0:00If you wake up every day feeling great, you're not taking enough risk. If you wake up every day throwing up, you're taking too much risk. You need to feel a tingle of uncomfortableness. I started with 60 grand. I can't express to you how under capitalized that is on the trading floor.
0:12Essentially, you were looking for arbitrage. You're looking for some sort of mispricing. I am now convinced that every ARB is just about time scale.
0:18How much money were you making doing this?
0:20Well, I drove to my dad's house and I showed it to him and he was kind of like, "Oh shit." He's like, "Is what you're doing legal?"
0:26I genuinely believe that geoence, meaning localized, dynamic and variable pricing for time slotted businesses, is something that someone's going to make hundreds of billions of dollars with.
0:36How does a guy who goes from trading and no restaurant experience create the best restaurant in America?
0:41Knowing what great is is making mostly 99% of the time.
0:44Is it that you're actually seeking the anxiety and fear?
0:47It's exciting to be uncomfortable in the sense of All right, today we're hanging out with my friend Nick Kakonis. He is one of the most interesting founders you have never heard of. This is a guy who started off trading options and then went and started one of the best restaurants in the world, then started a software company and sold it for hundreds of millions of dollars. So, an entrepreneur who's played many different games that really he had no business playing and
1:16somehow found a way to win. So, I came here to hang out and find out how he does it. I'm going to read you a quote.
1:22I'm motivated by fear. Fear of not living up to the possibilities. If you wake up every day feeling great, you're not taking enough risk. If you wake up every day throwing up, you're taking too much risk. You need to feel a tingle of uncomfortableness. Yeah. Or nausea was the actual quote. Yeah, that was I I have to give credit where credit's due.
1:40Keith Goagan, good friend of mine, former business partner. Uh we were traders back in the 90s early as we had this ridiculous short position on Plug Power still a company weirdly but he he told me that like he said that to me cuz I was like really on the verge of throwing up every morning and he was like perfect that's right where we need to be. That's right where we need to be.
2:06He's like you haven't thrown up yet.
2:08Correct. All right then we got we're good. Yeah. And so I I I do think that I internalized that at the time because then when I got comfortable I was like, "Oh, we're not taking enough risk now. We're not learning. We're not pushing the edge of what the possibilities are."
2:26And the phrase in my own household from my wife, also someone who pushes me, is ATNA. You know what ATNA is?
2:35So I was at your house.
2:36Oh, you know, I said that. I told you.
2:38You said it, but you said it in a hilarious way. You're like, you said it like a cop would it's like we issued an ATNA this morning.
2:46Explain. What is it? What does it mean?
2:47ATNA means I'll talk no action. So you But you'll do it to your kids.
2:51Well, we'll do it to each other. Yeah.
2:54Right. And you know with this place where we're sitting right now for 30 years, this was a like a northstar kind of thing. We came here every year since probably like 95 or 96 when we were very young and we kept finding our way back here like a couple times a year. Why not? Like it's beautiful. It's like a blue zone. It feels amazing. The weather's great. You know, all that and you had the dream. You're like one day the dream. We had just the dream. And
3:24The dream without the credit score.
3:25Yes. Yeah. But that's use that's really useful. You know, you do have to have goals. And in many ways, this was an unrealistic goal, I think. And then we were here uh three years ago and rented a house and we had friends and this place was for sale and I kept looking at it. And when I say kept looking at it, I mean I like looked at the video of this.
3:42They had like people in the pond, you know, the the real estate like guy like pretending like he lived here with a canoe. And and I watched that video a thousand times, right? And at some point my wife just looked at me and go like, "Are you going to pull the trigger or are you just going to be ATNA on this one?" M like that. It's like a slur. It is a sluratory.
4:02It is a very much a slur and and I put in a super low ball bid and they called me 15 minutes later, didn't even counter and they they hit the bid, which also gives you concern.
4:12So, because that, you know, it's kind of like the uh you know, Persian rug sale like where they price the rug super high and then you go low and then they go like, "Okay, here you go. You know, here's have more tea and we're we're good." And you've bid like three times too high even though you got 70% off kind of thing. So you had buyer remorse.
4:29Well, I don't know that I had buyer remorse. I had fear because I didn't know how any of this worked. I know nothing of agriculture. I know very little of viticulture. I certainly didn't know how irrigation works. You know, I don't know pond management. Like, these are all things that we've learned in the last couple years. But between the acceptance of that offer and the closing on this, I lost sleep.
4:56Because this is a real commitment. I was 55 at the time. And it was like, okay, is that that's your next three decades, right?
5:04You can't halfass this. And I mean, I there's a lot of people who do actually. I shouldn't say that. You can halfass it. It just feels wrong. Like it just feels like some people just buy a place like this. And so I want to say two ideas and you tell me if these apply to you or what you think about these. The two brothers actually who told me this.
5:22So the first brother is the guy who started Native Deodorant. Moyes Ali. And when he decided he was going to go start a deodorant company, his friend was like weird. Yeah.
5:32No offense, but right.
5:33When I think deodorant, you're not the guy that comes to mind. Like do you know anything about the deodorant industry?
5:38Yeah. And he goes, "I know nothing about the deodorant industry, but I'll tell you what, in six months, I'll know everything there is to know about the deodorant industry."
5:46And he just had this sort of like, you know, a self-belief, but also a bit of a practical approach to if I just obsess over anything for 6 to 18 months, I can get to the top of of any of almost every field of knowledge just through sheer brute force. That was one brother.
6:02And the other brother has this phrase where uh you know, he's been very successful. I said, 'Well, why are you doing this new thing? And he said, you know, I think a lot of life is find, it's like a Jerry Seinfeld, like finding the torture that you're comfortable with.
6:17Uh so, you know, uh being in the a prison of my own making.
6:21And he's just he's like, "Every decade or so, I set up a new prison of my own choosing."
6:26And it's painful and weird and and uncomfortable in lots of ways, but that's the only way I know how to live. Is that I relate to that. I mean, we're done. shut off the cameras, right? Like like that is absolutely the case. Every 10 years I've done an entirely new career and we should say what some of them are. So you had a finance career. You were a trader.
6:45I was a trader on a trading floor.
6:48Do the do the trading floor. Yell.
6:50Last time I was here, you're like, have you 28 32 50 up.
6:54You learn how to do that? You know, like we had like a vocal coach come in really and teach people how to do that. Yeah.
7:02Literally like we're right next door to the Lyric Opera in Chicago because now it's not like that. Now you just completely No, there's no But you actually needed to communicate to a guy on Oh yeah. Like you know from here 20 yards away and you know like the old this is bid that sell, this is price, this is quantity, this is tens, this is singles. I still do it.
7:24Yeah. Yeah. Yeah. Yeah. But like to me that was like I knew nothing about that. I was a philosophy major in college. I I knew what I didn't want to do and I didn't want to sit behind a desk and I didn't want to limit my upside earnings potential. I thought that like having a salary was the wrong kind of prison.
7:44Like that was a prison of like predictability, right?
7:48My dad's dad died when he was like 14 or 15. And my dad was what he called an entrepreneur by necessity. He got out of the army and the navy, drafted twice.
7:57And worked at the grocery store that he grew up working at from the time he was 12. And he bought that store when he was 28 or 29.
8:06And you know, he was like, "Yeah, no one would hire me." But he didn't want me to go through that struggle. So, he wanted me to go to law school or something like that. But I was looking at someone modeling behavior where he could come to my baseball games, he could come to my basketball games. Like he was one of the only dads there. If it was at a two o'clock game, he could leave or Right. And his prison let him out there.
8:28Yeah. I mean, well, you know, look, if you own your situation, you have no one to blame. There's no boss man that's going to, you know, say, "No, you don't get a bonus this year. We've had a bad year or whatever."
8:39And so, I just wanted to own my own situation is the best way to phrase it.
8:42I didn't know how to articulate that at the time. I just knew that when I went in for interviews at Goldman Sachs or Sockgen or any of these firms. You could get a contract and you kind of knew not what your work would be because you kind of didn't even know what that really entailed, right?
8:58But you had you kind of knew what you were going to make for the next 5 years. It was good. Like it was a lot of money in one sense. In another sense, it was like really boring because you knew exactly what you were going to right do.
9:11And to me, that felt limiting and scary in the other way. But at the time, I was just I I floundered about for years because I I was I knew what I didn't want to do, but I had no idea what I wanted to do, right?
9:27Which seems common. I mean, I think that's the most common state, of course.
9:31But when you're in that state, you don't think, well, this is common and normal. You feel like you're an idiot who doesn't know what to do and you feel uncertain and everybody else around you seems like they know a little bit more about what they want to do than you.
9:42I just kind of had a little bit of a chip on my shoulder but hadn't earned any reason to have that, right?
9:48Which is the worst. Like that's you know the hubris of being like 23 years old and you know testosterone fueled male with nowhere to put it, right? And so if you grew up in Chicago, you you know people who were traders. That was a thing. You know, New York was investment bankers. Chicago was traders. Those are not the same. Like you said, finance career. I do not consider it a finance career. It's it's a trading career, which is very different, especially back then.
10:14Explain. What's the difference?
10:15Um I think the best way to become successful is to see how other people did it, whether you're going to copy them or just use it as inspiration, because then now you know what's possible. So starting at the age of 24, I did this relentlessly and I was very methodical about it and I created a spreadsheet where I tracked roughly 50 people who were uber successful and I looked at the year that they were born, the year that they started their apprenticeship and then the year that they started, the first thing that made them successful, finally the year that they broke through. And I aggregated all
10:45this data along with the stories of what they did to be an apprentice and what they did to finally break through. and I put it together in a database and HubSpot went and found this thing that I frankly even forgot about, but it did change my life and they resurfaced it.
10:57They made it even better and they put it into a thing that you can download for free right now. So, if you click the link in the description or click the QR code right here, you can see this database that I made when I was 24 and it changed my life. And so, if you're looking to become successful or you're already successful and just want some more inspiration, check it out. in finance like you were working for investment banks and obviously like they they had trading desks but they also you know do you know deals on companies and
11:24and and you know IPOs and all this sorts of you know stuff and as a trader you're basically especially as an independent trader you basically have like a core nest egg you know of whatever a couple hundred thousand in those days I started with 60 which is 60 grand like you know 40 from 20 from me 40 from a backer.
11:49I can't express to you how under capitalized that is on the trading floor and you know like you would make trades all day long just like you know now there's day traders but then you would lease a seat and you'd be on a trading floor we get one of those colorful coats and it was all written down and you'd make a trade and you'd trade futures, options on commodities, currencies, you know, yield curve, whatever it may be, cattle. And just to set the table, so you have this trading career. You then start what became the best restaurant in
12:18America at one point. Some people call it the best restaurant in the world. You created a software company that you sold. You've done on and on and on, right? And each one of those all these interesting little subtories that we're going to go to. So if we're looking at the trading side, my understanding is you basically applied to a job that you were overqualified for in That's right. I mean, so explain that. I wanted to get on the trading floor. And if you had my academic career
12:45and you went to the like a clearing house to get a job as a runner for $5.25 an hour, they would go like, "Go work for Sockjan, go work for Goldman, go work for Merryill, like they'll hire you." And so I did that and then I looked at like the contracts and they, you know, I wanted to be a floor trader and they'd be like, "No, no, no. You're going to be on a a bond desk somewhere selling bond." I was like, "No, no, no.
13:08that's not what I want to do. So, in order to get that first job as a runner, which is exactly as described, you would take a piece of paper, someone would call, you'd call, you know, your broker, the broker would call the floor, the floor would hand the order to the runner, the runner would physically run it, walk it fast. You weren't technically allowed to run, but you'd have to walk fast and you would hold it up in the air for a broker who would grab it, read it, call it out to the
13:36pit, trade it, write it, hand it back to you. You'd go back. I mean, there's room for arbitrage there. It was like a 30-cond process, 40 second process.
13:45So, I had to fake my resume in the wrong direction in order to get the runner job. So, what' you do? I eliminated all college, you know, like, you know, and and you know, they hired me for $5.25 an hour.
13:59And did you have the mentality at that point like, okay, I'm going to take this job that's like, you know, sort of like I'm over educated for, overqualified for. I'm going to take this runner job, but I have my eye on the prize. Like, I'm going to be here in a certain amount of time. Like, did you have a I had a goal. My goal was I want to be trading in a year. So, I need access to the arena. And this this is like you know something Bill Gurley says like you know like move to the place where the shit's happening right so in this case the arena was literally like an arena
14:28like you know it was like it was an octagon like 30 octagons this is in the trading floor Chicago Merkantile exchange but they all worked the same you know I needed access to the arena and you get down there and it's very opaque like you can't figure out how it doesn't matter if you're smart you know or dumb or what you just don't know how it works and then After like running for a little bit, they were like, "Oh, you seem sharp. Like, we'll put you on the phones." So then I became a phone clerk, right?
14:53So now I'm the guy writing on the ticket. It is absolutely soulless, benal work, right? Like there's no nothing to it. And so what I started doing is taking open outcry classes from a guy at at after the close, just learning the hand signals and this and that, which might get you to a pit clerk position next, right? You know, you might get $8 an hour at that point.
15:17But I was starting to meet people that were independent traders and I was very much like I want to find someone who can teach me how to do this.
