about that?
Packy: This is, I guess, one of the hypocritical things about Not Boring maybe is that I've analyzed everybody else's strategy, plans, and all these things. There really isn't one for Not Boring. What I love Not Boring to be a big and lasting thing that builds actual products and does things that outlive me, 100% I would love that.
I'm right now worried about what I'm going to write about on Monday. That's both a blessing and a curse so far. I think maybe the good thing about Not Boring has been that I'm fully focused on the content and making sure that's as good as possible. The downside is that I'm not planning ahead by any stretch. I'm like one of the worst planners you've ever met.
David: Clearly, if you've been listening to this story.
Packy: There isn't, right now, a long-term plan for something like that. I think the really fun thing about the exponential growth of this is that new opportunities pop up. I do think I need to put a bit of a structure in place, whether that's formal or informal, around Not Boring so that I can have some time to focus on other opportunities, either as they arrive or God forbid, proactively.
For right now, I think one of the things that I can do, and this may be why media businesses are hard and have a hard time transitioning into something a lot bigger, is that if I say, you know what, I really want to start building apps. I'm going to launch Packy Coin, I'm going to build a bunch of apps and try to make like a billion dollars, and I don't focus on the content, the whole thing probably falls apart.
If I bring in people to help on the research, to go straight for me, and all of that, then it loses the thing that's one, I like doing, and two is at the core of it and on which everything else relies. I think there's a really interesting Web 3.0 angle here where like, how do I figure out how to build, whether it's a DAO or something like a loose structure around this where other people can go off and tap into the Not Boring audience, network, and all of those things to build things on top that are aligned with what we're doing.
Obviously, Not Boring Capital, you can scale the outcomes with, I guess, both the combination of AUM and actual ability to invest in the right companies, but there's not a lot of plans beyond that. If this becomes a thing that is a couple of million dollars a year, you'll never hear a complaint from me about that. But certainly, I think when I'm 80, I want to look back and say that I built something that the second I stopped writing doesn't fall apart, 100% yes.
David: I think it's worth spending a little bit of time on Not Boring Capital, which is obviously not Web 3.0 other than you're able to invest in Web 3.0 projects via it, but it is this really interesting thing.
Maybe it's unique to our collective corner of the creator economy, but it is a real business and it is a real step towards going from just being a—I'm thinking about like the Oprah episode that we did a year and a half ago, whenever it was, where was it her first agent if I'm remembering right, who said like, look, you can be the talent in front of the camera and you can make a few million dollars here, you'll have a great life, or you can own the production and then you can become Oprah.
It does feel like there's this opportunity for creators now to go from just being an indie version of the talent in front of the camera to a lot more.
Packy: Yeah. I think, certainly, Not Boring Capital is a step in that direction. I think the three of us are very lucky that the type of content that we make is also really well aligned with doing venture capital. Obviously, there's a lot of creators who are starting to invest in startups. I'm less dismissive of that—you can probably tell at this point—than most people are because I think they probably have really deep insights into certain spaces that other people who haven't been creators and haven't built that kind of business wouldn't understand.
But I think for us, in particular, we're really lucky. Harry Stebbings falls into this camp and a bunch of other people does as well. Lenny and Turner all fall into this camp where we're living and breathing this stuff every day. This probably goes back to our conversation on journalistic integrity where I actually don't want to do this without having skin in the game.
I don't want to do this without digging in and getting involved in the companies that I'm writing about and trying to help shape their trajectories. I love picking up the phone and talking to a founder about not just like, here's this idea that I came up with and wrote about abstractly, but here's this problem that we're having right now, how should we think about solving this problem? I think that is really a huge benefit of being able to have both Not Boring Capital and Not Boring the newsletter. There are all sorts of ways that they work together.
From a business perspective, it's phenomenal because it does scale a lot better to run a venture fund than to show up every week, get a sponsor, and then write an essay. But again, this wasn't even planned. It really came from one time where I wrote an essay to help a friend who was trying to explain how his company worked, then he raised a syndicate with somebody else, and then that turned into my own syndicate, which turned into a fund because it was too much of a pain in the ass to write memos every time that I wanted to do a deal. Founders didn't want to wait three weeks to see how much money I might be able to give them.
Ben: Wait, you're telling me, as an LP in your fund one and fund two, you don't write investment memos for every single one of your…? Packy.
Packy: I write them up here. [...] investments and not all of them have investment memos. But in all seriousness, I do think that all the time that I've spent writing about all of these different industries, companies, and all that really helped me show up prepared and thinking about what to look for in these different businesses.
David: And a lot of your investments you've written about.
Packy: A lot of my investments I've written about. A lot of investments, frankly, come in because I start writing about Web 3.0. I wrote something like the cooperation economy that unlocks how somebody thinks about something and then they want to start it. I've had that conversation with founders a few times where they're like, we make all of our employees read this because this is what we're trying to do.
That helps on the sourcing and winning deal side, but this wasn't planned either. So I think the next iteration of Not Boring or whatever we add on top here, it probably won't be planned and it probably be because it makes sense with what I'm doing, but I could not do this. I didn't plan it, that's why I couldn't do this if I didn't have some sort of skin in the game with what's going on here.
I like being honest when I get [...]. Bill.com, my worst call of all time being [...] bill.com. Really, the only time I've ever gotten kind of pessimistic. I like being called out when I'm wrong on stuff. I think to be able to run a venture fund that says, cool, here are the ideas, but then also, I'm putting money behind it. You'll see the results in how well fund one, fund two, fund three did, and whether I'm just fully talking out of my ass or only partially talking out of my ass and got lucky a little bit in the results of how these funds do.
Ben: It does seem like you're publishing pretty much. I think on Saturday, you send out the email to LPs, and then come Monday you send out a public version, and it's pretty much the same. Obviously, there are some things that the companies don't want you sharing. But other than that, it's a remarkably transparent way of going about venture investing.
It's also super different from classic venture capital. Did you lead a single round? Did you write any term sheets? Were you the biggest check in any one of those 91 investments?
Packy: Never, and that's all part of the strategy. We all love talking about strategy. Strategy isn't doing everything well. It's picking what things you want to do well and taking advantage of those things. Even figuring out how to price the round, figuring out what should go into the term sheet, spending time negotiating that, and then being on a board, God forbid. It actually just doesn't work with my strategy because it is a house of cards already, where you move one thing and the whole thing breaks.
If I'm doing the more deeply time-consuming parts of the venture, at least as I'm currently constructed, it doesn't work. But it really works very well when I can talk to a founder and we have this specific area—either internally or externally—where I can be helpful. Not to make fun of that venture pun but—
Ben: Put on your khakis and ask the question.
Packy: Yeah, but there's a bunch of things that you make trade-offs throughout. I wrote in both the public and private memo that I'm probably doing less diligence on a specific company than most people who are investing in a company. That's like an embarrassing thing to say publicly when LPs are reading that or when the world is reading that, but it's a fact of the business.
There's just no way in the world that by myself here while I have another job and I'm investing with 91 companies, I'm going as deep looking for the flaws in a company and calling references to look at what this person did wrong managerially.
