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Josh Buckley

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2021-04-27
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2021-04-27
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  1. “May sound trite, but it's my parents. I grew up in a family that loved me and gave me freedom to pursue whatever life I wanted. They did not stop me doing things that ultimately at the time looked weird. Like it was a much more fringe thing back in 2010 to not go to college and to Silicon Valley than it is today. Probably made no sense to them. It was what I wanted to do. And I think consistently throughout my life, they have just given me the freedom to both fail and to do what I wanted. I've always known that I've had that basin foundation and I think that's one of the luckiest things I could ever have having such a solid basin foundation. I can take risks like that and I always have that unconditional support.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “I think it's inevitable that the forces are just too strong. I mean, if I were capable enough, I would really try to push for more growth in the physical world. And I'm so grateful we live in a time where we have Elon Musk, who's trying to get us into space and kick off real growth and real innovation out there. Because right now, it's all happening in the world of bits. I think until we have that, and I would love to invest in more things actually provide real growth in the real world. Until we have that, I think the tectonic forces are just going to suck us deeper and deeper into the digital world, which I live in here. And I think it's fun and exciting, but I think it really is some form of illusion. And I think people mistake it for being real. I think that leads to some pretty big structural risks. It's inevitable, but I would love to be part of more things that create impact and growth in the actual real world.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “But it's not real at all. And I think we're going to start to see things break over time as artificial intelligence becomes super intelligent. We're going to start to see things like trillions of deepfakes where 95% of the images on the internet are fake. I think the digital world is much more suited to machine-to-machine communication than humans in a loop really just start to slow that down. I think we may start to see people want to take a step back over time from the digital world. And I think there'll be some form of physical renaissance over time.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Think there are actual forces sucking us into this digital world. The physical world just isn't growing fast enough for the financial system to keep up. It's something that you might hear from Peter Tiel is if you set in a room today and took away all the screens, it would look like a room from the 1970s. The only difference is the screen. But imagine if we were to invent, say, a teleport machine. We would spend so much less time online. We'd spend all our time teleporting around the world planes on as fast as we thought they'd be. There just hasn't been the growth that we anticipated or expected in the physical world. So all the talent and money and time is shifting into the digital world because the economy is rewarding knowledge work. It's where all the productivity is happening. My worry is that the digital world and the virtual world is a bit of an illusion. It's like a hallucination. It's very convincing.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “One idea I'm currently wrestling with is that, and maybe I'm overfitting my video gaming lens here, but basically that today's reality is akin to a giant NMO video game that we are living in a massively multiplayer online game. We have the two parallel worlds today. We have the physical world and the digital world. And I believe we're already in the matrix. We're already in this massively multiplayer online game. The boundaries have really blurred. Our lives have shifted rapidly into the digital world. More than half of our waking hours are on our screen, on our smartphones, our laptops, our smartphones are in a physical extension of ourselves. They're part of our brain. Over half a billion people are actually living.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I think people who do truly great work are much more intrinsically motivated. The act of doing the work itself is the reward rather than doing an activity in order to attain some separate outcome. When you're intrinsically motivated, you don't necessarily care what other people think. You're just in a state of play and you love the game. It's kind of like playing the piano because you love it rather than because of some external pressure, like maybe your parents telling you to play. And I think we're all born this way as kids. We're born to learn, to explore, to be creative until the pressures of society start to kick in. I think it's important because doing great things is really important. And there's going to be many times when And I think great that the external world is telling you. Not worth it, so Sustainable source of motivat”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “So I think there's nothing wrong with wanting to make a lot of money. It can motivate people to go do and build amazing things. And for most people in business, the motivation is some combination of money, power, social status, or say impact. And I think people tend to oscillate or switch through these motivations as they progress in their careers. And we also imitate and mimic the desires of the set of people around us. I think it's important to realize that money doesn't make you happy. Money just solves your money problems. I think it was Paul Graham who said that as you climb Maslow's hierarchy of needs, you start to find out how few of your problems are just money related. You can only sleep in one better time. You can only drive one car. I think maybe a more interesting question is what motivates people to do truly legendary work?”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Whether it was PayPal at the time, Braintree, etc. But the pitch, at least publicly, if you weren't looking under the hood, it did not have the cachet externally that it does today.