#80 How They Built It: Launch House - Building the Next Y Combinator

Brett Goldstein is Co-Founder of Launch House, a private community focused on connecting and supporting top entrepreneurs. In this episode, Brett and Daniel discuss innovation, the future of education, and vibes as a moat.
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August 14, 2023
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Brett Goldstein spent a year traveling to 18 countries, volunteering as a music teacher in refugee camps.
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#80 How They Built It: Launch House - Building the Next Y Combinator

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“If you can create a strong vibe where people feel deeply connected, deeply indebted to the community and the mission, you're set. Nobody wants to join another professional networking group anymore. They're looking for a good vibe.” – Brett Goldstein

Brett Goldstein (@thatguyBG) is Co-Founder of Launch House, a private community focused on connecting and supporting top entrepreneurs. Brett was previously a product manager at Accenture, Google, and Clearbit

To listen to Brett's quick interview on habits, routines, and inspirations, click here.

Chapters

  • Brett's background as a product manager
  • On investing early in Bitcoin and Ethereum
  • Mergers and acquisitions
  • The origins of Launch House
  • How innovation happens
  • The future of communications technology
  • The future of education
  • Y Combinator vs. Launch House
  • Vibes as a moat
  • The outlook for Launch House

Links

Learn More About This Topic

20 Things You Didn’t Know About Launch House

A quick and dirty intro to what Launch House is and is not.


How Y Combinator Changed the World

A great intro to how Paul Graham started Y Combinator and grew it to the well-respected entrepreneur accelerator it is today.


Choreographing “Creative Collisions” and Collaborative Innovation During COVID-19

The Global Institute on Innovation Districts outlines a few great examples of districts that have excelled at facilitating innovation, even with virtual-only spaces.


TED Playlist: Community

This mega-playlist addresses all aspects of building and maintaining community.


Gather

Brett mentions Gather.town as an excellent tool for facilitating creative collisions and organic community. Explore a few of Gather’s social spaces to see how it works.

Transcript

Daniel Scrivner:

Brett, thank you so much for joining me on Infinite Games. I'm so excited to have you.


Brett Goldstein:

Thanks for having me.


Daniel Scrivner:

So to start ... I mean we're going to spend the vast majority of our time today talking about Launch House which is something that you and your cofounder and your team launched last year in 2020, but I want to start with just a little bit about your background, just to get people up to speed. Can you just share a quick sketch of the things that you did professionally before launching Launch House?


Brett Goldstein:

Yeah, it would start in college. I thought I was going to go get a PhD in computational cognitive science which is a nerdy Boomer way to say machine learning without the fun stuff. And I decided that machine learning, AI thing probably wasn't going to be very important. First big mistake. And I got a job at Accenture in the research and development group which is the best of both worlds. I got to do some management consulting, but I also got to learn about emerging technologies, built proofs of concept like a product manager but not quite. That's where I got to go and visit the Coinbase headquarters in 2013. I got to see Stripe very early as well, all those big companies now. Actually still at Accenture, I helped start [inaudible 00:01:06] that is now Accenture Ventures which is the venture fund.


Brett Goldstein:

And then obviously, that naturally led me to Google where I joined the M&A team where initially was my job to look at the M&A team itself and say, "How can we do better? How are we doing?" Turns out there are billions of dollars of acquisitions that are not actually very good acquisitions.


Daniel Scrivner:

You don't say.


Brett Goldstein:

Yeah, you don't say. So as an early 20-year-old, 20-something-year-old, it was my job basically to go and write up some reports for the executives and tell them why their acquisitions were not that great. And that was cool, but then I got an even more interesting role where I was looking outwardly at the ecosystem and it was my job to look at emerging startups, looking at different trends and produced these reports every month that were consumed by the CEO and the other executives. So this was on chatbots back in the day. This was on the sharing economy back in the day. This is on AR and so I got to present one actually directly to the CEO which was really cool for a 20 something.


Brett Goldstein:

And then realized I wanted to be an actual builder. I wanted to actually make stuff, so I switched over to product management at Google where I was working on some early AR stuff in the comms org which is infamously known for all the messaging apps they like to launch. That was really cool, but got a little bit burnt out on big company culture and decided to take my obligatory eat, pray, love trip around the world where I inadvertently visited a bunch of religious sites. I was producing music on the side because I've been doing that for a long time. I taught music in some refugee camps, went to the World Cup. It's cinematic to say the least.


Brett Goldstein:

And I came back and was trying to figure out what I wanted to do. Obviously, I wanted to get back into product management. I was thinking about starting a company in the religion space at that point but realized that I wasn't quite ready. And so I found this seemingly uninteresting B2B SaaS company called Clearbit, but what was fascinating to me about them was the corporate culture which was very, very much about self-actualization, very much about just an honest truth that, "Hey, nobody cares about B2B SaaS in the grand scheme of things. We're just here to hang out, become better people, become better professionals and hopefully make a ton of money in the process." So that honestly was pretty cool. I joined as a PM, and then soon after that, actually year later, I left to go and started Launch House.


Daniel Scrivner:

It's a fascinating background. I know you talked about going and getting to visit Coinbase in 2013, I believe you were an early investor in Ethereum and Bitcoin. Do I have that right?


Brett Goldstein:

Early-ish, yeah. 2014, 2015, yeah.


