Basically, I had nothing to do. I was just going out drinking with my friends all the time, almost like five days a week. We had the system sending us stats at noon and at midnight. $10,000, $15,000.
On a good day, like $20,000, something thousand dollars. OK. And is it recording? OK.
OK, so what is this? So something that entertains me. And so I wanted to create a podcast, which was first and foremost just an excuse to hang out with people who I haven't been able to hang out with as much. So one way is to say, hey, let's go grab a coffee.
And the other way is to say, what if we recorded this? Other people could be flying on the wall and hear stories or chatter about random stuff. And I'm not trying to do it educationally. So for me, it's stories.
Stories is the part where the podcast is called My First Million. And the reason I picked that is because the audience that listens to this, they are entrepreneurs already or entrepreneurs thinking about, hey, that's the dream. I'd love to quit my job and start a business someday. And I remember for me, and I think this applies to many people, which is the idea of a million bucks is like a magic number.
Even today, when everyone's a billionaire, still, if you're a thousand there, a million bucks sounds like all the money. Totally understand. And so when I made my first million, I put it all in one account and I went to the ATM. Just look at it.
And I withdrew money, so I would have a slip of paper that said I had a million dollars. I framed that much to do with the slip. Well, the funny thing is, then we had all these jokes because I had these ATM slips with a million dollars on it. And we were just joking around, like, man, we should keep these in our wallet.
And then when you give a girl your phone number, you should be like, oh, let me write it down. Let me write this before. I'll just write it down in a slip of paper. I haven't.
I never actually did it, but it was a funny idea. And actually, I remember, I searched Googling the idea. And there were companies, I remember, that sold fake ATM slips online. Oh, wow.
So you weren't the first guy I think about doing this. It'll hold me in the street. Yeah, so basically, it's called My First Million. I'm talking about how they made a million bucks in all different ways.
So some people are tech entrepreneurs from start business. Some people made a million bucks selling mushrooms in their mushroom farmers. They didn't crypto, CBD, and all the different types of things, real estate. And so I want to tell stories that the listeners basically hear, man, first, there's a million ways to success.
You don't have to follow a particular track. And B, just a little bit of inspiration and entertainment about how these stories tend to be really interesting. They kind of come out of nowhere. It wasn't a perfect plan.
It wasn't a straight line. It usually has ups and downs. And so I want to tell those stories. In Harvard Business School, they have these HBS cases.
And everything in those cases is like, oh, Sean was looking out the window at the Charles River thinking about what he was going to do for his company. And the solution is always to give you all this data. And then at the end, it's like, oh, he did this and this and this and this and this. And then he did that and that and that.
It's like, oh, look how, like, the solution was a neat package. And in reality, you know, the guy was not sleeping and probably did 20 million things before he did, but he actually ended up doing or see whatever. But it's funny because it's always like that. But reality is never like that.
You know? Exactly. And so I'll give the brief intro. So we have James Hong on the show.
Entrepreneurs started famously a company called Hot or Not. One of the first tremendously viral product before viral was really even a thing, I would say. And now Angel Investor, all around good guy. I'm excited to be talking to you.
Last time I talked to you was like five years ago. Yeah, one time ago. So it's good to reconnect. And so I always start with, you know, not kind of how to do it.
But a different sort of question, which is really, did you always want to make a million bucks? Like, when you were growing up, did you want to be rich? Was that a goal of yours? Not necessarily.
I wasn't really like, oh, I have to be rich. My mom tells me that I drew her. I kind of remember this. In third grade, I drew her a picture of my house.
And I remember it was on the waterfront. And it had like two helicopter landing pads. And so maybe I did. By the time I grew up, by the time I went through college, I wasn't really like, I need to be rich.
But I did want to do something. You know what I mean? I didn't want to be bored. The thing I learned at my first job, which was at Hewlett-Packard, I remember this is when the web first came out.
And I was doing basically sales support for a technical product. And I created a website because I was tired of all these people calling me with the same questions. I basically eliminated my job and the job of two other people. My coworkers, we all got deployed on to other things.
But I remember thinking, they gave me a bonus of like, they gave me a raise of like five grand or something like that. And I just eliminated like three jobs. That was probably like back then, like a couple hundred grand or something like that. And I got five grand.
And I just remember thinking, I'll never make as much money as a value I deliver in a company because a company, a big company at least, has to kind of pay people based on kind of like the median value that any given person that the company will provide. Right? I think that's kind of the one thing that's changed a little bit like at Google and at Facebook is that they're now willing to be like, oh wow, you created like hundreds of millions of dollars in value. Maybe they still don't give you a couple hundred million.
But they'll be like, we'll give you 10 million. So at least maybe it's not that different today except that things operate at a higher scale and that they're able to because the margins are high. In any case, I was like, screw that. I'm going to go work for myself because then I can actually extract what I actually created.