I trust that if a good fund is leading the round or somebody that I trust is leading the round, that they've done that stuff. My job is, as it is with Not Boring, to look for what can go really, really right here. This will either blow up totally in my face or we're in this crazy bull market. I should have been a lot more conservative and gone for a VC value investing, or it'll work, but the whole thing is transparent.
Ben: Which is a thing that's never worked, by the way.
David: Even [...] would probably agree with that. I would argue. I'm doing very similar things with Kindergarten Ventures [...] is what you're doing with Not Boring Capital. So I'm arguing my own book here to a certain extent, but I would argue you're selling yourself short with Not Boring Capital.
Everything you've done is emergent. It's not like you cooked it all up on a whiteboard. But it's like the sponsored posts, right? People used to think about venture capital in a box and only in one way. You did a lot of diligence. You wrote the term sheet. You came to a valuation, you negotiated, you joined the board, you did all these things. Obviously, that wouldn't work for what you're doing.
You've got a big business writing a newsletter. But there are aspects of what you're doing that work way better than that one specific way of thinking. You've already scaled capital under management doing this. You could probably keep scaling even a lot further with this strategy. But what you're bringing to the table and how you're doing it is just this kind of new way of thinking, right?
Packy: Yeah, and there's a group of people who I think are doing this. You're certainly involved in this. It's maybe a liquid super team to quote myself, which is always fun. But coming together, sharing deals with each other, trading thoughts and advice, and here's where I think you were maybe wrong on that investment. The kind of things that maybe before you would have gotten out of a partnership at a firm and certainly right now you get out of a partnership at a firm. It's not as formal, and I will still make more mistakes than probably a firm will make, at least on saying yes to things that maybe I shouldn't say yes to.
David: But venture capital is never about the mistakes. The only thing that matters in venture capital are the ones you get right. That's kind of the point, right?
Ben: There may even be one founder committing fraud that you've invested in, and it kind of doesn't matter.
Packy: To the best of my knowledge, none of my founders are committing fraud and they're all amazing, but you hope that doesn't happen. I don't want to leave room for people to commit fraud, for me to just look the other way, make a quick decision, and be like, I don't really care. But I'm putting trust in the overall ecosystem and system that other people are doing their jobs, which again, could totally blow up in my face or not. But that's just a trade-off.
David: The way you're constructing your portfolio with 91 companies is, of course, absolutely, we don't want any fraud to happen. That's not the goal. But you've shifted the mindset from playing defense of we're going to make sure fraud doesn't happen. But in venture capital, the zeros are meaningless. The most you can lose is your money. The most you can make is 1000 times your money, so you want to maximize the winners.
The thing is, because of what you're doing with Not Boring, you're getting access to these great investment opportunities that, otherwise, if you were a traditional venture investor, you would have to do all of the efforts and work to build. We're going to take board seats, we're going to give you great advice, and we're going to do all this stuff. For you, it's a byproduct.
Packy: I think that part is totally true. The portfolio construction thing is super interesting too because I spent way longer than you should spend inside of, even a successful startup at a startup that ended up failing. I saw the other side of that where there are investors who are right off and at some point, you just stopped caring about that particular company, and you move on to the next one. I really don't want to take that attitude towards it.
If there are companies that are not doing well, I want to answer their call as quickly as the companies who are doing really, really well because I know how it feels to be on the other side of that. But at the same time, this is why I'm totally cool with founders being investors as well and all that. You should diversify and not put all of your eggs in one basket.
Obviously, if you're a founder and you have 1000 employees, 100 employees, or even 20 employees, you have people that rely on you. You should be giving a vast majority of your time to make sure that those people who are definitely putting all their eggs in one basket get the best possible outcome and as much care as they need from a leader. But I do think there's obviously a value to constructing a portfolio. Having been on the other side of that, I appreciate that even more.
Ben: All right, so we're talking about portfolio construction. You invested in 91 companies. You're on your second fund. The first fund was $9.99 million. Your second fund is $25 million.
David: You couldn't get it to 10?
Packy: You're not allowed to get it to 10.
David: Oh, I see. Because if you call me up, I'd give you an extra $100.
Packy: And fund two, were it to exist, would potentially be in the $25–$30 million range.
Ben: In that range? Okay. Listeners, if you are interested in data like this on funds, how many investments they have, and what fund size it is, if you're thinking about, geez I want to pitch that fund, but I don't know, when was it raised? Oh, it was raised a long time ago. While they've made a lot of investments, is it actually worth my time to meet with them? Do they have the dry powder to invest in? Does Packy have a new fund that he can even invest out of? I have a great product for you, and that product is PitchBook. Do you like what I did there, guys?
Packy: That was so good.
David: That was great. That wasn't inspiring.
Ben: I think as folks know, PitchBook is the no-brainer, leading financial data provider for VC, private equity, M&A. I should have these numbers memorized by now, but 3.1 million companies are in the database and over 1.5 million deals. Only half of those are ones that Packy did. So plenty of other deals in PitchBook's database too. Ninety-six percent of PitchBook's clients rate their coverage of private companies better than any other data provider.
I use it all the time. We use it here for Acquired. I was looking Packy up there before the show. Just a great product, great company. You should totally go check out pitchbook.com/acquired if you are interested in signing up. That way, they'll know that we sent you. Our thanks to our friends at PitchBook for sponsoring the show. Packy, go do more deals so they can grow the dataset.
Packy: We've texted about this before too, how jealous I am that PitchBook is a sponsor and that you are PitchBook clients and get access to the database. Because I had the trial one weekend and I'm still a solopreneur, and so I can't justify paying for any tools really. I think Substack has spoiled me. But the weekend or the week that I had access to the PitchBook data, I wrote a post called Dreams All the Way Up where I compared public company valuations to private company valuations. I was really a kid in the candy store.
I'm not getting paid at all for this. But I will second that PitchBook recommendation 100% because that was as much fun as I've ever had writing something when I was able to just kind of think of a question and then the answer was right there. It's amazing. If you're listening at PitchBook, I would love a free trial again, please.
Ben: Yeah, we'll make sure to get you hooked up.
David: Okay. I think before we move on from Not Boring Capital, this next phase, maybe it's the final additional phase of Not Boring. Maybe there are more phases to come in the future. We talked about Substack, Twitter, et cetera, the platforms enabling Not Boring, the media company. AngelList enables Not Boring Capital enables Kindergarten Capital.
I've spent 11, 12 years in venture now, 9 or 10 of those as a traditional professional venture capitalist. This would not have been possible. You are one person. You did 91 deals in fund one. Who knows how many you'll do in future funds? Now having the equivalent of Substack for a venture firm, it's game-changing. This was not possible before.
Packy: It's more than I'd say the equivalent Substack for a venture firm. Because of Substack I still have to write everything, edit everything, make all of my own graphics, and all of that. I work with Jen on the AngelList team. I will give Jen a shout-out anywhere that I possibly can because it is like having more than just a teammate.