Daniel Scrivner:

Which is very early. I first started poking around in 2015, 2016 because one of my younger brothers actually works as an engineer at Coinbase and introduced me. What was it like for you, take us back in time, what did it feel like to go and tour and did you think that there was something there in Bitcoin or Ethereum or were you just more curious about where it would head?


Brett Goldstein:

Honestly, I would frame it how we are right now. So we have all these crazy NFTs happening. We have all these products, platforms like OHM, the Olympus DAO and other interesting things emerging. And there's actually so much stuff that nobody really thinks about it in terms of this really long term. There's this hype cycle right now, but still there's so much noise and there's so much stuff happening that it's actually hard to tune out everything else and say, "Hey, this is actually going to be the thing long term." So I thought cryptocurrency was interesting.


Brett Goldstein:

I went to like a Future Of Money Conference where there were literally 40 people there and only one booth about Bitcoin, and yeah, it was nuts. It was like a lot of fintech. I thought it was really boring. And I thought honestly, crypto, Bitcoin was a little bit abstract in early days, because in the early days, it's all ideas, it's all potential and a lot has to go right for things to happen. So it actually took me a while to read the actual white paper and go down the rabbit hole, but when I did, I actually saw that it was pretty fascinating and exciting. It was until like 2016, 2017 that I was seriously thinking about joining a crypto company.


Brett Goldstein:

I was interviewing at Consensus and Protocol Labs a little bit later and another one called Status. And what I realized is that it wasn't the time for me to join the industry because I think what the audience crypto resonated with was finance people, cryptographers and computer scientists. And not being any of those, having a deep appreciation for all of them, but being semi-financially illiterate, just kidding, not having interest in a lot of those on an intellectual level meant that it was not appealing to me. So definitely understood the potential, but it wasn't ingrained.


Daniel Scrivner:

Well, I think you said it very well because I agree, we are in the middle of a giant hype cycle and I think there's both people that believe that cryptocurrency has "made it" and there are people that believe that we're still in incredibly early innings. I think some of the examples of DAOs you talked about. You saw the kinks with DAOs, all the potential are super interesting. I wanted to just ask a couple of questions around your product manager experience at Google and Clearbit. The question I wanted to ask you is, for anyone that's spent some substantial amount of time in that role and I would say, one, Clearbit is a fascinating company, I've spent a bit of time researching, so it's interesting to hear a little bit about that background, Google obviously one of the biggest companies in the world where product management is this honed thing, from those experiences, what did you take away or what's your take on what makes a great product manager?


Brett Goldstein:

I think it's a couple things, but I think the main thing is being able to zoom in and out. So one of the hardest things is that I think you have to have high level basically to see the full picture, understand the frameworks, the macrotrends, the microtrends, understand your place in the market but also understand how generally things work, understand how talent flows in and out of companies. Because guess what, your job is to inspire talent to build great products, understand how consumers adopt products. These are things that can be learned from like Paul Graham essays and other stuff like that, but it's really important to understand this broader thing. Otherwise, you're never going to make it as a product leader. Never. Otherwise, you're going to be an executor your whole life.


Brett Goldstein:

But on the flipside is if you actually hadn't zoomed the clouds and you can't actually articulate what this means on a low level for an engineer and understand how micro decision impacts that larger thing, then you're not going to make it either, so NGMI, yeah.


Daniel Scrivner:

And you really need to be able to expand levels, so be able to understand that high picture, navigate down.


Brett Goldstein:

Exactly.


Daniel Scrivner:

So it's interesting to thinking about your background of starting at Accenture and you're starting at that high-level perspective, although you are certainly working with companies, working with founders, but at Google then and as a product manager, you start to work cross functionally and you work across [eng 00:08:11], across design, across marketing which is very similar to obviously being a founder. What was that experience like for you and did you have any aha moments or learn any lessons when you actually got into the weeds of what it means to work cross functionally?


Brett Goldstein:

Yeah, I would say one of my biggest learning is about persuasion and deeply understanding what other people need in their lives, not even for their jobs, right? Understanding how people are measured and evaluated both at work like, "Hey, if we don't do this launch, the marketing team is going to have a tough time when the bonus season comes around," or, "If we don't do this, then the eng team is going to have problems," or, "If this person specifically is going for promotion right now, I need to be really thoughtful about that." And then also understanding what they want from their lives and saying, "Hey, this young, energetic person, they want to be the next Elon Musk," or, "Hey, this person, they had an illustrious career already and they're just trying to chill out and kick back and they want to be recognized."


Daniel Scrivner:

So understanding motivations I'm sure as a way. Obviously, at the end of the day, it sounds like your perspective is you're building a team to go and accomplish something, so then you need to assemble those people and understand what's driving each of them. On the M&A side, it's interesting to talk about some of those reports, so I guess that gets into a little bit of what you were doing there. What do you feel like you learned about M&A in that role because I think M&A is this interesting thing that as you allude to, you hear the stats, you read stories. Obviously, there's headlines all the time about different deals that are getting done. You obviously know a lot of those deals are bad. What did you learn actually being in the seat of helping the team think through that about M&A?


Brett Goldstein:

One of the simplest things is I think because there's so many headlines about M&A deals happening. It seems like it's a very likely scenario, but I remember being shocked here about all these companies that I knew about that I thought were great companies. And when we looked into their financials or learn more about them, they were actually bad companies or they're actually not good acquisition targets and they wound up totally floundering. Basically, M&A is not an easy thing to pull off like most acquisitions fail. And so no founder should expect that as a possible outcome. There are ways that you can make it more likely, but it's actually very hard to pull off.


