Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me is a mixer G fan like you, our listener here today, who I am in awe, because he has been building marketplaces for years, starting with one where he went door to door here in the San Francisco Bay area and signed up users.
He’s developed his businesses here. And still, when I talk to them about what would make this interview interesting for me, he said, I would like to challenge the Bay area and the Bay area mindset. And I go, this is a guy who’s benefited from it. What’s the challenge. We’re going to find out about how he built his businesses, including his latest company, which is called brain trust.
It’s a user controlled talent network uses crypto in a way that I have to be honest. I don’t understand. Here’s what I do understand about it. His vision is this. Imagine if you have a, a developer network. Where the developers have an upside in the network and where the marketplace gets more powerful instead of the marketplace saying to the developers or the way that the way most marketplaces do, Hey, we have more power now you have to get less of a cut.
We have more power. We’re sending you more customers. You have to get less money instead of that, it’s we have more power. Now you have a company that has more power. That’s his vision for this business? There’s some kind of part of here also that I don’t understand about how it’s not for profit. What is it doing, Adam?
All right. Today’s guest is Adam Jackson. He is the founder of brain trust and a few other companies that we’ll find out about in this interview. Thanks to two phenomenal sponsors. The first is actually not a paid sponsor anymore. It’s SEM rush. Their ad run, ran out. We happened to talk to him in the pre-interview and he said that he is a customer at Vessey I’m rush.
I said, let’s just do a freebie. Let’s talk about how SEM rush has helped Adam. And we have a sponsor who’s been with me for years. If you’re starting a business, you need a hosting package. Which I’ll tell you later why you should be hosting with HostGator, but first Adam, good to have you here.
Adam: Thanks for having me, Andrew big fan.
Andrew: Thank you.
What don’t you love about the Bay area?
Adam: Oh, where do I start? Man? Look, let’s be clear. Right? The Bay area has been very good to me. I came out here. I grew up in Ohio. I went to school in Nashville, Tennessee. And I moved here right out of school. And that was about 16 years ago. Um, I’m sort of a software engineer, turned entrepreneur I’ve started, uh, for venture backed businesses as well as an asset management firm.
Um, and so I’ve been in San Francisco city, San Francisco until very recently now I live in Marine County. Um, and look at it. This place has been very good to me then, you know, the, the technology network effects are strong here. All the capital, all the venture capital, basically in the world is right here.
Um, but you know, it takes someone growing their entire career in many businesses to, to see the flaws. And so now I feel like this is my hometown. I want to help fix the flaws.
Andrew: What’s the, for people who don’t know Marin County is right when you see the golden gate bridge and it’s the iconic San Francisco bridge at the other side of it is Moraine. So he’s basically just two miles out of the area where you probably get a little bit more of a yard. You’ve got nice quieter neighbors, right.
Also richer. Let’s be honest. Okay. What, well, you know what one, give me one thing that you would fix about this area.
Adam: So one thing that comes right to top of mind is I really feel like there’s quite a bit of group think. When it comes to capital allocation. So Sandhill road, the venture capital community here, cause it kind of invented the space risk capital, right? These are zero to one investors. They, they take ideas and founders and they give them seed money.
And usually it doesn’t work out right. That by definition was risk capital different from the public market investors. Well, over the past couple of decades, Yeah, they’ve gotten very risk averse in my mind. You know, they, they follow these rigid thesis. Many investors do not think from a position of first principles and they’re just following what the trends are.
They’re following whatever’s popular, or whatever’s been well established.
Andrew: seen. How have you seen this? Played out?
Adam: Well, I mean, I’ve very from firsthand experience here, I’m building a user owned economy or user owned marketplace built. So it’s a new business model, which is low fees instead of high fees, empowered by a new technology called blockchain.
And look, I’ll be the first to admit blockchain is not that easy to understand. I get it right. I, I love that stuff. That’s what I geek out on. But. You know, the average investor needs to put a little work and understanding what that is. But, you know, we, we pitched this idea and very sophisticated and established investors here in San Francisco and Silicon Valley basically usually take one look and say, well, that doesn’t, I have the high rate I like to see in marketplaces or it’s not SAS enabled, uh, B2B, uh, so not interested.
Right. They just don’t do the work.
Andrew: where, where a few, maybe a two years ago, if you would have said blockchain, crypto, anything, they would have been much more interested and they would have
Adam: Even less. Oh, for sure. I mean, look, even you, I mean, you’re in the heart of it here with me. I mean, blockchain’s becoming a trend now, but it’s still basically noise to most people to most investors. And so instead of doing the work, I mean, we have some phenomenal investors on board with brain trust who have done the work and work from first principles, or they’re just taking a bet on me, which that’s fine too.
But, um, Most investors, honestly, they, they just don’t do the work. They don’t want to think outside their box. If it’s not a high rate web enabled marketplace or, uh, something Salesforce will buy in the SAS area and they don’t want to bother with it. Right. So I just feel like this place is not rewarding risk taking entrepreneurs like it used to 20, 30 years ago.
And we live in a world of unlimited capital now, literally, right? Like the government $3 trillion in the money supply. They didn’t exist six months ago and they’re still not taking the risks. I think they should be taking so.
Andrew: know what, but on the seed stage, I see a lot of interesting developments. It feels like everyone who is an entrepreneur at any point in their life is raising some fund on angel list and going out there like a cowboy and putting 25 to a hundred K in companies that they believe in and they get their own wild visions of what it could be.