15:29And for like six months I didn't find anybody, you know, or I found some people, but I was like, ah, that's not the guy. I need someone that can exploit the things I'm good at. Like I was a philosophy major in college. I studied philosophy of language and logic. I grew up programming, you know, and I was watching this system that I felt was going to become digital, really in an analog world at the time,
15:57and I was looking for a guy that would take me to what I call now the smallest, highest hoops.
16:04The smallest, highest hoops.
16:05Yeah. Yeah. Like, so, you know, like if you got a big hoop on the ground, it's easy to jump in. Okay. If there's something 30 feet in the air and it's tiny, you know, and you got to figure out how to get up there, not a lot of people are going to follow you up there. So that you want what? High a good prize and less competition basically. Is that Yeah. And also difficult to understand.
16:22Like I felt like I was capable of understanding options and swaps and exotic options and as I was reading book like there is not a good option. There are like one or two but there all the options books that you get are academic books on like this is the right but not the obligation to buy by a certain time and like yes you have to understand all that but that doesn't get you anywhere in terms of actually why do I buy this one or sell that one of making money or yeah or how do they all interrelate and all that. So I read all those books
16:51and I felt no closer to understanding any of it. And I finally met a guy who was super geeky and he had like a little HP calculators that had macros in it, like super cool, you know, 48K in it kind of thing.
17:07And he had just hired a clerk. And I was like, "No, no, no, no, no. You're the guy and like you are the guy." Like he went to the University of Chicago. He studied, you know, quantitative finance and he had worked for Chicago Research and Trading. And they didn't want to put him on the floor. They thought he was a quant. They thought he was too geeky.
17:25So, he quit and he, you know, put himself up on the floor trading very small and very, you know, and as soon as I met him, I'm like, "You're my guy." And he's like, "I just hired someone."
17:36And I was like, "No, no, no." Like, "You're the only like you're the only guy here that understands what I'm trying to get at and can teach it to me." And I literally said, "I'll pay you to work for you." And that got his attention. Like, because he was like, "That's weird. Why?" And I explained it and he was like, "Okay, I'll pay you like 250 bucks a week." like totally illegal I'm sure you know by today's standards right and that was awesome like six months later like I had a rudimentary understanding on how to make markets and options and I put up $20,000
18:05he put up $40,000 and I started trading Swiss Frank options it was almost a year to the day which is a theme that will come back to you asked at the beginning of the question did you set a goal and the answer was within a year I need to be on a badge in trading and it was I was a week late but I was in process so I knew I counted it, you know, but like it was terrifying. There's nothing harder. I mean, I taught 30, 40 people how to do that after the fact. And the rule was on your first day in the pits, you had to
18:34make one trait. I cannot express to you how useful that is because you have to go into a very zero sum hostile competitive environment which was physical, loud, chaotic and you have to open your mouth in front of all those people and risk looking like an idiot.
18:51Yeah. What is it about that day one? So I think Facebook had this too. Day one any engineer you will ship code to production. They did this for a long time.
18:59I didn't know that but that's wonderful.
19:00It's like blasphemy back then. Yeah. My very first job was at a very first business idea I had was a sushi restaurant. I went out to LA to train with the chef and sushi's famous for this thing where you like spend years rice rice.
19:15Yeah. You're not going to get rice.
19:16That would be incredible if you got rice and you would do all this menial work before you were allowed.
19:21The chef that I was going to work under, he's like, "We're going to open this restaurant up.
19:26Can't do that." So the very first day, Daryl from the office walked in, came in as a customer, sat down at the bar, and he goes, "You're up." I just watched him do like, you know, for an hour I'd been watching him like try to pay attention, you know, I don't know if you know how to make sushi. You dip your hands in water first.
19:44Then you do the the seaweed, the rice, etc.
19:46Uh, so I didn't understand at that time the clap.
19:50So your hands soaking.
19:52I thought it's just like a celebratory thing. Why are they clapping? They're just I don't know. It's just a ritual, but it's to get all the water off to leave only the perfect amount of moisture. Too little water, rice is stuck to you. Too much water, soggy, soggy sushi.
20:05I didn't clap. I gave Daryl from the office some soggy sushi. But it was actually very beneficial to just absolutely up.
20:12Yeah. You have to right away.
20:13You have to just, you know, break the seal.
20:15Break the seal. And you know there was a guy who ended up becoming a very good trader, very good friend and he went like 3 weeks.
20:25Performance anxiety.
20:26Yeah. I mean Frank if you're out there like you know I remember and every day like he'd come back and I would just be like dude you know you're a capable human just right do it and he would freeze. he'd lock up, you know, and everything else, every 10 years, I kind of did something different because it didn't produce that same anxiety.
20:47Is it that you're actually seeking the anxiety and fear or you seeking something else? Anxiety, fear is like the signal to you, I found it.
20:53Well, what is what is it? What are you looking for actually?
20:55Um, we're here for whatever decades if we're lucky. and in order to keep learning and keep young and wake up like you guys were coming today. They showed up at what 6:30, 6:15, something like that. I get excited by that. It's exciting to be uncomfortable in the sense of, hey, we're doing something today.
21:16We're making this little thing here and who knows what that'll lead to and and all that. And if you just put yourself out to pasture, essentially once you get good at something, it's very, very easy to fall into, well, I'm making good money and I know what I'm doing and I'm kind of an expert in it now. And expertise is such a trap, right? It's such a trap. And you know that a non-expert is going to come after you. Like once you get to expert level,
21:44you're screwed because somebody who's younger, hungrier, fresher eyes, more willing to break convention to find the new way through is going to kick your ass. So before your ass gets kicked, you should quit. Yeah, it's really hard to do and then go find something new. And it's really hard. You know, the older you get, the slower you get at doing that, the less incentive you have to do it. Right.
22:10Right. Like there's very little incentive financially and otherwise if you've had some success to break it to quit to go do something new and lose money for a while. You know what's the quot you know most men die at 25 they're buried at 75 or yeah you know I think Naval says as well like the great the great ones the truly great ones they're great because not because they've reached the top of a mountain is because they are willing to go back to the bottom of the mountain and start again and find a new path. Nobody does that.
22:37One of the things my dad had on his desk was a little sisphus. I've got that like, you know, always on my desk. I've had it on my desk forever. And and for me, like the sysfist thing is like we got to wake up and, you know, I'm building a wine bar here. Like I got out of the restaurant. We'll get back to that, I'm sure. But I got out of the restaurant business. I was here for, you know, half the time for two years and all I'm walking by, I'm like, "Oh I got to rent that place. Build a new restaurant, you know.
23:03Bring out the boulder."
23:04Yeah. Right. Right. Right.
23:06Yeah. Yeah. Yeah. and and I was very much like, you know, do I want to do this? And everything in me said, "No, I I don't want to do it, so that's why I should probably do it."
23:18Well, your your philosophy guy, you might know this, the story of Seisphus is about like it's a it's the ultimate punishment, right? He's going to push the boulder up the hill.
23:26And then somebody I forgot who, but they were like, "We must imagine Seephus happy."
23:31Yes. meaning that the the work is the win that and so he had this sort of alternate take on the the idea that this is like the crulest punishment and instead it's like no he's in his element he's doing exactly what he wants to do and must be doing and where man is kind of at its best is is when work is the win the work is the win so you talked about trading how you started as a trader and you were I my understanding is that you're essentially you were looking for arbitragees you
24:00were looking for some sort of glitch in the system. You're looking for some sort of mispricing where you can come in and take advantage. And I think trading is a very pure way to do that. But even in your other businesses, I feel like in some ways you found an ARB. Can we talk about ARB? So like what excites you about an ARB? And then explain to me some ARB stories. So So here's So I've said no to every podcast for like three years until I got to this one idea, right? And I said yes to this because I
24:26because of you and also because I am now convinced that every ARB is just about time scale. Like this is not something that I've come up with or whatever. But like it's it's evident especially with AI coming in now and and everything.
24:40Everything is time scale. So at the time we started talking that like that piece of paper took like 30 seconds to go back and forth, right? And I was a good trader, not a genius trader. I was certainly capable and I was quasy decent at bringing what I called corporate refugees. So I'd meet someone like at a dinner party who was certainly bright, capable, outgoing, could probably do mental math quickly and then I'd see that they're miserable being an attorney, right?
25:09And I'd be like, I got a thing for you.
25:12I'll I'll I'll pay you $7 an hour and in eight months you can you can trade. And I did that dozens of times. That scaled kind of linearly and made I went from making, you know, $5 an hour to thousands of dollars an hour in five or six years. But I was looking around and there were companies making $10 million a day down there, more, you know, the crazy money. And I was like,
25:42what we really need to do is figure out a way to bypass that piece of paper going.
25:50So if you're in New York trading what was then nent ETFs, triple Q's, spiders, all that, those are just a basket of the NASDAQ 100 stocks. We know what those are and we know their ratios. So if you have a thousand triple Q's, you can figure out exactly how many shares all that is. The natural hedge for that is the futures in Chicago NASDAQ futures and then it all comes down to in the triangle a cash position. You don't really need to understand it in detail beyond that. But what I wanted to do is
26:19you know the guys trading the triple Q's in New York would have to pick up a phone or be on the phone constantly with someone who would give someone a piece of paper. And if I could just talk directly to New York from inside the pit, I've got a 20 second time window on Goldman Sachs. They can't beat me.
26:40What What does 20 seconds actually mean?
26:41And what is that worth? What does it allow you to do? How does that work?
26:43Well, so a trade would take place in the triple Q's and then the way you know if you just bought a million dollars notional in triple Q's, you would sell eight futures roughly in Chicago against it. Okay? and you'd lock in a little profit there and you'd be left with a long position in New York and a short position there, but it's all one company. And now that 30 seconds, if I make that trade there and I can talk to the guy who's actually
27:12in the pit bypassing that, I I know the pricing information instantly. And with like the first day, it took me like a year to get this all done. So, here's here's another thing. Okay, read the rules.
27:26Okay, it sounds like most people don't read the rules.
27:29It sounds like a dumb thing, but read the rules. There are laws and the CFTC had regulations that were like this thick and all the people on the board at the Merc and the AMX and all these institutions probably never read them.
27:43They had lawyers, right?
27:44And lawyers probably never read them.
27:46They went on case law. They went on practice. They went on what they're used to. And I went, "Well, if we're on the same tax ID in New York as Chicago, same firm, why can't I talk to somebody there?"
28:01Like, I don't see the rule. Like, I've read the whole damn thing. I mean, I really did. It's really long. And this is not when you can just throw it in a computer and be like, "Find the thing." You know, and I'm like, "Man, I can't find this." And so, I was like, "Great. I need to put up a a partial T1 line for a dedicated phone line between New York and Chicago.
28:22And the merc wouldn't run, you know, underneath this these pits was like cabling back then. It wasn't Wi-Fi. And I needed AT&T to run fiber. And I put in permitting and they wouldn't let me do it because they kind of got that this would be bad for the broker groups. And who owned who owned the merc? The broker groups. So, I bribed the union guys who did the work with cases of Jameson.
28:50For real. I can say that now. I'm not going to get in trouble anymore. Do you remember the day you kind of had that idea or you were like I remember the day when we turned it on the first time and it was basically like saying like let's say you know there's apples here and there's apples on the other side of that pond and that guy there's someone who rolls up over there is willing to pay $5 an apple and this guy over here is willing to sell me apples for $3.
29:13And there's a guy about to run to the pond going like do that trade over there but meanwhile we can we can talk. We got, you know, the string in the in the tin can.
29:23So, we made a trade. I went, "Oh my god, and we made, I don't know, a couple hundred thousand like instantly."
29:30And you're take no risk at this.
29:32Zero risk. Yeah. Yeah.
29:33And I immediately Is that feeling just orgasmic when you find No, it was terrifying. It was terrifying. And the reason it was terrifying was because it was so good that the powers that be would kill you.
29:45And I don't mean that as It's not figurative.
29:48I don't mean that as figurative Yeah, it really was. It really was. At that time, I also knew that if we picked the pockets of the big investment banks and we made $2 million that day, that'd be the last $2 million we ever made.
30:01So, in one sense, I was going like, oh my god, it is as I thought it was. You know, it's there's this gap here, right?
30:10But then I went, shut it down. And everyone was like, shut it down. We, you know, we've been working on this for seven months. What do you mean shut it down? I go, we can't be so blatant.
30:24We're much better off picking their pocket a little bit for years, right, than we are just destroying them on day one, right? So, I went back and reapplied for, hey, here's all the evidence that we're the natural hedge in Chicago and these are growing really fast. This product class, this ETF new innovation, you're going to want to do this kind of thing. So they gave me a pilot program thinking that it would take me six to eight months to get everything wired up not know and then once they gave me the
30:53pilot program then I could do it in the open and I could do it in a couple different pits and I had partner the guy the nausea guy that right that he was in the New York side and he we went to college together and he was a spreadsheet guru you know just great math mind and we cranked that thing up.
31:12So you started where and at its peak what it what were you doing? We were doing a couple percent of the daily volume of the American Stock Exchange within six months.
31:21What does that mean in dollars? I like how how much money were you making doing this?
31:24Well, we that I think that year we made over 100 million in a year.
31:28In a year back when 100 million was a lot of money and I and I and I had like not I had a small 100 million is not a lot of money.
31:34Well, apparently not. I mean like it is for me but it's not for you know the world. Yeah. It's nothing, right? You know it's like oh 100 million. Yeah. But like that's profit, that's revenue. What does that mean? Well, there it's trading are there.
31:46It's not like a GMV. That's like your take. That's what you made.
