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Ep 6: How This Silicon Valley Outsider Hustled His Way to $750M Exit – Meet Vungle’s Jack Smith

 
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Shaan Puri: Jack, man I appreciate you coming on the show. I’ve been excited to have you on because every time I meet you, you are up to some new companies, some new experiment, some new kind of clever thing. I would call you sort of, you’re the most clever guy I know in Silicon Valley.

Shaan Puri: I asked some friends of the day, I was saying, if we had to nominate one of us to go on a game show and you don’t even know what the game show is but want… you’re going to need some set of skills to win it. Maybe you have to be good socially, physically, you have to be clever or self-puzzles, whatever. And I feel like you would be my pick. Because you are very clever and it seems like whatever system gets put in front of you, you end up cracking the code and is that fair or that surprising to you when I say that?

Jack Smith: No, I’d like to think along those lines though. I just like trying whatever system is in front of me. I do think about like game shows and stuff as well like how to do reverse engineer the [inaudible 00:01:53].

Shaan Puri: Yeah, exactly. So, we’re going to talk about a couple of the things that you’ve built. So for people who are listening, this is Jack Smith. He is an entrepreneur and a friend of mine. He has started a bunch of different things. I sort of called him the Jack of all trades because he’s got his hand in all different types of projects, either starting the company, advising companies, investing in companies, that sort of thing.

Shaan Puri: The biggest success is a company called Vungle, which is an ad network that’s doing hundreds of millions of dollars in revenue, despite only raising by Silicon Valley terms, a small amount of money, about 25 million they raised and they’re doing worth of 300 million in revenue. So very impressive company. But I’m going to talk a little bit less about that. Not just because it’s an ad network and ad networks are not the most fun thing to talk about, but mostly because I think Jack does a lot of other interesting stuff.

Shaan Puri: So Jack, when I was growing up, I thought that if you had a million bucks, that meant you had like infinite money, you had all the money. And so that number of million was always top of mind for me. And so my goal is to find out from people, all the different crazy things that they get up to in order to make a million bucks. And what I want to actually know from you is, I want to rewind the clock.

Shaan Puri: So before Vungle you’re 15, 16 years old and you started your entrepreneurial journey. What were some of the early day’s things you tried to do to make money? Was that even a priority of yours? Were you trying to make money or where are you trying to do something else?

Jack Smith: Yeah. I’m never actually obsessed about money very much. But what I do value is freedom, and I think that I also like to try and be like successful. And I feel that just money is just kind of the kilometer by which we measure success. If I was a sprinter, then I’d be trying to get the best time in 100m, but because I’m kind of an entrepreneur, then that’s why I was focused on money.

Jack Smith: Probably the first thing actually that I did, like a business idea that I can remember, I think I was probably like eight years old or something. And basically I was a [inaudible 00:04:01] playing in the local park, and I found that there was this kind of seed on this tree by my house that you kind of open it up and had all this like dust inside, and it was kind of pretty itchy if it got on you. And so basically I just picked lots of them with my brother, and I sold them in the playground as like itchy bombs.

Jack Smith: And I told people, put this down someone’s back [inaudible 00:04:26].

Shaan Puri: Right.

Jack Smith: They’re going to go very itchy. And then, I think I sold each one for 25 cents. And I got quite a lot, like people’s older for siblings and stuff were coming to buy them from me in the playground and stuff, so that’s probably the first entrepreneur memory I can recall.

Shaan Puri: Okay. Did you have a name for them or were you just calling them itchy bombs?

Jack Smith: Yeah. I just branded it like itchy bombs, yeah.

Shaan Puri: Okay. All right. So you started off with that, and slightly evil, but I like it. And so where did you go from there? You’re eight years old then. And just to give people like the kind of context, how old are you now?

Jack Smith: I’m 30.

Shaan Puri: You’re 30? And how old do you look?

Jack Smith: Probably like 13.

Shaan Puri: I was trying to imagine you at eight and I was like, it’s not actually that big of a jump from how I see you today, because you sort of the baby faced assassin. So what did you try next? What were some of the other notable experiments or attempts that you made?

Jack Smith: Well when I was, I think around 12 years old, all my life I’d been getting not a massive amount… like small amount of pocket money, like allowance, I think about like $2.50 a week, maybe $5 a week maximum. And then when I was like 12 or something, my parents said, “Okay, if you want to keep getting your allowance, then you’re going to have to start doing more to help out around the house.” And then so they said, “All right, here’s the stuff you’re going to do. You’ve got to do dishes and tidy up and et cetera, et cetera.” And then so I said like, “Okay, well, I don’t want to do that stuff, so just stop giving me an allowance and I’ll just figure out how to make some money myself.”

Jack Smith: So I was more [inaudible 00:06:07] the freedom than the money.

Shaan Puri: Right.

Jack Smith: So basically, nowadays they’re very popular. At the time it was slightly smaller about these websites like Upwork, which it just IPOed a couple of months ago. Like Upwork or doodle.com.

Shaan Puri: Elance, yeah.

Jack Smith: Yeah. So basically I just went on those sites. And so as a worker, I bid on projects and I bid on them even lower than the guys in India and stuff. Because I’m like 12 years old, so any money is a lot for me. And so I bid on projects that I didn’t even know how to do them. And then basically I just learned how to do them. So basically people were paying me to learn.

