Dan Novaes
Appearances
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
in that sense.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
or a figure but i was like so enamored with billion dollar outcome billionaire outcome um and i just couldn't make it happen and so uh eventually though uh it did lead to what became this business so i would say probably like 20 dude like honestly this company has almost failed 20 different times um and even even knew as early as a few years ago like you're still dealing with those ups and downs
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, because it's anything but easy, you know, and then do you see when you think something's going great?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, you know, in 2021, 2022, we had like an insane, even with node, our current business, like an insane growth rate and everything's going because at the time we were making a ton of revenue off of like, you know, crypto companies and, uh, financial like neobanks that were super high valued and money's cheap. So everyone's go public.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So they're spending a ton of money on marketing and that's how we make money is, you know, brands paying us effectively for marketing. And, uh, In 2022, FTX happens, all this other stuff happens. Voyager goes bankrupt. That was one of our biggest clients. They owned this millions of dollars. And suddenly my revenue goes away and my business almost like, you know, tanks.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So that idea wasn't a dog, but it was also like the concept of what we were doing was working, but the market landscape changed. And, you know, the errors that I made was like revenue concentration. Like, oh, if 70% of your revenue is coming from like, you know, six or seven different people and then they're all in the same industry, something happens. It can completely take you down.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
That's a problem. And so you learn these things along the way of diversification and how to build a business so that you don't fail. And I think every year that you don't die effectively, the likelihood of your success infinitely scales because you just get so much wiser, you know what I mean, of how you operate.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, with Mode. So this is how essentially it started. We had created a concept. So obviously, we were in the app builder space. We kind of went from the start of the app boom, which was everyone wants an app, to everyone's like, We don't need any more apps. Honestly, if the restaurant down the street gets an app, I'm going to have to freak out. You know what I mean?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I don't want to download that app. And so then I was like, oh, OK, well, we should build a super app that brings all these services in one place. And then we focused specifically on media at the time. And so what ours specifically did was we aggregated all the music services into one place. So SoundCloud, Spotify, YouTube, all that stuff.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And it was this idea of multimedia, all the super apps, all these apps within it. Ultimately, it didn't work. There was only one type of user using it. And this is actually how the idea started, is that we asked these people, why are you using this product? And they all had one thing in common.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
They didn't pay for subscriptions, so they liked that it was free and that you could stream unlimited music. And at the time, the APIs of these services, so how we integrated, they didn't show ads in them. So it was like a weird hack to have an ad-free app experience with a huge library. And obviously, they could change that at any minute. It was just unfortunate for us at the time.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah. So, I mean, I grew up, my parents weren't necessarily entrepreneurs. They were like parents that did allow me to have, I think, a lot of freedom relative to my friends. Like I never had a curfew. I never had those type of kind of like rule sets. It was very like, you know, independence driven. So I think that was helpful.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And then we asked them like, you know, why don't you pay? It's like, oh, because, you know, a budget conscious or whatever it might be. And they tend to have more time than they had money. So we were like, oh, well, what if we paid you to listen to music? Like, would you be interested in that? And then everyone was like, yes, very interested in that. So we just put up a landing page.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I don't know if you used to use Robinhood when it first came out, but they had this like referral mechanism that you could jump the line into it and they get literally millions of installs on that. So we just put up a landing page. I was like, hey, we'll pay you to listen to music. And we had 250,000 people sign up in a matter of weeks. And so we're like, okay, there's something here for sure.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so we focused the entire business on paying you to listen to music. Problem is that Music is like a horrible business and it's really hard to make money doing that. So then that's how we moved into like gaming. And then we moved into other types of activities that you would do on the phone.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And before we knew it, we're like, really what we're building is like an operating system on the phone, focus on everything you do that rewards you. And then we were earning money to play games, to shop, to stream music, read the news, charge your phone.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so then that's how the whole concept was formed around EarnPhone and rewarding you for everything you do on this device and the 40 hours that you spend on average on your smartphone. That's only going up.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, so the way to kind of think about it is like, There are direct advertisers that will work with us. I mean, when you advertise, there's always a goal, right? For your podcast, it might be you want people to download your podcast. You want to wear that. So you're willing to spend money on that. For brands, same thing, right?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So if it's a game like a Candy Crush or something like that, they want you to play their game and basically create a habit playing that game. And over time, you'll either see a lot of ads and they'll monetize that way or you'll buy stuff in the game. And so they'll pay us a certain percentage just like they would Facebook.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
