Why You Need a Chief Automation Officer | My First Million #208 with Steph Smith

Shaan Puri

If you are skilled with either SEO, email list building, or D2C customer acquisition, this is a business in a box that you could start. I would love to see somebody start this. If you're going to do this, email me at sean@seanpury.com. I will invest in you, advise you, whatever. What's up, everybody? Sean here. And no, Sam, we have a pinch hitter, but it's going to be like when Tom Brady took over for Drew Bledsoe. I don't know if everyone gets the sports reference, but basically, when the sub comes in and outperforms the starter, that's what I'm expecting here. So we have Steph Smith here. You work for The Hustle, and you are also one of the more interesting people out there on Twitter in our space of business stuff. So, Steph, you were telling me you're nervous. Are you done being nervous yet?

Steph Smith

I'm a little nervous. I feel like the pod has grown so much since I was on a year ago, but hopefully, I'll live up to the hype.

Shaan Puri

Well, it doesn't matter how many people listen; it's the same experience either way. That's the good news for you because it's just us talking. So, you did a bunch of research, and I had a bunch of topic ideas because that's kind of your job for the hustle and trends and whatnot. I just see bullet points, and I want to call out the ones I think are interesting. I don't know all the details, so what we'll do is I'll look at your notes here. I'm just going to call out a name, you introduce it, tell me why it's interesting, what it is, and then we'll react to it. We'll just brainstorm off that. So, let's start with this one: the FSA Store. What is this?

Steph Smith

Okay, so the FSA store. If you're like me and you're not originally from the States, you're probably wondering, "What the hell is an FSA?" It's a **Flexible Spending Account**. Essentially, it's a health account. There's also HSAs, where you allocate a certain amount of money, and you do that pretax, I believe. So, you're basically saving on taxes and allocating this money only to certain products—only certain products related to your health. These products range from actually seeing a doctor to, you know, getting a COVID test or, not a shot, sorry, I should say a test, or band-aids. There's a whole range of products that you can use it on. But the interesting part about an FSA, that's different from an HSA, is that it **expires**. It's basically the only expiring money that I can think of. Even gift cards, you're actually legally not allowed to expire gift cards anymore.

Shaan Puri

And use it or lose it with FSA.

Steph Smith

Exactly. So, there's something called the FSA Store, it's fasastore.com. If you go to that site, it gets millions of page views a month. You might say, "Oh, just millions, that's not so many," but they're so high intent. Basically, what happens is at this cutoff, you get millions of people going and saying, "I have $100." You can get up to $2,7100 in your FSA per year, so you have a decent amount of money that you're like, "This is expiring, I have to spend it." I've done this before; I don't know if you have. I end up buying like 10 bottles of sunscreen or something ridiculous. I think there's just a couple of different opportunities here. The first is there was this really interesting brand called Welly that I noticed when I was going to splurge on my FSA dollars. We've talked about some of these topics on "My First Million" before, where you take a really boring business like Band-Aids and say, "Okay, I see the Band-Aid brand, and no one's really doing anything interesting around Band-Aids. Why don't I just create a really cool D2C version of Band-Aids?" If you go to getwelly.com, you'll just see it and think, "Okay, one, this is such a beautiful site, and two, I'm into Band-Aids." You're like, "I kind of want some of these Band-Aids." What I found interesting about this is there are all these other kinds of product lanes that you can just walk down in CVS or something like that and be like, "Oh, that's boring, that's boring. I haven't seen that reinvented." Actually, one person people have probably heard of is Eric Ryan. He's the founder of Welly, but he's also done Ollie Gummies, which people are probably familiar with, and Method Soaps. So, he's basically doing this, but I think there's a lot more room for other people to do the exact same thing and use the FSA Store as almost this really interesting acquisition house.

Shaan Puri

For your store, if I go to the FSA store and click "Shop" at the top, the first product is a Welly pack of bandages. However, it also includes other items like Zerotec medicine, sunscreen, IcyHot, a Theragun-type device, contact solution, and more. There’s a whole bunch of things you can pay for with this. I actually think you just brought up two separate but interesting ideas that can be combined, like this example. But first, let's talk about the Welly example. At HustleCon, the guy you were talking about, Eric Ryan, came and spoke about how he started Method Soap. He mentioned that Method Soap is now this big company; I forgot how much he sold it for, but I think it was around $100 million or something like that. Exact numbers don’t matter; it was a lot of money. He described his method for creating a soap brand, which he also applied to Ollie Gummies and Welly. He said, "Walk down any aisle and look for what I call a 'sea of sameness.'" He put up a photo of the soap aisle, which was filled with a bunch of green bottles. Every house cleaner was in a green bottle, and they all looked exactly the same. Their names were even kind of similar, like Windex and Spray Fast. This "sea of sameness" is your opportunity. In a sea of green bottles with boring names and ingredients that are crazy chemical names you can’t pronounce, they decided to make a different-shaped bottle with a different color, a different name, and ingredients you can pronounce. That’s what they did with Method. Then, he walked down another aisle, the vitamins and supplements aisle, and again, everything looked the same. He saw that sea of sameness and created Ollie Gummies. He did a couple of things differently; instead of saying "Vitamin C," he put "Immunity" or "Better Sleep" on the label because that’s the benefit you get from the product. Instead of needing to know why you want omega-3 fish oils, which isn’t that motivating, he made it about "Better Hair and Nails," which is way more motivating. He used that insight to create a better bottle and a better name. By the time he launched the third product, he already had a partnership with Target lined up because Target recognized him as a hit maker. They essentially offered him a record deal, giving him shelf space from day one instead of having to build up to it. That’s what he did with Welly band-aids. He looked down the band-aid aisle and noticed that every band-aid looked the same. They all had this skin color look that doesn’t actually match anyone's skin but is meant to blend in. He thought, "Let’s make the most fun-looking band-aids." He believed that your cuts, bruises, and scars are a badge of honor and should tell a story worth sharing. He could tell, just by the way he described something as mundane as a band-aid, why he’s successful. He sees the Olympics in a band-aid, and that’s why he approaches it so differently. I think that’s one interesting thing you talked about. Where else could you apply this? We discussed this before, and I remember one of the last ideas that came out of this was with the founder of David's Teas. He mentioned something like Duraflame logs. If you could create a modern version of Duraflame logs, similar to the Welly band-aids, that could be a great opportunity. There’s a significant amount of sales in that product category, but it’s a very sleepy category. Did you...?