Yeah, most people don't see that. So if you're at a company, and this is not because companies are evil, this is really just the standard way you have to operate. If somebody's 10 times more productive, 10 times better than their peers, you can't pay them 10 times as much usually. Yeah, that's exactly the point.
People make straight up more money at these companies than they would being fairly successful as an entrepreneur, hitting a double or hitting a triple even. And that's because the scale of these companies is so now. Because the scale and the margin is high. Right.
That's really the difference. And so you were, was it straight out of college that you were here with Packard? That was straight out of college. So I was like, forget it.
Because in the meantime, if anything that happened is, this is a 90, I got out of college in 95. And where'd you go to school? I went to Berkeley. OK.
I did engineering, electrical engineering, computer science and the funny thing is, in 1994, I remember summer of 94, that's when Mosaic came out in the first web browser. Coming out of Berkeley, everyone who got good grades went to grad school or at worst got the good jobs, which the good job was going to Intel or HP or whatever. And I went to HP. And meanwhile, our friends who were not a strong students, who couldn't get into grad school, who couldn't get a job at HP, they ended up taking jobs at other places that we'd never heard of, like eBay and Yahoo.
So around 96 or around 96, whenever Yahoo in public, all these friends got rich. And that's kind of like when you realize that, oh, like, oh, I'm trying to get back to you. Can I win? Because I got lost.
When you're at a school, you're still thinking, oh, whoever gets the best grades, whoever works hard is blah, blah, blah. Deserves the big prize. And then you're like, wait, what just happened? And that's kind of like when reality hits.
Like, life is not, I mean, there's a lot of things in life that determine how you end up doing. And I mean, a lot of it's luck. A lot of it's just circumstance or whatever. So anyway, I realize that I'm not going to get rich at HP.
And not only that, I didn't get the value of the job that I got. Made more efficient. Yeah, exactly. And so around that time, I was like, OK, screw this.
At that point, I was like, I'm out of here. And then I was like, well, I was either going to go to business school. Because back then, everyone thought business school was a path. And actually, to some degree, it kind of was.
Because back then, to start anything, you needed to raise venture money. And it was easier to raise venture money if you had either a lot of experience on the engineering side or it was MBA VCs funding other MBAs. So it was kind of seen as a path back then to get an MBA to become an entrepreneur. And today, you don't have to do that.
Because mainly because the cost is so much lower of starting up. I think what did you need to start? Well, back then is like, oh, to start any company, first of all, certainly, you needed a Sun machine. You need a box from Sun to run the web server.
And that might be like half a million bucks or something. Just to get started, cost a lot of money. Plus, there weren't as many tools. The kit was expensive.
We wanted to buy the box to play. Just to put up a website with the database on it, people thought you have to have a million bucks at least. And so nobody had the million bucks lying around. And today, what do you need for that?
Nothing. Five hours in. You got a free box, free instance from Amazon, whatever. It's nothing.
It's virtually free. Actually, when we started Hotter, not when it first started taking off, it was built on a PC I got for free from e-trade, I think, for opening an account of 500 bucks. It was like the thing is, machine had no memory or anything. But it could run as a server, not very well.
But it got us online, right? And the first thing we thought was we need to get a Sun machine when things took off. And so we got a Sun machine, we were leasing through Rackspace at the time. I remember distinctly hanging out in front of some restaurant in Palo Alto and the early page saying, oh, yeah, you should buy from Rackable, which was a one-new wrap-mount system company.
And it turned out that my neighbor, two doors down, was the guy who he was like number 20 at Google. And he was like, remember they used to say that we have a neurosurgeon on staff. But that was him. And he was in charge of scaling all their data center ops.
So he was saying, and he was like, yeah, guys, you should get a bunch of things. And this is kind of an untold story about Google's one of the reasons why they were able to win. And people don't talk too much about this, which is they were using commodity cheap hardware instead of these expensive specialised systems that were harder to scale. Because the robustness of a system of the 1000 machines was much better than one Sun box, especially centralizing all your problems.
Single points of failure, one single box. And you saw them, and that was like your Roger Vanister, four minute mile, where you're like, oh, we can do it with that, too. Yeah, basically. And it was cheaper.
I mean, we didn't have money. So in debt from business school, my partner was a PhD grad student. So we didn't have money. We were negative networks.
So Haudenos was like Tinder in 2000. It was a website where people would submit their picture, and other people would rate them on a scale of 1 to 10 on how they were. And this was kind of in the day when everyone was scared to post their photo online. If you posted your photo online, it was behind a password protected page that was for Shutterfly or photo back in the day.
So the concept of posting a photo for other people to see that you didn't have full control over who could see it was completely foreign at the time. Forget about the rating. That was obviously the rating actually as an idea came slightly second. It was originally about voyeurism.