The only difference is that we reward the user per minute they play Candy Crush for a period of like a week or something like that. Vice versa, if it's like Robinhood is like the client which we work with, their goal is for you to deposit $5 into a trading account. And with with that, they're willing to pay like 100 bucks, say, and so we'll take that 100 bucks.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And we'll say, Hey, user, if you deposit $5 into a brokerage account, we'll give you an extra 50 Robin Hood will give you $50 in free stock as well. So you get 100 bucks for opening up your account here. So that's how you align value, because we're taking a little bit of that you're sharing a little bit with the user, and then you're aligning the value with the advertiser.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
What's kind of the model works.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah. Yeah. I mean, and I think like what you'll see is like, you know, reward models are becoming way more like in the know. Now I'd say, I think they were like, when we started this business, these kind of like make money products or reward products were kind of like, you know, gimmicky, I think. And, you know, there's still like, advancements that are kind of happening.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I think actually where the entrepreneurship really came was, you know, I grew up through two very different environments my whole life. I grew up in Southern Indiana. and Sao Paulo, Brazil, where I'm from originally. My family's from Brazil. And they're very different places.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But if you just think about the amount of time that people are spending on these devices, I mean, your attention and data is effectively being utilized to make trillion dollar businesses. And so we're just kind of sharing that value back with the user and just doing every facet of your life that you could possibly think of.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, we've had over 45 million people download and use our products from around the world.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I mean, a good portion of that is also international, which is still kind of count as like a beta kind of program, because it just shows the interest right at the end of the day, because, you know, in order for us to be really successful at what we're doing, you need to have the advertisers because the advertisers are essentially
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
you know, the ones that are kind of fill in the bill, you know, for those users. But, you know, most of that is organic, you know, in that sense. But we've had over 45 million, you know, people install, use this product. And now the business is starting to acquire other assets and companies because, you know, we're essentially in the business of,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
sending you to use like the new TikTok app or the new game or whatever. And now we see an opportunity of being like, well, you know, there are the TikToks out there, but there's like a ton of these like utility apps that are like a little game or some photo filter app or, you know, whatever. And we can buy those apps, send users into those products.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And then now we capture all of that lifetime value along the way. So it's almost like the PE like roll-up model as well. That's kind of been very profitable. And then, you know, we're finding good cashline businesses and, you know, we bring them into the mode umbrella.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, us users are, I mean, it's in the value of, uh, of kind of like lifetime value us is the highest. Um, and the reason being is just because, um, fundamentally, you know, the ad markets here are just the most advanced, the high, the income per capita is the highest in the United States. And so you generally see it correlate, um, to each country.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Now, here's the thing that's like really interesting though, um, in the U S like, you know, right now our focus is on Android because generally that's more of a budget conscious population. But in the U S like the ratio is like 50, 50, right? Whereas if you go to a country like Brazil or India or South Africa, whatever, you're going to get like 99% penetration for Android.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I think the areas that I really started to really notice that difference as I was in my early teen years or going into sixth, seventh, eighth grade, was that things in Brazil were actually way more expensive, things that I cared about at least, like an Xbox or a car or whatever, because of this insane import tax.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So we just have a lot more people in those countries. You know, if in worldwide, I think if you, look, it's like, you know, 1.2 billion devices or so are iPhones and there's like 6 billion of everything else, right? And so it's just like a lot more people are using Android devices. And so, you know, there's nice arbitrages to be made because some markets are more efficient than others, you know?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
that yeah it's for sure like that and you know even countries like canada uk australia it's still like 80 of what you get in the us generally um you know it follows that pattern you know so you've gotten some you've gotten some joint partnerships or some deals done with some big box brands i mean some big companies i mean that spy and walmart and those things how did you get those deals done
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Man, honestly, it was every which way, I think, is the right answer here. Because it was like not something I had, you know, I guess like take a step back. Like, you know, the thesis behind this was, you know, we started out as a software company and we're still a software company.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
You know, I think one of the misconceptions that we're a hardware company, I think the main idea behind the phone was like literally that when it came to that conclusion that what we're doing is effectively an earn OS. And what I wanted to test out is kind of like, if someone bought a phone, that's value proposition was like, Hey, you're going to get paid to use your phone.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Would that change the earning habit of someone? Right. And also the time you first open up a device, there's all these new apps that you install. Right. And each time that that happens advertisers have to pay for that. Right. So as opposed to when someone downloads our app and you already have Facebook on there, there's no way I can monetize that action. Right.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so that was like the thesis behind why we launched our phone. And yeah,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
