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My First Million

From Design Agency To $419 Million Holding Company In 8 Years

Episode 573: Sam Parr and Shaan Puri talk to Jeremy Giffon about how Tiny Capital turned $5M in equity into 30 profitable companies.

Sam ParrhostJeremy GiffonguestShaan Purihost

Apr 16, 202432mWatch on YouTube

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CHAPTERS

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Chapter summaries

Tiny's Origins and the Metalab Cash Flow
Sam frames Tiny's roughly $5 million to $500 million run over eight years. Jeremy explains how he knew Andrew, how Metalab's free cash flow funded acquisitions, and why a concrete first deal like Dribbble beats an abstract plan to start a holding company.
- •Tiny turned about $5 million of starting capital into roughly $500 million over eight years
- •Jeremy shared a studio apartment office with Andrew while Metalab was starting
- •Agencies need little reinvestment, so Metalab's free cash flow had to go somewhere
- •Building a Tiny starts with bootstrapping a business that throws off millions in free cash flow
- •Starting with a concrete deal like Dribbble is better than abstractly planning a holding company
Buying a First Business Without Experience
Sam asks how three people who had never bought a business figured it out. Jeremy describes sellers who care about legacy versus those who don't, downloading a letter of intent template, and how inexperience let them move fast and be friendlier.
- •Sellers divide into those who care what happens after the sale and those who don't
- •Community businesses can turn on a new owner quickly
- •Jeremy pulled an LOI template from Legal Depot at age 19 or 20
- •They sent LOIs early, unaware that in private equity they are treated as sturdy commitments
- •Their goal was to be a better buyer than the ones they had bad experiences with
Underwriting Dribbble and the 50X Outcome
Sam asks whether Dribbble was an obviously good business. Jeremy describes the day-one levers, the scale of the site, and why they only aimed for 20-30% annual cash returns and never expected a 50X.
- •Dribbble was a top 1,000 website with millions of active users
- •Better advertising providers were a lever available on day one
- •Price is the due diligence, per the Buffett line Jeremy cites
- •They targeted 20-30% cash per year, with anything beyond that as upside
- •Jeremy says Andrew had him build DCFs, but he was making up the assumptions
Why Heavy Quantitative Analysis Gives No Edge
Sam asks about Jeremy's idea that more numerical analysis means more commoditization. Jeremy uses the Barclays Facebook IPO report as an example of how a model can be off by an order of magnitude, and says first-principles thinking is better.
- •Barclays' DCF used 3% terminal growth and valued Facebook at $200 billion
- •Facebook then grew about 30% a year to a $2 trillion company
- •Modeling skills are commodified and are at most table stakes
- •True quantitative edge lives at firms like Two Sigma and Jane Street, not in a small deal shop
How to Spot the Opportunity and Win Deals
Shaan asks which numbers matter when evaluating a small bootstrapped business. Jeremy says to work out what you'd pay given what you could improve on day one, then aim for a no-brainer price, noting Tiny often won without the highest bid because of trust and speed.
- •Decide what you'd pay based on day-one improvements like price increases or headcount cuts
- •Modeling matters most at the edge of what you'd pay
- •Tiny was rarely the highest bidder but won on other factors
- •Competing offers 25% higher often turned out not to be real
- •Ability to close, honesty and speed are the soft factors that win deals
Chris's Superpower and the Tiny Partnership
Sam asks about Chris's superpower. Jeremy says Chris tempers Andrew's pace and energy, and that letting each partner invest independently outside Tiny acts as a release valve, while Andrew leads on sales and vision and Chris on negotiating and structuring.
- •Chris modulates Andrew's high energy as the sober second thought
- •Each partner could pursue separate investments outside Tiny
- •This release valve keeps the partnership from becoming a prison
- •Andrew is strong at sales and vision, Chris at negotiation and deal structure
Stomaching Aggressively Low Offers and Staying Silent
Jeremy describes being the front person who made the lowest offer he could emotionally stomach, with Chris and Andrew pushing even lower. He shares the 'my manager is killing me' dynamic, and the trick of saying your offer and then not talking, which Shaan echoes with a CIA anecdote.
- •Jeremy's offers were the most aggressive he could emotionally stomach, and Chris and Andrew would push for about 25% lower
- •Sellers rarely lose it over a low offer
- •The front person can say they are on the seller's side, like the car salesman's manager gambit
- •After floating an offer, stay quiet because people negotiate against themselves
- •One cynical view is that negotiation is about who can bear discomfort longer
Negotiation: It's Not You vs. Them
Sam asks what Chris taught about negotiating beyond gamesmanship. Jeremy describes sitting on the same side of the table with the problem across from you, and Sam adds his dad's needs-and-gives table.
- •Reframe it so both parties sit on the same side and the problem sits opposite
- •Asking why a seller wants a number can uncover what matters beyond price
- •Jeremy uses this approach in everyday life, including relationships
- •Sam's dad advised mapping your needs and gives against theirs, since the two lists are rarely symmetrical
"What Would Need to Be True?" and Cold Emailing
Jeremy shares his favorite negotiation question, which surfaces hidden sticking points and sets up collaboration. The conversation then turns to cold email as an asymmetric trade that works as long as you show up prepared and good.
- •Ask what would need to be true for you to pay a given price
- •The question works for fundraising and even group trips
- •Cold email still has an arbitrage because most people are too scared to do it
- •Jeremy has sent hundreds of cold emails and never gotten a bad response, only silence
- •You must be prepared and interesting when the meeting happens
Worst Deal: Ignoring Red Flags
Shaan asks for first, worst, best and weirdest deals. Jeremy says his worst deal involved a dishonest person he ignored warning signs about out of greed, and he lost all the money in a small check.
- •The worst deal involved a dishonest counterpart whose red flags Jeremy ignored out of greed
- •A friend's deal showed founders asking on night one where to get drugs, a context where it was a clear signal
- •Flashy people are almost always a bad sign
- •Experts Jeremy introduced the person to all raised concerns
- •A good-looking deal can put blinders on you
Best Deal: Mealime and a 25X Return
Jeremy picks Mealime, a meal planning app Tiny bought in 2018, as a favorite. He describes the founder's attention to product detail, the quick payback, and the sale to a grocery retailer for over 25 times their money.
- •Mealime was built by a technical founder with great product detail, like using the proximity sensor to navigate recipes hands-free
- •Apple featured the app in the App Store
- •Tiny recouped its money within the first couple of years
- •It is the only business Tiny has sold to date
- •Two grocery retailers became interested, and the sale returned more than 25 times
- •Jeremy loves it as a craft app made by someone who cared about the product
Weirdest Deal: A $36 Acquisition
Jeremy describes buying a shrinking $10 million recurring-revenue unit that a Fortune 500 tech company needed to divest quickly. Tiny borrowed the money and repaid it in months, so the fund's cost basis was listed as $36, and a valuable domain came with it.
- •A Fortune 500 company had to divest one unit quickly
- •The unit had $10 million in recurring revenue but was shrinking
- •Tiny borrowed to buy it and repaid the loan in three or four months
- •The accountants listed the cost basis at $36
- •A domain worth perhaps $1 to $2 million came with it
- •Tiny knew a board member, and speed and certainty mattered more than price to the sellers
Part Two Teaser
Sam wraps up part one and previews the next episode, in which Jeremy explains what he would do if building Tiny today and the best investment opportunity he sees.
- •Part one covered how Tiny was built, the deals and the lessons
- •Part two is about what Jeremy would do today
- •Jeremy shares the single best investment opportunity he sees
- •Part two comes out the next day

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