Shaan Puri: Were you like a naughty kid or why? Because I think most kids don’t sort of look at their parents and say, “No deal.” When it comes to like it’d be an allowance for chores trade. And so you were willing to do work, you just didn’t want to do that work. You wanted to do other things.

Jack Smith: Yeah, so I wasn’t really naughty. I just don’t like being told what to do. I think that is just something somehow in my personality. I can remember as well, I think I was aged three or so and I had a sippy cup, like babies drink their milk out with these baby cups. My parents were like, “Hey, you’re getting pretty old for this now, so we need to get rid of it”. And I was like, “No, this is mine, I like this.” And they said like, “All right, what if we pull that cup off you, we’ll offer you $5 for the cup?”

Jack Smith: And then so I remember thinking just like, “Wow, these parents are idiots.” This is not worth $5. I’m ripping them off. And then so I did the deal. And I was like, “Okay, you can take the cup and then I’ll take $5 for it.” And so I felt like I was ripping them off. But then the next day I was like, “Actually I want the cup back, can I buy it back from you?” And they’re like, “Oh, we already threw away”. But I think like that kind of just shows that my parents kind of, even from a young age, just got the strategy that I didn’t like being told what to do. But if it was a business deal or something then, I was more rational in my thinking, yeah.

Shaan Puri: Nice. So first acquisition offer was five bucks for the cup?

Jack Smith: Yeah.

Shaan Puri: Very good. Okay, cool. So you started bidding on Elance. What type of stuff were you doing then? Because you’re not an engineer, right? Are you technical enough? Do you code at all or?

Jack Smith: Yes. I’m not an engineer. I’m just a crappy engineer. So I can code some stuff, but if I was speaking to a Silicon Valley engineer, then they’d quickly find out that line of fraud. But I can do designing websites, Dolby flash was big at the time, and so I knew like basic stuff on there, very crappy designer. So I could do basic design staff and then kind of 3D modeling and stuff like that. I’d take on any project and then I could deliver it. There wasn’t going to be great, but I’d figure out some way to do a basic version of it.

Shaan Puri: And what were you charging at the time? Because you said you’re trying to undercut even the cheap Indian labor. So what are we talking?

Jack Smith: Maybe 100 to $250 for a project, which could take a multiple weeks.

Shaan Puri: Okay. You’ve done so many different businesses. I personally know of five different things you’ve done. What’s your sort of formula for thinking of these business ideas that you think might work?

Jack Smith: Yeah, I mean on a smaller level, a hacky level is kind of exactly what you described. I was talking with someone else before and they asked, “Oh, what’s your favorite productivity hack?” And I think, I myself do this as well, but with kind of over-glorified productivity nowadays, have a lot of productivity poon. Like these articles saying the best way to be productive is, intermittent fasting and use this to do this stuff, and blah, blah, blah.

Jack Smith: I think actually most of the successes that I’ve had, have actually come from when I’ve maybe been procrastinating. Because I think you can have all the productivity tips in the world, but then if you’re being productive, working on the wrong thing, then you’re being a busy bee but with your head down, not looking up and see what’s around you.

Jack Smith: So I think that kind of allocating time, or at least just not being embarrassed about procrastinating and discovering new things on the internet is so much just unlimited things to discover online. I think that is how I discovered lots of opportunities for me, whether it’s just reading different tech news. So a number of breakthroughs for me have come just by one, reading tech news, but then two, actually acting on it. So if I read the news and I see something interesting just reaching out to the company or building a relationship with the journalist.

Shaan Puri: Give me an example of one that comes to mind where you were strategically giving yourself open space. You were just browsing around, maybe on the internet and something caught your eye. What’s an example?

Jack Smith: As you send an intro that I’d like founded Vungle, and then left around when we’d raised the series B sort of time, and I was planning to take some time off because I was pretty banned out to be honest. So I was thinking to take a fair bit of time off. But actually just one or two weeks after I left, I was just reading Hacker News, and then not the number one or two or whatever article that those often get a lot of attention, but actually on the second page of Hacker News, I just saw this post. It was two guys just saying that they were at idea stage and just testing out this idea that ended up becoming Shyp S-H-Y-P.

Jack Smith: And so I just reached out to them and I said, “Hey, let me know if you just want any help with your pitch deck or whatever, I’m happy to be helpful.” And then I ended up meeting them and we got on really well and very quickly spiraled within a matter of days they were like, “Oh dude, you just want to join as a co-founder.” With hindsight, probably would have been better as an advisor because they had a very strong relationship together. They were living together, and they worked together. So I was kind of a third wheel.

Jack Smith: But it was very interesting experience nevertheless. And that just came from procrastinating. I was reading Hacker News, saw something got an idea I thought was cool, and then found the guy’s email address and just send him an email.

Shaan Puri: I’m amazed you went to page two. I don’t know anybody that goes to page two of Hacker News.

Jack Smith: Yes, it’s three procrastinating.