know we launched the first one i literally we only made 5 000 devices and we just launched into our own users and we sold out of it we didn't have it in any stores i know nothing and it's not like you know we we just try to do in the most scrappy way possible um we then in the second device i was like okay this one we want to get into stores and uh the main reason why we wanted to do that is just to also show that the model is possible because you know our vision as a business is actually not to be it's it's more to be like roku if you're familiar with roku service
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
What Roku was able to do in 2015, they had seven attempts to go public and it failed every time. And then in 2015, they really hit it. And what they did differently, and now they're 10 billion plus billion dollar business, is effectively they licensed their software to TV makers like TCL, Panasonic, et cetera, and they get access to that distribution.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So let the people that are great at manufacturing distribution, and then they do a rev share on your streaming habits and things of that nature. And so that's what we wanted to do. The problem is that anytime I went to a big carrier or phone maker, it was just such an out-of-box model that people just didn't believe it was possible. And when they see it's an app, they're just going, eh.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And every time I'd go back to Brazil, my family would be like, oh, can you bring all of these electronics? Sure. I'm like, why? And so you realize that and you're like, wow, these are two places that as a kid you realize are, to me, they're different, but they're also the same. It's just people that I'm dealing with. But then I thought, wow, I could sell this stuff here, make a profit, vice versa.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I don't really want to do that. Yeah. And then they were just like, it just didn't have any credibility. So we're like, oh, we're going to launch it into the stores like Walmart, Best Buy, show the data, show it's possible. And that was the whole thesis. It wasn't to get a ton of distribution because of those 45 million, we're talking about tens of thousands of devices.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
We're talking about tens of millions of installs, right? And so the play there was just to show, hey, look, this cohort user, this is what happens when you have an earned phone. This is what happens even with like our device, which is definitely not as good as like a Samsung device from our device, because I haven't been in manufacturing for like 30 years.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But you can show that people are interested in it. And that's really the future of mode. You know, it's really kind of this idea
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
where we're going to see things like an AT&T-earned phone or a Samsung-earned phone or a Motorola-earned phone or in other countries where there's phone makers that you've never even heard of here in America like Oppo or Vivo that are literally like insanely like tens of billions of dollars business, but they're the market leaders in India or they're the market leaders in Africa.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so that allows us to license that to those people. They then launch earned phones in their own country. And that allows us to really kind of take over that model and be basically the creators of that earned phone idea. Just very similar to how Roku did for smart TV.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Well, I mean, Apple is, um, you know, they're not really, it's, it's kind of a different core market, I guess. Um, cause you know, people that have iPhones, like they're not as much cost. I mean, if you're spending your entire month's rent, like a flagship device, right. It's like, it's like, you know, okay, cool. Like I can, yeah, you use this product for the entire year.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Uh, you know, you'll, you'll be able to pay for your iPhone. Um, and that stuff, and obviously it's a good market. Like don't get me wrong. We have solutions that we're thinking about actually of what we want to launch for iPhone.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
uh that category but it just wasn't our focus area and even on the android side i think that um you know the general idea is like to build this business and to do it in the way that we've done it it's it's very complex it's not an easy business model to to actually operate in because you're effectively creating money out of thin air but i think the way that we also went about it was like i don't see other reward products or uh survey apps or whatever as like competitors
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
My goal as a business is how do I create the most value for you through earnings and savings and value? And because those people want our users, they're going to pay money to us that allows us to increase awards. And if you can earn from their product, great. You should definitely do that.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so that's how the thesis of the business operates and why we see that other companies want to work with us as opposed to compete. Many people have tried to do this model. It's just not very easy. to make actually work.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah. Um, team members, we have a little over like 60, uh, 65 or so employees. Uh, we have a lot, a lot of more part-time people as well. Like, you know, we're very, we're fully remote model. So, um, you know, after COVID we decided to fully operate in that way. Um, and so, you know, we, we operate super lean, you know what I mean? I think that that's the,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
That's the one thing that you learn, you know, from those hardships along the way is how to make like some of our OKRs internally is like revenue per team member. You know what I mean? So we have goals, you know, like what is the revenue per team member?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I could take stuff here and sell it there. And that's how my first business has started. And by the time I was a senior in high school, I was doing a couple million dollars a year in revenue.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And then if it starts getting out of whack, then, you know, you have to, you know, either create more revenue or be like, hey, look, are we being as efficient as we possibly need to be? But yeah, I mean, that's kind of how we think about it.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, I mean, people spend my highest cost is engineering and product because...