Steph Smith

See, the one that smelled like KFC was the Duraflame logs.

Shaan Puri

No, they look perfect! Hilarious.

Steph Smith

KFC, and they're like, "Make your house smell like Kentucky Fried Chicken," and it was amazing.

Shaan Puri

There is a brand for that. I don't...

Steph Smith

I know if it's a brand. I saw it on Walmart, so I think they actually just partnered with KFC. But I love this idea. Speaking of David's Tea, if anyone's listening, I know sometimes we talk about really broad topics. But something you could actually start today is this thing called **butterfly pea tea**. I used to drink this stuff every day in Thailand. It's this tea that probably costs like **10 cents** to actually make. You put it in your tea, and it makes your tea bright blue. Then you're sitting there, and it actually tastes pretty good. You add a little bit of lemon juice, and it turns bright purple. It's just this kind of quirky, viral thing. I think someone today could go source a bunch of butterfly pea tea from Thailand or wherever you originally get it, create an Instagram-focused business around this, and it would be just like the KFC log. It would just be this initial thing where you get a quick hit, and then you build out a tea business around that.

Shaan Puri

Right, yeah, this is great. I remember back in the day—I don't know how old you are—but we used to have this drink. I don't even remember what it was called, "Squeeze It" or something like that. It had the same concept where you could put a little capsule in, and it would change colors. So, like, you know the kid at the lunch table who had the Squeeze It thing? It was blue, and then he put it in, and it turned, you know, crazy pink or red or whatever. That was like, you know, just 5 seconds of entertainment where everybody's looking to see, "What is that fizzing thing, and why is it changing colors?" I love this model of basically looking at very Instagrammable products. So, TikTok, Instagram—what will work well here? Then, how do I work backwards from that and actually say, "Is there a business here?" Tea is like high margin, high retention. Exactly, if you can do it. So, I kind of like that idea. You said you used to drink this when you were in Thailand, is that right?

Steph Smith

Yeah, I mean, when I traveled, there were just so many different products that... You know, you think we're in this completely digital, distributed world, and you're like, "Okay, if something exists here, it's obviously gonna exist over there too." And I was just constantly surprised by how many products I would run into in one place that just don't exist in the rest of the world.

Shaan Puri

Right, I...

Steph Smith

Can give you another example. Just even right now, I'm living in California. I walk down the alcohol aisle in California and I see beer, I see wine, I see seltzer. You see that everywhere else, but in California, you also see hard kombucha. If I go to Florida or I went home to Toronto recently, I don't see any hard kombucha. If you actually just go on to Google Trends and search "hard kombucha," you can see the search volume trending up. It's a hockey stick. But interestingly enough, Google Trends shows you the pockets. It shows you where search volume is happening. It's only in California, it's only in Colorado, it's only in these kinds of places.

Shaan Puri

Right.

Steph Smith

...in the expected places that you would find hard kombucha. I think it's just going to take off. So someone in like Wyoming, go start a hard kombucha brand. I think you're going to kill it in, you know, the next 3 to 5 years.

Shaan Puri

Yeah, hard kombucha is a good example. There are a whole bunch of others, but the principle here is that the future is already here; it's just not evenly distributed. There's a great quote: normally, people say that about very high-tech stuff, like, "Somebody's using this advanced AI technology; it's just not available for everybody yet." In this case, what you're saying is that there are localized products that have kind of like cult followings in a local area. Humans are not that dissimilar to each other. So, if it's working in California, it's only a matter of time until that spreads throughout the rest of the country. Then, once it's working in the U.S., it'll spread elsewhere. You could be the one who gets rewarded for being ready as that spreads and helps accelerate that spread.

Steph Smith

Exactly! I wanted to share one more idea from this FSA store, which I think is actually really interesting. When you go to the FSA store, or if you just search "How can I use my FSA?" or "Can I use my FSA for Theragun?" for example, you might find a whole list of products where the answer is "maybe." This means you might need a doctor's note, or you might be able to expense this. Certain types of these products may qualify, but there's all this fuzziness around it. I think you could create a business that could do one of two things. One option is to work with companies that are on the fringe, like float tanks or red light therapy. You could say, "You have this huge amount of people that could be spending their FSAs in ways they probably would prefer." For instance, I'd rather go to a float tank than buy like 10 bottles of sunscreen. So, here’s the idea: we could help ensure that all your products are included in the FSA store, making it really easy for you to access this business.

Shaan Puri

Go ahead.

Steph Smith

I was going to say, the second is just you could do the opposite for the consumer, right? Where you could basically say: "Look, there's a bunch of these products that you probably would rather buy, but you might need a doctor's note or you might need this prerequisite, and we're going to make that really, really easy so you can spend your $27,100 on stuff you actually want."

Shaan Puri

Yeah, there's basically "paperwork as a service." A good example of that is "Do Not Pay." So, you could do it for the customer, or you could potentially create something else. I think a huge amount of this money just doesn't get used. One thing you could do here is actually say, "Look, most of this money doesn't get used. Why don't we create a subscription box?" We're just going to fill it with cool, interesting stuff. You don't have to even think about it, visit the store, or try to spend the right amount. It's just going to show up at your door—it's just free stuff for you. We will spend your account for you. I don't know exactly how the mechanics work for authenticating and giving your account so that they can spend for you, but I think someone could create a subscription box on FSA and provide free stuff to everybody. They could just take a middleman fee for being in the middle and stuffing these boxes.

Steph Smith

I love that because as I was trying to spend mine, I was on all these listicles being like it.

Shaan Puri

Takes hours.

Steph Smith

Yeah, interesting. It's like, "What can I spend my money on?" And I was just... it's so funny. It's like expiring money, and I'm like, "What possibly can I get that's worth anything to me?" And I end up buying just junk, right? Sunscreen, these sunglasses I didn't need. So yes, I think that could absolutely work if someone did the work to find out what are the best things you can spend an FSA [Flexible Spending Account] on and create some sort of subscription box or business that helps people access that stuff.