31:48Yeah. It was arbitrage. Arbitrage profits. I mean, the overhead on that was relatively small. And obviously, we we hired a lot of people and, you know, paid out a lot of salaries. And So, did you call home like, "Hey, mom, dad had a good year."
32:00I money this year. What happened?
32:02So, I had Because you didn't grow up rich.
32:04No, no, no. I had a a minority a tiny little percentage of that company because I needed the capital. The one thing I didn't have then was I probably had, you know, my first million probably happened when I was 28 or so. And all that money was at risk.
32:17And so what age are we talking about right now when you figure?
32:20Right. But all that money was at risk, right?
32:23So I had it but it very much felt uh fragile.
32:26Right. It was your bankroll.
32:27It was the bankroll to trade. Yeah.
32:30And as we grew the company, you know, my first employee became my business partner, still my best friend, Jim Hansen. And we grew the company and we hired the corporate refugees and we built to like 35 guys. But in order to do this ARB at scale, we needed capital.
32:46So we merged our firm with a firm in New York that had some more capital. No one knew how to run a company. Like let's just be clear. Like I had no idea how to manage people.
32:54What were you like back then?
32:56An I don't know. I was trying to come up with a good way. you woke up every day at 5:30 in the morning and I I you know got on the floor at 6:30 and it was game day and I was fueled by espresso and and agitas and you know like I was just like like you found this thing let'sing go right and one of the things that you know my dad was still around then and you know you asked like you know did you call the parents I remember like whoever says rich people
33:23don't pay taxes trust me if people have figured it out I have not that year. I remember that I had like a giant tax bill, multi-million dollar tax bill and had to then figure out like, well, I need to remove money from the trading firm and pay the taxes and all that. And I remember writing a check. You know, the biggest check I had written before that was probably like $3,000 for like a down payment on a car or something. So, I write this multi-million dollar IRS check and I I drove to my dad's house and I showed it to him and he was kind
33:53of like, "Oh shit." He's like, "Is what you're doing legal?"
33:57First question like yo Greek guy who grew up like you know in a grocery store business.
34:00Fair question. I said of course it's of course yes.
34:04And he went okay it won't last. Like you know he was a product of of the Great Depression and he was like it won't last. Put it away. No boats, no women, no drugs. Like you know gave me that like little talk and then he said just like remember that this is like the great country that your grandparents came to. Pay that. It's your patriotic duty to pay that. That's why I sacrifice. That's why they sacrifice.
34:29And I went, I was hoping for a little a little sympathy on the tax bill here. But I remember it vividly. Name for that speech. It's like we have the birds and the bees speech.
34:38What's the money, son? No. No. Pay your taxes. No boats, no liquor, no ladies.
34:44Yeah. I mean, really, that's that's what he said. And then he's like, I will allow you to take me out to dinner this time. And and that was it. Like there was no like harrah. Congrats. It was more just like a cautious tale of of optimism in a way of like save it, don't do stupid go home and wake up the next day and do it again. Like one the other thing that my dad really taught me was like at the beginning you were kind of like oh you have this great mind and all that stuff and that might or might not be true but
35:13what's really the case is that you show up like my dad was just like show up every day on time early. You know, the old the old adage like early is on time, on time is late, and late means get the out of here. And I literally feel that way.
35:28Most people don't show up. Most people don't follow through.
35:32Yeah. Yeah. And showing up means not just showing up. Like, look, there's two kinds of showing up. There's showing up prepared. And then there's showing up unprepared, but admitting that you're unprepared. Both of those count, by the way. Like, but then like show up late, don't show up, cancel, move it. Like, when when you text me, how long does it take to get a text back?
35:55Almost instantaneous. Because if you consistently do that, it's not very hard, right?
36:01Like I don't need to plan something 3 weeks out. Like, you text me, let's get on the phone right now. Let's hash it out.
36:06And if you do that consistently, it acrews so many benefits over time, right? So, you learned that from your dad.
36:13Yeah. A thousand%. and you have this amazing year. I assume these things don't last forever. Well, so the following year, you know, of course any arbitrage is going to be a window that closes. And they close quickly or slowly, but they're always going to close. So the time scale that kept getting shorter, other people figured it out. We started adding computation onto it. What had happened is that some of the older partners in New York made so much money that year that they went, "This is what I've been waiting for for 30 years. I'm out."
36:42Yeah. And at that time we were taking like we'd see like a small trading company that was distressed in Boston at the Boston stock exchange. We'd be like, "How much do they need to like keep them in business?" Okay. Next thing you know, I'm on a plane to Boston and some 30-year-old dude with a computer is telling these guys who've been there for 40 years like, "Here's how we're going to run your business now."
37:05That did not go well. Like, you know what I mean? Like so there was overexpansion not because of anything other than like oh yeah well we'll take what we've learned and we'll apply it to new things but we didn't know how to build a business. We didn't know how to build a a a layer of management and accounting and we're terrible at that. And some of the guys the following year made half of what they made in call it 20201.
37:32So 2002 comes along trading volumes go down. We're not doing anything wrong. We're just making a lot less money. So a guy that made $2 million, you know, he was making 50 grand when I met him and he makes $2 million. It's like athletes or something. Million feels poverty.
37:48Yeah. And then all of a sudden it's like they make $800,000 two years later and they're like, "Ah, this is right?"
37:54And then you get the rock band syndrome, you know, where everyone's starting to, you know, get a little salty and all that. But we're all super fortunate. And I just got I like I I've said eight times in the be I was a terrible manager of people. I probably still am. And I just didn't enjoy it. Like I got to the point where I had run really hard for 10 years. Um my dad died in 01. I was very close with him. 9/11 happens. We had people that worked on Wall Street.
38:21Everyone was okay, but I definitely knew people who were not. And I left that year going, what am I doing? like I need to dial dial this back. And I wasn't a good parent. I wasn't good husband. I wasn't I just wasn't being a good person. I go to dinner parties and I'm like, can we just move along people? Like, you know, cuz it's like it just felt like it's not the trading floor. Yeah. Yeah. Yeah. I mean, the world felt slow.
38:48And I grew up catting. I'm a lifelong golfer. So, all of a sudden, I would find myself playing golf with ex-professional athletes who were in their 30s who were famous, big-time guys, and they were like miserable, and like they took golf way too seriously, and they played for big money. And I was like, there's no edge. Like, why are they gambling on golf? Like, you know, I
39:17don't understand what's going on. I didn't consider myself a gambler. or I consider myself an arbitrageer and I just looked at them and I got the nudge from the wife like, "Hey, you're you're not pleasant to be around and all that." It wasn't really a nudge. It was a, you know, slap, you know, slap in the face to her credit like, you know, and deserve it.
39:36Yeah. And I just remember one day going waking up going, I think I'm out. Like I think I need to like take a a sbatical. It sounds like I remember I called Keith and I was like, I I think I need to take six months off. He's like, "Fuck that.
39:50You don't get six months off. Like, you want to take six months off and get paid? And meanwhile, the options group that you're building is not doing as well as the, you know, XYZ." You know, I was like, "Man, I what am I doing here?"
40:01You know, like I I kind of figured something out. I'm not enjoying it anymore.
40:06I should quit. And I And I did. I walked into like a group and I and they were all infighting one morning and I was like, "Guys, just so you know, like this is my last week here and you're all getting paid out and some of you will get some equity and I'm I'm gone." And people are like, "What are you talking about?" Like, this is bizarre, you know?
40:28And in hindsight, I probably didn't do a good job of of that in terms of like I was with my partners, I was super communicative, but like also like you can't go, hey, I might be leaving in a month, right? You know, that's just not something you can do.
40:42And so I did and you know, we had a young son and and now there's no game to play, right? And all of a sudden, I was thinking about those athletes.
40:57Don't want to be them.
40:58And I'm going like, you know, what do they all I'm going to ask you. What do they all say when they retire? They say, "I'm retiring, too."
41:07Spend more time with my family.
41:08Spend more time with the family.
41:09You know, Michael Jordan retires. He's going to spend more time with the family.
41:12It's the best. CEO resignation letter.
41:14I've decided to spend more time with the family.
41:16Yes. The board has decided you're not the CEO anymore. Also, that's right. Yes. Yeah. I mean, you know, when I when I left talk, like, you know, it's or when I sold the Elineia group, what do you the statement you put out is I'm allowing more opportunity for the people like in the organization or whatever. But the reality of course is that either like you sold for good reasons because something was not, you know, you were no longer a good fit or you got your ass kicked out of there.
41:42Did you ever read the Groupon CEO's letter when he did this?
41:46I don't think so. No, he's a Chicago guy.
41:48No, no. Uh, Mason. Andrew Mason.
41:50Oh, yeah. Yeah. Yeah. Yeah.
41:51When he's like, I've decided to spend more time with my family.
41:54Just kidding. I got fired.
41:55I got fired. Yeah. The second line of the thing was Yeah, that sounds like I I've met him a couple times. Yeah.
42:01By the way, when you're you told the story to me once about how you cross paths with the early Jane Street folks when you were doing the arbitrageing and they were the smartest guy. Can you tell that story? I thought that was awesome.
42:12Yeah. I mean in 99 we started doing ADR arbitrage American depository receipts and I was not hugely involved with it.
42:19It was out of New York but the guys who had built the best robo box of doing that were the early Jane Street guys and my partners were like these guys are better, smarter, faster, you know, have these Dell boxes on a desk that are doing things. And of course now like you know you could see the dorkish podcast and they've got you know the data center this is the public you know I I I can't
42:47really say much about about the great thing about Jane Street is that you know it's like fight club um and I've honored that for 30 years you don't say much about Jane Street but I will say that they are incredibly smart incredibly dedicated fiercely independent of thought and high integrity and I know some of people are going to watch and they're going to go but the India thing that's public or this or you know it's like yeah okay
43:16well you know again read the rules yeah you had an idea at the beginning you said three years I haven't said yes to any podcast but I have a new kind of like thought or idea around everything would you say everything's an arbitrage but it's just a question of the time scale is that what you said yeah roughly what do you mean by that once I was in the restaurant business the slow thing became how do people make reservations that was the equivalent of the the 32nd piece of paper, right? And
43:44people still call restaurants. It's so weird. There's nothing worse experience at a restaurant than going up to host stand, hearing a phone ring, and getting this. I'll be right with you. And you're the customer, and the first thing you see is, right, might as well be the middle finger. I'm on the phone, right?
44:03And then they hang up and they go essentially, who are you and do you belong here? That's terrible hospitality, but that's every restaurant. So, we got into starting to build a line and I was like, we got to get rid of that. And then, okay, well, how do you get rid of that? How do you know who's walking in the front door without them telling you who they are?
44:21Not it's not that hard, right?
44:23You know, how do you get rid of the host stand so it doesn't feel off-putting?
44:26How do you then get like I the analogy I used at the time was like it's like going to a sweater store and you see all these different color sweaters and t styles of sweater. Uh, hey, I want that blue cardigan cashmere sweater. Can't have it. What can I have? I don't know. Guess it. One of the other 300 sweaters.
44:43And that's what Open Table was like in 2005. That's what the software was dismal. They wanted to intermediate the relationship between the customer and the restaurant. That's how they that was their arbitrage.
44:55And so, you know, talk was born out of my frustration with not knowing the customer. It was a it was a KYC thing. You know, know your customer. Then it was overlaying the value of that customer, which is different on a Tuesday night at 9:00 p.m. in Chicago when no one goes out to dinner than it is on a Saturday night at 7 p.m. when everyone goes out to dinner.
45:17Those two things should be priced differently. And they're not. That was obvious to you, but was it not obvious to the world? It's still not obvious to the world, right? You know, I don't want to get political here, but Elizabeth Warren a couple months ago tweeted, "We need to make a law against dynamic pricing." Everything's dynamically priced. This table is dynamically priced. It's just really slow. This is dynamically priced.
45:41This water, everything is dynamically priced. Like, it's not priced forever.
45:45And what she's really saying is is that we don't want to squeeze people when bad things happen. Agreed. But the best way to do that is to dynamically price things as fast as you possibly can, right?
45:58And so like Uber, when Uber did surge pricing, that is the dumbest way you could possibly name something, right?
46:06And they got in a lot of trouble for it.
46:07Chose the wrong word for the right idea.
46:09Correct. And Travis tried to explain it.
46:11He was they were like, "How, you know, on New Year's Eve, you guys are going to be gouging people with this surge pricing." and he's like, "We need to get more drivers onto the road to meet the demand. We need the supply to rise to meet the demand. How do you get the supply to rise? You give it an incentive that you're going to make more money."
46:29I will say that I I was a little too autist like Travis was on that. Like I remember that and I was like, "Dude, just call it dynamic. Like get rid of the surge word." like you know just and you know my original pitches to restaurant was like look you're you're paying people to sell to your rivals like if you're full and you're really busy on a Wednesday all they're going to do is say well you should go to this restaurant down the street you know which is terrible like you should just change your pricing right but people are like well we print our
46:58menus once every quarter so that time scales off you should print your menu in some respect every day or every hour or every minute so used to even after talk and selling talk for hundreds you still see that this problem is like you know just fundamentally not solved across the economy. I I genuinely believe that geoenced, meaning localized dynamic and variable pricing for time slotted businesses, is something that someone's going to make hundreds of billions of dollars with.
47:28And I simply got tired of convincing people of it, right?
47:32You know, it's like trying to convince a restaurant owner who every day is game and I understand why. Every day is game day. That is not their core business.
