Are tariffs good or bad for founders?

Shaan Puri

For all of my friends, this is their only business. This is literally their lifeline. So I find it very... not cool. My official diagnosis: *super uncool* — by "the orange guy".

Sam Parr

Alright, Sean — *mahalo*. My first question is: "What does it feel like to be an extra on the set of The White Lotus?"

Shaan Puri

As long as I'm not the guy who dies, I'm good. Alright, so that's my— that's my *White Lotus* cape plan. I... I thought I'd be festive for you.

Sam Parr

"I mean, Hawaii."

Shaan Puri

Dude, I was — as you know, I don't leave my house, and I took the family on vacation. We're in Hawaii. I texted Ben: "Dude, I'm getting recognized left and right." He goes, "Really? That's awesome. Like, how many times — ten, eleven?" I said, "No, dude, two — left and right. It happened twice just now." It hits you right away — this is amazing. He asked, "Where did you get recognized? At the airport?" I said, "Dude, someone voice-recognized me." I was coming around the corner, talking to my kids, and some guy just runs around the corner and goes, "Hey — are you... are you Sean?" I asked, "Did you just recognize my voice?" He said, "Yeah, I've listened to the podcast a bunch."

Sam Parr

Dude, there have been so many times where I've met someone and I'm like, "We should hang out," and then they text me...

Shaan Puri

"You want to get on this flight?" "Yeah. Do you have a ticket?"

Sam Parr

Well, if I'm flying home and someone's sitting near me, I'll say, "Do you want to be friends and get together sometimes?" Then they'll message me a week later and I'm like, "What was I doing?" It's like going to the grocery store hungry — I'm just making bad choices. Can we talk about tariffs really quick? First of all, **I want to let people know I don't know anything about this**. I'm not an economist, which everyone is, all of a sudden. But I want to know: did you go to Hawaii because you were sweating and thought, "I need to find peace," or what?

Shaan Puri

Dude, the last time I came to Hawaii—I don't know if you remember—this was in 2022.

Sam Parr

Wasn't it, like, some *crypto* thing?</FormattedResponse>

Shaan Puri

You crashed? I landed. And the same day I landed, crypto had the biggest crash—Luna basically went broke, and it brought down Bitcoin with it. I landed and then lost **$1,000,000**, and I was just trying to hang out with my wife and be like, "Okay, cool—I'm just not going to mention how expensive this vacation just got." The worst part was that, because I was on vacation, I didn't have any of my normal computer hardware or access to my **cold storage**. I couldn't sell; I couldn't do anything. I was basically stuck. Then, too, the same thing happened another time: I went on vacation and the S&P 500 had the worst three-day losses since the bubonic plague. I was like, "Oh great—here we go again. I'm not coming to Hawaii anymore."

Sam Parr

When I've been going through this, as everyone knows, I'm heavy on index. When I have been going through this, I've just... I just **don't look**. I just...

Shaan Puri

Yeah, just don't look.

Sam Parr

"I don't look. I just pretend it doesn't exist, and I don't look. Although I did invest a little bit more than I normally do every month — I went a little bit heavier — I just didn't look. I can't log in... it makes me *too anxious*, and it really ruins my day."

Shaan Puri

Yeah. Well, I asked a simple question: am I going to do anything? Is my plan to—do I have some trade I'm trying to make right now? Is there some genius move, or am I just trying to *panic-sell*? No. Okay. If not, then there's really no point in even looking. It's just going to ruin my vacation, so I don't look. But when I landed, there was something I had to look at, which is these tariffs. So, not only did the stock market crash—or maybe because of this, the stock market has been crashing—which is that **Donald Trump** has created a new holiday: "**Sam Liberation Day**."

Sam Parr

Yeah, happy. Libs happy.

Shaan Puri

Lib day.

Sam Parr

Somebody was like, "Maybe he meant 'liberation day' in the sense of liberation—like the Buddhist thing, where we are being liberated from all of our possessions."

Shaan Puri

And we just aren't going to own anything anymore. I don't have any material goods anymore. Thank you, thank you. He came out with this giant poster board—like a "slam board"—to every country. It's basically a slam board where he's like, "China, you're getting tariffed. You're tariffed. Everybody's getting tariffed." Since then he came out with, like, a 50% or—or whatever it was—a 35% + 20% tariff on China. I was like, "Wow, 54% — this is gonna be crazy." Then he added another 50% on top, so now we're at 104%. I suppose there's just no upper limit as to how high this could go, because this morning—as of this morning—China retaliated with its own escalating retaliation: an 80-something percent tariff. So **we're in a trade war**.

Sam Parr

And does that mean for you, as an e-commerce owner, when you buy $10,000 worth of goods from China—or if you do buy them from China—that now you're going to pay $20,000?

Shaan Puri

Yes, exactly.

Sam Parr

Okay, so it's as simple as that. Got it.

