George, CEO de Grindr, en el escenario de Silvia: producto centrado en la IA, una expansión sanitaria liderada por la PrEP y el «descuento gay»

[2:01:34] Anthony Pompliano: So the first thing is I want to talk about Grindr is basically an AI company at this point, which I find fascinating.

[2:01:40] ?: We're trying. We're trying, okay.

[2:01:42] Anthony Pompliano: Let's talk about how do you go from, you're not the founder of Grindr, you are the CEO, and you come in, you basically have a bunch of people quit because you're like, you have to come back to the office, you have to work hard, you have to like be a real employee. And now you have fully transitioned this thing to an AI company. But it's maybe the most fascinating public company that I know of because everyone misunderstands what you're doing. So your job in the next 19 minutes and 30 seconds is to explain this thing to us.

[2:02:09] George: Yeah, so Grindr's had a lot of lives over the years. It was started by a really impressive founder named Joel Simkai. He built it with zero investor capital. I know at least three different VCs who wanted to do a deal and then their partners blocked them because they couldn't understand what was... Going on to happen at Grindr and it became super viral and exploded. This is like 2009, 2015. Then he sold it to a Chinese conglomerate named Kunlun. Kunlun didn't realize they had to get CFIUS approval to do the transaction. And so after the deal was announced, CFIUS showed up and said, there's no way you're going to own this business correctly because there are lots of people on Grindr that are... Quite important to our security and their identity should not be known to the Chinese. And so then it was divested out and frankly saved by three investors that bought it in 2020. The term sheet to do the deal was signed about two weeks before COVID started and then closed in June of 2020. So you can imagine what that was like. They put a temporary management in place and then they hired me to come in to take the company public in 2022. So I've been there. Almost four years now, coming up in I think a week and a half or something. And a lot of the employees that have been hired at Grindr were from this like 2020 to 2022 period when... Unfortunately, no one really worked. And so, yes, it was a bit of a culture shock for like a capitalist to show up and say, now we're going to go make a lot of money and be very big as a public business. It felt like water and oil a little bit. But I think we're well past that now. It's great. All but 20 employees at Grindr have been hired since I've been there. So in effect, we refounded the business completely and really didn't have a vision when we got there and had to like really come up with a plan for what to do. And the thing that attracted me to Grindr, like I've been using Grindr since it got started. I had this recollection of a friend of mine showing it to me in 2009. I'm like, wow, this is amazing. I've been building an app on BlackBerry and I went and got an iPhone in order to... That is crazy. That is nuts. Casual dating is a huge part of the experience. Long-term relationships are also a huge part of the experience. And then if you survey users, you know, they'll tell you we're here for obviously casual connections, we're here for relationships, we're here for friends. A lot of people have friends that they've met on Grindr that they're very close to. Travel is a really big use case where people use it. More when they travel versus when they're at home. Kind of jokes online, you'll find that like, oh, I show up in Singapore and I found my tour guide on Grindr and then spend all day with him, like, you know, figuring out what happened in Singapore. So there are a bunch of different use cases that people hacked into in the product over time. And what I really found interesting is like, how do we build out the product? Set for these things as we build out the business and obviously make AI be central to it because we have so much data that we can be a very forward thinking AI product at the same time. And there's not a lot of consumer AI, obviously. And so that creates a unique opportunity.

[2:05:32] Anthony Pompliano: All right. We're going to do one more serious part of the business and then I got to make you guys laugh for sure. Let's talk about gay men as a consumer. The first time you and I talked, I think we were in Utah, and you explained to me that gay men are like overeducated and all this. Explain like why, if you could design from scratch, like having gay men as your consumer, why it is so advantageous.

[2:05:57] George: Yeah, so as a gay man, we channel our... Kind of fears around being gay and to becoming overachievers, which I'm guessing most people here know overachieving gay men. We have one at the Department of Treasury. It's very, very common. And so on average, gay men are twice as likely to have a PhD, an MD, a JD as a straight person in this country, a straight male person in this country. Gay households, meaning when they're... People are, as a partnership or married, earn twice as much as a straight household. And while I'm fortunate enough to be a dad and that was super important to me and it's amazing to live in a world where that's now possible, most gay men don't have children. So they, A, earn way more than their straight counterparts and they don't have the largest expense that most straight people have, which is having children. So the amount of disposable income that they have is way higher. And so, and then... On top of that, they all have girlfriends who follow their behavior as a way to set patterns for what men should be doing in terms of taking care of themselves, working out, how to get dressed. And then you go from gay men. All right.

[2:07:35] Anthony Pompliano: Get ready. Explain woodwork.

