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you know, it's hard to right size your business in 1999 or 2000 eyeballs. Yeah. And so therefore, you know, at least there was there, we know that there's a business there. And all those businesses, even some of the crypto business, there's a business there. We just don't know how big it would be. So you could adjust your expenses to that. And then I think people don't really remember. There were several punches in the face. Things cracked in March. And then that fall was a huge fall from Greece in the fall of 2020 or 2000. And the market was down 30%, 40% in the public markets. And then things started to feel like they did now in the beginning of 01. And we're rattling along the bottom. And then September 11th happened. | Right. And people don't understand that one-two punch was just a knockout. Unbelievable. Yeah, because then the market lost all faith in this is the end of the world. |
Yeah. Yes. Much worse from a bunch of different perspectives than even the pandemic, because it was so sudden, so unexpected. Market drops 30% and there was no rebound. There was no interest rates easing that could ease either the economic or the pain that a lot of people suffered. | So we look at this speculative asset bubble bursting, then we have some unknowns. Ukraine, Taiwan, there are risk factors out there. So if one of them, this is where a weak economy, a weak balance sheet for the country, a weak balance sheet for your own private company, this could be particularly dangerous. Because if another black swan type event happens, something that's completely unexpected that you've never seen before definition of a black swan. That could be cataclysmic for a lot of companies now. |
I completely I agree. I mean, there's the thing that's most scary in this market, or everyone's asking, Is it over yet? Right? I mean, people, people have had their heads down, maybe even raised enough money. In 2021, they two or three years of cash. And now they might have a year of cash in the beginning of 2023. And they're asking, Is it over yet? Because, you know, I'd like to raise money and skew to or the second half of 23. And I don't think we can safely say it's over yet. I think we have to say, you know, we believe it's bouncing on the bottom, we believe in, you know, we're taping this on a Wednesday afternoon, where earnings just started to be announced at Microsoft announced, you know, weak guidance. So we believe that, you know, there might be a recession in the cards, which could mean a further step down, let alone all these black swans, which could occur on a political or macroeconomic basis, which could completely destabilize the system. | Yeah, so best advice for founders, while they're looking at the situation, they've got themselves to 18 months of runway, they've got a core team that's lean, that's really focused, maybe they're got a lot of headwinds, customers are canceling accounts or downsizing deals. But they're still in the game, they still have revenue, they've got, you know, maybe a reasonable path to break even in 18 or 24 months, they've done the riffs, What do you say to that lean startup? How should they operate now that they got that 18 months, 24 months of runway? And how do they keep the troops excited and engaged during this downmarket? |
I think that's probably three questions. The first part of it is, you know, when I was an operator, you know, after September, September 11, and revenue dropped 93%. And we thought we had we were cash flow positive. And then we realized we had, we probably had about 38 days of cash. at the end of 2001, that scar tissue, that scarring is pretty deep. So if you can control financing risk, and if you can control your path to cash flow break even, don't do anything to f*** that up. That is your most important job as a CEO, of being able to be default alive, and being able to get from here to there with the cash you have. And don't speculate on when a market window would open or when financing might turn back on. if you believe you have a path to cash flow breakeven. When you have that path to cash flow breakeven, you actually become much more attractive to everybody, because then people know that there's at least a floor to what's going to happen with this business and therefore you're investing for growth. So it might be counterintuitive to those founders, but getting the cash flow breakeven in this market might be the number one milestone, which would make you more attractive to get capital. So thinking about that milestone and being really tight on those milestones to get from here to there. | So if you're faced with growing to x year over year, but being unprofitable for growing one x year over year, or let's say 1.2 x 20% over last year, but you hit break even the latter scenario is the more attractive scenario for capital allocators. |
It's no it's a no brainer. It's a it's a no brainer because you want to control your own destiny. You want to be in control and master of your domain. you can get from here to there with the capital you have, be default alive. And then you can always accelerate behind your own profitability. And as a CEO, and I remember this, apparently, once you have to spend a huge chunk of your time with concern about this existential risk around financing, and that's off your shoulder, you have much more degrees of freedom to think and worry about creating the most valuable business you can. | I've been dealing with business insurance for three decades, I am on the board of a bunch of companies, I watch people who don't have insurance, get themselves into trouble all the time. Switching providers has always been a nightmare. It's too expensive takes too much time. And often, it doesn't even guarantee better coverage. But now you can make switching radically simple with Embroker. Yes, Embroker is the perfect destination for industry-tailored commercial insurance. It's business insurance specifically for startups. Embroker's single application helps startups get four quotes, one, two, three, four, for four lines of coverage in just 15 minutes. They connect you with one of their expert brokers for unmatched service that goes beyond your policy. And listen, Embroker is such an amazing product. I use it. A lot of my startups use it. It's so easy to use. So try Embroker today. with code twist and get 10% off their startup package at imbroker.com slash twist. That's E-M-B-R-O-K-E-R.com slash T-W-I-S-T and use the code twist to get that 10% off. It's meaningful. Every dollar counts right now. We love you, imbroker. Thank you so much for supporting this podcast for so many years. Let's talk about this sort of fallacy around acquiring customers and the cost to acquiring customers. What have you learned over this last cycle about the actual real cost of acquiring customers and, you know, the lifetime value of customers? Because it seems that maybe founders got, and even capital allocators, maybe got a little cute, or maybe disconnected from reality in terms of the cost of acquiring the customer. |
I think the cost to acquire a customer was always moving around more than folks would have guessed. A lot of people thought, from period to period, from this quarter, this is what we could spend on Facebook. Unknowingly, that cost of a customer changes on Facebook for a minute-to-minute basis. I think the fallacy, to your point, is based in LTV. People thought their LTV models were great. They were bulletproof. I'm going to hold this customer for five years. I'm going to be able to increase price. They might buy one or two other things from me, not knowing that the person adjacent to you on the other side is also counting that customer. And they're also looking at your profit stream as their potential upsell. And therefore, we've seen churn be higher than almost any LTV model has calculated. And, you know, your ability to grow be decreased compared to those LTV models. So CAC is something you have to pay today and probably less controllable than you guess. LTV is wildly speculative. I think entrepreneurs get that wrong way too much. | Lifetime value is, yeah, defining that becomes pretty hard, especially when you have a down market like this. I don't think anybody's LTVs took into account that a lot of your customers might be going out of business, or they might be doing a layoff. And when you do a layoff, that typically comes after you've looked at every other line item, and every other line item. So you're gonna when you see all these rifts happening, you can be sure that they've rift accounting software, or HR software, SaaS software, sometimes are on other sides of it. |
Sometimes the first thing is, hey, we have our contract that contracts not up to March, we got to get you know, if you're the company's hey, we're riffing people at the end of the year, we're announcing the beginning of the year, we're going to give them the holidays, and then we're going to go through it. But then we're going to look at every single line item. And you know, that accounting software, we don't have 100 people in accounting anymore, we have 50 people accounting, we're not paying for those five chairs, we're not re up, you know, we're not resigning with you. And by the way, the other this other vendor we use for FP&A analysis said they give you what we're doing for free. So in a world where the last five-year actuals were saying, my customers are growing seats by 10%, they're not pushing back on price, and they might be open for an upsell, all three of those assumptions might be wrong. | Yeah, wow. Yeah, that's, that's a that's a lot of mistakes in one math equation that are right. |
And if you think about how that compounds over a five year life of a customer, it dramatically impacts the math. | All right, let's talk about the emotional state of the employee base and founders. Because, you know, as capital allocators, we're placing bets on humans and teams to go out there and to fight through this. This has been quite a slog 2022, people getting thrown in the deep end of the ice cold pool. And yes, you know, but now it seems like okay, if the company is still alive in 2023, Okay, there's an opportunity for them to thrive if they can get through this. How do you keep the esprit de corps going? How do you keep people focused, especially founders, right, who might be looking at the situation and just saying, you know what, I'm exhausted. I don't know if I can do this anymore. I'm on a lot of zooms with exhausted people these days. I don't know if you're having that same experience. |
The body language is really tough. I think my friend Neil Blumenthal from Warby has this great analogy that the further you are up in an organization, the more you have to be a shock absorber. So I think the thing for us is board members, advisors, investors, we hopefully are shock absorbers to those founders who are getting whipsawed by the market, the financing market, they're losing big customers. And I think differently, and one of the things I learned by being much more junior 20 years ago, is I saw a lot of board members who were a**holes. when things were going wrong, they were pouring gasoline on the fire, instead of doing their job of being a mature person who can absorb those shocks, and be able to provide a calming influence to the room. And then hopefully, that passes on from your advisors or your board members, down to the CEO and that senior team, as rank and file employees are saying, hey, my next door neighbor just got laid off, my brother in law just got laid off, am I next? Let's go to the water cooler. Let's go for a walk around the block for a coffee. Let's not do work today. Let's just be stressed about the existential crisis of the company we're at." The job of that senior team is then to say, hey, we're going to be shock absorbers for the organization. We're going to do it in a transparent way. If we're doing layoffs, we're going to be transparent. We're going to try and be even keeled from an emotional perspective and get from here to there. Certain times, different than any other relationship, you have to act even keeled. But then when they talk to their board, hopefully, you're playing past the hat with that emotional bag. But we're telling founders, the reality is, It feels like we're going to be bouncing around the bottom for all 23. Setting expectations, we're not setting expectations that tomorrow, interest rates are going to drop, the market's going to rip, and we're going to be out of this like it's a bad dream. This is going to take some time. It goes back to the old Stockdale syndrome of being very aware of the current reality, it enables you to absorb that reality better. So, hey, founder, this is really hard. We know it was tough. You had to, you know, lay off a couple hundred people or a couple thousand people depending on who you are. That sucks. I'll absorb some of that stress for you. But let's be clear and transparent. We think this is, you know, we're in the fourth inning or fifth inning still, maybe. This might take a long time, even before what can be these negative black swans coming out of nowhere. We don't know what the catalyst will be on the upside. So we think we've taken our medicine, we've gotten lean, we've gotten fit. But we still might have another 14 miles to run in this marathon. But we do believe being all at the same time optimistic up, we do believe that you can finish this marathon. And there's going to be a lot of people that drop and if you win, there's going to be a huge gold ring there for you. | Yeah, the prize for the people who survive is not insignificant. And I really think the shock observer concept is super important in leadership, because it is very easy to lose your cool. It is very hard for some people to accept the fact that their billion dollar company or their $5 billion value company is now worth 500 million. But accept that you must, there is no other choice. And if you have to get to profitability or break even or within spinning distance, in order to get funded, that's what you need to do. So that is the job of leadership. And there's no reason to freak out about it, or to be cantankerous. Sometimes you just have to accept reality and make a plan. And I wonder, when you look at your portfolio, and who are the shining examples of people who were able to and what lessons did they teach you? of, hey, just let's face reality, you know, over all three cycles. What lessons did you learn? And from whom, on how to deal with this unique level of stress, it is unique. And it's, you know, when you're a leader, and everything's coming up roses, like, it's great. Yeah, high fives all around, everybody's options are worth more. |