47:40That is what they self- selected out of when they got into the restaurant business. they want to do accounting, you need a a big dumb button that you hit once that says make more money, right?
47:49And then the whole back end needs and now with AI, maybe we have that big dumb button.
47:53We do have that big dumb button.
47:54So So let me ask you a question. How does a guy who goes from trading and no restaurant experience create the best restaurant in America? That that's a mind-blowing sentence that that happened.
48:04What is the explanation for that?
48:07Part of it is Grant Atkins, great great young chef who I met. Part of it is the willingness to go man like it's really weird that like no one's seeing that like you know Chicago should have the next Charlie Troder. Trotters was I don't know open 15 years at that point or whatever he put Chicago on the map.
48:26And I was just like that thing I said earlier you know every 15 years someone's going to come along and kick someone's ass.
48:33And I met Grant and I was like ha we have the ass kicker. We have the guy who can do it. And and this is kind of the same thing you said about trading where you met that guy and you were like, "You're the guy.
48:44And you had this moment with Grant where you're the guy, right?
48:47And I asked you, I go, "How did you know?" You go, you said something like, "Every bite of food the guy put in my mouth was the best thing I'd ever tasted."
48:54But but there might be more to it where like there was something either entrepreneurial or creative or something about the person.
49:00The showing up part. It's it is the showing up part because look, I mean, for good and bad, he was me when I was a trader. He would show up and he would stay there till four in the morning and he would come up with the next thing and he would do the stuff the hard work and grind it out. Everything's a grind. Like if you are a great songwriter, you write songs every day. You throw out 98% of them. I met, you know, I love Wilco. I love those guys. I met Jeff once in the
49:28the loft in Chicago and he doesn't like people being there much. And I he was writing a song and it was honestly not good. You know what I mean? And it was a wonderful thing for me to see because what one of my favorite songwriters. And so finally I mustered up the courage to ask him like why do you come in here every day? And he was like I have to write like two or three songs every week because otherwise I want to have 12 good ones at the end of the year.
49:53Right? And I was like, "Oh man, like you want that artistic thing to be you wake up in the middle of the night, yesterday is just done, you know?"
50:04And the answer is like that might happen once in a while. But most people are Picasso. And what you do is you you grind out a lot of to get to something that's great. And when you find people that do that, those are your folks.
50:20Chris Rock has a great quote on this. He he was talking to some young comedian and the comedian was like, "Hey, any advice for me to make it?" And this is Chris Rock, you know. So, he says, "Uh, what are you doing today?" And he goes, "I got two shows tonight, big day." I got two two shows. Uh, one at 7, one at 9:00. So, I'm just getting ready for that. He goes, "No." I said, "That's tonight." I said, "What are you doing today?" He goes, "Well, I'm just getting, you know, runs, get some food, you know, whatever."
50:45He goes, "You want the advice? The advice is you write jokes every morning. The money is made in the day. We just happen to collect it at night.
50:53And you know, the stuff you're doing on the stage is the byproduct of the daily writing of bad jokes. If you're not doing the daily writing of bad jokes, like that's the whole racket.
51:01That's the whole racket.
51:02There's nothing else to it besides doing that. And that sounds simple, but guess what? Even amongst the professionals, most are not doing that. I gave the commencement address at the Culinary Institute of America in Hide Park years ago and I was like, what do I tell like you know these people are all they all are chefs and it's in the era of TV chefs, right?
51:22And you know I always liked the the commencement address where they you kind of tell three stories kind of thing, right? Like you don't really they don't even need to seem to connect. People will try to connect them. Steve Jobs Steve Jobs. Yeah. Perfect. So, I watched, you know, a couple of great commencement speeches and I was like, "Okay." And I finally thought of it like the morning of and the day we were going to open next, which is a restaurant that the idea was every four months we're going to have an entirely new cuisine, entirely new menu, entirely new everything. We were opening with this
51:52Paris 1906 menu time and place. You don't The great thing about that concept was as soon as we had that idea, Paris 1906, I don't need to tell you anything more, right? It's It's like already has aura to it.
52:04It's got You want to go like what was it like? I like I like French food. What was it like in the Scafier 1906? So, there was a sauce on the lamb dish that was off in the practice thing. And I had to go back early in the morning at like 6 a.m. to like I don't know do vinyl tile in the basement to pass the inspection or something like that. And on the pass were like 20
52:31small sauier pans this big with blue tape in front of them labeled like you know A through P or whatever. And I was like what are you doing here? And Grant was there and he was like I'm fixing that sauce that you emailed me about.
52:46Like I knew it was off. Like you know I didn't make it. And so in my head I'm like well of course he just knows how to make this classic sauce. And the reality was he made the base of it in the middle and then he made these a little sweeter and these a little more like salty and and at acidic and somewhere along that spectrum was the right one.
53:08But no one knows what it's supposed to taste like. It was from 1906, right?
53:11And also like no one really knows how to make it. Those recipes were kind of miserably, you know, they weren't down to the gram. That's for sure.
53:19And that was what I told the commencement. M I was like, if you want to be a great chef, you show up at 6:00 a.m. and you make 25 sauces.
53:27Yeah, I better see 20 sauces on the counter with blue tape.
53:29You don't simply go like, well, here's the recipe and it should taste like this. You have to know what grade is.
53:35And knowing what grade is is making mostly 99% of the time. And then you go like, oh, well, this one's kind of I don't hate this one. That's probably actually really good. You know, and I get a lot of people that blind email me. my emails out there in the public and I'm fine with it. And I get a lot of like young entrepreneurs going like, "Hey, I've got this idea and I want to do this or that." And I was like, "Cool, go do it. Come back to me in five weeks. I don't care about your logo, right?"
54:03Like, everyone wants to make the logo, right? You know, logo first, name for I got a great name for a restaurant.
54:08Awesome. That's terrific. Make the 50 sauces, you know?
54:12Have you ever read that book Art and Fear? I think they they use this uh the pottery class example. Do you know this story?
54:18I don't. Perfect uh example for this. So the story is there's a professor in Florida at university. I think he was actually teaching a photography class and they changed it to pottery, but story is the same either way.
54:28Splits his class in two and he basically tells the first first group when they come in, hey, for this uh pottery class, uh I'm going to grade you on your pottery, but it's really simple. At the end of the semester, you turn in your best pot and I will grade you only on your best work. And you pick you get to pick which one is your best. You get you submit that one. I'll give you a grade.
54:48They leave. Group two, he says, "You'll be graded based on the volume of pots that you make." So, at the end of the the year, at the end of the special, you're going to give me a haul based on volume. I will give you your grade.
55:01I feel like I know where you at the end of the semester, obviously, the volume people made more volume. They also made the better pots, of course.
55:09And like, you know, basically, this is like this principle is just everywhere.
55:15And yet even I who espouse this stuff wake up try to make a great pot.
55:20When I Well, no. And also when I met, you know, Jeff that time, I left going, "God, am I an idiot?" Of course that's what he does every day, right?
55:29Like of course that's what he's doing.
55:31The weird part is he's doing it after 30 years because for him that's that's the process, you know? I like to do that and I like to change it and I get miserable when I don't have pots to make, I guess.
55:45Like I'm I'm fearful of not finding more quests, side quests. So, I've gotten to know you a little bit. One thing I think you're very good at is you're good at having an inspiring vision, which sounds obvious, but that's a skill to like be able to do that. A vision that's compelling, that gets people excited, a story that you want to be a part of, that will get you to jump out of bed every day and like go do hard things, go do my new ship go make 20 sauces.
56:11You're really good at the vision part and you're really good at working backwards. And I think the story of Alineia, you told me that I knew it was this great three Michelin star restaurant. What I didn't know was that before you made it, you declared this will be a three this will be a Michelin star restaurant, but Michelin wasn't in America.
56:27Michelin wasn't even in America. And you said something even better. You go, we need to make it so that it will look bad for Michelin if they're not even coming to America. Like us not being there will be bad on them.
56:38Which is a stated goal.
56:40Which is a stated goal that is I would say unusual. And you said you posted this on some forum on the internet year before you even launched. Can you tell So I don't think this is a welltold story.
56:50Yeah. I So there was eullet at the time like there was the you know the what do you call boards you know like BBS forum?
56:57Yeah. Yeah. Forum boards. There's a foodie one called egollet at the time.
57:01You can still look at I mean like the archives are up and I was kind of fascinated with open source software at the time and I do what I always do and I start like reading how to run a restaurant like restaurant for dummies and I'm reading all these books. I'm like just like with the options I'm like I feel like none of these actually is they're not teaching me anything on how to run a restaurant.
57:24So I'm now building a restaurant but I don't know how to run a restaurant. I wrote this one spreadsheet that was I I call it the universal restaurant calculator. It was literally one tab with like 80 cells. So any input that I could think of like cost of insurance like that's a cell, right? And I couldn't think of any more cells. Like at the end of the day, like anybody listening to this could probably if they sat in a restaurant long enough and really thought about you could come up with the cells. It's not that it's not that big. And that's why restaurants
57:53fail because the actual bar entry is really kind of pretty low. You know, anyone who has a good dinner party or thinks they can cook something can start a restaurant. So, I just started like going, okay, what how can we learn from our customers and maybe there's someone else out there that I can learn from.
58:13And so, I was like, let's just open source the whole business plan. So, I created this thing called the Elenia project on egalit and it was like, hey, here's here's how we're thinking about naming the place and here are all the names we didn't take and here are the ones we did take. Here's the menu development. Like, these are foodies, these are chefs.
58:30Who's in this forum?
58:32So, it turns out it was a lot of people. I mean, we got hundreds of thousands of views. So, suddenly the press was interested. So, you know, Food and Wine and Gourmet Magazine and and you know, the New York Times, the Wall Street Journal were all like, "Oh, this is interesting." Like, "These people are building a restaurant."
58:48And did you say openly like, "We're trying to build Michelin star restaurant in Chicago."
58:51I didn't say I don't think I said Michelin star. I think we're trying to build the best restaurant in America.
58:55Trying to build the best restaurant in America.
58:57And you start and it needs to be profitable.
58:59You start building in public or open sourcing your ideas. And you're saying you're doing it because you kind of want smart smart people to be two things. I wanted I wanted feedback from people that might come across it and then I wanted to drum up future customers because when people have an engagement where they feel like, oh, I watched that and now it's open, right?
59:28I feel like a little bit like the origin story is already known, right? It's like one of my favorite documentaries of all time that I literally watch once a year is Hearts of Darkness. It's the making of Apocalypse Now. You want to talk about fear? Every time I'm like, "Oh, I'm doing too much." I watch Francis Ford Copela like, you know, with the with the Philippine, you know, like Navy and Air Force like actually going, you know, Fernand Marcos or whatever going to like, you know, you know, get Dennis Hopper out of there. They're actually
59:58gonna start shooting. You know, he mortgaged his house twice, all that stuff, right? So I'm not really taking much risk by doing a vineyard here compared to that. So it's very comforting and I felt like by putting that out to the world, people would have this engagement of like they see the process, they see how we're thinking about it. Like we would write like I read I look back at some like there's so you cringe always.
1:00:21Oh yeah, it's cringey. Like you know the purpose of bread like is there you know and why do you think that most restaurants give you bread? Well, it fills you up. they can give you less of everything else. Like I mean that could have been the whole post. It's Americans like fat and bread is a good vehicle for butter, right? Or oil and we can cut down our portion size if we give them a big basket of bread, right?
1:00:44That is literally why they do it.
1:00:47And it's delicious. Bread's delicious, you know, but like we wrote like 4,000 words on the purpose of bread. But it, you know, we had hundreds of thousands of people and and one of the coolest things was that the Sean Brock, who's a very famous chef now. He was the first customer through the door on the first day. Wow.
1:01:03And he wrote on there.
1:01:04So, did you have like a wait list by the time you launched or Yeah, we had we had like opening night we had the New York Times there, head food critic. Michael Roman told us like that guy is the head critic of the New York Times. They didn't know what anyone looked like back then.
1:01:16So, you couldn't know this, but if you hadn't been put publishing that stuff, but you opened the same restaurant, there's no chance it would have been as good. No chance. That was like such a marketing feat.
1:01:28And how do you think about product marketing, storytelling? Like what's your kind of theory or thesis or philosophy on this?
1:01:35The more open you can be about why you're doing it, as long as it's authentic, you win.
1:01:40Period. Like you can also lose on that. Like look, like you win. Period.
1:01:47Well, I'm thinking of I'm thinking of Daario and Sam right now. like you know it's like there are real concerns around AI and you know if you run around saying everything you think everything you think might not be the best thing all the time you know at the end of the day like a restaurant is a pretty benign thing no one's going to live or die based on me opening a restaurant um and but so why was I opening it we had really pure reasons like you know did we have
1:02:17ambition for sure at the time there was a real culture of people finding these things and there wasn't Instagram and there weren't you know the social media outlets and so this was novel to have that now like one of the problems I think is that you know if you're going to Paris you're going to email hey where should I eat okay I I love lame you should go there you're gonna go on and look you see all of it before you get
1:02:46there it's really hard to be surprised in life right now and So, you know, a lot of what we were doing was creating desire and enough engagement that you felt like you knew people. People always want to buy from people. You always want to have an engagement. You know, one of the successes of of this podcast is you people see you and you're genuinely curious. That's authentic. That that's that's the secret.
