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Gary Vaynerchuk

This Week In Startups - Episode #535
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Today’s episode Crushed It with guest Gary Vaynerchuk! Gary is the CEO/Cofounder of VaynerMedia and one of the most prominent voices around marketing, branding, and social media in the country.
Key Takeaways - 3 min read
 
Top Quote:

“The day I buy the New York Jets will be the worst day of my life because the process of trying to buy the New York Jets is my oxygen.”

- Gary Vaynerchuk
 
Key Takeaways:
 
On Gary's History

Gary grew up in the wine business because his family had a liquor business. 

What Gary wanted to do was use YouTube to talk to be about wine instead of down to them.
  • He was 120 episodes in to WineLibraryTV before he met Kevin Rose and they became friends.
The wine business went from $3 million to $40 million with Gary’s execution and then within 24-36 months of Web 2.0 tactics it went to the $60 million range.

On Public Speaking and His Book Deal

Gary got a 10-book deal, and it was great.
 
The wine thing got really big, but Gary started getting seen as “the wine guy.”
  • So he started making videos around business, and the book deal was important because he was able to write business books about how he was doing it and what he thought was happening.
This was an enormously strong foundation for his transition from the wine world.

 On Gary's Agency VaynerMedia

He felt in 2009-2010 that his persona and speaking started overshadowing the fact that he actually built a business.

It was perfect timing because his brother AJ just graduated from college so they started VaynerMedia together.

Then in the last three years when he fully jumped in they have gone from 30 to 500 people in LA, New York, and San Francisco.

On The Attention Graph

The only thing Gary cares about is the basic game of the attention graph. Where are peoples attention, and can you find it.
  • When the market moves as quickly as it is right now there is always an arbitrage opportunity.
There are a lot of people that headline read what’s going on with Facebook, Instagram, and Pinterest and they aren’t actual practitioners.

On Effort and Time

The big revelation for Gary was from Uber when he realized they are actually selling time.
 
Gary has an investment fund, and the thing he is most trying to invest in are things that are buying or capturing our time and selling it back to us.
  • The world is valuing time at a huge level (like surge pricing on Uber for example).
Time is the play right now. Every piece of technology that is selling us back time has an enormous value opportunity. 

On Gary's Investment Fund Vayner/RSE

Steve Ross (owner of the Miami Dolphins) bought a piece of VaynerMedia and at the same time they created this  $25 million angel fund (Vayner/RSE) together.

Gary’s angel career did really well so he is trying not to change his behavior. What he is looking for is his belief that there is something there.

On the early stage he wants to bet on jockeys.
  • Gary has lost a lot on the right idea, but he or she wasn’t the right jockey. He is betting more and more everyday on the person.
On Gary's Future

About four years ago Gary looked in the mirror and asked how he was going to buy the Jets.
 
He said he has to be self-aware that he wasn’t like Mark Zukerburg or Ev Williams so he realized he felt his best chance of wining was to buy a historic brand from 10-20 years ago, and then market it in the way that he believes things are going on now because he thinks it’s such good arbitrage opportunity.
 
He isn’t building VaynerMedia to have an agency forever because the business model is terrible.
 
He is building VaynerMedia to try and collect as many people as possible and the agency allows him to do that so he can have the ability to execute on his 10-15 year plan of buying a brand.

Gary doesn’t care where he is in 10 years. He does feel like he has won a little bit already, but really he just loves the process.
  • As long as he is able to keep playing, he just wants to keep doing it.
Table of Contents (Full Notes) - 12 min read 

*You can use the table of contents links below to jump to that section only on laptop and desktop.*
Top Show Links

Companies People  Misc
On Gary's History
Gary grew up in the wine business because his family had a liquor business.
  • He grew up in “Web 1.0” of ecommerce, which is how Gary built the family business.
YouTube then came out and Gary thought it was going to be huge.
  • The second someone gets a little bit of wine knowledge they become a straight douchebag.
  • What Gary wanted to do was use YouTube to talk to be about wine instead of down to them. 
Gary was 120 episodes in to WineLibraryTV before he met Kevin Rose and they became friends.
 
