The Brothers Who Live One Life — The Incredible Adventures of David and Daniil Liberman
Tim Ferriss: Gentlemen. David. Daniil. So where did you grow up? And what did childhood look like? Daniil Liberman: So the two of us were born in Moscow. Still Soviet Union at that time. To a family of very known neuroscientists.
Biophysicists. Who the family were sort of upper middle class for the Soviet measure. But as soon as the Soviet Union collapsed we — with the Soviet Union, the family collapsed. It was a below poverty type of situation. Because our dad was born in 1925. So in 1990 he was pretty old already — Tim Ferriss: Yeah.
Daniil Liberman: — and didn't have a chance to adapt to the reality. He always — David Liberman: And it was six of us. Daniil Liberman: It was six of us kids.
David Liberman: Elementary school. Daniil Liberman: Elementary school kids. So a complicated situation. Both parents had to continue the work as they wanted actually to finalize and finish the work of their life, and at the same time somehow survive and feed kids and get some clothes for us and stuff. David Liberman: It's like six of us one year apart.
Daniil Liberman: Our mom was — Tim Ferriss: Was a mom. Daniil Liberman: She was busy with making her breakthrough works in how neurons work and the signaling system in the neurons. At the same time, having six of us in eight years, less than eight years. David Liberman: Yes. Tim Ferriss: How did she — sorry to interrupt. But how does any human do that, let alone a mom? Not to get us into all these confusing gender waters.
But let's just say for the time being mom. Primary caregiver? Would that be fair to say? David Liberman: Yes. Daniil Liberman: Yes. Tim Ferriss: So how did she manage both the scientific exploration with this groundbreaking work and six kids? I can barely manage one dog — Daniil Liberman: I say always.
Tim Ferriss: — and what qualifies as my job? So how did she do that? David Liberman: I think that after the fourth one, we kind of a little bit managed ourself. Tim Ferriss: Right. David Liberman: But still it's not the answer to the question. Daniil Liberman: The kids were taking care of the kids. No, there was a — Tim Ferriss: Training managers. Daniil Liberman: — grandma and grandpa from time to time.
So from time to time they would drop half of us at the grandpa and grandma's place, and then took half of us with them to the laboratory. That's how we — David Liberman: Spent a lot of time. Daniil Liberman: — spent a lot. Surrounded by the fish and snails. David Liberman: We were surrounded by all this equipment.
Daniil Liberman: Lasers. Microscopes. David Liberman: They got first PCs much earlier than anyone else. That's why we also were quite excited about that. I think that in general they were super passionate — Daniil Liberman: About the work.
David Liberman: — about their work. That's what we definitely picked from our parents. Daniil Liberman: And about each other. So there were six of us. David Liberman: That's for sure.
Tim Ferriss: It's a full team, yeah. It's a full soccer team. So you have lots of excitement. Maybe lots of chaos. You have goldfish, snails, grandparents, lasers.
Sounds like a pretty awesome setup for curious kids, honestly. Daniil Liberman: For curious kids. Tim Ferriss: And what did you pick up on intellectually as a way of thinking from your parents? And I ask that because I know both of you for instance, and I'm not trying to lead with this question, but pay a lot of attention to data. You're sort of geeks for parsing the data. Whether it's to refine how you think about or identify problems and then also how you might solve problems. What did you observe in your parents or pick up from them when it came to how they thought about things? Daniil Liberman: Now that you said that, I realized that our parents were doing those experiments which required them years of repeating the same stuff.
Trying to get data which would make sense on top of their hypothesis of how everything works. So I guess we've been surrounded by the papers. Piles of papers with just numbers.
Literally, I remember this. David Liberman: They were like this. How we call this? Cards? Daniil Liberman: Cards.
Punch cards. Tim Ferriss: Oh, the punch cards. David Liberman: The punch cards, yes. Daniil Liberman: Yes, the punch cards.
Everywhere the punch cards. Before the PC was, there were this huge type recording machines with all this data as well. But what's interesting, both of them was always challenging the status quo of the current understanding of science. David Liberman: So if just someone claims something and you cannot really prove it for yourself with data, probably something is missing and you need to dig deeper.
Daniil Liberman: And that's how they lived. And they had their own discussions with everyone around. And we sort of picked it up as we were growing already. I don't know. 15ish years old.
Our dad was even older, so he needed someone to escort him to the conferences and meetings of scientists. Just basically it's Moscow in winter and the roads are icy, I don't know, five, six months a year. Something like this. So he needed someone to basically help him get there.
And being there all the time, we saw his conversations with the rest of the scientific community in his institute as they were just laughing out of nowhere. I mean just, "Oh, yeah. Of course. Again, Liberman is talking about the quantum nature of the consciousness. Blah, blah, blah, blah."
Something like that. And we were looking at this. It's like why? He has some ideas and proofs. So it was sort of a — David Liberman: Resistance. Daniil Liberman: — resistance to the rest of the world. We felt his resistance and were challenged with this as well.
Like, "Oh, we going to prove everyone." Tim Ferriss: Libermans against the world. Daniil Liberman: Libermans against the world. Exactly. Tim Ferriss: All right, so we're going to leapfrog from that. So as far as a next logical place, I like hopping around because I see things on paper, I find certain things exciting to talk about, and then we can fill in the gaps.
So I'm just going to actually answer my own question and I'm going to take you to around — then we can fill in the gaps as we go. So you're around 18 to 19 years old and you're presenting to Russian Parliament. What are you presenting about and how is the reception? David Liberman: Yeah, so a little bit of background.
Tim Ferriss: Sure. David Liberman: So after Soviet Union collapsed, the entire population of the country lost their savings in the banks. Twice during the decade.
Tim Ferriss: Yeah. David Liberman: So it was a quite harsh time for everyone. And for us it was — Daniil Liberman: Strange. David Liberman: — really strange. We weren't able to understand how with all the modern technologies, with computers and et cetera, how it's all this corruption and how it's even possible. Tim Ferriss: That your savings could just disappear.
