Lessons - The Investor Behind Impossible Foods and AG1 on What He Looks for Before Writing a Check | Shane Neman - Neman Ventures Founder & 2x Exited Founder

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In this lessons episode, discover how a barbell investment strategy can balance emerging technologies with resilient businesses.

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Understand why diligence and strong networks matter when investing in new industries.

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Explore how to identify opportunities that can withstand disruption and uncover why the founder often matters more than the technology.

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Even if you were just going to like, I know you said your framework is a little bit difficult, but if you looked at, so between cash flowing businesses like private equity or funds or real estate or early stage or late stage venture capital, do you have like a mix that you aim for?

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Like a loose mix?

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Yeah, so I have the...

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Personally, I have the most allocated to public equities because I think that it's very hard to replicate U.S. equities and the amount of value creation that is done there.

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Probably for me...

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Is that through a fund or just through picking?

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No, I do it.

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Yeah?

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Good.

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Good.

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I do it.

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I'm in like one hedge fund, one hedge fund, but that's because I know the person very well.

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But I've done, you know, like I do funds for early stage stuff like crypto and like

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And like biotech where I don't see like, and I'm not an expert in the field.

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So I tend to pick managers that are really good at that.

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But I like to do individual deals.

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And I'm probably more than normal in venture than a lot of people are.

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And I would probably say that my venture and my real estate and my private equity are probably equal onto that thing.

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I also have a

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I have a barbell strategy now, right?

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So the way I'm thinking about things is I'm trying to invest in deep tech, like quantum AI robotics.

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I did a company called Luma field recently that, that I invested in a company called Luma field recently that has a cat scan machine that can look at any object and then find the defects in it through AI.

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Uh, so even like a Nike sneaker, it can,

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But they do a lot of electronics too.

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So like you could put a battery in there and then they could figure out the defects without having to take it apart.

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I did a company called Sandbox.

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I invested in a company called Sandbox AQ, which is the leading quantum cybersecurity company in the world.

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It actually spun out of Google.

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So I did an investment in that two years ago.

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And people thought we were crazy like, like figure AI too, because like there was no chat GPT at that time.

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Right.

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Like this was bleeding edge.

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Yeah.

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Yeah.

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It was, it was, it was, it's Eric Schmidt.

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It's, you know, it's and, and quantum and this and the other thing.

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And, uh, people really didn't understand what it did.

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And it was a little early for its time because.

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You know, you're, you're protecting against a quantum computer that doesn't exist yet.

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Right.

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Just in case someone does it.

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Right.

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So anyway, so now that that business has done very, very, very well, it has a lot of government contracts and they just got a contract with the Air Force and this, this type of stuff.

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So doing follow ons on those, or I'm trying to find businesses where I don't have a good enough imagination to think

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about how AI or deep tech or quantum can really disrupt that company.

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You're looking for businesses that you do not have the understanding of?

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I don't have the imagination, a good enough imagination, to contemplate how AI or deep tech can disrupt that company and put them out of business.

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I understand.

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Okay.

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I'm not doing a lot of SaaS at all because I think that eventually computers will be coding.

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I mean, they're coding mostly right now.

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And it's going a lot faster than people think.

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I actually was able to go to SpaceX and get a tour of SpaceX last week.

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I saw that.

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Yeah.

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And so...

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I mean, I really saw firsthand how crazy things are going to get.

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And I see the magic that's happening there.

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I saw them actually putting together the components of the rockets.

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I saw how they're using AI.

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I actually touched a Starlink satellite, which was amazing.

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I went on the launch pad.

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Very cool.

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I drove a Plaid X at 165 miles an hour down where the shuttle used to land.

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Anyway, I digress.

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But part of that was like, holy shit, they're really going to get to Mars because I saw it.

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I saw what was happening there.

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And I know that they're going to get to a place where they're going to do multiple launches a day.

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And Boeing can never do what they do.

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So you see the tech, you see what people are capable of.

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No, it's just indescribable.

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I wasn't able to take pictures, so I wish I was, but I understand why.

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But it's so much further along than you can imagine.

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Yeah.

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It's just hard to, to, to, to, to human brains are not meant to understand change this rapidly, but it's happening.

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And so I think that with the robots and with AI and those types of things, a lot of things, and this, this might sound psycho to a lot of people because it might, it might sound like an exaggeration, but I don't, I personally, my opinion is not like, oh, in 10 years, things are going to be changing.

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I think in one year, two years, three years, you're going to see some really crazy changes.

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of how rapidly things are going to become.

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So when things change that quickly and you're investing in them, there's a really good chance you're going to screw it up or miss it or pick the wrong thing.

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So when you look at something like a quantum computing company that is protecting against malicious quantum computing attacks that have not... Quantum computers are not even commercially available yet.

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Yes.

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Like, who do you talk to to make sure the founder is not full of shit?

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How do you go?

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So for me, I'm lucky that there were a lot of really big, but this doesn't work all the time.

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Cause like Theranos is a good, good, good, good example of this.

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But, you know, typically you, you know, I, I rely, I read to the degree that other investors have investment memos or experts in the field that I can talk to.

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Um, that that's leveraging your network, right?

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So a lot of the deal flow that I get is from other fun guys that I've given stuff to, or I've personally gone into their fund just so I could see their deal deal flow.