Gary was starting to realize who all these high profile people were because of YouTube, and because his lead developer who was telling him to start reading their blogs.
  • Although, he still didn’t really grasp it.
Kevin DM’d him on Twitter one day and asked him to make an appearance on Diggnation, which then took him in to this “Web 2.0” bubble and his life completely changed.
 
Gary was extremely happy because the tech space during 2005-2006 was extremely pure.
 
People were really trying to do the right thing for society, and Gary just wanted to sell things.
  • It created an interesting dynamic because Gary was there in a very business mindset and everyone else was trying to do the right thing.
Gary was adjusting in to that mindset while recognizing that everything these people were building was going to change the way media, commerce, and everything in society was going to evolve in to.
On How Gary Grew His Wine Business
The wine business went from $3 million to $40 million with Gary’s execution and then within 24-36 months of Web 2.0 tactics it went to the $60 million range.
  • What was crazy about this was there was no paid media behind it. It was the organic content on YouTube and the Twitter execution that he was doing in the early days.
It wasn’t about how much more they were able to make, it was about how much more they were able to make without any financial investment.
 
The awareness was built organically using these incredible tools that were hitting scale.
On Public Speaking and His Book Deal
Gary got a 10-book deal, and it was great.
 
The wine thing got really big, but Gary started getting seen as “the wine guy.”
 
He signed with CAA, and started getting offered a lot of TV deals to be on the places like the Food Network and Bravo.
  • He didn’t want to be America’s wine guy. He loves wine, but he loves business more.
So he started making videos around business, and the book deal was important because he was able to write business books about how he was doing it and what he thought was happening.
  • This was an enormously strong foundation for his transition from the wine world.
Crush It did extremely well, and the This Week In Startups episode with Jason around that time, where Gary said “get off the bitch train” was an incredible moment for him, and led to a big build up.

Crush It sold extremely well and he built off of that.
On Gary's Agency VaynerMedia
The thing that matters to Gary is that he doesn’t take the fact that he is able to sit and talk in front of an audience lightly.
 
He felt in 2009-2010 that his persona and speaking started overshadowing the fact that he actually built a business.
 
More people thought of him as the hyperbole of how he was on stage or how he made videos than how he earned their attention because he built a business from $3 million to $60 million using new tactics.
  • He didn’t want to become a caricature of himself so he took a step back.
It was perfect timing because his brother AJ just graduated from college so they started VaynerMedia together.
 
Then in the last three years when he fully jumped in they have gone from 30 to 500 people in LA, New York, and San Francisco.
 
At the end of the day everyone is selling something.
 
All VaynerMedia does for companies like Toyota, GE, and Dove is try and drive what they want to happen.
 
They think there is a disproportional opportunity for these brands to spend their advertising dollars on places like Facebook, Instagram, Snapchat, Tumblr, etc. rather than Outdoor Media, banner ads, or pre-rolls.
 
VaynerMedia is doing a mix of growth hacking and brand (content) marketing with one very basic agenda of can they sell what they want to sell.
On The Attention Graph
When a brand does something stupid like hold a 9/11 sale it captures all of our attention and gets shared, but there are 365 days a year where other things are going on.
 
The only thing Gary cares about is the basic game of the attention graph. Where are peoples attention, and can you find it.
 
When the market moves as quickly as it is right now there is always an arbitrage opportunity.
 
There are a lot of people that headline read what’s going on with Facebook, Instagram, and Pinterest and they aren’t actual practitioners.
 
All they are doing at VaynerMedia (and anyone should do) is find where those opportunities lie, and are they good enough to communicate their value proposition in that section.
 
When you look at the attention graph that Gary most cares about Instagram has got it.
  • Everybody is much more selective of who they follow on Instagram, and they are actually consuming those things.
However, for a hardcore quant person Instagram is not a great place because you can’t link from the photo and there is a lot of friction to go to the profile link.
 