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “In hindsight, I mean, take strike as an example, fintech in 2010, 2011 was not a clear thing. I remember going on a walk with Paul Graham back in 2011 when I was going through Y Combinator and starting a gaming company and he paused me like mid-sentence and was like, Josh, you should go start a payments company. I was very set on being in gaming. I did not have any interest. But at the time, fintech was kind of this has to say like a cottage industry where there had been no precedent set for this to happen. The idea that you can go compete with PayPal or any of the existing incumbents as a small startup was just beyond reason. It's one of the first things. Second, I think there was a kind of received wisdom that is just a very unattractive space to be in. The margins are tiny. How are you going to kind of build a big business out of these rays that thin margins? There was just no precedent for doing it at the time. There were these large incumbents.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “17, he drove me up here from Los Angeles. And what is incredible about him is that consistently over the last decade, he has pointed out things to me such as stripe, plaid, ethereum, all these things that at the time looked really weird. This was Stripe in 2011. This was Ethereum maybe in 2013, et cetera. They looked really weird at the time. And then maybe three to five years later became incredibly consensus. What that taught me was like, one was, gosh, I need to spend more time paying attention to the things he points me to, but second was just a huge amount of respect for things that look weird at the time potentially contrarian because those things, ultimately the biggest outcomes in technology adventure, all of them looked really weird early on and they were none obvious ideas whether it's Bitcoin, SpaceX, Uber, Airbnb, they were in that intersection.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “First is Gabriel Leiden. He was a competitor of mine. We were both running free to play gaming companies and throughout the 2010s and he ran the number one and number two grossing apps in the app store under Machine Zone, built a multi-billion dollar business doing so. He wired my brain in a big way understanding thinking in terms of systems. He is by far one of the best systems thinkers I have ever come across and both entered an industry that was entered the free-to-play gaming industry and brought complete first principles thinking to the space and built products that just ran circles around everything else out there through the systems he built and optimized. Someone I talked to every day to just rewire my brain in the same way. Another person is Richard Burton. Richard is a close friend of mine where I met him in London when I was a teenager and when I first came to San Francisco and I was”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Another one, then I think is becoming more trite is artificial intelligence. I think we're seeing it play out in a number of industries where applied AI to certain industries is going to make a product. Data set and incredible models, you can frankly build a product that just out competes anything in the market. And I think the question is, does that apply to everything or where is that best applied?”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Are heavily incentivized to make this work? I think you see this with Bitcoin where the more people that own Bitcoin, they are heavily incentivized to spread the gospel of the good story of Bitcoin, right? And to get that next person to buy in, which is potentially the kind of story that never ends. I think you may see that play out in many other industries. And I think the question is, where does that most apply? So for me, it's really about what fields does it change both the system in and does it meaningfully improve that industry enough to actually get that industry to flip in a meaningful way?”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “I think for anything to work in a big way, it needs to be substantially better than what exists out there. Do I believe that our existing payments, rails, and infrastructure will be replaced by crypto? Probably not. I don't find that crypto is better by such an order of magnitude that we need to rip out our entire payments infrastructure. I think it's kind of like seeing mobile wallets take off in emerging markets because a lot of these emerging markets never necessarily have credit cards, et cetera. They will make the leap far ahead of what we've seen in the West because the kind of delta is that much greater. I think the fields in which crypto will win first is where they just offer so much greater value than what exists out there today. And I think where that will take place first is in the spaces where crypto actually flips the economic model of an industry or market where now you have a base of a million people that feel like owners of your business.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “By using that product, you are heavily incentivized to actually make this succeed over Google. That idea can apply to every field, and I think we're starting to see very, very early innings of that play out. I also think it completely changes incentive structure for talent. The amount of developers that have made fortunes working on a crypto protocol in comparison to stock options I think is going to skew towards the protocols. And we're seeing early on this liquid quickly, the dynamics in general are just almost better in every single way for a developer working on a protocol where the question for me over the next decade is what startup spaces are not going to be disrupted by some of these protocols.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “The one I'm paying a lot of attention to is crypto, and maybe for a slightly different reason some others, where I think we're seeing it potentially flip a lot of the business models we've seen historically on the internet on its head, both through crypto and NFTs, I think we'll see many business models potentially get disrupted that have historically been staples as traditional startups. First, I think it will change a typical model from software as a service where software is something you come and pay for to potentially software as something that makes you money by using it. You get paid to use it. If that dynamic works, it can completely change the model for many different markets and industries. Imagine if your users are making a lot of money by using your product, creates an incentive structure for them to make sure you succeed. Imagine if the next Google launch that you actually made money because you owned a”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Product hunter is essentially a city on the internet that celebrates new emerging products. It has been around since about 2014 and over that time so many of the most exciting venture businesses we see today launched on product time, whether it's Notion, Airtable, Zoom, Robin Hood, Coinbase, all of them got their start very early on launching on product timing. Even today, we see Stripe and Zoom, et cetera, come back to do launches to our community. So it's this incredible community that has millions of people coming every month to see what is the latest happening and launching within tech and startups. It was acquired by Angelist many years ago and I approached the company last year because I just saw all this untapped potential there, both investing in developing new tools for that community and expanding the city. It's clear that there is this incredible energy there and so much magic has come out of there, but there is so many different directions.