Shaan Puri

And do you know how much money is in FSA? Like, how much money is available in FSA? So the max an individual person could put in is like $2,610 or something like that, but how much is the total pie here? Do you know?

Steph Smith

So I was trying to research this before, and I couldn't find a number for FSAs, but I think I found a number around... I think there were 20,000,000 HSAs, and they're similar vehicles. So imagine that the average contribution is $1,000, right? You can put up to $27,100. Let's imagine the average is $1,000. That would mean that there's $20,000,000,000 in time-capped money every single year waiting to be spent.

Shaan Puri

Yeah, that's crazy. I'm looking at some article, and it basically says workers forfeit as much as **$400,000,000** a year in unused account cash. So, it's pretty good. I think this is, like, of many of the ideas that we have on here, this is one of the best ones. If you are skilled with either SEO, email list building, or D2C customer acquisition, this is a business in a box that you could start. I would love to see somebody start this. If you're going to do this, email me at **seanshampuri**. I will invest in you, advise you, whatever, because this is one I would make time for. I think this is a slam dunk sort of idea here. If you're going to take a shot, this is the type of shot to take. You can build kind of like a local monopoly. It's big; it's a niche, but it's big enough where you can get big in this category.

Steph Smith

It's a not-so-niche niche.

Shaan Puri

Yeah, exactly. Alright, so you have some more on here. Let's do the Better Swag Company. What do you have in mind here?

Steph Smith

Okay, so if you're like me, you've been to conferences. You go to a conference and you get **shitty** pens. You have like 10 water bottles in your cabinet.

Shaan Puri

Right, you have.

Steph Smith

All these things that companies give you are because they want you to care about their company or they want to reward you in some way when you join. But it's all stuff you never use, right? So, I imagine a better swag company, especially a conference swag company, where you're giving out things that you want people to use and to remember you by. It's crazy to me that this doesn't exist. There are only a couple of different products that come to mind when you think about swag: pens, notebooks, sweaters, and water bottles. I think someone needs to go out there and figure out what are just cool things that people are stoked to have. For example, a Yeti water bottle, which a lot of companies are giving out for free, costs around $50. It's not cheap. Instead, you could give a branded Polaroid camera. Someone would be excited to get it, and they would use it in front of other people. I'm just wondering what those other things are. Maybe they could get a pair of really cool sneakers, like Air Jordans, if you're really willing to splurge. I remember one company I worked at before had a laptop video cover that cost only 50 cents, but it was branded with their logo. People would always ask, "Where'd you get that?" They also gave out screen cleaners, which were little sprays that you'd use on your laptop. These are things that you would actually use—things that people would be excited to get. I think someone needs to create this. One company I wanted to call out is doing this, but I still don't see them really maximizing their potential. Someone should just hire a team to scout all the really cool products online and say, "This is the stuff people want," and build that into a swag company. This company, SwagUp, started in 2017. They did $5,000 in their first month, $3,300,000 in their first year, and today they're on track to do $55,000,000 in sales. The founder is 26 years old. I'm bringing this up because I think this is actually a pretty simple model. It's also simple because these businesses have money to spend. You're doing a B2B operation. You just go to HubSpot or any of these companies and say, "Look, I know swag is tiring for you. I know you probably have someone in your company that doesn't want to do this but is kind of forced to do it in their role. We're going to do this for you, and we're going to do it so much better."

Shaan Puri

Yes, shout out to Michael, the founder of SwagUp. He also hooked me up with my swag for my course, and he got me my swag with rush delivery, so I appreciate that. You're right; they do a great job. They're a pretty awesome platform. But that's not the market we're talking about here. We're discussing brands that are willing to pay way more for something that's way cooler. And "way cooler" doesn't actually make it way more expensive; it just makes it a little bit more expensive. So now you get this great trade: I will raise my budget a lot for something that's a lot cooler, but it only costs you a little more. For example, we were at Twitch, and if you think about the culture, we might want to reward our top partners, the top streamers. Now, these streamers make good money; they kind of have it all. We try to give them the VIP treatment. The same thing goes for FanDuel or DraftKings. They want to give their high rollers VIP treatment and branded swag. But if you give them a pen and a T-shirt, you sort of get lost in the shuffle. It feels a little bit cheap. Why wouldn't they do custom sneakers? Why wouldn't they do a jersey of some kind? Why wouldn't Twitch create a custom gaming console, case, or controller? For instance, a branded PS5 controller would be something you could do. In many cases, you're not even making a thing; you're just buying the retail item or buying it wholesale, ideally, and then adding a vinyl sticker wrap around it so that it becomes a branded item. I think you're right. If there's someone out there who has taste, or if you have an ad agency that's sort of struggling, this is the pivot for you. If you're tired of being a good ad agency but are tired of client services, here's what you do instead: keep rotating through unique hot products that you can customize just enough for the company, and then you can charge basically five times more. If I'm going to spend $5 a piece on a T-shirt, I'll easily spend, maybe even ten times more—I'll spend $50 a piece—if you can give me something that's unique, stands out, and is memorable. Because my business value with these high rollers or my VIPs is very, very high.

Steph Smith

Yeah, I love that you said the prerequisite for this business is taste. It has to be about identifying these products. I totally agree.

Shaan Puri

Yeah, and taste is something, by the way, that a lot of things need. Nobody talks about it because everybody thinks they have it, but very few actually do. So it's good to call that out. If you're self-aware enough, you're like, "Oh, that requires taste. Okay, cool. I'm maybe not the one for me." For example, an FSA store? No taste required. Cool. A swag company? Yeah, that takes some taste. By the way, if I did that, I would do it like Supreme. I would do it with limited edition drops. Today, companies just come up with swag whenever they have their conference. But what I would do instead is have a list of the key buyers inside all these companies. Then, every month, we would drop one new custom piece. It's like, "Put your orders in now if you want that piece, and we're never going to make that again." Then next month, it's like a new one. This is the video game controller. Next month is the sneakers. The month after that is, you know, whatever, like the laptop camera cover thing. Doing that might actually get people to buy more often than just their once-a-year kind of annual swag purchase. It will become like shopping for the company. The company will start to stockpile cool, unique things that they have to get before it's gone.

Steph Smith

Exactly.