When everybody's talking, that's less, yeah, when everyone's getting rich, it's easy to it's easy to leave. So I think there are a couple great examples. I remember, you know, early in from 20 years ago, we were founder Jeff floor, who's still an active angel investor, and even a venture capitalist at craft today. But he was the founder, CEO of stub hub, which was liquid seeds We had a great launch party with the 49ers and the Raiders back when they were in Oakland to launch liquid seats. And he had to get really lean. I forget how much 4% of the company he took out, but yeah, well in excess of 50%, down to the fact that I think him and a couple people were basically keeping the lights on when they pivoted to becoming StubHub. And then they were very capital efficient. I think we were the only institutional investor. I think they use very little of our capital. And they just grew behind their own success. And it was, hey, I don't want to look anywhere else. In terms of what I need, I'm going to be very self deterministic, I'm going to set very strict milestones, and I'm going to spend behind my own success. Because I have such deep belief in that my business is going to work. And I think he was a great leader, and a great entrepreneur at that time. I think you're right that the guys at Airbnb did a great job. I'd say an underreported one might be Zachary Taino at Row and Roman Health. We talked going into the financial, going into this change and everything. We saw the writing on the wall in October, November. Not everybody saw the writing on the wall. We were able to raise capital in December of 2021 to buy insurance before insurance got very expensive. And then by January or February of 2022, we had already ripped up the approved budget and said, hey, the budget we did in October, November, December of 2021 is irrelevant. Now, the cost of capital has changed so much. And our milestones and metrics have such different levels. We're going to just rip up the whole budget and start new. and say, we think the cost of capital is going to be this. We think the cost of customer acquisition is going to be this. And we think these are the milestones we have to hit to achieve a bigger, better business. And we also know we want to have this much cushion when we break even. So we bought insurance, we might not even use that insurance, but we're going to be able to run the business like we're never seeing a dime of capital And we're going to readjust things like unit economics, profitability, CAC, and LTV to a very conservative level. So we know we're hitting those milestones. And frankly, they took a bunch of people out of the business in order to do it because you had to. You couldn't run as many projects, because the key word of the time was focus. And they were doing this over a year ago, when a lot of people were still trying to figure out, is this just a blip? What's really going on? Is it still the glory days of 2021? They acted decisively. They acted with a rallying cry to the troops of, this is a time of focus. This is a time of leadership. Here's how we're reorienting the business, clearly and transparently communicating, and doing one big riff that says, here's our core team, and we're going to be able to achieve greatness with it. | Yeah, and then when they, they were, I don't believe they went public, but there was a lot of talk of them going public. And that's hard, because you have an employee base, a team base that thinks, hey, there's some big liquidation or event happening, I could potentially be able to sell my substance of shares. And to be able to reset that is never easy. Maybe you could talk about the most horrendous, horrific term sheets that came in during the dotcom era, liquidation preferences, the recaps, the complete wipeout of the cap table and the resetting of the cap table, and then what you're seeing in today's market. I'm starting to have a little PTSD from the first time around. And I'm starting to see some people come in and say, Hey, you know, I'll fund this company at, you know, x millions of dollar valuation, and everybody before it is going to be whatever a low single digit percentage of the cap table. Talk about these what some people might say are predatory, some people might see the best deal of best deal available is the most way of looking at it. |
Yeah, it's kind of two sides of the same coin, depending on what side you're offering. What we saw before was, there was 5x off the top liquidation preferences, right? Where it's like, I'm going to get five times my money before anyone gets a dime. And people had to take that then, because there was... Even if it was for a million dollars, because you got to keep the lights on. It was the lender of last resort, which always has draconian terms. I think one of my lessons from that was, I was always saying, whatever it takes to keep the lights on. And I think that didn't work out for anybody, because everyone was pissed. Everyone's like, hey, you're taking my company for pennies on the dollar. At some point, it feels more like your company than my company. I'm not going to be your employee because I hate you for just stealing my company. So I'm out. And there was no incentive for management to stay in place. And those deals almost always fail. Um, you know, we're starting to see nothing like that. We're starting to see multiple liquidation preferences You know, we've seen deals at two and a half x off the top. We've seen deals with two x off the top We've seen participating preferred for those of you who remember that Um, even in normal financing rounds and obviously we're seeing down rounds I think some of those things are normal, and that for companies that might have been overvalued to do a down round and figuring out... A couple of our companies have done down rounds. It's not the end of the world, because going back to that irrational bubble that we lived in, those were irrational valuations. And you probably, if you normalize it, you're probably going to have to take some dilution. And you should be happy that you're able to raise money in 2021 at an irrational price, rather than viewing this as irrational. We haven't seen the terrible down rounds that are just spine crushing to management teams and founders. We haven't seen yet. We don't know if that's coming. But hopefully, folks have learned from the past that if you if you crush a team spirit, you know, it's not going to be the right thing for anybody in the business. | And that is the challenge. Somebody comes along, they want to put a million dollars into this business. But you know, nobody else will invest and they they ratchet up the terms. Yeah, where they get five times their million dollars. And they wipe out the existing cap table. They've got all this toxicity around the cap table. No one cares. Nobody's nobody's got. Yeah, nobody's vested in the business anymore. No, that's it. |
And I think what you want to do, and you know, we've done some little bit of structure so far and some following rounds with our companies. You know, obviously, whatever it takes to incent someone, especially if you think that's the last round until you break even, because you know, there's downstream effects. If you put a bunch of structure, it's almost impossible to raise capital later. You know, because it's so hard to figure out what the waterfall looks like. But then the other side is, you know, if you're if you're going to be so greedy, you're taking all the economics and there's not much less for everyone else. Yeah, people won't care slash, you know, they'll they'll actually feel ill towards you. And that's not going to work for anyone. | Is there a solution for these rounds to thread the needle where the new money gets some extra consideration, but everybody stays incentivized? How do you manage it? |
I mean, we've done, we haven't done in this cycle and other cycles, like, hey, here's the cap table, we know what it's worth, you know, we know what the pie is set. How do we know all these camp tables, whether or not you you sign documents and got these huge legal documents take forever. We're all kind of written in pencil, right? Like you can always say, hey, if we want to keep management incentive, we can give them X percent of the company, early investors, you took a risk, you get this percent of the company, the new guys need this percent of the company existing investors get the rest. And in generally, hopefully, there's enough value there, that it seems fair to everybody. And that's the key thing of, how do you make sure everybody's vested in the long-term success of the business? Because once people stop caring, that's when businesses lose this mojo and then you're off. | You know, I'm in the email newsletter business, I got a bunch of newsletters that inside the launch ticker, my personal email list, I love email. And email is the best way to source crucial first party data and build amazing relationships with your users. And what really matters is how your community grows engages over time, and to how to convert that engagement into revenue, right? So you want to grow your community, get that engagement, but then you got to turn it into revenue. Well, if you're in the newsletter game, you're always trying to grow your open rates, your subscribers and your revenue. Let me tell you about letterhead. letterhead helps companies keep their customers and prospects engaged. And they do that with turnkey newsletters built from their existing content, audience and data. they're going to help you create, send and monetize your newsletters and letterhead will help you increase engagement and ROI with personalized guidance. They know what they're doing. So twist listeners will get 50% off their first year at try letterhead.com slash twist and qualified startups can get 75% off their first two years at try letterhead.com slash twist, go ahead and check it out. If you're not doing newsletters, you're missing out on one of the best ways to build a deep and meaningful business relationship with your constituents, and then eventually convert them into customers. When we look at exits, there were an opportunity to sell in secondary in a lot of these companies during the 2020 21 period. there were SPACs, there was an ability to do direct listings, we had a lot of options of how to get liquidity. Did you take advantage of that? Do you regret not taking advantage of that? How does that inform you in the future, you know, as a fund manager? |
Yeah, so largely, most of our investments are early stage, right? So we have, you know, long periods of illiquidity. Obviously, the secondary markets were just starting to develop that time period. But we, even in, you know, 2020 and 2021, we view there's been a lot of levers to getting liquid. Obviously, M&A is always the most prominent for all technology companies, traditional IPO, SPACs, direct listings, and private secondary shares. And we did all of them. all through 2020 and 2021. Because our belief is you can't eat IRR. And basically, your job as an early stage investor is to return capital in a profitable way to your investors. And I don't think anybody, any of my institutional LPs are relying on me to get every last dollar. They want us to drive great returns and provide them the capital back. So we were early in using the secondary market. We were early in using SPACs. And we had a couple of companies go public via SPAC, including DraftKings, which had a great run. And then obviously, traditional IPOs with things like Airbnb. And so obviously, we wish we had done more. Obviously, the definition of a bear market is you wish you would have sold more yesterday. So, you know, we wish we would have done more. But I think what's the lesson that we're going to take going forward is, I think the companies and I'm involved in several companies who are hopefully the next set of public companies, companies like this row and discord, and companies that public investors are excited about once that market reopens. But, you know, being able to have those companies manage their cap table, And they're going to need to provide liquidity on a regular basis for either early investors or founders through tenders or other mechanisms. They're going to need to be more transparent in how they do that, whether they use Carta or some other way to have, hey, we think that it's going to take us a long time to go from my seed investment to being public. I think at Pinterest, it took us 12 years plus. You go from the first institutional investor to being public. And therefore, not only for us, who probably has a portfolio, but for that, you know, for the early employees, how do you get liquidity along the way, especially now we've all learned that lesson, that something's better than nothing. you know, how to along that way, how do you get liquidity? And then how do founders can come to an agreement with their constituents, both employees and investors, and how they communicate it out clearly? Because I think that the Wild West of the secondary markets probably not good for anyone either. Yeah, that is seems to have created some bad feelings where maybe founders got to get some liquidity, but the team didn't, wasn't one team member is emailing, you know, the half dozen or so secondary brokers trying to sell something that they may or may not be able to, therefore stirring up, you know, the rest of the engineering team about, you know, as they're, you know, searching on, you know, they're searching the used car market with their other with their other browser tab. So I think that only causes It only causes noise in a system that already has so much noise. | So I need to What's the right way to do it in terms of if there was a standard that could emerge? |
