Andrew Chen — Growth Secrets from Uber, Exploring the Metaverse, Startup Investing, and More

Tim Ferriss 0:00 [upbeat music]

Tim Ferriss 0:15 Hello, boys and girls, ladies and germs. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show. My guest today, an old friend, Andrew Chen. You can find him on Twitter, @andrewchen, C-H-E-N. He is a general partner at Andreessen Horowitz, where he invests in consumer technology, including social, marketplace, entertainment, and gaming experiences. We have known each other a long time. We'll probably get into some of the backstory. It involves kettlebells. Today, Andrew serves on the boards of All Day Kitchens, Clubhouse, Envoy, Hipcamp, Maven, Reforge, Sandbox VR, Singularity 6, Sleeper, Snackpass, and Substack. Andrew is a prolific writer, and I'm gonna emphasize prolific, and leading voice on mobile metrics and user growth. For the past decade, God, we're old, aren't we? He's covered the topic on AndrewChen.com. He is the author of The Cold Start Problem, a book exploring how new startups are launched. He's also a board member and instructor at Reforge, which offers selective growth-focused programs for experienced professionals in marketing, product, data, and engineering. Andrew, welcome to the show.

Andrew Chen 1:20 Thank you for having me. And yes, we have known each other for way too long, so this is great to finally be on the podcast.

Tim Ferriss 1:25 And we were trying to trace it. I think all good things go back to Noah Kagan. He's sort of the Kevin Bacon of Silicon Valley circa, like, 2005-

Andrew Chen 1:37 Yes

Tim Ferriss 1:37 ... to 2010. So th-

Andrew Chen 1:39 Yes

Tim Ferriss 1:39 ... so thanks to Noah for that.

Andrew Chen 1:41 Yeah. And Noah's such an interesting character. I, I, I met him in that era, and he quickly fled to Austin, where, where you are, Tim, uh, before it was cool.

Tim Ferriss 1:49 Yes. He, he paddled for the wave before I even saw it coming, so Noah is, is certainly a trendsetter. And he's current day. I wanna go back in time because in the course of doing research for this conversation, I found that you often recommend a book called My Life in Advertising. This is not a new book.

Andrew Chen 2:10 [laughs]

Tim Ferriss 2:10 But I rec- I recognized a name, Claude C. Hopkins. And I recognized it-

Andrew Chen 2:16 Yes

Tim Ferriss 2:16 ... in part because I remember having, I think it was Scientific Advertising, which was published a few years before this book, recommended to me, and it was, I, I wanna say public domain. And I found it incredibly helpful. So I want to hear the story of how and why My Life in Advertising entered your life.

Andrew Chen 2:38 Yeah. Well, uh, the reason why it's public domain is because it's so old that it's just gone out of copyright.

Tim Ferriss 2:45 Yeah. [laughs]

Andrew Chen 2:45 'Cause it was written in, I think, 1900 or something like that. It's, like, right, right around that age.

Tim Ferriss 2:50 It's old.

Andrew Chen 2:51 Um, and this guy is such an interesting dude because he actually invented the mainstream use of coupons. He did a ton around basically what we'd call direct marketing today at a point where everything was very brand-driven. And so he wrote both Scientific Advertising and then in his book, My Life in Advertising, was sort of the, you know, it's a supplemental. You can get them together, and it's his autobiography of how he went and in, in invented a bunch of the stuff, which is, which is wild. Um, one of my favorite stories in the book is actually when he talks about inventing coupons, and the reason at the time was back then there wasn't... Obviously, there was no Amazon, and so the only way to actually get your products if you were a CPG company, if you had a new toothpaste or, you know, a new, new kind of milk or something like that, and you wanted to get it into grocery stores, you had to actually go to each of the grocery stores. And you had this chicken and egg problem. Actually, you had a cold start problem, which I'll, we'll talk about. You had a cold start problem where basically the grocery stores wouldn't actually want to carry any of your goods because the customers weren't asking for them, and then you couldn't also prove to them that the customers wanted your stuff because nobody stocked it. And so he created this thing where he would go to all the local newspapers, and he would tell them, like, "I'm gonna buy an, uh, an ad in your newspaper, and it's gonna have a coupon in it. And it's gonna tell you that, that you should watch this space because there's gonna be a coupon for," you know, I think this was for a condensed milk brand that he was working on. And then he'd go to all the grocery stores in that city and just start to tell them, like, "Hey, I'm about to buy this huge coupon, and I'm gonna put it in all the newspapers. All your customers are gonna show up and try to redeem this coupon, and they're gonna be pissed because you're not carrying it. And so ahead of this campaign, like, you better, you know, start stocking this stuff." Um, and so the coupon, even though we think of it now as this kind of like weird, you know, cheapskate thing that you clip out of newspapers or whatever, was really meant to solve this really fascinating problem. And so he has a story about that. He has stories about, you know, stunt marketing and building kind of like a massive cake in malls to get people to, you know, come and do that. I mean, he just has all these wild stories, um, from an era where, where all this stuff was just getting invented. And so I, I love this guy, and it's, it's from, you know, it's over, over 100 years ago now.

Tim Ferriss 5:14 Yeah, these, these old books on advertising and copywriting I just love. I remember, I wanna say Caples was another copywriter, really old copywriter who I found fascinating. And in the beginning and when [laughs] I first moved to Silicon Valley, I mean, direct response was about as close to kinda current-day tracking [laughs] as you could get-

Andrew Chen 5:39 [laughs]

Tim Ferriss 5:41 ... in a state-of-the-art infomercial, uh, sort of media efficiency ratios and, and, uh, and direct mail through Capital One or whoever it might be. And, you know, the principles, uh, you know, a lot of the principles are the same, right? They, they persist. Certainly a lot has changed, and we're gonna talk about that. But, uh-

Andrew Chen 6:02 Yeah, the consumer behavior is just, you know, is, is the underlying, you know, thing. I, I did a presentation a little while ago Um, where I talked about the Michelin Guide, which is, you know, we know as kind of this restaurant guide and everything. And if you go back, and again, this is one of these things from 100 years ago, it turns out there was 300 cars in France. And, you know, if you're Michelin, you're a c- tire company, you want people to drive around. Well, how do you get people to drive around? You start the Michelin Guide and you list all the restaurants. Conveniently, the restaurants are spread all over the country, and so you're gonna have to drive and, you know, collect them all, collect Michelin stars.

Tim Ferriss 6:35 [laughs]

Andrew Chen 6:36 Um, and it's just great. And it's like, oh, that's content marketing, and that's from 100 years ago. It's like, it's wild how this stuff persists.

Tim Ferriss 6:43 It not only persists, but, um, I suppose literally persists. There's, uh, there's an incredible amount of durability with some of these examples, right? [laughs] Like the Michelin Guides, the Michelin stars. Let's, let's talk about another author for a second. And this, this is Geoffrey Moore. You shared an office with Geoffrey Moore?

Andrew Chen 7:05 [laughs]

Tim Ferriss 7:06 Is this... And could you explain for people who he is?

Andrew Chen 7:10 Yes.

Tim Ferriss 7:10 And then confirm or deny this, this office rumor.

Andrew Chen 7:14 I love it. We're going, we're going old school on everything. I love this.

Tim Ferriss 7:17 Yeah.

Andrew Chen 7:17 I moved to the Bay Area in 2007, and, um, I was 25 years old. And my first job was I was a entrepreneur-in-residence at a VC firm that's called Mohr Davidow Ventures, and they had Geoffrey Moore as one of their kind of venture partners. And he and I would just share an office and, and I was such a huge fan of his because of Crossing the Chasm. And so he, he had written this book which, you know, before Lean Startup and before I- Innovator's Dilemma and all that kind of stuff, he was really the guy that built the core framework for how to think about bringing, especially those days, kind of an enterprise product to market. And so his whole thought was you have this, like, technology adoption curve. You have early adopters, and you have the early majority, and the late majority. And between the, the early adopters and the early majority, you have this chasm where all the nerds love you, but the mainstream market has no clue what it is that you do. And so he has this, all these frameworks and everything. So it was an amazing experience just to share an office with the guy. And so I feel like, Tim, I, I've basically been surrounded by authors for quite a while, and so it's, it's, it's, it's been fun to, uh, to, to see that journey.

Tim Ferriss 8:25 [laughs] Yeah, for sure. And in de- I, I just have to say because this is a trip down memory lane for me, 'cause we haven't reconnected in a long time. You know, Eric Ries, great guy, famous for The Lean Startup. I remember going to, it was like a 12-person seminar which was effectively a workshop developing the material that would later go into The Lean Startup.

Andrew Chen 8:52 Oh, wow.

Tim Ferriss 8:52 And it's just so fun to think about all of the things that came out of that vintage in Silicon Valley from, say, 2007 to, like, 2010, 2012.

Andrew Chen 9:05 That's right.

Tim Ferriss 9:05 It's so fun. It's so fun to look back.

Andrew Chen 9:07 Some of the best years. Yeah, for sure.

Tim Ferriss 9:09 Yeah. So, so let's, let's actually jump to, I don't wanna say present day, but I'm gonna try to, to segue here, and it might seem like a strange way to do it. Uh, who is Sean Ellis?

Andrew Chen 9:25 Sean Ellis is such an interesting guy. I, I met him couple years into being in the Bay Area. And what he told me which was so fascinating was he was, he was working with Dropbox and Eventbrite and a bunch of, a bunch of companies, bunch of startups. And he would try to talk to these amazing entrepreneurs, and they would ask him, "Oh, so Sean, what do you do? What can you do for us?" And he would tell them, "Oh, well, you know, I can lead your marketing." And his background was he, he had worked on a bunch of freemium companies like LogMeIn, and he's very successful kind of tech marketing executive. And whenever he said marketing, what he found was these 20-something-year-old founders were just like immediately would, like, flip the bozo bit. They would be like, "Okay, you wanna buy Super Bowl ads." [laughs]

Tim Ferriss 10:11 [laughs]

Andrew Chen 10:11 "You wanna do all this, like, crazy stuff?" Um, and so he eventually had to just come up with a new term in order to describe what he was doing. And, and so what I thought was super funny was he basically just thought, "Well, that's the opposite of what I do. I don't do crazy brand stuff. What I wanna do is, is really work with founders and be extremely quantitative." And so I'll give you an example. When he was working with Dropbox, Dro- Dropbox was growing, you know, really fast. Drew Houston and those guys had, you know, announced on Hacker News, and people were just downloading it 'cause it was, like, a really good product. And, and he started by buying a bunch of ads, and it just turned out none of that worked. And so one of the things they started to work on was, well, what if you gave people storage space, and then you got storage space? And it was sort of like a give space, get space kind of a thing, and it was very creative at the time. And it, you know, these referral programs were, were... Of course, you can probably find examples from 100, 100 years ago. But, you know, for, for tech at the time was, it was less common, and he really put that all together. And so, so because of all this, he, he began to describe himself as a growth hacker rather than thinking about it like, oh, he works in marketing, you know, or something like that. And then that word just, I think, just t- that term just took off like crazy, um, as soon as he described it because I think it really just was the start of a new age of marketing online which was very much about products, very much about numbers, and much less about kind of what was tr- in traditional marketing over the years. And so n- these days, if you look inside of an Uber or a Dropbox or a Slack or whatever, they all have growth teams now. They may not describe themselves as growth hackers, but the core concept is definitely still there with interdisciplinary people thinking about growing your users, not through big campaigns, but through what are the cool, creative features that you're gonna build.

Tim Ferriss 12:03 Yeah. Sean's a, Sean's a bright guy, and really enjoyed meeting him probably around the same period. [laughs]

Andrew Chen 12:11 Yeah.

Tim Ferriss 12:12 And, uh, yeah, he's, he's done really well for a lot of companies. And Let's jump to writing because it's, it's, it seems to me that this is connective tissue for you across so many different domains. When did you start, when did you start writing? Because my- the impression I have is that sort of all good things were this font coming from writing that you put out for free.

Andrew Chen 12:44 That's right.

Tim Ferriss 12:45 Uh, I don't know how accurate that is, but could you just maybe describe a bit your, your writing background, and especially when you moved to Silicon Valley, how you decided to start writing?

Andrew Chen 12:58 It was 100% an accident, and it's now one of the most important decisions I ever made in my life, which is crazy how, how things like that happen. Um, and I... And, and I'm sure for you too, Tim.

Tim Ferriss 13:10 Yeah.

Andrew Chen 13:11 And, uh, and maybe we, we can talk a little bit about that too, how we met, because there's a funny backstory about writing in there as well. But yeah, my blog was completely an accident. I mean, I grew up in Seattle, and felt like I was one of those people where early on I, I would love writing, you know, journals, and I would kind of write in a diary and use it to collect my thoughts, but I would never share it with anybody. And what happened was, when I was 25 and it was time for me to move to, to the Bay Area to, you know, find the secret of Silicon Valley, like what, what, what, what was really there, I was like, "You know what I'm gonna do? I'm, I am gonna write a blog and I'm just gonna write down everything that I learn along the way in my journey." And so my first year was actually really funny. It was, I think I imported my list of, you know, I forcibly subscribed my mom and my sister-

Tim Ferriss 14:00 [laughs]

Andrew Chen 14:00 ... [laughs] and like all of my friends to my blog. And I think maybe the first six months or something, like maybe 50 people read it. It was just like o- one of those. And it was a, it was... And I think I, I, I had it on, it was either on Blogger... Yeah, I think I had b- on Blogger originally, which is E- Ev Williams' old company, of course. And I started just writing everything that I knew, and I really treated myself almost like I was like a journalist. I was just meeting interesting people, and I would just hear really cool opinions, and I would have opinions and think like, "Wow, you know, this is, this is really great," or, "This is really dumb." I'll give you an example. You'd meet these, a lot of founders at the time. The concept then of even talking about monthly active users was kind of like a weird new idea. People would just talk about how many signups they had, how many registered users they have, and that was it. And that was like, ah, I got, you know, 100,000 registered users. You didn't care about engagement. You didn't care about whether people were using it or not, and, and that was it. And so I might have an opinion there that I would say like, "Oh, that's, you know, that's horrible" and [laughs] "We need to think about, you know, retention and engagement," and I would start digging into that. Um, and I would, I would, you know, throw up a post about it. Or when I met Sean Ellis, when he would talk about how, what he was doing with kind of this whole growth hacking term, I wrote a post that was called Growth Hacking is the New VP Marketing, and that was sort of a way that I sort of tried to introduce that into the world. But amazingly enough, I think in that first year, I had, I eventually had a bunch of folks posting it online. And so the way that I met Marc Andreessen actually was he w- was reading my blog, and he was working on Ning at the time. And he emailed me and was like, "Hey, I'm Marc, and we should have lunch." And I had, you know, I Googled him and I was like, "Is this who I think it is?"

