Jessie Itzler

Supported by Greenhaven Road Capital, finding value off the beaten path.

Entrepreneurs are great to study because they’ve done the thing rather than talk about the thing. Sure it’s an N of 1  but there are still things to be learned. Tyler Cowen put it this way:

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Can we extend this to business advice? For the most part. Though everyone liked Shoe Dog. Can we do this for Itzler? Let’s find out.

Itzler’s interview on The Investor’s Podcast focused on Marquis Jet. Itzler had no experience with planes but he took a ride in a private jet and said it was like a Wizard of Oz moment when everything turns from black and white to color.

These see-it-to-believe-it moments are the seeds of growth. Judd Apatow and Joe Rogan saw comedians. Alton Brown went to Tuscany. Ezra Klein read a blog. Richard Thaler read Value Theory.


But interestingness needs gumption to lead to action. Don’t worry that you don’t know it all, that’ll help. “Not knowing what you don’t know,” said Itzler, “is a gift.”

If you knew how hard this was going to be, you wouldn’t do it.

Okay, notice things and just start. After that, you have to hire for your weaknesses. Itzler knew zilch about aviation so he hired people who did. At this point you’ll start to hear doubts, that’s okay too. Good ideas are different ideas and different ideas are the big ones.

Itzler said, “when my wife started Spanx if she would have asked her parents or her close friends about footless pantyhose they would have been like, ‘if it’s such a good idea, Sara, why haven’t the big guys done it yet?’ and that might have scared her off.”

Leigh Drogen said “Union Square Ventures finds that when they go into a partner meeting with an idea they want to see a barbell of, ‘I think that’s an awesome idea’ and ‘you’re freaking crazy, why would we ever do that?’ Their worst investments are the ones where everybody thinks, ‘yeah that makes total sense.'”

Jason Calacanis said about VC investments “If it’s clear that it’s going to work you should not invest.”

Andy Rachleff said about the Howard Marks Matrix (below), “I also believe this framework can be applied to entrepreneurship….To be non-consensus and right you have to have tremendous knowledge of your domain…When we started the idea of people trusting their money to be managed exclusively by software was a radical idea.”


If you have an interesting idea then it’s time to get the business growing. For Modern Monopolies this is the chicken and egg problem. It’s when founders do things that don’t scale. Itzler did this too, filling every plane seat with people. “We out-cared everybody and that created word-of-mouth.” That and good PR which “is so inexpensive compared to advertising.”

As the company grew Itzler focused on getting the product right. He followed Scott Galloway’s advice: “People come to me and I tell them, ‘build a better mousetrap and the brand will take care of itself.'”

Itzler also suggests taking time to think and said “I’m sure Bill Gates takes time to think.” Well not only that, but he spends a whole week doing it.

I learned from that video that part of the goal of Think Week (for Gates) is to let good ideas percolate up.

“We’ve institutionalized it as a grassroots process. This is a way that somebody just a year or two into the company – and has ideas that may or may not relate to the group they’re in – can write something up.”

Good organizations have decision makers interact with customers. Think Week Papers may be a channel where the front line staff can communicate what they see with the C-suite. Talking with his customers helped Itzler sell to Berkshire, that’s good business.


Thanks for reading, I’m mikedariano.

See everything I’m learning here:

NFL Summer 2017 ‘Tawk’

Supported by Greenhaven Road Capital, finding value off the beaten path.

Bill Simmons, Mike Lombardi, Joe House and Tate Fraiser covered NFL storylines in a podcast. Not much is happening, so, there’s not much to talk about. Unless you talk about the things other people have talked about. Let’s dig into the notes.

1/ Base rates.

“Charlie Casserly was proclaiming he (Andrew Luck) was the next John Elway, they both went to Stanford but he’s not the next John Elway.” – Lombardi

“I don’t think you can compare anyone’s stats from this decade to last decade. No one gets hit anymore. The interceptions are way down. Even bad quarterbacks have good stats. I grew up with Steve Grogan and he would have years where he threw nine touchdowns and seventeen interceptions.” – Simmons

“Playing in a dome is a huge advantage.” – Lombardi

Base rates are a great place to begin any decision-making process. Michael Lewis wrote that base rates are “what you would predict if you had no information at all.” But base rates must be accurate. Is Stanford University relevant for quarterback talent? Does it matter when and where players play?

