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SPEAKER_04: I am so excited about today's All Ask Jason.

SPEAKER_05: I got the best questions from people who are building companies, people who are raising capital, people who are looking to invest in startups, and I gave them some of the best advice that they've ever gotten in their life. If I do say so myself, because I am sitting on a team of 15 great individuals here at my company who are reviewing thousands of startups a year and working with thousands of investors to fund the companies that we're participating in, and we have knowledge that nobody else has, and we're willing to share it. Because we have learned that the more we share our knowledge with you, the trusted This Week in Startups audience, the more it comes back to us. And the more that we want to come back to us are two things. One, you invest in or find a great company. You email jason.calacanis.com immediately, and you get us on the cap table. The second thing I want you to do, if you're a high net worth individual and you've considered angel investing or you think it's cool, go ahead and read my book and join thesyndicate.com so that you can read my deal memos when I'm investing in a company. And perhaps, if you're interested and you're an accredited investor, put in as little as $2,000 and start learning the art and magic of angel investing. And do it carefully and cautiously with the knowledge that we've learned and we've shared. You're going to love this episode. It is a tour de force of advice from your boy, J-Cal. Stick with us.

SPEAKER_09: Okay, we have Julian on the line. He's got a question for me on Ask Jason. Julian, how are you?

SPEAKER_12: I'm doing great. Yeah, blessed to be alive.

SPEAKER_09: I'm glad to be alive, too. We are both alive.

SPEAKER_12: Yeah, I'm from Sacramento.

SPEAKER_09: Sac Town. Very nice. Love passing through Sacramento on my way to Tahoe. Got stuck twice on that 80. And one of my favorite Twitter handles is the live 80 Donner Pass traffic cams where I get to see exactly how many days I will be stuck in Tahoe.

SPEAKER_15: Oh, yeah. Tahoe is beautiful. I just want to give a quick shout out to the startup taxing here. Yeah. They hosted an event. Sonny was there yesterday. Oh, great. He was on the Accelerator program with requested. Yeah. So it's super inspirational.

SPEAKER_20: I think it's a great scene out there, and one of my vices is if people want to run a startup in Sacramento,

SPEAKER_05: they can get to San Francisco in about an hour and 15 minutes, which is kind of the same as being in L.A., except you don't have to do a flight. You can drive in and drive out same day, just like some people fly in and fly out same day. But flying in, flying out takes three hours each way. Driving in and out takes an hour and 15 each way. So it's roughly half the amount of arduousness, and I think a one-bedroom in Sacramento around that area is probably $1,000, right?

SPEAKER_23: Oh, yeah. Well, I'm paying $450, so.

SPEAKER_13: So for people complaining about rent and problems, just move your startup to Sacramento and drive in here when you need money or you need to go to an event. Okay. What's your question for me, Julian, from Sacramento?

SPEAKER_15: Oh, yeah. So I was listening to Joe Rogan's podcast, and with Jack Dorsten, they were talking about transparency measures that social media players and ad tech companies have to take. And I was really wondering, what measures do you think they need to take? I know in trajectory, I was reading Ben Thompson's piece on the European Union versus the Internet. And when he was talking about measures, he was thinking about establishing clear measures, such as types of data retained, types of data inferred, mechanisms to lead user-generated data, mechanisms to lead inferred data, et cetera. So do you think ad companies need to take those measures going forward?

SPEAKER_27: And what do you think are the implications in the startup scene if they do take those measures?

SPEAKER_13: Okay. So it's kind of two questions. Let's go with the social one first.

SPEAKER_05: So if you think about social media, it's incredibly powerful, and a large number of people have gathered there, and it's a very connected experience. So if you look at Blogger or WordPress or Squarespace or Tumblr, when blogs came out in the 2000 to 2005 era, they weren't interconnected. You could post a comment or you could track and link back to other blogs, but it wasn't in a singular feed until Twitter and Facebook kind of got into that. And maybe Tumblr was kind of a hybrid between the two, now that I think about it. And in a social media environment, things can get amplified, and people can put their comments right under each other. And it's sort of like going to a giant arena. Whereas blogs are like coming over to somebody's house or somebody's restaurant.

SPEAKER_30: When you're doing a blog post at Calacanis.com, when I do one, if you come there and you act like a jerk off in the comments, I can just delete you and ban you, and you're subservient to me. You're underneath my blog post, and you're in comments. Now, you look at Twitter. If you want to troll somebody, and you want to troll me at Jason, and you want to write horrible things or put terrible images under my tweet, you're on the same level as me. And things can get amplified.

SPEAKER_05: So on blogs, things would sometimes on the margins go viral, but not to the level of instant velocity that you see on something like Twitter. Something can trend on Twitter in seconds to minutes. So if there's an earthquake, it'll be on trending topics within a minute or two. If there is a terrorist attack or somebody wins a basketball game, it's on the top of trending topics. So it's different in terms of the reach and velocity and the interconnectivity. Think of blogs like a restaurant or your home dinner party. Think of social media like a giant arena or a million people at the Indy 500 or in Times Square. It's a different type of experience. So that means how people behave at your house party is different than how people behave in an arena. If you're in an arena and you start yelling at the players and run on the court, you get tackled and arrested. If you're in a dinner party and you act inappropriately, people tell you to tone it down or maybe they don't invite you to the next one. So anyway, people have a hard time differentiating these two things. And additionally, we have freedom of speech laws. And so people are allowed to be jerks. But you add that trending topic and the global nature and the scale of these things, it's uncharted territory. So the analogy that I just gave, it breaks because there's no stadium that holds 100 million people or a billion people like social media does. And so we have to come up with a new set of rules. With blogs, you could say, listen, there's freedom of speech. Anybody can post whatever they want on blogs. If they break the law, let us know. On Twitter, you don't have the same ability because somebody who does something that breaks the law or they post a deep fake or something racist or something untrue, it immediately goes to the top of trending topics or it immediately trends on Facebook. And so I think we need to start thinking about them not as common carriers. In other words, not as a platform. But we can't think of them as publishers like the New York Times either where there's an editorial process because there's too much content. And so it's uncharted territory. And I think that the tools are there. I think a lot of people are crybabies and don't use the tools. Now, I am a bit of a free speech advocate. And I like to know where the Nazis and the racists and the maniacs are. And I'm kind of an old school ACLU person. The ACLU used to fight for the rights of horrible people to have freedom of speech. Now they have a real hard time doing that because of our woke era and just, you know, the way this next generation thinks. The idea that an organization like the ACLU would fight for the rights of Milo Yiannopoulos, which they did from him publishing his book, or before that, the Ku Klux Klan to march through a town. That is now seeming to be untenable to even these organizations because of the woke crowd and the anti-free speech crowd. So with microaggressions hurting people's feelings. So it's a whole new world. And I think the platforms haven't figured it out. And I don't think it's exactly their problem. The issue is really you have two different generations that think differently. Young people think that they need to be protected from speech. I don't feel I need to be protected from some idiot Nazi saying they hate Jews or black people or whatever it is. I just think that person's an idiot and I'll block them and report them and move on with my life.