Tim Ferriss 15:43 [laughs]

Andrew Chen 15:44 And I was half expecting this is gonna transition into like a phishing scam.

Tim Ferriss 15:48 [laughs]

Andrew Chen 15:48 I was gonna have to send, you know, a wire somewhere, um, in, in the Bermudas. But no, he, he actually was in town and just wanted to hang out, and so that's a great example of someone that I met because of, um, because of writing. And, then I met a lot of great people and a bunch of the PayPal mafia, a bunch of the, uh, the founders that I've, you know, come to be able to work with these days y- through, through my writing, which is just fantastic.

Tim Ferriss 16:12 So let's, let's dig a little deeper on that because I, I think back to 2007, 2008, and I started my blog in 2005, I wanna say. WordPress. Still WordPress.

Andrew Chen 16:26 Oh, wow. OG.

Tim Ferriss 16:27 OG. And at the time, people may not remember this, but blogging was a big deal, right? [laughs] And, uh, blogging is, it's still a big deal on some levels, but there are, there are many other shiny toys in the toy store now.

Andrew Chen 16:41 Yep.

Tim Ferriss 16:42 A- and-

Andrew Chen 16:42 Tim, we just make memes now. That's actually-

Tim Ferriss 16:44 Yes. [laughs] That's right. Yes

Andrew Chen 16:45 ... we're, we're in the post-literate world, so we should just make memes-

Tim Ferriss 16:48 Yeah

Andrew Chen 16:48 ... and just put them on Twitter.

Tim Ferriss 16:49 More interested in cat videos with extremely-

Andrew Chen 16:52 [laughs]

Tim Ferriss 16:52 ... high n- high-voiced narration. But the, the fact of the matter is, it was even then hard to cut through the clutter. So I would love to hear more about your approach, why you think it cut through. And if it's helpful, you could j- you could give an example of a piece. Right? Like you mentioned one, Growth Hacker is the New VP Marketing. I don't know if that was your breakout piece or if, if any breakout pieces come to mind because, for instance, I can think back [laughs] to the first post that hit the front page of Digg at the time on my blog, which was on muscle gain [laughs] and it crashed my s-

Andrew Chen 17:35 [laughs]

Tim Ferriss 17:36 ... crashed my site, which precipitated all sorts of FOMO and panic before FOMO was a term. What, uh, yeah, what, what helped you cut through the clutter? And d- do any pieces jump out that kind of really allowed you to step function up in the attention that you were getting?

Andrew Chen 17:53 I think there were two things that I started to see. One was just how much of the audience, my audience especially, they don't wanna read explainers. You know? It's just boring. They wanna read opinions. And so what I found was, what would happen is I, I would take, and I, and I'll give an example, which is I have a, um, I have an essay that's, that's called, you know, 80, 80% of Your Mobile Users Leave and That's Normal, right? And, and, and that's the truth. That is what the data says, is that most, most apps just lose all their users. And even, even the very good ones still only retain, you know, maybe 20 or 30% of it. And what I'll do is I will often get on social media, and I'll just drop little nuggets like that, little factoids that I see. I'll, I'll end up, um, writing kind of opinions, spicy B2B opinions, [laughs] um, about, uh... I always joke that I'm a B2B influencer, and that's like, that's... Or a B2B content creator. That's, that's, that's what my life is now. Um, and so I'll, I'll write these things and, and I'll say like, okay, well, you know, for example, that predominantly products are just poor at retaining users. That's just a reality. And what I'll see is that people will just engage with that tweet like crazy. They'll just retweet it, or they'll, you know, they'll like it a bunch of times. And they'll, what I'll end up doing is I end up learning that those types of articles, those, those types of titles are the things that end up becoming amazing topics for the subsequent blog that I'll end up writing. And so I kinda think of it as like, okay, well, cool, I already know that this particular thing, it's been, I've validated f- from a demand side. And then I can end up writing it, um, you know, as, as a full article. And, and it's so valuable, I think, writing is so valuable, I think, because it's just the most scalable professional activity. I mean, back before the pandemic when we went to conferences and we had, people did a bunch of networking, I used to just hate all that stuff. And so I, I just thought, you know, instead of going to a conference for, like, two hours or something, what if I just spent the two hours and just wrote down all the things that I might learn or say, you know, there? And, and then isn't that a better use of time? And so I, I think, Tim, go, to go back to your original question, I think my, my journey was actually very, very gradual, and I found that after writing a couple of these key articles, you know, I would write one on... I would find, like, terminology and jargon that people were interested in, like viral loops is maybe one. There's a lot that's obviously happening in web, at the intersection of Web3 and consumer and growth, and I might write about that now. But what I would do is I would just try to write the definitive piece around that and then just kind of send it out to my mailing list and, and, and, and that seems to work really well and break through the noise.

Tim Ferriss 20:40 How long do your pieces tend to be? Do you have a, a range typically on pieces you publish?

Andrew Chen 20:46 Yeah. So my creative process is a little bit funny, because what I end up doing is I end up starting with that unit of opinions, and I basically collect in a, in a notes file all sorts of random little opinions that I'll have through the course of a day.

Tim Ferriss 21:01 Could you give me an example of, uh, of an opinion? Uh, is it a value judgment versus sort of a, a literal explainer? Would you mind just elaborating on that a little bit? Like, what, what makes a good opinion?

Andrew Chen 21:15 So one of the nice things about being in tech is you just expo- get exposed to a lot of new ideas every day. And so through the course of a day, you might learn about camping and then pets, and then you might [laughs] you know, hear about productivity tools, or then you might hear about podcasting, and you might work on, you know, something else entirely. And through that course of the day, what you end up learning about is you try to generalize and try to figure out, okay, how do I feel about each one of these ideas and strategies and everything? And so, for example, you might see a new approach where a new social app is using TikTok to drive a lot of new users. But on the other hand, you also see that, wow, a lot of those new users, they seem, they all seem to follow a certain shape. They all seem to, you know, get a big spike of users, and then the next day they all seem to leave, right? And so over time, you're kind of like, okay, well, you know, how good of a customer acquisition channel is TikTok anyway, and what should you watch out for? So I might, I might, for example, try to take that observation and go on Twitter and then write a, a tweet about it, you know, kind of the, the perils of using TikTok as the way to grow your product and what are good ways and what are bad ways. And then if that ends up catching on, then I'll basically develop a whole article about it and, and go from there.

Tim Ferriss 22:37 Got it. So Twitter really is your, your MVP-

Andrew Chen 22:42 Yes

Tim Ferriss 22:42 ... not to get too jargony.

Andrew Chen 22:43 [laughs]

Tim Ferriss 22:43 But you're taking the very sort of minimal viable concept and then seeing if it sticks, and if it sticks, if it really sticks, then you consider developing that into a longer piece.

Andrew Chen 22:57 That's right. That's right. Yeah. And, and, and I think what, what ends up happening is if I'm organized about it, I will actually schedule blocks of time in my calendar to say, "This is writing time," and I'll build my whole schedule around it. And, and when I was writing my book, I actually went even further than that. I was like, "I actually need five-plus hours of writing time each day in order to make progress on all this." And so the only way to do that was I have to... You know, h- how do I, how do I write for five hours without, when there's, like, Twitter and TikTok and, you know, there's Netflix and there's all these wonderful, wonderful things in the world? And I would, I'd just completely organize my workflow where I would have a desk where I can just sit by myself with a computer that only has writing apps installed on it. I would lock away my phone. You know, there's a great product called the K Safe. I don't know if you've seen one of these, Tim.

Tim Ferriss 23:51 Yeah, [laughs] I have. I haven't used one yet. But the Time Safe, right?

Andrew Chen 23:54 Yeah, the Time Safe. Yeah. I think I have three or four of them now, and I have them all over the place in my house.

Tim Ferriss 23:59 [laughs]

Andrew Chen 24:00 So the way it works is you put your phone in, and then you, and you say, "Hey, I, I'm not gonna get my phone out for five hours." And you just stick it in and you, and you set it, and you just lock it away from yourself. I also turn on all the Kids Safe tools on your computer. You know, you can block individual websites, and then you have like a unique password, and so I'll just like make up a password and then write it on a piece of paper and then just hide it somewhere for myself, and I'll turn off Reddit, I'll turn off- You know, all my favorite websites

Tim Ferriss 24:26 Now, are you doing that through general settings?

Andrew Chen 24:29 Yeah, it's, it's just through the Apple settings

Tim Ferriss 24:31 Parental settings? Parental controls?

Andrew Chen 24:33 Yes. I'm self-parenting. [laughs]

Tim Ferriss 24:36 [laughs]

Andrew Chen 24:37 That's when you know you have too, too low of an attention span, is when you have to embrace all of this tooling to, uh, mana- manage your time. But I mean, that, that was ba- that's basically been my life for, for the last, you know, two, two years or so.

Tim Ferriss 24:48 Well, let's, let's dig into some of the examples, and we're gonna bounce around a lot, of course. But could you give an example of what the title refers to? So why write the book? And then if you could, if you could give a real-world example that is not condensed milk, but something more-

Andrew Chen 25:10 [laughs]

Tim Ferriss 25:10 ... more recent.

Andrew Chen 25:12 Slightly more recent.

Tim Ferriss 25:13 That would be outstanding.

Andrew Chen 25:15 When I started to write my blog for, for many years, what I found was I found... I basically wrote all these one-off articles, and they were-

Tim Ferriss 25:21 Mm

Andrew Chen 25:21 ... they were great, and it was a fun way to engage people. But if you recall, the, the, the original reason why I started it in the first place was I'm like, "I'm gonna find the secret of Silicon Valley. Like, I'm gonna figure out what it is that makes the, the kinds of companies that are built in the Bay Area as huge as they are." And in particular, I ended up actually spending a lot of time with a bunch of folks in the PayPal Mafia who went... you know, built Yelp and YouTube and LinkedIn and all these amazing companies.

Tim Ferriss 25:49 For those who don't know, could you just describe, uh, just briefly define what that is, the PayPal Mafia?

Andrew Chen 25:56 I mean, it's such an interesting phenomenon, right? But basically, PayPal was built at a time where eBay was also trying to build a competitor called Billpoint. And what happened was they were all competing against each other, and, you know, eBay, eBay, as, as you guys know, it's, uh, at, in the earliest days, there was no way for the buyers and sellers to pay each other. And so they, they literally needed these badges that were like the "We accept PayPal" badges put into all the eBay listings so that the buyers and sellers... I mean, this is like Web 1.0 kind of stuff, right? And so funny enough, this whole group, including Peter Thiel and Max Levchin and Reid Hoffman and Keith Rabois and, you know, some of the greats in the technology industry, they were all together at the same time at PayPal. They took the company public, and eventually eBay bought PayPal. And in, in one of the great traditions and life cycles of the Bay Area, all the amazing people all left at the same time to go [laughs] start other companies. And, and so this group went on to start all these iconic companies like YouTube and Yelp and LinkedIn and so on. And I remember reading about all these guys, and I was like, "What the hell? What do they know that no one else knows?" And a bunch of them obviously got involved with Facebook and other mega companies. So when I came to the Bay Area, that was one of my express goals, was I was like, "I am gonna meet all the PayPal people, and I'm gonna try and figure out what it is that they know that I don't." And, and so I think in a broader way, it sort of ties, Tim, to a lot of topics we've touched on, which is, you know, they had a very quantitative view of growth. They kind of had a critical mass of technology skill set and how do you scale these things over time. But, but one of the things that I think is also in particular really fascinating is that these companies that were getting built by, by the PayPal Mafia and also just more broadly, including Airbnb and Uber and Pinterest and, you know, all these companies that we love, are at their core about connecting people with one another. And sometimes you're being connected over commerce, like an Airbnb or an Uber or, or an eBay or whatnot, and, you know, there's a bunch of companies that are kinda more like marketplaces. Sometimes you're connecting people because of work. You know, Slack and Zoom and Dropbox and all these other tools are really about collaboration. You know, g- games also have, have this aspect, where there's really, like, network effects at the heart of these companies. And so this term that I'd heard a million, billion times while being in tech, which is like, "Oh, of course it's successful. It has network effects," or, "Hey, XYZ company, of course the app ecosystem is amazing because it has network effects." And I was kinda like, "Wow, that's kinda crazy that you have this something that's really this central," and really, in my mind, the secret to why these technology com- why the technology sector in the Bay Area is so incredible. And there isn't really a really definitive unpacking of all of it.

Tim Ferriss 28:43 Mm-hmm.

Andrew Chen 28:43 And so that's what I set out to do. I set out to do that three years ago. And The Cold Start Problem refers to the fact that, you know, if we look at a product like Slack, if you open up Slack and none of your coworkers are on it, and you're typing things in and no one's replying to you, that's not useful as a product. That's not a thing. And in the same way, if you use Tinder and you open up Tinder, and in your city no one else is using Tinder or the people that you're not attracted to are, are using Tinder, then-

Tim Ferriss 29:12 [laughs]

Andrew Chen 29:13 ... your type's not on Tinder, then that's also a cold start problem because-

Tim Ferriss 29:16 Okay

Andrew Chen 29:16 ... like, how are you gonna match who you want?