Do you think that’s helpful? It’s not enough money or it’s not enough? What.
Adam: it’s not enough capital and it’s not enough people doing it, right. There’s not, there’s only a handful of Angela Angeles, Cigna syndicates with any size. And all of them are just following the signals of the Sandhill guys, right? Like I’ve had people who run syndicates. Tell me if you don’t have one of five names on your cap table from Sandhill, our syndicate won’t even do it.
Andrew: it too early for somebody to have a sand Hill road venture capital. It is, but they still want it and they’re still expecting it.
Adam: There’s a, there’s a lack of people thinking from a position of first principles, right. They’re just not doing the work. And so they think of these idiotic reasons to pass on the deal. Right. And it’s just, it’s very, look, I come, I come at this from a personal standpoint, right? I mean, You know, I, I raise outside capital to have a diversity of thought and diversity of points of view on my cap table.
And that’s really, I don’t do it cause I need the money. I it’s, that’s really hard to do these days is my, is my criticism, right? Because people aren’t thinking of themselves. So that’s my, that’s my chief criticism, Silicon Valley today.
Andrew: for anyone who doesn’t, who might be thinking that maybe you’re, you’ve got sour grapes here. You’re a guy who’s raised a lot of money doctor on demand raised how much money.
Adam: 163 million.
I don’t think that even includes the last round. We just did 75 from general Atlantic.
Andrew: saw that. And you were so pressured with that business. This is a company where you could see a doctor on your phone, which made sense for a long time. And now it’s critical because from basic things, you shouldn’t go see a doctor you’re being told to stay home and you guys nailed it. You nailed it with dr.
Phil McGraw and incredible celebrity. You just nailed it ahead of your time. Alright, so we’ve got a little bit of a glimpse of what’s to come. I’m kind of curious about how you got here. And this is my own personal interest as somebody who’s to shovel snow. You mentioned you were in Ohio, you shoveled snow too, and charged your neighbors, right?
Adam: I had two jobs when I was a kid starting around age nine or 10 in the summer, my job was to cut the grass and lay the mulch in the winter. And my job was to shovel the snow
Andrew: Why did you do that? For me? It wasn’t that I needed money. It was that I wanted the money. I just wanted the points. I wanted to see how high I could go. What was it for you?
Adam: Oh, I was poor as hell. I needed the money
Andrew: How poor were you?
Adam: food stamps for lunch
Andrew: Oh, really
Andrew: in a neighborhood.
Adam: we weren’t in poverty, right. But we were, we were on the lower rung of the middle class and, you know, Mo money mattered quite a lot. And so, um, you know, my parents were hardworking people and we’re very upfront with us when we were younger and said, look, If you ever want a car, like you’re going to have, you know, you’re going to start working now when you’re 10 or 12, if you want a car when you’re 16.
And that I was so thankful for that advice, right? I mean, they didn’t sugar coat it. They said like, get out there. And my parents both have amazing work ethics and that, you know, that was instilled in me young.
Andrew: So, what did you use the money for? Did you help the family out with it?
Adam: Yeah, I mean, I did it to sustain myself as a kid by my own lunches. And then yeah, like saved up for a car so I could drive to a better job. Preferably one that didn’t involve lawnmowers or shovels.
Andrew: The job that I had, my, I was too young to work. So my dad who manufactured women’s clothing said, I’ll get you a job off the books at one of my clients and my job for less than minimum wage was taking hangers apart for hours at a time. And I’m the kind of person, if I start something I have to complete it.
So I spent the whole summer there making very little money, but I remember going home every night saying. I’m never going to have manual labor work. I’m going to be in an office where I think, because this is so grueling, I literally had nightmares about separating hangers because you quit, you can’t turn it off.
You had something similar, similar realization. You didn’t want to do manual labor.
Adam: By the time I was 13 or 14, then it wasn’t even about manual labor. I just wanted to be endorsed. The weather is so bad in Northern Ohio. Like pretty much every day of the year. I just like, I don’t care what I do. I just want to be inside. So I got, I actually, I was too young to work too. So I forged a work permit that said I was 16.
I was 14 at the time and just rounded it up to 16 and gave and walked into a computer store in our little town and said, Hey. Can I work here, I’ll do anything. And they’re like, yeah. I mean, we need to, the toilets gotta be clean, the trash ass you to take out. So it’s fine. As long as I’m inside, I got to get out of the snow.
And, uh, and that’s why my first indoor job. And then they taught me how to build computers. And that was like my, you know, my intro into the technology world.
Andrew: You told our producer, you basically ended up taking over the business or did you fully, what, what happened there?
Adam: Yeah. So I sort of start, I ended up, I’ve worked at a computer store, learn how to build PCs. This is back in the mid nineties. When, you know, before like Michael Dell had taken over and, and use of build custom PCs, like put in cards. I mean, you could still do it now, but you know, this is how most computers were built back then.
And so I learned how to do that and then started my own little business from within this store and eventually took the store over and had this like really nice computer custom PC assembly business in high school.
Andrew: What is it about you that allowed you to do that? Instead of just saying I’m indoors, it’s warm. What good
Adam: Yeah, I mean,
Andrew: To, what end did you imagine that you were going to then buy real estate with it? Or what.
Adam: Oh, I was just trying to like, make sure I didn’t go into decks. You know, I hadn’t gotten to investment grade yet. You know, I was still just, Hey, you know, I want to have a car and maybe a house someday. And like here’s a star college wasn’t even on my mind. Um, my parents, you know, fortunately kind of pushed me in that direction.