SPEAKER_37: Other people are like, oh, my God, that microaggression, I can't go on. I get it, but I mean, I don't get it, but I get it. I understand that that exists in the world, but I don't really relate to it because I grew up in a different generation that didn't feel that other people's words would make my life untenable in some way or I can't go on and whatever nonsense.

SPEAKER_05: So you have platforms that are easily gamed. And the Twitter people, honestly, and the Facebook people, they don't want to be the arbiter of what's posted on their networks. They don't want to be in that business. So when this video of a politician, Nancy Pelosi, I think they they they kind of did a deep fake or they oh, no, they slowed down her speech, I guess, to make her seem drunk. And the president retweeted it here in the United States or whatever. I mean, this is a level of craziness that's only going to get worse because.

SPEAKER_30: They could make a deep fake right now of Trump audio of him talking to Putin on the phone saying, thanks for helping getting me elected. And we would never know.

SPEAKER_05: And it would trend and impeachment hearings would start because this video existed and nobody could tell the difference if it was actually Trump or not. And so it's only going to get worse. It's going to be complete chaos. And it's the end of society. That's the answer to your first question.

SPEAKER_30: The second one about ad networks is I think consumer I think ad networks got over zealous and they started collecting too much data and it was unnecessary. So the level of targeting is unnecessary that Facebook did Facebook claims you can't target individual people.

SPEAKER_45: We all know that's bullshit. You can easily target individual people. You put 20 email addresses or 50 email addresses into a custom audience. You find those people. You put half of the people, you know, in France and then you put the one person in America. When you see an American IP address come up, you know that you've targeted that individual. So there's all kinds of hacks and Facebook lies about it. And Facebook let people target people by race and other things.

SPEAKER_30: In other words, they got too granular. They coveted micro-targeting to a level that now has blown up in their lap. They caused their own problem, in other words. Every industry needs to police themselves or they will be policed. Facebook is such a bad actor. They're so overreaching. And Facebook and Zuckerberg behave so badly for so long that they have given the entire industry a horrible name. And now we have to basically take the worst actor in the class, Mark Zuckerberg.

SPEAKER_37: And we have to take his behavior, which is abhorrent. And the whole industry now has to face the consequences of his nefarious behavior.

SPEAKER_30: If he had not been such a jerk off and done this terrible level of targeting and bad behavior and pretended he had no culpability in it, we wouldn't be in this situation.

SPEAKER_05: And so he's the cause of all this, in my mind. He's the tip of the bad actor spear. And what they need to do is, very simply, number one, give people an ability to pay for Facebook and Instagram and turn off the ads. If they did that, they have 100% cover. They could just say, anybody who signs up for Instagram and logs in tomorrow, it says $10 a month, just like Netflix, $100 a year, just like Amazon Prime. You can opt out of all tracking and opt out of all ads. One, two, three percent of people do that. It becomes a nice revenue stream. And it gives them the cover to say, if you don't want to be tracked, if you don't want a free product, pay for it, and you won't be. Do the same thing on Facebook and other platforms. Same thing with Google. They should have Google Pro. Google Pro should have zero tracking. And that's what our government should do. We should force them to say, there is a paid, non-tracked version. Which, by the way, is what Apple is doing. Apple doesn't have an ad business. They don't track us because they charge us $400 more than Google for a phone. If you want to avoid regulation, this is a message to the idiots running Facebook. If you want to avoid regulation, give a paid option, and then you can just pull it out and say, look, four percent of people took the paid option. If other people don't like it, then they should cancel their account or they should shoot the lock off their wallets, one or the other. And that's what, if I was in Congress or Senator, if I was your Senator, if I was your Congressperson, Julian, that's what I would do. And this is me preparing for my time. I am reclaiming my time. The Senator from California would like to reclaim his time. That's how I would handle it.

SPEAKER_47: Mr. Zuckerberg, why do you not have a pay? Would you give me your vote, Julian? Would you give it to me?

SPEAKER_48: Oh, 100%. Jake Alper, Mayor. Jake Alper, Senate.

SPEAKER_30: Yes, everything. Thank you. All right. Great call. And I'll look forward to seeing you at a live taping of This Week in Startups, which you now have a complimentary ticket to for calling into the show.

SPEAKER_09: And make sure you go to Patreon and sign up for the $2, $5, $10, or $20 plan so that you can be on This Week in Startups. Ask Jason. Okay, let's take our next caller.

Chamath Palihapitiya: Hiring is so hard. It is probably the hardest thing you're going to do aside from raising money. And you know what? A lot of the people I know who raise money, they have a harder time finding team members. It's arduous. It's hard out there. We have incredibly low unemployment, and there's a massive, massive competition for great talent. But luckily, there is LinkedIn Jobs. With more than 500 million active members, people come to LinkedIn every day to make connections, to grow their careers, and to discover new job opportunities. 90% of LinkedIn users are open to new opportunities, but they're not actively looking on job boards. You know these people. You're probably one of them. So LinkedIn Jobs gives you access to an entirely different demographic that doesn't exist anywhere else. We call those passive job seekers. They might not be looking for a job, but they would consider a new gig if it was better. And we found director, Sir Charles, and our marketing manager, Maureen, on LinkedIn. You need LinkedIn Jobs to find the right people for your business, and you will get targeted job promotion, recommended matches, and candidate management through a dashboard that tracks everyone from application all the way to hire, all in one place. So you're not going to lose valuable candidates. LinkedIn Jobs uses knowledge of both hard skills, like cloud computing, social media marketing, video production, whatever it is, and soft skills, like collaboration and time management. And they do that to match people who fit your role best in your company. So here is your call to action. Post a job today on LinkedIn.com slash twist and get $50. That's a fitty from Jason on your first job post. That's LinkedIn.com slash twist to get that fitty, that 5-0 from J-Cal.

