Greg Isenberg (03:00):
So Wall Street Survivor was that. It was a community centered around demystifying investing and I remember when we started building it, people told us, “People don’t care about education. It’s not sticky. They need things like Instagram, Facebook, whatever.” Turns out actually people do care. I mean why do you listen to this podcast? You listen to this podcast because you’re trying to be better. So that was Wall Street Survivor, and it became the number one stock market game on the internet basically overnight. Millions of students used it as a part of their finance curriculum to learn about investing. 85% of the top U.S. business schools use it as a part of a finance curriculum, and yeah, it was in my early twenties. This is in, or even earlier, at 20, 21, 22, and that’s the story of Wall Street Survivor which we ended up selling.

Trey Lockerbie (03:47):
Amazing. So you can’t actually invest real money. It’s simply just a tool for learning how to trade or invest using paper money.

Greg Isenberg (03:55):
Exactly, and I think the business model … We built it really just out of a need, to be honest, and then we’re kind of like, “Oh my god, we have a million people using this or whatever. How do we generate money?” The first thing we started doing is putting on ads, that’s what everyone used to do at the time. Then we’re like, “You know what? Why are we selling ads to TD Ameritrade when we realize that these people would spend three, four, five, six, seven-hundred dollars for an acquired customer. So then we started basically doing deals with some of these bigger sorts of advertisers and the lesson there was to pay attention to who’s advertising on your website and try to like strikeout sort of direct deals. But yeah, the business model is very strong around we’re basically top of the funnel for a lot of these financial firms.

Trey Lockerbie (04:39):
Now was your appeal with this business and this tool based on your own personal learning? I imagine what you just describe at the beginning, losing a lot of net worth for not understanding why is this sort of what drove you or intrigued you about the tool, and then I’m curious to know if you used it yourself to kind of build your own investing education.

Greg Isenberg (04:59):
So I’m fascinated by businesses that have community at the core, and I’m also a nerd. So I’m a nerd in the sense that I just bought a Volvo. I’m like hanging out in the Volvo sub-Reddit, and I’m like geeking out about the smallest details about Volvos. I’ll get really into a particular Columbian coffee bean and I’ll go find those people on a Facebook group and like go to a meetup for this particular thing. That’s really my nature, so when you combine the lack of community that exists for financial communities with a black swan event like the 2008 financial crisis, what excites me is like there’s an opportunity not only to give people utility in terms of teaching them literacy ultimately, financial literacy, and also combine them with people that they can meet that can really unlock potential. Like to me, that’s so exciting. Like I love those types of businesses. You really are making the world a better place and you’re also creating a place for … I’ll call it freaks like me, or geeks like me. That’s what intrigued me about it.

Trey Lockerbie (06:01):
Awesome. Well, I totally agree that the financial literacy piece is lacking in traditional education and it’s just really unbelievable how lacking we are in that department in most universities and even high schools.

Greg Isenberg (06:15):
People crave it, and why do you think Wall Street Bets has gotten so big? Why do you think personal finance YouTube has gotten so big? You got Graham Stephan, I don’t know if you follow him, but he went from like 100,000 subscribers to a couple million over the last 12 months. It’s like people are craving this, and there are not enough places for them to talk about these things because money is taboo.

Trey Lockerbie (06:38):
So going back to your own investing career, you posted about a bunch of mistakes, what Warren Buffett would call mistakes of omission. Talk to us about the lessons you’ve learned from your own investing career.

Greg Isenberg (06:50):
Yeah. I mean having lived in San Francisco for many years, being in the startup game, you end up meeting a lot of people and those people end up starting very successful companies. So the post I think you’re referring to, I think I talked about some mistakes that cost me $75 million … It’s actually more than $75 million. Way more than $75 million. So I had an opportunity to invest in multiple seed-based companies that became unicorns and not because I was particularly special, but just because of like these are the people I meet at like … I’d see them at Phil’s coffee shop in San Francisco.

Greg Isenberg (07:25):
So the first thing I just want to say is that like if you’re going to be serious in tech, you’re going to come across these deals and it’s going to suck. You’re going to learn the same mistakes that I made. So I can talk about a few of them. The first is everyone told me that there was this narrative, “Well if you can’t go for a beer with the founder, don’t invest in the startup.” It makes sense to you. It makes sense to me at least. It’s like, “Yeah, you want to be in business with people you like.” But it turns out there are some brilliant people or some people that you might not be … Might have very different views about the world or you might like tennis and they might like soccer or whatever, and it doesn’t mean you can’t invest in a business. That would be foolish to only invest in your friends.

Greg Isenberg (08:07):
Then also it creates this virtuous cycle of you’re only investing in these people that are like you. I actually think we should go against that. So that’s one of the biggest mistakes that I made. I’m curious about your thoughts on that, like do you agree? Do you disagree?