Tim Ferriss 29:17 Yeah. Or if you're unattractive to all the people who you wanna date, also a problem, but that's a different problem. [laughs]

Andrew Chen 29:22 [laughs] That's, that's a dif... Well, matching is at the heart of a lot of this, so yeah. I mean, you know, that, that, that is certainly true. And so we, we could go on and, you know, use a bunch of different examples, but they all kind of have this core concept of needing a... You, you need other users in order to make a product work, and so you have this problem where you're just like, "Well, how do I get enough people into the product at the same time so that we can all use it together?" And I'll, I'll describe one of the solutions that I just love

Andrew Chen 29:53 because it's so spot on. So when you study all these consumer startups, one of the first things you realize is that so many of them start at colleges. And you're just like, "Why?" Like, that's crazy. I mean, Facebook started at a college. You know, Snap was more high school, and then the example I'm gonna use is Tinder, which, which started at USC. And the reason why it's so interesting is because they, Sean Rad and Justin Mateen and Jonathan Badeen and some of the, some of the early people, when they originally started Tinder, first of all, it didn't even have the, the right swipe, left swipe thing. Like, that was added later. It was just like a check mark, like a green check mark, you know, and a red X. And John, who was a, the iOS developer there, he actually kept a deck of cards with him, and he would just play with the deck of cards while he was coding, and he, he just like added it in like kinda last minute. And it's so iconic now, but it's funny that, that, that's how it really came about. It was really an accident. But in the early days, they built Tinder, and it looked plus or minus kinda the way, way it was. And what ended up happening was they just invited all their friends. Now, in those days, it was kind of like an insult to tell one of your friends, like, "You're single, you need to use an online dating app." So the invitation strategy was not really gonna, gonna work for them, but they tried. They invited... They tried to invite a bunch of friends o- off their address book. It didn't work. And so what they realized was, well, maybe we just need a bunch of peop- how do we get a lot of people, hundreds of people, onto the app at the same time? And, uh, one of the co-founders had a, had a friend on the USC campus that was a very popular, you know, very social, uh, person and, and said, "You know, what if we just did this birthday party for this girl? And it'll be like this really amazing, really sick, just like birthday party. It'll be sponsored. We'll just go all out. But we're gonna put a bouncer in front of the door, and we're gonna make it so that you have to install Tinder in order for it to, to happen." And, and so the way that Sean and John and all these guys tell it, like this was like the party because what happened was they got a couple hundred people all to go to the party. They all installed Tinder. And they didn't use the app that day, but the next morning they woke up and they had this app, and they were like, "Oh, all, there's all these cute people that I hadn't talked to last night. Now I can kind of like swipe through them, and I can message them. Like holy shit, that's amazing." And then from that, they were able to take over the rest of USC. So I have this concept in, in the book that I call an atomic network, which is like what is the smallest network that you need that can retain and be engaged and be functional? And they figured out that it's 500 or, or, or m- maybe they could even go with a smaller party and it would've worked. But a couple hundred. And, and you could basically just... If you could build one atomic network, you can then build a second one and a third one. And so their whole early, early days was just about just throwing these parties. And of course, the product itself was just also really well done. Back in the day before Tinder, this'll m- make you laugh, Tim, if you, if you recall, this was like the Match.com days and Plenty of Fish and all of these, right?

Tim Ferriss 32:53 Oh, sure.

Andrew Chen 32:54 Where, where basically you would post your profile, and then anyone who wanted to message you could message you. And so the way that Sean describes it, he's like, "You know, back in the day, if you were like an attractive person and you used one of these apps, you were basically doing e-mail... You would go to work and do email all day, and then you'd go home, and for your dating life, you'd also do email all day. And it just wasn't fun" [laughs]

Tim Ferriss 33:15 [laughs]

Andrew Chen 33:16 And just making it visual and interesting and everything was, you know, was key.

Tim Ferriss 33:19 And for what it's worth, if you were unattractive, you were also doing email all day because you're just [laughs] sending-

Andrew Chen 33:24 You're copy and pasting

Tim Ferriss 33:24 ... messages-

Andrew Chen 33:26 What's up? [laughs]

Tim Ferriss 33:26 ... and not getting replied to. Right. So either way, it's a problem. Yeah.

Andrew Chen 33:30 [laughs] That's right. And, and I think that's, you know, one of the things that you find in all of these stories is, um... And, and there's some good ones in there about Zoom and Slack and Dropbox and all these, is that especially during the cold start, um, in the really early days, the, the approach to solving it ends up being usually pretty idiosyncratic. You know, in some cases, it's college parties. In other cases, it's putting something on Hacker News and having it take off. In other days, it's just going on Discord and trying to, you know, grow, grow these communities. And so you have a lot of different approaches.

Tim Ferriss 34:02 Well, I would imagine also, and I believe you coined this term, tell me if, if, if I'm misattributing, but the law of shitty click-throughs, right? That is to say, once something is used for the 10,000th time, let's say the, you know, give one, get one, uh, in the case of, say, a Dropbox or something, that at some point it starts to lose its leverage, right? Its, its novelty begins to affect, affect the results. I would love to hear you discuss some of your lessons learned or just share any stories from your time at Uber because that's, that's quite different in terms of, of product, quite different in terms of the, the issues at play. Or maybe not. Maybe there, maybe there's more s-

Andrew Chen 34:51 [laughs]

Tim Ferriss 34:52 Maybe there's more, maybe there's more overlap than I would imagine.

Andrew Chen 34:56 No, I mean, a- and, and I know you were, you were an early advisor to-

Tim Ferriss 34:59 I was

Andrew Chen 34:59 ... to the company.

Tim Ferriss 35:00 Wow.

Andrew Chen 35:00 So yes.

Tim Ferriss 35:00 A long time ago.

Andrew Chen 35:01 Yeah, yeah. Exactly. So no, we, we, we both have a little bit of an inside track.

Tim Ferriss 35:04 [laughs] Back when it was UberCab LLC, before it was Uber. Crazy.

Andrew Chen 35:08 That was a good time to be an advisor, for sure.

Tim Ferriss 35:10 It was. [laughs]

Andrew Chen 35:11 [laughs] Yeah. Um, yeah, U- Uber was such an interesting experience. It was, um... So I ended up there because I was working at a startup at the time, and this was back when people were building apps on the Facebook platform. You know, there was an era where people thought that it was, you know, you could build apps on iOS, and Facebook was gonna give you a way to build apps also. And so I actually started the company. I was a founder. My co-founder was an early YC guy named Matt Rubins, and we ended up getting funded by Marc Andreessen and Ben Horowitz, who led the seed round and then subsequently raised VC and so on. And so what ended up happening was when that didn't work out, I ended up talking with Ed Baker and Emil at Uber and ended up getting, getting, uh, acquired into the company to work on growth. And at the time, I mean, just to tell you kind of like how unique this place was, we had the main floor of the company when you walked in was all like Star Wars. It was all like LEDs, and everything was black. And then in the middle of the floor, there was, there was a room that was built. It was a special room that was often, there was like security guards next to it, and it was like a private conference room, and it was literally just named The War Room.

Tim Ferriss 36:27 [laughs]

Andrew Chen 36:28 And, and as you know, Tim, I mean, a lot of startups have war rooms. I mean, a lot of times they just, you commandeer a conference room. And you just make it your war room to do a project. But this was like permanent war room [laughs]

Tim Ferriss 36:39 Yeah

Andrew Chen 36:39 ... was like, you know, the, the setup. And this was also at a point where the company had just gotten into China, and I think we were losing like a billion dollars a year, but we were also growing, like, many billions of dollars per year. We had just been doing self-driving, and I remember visiting and sitting in one of the, like, trucks that we were building with all the, like, lidar stuff on it. And so when I, when I joined the company, it was adding 3% of the world's population into the app each year. And all of those, all of those users ended up seeing all these product experiences that my teams built there because I was running, running all the rider growth, uh, you know, side of things. And so I, I would say, just going back to your original question, I mean, I think the, the difference between solving the cold start problem and throwing college parties and all that stuff becomes very, very different when you're kind of at this, like, escape velocity phase, where you're just like, "We have billions of dollars, and how do we scale it more?" And, and the reason is because when you look at marketing and you look at growth, there ends up only being a couple things that can scale to be really, really big. I mean, it's basically paid marketing, forms of viral growth, including referrals, and also things like SEO, and may- and some- sometimes a smattering of partnerships. And I would say that this was a period in Uber where we were trying to do all of it [laughs] and spending billions of dollars each way and trying to get there. But I think these lessons are interesting m- mainly because when you look at Uber, you look at Slack now, or you look at, you know, Instacart, or you look at any of these companies, people tend to think that viral growth and network effects are this, like, weird... That, like, there's this silver bullet that once your product has it, you just are kind of on this amazing trajectory. And what you find instead, when you look inside, is you see, like, thousands of people working their asses off, and they're, they're doing all these little tests, and they're doing all these things just to kind of like stay above the growth goal. And I think that's what you really see-

Tim Ferriss 38:32 Yeah

Andrew Chen 38:32 ... is, like, the hard work that actually goes into these companies is just an, an incredible amount of work.

Tim Ferriss 38:38 Let's talk about, if you're open to it, Slack and/or Twitch, maybe both. So these stories, uh, I love these stories because I think many people imagine that if they haven't had much exposure to Silicon Valley or a tech ecosystem like it, that there's this sort of a idiosyncratic, eccentric founder or set of co-founders. They create this product, and then they scale it up to millions of users, and [laughs] perhaps it doesn't change very much along the way. Now, there are cases of that, right? Where if you look at, say, the Uber app is actually a good example of something that I remember seeing mock-ups before there were even cars on the street in San Francisco. The initial two or three cars [laughs] . Before there were even cars out there, I saw a mock-up for what Holland would look like, and I thought to myself, "Wow, that's ambitious."

Andrew Chen 39:38 [laughs]

Tim Ferriss 39:39 And it looked... It was true to form for several years, right? So-

Andrew Chen 39:44 Yes

Tim Ferriss 39:45 ... that, that was a case where the product kinda out of the box, even though it ev- evolved and changed and that war room got a lot of use, right? I mean, imagine-

Andrew Chen 39:53 Yes

Tim Ferriss 39:53 ... any other company where you're, you know you're gonna get sued every city you go into, you know you're gonna get attacked by unions, or you're gonna have to deal with, like, every possible vector of attack. So an unusual company in that respect. But could you talk about the origin stories of Slack or Twitch, whichever you wanna grab?

Andrew Chen 40:14 They're both great. Um, and, and maybe I'll do the Twitch one 'cause, 'cause I like that. But I was just gonna go back to the Uber thing for one second. There's... One of my favorite things, by the way, is to go find the original pitch decks of these great companies-

Tim Ferriss 40:25 Yeah, yeah

Andrew Chen 40:25 ... and just read them. I mean, online you can find, if you search for, like, Coinbase original pitch deck, you know, there's an amazing deck that was, you know, put together by, by Brian Armstrong that's worth looking at. And same for, same for Uber. Garrett Camp actually ended up posting his original deck. And at the time, it was like he wasn't sure if it was gonna be a thing and-

Tim Ferriss 40:45 Yeah

Andrew Chen 40:46 ... they had, I think, three different CEOs kind of in the first, you know, year or two, and, like, all, all that stuff. It was very... It was definitely one that broke all the rules. But yeah, let's, let's go to Twitch really quick. So Twitch is such a funny story because Justin Kan, who's himself now, like, this B2B content creator, you know, person and has stayed very true to his roots.

Tim Ferriss 41:07 Yeah. Sweet guy. Super sweet guy also.

Andrew Chen 41:10 Amazing guy, yeah. And, uh, I've gotten to work with him in a couple different capacities. But if you go back in time, this was like early Y Combinator, and Y Combinator at the time was sort of viewed as kind of this weird, like, why would you even do that? And it's like all these kids in it, and it's sort, sort of maybe for people that aren't legit. Obviously, they've, they've completely proven that, that what a, what an amazing idea it was at the time. And so Justin's project at that point was called Justin.tv. And he basically would just go and wear this backpack that had a laptop that had all... Had, connected to all the cellular networks, and it was kinda like all multiplexed together, so you get maximum bandwidth. And then that laptop then connected into a hat, like a camera that sat on his hat, and he would just live stream his entire life twenty-four/seven. I think this went on for months, months and months and months. And the funny thing about Justin and doing that is it was just... If you were working in tech at the time and you were like, "What's Justin up to?" You would pull up Justin.tv, and you would say, "Oh, he's doing the exact same, same thing that I'm doing," which is just staring at a monitor [laughs] you know, coding or whatever. And it was like a little bit of a critique of your own life, actually, is what, what it turned into. But he, he just did that and, um, for, for, for many years, and, um... Sorry, for, for many months. And he ended up basically realizing, like, okay, you could build a much more interesting company by allowing people, anybody to stream Not just Justin, obviously. But you can think of, you know, going back to that atomic network concept. The atomic network was Justin and his view- his, his nerdy viewers, including myself there. And so he said, "Okay, well let's, let's build that out." And so him and his co-founders, which include Kyle, who eventually started Cruise, very amazing guy, Michael Seibel, who eventually is president at Y Combinator, and his whole crew, all really impressive people, basically started to work on a platform where anybody could stream anything. And the thing is, it, it kind of worked, but not really. I remember using the product during that period and, and when interviewing them, they were basically saying, yeah, people would just stream pirated NFL games, and that was one of the major cases. And then other people would, would try to s- stream other kinds of, you know, weird things like people are cooking or there's, you know, they're just doing like random stuff. And, and the most interesting thing of, of... You know, and that went on for, for several years, and they got to a point where it was just kind of growing and they were feeling weird about it, and should they go and work on another company, or should they start a new company? And they ended up working on a couple new ideas at once, and one of them ended up being to take the really, really narrow set of stream- streamers that were part of Justin.tv that were focused on games, and they just decided, "Okay, well, why don't we make a bunch of changes all at once?" Like, "Let's, first of all, make all the streams just about games." And I think fi- at th- at that point, they said that gaming was maybe only 5% of Justin.tv, so it wasn't like an obvious thing to do. The second thing they did was rather than making it about the viewers, because streaming is so much about viewing, instead let's make it all about creators. What are, what's the creator's incentive in doing all of this? And so they ended up basically making it about monetization, and one of the interviews that I had with Emmett, um, who's now CEO of Twitch, he talked about this, which is it's amazing what happens when you are able to give any creator, someone on the internet, 50 bucks. You know, for us it... You may think, oh, well, what's 50 bucks? But for them it's just like it, it's a, like a huge aha moment to go from creating content just purely for follows and likes and views to being able to monetize it at all, 50 bucks, to a point where maybe every time you log in, you know that you're gonna make a, a bunch of money. And then being able to go professional is kind of like the next level up from there. And, and so they ended up basically spinning this off as its own separate property and, and amazingly it was like very, very, in a very interesting journey because it was became all about League of Legends for a long time. Like, it was just about watching, you know, people run that tournament. And then eventually app- Amazon bought them, I mean, it was I think a steal, for just under a billion dollars. I forget which year it was of the company, but it was probably like year like five or six or something of the company.