Dan Carlin reframed base rates within a historical context. Sam Hinkie used them to (try to) build a basketball team.

2/ Odell Odell Odell. Beckham has been a summer storyline too. Most receivers, Simmons said, have a bit a diva in them and the guys wonder if Beckham is worth the resources to have on your team. Simmons would take him, “The guy’s fucking scary…he does have greatness in him.” “He puts the ball in the end zone, he makes plays,” added Lombardi who compared Beckham to Jarvis Landry:

“He (Beckham) has 288 catches in his career. Landry has 288 catches in his career. Both came out of LSU three years ago. Beckham has 14 yards per catch. Landry has 10. Landry is a solid player. Beckham gives you that dimension where if he’s open on the three line you hit him.”

Similar statistics but one is a much better player.

What made Moneyball successful is that output was cheap if you knew what to buy. Fancy figures like home runs and batting average were expensive while OPS was cheap. Billy Beane bought output cheap.

If we ranked players by OPS (rather than BA) we might have seen something that looked like this:

#29 .8200 OPS $15 million/ year
#30 .8000 OPS $2.5 million/year

The difference between player #29 and #30 for OBP was small while the cost was high. Does that hold for NFL wide receivers? I’m guessing no. During a Wharton Moneyball podcast, they mentioned that NFL analytics can improve but how much change will it bring to looking at this position? Again, probably not much. As coaches have said, you can’t teach height or speed. (Or hands)

3/ This is water?  We all exist within some system and see the world through the lens of that system. Fish live in water. Tigers have Umwelt (and so do you).

One system is your generation and “Beckham is symbolic of understanding millennials,” Simmons said.  “This is the hardest thing for my generation,” continued Lombardi, “if you’re evaluating talent. You can’t judge players through your eyes. You have to understand what Millennials do…If you’re going to cast a guy aside because you don’t relate to him from your generation, you’re going to make a lot of mistakes.”

Mistakes beyond sports. Business mistakes like hiring the wrong CEO just because they did well at Google. Investing mistakes like thinking someone is brilliant when really it was a bull market.

Warren Buffett wrote: “The rise and fall of the tide is hardly something for the duck to quack about.” Flip that around and the selfie culture doesn’t mean anything more than a sign of the tides.

4/ How to win a football game.

How do I win games? Let me count the ways.
I win games by skills, agility, and might.
My playbook is sharp, my depth just right.

Lombardi said about Seattle “It’s the complete opposite of New England. New England’s players say nothing, Seattle’s players are outspoken and they both work.”

Success comes from having a system and doing it as best you can. Cherry picking ideas, adopting best practices, and talking with other coaches are all good things but they can’t be the thing.

Charley Ellis and David Salem have both shared what they think David Swensen has done right at Yale and both have warned about mistakes they think people make. In his podcast with Patrick O’Shaughnessy, Leigh Drogen warned against any sort of bolting on.

You can’t copy and paste.

Rather, choose to be different. Create a decentralized spirit. Build culture. Do those things and you’ll win games. It’s worked for New England (see: Bill Belichick) and Seattle (see: Pete Carroll).


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Frank Lloyd Wright

Supported by Greenhaven Road Capital, finding value off the beaten path.

Kentuck Knob. Southwest Pennsylvania. 2017

We amended a family vacation to include stops at Kentuck Knob and Fallingwater (yes, that one) to see these Frank Lloyd Wright houses. In preparation I read about Wright and noticed four patterns we’ve seen before.

1/ Luck. Wright was born in 1867 to a doting mother and overly ambitious father. His dad moved the family around as he tried this and that and his mom treated Wright like a prince during those years.

Ed Thorpe wrote, “Chance can be thought of as the cards you are dealt in life, choice is how you play them.”

This was true for Wright. His mother couldn’t control the moves (the cards) but she played them well, getting Wright music lessons, drawing supplies, and blocks as a child. When he was in high school Wright’s father left the family and Frank dropped out to help pay the family’s bills. His mother’s family hired Wright to do basic drawing work. In 1871 the great Chicago fire destroyed a swath of the city and fifteen years later Wright was one of the many builders that immigrated to rebuild and expand the city.