David Liberman: Yes, definitely some technologies — Daniil Liberman: Should be there. David Liberman: — should be there to solve these problems. Daniil Liberman: We had internet pretty early and we were hackers pretty — it was at that time of the internet era when everything was possible.
David Liberman: Yeah. Daniil Liberman: Access to everything was possible. So at that moment we read lots of the hackers' manifestos and some libertarian ideas wandering around the internet. And we saw all these ideas of decentralized type of data storage, which can be — David Liberman: Protected.
Daniil Liberman: — bulletproof from — Tim Ferriss: Various attacks or — Daniil Liberman: — attacks and modifications. Like falsifications. Tim Ferriss: Right.
It's resilient against falsification. Daniil Liberman: Yes. Resilient against falsification. Blockchain type of ideas before Satoshi actually released his first paper on the blockchain.
Which was never the one word. It was blocklike chain of blocks. David Liberman: But BitTorrent and other type of — Daniil Liberman: But BitTorrent and other type of — David Liberman: — these storages existed even before. Tim Ferriss: Sure. Daniil Liberman: It is about this. We're circulating over the internet.
So with this combination of those ideas, we came up to a solution as we saw it for eradicating corruption in Russia. To make all of the governmental expenses completely transparent. David Liberman: Store it on the people's machines. Daniil Liberman: And store it in the people's machines so that none of the corrupt officials can actually even do anything with the data.
So we are presenting this idea, and pretty soon when people realize what we're talking about they basically ask us to go out. David Liberman: Shut down the mic. Daniil Liberman: Shut down the mic. He's like, "The meeting is over. Thank you so much."
Tim Ferriss: "Sorry, we're having some technical difficulties." Daniil Liberman: Exactly. Tim Ferriss: "If you could step off the stage." Daniil Liberman: And then the guy who was actually — David Liberman: Who invited us. Daniil Liberman: Who invited us.
He was some sort of a deputy for the head of the party at the time. At the time there was multiple parties. Not only United Russia, but this guy came.
David Liberman: Approached us. Daniil Liberman: Approached us in the corridor saying, "Boys, I can see you are very smart and all these ideas are just brilliant. But stop talking about this, otherwise someone will kill you.
No, not us. We're good guys. But there are bad people who are making lots of money and this is against what they want." Tim Ferriss: Okay. So now at that point, do you pretty immediately pivot to something else? Daniil Liberman: Pretty immediately we realize that what we need to pivot into is grassrooting those ideas instead of trying to make them a top-to-bottom approach.
David Liberman: It's quite — Tim Ferriss: Instead of being the missionaries of anti-corruption. Distribute the risk a bit. Daniil Liberman: Yes. David Liberman: It started to be quite clear that people in the government — Daniil Liberman: Will never ever. David Liberman: — are not those people who really can adopt those ideas.
And it was another story to that. In a week after that, they actually invited us again to come. And we came and they asked us to work on a project. And we said, "Well, what is the project?" And they said, "Well, you mentioned something about digitalization and how digitalization can be anonymous at the same time. Can you create an anonymous HR agency which will sell seats in government?" Daniil Liberman: And we're like, "Wait.
What?" David Liberman: He's like, "Yes." So imagine people who actually making lots of money and who's capable of paying lots of money for a seat in the government. They are people who — business. Daniil Liberman: They manage better than us.
David Liberman: They manage better. They can manage stuff better than us just from the street. Daniil Liberman: Yes. David Liberman: Just happened to be here just by chance because someone was a friend of someone. So if we actually invite people who did something in business and have money to pay for the position in government, they can do a better job for the country. Daniil Liberman: Our first reaction was like, "Do you really have — David Liberman: Price list for that? Daniil Liberman: — prices?" David Liberman: He's like, "Yes, for sure."
We're like, "Can you give us an example?" And the guy was like — Daniil Liberman: Deputy Minister of Finance was half a million dollars. Tim Ferriss: Wow. Daniil Liberman: And Minister of Healthcare.
David Liberman: Ecology. Daniil Liberman: I mean, Ecology was $3 million. David Liberman: So the question was immediately, "Ecology? We don't give a shit about ecology in Russia."
He's like, "Exactly. That's how the person who will take the position will have a return on investment pretty much." Daniil Liberman: They use all these fancy words. David Liberman: They'll get their money back pretty much in a year on bribes.
Tim Ferriss: Oh. Daniil Liberman: So we quite soon realized that they are — Tim Ferriss: You're like, "Well, We appreciate the invitation." Daniil Liberman: "We appreciate the invitation. Never call us again. Thank you." That was our reaction.
But yes, that was a moment when we decided to pivot to building our own businesses and — David Liberman: Making our own money. Daniil Liberman: — gathering resources. David Liberman: Gathering resources and then building type of technologies ourselves. Tim Ferriss: Then you can buy the Ministry of Ecology seat.
Daniil Liberman: One day. David Liberman: One day. Or we can do other revolution or something like that. Tim Ferriss: Yeah. Now at that point do you — while you're observing all of this and it's imprinting your young minds.
Are you thinking, "Eventually we are going to want to build businesses somewhere else," or did you anticipate that you would be building in Russia for the foreseeable future? How were you thinking about things at that point? David Liberman: For us, somehow at this particular moment, it was still unreachable. The idea that we can fly somewhere and build businesses there. Tim Ferriss: Right. David Liberman: It is only years after that we start to be more confident in our abilities and start to think about that. Daniil Liberman: It was miserable the first time we flew to United States.
Just on our own. Miserable experience. Very low level.
Poor level of English. No understanding whatsoever what the country looks like and what's going on. David Liberman: We're trying to raise investment. Daniil Liberman: We were trying to raise investment.
David Liberman: Was total flop. Daniil Liberman: Miserable. Tim Ferriss: That sounds like a hard slog of a first trip. Daniil Liberman: Yes, Exactly. Tim Ferriss: Okay.
So at the time then you're just focused on building businesses. And what type of business were you building at that point? Daniil Liberman: We had ideas. 2001, 2002. David Liberman: Even before that, our first company was an ISP.
Internet service provider. It was kind of — we wanted to have a good internet connection and it was super unaffordable. $5,000 to connect your apartment. Tim Ferriss: Wow, that sounds very unreachable for most people. David Liberman: Super unreachable. For us as well.