Shaan Puri

It's as simple as that. Basically, the reason to talk about this is not because I'm a *terrafxpert* [sic] — which I'm not — but because I have an e-commerce store and I have a lot of friends in e-commerce as well. For all of them, I mean, this is like **D-day**, basically. Most of us manufacture in **China**, not because we're like, "Oh, I really want to have the lowest-cost goods from China" — that wasn't really the impetus. In fact, when I started our company we first looked at manufacturing in the U.S. We were like, "Oh, that'd be great. It'd be great to manufacture in the U.S.; it'd be a great story to tell customers." Also, maybe it would mean faster lead times, because we're not having to put every item on a boat and sail it across the sea. So I called all the manufacturers I could find in the U.S., and I was like, "Hey, do you think you could do this?" Most of them were just like, "No." One guy in L.A. was like, "Oh yeah, we could do this. Do you want it for double the price, half the speed, and half as good?" I was like, "Is that your sales pitch?" He said, "Yeah, I know, like, that sounds great. I'm just being honest with you. Because if you're comparing factors you're gonna find this." I was like, "How could it be half the speed? There's no boat; there's no sitting on a boat for a month." When he explained this, he said: > "Number one: all of the inputs to anything you're gonna make — even if we make it here, we're gonna import all the parts. So we still have the parts on a boat for a long time."

Shaan Puri

Of time. Secondly, we don't have the labor that's skilled at doing this. Third, we don't have the machines. He was like, **"Actually, it's the machines — not the labor — that's the problem."** He's like, "Basically, when we kind of deindustrialized, all of the best machinery to do this work went to China. There's only so many machines that do this right now. To get a new machine takes like a year and... it just costs a bunch of money." So, *we don't even have the machines.* And I was like, "Okay then, dude, how does this guy answer?"

Sam Parr

On the phone, he was like, "F you. This is Derek. You know what I mean? I don't want your business." How are you?

Shaan Puri

Is there anything I cannot get for you?

Sam Parr

Yeah... alright, have a good day. Bye-bye. Now, go laugh yourself.

Shaan Puri

"Is that just how— that's just how they do? They answer the phones. *Honestly, a great gig.* Maybe he's a retired guy and he just wanted to keep that going."

Sam Parr

"I feel like my dad would like..."

Shaan Puri

"To do that in retirement — turn people down all day."

Sam Parr

"And so, what are your friends thinking in the industry? It seems, *dude*, you guys just get **beat up constantly**. You know what I mean? Yeah — you just get punched all the time."

Shaan Puri

"Yeah, it's like **'Making America great again'** — where's the great part? What's happening? All we're doing is putting these small businesses out of business and raising the price on consumers. So here's what's happening. Just to give you a scenario: I have a friend who's doing really well with his business, and the business has been growing. Prior to Trump taking office, he was growing the business. Trump takes office and says he's going to have a tariff — he says it's going to be a **20% tariff**. So we're like, okay, mentally prepared for a 20% tariff. He placed an order. Now, just to give you a sense: forget about moving your manufacturing, which is a multiyear process that may not even work. Just changing your sourcing from one place to another is, you know, six months to a year to get it up to scale. This guy, basically, is operating on a **four-month lead time**, meaning from the day he knows he needs an order, he has to place it four months in advance. So he placed it four months ago. Four months ago is basically before Trump even took office, right? So he placed that order and now, as that order is — he's got five containers out at sea about...

Sam Parr

It's like on the ship, and they're like...

Shaan Puri

Yeah, it's a **100% tariff** now, so he has to pay **$1 million** in tariffs. He doesn't have $1 million, so he's like… He said, "Dude, I literally don't know what I'm gonna do. I don't have a million extra dollars lying around in my business that I could just pay this tariff. I also have five containers. I have thousands of units just sitting there. They can't be rerouted. I can't tell them to go back to China. I can't, I can't." He's like, "What do I do? Do I shut down my business?" He's basically *totally screwed.* And this is common — a lot of people are dealing with this. "Hey, let's take a quick break, but instead…"

Sam Parr

"Of an ad I have."

Shaan Puri

**A freebie for you:** it is my pitch deck template. If you're a founder and you're ever looking to raise money from investors, the reality is most founders are pretty bad at telling their own story. Their decks are bad. I've seen thousands of decks, and I can tell you that most decks don't do the business justice. So I actually made a template of what I use for my own companies. I've given this out before in my newsletter—thousands of people have downloaded it—and I get emails all the time saying, "Hey, thanks for that template. I used it; I raised my round." So it's a freebie. If you want to ever raise money from investors, go grab it. There's a link in the description below. It walks you, slide by slide: put this here, put this here, put this here, with a bit of commentary on why you're arranging the structure in that order. I think it will raise your odds of successfully raising a funding round. So go ahead and grab it—it's my free pitch deck template.

Sam Parr

You and I have a mutual friend. He said the same thing. He was like, "he's like, 'my container' — you know, the price per container got screwed during a bunch of stuff in the last two or three years." There were so many different things: the Panama Canal or Suez Canal — forget whatever. There was the...

Shaan Puri

The ship got stuck.

Sam Parr

Yeah, the ship got stuck. Then there was this, and then...

Shaan Puri

There was that, and then now he's like, "This thing," he's like...