Trey Lockerbie (08:22):
If you’re coming at it from a venture mindset, let’s just take the stock market. First of all, not often are you even meeting with these founders if you’re investing in the stock market, so plenty of people do well in the stock market without ever meeting a founder. If you look at it from the venture side, there’s not often … From my experience, a scenario where you’re meeting with your venture team all that often anyway. Unless they’re on your board perhaps and you’re meeting once a quarter. It reminds me of when I interviewed Bing Gordon. He did sort of touch on this idea of liking the people because he said you should like the people you’re having beers with because you’re paying a lot for it. But at the same time, it was more important than those people who had ideas for you. So if you are investing in people that you think you can add a lot of value and you can bring up five good ideas in your meetings with them, I think that’s more important than whether you both like soccer.

Greg Isenberg (09:09):
Right, I actually think … That’s another thing I didn’t put on the list which is you need to be a value add investor to be a great investor and you actually don’t. Like some of my best companies, I invest and they don’t have any questions. They’re just like kind of executing really, really well and like they might have a question once a year, whatever, but I also think that’s another thing which is you don’t need to be in the trenches every single day with your portfolio if you’re an angel investor. You could just be there when people need it.

Greg Isenberg (09:38):
The second mistake I made was … Or the big mistake I made is invest in founders with pedigree. Because when I first moved to San Francisco I went on Sand Hill Road where all the VCs are and I asked for their advice. I said, “Hey, I want to do more angel investing. What kind of advice could you give to me?” They all said VC is about pattern recognition. You need to invest in people that you think … That fits a certain pattern, and I was like, “Okay, tell me more about the pattern.” “Oh, they went to work at Facebook. They graduated from Stanford. They graduated at Harvard and based on that, you will do well as a VC.” What does that do? That’s a very exclusionary, non-inclusive way, frame of mind, and you end up missing huge, huge opportunities.

Greg Isenberg (10:23):
An example of a company that I invested in a year ago or so at this point is Yassir which is Uber for French-speaking Africa. We are using that methodology of just like patterns, like no, you wouldn’t do that. Like you would be investing in just Uber, and I think there’s a ton of businesses, global businesses, global entrepreneurs who didn’t graduate Stanford, who didn’t work at Facebook, who didn’t go to Harvard, who are going to be the world’s best, biggest entrepreneurs, and I want to back those people.

Trey Lockerbie (10:52):
Yeah, I think that one’s particularly interesting. When you bring up pedigree, I’m also reminded of investing in “proven founders” and how that can be somewhat of a mistake because a lot of times you might have a founder that exited already, but they’re not as hungry. A lot of times these people go out, they raise a ton of money because they’ve been there, done that. But then they’re out golfing while they implant some other CEO or somebody else to actually run the business and they just don’t have the same kind of drive and a lot of times that drive is what really matters.

Greg Isenberg (11:19):
Yeah, I think you hit upon a really good point which is if you’re a founder and you want to build a really big business, you need to have some chip on your shoulder. You need to prove something to someone somehow. If you’ve proven everything and I don’t know if it’s going to give you the extra gas in the tank which you need. So I totally agree with you on that point. This one, platform dependency kills startups, that’s what everyone was telling me. I get it. I get why being built on top of Airbnb or Facebook or Twitter could completely crush your business because Twitter could shut down API access and all of a sudden your business is worthless. I remember meeting a company called Sonder, it was called Flatbook at the time, the founders. They’re actually going to be SPACing I think I read $2.8 billion and they have this business where they’re like, “Hey listen Greg. Airbnb is awesome, but it’s really inconsistent. So we’re going to create a network of spaces across the world and it’s going to be consistent, there’s going to be like a coffee maker there and it’s going to have Starbucks coffee and we’re going to put it in everyone and the WiFi and is going to be good and we’re just going to list it on Airbnb.” I was like, “Yeah, that makes a lot of sense.” Like as a consumer I get it.

Greg Isenberg (12:34):
I asked some other VCs or other friends about it and they’re like, “Oh dude, forget about it.” It just takes one button from a product manager at Airbnb to be like, “No, we don’t want this on our platform, forget about it.” So my lesson there is yes, although you have to be careful of who you build on top of, it could lift you up. If you’re built on someone’s shoulders, the shoulder of a giant, it could lift you up, and there are tons of opportunities of how do you build zero to one businesses that are scaled on top of giants? You just have to be conscious that they can turn off lights at any moment. So that was a huge lesson for me there. I mean I think I looked at that deal at a four million dollar valuation, something around then, something like that. So I don’t know, do the math. 25K, we’re talking about what is it, like 1,000 times return or something like that? It’s a lot of Volvos.