A whole team of people working with me, I will come up with a crazy idea and be like, hey, we need this crazy idea done tomorrow, is that okay? I'm so sorry. She's like, yeah, 100%. I went and talked to our legal team and we can make it work if we do X, Y, and Z thing.
So having both the platform itself, which is great and makes it really easy to raise money from LPs, and for LPs to get visibility into how the portfolio is performing, although that data is a little bit delayed LPs, so it's actually performing better than it looks on there. But really, having a teammate over there who is fully responsible for making sure that things go smoothly, lets all of this happen. If there was no Jen at AngelList, Not Boring Capital 100% would not be a thing.
Ben: It's a total reorganization of the value chain by dismantling the vertical integration of venture firms. It's so interesting that going into this episode, I thought, oh, I see, and this is a crude oversimplification, but for Not Boring Capital, Packy doesn't need to have associates that are pounding the pavement out in the community meeting with entrepreneurs because he has a digital way to do that called Not Boring the newsletter, and that way he gets deal flow from that. But it's so much more fundamental than that.
You look at a venture firm that has 50 employees, that has several funds, and has been around for a while, there's a massive back office that you now don't need to have too. Traditionally, in venture firms, you have an IT person. I imagine you don't have an IT person. Not only does your media company not have a vertically integrated staff associated with it, but your venture capital firm also doesn't have a staff associated with it. You actually can leverage all this new value chain that is completely reorganized for both the media and the venture capital business to stay a one-person corporation.
Packy: None of this was possible 10 years ago. I'm not nearly technical enough to make any of this happen on my own. I'm not organized enough to build the systems, to even make it happen even if I couldn't build software. Having these software tools is the only reason that Not Boring exists. This is the point of the Power to the Person piece. There are just all of these things that you can snap off of the shelf.
So instead of having to deal with all of the organizational headache of managing and organizing a firm, it's very easy then to just snap one piece in at a time when you need it. Now it's great. Substack, it's not an as-needed thing, it's every week I'm sending on that AngelList. It's like snapping a whole huge sophisticated back office into place.
David: It's not even Substack for a venture firm. It's like AWS for a venture firm.
Packy: It's like AWS for a venture firm with a little bit of the person doing the integration when setting up AWS in the first place. Because the big thing for me is not just the fact that there's the software there that makes it really easy, but even when I don't know what to do, there's somebody that I could ask about like, hey, is this a thing we asked about?
You know, $9.999 million for fund one, that was through a conversation with Jen where she's like, by the way, I looked into it, this fund actually has this many beneficiary owners. But if they're less than 10% of this, then you can do X, Y, and Z thing. So it's even better than normal software until AI gets a lot better. Because all the things that I'm too stupid to know that I don't know, they can anticipate and show you the ropes. This is not an AngelList ad, but it is maybe a Jen ad. Jen's the best.
David: Nicole is also great. She's our person there.
Packy: There you go.
David: Thank you, Nicole.
Packy: It is amazing that it's not just software. When you think about the future, tech, and AI is stealing everyone's job, maybe that happens at some point in the future. But I think the really great thing is people are pulling resources in the right place and then you can access them at the time they make sense. So the AngelList model would never work if I only paid them $25,000 a year to do what they're doing for Not Boring.
I'm getting hundreds of thousands of dollars worth of advice, service, and all of that from AngelList, but they also have thousands of other clients and so it works. The more there are places that get really, really good at one specific thing, the easier it is for one person to start a business that draws from all of that.
Ben: You're championing specialization of labor. It's like, hey, pie growth happens when everybody gets really good at one thing. We have a super, super liquid way of stitching all those together.
Ben: Okay. We're sitting here, evaluating in all the most positive ways, and sunshine, and butterflies around this one-person corporation thing. What are the trade-offs? You're a strategy person. Where does it get hard?
Packy: The trade-offs right now are, I don't have any outside investors. I have LPs for the fund, but if I get hit by a bus, Not Boring is just done. That's the extreme example and the example that everybody uses when they talk about these things. But that means every week, if I don't show up and write something, the momentum slows a little bit.
It's very, very, very hard, I think, from that perspective. You'll hear zero complaints from me, but it's really hard to take a week off because I'm worried every time that the momentum will slow, and there’s not somebody else on the team who is just going to go write something else and keep the momentum going that particular week. I think that is the obvious one and the one that I don't have a solution to because I've said on the other side that if I have other people writing, maybe people don't want to come to Not Boring to read X, Y, and Z other person.
That's not the point, I don't want to be an editor and make sure that we all have the same tone. I'm limited, I think, to whatever I can do as one that's at least kind of front person on this thing. That's one big downside. I guess there's the whole churning group thesis that if you have a big audience that is loyal and dedicated to just one particular thing, then you should be able to build businesses all around that person.
Like I said, I have zero time to think about building other businesses around Not Boring. The sponsorship model is phenomenal. It works really, really well, but sponsorship, if I could be using that same microphone to sell my own products, that probably is actually better, higher upside, more equity value, and all of those things. I don't have the capabilities or the time to build out those types of things.
I guess here's another downside with the one-person model. The more I do have that stuff, the more it dilutes the core thing, and the more it makes it seem like a shell factory. Advertising is just part of the model. But if I were like, hey, you should also buy Packy-branded hats, they'd be like, all right, maybe I'll buy a hat.
David: Can we get some sneakers? I'd definitely pimp some Not Boring sneakers.
Packy: All right. We'll do some Not Boring sneakers. That, we can do. But there are certain things where I could plug in also to these off the shelf companies that let you launch your own brands and all of that, but at some point, people are like, dude, we like you because we like to read your stuff every once in a while. Chill out with building these other businesses on the side. So I do think it's limited in that. Whereas other companies are set up expressly for the purpose of building their core product, then expanding on top of it, and you know exactly what you can expect.
I think it's all about expectations. The expectation with Not Boring is that it's mainly about the content, and then other things that plugin very cleanly to that content. The more I do things that seem like a stretch, the more people are like, you know what, never mind. We're going to go read this other person who just does the content.
Ben: It's funny. It flies in the face of the most common advice I give Seed and Series A founders, which is, until now, until product-market fit, you were the only reason that the business could exist. You uniquely figured out the product that people wanted, willed it into existence, and needed to do everything. Now, the only thing holding the business back is you because you still are doing all that stuff, and you need to stop, pull yourself out, hire, and that sort of thing.
That is exactly not true here. You will always be in that first phase. David and I will too because we're not willing to organization build around pulling ourselves out of the core product because you are the product
Packy: A hundred percent, and for better or worse. That has other benefits for you, I'm sure, as well and for me as well that you are the product. You're probably more visible than CEOs of a lot of companies of the products you love, and that gives you all sorts of other personal opportunities. But for the business itself, it means that it is harder to scale it out in a predictable way. Maybe we could both figure out how to scale these things out.
I like business breakdowns a lot from the Invest Like the Best crew. Patrick's figuring out how to scale out the business. It looks like Harry with [...] and some of the data stuff that they're doing is figuring out how to scale out the business in different ways, but it's really hard.