I was addicted to reality TV back then. Well, we watched it. Back then, I used to watch a lot of Jerry Springer, Ricky Lake, all that kind of stuff. The best part of those days was I actually ended up going on some of those shows.
You were on Springer? I was on Ricky Lake, I think, or maybe one of those. As a guest? I was a guest judge.
I was a guest judge. They had people come out like, the themes would be like, my friend thinks she's hot, and she's really not. And then they would come out and talk about it, and then I would come out the end and tell them they're score. So where did that idea come from?
Post your photo online, and then you added later. Yeah, the rating was just kind of an add on. It'd be cool to have a mechanism where the audience could give data back. And there was this whole, what they called the two-way web.
The web is about conversations. So the concept that the audience could actually give a response back was new. So you like people watching? Right.
But that's still where did the lightning bolt strike? Actually, there's a backstory to all of this, which is that in the late 90s, there was this guy called the Turkish stud. I don't know if you know about that. Actually, I think Borat was based on him.
I think the guy who does Borat denies it, but it's so clear. There was this guy in Turkey who had a web page with pictures of him, like ping pong or whatever. And somebody, I don't think to this day anyone who did it, but someone took those pictures and made another web page that was a fake web page. And he called himself the Turkish stud.
And he's like, who wants to come to my country? I can imitate you, come have sex. It was Borat. He's like, oh, this sexy guy.
And it blew up. There was this company called Etor that jumped on it. And Etor was kind of like the equivalent then of Stumble Upon. And I know people remember Stumble Upon.
Whatever, like, it took you to random things on the web. Because back then there wasn't that much on the web. So it was going to Etor made a big deal out of this guy. And he ended up on Letterman.
And within a month, he had like a million page use or something like that. And my friend and I just thought it was my co-founder, Jim Young. He and I just thought it was hilarious. Because there were all these companies back in those days that were raising tons of money, throwing lavish parties and stuff like that.
You couldn't get a tenth of pages. Who couldn't get any page use? And this was when like Sea Durdson was starting to talk about viral marketing with Hotmail. And we're like, this is so fucking awesome.
Because it was just irony, right? Someone did it to him. And he ended up on Letterman and getting all these hits that all these other people were dying for. We just thought it was funny.
And so we kind of had it in the back of our mind. Someday I want to build a Turkish stud. So it wasn't even about money. It was about I want to do something that goes viral.
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And so when we were talking about just various ideas one time, this voyeurism and whatever came up, and then like, oh, then you could rate them, or whatever. Hey, this could be our Turkish stud. And so actually when we built it, like Jim was a grad student. I was working at a friends company at the time.
We were just killing a lot of time. And we were ready to set up in this house to do a startup. So anyway, Jim just disappeared in his room. And like three or four days later, he came out.
He's like, OK, it's done. Today you could build it in literally 20 minutes. But back then, you had to do a lot of extra stuff. And so he came out and said, it's done.
And then I. And I got you uploaded a photo. Yeah. And I clicked through other people's photos.
Yeah, basically. And then I tested it that weekend. I was playing with it. My dad came into.
What do you mean by you tested it? I was just looking at it. He said me a link. I didn't look at it for a couple of days.
Then I started looking at it a couple of days later. When I was at home on the weekend, my dad was looking over my shoulder. He walked in the room. He was like, oh, what are you doing?
And I was supposed to be working. And by this point, I had to quit my job. I'm sorry. So I was unemployed.
So now I remember. I was supposed to be looking for a job probably. So I lied and said, ah, this is just something Jim's doing. And so my dad starts playing with it.
And then I see him. He's the first person I ever saw. I get addicted to raiding swipes. Swipes.
I'm hot or not. Swipes. Yeah. And we just had, I just taken photos from it because I first most did like, seated.
And so he was like, oh, she's hot. Oh my god. Like my dad is like 60 year old Asian engineer. It was supposed to be asexual, except the three times he had my mom.
Which was, you know, a macro conception. Exactly. So I was like, holy crap. Like, this is pretty interesting.
So then we launched it like that Monday. I remember Monday or Tuesday. I think it was Monday. And I just, we launched it by sending it, I sent an email.
I put myself and Jim on the site. And then I sent a link to our pictures and sent it to a bunch of our friends. And I was like, it was 42 people, which I counted it later. But you know, it was 42.
It was a magic number, right from us. But anyway, so I sent it out. And like, it just immediately took off. And I think by the end of that was at 2 o'clock in the afternoon.
And by the end of the day, we had had like 30 something thousand IP addresses in our logs. It's sinking. And so that's back down a lot of people went through proxies or AOL and all these dialogues. So it's probably like, you know, 100,000 people or more.
And holy shit. That's crazy. So people were just sending it to their friends. Yeah, people were just sending it.
And like, within an hour, we had like 20 or 30 submissions. And so I was like, okay, we can take off the fake photos now. Because like, it was so slow because it was running on that one machine. I think like, after you voted, it would take you to the next page view where it would tell you the score of that person and then show you someone else to rate.