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “That's what we saw with the last generation of great firms like Don Valentine, the founder of Sequoia, was an executive at National Semiconductor or Tom Perkins was an executive at HP. I think it's really hard to both build and scale a flywheel in a space, in large part because it's such a people-driven business. partners you can attract but i think with all the change in the space with all the competition we're going to see a lot of innovation and like new models and brands being built in this decade there's no rules for how this has to work”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Have built just as strong a brand as institutions Work really hard to win and establish their brands. I think this is driven by the fact that startups are growing faster than ever. You can tap into global markets instantly and fast-growing companies today could hit a billion revenue in seven or eight years versus it took HP 25 years to get there. The real flywheels in the industry are beyond brand. This is a service business at its core and it's a relationship business. The job really comes down to how do you attract the next generation of world class founders and how do you be the most desirable partner to them? So a founder is really making a relationship decision. Is this someone I want to spend the next 10 years working with? I think the strongest partners have some kind of operational background rather than just having a reputation for being a great investor. So they may have ran a P&L in the past or founded a company.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “50 or 100% premium on their valuation. And over time, YC builds this amazing alumni base of founders that actors are great channel to help each other and a great channel to sell products to each other. And what's great about this flywheel is it's highly scalable. Like they could fund a thousand or more companies per year by doing this. I think we're seeing a lot of change in the industry right now more than I've ever seen. It's clear that software is just taking over our entire economy and we have many decades of runway to go. We're seeing as a result thousands of new investors come in at the early stages and even at the top we're seeing like large crossover funds come down into the private markets with all these new investors the market's getting more competitive than ever and we're seeing brands being formed faster than ever too like Andreessen Horowitz has become a tier one brand in a decade and we're also seeing individuals”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “So, I do think there are firms in venture with strong flywheels. It tends to be centered around having a strong brand that then goes on to compound on itself, having a strong reputation for partnering with the best companies tends to attract the next generation of top founders and partners. And that makes the brand grow even stronger. So it creates this nice flywheel effect. We've seen this with the top firms that have built brands over decades with this flywheel. Like some of today's top firms were formed in the 60s, like Greylock and Sutter Hill, or Sequoia and Kleiner were stuck in the 70s. Another example of a strong flywheel is Y combinator. They've probably built one of the best flywheels. Our industry has seen where it's become like a shelling point for early stage founders. At this point, the program basically pays for itself because a founder going through a YC's demo day may get”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Takes vision, right? It takes belief and some potential optimism. Ultimately, that is where you get paid for taking that risk and taking that belief and chance. But I would say that is one of the things that makes venture capital different, where you are betting on the future looking different from today. My job is both taking that leap and believing that this is creating real value in the world and this is creating something that the world wants and needs. That takes a healthy dose of belief. And that's where I draw back into the systems thinking where ultimately the best flywheels make the next step of the flywheel almost inevitable. If Amazon increases the buyers coming to the platform, they can lower prices. That makes it almost inevitable that more buyers are going to come to Amazon because they're known for having the lower prices. So what I like about the systems is that it lowers the amount of belief I almost need.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Three really strong pillars that feed into each other. You have the healthcare practices, doctors, you have the developers building products on top of it, and then you have the consumers who are actually engaging in the ecosystem. And each of them feed each other.