Shaan Puri: Yeah. I go to the show tab on Hacker News, where people are just showing a project they built. I find that way more interesting than just kind of people posting news or blog articles because I want to see what people are making. And they’re just posting demos basically, which is really awesome to check out. But that’s kind of one of my secret spots to go for kind of interesting stuff.

Shaan Puri: I think over time, I’ve figured out, on Twitter I got these lists that are my gems, Hacker News, the show tab. And I have like four or five of these different little, it’s almost like deal flow, but it’s basically just creativity flow where I go and I get inspired. One out of every 10 times I find something amazing. And maybe not at a 10 times it’s just junk, but I need versus just… Otherwise, I’ll just go on Instagram and then that’s sort of junk food for my brain. And so I have these little pockets on the internet that I get cool stuff from. Do you have to your pockets like that?

Jack Smith: Well, relevant to that is that Dropbox launched in Hacker News show section Drew Houston, I think when he was solo founder, announced his Dropbox idea in the Hacker News show section. You can still see the post online, and this is another bit to bear in mind. If you look on that post now, all of the comments are about how his idea is so terrible and it’s definitely going to fail. People are like, “Why do I need this? I’ve got USB stick. This is a shithole there.”

Shaan Puri: Yeah, this Dropbox thing is going nowhere.

Jack Smith: Yeah. So if you’d found that thing, when he posted it and being contrarian and had your own opinion instead of going with the crowd and telling him how terrible his idea is, you couldn’t have been his co-founder.

Shaan Puri: Right. I like how you just reached out. Like, “Hey, let me know if you guys need help.” Or “Hey, let me know if I can be helpful with X.” Because a lot of people I think want to reach out, but they don’t know what to say. Is that typically what you do? You just sort of say, “Hey, this looks cool. How can I help?”

Jack Smith: Not how can I help? Because then that puts the owner on the other party to have to think for you, and then they don’t know your skill sets and stuff. So for me, I was like “Hey, if you need help with your pitch deck,” Because I knew that they were kind of trying to raise funding and stuff. My email was just a few sentences, “Hey, I’d started this fungal thing-“

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Jack Smith: And had raised funding for that. And so I was saying if you need help with your pitch deck then I’d be happy to be helpful with that. And my intention was just to be helpful, I’d advised other companies at that point, so I’ve kind of thought maybe they might want me to join as advisor. But then, that kind of resonated with them because I was saying, “This is my skillset, if I can help with this.” And then they were like, “Yeah, actually we do need help with that.”

Shaan Puri: Right. And so speaking of raising money, you have kind of an insane story about how you raise your money for Vungle. Take us through that. You started Vungle when you were, how old?

Jack Smith: Probably 20.

Shaan Puri: 20. And so I’m guessing it’s one that you didn’t have some like super impressive track record that you could point to and say, “Hey, trust me with your money. I’ve done this before.” Right?

Jack Smith: Yeah.

Shaan Puri: So you’re basically new to the scene. You don’t have a ton of connections and you don’t have a huge track record. Is that all correct?

Jack Smith: Yeah. And especially in London, it’s like the ecosystem is a bit smaller than it’s in Silicon Valley.

Shaan Puri: And so you had this idea and how did you go about getting money for this?

Jack Smith: Well, in London we just tried a lot of different stuff. We pitched at different events and met anyone we could. One time pitched at an event and this guy came up afterwards and was like, “Oh yeah, that was a really great pitch. I would love to get coffee with you guys.” And then he gave us his card and it’s like, blah, blah, blah, AngelPad investor or something.

Jack Smith: We went out to coffee once, and then when I went out with him a second time and then you go and meet, he’s kind of dragging on and stuff. And we’re like, “So how much money do you generally invest in companies when you’re getting involved with them?” And he’s like, “Oh no, no, no, no, I don’t invest money. I invest my time [inaudible 00:17:42], so that was a kind of a tough experience in London. One of them when we’ve got one [inaudible 00:17:49], we got one VC fund who at the two associates liked what we were doing. That was kind of rarity, one active, one of them.

Jack Smith: And then they took us into a partner meeting. A meeting with one of the partners at 6:00 PM or something and then after like 10 minutes the guy was like, “Okay, I got to go now. Yeah that’s cool, thanks bye.” Because basically we were still so terrible at pitching or our idea was so terrible. He basically walked out after like 10 minutes.

Shaan Puri: And were you like devastated or were you fine?

Jack Smith: Yeah. We’re pretty devastated. We also had a lot weird experiences. One of the guy was just done started investing I guess, and he rented two conference rooms. A hotel or bar or something, and he went to interview my co-founder and I in separate rooms, and we were like, “Dude, why did you spend money renting these conference rooms, you don’t need to impress us like what we’re doing and why you keeping us in separate rooms? It’s super weird”. And then he was like, “Oh, I want to invest $1 million.” And then the next day he’s like, “Oh, actually I’ll change my mind.”

Jack Smith: All of this was not very established ecosystem in London at the time. I think it’s gotten better now. But having a very tough time there raising funding.” And then basically the big brand through pain again just because I was actually procrastinating. So there was stuff that I was supposed to be doing and my company, but instead I was just slacking off and reading tech crunch. And I saw this article and it said, there’s this new incubator or accelerator in Silicon Valley called AngelPad. And they’re giving every company that joins $120,000.