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
know fundamentally like we have certain business models that are the way to kind of think about mode is like we actually have three different divisions in our business we kind of have like a media uh division a mobile division which is our core business and then we have like now this like money division which is kind of like some of the stuff we're doing within like the financial services space but um and some of those divisions are way more profitable than others because they're almost like you know be able to use the resources like i'll give you an example like
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
When we were trying to find new revenue outlets and after that whole thing, debacle in 2022 that we had, that we had to kind of really pivot the business and find new revenues, we realized, Hey, you know, we have like 45 million emails that people, uh, you know, came into our service. And what do we know about this? Do you like to earn and save?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Okay, let's create some newsletters to basically tell them about earnings and savings. And now that's a mid seven figure a year business for us with extremely high gross margin, because all we're doing is doing something that like literally would just be an afterthought as a business person. Like I wasn't even monetizing emails at that time. And then it's turned into something.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So that's kind of like, obviously that business line, maybe they're way more offensive on like sales and kind of getting new advertisers in. But the core business, you have to invest in research and development. If I wanted to operate just for pure profits, only profits, we wouldn't need the amount of engineering and kind of product team that you have.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But now we're very disciplined on like, okay, how do we spend and where do we want to make those investments? And how long are we willing to wait before an investment comes in return on a specific product area?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I think the other thing, too, is 2022, the way you operate your company, 2021, 2022, with the soft banks of the world kind of funny and $200 million rounds, it was like growth at all costs. Yeah, growth at all costs, IPO, whatever. And then all the growth investors were basically underwater. Whatever you do, don't try to profit.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, that's where it started in Brazil. So basically, you know, uh, the thesis was like, I was like a eBay, uh, at the time, a titanium power seller, which, you know, for me, it was like a big title, you know, back in the day. And, uh, where it all started was, you know, I had a part-time job that I was working at Polo at the time I had just gotten a car.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Just don't make money.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Whatever you do, don't make any money. Yeah, yeah, yeah. Invest your valuation off. And now it's the opposite. Yeah, now it's the opposite. And I don't know. We had to change a lot of our... like even the payback cycle, like we used to wait like six to nine months before we even got breakeven.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And now it's like 45 days or less, you know, that we wait to basically, you know, turn a profit on the acquisition costs of a user versus, you know, six to nine months.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, I mean, it's both. I mean, you're getting inbound calls for sure. But I think anytime that you're setting up a new business line, you still have to go. I mean, it's like attention, attention. There's like so much happening at all times. And I think that, you know, you need to be able to pierce those new channels. And also it creates competition too, you know, in that sense.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So I think like for us, like,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
we are getting approached uh a lot of like you know partnerships and inbound but we're also looking at you know what are other ways that we can grow our business and again going back to this that concept i mentioned to you like that's something that wasn't even my brain like a couple years ago which is like this idea of like you know i'm in the business of like the moment that that action occurs our revenue kind of ends right and uh and that's fine you know but um
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
If you could capture the lifetime value of someone through a product that you build that people like, so that could be a game, that could be a utility app, whatever.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
and that business in itself already has good cash flow, then you're basically creating like this insane kind of roll-up strategy and you're kind of sending your consumers into a new product, you're getting those consumers and you're creating a really strong network effect. And I think that's what you saw with Facebook and acquiring Instagram or acquiring WhatsApp.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And not every acquisition needs to be a multi-billion dollar acquisition. What we've seen a lot of opportunity has been like, there's just these random teams, man. Like we bought this product earlier here in January, had 150 million installs, you know, about 2 million daily active users and, you know, like nine or so million monthlies.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And the app was like doing like $4 million, almost $4 million in EBITDA a year, right? Team of four, team of four people, right? And overseas, total cost, 15K a month. And I was just like,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
as possible you know and then we vetted it like we went through the diligence vetted it we came up to a deal term it was under 3x even i like the purchase and uh you know there's these opportunities out there right you just got to find them and then now we're growing that product double its revenues you know we kind of took all of our insights and now we're creating that network effect and so it's basically kind of your users to that
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And their users to us. And then also then you have more spaces for advertisers to kind of like, you know, do that. Then you take your know-how of like, you know, data analytics, user acquisition, all the things that we know how to do because the founders that are building these businesses, I mean, they've crushed it in some way.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And my dad was like, I'm not going to pay for all these extra things that you want in your car. You want a sound system, all that stuff. You need to get a job. And so I went, got a job at Polo, worked for a week, got like a $70 paycheck.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Like they found product market fit, but they may not be the most sophisticated in all these other areas, right? Just because you hit like, you know, gold once doesn't mean that it's going to come again. It's kind of like, you know, even thinking my story when I was 20, 22, right? 23 with my co-founder, we built some app that was literally spitting out five, 600 K a month and free cashflow.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I got lucky, you know, it just, it just hit it like, you know, at that time. And so, um, and, and so I think that like, that's a really interesting opportunity. If you look, there's a company called, um, Actually, you should check out this guy because I think you're a curious guy if you haven't heard of it. But there's Constellation Software. And it's like the billionaire that no one's heard of.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