So I, I ended up going to Vanderbilt, did a computer science degree there, and that got me sort of out of the hardware business.
Andrew: You sold the business so that you can afford to go to college.
Andrew: You came to San Francisco. Why?
Adam: No. I first came to LA because when I was, I graduated high school or college at 2020 wise just turned 22. And I always had the California dream in mind. And, um, and when you have, when you’re a midwife, when you think about the California dream, you don’t think about San Francisco, do you think about, you know, the beach and they watch, and, and so I showed up in, uh, in Santa Monica and I got a job in Pasadena and I realized that’s not a commute.
You can do so. And so I ended up in, uh, in the Hollywood Hills and, um, you know, it was a, it was a culture shock for me. I had grown up in conservatives, Ohio, and Tennessee, and here I am in the middle of Hollywood and, you know, a young man with $220,000 in student debt from Vanderbelt brutal student debt brutal.
So not worth it, by the way, do not go into debt, computer science degree, do not do it. Or any other degree for that matter, but
Andrew: computer science, especially you can, you can learn to code much cheaper.
Adam: absolutely just build it. You’re just read a book or watch a YouTube and build it. Yours, every practical skill I ever learned, I got OCP, Oracle certified database administrator certified when I was 19 self-taught out of textbooks I could barely afford. And then I was allowed to be an Oracle database administrator, which is one of the highest paying jobs in the field.
Um, Vanderbilt didn’t help me with any of that stuff. No school dots, right? I mean maybe MIT and
Andrew: you pushing yourself to learn on your own because of the money or because you’re a curious person or because somehow technology spoke to you.
Adam: Yeah, all the above. I, my first passion is technology. I love technology. This is why I’m doing brain brain. Trust is my it’s my passion project. I’m choosing to do this. I wasn’t looking for another job. I love technology. I love making money. I love making other people money. I love changing business models.
You know, I love, I love wealth creation, zero to one, you know, I, I think that’s part of
Andrew: to one, meaning, take an idea that doesn’t exist and just get it off the ground, growing it, doubling it. And so on is interesting, but it’s not the same as making something that didn’t exist. Come to life.
Adam: Exactly right.
Andrew: Okay. How’d you end up in San Francisco then in
Adam: Yeah, so I, so I can bounce out at LA. I learned quickly that Los Angeles has no place for a young man with no money and, and there’s no tech there. Uh, and so I, you know, back on bounced out, chewed up and spit out a Hollywood and, uh, uh, rolled back to my parents’ house in Ohio, kind of licking my wounds. Uh, uh, in, in the middle of a snow storm and, you know, so, um, spent Christmas there and said, packed up my car one night and said, I’m getting out of here next stop, San Francisco. So I drove, uh, about 40 hours straight along interstate 80 from Cleveland to San Francisco, crashed on couches here, uh, until I could scrape together rinse.
And, um, you know, that was the beginning of my career here.
Andrew: Where did the idea for market square? Come from?
Adam: Great. So I was. Uh, dating a girl at the time who, uh, when we were supposed to go to a birthday party for a friend of hers that Saturday night, and she said, well, I need to find a gift for this birthday party. And so we spent all day Saturday going into, you know, 10 or 12 different stores looking for a gift.
For this birthday party, I was like, and she’s like, well, we can’t buy on Amazon because that takes four days. Like we need it same day as like, Oh my gosh, we just killed our weekend. You know, going through retail stores, looking at, we could have been at the beach, you know? And so I thought, well, why is there not an Amazon for local products?
And so that, that was the birth of the idea. And, um, and then I, there wasn’t one, we were the first kind of among the first thing about it. So that’s where that started.
Andrew: And so you said we’re going to do this and I’m going to sell individual store owners on this idea. Where’d you
Adam: Well, well, I didn’t, so I was, I was too stupid to think. Well, I should go to best buy and circuit city and copier saying, go get those guys on board first. Cause then I’ll get I’ll sign three deals and get, you know, 8,000 stores. I wasn’t thinking that clearly. So.
Andrew: feel like that maybe they were too big for you, that you were, who are you to go? You did.
Adam: Where to start. Right. I just, I didn’t, I came out of school. So ill-equipped for anything, right? I mean a four year college and it’s such a waste, right. They don’t teach you anything. And it’s, I went to a good school. It was a, I had a blast. It was a total waste. And so I didn’t know anything about the world.
I, and so I said, well, look, I know how to build software. Right. I know I get it. So I built the marketplace myself. It looked like Amazon, it was easy to use. Um, and then I was like, well, now I need inventory. So I printed out some flyers at Kinko’s that like showed what the website looks like. So they couldn’t carry around a laptop.
And I went door to door up and down Chestnut union Polk street, Hayes Valley, all the cool shopping parts of San Francisco and asked the merchants, Hey, would you like to have like your top 25 or 50 products featured on the web and then people could shop online and come into this store. Would that be something you mentioned?
Almost all of them said yes. And they, you know, and I said, look, I’m not gonna charge you unless someone comes in. Right. And they don’t have it. They didn’t have no internet presence. So if someone says I’ve found you on the internet, it was me. And then we put a coupon system in their neck close loop and
Andrew: somebody literally comes into the store and then you’re trusting them to pay you at that point.