Hey, we're doing this, we're doing this deal tomorrow. And I think we think we should be able to, we think this is fair that early investors and early employees get liquidity along the way. Yeah, you can do it in Carter and say, hey, after four years maybe from founding or every two years, there's a regular time where we'll set a price no different than a tender offer and we'll say, Jason, you invested a dollar, now the company is worth $8 a share. Do you want to sell anything up to X percent of your holdings? And early employees who invested could sell up 20% of their holdings also. And it also gets rid of what was going on a little bit in the valley of people hopping around. to create a basket of options, because they have diversification. So I think that regular taking pressure out of the system. | I've never heard anybody express it that way. Yeah, you did have people saying like, hey, listen, I've got Airbnb shares, or Postmates shares, maybe Uber shares, maybe Google shares, whatever. |
I'll go spend two years of Google, two years of Postmates, two years of Pinterest. And therefore, I'm going to build my basket by job hopping. And that's not good for anybody. But that's how those founders saw diversification in a world where there was no liquid market for their options. | So if it's on a regular cadence, it's transparent, and it's equitable. Everybody gets a chance to participate. |
You know, you could be and you could differentiate yourself as an early stage company that you know, we're seeing in the secondary market with all these brokers. It's chaos now. Tons of people are looking for liquidity. There's very low bid volume. But coming out of this, if you could say, hey, one of the premises of our company is, we believe you should have a regular access to liquidity. It's not going to be for all your shares, and it's not going to be whenever you want. But that's the nature of being a startup. But we're not going to make you wait like you had to 20 years ago for all of us across the finish line together. When the lockups over after the IPO, we're going to create regular release valve so you could buy that car, you could buy that house, and we could all be successful together. | Anything inherently wrong with the SPAC format going out? It's gotten a pretty big black eye now, all these facts were created. And a lot of them weren't able to find an acquisition. So they've been sort of shuttered. But it did seem like a way to get public quick, and to engage the public markets. And we have so few companies going public that it did seem like it had a positive, almost too positive reception with retail, maybe getting too excited about it. Is there anything inherently wrong with the format or that needs to improve? And because it did seem to me like this could be a great way to get more companies available earlier to retail investors, but it's almost seemed like it was a victim of its own success. |
To me, it was a bit it was a little bit a lot of things in financial markets, it's if something's good, more is better up until the point where you just, you know, you stuff the turkey into a blur first. And that's what happened. And obviously, in a time of free money, that only happened at an accelerated pace. So I think the concept of a SPAC, of, hey, you could go public with a trusted partner, and you can control your shareholder base and tell a story in a more deliberate way, is very helpful. And DraftKings was a great example of that. in an interesting story that maybe took a little bit more unfurling, and you wanted patient capital around for that, was a wildly successful SPAC, and therefore, it suited it well. I think there's going to be other companies where it suits it. But you have to still be able to tell your story crisply and clearly. You still be able to have to have a projectable business, especially in a world where SPACs have projections. You want to be able to hit those numbers no different than any other company. And you want to be able to have the same attributes as a public company. And it shouldn't just be a loophole to be able to get let startups go public. Those attributes of being a public company should be the same for SPAC, as well as traditional and direct listing companies. it just should be slightly different in terms of maybe storytelling and the ability to pick your shareholder base. | Yeah, I mean, if consumers are educated, and the information is correct. I like the idea of consumers, theoretically, retail investors being able to invest earlier in companies like we do. But they need to understand like this might not be the if this is a high, high, high risk that you're making on vertical takeoff or landing. Yes, you know, devices like one, like Joby, like you've never been in one of these, they don't exist in the real world for consumers yet. But boy, what an incredible thing to be able to place a bet on. But you might not want to place your kids, you know, college funds on it, but you might want to put a 1% speculative bet on it. If you think you can withstand that, sure, you could play venture capitalist by buying a vertical takeoff and landing |
company, no different than angel investing, you don't want to really risk anything in a single company, you can't afford to lose. But you can build a basket of these assets, which should perform in the medium term, especially if you if you understand the company, and you've been thoughtful about the disclosures. | What are the what are the key things you look for in founders, independent of market up, down, left and right, but just over 30 years of doing this? What are the key attributes that you see across the successful founders? |
I think it's great, is number one, that they've been able to persist through adversity to success. And that's been proven. Obviously, sometimes in serial founders, you've been able to see it in the startup world, but you've seen it in their life in some respect. It could be in athletics, it could be in chess, it could be whatever it is that you've seen the ability for someone to face down adversarial conditions. It could be immigrating to the United States. It can be they face adversity, and they weren't rattled, but they persisted to success despite that adversity. The second is they really understand their market. They understand where the competitive dynamics, how people compete, what are the economics of that unit economics of that business, what are the unit economics on the industry and the whole. And then now that you're a gritty person, you understand the market, what's your secret? So you've figured out something because in general, if there's a big market that's complex, there's enough smart people who understand how that market works, and there's enough smart people to start a business. But do you have that secret that will be the tip of the spear that will enable you to accelerate and learn something that other people might not know? or other something might happen, you know, in case of Roe, to a certain extent, it was, you know, Viagra is coming off patent. So there's going to be an opportunity to private label direct to consumer the most successful drug in the history of drugs. And therefore, you know, the customer acquisition, economics matter, and erectile dysfunction is a red light or an engine light for men's health. And that's an opportunity to begin to have a conversation in a reasonable way around that. And that was something before, you know, hims or keeps understood exactly what was going on. They had the opportunity to be a first mover among the secret that not many people understood fully. | Fantastic. Really well said. What do you think about these direct listings? Is that the future of it as well? Now that they can raise capital with them? |
Um, you know, these things are coming closer and closer together. So yeah, no direct listing that could raise capital needs that's one and therefore needs bankers. How is that all that different than a traditional IPO? I know some people took a direct listing just because it wasn't a traditional IPO and it seemed cool. But it tends to be a specific company. It tends to be a consumer company that's already built a brand. If you think about Spotify or Warby being in that sense, it tends to be a company that generally doesn't need capital because if you're going to raise capital, it still feels like the traditional IPO is the way to go. So you don't need capital, you're profitable, and you have a big enough war chest. you're upsized that you're still going to get research coverage and people are still going to care. So you're over that couple billion dollar threshold that if you go public on a direct listing and no one cares, you're never going to get a float, you're never going to be able to get liquid, you're never going to be able to raise capital again. And therefore, In the medium term, no one's going to know the difference. As long as in the first couple of years, you're going to have name recognition, you're going to have a critical mass of capital to get from here to there, so no financing risk, and you're going to have a float to be able to start acting like a public company, it doesn't matter. But I heard a great sentence, here's all the ways to go public, but it's like how you were born and people say, no one asked you. after six months, you know, there's a baby born via c-section or a traditional birth, you're just born. And I think, you know, after three or four years, maybe even two years of these companies, you know, people don't remember Warby Parker was a direct listing, DraftKings was a SPAC and Airbnb was a traditional IPO. They're just public companies. | Yeah, and great companies at that resilient companies that seem to be fighting through this isn't a great hour. Well done on your first appearance on this week in startups, and we'll look to have you back. Keep fighting the good fight out there. And you're investing also early. So seed stage investments all the way to later stage. |
best way for folks to contact you if they've already given plug at Rick on Twitter, you know, Rick at first mark cap.com, which is amazing. A little bit more complex. | Yeah. All right. Well done. And I'll see you all next time. |
Thank you very much. Good. Well done. | Great job. |
big time. And then as I believe I predicted coding is in fact over semaphore is reporting that open AI has hired 1000 contractor workers for data labeling and creating data for its AI to learn how to code. And then China's version of Google Baidu is creating its own version of chat GPT. What could go wrong? | Yeah, anthropic is raising 300 million out of $5 billion valuation and a bunch of other AI startups seem to be raising at huge, huge revenue numbers. |
There's like vaccine talk. Like I'm just saying, if you want to skip ahead, like just stop after Mr. Beast, go to the end and then you'll still like us in the morning. | Yeah, what could go wrong? And then we have a conversation about Mr. Beast's latest video where he cures people of blindness. Is it exploitive or is it endearing? Uh, and then we just go super thorough from that project. Veritas Pfizer stuff. |
Yeah. Yeah. | Yeah. Oh, and Billy McFarland from fire. |
It's going to be a great show. Stick with us. | He's back. Just all the horrible stuff at the end of the show. Stick with us. It's going to be a great show. |
This Week in Startups is brought to you by LinkedIn Jobs. A business is only as strong as its people, and every hire matters. Post your first job for free at linkedin.com slash twist. Notion. Notion is one place for notes, docs, projects, and everyday work that goes way beyond a wiki. Get started for free at notion.com slash jason. and Cast AI. If you run software in the cloud and it's been a significant cost driver, listen up. Cast AI automates cloud cost reductions with client savings of an average of over 60%. Twist listeners can get a cloud cost audit with a personal consultation free of charge. Visit cast.ai slash twist to get started. | Hey, everybody. It's Monday. We made it. How you doing, Molly? |
It's Monday. I did that gut check with myself today, too, because I don't know what. Anyway, it's Monday. It's Monday. | It is Monday. Yes, we're back. You're back. I'm back. I'm feeling better. I was in Miami last week. Did a quick interview with the mayor of Miami. Like you do. Fan meetup, like one does. And had a little dinner for LPs. And I'm back. But I'm feeling better. I'm at 85%, I think. All right. |
We'll take it. Things are not worse after travels, that seems like the right trajectory, because travel can set you back. | Usually it does, but I was on the tail end of, I think, whatever I got. It wasn't COVID, I took tests. But yeah, I'm feeling better. And yeah, that's it. Good. That's it, I'm better. I think I'm better. I'm hoping I'm better. I got more travel coming up. I got a speaking gig in Salt Lake City, and then I got a speaking gig in Japan, and I'm gonna take four days to ski in Japan when I'm there, so I got a little mini vacay for J-Cow. I'm doing a solo Niseko trip. I'm gonna ski in Japan. |