He looks like Gandalf. His name is Mark Landor. He has this huge Gandalf beard. There's only two interviews of his on the internet. And I tried to find all the content that this guy says, but basically he has built a $70 billion business. He raised $20 million once, that's all he's raised, and then built a $70 billion business that's publicly traded in Canada.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And that's what's the most insane about it. But they acquire 1,000 companies a year and their business model is on VMS software, which essentially is called vertical market software. They acquire companies that make super niche software. It's like you make it from tennis courts or tennis clubs in Florida.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so there's not a ton of clients, but they're super profitable, but it's like $1 to $4 million businesses. These guys go and acquire thousands of those a year, and they have been able to do that for the last 20 years. that built a machine that just spits out so much cash and it operates in a very decentralized fashion. And so that's the type of stuff that's like really kind of inspiring.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I had this like aha moment when this like tour bus of foreigners came from, you know, they're coming from Japan, I believe, because there's a Toyota factory by my town. And they spent $40,000 on that day at that store. And it was just me and one other kid that was there. I'm thinking I'm going to get this great reward for like, you know, dealing with all this on a random Sunday.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Like when I see the future of Mode going into, which is really like, you know, we have this great ecosystem of opportunity where we have users, they're incentivized to go try out new products. You have on the other hand, a bunch of these small little apps that, you know, this is a great radio app, this great photo filter app, this is a great little game. And they're cashflow positive.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
You bring those things together and then essentially create the network effect. And then you could create this monster, monster opportunity across multiple different verticals.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, I mean, that's essentially the... I mean, that's a publisher model. I mean, we're still experimenting with this and what this looks like for us. But I think a lot of... Anytime you have a channel, like a medium of the ability to bring people in, that's what creates that network effect opportunity. And you look at guys like Tony Robbins, for example, and I've done a lot of his stuff.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
It's like... you can kind of see that he's selling you in some capacity, but I almost don't mind the way he's telling it to me. But it's like, if you do the core, it's like you see, like, all these different areas, and then he taps into all aspects of life. And each one of those was through a partnership, and then he potentially acquires them.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But that's how you know, you have one guy who created one brand, that then built a multi-billion dollar kind of empire through all of these facets of kind of like, you know, what it takes to have a whole life, which is whole thing. I mean, I'm not saying that we're doing exactly, you know, his, but you can see that in many different plays, you know, being played out.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, I think that's a, that's a great question. Um, I mean, I think like, you know, we have, uh, I mean, we've been doing it for like five years in a full remote, right? First, I think like, you know, one thing to say is like, I had a much easier time running a fully remote company than a hybrid company.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I think it's actually really difficult to run a hybrid company because some people have that in-office experience. culture and kind of that rapport and whatever. And other people then don't because they're fully remote. And so when we decided to be fully remote, it was really to embrace that and then create the best company we possibly could fully remote.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
The things that we do specifically around doing that, we brought in a chief people officer really early Like we had like 25 people and then someone that person's like one of our main jobs is literally to almost create like an NPS internally. So we had anonymous kind of reviews of how the company is doing. And then you have like really strong core values around that.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I got a $5 like Arby's gift card. That was like my reward, you know, and I was super pumped. And then I got back and I was like really upset, you know? But at the time I had this 40% discount at the store and I was like, man, if I just gave them 20%,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
You've listened to the people's feedback, but also, you know, we have crazy transparency within our business. So even when things were going awry in our business or going well internally, You know, we have like a weekly, you know, act meeting, which is actually the acronym for all of our core values. And that's basically a 20 or 30 minute meeting.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So people know exactly how the business is going in the various departments. And then we have an all hands meeting and it shows everything down to the financials and whether we're losing money, how much money you have in the bank. And so even in those difficult times that we had, you know, during those periods of like 2022, 23, when things are kind of coming up again.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
uh we only lost one team member right of and we had we had to have a layoff that was like you know we had a hundred and something members at one time we had to cut down to like 50 right and that was difficult we did two rounds of cuts um and typically in those times you see a lot of like your best people leave um and fortunately we only lost like one or so team member uh you know that we didn't you know make that decision to go and the reason is like i think of that kind of like transparent culture um and then just you know being able to
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
you know, listen to people, see that they're in their voice matters. And also being able to just kind of see your, you know, internal, like how the, how the, you know, the saying goes, like the, I don't know how the, how the pudding's made or something. I don't know. I'm forgetting like the saying, you know what I'm talking about though. I'm forgetting right now.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But anyways, like, so I think that that's kind of like how has been really helpful, but I think also just on more of the operational time or operational side of things, We've been very focused on OKRs. And I'm not the most organized person because I'm much more of a visionary kind of thinker. We have a lot more people that are way more operational than me, I guess, in that sense.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But I think one thing I really forced... on myself to have the discipline in is to operate with an OKR like framework of how we operate our business.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So, you know, departmental OKRs, ensuring that, you know, everyone's really aligned on what they're supposed to work on and then being able to kind of track those OKRs so that people know exactly what their goals are, ensuring that the managers get comped based on that. It's like, you know, everything aligns to that. And it literally took us like four years to do it.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And it's so painful to do, to be honest, if you're not wired in that way. But I think that that's been one of the most impactful, important things, along with these other things that we've learned to create a good remote culture that allows for like, you know, you know, we have like a 90, 80, 90% satisfaction rate. And the average company is like 65% or something like that.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I could have made AK, you know, and then, you know, not that that would have worked exactly like that, where I sold my discontent, but that's where I had an aha moment. I was like, Oh, what do I, why don't I just buy some of these items and then I'll sell them on eBay. And so I walked around the entire store. I had a Palm trio at the time. And it was like the smartphone of the time.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I think that those are all things that add up to be able to build a great remote company. I mean, I would love to run a