Daniil Liberman: Especially for the family of eight people who was making a couple hundred dollars a month for the household. It was unreachable. So at some point we realized that if we want to have such level of internet at our own apartment, what we can do. We can go through all of the neighbors. And it was like what, 1600? David Liberman: We went door to door.
Daniil Liberman: 1600 apartments in the — David Liberman: Small district. Daniil Liberman: — small district. Tim Ferriss: Yeah. Daniil Liberman: It's quite dense.
Tim Ferriss: The neighborhood. Daniil Liberman: The neighborhood. Like dense neighborhoods of [inaudible] in Moscow.
And we literally rang all the doorbells. And the question was, "Do you have a computer?" If the answer was yes, "Do you know what internet is?" If the answer was no, "Okay, let us explain you. Let's have some tea." And realized you are literally sneaking into people's apartment and starting to explain to them what they are losing by not having internet already connected to their computer. David Liberman: So we pre-sold couple hundreds of — Daniil Liberman: Pre-sold couple hundreds contracts.
And with that we were like, "Okay, we can now go to the bank. Get a..." How is it called? Tim Ferriss: A loan. Daniil Liberman: Consumer loan.
Just basically consumer loan. And we use the money to buy all the equipment to buy the cable. David Liberman: Optics. Daniil Liberman: Fiber. Tim Ferriss: Yeah, fiberoptic cable. Daniil Liberman: Fiberoptic cable.
And basically connect all these households and people paid. And we covered the loan pretty fast. David Liberman: It still was a quite challenging project. Tim Ferriss: So I'm wondering just what you're buying with the loans. You're buying servers, sticking them in a bathroom? How was it being connected to the existing infrastructure? Daniil Liberman: So existing.
First we needed to — basically someone to bring the cable in. It was the most expensive part of the operation. Tim Ferriss: Digging trenches. Daniil Liberman: Digging trenches. David Liberman: We hired.
Daniil Liberman: We hired the engineering team. We were lucky because the largest — David Liberman: Hub. Daniil Liberman: — communication hub for the Moscow internet was basically two kilometers away from us. Tim Ferriss: That's great luck.
Daniil Liberman: It's great luck. David Liberman: Because our parents from science, we were in the part of Moscow where — Daniil Liberman: Where most of the scientists was. David Liberman: — most of the scientists were and the universities were there as well. And that's why — Tim Ferriss: Makes sense. Daniil Liberman: Makes sense.
David Liberman: — internet first emerged at this part. Daniil Liberman: So we hired these people, the engineering team, to bring the cable. And then by night mostly we were connecting 20-story buildings to each other by shooting the cable using the athletic air bolt. Tim Ferriss: A crossbow? Daniil Liberman: Crossbow, yeah. David Liberman: Yes.
It's just local officials, they were bribed by the bigger player and they didn't allow us to actually — Daniil Liberman: They wouldn't give us the keys. David Liberman: — get into the roofs and to properly set the cables. Tim Ferriss: Yeah, competition. Daniil Liberman: Competition was there. Even though we had the license. David Liberman: License.
Daniil Liberman: And by law they couldn't prohibit us to do this, but they were not allowing us. That's why at night we would sneak onto the roof. Pretty dangerous operation of getting onto the roof even without having an access through the door. And then from the roof to the roof, we basically were putting these cables on our own using the crossbows. Shooting from one roof to another roof.
David Liberman: This company was then acquired by a bigger player. There was a significant consolidation on the market. Tim Ferriss: So between the ninja crossbow expansion and the acquisition, how long did that take? Daniil Liberman: Two years. Tim Ferriss: Two years.
David Liberman: Three years. Tim Ferriss: All right. Moving fast. Daniil Liberman: Moving fast.
Then later on we realized that what we actually need to do is super computing. We were like, "We are smart in mathematics. We can build out. We can write algorithms. And this is something." We'd foreseen the future of cloud computing.
Using machines in internet to be — David Liberman: To parallelize. Daniil Liberman: To parallelize compute over the — this was our idea originally. Then we realized that it's impossible to do in Russia type of business. And we decided that what we can do, we can start building games. Tim Ferriss: Now before you go on.
Was the computer science and whatever coding experience you had, was that self-taught? Was it school? Was it parents? David Liberman: Our college degree is computer science. But in reality. In Russia at this moment, no one will really teach you properly computer science because your teachers would know less than — Tim Ferriss: Than you would. Daniil Liberman: If you have internet.
Tim Ferriss: If you're motivated. Daniil Liberman: If you're motivated. David Liberman: So we were lucky. Because our parents were scientists, we got PCs at our home much earlier than most of our peers. We got internet in our home much earlier than most of our peers.
And we were super excited about this technology. Daniil Liberman: We were curious, and I would say naughty. So we would break the computers all the time and we had to fix them all the time for the parents to continue their work. And that's how we actually learn how to — David Liberman: We built our first website for our guild in online game.
Daniil Liberman: Online gaming. Ultima Online. David Liberman: Ultima Online. Tim Ferriss: Great choice. Curious and naughty. That can be the name of your autobiography.
The Life and Times of the Libermen. Okay, so you have the consolidation and then you decide to focus on games after that? David Liberman: Yes. Daniil Liberman: Yes. Tim Ferriss: And what form did that take? David Liberman: We played Ultima Online.
We were super excited about these type of games. We thought that this is revolution because people just hang out there. There is no aim or you don't need to just kill all the enemy. Just people hang out there. Daniil Liberman: Sandbox. David Liberman: Sandbox, yeah.
Daniil Liberman: You can have a marriage there. Build a house. David Liberman: Like Roblox. Tim Ferriss: Second Life type of feeling. David Liberman: Second Life, yes.
Tim Ferriss: Instead of Doom. Daniil Liberman: Instead Of Doom. Exactly. We're very excited about this, but had to play only overnight because of a dial-up connection and the phone was for everyone in the apartment. For us at night.