Jack Smith: And then at the bottom it said like, “Oh, and they have kindly reserved one spot or kept one spot for tech crunch readers. So if you’re interested, just apply here.” I said to my co founder, “Hey, look what we’re doing with no money. Imagine what we could do with $120,000, we should apply.” And he’s like, “Oh, you know, that’s going to be a waste of time. It’s not worth it.” Because they were saying they had like 2000 applications for this last fall or something. And I was like, “Come on, we might as well just give it a try. There’s not much to lose.” And so he was like, “Okay, just give it like three hours max and then if no, then, we should move on. “

Jack Smith: So basically, we just recorded a video on my phone of my co-founder and I just, talking to the camera like to know us, seen your background to a larger need. We deserve this last spot we won’t let you down. This is my phone number, this is my email address, give me a call. And then basically again kind of from procrastinating, I’d found this kind of loophole hack on LinkedIn, where I was able to create an advertisement and target it down to a specific person.

Jack Smith: So LinkedIn has this kind of own ad system like Google AdWords. I think it was a software engineer had done this as a bug that I found I could set the targeting so specifically say like job title, AngelPad, job title CEO. That there’s kind of only one person who that ad would sell it to. [crosstalk 00:20:58].

Shaan Puri: How did you find that? You said you stumbled into this?

Jack Smith: Yes. LinkedIn had launched a new ad system. And I think this is where the most opportunities are. Is when it’s like a nascent platform. If you’re trying to find hacks on Google AdWords, there’s probably none left because people have like 15, 20 years experience with Google AdWords and they’ve got lots of engineers working on.

Jack Smith: LinkedIn this ad system was new, they’d just launched it. And so I was just testing it out, Oh, let me create an ad. And then it had this interesting feature where you created an ad and you set your targeting like company, Apple, Dropbox or whatever, and it told you on the right how many people your advertisement would reach. So like 100,000 people or 50, 200, but then this actually at a very low level.

Jack Smith: So I just felt like what happens if I’m creating an ad targeting one person? So the number on the side said one, and I tried to submit the ad and then as you might expect it said, “Oh, your ad is not targeting enough people, so you need to target a wider audience because that makes sense.” Why would they let you run an ad?”

Shaan Puri: It was like a minimum.

Jack Smith: I mean why would they let you run an ad targeting one person. But then again, just because I was just being curious I guess and I liked trying something breaking in. I was like, “Okay, well what happens if I expand the targeting enough to make that number now say two people?” So I tried again to submit an ad that talked to two people this time. Again, it was like, “This audience is too small, increase it.”

Jack Smith: And so I kept on doing that one after another, and I basically found out that it would let me submit an ad when I had an advertisements targeting only seven people. I don’t know why seven was the number. Again, probably someone pushed the wrong, perhaps they meant 7,000 people when they only put seven by mistake. But yeah, so armed with that knowledge, I could now create an ad targeting the one person who I did want. And then I would put in six randoms who I don’t care if they saw the ad or maybe wouldn’t even understand it even if they did see it. So maybe like a job title, like janitor, a Chinese bank or something in China. So it doesn’t matter if those six people saw.

Shaan Puri: So what did you do with this ad?

Jack Smith: So I created an ad targeting all of his friends and our connections on LinkedIn. So basically again, I’d seen this tech launch post earlier in the day only spent like three hours doing this. And I talk to all this connection saying, and I also found another hack on LinkedIn ads, which was basically at the time, because it was new, all of their ads were manually reviewed. They didn’t have all 20 reviews, but the thing is that you could update the ad after it was approved.

Jack Smith: So basically, I would create like an innocent looking ad, just targeting whatever. And then I change it after they approved it because they wouldn’t have approved it. So basically the ad had a picture of the founder of AngelPad’s face and it’s said, “Do you know Thomas? We’ve got an urgent message we need to get to him, click here.” And so you’d click on it, and took it to a one page landing page and it’s basically got video again, I was talking to the camera, I’m saying, “Oh, we searched you, we really want this last spot.” And then I put my phone number and email address, and I put a button and just saying, quickly to email this, Thomas.

Jack Smith: And England’s different time zone to America, obviously basically I just went to sleep, didn’t really expect anything to come from it. Just gave it our best shot. And then the next hour I kind of forgot about it. And then the next day I just came into the office and I had an email, just a one line email from Thomas. And it just said, “I’ve seen your ad, what’s your phone number so I can call?” And then so he phoned me and was like, “Hey, is that Jack?” And I’m like, “Yeah.” And he’s like, “Well, I’ve seen your ad we can chat? But first of all, take it down now.”

Jack Smith: It’s like everyone’s calling me about these ads. You told us later on that if you’ve been on a flight from New York to San Francisco got off the plane, he had like close to 20 emails from people saying like, “Hey, have you seen this ad?” Of people, these young kids, they don’t really want to speak to you, and so basically we-

Shaan Puri: That’s amazing so this is you know lesson number 52 of My First Millions Podcast, which is don’t just put your resume on the desk that’s not enough. You didn’t just apply to AngelPad just like the other 2000 companies, you applied and then you spent a few hours messing around trying to get this guy’s attention trying to stand out-

Jack Smith: Yeah.