Daniel Scrivner:

On the similar hand, any generalizable lessons outside of that one that might help other entrepreneurs or founders? So I think, one, just what you just shared around expectation setting like, "Don't assume this is an easy thing, that this is a sure thing, but that you can count on this," any other maybe on the flipside of how to think about M&A and when to do a deal? Any generalizable lessons?


Brett Goldstein:

Yeah, so I think this is pretty standard in the M&A space is that if you're a great company and you're doing well, that's the best place to be in from an M&A perspective. So the idea is that don't wait until you're like really suffering to think about M&A if that's an outcome that you're thinking about. Because basically what usually happens or what I see a lot is that companies start not doing that great. They start doing bad, just chaos ensues, team members leave. And then they say, "Dang, I got to sell the company." And so suddenly, you're in a terrible negotiating position because your company is not doing well, you want to get out. Whereas if you are doing extremely well, that's the time where you're saying, "Hey, we're doing really well. If you want to buy the company, now is probably the time. If you don't want to buy it now, it's going to have to be for a lot more in the near future."


Daniel Scrivner:

Maybe set a different way because I think that's totally right. That's been my perspective experience as well too, is you need to be assuming that you don't need an M&A deal to get an M&A deal. And then it should basically be a peer opportunity of, "Should we sell the company alongside? Should we continue to raise? Should we IPO? Should we," yadi, yadi, yada and so it's like a fork in the road.


Brett Goldstein:

I wouldn't waste a ton of time on M&A, but if it's an outcome you're thinking about, I would explore it in the very early days alongside fundraisers because that's usually when you have everything tightened up, that's usually when you have your story, good to go. And if you have acquisition offers, investors love to hear that there's an exit potentially. Obviously, they don't want a 2x or 5x even exit. They want something a lot bigger, but it's nice to know that there are potential buyers.


Daniel Scrivner:

It's validation for sure along the way. I want to now transition and we'll spend the rest of the episode just talking around Launch House and anchor it for people just to I guess as a fun way to launch into the story because the origins of it I think are somewhat fascinating in that it was this wild, not even a bet, this wild idea that ended up snowballing and turning into something. Can you just share the story of this first Launch House you guys launched in Tulum and the origin story there?


Brett Goldstein:

Yeah, so it starts in the middle of the pandemic. We, like probably every single other person, were filling out a little bit of cabin fever, a little bit of isolation and a little bit stuck. And it was to the 10th degree because we were all trying to start companies, my friend, Michael Houck and a handful of other people. And so Michael had this fun idea and we're actually in this digital founder program and it wasn't cutting it. We were just in these Zoom calls all day. It was cool and it was exciting, it was awesome to meet other founders, but there's only so many Zoom calls you can take and that's not really how innovation happens from a broader perspective, so decided to get this beautiful Airbnb in Tulum and he just hustled and gotten a bunch of friends to live in it. Most of these friends were also trying to start companies.


Brett Goldstein:

And so that's all it was going to be. It was just going to be a vacation, a cool one-month vacation, very risky and yellowy vacation because it was in the middle of pandemic. But we decided to get a little bit cheeky and we named it Launch House in five minutes after the TikTok houses and we said let's pretend this is a reality show or TikTok house for the tech industry. And we blasted out a tweet that said, "Hey, super excited to announce Launch House, but it's a reality show where 18 entrepreneurs who have never met before live together in a house in Tulum. Follow us on all our socials to learn more, whatever." It gets retweeted, semi-viral in the tech Twitter world and then it snowballed from there. That was like a fire that ignited.


Brett Goldstein:

So basically, we had tons of people reaching out to us saying, "Wow, this is awesome. I want to come down," or, "LOL, this is funny." We actually had some people reach out to us and say, "Hey, if you want to make this into an actual reality show, you should because we know that Netflix and these other streaming platforms are interested in this exact concept and you guys can do this." And so we said, "Wow, that would be a fun pandemic project creating a reality TV show." So after the first house, we booked the second house and we flew down a videographer. We filmed the full sizzle reel to make this reality show cross between Shark Tank and The Silicon Valley and stuff like that, Terrace House meets Shark Tank something.


Brett Goldstein:

And we decided to go to LA because we wanted to build momentum, so we're in a better negotiating position with Netflix and stuff, so that we didn't have nothing, but it's just this big joke that we're just ... You know when your friends are just taking a joke a little too far and you're like, "Well, is this joke now or maybe it's not?" That's basically what was happening, but then the joke was on us because two really important things happened in both of those houses, and basically every house since then, is that, number one, amazing companies were created. So people from those first two houses raised money from A16Z, Sequoia, YC, all these are the cream of the crop, amazing, amazing investors.


Brett Goldstein:

And the other important thing is that a lot of those people are still incredibly close friends. So there are amazing friendships and amazing companies born out of those first two houses and basically every house since then. So we're like, "Hey, wait a second, maybe a reality show is not the right thing to be building, to be creating right now. This seems like misaligned with, "Actually over the long term, the incentives would be off because we'd be creating a cringy reality show, we wouldn't be able to attract great founders and then why don't we just create the next YC or something along those lines?" And so we kept on pushing down this path, formalized our company, made it an actual thing to raise money from actual venture capitalists and organized ourselves around this vision of the university of the future and particularly in this context around community, which is important to touch on because that's why we were there in the pandemic is because we wanted human connection. We didn't want another Zoom call.