And that, the turnover of that page was about 20 seconds. Like, people were doing it and like clicking away to like, going to their other browser when they're doing whatever and then coming back. But people is amazing. Like, people were just doing it.
And so we're like, holy shit. Like, this is nuts. Like, it just took off like crazy. And so by the end of the week, I think we were doing like a couple million pages a day.
And it's all still running on the laptop or at this time. No, I'll get to that. But yeah, yeah. Like, there are all these crazy stories about how we scaled it.
Like, it got to 2 million a day. And then like, within two months, like, we were in People Magazine. I think like, we were one of the top 20 most traffic websites on the web at that time. You had your Turkish dad.
Yeah, we beat the Turkish dad. Right. You know the funny thing? He has US.
He said the Turkish stud got popular because he first hit the scene because there was this woman at salon.com. salon was like an online mag and seen back then that was pretty popular. And there was this woman who was a writer in Janelle Brown. And she wrote about the Turkish stud.
She made the Turkish stud happen really. Because I think that's how you tour everyone else about them. Well, my friend was calling me up. He's like the first day that we were running.
He's like, hey, I got a friend who works at salon.com named Janelle. Can you talk to her? I'm like, OK. You know, like, we'll talk to her.
But like, we have to remain anonymous. Because we didn't know if we were going to get a trouble. Or, you know, like, people were going to be offended by this or whatever. And so he's like, OK, she said she'll talk to you anonymously.
And then so I did, I was talking to this woman Janelle. And she was interviewing me. And she's clicking on the site while she's doing it. And then she's like, and we didn't have that many photos on the site.
So she hit mine. But there's no way for her to know that. But she's like, wait a minute. Is this James Hong?
I'm like, yeah. How did she put together? How did she put together? She put a phone.
Because Janelle Brown was the very first person I met in college. Her door literally faced my door in the dorms at Berkeley. So I was like, James, it's Janelle Brown. I was like, whole, because at that point I just knew her of his friend Janelle.
So I was like, oh my god, Janelle, please don't tell anyone I'm doing this. So she's like, OK, OK, no problem. I said you'd be anonymous and I'll respect that, right? So she did.
Actually, but the traffic actually got so bad that first day that I called her, saying, hey, Janelle, thank you. Yes, I was like, can you please not run it? Because remember, we were running on a server that was at a time when we were hosting the photos and it was $1,000 a megabit per second. So I figured at the end of the day or whatever, I was like, man, this thing's going to cost the run rate was $50,000 a month.
And it was doubling every whatever hours. And so the trick with bandwidth pricing, no one knows this anymore, because everyone just goes to AWS and gets charged on throughput. But back in the day, when you pay for bandwidth, most carriers will give you, will bill you at the 95th percentile of your usage, which means you have 5% of, you can spike to infinity and you're fine, right? So that basically is a day and a half in 30 days, right?
So we had basically a day and a half of 40,000 to do as much as we want. But we were approaching that day and a half. And we're like, holy shit, this is going to be $40,000 a month or whatever. Like we were actually, we almost shut it down.
And so I told Janelle, I asked Janelle, can you not run this? He's like, I would love to help you, but it's a slow news day. So now I understand how journalists work. You know, like they're on a daily, like they got to put out something every day or whatever.
And so I was like, oh shit. So our solution was to that night, we moved it to Berkeley. Because like I said, my partner was a grad student at Berkeley. So we like, I remember we drove to Berkeley at like three in the morning.
And we went to his grad student office and we set up the box, we hit it under his desk, we stacked books in front of the box. Like it was just like this lone wire coming out from under his desk. That's costing me university. That was going to cost me.
And doubling, like I said, it was doubling like every like four hours. Anyway, we turned the site was down for a couple hours. We turned it back on and like we looked at the logs, you know, we tailed the log and it's like boom, boom, boom, boom, boom, boom, boom. Right.
So like we're like, holy shit, like we weren't sure if it was going to die once we turned it off for a couple hours or whatever. Right. Anyway, so I remember that was like 5.30 in the morning. We got it finally back up.
And then we like drove home and like crashed. And then Jim got like a call from his advisor at like nine or something. Apparently the IT guy at Berkeley like spit his coffee out when he saw the logs or whatever, you know, the knock management tools and followed the wire must have followed the wire. And then he was like, what the hell is this?
Luckily, he didn't turn the box off. You know, actually, I remember we taped, I took like a box of thumbtacks and took half the box and put it over the power switch and tape did. I was like, maybe that was a signal to not to turn this box off. But anyway, luckily, Jim's advisor was a, he was the Dean of engineering at Berkeley.
And he was also one of the co-founders of like Cadence and synopsis. He was like a father of that and he was also a venture partner at me field, venture partners. So he was like a very entrepreneurial guy. Right.