1:03:15We could do so many bad things like making dumb questions or dumb answers or And as long as you're authentically like engaged. And so that's the marketing.
1:03:23Finding that and being willing to put it out there is a little bit scary, a little bit invasive, a little bit, you know, like not everything you do is good. You know, you might not like the way you look or sound on camera, all that. But you have to keep doing it.
1:03:38You you told me another thing that I thought was really awesome cuz I've never been to Lydia. Most people who listen to this will have never been there, right? Right. So, like for 99% of us, we've never actually experienced what made it the best restaurant in America, but you've told me a little bit about like kind of every detail. So, you know, how are you greeted at the door?
1:03:57Uh, you know, what was the experience like? You know, the balloon uh for dessert, you know, where you're eating this this candy apple or this green apple balloon for dessert. And you've talked about like all the different elements of the experience. What are like three or four things where I where you are proud of like how you kind of rethought reinvented or just even a small touch like I think there are dozens of those and what I would say is that we looked at it like a theater like you know if you write a great piece of theater or read a great novel or
1:04:26whatever the term of art would be a call back right so like you write a you were talking about Chris Rock like the great thing about great comedians and whatnot is that they they they'll set something up at the beginning of their set and then they go through a whole bunch of unrelated did stuff and then somehow there's a satisfying call back.
1:04:42There's a satisfying call back which makes the beginning and the end funnier.
1:04:46Right. And when you leave you're going a you know. So we viewed the experience from the time you got out of your car to you walk down a hallway to you're at a table which was a complete cop of David Berg. Like you know like stop making sense. I saw in 1984. I was at Harvard summer schools as a teenager and I I haven't seen it. What would I have?
1:05:14Stop everything. Really? Are you kidding?
1:05:18When you said the name, I had to decide.
1:05:20Oh, dear God. You're a generationally make like Oh my dear. Talking about I know what I'm giving you for your birthday. Um, so the great thing about Stop Making Sense, that concert was that David Burn walks out. No one else is on stage. He has a boom box which just plays,
1:05:42you know, this before drum machines and all that. And so he got cassette tapes and then he, you know, he starts playing the guitar and then the stage builds. The stage builds and then pretty soon he gets smaller and smaller because he starts wearing the bigger and bigger suit. You've seen the Dson in that big That big suit is as the world around him gets bigger, he gets literally smaller by stage craft, right? It's brilliant.
1:06:09And I remember when we were building Elinia, Grant had said like, "Why do why do fancy restaurants have tablecloths?"
1:06:16And the answer is because the table underneath is a piece of And so he was like, "We want great tables because you'll feel it, you know, and you'll see it and all that." And then we were like, "Well, start with nothing." You know, you go to a fancy restaurant, you got like 18 different, right, forks and knives. And that's stressful because you're like, "I don't even know like how to use them. I'm not I'm not like a 19th century French aristocrat."
1:06:40And then, you know, and even then they have somebody with so you should probably use the fish, right? Like fork or whatever. Yeah. Reprimand.
1:06:47Yeah. Yeah. Right. Right. Yeah. For big.
1:06:49Yeah. Yeah. Soup away. Like we didn't want any of that. And I remember thinking of of stop making sense and going like let's start with a empty stage. And so when someone comes you get, you know, something that hits the table. What's the point of that? That's the call back for later. So it could be, you know, a honeycomb or it could be, you know, what looks just like a flower arrangement, but as it turns out, there's edible things in there, but you don't find that out until hour two, right?
1:07:15So these were all intentional things.
1:07:17Now, none of this sounds particularly revolutionary now because there's tons of restaurants that do that. I mean, that was the influence of not just Alineia, but like a lot of other restaurants that push that envelope. And so, that's we we worked really really hard to hone all of the little things that would make you feel something, right?
1:07:35So, if I said to you, I'll ask you not your favorite meal in a restaurant necessarily, but what's your like most memorable meal of your life? You know, uh I I know what came to mind right away. I remember when I was 21, 22 years old, we were doing the sushi restaurant thing or we wanted to start a sushi restaurant. We went to Las Vegas and my my buddy Trevor's girlfriend uh her dad was wealthy and he said, "Take the boys out to Nou and say the word omic ac."
1:08:03We didn't know whe 20. Of course, why would you go a school in North Carolina, not a great sushi scene, not a lot of omicass going on there. So we go to no boo and we and we say the word magic word omic ac and they start bringing dish after dish. We don't even know what's happening. We're trying this like miso glazed cod.
1:08:21It's like wow. Every bite tasted you know unique and and great and the whole bill was paid for by this other guy by you know the the her dad. And the whole thing just felt like totally taken care of and new and novel.
1:08:33And I just remember also where we were at in life like it was just like a relief from like the stress of trying to build something and being broke. So now how do you make that happen every night for people like you know and that's so that that's a real thing. So we would ask staff like past experiences best experiences what okay we're coming into fall what does that mean? Well, it means something very different here.
1:08:52Like, we're in October here. We filmed really early today because it's going to be 100 degrees. In Chicago, the leaves are already down and it smells different. It's wet. And so, as you're trying to craft these experiences, we just ask those very simple questions.
1:09:08And when we built software, there's a lot of different theories of software building. I like to build deadends in software that every software designer hates. If you could hit every button at every page, I can't take you on the journey where I want you to go.
1:09:23Right. So, I kind of build like dead-end caves that every every software designer hates, right?
1:09:30Like, you know, UX designer because they want like the Microsoft version of I want every button, every option at every time, right? My older son is very much like a Windows guy because he can tinker with everything, right? But like in a great experience like that omocas that you had, you had no choice, right? It's a defined it's a defined thing and sometimes it's great to have a lot of choice and sometimes it's great to just be taken on a journey, you know, and so studying that was fun, you know,
1:10:00and that's what we did.
1:10:01You also study so as I'm kind of deconstructing what you do, one of the things you do is you you learn but not from only within the industry. You steal from the sort of adjacencies. Yeah.
1:10:11You don't look at a restaurant and say, "Well, how do the best restaurants do what restaurants do?" You know, you say, "In fact, you try very hard not to do that."
1:10:17You say, "What do they do?" And what's the how do we invert some expectations rules?
1:10:22Like, I'm fine with stealing the best stuff. How what are they missing?
1:10:25Right. And then what do if this was theater? How would a theater guy do this? If if dinner was was like a theater show, what would it be? Right. Right. So, like taking these adjacent You also told me about magicians and how you were studying magicians. So, this kind of relates some new stuff that we're doing, but you told me this story of selling a bottle of wine to a table.
1:10:44And you were able to go in and you were able to sell a bottle of wine that maybe the waiter wasn't going to do. And he was kind of ask you like, "How'd you know how to do that?" So, when I was a kid, like every kid, you get a a a box, a magic box that has like the rope that with the little peanut in it that like holds Yeah. the the hidden coin thing, the the the roller that does the dollar bills on. And there's somewhere exists a video of me that my mom put me in a little tuxedo and I did the show for like the the relatives and everything went wrong. That's why, you know, it's
1:11:13so great. But of course, I'm I'm like doing the tricks and I'm like, "Oh, don't worry about that thing, right?"
1:11:18You know, and I'm like five or whatever, right? And so, like almost everyone, that sense of wonder and awe and all that is something that as you build out experiences for people, magic is a wonderful thing to study. But it's also a wonderful thing to study in everything else, marketing, sales, and all of that because you know for sure that I can't change a $10 bill into a $100 bill, right? You know that. Everyone knows
1:11:46that. And then when you do it, if you do it really well, it will appear as though you did it, even though intellectually you have to suspend your disbelief. And so, how do magicians do that? Well, you know that they control your attention.
1:12:01and where they stand, where they look at you, where they look, you know, not at you. All of those things are cues that are incredibly practiced. They know exactly when they're working and when they're not.
1:12:16And as you're building out experiences for people in restaurants, anywhere else. If you read the books on restaurants, I just hate them. I don't like them at all. But if you read a book on written by a magician to say the effect, they always start with the effect. The effect is that the bill will become a $100 bill.
1:12:40Okay, that's the effect. And then they go through the method. The method is well, you've already got the hundred and you're going to fold it like this. Then there's beyond the method the craft of right of what you're doing. So the presentation the pres Yeah. Yeah. If you read 50-y old books on magic from anywhere in the world. They have all of these wonderful things like, well, if you want to gain people's trust, you don't sit across from them or stand across from them. You
1:13:08will stand next to them. So, if I present this to you and I'm standing here and I just go, "This is the best water in the world." You know, whatever. Like, you're going to be going like, "Ah, guy's selling me water." If I go around the other side and stand next to you, so we're both looking at it.
1:13:27First of all, I could be doing a lot of different things there. I could be signaling someone, hey, bring more water. He's a little low. I can be doing all sorts of stuff in a restaurant. You know, your attention can't be on the water and behind me at the same time, right?
1:13:39So, I kind of own that space back there.
1:13:42So, in in reading these things and thinking about Elinia, it wasn't just the callbacks and it wasn't just, hey, we need to make a dish that transmogriphies into something else or whatever. We're going to start doing service in a way where we are on the side of the diner. We're going to present some weird stuff. We're going to present a dish that look that's hanging at the end of a skewer that makes you uncomfortable cuz you know you're supposed to kind of
1:14:11right do that. And one of the things that we kind of realized was if you if you're going to have people eat something that looks like glass, you should put it on a plate. And if you're gonna have something at the end of a skewer that's bobbing around, it looks like you have to give it head. You probably should make it taste like cherry pie.
1:14:30You can't like challenge people in two directions, right?
1:14:32But the way that you describe that should also not be adversarial. It should be like you're on the same team. Hey, and the waiter comes around to the side. They look at it with you and they go, look what he's putting out today.
1:14:47Now, he might have been putting it out for three months.
1:14:49Right. Right. But it, you know, it's like, and that was a very stayed thing. You have to be on the team, not team restaurant, team customer, team diner, right?
1:15:02And with that story with the wine, you know, this one table of six, like we did wine pairings mostly, this one table of six wanted to buy all the wrong wine.
1:15:11So big red wines don't really go with our food. You're probably not going to sell them easiling. If you're a S and you just go like, "Oh, they're gonna buy a thousand dollar bottle of the wrong wine." Well, you want to sell the thousand dollar bottle, but where we're at, we're like, "Well, you probably shouldn't get that. That's not really appropriate for the food." You don't want to say that. Don't want to embarrass the person. You don't want to say that. And so, you know, I'm looking and I'm looking at their shoes and the wife's wearing brand new Lebbitons. How do you know they're brand new? Well, the
1:15:39red is absolutely perfect. Those things cost about 1,200 bucks. And that guy over there has got a watch that's a $55,000 watch. That guy who's actually ordering the stuff is aspirational because he doesn't have any of that. So, he's either the really rich guy cuz the really rich guys don't do any of that or he's trying to impress these people. And it felt like that. So rather
1:16:07than say to them, you probably shouldn't get that. I walk over. I'm like, hey, I'm Nick. I love wine. I'm the owner of the place. What did you order? And I go, "What would you drink on Tuesday with a pizza?" Now, I know he's probably not going to answer honestly. Right. Right.
1:16:23I go, "Oh, that goes really well with the pizza." I said, "You know, like we've got a couple like, you know, you could probably get two or three bottles for what you ordered, but they'll pair wonderfully just like that at Super Tuscin with that pizza. You'll get like a better." And I didn't make it about him. I didn't cut down the spend at all.
1:16:40And then the waiter was like, "That's amazing." like, "How'd you do that?" I'm like, "She's wearing leutans. That guy's got a 55,000." Like, you have to know what you're looking at, right?
1:16:47And that's what magicians do all the time.
1:16:49They they they look at their environment, they assess their environment, and then they put themselves into that environment in a way that accomplishes the effect. And so, I got really into reading that stuff, the theme here of going, okay, I see an effect that I really like. I am going to reverse engineer how I would do that. Not because I want to perform it ever or I want to like know the trick,
1:17:16right? But because I want to know how he got to understand all the positioning you needed, the site angles, the psychology of of the person seeing it, and then how can we apply that to our sales team at talk selling software or how can we teach our waiters that standing in front of a table is not nearly as good as standing alongside a
1:17:43table. And these little things like you know it's so like I would not do training very often because a lot of the training is literally like you don't backhand someone like you know if you're pouring wine if I'm pouring from here I'm not going to do this I'm going to use my right hand and open hand it's and the labels there like small things and at that level I'm not the person to teach that but then I would show them a Darren Brown video you know and I'd be like today we're gonna watch a magic trick and it doesn't
1:18:12look like a magic trick. The great thing about Darren Brown is he's on the street and it doesn't look like magic. So, I would then walk them through the anchoring and the wrist and the hold.
1:18:24And if you watch, this is what he's going to do every time. And it seems like it flows like water. It just flows perfectly out of him. So, it never feels like, you know, when he backs up and they're walking with him, hey, they're engaged. It's easy to assess engagement with people. So, all of those things are studied in practice and when you ma when you kind of gamify that for your team whether it's a marketing team a sales team whatever it may be um it
1:18:53becomes really fun you know and you could do that in a smart memy way like the Jordan Belelffort way right you know sell me the pen you know and all that like you know how long have you been in the market for a pen like that's not what I'm talking about and so the great thing about magicians is that there's a suspension of disbelief that you're being sold a bill of goods you know that it's literally called a trick and yet you're fine with it.
1:19:17That's where you want to get to, right?
1:19:19You know, and that's why we studied it.