That's why we actually wanted the better internet all the time. And that's how the ISP started. David Liberman: So then when we decided to build such game. At that moment, this idea was really not popular. Most of the — you even can find some quotes from CEO of [inaudible] would say, "Online games is just a niche market." Daniil Liberman: It will never be.
David Liberman: No one will play online games and all this stuff. Daniil Liberman: He actually — David Liberman: Then apologized many years after. Daniil Liberman: — officially admitted he was wrong. Tim Ferriss: That's very, I suppose — Daniil Liberman: Honest. Tim Ferriss: — honest.
A lot of people don't own those things. Daniil Liberman: Yes, he was super cool in that. He was like, "I said that. I was wrong.
Now we are in the game." David Liberman: So we tried to launch several one time. Failed. Our own savings. Daniil Liberman: Spent all of our own savings.
David Liberman: Was out soon. But then World of Warcraft was released, and we were the only ones who were — Daniil Liberman: For years trying to raise money. David Liberman: — trying to raise for such type of the project. And that's how at some point.
Daniil Liberman: We got all that attention at this moment. And we raised our first money. Tim Ferriss: So World of Warcraft comes out. It proves.
It's a proof of concept — Daniil Liberman: Yes. David Liberman: Yes. Tim Ferriss: — for what you are also trying to get to in a way. David Liberman: Not only proof of concept.
It was the first game ever netting $1 billion of profit a year. It was just — Tim Ferriss: I think people outside of games also today do not realize how big the numbers are. David Liberman: Yes. Tim Ferriss: The opening weekend for the new Call of Duty compared to every Hollywood blockbuster for a six month period or something like that. The numbers are astronomical. David Liberman: This market was really for years larger than — Daniil Liberman: The movies.
David Liberman: — the movie market. But 15 years ago it's — Tim Ferriss: It's not as obvious. David Liberman: Yes. Daniil Liberman: But it was already obvious that it can make lots of money. So we were able to convince some of the investors. Tim Ferriss: Investors tend to like that, yes.
David Liberman: And we got a lot of attention, grew pretty fast, to 150 to 100 employees in different times. But then 2008 crisis came and just it's all — Daniil Liberman: And we were not ready. World of Warcraft, it took Blizzard, the top game development studio in the world, that what we didn't realize when we started, it took them like five, six years to build a game. David Liberman: It's quite complicated.
Tim Ferriss: With an army. Daniil Liberman: With an army and unlimited resources. And us, we were like, "We can do it with a couple million dollars." Okay. We were miserable in this case.
But honestly in this experience we realized that we can be cool in developing cheap cheat — not cheating, but how to say? Hacking. Hacking our way through the challenges, inventing new stuff, inventing how we can build a — David Liberman: New type of process. Daniil Liberman: New type of processes and technologies and et cetera. And even though we bankrupted the company in 2009, by March, 2009 I had to fire everyone, like 150 people in one day.
Tim Ferriss: Sounds fun. Daniil Liberman: Super fun. David Liberman: It was the most challenging experience of our life. Daniil Liberman: The most challenging experience of our life. And then three, four months later, we already started an animation studio, and used all of the ideas which came to our mind during this period.
Like, we can actually do this and this and that. We wouldn't do this in the games, but we can do this in the animation process. Tim Ferriss: So you were able to take things from the failed gaming studio and transfer them over into the — David Liberman: In terms of experience. Tim Ferriss: In terms of experience, like lessons learned. Daniil Liberman: Most experience, like lesson was learned.
We knew how to do stuff better, as we were progressing from knowing nothing when we started, to basically having a pretty sophisticated production process, we immediately reinvented the animation process. So we basically took the guy who was experienced in producing 3D graphics and it was like, "Okay, why don't we change it all? Why don't we take what you know and then try to figure out how to make it much more efficient?" Tim Ferriss: How did you decide on that, versus the hundred other things that you might — David Liberman: First of all, it was a super challenging time. The company was bankrupt.
By that time, we actually already were quite successful in different stuff. We already had a venture firm, raised $30 million to the venture firm. But this venture firm was took over.
Daniil Liberman: By our investors of the gaming studio. David Liberman: And so it's like ration style. Daniil Liberman: It's ration style, ration style. David Liberman: The people with the guns and the cars. Daniil Liberman: Literally, the security people from the persons arrived at the office, took us in the black cars, driving us to the underground of the, what is it, office building in the middle of Moscow.
David Liberman: So first of all — Daniil Liberman: And then threatening us that they will kill us and our family because they know where everyone lives, unless we will return the money. David Liberman: So this type of business experience. Daniil Liberman: This type of business experience. Tim Ferriss: Hard-lined, strict investors. David Liberman: In that moment we knew that we needed to, with the new projects, we needed to do something fast, because we still had some obligations in place, which we just fired because we haven't paid the salary for last month. Daniil Liberman: We tried to — Tim Ferriss: So you had outstanding debt — Daniil Liberman: The outstanding debt was like half a million dollars.
And we were still living with our parents. David Liberman: So we knew that we don't want to have investors anymore, and they see all this experience which we had. We wanted to do something which can generate cash right away.
Not — Tim Ferriss: Enough for apartment building basements. David Liberman: Yes, yes, yes. Tim Ferriss: That was enough. David Liberman: Yes. Daniil Liberman: Then there was luck — David Liberman: And you mentioned was — Daniil Liberman: — because a friend of ours who is a famous actress in Russia, she told the CEO, the president of Channel One, which is like NBC of Russia, like the largest network — Tim Ferriss: Or one of the BBC channels in the UK or 20 Minutes — Daniil Liberman: Exactly, exactly.
David Liberman: That we can do magic with graphics. Daniil Liberman: She told them that we can do magic with the computer graphics. Tim Ferriss: How did you become friends with the actress? Daniil Liberman: Friends of friends introduced us and we basically became super cool friends.
We were like writing scripts together for the future movies and stuff. David Liberman: In reality, I'm not sure that she really knew that we can do that, what they see, what — Tim Ferriss: But she was very confident in selling it. David Liberman: What she knew was that we fixed her internet. Daniil Liberman: Many times.