Even with that friction though, from a qualitative standpoint, the question is are people consuming it and becoming aware of things.
  • The way marketing works is it is not just about direct sales.
In that friction of the smart people that understand the data and the dumb people in corporate America who say “how does that make me feel or I think that’s pretty” there is a middle ground where all the magic is.
On Who Gary Is Impressed By
Gary is impressed by Taylor Swift because she understands that scaling unscalable moments is what people give a shit about.
 
The thing that we as human beings appreciate is effort.
 
Everyone is looking to use these tools for width, and we aren’t talking about depth enough. Depth is what actually creates things.
 
Taylor has been very strategic at scaling the unscalable because she will do things for her fan base that doesn’t feel scalable like going to an award show and following what’s being said on Twitter and then finding those people in the crowd and taking a selfie with them.
  • She is using her star power to have that amplified so that one moment is giving her much more reach.
  • Taylor is hacking culture very properly as a celebrity.
Gary also gives a lot of credit to Taco Bell because they have been very nimble to understand the value proposition.
 
It blew Gary away how long it took the tech space to understand what was happening on Snapchat.
 
Taco Bell was very early in moving in to some of these places so he gives them a lot of credit.
On Snapchat
Snapchat speaks to the attention graph because it was built to actually be consumed.
 
There are so many people tired of impressions. You can amass all the impressions you want, but people want results.
 
What gets results is attention. It is all depth not width.
  • If you are holding Snapchat you are really paying attention.
Once these social media platforms age up kids will move back down to a newer one because that is how it always works.
 
Kids don’t want to be in the same places as their older siblings or parents.
On Effort and Time
Gary has been replying to a lot of people on video because people want effort.
 
The big revelation for Gary was from Uber when he realized they are actually selling time.
 
Gary has an investment fund, and the thing he is most trying to invest in are things that are buying or capturing our time and selling it back to us.
  • The world is valuing time at a huge level (like surge pricing on Uber for example).
Time is the play right now. Every piece of technology that is selling us back time has an enormous value opportunity.
  • Gary is spending a lot of time looking for investments in companies doing this. 
With him replying to someone on Twitter he is giving back his time.
  • Gary built his foundation on replying to so many people on Twitter. 
People want to be heard. They don’t want to see someone just putting out their thoughts and not reciprocating in conversation or acknowledgement.
 
We as humans adore human interaction.
 
We are living in such a fast paced environment that time is the ultimate asset, so when Gary spends 14 seconds replying to someone on Twitter they are very appreciative.
On Gary's Investment Fund Vayner/RSE
Steve Ross (owner of the Miami Dolphins) bought a piece of VaynerMedia and at the same time they created this  $25 million angel fund (Vayner/RSE) together.
 
During that time of negotiations Steve actually offered a piece of the Miami Dolphins and Gary and his brother thought it was cool bought decided to pass.
 
Gary converted it to this headline in his brain, “Dude takes Miami Dolphins money and buys the Jets with it.”
 
The thesis of Vayner/RSE is to make money.
 
Gary’s angel career did really well so he is trying not to change his behavior. What he is looking for is his belief that there is something there.
  • For example, with a $20 billion Snapchat $15 billion Pinterest and a $20 billion Airbnb, it makes sense why some people think that is insanity but Gary actually thinks we are just at the beginning of all this. 
There are variables like financial crises and terrorist attacks that cannot be foreseen, but if you normalize and ask Gary if under this new economy if those companies will be worth those things his answer is absolutely.
 
Gary wants to look at late stage investing that way. On the early stage he wants to bet on jockeys.
 
Gary has lost a lot on the right idea, but he or she wasn’t the right jockey. He is betting more and more everyday on the person.
 
In Gary’s angel days it was worth it to spend the $25K on a good jockey with a terrible idea because they would eventually get rid of that idea and move on to a good idea and Gary would be in their network and somewhere along the line they would make money.
 
He didn’t really want to change this strategy even though now the check sizes are $150K - $250K.
  • He has absolutely made 4-5 bets with Vayner/RSE that he isn’t sold it is going to work out.
There is one female entrepreneur that Gary is obsessed with and it didn’t matter what the idea was he was going to fund her because he knows she is going to win.
On How You Can Tell Who Is A Winner
Everybody is prejudice to their nature vs. nurture environment.
 