So he's like, okay, what's a problem. This was an opportunity. He, well, in his wisdom, he saw this is an amazing thing. He's like, okay, look, I will buy you a couple of days.
But you got to figure something out. And so we did. So we ended up calling Rackspace, which at that time was a rinky dink, very small companies, so relatively. But they were the leaders in managed toasting at the time.
And I just happened to know, you know, I looked at their about us page and their VP of Biz Dev went to Stanford Law School around the same time as a guy named Josh Becker went to law school at Stanford. So Josh put me in touch with him and then I was like, hey, listen, you know, like, we don't have any money. But I think we're a good poster child for you guys because that's our whole stick is like you don't have to have money up front. You can, they can scale you up today because they have machines ready to go.
You know, like, back then, if you wanted to buy machines, even if we had the money, it would take a month to get the machines and to wrap up and all that kind of stuff. So you said this is the best marketing one of mine. And I'm like, this is perfect. So they're like, okay, put a logo of Rackspace above the fold.
We love what you're doing. We love the growth. And I basically said, look, I'm getting a ton of inbound inquiries about press. Like I will mention you guys everywhere I can.
And so they're like, perfect, let's do it. And to the ground, they didn't even know how many machines we're going to end up taking. And they didn't care. They're like, look, just when you need new machines, tell us.
And we end up calling them every night saying we need more machines, right? And they were like, yes, let's do it. And we hadn't even worked out the term. Yeah, there was no paperwork at this point.
It was just like, well, sometimes things move too fast. Well, yeah. And this is how the web really was back in the day. Like everyone just kind of helped each other.
You know, like, I think eBay hosted Yahoo or maybe it was the other way around. But anyway, maybe it's Netscape hosted eBay. Anyway, everyone used to help everyone. And so, yeah, so they're like, yeah, don't worry about it.
Like, just get big. Like, I think we were doing about maybe like 15 million, 10 to 15 million pages a day. And you have to remember, like, today, like that might not seem as big. But at the time, it was it was hard for things to grow as fast as it, because there was no social media.
So like when things got passed around, they were passed around by email or, you know, it wasn't as easy as just clicking the button, which, you know, and you know, any bit of friction reduction can increase the liquidity of any system by like 10x, right? So like, things did just not grow that fast back then. And it just, I mean, like today, like it would have probably been like insane. Anyway, it was insane by those days standards.
And like I said, within two months, I think Netnelson or whatever had us as like, we were bigger than ESPN, you know? And it was just like two guys like in their underwear, like in their living room, like coding, right, or whatever. And yeah, so anyway, we cut that deal with them. And we still had the problem of like, they gave us, when we finally worked out the numbers, they were like, okay, you can have a year.
They gave us a half a year of free hosting and then a quarter of like 50% off and then a quarter of 25% off and then in the year we would have to start paying. So, but that was more than generous, right? That was just amazing. But we didn't know that like, and at that point in time, like, we're like, okay, we made our Turkish stud.
We want this thing to keep going, but Jim needed to get back to his dissertation and I needed to go back to finding a job or whatever. We didn't think that there was any business model in this. In fact, we stuck ads on the site when it first started. And I remember we were going through like 24, 7 media or something, some ad network back in the day.
That was pretty big. The CPM at that time was 25 cents, CPM, which means for every thousand pages, we got 0.25 cents. You know, today it's like $1, right? And so it basically wasn't enough.
It was barely enough. It wasn't going to cover anything, right? So we still needed to figure out how to like make this thing last. So the first thing we did was, that's when we stopped hosting photos and we started sending people to Yahoo and saying, hey, just send us a URL of the photo on Yahoo and Yahoo basically pay for this, right?
That got the bill by what? Well, I mean, that killed almost all of the bill. Right now we just have to pay for the machines. But basically all of the cost was basically all of that 50,000 in doubling was bandwidth for the pictures, right?
And you know, the funny thing is a month or two after we did that, Yahoo shut off all ability for anyone to post, to use pictures that were hosted by them. But somehow we got whitelisted. And like two years later, I was speaking at Berkeley and I met a guy who worked on GeoCities, he was her angel inside. Yeah, basically.
And I was like, hey, listen, I don't want to look a gift for us in the mouth. I'm kind of nervous to ask you, but why do this for us? And they're like, oh, yeah, we love Hot or No, we just didn't want to be the guys who killed it. So like I said, people used to help people out.
It was really cool. And anyway, we knew we had to get off of them. So the first thing we did was we cut a deal with Ophoto. People were starting to get digital cameras at the time.
And they were willing to pay a bounty, a dollar for every user that has a digital camera. So what we did is we said, hey, if you don't have a digital camera, which most people at the Poutan didn't go to GeoCities and Yahoo will host it for free. But if you have a digital camera, please go to Ophoto, and they would pay us a dollar, basically. And they even paid us 25 grand up front.