Tim Ferriss 45:34 Yeah.

Andrew Chen 45:34 And I think everyone thinks of Twitch as kind of like this weird overnight success, when in reality you see all the like stops and starts along the way, you know, for it to become the success that it is.

Tim Ferriss 45:45 Do you have any insight into how they made the decision to focus on gaming? There must have been some rationale behind it. Do you know why?

Andrew Chen 45:53 Yeah, I think they were just seeing, um... And I think this is true of a lot of these network effect-driven companies, that it's not just one network, it's actually a lot of different networks kind of all under one roof, right? So if you think about what Twitch or what Justin.tv was at the time, it was gaming, but it was also sports and it was also creative stuff, and it was also, you know, all these other things. And I think the, the most interesting part of the early data was that they saw that there was just so much more engagement in this narrow niche. And so even though it wasn't clear that this was gonna be a big idea, and this is for a long time people just didn't understand Twitch, they could see that there was a small group of people that were just like fanatical about it. And so if you chase that, often then you can kind of expand that goodness and maybe there's a whole product that's just about that. And I think that's often very counterintuitive because especially when you're at a bigger company, you end up being very oriented around like, can this be big enough? Can this move the needle enough? And you, you end up not chasing these little things, which is what one of the amazing parts that a startup can actually do, is they can just focus very much on, on that and expand from there.

Tim Ferriss 47:02 Well, the other, you know, aspect of this that, that hops to mind for me and, and please feel free to dismantle this if this is not sort of plausible observation, but is it seems consistently underestimated how much a good company/service can expand the market, right? So in the case of Twitch, it's by virtue of creating these tools and catering to creators, they increase the number of people drawn to create, right?

Andrew Chen 47:39 Yes.

Tim Ferriss 47:39 So in, in other words, if you were to look at the market analysis of what that could become prior to them creating all these tools, it would be somewhat misleading in the same way that a lot of people, I mean, hundreds of people said no to funding Uber [laughs] on AngelList.

Andrew Chen 47:57 [laughs]

Tim Ferriss 47:58 'Cause, because they said, "Well, how big is the current, you know, total addressable market of black sedans really?" And then if you only get 5% of that, that's a tiny company. Of course, not taking into account that the existence of the technology and enabling everyone to become, or many people to become drivers automatically multiplies the size of that pie over and over and over and over again.

Andrew Chen 48:26 That's right. Well, and, and, and I think if you really look at it, Twitch unlock the ability... I mean, I think Twitch and Patreon and Substack, and there's a couple of these companies that are now kind of part of the creator economy, really reinvented, I think the, the, the just really ma- made it so that people could think, wow, like instead of s- starting a small business- Doing the kinds of things that people did back in the day. You know, you open a small coffee shop or you do whatever. It's like, you know, you can, you can make millions of dollars a year being a content creator on the internet. And it really solves, I think, something that I think w- that has been called the, the original sin of the internet, which is that we have an advertising-based system, right?

Tim Ferriss 49:08 Yeah.

Andrew Chen 49:08 Like, how much of the privacy issues that people talk about and the targeting, you know, and all, all the stuff that's been, been happening is really because we d- we decided to go with banner ads instead of having people pay each other online. And, and I think we... Uh, we're kind of in this really interesting point of the ecosystem where we're able to kind of unlock that. There was a really funny poll that Lego actually ran where they surveyed a bunch of kids, it was like 3,000 kids, and asked them what are the professions that they wanted to do. And, and if you look at the results, maybe... It's, it's both funny and maybe, maybe, uh, dystopian, um, that very high up on the list, the first, uh, thing on the list is being a YouTuber-

Tim Ferriss 49:46 [laughs]

Andrew Chen 49:47 ... is actually, like, the top job.

Tim Ferriss 49:48 Wow.

Andrew Chen 49:49 And it was above, uh, teacher, athlete, musician, and then the last one on the list was being an astronaut. So no one wants to be an astronaut.

Tim Ferriss 49:55 [laughs]

Andrew Chen 49:55 They wanna be YouTubers. That... This might be, this might be bad, but, like [laughs] ... Um, but, but it is really interesting. And, and I think Twitch actually was so early in all this because they built all these tools, exactly what you're saying. They basically became a way for people to earn a new kind of living, right? Which is amazing because instead of... Not everyone wants to drive a car, not everyone wants to, you know, deliver food or sell Beanie Babies on the internet, but, like, there are new kinds of work that are forming. And if these kinds of work are more compelling, you get paid more, they're more interesting than a lot of the hourly work that we have in America, well, you know, what's gonna happen is, like, a bun- a lot of people are gonna try to be these things.

Tim Ferriss 50:38 Yeah.

Andrew Chen 50:38 And this whole technology layer is going to support this new type of work that's going to emerge. And so we often think of kind of the information age as very much like a white collar kind of, um, you know, so you sit at a desk and, you know, you're writing documents or whatever. But I think that actually a lot of this will probably lead to a ton of jobs being created and a lot of work being created that's of ultimately a creative nature.

Tim Ferriss 51:02 Yeah.

Andrew Chen 51:03 And then that may be really what people are more excited about than, you know, than doing the kind of hourly work that, that's available.

Tim Ferriss 51:11 Yeah, I mean, there's gonna be such a broad spectrum of work available, right? I mean, just ask Axie Infinity and their player population in the Philippines is one example, right? I mean-

Andrew Chen 51:21 That's right

Tim Ferriss 51:22 ... it's, it, it's, it's really just incredible. And I wanted to ask you, I know very little about gaming. The extent of my gaming knowledge pretty much ends at Advanced D&D, which I know pretty well.

Andrew Chen 51:32 [laughs]

Tim Ferriss 51:32 I still have, I still have my Dungeon Master's manual.

Andrew Chen 51:35 [laughs]

Tim Ferriss 51:35 I still have, you know, Fiend Folio, but sadly, uh, that, that's about the extent of it. I, I wanted to ask you about social networks and gaming for a second because... And specifically I, I was wondering how well you know Roblox. Is that how you say this?

Andrew Chen 51:54 Yeah, Roblox. Yep.

Tim Ferriss 51:55 Because I'd never heard of Roblox until a few months ago when a friend was telling me that during at least the last sort of portion of, say, the last year, that all his kids wanted to do was spend time on Roblox, and I had never heard of it before. For people who don't know what it is, could you describe what it is?

Andrew Chen 52:15 Roblox is very popular in kind of 12-year-olds and younger, and the idea is you go into the Roblox product. There are a ton of apps that all these games that you can play, and so if you wanted to play ki- you know, and it's very kind of blocky, fun, colorful. Think of it kind of li- very Lego-y kind of, you know, format. And if you wanna play like a pet simulation game, there's one of those. If you wanna kind of play a very friendly, funny, um, kind of Grand Theft Auto type open world experience, those exist. There's tons and tons of games in there. And, and the thing that's really fascinating about it is the company itself does not build the games. And so what's happened is there's all these developers that have been using the Roblox platform to build games that are targeted at, you know, millions of kids. And so it... Some of these individuals, like they end up starting out with like... I think there's an example of like a 16-year-old kid that just like learns how to code, starts building one of these games. It gets super popular, gets turned into a company. It's making, you know, millions, tens of millions of dollars, and like off you go. And it's like this entire ecosystem that's been built that way. And the CEO, Dave, is super interesting. He started out actually on the education side of all this, and he was building it, um, I think at the, you know, for, for 10-plus years, kind of very slowly growing the ecosystem, you know, into this, into this product. But, but I think, you know, Roblox is just, I think, a really fascinating example of, I think, a broader phenomenon that's happening, which is that first, games are often the, the canary in the coal mine for a lot of new computing platforms, right?

Tim Ferriss 53:48 Totally.

Andrew Chen 53:48 And so when we, when we talk about Web3 and Axie Infinity, you know, that there's, there's, there's a great example of that, and I think it's... People are gonna figure out that it's a natural way to onboard new casual people into crypto is by exposing them to, to these games. Same with VR, AR, right? I mean, there's a lot of different applications you can imagine with VR, AR. You can explore maps, you can explore planets. I mean, well, the things that people are playing though, they're playing Beat Saber, they're playing VR Chat, they're playing, you know... That's the thing that's getting a lot of screen time. Same for Angry Birds and iOS originally, et cetera, et cetera. And the problem from a investing standpoint with these, with these companies has always been that they felt for a long time like they were movies. Like Grand Theft Auto is a game, I think it costs like 100, it might, it might even be 200 million to, to actually build Grand Theft Auto, and at the same time it's also amazing because they have like an opening weekend and Grand Theft Auto, I think in the first 24 hours made 800 million bucks of revenue-

Tim Ferriss 54:45 [laughs]

Andrew Chen 54:46 ... like instantly. It's like incredible entertainment, you know, thing. But that's sort of like the original model, um, because you have these game publishers like Activision and Microsoft and EA, and they actually own the IP, and so you can't really develop a, a startup there. And so I think what's interesting about Roblox, and I would say Riot Games, which makes League of Legends and Fortnite and Minecraft, and there's a bunch of these that are like, like this, that they actually end up being a next generation of social network is what's really happening. It's like I have this observation, every generation seems to have their own social network. And so if you, you know, came into tech in the, in the, in the '90s, you know, then, um, as a kid, maybe you were all about AOL Instant Messenger, and that was your thing. And then if you were a little bit later, it was like Xanga and LiveJournal and those things. And then, you know, and then Facebook was, like, a real thing, and then now people are on, on Instagram and Discord and, you know, all that. And so when you, when you go back and you look at what a lot of the kids are playing, they end up basically playing these inherently multiplayer, kind of very long-lived, kind of persistent kind of games. And, and because they're multiplayer and they play... they actually play it with their friends, you end up with these deep network effects, the same ones that will make a social network, you know, really successful over time. And so I think it's one of these categories where we've seen a number of these $10 billion outcomes as a result.

Tim Ferriss 56:11 Hmm.

Andrew Chen 56:12 And I think the whole space now, Tim, I think what's interesting, just it's very timely, is that it's getting elevated where I think we, we all thought of this as, okay, we're, we're in this games world, and maybe there's gonna be a lot of, you know, startups. But now there's this co- sort of concept of, like, metaverse, which is this, like, much broader encompassing term that's really kind of like seems like it's actually a mashup of four different things, right? You have, you have, like, the actual games experience, which is kind of the 3D experience that makes you feel like, uh, you're, you're immersed. But then there's also kind of this, this whole concept of the, the, the fact that the metaverse actually gives you a bit of, like, a double life, where you can actually work in the metaverse, you can organize in the metaverse. And again, these are not new ideas because World of Warcraft, which has been around for a decade, people would organize as guild leaders, and people would buy and sell characters, and you could do all these other things. And so there's that piece of it. It's also kind of bringing in VR and AR, which, you know, if you look at the VR units, I think it's kind of under, under the radar that there's something like 10 million units that are gonna be sold of all the various new modern VR units, which is a- approximately the same install base as the, uh, PlayStation 5.

Tim Ferriss 57:23 That's a wild stat.

Andrew Chen 57:24 I know. Isn't that a wild stat? I think, I think, like, people have kind of written it off a little bit, but it's like actually, wow, like, it's actually coming back and there's a lot of usage. And then, of course, I think Web3 kind of intersects with is, is sort of me- like one of the core pillars of the metaverse because when you have a persistent world that you're spending all of your time in, well, naturally, you wanna be rewarded for it somehow, right? And ideally rewarded not using, you know, what we were saying earlier, like a lot of the social networks are all about just likes and follows, and then now there's ways that you can make money, like using, you know, Twitch and so on, you can actually just generate revenue. But the next phase of this, I think, really is ownership. And if you're really early to a new metaverse property and you're able to make it a success, well, you know, what do the creators get for it beyond just having large followings in this thing? And like maybe ownership is gonna be the next big trend, and maybe Web3 and the underlying technologies will be what powers it. And so I think everyone's very excited about this, but it's sort of a mashup of couple, couple new technologies all together at the same time.