SPEAKER_52: Terms and conditions, of course, apply. Let's get back to this amazing episode.

SPEAKER_13: Okay, I got Daryl on the line.

SPEAKER_55: Where are you from, Daryl?

SPEAKER_56: Hey, I'm from New Jersey.

SPEAKER_55: New Jersey, wow. Next door to my hometown of New York. What city, what town, what province of New Jersey are you in?

SPEAKER_59: So I'm from Trenton, but I currently live in Plainsboro, which is near Princeton.

SPEAKER_28: Okay, very nice. I was out in Princeton for a talk. Tell me, what's your question for me?

SPEAKER_59: Yeah, so I'm the co-founder of a startup called Prom Social. We're a social networking app for teens to plan, organize, and share their prom experience. Pretty much if you're familiar with any wedding planning apps like Zola, WeddingWire, and Zonat, you could think of us as them, but for high schoolers and prom.

SPEAKER_62: Okay.

SPEAKER_59: So we're currently self-funded, and we're at the point where we think it might be best to raise our first round of funding in order so we can grow faster. And we're currently structured as an LLC. I listen to the show a lot. I know that you think that it's preferred to be a Delaware C-Corp, and that's preferred for investors.

SPEAKER_64: At what stage do you think that it's important for us to make this change?

SPEAKER_09: Yeah, you have to have that change done before you even go talk to investors. It will be a tell that you're not in the know in terms of startups.

SPEAKER_05: So an LLC will create dividends and taxes and K-1s, and it complicates what an investor does.

SPEAKER_45: We just want to get shares in a company or do a convertible note, which converts into shares at some point in time. Delaware has a bunch of shareholder rights, and it's sort of a very clean place to do business. That's why it became the standard.

SPEAKER_05: You can look up the sort of history of that if you like. But LLCs are great if you've got an investment fund or you've got a small business or you're doing like a consulting business because you pay one-time tax straight through. And, you know, C-corporations, which is how you do shares, they have to pay tax twice. So you pay taxes as a company. Then the people you give a dividend to pay taxes. So that's inefficient. So if you were running a lifestyle business that threw off cash, you go LLC. If you can have shareholders, you need to have professionalism and have a C-Corp. There's something called an S-Corp in between those two, but people don't do that either. People get a little bit caught up in this. If you're going to go investor route, you just do C-Corp.

SPEAKER_04: It's that simple. And are you a first-time founder, second-time founder? Have you had a successful exit before?

SPEAKER_47: Great. So that's why you did an LLC.

SPEAKER_69: Do you have a professional Silicon Valley type attorney or do you have like your cousin as an attorney?

SPEAKER_70: We have an attorney, but we're going to look into how much it's going to cost for us to transfer over to a C-Corp.

SPEAKER_47: Yeah, but is your attorney like somebody who does wills and divorces and like a whole range of stuff?

SPEAKER_09: Or do they specialize in their firm on startups, technology companies, venture capital, et cetera?

SPEAKER_73: I would say they specialize in venture capital. We met at a conference a couple of months ago. We've been talking to him.

SPEAKER_13: You didn't ask this question, but it's good for you to have an attorney like Scott Walker, Fenwick, or Wilson Sonsini,

SPEAKER_05: somebody who specializes and does this because it signals to investors a level of comfort and professionalism that takes away another set of red flags. So you didn't ask this either, but I'm going to give you some other advice, which is you don't want to throw up red flags to investors. An LLC is a red flag. Your cousin or a family law attorney doing a startup because it's cheaper or they're a friend of yours, that all is red flags. First-time founder is also a red flag, and no business model is another red flag. A derivative business is another red flag.

SPEAKER_45: Tell me, what is the revenue model of PromSocial? What's your revenue model, or do you not know yet?

SPEAKER_77: Yeah, we know our revenue model.

SPEAKER_59: So pretty much we're going to connect the prom goers with the prom retailers, similar to how the wedding companies are doing it, where the people that are planning their prom, they're going to be able to find different retailers,

SPEAKER_80: such as limo companies, dress and tuxedo companies, different service providers.

SPEAKER_09: So you're going to be a marketplace of services or a directory and take commissions.

SPEAKER_77: Correct.

SPEAKER_09: Or a lead gen. Correct. It could be any of those models.

SPEAKER_77: So we're going to roll out a directory, and then as we build both sides of the market,

SPEAKER_86: we're going to transfer it into a full-fledged marketplace where they can control their own listings.

SPEAKER_05: Yeah, so I think that's why I was curious what your idea was here, because I think that this sounds like it's a very small business, because every time you acquire a customer, they use your product once, maybe twice. If they have a junior prom and then they're senior prom. And so that's going to be one of your challenges is you're going to spend a bunch of money to acquire a customer who then you get to sell to once or twice. The wedding companies had the same issue. So I'm just, again, you didn't ask this, but I'm looking forward in your business. And I had a feeling you were a marketplace, and I was going to tell you, I think the people from The Knot then did a post-wedding type business where they talk to people and try to help them with houses and other big ticket purchases or anniversaries and other stuff and babies. So if you think about prom, what comes next, what is the next spending trend, that's the question VCs, I predict, and investors ask you, is what happens after prom? Because if you do your job right and they have a great prom, and if you do your job wrong, it doesn't matter. You're not going to get them back. So your CAC, your customer acquisition cost, is going to be divided by one or two, and that's bad. With Netflix, they acquire a customer, and they might subscribe for 40 months. So you take the $100 CAC, and you divide it by 100 months.