At least for me, it would require a big pause and a step backward where it's like, all right, I can't do as much content for the next three months because I need to build out a team, and I know how hard it is to hire, I know how hard it is to manage, I know how hard it is to manage on an ongoing basis. It would be a really risky move to even hire people in and take that step back that you need to build the structure to build an organization on top.
Ben: It's to kind of go that morning brew route where you're like, actually, there is a brand voice and a format here. If we can hire correctly for people that can do the Not Boring thing like they did for the—what is it, 100-person team now or something doing Morning Brew? I don't think Austin or Alex are actually writing the letter anymore. But it still feels like a pretty similar letter to what I was reading five years ago or four years ago, so that worked. It's a totally different way to go about it though.
Packy: You guys could probably do it better than I could. I think the great thing about that business is they had both Alex and Austin. If one person could focus on the content, then one person could focus on building the organization, take turns, and all that. Again, a little bit different with Acquired because you're both the personalities and you're both on the podcast. But it is nice, I think, for them that they've had this partnership where I'm sitting in a room alone here.
David: But you have robots on the wall.
Packy: I have robots on the wall, I have my brother who edits the vast majority of my pieces and helps me think through the business side. Puja is a saint in addition to working a full-time job and managing our growing boy. She's dead tired on Sunday reading drafts. I'm not solely alone here, but I also can't be like, all right, Dan and Puja, you write the next Not Boring while I think about building this organization.
David: Ben and I talked about this. It is interesting. I've been thinking for a long time now. Certainly, this is the path we've taken at Acquired of like, what is the ceiling to the core thing? If the core thing is great and continues to be, do you need all the other stuff? Do you need more shows? Do you need more content? Or on the internet, can it just get big? Then when you add the capital piece too, then that is very scalable and directly related to the content as well. It's interesting.
Packy: I think it can scale with this one thing pretty well. Everything also continues to feed off each other where if I have a bigger portfolio of companies, but each time I mentioned a company in a newsletter, it has a bigger impact because the audience has gotten bigger. It all scales with each other, which I think is really nice. I don't know.
If this ends up being a thing where I do one sponsored post a month instead of two and get a little bit more time to take a weekend off every once in a while, that'd be great. But there's a path to this being a million-person newsletter at some point in the next five years. I would be very psyched about that.
Ben: From the graph I'm looking at, if it keeps the shape, it would be in the next two years. So the question is, how long can it continue on this 20% month-over-month growth? What do you think the saturation point of your audience is?
Packy: It doesn't feel as exponential the chart where it still grows 1000–2000 people a week, the newsletter. But 1000–2000 people a week is a lot different when you're at 40,000 versus 80,000. So maybe it does go a little bit more linear than exponential at some point. Maybe we are hitting the S part of the S-curve. I certainly hope that's not the case.
I think probably the reason that that would happen is if I get really lazy on it, frankly. I'm like, look, I have a big audience, things are great, making money, this is awesome, I'm just going to keep doing what I'm doing, and don't want to mess it up on the content side specifically. But I think if I keep pushing on the content side and keep attracting new readers who are interested and want to learn, while also keeping a tether to the audience that's there already, then I think you can continue to grow.
That's why on the content side, other than just being obsessed with the idea of constitution dial was, it's like, all right, I can either write a normal Not Boring piece or I could go gonzo on this, and actually join it, write about what's happening, and take part in this whole thing.
I think where this ends up losing its steam is if people don't think that they can get a glimpse into the near future from reading Not Boring and glimpse into the near future that's explained in an approachable and not crazy-sounding way. If I go too far into the future and I'm just making stuff up, then that's bad. But if I'm just like, hey, here's what happened last week, here's your tech roundup, then that's not good.
I think what I will hopefully continue to do well at is looking into the very near future, never being the earliest person on something, but being the person who can say, all right, this is actually probably worth taking a look at now, and here's actually why it's not as wild as it seems, or why this is wild as it seems but it just might work. That's where I can hopefully continue to grow as the future will continue to get crazier and crazier and crazier. So if I can just help keep translating what's going on and make people feel a little more comfortable with it, then I think I'll be able to continue to grow.
Ben: I feel like you live three to six months in the possible future, and we live one month into the probably future. I don't know if you think about it that way at all. Whenever I'm reading your pieces, I'm like, oh, I'm not there yet, but I bet this will help me get there by reading it.
Packy: The fun thing for me has been that I'm writing this very tech optimistic newsletter in the greatest bull run ever, that somehow instead of getting hitting its own S-curve point, it keeps getting wilder. If that keeps happening, then I'm in really good shape, but it could also slow down. Not Boring is still, I think, even if there's a two-year bear market, we come out the other side, reload, continue to grow, things continue to get better, and all of that.
Those two years are going to be a really interesting time in Not Boring, where I'm like, all right, everybody, here's another piece talking about why we should hang on and not lose hope. That will get old pretty quickly. So that's probably actually the biggest risk to the business in the short term, both on the venture side and the newsletter side. People are like, enough with this optimism, things are kind of tough right now.
Ben: Okay. Just to highlight before we finish history and facts here and move into power is the insane last month. Speaking of compounding, all this somehow happened in one month. I'm just, again, looking at your Twitter. You went from 78,000 followers to 106,500 followers. You made your first and then a second appearance on CNBC.
You, with Chris Dixon, wrote a piece that was published in The Economist and proved to the world that you can write in The Economist's voice, not just in the unique Packy voice that I love that brings me three to six months of the future today, it is a very different voice. You read that Economist piece and you're like, wow, this is written by the Economist, not by Packy and Chris.
Of course, speaking of Chris Dixon, you're working with Andreessen Horowitz now. The whole world, including Packy, they've hired. I want to point out all the results of this crazy compounding that unbelievably happened to you in mid-October to mid-November of 2021, and a) what does that feel like, and b) what are you doing with a16z?
Packy: I think, actually, the biggest growth driver potentially was that Mario and I wrote this piece on Discord, and then Discord CEO, in the replies to my tweet about the piece, announced that they were adding Web 3.0 integrations and then announced that they were not adding Web 3.0 integrations. So that brought out the deepest, darkest, worst parts of Twitter.
The replies to that were fast, furious, and crazy. But it also added, I think, a bunch of followers, and that happened the same week that The Economist piece came out and announced the advisory at Andreessen off the back of that. So just a bunch of things happen at the same time. That makes the Twitter graph look a little bit wild, but I think that was an underappreciated one.
It's weird. I have to pinch myself every week that this time it's happening. I was like, oh, yeah, that was last week. What are we doing this week?
David: Like picking the brain.
Packy: Yeah, take over the world. But I don't think it's compounding the same way that interest would where next week even cooler things will happen, and then next week even cooler things will happen. There will certainly be ebbs and flows. We're going to go into the holiday season here where everything, I'm going to get panicked because my graph looks a lot flatter than it would have otherwise.
I'm actually taking some time off. So maybe this whole thing falls apart and we regret having this conversation in the first place. But hopefully, the ebbs and flows are just average higher over time. In terms of the a16z advisory, that's a really fun one when I think we're just mission and values aligned.