Again, really just to help us out. There was a guy a new named Mitch Brown who worked there who did BD. And at the time the company was run by this guy, James Joaquin, who he was CEO of Ophoto. He's now running Obvious Ventures with Evan Williams.
Anyways, Evan James, awesome people. James loved it, too. So they were really just doing it as a favor to help us out. They didn't really know us.
But that's how the web was. And so did it ever become a business or what would end up happening? So we realized it had to make money because we needed to hire somebody to run the thing. Because clearly, we weren't going to run it.
We weren't going to go back to getting a real job or going back to finishing Jim's PhD. And so, but the ads were slowly starting making more money. It wasn't enough to pay for the bills. That's why we added the dating side of it.
So we were the first ones to do the concept of what you call double opt-in dating. Like if you say you're interested in someone, then they can say they're interested in you too. What Tinder is today, they have swipe. We invented the, to my knowledge, we invented the JavaScript auto submit radio button.
You had to hit submit every time you clicked a button. So Hodden was the first one that was two clicks. So we made it one click. We'd never seen it before.
So we think we invented it. But you never know. Someone called it. But we had to figure out how to do it on our own.
But that's amazing because now there's no rejection. It's like, if we got connected, it's because we both think we're the other hot. Right. Because our whole thing is you have a highly liquid marketplace.
There is no rejection because you don't even remember everyone you said yes to. And the other thing that it did was it protected the woman who, like, you know, basically we saw Mash.com and all these guys is basically PIMPS. Right? Like, oh, look at my, look at my, you know, all these women are men that you might think they're hot.
Like, oh, you want to talk to him? You know, like, you put on a doll. You got paid. Right?
And what that did is that, what that ended up doing is like that led to lots of men paying and flooding women with messages. And where like the women just look at their photo, no. And then that guy just like got basically ripped off. And the woman got, you know, the signal to noise was too low for the woman.
And so we thought that was just kind of an inefficient thing. Right? And so we thought, you know, doing it, basically it was speed dating and doing it as speed dating, bringing speed dating online was a good idea. And so that's what we did.
And that actually, so we turned that on. We turned on charging for it. So the way it worked was like one of the two people once you matched had to be a paid member. So there's equivalent of, look, you guys smile at a girl in a bar, see smiles back.
At the end of the day, someone's got to buy drinks. Right? And it's usually not the girl. And that's how we had a payment model.
So all of a sudden, like, as soon as we turned that on, I think it was like within a month, it was like by the end of that year, we were at like a half a million dollar run rate, which was enough to like hire someone and pay the cost or whatever. I mean, actually at that point, the cost was zero because we had the free hosting or whatever. But even, you know, if you have any, if you can find any model that can convert, even a small percentage of, I think we were converting, actually we were converting like 5% of our users were paid, including the woman. And then by the end of it, we had optimized it to like 20% of people who joined paid, right?
It was enough to pay for everything. And then, you know, it doesn't matter, if you have scale, if you can even have any model that makes enough money, if you are a lean operation, you can definitely pay your salaries and have like a life-sullivis in this. Right? And so that's what we had, basically, we were doing half a million and it just kept growing, like organically.
And so, while we had to do, at that point, we were basically like, we were the modern day equivalent of people who ran a laundromat. Like we just have to keep these machines running and, you know, we have to install new machines to support, you know, like we have to like, but we're just collecting quarters. And yeah, so that, so we kind of stumbled upon, it wasn't, you know, like it sounds much more intentional than it was, it was like, we kind of stumbled into having a very profitable business. And then you decide to sell the company at some point?
Well, yeah, so we ran it for eight years. Around year three or year four, we finally started, we hired people. So what happened is we ran it for three years or so out of the house, just the two of us. And at that point, we were doing like three to four million in revenue, almost all of it was profit.
My co-founder started writing motorcycles. And at some point, I was like, hey, you know, like, if something happens to you, that's probably not good for it or not. And also, like, frankly, he was tired and I was tired. Not to be a buzzkill, but.
I mean, we were also like, look, I mean, at that point, we were running like, he was running ops on like a hundred machines. You know, so I'm having to go to the data center all the time. Running the ops probably got tiresome. He automated it as much as he could, so he wouldn't have to go in that often.
At some point in time, we brought in a friend of his from high school, Greg Lynn, and we brought in Don Paulak, who did customer service. Because by that point, I was doing a lot of the customer service emails and stuff like that. So we brought her in. And so we basically had now a company.
We had employees. And then we started hiring more people and more people, not that many, but we hired a few more people. And then it kind of became like, we had responsibility. We had employees and we had to manage people with this company.
And that wasn't really either of our thing. And so we both kind of flamed out on it. We're just not very operational people, either of us. Or at least, I wouldn't say we're not operational, it's not the part we enjoy.