SPEAKER_30: It costs them $1. If they stay 100 months, it costs them $2. If they stay 50 months, it costs them $4. If they stay 25 months, if they stay 25 months, it costs them $4.

SPEAKER_45: And they charge $13, they make $9 in profit. You know, you get the idea. So I think it's super important for you to understand this and understand that that is the ceiling of your business.

SPEAKER_30: It's fine for a first-time business, but be aware going in that you're going to have some challenges. And you might want to think about, after you get this one started, if you build a platform for events, why not do other events? Why not do formals? Why not do birthdays? Why not do weddings? If the platform works, and people wear tuxedos to proms, they also wear them to weddings.

SPEAKER_37: They wear them to, you know, nonprofit galas or galas, whatever you say. You know, you get the idea. So anyway, be prepared for that.

SPEAKER_94: Any other problems or challenges with your life or startup?

SPEAKER_86: Yeah, I have one more question in regards to that. So what do you think about us having pretty much two kind of models?

SPEAKER_59: So it's a social platform, and it's also going to be the marketplace that's going to be added in the near future. So our core is the social platform because it's a big prom culture where these students are planning for prom three, four years out. And there's a lot of people that even after now, as adults and into their later years, they still, you know, follow the Instagram pages and stay up to date with what's going on with prom. You have, I got you. So it's a moment of a thing.

SPEAKER_45: Yeah. So you have 20 developers and they have nothing to do? You're sitting there in a room with 20 developers and they're looking for work to do? Or are you under-resourced?

SPEAKER_101: I would say just starting out. You're under-resourced. No.

SPEAKER_05: All startups are under-resourced. So now you want to build two platforms. You want to build an Instagram competitor for people to share stuff or a Twitter, Facebook competitor, whatever. And you want to build a marketplace.

SPEAKER_45: That's two businesses that have two product managers, yada, yada, yada. I would rather see you do what the Shade Room did or other consumer brands where they just had an Instagram channel

SPEAKER_05: with one or two people working it day in and day out. But then you just do the social media strategy and the content strategy where you're posting articles and you're posting videos to YouTube and you're posting to Instagram content, which means you don't need any developers. You just need two people who cost 20 bucks an hour on average. And you can work from home people. You can do it on contract basis, five hours a day, 50 hours a week, whatever you choose, whatever they choose. And then build and go to where the users are. Because Instagram had to build that whole following. YouTube had to build that whole following. You're going to have to then spend $100 to acquire people to your social product and then maybe another $50 to convert them into the marketplace. It's too much work. I would just do dope prom looks or prom looks or prom life, right? If you have prom life, you're prom social. But let's say you had prom life or that prom life. You come up with something that appeals to this Generation Z group. And you just do funny prom stuff over and over and over again. Maybe even you make your own content. Maybe you feature your marketplace people in that content. So you're doing funny videos and then you include a limo and you tell the limo company, hey, we'll blow you up in the video if you let us use a limo for this skit we're going to do on YouTube or this viral video we're going to do on our Instagram channel. Hey, this tuxedo company, we're going to blow you up in the video. Now you're charging them $500 to get blown up in the video and that video is getting you users. And so that's a content marketing strategy with a little bit of a dope monetized marketing sprinkled pixie dust in it where you're saying, hey, I'll make you some videos. I'll make you some stuff. You can use it on your channel too and do what's called a collab.

SPEAKER_37: Look up collab, YouTube, collab, Instagram. You know what it is already, but it's a whole playbook on YouTube and Instagram. A collab is when you get three or four people together. They all produce the same content. They share the same content. They blow each other up in the app mentions. They all embed their products or services or people into those collabs and they all grow because they say, follow this person, follow that person, follow this person. You ever see those in stories? The reason you're seeing them is because they work.

SPEAKER_102: Agreed.

SPEAKER_05: All right. Listen, when you get to 510K a month in revenue, you're going to be ready to come to the launch accelerator.

SPEAKER_20: So I want you to email me, jason at calacanis.com when you get to that 510 a month in revenue. And then it's time for us to talk business and getting J-Cal on your cap table. Capisce?

SPEAKER_103: Awesome.

SPEAKER_28: All right, let's do it. Okay, back to work. 510K a month, then you call J-Cal. All right, let's take another question.

Chamath Palihapitiya: You know Envision as the product design platform used by thousands of startups. We all use it. We all love it. And 100% of the Fortune 100 use it as well. Well, they've just introduced a new offering for startups. It's called Envision for Startups. What a creative name. And that will help you streamline your workflow from design to development. Envision for Startups gives you the full suite of Envision tools, all packaged with startups in mind, including unlimited accounts for collaboration. So everybody can have their two cents in your product development, enterprise-level security so nobody's stealing your ideas, and custom support. Here, my CMO, Presh, is inviting teammates to help create a simple freehand drawing with Envision tools. He's signing up for Envision for the first time, inviting a teammate, and collaborating in real time on a simple iPhone mock-up. And he's doing this all within minutes. Look how much fun this is. Think about all the great ideas you have that you can start collaborating on and how simple and easy it is. Freehand Collaboration is the name of this super slick, super sexy product that I love. And it is just one part of the end-to-end tools offered by Envision to take your idea from concept to development. So here is your call to action. Get Envision for Startups at Envision, I-N-V-I-S-I-O-N, .com slash twist. Go ahead and streamline your workflow with unlimited users on the full suite of Envision tools, plus get that enterprise-level security and support. Once again, that URL to sign up, Envision.com slash twist. And boy, that freehand collaboration is just brilliant.

SPEAKER_108: Okay, let's get back to this brilliant episode.

SPEAKER_05: All right, next on the phone is Ted, my man Ted. How can I help you?

SPEAKER_108: Hey, how are you?

SPEAKER_05: I am fantastic.

SPEAKER_09: How are you, Ted?

SPEAKER_110: Great. First-time caller, long-time listener. All right. I just wanted to talk a little about Twitter.