David Liberman: Many times. Tim Ferriss: It goes a long way, keeping somebody online. David Liberman: Yes. Tim Ferriss: So she sells — it's head of this primary channel, that you can work magic with graphics. Daniil Liberman: We work magic with graphics.
And we actually were doing magic with graphics, but for games. David Liberman: And he wanted to create a political satire show, which would be based on the last week events, which is impossible. And you mentioned usual production cycle is nine to 12 months of production. Daniil Liberman: South Park is actually like three, four months. But then they leave these several minutes for something topical, which they can produce over a couple of weeks, right before the episode is released, like they are doing this trick. Tim Ferriss: And that's South Park.
They're the fastest. Daniil Liberman: They are the fastest. Exactly. David Liberman: And we invented the production process, which allowed us to produce half-hour animated show, 3D graphics, in one week. Tim Ferriss: How did you do that? Daniil Liberman: The interesting part was we just basically disassembled the entire process on smaller pieces and paralleled them.
This idea of decentralization and parallelization was like we couldn't live it. Tim Ferriss: Right. So rather than an assembly-line type of production, you're like, how many of these can we have running in parallel? Daniil Liberman: In parallel.
David Liberman: We found out — Tim Ferriss: Were you able to borrow resources from the channel to work on those parallels? Daniil Liberman: No, we actually at the time were able to borrow resources from IBM. Tim Ferriss: Okay. How does that work? Daniil Liberman: Friend of ours was the president of IBM of Russia. David Liberman: And we agreed that they would be able — Daniil Liberman: He was a DJ in the club during the weekends. That's how we knew the guy.
So during the weekends — Tim Ferriss: Moral of the story, you never know who's DJing at the club. Make friends. Daniil Liberman: They're DJing at night during the weekends, and then he's in a suit like a serious president of IBM during the weekdays. Tim Ferriss: That's crazy.
Daniil Liberman: That's crazy. And the guy was like, "I fucking love what you are doing." I'm sorry, can I say this? Tim Ferriss: Oh, yeah. Daniil Liberman: And he was like, "Yes. I will give you the equipment." And they gave us, I don't know, what was it? David Liberman: It was around a million dollars worth of servers, with the idea that they will give us this equipment, not permanently, but for some time for free, in exchange that IBM will use the fact that this show was created with — Daniil Liberman: The most innovative show was created using IBM equipment.
David Liberman: Then they gives us equipment, but IBM decided that it's too political. Daniil Liberman: The head of this IBM. David Liberman: And they never even used it. Daniil Liberman: Because the show was political satire in Russia. So the headquarter in the United States was like, "No, no, no, we don't…" Tim Ferriss: That does not sound low risk. Daniil Liberman: Yes.
They allowed us to use the equipment but never put the logo in there. Tim Ferriss: Okay, so they allowed you to use the equipment. And then was the president just like, "Look, we're going to forget it's there for a while, you guys can use it?" Daniil Liberman: Yes. Yes.
It was exactly like this. Tim Ferriss: Very helpful DJ. Daniil Liberman: We made the first season using that equipment. David Liberman: But then already from profit — Daniil Liberman: And then the Channel One paid us like $3 million for the first season. Tim Ferriss: That seems significant.
Daniil Liberman: And with that money we were able to buy all the equipment we needed — Tim Ferriss: Because you owed half a million to the employees? Daniil Liberman: Yes. The first we paid the half a million — David Liberman: We paid it in — Daniil Liberman: It was advanced payments. So we came to Channel One, it's like, "We needed vast payment."
They're like, "Why?" It was like the processes. And we basically paid the debts. Tim Ferriss: Wow. Okay. Okay. So what happens then? So you have this parallel processing that's working with your semi-permanently borrowed IBM machines from the DJ, you make three million, you manage to negotiate prepayments.
So you satisfy your outstanding debts to paying the ex-employees. And then what? David Liberman: This was the first time — Daniil Liberman: And then this summer was hard work. David Liberman: Yes.
But this was the first time when we actually start to earn enough of our own funds and we return to — first we return to our ideas, that we need to think about — Daniil Liberman: How to fight the corruption. David Liberman: How to fight the current — fight corruption, what type of technologies can be created to — Tim Ferriss: Were you guys not afraid, just for your personal or family safety? Daniil Liberman: We still are not. Honestly, the part of us not being afraid probably somehow was related to our dad was never afraid of whoever was challenging him.
But at the same time, back in 2000, as we finished the school, we knew that if we have all these ideas of changing the world, it's going to be impossible if we just stay home, play computer games, and stuff. So we decided that we would go to some business trainings, personal development trainings, fear trainings. We started challenging ourself in developing ourself.
And by 2005, we spent four years developing our own internal equanimity. Tim Ferriss: Well, let's talk about this equanimity for a second because this is super important and it's the enabler or the handicapper, the lack of it being a handicapper in so many different capacities. And I would say a lot of the people listening to this are going to be from the US, and fortunately for them, they've never had the experience of being under a political regime where people disappear. But I've spent a lot of time in South America — Daniil Liberman: Or poisoned.
Tim Ferriss: Or poisoned, or fill in the blank. Yeah, "disappears." Daniil Liberman: Yes. Tim Ferriss: But what you realize is there are political regimes all around the world, very common, where people routinely are killed, poisoned, or otherwise made to disappear. So the risks were very real for you.
And these are not conspiracy theories. They were actual threats. So was the lack of fear a lack of fear of death, or was it a belief that you could extricate yourself or avoid any type of really significant consequence, or something else? Daniil Liberman: There are three answers to that.
A, yes. We don't afraid to die, somehow don't. I mean this is like you die, that's it, whatever. B, somehow — and it actually really helped with the bandits in 2009, when they came to ask for all of their money invested in the game back. We knew that it's their way of threatening you, and they want you to be afraid.
They want you to fear. And that's how you are on the hook. As soon as you show the fear — Tim Ferriss: That's how you are controlled. Daniil Liberman: — that's when they hook you and you owe them forever. And we showed them that like, "Okay, kill us, whatever, you will never get your money back.