Shaan Puri

Alright, you have some other good ones on here. Let's do... Okay, I heard you say this and I thought it sounded smart, but I'm not sure exactly what it would be. You said something like companies should have a Chief Automation Officer, or you drew some parallel. You said the way they have this today, in the future they will or should have Chief Automation Officers. What does that mean? What did you mean by that tweet?

Steph Smith

Yeah, so this title is a little silly. It's just like, you know, a neat title that you could assign to someone whose job is something that I don't see enough in companies today. You have people who are responsible for setting the goals and the strategy. Then you have a bunch of people who are actually focused on deploying that strategy. What you don't really have in companies is someone who is solely responsible for making sure that we do that effectively. As in, you know, are we automating the right things? Do people have virtual assistants and others that they can delegate to? Are we operating this company effectively? The same way that you would have a pilot who uses an airplane to get to a destination, you also have someone checking if the machine is working properly—if the airplane is operating as it should be. I think this would, you know, again, the title is a little silly: **Chief Automation Officer**. But it's someone whose sole responsibility is to go find things that can be automated or delegated within a company that should be. Their responsibility could be to have a team of automation experts, or maybe they just do it themselves if it's a small company. I think you would see the ROI on this role immediately. They would easily pay for themselves and more. I think it would be really simple. I mean, maybe in 10 years this will be more sophisticated. They would just literally shadow people in their role for a day and be like, "Okay, so what are you doing and why are you doing that? Have you ever thought about doing this?" And they'd probably just be like, "Oh no, I didn't think of doing that. I've just been doing it this way because that's how I was taught." So I think that could be just like a really simple version. I don't even think you need a chief executive officer; it can just be someone in your company where that is their sole responsibility: to improve processes.

Shaan Puri

Right, so you have, or already inside companies, you have a couple of roles like this that are internal-facing. They don't face the customer; the customer is inside the company. So there are roles like Chief People Officer and the whole HR department, the people team, as they like to call it now. Then there's IT. It basically says, "Oh great, I gotta get you the right equipment, the best equipment. I gotta make sure it works and that you can access all the internal stuff." They're more like firefighters; they just come in when things are broken. For the most part, they're there on day one and then they're there for every emergency after that. Then you have data scientists. That wasn't super common before, but now you have teams inside companies that say, "Look, we're gonna dig through all this data, we're gonna organize it, we're gonna get analysis and insights, and we're gonna hand those to the execs that run all these different functions." We're gonna say, "With this data, now you can do your job better." What you're saying is that just like there's a data scientist, there might be an automation engineer. The automation engineer might say, "Hey, we're not digging through data; we're digging through processes. When we dig through processes, we're gonna find repetitive, janky processes that are sucking up time, causing failures, errors, and mistakes. We're gonna free up those problems." We know how to do that because we are experts in this set of tools that exist. For example, this thing you're doing with Excel should be done on a dashboard. This thing you're doing manually, where you set out a reminder to do every night at 11 PM, that can be automated. Or whatever, right? This thing that you're writing, this report every day for your boss, that can be a Zapier command and just update the data automatically. So I totally believe in what you're saying right now. It's kind of annoying; I like it more when we disagree, but I totally agree with this one. The question is, what would you do if you knew this was gonna be true? Like, okay, let's say we agree that this should exist. How would you make this exist?

Steph Smith

So, do you mean within a company, or if you were going to build a business around it?

Shaan Puri

Either way, so you're Steph Smith and let's say I said this is your mission. You could do it like inside HubSpot, maybe that's a good place to start. Maybe that would be the end of it. Or you could build a company out of this. How would this come to life?

Steph Smith

So, I think if I was going to do it myself, I would do kind of what I just mentioned. I would go to my boss and say, "Hey, look, I've noticed that there are some processes that aren't efficient in my own role and in other people's roles, but no one has the time to actually focus on this. They're too busy, you know, running on the treadmill. They don't have enough time to repair their treadmill." I'd say, "Give me this budget to hire someone part-time who knows a lot about automation. Let me have them shadow me first. Then, in two weeks' time, I'll come back to you and tell you all the time that I saved so I can focus on these high-performance projects." Then, I would ask, "Can I do this for another person?" and get that buy-in to show, "Oh my gosh, look how effective this is!" Then it would spread. If I was going to build a company around this, I would basically create a program. I mean, this is basically just a course to teach people the most effective ways to use things like Zapier, no-code tools, and maybe a little bit of code so they know how to implement automation. Then, I would go to companies and do the same thing, similar to what Lambda School is doing. Lambda School allows people to test drive their engineers and says, "Hey, look, we'll give you a month free, and if you like them, you'll hire them. That month is going to be free." I would do the same thing. I would say, "Look, we've got these badasses. Your company doesn't have enough time to figure out how to make your internal processes better, so let me give you this person for a week, a month, whatever it is, and I want you to see the returns. After that, this is what we're charging for them." So, I would do kind of a Lambda School-esque model if I was building a business around it.

Shaan Puri

Right, there's also UiPath, which is a company that basically created a piece of software that's like... I don't know, I don't even actually know exactly how UiPath works. Do you? I don't know if you know, but here's what I've heard. I could be wrong. If you're the CEO of UiPath, who I think is based in Romania or something like that, you know, my apologies. But the way I think UiPath works is that they install a program on your computer, and all it does is watch what you do. It just watches where you move the mouse, watches what you type in, and it sort of looks for this pattern. It basically says, "Oh, okay, it's called Robotic Process Automation, I think RPA." And basically, the machine will just say, "Cool, I figured out how to automate that thing you were doing." Right? Like, I figured out what you do every day. You wake up, copy these 10 rows from this Excel file into this other file, add this other piece of information, and then drop the file in Dropbox. Cool, I just do that automatically now. UiPath is a very big, multibillion-dollar company. It works with big companies that need more efficiency. So I think UiPath is probably like the craziest way to solve this problem, and I'm pretty fascinated with this idea of robots. It sounds almost too good to be true, right? Like, if somebody pitched me this, I'd be like, "No, that's not how it works. A computer can't just watch what I do on a screen and automate me." And like, the reality is that apparently it can. So I would love to actually play with some of these and maybe invest in companies that are doing RPA, but I haven't had a chance to do it much myself. Have you? Do you know anything about UiPath?