And so the more people we hired, the more of a drag it became. And yeah, we both got tired probably year four, year five, I would say. And I took a break and Jim took over. And then Jim left and I took over.
And then at some point, we're just like, let's just, we're just going to sell this thing. It was right before the 2008 crash. So it was a good timing in that sense. But we probably let it go for a lot less than it was worth just because it was a downturn.
Because at that point in time, it was doing like six million earnings. But both of us, frankly, were so tired of it. And our good friends had just started, Jim's really close with Steve Chen at the time from YouTube. And we watched them go from zero to 1.6 billion in like, how long?
You know, like a year. And we didn't really see hot or not getting to that scale that quickly ever. Arguably, you know, you see what happened with Tinder and maybe that's true. Although it's not clear hot or not would become Tinder because hot or not have the rating part, which made it grow, but could also hold it back for being pure plating.
But in any case, we were just like, we both just wanted to do anything else. At that point, when I left, I started this thing with Elleve. He was a co-founder of E-Vite called Save My Ass, which would send your girlfriend or wife flowers on a regular but semi-random basis. It was one of the first subscription conversations we'd ever seen.
But then I had to go back to Hot or Not. So I stopped working on Elle's sort of clear slide, which took off. So we ended up shutting it down because it was actually doing decently well, like the scale. But anyway, neither of us could deal with it.
So yeah, we ended up selling the company mainly because we were just tired of it and wanted something else to work on. And so how did, again, because you make your first meal and you made it basically during that while you were collecting quarters, like you said. You're running the laundromat. Dude, that was an awesome period of time because I was like, I was still in my late 20s.
We had the system sending us stats like at noon and at midnight. And that was mainly so we would know how the system was doing. If it had problems or not, how many matches were made per hour or up at that point in time. And it also had how much money we had made up to that time for that day.
And so at noon and at midnight, I would basically get this thing saying, oh, today you made $10,000, $15,000 on a good day, like $20,000, and I would have to divvy it up and figure out my portion. But I was like, holy shit. But it's like I had a bunch of my friends. I always knew like when we, because basically I had nothing to do, I was just going out drinking with my friends all the time, almost like five days a week.
And at midnight it would be like, I remember like, I think it was my friend Philip Kaplan, I just remember him like, you buying? Because he saw me pull out my phone at midnight and I'm like, I'm buying? Yeah. And I was like, back in those days, no one was making money on the web.
This was like the dark period, right? I mean, I used to like go out drink with Philip all the time, Evan Williams from, you know, the time he was doing Blogger, he was like, you know, I met Evan because I had sent him a message saying, hey, like, he was about to like practically shut down, but it was just him by himself at that point. And I was like, hey, you know, we had all this excess bandwidth at this point. So I was like, hey, if you want free photos, I'm happy to help you out.
Right? So that's how I met him and that became good friends. And so like, I remember I would pick up Evan from his apartment in Noyan, like, you know, like, he didn't have much money at that point in time. I was like, I was like, I was a baller.
So yeah, so like, you know, how times have changed. Yeah, this is on you right. Yeah, yeah, basically. But I mean, like, anyway, like those were really the days because the people who were still around, no one knew that we were going to make money at the time.
And like, we were one of the few people who were making money. Most of the people were having a hard time, but you know, like, a lot of like really famous names were still like after the dot com crash happened, all the MBAs kind of disappeared. And the only people who were stuck around were like, the people who were just like passionate about it. So many people that are like huge today were just hanging out back then.
And it's like, you know, because people are like, oh, how do you know all these people? Because, you know, like Silicon Valley, there's so many people running around. Like, how do you know all these people? Like, dude, like there were like 10 of us back then and we used to hang out.
Right. Very simple. Yeah. And so you're kind of amazing in that you've been here so long.
You built one of the kind of staple named products that everybody remembers fondly. And since then- Well, everyone over the age of X. Yeah, if you don't know, that's like a litmus test. Were you really around or are you just- Right, if I was single, I'd be like, ah, no, I probably can't date you.
Yeah, exactly. And so since then you transitioned to being angel investor, do you, I mean, how do you think about stuff now? Do you think about getting back on the horse and starting a new thing? Do you love investing and that's what you want to do?
Yeah, you know, like, so I got, I mean, I was never an angel investor. I just invested in my friends, right? And so like people, you know, like I said, people back then, everyone helped everyone. So like, we would invest in friends, you know, like you'd invest in people.
You didn't even, they didn't even know what they were going to do yet. Right. And like, it's pretty cool. Like, like, what were the results of that?
Because, you know, some people would say, investment friends, that's crazy strategy. No, actually, it is really well. I mean, it probably depends on how well you pick your friends. Right.
Like, I stupidly passed on a lot of friends where I'm like, ah, I don't see it or whatever. Like, I passed on Uber. I passed on, like, all these things were like, I mean, literally I would be like a billionaire post-backs. If you just invested in the people that I actually liked, you know, but I think it depends on how you pick your friends.