Brett Goldstein:

And it was kind of a contrarian point because in the tech industry, we like to say everything is solved by technology. It's like the hubris of the tech industries.


Daniel Scrivner:

It's not at all.


Brett Goldstein:

It's not, it's definitely not. And so there are these intangible things about being IRL, being physically co-located with somebody creates innovation. Three out of the six most valuable companies in the world were started in dorm rooms and creates friendships. Again, they've done research on dorm rooms. It doesn't matter what you have in common with somebody. Your best friend is going to be a roommate or your neighbor. So these are just again, first principles, human truths about being a human that I think that technology industry missed for a while or at least missed in COVID and post-COVID that we accidentally stumbled upon.


Daniel Scrivner:

And now we can just live in a world that suddenly fully digital and it has all the perks and benefits and great things that come from being in real life, working alongside each other and that's just completely not true. I want to dive into one of the things that you raised a little bit deeper which is you and your cofounder, Michael, we're both in this founder program. It was just an endless series of Zoom calls and you said that's not how innovation happens. And obviously, you gave some of the examples there of just the number of incredibly valuable companies that are started with just these really tiny tight-knit communal groups and dorm rooms and garages. Talk more about how innovations happens and why it's so important to be in person.


Brett Goldstein:

Yeah, so there are tons of amazing studies and essays on this. HP, Apple, all the greatest companies in the history of the Silicon Valley heavily researched this idea of like, "How can you create innovation?" because most of these companies get to this point where they're like, "Damn, we're so big and we're so old. And how do we get people to create interesting stuff?"


Daniel Scrivner:

It's like IBM.


Brett Goldstein:

Yeah, IBM, right? And so they do all this research. They experiment with layouts and all this stuff. And even Tony Shea, building his Las Vegas like Silicon Valley, he wrote about this in his book. And what it is is collisions. One of the most important thing is collisions, is like creating opportunities for people to have serendipity, serendipitous encounters with different types of people, get exposed to different information. And so when I talk about it, I think really it's unstructured, open-ended time. So again, at Harvard, they have this thing called reading period which is between classes and finals where you're supposed to be studying. Well, if you're a bad student, but you're a brilliant person like Mark Zuckerberg or Bill Gates, you're definitely not studying, you're building a company. And that was the period in which they were building their company.


Brett Goldstein:

So they had the collisions, they were surrounded by amazing people, amazing ideas, but they had the unstructured time to go and do what they wanted to do which was build. And so I think that's really what it is. And the problem with Zoom is that it's structured, it's time locked. It's 30 minutes, an hour, two hours, hopefully never. And it's just not built for that. And actually, even the user experience the interface is not built for that. Your job is to look directly at the other person for that entire time period or your job is to look at a presentation. That's not how like normal life is. It's much more fluffy, you're at a whiteboard, you're walking by somebody's desk, you hear them talking. You know what I mean?


Brett Goldstein:

So the flipside of all this is that I do believe that there are digital platforms that are emerging that are actually much more lifelike and much more that will inspire a lot more creativity and innovation. It's just not Zoom.


Daniel Scrivner:

What's your thought on what that is? Because I guess the example that comes to mind and this is just because it's so recent is all of the hot takes around some of the Oculus applications around being able to do VR/AR Zoom calls where you're this disembodied figure with no legs, wandering around in environment. I'm guessing it's not that. I don't know. What do you see emerging that's interesting?


Brett Goldstein:

Well, so long term, I think it is that.


Daniel Scrivner:

Got it.


Brett Goldstein:

Very long term. So if you think about technology and media and communications technology, it's about two things basically. The first thing is simulating life, simulating the world, right? If you think about all media, that's what it's going towards. Photos are more realistic than text. Videos are more realistic than photos. So that's the progression of technology. Zoom is a one-to-one IRL or a real-time conversation that's much more lifelike than a synchronous video. And so the natural progression of technology is to go towards these synchronous three-dimensional environments because, hey, that's what we live in today.


Brett Goldstein:

I don't know if those three-dimensional environments are there yet. I definitely don't think VR is quite there yet from a hardware perspective and all that stuff, but there are platforms that unlock a similar thing. Interestingly, we are actually launching a Metaverse location for Launch House. We have one in Beverly Hills, we have one in New York City and we're launching a Metaverse location that is going to be treated equally for those two. And Metaverse is a fun fancy word these days, but we mean that because we don't mean Zoom calls. We mean that because we're going to be using this product called Gather Town. It looks like The Legend of Zelda or a Pokemon Game Boy game where you're like this little character and you walk around, but in it, you can build these like offices, foreign office space that have all these really cool features where you can have these private conversations. You have these conference rooms and all this stuff.


Brett Goldstein:

And so what's important about that is not like, "Hey, look at this cute little graphics and stuff," that it's meant to be a place that you hang out and that you just are there during the day. And so what that means is you can just interact with people in passing, hear conversations. The other day, I was in it with my team and I walked into a room and two of my teammates were talking about something that I was interested in. It literally would not have happened on Zoom, Slack, discord, any other platform. That's what's in the near future for sure.


