These old school businesses are making millions

The speaker highlights common entrepreneurial pitfalls, emphasizing the trap of prematurely abandoning growth channels like Google Ads after a superficial attempt. He advocates for rigorous testing and data analysis, suggesting that even seemingly failed strategies might just require proper execution and iteration. The discussion then shifts to the importance of "dogfooding" one's own product, urging entrepreneurs to personally experience their offering from a customer's perspective to identify and fix pain points.

A key principle discussed is the value of intentional differentiation, using the "purple cow" concept to illustrate how being uniquely different can be more effective than optimizing for the average. This is exemplified by The Onion's successful return to print, a contrarian move in the digital age. The speaker also explores the potential of physical media and curated content as a way to combat digital fatigue and offer high-value information.

Finally, the conversation delves into the future of education, highlighting Alpha School's innovative AI-driven, personalized learning model that integrates academic rigor with life skills. This is contrasted with traditional schooling, with an emphasis on how AI can address the "two sigma problem" by providing tailored, mastery-based education to individual students, preparing them for a rapidly changing world.

• Entrepreneurs often abandon growth channels like Google Ads prematurely without proper testing and data.
• "Dogfooding" or using your own product is crucial to identify and fix customer pain points.
• Differentiation ("purple cow") is key to standing out in a crowded market, rather than just optimizing for the average.
• Physical media and curated content offer a valuable alternative to digital overload and can create a strong brand.
• Alpha School leverages AI to revolutionize education, offering personalized, mastery-based learning that integrates academic and life skills.

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Common Entrepreneurial Traps [0:00]

• Many founders write off obvious growth channels with the internal narrative that "we tried it and it didn't work."
• The speaker is skeptical of the phrase "it didn't work" because few people truly test things to the point of definitive answers or iterate enough to know for sure.
• Trap #1: Looking for the next fancy thing when the obvious, proven channel (like Google Ads) hasn't been done properly.
• Example: A mobile emissions testing business tried Google Ads with free credits, didn't set up tracking, got anecdotal "lower quality leads," and abandoned it, missing a prime growth opportunity.
• The speaker admits to making this mistake himself, where if something didn't work in the first few tries, he assumed it wouldn't work, when in reality, it might take 50-100 attempts (or more) for an ad to succeed.
• The solution is to write everything down, use the Socratic method on yourself (e.g., in a Google Doc) to ask probing questions about what happened, what data exists, and what the real learnings are. Writing forces clear thinking and exposes sloppy reasoning.

"It didn't work is a sentence I'm very skeptical of."

"writing forces clear thinking and it just highlights sloppy thinking because you can't fill in the gaps."

Dogfooding Your Product [14:27]

• Trap #2: Not "dogfooding" your own product, meaning not using your product as a customer would.
• The speaker suggests mystery shopping the product as a quick test for founders.
• He observed that the mobile emissions business wasn't even in the top organic Google search results, nor were they utilizing the Google Business Profile effectively.
• The value proposition of saving time wasn't clearly communicated on their website.
• Entrepreneurs often fail to see problems within their own core product flow because they are too close to it.
• The advice is to focus on becoming more visible, making the value proposition more compelling, and ensuring clarity for the user.

"you got to walk through your product from the eyes of a user and face the pain."

Decision-Making and Deliberate Practice [23:19]

• Trap #3: Focusing on expansion before fixing and optimizing the core funnel, or making decisions based on perceived ease rather than true value.
• The speaker uses Charlie Munger's quote: "A smart man does first what a dumb man does last," advocating for taking the harder, more foundational route first.
• He regrets not scaling his own businesses slowly city-by-city initially, but prioritizes the "fun" of rapid scaling.
• The principle of "Train Hard, Win Easy" applies to decision-making; the personal judgment function needs regular exercise.
• Tools to improve decision-making include writing, understanding personal biases (e.g., bias towards easy or fun options), and recognizing how fatigue or poor state of mind (like being sick) severely impacts judgment.
• He emphasizes the importance of getting into a good state of mind before making important decisions.

"Fatigue makes cowards of us all."

Traits of Successful People [30:06]

• The "Triple Package" theory suggests ultra-successful people share three traits:
  • A superiority complex: Believing they are destined for greatness.
  • An inferiority complex: A drive to improve due to a feeling of not being good enough, creating urgency.
  • Impulse control: The ability to manage urges and not let emotions dictate actions.
• The speaker agrees with these traits and notes that improving one's decision-making muscle is an underinvested area.
• He also brings up Chris Spalling's point about critically evaluating the lessons learned from failure: "Are you sure that's the right lesson that you should take away from this situation?" Many people extract the wrong lessons.