SPEAKER_115: Twitter is such a powerful tool for building your community and doing all that. And it kind of gets rid of a lot of the barriers between people. But I do feel like sometimes because I'm an ENTP that I'm a little overbearing. So I compensate for that and I try to hold back a little bit. But, you know, you're very active on Twitter. So I reach out to you and I try to make things funny and additive and useful and thoughtful. Yeah. But is there a line that, you know, there's obviously an invisible line, like you've said in the past, where people can say something and the VC or the angel won't say anything to you to your face. But they will say, they'll put a little check mark next to your name and say, oh, this is a little bush league.

SPEAKER_121: Let me get out of this, you know?

SPEAKER_05: Yeah. Okay. So I'm going to rephrase your question. Hey, what's the best practice if you're an investor and a founder interacting on the social, on the Twitter? Great. So what I would say is you got to understand you're an ENTP or ENTJ, I think you said. For people who don't know what that is, is you're highly extroverted. You have on the Myers-Briggs scale, also intuitive thinking and perception as opposed to judging. I'm an ENTJ, ENTP, depending on when I took the test. And yeah, so here's the thing. Some people are full contact and they never shut up and they love to talk. And other people who are like that find it charming and engaging and they get more energy from it. When it comes to introverts, if you're a high, high intensity extrovert, introverts can deal with you for about 45 seconds.

SPEAKER_30: Now you're used to, as an ENTJ or an ENTP, having like an all out conversation brawl until two in the morning, four hours. That was a great discussion. You stay up another two hours reading. Introverts, you know, they can lose their energy and want to get out of there and go home and read a book for two hours instead of dealing with that.

SPEAKER_45: And so what I see on Twitter sometimes is people are, you know, Naval writes something that's like this super philosophical thing or, you know, you know, some journalists write something

SPEAKER_05: clever and they're talking through each other or above and below each other or they're just rolling over people and steamrolling people. And then you get muted or you get unfollowed or you get blocked. So like people like to have the Uber debate with me. I'll give you an example. Um, oh my God, Uber drivers make $2 an hour. And I'm like, really? Uber drivers make $2 an hour. We have the lowest unemployment in the world. Uber, Lyft, Postmates, DoorDash are all fighting Instacart for delivery people, Amazon as well. And you really think people are going to work for $2 an hour. You're being completely disingenuous. And I try to explain to them and they're like, no, you're wrong. Or they're just like, Jason's a billionaire and he hates and he wants everybody to be poor. And I'm like, okay, well, now we're not even having an intelligent conversation. You're ad hominem attacking me. You're not, you're misrepresenting stuff. So when people are intellectually dishonest and they add ad hominem, which just means calling people names, you're going to lose people. Now you may see me strategically do that. I started a fight with this kid, Anand or whatever, who is a socialist, former Reformed. He wrote a pretty good book, by the way. I actually endorse people listening to the book.

SPEAKER_125: I saw that.

SPEAKER_05: And I'm like, listen, but I'm picking a very strategic fight here. I'm not doing that with somebody who's a future founder and LP.

SPEAKER_37: I'm doing that with a socialist who's, you know, wrote this book, Winner Take All. And like, it's like entrepreneurship is terrible and no more billionaires. And he's kind of like the AOC socialist party, Bernie party, which I think is a bunch of lunatics who will keep Trump in office and enable the right wing nutcases.

SPEAKER_30: And I'm trying to mix it up with them because I want to stop the socialist movement and I want to keep young people believing in capitalism because capitalism is responsible for almost

SPEAKER_37: all the great stuff that we're experiencing right now. And governments don't solve problems. They cause more problems. They start. So anyway, that's a strategic fight with me where I'm picking the person to mix it up with who I know is a socialist. I'm not trying to convert them. I want to mix it up and have that debate. I want to have this kid, Anand, uh, on the podcast because it's an important debate,

SPEAKER_05: but I'm not going to, you know, uh, ad hominem too much. You might see me playfully be like, the kid's got great hair, but terrible ideas. So I like to be funny. If you're funny, that forgives. Um, but don't be a jerk. Be careful with the ad hominem. You know, like if you see me call a Nazi, a jerk or pathetic, or I call incels pathetic or whatever, that's because they are pathetic, but I'm not going to do that with other people in the industry. I want to challenge people on an intellectual basis. That's intellectually honest, that understands their position and then reflects back my difference in an intelligent way. When people do that, when they challenge my opinion in an intelligent way, I love it. When they point out my arguments weak for these reasons, I'm like, oh my God, finally, somebody's giving me feedback on how to refine my argument. So I feel that way about Anand who thinks I'm obsessed with him and maybe I am, but I think some of his points are good and I think his book, you know, definitely has some merit. I just think he's got no solutions. So I like interacting with those people. Just like I like, I have a couple of friends who are Scientologists. I'm an atheist. I like understanding why they're so, you know, obsessed with Scientology or other religions. I like that debate. So have an intellectually honest debate, easy on the ad hominem. And if you're going to pick a fight with somebody on the other side of the aisle, have it in an intelligent way and have a position. And that's the problem is people want to be intellectually dishonest.

SPEAKER_37: I think that's the cardinal sin on Twitter. It's like not being funny or being stupid.

SPEAKER_115: All right. And what do you think? Like I've, this is my second Twitter handle that I've gotten and I kind of stay apolitical on them and I, and I play it a little safe, but I still have my, my version of personality and humor and stuff like that. So I try to do the personal thing that you've talked about being a person on Twitter, you know, connecting with other people, but I try, I steer clear of the complete, you know, political and kind of the, the debate with teeth, all that stuff you're talking about, just because we're always trying to build something and I don't want to alienate anyone. Does that, is that disingenuous?

SPEAKER_05: Maybe it's disingenuous. I mean, listen, if it's the corporate handle for a donut shop, I don't think the donut shop needs to chime in on the Mueller report, nor do people expect the donut shop to be like,

SPEAKER_30: you know, Mueller's a conspiracy or Mueller is right, whatever.

SPEAKER_05: So like, are you a donut shop or are you a human? And like, when I see a venture capitalist from their personal account talking about politics, I'm okay with it, as long as it doesn't fill the whole feed. And I do think you have to be careful if like, if you, the perfect example is Paul Graham.

SPEAKER_30: He got very caught up in, in being kind of perceived as anti-Israel, pro-Palestinian. And I think that caused a lot of problems. He also came across, I think at times as a bit misogynistic, even though his partner on YC is a woman, it doesn't make sense.