Shaan Puri: And in a way that I feel like literally only you would have done. You target the ad, you figure out that you can target to seven people. You put his face in it and it says, “Do you know this person? If so, click this thing.” And you’ve got his attention. Was he annoyed or was he like, was he impressed or annoyed or a mix of both?

Jack Smith: I think a bit of both, yeah. He was like, “Take you down this causing a lot of trouble, but yeah, you guys are like hustling too. So you really want this?” And you obviously as you said like going putting in work and thinking outside the box.

Shaan Puri: Yeah. When I moved to Silicon Valley I was in Australia at the time so sort a like you on the outside of the bubble. And I wanted to work at this place called Monkey Inferno, which was Michael Birch’s incubator. I was like, “Wow, this guy’s like a billionaire.” He’s built and sold multiple companies and he’s got this amazing place where he looks like he just bought a building decked it out. And it’s an ideal lab, sort of like any idea you want you can come and work on it here. So I thought that was amazing.

Shaan Puri: But I looked at the job description and it said, “We’re hiring a product manager.” I didn’t even know what that was and it said, “You need seven years of product management experience.” I didn’t even have seven minutes of product management experience, but I applied and then I was like, “Okay, there’s no way they’re gonna just like pick me out of the bunch.”So then I made a custom website about why I’m the guy for the role. I wrote a letter to him and then even that got me a meeting and then they kind of blew me off, and I started just doing the job even though they weren’t asking me to.

Shaan Puri: So I would look at all the products they built and I would send them like a PowerPoint saying Hey, here’s how I think this product could be improved. And just started doing the job. I only was applying to one job I didn’t apply to any other jobs. I was like, I’m going to get this job and go further than anyone else. And it sounds like that’s pretty much the principal you were using to get into AngelPad.

Jack Smith: Yeah Exactly, for sure. I mean, I’d never even heard of Y Combinator. We didn’t even apply to that, like we didn’t apply to anything else.

Shaan Puri: And so you, did you end up getting in, did you end up getting the funding from them?

Jack Smith: Yeah, so basically I said like had seen the tech crunch post on a Thursday, had the call with him on the Friday the next day, and then over the course of the next week we had maybe like one or two more Skype calls. At the time it was only my co-founder and I we had two or three interns in the office.

Jack Smith: And then so a week after the initial call, he said like, “Okay guys I made my final decision.” And by the way, when we done other calls, we told every other company and AngelPad at that point were amazing software engineers, most of them were from Google. One guy had written YouTube’s API, these other two were like, they had PhDs and video and coding. And so we knew that was a weakness that we didn’t fit in at all.

Jack Smith: But what we told Thomas is we said like, “Hey look, you’ve got 11 other companies all like heavy software engineering backgrounds and you’ve got one last spot.” And we were like, “Why didn’t you just choose us as just like a wild card? It could be an epic failure or it could be a massive success.” So that’s to me was our pitch, is like we know [inaudible 00:28:34] but at least we can wild card., and the so-

Shaan Puri: So you turn a weakness into a strength basically.

Jack Smith: Exactly, yeah. We were like your other companies they are really safe bets at one you’d have to have one wild card, and so a week after, he was like, “All right, I have make my decision who’s got the final spot? Let’s have a final Skype video call.” And we were like, “Oh man, can we still phone call like we’ve got our interns here, or do you have to reject us on video?” And he was like, “Yeah, we’ve got that.” And so on the call, and then he’s like well I’ve made bad decision, I’m going to take a risk and go for a wild card. Like you got the last spot.”

Jack Smith: And we’re like high fiving around the office and he’s like, “But if we do this, then I’ve invested in like foreign companies before, and then after the program they just like move back to home country and our investors don’t like that. So if you’re going to get the last spot, then you have to move to America permanently.” And my co-founder and I, didn’t even need to look at each other. We’ve not even discussed at that point we were just like, “Yeah, no problem that’s fine.” And he’s like, “Okay, then well the program starts on Monday, so just, but for first flight out here that you can. And so two days later, I think we just got on the plane to San Francisco.

Shaan Puri: Amazing. And that’s the company that turned into Vungle, which is the sort of monster. How many people work there now?

Jack Smith: Over 200, I think, yeah.

Shaan Puri: And so what was the pitch at the time? Because we haven’t really even been talking about the idea. I’m more interested in your sort of clever hacks in your hustles of how you pick what you want. I think that is really the more interesting piece to me at least, but like what was the idea? Was the idea at the time we’re going to be a mobile ad network or was it-

Jack Smith: The idea was terrible. It would never have actually worked. I’m surprised that we actually as I said, we got in not because of the idea or our backgrounds, it was just because of our hustling. The idea was terrible it was a cross platform app store where every app would have a video showing you how the app works. So it was like an Android and iPhone and PC app store wouldn’t never actually worked.

Jack Smith: But basically when we got to AngelPad, he gave some advice, which really was very compelling, and he basically he said this a little teams, but we kind of took it on us. He said like, “I want you to call like 20 prospective customers of yours, and don’t pitch them your current business idea, instead talk to them and ask what is their biggest problem in their current day-to-day role in their life.