Trey Lockerbie (13:28):
There’s one mistake on here that resonated with me actually that you listed which was this idea that I’m a founder and so therefore I don’t have the time or energy to invest in another business. I have had a couple of things come across my desk that I’ve had that exact thought on. So what have you learned from that one?

Greg Isenberg (13:44):
Yeah. So that’s another one which is like the narrative is that the best founders are focused. Therefore, you should only be focused on your business. I mean that’s true, you should be focused on your business, but as a founder, you kind of get access to this exclusive club of other founders. Like you end up meeting other founders and another founder would be like, “Oh.” It’s like the expression real recognizes real. Another founder will recognize you and he or she’s going to tell you or they are going to tell you about how their business is actually doing in a certain type of way that you wouldn’t give to … For example, a VC.

Greg Isenberg (14:19):
What I should have done was write really small checks into these companies, $1,000.00, $5,000.00, $10,000.00. A lot of times, other founders will take small checks like that because it’s another founder, they know it’s tough, they know the struggle, and I think if I can give advice to my 22-year-old self is instead of investing, or whatever. Take 25 grand per year, take 20 grand per year, take 15 grand, take 40K per year and just put small bets into people you meet along the way, and I think you’d be surprised with the results.

Trey Lockerbie (14:52):
I love it. Well, let’s talk about where you’ve been “unbundling businesses”, which is not a term I was very familiar with before discovering you and your work. But it seems to involve a lot of time on Reddit and so we mentioned Wall Street Bets earlier and some of these other communities that are built on Reddit and other platforms and you’ve been spending a lot of time on it. I’m curious, what fascinates you the most about Reddit?

Greg Isenberg (15:16):
Reddit is a goldmine. When you break down Reddit, what is it? You have hundreds of thousands of what they call sub-Reddits, which are communities, like a Facebook group in particular niches, where everything is public, and people are pseudonymous, meaning completely anonymous but they don’t have their real identity, it’s somewhere in between, they pick a username. You get this like the real rawness out of people. On Facebook let’s say or Instagram, if it says Greg Isenberg, I might act a bit differently on that platform than I would if I’m a particular user name and I’m kind of in this sub-Reddit, in this culture, and I’m giving my personal opinion. Think about the FIRE, are you familiar with the FIRE community? Financial Independence Retire Early?

Trey Lockerbie (16:00):
No, I’ve sadly not spent hardly any time on Reddit. So I’m not as familiar.

Greg Isenberg (16:06):
Let’s just say you know FatFIRE out which is F-A-T-F-I-R-E on Reddit. It’s basically a community of people who subscribe to this lifestyle of, “Hey, I want to retire early, and there’s that 4% rule. But I don’t want to retire off let’s say 30 grand a year, 40 grand a year. I want to be making 200 grand, 400 grand, 500 grand, a million dollars a year with these passive investments. It’s people just like asking questions, learning about how to do it, sharing their experiences, and it’s beautiful. It’s beautiful because it’s people, going back to what we talked about with Wall Street Survivor, it’s people who have a shared mission, shared identity shared culture, and real progress is being made every single day. Now I look at that community, going back to your question, it’s like why am I fascinated with Reddit? Well, I’m fascinated with Reddit because where else can I teleport into this world and see the writing on the wall and be able to distill those insights to create products and businesses around. Not many places.

Trey Lockerbie (17:11):
So you’re speaking to a sense of authenticity, the pseudonyms or the monikers people are using. It’s kind of taking down this barrier and making them feel like they can be as authentic as possible, so therefore, you’re getting really transparent dialogue. So maybe give us an example of how that has driven you to build a product or seen a product that you’ve visualized for this group of people.

Greg Isenberg (17:34):
So I’ll give you an example. So one of the things I like to do on Reddit when I’m unbundling a sub-Reddit, and we’ll use fatFIRE as an example, is look at … On Reddit, there are these things called flares. Flares are just a category. It basically is the moderator of that community saying, “How are people using this sub-Reddit and how can I make it easier for people to filter through different posts?” What I like about looking at flares is it gives me a sense, a bird’s eye view, of how people are using this community.

Greg Isenberg (18:01):
One of the most popular flares on fatFIRE is a path to fatFIRE, meaning of the whatever, 200,000, I think it’s like 175,000, 200,000 subscribers to this group, a large chunk of those people are not actually FIRE as they call it. That meaning they don’t have a net worth of more than three or four or five million dollars, but they have this desire to get there. Those are some of the most active people in the group.