1:19:21That's why I studied it and that's why I'm still fascinated with it. So, how would you use your brain on a podcast?
1:19:26So, uh let's say you let's say you're me and you're going to try to do something whether it's this podcast or a new podcast. What are some of the questions or some of the ways you should think about this? I'm just curious.
1:19:37Huh, that's a really great question and I I don't know the answer.
1:19:40Yeah, that's okay. You don't have a good answer. I'm curious to know.
1:19:42Yeah, I don't you know I feel nervous all of a sudden stuff. That's a good nausea.
1:19:46That's a good question. Yeah, that's a good question. So, I listen to podcasts. I listen to your podcast a lot. And I think one of the things I would do is I would never send any questions ahead.
1:19:54You did not with me, right?
1:19:55I don't know if you ever do or if people request it, but I have on a lot of podcasts where someone sent me a list of the questions before an interview. I never look at them, right? Like if you're running a podcast, do not send out any information ahead, you know, because it will not feel real and authentic. Like I didn't know you were going to ask that, right? My response is is much better because of that. Um, you've done a very good job of being yourself. And then the the thing that I would say next is what's the next format? Like I don't
1:20:23know what that answer is, but podcast that's a thing you'd be thinking about.
1:20:27Oh, I need to know like how are how do you get this down into something that's going to be consumed in the next format because it went it went from listening to podcasts I mean all in like the last 10 years to now we're visually doing it to something here will be a sound bite that will get down to like the the clip 15 second short video that'll probably go like I do better you know a couple of the podcasts I've done
1:20:55have been long form and they've helped me immensely uh in business simply because people who I think wouldn't listen to it did, right?
1:21:04And then they feel like they know me because it's authentic.
1:21:08Have you seen the Hot Ones?
1:21:10I don't think Oh, yes. Yeah. You mean The Wings? Yeah. I love it.
1:21:12So, so it's a simple mechanic where the guy basically says, "Well, for celebrities coming in and every celebrity's PE," he uses like real Hollywood celebrities.
1:21:20Yeah. Yeah. I've seen it.
1:21:21They're all PR trained and you know, they do a thousand of these things. It's like actually not that novel to have access to them anymore. But what what do you not have access to in that person?
1:21:30It's like you get to see them sweat.
1:21:32It's like but in a likable, understandable way. You're not like putting them under so much pressure, right? And it's it's also like and it's relatable sweat. It's relatable. It's spice.
1:21:42Everybody can kind of even imagine what it looks like. And there's a progression. So you kind of wherever they start, there's a built-in book.
1:21:49And you also know it's coming. you know it's coming and you want to see what the finale is. How bad does it get? And they can use clips of them like drinking milk and gas. So you know, oh man, they're going to it gets hacked.
1:22:01So already it's like that guy took interviews and with one mechanic changed it. And if you look at our space for example, like in the business space, nobody does that. I Nobody does that.
1:22:10I will say that I wanted to because I'm a golf fan. It would be really fun if we were walking up the hill behind here. Like one of the things I thought of and got rid of was like and I didn't know that you'd have like a production so it wouldn't have worked anyway but like like doing some activity like that is super cool right? I've been very fortunate to golf with amazing people.
1:22:32Not just like professional golfers, but just amazing people. And four hours on a golf course is a great filter, right?
1:22:42Because they're golf is a game of utter failure. Like no matter how good you are, you're going to do bad, you're going to do poorly.
1:22:49How they react to that is fascinating and human and all of that. Yeah. And some people are really enjoyable to golf with and some people are not. And it's unpredictable. Like I can't predict. So one of the things I want to do is like, you know, Bill Gates loves to golf. If I was going to interview Bill Gates, I'd be like, "Cool. Let's go to the MUN golf course, right? and we're just going to go and there's going to be like a little handheld camera around and we're just going to play golf and we'll interview
1:23:19you about your history of software and AI or whatever, but we're going to we're going to make watch you look miserable in the middle because he's not a very good golfer from what I hear.
1:23:28That's a really humanizing thing. Like it's great to talk about all the things I I do well. Like thank you, but like there's a lot of things I'm miserable at. Like like let's let's put a little trouble in the way. Which I guess is what your point is with the hot ones.
1:23:42Yeah. Put a little trouble in the way. I think that's a good like principle. How how might we put a little trouble in the way and you can come up with 10 ideas. Another one would be, you know, you you talked about like if you want to learn how to manipulate, let's say, attention or make immediately disarm people or be suggestive, we can learn from magicians.
1:23:59Or if you want to create a three-hour experience, we can learn from theater.
1:24:02So I wonder like who should I have been studying? like should I have been studying, you know, how does a kind of interrogators for the, you know, the CIA, what do they do to really get somebody to be honest? Yeah.
1:24:11And I'm not going to interrogate somebody, but it'd be very useful to go to that level of extreme versus just listen to how podcasters like me do what we do, right?
1:24:20Well, and also you're trying to break down like for the audience like, oh, you've had like four different careers.
1:24:25How and why, right?
1:24:26How did that work? Why were you successful at it? What can people get out of it? It's a show don't tell thing.
1:24:32Like here we're forced to tell, right?
1:24:34It'd be cool if we just could show it somehow, right?
1:24:36Like uh Steve Barllet from Diary of a CEO early on the effect of every episode was the guest was going to cry. And so how do we achieve that effect?
1:24:44The method was I'm going to surprise you at some point with a photo of your mother who has passed away recently, but it's a really wonderful thing. And then I got your third grade teacher to write this letter.
1:24:58And I want you to read it here live. And then the effect was the guest would always get emotional and you never used to see that person the high achiever get emotional and that became a calling card for his show and then it was like this flywheel thing where the guests kind of know oh I better open up behaving I watched that bear grill show you know you know he's like that outdoor guy survivor man kind of thing and he he did a series where he takes celebrities and in the wild
1:25:27takes them somewhere and talks about their career and and I love the concept of it, but the execution of it, even though I love when he does it.
1:25:35Obviously, they can't put these people in actual danger.
1:25:38It feels dangerous, but like, you know, they they can't they can't really suffer, you know, like Uma Thurman is not going to go. I mean, she was one of the people. I'm a big UA fan. I was going to say that was a random reference.
1:25:49I know it wasn't that random. My wife's gonna be like, "Yeah, okay." Uma always Uma. So, but like you know I watched that and I went like oh that wasn't like that wasn't all that interesting because she never felt actually right like emotional I don't think.
1:26:04Yeah. I guess the thing I take from it is I consider myself a creative person and it sounds like when I'm hearing about how you go to the restaurant industry or how you did you found arbitragees or you know with talk how you did talk you know I've I've heard you tell some of these stories and I realized oh wow there's levels to this game of how to truly live in that kind of creative mindset and you know there's common patterns like where can we go what adjacencies or like totally unrelated spaces could we go learn from
1:26:33and pull one or two things that might be really accurate.
1:26:36Well, I mean, and that's the philosophy training to me was like figure out the first principles thinking when we were building Lineia, it was great customer experience, great business because then you've got a flywheel where if the restaurant's making money, you can reinvest in the customer experience, which makes you an even better restaurant, which means that you're make more money.
1:26:57You make more money. Yeah. And I think that there's a lot of the garage band mentality among chefs, even some of the famous ones. I mean, I almost broke my my TV in my basement when COVID started.
1:27:12And they had famous chefs on CNN going, "This is the kind of business where at best you make 2 or 3% and you pay, you know, this month's bills with next month's revenue and all that." And this very famous chef was on TV all the time saying that and that we need to print $2 billion for the restaurant industry and all that. And I was like this guy. I mean I literally emailed him. I was like stop saying that. That's not true. He's like what part of it's not true? Like my restaurants make 2%. I'm like well
1:27:41that's because you don't actually you haven't figured it out. Like you should be the last spokesperson on there. But he was a very successful TV chef, not a very successful restaurant owner. Mhm.
1:27:51And those are two different things and the press doesn't get that they're two different things. You know, for a lot of these industries that are like kind of art craftbased, openly desiring running it as a good business is sort of low status.
1:28:05It's like that's what I mean by the Garage Band thing. Like, oh, you sold out. Like, you know, it's like for me, I'm really, really proud. I sold the Elinia Group three years ago. Our investors got quarterly distributions from the time I started it in 2005 all the way to when I sold it in 2023 and then they got 8x their initial investment walking out the door. Right?
1:28:24So I think overall it was like 27 or 28x.
1:28:27So if you put in $100,000 in 2005 into a restaurant that you thought was an art project in 2019 you got about a quarter million back.
1:28:35See this is why I got mad at you last time. I was like, "Dude, I used to always just say restaurants are a horrible business." And I realized, no, no, no. The way I bad at I was horrible at the restaurant business.
1:28:45And it's a skill issue.
1:28:47Well, and you know, look, I mean, we could have gotten lucky, but like at the at the end of the day, like the end of whatever is relatively small. Like you could say like, well, you caught the right thing and this and that. But, you know, the first year we did a line, uh, it did about 5 million in sales and made like 8% 7%. It was considered really good. And I'm going like, well, that's a giant downgrade from my previous career.
1:29:07Um, and a lot more work. And then at the peak, like it was doing 20ome million dollars a year and making, you know, 18 20%. And like that was I needed to build a software company to do that. We need to get rid of all the phone lines to do that. You know, uh, Steve Bernaki, our CFO, came up with Marameco Charts to do to do all the food costing. That wasn't me. that was, you know, a guy that I helped to mentor and then I learned from him and, you know, it's like all of
1:29:36those things we disseminated freely to the industry. No one wanted to do them, right?
1:29:43And so, like, you find yourself during co looking at the TV going, "Oh my god, like it's so broken the information that comes out." And then the thing that happens to me is I go, "What else is like that?" And as it turns out, probably everything, right?
1:30:00Like, you know, if I I do know awesome food reporters. I know awesome economic reporters and all that, but chances are that if you're going to write a book about trading, I'm going to pick on Michael Lewis here. Great writer, great writer, love his books, love reading them. When he finally wrote about something I actually knew about, I went, "Ah, this is all wrong." Right?
1:30:21Flash Boys is all Because if you show up and start asking traders, hey, how did you do that? And you engender their trust in order to betray it because they know you're going to write a book, what do you tell them?
1:30:33Well, you tell them the that worked 5 years ago. If my arbitrage between the MX and the Merc was working right now, we would not be sitting here talking about it, right? I'd be going like, "Oh, really hard.
1:30:45Doesn't work." Like, "No, none of that's going to work." Right? And so, like, you read that and then you go, "Oh, man.
1:30:51That's, you know, and I think that's a lot of where the current frustration with the press comes from is that when you have all of these people who can see information freely in each of their silos where they're really learned, all of a sudden you go, "Oh, well that's not what I said or that's not, you know, I love doing these long form things because if I put my foot in my mouth, everyone can see it." But it's really hard to take it out of context. Or if you did take it out of context, you go like, "Well, go look at look at" and it
1:31:19was direct. it wasn't filtered.
1:31:21So, you know, I I I feel like that's part of the disconnect politically these days. That's part of the disconnect with all of that is that you have again different time scales of information.
1:31:32And I have a really good friend that gets all of his media consumption, for lack of a better term, filtered through three things. And I get it from the unfiltered messy versions of X and Reddit and boards and like I'm a geek, right? So I'm in all that and by the time he reads it I'm like that's two weeks ago, man.
1:31:58Like and also it's wrong. That's actually not what happened or not what was said or you're not getting the context of that thing. And so I'm like oh my god I'm consume, you know, for sure I'm also consuming it wrong, right? because I'm not close enough to it to really fully get it. So, what I try to do is I'm fortunate enough being 58 years old that I just try to like get to the person.
1:32:20Like if I see something and I'm like that probably doesn't seem right, I just email the person now.
1:32:24Well, one of my favorite stories you told me was uh when you were selling talk and I've gone through M&A and I think every entrepreneur should try to listen to more M&A stories because if you ever get to that point, it's going to be basically your life's work. Yeah.
1:32:36you know, 15 years, however long you've been doing this company, and then in this like 3 to 6 month span, you're going to have this huge swing in the outcome that you're going to have price.
1:32:48Maybe the deal falls apart, which happens all the time, and you're doing this thing where the other side of the table knows a hell of a lot more about this, has done this 10 times more than you have.
1:32:58And so you're kind of going into the gunfight with a, you know, butter knife trying to do this. And you told this great story that resonated with me about when you were selling talk and how you treated the lawyers and the diligence process where you kind of like took control of it entrepreneurally rather than being a passenger to the process.
1:33:13We we had incredible growth during co and the trader in me was like we are going to lap this growth and we're still going to do well but we're not going to go 200% next year right this is my moment like it looks really good right now and with technology you know you could have something that that's you know growing 200% a year and then all of a sudden you grow 50% one year and even though that's amazing the world of M&A
1:33:42and VC just goes oh tries like you you are you are on your way down and pretty soon you're going to be like a legacy you're Comcast pretty soon you know even though that's not true so Steve Bernaki Jeff Kaplan my COO myself the lawyers would go like well we just got the diligence list and it's 896 questions and we would convert it from Excel into Google Docs and then Steve would go through and he would color code it all and and we would assign it to the people
1:34:10that could answer all the questions And of course, like the investment bankers and lawyers kind of thing would go, okay, well, this will take like four to six weeks, right?
