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[00:00:00] Colin Keeley: All right. Hello And welcome back. This is Collin Keeley. Here

[00:00:03] Brent Sanders: And I'm Bren Sanders.

we are a two guys buying and building wonderful internet companies.

Yes, sir. And what's happening this week on the, the internet companies Vernay.

[00:00:19] Colin Keeley: Okay. Normally you do then show I can do it. So we got one, a bigger deal under LOI and this one we're playing it a little differently as far as like due diligence and stuff. And so basically we heard this from a competitive firm, how they'd like to do it. Basically act as the owner right away. So you jump into their slack, you jump into all their meetings and it basically makes the transition period much longer.

So you get introduced as the owner and, kinda the goal here is like in the investor community. There's always the talk of as soon as the deal closes, there's that oh, shit. Board meeting. The other few jobs, you find out all the things that you maybe wanted to know going in. And this is a different, so the goal here is avoiding that OSHA meeting and, the reality is all these companies were buying at this size.

Like they're not perfect. And if it was a perfect company, we couldn't possibly afford it. So really just understanding those issues.

[00:01:13] Brent Sanders: Yeah, the deal has to have hair on it.

[00:01:14] Colin Keeley: It does for us to be able to buy it or else it'd be like, a a hundred times revenue, multiple, or like a multi-billion dollar company.

[00:01:21] Brent Sanders: And if it didn't have hair on it. Yeah. I don't know that we would do it either. I don't know that we would be in this space cause that's, that seems to be the most interesting.

[00:01:32] Colin Keeley: Yeah. There's a reason they're smaller companies, and not huge. There's clearly flaws. They're not, not perfect if there were perfect. I don't know. I don't think a single perfect company exists. They're also growing so quickly that it's they never possibly sell out.

[00:01:45] Brent Sanders: Yeah. Yeah. It's a, it seems like a really interesting methodology, to be able to try before you buy, but there is a good part of it. That's the commitment backwards. Hey, we're going to tell you. We're going to make this proclamation, this affirmation in front of everyone else.

And, there's no easy outright. There's no, we're making a commitment, which I think is a really good way to do it. It's like you have to have a certain amount of underlying trust to, to start a deal.

[00:02:13] Colin Keeley: Yeah. I heard this crazy,

stat on Twitter this week that only 25% of Lys close, which is apparently a search fund stat, which seems wild. So we've never failed to close an LOI. On our end. We always enter with the intention of closing. We had one seller backout which you talked about last podcast.

At 25% just seems so, so low, but maybe that is the case.

[00:02:34] Brent Sanders: right? Yeah. I guess it's the commitment part. The visibility part is great as well. Cause like you're going to find the information eventually. And so it's like your best to get it all out in front and early, right off the bat, so you can start talking about how can we get this deal done instead of like, how can I get out of this deal?

[00:02:52] Colin Keeley: Yeah. And you then, otherwise you have this very brief transition period, and then you're on your own. Like maybe you could pay them to continue to advise you and help you. But, I would like to not be on my own until I, know as much as I possibly can.

[00:03:06] Brent Sanders: That's one thing that I find interesting is I always saw that, like empire flippers or those kind of early. Business, internet, business websites, where it would a big part of the deal was how long the owner is going to stand for. And I'll give you this amount of time and then you pay X rate, then Y rate, then Z rate, and then I'm done, you'll never hear from me or I'll give access to my development team or something like that, where you're implying someone else's participation, which I always think is bullshit.

Like you can't guarantee me. Somebody that doesn't directly work for you doesn't directly work for you is going to fulfill some obligation that you made for them. It's that's never going to have.

The other thing is we haven't really looked at any businesses that are from a technical perspective that are like, Like we've never come in and just said Hey, we don't really care what the tech is. We want these customers, or we want your, some assets you have versus I think that's where these, deals are always the most interesting from a technical perspective, but it's always been in the spirit of, Hey, we're going to try to preserve all these different sort of, code bases and give them a better place to live in these, the software.

Custodianship. We were trying to make these better products, long-term versus hybrids would come in and rate it.

[00:04:17] Colin Keeley: Yeah, that is more of ESW of like how broken of a tech product are you willing to go? And they will go like all the way broken they'll take on like the crazy tech debt and get it for a crazy multiple, understandably. But it is. Some of that or all of it mostly falls on you. I don't have anything to add in that person.

[00:04:35] Brent Sanders: Brutal. Yeah. So let's talk about that a little, that's funny. Have you ever signed up for a service that you later found like as you logged in and you were getting charged monthly, like it just totally didn't work.

[00:04:46] Colin Keeley: Our payment processor and NCR, like of trying to grab reports for a month and it literally just doesn't work. I can do it for two days at a time.

[00:04:55] Brent Sanders: Yeah.

[00:04:55] Colin Keeley: that is the only one I can think of. And it's a monster company, like a multi-billion dollar company.