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Is using that platform. They are also integrated with the vast majority of EHR systems and continually building integrations day by day. What that gives them is this opportunity to launch an API for developers to build healthcare products. So now a developer can build a healthcare product that integrates with all the EHR systems out there and has access to healthcare practices in six weeks instead of 18 months. So you can think of it like a plaid for healthcare. So now they have very large developers building healthcare products on top of NextLe CAPI. We're talking large public companies are building healthcare products. And then finally they have the third pillar of their ecosystem which is the patients. They have tens of millions of patients going through this ecosystem over time. They can launch a number of things because they have the direct line to these patients and the information and they sit within marketplace with”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Shows up in a lot of my investing. One example is a company that I have invested in called NexHealth. So Nexhealth has the epitome of this incredible flywheel. NexHealth starts off as a SaaS platform where they approach healthcare practices for the SaaS product. And this product instantly digitizes and monetizes their business overnight. You go from being an analog healthcare practice where you need a receptionist logging into your on-premise EHR system and can only book nine to five whenever someone is in the office. Putting next health in your practice instantly turns you into a one medical style practice where you get instant online booking, payments, marketing, everything. You're brought into the 21st century. That is going to be an amazing SaaS business on its own. But where this starts to get really interesting is that NextHealth now has all of their healthcare practices. Today it's thousands and thousands of healthcare practices.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “So it may be far higher leverage to focus on those core customers. The customers are actually going to stick around and are willing to pay a lot more than, say, the other 90% who are much more fickle. But if you were just to focus on the averages across your business, it may mask these nonlinear relationships.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “Multiply it and our brains aren't really wired to understand nonlinear systems. Many of our historical systems are brainlinear, like manufacturing or agriculture, where the inputs can equally reflect the outputs. You plant more seeds and you get more grain. But technology businesses today are not linear. We have near infinite leverage and zero marginal costs where a tiny team of engineers can go on to impact a billion lives. And the history of technology is all about finding leverage to multiply your efforts. Technology is a new way of doing things or take a different example is customers. You may find looking at your customer base that your top 5 to 10% of customers may have a vastly different motivation for using your product and be willing to spend a lot more and just need it so much more. And they may generate a disproportionate amount of your revenue.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “To think of a business as a set of systems, and it's both the set of systems that make the business work, it's also the set of systems that it sits in, such as the broader market, even the economy, and as far as society, it can be really hard to do this as an entrepreneur because you have to focus on the day-to-day of your business and you have to focus on one element of the system at any one time. It's almost like a vantage point problem. It's challenging to zoom out and take the 50,000 foot view and comprehend all these systems and how they work together. But probably the first thing I would ask when I'm trying to understand a system is where is the leverage? And leverage is really trying to understand what element of your system is nonlinear, which can be quite counterintuitive. And nonlinear element of your system is where the outputs in any given area can vastly differ from the inputs where any of your efforts can be”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “An example early on the smartphone, the iPhone actually had relatively disappointing sales and building a business on top of the app store would have been quite radical to assume we would have had the outcomes of today. You had to kind of assume that the install base would have hit the billions of users we have today and these devices have become extensions of ourselves. Now there's countless of the most impactful companies in the world with Air Core business built on top of the app store.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “I think one of the key things with being open minded is that you're looking for the tectonic trends that are actually going to be true over the next decade that change the size of a market”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “Things that are important in my view in a founder, many of them kind of very tried, like they need to be highly intelligent. Other than that, I think they need to be fast moving and relentless and really tough. Starting a company is just frankly hard and you're going to hear no so much that the person needs to be tough and kind of ready for all of that. And then finally, the rate of improvement. When I meet someone and then I meet them a couple weeks later or a month later and I can just tell the rate at which they've been improving or exploring the idea space, that gets me excited because I view everything compounds, including a person. And when I see a person compounding, that really gets me excited. And then the last one is the market. Again, this is an area I've spent a long time changing my views where first is I'm looking for markets that are rapidly growing. But I would say that most investors I see are looking at the size of the market today, assuming the world won't change.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “These things like Bitcoin, Airbnb, et cetera. They looked really weird early on before they suddenly became consensus. And people that caught them were open-minded enough to see a vision of the future where they would exist at scale. And then that's another lesson that I've had to throw out the window when I got started. I was reading the book of Value Investing. Value investing is kind of fundamentally opposed to breakthrough ideas. Expetting that the world is going to stay the same versus venture capital is betting that the world is going to be different. And then one other point I would say that a lesson that I took from zero to one is more often than not, these companies have some kind of secret early on about their breakthrough ideas. It's a view of the world that as to why this is going to break through. The second is the founders. A key question I will ask around founders is, is this someone I would work for? Because if I'm going to invest in them in a meaningful way, then I will be for a decade. There's a number of”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “I invest in technology companies, and what I'm looking for is the next legendary outcomes, the next $10 plus billion dollar outcomes. And this typically takes the form, hopefully, in the form of a compounding machine. When I found it, the compounding is starting and hopefully it continues on for in the best case decades. I also want to play this game for as long as possible, so it's really important for me to have incredible returns. I kind of view it like truffle hunting, right? You're searching for the gemout. So with investing, I'm technology startups at the early stage. There's really three key things I'm looking for. I would say the first is some kind of breakthrough idea that's going to cut into a market idea requires like a radically open mind. By definition, you're believing that the future is going to be different to the past. That's a really hard thing to do psychologically. Like a breakthrough, because they look so different to the past are going to look really weird. I've had to constantly train myself to have such an open mind.