Greg Isenberg (18:29):
Now when you look at that, you can look at it and be like, “Cool, that’s interesting.” Or you can be like me and be like, “Okay. Let’s take a step back. Is there a product to be built here? Is there a paid community? Maybe there’s a $29.99 a month product that we can create specifically to unbundle the fatFIRE community, specifically to unbundle the path to fatFIRE portion of it into its own product. So we’re just riffing right now but like I like the framework of thinking like what is it, come for the tool, stay for the network. I’m sure you might have heard that before and what is a tool that we can be building for that particular community and then layer around that tool an actual community. So going back to the Wall Street Survivor example, the tool was this stock market simulator. It wascoming for like, “Hey, get $100,000.00 of virtual cash.” But then the network was, “Oh hey, Johnny from Des Moines, Illinois, you seem really cool and you’re around my age and I want to follow your stock picks and I want to have a conversation with you.” There are so many opportunities to build a network and community around it, and that’s how … Yeah, just giving an example of how I think about it.

Trey Lockerbie (19:43):
So this is particularly interesting maybe to our entrepreneurial audience because a lot of times you can find yourself developing a solution without a problem and it sounds like not only are you finding may be problems that you can create a solution around, but you’re even going above and beyond that and alluding to this what I’ve heard called something like the community economy. I mean this new era it seems like we’re entering where it’s not even just the products, it’s this diverse dynamic community that builds even maybe upon your product.

Greg Isenberg (20:15):
Yeah. I mean the biggest businesses that will be created over the next 10 years are going to have a community editor and that includes B2B businesses. I know some of you might be like, “Oh, he’s just … Yeah, it makes sense for a keto diet product to have a community around it, but how does that make sense for my SaaS business?” But the community is a big part of that too. We’re seeing it happen. I mean it’s happening right now with crypto. We’re seeing things like Bored Apes, a billion dollars of NFT transactions in 2021. It was $40 million last year, and just like if you don’t believe me, think about the brands that you use every day. Think about brands that aren’t just a product but are a lifestyle, about building community and stuff like that. I think especially the younger you go, Gen Z, younger millennials, they don’t just want to buy a Procter & Gamble product. They’ll want to be buying, experience the product, but being a part of something bigger than themselves, and that’s really where I believe everything is going.

Trey Lockerbie (21:21):
So there are a few terms I’m seeing thrown around and I don’t know if they’re exactly crypto-related but I’m hoping you can help us dive into these terms and help us understand what they mean. So particularly I’m talking about Web 2 and Web 3. It kind of reminded me of when the iPhone came out with iPhone 8 and 10, I’m hearing about Web 3, what was Web 2? I don’t even know. So what is Web 1? So these are all questions I have and there’s a lot of hype or excitement around it, but maybe let’s take a step back if you can, just give us an overview of what each of these is and what they kind of mean for you what we’re talking about.

Greg Isenberg (21:57):
Yeah; et’s do it. I think it’s worth diving into. Crypto I think is today more than a $2 trillion industry so it’s worth sort of … Crypto and Web 3 is big, so it’s worth diving into, so I’m happy you brought it up.

Greg Isenberg (22:09):
So Web 1, and we’re talking ’95 to 2004, commercialization of the internet. That was about information. It was about you’re People Magazine, you created people.com and you just took your magazine and you basically threw it on the internet. It was just about taking analog things and putting information. The hallmark of Web 1.0 is information, putting it online. That was very big.

Greg Isenberg (22:34):
Web 2.0, Web 2, was all about people. So this is Facebook, it’s no longer about just having this one-way interaction with information but being able to read information and write information. So you could see a photo but you can also post a photo, and you can comment on it and it was this two-way social networking mobile phase of the internet and that was like 2005, 2004 let’s say, to 2017.

Greg Isenberg (23:08):
Where we are today is this new era called Web 3. Web 3 is all about execution. When I say execution, I mean things like smart contracts, which are contracts that are executed by code versus people. So imagine I bought a house a year ago and that house, I had to go … It was in Canada, I had to go to a notary, the notary had to like draw out some documents and I had to go to the bank. If the bank had to like drop some documents, I had to believe this paper that I saw, that like here’s … The backyard is one acre and this is someone’s impeding on my lawn and there’s this I have to believe a lot of the title. There’s a lot of trusts that I had to have in all these systems, and then it happens like pretty manually. Like someone wires the money, someone signs this, but we live in a world of code. Web 3 is about removing that human trust that you have and being able to buy products, services, experiences that are executed smartly by code. So I think that’s a hallmark of the Web 3 is this whole smart contracts thing.