Sam Parr

I don't have enough money to buy the goods that I have coming in because I placed the order about a month ago. While it was in transit, the price changed. It's sort of like when a parent says, "You say one more word and it's five more minutes to time‑out," and then suddenly, "Oh, there's five—what? What did you...?" </FormattedResponse>

Shaan Puri

Hear me.

Sam Parr

Yeah—*five more*. *Five more.* You just got yourself five more, totally.

Shaan Puri

I'm going to start calling it **"tariffs"** with my kids. I'm just going to start using that lingo — maybe it'll be fun to be on the other side of the tariff for once. There's a little bit of... now people are trying to find workarounds or figure out, "Hey, does this apply?" It's kind of unclear how this applies. Does it matter if I got my goods on the boat beforehand? Either way — whether this shipment gets tariffed a million dollars or not — it's very hard to survive as a business when you operate, let's say, an ecommerce business that has **10–15%** profit margins if you're doing things right. Maybe **20%** if you're really kicking ass, you've been in business a long time, you have economies of scale, and you have a large returning customer base. But with **10–15%** profit margins, and then your **COGS** [cost of goods sold] go up by **100%**, that is not going to work. They're going to go broke. So the only alternative is you have to pass that to the customer. Now you have to tell the customer, "Hey, what this means to the customer." The math is: if a unit of your product cost $1 and now it's going to cost $2... well, before you sold that $1 item for, let's say, $3 or $4 — let's just say $4, a 4x markup — right? So your COGS was 25% of... [transcript ends abruptly] </FormattedResponse>

Sam Parr

Well, your four X is, I would imagine, very normal.

Shaan Puri

Yeah, a standard markup, let's say. And that sounds like greedy — like, “Oh, you're already marking it at 4x.” Well, no. Because you have to pay for marketing and advertising, your staff, fulfillment, and all this other stuff. You'll end up with a **10 to 15% profit margin** by the end of it, which is like restaurant territory. So, you know, we're not some fat cats over here in the e‑commerce land. Go look at e‑com: you just see a bunch of tired, scraggly fools who are playing the wrong game. If you take that $1 item and now it's $2, well, that means you have to raise the price — instead of being a big 4 originally, now you gotta raise it to $5 to make up for that, right? So all your goods are gonna go up by **25 to 30%**. That's inflationary. So if you thought inflation was bad before — the price of eggs and all this stuff — well, wait till Christmas season comes and nobody can buy a toy because all the toys are made in China. Like, all the shirts are made in China, all the toys are made in China. And if they're not made in China, they're made in Vietnam, which also got tariffed. So it's like, you know, there's a few countries that make all the stuff. This plan really doesn't make a lot of sense to me. Now maybe I'm just being sensitive because I have a business in this space... is your

Sam Parr

Lifeline.

Shaan Puri

Yeah, yeah. Less so for me because I have a lot of businesses. But for people—for all of my friends—this is their **only business**; this is *literally their lifeline*. So I find it very... not cool. That's my official diagnosis: **super uncool** by the *orange guy*.

Sam Parr

I think you need to create, like, a *Sean's Homie* private chat lobby. You guys could spend *literally thousands of dollars* to lobby the government to change their opinion.

Shaan Puri

"Dude, I'm gonna go to the lobby of this hotel and just see if I can get someone to change their mind. Is that what *'lobbying'* is? Am I doing it?"

Sam Parr

And you'll *declare bankruptcy* down there by yelling it and declaring it, *exactly*.

Shaan Puri

And so, by the way, I don't know if you've read Molson — Molson Hart. He wrote a great post on **X** [on X] that I think is worth reading. It's basically called "America Underestimates the Difficulty of Bringing Back." He gives 14 reasons explaining why, even if you take the generous side of this policy and say, "short-term pain for long-term gain," there are problems. I think we can all agree there's **short-term pain**: business owners have short-term pain; consumers will see their prices rise; factories on the other side have short-term pain; the stock market is crashing because of short-term pain; 401(k)s are going down. So that part's pretty unambiguous — the short-term pain. The question is: is there even **long-term gain**? He wrote a post that outlines, thoughtfully, why there are problems with this. It's one argument after another. It's not only that moving a manufacturing plant back to America takes a long time. By the time a business owner who today is hit by these tariffs — assuming they could somehow survive — could spend millions of extra dollars opening up manufacturing in the United States (which is not going to happen), it's a multi-year process.

Shaan Puri

Before they get it all online and then magically find the labor to do this — because we don't really even train people in *America* to do this type of work anymore — there's going to be a new president, and you don't even know what this tariff situation is going to be. By then it might be a total fool's errand to do it, so nobody's really going to be able to make that move. Most likely what's actually going to happen is, he's like, you know, "we tried to do this in **Trump**'s first term and all we did was *make Vietnam great again*." Basically, this manufacturer just shifts to one of the other low‑cost **Asian** countries that has lower tariffs. That's what's actually going to happen. There's not going to be a magical bringing of jobs back. Oh, and by the way, you don't want to sit there and knit T‑shirts either. This is not a job you want; these are jobs **China** doesn't even want.

Sam Parr

Yeah, Dave Chappelle was like, "I want to wear Jordans. I don't want to make them exactly."