While Wright’s childhood wasn’t in the big woods of Wisconsin, he had both misfortunes and fortunate breaks.

2/ Learn by doing. Wright wasn’t opposed to dropping out. He didn’t like school. Rather, he had spent so much time learning by doing.  At one job Wright couldn’t do anything but trace prepared drawings. That was fine because it gave him time to learn and ask questions.

As his skill grew he left one firm for another until he started his own. Job hops gave Wright experience doing this and that. It showed him how people thought. Tyler Cowen suggested to Russ Roberts that the advantage to centrality is not connecting with everyone but with someone who might. Cowen said that being in DC means he doesn’t need to visit think tanks but only talk to people who do.

Know and do, do and know.

Yvon Chouinard wrote  “I didn’t know anything about clothing. I learn everything by taking a step forward and see how that feels. If it feels good I take another step, if it feels bad I take a step back…I learn by just doing.”

Wright, Aziz Ansari, and Ty Warner all learned by doing.

3/ 10K hours. Wright was committed to his work and not much else.  Charlie Munger never coached youth soccer. Gene Kranz of ‘failure is not an option’ fame wrote, “Behind every great man is a woman – and behind her is the plumber, the electrician, the Maytag repairman, and one or more sick kids. And the car needs to go into the shop.” John Boyd had the greatest gulf between professional accomplishments and personal failings.

Malcolm Gladwell told Stephen Dubner this was his point in Outliers:

The work required for elite success is intense and leaves little room for much else.

4/ Be different. The reason Wright stands out in time is because he was different. He even invented a word, Usonian, to describe a style. That’s Tyson Zone different. Wright wrote about his approach, “No house should ever be on a hill or on anything. It should be of the hill.”

Critics baptized him as ‘Frank Lloyd Wrong.’ Artists refused to have their work shown at the Guggenheim. Being different means headwinds.

But America needed a style of architecture and Wright wanted to give them one. It reminded me of Alton Brown show Good Eats. When someone asks, what the hell is that? it means you might be headed in the right direction.

Leigh Drogen said:

“Union Square Ventures finds that when they go into a partner meeting with an idea they want to see a barbell of, ‘I think that’s an awesome idea’ and ‘you’re freaking crazy, why would we ever do that?’ Their worst investments are the ones where everybody thinks, ‘yeah that makes total sense.’


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Ed Thorpe

Supported by Greenhaven Road Capital, finding value off the beaten path.

Ed Thorpe joined Barry Ritholtz on Masters in Business to talk about his life – via book form. What an interview this one was.

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1/ Two-jar model. Thrope has a TJM view of life. He wrote, “Chance can be thought of as the cards you are dealt in life choice is how you play them,” and explained to Ritholtz:

“And then there are things you can’t control like; who your parents were, what kind of economics circumstances you were brought up in, where you started, did you start twenty yards behind the start line or twenty yards ahead of it or right on it. People start in different places, those are card they’re dealt.”

Good decision making, noted Chris Blattman, requires good data. It’s why Judd Apatow and Joe Rogan focus on writing good jokes (how they play the cards) and not how the tickets are selling (the cards they are dealt).

Good data increases the relative weight of the skill jar scores. These data repeat. Joe Peta found that strikeouts, base on balls, and home run rates were skill jar scores for major league pitchers.

2/ Choose games with good odds (both ways).  “I also believed then as I do now, after fifty years as a money manager, the surest way to get rich is to only play those gambling games where I have an edge.” Andy Rachleff started Wealthfront because he read Howard Marks and thought, how can I be non-consensus and be right. Charley Ellis said about his early work, “It was not very skillful work but compared to the competition it was fine.” For Jeremy Liew it was realizing his odds were worse as an operator than an investor.

Sometimes games can have good odds because you’re the only one playing. Thorpe said that overpriced warrants, “someone eluded the market.” Rishi Ganti told Patrick O’Shaughnessy that a market needs two buyers. If there aren’t two buyers, there is no market, if there isn’t a market there isn’t a pricing mechanism.

Whether it’s the NBA finals or investing like Charlie Munger playing in the better areas is better than not.