Steph Smith

Yeah, so like you said, they went public recently. I think I just checked, and they're at a **$32 billion** valuation. So this is not, you know, chump change; this is a big company. But like you said, I think they're focused more on enterprises right now and figuring out just like the really common things that people do, perhaps it's like customer service or something like that. I think, you know, maybe this is just an interim solution, but there's always going to be things that a human can spot more easily by just literally shadowing someone—like sitting next to them for a day on Zoom or in person. I think there still is this gap that RPA [Robotic Process Automation]... there's always going to be a delta between what RPA can tackle and, you know, the human exchange there. So I think there's still an opportunity for you to go hire like a Chief Automation Officer or...

Shaan Puri

Have you ever shadowed someone at their job?

Steph Smith

I have... yeah, I mean, early.

Shaan Puri

Who did you shadow?

Steph Smith

Well, it was in my first job, and I remember it was in business consulting. In the first week, they get you to shadow someone in their role. But my favorite part of that is... it was like classic business consulting. Your whole day is spent in Excel, and they just go, "See that mouse over there? We're gonna teach you not to use it." I remember thinking at the time, "What? How am I gonna do that?" But yeah, it was game-changing to just see what someone does. Because when you're working on your own, you're just inventing processes, and you learn so much by just watching.

Shaan Puri

Yeah, I think that actually there should be more shadowing. I've learned a ton from shadowing. I did it for products we made before we got acquired by Twitch. We were building for Twitch streamers, and I was like, "Well, I'm not a Twitch streamer." I could try to pretend to be one, but the fact is, I'm not a Twitch streamer with a big community—the type of person we were actually building for. So, I arranged with... I reached out to a bunch of Twitch streamers and I said, "Hey, I would love to, you know, just shadow you. I'm doing this thing. What I think I'm building is going to help people like you, but I bet you've used a bunch of software where you literally look at it and you're like, 'Dude, this person didn't understand what the hell they were supposed to do. This thing doesn't work.' I want to avoid that." My way of avoiding that is, "Can I come and just hang out in the room while you stream? I just want to watch you for a couple of hours. I know that sounds weird, but... blah blah blah. I'll give you $50." And he's like, "$50? Okay, great. Why'd you say all that other stuff?" So, I went and I would go sit in the Twitch streamer's stream in their bedroom. I'm literally sitting on the dude's bed because there's no other space in the room. Everything else is like a camera or I'd be on screen. So, I'm sitting on the bed, twiddling my thumbs, and I'm watching him do things. I thought I knew kind of what it was like, and then you see all the nuances. You're like, "Oh, he literally is peeing in a bottle because he can't stand up. He's going to lose viewers." Maybe we could do something. Maybe we could build a feature that would let him have a restroom break but would keep the viewers entertained. I would have never thought of that feature if I hadn't seen the guy peeing in a bottle under the desk. There's just a whole bunch of things like that that you cannot pick up unless you're there—kind of like what they call "in situ." You're basically in the situation, watching it all happen. You'll see both those nuances of the customer, but you'll also see stuff that if you just ask them, "Hey, what are your biggest pain points?" they'll tell you a few things. Then you watch them and you're like, "Dude, you spent half your day doing this." They're like, "Yeah, well, you just gotta do it. You gotta do what you gotta do." You're like, "No, you don't have to do that. I could solve that. You just don't know." So, you didn't tell me when I asked you, but when I watched you, I saw something different. So, I highly recommend shadowing for many things. If you want to know if you want to do a job or if you want to build a better product, shadow somebody.

Steph Smith

Exactly. I think this is actually why, if you had someone shadow you who is focused on automation, they would ask you those same questions. Like, "Why do you do that?" and you'd be like, "I just do it. This is the way it has to be done." They'd be like, "Actually, no. I can eliminate this in 30 minutes and you'll never have to do this again." So, I think shadowing... you're absolutely right. You think there's all this really intentional process behind what you do, and as soon as you just start asking questions, like shadow yourself. Literally, write down all the things that you do in a day as if you were leaving the company tomorrow and had to pass this on to someone. I bet you there's going to be all this stuff that you're going to uncover where you're like, "Oh, actually, I don't know if we should be doing it that way."

Shaan Puri

Right, right, right, right. Yeah, totally. I've been hiring a bunch of people who are like virtual assistants in the Philippines, basically to automate a bunch of things in my life as well as in my company. When you do it, you're like, "Okay, if this random person, who you're paying $5 or $6 an hour, how are they going to do this task that I used to pay somebody in the U.S. this much money to do?" So, I need to write a script. The script is basically like, you know, I'm coding a Google Doc for a human to execute this same thing every day or every week. Every Friday, I say, "Do this." I can see how you can do that in software, but doing that process for yourself when you're trying to automate yourself out of something, you're right. It's like the easiest way to see a bunch of inefficiencies and leaks in your own game is when you try to write the script for somebody else to do what you do. It's like, "Oh, either you find out, no, this can't be delegated because there's actually just a bunch of intuition and creativity here," or you're like, "Oh my God, why do I even do this task? And why do I do it this way? This makes no sense."

Steph Smith

Totally.

Shaan Puri

Alright, let's do a couple others that I think are interesting. Let's do... I actually... okay, I'll let you pick. So we can either do: 1. The BevTree thing 2. Expired patents 3. The TikTok China factory thing Which one is most interesting to you?