Shaan Puri

Perfectly said. There are these memes going around — you know, it'll be like Chamath at a sewing machine, trying to make it. Sure, it's so true. It's like, "Is this what you think is going to happen? Is this America being great again?" I'm not sure. *Political stuff aside,* I think the **tariff situation** is really crazy right now. As a business owner, it is very, very tricky to navigate this.

Sam Parr

"Among your friend group, is this going to **put anyone out of business**, or is it just going to **destroy their margins**? Is this a complete, huge risk, or have you just made my life more challenging?"

Shaan Puri

It's kind of—for sure—putting people out of business. For example, if you had a $100 product before and now it needs to be $140 to maintain any profit, demand will go down. You'll have fewer customers because you raised your price. Your costs went up, your cash flow in the business goes down, and you may need to borrow money just to pay the tariff bills for stuff you already have in flight [goods already shipped or en route]. It's a very tricky situation. What we did in our business was create an **immediate SWAT team**. We opened a Google Doc and made six bullet points—**the six levers** we could pull. They were: 1. **Pricing** — create a "tariff surcharge." Estimate a range that offsets some, but not all, of the tariff. You can't pass 100% of it to the customer because that will kill demand, so pass a few dollars to the customer instead. 2. **Sourcing** — look for suppliers in lower-tariff countries (for example, Mexico or India). 3. **Cost reduction** — negotiate with the factory to ask them to share some of the burden. 4. **Legal/contract review** — talk to lawyers about the shipments that are already in flight. 5. **Purchase orders** — reduce and be much more conservative on new orders. 6. **Financing** — secure more debt or a line of credit so you can withstand the storm. We made a plan and committed to meeting every day with the five core people in the company. Other priorities were deprioritized—this became the priority. I think it takes that level of intensity. A mistake I've made in the past is taking a "wait and see" approach. Every day you don't act can be very costly as a business owner. We have a CEO and a full exec team, but when I heard how they were planning to approach this, it sounded like "this is just one of several important things." I pushed back: no, this is the most important thing. You need a public PSA that this is the top priority. Give the team a name. Make it clear: this is the most important thing we're doing and you need to cut off other work. In short: raise the level of intensity and treat it like your top priority—or people will go out of business.

Sam Parr

So you're going snorkeling, yeah?

Shaan Puri

And it's so funny — I'm on the call talking about how we have to go raise the intensity. There's literally just "Aloha": calming Hawaiian music behind me and, clearly, palm trees. I'm like, "Guys, guys, this is life or death." I'm going down a waterslide on Google Meet; I didn't plan it this way. Alright, you...

Sam Parr

Stop, like *mid-talk*, to get your drink that has the umbrella on it, and you're looking for the straw *with your mouth*. That's awesome... well, sucks. Is there...?

Shaan Puri

A world where... Is there any type? You know how, like, what are they—what are... What did George—it's just like, "Is there anything I could do?" "No, there's nothing you could do."

Sam Parr

Dude. I met with a guy the other day and I thought, "Why do you want to—?" I'd never take phone calls with people, but he wanted to talk. I thought he was going to end the conversation with, "Look, I've loved watching you get big and be on the pod. Is there anything I can do?" I assumed he was going to ask how he could help. But he said, **"Is there anything I could do to be a guest on the podcast?"** I was like, *"Wait, what?"* I thought he was going to ask me how he could help me, and then he just ended it with, "Is there anything I could do to be on your podcast and to have you promote me?"

Shaan Puri

I was like, "No—there's nothing you could do. Wow. *Hell of an ask.*"

Sam Parr

Yeah, it was a *bold ask*. Do you want to talk about something more fun?

Shaan Puri

Please.

Sam Parr

Alright, let's talk about something *more fun*. I think this is actually going to be really fun. I'm going to try and take your mind away from the fact that the company that you've spent decades trying to build—which...

Shaan Puri

Are... I'm gonna try and...

Sam Parr

Take your mind off of that. It just... you know, four decades you spent building this company now.

Shaan Puri

"It's never gonna send Sam to, like, the cancer ward—the bedside manner."

Sam Parr

We don't have much time. We don't have a lot of time left, so let's get to it. Sorry—I meant, you don't have a lot of time left, so let's hurry up and get to it. Alright. I did—I read something interesting, and when I read it I was shocked. The reason I read it was because my company, **Hampton**, is basically an events company. We host hundreds of events a year, so I'm trying to learn how other event-based businesses operate. I found one that I totally didn't realize was so amazing—I had just forgotten about it. Have you ever heard of **"Medieval Times"**?

Shaan Puri

Generally, yeah. Sure.

Sam Parr

No—the *restaurant series*? *Restaurant franchise*? No, you've never.

Shaan Puri

Heard no.

Sam Parr

"Oh my God, you're gonna love this. Okay—goo goo."

Shaan Puri

Is it like Rainforest Cafe, but for...?

Sam Parr

More.

Shaan Puri

Oh, there's basically... it looks like a small castle—like the **Excalibur Hotel in Las Vegas**. Inside, there are people on horses jousting.