[2:07:46] George: This job was that healthcare would be a huge opportunity, health and wellness. So two years, two and a half years ago, we did Investor Day. We talked about kind of expansion verticals. So instead of thinking of the TAM as like number of people on Grindr, we want folks to think of TAM as how much of the wallet of our users can we serve? And the best way to do that is to expand into new business lines. Which we can satisfy where we know that our users want to buy that product or they're already buying that product for somebody else and we can do a better job. Healthcare seemed like a logical place to go to because it's a pretty important thing for gay men given everything we know about them from history. They really care about their wellness. I think about 40% of gay men work out five or more times a week, which is pretty... Incredible when you think about it. And so we created a telehealth brand called Woodwork, all through a partnership. So like there are four people working on Woodwork inside Grindr to sell ED medications. Then we added GLP-1s, we added peptides, DoxyPep through this telehealth product, primarily to learn about. The healthcare space and how could the Grindr app function as a channel for acquiring users who are on Grindr to also buy healthcare products from us. And we've had, you know, many thousands of people buy healthcare products now and that business has done quite well. It helped me become more comfortable with healthcare, quite frankly, because it's a regulated space. And as a CEO who used to run a regulated company, I tend to not be as into that. So being in healthcare for a year and a half was really helpful from getting comfortable with it. It's all cash pay, so that was easier. And then the really big learning from it was that actually the thing that our users really want us to do is PrEP. PrEP is a medication that you take as a preventative way of not getting HIV. It's 99% effective, so it's an incredible tool that frankly everyone... Thank you. Thank you. Telehealth provider named Freddie. They're a Canadian business that controls about a third of all PrEP in Canada, meaning issuance of prescriptions for PrEP in Canada. They entered the US about a year and a half ago. Definitely past product market fit in the U.S. and are doing very well, but it was the right business for us because all the growth in the U.S. will accrue to grander shareholders versus buying a larger player that already has a huge base of customers. And so you'd be paying a lot more for it and growth would be slower. So we're really psyched about this opportunity because it really... Turns us into a platform business where we're going to have two separate business lines that are very profitable. Grindr's core business is super profitable. We are running a 43 to 45% EBITDA margin any given year. And it's very hard to find other businesses that have margins like that. And this is one of those businesses that can have a margin like that. But then they also reinforce each other, right? Our users can be on Grindr. They can get prep from Grindr. We can offer them. Premium products on Grindr if they are getting tested with us for HIV, which you have to do if you're on PrEP, which will then kind of close the loop between the two products together. It's going to be a huge, I think, growth engine for us and I'm super psyched about that. So that kind of is something that we've spent the last year working on and that's the next phase of our growth.

[2:11:44] Anthony Pompliano: So I think that you gave guidance at one point that you think the healthcare stuff will be more revenue.

[2:11:50] ?: Then the core product, is that correct?

[2:11:52] George: Well, if you look at Freddy's, this is the company we bought market share in Canada, and you apply that to just the current PrEP prescriptions in the US, it would be equivalent of 200,000 prescriptions. You make $4,800 per prescription. A year, meaning if a patient stays on PrEP for a full year. So if you just do the math, that's a billion dollar in revenue business at, you know, 40 to 45% EBITDA margin. So 400 to 450 million in EBITDA, just purely thinking of like, can we achieve Freddie market share in the US? I'm not promising that we're going to achieve Freddie market share in the US, but I think it tells you what's possible. And that's in a world where only 650 to 700,000 people are on PrEP in the US today. PrEP is growing on its own at about 10 to 15% a year. And my goal is to at least double that rate. Now, I can't, again, promise that, but that's what I want to do. For every 200,000 people that are on PrEP, you avoid about 3,000 to 5,000 HIV infections a year, depending on what segment of the population you're talking about. There are 38,000 HIV infections a year, so if we could get 200,000 people extra on PrEP, then we'd get on PrEP otherwise. We would cut the infection rate by at least 10%, and doing that is a huge step in saving people's lives and getting the epidemic

[2:13:29] Anthony Pompliano: under control. Now, as you've been doing this, there is a very weird dynamic, which you and I talked about on a podcast, and it went very viral online. There's something called a gay discount to the stock price. And maybe you could describe what is the gay discount, and then I'll describe... Why it happens, because it's probably better for me to say that than you.

[2:13:53] George: Yeah, sure. I mean, I didn't come up with this concept. I had been at Grindr maybe six or seven months. There's an investor who will be nameless, but he's a very, very good investor.

[2:14:06] ?: He has a very big fund. He asked me to meet with him.