1:34:22And I was like, we built dashboards for all this. I could have it like two days, but then they realize they ain't getting paid if it's in two days, right? You know, it's like they're billing hourly and there's four of them. So, you're at you're at $3,200 an hour or whatever every time you get on a Zoom call with them. And then, you know, the investment bankers want whatever 3% to 4% or whatever. So, we just went, we don't need an investment bank. Like, there's nothing here that we can't figure out on our own. And of course, the board hated
1:34:52that idea, but we still had a controlling interest.
1:34:55And so, I just said like, awesome, we'll do it for 2%. Does that make you feel better?
1:35:01For real. And they So, you your own your own investment bank.
1:35:05Yeah. And I'm like, I wasn't going to do that, but they were so adamant that it was hard. And I said, well, you know, like, look, they're getting paid 4%.
1:35:12I'll save you 2%. We'll take it and that way we'll be beholden. If we don't get it done, like, you can, you know, we won't get paid. Which is weird be they should just say no to that. But they didn't say no. They said yes. And we did that whole list in three days. We just stayed up.
1:35:27Hey, you just locked yourself in a room, right?
1:35:28Locked yourself in a room. Did the whole thing in three days. There was like, you know, there was a lot of questions that were like unclear what this what you're asking here, you know, or irrelevant, but and then they just went, "What is this?" We're like, "That's your diligence. He's done.
1:35:41You got to tell the Spock the Spock story."
1:35:43Oh, God. There was I'll let you up. Okay. Yeah. There was a guy on the other side. We won't use his name or the firm, but you know, there'd be, this is during COVID, too, so they wouldn't be in person. And there'd be like 30 people. I mean, I have screenshots. Zoom call of Zoom call of 30 people, all lawyers, all lawyers, our side, their side, a couple people from Squarespace, and then the three of us basically. And we knew the answers to all this stuff cuz we did it ourselves. There's no one to parse it
1:36:13through or whatever. And so then I would just ask a question or Steve would ask a question or Jeff would ask a question and the lawyer would literally go, I will take that to my client. And I'd be like, "Your clients are on the like I can see your like we're here.
1:36:28We've got two weeks left. Let's not leave it till like and it had to be done." One of the critical things. And and the reason it got done is because they were going to go public the following quarter. And all of their S1 information whatnot need to be locked down into Q1, which happened to be on March 31st.
1:36:45Like it it actually followed the calendar year. So March 31, we had to be done otherwise it was not going to happen for 6 months to a year and maybe never, right? And finally I just looked and I was like, "Hey Spock, shut the up." And everyone kind like even some people on his own team were kind of like, you know, kind of trying not to giggle, but you could see them, you know, and I was taking screenshots the whole time cuz this guy It takes guts to say that to the other side.
1:37:11I was so angry because like did he wonder why you were calling him spy? No, no, no, no. This was his entire strategy was simply to close at noon on the last day possible, right?
1:37:26Because that's how they could get the most out of it, right?
1:37:30And that's one of the, you know, you were we were talking earlier like one of the superpowers is not a superpower.
1:37:35It's just what what is this person's motivation? If they're on your team, even are they are are your incentives aligned? I learned very quickly at Alinia that my manager's incentives on a Wednesday night were not to be full. And I learned it because this one guy said to me, "Nick, if every day was Saturday, we would be so tired and burned out."
1:37:55Because I'd be like, "We have 140 person weight list. We're doing 80 people tonight and 94 people Saturday.
1:38:00Why is every day not Saturday? Why are we not doing 94 people every night?"
1:38:05And he said, "Well, I'm holding back those because otherwise we'd be too tired." And I'm like, but you don't get that like we could hire 10 more people and you could work four days a week instead of five and get paid more, right?
1:38:17He did not last much longer. Like because I literally went in to the primitive pre-talk talk and opened up 110 seats for every day for the next two weeks. And we sold all 110 and I went in the kitchen and I told Grant, "We're doing 110 every day for the next two weeks." He's like, "Okay."
1:38:35And then I knew that they would make it happen. And then the guy just kind of walked off like you know and so you just go like okay like I that was my fault in a lot of ways like in hindsight I did not align the incentives. I did not expl explain that every day should be Saturday and you know it's like there's a certain group of people that I'd be like you know yes every day is Saturday like it's game day. So I have this phrase that intensity is the strategy.
1:39:01And what I mean by that is I spent a lot of my life searching for the better way, the better strategy, the hack, the shortcut, the whatever. As I hang out with enough winners, you realize like the difference is not that they knew something I didn't know or they had some magic formula, but like they applied a greater level of intensity to a pretty visible strategy that I could have seen.
1:39:23And actually the intensity almost changes the strategy over time. Just like Yeah. And also when you're wrong, you go like, "Oh, I was I was really wrong." I mean, I just said in hindsight, thinking about it, I did that wrong. He did not know why that was important to the business or why it could make his life better. That was my fault.
1:39:40But I But do you think that you had was the trading floor like the formative period where you you So I will tell you a great I will tell you an exact thing that that is a tautological stupidity that is in a book called Market Wizards. So this there's this book called Market Wizards. It's one of the rare trading books that's great. Now everything in it's out of date in terms of the the process of like the floor traders and all that, but what's not out of date with the market wizards book, the mentality of the people that he profiles in there and interviews is great. And one of them was
1:40:10called one lot wonders. And so this guy would just trade one contract at a time, really small. And one of the questions I remember this and I think about it all the time is that he asked the trader, "What should a failing trader do to become a successful trader?" And he goes, "Well, that's a dumb question because a successful trader will figure that out." And it sounds stupid, right?
1:40:34And all he's saying is like, "Well, no, like if you're a successful trader, you will stop doing all the stupid shit." And I don't know what stupid you're doing. you know, I can't know and I can't put it in this book and in this interview, but it's a mark of a successful person that they will at the end of every day, like kind of like you were saying about Chris Rock. At the end of every trading day, you do the postmortem or whatever, you know, that's the the Google version of it, postmortem, you know, like something goes wrong, you analyze what
1:41:02went wrong. One of the things I tell people is like no one likes getting punched in the face, but there's a certainly a lot of people that when they get punched in the face a lot, instead of saying like maybe I should learn to bob and weave a little, they blame the puncher or they blame the referee or they're like maybe I shouldn't be in the ring or whatever it is, right? And you know, that's why, you know, that's the flip side is the Mike Tyson quote, right? You know, everybody's got to play it until they get punched in the face.
1:41:28Well, it's true. You got to play it impression. Thank you. You know, and I love that too. You know, I used to show that to people because I'd be like, "Yeah, like we have a plan. Our plan is changing, right?
1:41:40Because we we are absolutely getting destroyed right now." And I was wrong.
1:41:44And one of the things I hate about managers and when I have worked in other organizations, you know, I'd be sitting in a meeting for two hours and like I'd be like, "Can we just all admit that this is stupid?
1:41:55Like we should not like I don't care who's who owned it or whatever. like it's just not working right.
1:42:01Kill it. Like this one company bought this other small company and I'm like you have 14 different competitors now and it'll never be monetized, right?
1:42:10Can we admit that that's never going to make a dime? Now you could keep it for strategic reasons, but you probably shouldn't spend $10 million a year developing it. And everyone's like, everyone who had ownership of it, no one would just go like, "Yeah, that was right.
1:42:21We screwed that up. We shouldn't have bought that."
1:42:22I love that the successful trader will figure out how to be a successful successful trader, which is he will edit out the stupid he's doing. Yes.
1:42:29He'll just over time every night edit out, snip out some of the stupidity until there's not enough left. Yeah. And he'll be successful.
1:42:35Yeah. I mean, look, like everything around us here, I'm not a viticulturalist at all. I am I don't know agriculture. I'm learning. But I got this place and got here and was very scared. I didn't know how to shut off the sprinklers in this lawn today because it all changed in the last couple weeks. And you learn, you know, you start going around and you start learning. And I I got asked to be the keynote speaker at the um Napa Valley Grape Growers Association this past
1:43:02spring and I said, "Oh, you you've got the wrong person." You know, I I don't know anything about grape growing really and I'm learning and but some of my heroes in this industry are the people who started that 30, 40 years ago, right? And so I'm like, I'm not I'm not going in there and telling Randy Dunn like anything about grape growing, right?
1:43:25And they said, "No, you're the only optimist left here. Like, you're building you're planting grapes and you're building a wine bar in town and you're you bought property when everyone's selling property. We just want to know your why." So, I was like, "Okay, I'll show up." And the first thing I said is, "I know nothing about grape growing. I I hope to learn from all of you. They all big smiles on their face because they thought I was going to get up there and be like, new new rich guy comes to Napa and tells people how
1:43:53to grow grapes, right? And then the software guy, because they all use talk, the software guy is going to tell us that the tasting rooms are doing great now, even though we know they're not, right?
1:44:02Okay. And all that. And what I said was you had 30 years up into the right. You thought you weren't going to get kicked in the face at some point, prices weren't going to go down. Really? Who told you that? Was it the hippies that came here in the 50s?
1:44:13Right. you know, and it's like they couldn't have imagined $38,000 a ton.
1:44:18What makes you think that you're you're owed that? Walked out and people were like, "Yeah, yeah, like let's go." You know, and this cycle is going to be like any other cycle. This time scale is really long. These grapes won't be good until I'm 70. And so, like, that's weird. You can't yell at the grapes and have them grow faster. But the way that they run their businesses can feel different, right?
1:44:40And I think I just gave a little hope in that. Like you have copium or hopeium and I'm more of aopium like figure it out, you know, kind of guy, right?
1:44:48It's like the the Matrix red pill.
1:44:51You choose one of these.
1:44:53We got to talk about Strange House. So, you got to tell this story because this is one of the coolest projects that I hope it happens. Sean, are we going to make this happen?
1:45:01It's got to happen. I mean, you know, how can you listen? You should listen to this podcast and be like, "That guy would make that happen." You know what I mean?
1:45:06Yeah. If anyone's listening to this, I'm going to look at the camera. If anyone's listening, down the barrel, we are building the weirdest, coolest thing. I say we, I we are now after like a couple conversations. Okay, like where to begin?
1:45:20And it's it's just another one of these. You have no business doing this, but I'm going to do it anyways. And I'm going to shoot to the very top when I try to do this. And because of that, I'm going to like I'm going to go figure this out. All right. I'm going to I'm going to figure this out one step at a time. So So tell the back story.
1:45:34Okay. The backstory is I was doing what I do on like a Wednesday night at 10:00 and I I open up a bottle of wine too late and um everyone's like going to bed. I start watching some random YouTube magic thing, you know, and there was a guy who had never seen, you know, comes up on the feed, Nate Stanforth, does the lottery trick and the effect is that he's in an he's in a a theater, they throw around, you know, a beach ball or like a little crumpled piece of paper in this case and six people call
1:46:03out a number and at the end the last person comes up and in the wallet that's been sitting, you know, Yeah. at the beginning he put on a stool on a stool there, you know, that comes up um on stage and he opens up the wallet and he pulls out the lottery ticket from whatever state they're in and the guy reads off the numbers of of the uh what the random people and they're they're genuinely random like you can tell that they are genuinely random.
1:46:30They're not stooges. cuz they're not placing the ball's bouncing around and and the people are clearly you could see the audience going by the time they name the third number like you know that the lottery trick and Nate gives such it's kind of like that that stop making sense empty stage just one stool it's very elegant he's very quiet about not a big fog machine there's no craziness and boy I like this effect a lot but the thing that I didn't like was that he called out the numbers
1:46:59in the order that the audience called them out and every lottery ticket I thought and then I had to look it up. If you buy and I play the lottery for no edge. So, um they're an ordinal number, right? So, if you go in and scratch off a lot ticket or call it in or whatever, it's always going to go from 1 37 whatever. But in his it would go 173, whatever the audience called it at. So, this upset me greatly, right? You know, I was like watching it going like this
1:47:28is like one of the greatest illusions ever given my disorders.
1:47:32It bothered me to no end. This bothered me to no end because I thought he he did such a wonderful thing and then at the end he just messed it up just a like a hair, you know, and so I reverse engineered how I would make that lottery ticket appear in that wallet and starting at the end working backwards, which is kind of like like I look I think of everything like you know those mazes as a kid and there's like the mouse in the middle and the or the
1:48:01cheese in the middle and the mouse in the end. you have to like do the maze, you know, I would always like you're like you're not supposed to in the classroom, but of course you start start with the cheese cheese and work your way out, right?
1:48:12So that's that's it in a nutshell. Start with the cheese and work your way to the mouse, right? And so I did that with this and you know had a reasonable solution I thought for how it would happen, but I was really bothered by this thing. So, I'm like, well, you know, I don't think I'm giving anything away that like everyone knows that the ticket couldn't have been in there the whole time. So, clearly it's getting printed at some point here. I don't think Nate's going to get angry with me on that. So, I was just like, well, I could write like a little Arduino
1:48:41algorithm or however he's doing this for him. And so, I wrote him this long cold email, you know, as I want to do saying, love your stuff. I've I've watched all the stuff now. And like, man, I love that effect. Well, you got to get the numbers right. And much to my amazement, like 5 minutes later, my phone rings. I expect to never hear from this guy cuz magicians also are kind of like, "Who are you that you're reverse engineering my guy on YouTube?"
1:49:07Yeah. Yeah. Some Yeah. Right.
1:49:09And Nate was, "Who are you and what what's going on?" And I was like, "Well, you know, I own restaurants and I'm I'm I kind of like look at magic." He's like, "No, no, this is this is a great email. This is a great like this is weird. like only one other person's ever noticed that. And I was like, and he's like one of the best magicians in the world. Like, you're not a magician. I go, no, this is this is really weird.