Daniel Scrivner:

That's fascinating. For those Metaverse, Gather Town, Launch House, is the idea there that it's a way for people that aren't able to travel, aren't willing to travel to an actual Launch House to be able to participate? Is that the big idea behind it?


Brett Goldstein:

Yeah, exactly. So our objective is to get the brightest minds into the community and bring them in in a very deep way. So our objective is not to have an extremely superficial community just to get people through the door to get money in the bank and stuff. We believe that a deeply intimate and connected community is really important, especially in the early days of the community. So that's why the IRL stuff has been so valuable, is because in a world where there's so many programs for founders and engineers and stuff, it means something a lot more to have lived with somebody for a month than being in a Zoom call with him a few times here and there. Whatever else there is doesn't matter if you don't have that human connection with the other people in the program.


Brett Goldstein:

So that's what IRL does. That's what we're going to try to replicate with digital, but we acknowledge it definitely will not be as immersive and intimate. And so the reason for that is because we're not orthodox, if you think about a religion, there are several layers of devoutness in a religion and the most orthodox ones are people that say, "You have to travel across the world to go to this site every single year. You have to physically go somewhere every single week or day. You have to do all these things. And if you don't, you're not a member of my religion."


Brett Goldstein:

And that's just not how the world works. There's a scale of your ability to interact and participate. And what we found is that an IRL co-living experience is actually it's not inclusive. There are certain people that cannot participate. So folks with families, people with mortgages, people who don't want to sleep in shared bedrooms, people who have certain chronic illnesses or something like that that needs to be taken care of to some degree like women actually, we found that they're much more receptive to a digital program than the physical co-living Program. And so we're always experimenting with things, so we're launching our first all-female physical founder house in a few months.


Daniel Scrivner:

That's incredible. Going back to that original house in Tulum and that second house in Los Angeles, what do you feel like you took away from those experiences and what lessons did you take away that you're applying going forward? And I guess part of that is just ... I mean the concept is both extremely novel and that it's tied to a location. It's a specific house. You're co-living with all these people. You're opting into this experience, but it's also somewhat historic in terms of, "This does not look all that different from a typical accelerator." I'm curious, one, when do you feel like you really realized, "Oh, wow, that we really have something here"? And then two, what lessons did you take away that you wanted to apply in future iterations?


Brett Goldstein:

I would say ... When did I realize that we had something here? I think-


Daniel Scrivner:

Outside maybe the social response, just probably separate.


Brett Goldstein:

I think it was, honestly, the first house that we like said, "This is a Launch House experience," people were ecstatic. And it's funny, because I had a friend who is working on a consumer social product and she said, "Look, Brett, everything IRL has product market fit. When you put people together, it has product market fit. So don't get distracted by this having product market fit because everything does." And I was like, "Okay, yeah, you're right. It's not a real company," but then I was like, "Wait a second. Why would I not pursue something that has product market fit? Why would I not go after that?"


Brett Goldstein:

Sometimes it takes time for ideas to percolate in your brain. It's like you're working on a problem or you're thinking about something, or as a writer or creator, you're working on a narrative or an outline, it just doesn't make sense. And then you wake up one day and it all just clicks. And so that's what happened where we didn't have this feature of education thesis until months in. We might have even verbalized it, but it didn't truly click. And then as soon as we were thinking about that, everything started flowing in. This idea like you said it's an old idea. Hacker houses are really old, as old as the Silicon Valley. Even beyond that, this idea of that invisible college, people have been co living or hanging out near each other for generations, 1912. It was like Trotsky, Tito, Freud, Stalin and Hitler living in Vienna, not a Launch House. We wouldn't have accepted those people or most of them, but this idea is as old as time.


Brett Goldstein:

And so I was like, "Well, it makes a ton of sense for somebody to come and productize it because if the two most important things in life are basically building stuff to make the world better and building real relationships and connections that are authentic and deep and living near people helps both of those, why would we not go after this?"


Daniel Scrivner:

Super interesting. I think it would be good to pause for people and talk about that future of education thesis and we're going to in a second getting to a few of the other big ideas that you and I were chatting about what we discussed today, bubbled up around Launch House and I think there's a lot of actually really interesting things to explore. So maybe we can just start with getting your take on the future of education, what that looks like and if you could just maybe lay out that at super high level for us.


Brett Goldstein:

Yeah, so basically what we've seen, there's this amazing graph that shows the price of goods. The average price of goods over time, it changed and it basically shows television sets, the average price has plummeted because all these materials are easier to extract from the earth. We have technologies for extracting them like supply lines or they used to be good currently in a supply line-


Daniel Scrivner:

Maybe good again.


Brett Goldstein:

Maybe good again, but the price of TVs has plummeted because that's how technology works. It makes things easier and easier. And in education, the price of textbooks and a college degree has skyrocketed, absolutely skyrocketed, which is really ironic because guess what? Textbooks have what? They have information in it. Information is free now. Information is everywhere. The textbooks actually have less good information than Wikipedia that is curated by who knows and then same thing with education, higher education. An English degree is hundreds of thousands of dollars these days and it's way too expensive for what you're getting.