Like, all of the people that I enjoy talking to and being friends with tend to be like really smart and really quirky too. Like, people, yeah, like smart traders or whatever that, like, like people who are like a little crazy, but really smart and can pull stuff off, right? And so those people tend to do well. And so, I mean, yeah, I mean, I've definitely done pretty well.
I think, I mean, actually, I've never really compared to other people, but I think I've done pretty well with my angel investing. But, you know, like, I mainly just invested in my friends and I don't really see myself as an investor. And it's actually the reality being an angel investor is basically my cover for not working. Because I'm basically mostly just hanging out at home with my kids, you know, like a Mr.
Mom driving, I'm like my kids show for basically taking them to school, taking them to swimming or whatever. But I think about that a lot. And the other person who introduced us, Michael Birch, he's another person who I feel kind of out of the rat race. He definitely does things.
He does lots of interesting projects, but he's not just saying, okay, you know, he's all people for $850 million. He's got to be a billion, right? He's not just endlessly in the rat race. Well, listen, I'm not going to criticize anyone if they choose to be in the rat race and that's what they want.
That's what they want. I'm all about everyone else to figure out what makes them happy. And the only advice I have to be really about this is, look, you only have to make yourself happy. Don't try to make other people happy.
Live your life for yourself. But be honest with yourself about what makes you happy. Because, like, society wants to tell you, oh, you should want to make a ton of money or you should want to, like, not make a ton of money and go meditate or whatever. And I'm just saying, you know, whatever is right for you is right for you.
You got to be honest with yourself. But if you can be honest with yourself, go do whatever you want to do. I have friends who have to be billionaires. And, like, that's not my thing.
But if that's what makes them happy, go do it, right? But for me, like, I always thought I would do something else again, but then I had kids and then, like, how that can be all encompassing. And, you know, like, for me, I just realized, like, you know, I built an app that was like a YouTube for kids before YouTube kids came out. I was like, I just want to learn to code again.
And I made an iPhone app. And my son at some point was like, and I'm a shitty coder. So I wasn't very efficient. I was always like coding until four in the morning.
But the bus still comes at 730. So I'm getting mostly, and I was always grumpy. And I'm like, it doesn't matter if it's a hobby. I'm always thinking about it, right?
And basically, at some point, my son was like, Daddy, when are you going to play with us again? And I was like, oh, shit. Like, that guy. So, well, I mean, at that point, it's a choice.
And I'm like, OK, I can't do this. Like, I am so obsessive about anything I build that, like, the dad that I wanted to be, I wasn't able to be it. And so, what can the recipe for you now? What's the recipe that makes you happy?
Listen, look, it's not to say that I don't love the idea of starting a company. And, look, it's not from the money. It's for the adrenaline rush, right? Like, it's basically like gambling.
Like, this thing's likely to fail. It might succeed. It might succeed. It might win big if it, you know, it is like gambling in a way.
And so, it's a huge adrenaline rush when you start a company. And that's why the highs are high and the lows are low. It's like being an entrepreneur is like volunteering to be bipolar, right? And so, you know, like, I had to decide.
And I said, well, I'm not willing to sacrifice these things. So, the next best thing is that I can just angel invest more. And so, that's kind of what I've done. And, you know, like, I think I've been pretty successful at it.
Not as successful as if I just invested in my friends. It's kind of like my new strategy is like, hey, I have a friend. Yeah, like, I have a friend who just picked me the other day. And I'm like, you know what?
I don't even need to know. Like, because we had a call scheduled and I brought in a friend. And then I was like, hey, guys, I got to take my kids to find me. But it doesn't matter.
I mean, you know, the funny thing is like, that's what happened with ODO and Twitter with Evan. I was like, hey, after, after Bladder got sold, because actually Bladder, before it got bought by Google, he was in trouble. And Nick Denton and I were both like kind of talking to Evan about maybe we could invest in it just to basically to bail it out and keep it going. And ended up not happening because he ended up selling to Google for, you know, whatever million, you know, in 2002, something like that, 2003.
And so, when that happened, I was like, Evan, I don't care what you're doing next. I'm in, right? And then I went to the company for ODO. I was like, let me know when to put back into Twitter, you know, and then there's a whole long story, I end up not.
Oh, no. There's a whole long story about that. It's a tragedy. But it's fine because.
We're going to make another podcast. My blog has a million. I basically decided I wanted to choose friendships over money. And that's how that ended up.
That's a long story short. And I don't regret that, actually. So anyway, so. So, so the other, you know, we got to wrap up with the one question.
So normally I have these like five questions I asked at the end. Sure. But there's one that I'm really curious about for you because I see you as this incredibly creative guy who has a very humble not saying, you know what, all that stuff. I'm just curious.