1:49:32And then he said something to me that I was really mad at myself for not noticing. And that was, hey, I did it that way, of course, but the audience couldn't follow along.
1:49:45And because two people out of five million noticed the or numbers wrong doesn't matter matters to you kind of mattered to me too when I first did it not the best way to do the effect and I went of course it's not like I just went that's it that I thought nothing more of it right but we exchanged books he sent me a book he wrote called finding real magic he went to India and I read it after he re unbelievable book wonderful guy like great thinker great
1:50:12everything and then he was working as a consultant on building magic for David Blaine. And I went and saw the Vegas show because I I don't go to Vegas. I don't gamble, but my wife and I happen to have to go there. And then we got stuck there for a night. And I was like, "Ah, I know that guy. I know the guy who's working on that." And we went to the Blaine show. And that version of it I didn't love. But when I had breakfast with Nate the next morning and he said, "How'd you like the show?"
1:50:41What am I going to say?
1:50:42Two choices. Be nice. I was nice. Okay, it's not it's not typically me, but I was like, I was great. And he just looked at me. He goes, "Nick, I read people for a living. What didn't you like?" Like instantly. And I said, "Well, I had done another email, but I didn't send it." And I pulled it out and he looked at it. He said, "Did Blaine put you up to that?" And I go, "No."
1:51:04Because Blaine had been to Alinia a couple times. I had never met him, but you know. And I go, "No, no, no, no.
1:51:11that like I just I wrote that like when I got back from the show last night so it was fresh in my head but I felt like a jerk sending it to you and he goes I got to show you something and he had written almost the same email to all the production team like a week earlier and he was like that's extraordinary and then we started talking about the business of magic which I had never really thought about before okay and he was kind of lamenting the fact that the next David Blaine is not going to get minted that kind of TV doesn't
1:51:40happen and he's gotten tons of views on YouTube and it doesn't monetize and you know he's been doing magic and looks at as an art form and a love of his like many magicians and there's this guild of people that do it but they're kind of seen as outsiders right you know it's like you're either the the weirdo that does the kids you know birthday party with the balloons at the end or whatever and a lot of people don't see the art of it and I think he's saw that I did see the art of it and the
1:52:08complexity of it And then I just said to him like, "Yeah, I had an idea years ago for a restaurant that would have a narrative arc through it and people would move through it like Disney's Haunted House." Because one of the problems with the restaurant is you have 50 seats. They're going to sit there for two hours. You're going to get a turn, a turn and a half. Maybe you do 120 people at those 50 seats. Maybe you can only do 75. They're capped by the turnover.
1:52:33Right. I don't think you like caps very much.
1:52:35But the wonder correct. And one of the cool things though about Disney is that the haunted house, you get 30 people, they have a very intimate experience. They go to the next room, they're having another cool experience, next 30 people come in and every 10 minutes, whatever it is. Yeah.
1:52:55And I was like, you know, I wanted to do a restaurant that way, but the cogs were terrible. Like too many variable costs, too many servers, too many rooms, too, it's just is not going to work. And we talked about it for years. I analyzed it to death and I'm like the economic you'd have to charge way more than it's worth to have it work. And that's true of all the pop-ups. Like unless you get an underwriter like American Express or whatever, the pop-ups tend not to work either. Even though they're famous and they pop up all over the world. Um, and
1:53:25people pay $500 to go to what XYZ popup.
1:53:28They don't really make money. That's the weird secret of it because it's the production's too high. Okay. But then I was sitting there going, it would work for magic. The theater scale needs to be different. You know, it's like when you go see Sig Freed and Roy or whatever and a lion pops out, it's not that surprising because there's a giant stage and they can hide a lion. But if we're in a little room and a lion pops out, holy that's something, right?
1:53:52Because that's new. And also the the kind of magic I like the best is close-up magic because I know exactly what they're doing. I know I know how all of it's done at this point in my life. A really great close-up magician is a thing of beauty. It is an art form. It's like watching a great musician or a great ballerina or something like that.
1:54:12It's awesome. I mean, I'm getting choked up thinking about some of these people and what they do to make it happen. It's amazing. So, I say that to Nate and leave.
1:54:22And then he starts calling me with questions. How much does insurance cost?
1:54:26What kind of room? How many square feet do you think we would need? You know, all these things. And we email back and forth. And the day I closed on this and my wife was running, she runs women's hiking groups all around the world. She was on a hike somewhere, I think Portugal, maybe I'm somewhere in Europe. And I was terrified of this whole thing.
1:54:44And I get a FedEx package and it's from Nate and it says, "Hey Nick, thank you so much. This is what I've been working on for the last eight months. Thanks for the inspiration. Thanks for the questions. and here is my proposal for how to do that thing that you told me about and I think it's the solution to everything and take your time reading it. I'm on a 10-day trip to Canada with my family that I take every year and I'll be completely off the grid. So, I'm sitting up there and I got a lot of
1:55:13to worry about here. And I read the whole thing and every like tenth page there was a QR code and you'd look at it and it would be him in his studio with a scale model of a room and the first one when it first came on I just assumed like oh these are videos he's done and but it would be like hey Nick okay room three is the car and I would be like oh my god he made all of
1:55:40the videos for me and then I got to the spreadsheets and and the insurance, all that. And a lot of that was like verifiably like kind of wrong. But here he was doing it all. Like it wasn't just like a business plan of like the thing he was great at. It included all of the things to do a proof of concept that this would indeed be a great business.
1:56:01And I had put a limit, a bottom line. I said, "Look, if you build something like that, it can't gross under 20 million."
1:56:08Like it sounds like a big number, but like when you do the throughput and the math, it's actually not that big of a number at a $120 ticket price or something. And that's what it is, you know? And I started going through like whenever I go to like the sphere, I'm like, what are the economics of the sphere, right? You know, you're not watching the show.
1:56:24I can't help myself, right? So, it was a great business plan. And by the time he got out of the Canadian wild, I had read it like three times. And my first thing I said to him, I was like, "This is the last thing I need in my life right now. But there's no way we can't do this, right?" And that was three years ago.
1:56:41And in the past three years, we have scoured the world for real estate because the real estate is the thing you get married to. It's like the Ray Croc story. Like they're not in the business of selling hamburgers. They're in the business of real estate.
1:56:52I learned long ago that the deal that you make for a restaurant or for a show or whatever, in this case, you are not renting a theater on Broadway. you are building a purpose-built theater that is a small high hoop, right?
1:57:05There are very few people that are going to do that. And I knew the guys for years uh who did Sleep No More and Sleep No More was a similar idea where traditionally the theater is you sit in a chair, it's happening on the stage, you watch the thing, show's over. Sleep No More was like you go to this hotel motel. Yeah.
1:57:24And the play is happening in and around you and it makes no sense. It's not linear. It's like because you go to a different room, a different scene is going on. I don't know what the hell's happening.
1:57:32They're dancing, not talking, and it's Hamlet and like I But the thing was like it sold out. It made like hundreds of millions in revenue, right?
1:57:39Yeah. And it also like the first time I did it, it was like nothing I'd ever seen. And while this is different because it use it utilizes illusion to create that sense of childlike wonder and awe that we were talking about earlier, right? And that's what we were trying to do with Alenia.
1:57:56That's the cheese. as the the customer's cheese that they a moment of wonder and I would I would say that as much as I love AI and I love I'm I I live mostly here I would like to connect my body more to my mind like you know like like I'm not as disciplined about exercise as I should be and things like that but theater great theater great music is about human connection and utilizing illusion now in an immersive thing that you
1:58:25cannot get any other way feels like it's going to be more important two years from now than it is less important two years from now. Yeah. Because more and more and more things are going to go the AI route. They're going to go in the non-person. You know, they don't need to be personto person anymore. Agents are going to be doing things. I love all that. I am all in on all of it. I still believe that sitting down to a table is important. I still believe that growing the wine in 10 years is important. And I want to create human connection among
1:58:54complete strangers because you don't meet people don't meet each other anymore. And all the discourse is that's an other. That person's an other. And I guarantee you, you could take any two people, put them in the environment that we're creating. They could hate each other politically. They could be from opposite ends of the earth. And at the end of that, we need to make them love each other.
1:59:16That's it. And so, how do you do that?
1:59:18Well, creating moments of awe and wonder where you feel like you're five years old again is what Strange House is about. And it's going to be really hard to build and really expensive to build.
1:59:29And we found a space 90,000 square ft underneath Wall Street in Manhattan, 6 months of of negotiating uh the LOI on the lease. Because when you go to a REIT and you go, "Ah, I've got just the thing." It's kind of a magic show, but not really.
1:59:48In fact, there's no magician and there's no stage and it's kind of more like Disney's haunted house, but there's nothing haunted and it's about human connection.
1:59:55Nothing like this has ever existed and so there's no comparables.
1:59:58And they just go, "Yeah, well, we we've listened to your podcast and we've seen that you're successful, but like what do you know about doing this?"
2:00:07And so then they go like, "Well, Nate, yeah." And they're like, "Yeah, you know, he's got some YouTube views. He's a magician. like we don't really want to lease out 90,000 ft to a magician. So then you start talking to the powers that be in other things. So like Alon Lee who's a friend of yours who connected us did Exploding Kittens. I actually play tested that at a thing called ord camp that was run at Google.
2:00:29And you meet these creators, these builders. And the people who build are the people like that that one lot wonder trader guy who you know I sent this to Alain and Alain was like this is what I've been waiting for my entire life.
2:00:44And he goes he tells the same story about magic that I told. And when you watch his videos on how to build games and all that, they are about human connection and about getting a small group of people together and a family together. And my my family, my wife and my younger son do the New York Times cross puzzle every day. They do British cryptic crosswords that I can't remotely get to. And my wife builds puzzles for family Thanksgiving to like do things
2:01:13like that. Uh, so you meet Alain and he has passionately thought about these things and built amazing things. So we're trying to put together the dream team on this and we're running out of time because real estate only sits for so long.
2:01:29Yeah. So I don't know if it's going to happen. Is it going to happen, Sean? It has everything it needs except for a lot of the things that you talked about earlier in this episode which is basically if you look at when you were talking about building the arbitrage and you had to run fiber into the thing and they don't let you have the permit and you bribe the guy with the Jamus.
2:01:47You figure out the way you know it's like okay you do it with the linear and you got no experience or whatever. Okay, we're going to start posting about this.
2:01:53We're going to open source everything that we're doing. We're going to build this weight list so that on day one we have the right people who understand the story and are bought in. You found the way. So like to me the question of is it gonna happen or not is always like a self-reerential question. It's like well make it happen or not. It's like it's the dumb trader will like the dumb theater producer will will not get it done and the good one obviously it's going to get done. Right. Exactly. I I think um choice more than it is a like a question.
2:02:20Yeah. I I think what we're trying to do that's challenging for people to wrap their heads around is it works at scale and not at not scale. can't do a small you can't play test it right like a board game and this is not Alain's problem I'm just using as a as an analogy you know it's like some of the illusions that we've crafted and that Nate has done a technical guide that's hundreds of pages long that we don't want to really show to that many
2:02:48people really smart people will look at it and go how do you know it will work and it's like well we've spent the last three years working on it like we have the best people in the world who build these sorts of things building it like the people who built Taylor Swift stage are going to build room three for real.
2:03:05Like that's literally true. But until you spend a couple million dollars to build room three, you don't have room three.
2:03:13So you could you could make walkthrough videos and VR things and all that. And you know, part of me is is a little bit pissy in that like, well, I didn't know anything about restaurants. they got 28x, you know, and the tech people that I talk to go, "Oh, yeah, well, you know technology, but you don't know theater."
2:03:32And I'm like, "Nah, you said no to me eight years ago and said I didn't know how to build a software company." So, you know, and I get that. Like, that's part of human nature. And then they're kind of like, "What's the point?" And the point is it's going to be a great business. It has the throughput of Disney. It could be like Cirus LA. You could build five of these things, right? But the point is, it's hitting the market at the right with the right thing at the right moment. It's the Gretzky skate to where the puck's going to be. In-person experiences are going
2:04:00to be more important every single year from now till we hit deep like the holiday, right? Like, you know, and this is a different one. It's not a concert. It's not a theater. It's it's it is its own thing, which makes it really hard to reproduce.
2:04:14Yeah. I think people will get it. I mean, I you got it in in five minutes. I was like, "Oh, this is amazing. there's going to be a one in a one in the world type of thing that exists.
2:04:23You read Nate's book, you're like, "All right, yeah, it's doable. Nate's wonderful. This guy's like, you know, he spent his whole life basically preparing for this." So, you sort of figured that part out. Yeah, I think it's going to happen. I think we got to figure out the way. But yeah, I agree. I still feel that way. I'm like, that is the last thing I need.
2:04:37And then every time I pick up the phone, which is every day, and we Nate and I talk through something, I, you know, I'm often walking up the hill up there or whatever with the dog, and I get off the phone, I'm like, man, I need to like we need to start, we need to get the next step because if we don't get the next step, we're not going to get it done.
2:04:54And it deserves to exist.
2:04:57Like it's a great enough thing that it deserves to exist.
2:04:59Well, you found your next boulder for We found We found the next We found the next boulder. Nick, thanks for coming on. Appreciate you, man.
2:05:05Always good to see you.