So fun. By the way, we're both available for speaking gigs, so please feel free to reach out. feel free to react data. | Yeah. And coming up, February 16, and 17. Later this month, well, it's still January, I guess. But in a couple of weeks, we're going to have our next founder university and founder university is a two day program. We've done it gosh, two dozen times. And in the studio program, you're going to learn a bunch of important stuff as a founder, customer acquisition, sales, marketing, pitching, investors, hiring, all that kind of good stuff. I take pitches at it, Molly takes some pitches at it. And it's just a great way to level up as a founder, get to know our firm, and it's free. |
Yep, it's free. 18 of the founders who have gone through these two day workshops, by the way, have gone on to be accepted in the launch accelerator. And the one that's coming up February 16th and 17th is for women founders only. So about once, I think once a year, maybe one of the ones we do, maybe a little more often is for to really kind of incubate and nurture female founders, which Yeah, it's a way for us to increase the deal flow from female founders when we created a specific space. | where women knew they were welcome, then more women showed up. And so we do this, go figure. And it's been a great success for us. It's really increased the number of female founders that we get to meet and ultimately invest in. So go to founder.university to apply. And it's a great, great two day workshop and free. Hope we see you there. |
And it's remote. Oh, yeah. And it's remote. You don't have to go anywhere. | Even better. |
And if you don't get into this one, you know, there will be three more in 2023. | But yes, we do basically quarterly and a great two day program. All right, listen, there's a ton of news. This generative AI has just taken the industry by storm. I think the industry needed something to feel good about. And this impressive demo of chat GPT and stable diffusion. Oh, well, yeah, I think post crypto hosts, you know, the bubble bursting, people are like, Hey, what's next? And we still don't have AR. We're waiting on those Apple AR glasses. And people pretty much have given up on web three. So what's going to fill that space? I think, yeah, chat GPT and stable diffusion have inspired people. A lot of developers are doing a lot of cool stuff with it. |
They are. I mean, I'm just going to go ahead and make my plug for all the climate opportunities that still exist. So we still have that. It's a double bubble. That bubble is still going. However, yes, all of the super tech bro excitement right now is all about generative AI. And we have now entered, I think, the stage of the generative AI fund raising hype cycle. being equally real, potentially. According to anonymous New York Times sources over the weekend, Anthropic, which is, quote, an AI safety and research company that's working to build reliable, interpretable, and steerable AI systems, shrug, is close to raising $300 million at a $5 billion valuation. Let's let the numbers sink in for a minute. | Yeah, no, I mean, I always like to read how they describe themselves. And I think the key thing there is, it's a research company. And they obviously care deeply about AI safety, which is like these things don't cause damage in society that that seems to be on the minds of everybody doing AI. But we're far from having general AI. But there are other types of harm that can be done, like stealing people's content, or misinformation. If chat GPT is right half the time, well, that's not good enough. Like, you don't want a recipe that works half the time in coin flip. And nor do you want medical advice, or customer support, or legal advice. So as impressive as chat GPT is, it can't be right half the time, it's got to be right 99.99% of the time, right to take human out of it. |
I also have to think that a big part of this safety conversation does have to do with bias and abuse, because we've seen so many AI systems repeat know, racist rhetoric and all kinds of things. So the safety could mean a lot of different things here. And we don't know, we just know, garbage in garbage out, right, garbage in garbage out the some of its co founders, a couple interesting facts. Anthropic was founded in 2021. Some of its co founders include former open AI researchers. Its CEO actually is Dario Amodi, a former VP of research at open AI and the website really emphasizes the safer, more reliable AI systems messaging. Anthropic last raised, and this is extra interesting $580 million at a $4 billion valuation that was in in April 2022. Series B, its last round was led by Sam Bankman free with Carolyn Ellison and other FTX and executives joining means the majority of the money or the largest check typically, and the person who sets the price when you say it was led by that's people who don't know. | Typically, the lead does two things sets the price and puts in the most money compared to other investors. So you would think of the 580 million, that's a big number, maybe put 100 million in or 250 million in, there's no idea how to tell. But that's interesting, because they bought shares in a company, I wonder if they've deployed that capital anthropic. And so then the estate or whoever's doing the bankruptcy of Sam Bankman, freed FTX and trying to collect this money, which was obviously stolen, or fairly obvious to me that it was ill-gotten gains, unless he made it somewhere else, that would go back to those shareholders. So that's an interesting vehicle. |
Yeah, it really is. It's just sort of like, side note, some huge amount of money could potentially be clawed back by the bankruptcy court. So we don't really know. | If this is around, that's going to be at 15 billion, or would they say 5 billion this round? 5 billion. 5 billion. So that's 20%, 25% increase from the last one. So Sam Bankman Freed's money should have gone up 25%. So if you put 100 in, it's worth 125 now. Maybe they could sell those shares to new shareholders as a secondary right now. Maybe, yeah. And get a profit for the people who have lost money. The march to 1 billion continues. LinkedIn is now at 875 million users. Unbelievable. There is no business network on the planet that comes even close to the scale of LinkedIn. So if you're a small business owner, or you manage hiring at your company, you know that your success in 2023 all depends on your team. The team that you surround yourself is going to define your success, don't I know it. And that's why you need to check out LinkedIn jobs. With LinkedIn jobs, you're going to hire qualified candidates much more efficiently. Why? How? Well, they match the open roles with people who have the skills, values, and experience that you're looking for out of the pool of 875 million members. And LinkedIn has the most qualified people at every level of employment. So, if you have a strong following like me, you know you can add that purple hiring frame to your LinkedIn profile and that spreads the word that you're hiring. Now you're going to get friends of a friend coming in, you know, those high quality referrals. Your inbounds are going to happen much faster. That's why you need to be active on LinkedIn. Write some articles, do some updates, keep your profile fresh. So go find those amazing candidates today. People are looking. They're open to opportunities. And in 2023, you're going to want to fill your team with amazing candidates that you find on LinkedIn jobs. And that's what we've done at launch. LinkedIn Jobs helps you find qualified candidates you want to talk to and it helps you find them faster. Post your job for free at linkedin.com slash twist linkedin.com slash TWIST to post your first job for free. Terms and conditions apply. |
So the other fairly large piece of information that is missing with respect to this now potentially $5 billion company is what the product is. We don't know. Like you said, it's a research company. Anthropic appears to be pre-revenue. two articles covering the fundraising, one from 2022 and one from last week, neither mentioned the word revenue. And the blog post that announced last year's fundraise said, quote, the purpose of this research is to develop the technical components necessary to build large scale models, which have better implicit safeguards and require less after training interventions, as well as to develop the tools necessary to further look inside these models to be confident that the safeguards actually work. Okay. I just read a bunch of that, but didn't understand it. So maybe if you were listening, you can explain it. | Well, I mean, I think part of the research marketing, I'll be totally honest, this idea that the, you know, AI is going to become sentient and cause all these problems in society. It's, you know, it's a bit of science fiction right now. That's not happening anytime soon. That could happen in 510 15 years if we get to some sort of form of general AI, but I don't think that's I think it's people use that as kind of a marketing shtick. right now, more than reality, like, I just really GPT or stable diffusion going to do like they're going to just flood the internet with images. |
And so what do you mean when you say safety? Like, I guess, you know, it's like, listen, I talked to a lot of companies that are in the R&D phase, and they're raising money to commercialize. That's one part of this equation, right? Is do you is that a is that an investable and venture appropriate endeavor? What? But to what do you mean? What do you mean when you say safety? | Yeah. So I think that it's marketing around this general AI becoming sentient and doing bad things in the world. Like literally, people think it's going to escape the computer network and then go do bad things in the world. Is that what you think? Or that somebody will take it and use it for harm. So like some, you know, ephemeral terrorist organization. So Al Qaeda will get their hands on this and then do something with it. that is really bad, like, like deep fakes, right? Like, so you make a thing where Putin declares war, or says, I'm going to drop a nuke, and then somebody reacts to it. That's kind of the hypothetical situation. I think a lot of these AI people start to convince themselves of. |
Oh, for sure. I mean, that's, you know, like, as I reported from seeing Sam Altman speak, you know, he sits in public and says, the worst case scenario is lights out for all of us. But I think I sort of feel like there is a safety conversation to be had around AI that's a lot more narrow than that, that doesn't have to be sort of like, and that's the part where, like, that's what I want to know. Like, is that what they mean? Do you mean AI that is accurate, that doesn't plagiarize, that doesn't accidentally reinforce racial or gender stereotypes? Like, I would appreciate if it were me and I was talking about $100 million check. Yeah. I would want to know a little more about what you mean. | They probably have some demos that they're showing people that have a path to some kind of product. But if you look at what happened with, you know, when Google bought DeepMind, they were, you know, trying to beat video games and do sort of proof of concept with that. And it was Google who looked at and said, You know what, we can buy this company, I think I bought it for five or 600 million. And we can apply it to our stack of products, Google Local, Google flights, Google Shopping, Google search, writ large, you know, Google ad network, we'll figure out where to apply this and point it. So that's the playbook they're going for here, obviously, build a bunch of talent, build a bunch of proof of concept show that you have the dexterity to do all kinds of interesting things. And then you have the option to get bought by Amazon, Apple, whoever needs, you know, a couple 100 AI developers, which are worth, you know, conservatively one $2 million each $3 million each is probably what they get bought for as a group in an acquirer. And then who knows, maybe they have an actual product in there. That's like some sort of chat GPT like product. |