Adam: Well, I was trying, I was testing it, right. I was like, look, this is either going to drive value or it’s not right. And here’s kind of the key lesson, right? Stay close to your customer. Right. If you’re not driving value for your customer, don’t do it. Right. It’s just, it’s a waste. It’s like technology looking for a, for a market, which is most, most projects today.
Um, and so I said, look, I’ll come back in a month and I’ll, I want you to tell me if anyone has come in, this is before we figured out coupons, coupons, quotes, but you know, if anyone came in off the internet or saw you on a site called market square, and I came back and overwhelmingly people had found them, cause we figured out organic search for it.
Right. We were the first to do local organic search.
Andrew: By the way I went to the website in the internet archive on the bottom, it said copyrights, step up.com. What step up?
Adam: Yeah. So step up was a company that was doing the same thing we were, but for big box, I started by a dear friend and my partner in that business, uh, Kendall Fargo. So Kendall was doing step up, which is local shopping group for big box. I was doing market square, local shopping for, for small retailers. So we merged them.
We put them together and we raised some money together and had this phenomenal exit to, into it. And we, we joined, we were both, uh, executives and into it for a while. Uh, so it, Kendall was an early mentor and, and really like made that business successful.
Andrew: And he went after the big box stores that you didn’t know to go after you went after the, when you told our producer Chestnut street, I remember we’re going down Chestnut street. It’s got these little mom and pop stores, which you don’t think exist anymore, but they do, you know, where you can buy a baby stroller and have somebody consult you on it and, and insults you a little bit for lack of understanding.
Um, I get, I get how you did it. What ha why, what happened to you personally after the sale? Did you make it to the point where you could just take a breath and feel like this kid who grew up on welfare now can be comfortable.
Adam: Um, I took about a week to enjoy it and, um, and by the way, I didn’t grow up on welfare. I was just poor. We weren’t actually,
Andrew: food stamps. Excuse
Adam: yeah, we were with the stamps. And so, um, we, you know, I took about a week, but look, w when you, when you get a win, it wasn’t a giant, it was, it was a nice outcome. It was definitely life changing
Andrew: say how much, what are we
Adam: as much as 65 million in cash for the deal.
Andrew: That’s a really nice and how much of it did you get more than five?
Adam: Yeah around that.
Andrew: Okay. So then that’s it. That’s a really nice one. You can’t, you live for the rest of your life off of that,
Adam: I could have, but I didn’t want it. Right. Cause, cause you’re on this now you’re on this. You’re on the top. Right. You’re like we got to go do it again. And so I spent a year at Intuit as a product manager and I look, I wanted to, I’ve never had a job before. I’ve never had a big company, certainly a venerable company like into it.
And so I spent a year there, uh, working under, under Brad Smith, who was the CEO until recently, um, And learned a ton. They are a hell of a product development shop. They really, you know, they effectively run two monopolies tax and accounting and, um, you know, you don’t get that good by accident. Right.
They’re, they’re, they’re a great order. So I learned there for a year, uh, and then went off and started another company.
Andrew: What’s one thing that you learned. I keep wanting to go into the ad and then move on to the next company, but what’s one thing that you learned from them.
Adam: I think I learned good product development process. Like watch your customers. There are consumer facing system, right? So if you want to build good consumer facing software, there’s an art and a science to it. And so they have these cool usability labs. We’ve watched people with cameras above them and you watch them watch their eyes.
Um, that was super cool, right? That was a, like a peek behind the curtain.
Andrew: invested in a Reportive. Have you seen role, have you gone through his superhuman training?
Adam: I was one of the first investors in superhuman.
Andrew: were D he does that, right? He literally said, let me see your, your, your desktop. And I said, I’m on an iPad. He goes, I’m not sure that you’re gonna want to switch to us. If you’re on an iPad, we’re not as developed as we’d like to be.
I said, but I’d still want to try it. He goes, okay, can I see it? So I did a screen share, and then I walked him through how I used it and he starts taking notes. He says, so let’s go through how you do this. And he’s right. That’s what you’re talking about from Intuit. Okay. Alright, look unbelievable. And you could feel it in a software. You could feel it. Do you superhuman? It’s so
Adam: Every day.
Andrew: you feel the human touch, not the human touch. You feel that he knows you. He’s anticipating. Alright, let me talk about why are you looking over your shoulder? As I talk about them, I feel like maybe there’s something that I’m missing.
Like, are you guys upset with each other or something?
Adam: Looking over her shoulder.
Andrew: Or you’re looking over the computer when I’m talking about Rahula you,
Adam: Oh, no, I just, uh, I would, to be honest, I’m looking at the time I have a reporter I’m talking to at 1130. I just want to make sure we don’t run
Andrew: okay. Then we’ll rush really quickly then I understand we’ve got 25 minutes. I will
Adam: No, no, no. I would invest in anything that guy does. If that guy open a chain of restaurants, I’d invest in that.
Andrew: And now I feel that I didn’t understand it and reported. It was a good tool that I love that I didn’t understand it until I saw. And superhuman superhuman is understanding of people in software. You could totally see it. All right. Really quickly. This interview is sponsored by HostGator. If you need a website hosted, if you have an idea, especially if you’ve got a marketplace idea, like what we’ve been talking about, you can go to hostgator.com/mixergy and launch it right away.
Adam, if you came to San Francisco today and I gave you. You had no money and I gave you a hosting package. Pro skaters are a quick idea that you would want to launch.
Adam: Hmm, what would I launch? I would, I would build what hasn’t been built. You know, I would build a better, uh, interface for blockchain apps. You know, blockchain just desperately needs better UI. And so I would build something like that on how skater.