Then you have to figure out how much to bet. It’s hard said Thorpe:

“That was one of the early things that I learned, fortunately, how much to bet on good situations. If you bet too much you could be wiped out. If you bet too little it takes forever to make any money. There’s a happy medium in there and that was one of the things I came across quite early.”


Matt Patricia said about coaching for the Patriots, “We talk a lot that before you win you have to learn not to lose.” Seymour Schulich asked whether decision missteps would be painful or fatal.

Wilbur Wright wrote, “The man who wishes to keep at the problem long enough to really learn anything positively must not take dangerous risks. Carelessness and overconfidence are usually more dangerous than deliberately accepted risks.”

3/ Serendipity. Thrope found himself in Las Vegas with his wife for a “cheap vacation” and to see the roulette wheel in action. He wanted to beat roulette and needed experience in the casinos.

“I wanted to verify by close up observation that what I was doing would work. On the way I heard about a blackjack paper some statistician as written so I thought, I’ll get a little casino experience if I’m playing roulette, so I sat down at the blackjack table and played for forty minutes and I learned enough in that forty minutes that I could probably beat black jack and I went to work doing that.”

One deck blackjack was solvable! If you tracked the cards and knew if the deck was heavy (or light) in tens then there would be better odds. Not only that, but the payouts were favorable (#2).

Thorpe wrote his book – Beat the Dealer – and the advantage eroded away. Casinos changed the rules and began to deal “what they called – professor stoppers; two, four, six, or eight decks and deal them out of shoes because it’s hard to hold eight decks in your hand.”

4/ Rapid fire.

“Every edge has a scale limit and can only get so big.”  Microcap investors like Sean Iddings and baseball bettors like Joe Peta see this too.

Thrope has a “let’s see if I can figure it out,” attitude.  He has what David Salem calls “intellectual integrity.” Probably Grit too.

“Any edge in the market is limited, small, temporary, and quickly captured by the smartest or best-informed investors.” Daryl Morey had this happen with player evaluation. His alpha has eroded.

And these last two quotes were my favorites.

“Success on Wall Street was getting the most money, success for us was having the best life.”

Ritholtz asked, “How do you keep your ego in check?” after all these accomplishments. Thrope said, “All you have to do is look at all the other things people do.”


Thanks for reading, I’m mikedariano. If you don’t want to miss out on these posts, sign up for a weekly email here,

Grab Bag #2

Supported by Greenhaven Road Capital, finding value off the beaten path.

Bad news, this is the last grab bag post. Good news, grab bag is moving to email. If you’d like a weekly email in this style subscribe here.


Julia Galef on The Ezra Klein Show talked about how to change your mind. The short answer; it’s not easy. The long answer; but it is possible. Galef suggested to reduce your “identity footprint” and mentioned this post from Paul Graham where he wrote:

“I think what religion and politics have in common is that they become part of people’s identity, and people can never have a fruitful argument about something that’s part of their identity. By definition they’re partisan.”

Or to quote Bob Sutton, “strong opinions. weakly held.”

Sanjay Bakshi also liked this episode.

Rejection Proof on The Investors Podcast. To go along with decoupling our identity from a rejection, Stig and Preston talked about the book Rejection Proof.

Sam Dogen on Noah Kagan presents. Dogen and Kagan talk about investments but two non-asset ideas stuck out. First, there can be a lot of reasons to fail but one that’s always in your control is your efforts. That fits with our two-jar model. The second was to ask, ‘what am I working toward?’ Dogen recounts playing tennis with a friend who, while he had an order of magnitude more net worth, he could only play tennis at certain times.

Thomas Delong on Capital Allocators. How well do you know yourself? Do you have an inner scorecard or outer one? Three quotes that stuck with me.

“Talk to yourself about what’s going on inside yourself to try to settle yourself down so you don’t screw yourself over by creating pain for other people and yourself.”

“If you live a more curious life, you’re going to listen more, you’re going to be more interesting, you’re going to learn a lot more and you need to move your lives from certainty to curiosity and that would make a big leap.”

“I believe our need to cross things off our list is an addiction.”

Wharton Moneyball on 7/27/17. This episode was all about figuring out how current statistics predict future ones. For example; can Justin Speith continue to win twenty-five percent of his majors, can Kyrie Irving succeed without LeBron James, and can Aaron Judge continue his high BABIP even though that figure is mostly based on luck? These kinds of predictions are hard but not impossible. Important follow-up questions are; what’s the base rate, what’s the sample size, and how have things changed?