The producers went through the job listings for product focused software engineers. Yep, good reporting. Some of the projects listed were developed conversational interfaces that leverage leverage the language models. So chat GPT like product sounds chat GPT, build core components of the API to access large language models. So an API for others to build on sort of like open AI does. And then things like write, billing, email and other integrations with third party providers, suggesting that some version of revenue will eventually be turned on. So really, it sort of sounds like OpenAI 2.0, but with this kind of vague safety lens. | Yeah, I would discount the whole safety thing as marketing. And it sounds like they're going to build the same exact stuff. Yeah, that open AI is building and they will make it AWS like in other words, you can go take this and use it to build your startup build your vertical product, right. So I think this is kind of like the beginning of a new cloud computing era where there'll be the equivalent of s one or EC two, whatever they are, you know, CPUs on demand, storage on demand, CDN on demand, now you'll just have some chat GPT-like product on demand. And if you're, I don't know, intuitive, you have some billing software, you're going to be able to have it automatically figure out, oh, these expenses are in this category. And it'll just, you'll use something like OpenAI, Azure, something on Amazon's cloud to do that. The thing that's super interesting, I think, is In the short term, what this is going to do to developers, because it seems like developers are going to be writing better and better code faster and faster. So this is where this augmented human intelligence, I think, is what's going to be particularly notable. If developers, just as a group, become 20-30% more efficient, then they're going to be training the AI that made them 20 or 30% more efficient, which means that AI is going to become again, 20 or 30% efficient, because it's going to see those developers say, Oh, yeah, the of these five snippets of code you gave me, these two were perfect, this one needed a tweak, these two didn't work, and I passed on them. So now you're training that AI in real time to write better code. So as developers use this, It's kind of a self-fulfilling prophecy. It's just going to get better and better and better. And then developers, you know, are just going to be like watching the AI write code and like steering it. And then that's going to get really weird. If you want your business to be more productive, more cost efficient, and you want to have bigger impact, you need to use notion. We run our entire business on notion here at launch. And, you know, we were looking for a deal flow solution. And these CRM systems for venture capitals, my god quarter million a year, I was going to build my own software $100,000 a year, plus $50,000 a year just to maintain it all the existing solutions. expensive, slow, janky, not customized. And then we built our own system right inside of Notion at a fraction of the cost with no developers. We just used our team and we built all these different views of all the notes that we were already keeping inside of Notion. So, whether you're starting a new gym routine, organizing a trip with your friends, or even planning your company goals, Notion is a flexible, collaborative workspace that helps you make meaningful progress in every part of your life. Get started in seconds by choosing from thousands of templates for every task and make it your own. From to-do lists to OKR trackers and so much more. Notion lets you build the exact system you want so you can work the way you work best. Here's your call to action. Get started with a free Notion account at Notion.com slash Jason. That's right. Make sure slash Jason is all lowercase. Notion.com slash J-A-S-O-N to get started for free right now. |
It's so funny that you mentioned that because also, over the weekend, it was reported that open AI has hired about 1000 remote contractors over the past six months. Sure. And that at least 40% of those contractors are software engineers who are creating data for open AI models to learn software engineering tasks. | They have it. And that's a and that's a model when you think about it. Because Microsoft owns GitHub, which has copilot. Yeah, that's also getting sued by some open source folks for stealing their code. And it's debatable how much code is protectable. You know, it's kind of like a recipe. So how much can you protect a recipe you can't, right? You can protect the name cronut, like a croissant donut, you can't protect the recipe. So there's been an ongoing debate about that for many years. But this could be very powerful. So if they're hiring all these contractors, that's IBM did that for Watson back in the day, they would just say here, show us, you'd show the same image to three people on three different continents with three different education levels, right? What is this? Oh, that's an orange. Okay, great. Oh, that's two oranges. Okay, great. That's two oranges on the beach. You know, like, whatever keywords they put in, and they label if two out of three of them or three of them or one out of three then that you would put on how sure you are of what that is so you can imagine with code all you have to do molly is say to like 10 developers write the code to, you know, say hello world or do you know, LinkedIn login authentication, it looks at the 10 pieces of code. These three worked and had no bugs. These three needed to be edited, and then you look for some commonality and then says, Okay, this is the best way to do LinkedIn authentication for your website. Right now, nobody ever has to write that again. |
Right. You just instead you go to a version, you know, and and listen, like, I know somebody who's doing this now goes to chat GPT and is like, generate me some code for this, and then has to, you know, human check it, like, because it might be wrong or whatever, massage it into what they need. But it sounds like what they're doing. And I should note that 60% of the contractors were hired for what I call janitorial data janitor, right? They're cleaning up. they're labeling, they're creating these sets of images and clips and other information. And then these engineers who are specifically creating data around software engineering, one of the things that they're doing is almost like commenting. So taking pieces of code and annotating them with the natural language, the human explanations behind what the code does to help associate the code base itself with the action that somebody might type in. For example, I want you to create me an auto LinkedIn login. Right. So OpenAI, I remember, has that existing product called Codex that is designed to translate text into code. They power... That's what Copilot is built onto. Copilot, right, which also is text to code. So I'm just going to go back to what I said a couple days ago, which is like, don't learn to code, learn to wire. computers, the machines have been coming for this job for a long time. And in fact, Tesla's former head of AI Andres Karpathy tweeted the following last week, the hottest new programming language is English. | Yeah, people are talking about that, that if you can actually do the prompt engineering, like we talked about it all in the other day, I think here as well. You can have an interesting job if you tell the code how to program itself, right? Like, so I want you when you say I want you to write me a play about two podcasters talking about Sam Beckman Freed. And then when you say in the voice of Shakespeare, with a little Quentin Tarantino, and that rhymes like Eminem, it's like okay, wow, those are a lot of conditions that you added to it, but it understands them. And so that that's super fascinating. And I was watching McCarthy do a YouTube video this weekend, where he made his own chat GP two instance with like version two of it, the open source one. And it was like a really interesting video. I just watched it in the background while I was doing some work. It was like an hour and a half long video where he was explaining how all these predictive models work. And he actually showed like this Shakespeare AI, which is on GitHub. And so people are taking like, you know, verticalized content, the complete works of William Shakespeare. And you can just go on a on to, you know, GitHub right now, grab that Shakespeare AI, and then put it into your software. So you're like, I want my, you know, podcast to be translated into Shakespeare and make us translate our, you'll be able to translate this podcast and have us talk like we're Shakespeare characters, but can keep the complete intent and then republish it in our voices. With us as Star Wars characters, like, it's gonna be pretty crazy when you think about like, what this AI is going to be able to do. Right. |
And then what are the aspects of that that are related to this kind of safety marketing pitch? I think what we're likely to see, just as a little bit of a kind of bubble watch prediction, is like, for example, this race of this whatever, I've already forgotten the name, anthropic, is like cash in now with the slightest of differentiators, because you're one of the eight people, right? Remember that moment in time where all of the autonomous driving startups got acquired Argo, and you had the way mo intellectual, and they raised tons of money, because there are only like 11 people in the world who know how to do this. Yep, it is quickly going to become a commodity. Yep. Or much like self driving, it's way, way, way, way harder than anybody thinks. And so it's going to get like speech to text. Remember when it was like dragon naturally speaking, or something would be it was, they were like, yeah, it's 85% accurate. But that 15% is the difference between something that is functional, and makes you sound like normal. Yeah. And something that doesn't really work. And so if AI gets 85% of the way there, and then gets stuck, much like autonomous driving, then now is the moment to get your $5 billion valuation and your acqui-hire. | And slap whatever differentiator you want on it. Sell as many shares as you can. Yeah. |
And a lot of investors are going to lose a lot of money right now. Just saying. | In order to make money on this, you would need to have if this was a publicly traded company with $100 million in profits on, let's call it 250 million in revenue, 250 million in revenue. You know, if they were selling to enterprises that $25,000 a year or something, there's a lot of customers, you would have to have 100 million to have a 50 times earnings to make a $5 billion valuation, there's a long way to go. So as far as a bet goes, it's not a terrible bet. Because if the company sells for anything above the capital, it's raised, you get your money back. So one important thing to understand here is if it's 5 billion, And they've had a let's say, a billion dollars invested in the company. If the company sells, but for a billion, all those investors get their money first, obviously. So that's why sometimes people will take a optionality bet here, which is, you know, if it, if it happens to go to 50 billion, they have a 10x. But that would be very hard to do. It's very hard to get to a billion dollars in profits, which is what it would imply if they got to 50 billion. Yeah, at least a billion in profits, maybe 2 billion in profits. |
Hard to have Tread carefully, people. Tread carefully. Speaking of treading carefully, this is just straight up Jason Bate. Oh, okay. Last in our trio, our triptych of generative AI stories. Baidu, China's equivalent to Google, is building its own version of ChatGPT. Bloomberg reported that. Exactly. A CCP-approved dystopian version of ChatGPT. Yep. You know, to sort of tell you, like, you ask it a question, it's like, yeah, I got my version of the truth for you. Sure. | Makes sense. I mean, yes. Well, I mean, everyone's going to open source, and you can fork it and build on top of it. And it's really going to be about the data at this point, you know, like you're gonna need to have 100 engineers, 50 engineers to program it, but it really is going to be about the data set. And so I would think Baidu has some very interesting data sets. Very, very interesting data sets. |
I mean, ironically, right? All all the data sets. I mean, China is effectively a surveillance state. Yes. So the data advantage that China potentially has, I find to be a fascinating question. Like, does China know more about people than Google? Honestly, I don't know if I honestly know the answer to that question. | But I would say it's probably close to even what you could think about is, you know, when you're on YouTube, and that whole, like intellectual dark web kind of exercise, and then there was that lawsuit where, in France, somebody who was murdered by terrorists said, Hey, we, this was kind of, this person was being steered on YouTube towards more and more extreme content. Yeah. And that led to so there was a whole, yeah. |
I did a bunch, by the way, a bunch of reporting about that. The ladder of radicalization, there's like a ton of actual research about how it happens. It's a thing. | So if the algorithm can steer people towards more and more extreme content, or more, let's just call it adjacent content. So adjacent contents either going to be, you know, it could be steering negatively, it could be stirring positively, you know, you get into some beautiful guitar solo, it could take you in a positive direction, right? um but it'll also take you in a negative direction as i say and yet somehow it never does no it does i mean i see a lot of cool like pink floyd people doing covers and mark knopfler covers going on in my uh youtube feed so that's positive for me good great but here's what happens you know if it can steer people in certain directions to adjacencies. Well, what the government could do with that is if they weren't just interested in making more money, they could actually know, oh, we're steering somebody towards being radicalized, or this person is doing searches that are the precursors to somebody becoming a dissident, right, somebody becoming a protester. So they might know, from some early signs of what you're searching for, that you're eventually going to wind up as a protester there. And then it becomes minority report, we have the pre cogs pre cognition, knowing this person potentially could become not a terrorist, but a protester, you know, a freedom fighter. They've got too many thoughts about freedom, they're searching for the constitution, they're searching for freedom of speech, they're searching for certain religions, whatever it is. And that's where I think this becomes super nefarious. And then you combine that with people's credit card data, location data, maybe this person was looking in a bookstore window, and you know, like, hey, they have certain books in the window there. And just the fact that the person was hanging around a bookstore, plus their YouTube data, now you know something about them, and you could go pick them up and torture them and re-educate them. |
Yep. I mean, AI makes all of the what ifs into potential realities, you know, like when you imagine the worst case scenario of like, well, what does it matter if you have all these disparate pieces of data about me? | Well, it weren't actually all that data was sitting there in a database, you'd be like, who cares? Who cares about my location data? Who cares about my YouTube data? Right? Exactly. Yeah. It's like, oh, well, if the AI stitches it together, And now they're saying you're a potential terrorist. You're a potential freedom fighter, whatever, you know, framing you want to use. And you don't even know it yourself. You're like, no, I'm not. |