Andrew: I would be thinking about how many parents, I’m never going to send their kids back to school and say, what resources do they need? And I’m going to build a marketplace for that. And they’re now looking for it. I do a podcast about it, a blog about it. And then you have a marketplace where I don’t know what it is.
Maybe it’s tutors that they need. Maybe it’s an in person, teacher that they need. Maybe it’s other people to join their pods, but many people are not going back to school. There’s a, there’s a new Yorker article I know about homeschooling is apparently. Something called road schooling, where parents are just on the road and the kids are doing their, their classes from the road.
They might as well. All right. Whether it’s that
Adam: a much better idea by the way.
Andrew: I liked it with throwing out ideas. If you’re out there and you’ve got an idea, or you’re trying to kick around some ideas, go to hostgator.com/mixergy, you’ll get the lowest price that they have possible. If you use that URL and you can just experiment with your ideas, if you don’t like it, just throw it out and start again.
It’s just like having a piece of paper or a notebook for an artist where you could just sketch out your ideas. And if you love them, you develop them. If you don’t, you can throw it out. It’s super inexpensive, but very, very Bulletproof. Hostgator.com/mixergy. Alright. Um, the idea for doctor on demand came from where,
Adam: From my cofounders, Jane McGraw and his dad, dr. Phil McGraw.
Andrew: how did you meet Jay?
Adam: So, this is funny story I have. I’ve worked with the law firm Fenwick and West here in San Francisco and LA it’s been like, I love, hate, mostly love relationship. Hey, because they’re super, super expensive worth. Every penny though. They’re they’re wonderful attorneys. I built two companies with them. Um, Cindy Hass was our partner there and Cindy is wonderful woman who is one of the most well-connected people in the Valley.
Um, she, I just sold driver’s side, my second company to advance auto parts. I was earn-outs, which was a miserable experience and I was just dying to do something new and I wanted to build consumer facing what tech and this is back in 2011, 2012, like the iPhone apps are just kind of, you know, the, the app for that phrase.
And so Cindy.
They were at, she was asking Sarah Neera, Hey, put a list together of people who could build something like very high profile. And so, uh, I always say everybody good on that list was busy. And so I was not busy. And so they got to me and called me and Nero just said, look, whatever it is she’s they want to do, you should just do it.
Right. It’s dr. Phil. He reaches 33 million people a week on his TV show. His son, Jay is just like. Like this amazing entrepreneur, he’s like a serial entrepreneur, but on television and tech, right. He spans both worlds. I’m like, Jay’s, Jay’s my age, you know, fill it. Phil’s our parents’ generation. And so, um, they, they flew up to San Francisco.
We had lunch at and they pitched me this. Hey, let you know, there’s an app for everything, right. Well, why can’t you see your doctor on now? Well, I don’t know why. I mean, I don’t know anything about it. I never been to a doctor. I don’t know anything about it. I, all I know is the field sucks, right? From a patient experience standpoint, the field is terrible.
Um, that’s it. That’s all I know. I know the UX could be improved and they’re like, yeah, that’s what we’re talking about. Making the UX better. And so they said, come, come, we want to run this thing in Silicon Valley. We don’t want it to be in LA, but build it. Let’s build a simple, easy to use consumer facing medical app.
Let’s staff it with great doctors. Let’s talk about it on our show, the dr. Phil show, and Jay has a show called the doctors, which is a medical talk show and let’s see what happens. And so I said, cool. I’m in there. And that’s how we started back in 2012.
Andrew: Equal partners
Andrew: and your job was versus his.
Adam: My job was to build it, run it and scale it. His job was to promote it.
Andrew: Okay. And I can see that he’s in killer a promoter. I didn’t know much about him. And then I started researching him because of you. He, uh, he was a host of renovate my family, executive producer of the television series, the doctors he’s now the CEO of stage nine productions. It goes on and on and on and on the things that he’s done, what was the hardest part of building that company?
Adam: Not knowing anything about healthcare. When I started.
Andrew: It seems super simple sign up doctors, which you’re good at. They don’t have to be in the U S get a get software to let people do basically face time, right over the app and charge, charge a fee. What’s the difficulty. Where’s the part that you have to understand.
Adam: I mean, every step of that is like a mile deep hole you will fall into. So, um, build the app. So the app, first of all, live video streaming in 2012 was like this before base time, we were the first HIPAA and then re regulation, right hip. So HIPAA is the regulatory framework for healthcare. It’s a very, it’s, it’s more aggressive than banking regulations from a privacy standpoint.
And so you’ve got to build this like super encrypted. If you, if you lose a medical record, they find you a hundred thousand dollars per record loss. Okay. So they’ll find you out of existence where target can lose 200 million credit card numbers, and nobody gives a shit, right. It’s different sources for healthcare.
And so you’ve got to build something easy to use. Now that’s what I do, right? So that I can make that easy. You want to make, build something very, very secure in service. Ready? You still don’t have good wifi back in 2012, like service was a big deal. So we built a lot of our own algorithms there. Um, and then you got to staff it with great doctors.
Well, what does that mean? What makes the great doctor. You know, like if it’s not the same thing, it makes a great restaurant or a dry cleaner, right. These are very, like, they can’t pander to people. They have to make the hard medical decisions. They have to know when not to practice over video and when to there’s a lot to it.