Steph Smith

So, either Bevtry or expired patents. Let's do Bevtry really quickly. I don't think there's too much of a takeaway here, but I think it's one of those things that may actually be interesting to you if you're operating a company. A lot of the time, when you create a product, you think about how to market it afterward. Bevtry was a really interesting inversion of that. I was in Toronto recently at a friend's house, and they asked, "Do you want a drink?" I said, "Yeah, sure. What do you have?" They told me to open the fridge, and I looked inside to find a dozen different types of drinks, but only one of each. I asked, "Alicia, why do you have one seltzer, one cider, one type of beer?" She replied, "Oh, it's because of Bevtry. Have you heard of Bevtry?" I said no. Basically, it's a really simple acquisition tactic. You give them your phone number, and then they text you. You're on a text list where they say, "Hey, do you want our next alcohol drop?" They literally just show up at your house and give you free alcohol. I was like, "No, no, no. This can't be true. Are you paying for this? Are they selling your data?" She said, "No, they just give me free alcohol." I asked how many times they've done this, and she said, "They've done it like four times." It's similar to something like BlockFi, where you can work your way up a list if you start referring other users. I think they have this massive list of users. The reason I find this especially interesting is that, one, I think they actually get the alcohol for free. That's why it's all disjointed; you're not getting a six-pack, you're getting one of this new drink that some brand is launching. I also think it's really interesting because they have zero product today. As a company, Bevtry is not selling anything, but you can see a little glimpse of it in the app. She opened the app, and I was like, "Oh, let me see this." You can see that they're going to add new products. It almost looks like one of these super apps that you would find in Southeast Asia, where they're probably going to sell you some food or come up with their own alcohol brand. Who knows what they're going to do with this? I thought it was really interesting because most of the time, you create a product and then market the hell out of it. For some companies like Uber or HelloFresh, they're splurging so much money on acquiring users. I thought this was a really interesting inversion: what if we actually figure out the easiest way to attract a large mass of people and then figure out the product afterward? I don't know if you have any thoughts on that, but that's the Bevtry story.

Shaan Puri

Yeah, I think there's some good and some bad in that. The good part is that usually there's a lag time while you're waiting for your product to be built. It takes time to get your formulations right, or you're waiting for the engineer to make the app, or whatever it is. You can either sit on your ass and do nothing, or you can actually go and build your customer list. Ideally, this would be with an experience that is similar to what your product is, so they get to kind of sample it manually before it's available full time. The downside is, let's assume I don't... would you know what the actual product is going to be for Bev Try? Is it going to be a subscription for drinks? Is it going to be... I have...

Steph Smith

No idea. I don't even know.

Shaan Puri

Delivery candidly, if they know.

Steph Smith

I mean, they probably do have some sort of strategy there. But so far, there's nothing in the app that indicates what they're going to sell.

Shaan Puri

Okay, fair enough. So, we don't know what it is, but the risk is you can build a big, interested customer list with samples and tips and tricks of marketing. However, the big risk for most startups is that you don't have **product-market fit**, meaning you're actually not building something that somebody wants, is willing to pay for, and is going to keep using. You're kind of working on the wrong problem in a way. You may only need 100 customers to find out if you have product-market fit, or 1,000 customers. Yet, you're sitting here trying to build a 10,000-person or 100,000-person list, and you're going to go to them with the wrong product. The other thing is that these lists are **perishable**. I've had many waitlists, and for every week that the waitlist goes by, another half of the people on the list forget what they signed up for and don't care. So, you're like, "Oh, we have this..." At one point, I had a 1,000,000-person waitlist for an app that we were building because I had this viral video, blah blah blah. So, 1,000,000 people on the list, but by the time we actually went and hit them up, it was like, I don't even remember what it was, but it was something pitiful like 10,000 or 20,000 people who actually tried the thing. It's like, "Oh, 10,000 or 20,000? I could have just paid $10,000 and gotten that through direct marketing, and they would have actually been maybe my perfect target market." So, you know, this million-person list didn't actually turn out to be that useful. I've seen this many times; every waitlist decays in value over time. I would say that's like the downside. But in general, you have to decide how you're going to build your company. Is it product-first, or is it audience-first? For me, I built an audience first, and then I can launch things like a course or a book or whatever. It's easy then because I have an audience. You can build it community-first; you build a community like, you know, trends or whatnot. You have to decide. It could be partnership-first; you sign some big licensing deal or distribution deal with someone who has big reach, and that's your first move. Then after that, you go build the product. It's not so bad, and I think all these can work, but it's good to be intentional and not try to do all of them. If you try to do all of them, you're going to split your focus. So, you know, that's kind of my thoughts on that strategy.

Steph Smith

No, I think that's spot on. I think you're totally right that these are absolutely going to decay. These types of lists don't have the same kind of intentionality in the way that you're acquiring customers because they want free alcohol. You don't know what else, right? On top of that, I think one kind of parallel to this, which I think a lot of people know, is that you're almost doing arbitrage. It's like, "Let me find these big companies that have alcohol that they want other people to know about. They're going to give me the alcohol for free, and I'm going to use this to acquire customers at basically no cost." Another parallel business that does this is subscription boxes. A lot of people think subscription boxes are about buying a bunch of products at scale and then selling them to other people for a margin on top of that. Well, actually, a lot of subscription boxes just get their products for free because these companies want to be in it. So anyway, I think that's just a kind of parallel business approach.

Shaan Puri

Yeah, exactly. It's good to see these patterns because you can figure out how to apply them. I wanted to ask you, you make stuff. You create content and products, and sometimes you probably invest some of your own money. I saw you put something in here about TransferWise, a stock, and it made me think: does Steph own this stock? What does Steph own? What does Steph like to invest in? So I'm curious. Give us the rundown on what you do. You're building the stuff you make, and then what do you do with your money? How is that different from what you've heard me or Sam do with how we build and how we invest?

Steph Smith

So, I mean, I'll start by saying I'm actually a terrible investor. It's funny because early on, especially when I was writing for Trends, I look back on that time and I'm like, "If I just invested in all the things that I wrote about, I would be really wealthy," which I didn't. I think the reason I'm a bad investor is because, like other people, I think I'm smarter than the market. So, I make bets, and you know, I'm not smarter than the market. I mean, not financial advice, but the best way to make money, right, is just like index funds. That's what Sam does. But I also would say that I think, in general, the way that I spend my money is that I especially today try not to focus on markets at all. Meaning that I invest most of my money in just my own projects. I'd rather bet on myself than anything else. So, I know that's kind of a cop-out answer, but that's my investing strategy today.

Shaan Puri

Okay, so what does that mean? Give me an example of you investing in yourself. Let's make it real, because it is kind of a cop-out answer. On this podcast, we don't let "invest in yourself" slide as the best answer. We say, "Alright, what are you doing? What did you invest in?"

Steph Smith

Well, okay, so the idea of investing in myself is partially about anything I want to buy that is education-related. I buy it. We've talked about this with Sam before. But it also means that I don't spend any time looking at the markets anymore. I think last year, when everyone was looking at the markets, I did the same thing. I made a bunch of bad bets and shorted the market. We've heard the story before. So now, I have my money in indexes or a couple of stocks that I like, and then I don't touch it at all. I never look at the market these days. Instead, I just spend all of my time, which I view as an asset in myself, learning skills and building things online.