It's like, you will be. They're like, you will be. Just trust me. You're going to be part of the rebel alliance. Yeah. You just pretty obviously, you just talked me back into the safety marketing. Just tell me what you mean. | I mean, there are things that will be obvious, like deep fakes, right? obvious, you can just imagine in your mind, but it's the cases where we don't know what the AI is going to come up with the AI is going to find things that are going to be very challenging for humans to deal with. know, and when we find those uncomfortable truths, that's going to be really challenging for human brains to kind of understand it. Yeah. |
I mean, Asimov's first law is a really, really, like, if you ever sit there in the dark and truly contemplate what that means, and then apply it to what we think AI is about to reveal about us, like, it's, it gets, you get a little, you can get, some despair can occur. The first law says that, yeah, that, that the, primate the only job the robot bot has is to protect humans protect humans so then the robots inevitably determine that the only way to protect humans is to kill all the humans because humans are so bad for themselves right so and like megan that's where i'm that's where i'm going with this idea that what it uncovers about us is that we're the problem | Well, and then you have the seminal work of Megan, uh, you know, and Terminator and John Connor. And then Megan's got to protect, you know, her, uh, little girl and it's like, Oh, the doctor is going to put a shot in their arm and it's going to hurt. Okay. We have to tell the doctor now, you know, like in some horrific way or. Yeah. Somebody is administering some basic discipline on a child and it's like, oh, okay. They're harming the child. I have to attack them. Yeah. And kill this person. Uh, good times. There's three laws. |
There are three laws. Yeah. It's like a robot, uh, like what has to protect him may not injure a human being or through an action, allow a human being to come to harm. That's the first law. The second law, a robot must obey the orders given it by the human beings, except where such orders would conflict with the first law. Got it. Which is how they always end up killing us. And then the third law is a robot must protect its own existence as long as such protection does not conflict with the first or second law. | Clever. Super clever. |
Clever. I mean, it was, to be clear, a narrative device, not a real law. I just want to... Yes. We could do better now that we know that the second law is what allows them to use the first law to wipe us out. It's a loophole, if you will, but yeah, uncomfortable truths. | If you run software on AWS, Google Cloud or Azure, you know how out of hand the bills can get, right? The pricing uncertainty can really hurt your business, you get these surprise bills. But you can solve that right now with Cast AI. Cast AI audits and optimizes your cloud costs and performance for you, which the cloud companies don't do automatically, right? You have to do it, you have to take control of this and Cast AI is going to help you do that. they eliminate the stuff you're paying for, but that you don't use and they search for less expensive hosting options within your cloud provider. And then you begin saving immediately. Listen to this on average cast AI customers save over 60% on their cloud spend. Imagine what you can do putting that capital back into your business, right? Everybody's in austerity mode, everybody's in optimization mode and cast AI is going to do that. It's priced for a tiny portion of what you save. So before you go and sign any multi-year cloud contracts or make any drastic personnel decisions, check out what Cast.ai can do for you. So here's your call to action. Cast.ai will give you a free cloud cost audit, which you can save and a personal consultation. Visit cast.ai slash twist to get started. That's cast.ai slash TW IST for a free cloud cost audit today. And we met with the founders last week and they are really excited to help founders and listeners to this week and startups save on their cloud bills. So give them a call. Go visit cast.ai slash twist. |
Speaking of uncomfortable truths, let's talk about Mr. Beast. Oh, he's awesome. He's having a cultural moment. of maybe of medium awesome. Okay, so we all know Mr. Beast is a huge deal, obviously, right? Like this is very popular. He's sort of changed, I think what it means to be a creator celebrity. Like he's got this potentially billion dollar business, all these people are investing in it. He's got the burger empire, like Mr. Beast is an empire. And this video posted this weekend, and just purely anecdotally, I will say, My son and I were watching YouTube last night, like we do, because nobody watches TV with their parents anymore. You just watch various YouTube videos. And we saw this thumbnail pop up for this new video yesterday. Mr. Beast posted. And here's the thumbnail. And in case you're not watching, it's Mr. Beast with his, I've always found slightly empty and scary grin. And then this kid with these like big, weird, fake looking, creepy crocodile tears running down his face and a bandage. And the video is titled 1000 blind people see for the first time. Amazing. So in the video, he took 1000 people who suffered from blindness caused by cataracts, and he paid for the surgery to repair their I watched it. | Yeah, it was quite this is a classic. video on YouTube. Like there's that whole, uh, do they call them cochlear implants where you can hear again? |
Yep. There are tons of those, right? | Yeah. I get so emotional when somebody can hear their child for the first time. And then there are these ones with blindness where people can see again for the first time. And so I guess the device he came up with here was if seeing one of those is amazing, why don't we do 10 of them? A hundred of them, a thousand of them. Totally. |
If one of these is totally engaging and pulls on your heartstrings, let's just blow that up. And so, it's just provoked this really interesting reaction. So, I will tell you that last night, we saw this thumbnail pop up. And literally, my 15-year-old was like, that's creepy. His immediate response was, that feels gross and exploitative. And so we skipped it. We were like, no, let's not watch it. And I was like, you're right. There's something weird about that that I don't like. And so then I wake up this morning and Mr. Beast is trending. And I see that the internet is going crazy because tons of people are having that exact same response. And tons of people, and I will say, much like in a predictive AI, I was like, I know exactly what's gonna happen on the show. Jason's gonna be like, that's awesome. And I'm going to be like, that's exploitative and weird. And we and we are going to have the exact. And so I want us to be able to mirror the conversation that's happening on the Internet today because people are having really strong feelings about this. | Let me guess, because I could tell you the, dare I say, woke position. I could tell you what the what is woke about it. I'll tell you the work position. |
Oh, God, I'll tell you the now I'm regretting pushing so hard for this. I knew it was going to happen. And yet I'm irritated. | All right, let's go. Let's go. This falls into the, this is going to trigger for people, dare I say, what is the state of the world when a YouTuber has to pay for people's healthcare, why don't we have healthcare? Which is completely valid. That is the default, yes, that is like trigger number one. We don't have healthcare in this country, which is totally valid. The counter to that would be, well, he's a rich guy with a huge platform. And so at least they helped a thousand people and he's raising awareness for this. So what's wrong with that? The second one is going to be what kind of world do we live in when people. are used as props for him to make money and get more famous. Yeah, it's kind of that he is using them. Yeah, for exploitive reasons. And there's no dignity. And if he was a good person, he would just quietly pay for all of their surgeries. And why doesn't Jeff Bezos also pay for a billion people? And if Jeff Bezos gave everybody a billion dollars, and everybody be a billionaire. And we would have no poverty. Yeah. So those, those are the two reactions I am certain happened. |
Oh yeah. A hundred percent. Yep. And then there were the ones that are just like, you're also deploiting, exploiting disabled people, right? Like you're just moderate monetize monetizing the suffering of the differently abled. And you know, so there was that person too. Um, someone, someone's tweet said, I'm tired of having to perform gratitude for wealthy people just to stay alive. It's like, yeah, that's the one. I think it really, and then there's the, and then there was the really messed up joke. that I don't want to, I don't want to dox my son. But he was like, yeah, he got a thousand more views. Hey, wow. | Yeah, that's a dad joke. Sort of. Yeah. Wow. Yeah. |
Anyway, I mean, it's like, you know, and then I was like, yeah, what's he gonna do next, kidnap 1000 orphans, and then make them work for him for free, and then say, I'm a job creator. Anyway, it's, I think it's like, it's, it's both of those things at once, right? Like, that's amazing for those people to whom this happened. It's a Rorschach test, and read into whatever you want. They were 100% exploited for him to get clicks. Like, And it just is like, you start to see that, I mean, this is sort of, this gets to what you were just saying about the YouTube algorithm, right? every if you want to win at the game of entertainment you have to get like it wasn't enough for mr beast to give some people some money after making him stand in a parking lot for a few hours or whatever 10 hours it wasn't like you could do that and then you can give someone a house and then you could give someone a car and then you can give them 50 lamborghinis and then you got to create the wonka house like the wheel of entertainment when it's click related is like to get more and more and more and more extreme And then eventually you land on something like this, where both of these things are true at once, like. Yay and also like there's some a little creepy about it. | Well, you know, this is not like some brand new. Phenomenon, obviously, there was a show called Queen for a Day. Yeah. And this TV show basically would bring people in to give their emotional sob stories and then. Give them, you know, a refrigerator or a washing machine or a hearing aid. Mm hmm. This show was like in the 40s. 50s. Yeah. |
I mean, this is American popular. This is American entertainment at its finest like reality TV exists to take some schlub give them a hear a sob story like the American Idol with the weepy thing and they go and they visit the home and they're like, oh my god and everybody in the family only has one leg and I mean, it's just like it could not be more like American entertainment is exploitation at its core. And Mr. Beast was the guy who seemed to be doing it a little bit better, right? You felt better about it and then all of a sudden you see this kid with the big fake crocodile tears and you're like, oh, I get it. Okay, it's just the same stuff. | Yeah, I mean, I think everybody's the NFL draft, like Nick said, everybody who's in this video opted in to do it. Some of them not only got free surgery, he gave him ten grand. If the video pays for all that surgery, I think he probably breaks even on most of these videos is my understanding of it. Some of them, he loses money. Some of it makes a little money. But like his bigger business is going to be like his his edibles, his candy, because he could do edibles, too. But I don't have a super problem with it. I think people are looking for something to be outraged about. I don't think it's his. No, I think they're both true. I think both things are true. |
I think a little bit of it is both true at the same time. Like this is a little bit Jesus-y and the thumbnail is creepy as hell. And it's exploitative, and America's messed up, and capitalism sucks, and Mr. Beast did this nice thing for these people, right? It's like, I think all of those things are 100% true, and I'm delighted that Jason and I were basically able to role-play Twitter for you today. In case you're wondering, you no longer need to click on the trending topic. | You don't need to. You just... You're welcome. Pick your opinion that reinforces your tribe and you can pick capitalism or... Can I show one screenshot from the NFL draft in 2020 that's absolutely... It's sad, but it's hysterical. |
America's gross, y'all. That's why I'm saying we had higher hopes for Mr. Beast. We wanted him to be better than Oprah. | Listen, Hands on a Truck says something about America. Hands on a Hard Body. Hands on a Hard Body? Is that the whole... It was a documentary. I remember seeing it back in the day. And it's like, okay, sure. Like it's a contest. It's fun. Nobody gets hurt except it's extremely painful and you pee your pants. Um, I mean, I have a friend who thinks like- What are we saying about America that like a mom with three kids who's a single mom can't afford a car and she's got to torture herself for 47 hours. |
Like they're all, I have a friend who feels this way about Hot Ones. Like we had this big, she thinks that that Hot Ones show where celebrities go on and eat hot wings until they cry is exploitative. And I was like, what? Like, come on. | Absolutely it is. These poor celebrities are trying to- get people to see their Marvel movie after we have to show another one from ESPN. |