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Right.

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And, and, and, and, and get to pick their brain and talk to them.

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You know, that's, that's worth every penny.

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If you think about it, right.

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The smartest guys.

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you know, have been in this for a long time, run their own funds.

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You know, you put a little bit or you could put a lot, you know, and get to talk to these people.

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Find a way to get around those tables.

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Exactly.

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And so to that degree, I have a degree in computer science.

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So to the degree that I can diligence things, I'm pretty technical.

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So I'm kind of unique in that way.

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So I leverage that, right?

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Like, by the way, like if someone tells you they understand quantum, it means that they don't understand quantum.

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So that's the number one rule in quantum.

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It's like, so like, I don't understand it, I understand it, but I have enough interest in it and enough background to get the concepts on a high level.

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And that's, I think, probably one of the most important lessons.

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Like there has to be some data point or some person or some, some thing that allows you to understand it.

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Just like, just so you're not ignorant going into it.

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So you're not just dumb money going into it.

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Yeah.

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So, but also if you think you're thinking, think about it, you know, you're also 90% of the time betting on the horse.

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So Jack Hittery, who's the CEO, is literally considered to be the foremost expert on quantum computing.

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He wrote the textbook on quantum computing that's taught.

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And Eric Schmidt was the CEO and chairman of Google for 12 years.

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So like, what better horse can I bet on, right?

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Just like how people bet on Elon, right?

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It's the same concept there.

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You know, the tech is important and everything like that's important.

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But I would argue to you, like in those cases, 90% of it is who you're betting on, right?

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Who you're betting on, not just what you're betting on.

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So, yeah.

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So, and then, and then, so like, let's talk about the other end of the spectrum, right?

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What, what can't be, uh, you know, disrupted by all this stuff that's happening, right?

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Santa Monica Pier, people are going to still be going on the weekends on, you know, they're going to be still trying to be.

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Hospitality, leisure.

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Leisure.

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Yeah.

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Um, you know, experiences, although, although some, what people can argue that, you know, you can virtually do some of these things.

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Um, and that might get replaced by virtual reality, but, um, but not yet.

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I mean, I guess, I mean, it could be, but not yet.

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And there's also, if you think about like the, so can a robot, can a robot replace a person in a warehouse tomorrow?

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Yes.

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But yeah.

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If you're going to talk about replacing a tourist destination, you have to replace like the smells and the feeling of the wind on your face and the taste of the hot dog or the pretzel you go eat.

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Like that's it.

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I can argue that Neuralink will do that for you because it'll go into your brain.

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The precursor technology is not already there, right?

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The precursor.

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Yes, you're right.

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Yeah.

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But when that happens, so it's like it depends on like what are you investing in the technology that's directly applicable or are you investing in the technology that's going to create another category or another industry?

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I think for those things, those are a little bit... You're going to have regulation issues also.

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And there are regulatory issues.

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So the things that could stop this and stop, you know, AI from advancing is government intervention, regulation, one of the robots accidentally kills someone.

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shoots someone, gets hijacked through cybersecurity.

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You know, there's a lot of scenarios that you can come up with that could really kind of put us back as well.

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So you can't have all your eggs in one basket thinking that only the future, the things in the future.

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But like, again, I'm looking at a hemorrhoid cream that's like trying to disrupt preparation age that's been the incumbent for like 57 years.

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What was the one that you sent me?

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I didn't look at it yet.

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You just sent me one like last week or this week.

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I think it was something for creators.

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It was a creator.

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It was a creator.

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I see a lot of things.

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So I, the one thing I, I, I, uh,

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The one thing I haven't done much of is anything that's like social media related.

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It's just way too difficult and competitive, I think, for me to... A lot of people to build in this space.

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Yes, it's too hard to know the winners of that.

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That's so interesting because I think that it's almost...

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So if you look at investing in the Blue Ocean versus Red Ocean, well, Red Ocean, you know there's a market for sure.

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Blue Ocean, with the things that you're talking about, the market should be created in the future.

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but it's not like really here yet.

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No.

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But you feel more comfortable doing that because it's just less crowded.

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I think I'm doing that on that barbell stretch.

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The other thing where I'm doing where I think they can't be disrupted, it's already, it's Red Ocean.

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Like, you know...

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Yeah.

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Hemorrhoid cream.

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Hemorrhoid cream.

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Right?

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Yeah, yeah, yeah.

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I mean, if you think about it, no one's done, like Manscaped, for example, is a big brand, and they do a lot of money, and they took what a lot of people wouldn't talk about men's grooming.

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and made it into a hip, cool brand, and they make a lot of money doing it.

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And no one's done that in that space.

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Or, you know, there's the female hygiene space.

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So I invested in a company called AntFlow, which is doing that.

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So I think a lot of it is really kind of thinking deeply about things and also...

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Who you're investing in.

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Yeah, it's the person.

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Because they're going to eventually, just like I did, you know, they're going to eventually hit these roadblocks that everybody eventually gets to.

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And you have to feel comfortable that that person has the wits in them to figure it out.

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However they do it, they have to be able to figure it out or pivot or do whatever it is that needs to be done to continue on.

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And that's really what you, the best you can hope for.

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Thanks for tuning in.

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And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode.

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See you in the next one.