Under the Influence – Influencer Marketing. Terry O’Reilly’s podcast is one of the best per-minute shows. This one was about how companies are using influencers for marketing. One example was about Universal and J.K. Rowling reaching out to bloggers to open a new Harry Potter attraction.

Dave Rubin joined Tyler Cowen to talk political correctness and the duo concluded that the biggest problem isn’t being able to say too much, but too little. This episode reinforced my view that comedians understand deeply and that’s key for success. A deep understanding was central to Jason Calacanis’s advice.

Jocko Willink #86 & Alex Guarnaschelli on food on EconTalk. Both Willink and Guarnaschelli know that there are two parts to an outcome; native and creative skill. Willink said that stronger people can win in Jui Jitsu match to a point. A purple belt, Willink said, is tough for anyone to defeat no matter how strong you are. Guarnaschelli said that a cook shows their worth once they can use overly ripe produce. Of course, you and I can make delicious bacon, eggs, and toast but what about using the other parts?

Dan Schorr on Capital Allocators with Ted Seides. Schorr was like an unending storyteller and he could probably give you a brain freeze faster than his ice cream. What Schorr guessed was that ice cream was ready for a different company and he started Vice Cream.


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Jason Calacanis 2

Supported by Greenhaven Road Capital, finding value off the beaten path.

Jason Calacanis talked with James Altucher about his new book, Angel.

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There’s a part of Danny Meyer‘s book, Setting the Table where he’s dining in a restaurant with a mentor. Meyer asks for advice and the mentor moves the salt shaker on their table, and asks ‘What do you see?’.

Meyer returns the shaker to the center and says the table is ready. The mentor moves the shaker again. Meyer returns in again. The mentor’s point has been made.

Meyer wrote, “Wherever your center lies know it, name it, sticks to it, and believe in it.” Pay attention to where the salt shaker is and always return it to where it should be.

1/ Know the costs. Calacanis said something that echoed my findings on failed start-ups, failure isn’t a total loss.

“Let’s say you were to lose 5% of your net worth (in an angel syndicate). It would be a bummer. But if you think about the network and the education you would build, it would be much greater than 5% of your net worth at any given time.”

Time is our only cost. Time to earn money. Time to network. Time to learn. Another way to express this is the DIY-MBA. When people like Troy Carter, Ezra Klein, and Elizabeth Gilbert skip school to live – they do so because of the time costs. The kind of investing Calcanis proposed in exchange for (possible) financial, relationship, and educational returns is the same thing Tim Ferriss did early on.

Even if the financial part goes to zero, there are other rewards for your time.

2 / Know the odds.

“Most people over-estimate the downside risk.” Elon Musk.

That’s from someone building rocket ships and cars. Calacanis echoes what people like Joe Peta have said know the odds.

Calacanis said, “If I took ten people and said, here’s a deck of cards, it’ll cost you a thousand dollars, but if you pull the ace of spades I’ll pay you a million.” People who pay attention will play that game all day. This instinct from poker has contributed to a shift in Calacanis’s thinking.

Calacanis has transformed from a what can go wrong? mindset to a what can go right? one. “When I invest in a startup I’ll write down five reasons why it might fail – and then rip the paper up. Then I’ll write down the one or two reasons it will work.”

Bill Gurley learned this lesson after missing on Google:

“I think it came down to the price at the time was remarkably high and the team was remarkably self-confident in a way that would cause you to question whether they could pull it off but they did. I go back and the learning is that if you have remarkably asymmetric returns you have to ask yourself, ‘how high could up be and what could go right?’ because it’s not a 50/50 thing. If you thought there was a 20% chance you should still do it because the upside is so high.”

Marc Cohodes knew the odds with an early investment in high-fructose corn syrup. If the HFCS market didn’t metastasis, his investment would be flat. But if HFCS was replaced sugar in nearly everything, well, as Gurley said, “the upside is so high.”

3/ Know the customer. Who is Airbnb for? Serial killers and meth heads. That line got Calacanis a laugh but that thinking made him miss investing.