In the other case, we can probably work it out, somehow." David Liberman: And Lawrence has this experience, that actually if you don't show the fear, it's much safer than if you show. It's a little bit like with lions. Tim Ferriss: Like blood in the water. David Liberman: Yes.
Daniil Liberman: Blood in the water. Yeah. And then the third one is when it comes to the political systems, let's say particularly Russian political system, for the KGB people who were actually running the country at that time, Putin was ex-head of KGB. That's the only thing which we all should understand. That's a country run by KGB people. Yes, they call themselves FSB, but who's to give a shit? It's KGB.
It's the same guys who [inaudible] who were just basically killing people 60, 50 years before that in Russia, after the war, before the war. So when it comes to them, they see two type of people who are playing against them. It's either enemies or idiots, fools. Tim Ferriss: Enemies or idiots.
Daniil Liberman: Enemies or fools. David Liberman: Enemies, like spies. Daniil Liberman: Spies. David Liberman: Your either work for CIA — Daniil Liberman: You either work for CIA — David Liberman: — or you're an idiot. Daniil Liberman: — or you're an idiot who was convinced by CIA to fight against them and you just fool who — Tim Ferriss: Yeah, you're a pawn.
Daniil Liberman: A pawn. So we played the pawn card. We're like, "Let's show ourself as if we're stupid." And we were completely transparent about all of our ideas from the very beginning, saying like, "They will just see us as fools." Tim Ferriss: Like town lunatics.
Daniil Liberman: Town lunatics. David Liberman: And this strategy — Daniil Liberman: Worked. David Liberman: It worked. This point, it doesn't work anymore.
Daniil Liberman: Officially, look at what’s happening — David Liberman: We know people like that who already were in jail. But at that particular time, at the time — Tim Ferriss: It was just so rare that they're like, "Oh, these guys are just crazy." David Liberman: Because we made it transparently. If you are a CIA agent, you will try to hide. But if you transfer money to the biggest opposition here transparently, write an article — Daniil Liberman: Writing an article in the largest newspaper, Financial Times — David Liberman: — about that, you probably need — Tim Ferriss: Hiding in plain sight.
Daniil Liberman: Hiding in plain sight. And they're like, "Oh, idiots. They spend their money.
Okay, whatever. We'll just steal this money from the opposition here anyway, so fools." That was hesitation. So for us, the shield for us all those years was like they believe we're just idiots. Tim Ferriss: Incredible.
All right. We may come back to this, but I want to make sure I don't lose the thread. So the graphics for this political satire, it seems to be working pretty well. You returned to your ideas from prior, which is how we got here.
So thinking about anti-corruption and things like that. And then where do you — David Liberman: And also, we started our move to United States in 2010. Tim Ferriss: You started thinking about — David Liberman: Immediately established our presence in Los Angeles, because of animation in 2010, and started to move our whole attention to United States.
Daniil Liberman: So we were like, "Nothing good going to happen in the country. It's run by the KGB and they're not going to release their grasp over the country, unless it's going to be like a revolution type of situation," which we saw that even the opposition, they were trying to play the political game, and it was a lost game from the very beginning. So we knew that the show political satire on largest TV network in Russia is not going to last more than the term of puppet president Medvedev. That's exactly what happened. As soon as Putin got back to his position, the show was shut down immediately.
So we knew it's going to end, and we knew that we needed to spend all of the money which we will make from this in order to transit to United States. Tim Ferriss: So two questions, and it might seem obvious to you guys, but I think for a lot of people listening, they might wonder, well, why not Europe? Why not somewhere else? Daniil Liberman: We tried. Tim Ferriss: Why the US? And then how hard was it or how easy to start to move your lives to the US? David Liberman: In Europe, especially animation industry is — Daniil Liberman: It's mostly subsidized. David Liberman: — mostly subsidized by government.
So you actually need to deal with bureaucrats and you need to get any fighting. The private sector almost doesn't exist. Tim Ferriss: I would say that makes it very hard for immigrants. Daniil Liberman: Yes, exactly. David Liberman: Yes, yes, yes.
Daniil Liberman: And it was always like if you want to get — David Liberman: If you're local, you need to work with local studios, and they should get this funding, and all that stuff. Daniil Liberman: We started developing the relationship, but even faster we realized that in Hollywood we have all the chances. And pretty quickly we were introduced to people who then introduced us to the agencies, and the William Morris Endeavor signed up with us January, 2010. Tim Ferriss: Early, on the trajectory. Daniil Liberman: Half a year after we started the company.
David Liberman: It's still a challenging process. Any immigration is a challenging process. It took us six years for people to really take us seriously and to get to the same type of level of professional acceptance than we had back in Moscow. Daniil Liberman: But we found our ways.
David Liberman: But at least it is possible here, like in airport, in UK you would never become — Daniil Liberman: You would never able to spend only five, six years and get into the major Hollywood studios to — David Liberman: To be the same, like equal in terms of market — Tim Ferriss: And California has a lot of downsides. But one of the upsides is — this is true in a lot of the US, no one is discriminating against green, and people like opportunity. And also California, a lot of people don't realize part of the reason Silicon Valley worked is that California also makes it very hard to enforce non-compete contracts. So there are opportunities everywhere of all different types. Daniil Liberman: Yeah. Yeah.
We agree with you completely. This is the cornerstone — David Liberman: This was our observations. It's all about non-competes, that they are not enforceable, that this allow you to actually work at Google, write your own search engine at night, and then launch your own search engine. And Google cannot do really anything that you can — Tim Ferriss: There's a lot of free flow of talent. David Liberman: Free flow. Yes.
Tim Ferriss: Which makes it hard sometimes to retain talent in Silicon Valley, but that's a whole separate story. So you land in L.A., you have introductions to people at, say, William Morris Endeavor and other places. What happens as that momentum starts building? David Liberman: Yeah. We actually had a pretty good success working with different studios and different big names like Jimmy Fallon, we worked on the show with him in — Daniil Liberman: At some point we met with the guy who used to be Jon Stewart's head writer, and he just moved back from New York to Los Angeles, and was available-ish. He wasn't for a year, but then a year later he was available.