Greg Isenberg (24:20):
The other thing is money and creating internet-native money. So I’m sure everyone here has heard of Bitcoin and Ethereum. These are internet native money, and I think that’s a hallmark of it, and the third thing, the other hallmark of Web 3 is probably ownership. Just ownership in general. We can talk more about NFTs but I think NFT is a good example of that, non-fungible tokens which basically is a piece of content that exists on the internet that I could say that you Trey own this photo. Not anyone else. Similar to how in the house example, when you have a title that exists that says Greg Isenberg owns this house on 123 Main Street.” This is on the internet, it lives on the internet. So the way, to summarize how I think about Web 1, 2, and 3, I think of Web 1 as read, Web 2 as read/write, and Web 3 as read, write and execute.

Trey Lockerbie (25:17):
Very interesting. So with Web 3, I’m getting a sense that what you’re speaking about is involving a lot of decentralization perhaps as well. Is that part of the equation here with Web 3?

Greg Isenberg (25:30):
Yeah, exactly. So the decentralization piece of it is all about trust. So instead of me trusting TD Ameritrade or instead of me trusting this bank or this institution or this person or Facebook, we live in a world where people are trusting a lot of these organizations less and less. That’s why decentralization is so powerful as a concept and I think it’s probably one of the biggest … Probably one of the greatest inventions of all time because we’re seeing this all across the world. People are trusting governments less and companies less and they need a way to execute on day to day operations and they want to do it in a way that they can trust. They want to do it in an internet-native way, and a lot of these people are in their twenties or even younger.

Trey Lockerbie (26:21):
When I look at this space as an investor, what intrigues me the most about it is I’m getting this sense, and I don’t know if this is misplaced or not, but with this whole Web 3 phenomenon or development or evolution, whatever you want to call it, I’m remembering back to when Bill Gates was on Letterman, telling Letterman what the internet was. At that time, you had companies and then you had internet companies. I sure would have loved to invest in those internet companies at that time. So what I’m seeing right now is if I’m an investor, I want to be very mindful of companies that are jumping on this potentially or on the cutting edge of this. Because it seems like this could be a whole new era of a certain kind of economy or the way consumers interact and I want to be looking at companies that are tapping into this as early as possible, potentially. Is that how you’re looking at it as well?

Greg Isenberg (27:10):
Web 3 changes everything. It’s going to be as big as that shift from company to the internet company, except that it’s going to go from company to internet company to what in the Web 3 terminology is called a DAO, decentralized autonomous organization, which is basically a company that’s governed by smart contracts. The world has changed and is never going back. Once the internet happened in ’95, ’96, ’97, it was commercialized, we couldn’t go back. The genie is out of the bottle with Web 3 and just as how there was millions, billions, trillions that were made in Web 1.0, there was a lot lost. There was tons lost. Yes, Amazon is a … What is Amazon, a $2 trillion company, something like that? Around there. If you would have invested in ’95, ’97, ’98, you would have done really well. But there’s obviously the pets.com of the world where you would have lost. But I do think from an investor perspective, everyone should allocate 1%, 2%, 3%, 4% of their net worth into Web 3, come up with a portfolio approach. You’re sitting there, it’s 1994, it’s 1995, right? It’s all over again. Now is your chance and you can look at it and be like, “Bitcoin’s overvalued. It’s worth a trillion dollars.” You could have made those same arguments with, “Oh, Amazon’s overvalued. They sell books, and how many people actually use the internet?”

Trey Lockerbie (28:40):
So when you talk about allocating part of your portfolio to Web 3, are we talking just crypto? Are we talking NFTs? Are we talking businesses that are developing marketing strategies around NFTs? I mean talk to us a little bit about what that allocation might look like.

Greg Isenberg (28:56):
I would say … This isn’t financial advice, but here’s what I would do myself, and everyone’s different. But here’s what I’ll say. Take a percentage that you’re comfortable with, call it 4% of your liquid net worth, and put a third of it to ETC Ethereum. This is the blue chip, this is the Amazon of the era. It has staying power, that’s where the biggest communities live. It makes sense to have some exposure there. Second is to put a third to five or ten upcoming projects that you really believe in and do the research. So every crypto project has a whitepaper and a whitepaper just describes what they’re doing and you might not understand 97% of what’s in the whitepaper and I think that’s actually a good thing. I think it’s a good thing for you to actually go through and put the work and try to understand all these whitepapers and do the research.

Greg Isenberg (29:54):
Once you’ve done the research, allocate some liquid net worth to some of these up and coming projects. Some of them could even be like the seventh biggest coin, the ninth biggest coin. It could be projects like Solana, it could be projects like Chainlink, it could be projects like Polkadot, and you can find it if you go to coinmarketcap.org I believe, you can see a list of the top coins by market cap and just see what you like and see what speaks to you. It’s basically like the NASDAQ for [inaudible 00:30:23]. Then the third is putting a third to NFT projects and should you buy something like a CryptoPunk which is like the number one by market cap NFT project which is these pixelated punks, should you buy something like that, should you buy a Bored Ape, and just thinking about … It’s basically collecting crypto characters and crypto assets. I would say there, I would probably put half in blue chip projects and then half in up and coming cool stuff.