[00:05:00] Brent Sanders: Yeah.

[00:05:00] Colin Keeley: Have you ever had that experience?

[00:05:02] Brent Sanders: I have, yeah, I think it was like a type of service that was supposed to be, you sign up for once. Cause it's God damn it. I have to fax something. Not working in an office and just having a laptop, sign up for something quickly. And this is probably in 2007 and you come back to, to send that one fax a year and it doesn't even work.

And you're like, I've been paying for this. You can't get, there was other stuff that's happened too, that I've seen, that has been purchased. There was a company GoTo meeting. I feel like it was like one of the first really easy, just, Hey, let me share my screen with you. Cross-platform software products.

And it was like, It was great. And then Citrix bought it and then it just slowly declined. And eventually these services became free, but also, zoom came out and slayed everybody.

[00:05:44] Colin Keeley: Anything else they add on this? Or you want to talk about constitution Dow? Since I think we started that last podcast.

[00:05:50] Brent Sanders: Oh yeah. Yeah. So let's talk about the biggest UX blender of 2021.

[00:05:55] Colin Keeley: So first how it played out for the people that I don't know weren't listening. So we had our total, which is ended up being like 40 million or something. And then I think, You have to take 25% of that out in fees. And we ended up losing to, Who a famous founders, Citadel and recurring villain to internet, groups everywhere.

So with the big game stop debacle. He was on the other side of that kind of screwing retail traders. And then again, he, I don't know if he just hates those internet kids, but he swept in newer, highest bid and bid like a dollar more and bought it. So definitely like the most entertaining, possible outcome, but that one.

[00:06:34] Brent Sanders: Was liquidity that the difficulty or is a seriously, they couldn't get the gas fees.

[00:06:38] Colin Keeley: So the situation was, Ken Griffin knew how much money we had in, Sotheby's basically required the theory and to be turned into cash. And so there's no ability to add more money. So Ken, who is like the, one of the best traders of all time, and you're like our highest bid. He's okay, thank you, everyone I'll do bid, $1 more. Tomas had a really good point where he's I could have been, like they should have given all the money to me. And I would have had the ability to bid more, in bid to a higher number. But the, basically the way the whole thing was structured was we had no ability to add more money. And so we lost obviously.

But the bigger thing was. The team behind it, they were super young and inexperienced and they definitely set this up as a joke and it really took off. And then there's, $40 million in Ethereum sitting in this account. And they're like, we're going to turn into people or we're going to turn into we, the people and had different names for the tokens they're going to do.

And they had no plan for it. So on Twitter Saturday morning is when I make my like crypto trades, because they asked me is the lowest and I'm awake. Cause I'm going to go play basketball like a little after that. And so I very responsibly after they just tweeted out, Hey, we're not going to do anything with the people tokens, like just go redeem.

Your funds is like, fine. I'll take out my 300. And so I paid my 50 bucks redeemed by a little bit of money and, went along my way. And then you messaged me, five hours later, what happened with you?

[00:08:00] Brent Sanders: It was, just watching what was happening. I'm not going to admit to, any particular trades just in case, somebody was trying to interpret this as investment advice, because this is not what's on this show. We're not making investment advice. But yeah, it turned them into coins.

They went up like what, 200%. And they stayed up for a little bit. But if it's a similar to what happened with, Ethereum names versus, airdrop where it's like, Hey, we're going to convert this to something else. There's a way to get converted into tokens. So I started seeing all these tweets after that about people, What they were, they didn't know how to use the user interface.

That was the craziest thing is if it was like, do you want to claim a redeem? So those, I don't really know the difference between those two words. And then the way that UI set up was set up, it was like people thought they were converting them to people tokens. And it's just furthers the fun of cryptocurrency, which is I feel like we're all playing like an interactive version of the Oregon trail.

It's like very primitive. The way that you're moving things between the different blockchains and the tools that are available to support it right now are so primitive that it reminds me of the apple TV a little bit, but it's exciting. Cause you're like, oh, I get how this could work.

Yeah, the people token, I think has now gone to zero. Is

[00:09:13] Colin Keeley: Oh, has it.

[00:09:14] Brent Sanders: is it, I don't know. I'm asking, is it an official shitcoin.

[00:09:17] Colin Keeley: I would argue is always a shitcoin.

which is why I responsibly took my money out. But, everyone else on Twitter who did not do. They were saying like $200 would have been like $10,000. So many of them just, redeemed it for people and then immediately turned that into theories and got out.

So that was, I would say far more wild than the CNS job. Like all these people made so much money after they were expecting to lose like 50% of their money in gas cities.

[00:09:43] Brent Sanders: So all these people pumping this thing up and then selling off is I think what to expect out of, this crypto market and specific, maybe even like retail trading similar now where people have this expectation of everything's going to have a pop to it.