Shaan Puri

So, what are you learning? What are you investing in to build your own skills right now?

Steph Smith

So, most recently, I'm invested in... I'm taking an automation course. It's just a Python automation course because I believe in this idea of automating every possible thing in your life that you don't need to be the one doing. I also created a course around this topic. It's called "Doing Time Right," which is all about this. We call it the **Bicycle Framework** of how people should think about spending their time. It's just a sequential framework where a lot of people think about how to move faster on their bike to get to their destination. The course is all about how to first eliminate whatever the hell you should be eliminating, then automate, and then delegate. So, it's just a sequential framework that teaches people how to do that.

Shaan Puri

Well, how does that relate to a bike?

Steph Smith

So basically, the way that I view it is, if you're going to create a $1,000,000,000 company or do something really impressive in your life, those are the things that you look back on and think, "Wow, I did it." Those experiences are like cross-country bike journeys. If you want to cross the country on a bike, it's going to be kind of hard, right? You might not show up every day, you might quit; it's going to be pretty grueling. What a lot of people do when they're pursuing these really audacious goals is they just get on their bike and wonder, "How do I bike faster? How do I get to this destination faster?" Really, what you should be doing is first laying out your map. This is your strategy. These are your goals. "Where do I want to go? What am I going to run into? How do I make it most likely for me to actually get to my destination?" The second thing is **elimination**, which means that as you're on your bike, if you just hop on, you probably have all the stuff that you thought, "Oh yeah, I need this." Maybe you have a monkey on your back, or you have a bad bike, and you're just going on your journey. So, elimination is about getting rid of all the unnecessary stuff. This includes all those random detours where you're like, "Oh, it'd be kind of fun to go to this petting zoo," or "It'd be kind of fun to see a movie." That's fine every so often, but ultimately, infinite detours mean you're never getting to your destination. The third is **automation**, which means basically getting an electric bike. How much easier is a cross-country journey if you have a machine working on your side? You still have to hop on the bike and pedal, but it's just going to be a lot easier to get there. **Delegation** is kind of like the more badass version of automation. It's about taking things that, again, you don't want to be doing, and in addition to automating it with a machine, now you have a human who is even more contextual. So that's like upgrading your bike, you know, getting the best electric bike on the market. By the end, we have these images that we created for the course. There's this image of someone biking cross-country, smelling a flower, with the sun shining outside, and they're thinking, "Wow, this is actually like I want to be on this journey."

Shaan Puri

Right.

Steph Smith

And so anyway, that's kind of the foundation of the course. We actually show people exactly how to purge their inbox and zap the hell out of their project stack, and things like that. One interesting little thing that I tweeted about recently from the course that I'll just call out is we came up with all these little frameworks. One of them is **expiring to-dos**. We all have this long list of to-dos, and some of them are just not that important. You know, you come across an article and think, "I should definitely read this later," or podcasts that you say, "I should definitely listen to this later." Then you end up with this never-ending to-do list. So, I came up with this super simple Notion template which expires certain types of to-dos after 30 days. You could set it to 7 days or even 90 days. I think that's actually a product that someone could build—a productivity tool that's centered around using your psychology for you, right? So, **expiring to-dos** would mean having it so that you can't actually see your full to-do list until you get the number one thing of the day done. Then you could just kind of think through some of those psychological hacks and implement them into an actual productivity tool.

Shaan Puri

Gotcha. You don't know this, but I hate productivity tools. I know I feel like that's the first thing everyone builds: a better to-do list. Then they build better invoicing, and then they build better time tracking and things like that. That's like the engineers' rite of passage. As a general business rule, I'm like, just don't build productivity tools or build things that don't seem like productivity tools but are actually productivity tools. That works. But if you build something that's supposed to be a productivity tool, I'm like, that's just like a death pit I just love to avoid. But I do, I'm with you. I think productivity matters, and you know, I just don't like to build tools in that space. But okay, I like that. That's pretty cool. What about your philosophy? Do you have anything in your philosophy around either building or investing that is different from me or Sam or what you've heard us talking about?

Steph Smith

That's a good question. Is there anything different than what you and Sam have talked about? I don't know. I think that, so I basically take the investing approach of Sam. I also think that one of the things that I've done, which maybe you did as well, is build the podcast in this way. But I don't see enough people doing this. A lot of people think that they either need to go binary—in the sense of like, "I need to quit my job and build something," or "I need to just do my job and, you know, one day I'll build a company." I actually think that the hybrid approach is possibly the best approach. You have complete financial stability through your job, right? So you don't need to worry about that. This means you can be really risky, really creative, and really authentic with anything that you build on the side because you're not worried about, "Oh, how do I convert these people today?" or "How do I make sure I have dinner on the table?" That's what I don't see enough creators doing. They think they need to go like full Zuckerberg, drop out of school, and scale a business right away. When I see a lot of indie hackers do that, they burn out real quick because they're like, "This isn't even fun anymore." I also like, I thought I could make money in three months, and I can't. I think maybe that's not different from what you and Sam have done, but I think that's different from what I see a lot of creators do.

Shaan Puri

Okay, fair enough. Yeah, I actually think, in general, it's better not to take hybrid approaches. Hybrid approaches are typically kind of compromises or "have your cake and eat it too" scenarios that you're trying to achieve. If you just really stated what you wanted, the question is: are you doing the hybrid approach because you want to do both things, or are you doing it because you're afraid the thing you want to do won't work? Essentially, it's about fear; you have some doubt about the idea. I've definitely done both. For example, I started the podcast while I was at Twitch, and since then, I've quit Twitch and now do it more or less full-time. So, I have experience with that. However, I think you could apply this to hobbies. I consider investing a hobby, and I consider podcasting a hobby as well. But I don't think you can do it with company building in the same way. I wouldn't advise a hybrid approach for that. When it comes to company building, if this works, the prize is big. In order for this to work, your commitment has to be full-on. You should just go all in once you have conviction. For everyone, conviction comes at a different level. I'm the type that tends to default to conviction quickly and then change my mind once I have evidence that it's not right. So, I would say we probably differ a little bit in that I'm not a huge believer in the side hustle, even though it looks like I have tons of side hustles. I actually think the optimal path is to know what you want and then go for it. If it doesn't work out, you can always fall back on a job and things like that. America is kind of a great place in that sense, where failure is rewarded here, unlike any other culture I've ever seen. Because of that, you can use it to your advantage, especially in the tech industry. I did a failed startup, and that's considered solid experience. You learn from screwing it up, and I don't think that's true for most industries and cultures.