We took our chance to become friends over the year. And then when he become available, like, "Josh, why don't you work with us?" And we managed to convince him because we showed him how fast we actually can produce animation. David Liberman: Yeah. We realized that he — Daniil Liberman: What we realized, that people even like William Morris Endeavor or Josh, even being the friend for us for a year, they never actually believed that we can produce animation in one week. And we had to prove it literally by saying like, "Josh, are you serious? Okay, let's write a script right now, a one-pager.
You will write a one-pager joke. In a week you will have it in animation." And that's what we did. And he was like, "Whoa, you guys were saying true."
Tim Ferriss: You guys can actually do it. Daniil Liberman: You guys can actually do it. David Liberman: Before that he worked at Simpsons, before Jon Stewart, and at Simpsons like 12 months — Daniil Liberman: Like a year. He's like, "You're making a joke?" And it's all really old, a year-old joke.
And with us there was an opportunity for him to make jokes, which are super hard. David Liberman: So it was cool. But on the other hand, really wanted to focus more on the technologies which can transform society. And plus, Hollywood wasn't really our thing.
Tim Ferriss: There are some trade-offs. David Liberman: Yes. Daniil Liberman: There are lots of trade-offs.
David Liberman: No one cares about technologists, especially that time. It's before Netflix and before all this stuff. No one cared about technologists.
No one cares that you are faster and cheaper. No one cared about like who is your producers and all — Daniil Liberman: Divorce lawyers. David Liberman: — divorce lawyers and all this stuff. Tim Ferriss: Wait, wait, wait. How does the divorce lawyer fit in? Daniil Liberman: We don't know, but people in Hollywood say so. Tim Ferriss: Oh, wait, you need to know divorce lawyers? Daniil Liberman: Yes, because they know people.
David Liberman: They know people, they know the power dynamics. Tim Ferriss: Oh, this is good for me to know. Daniil Liberman: There's a power dynamic of the divorce lawyers who control — Tim Ferriss: I picked up a new stratagem today. Thank you. Daniil Liberman: Exactly. Tim Ferriss: Okay, divorce lawyers.
Daniil Liberman: So, in addition, we knew all the lawyers and we started to know the people, and we started to meet the people, and eventually we deconstructed what the show needed to be in order to come to a meeting in Fox, at Fox. Tim Ferriss: Okay. So you were at that point then you're pitching your own show? Daniil Liberman: Yes. So we get to the point understanding that we cannot sell our technology, we have to sell the entire show. David Liberman: Package, yeah. Daniil Liberman: We package it.
We should package voice actors — Tim Ferriss: The Trojan horse with the technology inside. Daniil Liberman: Exactly. We took it all. That's why we needed Josh, because we needed a head writer. That, we took the voice actors, we took the best concept artists to combine this all and produce a pilot, like a literal final quality pilot, and brought it to Fox. And who was it? Suzanna Makkos at the time, she was like, "Wow, I love it," because we actually knew what she likes, who she likes — David Liberman: What type of artist.
Daniil Liberman: What type of artist. We engineered data, data, data. And then we — Tim Ferriss: Went to a custom tailor to put together a pilot for her? Daniil Liberman: Yes, exactly. David Liberman: But it was also some misfortuned time, because still we didn't get back to power. So our show was canceled back in Russia in 2013.
The banking crisis in Cyprus, all our money were nationalized. So [inaudible] — Tim Ferriss: Wait, hold on a second. So Cyprus, you had — does that mean that you had moved your finances from Russia to Cyprus? David Liberman: Yes. Tim Ferriss: And then it was out of the pan and into the fire. David Liberman: Yes. Tim Ferriss: And then Cyprus got nationalized.
It was like uh-oh, it's the same story all over again. David Liberman: Yes. Daniil Liberman: Same story all over again. David Liberman: It was like $6 million earned. Daniil Liberman: And all of a sudden we couldn't pay anyone in the United States. No voice actors, no screenwriters, we couldn't pay anyone.
Immediately it all fell apart. And we're sitting there and like, all right, are we going to do it again here? We know everything but — Tim Ferriss: So did you get the green light for the pilot? Daniil Liberman: Yes. Tim Ferriss: And then Cyprus, and then bye-bye fuel — Daniil Liberman: Bye-bye fuel. Exactly. And we tried to think what we can do in Hollywood more for half a year, a year.
But then we realize that it will take us another four or five years to recover, because there's no money, there's nothing in there. We're like, "Screw it, we're not going to stay in Hollywood. Let's move to Silicon Valley."
David Liberman: And we moved to Menlo Park at that point. Tim Ferriss: Right in the middle. Daniil Liberman: Right in the middle. David Liberman: And also, we really already wanted to return to our real ideas. We started with transparency again. We decided that we can do a trick, that we can actually not target governments, become transparent, but target nonprofits.
Like, why we don't see how nonprofits actually spend our money? It's kind of obvious. It's not your personal money. It's like we all together gather these funds to make the world a better place. So we created a transparent banking platform for nonprofits. Daniil Liberman: For many reasons.
We were wrong about the — David Liberman: Ability and readiness on — Tim Ferriss: The appetite. Daniil Liberman: The appetite, exactly. The appetite for the nonprofits. David Liberman: But this was also the times when we realized that some of the challenges, fundamental challenges which we saw in — Daniil Liberman: United States. David Liberman: — the economy, actually they were true in the United States as well.
Not only in Europe, not only in Russia, not only in Israel, but in the United States as well. And we realized that even with the nonprofit transparency, if you will look at research of what actually donors want, you will see it's the previous generations of donors, they don't really want to see where is the money spent. Tim Ferriss: Don't ask, don't tell. David Liberman: Yes.
It's almost the last item in the list of their preferences, their requirements. But our generation is younger, it's actually on the first place. We want to see what happens with the — Daniil Liberman: The dynamic of thinking behind this as for the older generation, they donate money because it's a giveback for them. They're like society — David Liberman: Society gives them a lot.
Tim Ferriss: It's feeling good versus doing good. David Liberman: Yes. Daniil Liberman: And for the youngest it's like giving forward. David Liberman: They don't — Daniil Liberman: We want to change what's bad right now, and we want to see it's changing, now.