It's it feels frothy. So

[00:09:58] Colin Keeley: Yeah, it did cross my mind. If you get in and almost any like reasonable token early, it's a super liquid market. So you hear about it first, then other people hear about it and then they start by. And that just like functionally makes the price rise. So I did think oh, this people token is just launching.

I got like in the launch phase of it, it's almost certainly going to.

go up and then I could get out. And then it was just like, ah, this is it. I can do anything. I'll just take my money out. But it was crazy.

[00:10:24] Brent Sanders: Yeah. That's the thing though. It really is true. Like these, anything that pops up is going to have a certain, I think I saw Busta rhymes, pumping some coin the other day and it's I love Busta, but everybody's got a hand in this and it feels like that coupled with COVID is also a little kind of freakish where I don't know if you have any friends that have just gone off the deep end during.

But, I have a couple and they all seem to be fully into this sort of going to the casino. They call the casino, closing it at three. it's like the stock market and the crypto market coupled with this, like everyone's staring at their screens and at home is just creating like a weird time.

And I feel like there's, everyone's talking about this rumbling of things are gonna, the ball's going to pop, I think who was it? Charlie Munger was on, was interviewed some panels saying he's he applauded China for banning cryptocurrency.

[00:11:16] Colin Keeley: I've seen him say things along those lines, he hates it. But I dunno if I'm taking, latest technology advice from a 97 year old or whatever, although

[00:11:25] Brent Sanders: he's so successful. You can say exotic, my mother he's so successful. He knows what he's doing T does. But yeah, that was, an interesting statement, but the guy definitely knows something about markets, so you can't really just dismiss him cause he's old, but still it's like, there's something to this that feels very, it's exciting, but it's also a little, uncharted territory.

[00:11:46] Colin Keeley: Yeah, I have this theory that like the internet and algorithms are driving everyone crazy, which seems to be the case. So I have, like the one example recently was, is an outdoor farmer's. And this young woman with two masks on was like, I got to get out of here. She actually said this out loud. We got to get out of here.

We're too close together. It's no one was in like 10 feet of her outdoors and she's mast and everyone has vaccines already. I think a lot of people, I get so deep into the news that they credibly think like COVID is a hundred times where dangerous senators are a thousand times more dangerous and people just live in such fear because they're like so deep into the news.

And the other example of this I have is, so my wife is a pediatric neurologist. And this was a big story in the wall street journal recently as well, where a tic-tac and ticks are like a big thing, like Tourette's syndrome ticks. And a lot of teenage girls are so deep into tic-tac that they start effectively mimicking these texts and it's called a functional neurological disorder.

So they are behaving as if they have these ticks, but then they go in and see a neurologist and the neurologist is get these aren't ticks. Like they're far too complicated. Like one of those. Famous influencers, yells out beans and like a British accent. And so all these teenage girls are coming in, yelling out beans and a British accent as like it's their tick.

But then they, they deliver the news and one of the parents is normally oh yeah, I kinda thought it was all made up. And then the teenager generally like shuts down and, mostly stops doing the text, but not completely. But it is a real disorder. It's wild, functional neurological disorders.

[00:13:19] Brent Sanders: What age is this typically around

[00:13:22] Colin Keeley: Teenage? girls is what they say. So I don't know what teenage would be 13, 18, or something like that.

[00:13:27] Brent Sanders: I have a two-year-old and he will repeat stuff until it, yeah. I could see that. I could see the sort of just, you see something enough and you mimic it. It's like a, it's almost like our lizard brain kind of just, nah, we need some sort of, some rhythm.

I don't know, but it's, it sounds sad. It sounds, I feel bad for those kids, but also gotta have some time away. Devices. I'm not really sure what to say to that comment.

[00:13:48] Colin Keeley: I think it's just yeah, I don't really blame them. I think it's, our brains Are just like, not built to handle this like feed of information. And like the media is designed to, enraged basically. And it's very effective at doing that. And if you spend all day staring at a screen, like it's just a feed of information to your brain, that is not well-equipped to.

I don't like the only advice I have is interact with people in person. You'll get outside, see the sun, eat healthy, sleep well, exercise, all the stuff that we were more designed to do.

[00:14:16] Brent Sanders: Are we designed to sleep? I don't know if I get, I have not been getting good sleep. I'm just going to say, and I'm not doing anything wrong with calling. I got two small kids. It's just not happening for me.

[00:14:25] Colin Keeley: And if that's the pushback I always get, I don't have any kids yet. And boy, yeah, everyone, that's a young parent or parents of young children. They pushed back at me.

on Twitter. Whenever I say anything like that.

[00:14:34] Brent Sanders: Yeah. I'm not doing anything wrong. You're making me feel bad.

[00:14:37] Colin Keeley: Anything else you got?

[00:14:38] Brent Sanders: No.

[00:14:40] Colin Keeley: All right. Take care, everyone.

[00:14:43] Brent Sanders: Thanks for listening.

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