Trey Lockerbie (30:54):
So my background in investing is very much of the Warren Buffett, Benjamin Graham value investing style. So it’s very hard for me to even consider something like an NFT because it does feel so much like gambling but then you look at it and the market … I mean $3 billion traded on OpenSea just last month in August. This is an incredibly real marketplace now, and you mentioned the Bored Ape Yacht Club. But all of a sudden, there’s something called Loot out of the blue. So all of a sudden it seems to me like Bored Ape was so last week. This is how fast things are moving. Is that a concern to you at all as far as like just the general pace of this development?

Greg Isenberg (31:36):
My concern would not be allocating. Even if you’re of the Warren Buffett mindset, which is awesome, and I’m also … Like I believe in that as well, I still believe that taking a very small amount of your net worth to experience Web 3, even if it could go to zero, the amount of lessons that you’re going to learn is going to drive your business forward, is going to make you more cutting edge when you’re investing in the public stock market. It’s going to help you become a better company employee. It’s worth it, and best case scenario, Ethereum was like … People were talking this week, like we’re talking right now it’s September 8. I think Ethereum went down like 25% this week. It’s still up 10 times in the last 12 months. This is huge alpha that’s worth paying attention to. So yes, do you have to keep up with new projects? Yes, absolutely. Does it move quick? Absolutely. But it still means that I think that … It’s important that you get involved because this is where everything is going.

Trey Lockerbie (32:44):
A good analogy or maybe a good analog to what you just said about where things are going. I want you to share with us about your experience watching Travis Scott perform on Fortnite and what your realizations were from this event and then we’ll kind of go into I think this projection of sorts of where our economy is ultimately going and how it’s going to become more engaging and entertaining.

Greg Isenberg (33:08):
Yeah. So Travis Scott did a concert in Fortnite where he was this 1,000-foot tall Fortnite character and he was moving around and you were flying around him and there was millions of other people there with you, and it was this massive cultural moment where we were during the pandemic having an experience, seeing someone, interacting with them, and it felt really magical. It felt a lot similar to like … I loved going to concerts growing up, and it felt similar to that where you feel like you’re a part of something bigger than yourself. This is what they call the metaverse, and this is something that authors have been talking a lot about for years and there’s been movies about it, Ready Player One is a very popular one where you put in your VR headset and you just get transported to this environment and you’re able to interact with other people.

Greg Isenberg (33:58):
I know a lot of you are probably thinking and you’re like, “Wow, that Greg Isenberg guy, at this point, he’s crazy. He’s talking about there’s going to be smart contracts, we can’t trust banks, we can’t trust governments, we’re going to transport into these like metaverses where there’s going to be like hundreds of tall rappers instead of like in-person events.” I think this is just … I think metaverses and having places and virtual places that we can go and hang out in are going to be a greater and greater part of how people experience culture. So it’s a really scary thing to say because we’re used to experiencing culture by think of like how people grew up. Think about how we’ve evolved, like around a bonfire with other people and tribes and it’s just the evolution of people as the internet becomes a greater and greater part of our day to day life.

Greg Isenberg (34:55):
What this means from an investor standpoint is paying attention to who owns these virtual worlds. Roblox is huge. It’s a great company. Minecraft is massive. It allows people to create their own worlds. It’s massive. There’s a new ETF that came out, I think it’s called something like the metaverse I believe by a guy named Matthew Ball. Let me pull it up here, I think it’s called META, yeah. Roundhill Ball Metaverse ETF. It’s literally an ETF just about metaverse-based companies. Huge opportunities.

Trey Lockerbie (35:32):
Yeah, I’ve heard you describe it almost like … Apparently your parents had a shopping mall store and now we are going back into the shopping mall world, except this time it’s virtual and your imagination can run wild. It can be anything you want. Are we coming full circle to some extent where we’ve moved on from shopping malls to Amazon and now shopping malls again except just on your VR set? Or is it something much greater than that?

Greg Isenberg (35:57):
I think, so yeah, my family ran kind of like a Williams Sonoma type store but in Quebec where I’m from and they were primarily in shopping malls. So as a result, I kind of like grew up in shopping malls. Having spent a lot of time there, just looking around, it was a place where a lot of stuff would happen. People would fall in love, people would meet friends, people would go and have this like slot machine type experience where they’re just like, “I wonder what I’ll see at the mall, what kind of clothes.” I think what ended up happening is when Amazon came out and Amazon Prime came out, we ended up just being like, “Okay, I’ll just get it on Amazon. Let me just get it on Amazon. I’ll get it on Amazon. Let me just reorder.” And e-commerce became extremely transactional and the way the internet works and the way the world works is it’s the pendulum swinging. We start over here and then we end over here.