The "Purple Cow" and Differentiation [35:25]

• The concept of a "purple cow" (from Seth Godin) is discussed: being different is better than being better.
• Example: A runner excelling in marathons while wearing blue jeans.
• The speaker argues that constantly A/B testing everything can lead to bland, average results (likened to "Pornhub" – if you test too much, you end up with extreme versions that appeal to the lowest common denominator).
• The Onion's Print Magazine: Despite being a digital-first era, The Onion successfully relaunched its print magazine, attracting 53,000 paying subscribers and tripling its revenue. This highlights the power of a physical, differentiated product.
• Curated Physical Content: The idea of a high-value, physical newsletter or curated package of reading material is explored. This could be delivered monthly for a significant fee (e.g., $1,000/year) for busy professionals or high-net-worth individuals, offering a break from digital overload.
• This model relies on trusted curation and storytelling to explain the importance of the content.

"in order to stand out, you have to have it's better to be different than it is better."

"If you split test everything, you're just going to have porn."

The Dairy Delivery Business and Nostalgia [57:00]

• The speaker recalls the nostalgic experience of milk delivery in glass bottles from Oberwise Dairy.
• He sees potential in reviving this model, especially with the resurgence of dairy and the consumer desire for nostalgia.
• The idea is to focus on high-quality dairy products, potentially similar to premium brands like Strauss Farms or Snake River Farms for beef.
• The counterpoint is that delivery-only milk might not generate enough revenue to cover logistics, suggesting a broader approach of building a premier dairy brand for grocery stores.

Critique of Cracker Barrel's Rebranding [1:05:45]

• The speaker criticizes Cracker Barrel's attempt to modernize its interior, arguing that its "disgusting" or unpolished aesthetic was part of its charm and appeal to its clientele.
• He suggests that "worse is better" in this context, implying that trying to be too polished or "hip" can alienate the core customer base.

Alpha School: AI-Powered Education [1:08:00]

• Joe Lonsdale, founder of Trilogy Software, has invested $1 billion in Alpha School, an educational model focused on AI-driven, personalized learning for K-8.
• The "two sigma problem" (students in one-on-one tutoring achieve 2 standard deviations better results than in traditional classrooms) is addressed by AI tutors that can create custom lesson plans and ensure mastery.
• Alpha School students spend two hours daily on iPads with AI tutors, learning double the material, and the rest of the day on "life skill workshops" like public speaking, entrepreneurship, and outdoor education, building grit and adaptability.
• An example of a second-grade class successfully training to run a 5K in under 35 minutes is given to illustrate breaking down complex goals.
• Lonsdale considers Alpha School his "best product ever."
• The speaker shares his personal experience with a similar reading app (Menava) for his children, highlighting its effectiveness despite a "janky" interface and high cost ($500/month). The app uses spaced repetition and adaptive learning to teach reading.
• There's an acknowledgment of parental concern about screen time, but the argument is that kids are already on devices, so the focus should be on the quality of content.
• The model anticipates students performing exceptionally well on standardized tests like the SAT and ACT due to the advanced learning methodology.

"This is the best product I have ever built by far."

"The problem with traditional school is you pass if you get a C. A C is about, you know, 70% or better. Well, what they've shown is that you if you get a person to 70% or 72%. Basically, their rate of learning as they progress will always like decrease because 70% was actually a bit of a shaky foundation."

Alternative Schooling Models and Personal Experiences [1:35:30]

• The speaker discusses his brother-in-law's "Grind Academy" in Las Vegas, a sports prep school that combines homeschooling with rigorous athletic training and life skills workshops (e.g., starting a YouTube channel, AI, drone tech).
• This model aims to address the perceived slowness, boredom, and irrelevance of traditional schooling for talented young athletes.
• The speaker reflects on the overwhelming nature of choosing educational paths for children and the potential for parents to empathize with their children's experiences.
• He contrasts his positive experiences in a structured, all-boys Catholic high school with the overwhelming scale of large public schools, citing examples of disruptive environments and scheduled fights.
• His move to an international school in Beijing provided a fresh start and a higher quality of education and experience.
• The episode concludes with a return to the idea of brainstorming and sharing old-school ideas.

"I'm very eager to see how like some rat like if you told me about this school 12 years ago, we would said you're insane. What are you talking about?"