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
a 1 000 person kind of remote company one day uh that fully operates you know uh autonomously um you know in more of a decentralized fashion and that's what i'm trying to move more and more towards as you know we think about our business well i run a 600 person in-person company so yeah that's definitely it would be uh what what to do for sure
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, yeah. Well, I think even for that, I mean, honestly, I sent it to my co-founder.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, yeah. I posted it immediately.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And that was like wise words from the CEO. And it was like a special place for us. I mean, I think that, I mean, their business in particular, if you think about like, and he wrote it in a really good way. It was something along the lines of like, you know, easy tasks, like what used to be easy tasks or like brainless tasks now, what used to be hard tasks. That goes away. Hard is the new easy.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
What used to be impossible. Is the new hard. Right. And that was really well said. But I think if you think about their business, what does that business thrive from? It's been literally stupid graphic design or not stupid, but make a logo. You know what I mean? Like, dude, you can do that with chat. You know what I mean?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So I think it doesn't impact my business as much as I would say theirs, because that's kind of their core thing. The way that we've been thinking about AI internally is like, we need, I've been really adamant about like every, all of our engineers should be using things like GitHub Copilot or whatever, because it basically makes like a,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
you know, a 1x engineer, like a 1.4x engineer, or, and in some cases, if you're like a 3x engineer, it could potentially make you a 9x engineer. It just depends how well you know how to use it, how much you care about it. And so that's all about efficiency. The other component of it is how to basically make sure your business is smarter.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
You know, we're starting to invest a lot more on that internally with our own tools and internal sets. And the way that we also think about like our broader core mission is around this concept around universal basic income. And it's not that we're uh, in favor of necessarily, um, the government paying for that.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
It's like, you know, that's kind of like, what are tools that we can also provide to our consumers over time to allow them to earn additional income? Because now with AI, you could potentially create like, you know, royalty-free music, for example, that other people can listen to and you could earn streaming on or products or whatever.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I was like taking a picture of the Palm Trio 600P. And so I would like take the pictures, get the serial numbers. And then I cross reference, found this jacket. And this one leather jacket was like selling there at the store for 180 bucks at this factory and outlet. And online, it was like 380. I bought three on emergency credit card, kept the receipt, you know, my dad's emergency card.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so how do we use this technology to enable earning and saving for our consumers in some capacity? That's how we're thinking about it into the future.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Who knows?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
That's really interesting. It kind of reminds me actually of... There's a service, Masterclass. So Masterclass has like an AI that's like, you know, it's like part of their service now is like, hey, you get basically the Mark Cuban bot or the, you know, insert like professional Gordon Ramsay bot, whatever. And then now you kind of like get a fed from their brain, I guess.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I think it's like super interesting. Yeah.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I have kids tell me my cooking is shit. I don't need Gordon Ramsay bot to get me. Yeah.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah. Well, I mean, they might get like, it might, it'll probably have to be also hate them to be honest in his case.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yes. Haze my children.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah. I mean, I think like, uh, we are, you know, we're scaling, we're growing. I mean, this early part of this model has really been, um, of those last two years really has been around kind of diversification of revenue and, you know, expanding our services and reach.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I think like, you know, we did a super successful, like reggae plus offering, which is kind of like a, you know, retail offering allows investors to any retail investor to go through and invest in the business. And we got qualified by the IC to do that. We brought in over 50,000 shareholders so far.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so have been able to raise nearly over actually $50 million just through crowdfunding over the last couple of years. And so we see consumers really interested. And many of these people are not our target market. They're much more wealthy individuals, but they see, they believe in the vision. So I think where the future is, you know, we eventually want to take this business public.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
That's our North Star and North Focus. But where we're going as a business, you know, we believe that the phone will be free. We're the closest company to make the phone free. It's not an easy thing to do. So, you know, we're still a long way, you know, to kind of fully delivering on that vision. But I think that whoever can unlock that, that creates a, you know,
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
trillion dollar opportunity because that is the one thing that we do the most. I mean, there's 168 hours in a week. If you're sleeping eight hours, there's 112 left. And then if you check your phone and your screen time, people are spending anywhere from 40 to 50 hours a week. So one third to one half of your life is being spent on this device every single week, which is insane.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so I think that if you think about that, what's possible
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
um it's a really really big opportunity and you know i think that we're just scratching the surface of uh where our story will be here in the next few years to come yeah all right well if you want if you want to if they want you want them to take a look at your reg d or get your app or do you have a centralized place where they can find you
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And by the next day, I had sold all three, you know, and I made 680 bucks or something. And I was like, what the hell just happened? You know, I just made more money in this day that I had made the entire month of me working here times five, right? And so I think that that's like where that started thinking. And then I was like, oh, why don't I sell these items in Brazil?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Yeah, I mean, the best way to find information on the company is invest.mobile.com. You can also download our app and you can claim actually free shares. We're actually the first ever. I think we're actually the first ever company that's ever been qualified to allow people to use their points to invest in the company if they wish.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so our goal is to be the first ever company with a million shareholders prior to going uh, you know, public into the markets. And so the idea is to kind of build that ambassadorship and we're taking basically users, turn them into earners and earners now turn into owners. Um, so those are two great places to go. You can download our product, you know, get shares for free, no cost.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, or you can check out our site and invest.memobile.com and learn more, watch the content. Um, you know, yeah. And be a part of the community.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