David Liberman: And also, actually, previous generations got a lot from society, in terms of form of free education, almost free college education, like 30 years ago, and things like that. New generation being — Daniil Liberman: Hammered. David Liberman: — hammered with student debts, et cetera, they don't really feel that society gives them much. But they really still donate the same portion. Daniil Liberman: Share.
David Liberman: The same share as the older generation. But it's just different reasons to do that. Tim Ferriss: Yeah, I feel like some of the younger generations here, younger certainly than me, get a bad reputation for misunderstood reasons, or I should say they're misunderstood in the sense that — and I know you guys have spoken about this before, but if you look at, say, previous generations' ability to get a higher education, put a down payment on a house and pay for a mortgage, compared to some of the more recent generations, it's night and day.
David Liberman: Yes. Tim Ferriss: It's night and day. So it's important to factor that into how you evaluate them. So question for you guys, looking at the nonprofit and this and the platform, you're very good at, it seems like, letting go of ideas, having a light grasp on ideas if things are not working, so you can move to something else that you think might work better.
David Liberman: Yes. Tim Ferriss: That's not true for everyone. Some people get very attached to one thing and they want to ride it until they die, and they get attached to things that may never work. And I'm wondering how you think about changing direction, maybe "failure."
What allows you to do that so readily? David Liberman: Data. Daniil Liberman: Data. Yes. David Liberman: They will learn the hard way. Daniil Liberman: So the first, the game studio, we grasp, and we tried — David Liberman: So you know that if you don't stop at the right moment, you can actually get to deep shit.
Tim Ferriss: Yeah, you can get into a hole. David Liberman: Yes. But also what we saw in the data is that — and what we realized also through the experience of game development, failure, and then animation success, that we realized that — Daniil Liberman: It is not always about your abilities. David Liberman: — your abilities. So you can fail because of different reasons, like financial crises — Tim Ferriss: Like poker, right? David Liberman: — and the times are not right. Tim Ferriss: You have to study the decision-making, not just the outcomes.
David Liberman: Yes, and the statistics of venture startups, is that like two thirds will fail, completely fail. Daniil Liberman: Completely fail, losing all the money, at zero. David Liberman: And if you will look at all these failures, there are rare exceptions, but in most cases what you should see is that if your startup is growing, you should continue, you should double down with your all attention there, et cetera. Daniil Liberman: If it's not, think twice. David Liberman: But if it's not, it could stop growing. Daniil Liberman: And probably just quit.
David Liberman: And quit and start another one. It's almost like in most of the startups you will observe — Daniil Liberman: If we look at this purely from the perspective of statistics, if it's not doubled the growth, if whatever numbers behind your understanding of your business isn't doubled, it didn't double, isn't doubled — Tim Ferriss: Yeah, didn't double — Daniil Liberman: Didn't double — Tim Ferriss: Over what period of time? David Liberman: 14 months. Daniil Liberman: Over 14 months. Tim Ferriss: 14 months? David Liberman: Yes. Tim Ferriss: Why 14 months? I have to ask.
Daniil Liberman: It's pure statistics. David Liberman: If you look at the statistics of just — Daniil Liberman: If you look at all the failures and successes, it's like a pattern. They should basically take — Tim Ferriss: Oh, I see, I see.
That's the pattern, is over that period — doubling over 14 months. Daniil Liberman: If you take all of them and divide, then just 14 months — David Liberman: Because if you're also not growing within this space, venture capital will not be accessible to you, and you won't be able to actually raise money, use these funds to grow further, and things like that. So this market is actually pretty special in terms of these probabilities, like just one out of hundreds. Daniil Liberman: It is going to be a unicorn. David Liberman: — success.
And if you don't see trajectory to get there, probably — Daniil Liberman: Probably you're not getting there. David Liberman: — the right thing is just to stop and start something new. Daniil Liberman: And knowing that your chance is a one in a hundred, you should try as many attempts as possible, take more shots overall. David Liberman: Moreover, we usually show to the young — Daniil Liberman: One of the entrepreneurs.
David Liberman: — people who want to be an entrepreneurs, we show this picture of Mark Zuckerberg or Evan Spiegel who made into success from the first attempt. Daniil Liberman: Dropping out from the college and look, they're billionaires. David Liberman: Most of the billion dollar companies — Daniil Liberman: It's not like that. David Liberman: — created not like that. It's created by people who failed multiple times — Daniil Liberman: Multiple times, and then got to success.
In terms of statistics, this is what we should observe with these things. Definitely something depends on your abilities to execute, et cetera. But there are things which is independent from you.
Tim Ferriss: Totally. I mean I remember angel investing starting in 2008 and seeing business models, companies that couldn't execute in a period of time because the technology just wasn't there and the adoption wasn't there. And then five, six years later, basically the exact same company, but a few things have changed. Mobile phones have become more powerful.
A handful of protocols have been developed and then boom, it works. David Liberman: Uber is mobile phone with GPS. Yes, with wide enough adoption. And it was tried, these ideas were tried — Daniil Liberman: Ordering taxi online, yes, for sure has been there.
David Liberman: And because of that, especially because we really balance ourself between sometimes when we work on some forward-looking ideas, like not — Daniil Liberman: Flying cars, rockets to Mars. David Liberman: — something which is not happening yet. And also we work on some projects which down to Earth, which already something which is happening.
We know that with these projects which are not there yet, yes there is a chance to win big, but this chance is small and there is a lot of timing issues — Tim Ferriss: Very binary. David Liberman: And you can lose just because timing is not right. And we, as Daniil mentioned, we learned it hard way with game development studio.
It was really hard for us to stop, even though it was obvious that probably — Daniil Liberman: We were lucky with the animation studio. And then another unfortunate event with losing all of the money just in banking crisis in Cyprus. And we stopped pretty fast. I mean we're like, "Okay, are we going to spend time recovering, or are we just starting something new?" David Liberman: Yeah. When Silicon Valley Bank crisis happened, we were among really small group of our friends, founders who all this time we were obsessed — Daniil Liberman: With diversifying. David Liberman: — diversifying