The Next, Episode #50

Annual reviews, 3 day fasts, and a new era for startups

Hi there, and welcome to The Next - my take on health, wellness, and company building.

In the last few years I’ve founded 3 health brands (Kettle & Fire, Perfect Keto, Surely non-alc wine), which do tens of millions in revenue. I’m now working on TrueMed, which allows health and wellness brands to accept HSA/FSA funds. Previously, I worked in tech and had no experience in CPG, DTC, or any other 3-letter industries.

If you missed past episodes, I recommend checking out Episode 42 on finding work you love and why I’m worried about environmental toxins. Otherwise, let’s dive in! 

🆕 What’s new

Right about now is the time when many take some time to review and decide goals for the coming year (like I did for my 2023 goals). 

In the past, I’ve taken the “striving” approach to goal achievement. Set a goal, make it happen. This has worked well for some things (starting a business, lifting), and less well for others (meditating). 

I recently discussed this with one of my coaches - how for years I’ve wanted a stronger meditation practice, and haven’t gotten there. “Maybe you’re just not ready yet”, he reflected. “You don’t feel the need enough, so you don’t do it. When you want it badly enough, you’ll find it easy to meditate”. 

This struck me as profoundly true. The times in my life I’ve made the most change have all been when I felt like change was necessary, not a nice-to-have. In many ways, my health journey began freshman year, when a friend committed suicide. In the weeks and months to follow, I was depressed, for basically the first time in my life. 

I felt like I had to figure out how to make myself happy. And that deep desire to be okay again opened me up to trying new things to feel good. And as it turns out, exercising, eating well, and investing in your health feels pretty darn good! 

I suspect that roughly half of my goals in years past failed the “do I want it badly enough” test. The answer, obviously, was no. If I wanted to meditate as badly as I wanted to breathe (cue motivational video), then I would be meditating! Instead, evidently, I wanted to spend time reading, socializing, working, or anything but the thing I had told myself I wanted. 

In a way, the approach I was taking to my goals was the worst possible one I could take:

1. Tell myself I really, really want Thing

2. Change nothing about my life to achieve Thing

3. Feel bad about myself for not achieving Thing 

As I think about setting goals this year, I’m trying to keep this in mind. Trying to limit the areas I set goals in to only the areas that I obviously, demonstrably want. 

And truthfully, I’m not even sure that’s the right approach. When I first started eating better, it was hard. A daily battle of the will. As I’ve learned more about health and food, it’s gotten less hard. Not because I no longer like sugar and such (as you’ll see if you ever hang with Drinking Justin), but because certain unhealthy foods no longer fit my self-concept. 

Probably, this is the best and most lasting way to make change. As my friend Scott said:

“Changing the conception of who You are, is a more fundamental input to how you engage the world than anything else.”

I tend to agree. And I wish you all luck as you evolve your self-concepts this year. 

💪 Health stuff

I’m about to embark on a 72-hour bone broth fast. The same one Dana White (UFC founder) recently did that took the internet by storm. And, frankly, really helped Kettle & Fire sales 🤑.

The protocol is simple (and linked here):

1. Day 1 - drink 2 liters of water (with electrolytes), and 32oz of bone broth (Kettle & Fire)

2. Day 2 - drink 3 liters of water with electrolytes (Perfect Keto has great ones), and put a pinch of sea salt in each glass of water 

3. Day 3 - same as day 2 

The benefits of fasting are well-documented (1, 2, 3, 4) and come with body composition, anti-cancer, and longevity benefits. When I’ve done them in the past, I feel friggin great: high energy, positive mood, focused. And coming off quite a bit of honeymoon sushi and ramen in Japan, I’m looking forward to not eating for a minute 😂.

Fasting is very Lindy. There is almost no possible way that our ancestors would have been able to eat 3 meals a day, without interruption, for their entire lives. Today, fasting is the exception: then it was the rule. 

https://twitter.com/naval/status/688805145929371649?lang=en

For my money, regular fasts are likely one of the most beneficial things you can do for your long-term health. It’s one reason why (I suspect) fasting has been a core part of many religious traditions for millennia. After all, if adherents to a given religion live long, healthy lives, that’s a pretty good advertisement (in a sense) for that belief system! 

Fasting also has a way of cutting through my internal narrative around food. How many times have I found myself unconsciously eating to avoid something, eating to assuage boredom, or eating simply to socialize. On a fast, it’s much easier to notice when you’re eating for reasons other than “my physical body requires sustenance”. And easier to realize how often hunger is not a stable state, but a fleeting sensation. Here one minute, gone the next. 

If you haven’t fasted even a day in your life, I’d recommend it. Just start with 1 day and something that previously felt SO HARD will - I suspect - prove to be just not a big deal. Later this year I’d like to try doing another one of these with newsletter subscribers, so stay tuned. 

🤑 Biz stuff

Historically, software startups raise a lot of money to hire employees, scale a team, and invest in go-to-market. If you wanted to build Stripe, Hubspot, or any of the great software companies of the last 15 years, you basically had no choice but to raise a lot of venture funding, hire a bunch of people, and hope for a gigantic outcome. 