Brett Goldstein:

And so that's basically a sign of a bubble. You have the value of something is massively declining and the cost is massively increasing. That is a huge bubble. We've been predicting this for a long time. People have been talking about what the future of education will look like for a long time. And in my opinion, it's going to look like basically every other future of media, future of money, future of this. It's going to be a bunch of people basically sticking their middle finger up to the institutions and saying, "We're just exiting the system. There's no integration." It's not like, "Hey, we're going to build tools for Harvard to help them modernize." No, the new Harvard, the new Stanford, the new even like technical college is not going to be at all associated with these institutions and it's going to replace them.


Brett Goldstein:

So just like Bitcoin and cryptocurrency is going to replace fiat currency not because it's integrating with the system or it's like, "We're working with governments to help them," no, the next currencies are not going to be fiat based, same thing with media companies. The new media companies, podcasters, not everybody is hanging out in Hollywood, right? The new media companies are not traditional media based. And so that's what's going to happen in education. I think what's going to happen is it's starting from the top. A master's degree and beyond is basically the least necessary education. It's the most expensive and it's actually the most targeted at a specific use case or discipline, "Oh, I need to get my MBA so that I can level up in my job. I need to get a master's in engineering to level up." Who gets a master's in engineering anymore? Software Engineering? Why would you do that? Nobody, right, so-


Daniel Scrivner:

I don't know anyone that has it. I know a lot of very smart engineers, but that's just not the path, I think, people are naturally going down anymore.


Brett Goldstein:

So I think what's happening is you have the technology industry which is basically taking over every industry. Every business is a technology business right now. And so what that means is the master's, MBA programs need to be master's in technology business programs and they're not. Some of them are Stanford. Harvard turns out a bunch of entrepreneurs, but they're really training people to go and work at McKinsey and these banks to become CEOs of old school Fortune 500 companies, not be founders or not even be executives at current technology companies.


Brett Goldstein:

And so what I think is happening is that new institutions like Launch House, OnDeck, Y Combinator, Antler, TechStars, these are organizations that are basically going to be replacing the business school and training people in the technology industry. We've had people who've gone to GSB in Columbia basically walk in on day one and say, "My first day here was more valuable than every single other day I've had at universities."


Daniel Scrivner:

Which is a really great endorsement of what you're working on.


Brett Goldstein:

It's great. I mean basically walk around and say, "We're like the anti-YC or the anti-Stanford." In our current cohort, we have somebody who's dropping out of Stanford right now and we have two people who declined to go into YC.


Daniel Scrivner:

On the YC piece, I'd be curious to know, because YC is, at least in the tech space, incredibly well known, I think generally incredibly well respected. It's something a lot of people still encourage founders to go to. I think, for a lot of people, depending on where you're at, from a trajectory and background perspective, it can be really helpful. What are your thoughts on the pros and cons of that model compared to something like Launch House?


Brett Goldstein:

So I think YC is great. I think the YC founders are really, really great. The discussion is more about what happens over the longer term. And the way that we frame it is that ... This is a really fascinating. So every generation basically redefines the Silicon Valley, the "Silicon Valley." When you ask somebody 10 years ago, "What's the Silicon Valley?" They might have said, "Oh, yeah, it's just these people in Palo Alto and Mountain View building like semiconductors," probably more than 10 years ago, but that was it. You fast forward. It's not Mountain View, Palo Alto anymore. It's not the Boomers and Gen X. It's the old Millennials in San Francisco building applications, web applications, so web infrastructure, web applications, Boomers, Gen X, old Millennials.


Brett Goldstein:

Well, guess what? Gen Z and young Millennials are the new dominant entrepreneurial force. Old Millennials are becoming VCs. And where are they living? Definitely not SF anymore at least right now because the pandemic really, really knocked the wind out of SF. So New York and LA are probably going to be the largest benefactors of that, but what's really important is that Gen Z and young Millennial grew up on the internet. So Discord is the new Silicon Valley. You know what I mean? And what are they building? It's infrastructure, mostly infrastructure, some applications for Web 3, so infrastructure, applications, infrastructure, applications.


Brett Goldstein:

What's also important as the capital markets have changed as well. So when YC started, it was the beginning of basically the application layer. No wonder why YC loves B2B SaaS so much. No wonder why the biggest breakouts from YC were these massive, massive, massive application companies like Airbnb, Coinbase, all that stuff. And so what I think is happening is that because capital so abundant, the model that YC built is not basically adapted to this new environment. So what that means is really tactically you have firms like Tiger Global coming down and basically taking deals from the A16Zs and these tier-one later stage firms.


Brett Goldstein:

And so in order for them to get the returns they need because they raised these massive, massive funds, they need to push down. And so what they're doing is they're investing the pre-seed and seed. That means they're competing with YC. So if you're the best founder, you're basically choosing between Sequoia, A16Z and YC and you look at the terms that you're going to get. The YC terms are terrible at this point. And from the bottom, you're also getting competition because there are companies like Launch House. Over the long term, we'll be offering a lot of the things that an accelerator offers for no equity.


Brett Goldstein:

So YC has this Lindy effect where it's basically Harvard. There won't be people going to it for a long time. I think they'll adapt, but I think what's important is the new Silicon Valley needs new institutions that are adapted to the current market, the current generation, the current products that people are building the current distribution models and everything and that's how we think about what we're building.


Daniel Scrivner:

That's really well said and that's also I think explains why you guys can be very geographically unconcentrated or very decentralized in terms of having houses really everywhere. You can have Metaverse houses. You can have houses in all of the major cities that have these booming tech ecosystems. Super interesting. And the thing you didn't comment on too which is just the proliferation of small angels and funds which I feel like are in the middle of, I think, exploding a lot of paradigms around how founders raise capital and how they need to think about it.