Andrew: notice that about the website. It was here are the things that we are here for you to do, and it, and that made a lot of sense that there are many things that you just can’t do via video
Adam: So we had, we had to build a new app and a new hospital. Oh. And then get licensed in every state. And when we started, it was not legal or gray area in 20 something States. I mean, now it’s legal in every state. I mean, now the government pays for it. I mean before COVID it was, it was basically legal pre COVID.
It was legal. It was, we helped get it legal in every state, Austin and a few other companies works to change regulation. We had Senator Tom Daschel on our board of directors is tremendously helpful in shaping policy postcode, but it’s the new normal, right. COVID accelerated that business by a decade.
Andrew: Okay. Let’s close it out with why’d you leave the company.
Adam: So w I ran it for four years, day to day, grew into, you know, we’re doing 12, 15 million a year in revenue. Um, we probably had 120, 130 employees. It became a big company. And what w what we had morphed into was an enterprise health character company, right. Truly something that we, I signed Walmart and home Depot and American airlines and United healthcare.
And those big contracts needed to be rolled out. They’re multi-year implementations. It went from. What my passion is direct to consumer tech into a giant enterprise healthcare and software company. And look, we, as a board of directors, looked around a table and we’re like, I am not the guy to get this from year five to year 10.
I’m just not, you know, I don’t want to say it wasn’t a difficult process. It was, you don’t start a company with the intention of weeding. Um, but it was the right move. There was to put in a, a real manager as what I like to call it. And so we put actually a friend and mentor of mine from Vanderbilt, uh, Hill Ferguson.
Um, who’s now. And he was at pate. He was a senior executive at PayPal before, and was hanging out with shamatha as an EIR, looking for something to do. And we got lucky. We tricked him into taking the job and he he’s, the phenomenal CEO, um, has raised the last two rounds. And, you know, it was going to take this thing, you know, through a very large exit or IPO or whatever.
Andrew: story. I can almost spend an hour just talking about that. Fair enough though. I want to talk about what you’re doing with brain trust. Why don’t we take a quick moment to talk about SEM rush. You’re a customer of theirs. How do you use SEM rush
Adam: I’ve been using SEM rush. I’ve been using them for years. Uh, we, we use them a little bit less with brain trust because we’re, we’re more of an organic growth play. So we don’t do much paid here in all my prior company or in things that I’ve invested in. It’s just the best tool for what they do. Right.
There’s a, I think it’s a noisy space, but like you go in there, you do keyword analysis, you do competitor analysis. It just works, man. Like it’s and it’s one of the few tools that’s actually worth paying for.
Andrew: If you want to try it for free to see if it’s worth paying for no credit card needed, they are letting me test a special URL just to see if this is a good fit for them to advertise on. So all you have to do is go to mixergy.com/s E. M rush again, it’s not on their domain because they want to do this quickly to get a sense of whether this audience was a good fit.
And that means your benefit is you don’t even have to pay it. You don’t have to use a credit card. You just have to see does this work for you. And this will help them decide whether I’m a good fit for them. It’s mixergy.com/s E M. Rush to use it for free. All right. Where did the idea for brain trust come from?
Adam: so brain trust was a, is a project that culminates from a career of building two sided marketplaces. So let me, let me zoom out. Two-sided web enabled two sided marketplaces email was the first one all the way up to the modern ones. We see powering to gig economy now, or destroying the middle class is another way of talking about the gig economy.
Um, They’re two sided, web enabled marketplaces are very hard to build, right? They’re very capital intensive. You rate, you took the typical playbook because you raised hundreds of millions, if not billions of dollars. And you use that money from BCS to subsidize one or both sides of the marketplace, right.
Pay them to show up. Right.
Andrew: classic example is Uber gets to drop their prices lower than they, then it cost them for a ride just to get more people to start using Uber. And eventually the market mechanics kick in and they
Adam: Exactly. I mean, every category has the same playbook. Yelp paid us first, 10, 15,000 reviewers to review the restaurants. Right. Everyone had the same playbook. And so that’s fine. If you’re lucky enough to get to liquidity most don’t most lame out and go away. Negative gross, a unit economics. Um, if you’re lucky enough to break out into the S curve, you’re now an investor own network, right?
You are now majority investor owned. And because of all that capital infusion and those investors rightfully need a return. And how do you generate that return? Well, you dial up the fees, you start overtaxing the network, and in many cases you start extracting disproportionate value from the users. Then what you’re creating, right?
So there’s a spectrum of marketplace businesses. There’s extracting way more value than you deliver or delivering way more value than you extract. Right. So, so good. So good examples on the, on the bad side, Amazon marketplace, right? Those Amazon charges such exorbitant fees for the privilege of selling.
Products on Amazon dipping into their traffic, and then they knock off the stuff that works right to just add insult to injury. And so that they’re, you know, the gig economy, you know, door dash, you know, those guys taking giant rips out of every transaction, just for connecting food delivery. Like those are good examples of overly extractive networks.
But to an example of someone who probably takes as much value as they give is Airbnb. Right. Airbnb provides all these, you know, the, the insurance for the, for the, uh, Owner of ver verification of identity reputation, like lots of handholding they’re there. It’s a great marketplace, right? There’s very little incentive to disintermediate them.
Anyway, they’re the exception, not the rule. So I’d been building an investing in early stage in all these marketplaces and I thought, look, this problem of divergence incentives, once the thing gets big, It’s kryptonite, right? It’s, it’s corrosive to network effects. So what if, what if we could do a better way?