Sam Parr

Dude, I always thought this was just a joke. I thought it was a joke in, like, ’90s movies—where people were going for dinner. I didn't realize it was a real thing. Let me tell you the story. So, **Medieval Times** is basically dinner theater. They do a two-hour show where you go with your wife and your two kids, you spend something like $80 a head, and you see people host a medieval show. There are about 200 actors who do jousting and theatrical stuff. It's almost like Cirque du Soleil, but medieval. It's almost like wrestling—WWF—but acted. I did not realize how big this was. The guy who started it, his name was Jose. He was a Spanish guy who had a small restaurant in Spain where he would have medieval performers doing juggling and small acts inside a barbecue joint in the 1980s. For some reason he decided to move to America and recreate what he did in Spain on a much larger scale. He convinced a couple of bankers to invest $8,000,000 into his first restaurant, which opened in Florida, and that’s where Medieval Times was launched in 1983. He created the idea: host 20 to 40 shows per month, hire 200 actors, and spend a year training them in sword fighting, jousting, and acting. They serve turkey legs and other stereotypical medieval food and create a full dinner experience. Fast forward forty-plus years. His son has taken it over, and they were recently sued because a bunch of performers tried to unionize and the company was allegedly preventing them from unionizing. There were a ton of articles about the company and its financials. They're enormous. It’s estimated that about 2 to 2.5 million people a year attend the restaurants, and they make something like $150 to $200 million a year across 10 locations hosting these dinner-theater shows. Since 1983 they've hosted close to 80 million people at these events. Have you ever?

Shaan Puri

Been to one of these?

Sam Parr

No. So there are ten locations, and I haven't lived in any of them: **Dallas**, **Myrtle Beach**, **Scottsdale**—places that I, *you know*, haven't really lived in. So I've never been to one. Have you?

Shaan Puri

No, I've never been to one. Say the numbers again. How big is this? So, just on **10 — 10** locations?

Sam Parr

On 10 locations during the union lawsuit and things like that, reporters were doing back-of-the-envelope math and they were like, we think the company does between **$150,000,000 and $200,000,000** a year in revenue. There are 10 locations, and each location hosts… depending on how popular it is, the lowest one does about **20 performances a month**, all the way up to **60 performances a month** — so two a day for thirty days. It's insane how much demand there is. It was estimated that around **2 million people a year** attend. On their official website they say something like — I think they say — **76 million people** have ever attended a Medieval Times restaurant for one of their performances.

Shaan Puri

That's insane. So, you know, **$10 to $20 million** per location, and they might be making, you know, **$1 to $2 million** of profit per location—something like that. So that's my guess.

Sam Parr

**It's not a normal restaurant.** You don't order the food; it's all **preselected**. It's like an assembly line, and all 1,000 guests get the exact same food. Because there's not a whole menu of options to prepare, there are potentially significantly more efficiencies than in a normal restaurant. Get this: their performances only change every five to seven years. They spend a lot of time creating the performance, and then everyone else learns it and perfects it over the course of those five to seven years. They don't change it often, and it takes about **200 performers** for every show.

Shaan Puri

Yeah, it's pretty rough for, you know, night performers, right? Because you have to step down between *Game of Thrones* and the *Medieval Times* restaurant. It's so vast... the second place is real. It's pretty rough out there.

Sam Parr

*"Knife's gotta do what knife's gotta do."*

Shaan Puri

So, this is hilarious—because you were, like, looking this up as an analog for Hampton. Are you thinking about getting in the *turkey leg* business? What's going on?

Sam Parr

Well, the way that we are going to grow is through **launching cities**. I'm trying to study how launches work: how do you have general managers for each city or region? I'm trying to understand the logistics of it. I'm looking at a variety of examples — unrelated, but still in the event space — to figure out how they do it. How do people do it? I'm looking at a ton of different ways. I was just curious. For some reason I came across these guys and started thinking about them. I thought, "Oh, they have **10 locations** — are they franchises? How do they work?" It caught my eye, and I was shocked at how big they were.

Shaan Puri

Dude, can I tell you a *goofy story* that's kind of similar to what you just described? I've been writing this book on the side. I'm not sure if I'm actually going to publish it or not, but I kind of went down a rabbit hole—I got interested in it. It was about **how creativity works**: how people become more creative and, ultimately, how to make hits. Like, where do the hits come from?

Sam Parr

What's the title?

Shaan Puri

Bad art, bad art. Okay, yeah. So it's like—there's one of the key, obvious things. It sounds obvious in hindsight, but when you look at the creative process of the world's most successful creative people, you would think, "Oh wow—the ones who make the hits, the things that we all love, the high-quality stuff—they just nail quality." If you listen to any of their interviews or watch their process, they don't give two shits about *quality* directly. What they do is focus on *quantity*. Their belief is basically that *quantity* is the only way to get to *quality*. They play a volume game and they're like, "We produce a lot of bad art," and that's where the one or two things that are real gold come from. If you just sit down and try to make gold, it doesn't work—you actually end up not creating at all. So one of the things I've been looking at is how some of the big breakthroughs came from doing what you're talking about, which is learning from an adjacent space. So you go and, you know, the Wright brothers, who ended up creating...