Brett Goldstein:

And I think one of the interesting things is we think a lot about city building and stuff and we're in this weird space where we're not. It's not quite software, so we're building institutions and cities and stuff. And actually our first investor was Balaji and his whole thesis around us and generally our spaces that countries and nations will be born at the same rate in the future as currencies are born today. And so when you think about what creates a city, it's usually the institutions that are near it. So Stanford, Berkeley and YC basically are the reason that San Francisco Silicon Valley exists, right? Without those institutions feeding new younger blood and tech workers and talent into the ecosystem, the city would look like Detroit, right?


Brett Goldstein:

And so what I think is interesting is our model is basically we have people come and live in this house for one month at a time, new group every single month, so the high turnover rate. And so what we're seeing in LA, at least, is that a lot of people are moving to LA after they're doing our program which is we're essentially acting somewhat ... I mean LA already has USC and UCLA, but we're acting somewhat as like this ... We're playing this YC-like role in this ecosystem. And so it's cool as other cities and nations are starting to catch on to this. They're saying, "Everybody wants to build the Silicon Valley." Every nation or president or somebody is like, "I want to build the greatest technology ecosystem in my country," and the number one thing you need is talent and knowhow.


Brett Goldstein:

And so we're in pretty early discussions with major city governments and major national governments about bringing what we have to their countries which is really cool.


Daniel Scrivner:

Well, it's fascinating to think about it from the perspective too of in that case five to 10 years looking forward, you guys could have been a major part in bringing technology, ecosystems and infrastructure all around the world because I feel like what I've witnessed over the last 10 years is going from San Francisco to now seeing incredibly successful startups in Austin and LA and Miami and New York and Chicago and Boston. It's all over the place. It still is heavily concentrated in the US. And in the UK and the EU, there are a lot of places where I think the infrastructure is still struggling. And so it's fascinating to think about Launch House being this Switzerland of the startup ecosystem that can basically go anywhere around the world and help boot up this infrastructure.


Brett Goldstein:

I like that, "Switzerland of startups." I love it.


Daniel Scrivner:

I have to ask you a question about Balaji. Obviously, incredibly well known, incredibly respected, also very polarizing just because he has, I think, strong beliefs and isn't afraid to communicate those. What have you guys learned having him as an investor and has any of that rubbed off on you? Maybe framed another way, just what is it like to have Balaji as an investor? How's that helped?


Brett Goldstein:

Honestly, I would say that I've always personally had a similar way of thinking. Obviously, I'm nowhere near on his level in terms of his ability to predict the future and all that stuff, but I've always been a thinker in the same context and I got to know Balaji on Twitter and have interacted with him a handful of times over the years because we just share a similar way of thinking about the world that from this first principles perspective. So that first principles approach is what led us to this thesis and was able to allow us to fundraise for a house with founders in it which is not something that venture capitalists love investing in. You know what I mean?


Daniel Scrivner:

So you needed people that were non-consensus to basically make a bet on a totally new model?


Brett Goldstein:

Yeah, the thing with fundraising is when you have somebody who's well respected place a bet on you and, say, give you their endorsement, it really changes everything. So people were able to look at that investment and say, "Okay, Balaji is a futurist. He's usually not wrong about things. He's really well respected." Whatever you think about him personally, you think that he's right most of the time about [crosstalk 00:40:08]-


Daniel Scrivner:

Or his ideas are at least very striking and interesting and they'll, I believe, be thinking for a long time.


Brett Goldstein:

And so if you're like, "Wow, this really intelligent person believes in this company enough to give them money, then maybe I don't even need to worry too much. If I coinvest with Balaji, then I'll be fine." So that was probably the most important thing.


Daniel Scrivner:

It's just having somebody with that fame and prestige and notoriety investing so early. One of the things I thought was super fascinating that we talked about before is this idea that, for Launch House, community is the moat. And you frame that up in a great way by calling it vibes are the moat. Can you talk a little bit about that and why that is important and how that shows up in how you run Launch House?


Brett Goldstein:

I guess like backing up a little bit, I think community is going through this interesting change where I don't think people really took it seriously for a while, let alone saw it as an investable thing in itself. So Reddit is a community product like Alexis Ohanian is very eager to point out that ... He has mentioned this a few times that there are a few years where there wasn't a lot of product change with Reddit, but it was a community that kept it going. And so what I think is happening recently with Launch House and other companies, especially in crypto, especially in the DAO space, is that community is the product. And the reason for that is that when you have a community, it's very sticky. It's a shared identity.


Brett Goldstein:

Think about how long Christianity has been around. It's a shared identity, right? It's a shared identity, its rituals. It's like this amazing thing. And if you are the leader of a community, you have infinite shots on goal. This is why celebrities can just sell infinite products to their followers and community members because they're very well respected. They don't have just one shot. It's not about the product anymore. And so it's just important context because we're entering this world where like Stripe's been around a while, AWS has been around a while. Information about how to start a company is all over the internet. There's so much competition.


Brett Goldstein:

Go-to-market distribution is the most important thing that a founder can have. You have a lot of VCs just investing straight on distribution, not even thinking about product. And that's what community is. It's better than an audience because it's self-sustaining and so that's why I think community is so important. Vibes of the moat is basically a way to build a community or what to focus on in a community which is vibes. After a certain point, obviously, your job as a community leader is to help your community connect and get rich and successful and all that stuff, but the latter stuff is hard.