What if we could build a market, the place where the operators, the owners are also the users that make a living on the marketplace. Right? And so if you’re owned by your users, why would you want to raise fees? You don’t want to tax yourself. Right. And so it’s like, it’s sort of like a global co-op kind of concept, but implemented with technology.
So it can be instant.
Andrew: But Adam, you, then don’t the users don’t have the money that you need in order to build the marketplace. Right. You haven’t solved the where’s the funding coming from.
Adam: Yeah. So, so does it mean. There’s no need for ambassadors, right? So you still need startup capital here. We’re we’re raising, um, when this doesn’t come out tomorrow, right?
Adam: Okay. So we’re announcing tomorrow, uh, an $18 million strategic funding round. Um, prior to that, we raised a $6 million seed rounds. So we, and that’s the only private money we’ll ever raise.
It’s about 24 million of capital went into this thing. Um, you absolutely need capital to start something from scratch. Right? And w and what that does is it starts the flywheel turning. When we use that capital for, we build out the tech, um, we built out a referral engine that rewards people who invite talent to our network and invite clients to our network.
And they’re rewarded with ownership. And that ownership is in the form of our token. And so we use a token instead of a share of stock. Um, it’s yeah, as you said, it’s a nonprofit. So this isn’t when you say ownership, Oh, you get a dividend. It’s not a financial token. It’s a token that allows you to work and operate your business on the network and vote, vote your share.
Andrew: do you need tokens? Why not make it into shares and keep it as simple as the thing that we’ve had here in Silicon Valley for years?
Adam: There’s a simple answer to this. So if you’re gonna build a global talent network to take 10 million people in 50 countries, You simply cannot do that with shares of a Delaware C Corp, the, the American government that the laws of the state of Delaware simply don’t apply outside of.
Andrew: I think that once you give a certain number of shares, then the company automatically has to go public. Right. And I thought
Andrew: obstacle. What
Adam: part, that’s part of it. That’s certainly part of it, but that’s not the, the, the real reason is like, if I want to give. Ownership to folks in Kiev who have invited so many amazing machine learning engineers, I cannot share it. Uh, send a sheriff, Delaware, CTF the laws there don’t respect our laws.
Yeah. And that’s true for most countries, most countries custody of shares is a big issue. And so you don’t want everyone who has a piece of our network to like have a registered brokerage account in the United States that you need a passport for the U S passport. And so blockchain token. Blockchain with blockchain code is law, right?
That’s their thing. And so a token represents immutable control of a network, right? So one token, one vote. And so the more tokens you get, the more of a say you have in the network. And as long as we’re majority talent owning control, our talent can dictate the rules of the network and prevent some extreme extractor from coming in and ruining things.
Andrew: We’re going to be a for profit company. We just happen to have tokens instead of shares and more owners than most.
Adam: So if you’re a for profit company, you have a strong economic incentive to extract these from the network, right. Raise fees, and that’s bad for business, right. But the more fees our talent in our community have to pay. The the, the weaker our network effects are and the weaker the marketplace is for them.
So, so we are, if you think about zooming out like Ethereum, it’s just wonderful crypto network that is power smart contracts, right. Something that’ll, that’ll eventually, you know, disrupt the legal industry and a lot of other things that rely on common law. Uh, and many other things powers. Our token, Ethereum is itself a nonprofit, it’s a network that figured out incentives and it pays people to run nodes on their computer.
And, um, and it just generates sort of enough value creation to sustain itself and nothing more. Right. So you call that economic terms. You call that a public good. Well, we’re building a brain. Trust is a public good as well. It’s a protocol. It’s a public protocol that matches global labor needs of clients who need it, you know, companies.
Andrew: Sorry, go ahead.
Adam: Yeah. And so, and so we have many for profit entities, including one that I own called freelance labs that builds sophisticated software for profit, but we, we, freelance labs are just one of many hundreds of, of agencies or dev shops or individuals who make a living on this kind of public good protocol called brain trust.
Andrew: And then what about you, Adam? As the creator, as the guy who has to suffer through infinite conversations with investors who don’t get it, cause their friends aren’t investing in something similar. What do you, what’s your upside in a, not for profit business.
Adam: So I am doing this to create a new way of marketplaces organizing. Like it’s a new business model empowered by new technology. I’m not doing this. To get rich. I’m not doing this for financial gain. That’s not to say there isn’t, you know, financial upside
Andrew: the fine? Where’s the financial gain for you? Where’s the big windfall, the biggest possible windfall then.
Adam: I mean, the, the big windfall is enabling this new class of transactions, right? Like we can, my, my little dev shop, freelance labs, other dev shops can now service clients like NASA or Porsche or Nestle or Deloitte or. Um, some of the big banks that are coming on, right? Like we, we can now foment this whole new class of commerce that could never touch a network like Upwork, right.
That, that charges too many fees. And it’s too hard to use.
Andrew: coin is called B trust. Do you also have a big share of the bead trust coins, which then become more valuable as they’re more people on the network and as the company becomes more valuable,
Adam: so our that’s right. Our token is called the trust, the brain trust token. Uh, it will, it doesn’t exist yet. It will publicly launch next year in 2021. When we launched the network and the token, the brain trust token is the incentive mechanism and the governance system. For the network, right? So people earn it by helping us.
They help us by referring. The more you refer, the more you earn, right? So if you refer Microsoft as a client, you’re gonna earn some percentage and then you keep those tokens and you vote them. Right. And so my cofounders and I do own it. Small percentage were, were I think some 15% the majority, and then investors will own something like another 15%.