I think Chris said that there's a lot of complex stuff happening and the overall arc is really good and really positive. But if you can't translate what's happening, why this is going to be actually good for people, and actually what's happening beneath the surface here, everybody's just going to miss out and dismiss this whole thing. I think really, the advisor there is like, working with some of the companies and their portfolio to think about how they tell their story, writing pieces like I wrote with Chris in The Economist, they'll introduce me to companies that they have invested in and are excited about.
There's no guarantee that I have to write about them or anything like that, but maybe I invest in them, maybe I write about them. I think the main thrust of the partnership is that we're both out there just trying to explain what is going on, why this can be a potentially good thing, where it can go wrong, and why it's not as scary as it seems. So I think it's really all about that. We're both—this is going to sound way cornier than I want it to—just working in service of this thing that's happening.
One of the things that I think really impressed me, I signed on, obviously, as you alluded to, in the middle of them hiring all these people. I was like, so excited to announce it and I was like, oh, man, everybody's out. I don't know about that. So I was like, can I do a snarky tweet? Not snarky, but I was going to do a tweet that was like I'm joining a16z too.
I went to the offsite of the team in California. It was so clear that this big team of people was there because Andreessen was just throwing its resources behind and making sure that this nascent movement had the resources it needed to grow. So there's a bunch of people working on the regulatory side there. There's a bunch of people working on the technical side there.
They have genius engineers with other Web 2.0 protocols and companies were trying to hire who are just in-house there working on behalf of portfolio companies. I know that I'm romanticizing the services model of venture capital right now. There's obviously a reason that they're doing that.
David: We did a two-part series on it.
Packy: Yeah, exactly. It's good for them if the industry and their particular companies do really well. But it really feels like a group of people that just actually believes in this thing, wants to put the management fees to work in service of it actually happening, and not getting choked at the beginning by over-regulation and by people's lack of understanding. So I came out of that feeling a lot more optimistic and just even more excited about working with them after getting to meet more of the team.
Ben: Cool. Thanks for cluing us in. It's fascinating to me that, yeah, then it's not like you joined the firm and you are still investing completely separately out of a separate pool of capital. You have your own newsletter that's staying totally separate. But I think it's a smart evolution of the venture model to say, hey, actually, crypto advisor, I don't know exactly what your title is, but it's smart.
Packy: I've had that other conversation with funds too where it's like, hey, you want to come work and be a full-time partner at this fund? No, we've talked for the past couple of hours about how much fun I'm having doing this particular thing, so that would never be an attractive model.
David: You're still like the thunder on our big idea for grading.
Ben: Yeah, listeners, we're going to talk about this and grading because I'm curious to dig into that, so hold that thought for now. Let's do powers. You've got this concept of the Not Boring flywheel, which I want to say it's like you can make an Excel spreadsheet and say anything. You can put a flywheel diagram down on paper and it will always look good, but no one has Amazon's flywheel.
Before actually naming the powers, you've got the Not Boring flywheel here that has the audience at the core that feeds out into founders, their sponsors—we'll link to this in the show notes, and they're sort of the Monday pieces that really feed it all, go back in, and grow the audience.
David: That was from a great interview you did with Jake Singer a year or plus ago that we use his big resource here.
Packy: Actually, right around February.
Ben: Wow. So it needs to be updated.
Packy: It probably actually was a result of the million-dollar tweet. I think that's when he was like, all right, we should talk.
Ben: I'm curious how you would describe the most powerful aspect of the flywheel. What is the thing where you are like, oh, these mutually reinforcing aspects are strongly tied?
Packy: As we talked about a little bit before, the audience at the center of the flywheel is maybe not exactly the thing. If I had a million-person audience and people who didn't care about startups or whatever, it wouldn't be as powerful. I think it's really just the alignment between the content, the particular people who are in the audience, and then the investing. Those three just I think really worked well together because they all feed each other.
So that's a cop-out answer where I think I pretty much just named the whole flywheel, but I don't think there's any one particularly strong link. I really think that the content has attracted a certain type of audience member who's both more valuable to companies and who also include people who are starting companies, running companies, and all of that, and it all just feeds back into each other. I think maybe the core part is that the content itself is so aligned with the venture business. I think that's the magic.
Ben: With what types of companies or founders do you have a strong product-market fit on the investment side versus weak? Where has it happened where someone's been like, sorry, there's not really space in this round for this reason?
David: Or you're talking with somebody about sponsoring and then they’re like, actually, no,
Packy: On the sponsor side, really, it comes down to price, frankly. I think if this were a business, I'd probably be more relaxed on pricing sometimes. But because it's me at the center of it, I'm equally happy not writing a sponsored deep dive and giving myself an extra week off. As long as I like the company, I'd like to write about them, but I'm going to stand pretty firm on price. So that's where that falls apart. It's not necessarily a particular type of company.
What's really interesting is there are actually companies that I’ll say no to that I would invest in, that I think are great businesses, and I think to have something interesting strategically, but just maybe isn't interesting enough to the audience where actually, it would still perform. I've done stuff like this a little bit in the past and had learned from that where it still does well because maybe they are high ACV products, and if they get 50 people to sign up coming out of the newsletter, that is a huge win.
The ROI is fantastic and all of that, but maybe those 50 people are the only 50 people who actually cared about that particular story. So I tried to do a little bit less of that. On the founder's side, I don't think it's a particular type of industry as much as it really comes down to—nobody gives a shit that I write Not Boring, and so that's why I bristle at the audience size being the thing.
Because if somebody comes in and then they're introduced cold to me, someone's like, this is Packy from Not Boring, and it's an 88,000-person audience, so like, oh, cool, you're writing a newsletter? I think the divide is, did the person actually read Not Boring before and really get value out of something that I've written or not? I think that's actually where the divide is.
Ben: Such a good point because otherwise, it's transactional and they're like, so, are you going to write about me for free? Why do I care that you have a newsletter?
Packy: A hundred percent. I'll get that sometimes from founders when that's the introduction path. I had a founder recently email me and ask after I committed and said, here's what I'd love to do on the allocation side. He was like, great, and can you give me the open rates on your last five posts and your audience size? I was like, this feels more transactional than I want it to feel.
This will be good for both of us if this works out. I really don't like what I'm on a pitch being like, here's how the newsletter will change your company's trajectory. I think it can be really, really helpful for companies. I don't want it to be this transactional thing where it's like, all right, we'll give you $75,000 in allocation because you have a 45% open rate and 88,000 subscribers, and I've done the math. That doesn't feel right. It's more like, am I aligned with this founder and excited about the story.
Ben: Put another way, the size of the audience is not important because that is the reach that a founder or company will have access to after you invest. It's because the larger the audience size is of the right types of people, the more likely it is that someone has read something you've written, and that introduction is warm and appreciated, rather than who are you.
David: And that mental leap is automatic. If you're already a Not Boring fan, then you're like, oh, yeah, I get it. People like me read Not Boring, I want to get in front of more people in my orbit. This makes sense.