It's worth even more there. And so over the course of the next five months, I made like 30 grand in profit just by reselling Polo stuff. Eventually had to leave that job, right? Some sustainable model in that sense.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
wait you're buying all of this stuff from us how many uncles do you have how many uncles do you have and why do they need so many leather jackets in brazil um and so it was excessive but it was like the initial i think starting capital uh to get started and then um and where i started really noticing why i moved into electronics it was like at the time is like when apple ipod was getting really big and all this stuff um and you know uh internationally this isn't as much of a supply chain issue now but back back then this is like
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
almost 20 years ago, or probably 20 years ago, typically, electronics would come out in America first. And then everywhere else, it was like three to six months later. So in addition to that arbitrage that already occurs based on currency arbitrage, there was also the delay. And so I could be the first person selling something and then basically sell it to the wealthiest people of that country.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And then I saw that that would be true in the UK and Australia. You could buy electronics and then unlock the phones, like smartphones. You could buy like bricked phones that people didn't pay their bills on Verizon and AT&T, BlackBerry, or sorry, Verizon and Sprint at the time here. And you can make a couple hundred bucks. So that's kind of like how the business started.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And I literally set up a warehouse in the UK, then I moved to Australia, I did the same thing. And I was like hiring like my taxi cab driver, you know, that I... I lived in Australia for six months in college, and I literally hired a cab driver that was just a good guy I met. We interviewed him, and then that's how I was setting this stuff up. So that's where it all started.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But then I got into software after that, and there was a whole long story of how we did that. But I think that's where the foundation of entrepreneurship went. And what was going through my head at the time was...
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
you know uh that this was like for me you know i didn't know uh i didn't want to work a regular job you know and i really came to that realization probably like my sophomore junior year of college where it confirmed after like two internships that it just wasn't made uh for me i guess
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Honestly, dude, the way that happened, it was like, I don't know. Oftentimes, the worst things in your life are usually the best things for you, I guess. So at the time, I did a bunch of different businesses in college while running this company. I had a screen printing business. I had started a college music website before Spotify.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And you're getting about a million people a month listening to my music playlist. I wasn't making a ton of money, though, but right around this time, I remember I was sleeping. It was fine. My warehouse, I get an email from our worker there and the warehouse was robbed. I didn't have any insurance on it or anything. I didn't have credit or anything. So this is all my money.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I mean, it wasn't all my money, but I'm saying it's probably like 70% of my money. And apparently there was... a FedEx guy that then, you know, and then this warehouse got robbed in the UK and he was so apologetic, but really there was no recourse. Right. And I remember thinking to myself, man, I just like wiped out like 70% of everything I've ever worked for.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
At the time I'm now living in Chicago, I'm 22 years old. I just have graduated. And I was like, how do I prevent this from happening? I was like, what a hassle. Cause like, you know, the thing with electronics is you might do a lot of revenue, but your margins, like maybe 10%, you know, 10, 15%, you're not making a lot of money on the stuff. Um, and so that was a huge hit to me.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And so I was like, well, if I do software, not thinking about hackers, right. But I was just like, if I do software, that would not be possible. Right. And so at the time it was kind of like, um, the iPhone was starting to get really big app store was getting really big. We, a lot of the traffic that we were having on our site was on desktop. So I was like, Oh, I should make an iPhone app.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, and you know, I actually, uh, went on Fiverr. Uh, if you, you know, if you know the website where you can get anything for five bucks, um, found someone that had posted a listing that was like, Hey, I'll make an app for five bucks. Uh, so it sounds very promising, you know, definitely. Uh, but I hit him, hit him up and was like, Hey, this is what I want.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
And then he was like, you know, I can't make that for five bucks, but I'll make it for 85 bucks. I'm like, you know what? That's a great deal. Let's do it. Um, was like, you know, didn't really have any expectation for it. Six weeks later, you know, we're Skype friends at this point in time. I get an app and the app actually works. Not the best app I've ever seen.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I post them on the app store and we send it out to the audience. And I made like 10 grand, right? In like three days. I was like, this is insane. We're turned on investment.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, so initially it was supposed to play music as like a music streaming app, but he didn't know how to do that. So what it did is it preloaded 10 songs and then it was like, um, you know, that game that you would play on, um, you know, you're kind of like Microsoft where it's like, it's like a little puzzle and you've got to clean up the puzzle. So it's like a picture that's all broken. Right.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
It's like early PC days. Anyways, that's all it did. And it had like, you know, 20 of the favorite songs of the songs that people liked. And they were just kind of like, you know, kind of like a stupid game that was in there that was kind of like a hybrid of the music and game. Very simple. And but honestly, you know, had made that 10k very quickly and was every day making a couple hundred bucks.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I'm like, dude, I'm making more money on this. And I did this with a guy from Fiverr, who I turns out, you know, is my co founder still to this day. It turns out it was a 17-year-old kid in high school that was about to graduate high school in the UK. And he was on Fiverr because it was his first ever project.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
He had just learned a code, didn't really believe in his skills, and just wanted to work on a project. And then I was like, hey, listen, I just graduated. You're about to go to college. Why don't you take a gap year? Come move to Chicago. I was living in Chicago at the time. And I had this idea. We're going to create apps without coding for people. And he did it. Took a gap year and came.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
How many uncles do you have? And why do they need so many leather jackets in Brazil?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
His parents allowed him. And we then started this company. We proceeded to struggle for a year. It's not like that story of like, oh, and then everything happened and it was great. But we started making a little bit of money towards the end. But at the end, he was like, oh, I can't take another gap year, and we're not making enough for me to be sustainable.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So I'm willing to work on this part-time, but I got to go back to college. So after that year, that's what happened.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
On Fiverr?