Greg Isenberg (36:55):
All that’s new is old and we’re kind of moving back to the shopping mall type where you … Instead of going to an e-commerce place, like I believe that where e-commerce is going at least is you’re going to go to a place like a Fortnite event, like the Travis Scott event, and not only are you going to come and experience it, but you might buy virtual shoes. You might buy a virtual beer for a friend. You might buy a beer that shows up at that person’s door in 10 minutes. Gifts, virtual gifts, real gifts. All these sorts of things, you’re going to transact in these virtual worlds. That’s where it’s going.

Trey Lockerbie (37:40):
That is wild. So a company like Roblox, is that a company that’s actually building the platform for these types of experiences? What’s happening there?

Greg Isenberg (37:52):
Roblox is a platform. We’ll see where it goes. We’ll see who wins this metaverse world. Like I can’t tell you today like is it going to be Minecraft versus Roblox versus Epic, the makers of Fortnite. I think what ends up happening is it’s not a winner take all and it ends up becoming a winner take most maybe, but a lot of opportunity for different types of spaces for different use cases. So I think what ends up happening in the metaverse land is actually going to be different that what happened in Web 2.0 which was a massive, massive consolidation and concentration I should say of power between the holy trinity of Facebook and Google and even Snap from the social perspective. Where you’re kind of just spending, if you’re using social in 2017, like you’re on WhatsApp, you’re on Instagram, you’re on Facebook, you’re on Snapchat, that’s where you’re spending your time.

Greg Isenberg (38:51):
Metaverse-land, I think what would happen is you’ll have a handful of those places that you’ll go to. Some might end up being work-related places, meaning what does co-working look like from a virtual first perspective. Some will be Minecraft, which might be for 8 to 14-year-olds. You’re just going to have these different use cases for different demographics and different use cases, which honestly is better for the ecosystem I think to have multiple products versus just one or two or three central companies.

Trey Lockerbie (39:25):
Well given your experience at WeWork for example, you just touched on co-working spaces and taking that to the virtual world. I imagine you’ve given this a lot of thought, so what does the WeWork look like in the metaverse and is anyone doing that?

Greg Isenberg (39:39):
No, but someone probably should. Facebook is trying. I think Mark Zuckerberg just did a demo of what a virtual boardroom could look like and it’s like you put on your Oculus VR set and you can talk to people and converse with people. But there’s opportunities. Like I think Facebook might win a portion of that, but I think there’s tons of opportunities for startups to go and create what does working in a metaverse look like. I’ll tell you right now, it certainly doesn’t look like Zoom today. Like it certainly doesn’t look like Hollywood squares basically in boxes. Like this doesn’t feel like this is the end all and be all of working in the 21st century. So tons of opportunity.

Trey Lockerbie (40:24):
So your latest venture is called Late Checkout. So talk to us a little bit about what you’re working on through Late Checkout.

Greg Isenberg (40:31):
Totally. So Late Checkout has a thesis. Now that you know me now and the thesis is community-based products outperform non-community-based products, shocker, obviously that’s what I’m working on, and it’s a holding company that almost like the Berkshire Hathaway of community and community-based products. We’ve got three business units to go after this mission. One is a product studio where we incubate our own startups, zero to one, so we might say like, “Hey, let’s go build a co-working type or a work first metaverse and we’ll go and fund it ourselves and build it.” We’ve got also a product design agency which is the leading product design agency for community-based products and community first products, so we work with some of the biggest brands in the world to go and help them figure this out and transition to this new economy, the community economy as you mentioned, and the third is we have a fund which we just invest. We invest in community-based products and we do about 15 to 20 investments per year and also looking to acquire one community-based company per year as well. So we’re building this ecosystem, that’s why I like using the Berkshire analogy is building this ecosystem around investing, owning, in this future.

Trey Lockerbie (41:47):
I think I’ve even heard you say that VC itself might even be a little outdated whereas a studio element on VC is going to be more and more important moving forward.

Greg Isenberg (42:00):
I believe that startup studios, which is really a factory, a startup factory, is going to be a huge part of startup creation going forward. What does that mean? What is a startup studio? It basically means you’re launching multiple per year. You’re launching them as experiments. You have some shared technology or infrastructure that you’re launching for all of these things. You’re sharing learnings across teams and why, why do I think studios are going to be more and more prevalent, well I think the cost of creating a startup today is so much less than it was. You can go and create a startup today, 50 grand, 100 grand, 10 grand, $1,000.00. Like if you would put me in the corner and say, “What would be a startup for $1,000.00 that you can create that can be for the fatFIRE community, we’d probably launch something by the end of the day. You can do that now because it’s so quick to create and so cheap to create.