SPEAKER_45: But I think you have to be careful there because I think he, he damaged, I think the Y Combinator brand for a little while because of those positions.

SPEAKER_05: Okay. And he, you saw him pull back on it and it was also a little ridiculous because like the president of YC is gay or the CEO was gay, the president's a black man and the co-founder's a woman. And people are like, YC is racist or bigoted or, you know, a bro culture. And it's like, really? It's a bro culture when the management is not white bros? Okay, sure. Whatever. But that's why I think you have to be careful. And so it's, if you're super successful, I find there's super successful people, either they shut up completely because they don't want to mess with their cash and their paper. And then some of them have so much money or so much power, or they're just so iconoclastic that they just go for it. Mark Cuban, Chris Saka, Paul Graham, they're just going to say what they, what they mean. And you just have to be careful with that because you will lose people. I've lost business partners because of my stand on human rights, as an example. I can't go to certain countries because of my stand on human rights, but that's important to me. So I made that decision. So just be eyes wide open and be prepared to pay that price. Now, if you're a founder, it's your first startup or you're an investor and you need the deal flow, I don't know that you can afford to alienate potential funders. So if you alienate half the funding people in the world because of your crazy Twitter

SPEAKER_09: handle, that's not good because that could impact your paper. I don't need to worry about it. And it's my brand.

SPEAKER_45: So just, you got to be cognizant of the ramifications of this. If you want to go full opinionated, you're going to lose some people.

SPEAKER_20: That's the truth. I've lost people. People think I'm a jerk sometimes because I'm opinionated. Some people think I'm a loud mouth. Some people think I'm a loud mouth and they find it charming. Some people think I'm a loud mouth and they would never do business with me. So whatever, let the chips fall where they may. I don't need to do business with everybody.

SPEAKER_110: Awesome. And do you think it's ever too early to build? I mean, we're still building the product. We're still haven't checked all the boxes. But I'm trying to build the community of goodwill on Twitter.

SPEAKER_115: And I just enjoy the interaction with the VCs and the startup founders. And, you know, Naval is a Naval or Naval, right? Naval is a great, you know, inspiration. You're a great inspiration. So I feed off of that a lot. So I just, I feel like I'm in there mixing it up and trying to just build goodwill. I think it's fine. You know, get some more engineers here.

SPEAKER_147: And be completely, be intelligent and insightful.

SPEAKER_30: Yeah. I think that sometimes, and I, in the early days of Twitter, nobody really knew how it

SPEAKER_05: actually was supposed to work. So people like me and Robert Scoble were tweeting 100, 200 times a day. And we looked at it more like a conversation. And the replies and tweets, original tweets and replies were given the same play.

SPEAKER_30: They didn't bury replies on your reply tab. So when you went to somebody's profile, you went to your feed, it was just flooded. And people would be having conversations going back and forth. So you want to provide a lot of value. And you want to speak, especially if you're a nobody, you really want to look at each tweet as, am I adding a lot of value?

SPEAKER_37: Am I building my brand? If you've already got a brand, you can pop off and be a maniac. Like some founders, you know, you could be iconoclastic like Elon is, or I am, or Naval is. But, you know, some people also craft their tweets on a very, you know, they make everyone

SPEAKER_05: count. And I think when you're starting out, I would make every tweet count. I keep it positive and be intelligent. That doesn't mean you can't disagree with somebody. But in disagreement, I would be twice as considered. So I like to mix it up with people. And people know me as somebody who mixes it up. But I always try to also be intelligent and have my passion and intelligence match. And I think you see that on the podcast, too. You know, like I may be passionate about certain things, but I also like to be informed. And so what I'll do before I tweet something, if I don't know about the subject, is I'll read. Or if somebody like Anand is, you know, with Winners Take All, I'll listen to his book, which I did. Because I was like, well, if I'm going to get into it with this guy and he's going to say my book, my book, my book, I'll listen to it. And this way, I can have an intelligent conversation with him. I don't know if he's read my book. I think he'd find it pretty horrific and painful to listen to a person who wants to build $100

SPEAKER_28: billion companies. But vive la difference.

SPEAKER_154: Right.

SPEAKER_28: All right. Good luck with everything. Awesome. Thank you.

SPEAKER_156: All right. See you soon. Cheers. Bye.

SPEAKER_28: All right. Great job, everybody. We've got some really great callers here. We've got another caller lined up. Stay with us.

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SPEAKER_28: Okay, let's take another call. This time, it's Matt. Where are you calling from, Matt?

SPEAKER_159: I'm calling from Bristol in the UK.

SPEAKER_28: Very nice. Did you get to see Mark Knopfler on the latest tour?

SPEAKER_82: I didn't have the pleasure. No, no. All right.

SPEAKER_28: Well, I'm going to suggest that you have the pleasure and call me back with a report from Mark Knopfler's incredible on-the-road tour.

SPEAKER_55: Okay. Do you have a question for me?

SPEAKER_162: I do. I do. So I'm a founder of a startup here. We're in the process of raising.

SPEAKER_164: And it's a little bit early for most VCs. And I know because I've spoken to quite a lot and most of them want to keep updated, but I'm ready at this point. And now, being in Bristol, kind of outside of the main tech hub of London, and so I guess my question is, other than the bigger angel groups, what's the best way of finding the right angels for the company that have a really deep knowledge of the market and can really add to you?

SPEAKER_20: All right. This is a great question. And if I may, Matt, can I give you the silver bullet?

SPEAKER_166: Go for it. That'd be great.

SPEAKER_05: Can I give you the exact technique that will work to get you to the meeting 100% of the time?

SPEAKER_167: Yes, please.

SPEAKER_05: Okay.

SPEAKER_20: Angel groups are almost universally complete nonsense and a waste of time.

SPEAKER_05: What they do is they bring a group of people together. Typically, they're barristers, aka lawyers, accountants, headhunters, PR people, people selling cloud services who are trying to sell into those founders, right? And so I get a lot of bad reports back about this Koretsu forum and other evil people, young startups, these evil programs that charge people to pitch. If you're getting charged to pitch to angel investors, it's by definition a scam. Do not do it. Period. No professional angels are going to let a founder pay to pitch them. I wouldn't let a founder buy me a cup of coffee until they IPO their company. And if they did IPO their company, I would have made a ton of money. I'd probably be taking them out to a Michelin store restaurant.