Packy: The other way to describe that is, I don't think it's gotten any easier convincing founders to give me allocation at 50,000 readers or 88,000 readers. If they're a reader, then they get it and if they're not, then on the sponsorship side, it's different. There's more of an equation there and people are willing to pay more with the bigger audience, which makes total sense. But I do think on the founder's side, that’s really the binary is, do you read Not Boring or not?
Ben: Yeah, makes sense.
David: Makes total sense.
Ben: Okay, powers.
David: Seven powers for Not Boring?
David: This is going to be fun. I'm going out on a limb here. I think it's not going to be scale economies.
Ben: For folks, I don't know how this could possibly be your first exposure to Seven Powers because you either have listened to Acquired or read Not Boring coming into this. But briefly, the real question is what thing enables this business to achieve persistent differential returns? So the more profitable than their closest competitor on a sustainable basis for years and years and years in the future.
It's kind of interesting. The first thing that I was thinking about when I was preparing for this episode is Hamilton Helmer makes the point that, actually, public company shareholders are not short-term oriented, they're long-term oriented. That's why when you change your guidance for the next quarter, the valuation can change by billions and billions and billions of dollars because people are accounting for the next 29 and three-quarters years after the next quarter in the way that they think about the trajectory of the business.
It's interesting thinking about the future value of Not Boring because it's actually much more near term than you would forecast in a public company with a durable organization and product-market fit because it's so Packy dependent. I know that's not naming a power. I think we should do that too, but it's an interesting observation, and probably why media companies, small organizations, and family-run businesses get lower multiples.
Packy: That's right. I don't raise money because then I'd have bosses. I don't think I'd get a valuation that I'd be happy to sell part of myself for.
Ben: Yeah. David, where do you think the strongest one is?
David: I hadn't thought about this before going through the whole episode. But I think there's a strong element of counter positioning here with what you're doing, at least relative to traditional media companies.
Ben: Yeah. Certainly on the journalism side, actually, and on the venture side.
David: Totally on the venture side. I think there may be some element of network economies here like what you were just talking about with the flywheel and being a reader. The more people in your target audiences who are readers, the more powerful taking an investment from Not Boring Capital, sponsoring Not Boring, or frankly, just continuing to read Not Boring becomes as more people in your circle are reading it.
Packy: I think that's probably right, but I don't want to give myself too much credit for it. I know there's definitely a difference between network economies and some sort of benefits to scale. I wouldn't call it scale economies either where hopefully it gets better. I think this is like data network effects or something where maybe it's there. Sometimes, maybe people have it. But probably, like you said, there are network effects just to pretend they are network effects. I actually don't know if I have them.
If it means that I'm able to write about more interesting companies because there are more readers, some more different types of companies want me to tell their story, and all of that, or the audience is getting bigger and I have more interesting conversations with people, so I have more interesting ideas, then maybe that is there. But it's certainly not Facebook-level network economies where it's very clear that one extra person coming on is really good for the people who know that person, et cetera.
David: There's a factor of the strength of network effects. No, you're not Facebook strength network, but I do think it's there. It is valuable to me that Ben reads Not Boring. We talk about Not Boring.
Ben: Yeah. It's weak, though. You notably don't have a community. There's a pseudo community that exists in your Twitter replies, but you haven't organized the community in a way that actually has network value. I'd say that's an opportunity. Now, maybe one that doesn't meet the bar, but an opportunity.
Packy: I think that's 100% right. Definitely, I think probably because of Not Boring Club I shied away from trying to be a community manager again. I do think Twitter is where that exists now, but I think there are absolutely opportunities. Maybe that's where a DAO or something comes in. Even a Not Boring token at some point down the line comes into play where then you get all the network effects that come built-in with crypto. But for now, I don't think that it's particularly strong. I agree, it's pretty weak.
Ben: There's one that I want to bring up where Hamilton would probably yell at me for calling it the cornered resource of Packy. I guess it's probably more process power, but you could not write a document such that you could hand it to someone else and they could do your job, that they could create the product that you create. I think that's definitionally process power that you can't actually write down the process of creating the product that you create.
I've heard you tried to explain it a few times and it's always a little bit different. You can never really articulate the consistent way that lightning strikes you such that you have a great idea. It seems like you go into your basement, you surf the internet, and magic happens. You might have to start that process a few times. But I don't think even you can really articulate the process by which the product comes out.
Packy: That's an incredibly good point. I've tried to explain this many times. It's one of the first questions that I get from people if I go talk to a group of people. I never have a good answer for it because there isn't a good answer for it.
David: Totally, it's fine. We get it a lot too. What's your process? We're like, well, I can tell you mechanically, but it's not going to sound like…
Ben: Ben opens up TextEdit and he has a document that has a zillion fonts in it because it's been cloned from 250 episodes in that text edit document. Plus David's notion has almost nothing to do with what are actual processes to create an episode.
Packy: That's the beauty. I think for Acquired, for Not Boring, for good content businesses, this is why I don't want to scale it and have to write a brand guideline or the style guide. The Economist has their guide where you should be able to plug into that thing and sound like the brand voice. I don't want to do that.
David: Okay. What was that process like writing for The Economist? What was the transition from you writing a draft to the final phase?
Packy: It was pretty close. It goes through editors. But the interesting thing is that they send you their guide upfront on the things to avoid. One of those things is to not use the word increasingly, which I then realized that I do all of the time in my writing. They give you those things upfront so that you come in kind of aware, and so it does much of what you've written as it can possibly be. Then obviously, I think just normally, an editor, they go for it. But I definitely tried to catch The Economist style in the thing that we wrote.
Ben: All right. Done with powers.
David: Yeah. I'm with that. I think it's process power. At the end of the day, it's a creative business.
Ben: For sure. Before we get into evaluating should Packy go work at a venture firm, I want to talk about NordVPN. But I have a personal story to share, as we sort of close this out. Many of you know, NordVPN, a big company, over 1000 employees, 15 million people use the product.
It's a really cool story. The CEO, Tom Oakman started this company with some childhood friends in Lithuania back in 2012. He's an Acquired fan and DMed us in Slack. It's just the coolest thing. So I was in Lisbon a couple of weeks ago for the Solana Breakpoint Conference and for Web Summit. I found myself in dire need of a VPN because I am pulling my laptop out at a cryptography event where that's dumb for lots of reasons, but there was a couple of things that I had to do.
So I opened up NordVPN. Actually, I had it on my computer, but it was the first time I had really used it. It's a remarkably good UX, super flexible, great client for my Mac, my iPhone, and I'm sure every other device that exists out there too. It was a really delightful experience. If you like using well-crafted software, I think you should go check it out. You can sign up at nordvpn.com/acquired or by clicking the link in the show notes and using the coupon code Acquired at checkout. Our thanks to Tom and the whole Nord crew.
David: Thank you, Nord.
Ben: All right. Packy, I was thinking about this, should you go work at a venture firm? Without naming a venture firm because then, it gets harder to talk about, let's say you were to go work at a big, big venture capital firm where a fund is like a billion dollars plus.