Sam Parr

"The 'first Airplane' dude, George — I read their book, and they're amazing. But **George Mack** summarized their book amazingly in his *High Agency* blog post. </FormattedResponse>

Shaan Puri

Yeah, exactly. They were not funded; they had no education, no team, no specialty, no experience—nothing. Meanwhile, there was a guy funded by the Smithsonian with $2,000,000 in funding, tons of engineers and scientists on his team, and all the press and fanfare. It was clear he was going to win—he was the favorite. So how did the underdog win? Why did the underdog have the creative breakthrough? One reason is the two brothers—the **Wright brothers**—who owned a bike shop. Because they had no money, they built about 200 prototypes in the time the other guy made two. Their 200 prototypes didn't even look like planes; they were testing individual parts of a plane. They'd make a glider or a wing, then the wheels, and try different ways to test these things. Even the selection of where to go—Kitty Hawk—was thought through from *first-principles thinking*: “Where should we launch this thing? Where are we going to have the best wind?” They weren't tied to conventional assumptions; everything was first-principles thinking. Similarly, I don't know if you've heard the story about the Yankees bats—have you seen this?

Sam Parr

"You'll have to *enlighten me*, but basically the bats are heavier in the area where the ball mostly hits. Is that right?"

Shaan Puri

Yeah — take the physics aside. The story is just kind of interesting because here you have baseball, this game that's been around for, I don't know, **100+ years** or whatever. Then, in a bit of a high-agency way, the Yankees were like, "Hey, can we just make a better bat? Within the rules — we're not going to make a heavier bat, we're not going to cheat." They hired this MIT guy to think about it, and he was like, "Oh yeah, you could just move more of the barrel to one *sweet spot*. If you hit that, it's going to go way further, way harder, and you'll have fewer misses and fewer near-misses because you'll have the thicker part of the bat right there. You'll have more barrels." Sure enough, the Yankees start the season off with way more home runs than anybody else. This year, I don't know anything about baseball.

Sam Parr

But is it *statistically significant*, or do they just have ballers on their team this year? Is it, like... is it the bat? [unclear phrase]

Shaan Puri

I think it's the bat, but I don't know if it's statistically significant. I can't—if you could say that, right? They started talking about this when they jumped out to a big lead in home runs: 14 home runs already, and nobody else was even close. We'll see if this lands. The important part—because, like, "who gives a shit about baseball"—is that if baseball, a 100-year-old sport where teams spend hundreds of millions of dollars a year trying to find any edge they can, still has edges to be found, it just proves how much of the world is unoptimized and underthought. If you actually take a lot of focus and intensity to any one problem and you don't assume people have already figured it out, that's one of the key things you need to have a breakthrough. So the way you're talking about studying these other models is really important. I remember when we did our restaurant—this was my first startup—and we did pretty much everything wrong. Now that I look back, I'm like, "oh my god, so embarrassing." We wrote a 300-page business plan. Nowadays I write one page, if that. We literally printed it out in a binder and were so proud of it. We thought that was a mark of our brilliance when actually it was a mark of our stupidity. Our marketing was terrible. I used to go door-to-door, knocking on doors, trying to sell sushi—like an idiot. I didn't know anything about Facebook ads or Google ads; I didn't know anything about anything. One smart thing we did was be a delivery-only restaurant—what today they call "cloud kitchens." Back then that didn't exist.

Sam Parr

"Door-to-door sushi — I think it's the **worst idea I've ever heard**, right, but..."

Shaan Puri

I was like, "Oh, let's try it, actually, by the way."

Sam Parr

"Who doesn't want to eat this at *10:30*, when it's *95 degrees in Dallas*?"

Shaan Puri

No. What we—and I—did was I went door to door. I went floor to floor. Really, I went into a skyscraper: I just went in the elevator, pushed a button—1, 2, 3, 4—I'd get out. I'd just talk to the office manager on each floor, and if I could get her to cater the lunch, it was like getting 50 orders... and it's

Sam Parr

Actually, yeah.

Shaan Puri

It actually worked pretty well. That was a bit of an example of *ignorance is bliss*. The other thing we looked at was delivery. For traditional food delivery—like you were talking about city-to-city expansion—we studied how all the big restaurant chains handled delivery. What they did was have a delivery driver at the restaurant waiting for a batch of orders. You would order, but they wouldn't just take your one order. They'd wait until there were five or six orders to go. If a driver left with one order, that was inefficient. So they'd wait for a batch, then drive out and deliver one place at a time, then drive back. I couldn't understand why delivery from a restaurant one mile away would take forty minutes. The route is two minutes—how is it possible that it takes forty minutes for the order? So I watched and studied them. We had our buddy Dan become one of the drivers to learn firsthand. He basically went undercover to spy on the process. [referring to early DoorDash-style tactics] All he came back with was like, "Dude, don't eat the food at Noodles—there's so much salt." We asked, "But what about the delivery?" He said, "Oh, I didn't even get delivery. I got the soup—I'm gonna make it tomato soup"—and he added, "so much salt in this soup, it's insane." The breakthrough was realizing the slowest part of delivery wasn't the drive. It wasn't even the last mile. The slow part was the driver doing that last 200 feet to your door: finding the exact house or apartment, knocking, waiting for someone to come out, and so on. So in downtown Denver we created what we called the **drop zone**. In an area with a lot of skyscrapers, we had one person stand there as our delivery agent on the ground. Drivers would keep going back and forth, dropping off orders to him nonstop. The drop-zone person was essentially stationary, holding orders while drivers continued their routes. This eliminated all the lag caused by drivers doing those last little deliveries. Delivery times sped up dramatically—sudden ly we were doing 15, 16, 18-minute deliveries and crushing everyone on delivery speed. The restaurant ultimately failed, but the lesson stuck: you can't take for granted that everything is already figured out. If you use first-principles thinking—watch the process, find the slowest part, and ask what you can change, even if it sounds a little weird—you can find big wins. For us, putting one guy at the bottom holding orders was the key.