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “Would imagine the best product should win in many categories. But if you have a product that just has an LTV that much higher than the rest of the market, you can outdistribute. You can eat the market. If you have a SaaS product that is five times greater LTV than the rest of the market, it gives you a lot of leeway to kind of eat the market. You can spend the market on distribution, you can invest more in R&D, you can kind of suck the oxygen out of the room. all else being equal.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “World that I think is increasingly shifting to a more variable monetization model, those latter segments who may drive more than half your revenue, but maybe a small base of your customers or users are really important to understand. And I've seen more often than not, and I'm guiltyer than any one of this, of not understanding that they are one of the biggest levers to inflecting many businesses.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “It would be the full understanding of power laws. It would be understanding your base of users or customers in their segments and then understanding how much of your business is driven by your biggest segments and realizing you probably don't understand them as well as you think both you're probably underpricing that segment because you don't value the product nearly like they do and you probably don't understand how to build effectively for them because either you don't love the product as much as they do or you don't drive as much value from it as they do so you can't really build a one size fits all product there's so many different jobs to be done for a product your product may be a swiss army knife because you know you have 10 different segments or five different segments and each of those segments may both have different things they want from the product and they may have different importance to your own business”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “Profiles and player characteristics, whether it's creating a dozen different segments automatically of your players and then offering different offers based on how they engage, their spending profiles, and players may change segment over time. They may move into different buckets. So the product is really living and breathing based on what segment you live in.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “You're seeing the basics just like a basic storefront. However, increasingly more some of the best games really integrate the shop flow throughout the product. The game and the shop are one. I think one lesson that I think ring is very true in startups that took me a long time to learn in gaming is just raise your prices. Most games simply don't charge enough to make the entire model work. Like it is not possible for the model. If you actually look at the model, it is not possible for someone to spend enough to justify the entire economic business of this game. And that's one thing that you see games like Fortnite and Roblox, et cetera, it is possible to spend a few really love that product and want to spend a lot of money in there. Firstly, it's possible. And then there's a whole idea space that you've seen in e-commerce that I think gaming is really exploring, which is optimizing that to its full extreme. So you can get very advanced on segmenting. There are many different”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “All of these games are built on top of an economy. It's an incredibly hard problem to solve where only a small percentage of the players may spend anything. And then a subset, people use the term Wales, will spend a large amount. And that distribution, the power curve there, makes the model work. The hard problem for these games to solve is that how do you make a product that is first compelling and second possible for someone to actually make that distribution work? Making a product that you're essentially selling something digitally, a single player may come in and spend hundreds of thousands or more dollars in this product and get real value from that. And that comes down to the game and the economy, everything around it and the kind of first two points. The part that I think you're seeing games explore more and more over time has got more sophisticated over the last decade is the kind of shop piece. That is taking a lot of the lessons that's kind of integrating from e-commerce.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “A lot of likes on average, or you have a very high follow account. And when you get to the metagame layer, it really comes down to like core human motivation.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “Actually, quite similar. That's why some people can get confused, where we really separate the core game loop that you may do day in, day out, which is the kind of flow. And then more often than not, the actual metagame on top of many of these games, whether it's Fortnite, Game of War, more often than not is people getting a sense of meaning, often on a relative basis via social status. So maybe they want to belong to a group, so they belong to a guild or a clan in that game and they want to help that group progress, hit their goals. Maybe they want to receive a sense of status from their peers. They want to be a bit constantly at the top of the leaderboard. It's all about providing that meaning and making sure that there is true meaning to the player in that game. So in Fortnite, it may be constantly having the best skin so that you are perceived by everyone around you as high status. That's fairly synonymous with being high status in Twitter, where it might be your tweets get.