June 3, 2024 • 52min
This $50M/Yr Side Hustle Is On Track To Make $1 Billion By 2030
My First Million
Key Takeaways
- Craig Fuller, the founder of FreightWaves, has built a $50 million per year "side hustle" by acquiring and reviving niche hobby magazines like Flying Magazine and turning them into profitable e-commerce and media businesses.
- The New York Times has transformed itself into a gaming company, with its digital games and crossword products now generating over $1 billion in annual revenue and accounting for over 50% of user engagement.
- AI-powered cameras that can automatically track and film sports games are becoming ubiquitous, with companies like Veo raising over $100 million to bring this technology to youth and amateur sports leagues.
- When new technology waves emerge, the "menus on the internet" - the most obvious and immediate applications - often precede the more transformative use cases. Identifying these early applications can reveal promising investment opportunities.
- Successful investors focus on asymmetrical risk/reward, protecting against losses, and building systems to succeed even when they are wrong, rather than just trying to pick winners.
Introduction
In this episode, Sam Parr and Shaan Puri discuss several fascinating business stories and trends, including the entrepreneurial exploits of Craig Fuller, the transformation of the New York Times into a gaming company, and the rise of AI-powered sports cameras.
The conversation begins with Sam sharing an update on Craig Fuller, the founder of FreightWaves, who has built a thriving "side hustle" by acquiring and reviving niche hobby magazines. The hosts then dive into the New York Times' pivot to games and the broader trend of established companies leveraging games and interactive content to drive engagement and revenue.
The discussion then shifts to the rapid growth of AI-powered cameras that can automatically film and track sports games, a technology that the hosts believe is poised to become ubiquitous across youth and amateur sports leagues. Finally, the conversation explores the concept of identifying the "menus on the internet" - the obvious early applications of new technologies - as a way to uncover promising investment opportunities.
Topics Discussed
Craig Fuller's $50 Million "Side Hustle" (5:12)
Sam shares an update on Craig Fuller, the founder of FreightWaves, who has built a thriving "side hustle" by acquiring and reviving niche hobby magazines like Flying Magazine. Some key points:
- Fuller has acquired 44 different magazine titles and expects the business to generate $50 million in revenue this year with 18% EBITDA margins.
- His strategy is to buy up older magazine titles focused on expensive hobbies, use the existing subscriber base as a customer acquisition channel, and then sell commerce products to that audience.
- Fuller has been able to acquire these magazines for 3-5x EBITDA, which Sam and Shaan consider a relatively low valuation for a media business.
- The business is growing rapidly, with Fuller predicting it could reach $1 billion in revenue by 2030 with 30% profit margins.
Calling Craig Fuller (9:16)
Sam and Shaan decide to call Craig Fuller live on the podcast to get more details on his magazine acquisition strategy and the economics of the business. Some key points from the conversation:
- Fuller initially saw the magazine business as a "lifestyle side hustle" but it has since ballooned to 257 employees.
- The core strategy is to let the content of the magazines inform the commercial decisions, such as building airport hangars and real estate developments for the aviation-focused titles.
- The business is financed primarily through pre-sales and deposits from customers, allowing them to fund infrastructure projects with relatively low risk.
- Fuller has been able to acquire the magazine titles for low valuations (3-5x EBITDA) by leveraging patient capital investors with a long-term horizon.
The New York Times as a Gaming Company (19:02)
Shaan shares insights on how the New York Times has transformed itself into a gaming company, with its digital games and crossword products now generating over $1 billion in annual revenue. Some key points:
- The New York Times' games and cooking products now account for over 50% of total user engagement, surpassing the time spent on news content.
- The games business generates over $300 million per quarter, with the average subscriber paying over $40 per year.
- The Times has been able to revive and digitize its existing content assets, like crossword puzzles and recipes, to create highly engaging and profitable games and interactive experiences.
- Other major platforms like YouTube and LinkedIn are also launching their own games and interactive content to drive user engagement.
The Rise of AI Cameras in Sports (30:57)
Shaan discusses the rapid growth of AI-powered cameras that can automatically film and track sports games, a technology he believes is poised to become ubiquitous across youth and amateur sports leagues. Some key points:
- Companies like Veo have raised over $100 million to bring this technology to the market, which can automatically track the ball and players, live stream games, and generate highlights.
- These cameras are already being widely adopted in youth soccer and other sports, providing an easy way for parents and fans to watch and share games remotely.
- Shaan predicts that just as the personal computer became a fixture in every office, these AI cameras will become a standard fixture on every sports field and court.
Identifying the "Menus on the Internet" (38:31)
Shaan shares a framework for identifying promising investment opportunities by looking for the "menus on the internet" - the most obvious and immediate applications of new technologies. Some key points:
- When a new technology wave emerges, the first applications are often the most obvious and straightforward, like putting restaurant menus online in the early days of the internet.
- These "menus on the internet" can reveal promising investment opportunities, even if they aren't the most transformative use cases, because they provide immediate value and traction.
- Shaan cites examples like the initial mobile apps (e.g. flashlight, calculator) and LinkedIn's new games feature as examples of "menus on the internet" for new technology waves.
- Identifying these early applications can be a safer way to invest in emerging technologies compared to trying to pick the most disruptive startups.
Avoiding Product Obsolescence (40:41)
The discussion touches on the challenge of avoiding product obsolescence in the face of rapid AI advancements, drawing on comments from OpenAI CEO Sam Altman. Some key points:
- Altman has said there are two types of companies in AI - those that "can't wait" for the next model release, and those that "can't sleep" knowing a new model is coming.
- Companies that have built their business around a specific AI model or capability are at risk of being "steamrolled" as the technology rapidly improves.
- In contrast, companies that have integrated AI into a broader product or workflow are better positioned to benefit from AI advancements without becoming obsolete.
- Shaan advises a "measure twice, cut once" approach to investing in AI startups given the uncertainty and rapid pace of change in the space.
Investing in the AI Wave (44:09)
Shaan shares his personal approach to investing in the AI space, emphasizing a cautious, measured strategy rather than "spraying and praying" investments into early-stage startups. Some key points:
- Shaan is more inclined to invest in large, established companies that are poised to benefit from AI advancements, rather than trying to pick winners among early-stage AI startups.
- He cites companies like Nvidia, Facebook, and other tech giants as safer bets compared to speculative investments in unproven AI startups.
- Shaan's AI study group with friends serves as a way to deeply understand the technology and its implications before making investment decisions.
- The group discusses which companies are at risk of being "steamrolled" by AI advancements versus those that are better positioned to leverage the technology.
Conclusion
This episode of My First Million covers a diverse range of fascinating business stories and trends, from Craig Fuller's thriving "side hustle" in hobby magazines to the New York Times' transformation into a gaming company and the rapid growth of AI-powered sports cameras.
The hosts also explore the concept of identifying the "menus on the internet" - the obvious early applications of new technologies - as a framework for uncovering promising investment opportunities. Additionally, they discuss the challenge of avoiding product obsolescence in the face of rapid AI advancements and Shaan's cautious, measured approach to investing in the AI space.
Overall, this episode provides valuable insights into the evolving media and technology landscapes, as well as strategies for identifying and capitalizing on emerging trends. The diverse range of topics and the hosts' engaging discussion make this a must-listen for anyone interested in entrepreneurship, investing, and the future of technology.