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Okay, there we go. All right, keep going. Sorry.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Um, yeah, no. So, so it was, it was a crazy time, you know, we became friends and then, um, he like goes back to have his freshman year, you know, you know, like freshman week, like it's like super fun, whatever. And he's like, but I'm, I'm down this one week to kind of build this app. And I was like, listen, I have this other idea for an app. Um, I think we can knock it out in one week.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Let's, let's try it out. And he's like, okay, I'm down. So we launched this app and it was basically Instagram had, I think, had just gotten acquired by Facebook, right? It was like that billion dollar acquisition at the time, but it's still relatively small compared to what it is today.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
This app was the first ever app that basically created Instagram as like an exchange system, meaning you could upload your photo. And you could like someone's photo or you can follow them and you get a certain amount of coins for those actions. Or you can just buy coins. At the time, the way the algorithm worked on Instagram is the most likes, most follows gets to the popular page.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
Once you get to the popular page, you get a ton of organic reach. It doesn't work like that anymore. This app basically was the first time that you could do that without bots. And this app went out. And the first day it came out, there was like four hours left in the day. And every 24 hours, the clock resets. And it made like $700. I thought it was a glitch.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I was like, someone came in here and probably went insane about that. The next day, I see it rising through the charts.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
know we're at like number four you know in the paid charts and uh the next day it made like 12 grand right and then the next day it made 20 grand right and it was just organically growing you know had this really nice viral loop um and then we were the 65th highest grossing app in the entire app store and so every day we're making like 20 000 profit you know on this product um and it got to a point that i was like look i think you should drop out of school
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
i'm good thank you for having me john appreciate it you're good welcome man so dude you entrepreneurship is not something that is new for you it's not something you just started this is something you you've been doing your whole life right uh i've been yeah doing businesses ever since i was in high school so uh it's it's just kind of like in the dna and even before i knew the word entrepreneurship was uh you know i have these little tricks that i would do i guess as a kid you know to try and make a couple extra bucks i guess
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
we should keep building other apps. And he's like, listen, I can't get a visa because I don't have a college degree. And so he's like, if we raise an investment round, we can get a special visa called the O1A visa. It's like people of extraordinary ability. And so then I went out to go try and raise money. And we were able to raise $1.5 million.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
We got Mark Cuban to become an advisor in the business as well at the time. And he dropped out of school. And then we started this company. Three or four months into that app, Facebook tried to sue us. They sent us a cease and desist. They didn't actually sue us because we were using their private API. They didn't like what we were doing. And so we adjusted the way that that worked.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
But ultimately, that's how we got started in software and then ran a lot of different apps
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
know through the years and you know that kind of led to you know what we do now with mode is kind of all that learning all those different businesses um and uh we sold a lot of parts a lot of the app studio and apps to you know other people along the way um but that's kind of like the story of those you know early 20s uh and and you know the pivots along the way all right just so so for those of folks that are listening right how many dogs did you have i mean did you guys just literally go on a streak of winners or did you were there a couple just dogs
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
I mean, the app builder was a dog and the entire thesis of that business. Um, it's not that it was like that business. Some people made it work. Like I, I just like, wasn't built to be a founder. I think like that, because I was like, I've always been a mass consumer founder. I would say like every business I've ever operated has been like a B2C business focused on getting consumers in the door.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
That's like what I'm good at. That's what I like to do. Um, and so, uh, that's, So that didn't work. And then you have this consumer app, and that did, and that prevented the capital. Then we were like, oh, okay, let's make all these other apps. And we did these celebrity apps. We were the first ones to use. We were going Vine kids. At the time, Vine was big.
Escaping the Drift with John Gafford
Exploring the Future of Smartphones and Income Generation with Dan Novaes
So we were really ahead of a lot of trends. And some of them made that money, but not to the scale of that first InstaLiker app. And that was actually a big life lesson, I would say, because if we just would have focused on some of the core value props that we were doing, instead of wanting to aim for a billion-dollar outcome, instead of a several million,