Brett Goldstein:

If you can create a strong vibe where people feel deeply connected, deeply indebted to the community and the mission and all that stuff, you're set. Nobody wants to join another professional networking group anymore. They're looking for a good vibe. And so when we think about Launch House, we started very early thinking about brand, because again, in any system where there are tons of like undifferentiated products, another Slack group, another digital social club or whatever, it's brand that matters a ton. And so we invested a lot in our visual aesthetic. We thought really deeply about who the target person we're going after is. We looked to change the voice in our Twitter to make sure that it reflected that. We think really deeply about everything from the lighting in the house during certain events, make sure that it's like perfect to set the mood and credit the context that we need to create.


Daniel Scrivner:

And I think vibes are the moat I think works incredibly well, especially now when we're still two years into this pandemic. I think everyone still is lonely. Everyone's too overly tired of not having enough IRL, and being over indexed on digital, it's fascinating to think about that. So we talked about the early days of launching this Tulum house, this Los Angeles house. We talked about some of the things that you guys are working on now. It's all-female house. We talked about the Metaverse just to give people a sense, I guess, what houses do you have now. And for people listening that want to participate, how would you suggest they go about thinking about that and going through the process of looking at and applying to a Launch House?


Brett Goldstein:

Yeah, so Launch House today, we offer basically these residency programs. They're one-month residency programs, unstructured, open ended. They're focused on helping folks in it achieve professionally but also connect interpersonally. Those are the two most important goals and we have very light programming, non-cringe, non-Kumbaya, very targeted good programming to help folks do that, but still very unstructured, open ended. It's the space in between. So we offer these one month programs in three locations right now, Beverly Hills which is in the mansion that Paris Hilton used to live in, New York City in Chelsea which is a mansion of Goldman Sachs execs used to live in, you can sense our vibe and then the Metaverse which nobody used to live in and we just made it ourselves.


Brett Goldstein:

And what's really interesting is we're actually just about to announce this thing called Hack house which is basically our engineering-focused school. If you think of large houses, the university or the broader companies and university, Launch Houses is the school of entrepreneurship or business. Hack House is the school of engineering. And so basically if you're an early stage founder or you are an engineer, you don't even have to want to be a founder if you're an engineer. You can just be an engineer who wants to hang out, meet other engineers. We have programs every single month. The first three founding programs for the Hack House are three starting in January and you can go to launchhouse.co, apply. Basically, we look for ambitious people, people on steep trajectories who are down the hang, who've got good vibes, pass the vibe check basically.


Daniel Scrivner:

And I guess when it comes to vibes, it's hard to give any guidance on to just be yourself and show up and see if it's a good fit with the community. So I think just to close it out, one thing that would be interesting is to jump forward in time and you can pick the time horizon, whether it's 12 months from now, two years from now, three years from now. What do you hope that Launch House has accomplished and what do you hope that it looks like and feels like in terms of where you have houses, the programs that you have? In other words, where is this heading and pick that time horizon and paint that picture for people?


Brett Goldstein:

It's really funny because last night we had literally opened the kimono a little bit. Last night, we had one of our bonding events and it's a pseudo-manifestation exercise. So we actually did a little bit of this, but I'll start a little bit high level. So the point of Launch House is, in this context of all this loneliness and stuff, it's important to remember that the need to belong is the most fundamental human need and they've done studies. Literally, animals will die if they're neglected. So it's not only important for your mental health, but it's important for your physical health. This is what's causing all the chaos and bad stuff in the world in my opinion.


Brett Goldstein:

And so community is the thing that solves that. Community is literally creating belonging. And so we can't create community for everybody in the world. Unfortunately, we would love to, but we can't do that. So the objective of Launch House is to create community, create a sense of belonging for extremely high potential people, people who already succeeded as well and help them succeed, so that they can be compassionate themselves that trickledown economics for love basically. But over time, what we hope to be doing is launching more of these schools. So Launch House, Hack House for those two verticals, then many more verticals to come.


Brett Goldstein:

We'll be launching more locations around the world probably and digitally we'll be expanding immensely. So we hope that many of the people, their first interaction with Launch House will be through these digital programs. And really importantly, the other exciting components are, number one, in media which is we think there's a huge opportunity to start educating and inspiring the world, not just the tech industry, but the broader world on entrepreneurship and basically being empowered yourself to go and build cool stuff and then this idea of educating the world, not just through media, but some like Harvard Extension-type scenario. So that's basically the long-term plans.


Daniel Scrivner:

Well, it's fascinating, and one, it's incredible to think about just to reflect back on earlier in the conversation you were talking about that every generation creates updates, creates their new definition of what Silicon Valley is and we're going through that right now. And that Launch House could be this next iteration of that, where Silicon Valley is literally this globally distributed community of people that just want to build, that want to build incredible things with other incredibly smart people and that Launch House can be the fabric to help make that a thing. I think it's fascinating. Thank you so much for the time, Brett. I really appreciate it.


Brett Goldstein:

Thanks.








On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today. 

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Daniel Scrivner and Mighty Publishing LLC own the copyright in and to all content in and transcripts of the Outlier Academy podcast, with all rights reserved, including Daniel’s right of publicity.

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