The majority of the tokens will be given out to the community to people who help us build. We only have eight employees, right? A network of our size. We’re doing a couple million dollars a year in transactions. We’ll do 20 something million next year, a network of that size. We typically have hundreds. At least of employees, we have eight or nine and all the work is done by the community.
Right. It’s a real community
Andrew: an example of work that would be done by say top towels management company that you guys have been able to pass to the community because they’re incentivized to do it.
Adam: All of the roles, sales, marketing, engineering, copywriting. I mean, those are all full time roles at most
Andrew: do you, how do you reward someone for copywriting with you reward them with tokens? Not with, okay. How do you reward someone for copywriting? I guess there’s just a token payout. If they do the work that’s needed. And in the beginning, you and Gabe were doing the sales yourselves. You would call up companies like Nestle and Deloitte.
You would just find a contact there, call them up. And what was, and they said to you, well, we’ve got this, these jobs that are going on fulfilled. Why don’t we just list them on your network? They listed on your network. How did it go for them?
Adam: Absolutely. I mean, so these are, these are, we serve primarily non tech companies. So we’re not serving Facebook, Apple, Microsoft, we’re serving, you know, Nestle and Deloitte and Porsche and NASA. They are having trouble filling these high tech roles in house. So they come to us. We bring them amazing people, many of them, former Facebook or former Google or whatever.
And they, these people don’t want to slog mountain view every day anymore. They want to work freelance. They want their own autonomy over their careers. So we plugged them in on a contract basis, too. Nestle or wherever. And they get, definitely gets a spin up an amazing team of engineers and they, they do so we’re diminimous fees.
We charge 0% fee to talent, flat 10% of clients so that they get access to these people at market rates, very flexibly, right? That’s the value prop to the client.
Andrew: And the 10% goes where to run the company for the people who you guys need.
Adam: The 10% basically sustains the brain trust network, right? It just pays the bills pays for development. You can’t pay tokens for everything, right? You gotta pay out cash.
Andrew: Right. Okay. Alright. Right. You can’t, you can’t buy Dell computers with tokens. You still, at some point need to buy cat. You need some cash. You pick developers is the first place to start because developers will understand coins and understand this process. And also because there’s a high demand for developers COVID hit.
What happened to your business? As soon as covert hit.
Adam: So I’ll tell you we started private beta, January of 2020. We’re off to a nice start. February was great. March was great. Up locked down heads. We saw everybody hit the brakes at the same time. It was terrifying. We thought we were toast. April was down 55% may was down this garbage June. They start some of the clients started calling back and they basically, the message was.
Well, um, our stock didn’t go to zero. We didn’t all die or get laid off, but we still have to build all the software. And now we’re three months behind. Can you help us? Oh, and we can’t get into our offices anymore. We gotta do this remote you brain trust guy. You were the remote guys. Can you help us? And so those two or three roles, someone like a necessary portion was looking at became 20 or 30 or 40 roles.
And so that was the accelerant. Um, we’re now sitting here October 1st, almost. Um, we’re about to X or pre COVID financial plan.
Andrew: Twice because people at companies are still hiring developers. That part of the business hasn’t gone away. If anything has gone up and because they’re much more open to remote developers.
Adam: They’re forced remote all companies are remote companies now,
Andrew: I know that actually is phenomenal. And here we are still living in the Bay area, dealing with smoke. I wonder for how much longer we’re going to be here. You’re working from your home now. That’s it.
Adam: We were, we were run from beginning with, we never had an office. I mean, we, we we’ve started, we’ve rigged, we dog food. Right. We build everything with everything we do is a job on brain trust and we’re completely distributed team.
Andrew: So do people in my audience. I know you deal with enterprise. It’s someone in my audience going to go to brain. What’s your URL. I wish you had brain trust.com. You don’t right. What’s the, what’s the URL. Are you working on
Adam: Use use brain trust.com.
Andrew: Use brain trust.com. Is that something that my audience would be able to go and sign up for?
Or are you guys too enterprisey for them?
Adam: You know what? We serve a lot. We serve, we focus our sales team on the enterprise because that’s the long sales cycle. If you come to us and need a big job built, we don’t care who you are, we’ll help you out. So we do help startups as well as what I’m trying to say.
Andrew: I see one of my favorites zero. They’ve gotten me to stop snacking at night with this intermittent fasting. They’re one of your clients. Alright. It’s it’s used brain trust.com and I want to thank the two sponsors who made this interview happen. The first, if you’re hosting any idea, or you don’t know what your idea is, and you want to start over.
Go to hostgator.com/mixer. Do you start in extensively? They will scale with you. They have the higher end plans that you need when you’re ready for them, but go cheap, go with extensive and go dependable hostgator.com/mixergy for the best price available. And second, if you need to try marketing content marketing, especially, but anything, even social media marketing, they do it all at SEM rush and they’re letting use it for free for a limited time where we actually used up all of our free trials.
I had to reach out to them and say, please give us more. There’ll be available for a limited time. Honestly limited time at mixergy.com/s E M. Rush, rush out and get it. mixergy.com/sem. Rush, Adam, thanks so much for being here.
Adam: Andrew. I wish I hadn’t booked ended this. I could talk another hour with you really love and conversation.
Andrew: Thank you. Hopefully we’ll get to meet in person once. This is all done. everyone.