Jack Smith: And so we spoke to different app developers, we went app developers to meet ups and stuff, and we ask the, “What’s your biggest challenge?” And they told us, “We’re app developers we know how to build app, but then we don’t know how to do the marketing or how to get uses for it.” And basically how AngelPad works is they have a demo day, so their whole program last was 12 weeks and at the end do you have a demo day where you pitch to investors, give a presentation.

Jack Smith: And so basically, it was actually only two weeks left and we knew what we needed to do. We needed to come up with a new business idea. We needed to accrue a CTO because neither of us could code. And you kind of need a CTO type person to raise funding, and we needed to raise at least some funding, otherwise, we would have had to go back to England because we were only there on a tourist visa anyway.

Jack Smith: And so roughly two weeks before the demo day, what we did is we just came up with like six different business ideas related to this idea of how can app developers get users. And we spent like half an hour each creating super crappy landing page for each one. And basically, we just spent a day trying to actually sell each idea. So the first idea, we were like we can help you get this to be [inaudible 00:32:22] two different blogs and get, it’s like cover your app. And then we were like, “Normally this is going to be $200, but we’ll give it to you for like $20 this first day.”

Jack Smith: Now with those different app developers and stuff, everyone was like, “Wow, this idea is amazing. Yeah, I’ll sign up when I get home.” We didn’t get single sale though, like people just are telling us it’s a great idea to get us to go away.

Shaan Puri: Right.

Jack Smith: And so we tried two different ideas each day, and then the final day we actually came up with the idea, I think, I’m not sure. I think that how we came up with the idea for Vungle is that we had been trying to record a meeting that we had with one of our like Thomas, [inaudible 00:32:59] Japan raised the advice and we were like, “[inaudible 00:33:01] we call this meeting?” We opened the app and in this like crazy like the horizon or Coke, like video ads started playing really loudly over commute, and it was like really annoying.

Jack Smith: But then we fought like, “Wait a minute. Instead of advertising like Coke or something, why don’t we have the video advertising another at different time?” And so we kind of again we haven’t written a single line of code, it was neglected by the engineers, but we spoke to app developers and we were like, “Fine, what if you could have like a movie trailer for your app, like 15 seconds, and then when a gamer is playing a different mobile game, they could see a trailer for your app.”

Jack Smith: And then people we knew would hit the right idea at that point because people were basically like, “Wow, I need this so badly like I want to be your first customer.” Then you haven’t launched yet. But they were like, “I want to be first in line when it launches, like put me down for one $5,000, $10,000” Like people were throwing money at us even though we hadn’t bought a product. And so that’s when we knew we’d got the buying idea.

Shaan Puri: Is that real? I mean the people were that excited? I mean, why were they so differently excited about that and the other one? And I guess like how did they know that, yeah, this is going to get me customers. What was the difference I guess?

Jack Smith: Well, the first one is not really helping them get onto a blog or something. That’s a nice to have. So one of the investigator’s advice that also while we’ve come up with idea, that raised and it did he said, “Don’t create a business where you’re curing your customers age like that. If you don’t exist, they’re like, “Well it’s just an age it doesn’t matter. Your antidote for my age is nice but whatever.” He’s like, “Create something where cures your customer’s cancer.” And so for them getting onto a blog or reviews or something that’s not really users having an ad that work with video that would join with actual users.

Jack Smith: And I think that got the idea more because we compared it to the current industry in Cuban at that time. The only real option for mobile games was banner ads. And so, we said, “Banner ad sucks.” They don’t get what your game does. It’s a tiny banner, the users click on it by mistake, they didn’t even need to click it and they don’t even know what your app does.

Jack Smith: If you’ve got to have a 15 second video, it’s like a movie trailer. They’re going to see what your app does. And so that will be a much better way to get users. And $5,000 also, even though it’s throwing money at us, it’s not that much money. They basically were willing to try anything that took potentially give them users. They weren’t committing $1 million, they were saying, “We’ll try this out when it launches, will for sure give you like $5,000 test budget.” It wasn’t a massive hurdle, but what we were selling at that point was users, they didn’t what were nice to have was blogs.

Shaan Puri: So they were already advertising, but it was crappy banner ads and they were thinking, “We can’t show them how fun our game is, to this little banner.” And what you guys brought to the market was the video ad, so that they can make a little juicy trailer. And they were, “Okay, I believe more people will come to us than we’re currently getting if we do the video.”

Jack Smith: Yeah. Bear in mind as well as Thomas, the AngelPad guy actually had worked at Google for many years, and so we’ve come up with all these different ideas on, and so we met him during AngelPad then, again, we were super laymen. And I remember drawing on the white board, [inaudible 00:36:36]. I’ve done some brief reading online. I think this is how mobile advertising works, it’s like you can have a app for example, basically he was also this was not like a practice investor pitch. So, I think he was kind of in the acting mode of it. We made him feel guilty about it afterwards.

Jack Smith: But basically, there was enough investors sitting as well. Basically, he stood up during the pitch and he’s like banged on the table when he’s like, “You guys don’t know anything about advertising. There’re people with like 20 year experience at Google working on this, and you just look this up on the internet like five minutes ago you think you could come up with better advertising company. You will never raise a single dollar of funding.” And so, we started fighting about that.