Tim Ferriss 58:30 Since you mentioned metaverse, I have to ask you, so what do you think, what do you think the metaverse might look like in, say, three to five years' time? You c- you can pick. Actually, two to five years. You can pick the timeframe. But it seems like the term is being used in a very ubiquitous fashion. You have Facebook's move to Meta. For those who have seen Ready Player One, you've got the kind of Darth Vader character-

Andrew Chen 58:58 [laughs]

Tim Ferriss 58:59 ... who's the CEO of this corporation, right? That is, uh, you know, effectively rigging the game and determining how much real estate they can allocate to advertising before people stop playing, et cetera. And as much as NFTs could give one the ability to transfer ownership from, say, one platform to another or one game to another, there are a lot of counter incentives for companies to make it harder to do that, right? The easier the switching cost, sort of the higher the potential churn rate of users. And at least some of the game developers, uh, large development houses have been hesitant to make any type of jump into, into NFTs. What do you think the metaverse looks like? Is it a gazillion splintered independent properties? Is it Facebook who effectively says, "Hey, if you wanna play with Oculus, if you wanna play in our metaverse, like, here are the rules of engagement," and that's it, end of story? What do you foresee if you look into your crystal ball, recognizing this is, this is just guesswork, but-

Andrew Chen 1:00:17 Yeah

Tim Ferriss 1:00:17 ... still.

Andrew Chen 1:00:17 The nice part about working as a startup investor is we're funding all these companies that will eventually announce their products in two or three years. And so I feel like I have a little, a little glimpse of, of, you know, what, what it is that the founders wanna do and, uh, and certainly something that we're trying to support. So, uh, there's a couple things going on that, that I think are just fascinating. I think the first is that I think you're totally right that if you are one of these really big games companies, and I think, you know, for example, Tim Sweeney at Epic has said this, you really don't have an incentive to play around with Web3 because you have an existing player base where you sell virtual items to them And in, in one of these games, literally just custom, just, you know, decorated skins or outfits will generate hundreds of millions of dollars, and it's just all pure margin, right? There's no cost to that, right? You know what I mean? I guess an artist had to make it in the first place, but there's no cost to it. And so what happens is, why would you wanna turn it into something where people can trade it and you're limited? You know, the second part is you have an existing player base that's really happy. Well, what happens if you release a bunch of, bunch of NFTs and there's a whole hype cycle, and it goes up and down, as, as we all know it will, right? There's gonna be cycles to this thing. Are you gonna end up with a bunch of pissed-off players? So I think the conservative thing to do for them is to just kind of sit back and see what happens. At the same time, this is just an incredible opportunity, I think, for anybody that wants to make a new virtual world or new game experience, game, new game studio right now, because you can go and, and take all these ideas and try to combine it in new, fresh ways that sort of blend together economic gameplay with, you know, kind of the visual like cl- kind of classic g- game design in ways that the world has never seen. And you can get that out to the world in, in a really interesting, you know, fresh takes. I mean, you know, for example, we funded a company called Mainframe, where a lot of the, where a lot of the co-founders worked on a game called EVE Online from many years ago, which is this amazing big game where you fly around in these spaceships, but really it's an economic game where you're building corporations and you're trading, and it's very, like, trading-oriented, kind of capitalist type of game. And it, and, and that's the perfect kind of thing where if you had a fresh take on it, you could build a whole new type of experience in- involving Web3. And so at this point, um, and I think actually Chris Dixon mentioned this in a, in a previous podcast, him and Naval, that something like 100% of the game developers that we talk to have some plan for Web3 at this point. So I think people are very, very excited. So I think that's one thing that's happening, is it's getting embedded whether people want to or not. Like, we're just gonna see it all over the place. Ready Player One is such a captivating view of what the metaverse could be. But in some ways, it also seems a little bit dystopian for it to be, you know, one company. I think we'd all hope for it to actually be really, really, you know, more, more like what the browser was, more like what, you know, the internet is. And you could make the argument that this is actually a historical aberration because if you go back in time and you look at computing platforms, you see that all the, all the older platforms, Unix was owned by AT&T/Bell Labs, then Microsoft, of course, owned Windows, and Intel owned the h- the hardware layer. The internet obviously open, amazing. And then the last, uh, decade or so, it's been very much about this Apple, Google duopoly and all the ramifications that we've had to deal with over the fact that they have control in, in, in such a, you know, stark way. And so I'm hopeful that the metaverse actually is a little bit more simultaneously fragmented and disjointed, but then also makes it very, very easy for anyone to basically get started and, and, and, and go. And I think a lot of the new games that people are building, whether we call them metaverse games or not, I think people will just view them potentially just as games with kind of these, uh, N- NFT features. It'll almost be... I, I, I view it like it'll almost be a genre of games because it'll be sort of this contract that you're making with your players by telling them, "Hey, you're not gonna make too many of the amazing sword that kills all your enemies but is very, very valuable," because you literally can't, because it's an NFT, right? I mean-

Tim Ferriss 1:04:33 Yeah

Andrew Chen 1:04:33 ... I think, I think those are some of the, uh, interesting parts there. I, I was gonna mention one last thing, is there's actually a funny story. I just read, read about this the other day, where Vitalik, who of course built, built Ethereum, one of the core reasons was he used to play World of Warcraft all the time. And, um, and so this is like 2007. Um, and, and what ended up happening was he ended up basically figuring out... I actually have this quote here. He... So Blizzard one day actually just nerfed. He had a warlock, and his warlock had a Siphon Life spell that would like create a lot of damage.

Tim Ferriss 1:05:05 [laughs]

Andrew Chen 1:05:06 And, and Blizzard one day just, like, removed it, and he literally has a funny quote. He says, "I cried myself to sleep, and on that day I realized what horrors centralized services can bring." And then he quit World of Warcraft later and then a little bit later down the line started Ethereum. So anyway, I k- I kinda love that-

Tim Ferriss 1:05:22 [laughs]

Andrew Chen 1:05:22 ... as like poetic justice of, you know, how it all fits together.

Tim Ferriss 1:05:24 Man, thank God they fucked up his warlock. [laughs]

Andrew Chen 1:05:29 [laughs]

Tim Ferriss 1:05:29 For him too, sometimes you need life to save you from what you want, I guess.

Andrew Chen 1:05:33 [laughs]

Tim Ferriss 1:05:33 But good Lord, that's a hell of a story.

Andrew Chen 1:05:35 That's right.

Tim Ferriss 1:05:35 What a great story. You know, it also makes me wonder, as these economies are built within these games, how that will affect continuity and succession planning for company management, right? Because presumably, there are gonna be people who are like, "Ah, I don't wanna do this anymore." But to shut down a game, now understanding that when we're talking Web3, we have decentralized options and so on, but at the end of the day, you, you also have people working on keeping the electricity on, so to speak. I wonder if n- how that will affect corporate governance and succession planning and, and so on.

Andrew Chen 1:06:19 Right.

Tim Ferriss 1:06:19 Right? Because if you suddenly have millions of people who are depending on a game for their livelihood, to just flip the switch and power it down doesn't seem like a very viable option. You could have a, you know, physical uprising on your hands.

Andrew Chen 1:06:33 Right. You know what? That'll probably happen-

Tim Ferriss 1:06:35 Yeah

Andrew Chen 1:06:35 ... now that you, uh, now that you talk about... Well, one of the stories I write about in the book is how at Uber, especially in, you know, 20, 2016 and 2017, how many protests there were outside the office. And you'd see... And then, and it wasn't just the San Francisco office, it was like all the Uber offices, and it would always be just like pissed-off drivers, you know, who were complaining about Uh, whatever policies that, that were ena- enacted in the app, often to balance kind of the rider side and the driver side, you know, 'cause they, they all have different needs. The company has to kind of balance the needs. But, um, sometimes the, the drivers would get upset. But no, I mean, I definitely agree that that, that's an example of a digital phenomenon that then causes this-

Tim Ferriss 1:07:18 Yeah

Andrew Chen 1:07:18 ... you know, physical, you know, kind of situation. But, but yeah, I, I think the, the whole governance thing will be... I think we'll... The, the closest metaphor I have probably is, is open source. 'Cause it sort of seems like open source really changed the way that you could work as a software engineer because now with all of your nights and weekend time, you could contribute to all these projects, and you would then earn this kind of broader ecosystem kudos from other software engineers. And sometimes you could eventually then monetize that by starting a company or by getting hired into, into people, et cetera. But I think what's so fascinating about Web3 is, of course, it's all interlinked, right? So it's like literally, I think what we'll find is a bunch of these, quote-unquote, companies will actually just be lots of, of an extended ecosystem of developers that are contributing to it, and then they're, they're benefiting economically through the tokens. And so I think we're, we're potentially on the cusp of just, like, new ways to organize companies in the future. And, you know, my colleague Chris Dixon and, and, and also Katie Haun, you know, they're, they're, they keep needing to figure out, like, okay, do you invest in equity for startups, or do you buy tokens? And, like, how do you structure it and all this stuff, anticipating all, all of these kind of future changes that are gonna happen in the economy.

Tim Ferriss 1:08:30 Yeah. Things are gonna get pretty cuckoo bananas in the next two or three years, man. Once, uh, [laughs] once all those firms get their RIA certs in order, good Lord-

Andrew Chen 1:08:41 [laughs]

Tim Ferriss 1:08:42 ... there's gonna be a hell of a flood. It's gonna be, it's gonna be very exciting. Uh-

Andrew Chen 1:08:48 Yeah.

Tim Ferriss 1:08:49 Next quest-

Andrew Chen 1:08:49 Well, and, and, and I think for the founders it's, it's just the perfect time to do this because when you, when you look at what's happened in kind of the traditional mobile app world, I think one of the challenges right now is when, when you were building apps just as the App Store came alive, your apps would just compete with, like, waiting in line and, like, you know, you're sitting on the toilet or, like, whatever, right? It's like you... Th- th- that's, those are good forms of competition because of course whatever app you build is gonna be better than, than those experiences. And then now it's like, well, you don't compete against waiting in line. You're competing against the most engaging, most addictive products ever built that are on your phone, and it's very... And, and it, it feels like it's so hard to, to break out these days. And so I think having this, ha- having the, uh, the new Web3 angle on everything is like a breath of fresh air in the whole ecosystem because of that.

Tim Ferriss 1:09:42 Yeah. The Wild West is gonna be an exciting frontier [laughs] for the foreseeable future. I'd love to ask you a question about questions, and that is... So I have in front of me a question: How would you 10X the growth of product X? Right? Whatever that product might be. So I've read that that is one of your go-to questions when talking to growth teams, so you could confirm or deny that. But what, what I'd love to ask you, broadly speaking, and it could include this, is what types of questions do you find helpful to ask entrepreneurs when you're trying to assess how they think about growth?

Andrew Chen 1:10:17 I love these questions you can ask that are basically in infinite depth in nature, where somebody who really, really knows their shit can just go incredibly, incredibly deep, and somebody who's just very shallow will just stop after, you know, five minutes, right? And I'll give a couple examples there, right? So, you know, one, one, one really good one that you can ask technical people is, "If you type in AndrewChen.com and you hi- hit Enter, explain in as much detail as you can about what actually happens that causes the webpage to render at that point."

Tim Ferriss 1:10:52 Mm.

Andrew Chen 1:10:53 And so if you're talking to somebody who really knows what they're, what they're, what they're doing, they'll go into as much detail as you want, you know? It's like you h- you hit Enter, and how does the, like, keyboard actually interface with the device drivers on your operating system? And, you know, how does DNS work? And how does... You know, and, and you just go really, really deep in, in all of this. And, and I love that, and it gives you a sense for how people are strong or weak in different areas. And, um, and so what I'll often do with founders is to ask kind of these big, broad questions like that and just see how, how deep the rabbit hole goes for it. And, and, and one of those is to ask them, like, how do you, how do you 10X TikTok? Or how do you 10X, you know, Axie Infinity? Or how do you 10X, uh, Clubhouse, or something like that? And what you're really looking for there is the, the people that kind of immediately jump to some kind of a specific tactic, where they're just like, "Oh, well, you know, you need a better invite mechanism," or, "You really need to fix XYZ feature," I think tho- those tend to be all, all tactics and all tips and no organizing principle for how you can then generate 10 more ideas like that. And, and it doesn't indicate where you wanna go. And so, so what you want instead is you want something that looks more like a model of the world that you're describing, hopefully succinctly, and, and using that model, you can, you can kinda generate many, many ideas. So if you're... If you ask a question about Clubhouse, for instance, you need to... First of all, I think I... What I'm looking for ideally is a theory for how it is that, you know, a user maybe gets invited to Clubhouse from one of their friends, and then they end up being activated because they connect with a certain number of rooms that they really like. And then as a result of that, do they then share one of those events to another set of friends? And then there's a loop that then you can kinda describe, you know, within that. And you can call that a viral loop, or you can, you know, there's kind of various forms where you call it an engagement loop. But you want something that sort of feels like it's a theory that you can repeat over and over and over again. And with that, then you can start to ta- dissect First of all, how do you measure it? How do you measure whether or not that loop is actually working or not? Because in a world of viral loops, for example, if you have 100 users using your app and they invite more than 100 users, then that group will then invite even more users and on and on, and then that becomes exponential versus if those 100 users invites 50 users, then that'll drop off to 25 in the next one, and then 12 in the next one, then you'll... Then your, then your loop will eventually die. And so I'm looking for that type of a, you know, theory about how it all fits together. And then I think once you kind of set all of that scaffolding up, then I'm very interested in the exact details of like, okay, well, what does the screen look like? Where does the button go? What, what does it say on the head- on the, on, on the title page? And really get down into the nitty-gritty. And I think that sort of encompasses everything from strategy all the way down to kinda measurement and, you know, into, into the tactics. But, but I love those kinds of questions when you get into it because, you know, wh- when you're, when you're with somebody that, um, is as equally nerdy as you are about a topic, you can just go on and on and on, right? It's like me asking you, like, what makes a good, uh, podcast. Like, you probably could talk about that for a year.

Tim Ferriss 1:14:14 Turtles all, all the way down. Turtles all the way down.