Greg Isenberg (42:52):
The hard part is distilling the insights. It’s like going to those places on Reddit, going to those places on Facebook groups, going to those YouTube comments, and trying to distill the insights, coming up with the product ideas, shaping that minimum viable product so it’s simple, and then using all the infrastructure that exists that’s given away for free often through platforms like Google et cetera. They’re giving you these like these you know low cost tools or these infrastructures that you can go and build so cheaply and that’s why I think studios is really a compelling a model for a lot of entrepreneurs.

Trey Lockerbie (43:26):
So one element of what you just mentioned you said was cheap to create. I’m also wondering if that means cheap to acquire. So you look at companies like MicroAcquire doing this where it seems like they’re just snatching up small SaaS companies and I think it makes a lot of sense because the VC model is so much built on 10x, 100x returns, billion dollar exits. But that’s not necessarily what every founder needs or even wants. So sometimes the incentives are not aligned. I’m wondering if … You’re viewing this as a form of again building that Berkshire conglomerate but at an earlier price point.

Greg Isenberg (44:03):
Yeah. So full disclosure, first of all I’m an investor in MicroAcquire or Lead Checkout is an investor in MicroAcquire which is a marketplace to buy and sell small companies. I think that’s … Like the reason we invested was because of exactly what you said. Like we believe that there is a lot of entrepreneurs who are going to create something who create it maybe quickly or get some level of scale, they’re at like 500K AR or a million dollars AR and they don’t want to raise venture capital and like scale it and go through that process. There’s just an opportunity there for someone like us to be, “Hey, you built this amazing community. We know how to take it from X to Y. You want to get paid for your work, which is totally fair. Let’s go and go after that.”

Greg Isenberg (44:51):
I’m excited about that because it gives opportunity to studios like ours who can get and help scale some of these communities and businesses and it also gives optionality for founders who no longer have to go out and raise venture capital and swing for the fences if they don’t want to. There’s nothing wrong about starting a bootstrap business, getting it to and just … If you’re passionate about something, you want to create this business, there’s nothing wrong with that, and I think that we need to remove that stigma of like raising venture capital is good and bootstrapping is bad, and actually the founder of MicroAcquire is a great Twitter follow if you don’t follow him already, Andrew Gazdecki, and he just launched … I think it’s, what is it, bootstrap.com? It’s like a competitor to TechCrunch and they only talk about bootstrap companies because he was tired of people celebrating the venture round. “Oh, this company raised $2 million. This company raised $4 million.” No no no. This is about four bootstrappers, five bootstrappers. It’s an exciting trend.

Trey Lockerbie (45:53):
Lower barrier to entry, lower barrier to exit. It’s really, really exciting and I could almost see this as a means of how folks can compete with things like inflation and other things, when they’re just working their day jobs without much wage potential, there’s always this option on the side. Get after a project, bootstrap it, and build real wealth in a whole new way, which is really exciting. Greg, before I let you go, I definitely want to give you the opportunity to hand off to our audience where they can learn more about you, more about Late Checkout. Any other endeavors you want to pass along?

Greg Isenberg (46:27):
Absolutely. So I spend a lot of time on Twitter. I love that platform so you can find me on Twitter, just my name @gregisenberg, G-R-E-G-I-S-E-N-B-E-R-G, and then in my Twitter bio, you’ll see a link to Late Checkout’s Twitter and Late Checkout’s website in my newsletter, so go check that out. Have some fun, DMs are open.

Trey Lockerbie (46:51):
Well given the pace of these developments, I would love to have this chat again maybe a year from now and just see all the craziness that’s unfolded. So this has been really awesome. Thanks a lot for coming on the show.

Greg Isenberg (47:02):
I mean it’s been an absolute pleasure. I hope I didn’t scare too many people with painting the future.

Trey Lockerbie (47:07):
We got to get uncomfortable to grow, right?

Greg Isenberg (47:10):
Exactly. If you’re listening, this could be finally your wake-up call to get involved in Web 3 and community-based business. I hope you’re as excited as I am.

Trey Lockerbie (47:22):
It’s certainly an enticing future. Thanks a lot, Greg.

Greg Isenberg (47:25):
Thanks.

Trey Lockerbie (47:27):
All right. If you’re loving the show, please don’t forget to follow us on your favorite podcast app so you get these episodes in the app automatically. The guest today and I originally connected on Twitter, so if you want to reach out, you can always grab me at treylockerbie. And lastly, if you’re trying to learn the intrinsic value of a company, look no further than the TIP Finance tool. Just simply google TIP finance and it should pop right up, and with that, we’ll see you again next time.

Outro (47:48):
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