Can you just, we need some more sad music. | It literally is like, everything has to be sadness and trauma porn. |
Okay, we don't have to keep seeing it. That is a nightmare tonight. | I was going to write some fiction when I was in my youth. And I wrote this scene, I got to pull it up. It's on one of my old laptops. And I wrote like this scene where I was like, you know, it'd be like really interesting. This is getting super dystopian watching like, Shark Week, I just watched Shark Week. And I was like, I wrote the scene where people in this dystopian future would swim across chummed waters. where like Air Jaws was. And they would do it to get clemency for their family member who was in jail. And it would pay back the state. And the state was so corrupt that they were like, yeah, like if one of your family members or you as like the prisoner want to swim across for entertainment on this pay-per-view, we'll take the money from the pay-per-view and pay off your debts. And like, you know, like five people jump in the water and swim from one platoon to another. And like two of them get taken out by sharks and they make a $10 million and they're heroes. Yeah, you invented squid game. And I literally invented squid game before that happened. I was like, huh. But then even more than that, there was just a shark week where I was in a plexiglass tube. And I guess I don't know if we can show it here without it getting censored. We'll probably get a strike against us. But anyway, if you guys can pull it up, guys in a glass, you can get a still photo of it, guys in a plexiglass thing. And I'm like, that plexiglass is not going to survive air jaws. No way. Like if one of those big 20-foot sharks goes full speed into that, it's going to shatter. And literally, I'm watching this video, it shatters. Exactly what I thought would happen. And the guy's left, like instead of being in a plastic cube, he's like left like floating on a sheet of plastic while a great white shark has just demolished the box. And they're like, I wonder what happens. Yeah, there it is. So this guy is in a plexi block, like in a coffin, basically. And you're like, okay, yeah, that's a plexiglass coffin. And you're in a seal outfit. And yeah, that's a 20 foot shark. And yeah, the shark just comes out from the bottom. He's like, I'll take a bite. And literally, this piece of plastic, which some person's like, yeah, that piece of plastic will be fine. The shark can't bite through it. |
I mean, it's also jackass, right? Like this is literally the grand tradition of American entertainment. | Yeah, the shark rocket eating. |
Oh, it a hundred percent does like that. That was the whole right. That was the I mean, I remember, again, doing those stories in 2016 about stupid Jake Paul and Logan Paul and like the stunts get more extreme in the TikTok challenge that like literally we had to stay home from school one day because there was that TikTok challenge that was like somebody you show up and kill somebody. I don't even know. Right. It like this is, this is 100% part. Stunt culture is dangerous. And and now I think the argument is that now Mr. Beast is part of stunt culture. | I think this stuff be allowed online is the question. Does it inspire people to do more dangerous stuff? |
Speaking of stunt culture, you know what, I'm kind of on one this morning. I made that orphan joke. | Should we touch the third row? A lot. Should we go right to the third row? Sure. |
No. Oh, you didn't see it. I literally ignore anything that has project Veritas in it. Because I'm just like, Oh, no, thank you. | Let's do it. You saw this project Veritas thing with the Pfizer executive? |
uh and the guy goes crazy and breaks the laptop and there's a big fight you have to see it because is this like recent or old this is over the weekend no no i mean like the actual this footage like did this this footage occurred recently just suggest that pfizer is currently working on engineering a virus that they can then magically cure and make a ton of money honestly and pfizer responded as well did pfizer respond today because they haven't responded oh really what would even surprise me about any american corporation at this point Like, really, in related news, did you see the story about Exxon? Which was that, like, in the 70s, as far back as the 70s, Exxon had scientists who specifically and unbelievably accurately predicted everything that is happening now with respect to global warming. Like, literally, they were like, oh, yeah, they were like, there are going to be tons of super storms and, like, a lot of people are going to die and Bangladesh is pretty much going to be gone. And I mean, like, literally, shockingly good science. And then we're like, we should definitely spend billions of dollars on a decades long disinformation campaign to make sure that no one finds out about that. Yeah, literally finding out that you are at the crux of possible human extinction, and being like, we should probably cover that up. We should cover that up. Yeah, so it would surprise me at this point about anything. | Please tell me. Project Veritas trended over the weekend. um you know their stunt culture they do kind of what dateline would do which is like frame people you know like people doing bad things of course yeah so they use dating as a pretext to get people to go on hidden camera they get a pfizer executive who predicts that he could be on Project Veritas. He's like, yeah, this, you know, this was hidden camera stuff, but he starts lying about how he claims he was lying. He starts talking about how he's going to do gain, they're doing gain of function research at Pfizer, and how it's great for Pfizer because they're going to sell so many vaccines and all this stuff. And literally, then the guy James O'Keefe comes out and he's like, does the dateline thing. It's like, hey, can I talk to you for a minute? And the guy's like, I'm a liar. I'm a liar. I was lying about everything just to impress my date. And now here we are. |
And then what happens honestly, what happens is that even if it's true and it probably fricking is, I'm sorry. It's probably fricking true. It's going to be hard to believe it. Like you're going to, you will have, you will have, when you're an unreliable narrator, you rule out a huge chunk of your potential audience. Correct. who won't necessarily believe that it's the truth. | But this is going to be open up a can of worms because the guy basically says like, yeah, we're basically doing and the but you know, he's being led on and they don't release the whole tape. So you don't know how much he's being egged on by his That's the problem is that veritas stuff is not a trustworthy source gnarly To use dating as a pretext to get people to make confessions like this. Like I don't know we like This does not say anything. It doesn't exist in the world of journalism. Right. Exactly. And so it's a, a YouTube banned the video. Other places didn't ban the video. It's like, or I don't know if YouTube banned it or not. |
To be honest, even if they use those tactics, and I'm not saying that's never happened in the history of journalism, it's a pretty cutthroat sport, right? Like I don't, I'm not saying, I don't think that is common now. I don't think that happens a lot, but I'm just saying, even if that did happen and you got this like bombshell thing, your initial response would not be to like, aha! we got you and then put it out it would be like okay now i will embark upon a painstaking years-long process of trying to confirm this yeah i mean before i report it these are tactics that like musad kgb cia use right yeah trapping people with love and sex and dates that's like you know remember when meg whitman said that about reporters She was like, yeah, oh yeah, yeah. This was not very long ago. And then she called me personally to apologize because she got, so she was in like an all hands and she was like, don't talk to reporters. Um, they will groom you like pedophiles do effectively. Like we could look it up and get her direct quote, but she was just like, you know, they'll, they'll try to make friends with you and they'll do this thing. And she kind of like compared journalists to pedophiles and then made this series of like personal phone calls. It was at Quibi. It was when she was at Quibi. | mainstream media will cover it. Right? mainstream media does not do these tactics. Like mainstream media is not going to break into an office building to get documents, right? They rely on leakers. I mean, I only did that one time compass here. So they would never send a New York Times reporter on to grinder or match.com or whatever app they used to set up a date to then kind of lead the witness into confessing about things whether the confession is true or not. They would never use those tactics. The guy from Project Veritas says the only way to get this information is to use these tactics. |
People said they were strange enough putting. Which was such an, it was very interesting. I thought she handled it. I mean, frankly, she handled it beautifully. She literally personally called reporters that she had talked to, called them directly and apologized and whatever. But I, and then I'm again, as long as we're on third rail day, third rail Monday, I was like, I literally was like, well, they kind of do do that though. Well, yes. | Oh my God. Yes. Because analogy was inappropriate. And I had just talked to her. Whitman said in an interview, none of us are ever perfect. I didn't intend it. It's not how I feel. Whitman reportedly compared the way journalists cultivate sources to tactics used by predators to groom victims at an all hands meeting. On Friday nights were mostly accurately reported. Okay, so she said it was okay. Yeah. |
You then try to confirm that information. You don't just go like, aha, we got it. We got the story. You confirm. You do the reporting. So here's the Pfizer response, by the way. In the ongoing development of the Pfizer-BioNTech COVID-19 vaccine, Pfizer has not conducted gain-of-function or directed evolution research. | We're out here making friends. Not grooming in predator kind of way, but you might build rapport. You build rapport. Which is what predators do as well. Like a spy. Yeah. Like a spy would do. You build trust. But then you pump people for information. The important thing is learn the source. |
And this guy says they do. Now, they say that in the ongoing development of Pfizer-BioNTech. If you were really going to parse this, you'd be like, well, they didn't say they did it any other time, didn't do it any other time. But working with collaborators, we have conducted research where the original SARS-CoV-2 virus has been used to express the spike protein from new variants of concern. This work is undertaken once a new variant of concern has been identified by public health authorities. This research provides a way for us to rapidly assess the ability of an existing vaccine to induce antibodies that neutralize a newly identified variant of concern. We then make this data available through peer-reviewed scientific journals and use it as one of the steps to determine whether a vaccine update is required. Express the spike protein. That's not the same thing, right, as gain-of-function? mean, I don't really know, right? Like, who knows, medical research is crazy. And I would not put it past any pharmaceutical company, anywhere in the world to engineer viruses that they can then magically introduce a vaccine against that, by the way, will not cure it. Because nobody here is in the business of cures. Yeah. Because cures don't make any money. | Okay. Directed evolution, yeah. And this guy says they do. |
No, no, it's a dirty job. It can be investigative journalism is a very, very cutthroat job. | You would, you would, you want to think that the system does not have we are flagged like hell today. There will there are perverse incentives in every system. And yeah, they made a lot of money off of the vaccine. And it did some good and lowering debts, and it didn't actually keep up. And I'm not taking any more boosters. But I don't know what my position is with my parents taking boosters. Maybe I want my parents to take boosters because they're more at risk than I am. definitely do. Yeah. You know, Joan Didion had a great quote at one point about journalism. And like you specifically around sources, the great Joan Didion, and she, this is the quote, My only advantage as a reporter is that I am so physically small, so temperamentally unobtrusive, unobtrusive, and so neurotically inarticulate that people tend to forget that my presence runs counter to their best interest. And it always does. That is one last thing to remember, writers are always selling somebody out. It's a tough quote. Um, but it's not wrong. It's not wrong. |
Maybe, but I want somebody, I want somebody else to do that reporting. Like I'm never going to, I mean, if I see project very test, blah, blah, blah. I'm always like, no, that's the problem with it. Like I automatically don't believe it. That's the problem with being shady is you don't get a benefit of the doubt you don't. | Yes. And they, you know, we'll use a source. And so like, you know, the, the, I, I don't agree with project full stop. Don't agree with project where it tosses techniques. And that's what I mean when I, yeah, it could be valid. |
