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CHAPTERS
- 0:00 – 2:06
Guessing the Owners of America's Top Websites
Shaan quizzes Sam on who owns the most-trafficked US websites. Sam knows the tech founders but not who owns Pornhub, the number six site, which sets up Shaan's Game of Thrones-style story.
- •Sam correctly names the owners of Google, YouTube, Reddit, Amazon and Facebook
- •Sam only vaguely recalls a German guy and MindGeek for Pornhub
- •Shaan frames the story around assets so powerful that owning them is short-lived
- •Pornhub gets around 3 billion visits a month according to Shaan
- 2:06 – 6:42
How YouTube Disrupted the Porn Industry and Vivid
Shaan rewinds to 2005, when porn sites were link directories. YouTube's launch spawned free pirated tube sites that ate into the business of Vivid, the studio that was then called the king of porn, until lawsuits hit the tube sites too.
- •Early porn sites were directories of links and photos
- •Tube-site copycats were private, instant, endless in variety and free
- •Vivid's revenue fell 50% and then 80% as these sites appeared
- •Vivid copied Viacom's lawsuit playbook against the tube sites
- 6:42 – 10:31
Three Canadian Students Build Pornhub and Brazzers
Three college friends who met at a foosball tournament and ran link directory sites team up with a programmer who built a streaming site. They launch Pornhub and the content studio Brazzers at the same time and hide the connection between them.
- •The best foosball player became the programmer behind the video site
- •They built the platform and a content producer together
- •Nobody knew the studio and the website were linked, and the studio's owner publicly denied it
- •Owning their own content kept them stocked when other material was taken down
- 10:31 – 13:08
Scaling Bootstrapped: SEO, Roll-Ups and Paranoia
After the sponsor break, Shaan describes how the founders bootstrapped to hundreds of employees on the back of top Google rankings and a roll-up of rival sites. By 2009 the stress of seizures, security and surveillance pushes them to cash out.
- •The team grew from three friends to 250 people with no investors
- •Keezer's SEO work earned them the top Google rank for porn and sex
- •A brother became CEO and began consolidating competitors cheaply
- •The government seized $9 million from a bank account and they were followed by SUVs
- •Keezer quit and the founders decided to sell
- 13:08 – 17:51
Fabian Thylmann Buys Pornhub and Builds MindGeek
The founders sell for $140 million to Fabian Thylmann, a young programmer who made his fortune on affiliate tracking software. He doubles profits, settles content licensing and uses data to optimize paywalls, funded by a high-interest loan from secret lenders.
- •Thylmann started with a traffic stats site and then built affiliate tracking software
- •He doubled profits within months and spent a million on licensing rights
- •Data scientists found the optimal paywall point at 2 minutes and 59 seconds
- •He borrowed $362 million at 20% interest from about 125 secret lenders
- •The CEO's $16 million house was burned down by arsonists
- 17:51 – 21:14
Bill Ackman Cuts Off Pornhub's Payments
Bill Ackman reads a New York Times article about a teenage girl whose photos were leaked and goes after Pornhub. He texts the Visa CEO, and Visa and MasterCard cut off the site, forcing policy changes. Thylmann later runs into tax trouble and sells for $77 million.
- •Ackman couldn't pressure the owner directly, so he targeted payment processors
- •The Visa CEO replied within minutes and Visa cut Pornhub off a day later
- •Pornhub had to start verifying uploaders
- •Sam notes Ackman's tweet seeking victims, which came before his Harvard and Business Insider fights
- •Thylmann sold in a fire sale for $77 million, similar to Morning Brew's sale price
- 21:14 – 21:24
Who Owns Pornhub Now: Bernd Bergemeier and Ethical Capital Partners
The reported $77 million employee buyout turns out to be backed by Austrian businessman Bernd Bergemeier. His opaque finances and a divorce lead to a sale to Ethical Capital Partners, a firm formed just for this purchase.
- •Shaan says the employee-buyout story didn't add up
- •Bergemeier is a former Goldman Sachs banker who had bought RedTube
- •Reported profits are tiny because of related-party loans and shell subsidiaries
- •A private equity group, Ethical Capital Partners, bought the company
- •Ethical Capital Partners owns only that one company
- 21:24 – 28:10
The Original Founders Reinvent Themselves as Valsoft
Shaan follows the original founders, whose LinkedIn profiles omit this past. One of them read 150 investing books and created Valsoft, a software roll-up modeled on Constellation Software that now buys many small companies each year.
- •The founders' profiles now emphasize philanthropy and don't mention Pornhub
- •Youssef became a Buffett disciple and built an internet-company holding group
- •He saw private software as ten times better than public markets, with many companies and little competition
- •Valsoft buys small niche software firms and has grown to a billion-dollar company with over $100M EBITDA
- •Valsoft's site doesn't mention Pornhub, and the group plans an IPO
- 28:10 – 32:50
What It's Like to Work at an Entertainment Business
Sam wonders how people stay professional running such a company. Shaan says abstraction lets people lose sight of what they're doing, citing Twitch, Facebook and MrBeast's team, and both agree you can take the work seriously without taking yourself too seriously.
- •Sam wouldn't trade places with the later owners
- •Shaan compares the abstraction to Chuck E. Cheese tokens
- •At Twitch, high-stakes meetings concerned ad pop-ups in game streams
- •Sam's wife at Facebook worked on a photo sticker feature
- •Both say it's fine to enjoy the game without taking yourself too seriously
- 32:50 – 38:56
Optimized to Infinity: Max Levchin and Existential Doubt
After Sam's anecdote about people running porn sites by the spreadsheet, Shaan tells of Max Levchin's lesson from Slide: any project can be optimized endlessly, so pick carefully. Shaan admits this triggers doubt about his own e-commerce work, and Sam reframes the work as creating jobs and providing for family.
- •Sam says the site operators he knew just focused on the spreadsheet number
- •Levchin's quote about being careful which projects you pick because anything can be optimized to infinity
- •Shaan feels periodic existential doubt about A/B testing his store
- •Sam argues a product doesn't have to change the world, and the thing you're building can be a good workplace or a future for your family
- 38:56 – 43:30
DuckDuckGo in the Top 10
Looking at the list of top websites, both are stunned that DuckDuckGo ranks so high. They discuss its privacy-focused ads, its growth and its reported profitability, and then wrap up the episode.
- •DuckDuckGo ranks above Yahoo, Wikipedia and Twitter on the list
- •Shaan says it shows ads based only on the search term, not personal tracking
- •Sam says its recent funding was reportedly early employees selling stock rather than new cash for the company
- •Shaan cites market share growth from .01% to .63% over ten years
- •Sam proposes a title about the fifth most popular website