Jack Smith: But the reason they had worked was actually an advantage that we didn’t know anything at all about advertising, because what it meant is that we looked at things just through the lengths of the customer needs. So at the time the industry started for mobile advertising, it was charged on a CPM basis, cost per meal. And that means cost per thousand people that view an advertisement whether it was a banner or a video. So it was $2 per thousand people that see your round. And we were thinking, we just saw and understood the lens of, and stared thinking like this is just how everyone in the industry does it, this is the role so I guess we should follow it.

Jack Smith: We fought back from the needs of our customer, the app developer, and we just thought like, “Wait a minute, I don’t care how many people see the video, they just want users.” And so, it was a risk, could have totally not worked, but we said, “All right, instead of charging CPN we’ll just charge you, you just pay us for each user that we get you.” So, you just pay us like $2 for every user we get you. It doesn’t matter if we get you a user after they see your video once or 100,000 times, we were just going to charge you based on how many users we get you.”

Jack Smith: And then that again, was a massive differentiator for us. And it became because we were naive and if we had more experience, we could have just said, “You know [inaudible 00:38:46].”

Shaan Puri: Love it.

Jack Smith: Everyone does it this way, so.

Shaan Puri: Because it’s so simple and it seems obvious in hindsight, but for sure I mean that’s the way the industry worked. That’s the acronym everybody knows CPM. And so, if you had come at it from the advertising background, you would have taken that for granted and just continued going as it is. And so, how did you… You left the company at a certain point? Was that just found tension? Was it you were tired of it? You vested all your stock. What was the reason you left?

Jack Smith: A lot of different reasons. I think as humans we like to have very simple, and clean explanation or story to lots of stuff, right? But there’s lots of dynamics going yet on in a company. I think that for me it was like various things. One is that after putting in all of this effort, getting into AngelPad, I think during the program, basically sleeping in the office and going all in and not having any weekends or holiday, I was very burned out at the end, and I think that was very unhealthy, and not in a good frame of mind really, because it had gone all in on my company.

Jack Smith: And then the important thing as a company scales, and you get more and more people is the founders also need to scale as well. So when there’s two of you, you need to do everything. You need to be the company janitor, the company accountant, the company office manager, everything. So throughout the time of the company I was doing everything, marketing product.

Jack Smith: And then as the company scales, you kind of need to fire yourself from those responsibilities and hire people to take them over from you. And you become very focused on what you’re good at. The conventional wisdom that’s given a lot by investors and stuff like that. They give out, they say the certain rules like Silicon Valley rules, they say you should never invest in family teams. You should never invest in husband and wife teams. You should never have one of the founder be CEO and one be president, because then there’s not clear line of controls people get confused.

Jack Smith: And so, I kind of didn’t really take my own advice by breaking the rules. I kind of just accepted these Silicon Valley norms everyone was telling me. It was only after I left the company, that when I researched… at the time there was only about 20 unicorns, say company’s worth over a billion, now it’s a lot. When I left them, pretty much every single one broke one of those rules. [inaudible 00:41:13] was the husband and wife team Stripe their brothers, left one of the co-founders is CEO, the other one is president.

Jack Smith: So kind of, there is no rules in Silicon Valley, but at the time I went along with what different investors had started telling me.

Shaan Puri: Got you. Okay. That makes sense. I appreciate that sort of the nuance. And so, when you left, at one point the company was doing really well, but you personally sold a little bit of the stock, explained to people who have never been in that position where you have this paper net worth it’s worth something, but the company’s not liquid yet. And so how did you think about that? And how did you actually do that? Walk us through how that works. How do you sell secondary stock?

Jack Smith: Investors when you’re still working at a company, they probably don’t want you selling stock that much. It’s become a bit more normal by them wanting to do as much because they want you to be incentivized unlike hungry to get an exit, so that they can make money as well. If you sold a lot of your stock then you’re probably just going to be not in any rush to sell, but they want you to be hungry.

Jack Smith: But because I’d left, then the company was a bit more amenable to that. And so, I could do with having a bit of cash to [inaudible 00:42:31] on a day-to-day basis. So, my co-founder who was still there just said, “Hey, well, there’s these other investors who want to invest in the company, but we don’t really want to raise investment right now. Would you be interested in selling a small amount of your stock to them?” And then, so, I said, “Okay, that sounds like a good arrangement.”

Jack Smith: And then the company was all on board with it because it was only a small amount, and it wasn’t going to be more dilution for everybody. So basically, I just chatted with these guys and it was fairly simple that I just sold a small amount that we kind of just went back and forth agreed about valuation and then just sold a small amount that of these little valuation for both parties.

Shaan Puri: Got you. And so how did you decide, how much you wanted to sell? Did you want to do investing and create other businesses? Or invest in real estate or something like that? How did you think about the money there?

Jack Smith: I was just thinking, I didn’t want to take the money to do investing because I also was confident that the company valuation was going to keep going up. So, I kind of just though like what’s the minimum amount that I’m going to feel comfortable the next few years, at least just not have to worry about how I’m going to pay my rent and stuff, and I’m not have to be forced to try and get salary somewhere.