Steph Smith

Yeah, I think there are a couple of examples where I often agree with you. If you're going to create the next billion-dollar company, then yes, you have to go all in. However, there are tons of examples where, like the Google founders, they made sure they finished their PhDs before actually going all in because they wanted that stability. The same thing goes for the Spanx founder. I think she was, I can't remember if it was her or someone else, selling printers to ensure she had the long-term vision to build Spanx. But we can agree to slightly disagree on that one. Why don't we do one more? Do we want to discuss the expired patents?

Shaan Puri

Let's do... Hold on, let me look at this list. I think there might be a better one than that because I think that one we might have talked about before. Let's talk about this financial... this Fidelity rule change and what that might mean. So, talk about the Fidelity thing that you had here at the bottom.

Steph Smith

Yeah, so Fidelity recently launched trading accounts for 13 to 17-year-olds. Before this, I'm not sure if they just didn't have them or if it was illegal. You've talked about how rule changes are game changers and they unlock innovation. So basically, now teens can open accounts. They do need to, I believe, have a parent open the account for them. But basically, there's this new wave of investors. We've seen the same thing with Robinhood, where they are able to trade, make deposits, and buy ETFs—all of those things. I think that you have this new huge cohort of people, and that'll continue to be true. Someone needs to create some sort of financial education game for these children because the parents are going to be way more likely to allow their children to trade these stocks if they've had that education. Also, I think you can make it fun, right? We've talked before about how education is really boring most of the time. So I think, like the TikTok generation, someone should go create a financial education game for these kids.

Shaan Puri

Yeah, there was an idea that came up in the episode we did with Elaine. She said something that has stuck with me: "Why isn't there fantasy sports for trading?" Or, in other words, "Fantasy football for trading." I thought, that's kind of a great idea. This reminds me of a trend where companies like Robinhood captured an opportunity that was hidden in plain sight. They realized that more people would trade if you lowered the friction. They put it on their phones, made it no fees for every trade, and simplified the user interface. You could just see pretty charts and push buttons. They even offered a free share of Apple or Tesla when you signed up or referred friends. They really "Gen Zed" it up and did a good job there. Now, there's a whole wave of stock trading apps. Some are like social networks, while others are super hardcore for options traders. I actually think someone should explore the other quadrant of the chart, which is basically doing it for fun, not just to get rich. What does that mean? I think a fantasy trading game could be interesting. For example, if I had a teenager, it could be something they could do with their friends or family. Everyone would create a monthly stock game. The way it works is that everyone gets the same budget, and then they allocate that into different stocks. Everyone can see what everyone invested in, and it plays out over the course of the month. Every day, there would be trading news, creating ups and downs as you go. Essentially, you would create a fantasy sports game around the stock market. I think if you did that, you could definitely tap into a large audience. Fantasy sports already has over 50 million players. While a fantasy version of trading may not reach that number, I believe you could get into the millions of participants, which would be very valuable. Those leads would be extremely valuable because you could upsell them into actual trading. They would have seen their fantasy portfolio perform well and think, "Oh my God, I should go play the real game." Whether you build it yourself or sell it off to Robinhood or partner with them, you could even have a premium version where users pay extra for advanced charts, metrics, or saved history. So, what do you think of this fantasy sports idea for the stock market?

Steph Smith

No, I love it because, as I said, I think a lot of the time people try to acquire users like, "Let me just do this promo or something." Really, the easiest way to acquire users is to make something fun, right? So you would acquire all these users through this game. The beauty of acquiring users from 13 to 17 is that in 5 years, they're gonna be 18. Maybe some people would think this is a little predatory, but...

Shaan Puri

To shop, you know.

Steph Smith

Yeah, exactly. To 22 and even past that, they're just going to be scaling in net worth, and you're acquiring them when they're really cheap and when it's easy to acquire them through things like a game. You don't really see many banks [doing this].

Shaan Puri

Doing that, like Steph the Shark, I love it. The predatory stuff comes out. No more nice stuff on Twitter. This is the real calculating, cold-blooded killer.

Steph Smith

Why do you think YouTube and Instagram want to create versions for kids? I mean, it's so that they can acquire users easily and then kind of stick with those users for the next 5, 10, 20, or even 50 years. I think, again, it's predatory. So if someone does this, please, you know, do it well and do it with good intentions. But it's true that this is a rule unlock, right? These people are coming online; they have access to these products. If you can do it in a smart way where parents feel good about your product, unlike how parents might feel about something like Instagram for kids, then I think you're going to get a huge swath of users that will carry through with you for a long time.

Shaan Puri

Love it! Okay, great. Where should people get more Steph? I think a lot of people are going to listen to this and be like, "Oh, she's amazing! How do I get more Steph in my life?"

Steph Smith

So, the place I'm most active is on Twitter. My handle there is **@stephsmithio** because my website is **stephsmith.io**. Obviously, I work on trends, so people can go to **trends.co** if they're interested in that. We mentioned the productivity course earlier. I know productivity can be a really fuzzy thing, but if people are interested, that course is at **doingtimeright.com** because my original book was **doingcontentright.com**.

Shaan Puri

And I think you're supposed to be helping with the podcast now, is that right? What are you doing for the pod?

Steph Smith

Well, Sam tried to get me to help because you guys are growing so quickly and you need more help. I think you're hiring a growth marketer, though.

Shaan Puri

Oh, gotcha. Okay, so you're not helping in the end.

Steph Smith

I mean, I'm here to help if you need help. But I think I have a couple of other projects that HubSpot has me on.

Shaan Puri

Okay, alright, sounds good. I don't know how they could put you on anything but the most important topic of all in HubSpot, which is this podcast.

Steph Smith

Exactly, we...

Shaan Puri

All know the truth. Alright, Steph, this is great! Everybody go follow Steph; this is amazing. Thanks for coming on. I appreciate you.

Steph Smith

Thanks for having me.