all right yeah i mean you know i think mr beast is mr beast is america and america is mr beast yeah there you go perfect there you go um also classic american tale of redemption in progress right here no Billy McFarland of FireFest fame is back on Twitter and selling his services. We kind of we have a little bit of services. Yeah. Oh, yeah. He's an event planner. Uh, no, he all in Summit 2023. He'll help. Well, he will help make all in Summit go viral. For sure. Yeah. Yes. That's his services. Who's got all the reasons? Who's got a startup? He tweeted on Saturday and needs me to blow up the marketing. | Yeah. And Yeah, I wonder what's gonna happen with this whole situation. Speaking of being shady, and getting the benefit of the doubt. I love Mr. Beast by just so just, I know, Jimmy, I wasn't talking about Mr. Beast. No, no, I just want to put a pin in that. So I just want to say like, I think what he's doing is great. And if he wants to, you know, do philanthropy through his YouTube channel, I think it's awesome. Yeah. Generally speaking, |
And then on Sunday, he tweeted a whole thread about how he got his first company to go viral. And then ended the thread with this tweet, want me to make your viral company go viral DM me. And then there's a link to a page that includes his consulting schedule. Oh, nice, where he's charging $600 for a 15 minute interview. Okay, $1,000 for 30 minutes and $1,800 for an hour long consulting call about how to make your startup go viral. | Blow up is the key word in that sentence. |
Maybe. | So we could have him on the show for 1800 bucks, recorded here, interview him for 1800 bucks, talk to him about his life and times and see if it goes viral on YouTube when we make back the 1800 like Mr. Beast. |
We have one additional side letter for 2023 for all of our deals. And if you hire Billy, we're out. We sell our shares. | Maybe. I'm just going to tell every single one of my founders, please don't. Because even if it does give you advice, I mean, imagine somebody takes this advice and it lands them in jail. I mean, we'll be careful, folks. |
Yeah, well, our producers went ahead and came up with some other ways to spend that kind of money. So for the $600 that you could spend on 15 minutes with Billy, you could eat at the French Laundry with all the food and wine upgrades. Oh, 500 bucks a person. That's good. Instead of the 1800 for an hour with Billy, you could spend $150 more and sit two rows back from the floor to watch LeBron versus KD at the Barclays Center tonight. Oh, like a side note, I had to include this because I'm about to fly to New York. You can get that kind of tickets. | Let me tell you a story. Storytime. Okay. Storytime. Storytime. since we're third rail Mondays, I had a founder who hired somebody who had a colorful background, like McFarland, like high profile, had done like horrible stuff, said terrible stuff that just was super toxic. And he had met the person at a party, I'm going to make this an amalgamation. So it's not about a specific company. But Imagine, if you will, you know, you hire somebody like this, and I'm on the board. And I'm like, under no circumstances, can we be at a startup responsible for this person's redemption? Because you have shareholders. And there is no upside to hiring this person that could not be achieved through the 1000 other people who have this skill, who will apply for the job. So if you as the founder, CEO, meet a person they have this colorful checkered disturbing past and then you bring them into the startup, and it blows up in our faces. Anybody who sees this person on our masthead sees he has an email address from us makes this connection. It's going to put us in the press for the wrong reasons. You have shareholders and employees, you have an obligation not to do stuff like this. It's not dissimilar to the Palmer lucky stuff, right? alleged pommel lucky stuff, he denies whatever you you know, if you're doing something that could be embarrassing to the company, you're just taking you're making it putting everybody at risk. And why would you do that if you don't have to? Anyway, the person you as a board member and investor, you have very little say in this kind of matters on data to average person hire the person anyway. And then just engage with them. Because they just actually didn't get the work done. Luckily, didn't blow up. But yeah, you know, it's like, you don't really want your startup to be the platform in which somebody solves their problem, right? Not your obligation. And so if you're Billy McFarland's problem is obviously needs cash. Like everybody needs a job, I guess most people do. And if your startup uses the device, even if it's brilliant advice, and then people find out you used his advice, it's just like a stain on your company, not worth the risk. |
And the Warriors. Seriously. Literally. Literally. Quite literally. Literally. Yes. Like I was like, my son's 16th birthday is coming up. I was like, ooh, I'm gonna ask J. Cal for like some Warriors hookups, you know, like to get some good tickets. And I was like, uh, no, I'll, I could, instead I could get him a car. | You came to fly first class to New York. stay at a four-star hotel for the same amount of sitting in that seat. And the Warriors. |
Yuba City is the weird spot to go see big bands in the Bay Area. The general, it's like near Marysville. Which city? Yuba. Yuba City. Yuba City. I don't even know what that is. Like a lot of bands make a stop in Yuba City. | Yes, it is a little crazy. One of the tricks in the if you're a big sports fan is to go to a smaller market. You know, make a trip out of it, you go to Utah jazz versus Warriors sick courtside for, you know, two grand or three grand instead of 20 grand at Madison Square Garden or whatever, or at the Warriors arena or Lakers. You get to have that courtside experience. Yeah, people do that. They make a trip out of it. Same thing for concerts, too, by the way. you know, you're in a major city, and you go see some major artists, it's kind of hard to get tickets, scalpers, whatever. But you can make a trip out of and go to Red Rocks or go to, you know, I don't know, Canada, and be able to scalp tickets at a more reasonable price. I'm like, I'm talking about the Canada, Canada, Yeah. Yuba City. No offense to my Canadian listeners. |
I went to see a show there once and then the car broke down on the way back and then we, I spent the scariest night of my life in a hotel with like, I swear a dead body in a pool, like the room had been condemned. There was like a guy in a Camaro who was like, Oh yeah, go to the Sacramento. Yeah. It's a hall. You want to take a reliable vehicle, but if you break down, Earl will come in a Camaro and he will direct you to the auto body shop and he'll tell them, he'll tell you that you could say that Earl sent you. | Oh, Y-U-B-A. Yuba City. |
I can't believe I didn't die. It was amazing. | and then you will tell that story for the rest of your life. Sounds like the start of like Hostel Part 7. |
Let's see how it goes. Let's see. Publish. | Yeah, don't die, please. OK, everybody, well, that's the show for today. Third Real Mondays. It'll be a tradition here. Maybe we'll see you tomorrow. Who knows? I mean, the show's, we might get three strikes and the YouTube channel's over now because we talked about Project Veritas and other stuff. But yeah, good luck to us. |
See you tomorrow. Bye bye. | Publish. Boop. See you tomorrow, everybody. |
This Week in Startups is brought to you by Lemon.io. Need to speed up your product development without draining your budget? Hire vetted engineers from Europe at Lemon.io. Go to Lemon.io slash twist to get 15% off for the first four weeks. Linode. Apply to Linode's RISE program for founder-led early-stage startups and get a $500 credit, up to $120,000 in infrastructure credits, in one-year cloud consulting, and so much more. Apply at linode.com slash twist. And Crowdbotics. Great ideas can change the world, and Crowdbotics is the fastest way to turn those ideas into code. Get a free scoping session for your next big app idea at carbotics.com slash twist. | All right, Molly, it's Friday. There's some news here that we should go over. |
I think James Dolan- This is a pro James Dolan podcast. | Are you going to say it? Are you going to read that? Well, I don't- I mean- Nick might be trying to trick you. |
If a security guard comes up to you, just ask them, hey, what level am I by the way? Am I two? Am I three? | And then I'd have to get, like, a mustache. Like, a giant mustache. |
Yeah, Rachel, thank you for having me on. | So first things first, how did you get this idea? I want to know about the actual origin stories of Playlist AI. |
Yeah. So, um, like you said, there's a few different ways to make a playlist. And the one that was the original way was through an image. So I was going to a music festival and I wanted to, you know, a playlist of the lineup, like a lot of people do, but I couldn't really find a way to, to do that automatically. there's no like service for doing that. So I kind of worked backwards from that, thought about taking a picture of the music festival poster and making a playlist of it from that. And that was the first release of the app. Um, it was originally called something different. And I, since then tried to make an app that is kind of just like the ultimate playlist making app. And I've sort of added on different features over time, like the video one you mentioned and, and some other things. | So cool. And what was the concert or festival that you were at that really inspired you? |
Yeah, I was going to Portola in San Francisco. I think it was the first year they've done it, but it was a was a cool festival for sure. | Okay, very awesome. And I found you on Twitter after seeing like, I think it was like your first tweet where you were testing a beta possibly, which was really, really cool. Where are people like really finding out about Playlist AI using social media to like really share, share the platform? Or is there like other partnerships you're doing? |
I'd say mostly social. Yeah. I mean, I've been sharing on Twitter kind of just like as I release new things, it's kind of like each way to make a playlist is its own little mini app inside the bigger app. And kind of sharing my journey as I build it. As well as recently some like more traditional press, I guess you could say like TechCrunch and Fast Company and stuff have picked it up. So that's been pretty cool as well. | I could totally see you partnering with, I know there's a venue, for example, in the Lower East Side of Manhattan, it's called Mercury Lounge, and a bunch of different types of musicians come and perform there. One of my friends performed there, which was really cool, her name's Ashley Kutcher, so shout out to Ashley. But it would be so cool to create a playlist by partnering with a venue and be like, okay, if you're going to multiple different artists, you can create a playlist based on that. So super excited to see where you guys go in the future. Making a playlist off an image is very, very cool. And how did you, I guess, like, what was the first step into the process of making this? |
You know, I really didn't know if it would work or be possible. So kind of just like figure out what pieces I have that I can connect together and test things out. And then, you know, walk down the street and find music festival posters to take a picture of. | Okay. And what, what are people mostly using this for? Like, have you seen more people use that, that image prompt, um, generator, or do you think more people are using videos or I know that one feature rewind is pretty cool, which is where you make playlists on top of like other artists and tracks like that Spotify rap does. Right. |
Yeah, the most popular and most used one is the like AI prompt. So kind of like Dolly, but for playlists, you could say you just type in what you want, and it goes from there. So you know, whether you'd say like a playlist for running or working out or whatever. | That's super, I want somebody to make this for movies. I'm sure chat GPT could probably do it, but I'd like it to be even more curated. Once a week, we have Lon join this week in startups and Lon has the best movie recommendations, the best movie reviews. But unfortunately, I have horrible taste in movies, TV shows. probably music too, but I love things that are just so below Lan's level of critique. I love rewatching Gossip Girl and things like that. So it'd be cool if I could not ask Lan those questions and go straight to chat GPT. So definitely think this is really cool seeing this in the music sector. And if anybody's making this for like movies, TV, things like that, also interested. And where do you see Playlist AI going? Like, are you guys working on you guys saying like, there are multiple people, you're the solo creator, right of this? |
Yeah, yeah, it's just me. | And so where do you see this going? |
Yeah, I think, you know, expanding into other things other than other than music would be really cool, whether it's like movies or podcasts. For me, for me right now, I'm pretty focused on the music part of it. I think that there are like sort of two things to do. One is like, improve that AI text feature, because it's the early prompt, I guess you could say text prompt, because it's the most popular one. I think that there are some like natural things to do, like following how other AI uh, tools are expanding, whether it's like chat GPT. So you can imagine, you know, having that playlist creation be more conversational or even say, Hey, like I have this existing playlist and I want you to make it more poppy or remove like some of these parts of it. Um, but as also, I have a ton of other ideas that are completely unrelated to the prompt thing, whether it's like, um, Selecting some genres and then, you know, narrowing down, um, the more musical details like acousticness or BPM, or I had this weird thing I've been thinking about where you could kind of like swipe on artists sort of like Tinder style and dating app style and build a playlist that way. So just random things like that, that I'm really interested in. | So do you have a background in music? |
No, not really. | Okay. |