Gary was a D and F student and failed all his classes so he often pushes against a lot of Ivy League people.
 
Gary is all about hustle so if somebody is bleeding out of their eyeballs because they don’t sleep and they hustle he likes that.
 
A lot of times he has made those bets and they ended up to be idiots even though they hustled 24 hours a day and he lost.
  • Gary tries to calibrate that.
He doesn’t think it is any different than when he went on his first date with his wife and new she was the one.
 
The first three things Gary ever put money in to was Facebook, Twitter, and Tumblr, so he says he has gotten progressively stupider as time has gone on.
 
Back then Gary didn’t think of himself as an investor he just looked at something on whether it would be good or not, and he is trying to get himself back to that place but it is difficult because so many things have happened.
On The Media Business
The cost of entry to be in the media game is almost non-existent.
 
Gary believes that everybody is in the media business, and every business is in the media business.
 
With the cost of entry so low now and people starting realizing how that can impact their business it will result in their behavior changing.
  • Gary believes that fortune 500 companies and startups will start having “Chief Media Officers” from founding teams because it will be such an important factor for success going forward.
Anybody who has heavy infrastructure and heavy costs for acting slow in media right now is a ticking time bomb.
 
These traditional media companies have a problem because they have such high overhead on something that doesn’t provide value anymore in the marketplace.
 
Gary wakes up every morning trying to put himself out of business. He would much rather put himself out of business than have somebody else do it.
 
What you are looking at with the big media companies is they are holding their collective breath, and the truth is their interests aren’t aligned.
  • They are just holding on for three more years for their bonus, and they don’t care about month 37.
If you are half smart you realize things are about to hit the fan, but they don’t care because they just need to hold on and let the stock price stay level until it is the next persons problem.
  • That’s why big companies go out of business.
On Investing and Gary's Future
Gary hasn’t used the AngelList Syndicate yet because it hit right at the same time his fund hit, and he is still trying to learn what he is doing there.
 
The honest truth is you can’t be the first and deepest mover in everything, and the timing didn’t line up with what was going on with his life.
 
Jason and Gary are both co-investors in a company called Stowaway.
 
About four years ago Gary looked in the mirror and asked how he was going to buy the Jets.
 
He said he has to be self-aware that he wasn’t like Mark Zukerburg or Ev Williams so he realized he felt his best chance of wining was to buy a historic brand from 10-20 years ago, and then market it in the way that he believes things are going on now because he thinks it’s such good arbitrage opportunity.
 
He isn’t building VaynerMedia to have an agency forever because the business model is terrible.
  • He is building VaynerMedia to try and collect as many people as possible and the agency allows him to do that so he can have the ability to execute on his 10-15 year plan of buying a brand.
When Gary invested in Birchbox he was blown away by the founders of that company and because he wanted to learn about the direct-to-consumer model.
 
Stowaway is another great opportunity for Gary to continue to learn because they are trying to build a brand marketing it in the way that Gary believes.
  • Then he also had L’Oreal as a client who is spending $700 million a year on print advertising.
Stowaway fits in to his thesis of what’s happening over the next decade.
 
Gary is also excited about the company he invested in called Button.
  • He has realized that consumer is hard and B2B has been really good to him.
  • Button is a great platform that connects apps to be able to talk to each other.
Before Gary ever talked to anybody he had a ten-year career of building a retail business.
  • Then he had a 4-5 year window where things got crazy and he got a lot of notoriety for public speaking, books, etc.
It is very important to him to take a step back and be an operator again.
  • This chapter of his career is to build infrastructure around human beings, real long-term 15-30 year infrastructure.
The things that are most exciting to Gary are the startups he invests in where he thinks he will have a decades long relationship with that person.
On Ten Years From Now
Gary doesn’t care where he is in 10 years. He does feel like he has won a little bit already, but really he just loves the process.
  • As long as he is able to keep playing, he just wants to keep doing it.
Gary made a video about three years ago where he held a newspaper to prove the date where he said the day he buys the New York Jets will be the worst day of his life because the process of trying to buy the New York Jets is his oxygen.