“One of the secrets of angel investing is separating your limited capacity to understand ideas and be able to read the passion of the person creating the product and why it’s going to work and (see) the crazy first five customers.”

Peter Thiel wrote to be different. Alton Brown created a different TV show. Scott Norton created a different ketchup.

What each of them also did was understand what their customers wanted. Norton hosted a taste testing party. Brown worked in media for a decade. Thiel lived in technology. It’s not what you think is a good and different idea but what others think is good and different.

That understanding only comes from talking to your customers. One way to be a  Dead Company Walking is to be a distant owner, someone who doesn’t know their customer.

Calacanis said that being a journalist help him understand the market conditions.

“When you’re a journalist and understand the playing field, businesses, technology and cycles you know how to ask the questions of which founders are full of shit and which ones are actually going to change the world.”

Like animals exist in ecosystems, businesses exist in markets.

4/ Know how to communicate. The better a founder communicates with a funder, the better the situation will be. Calacanis is clear about this from the start:

“What I tell them in the beginning is; most startups fail. When/if we have that shut down conversation I’ll say, ‘it’s okay, most companies fail therefore all I ask is that we shut this down gracefully and after you recover I’m your first phone call when you have your next idea.'”

The idea of good communication permeates the podcast. Investors are like spouses, investments like marriages and the suggestions for both are the same, communicate well.


Thanks for reading, I’m mikedariano

Andy Rachleff

Supported by Greenhaven Road Capital, finding value off the beaten path.

Andy Rachleff was on Going Deep with Aaron Watson and if the podcast could be described in one image it would be this:


That’s from Howard Marks. We like Marks around here; Howard Marks 1, Howard Marks 2, Howard Marks’s ‘Expert Opinion’, and Howard Marks 4. Wow. That’s a lot of Howard Marks. Let’s jump into what Rachleff had to say.

In a revisitation of Zero to One, I guessed that what Peter Thiel really wants is for ideas to be in the “Tyson Zone.” Rachleff tries to be “non-consensus” too. The Wealthfront service is different, it’s access to a service (financial advice) they couldn’t previously afford. At Wealthfront they hire differently, choosing engineers rather than bankers and giving them interesting problems to solve. Rachleff said about this:

“To be non-consensus and right you have to have tremendous knowledge of your domain…When we started the idea of people trusting their money to be managed exclusively by software was a radical idea.”

A radical idea, that’s the Tyson Zone.

The idea is mainstream now and could be the default in the future but it hasn’t always been that way. In fact, Rachleff hasn’t always felt this way. The first iteration of Wealthfront was a hybrid approach between apps and appointments. It didn’t work. “They (customers) consistently told us they would prefer we manage all their money adequately and inexpensively rather than a portion of it superbly.”

Wealthfront redirected their efforts and found a better product market fit. This, Rachleff said, “trumps everything else. If dogs don’t want to eat your dog food you’re not going to succeed.”

A good product market fit also solves the story-telling problem startups face:

“The biggest challenge a startup faces is it cannot afford to educate. Startups have to preach to the converted. We can’t convince of the merit of our approach, we have to rely on others.”

How do you start to think about this? Rachleff suggested the books The Innovator’s Dilemma and The Innovator’s Solution by Clay Christensen. “Clay’s original theory of disruption is worthy of a Nobel Prize…These two books are unbelievable.”

Those books say that customer’s preference migrate. Where speed once ruled the day now it’s about brand. Brand will give way to size and size to cost. It’s an evolution. Applying this theory isn’t so easy. Established companies have to serve their existing customers. New ideas – which may or may not be what the customers want – aren’t worth pursuing. Sometimes they are parts of the buiness an established company is all too happy to be rid of. Reading the Christensen’s books won’t tell you what to do, but they can give you a lay of the land.

To get beyond market returns you have to be non-consensus. Sometimes the market returns are fine. Low-cost index investing is a good path for many people. Other times like when drafting NBA players (Daryl Morey, Sam Hinkie), creating TV shows (Brian Koppelman, Alton Brown), or investing — being different is the only way to succeed.

Being different requires a deep understanding of customers, competition, and markets. Scott Norton provided a nice example in, of all places, ketchup.


Thanks for reading, I’m mikedariano.