[2:14:09] George: We meet in Palo Alto, and he walks me through his financial model. And he knows a lot about Grindr for a variety of reasons, has a big position in it personally. And so I look at his model and he comes out with this view of what the share price should be. And then. Below that, he has a line that's like gay discount, and he cuts the price by 30%. And I'm like, what is that? He's like, well, this is like, you know, my assumption that not every shareholder is going to want to buy Grindr for a variety of reasons. And so I'm just assuming that as a result, the share price will not accrue to what it actually should accrue. And this is going to be surprising. It was still a great share price, even with the discount. But I was like, wow, that's really kind of crazy. And I, you know. Broadly have been very lucky in my life where I've not experienced a lot of homophobia. I came to America, went to prep school in Maine, went to college in Vermont, then lived in D.C. and then in the Bay Area. So like not the places where you don't have intolerance. And so it was probably one of my like first moments of like in this job where like, oh, like somebody who actually really believes in our business and really supports it is. Assuming homophobia in society and as a result is pricing us lower than actual reality. To me, that's like super motivating, actually, because then I'm like, OK, if we can be really, really successful and do very, very well and prove our naysayers wrong, which is, by the way, what gay people have done for hundreds of years and for the last 50 years openly, which is one of the reasons why gay rights are now. I'm an omnipresent in this country and I can have the life that I have. Then we can hopefully make other people's lives better because this is the first time that there's a global company that's public that has an opportunity to have that kind of massive impact on society through its business success, right? So you're not like out there doing a mission-driven thing only. You're being very successful in the business and through that accomplishing a really big mission.

[2:16:10] Anthony Pompliano: So you can imagine if you're like a hedge fund manager and you're a portfolio manager and you're like, all right, I think this grinder thing is a good idea.

[2:16:16] ?: We got to go to your investment committee. Somebody's going to say something.

[2:16:19] Anthony Pompliano: Somebody's going to make a joke. Somebody's going to whatever. And so like there is this element of I actually think that individual shareholders who don't have to go and talk to anybody else are much

[2:16:30] ?: more likely to buy the stock.

[2:16:45] George: But I do hope now with us buying Freddie, where Grindr is becoming a public health business as much as it's becoming a connections business. That dynamic will start to shift a little bit because, you know, we will be saving lives concurrently with enabling people to meet each other or get married and have families. And so that is like an added benefit of this decision that we made to become much more involved in health care where I think people's perceptions will start to shift as well. And then the other piece here is like I'll give another story. I'm going to be. More generic than the story actually is for the sake of people's privacy. We have an investor who, again, is very supportive and he has a big Middle Eastern position in his fund, meaning his investor is somebody or is a fund in the Middle East. And when they found out that he's in Grindr, they asked him to sell. Which he did. But he kept sending them updates about Grindr in every quarterly report. And three quarters later, they came back and said, you should buy Grindr again. Which like, I mean, to me, that is a really awesome story of what us as a powerful business that is really successful can do, which is force people to change their perspective.

[2:18:05] Anthony Pompliano: When you think about maybe people in this room, what are like the... Three to four bullet points of what you think they should take away in terms of the business, the opportunity, you know, and why you're excited to be the CEO.

[2:18:17] George: So as a core business, which is our core grinder business, we've grown, you know, 25 plus percent every year that I've been CEO. We went from 195 million revenue in 2022 to guiding over 530 for the year now. And in every year we've been CEO, we've had a 40. Two plus percent EBITDA margin. There's no reason why that business can't keep growing at roughly the pace that we've been growing so far. And so we're very comfortable with that. And the way we're doing that is actually different from what traditional dating apps have done, which is to make the app unusable and get more people to pay. We are premiumizing the product, building more products and features and then getting people to pay more for them. We've raised prices about 20% in a year and we've had virtually no churn. So that's point one. Like the core business is very stable and can do really well. By the way, incredibly lean. Grindr has only 175 or so employees. I'm very proud of that. Being super lean is something that I think is way better. Elon firing everybody at Twitter, frankly, gave me the backbone to push the team to become as lean as they are. And it's been really awesome because we had over 225 employees when I started. But obviously we're a lot smaller. So that's point one. Point two, gay men are an incredible audience to have access to because they are such trendsetters and have so much disposable income. And so there's a ton of opportunity to capture more of their wallet share. And then three, we're about to become a public health business with a very profitable public health line within the company, which I think over the next four years will probably... Be bigger than CoreGrinder is today. Because if it's not, then we've really failed. And I've had 17 amazing quarters of execution that our team delivers results really, really well. And so I don't think there's any reason why we cannot execute at the same level with what we're about to do and grow this new business line as fast as we've grown the rest of the business. And that will compound, right? Because then we'll have two business lines delivering very strong EBITDA, giving us... Well, Grinder does have a pretty active social media presence. We are one of the most followed accounts on Instagram and on X, etc.

[2:20:52] Anthony Pompliano: So you may not want to go look at those.

[2:20:54] George: But we don't talk about investment stuff there. I'm pretty active on more like finance stuff on LinkedIn and starting to be a little bit on X. I've generally avoided X for posting purposes, but I think given our desire to get a lot more retail holders to have Grindr, we're going to be more active in that sense as well.

[2:21:13] Anthony Pompliano: All right. So is it like investors.grinder.com?

[2:21:16] George: We do have investors.grinder.com, and that's a very typical, stoogey, old-school investor section. But I write a pretty cool shareholder letter every quarter, so that's all there, too.

[2:21:26] Anthony Pompliano: When we did the podcast, I told George if he needs any models or talent for any of the content, my brothers are available. So I got George a good laugh. All right. Thank you very much for doing this.

[2:21:41] ?: We'll do it again in the future.