I think we are entering a new era for many startup founders. One where the model does not involve raising hundreds of millions of dollars in round after round of funding, but looks a lot more like:

1. Raise a small amount of money in a pre-seed round 

2. Use that money to hire a team and ship a product

3. Use early traction to raise a $3-5M seed round 

4. Get to profitability, never raise again 

Now, obviously, this won’t be the path for every startup. If you’re building a hard tech company, (1) thank you, and (2) this is likely not your path. However, for $Insert-SaaS-startup, we’ll see more and more taking this path. 

Raising money constrains your set of exit outcomes. If you raise $100M+, well, you better hope you can sell for at least $300M. And the universe of potential acquirers who can pay $300M for an asset is just not all that big. 

We saw this when we bought Fomo. We bought it for ~$400k, seller-financed it, and sold it 5 years later for more than 10x our purchase price. We had a well-funded YC competitor who raised close to $5M to pursue the same idea in what turned out to be a small market. When that market didn’t quite materialize, they were stuck whereas we had a really nice outcome. 

If you raise $5-7M, you haven’t constrained your set of outcomes all that much: you have increased your capacity to build a product and a team quite significantly. If you’ve built something valuable, there is a huge universe of buyers that can transact at the sub-$25M purchase price level. And if you sell 25% of your company to investors and later exit for $20M, that’s still life-changing! 

This is amazing news if your goal as a founder is to maximize your odds of banking generational wealth. That was my goal until a few years ago, and it meant I bootstrapped Fomo, raised no money for Perfect Keto (which has since done $150M+ in revenue), and raised relatively little for Kettle & Fire. 

This has all been said before and is the thesis of funds like IndieVC (which I attempted to invest in). But this is one area where I strongly suspect AI (specifically, Github’s CoPilot and Google Gemini) will have a huge impact. Historically, you had to hire tens-to-hundreds of engineers to build and maintain a given software application and tens-to-hundreds more employees in your city to operate, market, and sell the thing. 

Today, both of those things are increasingly untrue. When you’re hiring remotely, it suddenly matters less if your person is based in SF or South America, but there’s certainly a cost difference! This combination of AI-building software + outsourcing in my opinion structurally changes the cost structure of your average software company and means that many startups can raise far less than they have in the last decade. 

If this is true, it has two major implications in my mind. One is that VC funds are likely to go back to funding hard stuff with a high degree of uncertainty, like nuclear fusion or drones that make it rain. 

The second is that go to market is likely to become even more expensive. Already, something like 40 cents of every dollar of venture raised goes to Amazon, Facebook, or Google to acquire customers. I suspect that these costs will increase, but that the main beneficiaries will be influencers and content creators. Mr. Beast’s Feastables hit $200M in sales in just 2 years, and I think this trend is only just getting started. 

As an operator, I think you have to start thinking along these lines. If other founders can run structurally lower-cost businesses, well, it’s going to be hard to compete with them. Personally, I suspect we are going to be blown away over the next 12 months by all that this class of AI tools can do, and I’m excited to figure out how to deploy them to build a better, more profitable company. 

😌 Dope stuff on the internet

Some of my favorite things since the last newsletter (note: I don’t get paid to recommend anything here):

• 📰  Article - This post on getting unstuck is one the best pieces of writing I’ve consumed this year. If you feel at all like you’re stuck in any area of your life (like I currently do with meditation!), you’ll probably find something that resonates.
  

• 📚 Book rec - After barely reading at all May-July, I had a strong push at the end of the year, and read like 5 books in December (audiobook morning walks in the park near my house have been lovely). I really enjoyed Erik Hoel’s recent book The World Behind the World, and was particularly excited by his idea around causal emergence and its implication in arguing for free will. The book gave me a lot to think about, and feels like one of those reads I need to sit with for a bit to fully grasp all of its implications.
  

• ⌚ Cool product - I’m biased, but I am very excited about what we are doing with Truemed. If you’re looking to save money on your gym membership this year, there’s a good chance that Truemed can help you pay for it using tax-free HSA/FSA dollars!
  

• 🎵 Music  - I’ve been digging this chill Chris Luno mix, very much a vibe. And this remix by Ryan Taggart is a favorite I heard recently that I suspect you’ll enjoy if you’re into the Lane 8 type of sound.
  

• 🏀 Random - This is just insane. This article explores the phenomenon of echolocation, where blind individuals use sound waves to create a mental map of their surroundings experiences (and can even… mountain bike?). The "defensive activation theory" proposes that dreaming, particularly during REM sleep, helps protect the visual cortex from being taken over by other senses in the absence of visual input. The article suggests that the brain's flexibility and its need to defend the visual cortex contribute to the occurrence of dreams, which is so cool!
  I’m constantly fascinated by relationships like this, where various subsystems in the body both compete with one another for resources, while also working together to enable higher-order functioning. Biology is wild.
  

• 🔥Hot take - We are soon going to have an understanding of the negative effects of taking the Pill. It’s associated with 24% increased risk in breast cancer, 60% increased risk of cervical cancer (after 5+ years of use)(1). The Pill changes who women are attracted to (2, 3), and I can’t help but feel that under today’s FDA there’s no way it would possibly be approved.
  

• 🙋‍♂️ Ask - Please send me your weirdest health theories, they are basically my love language and I love learning about new ones. I’ve been digging into Ray Peat as of late, and want exposure to more heterodox health ideas! 

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Enjoy the first month of 2024! Excited for another spin around the sun, may it be a good one for you and yours. See you next month! 

• Justin