Vanguard's 1976 IPO of the First Index Investment Trust raised only $11.3 million — roughly 1/14th of the $150 million target — a crushingly broken debut for what would become the world's largest fund.
Where this was said
At 1:35:14 · chapter starts 1:35:02
The 1980s were a turning point. The 500 Index Fund crossed $1 billion in assets in 1988 and $10 billion by roughly 1992, as scale economies compounded and fees fell from 68 basis points at launch to 35 basis points by 1987. In 1992, Vanguard launched the Total Stock Market Index Fund, finally able to own every US stock rather than just the S&P 500 — and conveniently avoiding S&P Global's licensing fees. The hosts trace three macro tailwinds that transformed index fund adoption: the professionalization of the market (making it harder for active managers to beat 'dumb money'), the rise of the financial advisory business (advisors who were paid on asset growth, not trading commissions, naturally gravitated toward index funds), and the dot-com era that brought millions of retail investors online and allowed them to directly compare their actively managed fund's underperformance against an S&P benchmark. Warren Buffett provided the ultimate endorsement in the 1996 Berkshire annual letter. By the mid-1990s, US equity ownership had risen from 32% of Americans in 1989 to over 50% by 2001, with index funds playing a leading role in the 401(k) revolution.
Vanguard is estimated to pay S&P Global roughly $300–400 million per year in licensing fees to use the S&P 500 index, making Vanguard S&P Global's single largest licensing client.
Vanguard negotiated S&P 500 licensing rights for $25,000 per year in 1975. Today it pays S&P Global an estimated $300–400 million annually — making Vanguard its largest single client — out of a $1.85 billion/year licensing segment that is essentially pure profit. The world's cheapest fund pays what amounts to a management fee to S&P Global.
Despite months of meticulous preparation, Starter Story's initial launch attracted zero users — a humbling reminder that building alone guarantees nothing.
A single Reddit link post quickly drove 100 visitors to the Starter Story website, igniting the founder's belief in social traffic.
After reformatting content as a native self-post (no direct link spam), the post exploded with hundreds of upvotes and thousands of readers.
By posting again and again with the native-content strategy, the founder's posts repeatedly hit Reddit's front page, reaching millions of readers.
Before Reddit banned his domain, the founder converted his viral traffic into an email list of tens of thousands — a self-owned audience independent of Reddit.
Redditors eventually organized a petition to ban starterstory.com posts, effectively ending the Reddit growth channel — but the email list was already built.
The Reddit attention strategy ultimately served as the foundation for a million-dollar business, proving that free distribution channels can replace paid marketing.
The key tactic was keeping content fully on-platform (no direct link spam), then adding a small link at the post's end for users who wanted more.
With a thriving email list and a self-owned audience, the founder quit his six-figure New York City salary job to go all-in on Starter Story.
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