Andrew Chen 1:14:17 [laughs]

Tim Ferriss 1:14:18 Uh, [laughs] okay, Andrew, I have to ask you a very important question, and, uh, this relates to metrics. Mr. Metrics. [laughs] How do you suggest startups, companies, people go with that about picking the right metrics? Because there are vanity metrics, there are useful metrics, there are meaningless metrics, there are misapplied metrics. You can really mess it up every which way from Sunday. So how, how do you-

Andrew Chen 1:14:45 Yes

Tim Ferriss 1:14:45 ... walk someone through the process or interrogate someone when you're trying to figure out if they're using the right metrics? However you wanna-

Andrew Chen 1:14:51 Right

Tim Ferriss 1:14:52 ... answer that.

Andrew Chen 1:14:53 Maybe I'll give a short story about what metrics c- how, how that maps into your strategy, because I think it is such a fascinating interplay kinda between the two. Which is, I've been an advisor to Dropbox kinda off and on over the years and, uh, you know, always on, on, on growth and things that they're trying to do to, to continuing adding new products and continuing to monetize. And, and one of the things they did in the, in the early days that I thought was so interesting was for many years, Dropbox actually saw themselves as a consumer company.

Tim Ferriss 1:15:27 Hmm.

Andrew Chen 1:15:27 And the reason for that was when you would look inside of a Dropbox folder, what you'd find is tons and tons of photos, because that was kind of by far the most numerous thing that was in, in, in all the, all the Dropbox folders. And so it, it was before that reason that they ended up building a bunch of photo apps, including Carousel, and they had a bunch of other projects kind of over the years, was because they thought, you know, they had a chance to build another kind of, another form of social network around sharing photos. And as part of that, they ended up measuring, um... So, so going, going to the metrics point, they were thinking a lot about monthly active users. They were thinking a lot about kind of all the standard things that we might associate with a social network. And what happened though was, well, if you're going for monthly active users, what does that lead you to? Well, it leads you to potentially giving away your product for free to as wide of an audience as possible. And so, for example, if you find a Dropbox folder that's just full of music or movies, that's, that's, that's good Dropbox usage because maybe a lot of people will download from that, and that's great. But what the company found over time was they basically started to really analyze, okay, like, what are people actually using Dropbox for? And for the people especially who pay for Dropbox, what do they use it for? And they found that even though there was a lot of photos and a lot of movies and a lot of other things being shared, the files that actually got a lot of repeat usage and actually retained people tended to be documents, tended to be spreadsheets, tended to be things that people were using for work. And what that led them to understand was that if you did an analysis of all the people who converted to becoming high-value users, you could actually define it. And so they created an internal metric that they called a HVA versus an LVA, so a high-value active versus a low-value active.

Tim Ferriss 1:17:21 Hmm.

Andrew Chen 1:17:21 And a high-value active was somebody that was sharing folders with other people, was, um, had Dropbox installed on multiple computers and were syncing files across it, versus an LVA was somebody who maybe was just backing up their computer, maybe was sharing files, but not the right type, you know, et cetera, et cetera. And I think that this, this is an important example of how much your strategy and your metrics actually interplay. People tend to pick a metric, like a really simple one, and tend to say, "Okay, well, let's make that one bigger," but then not understand what are the actual downstream ramifications of what, what, what are actually going on.

Tim Ferriss 1:17:57 Yeah. Registered users, right? Coming back to early in the conversation.

Andrew Chen 1:18:01 That's right. Exactly. And so I think instead, what you really wanna do is you want to actually pick your s- strategy first. Are you going for... You know, what's your vision for the product? Are you going for a certain target audience? What is the unique value prop that you're trying to go for? And really tie that up, especially with what actually retains and generates business value for you. And then you set your metrics in a way to validate that your strategy is actually working. And I think some of the biggest blowups in all of tech history, ones where you spent way too much money trying to grow too many users, and then it just turned out that they would never be profitable, and it would kind of implode from there. Or, um, actually an example that I have in the book is, um, Google+ was a product that Google had released in order to compete against Facebook with the idea that more users is better. They ended up linking the Google+ product from the Google homepage and from, you know, Google Maps and from YouTube. And of course, like, it looked like it had hundreds of millions of users very fast. But the question is, well, were people really using it with each other? And the answer was no. But if you define it by Just active users, that's the kind of result that you get. And so I think, you know, that, that's an example of where the strategy wasn't sound, and then the metrics that were picked kind of overwhelmed what, what you ended up being there. So I think, I think our founders have to be very careful about that and really start with the fundamentals there.

Tim Ferriss 1:19:24 Hmm. What are some other common mistakes that you see people making when they're trying to improve growth within a startup? Could be just a small business of any type, but what, what are some, what are some common errors that you see among founders?

Andrew Chen 1:19:45 One of my favorite ones to debate people on Twitter about [laughs] is, uh, is, is, uh, is the use of, um, brand marketing in order to power your customer acquisition. And I think it's, it's just such a tough thing because there's sort of a brand marketing kind of like industrial complex that it exists out there-

Tim Ferriss 1:20:07 [laughs]

Andrew Chen 1:20:07 ... that's just full of, like, agencies and all these, like, you know, creative people, and it's just, like, amazing. And it is what the big companies do because when you're, when you're doing brand marketing, you're working on a, you know, multi-decade timeframe if you're a bigger company to be able to recoup a bunch of those costs. But when you're a startup, I think the, the reality is that what... The world that you work in has to be very concrete. It has to be very much about how you use your very scarce resources to acquire your next batch of 100 users or 500 users. Paul Graham has a great essay about doing things that don't scale, and one of the things he talks about is how founders are very, very reluctant to individually onboard customers into their product because it just feels like such a waste of time [laughs] and just, like, way too much work. But I think in reality, what you find is that you learn so much from doing that, and then you find new ways to scale. And then once you've proven that you've built your atomic network and you can kinda go from there, then that's when you start to think about paid marketing and referral programs and, you know, all the, all that good stuff. And so that, that's, the, the whole brand and, uh, you know, pa- paid marketing thing is definitely one that I, that I think, you know, startups should just completely avoid if they can.

Tim Ferriss 1:21:21 I'm so glad you, you brought up the doing things that don't scale. Uh, I would also highly recommend people check out, it was an early episode of Masters of Scale with Reid Hoffman featuring Brian Chesky, and they were talking about doing things that didn't scale in the beginning of creating Airbnb, and it's just a phenomenal episode. And it shows you how fluent they became in all of the touchpoints for users of their service by being really hands-on in the beginning. And, uh, I find it to be very inspiring also 'cause it, it, it means that you don't necessarily have to have an infrastructure ready for billions of users on day zero [laughs] , you know?

Andrew Chen 1:22:09 That's right. And I think that that's why every startup that is getting created today has the advantage of looking at all the other companies that have been founded in the past and seeing all the idiosyncratic, you know, new growth hacks and techniques that they used. But also, they get to use all of these new ones that are just emerging in the market. I mean, I think one, one of the big areas has definitely been the creator economy getting to scale. I mean, 10 years ago, being a creator was not a thing that a lot of people could do, and then now of a, all of a sudden, you have all these people with millions of followers, and they want to work with startups. They wanna work with communities. I mean, a lot of what we saw in the Clubhouse journey so far is how many folks from the entertainment world are so interested in tech and want to invest in the companies and want to build ownership in these companies. And it's something where if you're a brand-new startup, you can find that edge and go for it in a way where if you're a larger company, while engaging, you know, one or two YouTube influencers is not gonna be as interesting and move the needle as much as if you, you know, closely partner with, with another. So I think one of the things I'm always looking for is what, what is that next big edge, the new computing platform, the new technique that a startup can use to get a couple hundred users that the big companies are, are not gonna be able to take advantage of.

Tim Ferriss 1:23:28 That's a, a large subset, right? I mean, big companies are handicapped in, in a lot of respects, right? In the same way that individual investors can outperform some of these huge investing outfits, oftentimes because they just don't have the same constraints applied to them, right? Like, if you can't have more than 5% of your portfolio allocated to an individual position because you're the Magellan Fund or something, you have to follow a certain set of rules that, you know, Joe Main Street

Tim Ferriss 1:23:59 instead of Mr. Wall Street doesn't have to follow, right? So there are a lot of options. Let me take a, a hard left turn here and ask just a handful of additional questions. I have meerkat written down here [laughs] .

Andrew Chen 1:24:15 [laughs]

Tim Ferriss 1:24:15 Could, could, could you please talk to me about meerkats?

Andrew Chen 1:24:20 So one of the really interesting parts of the network effects literature, if you go back and, and, and read about it, is there's, there's this concept of Metcalfe's law, which has sort of been this framework that justified... It basically says the more users that use a network, its value exponentially grows. It's very simple. It's what was used, especially in the, in the original, you know, dot-com era to justify these enormous valuations for all these companies, and really is the heart of, like, first mover advantage or kinda these ideas like winner take all. And the more you stare at that, if you've been in the tech industry, the more you realize, oh my God, this really classic law is actually wrong. And it's really obvious why it's wrong because first of all, as we've been talking about today, Tim, it isn't just that more, more nodes on a network is better. You actually need, like, a critical mass of people, as... and, and there's a certain number that you need in order for it to work. And so if you talk to the You know Slack folks, and I interviewed Stewart for the book. One of the things he talks about is you need at least three people in a, in a company using Slack together in order for it to work. And so network... The, the Metcalfe's law just doesn't capture any of that at all. And then the other thing is, on the other side of it, which I think is really fascinating, is that very large networks end up having all these problems because there's just too much stuff. Like, you get these overcrowding effects where, you know, now it's just really hard to find good content on, on a YouTube, or it's really hard to find, you know, Craigslist has so much stuff in there where just the navigation and, and, you know, the fact that there's fraud and scams and, like, all that other stuff is really a core part of it. And, and I think this is something that you just see across all of these platforms, which is that not only is it really... Not only do you get the cold start problem at the beginning, but then as it gets too big, you end up needing to deal with, like, trolls and spammers and overcrowding and all these other things. And so at the heart of it, what that tells you is, well, Metcalfe's law happens to be, has to be wrong because the value doesn't just go off into infinity. Otherwise, we would never, ever use any new products. We would just stick with the five big, you know, marketpl- you know, we would all just use eBay for everything. We would all just use AOL Instant Messenger for everything. We wouldn't use anything else. And so the, the framework that I actually came to in, in trying to understand this is actually borrowing a theory that comes out of the, uh, the world of ecology, which is that you have meerkats, which are, you know, if you remember, this is one of the characters from The Lion King. There's Timon, who's the meerkat, and Pumbaa, who's the, who's the warthog. And what happens with meerkats that's, that's super interesting is that basically if you m- if you look at all the, the academic research on it, when you model them or, or flocks of birds or goldfish or, you know, whatever it is that you wanna model, what you find is that you have to model them in such a way where there's, there's a certain size of me- a meerkat, um, grouping that you need in order for them to be able to warn each other about for predators and so on. And if you bring them way far down, if you lose too many meerkats, um, [chuckles] then what ends up happening is they become, um, the, the whole, uh, the whole grouping becomes much less, um, effective. And on the other hand, if you have too many meerkats, then you end up with overpopulation because there's, there's just too many in a, in a given area, and then the population will also tail off. And so that S curve is actually really at the heart of a theory that then you can apply to all of these social apps and marketplace companies and collaboration tools because the dynamics are really the same. And so when I was writing The Cold Start Problem, I remembered this class that I had taken at the University of Washington on, on the study of, uh, animal populations, and I was like, "Yes, that's the curve. That's the math behind it." And so I, I was excited to be able to actually put that into, into the book. One of my other favorite things to do in the Bay Area is to go to the Monterey Bay Aquarium.

Tim Ferriss 1:28:29 Oh, so great.

Andrew Chen 1:28:30 It's, it's such a great aquarium, and one of the funny things, it's like funny and sad, is that there's all these sardines that they used to fish for, and they basically fish for them every year with more and more and more, and they were fishing, you know, d- several dozen tons of, of these fish. And then one year they just all disappeared. And if, again, the math is the same kind of idea, which is that you need a critical mass of sardines, and if you overfish, then the whole population will, will, will collapse. And so those ideas are, are, are so fascinating how they sort of weave across nature and then also, um, a, a lot of the different products that I was studying for the book.

Tim Ferriss 1:29:05 Yeah, that's right. What is it, Cannery Row? Is that the name of that road where-

Andrew Chen 1:29:09 Yes

Tim Ferriss 1:29:09 ... the Monterey Aquarium is? I haven't been there in so long. Man, that brings back the memories. I thought-

Andrew Chen 1:29:14 Yeah

Tim Ferriss 1:29:14 ... you were gonna mention the sea otters [chuckles] as a-

Andrew Chen 1:29:17 [laughs]

Tim Ferriss 1:29:18 ... distant aquatic cousin of the meerkat. I'm sure there's gotta be some type of surveillance system among the, among the sea otters that has some similarity. Who knows? Uh, definitely plenty, plenty of sharks in, uh, in those waters.

Andrew Chen 1:29:36 Yes.

Tim Ferriss 1:29:36 You don't have to go to the Farallons to find those. Uh [chuckles]

Andrew Chen 1:29:39 I, I was gonna mention the other, the other place where I've been very fascinated about network effects is actually the network effects of work in the cities that we live in. Because when I first moved to the Bay Area, I lived in Palo Alto, and it was not... It did not take that long for... And, uh, there was a period where basically everyone said, "All the serious startups are in Palo Alto. That's where..." I think there was one building, 165 University Avenue, where Google and PayPal and a bunch of other companies had all been built in one building. It was like, you know, U- University Avenue is just, like, one street, and it had, like, all the companies were on, were, were in one street. And I think it took four or five years before all the startups moved to San Francisco.

Tim Ferriss 1:30:21 Yeah.