Sam Parr

I found, when doing this, there are a few hard parts. Just doing the exercise — the hard part, one, is knowing what things to question and what things to accept. For example, let's say you're creating **Tesla**, and you're thinking, "An electric battery probably can go long enough if I look at the math behind it," but they didn't change the shape of the wheel. That's a very obvious one. When you're running a company, it's very hard to decide what to question and what not to question. It's also incredibly challenging to get yourself into the mindset of **first principles thinking**, and even more challenging to convince your staff or your coworkers — whoever — to come with an open mind and actually get on board and be open-minded about trying this exercise. I found that to be hard.

Shaan Puri

"What's hard about it, and how did you try to *tackle* that?"

Sam Parr

For example, just like the people saying, "Well, it has to be this way for these reasons," and it's like—you have to say to them, "I know, but... just try to get beyond that, just for a few minutes, and let's just have a conversation where it doesn't happen that way. What would happen?" There's this book called "Six Ways of Thinking for Design" — I forget exactly. Do you know what I'm talking about? That book...

Shaan Puri

No, I haven't read that.

Sam Parr

Basically, it's like an exercise where there are six different colored hats. When you put your **green hat** on, that means you're just thinking of profit. When you put your **red hat** on, that means you're going to be very pessimistic and poke holes in everything. Your **black hat** means you're open minded. So it's this way of saying, "Right now I'm going to put this hat on," which means, by default, I'm not going to hate on anything. A lot of people default to, "This is why you can't do it." I'm going to figure out all the reasons why this could work. </FormattedResponse>

Shaan Puri

Yes—yeah. So you do that? You tried that?

Sam Parr

Yeah, and it helps, but it's still... *I guess what I'm saying is—*

Shaan Puri

That? No, it didn't have any hats.

Sam Parr

No, it helps, but it's still a challenge to get into that mindset—at least for me. Also, conveying that to teammates is hard. *Having an open mind and questioning everything* is actually way harder to do than it sounds. You know what I mean?

Shaan Puri

Yeah, yeah. I feel that people like it. Once you give people *permission* to do it, they actually get excited about it. You're right — you have to *frame it the right way*. If you just go into a meeting and your hope and expectation is that people are going to be open-minded and creative and come up with a novel solution, that might not happen at all. You have to either tell a story at the beginning that gets them in the right mindset. I've done that before.

Sam Parr

Which is basically the Yankee bat thing. I mean, it was *pretty good*.

Shaan Puri

Yeah, it'll be one like that, or it'll be like: I remember back in the day I watched this thing on YouTube that was really inspiring to me. I don't know if you've ever seen it — it's the **IDEO Grocery Cart Challenge**. IDEO is this design-thinking lab. Companies pay them a lot of money to come up with novel, innovative solutions and designs. I think *60 Minutes* — or somebody — went to them for a TV show and said, “Hey, we want to understand how you guys think, so we have a challenge for you as part of the show.” They said, “We want you to redesign/reimagine the grocery cart in a day — you have 24–48 hours to do this.” They break up into two teams and show their process. First, there's fact gathering. They go get a grocery cart or watch people use it in a grocery store. They don't take anything for granted. For example, certain customers actually use the cart as a kid babysitter — the kid sits inside it and needs something to play with. If you removed the kid seat, you'd lose that mom as a customer. Other people load the cart up and need two racks, and so on. You're seeing how people actually use it. They state those observations, put them on index cards, and start throwing them on the wall. The facilitator sets the tone and says, “We're in the *diverge* phase,” and draws this little cone. During the *diverge* phase — which is a predetermined set of time — the team goes into free-play mode: super crazy, wacky ideas; you don't judge ideas during this phase. You're just trying to riff off as many ideas as you can. Then they switch modes — switch hats — and go to *converge*, where they ruthlessly narrow down the possibilities. They explicitly separate the two phases because you don't want one brave person to throw out a half-baked idea and then have some smart guy immediately slam them. If that happens, nobody wants to suggest ideas for the rest of the hour. So they make it explicit: during the diverge hour you can only say “yes, and...,” and during the converge hour it's “no, but...,” or the narrowing critique. They end up with this redesigned grocery cart — you can look up the image online — it was a new type of cart. I was kind of inspired by that because, a) I thought, “Wow — what a cool job these guys have, getting to be creative for a living.”