SPEAKER_09: So again, angels should pay all the time, not founders. Let's put that aside for a second. Now let's get to the magic bullet.

SPEAKER_05: And I'm going to give you two magic bullets because it's not enough for me to give you one.

SPEAKER_45: The first one is, what is the general genre of your startup? You don't have to tell me all the specifics.

SPEAKER_05: What is it?

SPEAKER_162: It's a fintech platform.

SPEAKER_05: Perfect. Got it. That's all I need. Fintech platform. There are a group of people who are high net worth individuals who have worked in financial services. Correct? Yeah. And you happen to be in a category like fintech as opposed to poetry or documentary films where there's a ton of money. So if you were a poetry marketplace or a documentary social network, this advice would not work as well because nobody's ever made money in those two areas. You can make a list of all the people, all the companies, I'm sorry, that have had success in financial services or adjacent to that area. So financial services could be somebody who worked in the bond market, in stocks, and then in adjacencies like wealth management or retirement savings or reverse mortgages, any of those things. And they are almost by definition going to be accredited investors capable of being an angel. However, they may have never made an angel investment. So they're not listed on AngelList or Crunchbase or any of those other databases of angel investors and early stage investors, but you with a chutzpah to call me at 1230 in the morning from the UK are going to get the dope secret advice. They don't need to be angel investors. You're going to write them an email. You ready to take a memo, Matt, from Bristol? Take a memo, Matt. Dear Susan, I noticed on LinkedIn that you worked at Bear Stearns and you've got a deep experience having worked at Morgan Stanley before that and an MBA from Oxford in economics. I am a humble entrepreneur building a financial platform that's going to help people get out of college debt and plan for their future. And I really could use your advice since you have at least 24 years of experience from what I can tell in this space. I live in Bristol. I have a prototype. I would love to meet you for coffee anywhere at any time, 5 a.m. or 11 p.m. at any cafe or your home or any, don't say home, that's creepy, at any cafe, anywhere to just get 15 minutes of your advice. I would truly appreciate it as an entrepreneur to be able to tap in your wealth of knowledge. Now, if you write that email, you didn't ask for money. You didn't mention angel investor. You were interested in that person. You showed that person that you examined their profile on LinkedIn. You examined their history. Maybe you found them on another platform, whatever it is. And you took the time to recognize their expertise and to ask them for advice and to make yourself available at any time. And you followed up with them four times and they got back to you on the third or fourth in all likelihood. And you do this 100 times and it takes 400 emails. And you're thinking like, this is crazy, but you're going to get 10 or 20 of those meetings. And out of those 10 or 20 meetings, you're going to get amazing advice from these human beings because they've been there. They've done that. And you're going to write all that advice down. And then you're going to put them into your CRM system. It could be a Google sheet or it could be a proper CRM. And you're going to give them updates on your progress. So even if you don't close them now, they may know somebody who they refer you to in the future or they may become customers later, or they may respond to your update 18 months from now with a killer idea. You're playing the long game. So I've met a lot of rich and powerful people in my life. When I met Mark Cuban, I never asked him for money. I was a journalist. Five or six years after I met him, I said, I'm doing a blogging company. I think you should do a blog. And by the way, I'm raising money for my blog company, Weblogs Inc. with my partner, Brian Alvey. Would you be interested in investing? And he did. That was year six of my relationship with him. So if you're truly an entrepreneur and you're truly playing the long game, networking, which Naval on Twitter derided the other day because he's an introvert, networking is actually a super powerful use for people who have no network. If you have a network, networking is annoying because you have too many contacts. You can't even keep up with them. You feel guilty about that. But you're a nobody, correct, Matt? Nobody knows you. Yep.

SPEAKER_30: And let's be honest about that. That's where I was in the early 90s. I was a nobody. Now look at me. I'm an annoying somebody.

SPEAKER_37: I can get to anybody through my network. Networks are powerful. That's why people build them. That's why the term network effect exists. So disregard Naval's advice about networking. It actually is a very powerful thing. J. Cal says, do the networking, build the network, and leverage the network over time. Now at some point it might work against you because it's annoying. Too many people calling you, too many people emailing you, too many people calling into your podcast, asking you for a favor, yada yada. So anyway, that's your first way to get those people. The second is, I wrote a blog post at calacanis.com recently. This chart will get you funded. If you're raising money and you really want to make it easy, if you have a chart of revenue doubling in six months or less, even a small amount of revenue, we're talking $5,000, $10,000 turning into $10,000 or $20,000 every three, four, five, or six months, that shows that you figured something out and that you're focused on what matters, growing. Startups are built to grow.

SPEAKER_31: Not burn money, but burn money and grow. Burning money and growing is called investing. Burning money and not growing is called nothing. It's called a waste of time.

SPEAKER_37: It's called burning a house. You want to put your category, you want to put yourself into the bucket and category of you're investing and growing.

SPEAKER_05: If revenue doubles every three months and you go from five to 10 in three months, then 10 to 20 in three months, and then 20 to 40 in three months, people are going to look at this and go, you know what? I believe that this person, Matt from Bristol, who's a nobody, who I met through the Bear Stearns person who worked in bonds, who they introduced me to, you know what? I saw the chart in their updates and I forwarded it to my friend who's a billionaire who sold his crypto assets and got out at the right time. Maybe they want to actually put that money into a real business. And since you have the doubling chart and you've been lightning focused on that, boom, now you're fundable. I'm doing that at inside.com right now. We double the revenue every six months. I look like a genius. Or every nine months, whatever it is. You start to open up doors that you didn't even know existed. And so that's my hope for you, Matt. Number one, you take your time and find non-traditional people who have a predisposition to invest in your vertical, but don't know they're yet in angels, because if they are in your vertical, be it poetry, be it documentary, film, or finance, movies, enterprise software, sales, you get the drill here, sysadmins, if they are in that category, you have the ability to ask them for advice. And if they give you good advice and you bond and you come across as somebody driven,

SPEAKER_30: you may unlock their affinity for you and the vertical and the product. And that's what you're looking for. The best early stage investors are the ones who have an affinity for the market, the product, and or the founder.