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “Etc. And then that's where the concept of a metagame comes in, which is kind of like the abstraction layer above the game, is what provides me.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “And without frequency, you're going to get apathetic or bored and fall out of the sense of flow. The second is a sense of variable outcome. So there's a bunch of psychological studies that show people adapt very quickly to a predictable reward schedule. The term maybe is addictive, like nothing else out there. And then the third one is sense of control. So believe it or not, people actually like to work. People like to work for a reward to stay in flow, you need some sense of challenge. It's kind of like, I don't know, it's quite rewarding to build a piece of Ikea furniture. The best games, and I view games as very broad term as it applies to many things. It's really psychology are really good at getting people into that sense of flow. And that's a core loop of a game that brings someone into flow and keeps them there. A bigger challenge is scaling that. You'll see hit products or hit games bring people into flow, but they don't hold on to them, whether it's like angry birds or flappy birds.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “The best games are creating spaces that bring you into flow. I think many people know flow as a concept from psychology where it creates a sense of immersion, where time, ego, and the world fades away. And the thing is, flow is almost synonymous with fun. Flow is like ecstasy. It's exhilarating. Athletes call it the zone. The best games are really creating these controlled spaces that bring you into that sense of flow. And then the biggest games today really take advantage of this, but you wouldn't actually think of them as a game. I look at Twitter, Facebook, and Instagram as games, and 3 billion people are playing them actively. They're essentially big layers on top of a slot machine. They are these flow machines. And I think in terms of what these spaces, games, et cetera, what elements actually make them tick, there's like three that I've really kind of drawn out. The first is frequency. There is some kind of frequent feedback within these products.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  45. “In which games are running optimizations on them and testing far flung ideas is at an order of magnitude faster and more extreme because the costs and the risks are lower for messing up, but also they just have to because of how competitive that market is. Games treat every user's visit like it's their last. They need to kind of bring them back.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  46. “Most successful free to play gaming products are a mixture of maybe three different things. People just think it's a game. The game is maybe 30% of the second layer is the community. It's both a chat room, it's a virtual world, is literally a social network or even a city within the internet. There's a group of people that are engaging together within the system of the game. But as a social network just in the same way that a Facebook or Twitter is. And then the third element is shop. These are huge businesses where a single player or customer will come and spend hundreds of thousands, if not million dollars on a single virtual item on their lifetime within this product. That is higher than the ACV of some enterprise SaaS contracts. Those three elements, I think what gaming is doing is really exploring and optimizing those three idea spaces to an extreme. All of those disciplines and those three categories, the cycle.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  47. “Virtual goods are sold in these virtual worlds. Now we're seeing both concepts of variable reward or loot boxes infiltrating a lot of consumer products. I mean, the news feed in Facebook is a variable reward mechanism. That's what makes it so addictive. That's what makes you fall back into it. It's the same with the Twitter feed. These are core concepts of behavioral psychology. Now I'm seeing startups all the way to enterprise SaaS actually integrate the concept of variable because it ultimately adds so much delight to a product. It's a key way for a product to both differentiate but also delight as users.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  48. “Some of the most fundamental concepts from behavioral psychology actually get their execution properly starting in gaming. A lot of the ideas you might find from like a Daniel Kahneman, like loss aversion, like the concept of variable rewards. Everyone knows these concepts, but the execution actually kind of has followed through throughout gaming first. So we first saw the concept of loot boxes probably throughout the 2000s in gaming in the East. companies in the east whether it's 10 cent etc have now taken their idea to optimize to one full extreme and created so much depth in the idea then you'll find mid 2010s gaming companies in the west like supercell or even like niantic with pokemon going on to implement these loot boxers or fortnight is an amazing example with the variable reward mechanics throughout their products it's one of the maybe core ways that”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  49. “Definitely. I mean, I think gaming in the West tends to follow gaming in the East with maybe a two-year lag, two to three-year lag. And then consumer apps in the West follow gaming in the West with maybe a two-year lag. And then you start to see some of these features trickle down into just even non-consumer social apps many years later. Some of this is cultural, I think. Games can just afford to experiment a lot more. Games also have to experiment a lot more. The skill set that kind of a world-class gaming operational team has to develop are translate incredibly well to the key skill sets that many kind of consumer or some B2B apps have to build. There's a lot of cognitive psychology happening in there.”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source

  50. “Rightfully and somewhat wrongfully just assumed it's a fully hits driven business. I think one of the things that's being very clear in gaming over the last decade is just as much if not more so a service business where these games are full-on live services where if you look at some of the biggest gaming companies around today or at least”

    2021-04-27 · Invest Like the Best · Josh Buckley - Identifying Legendary Start-ups - [Invest Like the Best, EP. 223] · IDENTIFIED FROM THE TRANSCRIPT · source