Andrew Chen 1:30:21 They moved to the city, which is, like, an hour away. And I remember it was because one of my friends was saying, "It's easier to get funded than it is to get Palo Alto, Palo Alto office space."

Tim Ferriss 1:30:31 [laughs]

Andrew Chen 1:30:33 And Pinterest actually started in Palo Alto and, like, moved to, to the city. But it, it's been fascinating to watch also kind of, you know, just thinking about some of these ideas in the context of cities because obviously s- having Zoom and having, you know, remote first as an option really weakens the network effects of all, all of these, uh, different cities 'cause you can actually work from anywhere. And having seen the whole tech industry move from Palo Alto to San Francisco makes me actually wonder how likely it is that of huge chunks of, you know, SF might actually, the tech industry might actually decamp and move to New York and LA and some of these other places.

Tim Ferriss 1:31:09 [chuckles] Austin. Half of the city-

Andrew Chen 1:31:11 And Austin

Tim Ferriss 1:31:11 ... has moved. [laughs]

Andrew Chen 1:31:12 Yes. Yeah, exactly. That's right.

Tim Ferriss 1:31:13 Yeah.

Andrew Chen 1:31:14 That's right. Well, I, I was telling you that, uh, that I, I, I, um, uh, during COVID, I, I drove around in a van for, for four or five months, and then I ended up actually staying in, in Austin for four or five months as well. And one of the things I put together was, like, the WhatsApp group of... I went on Twitter and just asked, like, "Who in SF is in Austin?" DM me and I'll put together a WhatsApp group. And I think I still have like 200, 300 people in this WhatsApp group-

Tim Ferriss 1:31:38 Wow

Andrew Chen 1:31:38 ... of the SF-

Tim Ferriss 1:31:39 Yeah

Andrew Chen 1:31:39 ... like expats that are, you know, visiting there. But, but I, I think, I think it's very real that the same things that p- keep people all in these top cities are, are gonna fundamentally change because of the way that we're working.

Tim Ferriss 1:31:50 Oh, for sure. For sure. I've been excited about it. I've been excited about the sort of geographic redistribution. And I'm sure there will be some regression to the mean in the sense that I knew that New York was gonna recover quickly, for instance, right? People are like, "New York's dead." I'm like, "No, it's not." [laughs] It's definitely not.

Andrew Chen 1:32:10 [laughs]

Tim Ferriss 1:32:11 And lo and behold, you know, six months later it's, it's, it's alive and well, not to worry. What else are you looking at over the horizon, say in, in the near term? And you can define that however you like, but are there any particular changes that you are excited about, worried about, thinking about? Or trends that you're paying a lot of attention to?

Andrew Chen 1:32:42 Yeah. One of the trends that I've been following that I think is just incredibly fascinating is how much startup investing has become part of the overall vernacular of Twitter and, and just everyone who's, who's an employee in tech also, everyone wants to invest. This crystallized for me recently where you, you guys may know, um, Austin Allred from Lambda School, who's one of my-

Tim Ferriss 1:33:06 Mm-hmm

Andrew Chen 1:33:06 ... favorite people.

Tim Ferriss 1:33:07 Yeah.

Andrew Chen 1:33:08 And he, he said he, he basically thought, "Maybe I should start a rolling fund," and he just tweeted out, I think it, it was him and Sahil who, who, who put a couple tweets together, and they immediately just instantaneously put together a, uh, $30 million rolling fund wh- which he's now off investing. And it's a really interesting place because of both obviously Robinhood as well as OpenSea and I'm involved in a couple companies. Um, one's called Stonks, which is, uh, kind of a, a product that aims to be kind of Robinhood for, for the private markets. That there's just so many ways to angel invest now. I mean, you can, you can be an angel of course. You can be one of these solo GPs. You can be-

Tim Ferriss 1:33:49 What do you mean by solo GPs?

Andrew Chen 1:33:51 Yeah, so these, there, there's a bunch of folks like, uh, Ryan Hoover and, uh, Jeff Morris Jr. and these folks that are running around basically where they start a venture capital fund, but it's just one person-

Tim Ferriss 1:34:02 Yeah

Andrew Chen 1:34:02 ... at the top of it.

Tim Ferriss 1:34:03 Mm-hmm.

Andrew Chen 1:34:04 Um, and they're investing other people's money, but oftentimes these are folks that have really interesting social media followings and have really unique insights about, about their particular markets. And so because of that they go off and they raise, you know, $5 or $10 million funds. And I think it's, it's fascinating because we've, we went from this world where we w- have been giving 1 or 2 million bucks to every credible entrepreneur, and now it seems like what we're doing is we're gonna give $5 or $10 million to every credible person to now go and invest in their friends. Um, and, and I think we've been happy with the former part of this experiment with all the innovation that it's been creating. And I think just generally making this, making it so much easier for founders to get started is a huge deal. And so I think what's been happening now is as people get into the market and are starting to invest more, what I always tell them is, first of all, if you're gonna get into investing in startups, that you, number one, have to, you really have to think about it like you're building a portfolio. And if you look at the venture capital data out there, there's, um, one of our LPs, Horsley Bridge, went and released a ton of data about how for the top-tier venture capital funds, about half of your investments will actually lose money. And then you'll get another slice that basically where you get your money back. And then it's, you know, it's 1 out of 10, 1 out of 20 that actually return, that makes money and pays for, for everything else. And so what that really tells you is that if you're not in a world where you're actually getting to 20-plus investments, then you're, you're not doing it right, you know, first of all.

Tim Ferriss 1:35:37 Yeah. No, I was just, I was just gonna say it's like reading Bringing Down the House and playing blackjack. Like, you need to have enough bankroll to survive a string of bad luck [laughs] right? Like-

Andrew Chen 1:35:50 That's right

Tim Ferriss 1:35:51 ... you can't just have enough for one hand. Like you need, you need to actually plan for larger numbers. Not to interrupt, but-

Andrew Chen 1:36:01 Yeah, exactly. And I think you need to scale down your check size to be small enough where you can put money into 20, 30, 40 companies. And so sometimes what that means is, you know, you're, you're DM'ing founders and you're individually investing 5,000 bucks or, you know, 10,000 bucks or something into their company, and you're trying to spread it out across, you know, many of these. Um, and then counterintuitively I think a lot of folks are getting into startup investing and they're thinking about it as where they wanna do advising first. And on one hand, those can work out, as you and I both know, if you, especially if you do quite a, quite a few of them. But in a lot of cases you're advising companies and you end up in a situation where they're adversely selected.

Tim Ferriss 1:36:42 Yeah.

Andrew Chen 1:36:43 These are companies that need your help. And so when, when a company needs your help it ends up being a sign that maybe, okay, like where, where [laughs] is this gonna go? Are they actually gonna be mature enough to be able to, to be successful on, on their own? And then the final thing I, I, I, I wanted to mention is I think that writing and tweeting and social media has become such a big part of it because in a world where there's so much capital and so many new ways for people to do investing, that you end up needing to really show your unique expertise. And social media and, and, and writing and all that has become like the way to, to do that for a very founder-oriented, founder-leaning ecosystem at this point.

Tim Ferriss 1:37:23 Yeah, you're mentioning advising and sort of the more help a company needs maybe [laughs] acting as an, like an adverse selection criterion, right? And it, it seems to me in, in Web3 also, as companies get, in some respects, leaner and leaner and leaner, and they get to tokens faster and faster and faster, i- at least in certain forms, you know, Web3 companies that need a lot of capital could also ... That, that could also act as an adverse selection indicator, right? Like, if, if something's really cash hungry, it's like, well, wait a second. [laughs]

Andrew Chen 1:38:05 [laughs]

Tim Ferriss 1:38:05 Let me make sure they're making good decisions before we plow a huge check into this.

Andrew Chen 1:38:09 Back in the day, you were pretty prolific. Have you, have you gotten back into investing or advising at all? Or is that-

Tim Ferriss 1:38:14 I, you know, I haven't done any advising in a really long time, just because, uh, my time doesn't scale, uh, [laughs] these days. And also in the beginning, you know, I did advising in part because I didn't have enough chips to spread it around. [laughs]

Andrew Chen 1:38:31 Yeah.

Tim Ferriss 1:38:32 And, uh, I understood, but I understood the, the, uh, p-portfolio theory for angel investing well enough to know that I couldn't just have o- I'd have to be, you know, batting 1,000 to only place a few bets. And, yeah, I think importantly for me at least, I also committed to doing it for a long time, right?

Andrew Chen 1:38:53 Mm-hmm.

Tim Ferriss 1:38:53 So I, I knew that I would put money out, learn, and then place more bets as I made more money, and to view it almost ... I mean, the way I really did view it was my own Stanford GSB, right?

Andrew Chen 1:39:07 Right.

Tim Ferriss 1:39:07 So rather than going to business school, I was like, all right, I'm gonna spend this money over two years, like tuition, and I'm gonna assume I'm gonna lose it all, so I'm gonna optimize for developing relationships and learning new skills, and then we'll see where things land, right? [laughs]

Andrew Chen 1:39:21 Right.

Tim Ferriss 1:39:22 Uh, so I did the advising early on and, uh, had some good, good choices, and a lot of luck, and really good timing, which I can't take credit for in most cases. So that worked out. But stopped investing from, I'd say, almost entirely stopped investing from 2015 to 2019, 2020, and then r-really started investing aggressively beginning of 2020, and have become very, very fascinated by Web3. So I've ... I have invested in some companies. Uh, but I'm also treading carefully because there's so much noise and so much volume and so much excitement that it's- it's become a little difficult for me to read the room, if that makes any sense.

Andrew Chen 1:40:20 Mm-hmm. Mm-hmm.

Tim Ferriss 1:40:21 And I, I think it's really important, at least for me, I try to identify ... We're all playing games, right? So I try to identify the game that I'm, the games that I'm playing. And [laughs] then once you've identified that, you know, am I actually well-suited to do well at this game? And so in 2015, there was all this money coming in from, like, China and other places, and these term sheets were getting so weird. And I thought to myself, "Well, I'm playing with my own money here." So I don't have fund economics, right? So if, [laughs] if you have, and there's nothing wrong with this, I think it's genius, uh, and it's a, it's a great way to get a lot of, of leverage, and if you can do it intelligently, it's awesome. But if you, if you have, say, management fees and carry and so on, it's a very different thought process than if you're using all your own savings, right? At least on some level. There are similarities, but there's ... The return profile is, is, is a little different. So I stopped, and, uh, have been getting back into it, but I've also recognized for myself at least that I get, I think, addicted to the adrenaline of the sport. And-

Andrew Chen 1:41:33 [laughs]

Tim Ferriss 1:41:34 And I like, I like competing and competition, not necessarily against other investors, because I don't really think about it that way. But I like backing players and seeing them kill it. [laughs]

Andrew Chen 1:41:49 Right. Right.

Tim Ferriss 1:41:49 And I don't know if I wanna optimize for competition over the next-

Andrew Chen 1:41:54 [laughs]

Tim Ferriss 1:41:54 ... you know, chapters of my life. I'm g- I'm good at it. I enjoy it. But it also ... It does create a fair amount of cortisol, as you know. Like, i-i-if-

Andrew Chen 1:42:05 Yes

Tim Ferriss 1:42:05 ... if these startups actually turn out the way you want them to, which is, like, they have a tiger by the tail and they're exploding, bursting at the seams, that just means they have a whole different set of problems. It doesn't mean that problems go away. [laughs]

Andrew Chen 1:42:19 [laughs]

Tim Ferriss 1:42:19 You know? So, uh, I, I think, I, I think that I'm in the process of doing some self-assessment. But I, I am enjoying ... The investment that I've done in the la- in the last year I will say has been really fun and has largely reminded me of that kinda 2007 to 2010 period in a lot of ways. So that's been, that's been cool. That's been, uh, a lot of fun.

Andrew Chen 1:42:46 Yeah, I know our mutual friend Naval says how, uh, angel investing is somewhere between a hobby and a business.

Tim Ferriss 1:42:52 [laughs]

Andrew Chen 1:42:53 [laughs] Probably closer to a hobby. And so you have to be, uh, be careful about it. I, I was gonna ask you one, one other question, which is, um, for you as a creator, I imagine you must be pitched all sorts of stuff in kind of-

Tim Ferriss 1:43:05 Yeah

Andrew Chen 1:43:05 ... quote-unquote creator economy. And I'm curious what, what's been resonating with you and, like, what you, what you like and, you know, don't like in the market as, as all the trends have been going.

Tim Ferriss 1:43:15 Yeah, it's, uh-

Andrew Chen 1:43:16 Kind of like a golden era, right? Like, who would've thought that, you know, these kinds of contracts and these kinds of, you know, deals would be getting thrown around, so.

Tim Ferriss 1:43:24 It's really exciting. It's also, I think, seductive for a lot of folks who are relatively new entrants. So they're, the walled gardens in, say, the world of podcasting, right? There are some very lucrative deals that are offered by some of these services. And if Uh, you know, the, the, the, the numbers can be pretty astonishing. So d- so it depends on where you are in your, I think, career. I'll speak to my personal feelings too.

Andrew Chen 1:43:55 Yeah

Tim Ferriss 1:43:55 But I think it depends a lot on where you are in your career and what you're trying to create for yourself, and what type of opportunity cost you think there might be. So I do see people taking deals that reduce their total listenership by, say, 50%, 60%, and they get paid a premium for that f- over a period of time. And I am not currently in a place where that is interesting, just because I, I've been fortunate with the startup game and with other, other forays, uh, like the, [laughs] my publishing chapters and so on. Um, so I just, I... And I don't have too many expensive habits, so I just don't need to automatically look for s- like a corporate overlord to tell me what to do-

Andrew Chen 1:44:45 [laughs]

Tim Ferriss 1:44:46 ... for a huge check size. That sounds really un- unpleasant. Now, there are more and more creative deals coming into the space, say for podcasting, as there are more well-funded entrants beginning to throw muscle into the space.