Let's say, to reflect the very quick audience that you've built this relationship and community you've cultivated, and the way that you're seeing into a very important future in Web 3.0, you would become a general partner, and the offer would be for a big, let's call it, I don't know what carry is a big firm, but call it a double-digit percentage of carry and a brand new multi-billion-dollar fund or at least billion-dollar fund.
So you're getting serious economics, but the returns are probably like seven-plus years out in the future and you make a pretty good salary. You probably make, I don't know, half of what Not Boring is making just in salary. So you have this interesting question of like, do you want to delay most of your upside another five, seven-plus years, and do you want to cut down on something that is at an inflection point right now? Or do you want to stay the course and hope that what you're building now has way more risk, but what you're building can eclipse even what the greatest upside would be from becoming a general partner at a big firm? Am I thinking about that right in the set of trade-offs?
Packy: I think that you're thinking about it right in the set of trade-offs. I think the tricky part is that, and Schrödinger's cat is not right here, but maybe you'll understand the right version of what I'm saying. As soon as I go in-house somewhere, I lose half of my value or X percent of my value as soon as I go in-house somewhere, and that is one. Even though I do sponsored posts and all that, there's this independent voice that I have, that obviously goes away.
Everything that I write would go through a legal team and a compliance team. All of those types of things probably wouldn't be able to even do it at the cadence or even the schedule that I do now where I'm making my last edit or writing my last sentence 30 minutes before the piece goes out, or even a minute before the piece goes out. So I think it would lose a little bit of that flavor.
I think, probably, you need to add a time dimension on this, which is, when does it make sense to do this? There's probably like, when I'm deeply in that S-curve, if I've gotten big enough that somehow, just because I'm Packy McCormick, people now think that I'm smart, where now I need to prove that I can add value every week.
Maybe at some point in the future when there are half a million subscribers, people will just assume that I know what I'm talking about, even though I don't and I'm just making it up every week. Then maybe the trade makes sense for me because there's not that exponential upside and for the fund because I don't lose all of my value as soon as I set foot in the door of that fund. But I think for the time being, it would be upside limiting for me and option limiting for me, and the fund would not, I don't think, get what it paid for.
David: It's funny. I'm thinking as you're saying that, you doing this—joining a venture firm—to my mind, will be almost exactly like Amazon buying Kiva Systems. Kiva Systems Robotic Warehouse company, they had lots of clients. I think maybe Target was a client, Walmart, lots of clients including Amazon, lots of value. Then at a certain point, Amazon was like, okay, it's worth more to us to buy you, it's worth more to you to sell to us at Amazon, and we're going to shut down 90% of your business, but the ultimate value is going to be higher.
Packy: I think that's probably right. Maybe where it would make sense right now is if there is, it's more than just having a GP. It's their strategic value in another firm not hiring me or in maybe you don't have a Web 3.0 practice, but you need to play catch up. I still think there are better people, frankly, who are way more technical. It would have to be me and some technical people who are deeper in the space than me, but maybe it helps you get a quicker leg up into an area where you feel that you're behind.
I think you're absolutely right, though. Amazon was not just making that decision based on Kiva's revenue and client roster because that all goes away. They're making it to keep that away from other people and to do something themselves.
Ben: There's this funny game theory thing happening here where it seems like you're willing to be reasonably public about the idea that it's not that attractive and it doesn't make sense to go join, which then makes me—with my professional venture capitalist hat on—going, well, I guess I don't need to do a takeout acquisition here because he's not going to go join anywhere else either.
David: Or it makes me more like, shoot, if I'm going to game theory that's all the way out, if Packy is going to do it at some point, then do I actually need to make the over to the top offer now to make sure that he doesn't go anywhere else in the future?
Packy: I've been public about everything in Not Boring's past. So if this does happen, if people start making big offers, I'll come back on and let you know what those offers look like.
David: Okay. To me, though, I think the wild card, since it's our show, we get to grade you. You can chime in if you want to. I feel like I'm the Packy in this episode. I'm the optimist. The question to me is, if you had that offer on the table, it'd be really hard to turn down. That's a lot of economics. Ben's probably underselling the amount of salary you'd make every year from the management fees on multi-billion dollars, that's a lot of money.
Ben: Yeah, I was trying to create this straw man that wasn't just like, well, if you want lifestyle, you do Not Boring. If you want a whole bunch of cash now and a whole bunch of cash in the future, then you go, join the [...]. It's actually not a lifestyle. I'm sorry, really restate that.
Packy: Lifestyle would be better actually in that one too.
Ben: It's control.
David: Yeah. If you want control now or you want lifestyle, cash now, and cash in the future, go join a venture firm. But here's my question, can you also manage billions of capital in Not Boring Capital? That's the question, someday.
Packy: It's such an interesting question because I keep telling myself no. We've actually had this conversation over text and voice with this group of people before. Right now, the answer is clearly no.
If I built out infrastructure, Not Boring keeps getting bigger, and I was able to hire a really phenomenal team of people who are much smarter than me around me, would Not Boring be a platform from which you could launch a billion-dollar fund potentially? It changes the strategy completely though. You can't deploy a billion dollars in follow checks.
Ben: You can't just slide in a little.
Packy: Yeah, exactly. You have to be able to invest in every, even at all reasonable company, it just wouldn't work. So I'd have to change the strategy totally where it's not friendly and you'd have to go head to head with these big, reputable, established firms with teams full of smart people. That, I think, is also a limiting factor.
That said, Josh and [...], that group of people has turned a sole capitalist thing into a bigger fund, and they're competing and winning deals. So it's doable, it is just a very different strategy that I don't know if I'd be good at or not.
David: Andreessen itself, the Andreessen story, it was that, right? Mark and Ben were super angels. They played nice with everybody. They had everybody in the valley, except maybe Benchmark after the LoudCloud experience. Then they were like, well, I think we can turn this into a firm, and they did.
Packy: They're a little smarter than I am.
David: It's a different thing than being a super angel, but it doesn't mean it's not possible.
Packy: Listeners, stay tuned to find out.
Ben: I don't know if you're the primary or the sole shareholder of Not Boring. You also just get to pick. You're like, well, if this will make my life worse, and I don't need to make more money, why would I do it?
Packy: I think a lot of this is don't get greedy. I think getting greedy, that is hiring more people, that is lowering the bar on who I write sponsored posts on or even who the advertisers are on a normal piece. This works if I don't get greedy and this stops working if I get greedy. So it's a pretty clear binary there. Maybe that means I'm being too risk-averse on some things, but I'm very happy with the way things are going now, and I know that I can mess it up by getting too greedy.
David: Fair answer, we'll accept it.
Ben: You guys want to do carve outs?
David: Yeah, let's do it.
Ben: All right. David, you first.
David: Okay. My carve out, fitting for my status as a new dad. This might be portending a lot of parenting carve outs to come. Some people had told us this before we went to the hospital to give birth there. I didn't pay attention and I wish I had. So if you're a parent, you know what I'm talking about, if you're not, this may happen to you someday.