Sam Parr

At the top: this video is 15 years old, and it says the **top comment** is, "They're still making us watches for school, by the way, in 2024."

Shaan Puri

Yeah, I actually think there should be a **Netflix** show of this — like *Chopped*, where they give a random basket of ingredients and you have to make a meal out of it. I would love to see two teams of engineer-designer types. You basically give them a challenge: redesign the grocery cart, redesign the inside of an elevator to make it more entertaining, and just see what they do. I would find that super fascinating as a TV show. I think it would inspire a lot of people to become engineers or designers if they watched it the same way people watch **Shark Tank**. Although *Shark Tank* is totally bogus in terms of the entrepreneurship that they show, it's super accessible and it gets people excited about the idea of entrepreneurship.

Sam Parr

This book sounds pretty great. "Bad Art" sounds like a pretty good idea.

Shaan Puri

It's a great book. I'm excited about it. My only hesitation was that I feel like I already got a *shit ton* of value out of it from doing the research and the prep—outlining the big ideas and then crystallizing them in my mind.

Sam Parr

So you're gonna be like Derek from L.A., and you're gonna just say, "F you, reader." I... </FormattedResponse>

Shaan Puri

Don't care about you—it's already exactly... **Do I need to go the extra mile of publishing it for other people to benefit?** I'm not sure that I care about that. I'm not going to make any money off this. I'm not trying to get famous off a book. Why do I need to do that? So, I might publish it. The other problem is I'm not sure how many other people *nerd out* about this idea of making great art, making great products—just insanely great things—and caring about, like, wanting to learn the creative process, because, you know, what I... what I figured out... </FormattedResponse>

Sam Parr

During... that's... *this is obviously foolish.* What about that guy? Like, that's a foolish fuck. Yeah, yeah, yeah. You... you...

Shaan Puri

"You got— you caught me." </FormattedResponse>

Sam Parr

On the hook—you got the compliments on the hook. But what about that **Austin** guy? Like... you know... the artist—what was it called?

Shaan Puri

Great artist steel.

Sam Parr

Is that?

Shaan Puri

"What, do I want to just be that Austin guy? You didn't even know the guy's last name."

Sam Parr

I know the book cover... isn't it, like, a— what's it called?

Shaan Puri

"Great artist Steel."

Sam Parr

Yeah. I know a lot of smart people whose books I read always say that. We had **Jack Carr** on the podcast—he wrote all these amazing fiction books I love—and he talked about it. **Ryan Holiday** talked about it. **Mark Manson**, who I know you like, talked about that book... everyone, well.

Shaan Puri

That's the thing. A lot of authors—like, *I wrote this, I wrote this thing because I was studying how to do this because I wanted to write a book.* I didn't want to write the book about this, but that's just where I landed. It's **for sure super important** for anybody who's an author or screenwriter-type of person. It's just such a small percentage of the population that I'm not sure it's worth the pain of publishing.

Sam Parr

Dude, if...

Shaan Puri

I don't know if you feel...

Sam Parr

If the...

Shaan Puri

Comments on **YouTube** persuaded me enough. I'd like to open the publishing for this.

Sam Parr

If Sahil Bloom can convince everyone on Twitter to share his book, **you can too.**</FormattedResponse>

Shaan Puri

What's hilarious about *Sahil* is that he's great, and he's such an achiever.

Sam Parr

He brought the P.E. energy to...

Shaan Puri

Totally. The author—he brought the Ivy League energy, right? He, like, *achieved his way* into Stanford, achieved his way into being a good athlete, like a D1 athlete. He achieved his way into private equity, successfully achieved his way into a six-pack. He just basically is like, "Alright, give me a target and show me a ladder and I shall climb." When we were like, "Yo, you should Twitter, dude—your posts are kinda interesting. I think you could do this," he's like, "Cool. Monday through Friday: 6 a.m.—get up, cold plunge, write thread, publish thread every day for the next 900 days straight." And he did. He got, like, a billion followers. He achieved this shit out of Twitter, too. It's amazing. Yeah. And now you're gonna have to do the same with *bad art*. As Elon once said, when they asked him, "Are you afraid of failure?" he said, "It is not in my nature." That's how I feel about achieving—*it is not in my nature* to do this. Is that gonna be? That should be.

Sam Parr

The reply to everything, though.

Shaan Puri

As the great *Elon Musk* has once said, "This is not in my nature, dude." How sick is that phrase? How—how—how... timeless and *alpha* is that phrase? </FormattedResponse>

Sam Parr

Alright. Is that it? Are you gonna go and enjoy the sand or do whatever you do? Do you even leave your apartment when you're in Hawaii?

Shaan Puri

Yeah, *dude*. I'm in the ocean. I'm at the beach. I got kids—*dude*, they want to do everything.

Sam Parr

Are you going to wear a Tweety shirt at every...?

Shaan Puri

It's the same day for six days straight. Like, it's the same day, but they love it so much that I can't help but love it too. Alright — that's it. That's the pod.