Jack Smith: So, I kind of just felt that the average Silicon Valley salary is like 80 or $100,000 or something I just thought, I’ll go ahead we’ll set a few years of that kind of salary range that we can make some money to live but I’m not selling I’m still keeping like 95% of my stock.

Shaan Puri: Got you. Okay. And you wanted to continue to ride that upside, so you found that balance that worked for you?

Jack Smith: Yeah.

Shaan Puri: Love it. Cool. And the last question I have for you, is again, I think you are one of the cleverest and sort of outside the box thinkers. And it’s funny having you on a podcast, and in general you do a great job of meeting a lot of people. I feel like you meet a lot of entrepreneurs either through the internet or in person, but you’re actually kind of an introverted guy. You’re not the sort of loudest guy in the room.

Shaan Puri: And so, I wanted to have you on so that you could tell your story, but I think a lot of people can learn from you. The one thing I wanted to know, is if you were 20 years old again today, and you take on of Vungle and you don’t have that stock that’s going to be worth all this money and you were trying to make it again, you were trying to do something new, where would you gravitate towards if it’s a specific project, that’s great, but even if it’s just a certain space that you’re interested in, what would you do If you were 20 years old again today?

Jack Smith: I would be reading tech news, like TechCrunch or Hacker News or things like these, and then seeing what new platforms are launching. So let’s say like you had your blab platform, right?

Shaan Puri: You.

Jack Smith: Even after Vungle one thing I did is, I sold Product Hunt, it launched. Had I think under 200 users on the site. I was like, “Oh this just seems pretty interesting.” And then I just started using it every single day. I just would post new products every single day. SO a few minutes of work each day, and then quickly I just became the number one user on the site, and they had like a ranking board. And then Product Hunt then just got more and more popular. And then nowadays it’s like a very established thing. But I had just started very early and you’re only allowed to post one product per day.

Jack Smith: So, kind of I had a head start that nobody else could catch me up with as long as I consistently posted each day. And so I just posted each day and then I made it a bit more scalable. Again, I’m a crappy software engineer. If I was doing this again, I would just find some enough for Upwork, could probably get it done for like $10 or something. I basically did this myself, but I could have hired someone for $10.

Jack Smith: I created just a script to automatically schedule a post to Product Hunt each day at exactly midnight. And that’s when I made all resets. And then basically, I just had a massive list of products and so I didn’t have to do any work, maybe just post product. And each day and I was the number one user and so nobody else could catch me. And then because there’s a leaderboard, I’m kind of getting free advertising if you like on the homepage.

Jack Smith: And then, a number of people kind of found me on there and we’re reaching out. Sequoia is pretty much one of the best-known VC funds in Silicon Valley. One of the partners from Sequoia just reached out to me and asked like, “Hey, can we get lunch?” Just because I think he just found it interesting, why is this guy so prominent on that? And I did the same thing with, to put up time has become popular. I also did it with some other platforms. One was called Wale it was like question and answer site. That one ended up dying. But if you place enough bets in different places, then one of them might take off and because you are one of the early users.

Jack Smith: The early users of YouTube nowadays are like hundreds of millionaires. So that’s probably what I’d do it doesn’t cost any money at all to become a power user on a platform that is new. And so you have a good opportunity of becoming a number one user, and then when you’ve got that you can leverage that. You get connections. Because I was on Product Hunt, many startups reach out to me all the time, pitching me, asking can you help me go on to Product Hunt. And then I could have asked them or transitioned back to be an advisor at one of the companies, or if they seemed interesting, try and be co-founder. The same as the ship shipper described. So something like that.

Shaan Puri: Jack, this is why you would win the game show. You are quick to sort of find the exploits, the platforms that are fast and new and fast growing and you jump on it like that. Very good strategy. And reminds me of a framework that I have, which is you don’t always have to… So some people look for windows and some people look for doors. This is what I like to say. A window is something where you can see through it, you know exactly what’s on the other side and you can decide, this is worth my time or not?

Shaan Puri: And it’s good to look through windows, right? You want to look at opportunities to say, is this going to be worth it or not? But sometimes you got to open doors and you don’t know what’s behind the door. But as long as you’re reasonably confident that this door leads to four more doors, it’s worth going through. And so, I think there’s a lot of people out there who look for windows and anytime they see a door, they get a little bit scared. They don’t want to open it.

Shaan Puri: And it’s advantageous to be a door opener and just keep opening one door that opens four more. And it sounds like what you did with product on is exactly that.

Jack Smith: Yeah, exactly.

Shaan Puri: Hey, so listen man, we’re going to hop off, but I wanted to give you a chance to give people a way to follow you, to contact you, to check out some new stuff you’re working on, this is your opportunity to kind of shout out, how should the people who are listening to this, how should they get more Jack Smith in their life, which we all want.

Jack Smith: Yes. My website is just jacksmith.eu. I’ve got blog, I haven’t posted on a while, but maybe if more people reach out to me by that, then I can start posting more, I guess. But that’s probably the best way to find me and then made links off to my tweets and stuff like that.

Shaan Puri: Awesome. Great Jack man, it’s good talking to you. And I’ll see you soon when you’re back from New York after the summer.

Jack Smith: Yes, absolutely. Thanks for having me on, and best of luck. I’m looking forward to see who else comes on the broadcast next.

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