The baby comes out and then the babies need to be swaddled. The nurses in the hospital, they just used a regular blanket, they take it, they put the baby in the blanket, and they do some folds. They're like, this is how you do it, it's so easy. Like, oh yeah, that's so easy, I can do that. That's just like folding a sheet of paper, no problem. Then the nurses leave the room.
Then you're like, the baby comes out of the swaddle, you got to re-swaddle the baby. I got it and it's just like, whoa, how did they do that? That was magic. You can't do it. New parents, do not try and swaddle your baby in a regular blanket. Get some dedicated baby blankets swaddles with velcro and zippers. It will save you so much heartache, and bring them to the hospital for God's sake. That's my carve out.
Ben: David's carve outs have really changed.
Ben: It's great advice, though. I'll take a note. It's funny. In preparing for carve outs for this, normally I have five or six I can choose from what I'm reading that are off-the-wall stuff or different things I'm watching. I'm watching Succession, but I've already carved that out. Everything that I'm reading or listening to right now is either prep for this episode or our next two episodes, which I won't spoil.
So I'm going to do something that is way too much talking my own book, but I think it's an awesome thing to read. A tough few posts on Hacker News yesterday. So clearly, there's another heat around it. There's a Pioneer Square Labs piece by Dave Peck, who's a veteran engineer on our team called An Engineer's Hype-Free Observations on Web3 (and its Possibilities).
I helped a little bit with this. Our goal was really to take all the [...] that our engineering team has done in the studio. These are people who have worked their whole careers not in crypto, and explore what actually are the technical merits of these technologies, what should be built, is there a lot of discussion around building, but doesn't actually make a lot of sense to us why you would build that distributed? Try and write a balanced honest take on here's what the tech can do, here's what the tech can't do.
We're going to try and ignore some of the cultural elements of Web 3.0 and just do it a little bit more analytically. Of course, you can't help but throw in some cultural elements because it's a cultural movement, but I'm really proud of how it came out. I welcome all feedback, and we'll put a link in the show notes.
Packy: So I'm going to keep it in Seattle for mine. I think the last time that we talked, maybe I recommended a sci-fi book. I've been reading a lot of sci-fi. If I'm spending so much time in real stuff when I'm writing, it's nice to turn my brain off. The other day, I finished a book and I googled best sci-fi 2021 and this one book came up. It was described as Haruki Murakami meets Ready Player One.
Haruki Murakami is my favorite author. Ready Player One, maybe not the best-written book of all time, but it certainly inspired a lot of the things that people are talking about right now. This book is called Rabbits. It's this thriller about this global game that takes place to save the world. You play it by following a bunch of these coincidences that seem like coincidences, but maybe they aren't.
Ultimately, playing and winning rabbits is how you reset balance in the universe. It's, again, maybe not the best-written book that I've ever read. I've heard the ending isn't great. I haven't gotten there yet, but it's been really entertaining. I can't put it down kind of read. It has Murakami-ish vibes if it's not quite as good as Murakami.
David: I'm going to have to check this out.
Packy: I'm learning a lot about Seattle, which is making me feel closer to Ben.
Ben: You're welcome anytime, my friend.
David: Seattle is such a great sci-fi—tenuous Seattle connection, but also sci-fi and sci-fi books. I am so hyped, November 30th, which will probably be after this comes out. But before we're recording it, the last book of The Expanse is finally coming out.
David: I'm so hyped.
Packy: Someone recommended The Expanse to me today. I've never read any of them. So I bought book one.
David: Oh my God. You got to read it. It's the best. It's so good.
Ben: Have you watched the show?
Packy: No. I've been told to read the books first and then watch the show.
Ben: I could see. Having not read any of the books, at least the first two, maybe three seasons of the show were excellent, like some of the best sci-fi TV I've ever watched.
David: I'm rereading to get ready for the final book. There are going to be nine books total. Eight have already come out, the ninth is coming out. The first two, amazing, so great. Then I would say three is pretty good too. Four, five, six, and seven, they're still really good. Read them through the first time. I reread one and two, then I'm rereading eight, and then I'm going to go right into nine.
Packy: Have you read Red Rising, the Red Rising trilogy?
David: No, I need to.
Packy: Just what you said, it reminded me. Normally, because again, I'm a happy-go-lucky optimist kind of guy. When people say that, where they're like, I liked one and two, I didn't like three, I loved four, I hated five, I don't have that kind of nuance in my brain.
But Red Rising, it feels like it was written by not only a different person, but a different species almost after book three. Books one, two, and three were so good. Book four was an abomination. It's one of the few books that I've stopped in the past few years.
David: Wow. How many books total are in the series?
Packy: I couldn't tell you.
David: You just stopped stopped.
Packy: I stopped.
David: Wow, interesting. Okay, let's check it out.
Packy: One through three, though, you should definitely read once The Expanse is over
David: Great. The Expanse, if you only watch the TV show, you might not know it. There are two authors. James S. A. Corey is a pen name of the two authors who collaborate. They are George R.R. Martin's assistants.
Ben: No way.
David: So The Expanse is Game of Thrones in space.
Ben: I never realized that.
David: Yeah, it's really good.
Ben: All right. Now I have to go read the books.
Packy: Me too.
Ben: Wild. Well, Packy, we can't thank you enough for being here.
Packy: Thank you for having me. This was a dream come true. This was so much fun.
Ben: It's a very unique Acquired episode for us. Notably, not a special. We want to be very intentional that this is profiling the history and strategy of a company the way that we would, the New York Times, Standard Oil, or Amazon.
David: The company just happens to be Packy.
Ben: One person and 18-months-old.
Packy: It's surreal.
Ben: Also, as we drift toward our closing notes here, I was going to tell folks, seriously, you should go subscribe to the public Acquired LP Show wherever you get your podcasts now. But it's worth pointing out, the strategy to shift to make episodes and the whole back catalog, public to listeners on a new feed after two weeks of being just for the paid subscribers is totally inspired by you, Packy.
I think the realization that with such a smart, valuable, audience that attention is the scarce resource, I think that part of us realizing, oh, we should change the way that the Limited Partner program works and really make it just the limited partner community with some early exclusive access to this content. Actually, in crypto, I guess two weeks is forever. So that two weeks is valuable, especially, as we do more crypto stuff. But yeah, that was really largely inspired by you, so thanks for that too.
Packy: If my biggest contribution to the world is making more great content free on the internet, I am very psyched for that legacy.
Ben: Awesome. Packy, where can listeners find you or Not Boring on the internet?
Packy: Not Boring is at notboring.co. I have a poorly produced podcast that you can find by searching Not Boring Podcast wherever you listen to podcasts.
David: We're going to get you upgraded.
Packy: We're going to get me upgraded.
David: Next time we do this, you're not going to be saying poorly produced.
Ben: That is how I read Not Boring is listening.
Packy: That's true. None of it is overly produced, which I think is good. Twitter is @packyM.
Ben: Awesome. Thank you to Pilot, PitchBook, and NordVPN. Listeners, we'll catch you next time.
David: See you next time. Bye.
Oops! Something went wrong while submitting the form