Andrew Chen 1:45:03 Right

Tim Ferriss 1:45:04 And we're seeing that with Amazon, who it's always a mistake to underestimate Amazon, I think. And from a content perspective otherwise, you know, I, I do find it really interesting to see how new iterations of older technologies or approaches can still strike such a chord, like Substack, right?

Andrew Chen 1:45:28 Mm-hmm.

Tim Ferriss 1:45:28 So I have a, I have a newsletter. I do manage it. Like, my team manages all of it. I do the writing. And it's, it's been really exciting to see how many top-tier journalists have, have made the jump to independently self-sufficient through something like a Substack. For me, a lot of the stuff I have been pitched just doesn't make a lot of sense financially-

Andrew Chen 1:45:58 Right. Right

Tim Ferriss 1:45:59 ... financially or energetically, because I really enjoy doing the podcast. The podcast does very, very well. For the amount of work that goes into it, it is a fantastic business model, and [laughs] uh, and I get to offer it for free to my listeners. Now, they do get to pay the tax, which is listening to advertising, but-

Andrew Chen 1:46:27 There's a fast-forward button, you know [laughs]

Tim Ferriss 1:46:28 There's a fast-forward button.

Andrew Chen 1:46:29 It's a great trade

Tim Ferriss 1:46:30 I've... Yeah, I vet all of my sponsors really carefully, turn down, like 80%-plus of them, which is, which may immediately make it impossible for me to do any type of deal with a larger company because there would be minimal approval ratings for sponsors and things like this.

Andrew Chen 1:46:46 Ah, right

Tim Ferriss 1:46:46 But that's okay. So what is currently getting my attention right now is the NFT space, not because of the cash grab. Of course, there's a lot of that going on, but if I were just trying to capitalize on striking while the iron's hot, I would've done something already. And, uh, for me, what's interesting in particular is the, the prospect of, of, say, funding scientific research through my foundation-

Andrew Chen 1:47:16 Hmm

Tim Ferriss 1:47:16 ... with projects that then deliver an annuity back to the foundation in the form of, say, 10% of secondary sales or something like that.

Andrew Chen 1:47:25 Right

Tim Ferriss 1:47:26 So to have a, like a regenerative philanthropic approach that is fueled in part by NFTs is really exciting to me. So that's something that I'll be looking at.

Andrew Chen 1:47:37 Yeah, I mean, all, all those ... The, the business models are so interesting because I think what we're figuring out in this era is that creative work has probably been wildly undervalued because it's the thing that l- so many consumers actually want and experience. But then you have this whole generation of middlemen, whether those are music labels or publishers or, you know, whatever, that have artificially been constraining some of the economics in order, you know, for, for, for, for their businesses to be interesting.

Tim Ferriss 1:48:06 Yeah

Andrew Chen 1:48:06 And being able to go direct in this way, first through things like Substack, where, you know, it's now part of the, the playbook of, of the company as well as many, many other companies like it, to basically have a creator fund and to be able to write, you know, advances of, you know, huge numbers. I mean, you can goo-

Tim Ferriss 1:48:24 Yeah

Andrew Chen 1:48:24 ... Google some of the rumored numbers out there, but like big numbers, I think just really fundamentally changes the way that... And then, you know, the creators can then own their work. They can ... You know, they don't have to be-

Tim Ferriss 1:48:34 Yeah

Andrew Chen 1:48:34 ... intermediated, you know, et cetera. And then, and then I completely agree. I think the whole NFT thing is fascinating in how it provides ownership kind of at the, at the next level. So that, that's cool to hear that you're, you're, you're so engaged in the Web3 stuff.

Tim Ferriss 1:48:46 Yeah. I'm, I'm, I'm very, uh, fascinated by it. A number of my friends who are, uh, brilliant artists of different types have f- from my perspective, right, finally kinda been paid. They've had a balloon payment [laughs] in the form of NFTs [laughs] -

Andrew Chen 1:49:04 [laughs]

Tim Ferriss 1:49:05 ... or in the form of Ethereum for NFTs that ha- have just lagged for years, in a sense, with the value they've offered to their fans because the economic models have been so lopsided, right? And-

Andrew Chen 1:49:20 Right. Right

Tim Ferriss 1:49:20 ... and that's okay. Like, people get something fr- from participating in these structures. But now that there are new options, it's ... I anticipate that the, the, the self-designation of creator is going to become ... And this is not, you know, this is, this is not a controversial prediction, but, um, is going to become much more common, right? Like, as, as you mentioned, kids looking to become YouTube stars. I think that That that will kind of expand in multiple directions to encapsulate a lot more as ownership becomes more and more of an option, and technologies exist to facilitate that. And, you know, I remember talking to somebody who had a massive, massive business built on a number of Facebook pages, and I asked him h- what it felt like, and he said, "It feels like I have the most profitable McDonald's in the world built on top of an active volcano." Because [laughs]

Andrew Chen 1:50:25 [laughs]

Tim Ferriss 1:50:27 With one algorithm change, with f- with, uh, any number of platform changes that he has no control over, you know, his organic reach could be ratcheted down by God knows how much, right?

Andrew Chen 1:50:39 Right.

Tim Ferriss 1:50:39 And that's why quite a few years ago I decided to focus on 5-Bullet Friday and the newsletter, which has also become this sort of joy for me to do, I enjoy doing. It's like my diary of the coolest things I've discovered each week. Uh, because you have some sovereignty.

Andrew Chen 1:50:59 Mm-hmm. Yep.

Tim Ferriss 1:50:59 And that email list is like, I mean, in a sense it is an NFT, right? [laughs] It's sort of a non-fungible token in the form of an ex- uh, of a, of a unique database that can travel with me if I become unhappy with a given email service provider or whatever it might be. Uh, so I, I'm really, really, really interested to see where this all goes.

Andrew Chen 1:51:25 I feel the same way about my email list, by the way. I mean, I, it's, it's, it's, I, I would give up... Uh, if, if I could convert, you know, my, my Twitter followers into more email subscribers, I would if I could.

Tim Ferriss 1:51:35 Yeah.

Andrew Chen 1:51:36 It's the one thing that you really control. A- as you were talking about that, I, I was just thinking, you know how there's the concept of, like, thousand true fans?

Tim Ferriss 1:51:44 Oh, yeah. Kevin Kelly.

Andrew Chen 1:51:45 Yeah, in the Kevin Kelly world. I, I wonder if there needs to be a new rule created now in NFT world where it's like, actually instead of having 1,000 true fans, you maybe just need, you know, 100 investors.

Tim Ferriss 1:51:59 [laughs]

Andrew Chen 1:52:00 You know? [laughs]

Tim Ferriss 1:52:01 Yeah, yeah. It's true.

Andrew Chen 1:52:03 As the new form of patronage.

Tim Ferriss 1:52:04 Yeah. Yeah, I'm, uh, really excited to see what, what emerges, right? Out of, out of the rapid experimentation and the high volume experimentation that, that I'm seeing now in Web3. I've never seen anything like it. And that's coming from... You know, maybe that's just my age talking, but it's, you know, I feel like we've, we've both seen quite a few cycles now, and the, the sheer volume of experimentation is something I've never seen-

Andrew Chen 1:52:40 Yeah

Tim Ferriss 1:52:40 ... in such a compressed way. It's, it's-

Andrew Chen 1:52:43 Right

Tim Ferriss 1:52:43 ... really incredible. So can't wait to see what it does to film, to TV, to people who want to direct, to creators of all different types. And it's also going to become a sort of a, a curation mess in, even more of a mess in so many respects. So I, I'll, I'm very interested to see how... And it's already happening, but how sort of tastemakers and cultural shapers emerge from this primordial soup [laughs]

Andrew Chen 1:53:18 Yes. Yes

Tim Ferriss 1:53:19 ... of Web3.

Andrew Chen 1:53:20 Yeah. Well, there's been, there's been several cycles of crypto now, but it definitely feels like this is the one where this particular cycle where because of games and crypto-

Tim Ferriss 1:53:32 Yeah

Andrew Chen 1:53:32 ... and then also kind of NFTs and kinda creators and all of that, where it's really burst into the, the mainstream of what, you know, a normal average consumer would actually be excited about. You know, for them, as, as much as the nerds were excited about kind of new, new versions of different protocols and so on, you know, that wasn't as appealing as now, like-

Tim Ferriss 1:53:51 A little abstract, yeah, for most folks.

Andrew Chen 1:53:53 Yeah, it's a little abstract. So I, I think it's, it's gonna be one where, you know, hopefully in, in a couple years it's like any, any game that you download off of Steam or off the internet or whatever is gonna have a bunch of crypto functionality and a wallet embedded and all that stuff, and it'll just be transparent to the user. It'll just seem like it just works.

Tim Ferriss 1:54:11 Yeah.

Andrew Chen 1:54:11 And, uh, and a lot of what we're talking about now is just, you know, the underlying technologies will feel more like when people used to talk about, you know, megahertz and [laughs] you know? Like-

Tim Ferriss 1:54:21 Yeah

Andrew Chen 1:54:21 ... how many gigabytes of, you know, memory does your thing have, et cetera. It'll just become, you know, fully just a, a, a natural part of every, every product experience we have.

Tim Ferriss 1:54:29 Oh, yeah. Well, it's, it'd be like explaining to little kids now who use iPads what a touch screen is. They'll be like, "A touch what?" It's just like that is what a computer is, is this thing that I touch.

Andrew Chen 1:54:40 [laughs]

Tim Ferriss 1:54:40 You know, it's sort of like the David Foster Wallace, uh, you know, this is water, or what is water. The, the two young fish going by the older fish, and the older fish says, "How's the water, boys?" And they go by, and one turns to the other and says, "What's water?" You know, that kind of situation.

Andrew Chen 1:54:57 [laughs]

Tim Ferriss 1:54:57 I'm sure that a lot of what we're talking about now will just be u- ubiquitous in a handful of years. Uh, Andrew, we've covered a, a hell of a lot of ground. I, I, uh, I really appreciate you taking the time. It's fun to reconnect. It's been a long, long time. People can find you on Twitter @andrewchen, on your website of course at andrewchen.com. You have a very popular newsletter I'm sure that people can find there. The new book is The Cold Start Problem, which people can find wherever books are sold. Reforge, would you like to say anything about Reforge or anything else before we bring this to a close?

Andrew Chen 1:55:34 Yeah. I'll also just add that, um, one, one of the things I've been doing over the years has been to take a lot of my lessons and ideas, especially around metrics and growth and marketing, and packaging them into kind of multi-week programs under a company called Reforge, which you can check out. And the, and the whole idea there is basically that the, the whole concept of a business school needs to just be completely reinvented. I actually Lived in a Stanford GSB pass-down house where it was basically a bunch of the MBA students and, and I just found it on Craigslist when I first moved to the Bay Area. And it was always one of those things where you ask them, "Oh, how's school?" And it's like, "We didn't learn anything but, but you meet amazing people, the parties are really fun." And that's kind of the state of things. And so what the Reforge people are trying to do is really to take all the knowledge out of the... all of these frontier skill sets, right? Uh, everything that we've talked about today actually. You know, everything from, from Web3 to, you know, metaverse and game design to all the creator economy stuff. And how do you take all these, these, these frontier skills and actually get them out of the practitioners' heads and organized into ways that you can train kind of the next, you know, group of, group of people. And so this company's been kind of a, a really interesting vehicle for me to be able to publish more of my thoughts and content to in, in, in a very organized way. And so they'll work with folks like Casey Winters, who's the chief product officer at Eventbrite, or a bunch of folks from Airbnb and Slack and, you know, some of the really interesting companies. And really to, to, uh, bridge that disconnect that exists between academia and what actually happens in, in the real world, and to provide it in a format where people can basically learn all these frontier skills from, from other people, and to do it in a way where, you know, their employers are paying for it and it's part-time. And I think that really s- stands in stark contrast with this whole reinvention that we're seeing in kind of academia as a whole, where the first, you know, the top 200 schools, maybe 500 universities will probably be fine, but you're actually seeing a, a ton of universities going bankrupt these days. Student debt is obviously a huge crisis and, and it makes the whole process of going to one of these schools less attractive. And so it's part of a... Reforge is part of a really interesting new trend of trying to reinvent this whole system that we know, we- I think we all know needs to be reinvented. Um, and, and starting at, on kind of like business education and, and, uh, and, and tech and so on.

Tim Ferriss 1:57:59 And we'll link to it in the show notes, but what is the URL offhand?

Andrew Chen 1:58:03 Yeah. So if you just go to reforge.com, R-E and then forge.com, it'll list all the, all the new programs that, that folks are doing in product management, in marketing, in growth, and a bunch of other upcoming programs that, uh, Brian Balfour, who's the CEO, and, and that whole team is putting together.

Tim Ferriss 1:58:22 Amazing. Is there anything else you'd like to share? Any comments, complaints, requests to the audience?

Andrew Chen 1:58:28 [laughs]

Tim Ferriss 1:58:30 Closing comments that you'd like to add?

Andrew Chen 1:58:32 No, all good. And Tim, I hope you'll allow me to take you out to dinner in Austin when I'm next out there.

Tim Ferriss 1:58:37 I would love that. I would love that, man. Just like old times. Holy cow.

Andrew Chen 1:58:41 Yeah, exactly.

Tim Ferriss 1:58:42 It's been a long, long time since we were neighbors in the Mission. [laughs]

Andrew Chen 1:58:46 That's right.

Tim Ferriss 1:58:47 So great to see you. And to everybody listening, we will link to all of the resources we discussed, including the new book of course, The Cold Start Problem, at tim.blog/podcast. That's tim.blog, B-L-O-G, slash podcast. And until next time, pay attention to those meerkats, be nice-

Andrew Chen 1:59:09 [laughs]

Tim Ferriss 1:59:10 ... experiment often, and take care.