SPEAKER_37: The founder, they might have an affinity for because you're their nephew or your cousin or your sister or your brother or whatever. For the product, they may have built a similar product two decades ago. So they built something for PCs that now is happening in VR, AR, mobile, wearables, etc. So they built the original sales software for PCs and now you're doing sales software on mobile

SPEAKER_30: phones, oh, they totally get it. So that's a product base. And then there might be people who just market based. Yeah, I worked in bonds for 30 years and I always wondered why this product for bonds didn't exist.

SPEAKER_05: And wow, you're actually making it exist. I like it. Let me get involved. And you can also unlock their greed because you have a two or $3 million valuation right now. So they can put in $25K for 1% and look like geniuses when you hit $25 million because now they made 10X or then they made 100X. You get the idea. So you want to play into that. Make your own angels. Make your own early stage investors at this stage. And if you get a couple of them going, they might provide knowledge and money. And that's the double whammy. That's what you're looking for.

SPEAKER_162: Yeah, that sounds great. I think we've got the beginnings of that chart as well. Awesome. Give it another month.

SPEAKER_20: I would like to invite you to come to the founder of University. Talk to Jackie at launch.co and you can come as our guest.

SPEAKER_05: And also, if you want to come by the accelerator, if you can get yourself to 10K in revenue, you can come audit our accelerator. And you can just email me, Jason at Calacanis.com. Thanks for calling in, Ted, and staying up late for your first-time call on This Week in Startups.

SPEAKER_179: That's what I said. Matt.

SPEAKER_05: Thank you, Matt. Sorry. Okay. Let's take another call. Okay. I've got David driving down the road.

SPEAKER_13: David, what's your question?

SPEAKER_181: Hi, Jason. I was wondering, what's the biggest mistake you can make when pitching to angels?

SPEAKER_09: What's the biggest mistake?

SPEAKER_183: Yes, sir.

SPEAKER_09: Oh, my God. I've got a long list. Let me start going through the list.

SPEAKER_183: What's the most common or something along those lines?

SPEAKER_05: Okay. Gotcha. Most common mistakes. The most common mistake is reaching out to an investor before you're in their sweet spot for investing and not doing your research about that investor. So, if the investor is a late-stage investor and they work at TPG Capital or BlackRock and they're used to putting a billion dollars or $100 million into a company, they don't want to meet you when you have an idea. There's a complete mismatch. And another one would be going after somebody who only invests in Japan and you're in America.

SPEAKER_30: Another one would be going to somebody who only invests in a certain vertical enterprise like Jason Lemkin from Saster and you're bringing him a consumer social network. These are terrible ideas. If you're not aligned with the investor, you look really bad wasting your time and theirs. And they're going to go, why would this person waste my time? But more importantly, why are they wasting their own? I don't invest in this zone.

SPEAKER_37: All investors are on social media, on their blogs, on their corporate websites, in interviews, explaining their sweet spot and how they invest and how much they invest.

SPEAKER_30: And so, I have founders who contact me at this day and age not knowing where I invest and what my zone is.

SPEAKER_05: Early stage, post-product launch, pre-series A. I'm very clear. In fact, we gave it a name here, our Goldilocks zone. And we have spent considerable effort on the podcast, on our websites, in our emails, on our blog posts, in drilling into people's head, co-investors, founders, etc. We are not interested in ideas or MVPs. And that is too cold. And we are not interested in a competitive Series B where you have five term sheets. That is too hot. Just right for us is you got your product to market on your own. You're all grown up now. And you got a little bit of traction. You got five customers, 10 customers. You're doing 1, 2, 3, 4, 5, 6, 7, 8, 9, 10K a month in revenue. And it's growing. It doesn't have to be perfect. And we can then have you come to the accelerator. And if you've got 50K a month in revenue and it doubles every three to six months, hey, maybe we'll consider you for the syndicate. And that is the sweet spot for us. Do your research on investors. Second, having a derivative product where you are saying Pinterest is terrible. If only Pinterest allowed you to use VR glasses when pinning objects, it would be a success. When you build a product that's copycat or derivative, you look like you're uninvestable. Because none of us are interested in the founders who don't have original, unique, passionate takes on the world. So those are my top two that I see all the time. People come to me with the Uber killer or the Calm.com killer. And I'm like, hey, schmuck, you're adding something to Calm.com that I know they already tested. Or you're doing something that Uber has on the roadmap. It's just not important enough to do right now. And maybe they'll do it in year 15. So for the love of God, research and target your investors. And for the love of God, come up with a really interesting idea that's unique to you and that you're passionate about and that is not derivative.

SPEAKER_37: Is that helpful, David?

SPEAKER_182: On the topic of derivatives, what if the startup that you're pitching is somewhat of a derivative of multiple companies and taking the good of the individual companies and kind of excluding what the companies don't do right?

SPEAKER_37: Yeah, so that can be fine.

SPEAKER_05: Because you're taking something that existed previously, like, I don't know, let's say ordering a cab on SMS on Taxi Magic or the other app that existed before that. I can't remember the name of it. There were people who had those apps before, but they didn't have the innovation that Lyft and Uber had around GPS-enabled smartphones. And they didn't have the innovation of creating ride-sharing, which sits between taxi cabs, which smell terrible and, you know, are hard to find, and Lincoln Town cars that were too expensive. They did that thing in the middle called ride-sharing, which is called Lyft or UberX, right? Or delivery of food is another example. People used to have websites where you can go and deliver food, but they didn't work on mobile very well. They didn't handle the driver experience really well. They didn't put the menus online and organize them in the way DoorDash or Uber Eats are. And those services really super-evolved them. So if you're going to do a business that's been done before, you better evolve it and have a why now, something significant that you've improved. The why now for Uber was smartphones with GPS. So you could watch the cab on the map, I'm sorry, the ride-sharing, the driver coming to you. That really was the big innovation, as well as payments being easy and breezy to do. You put those two things together, that's the why now for Uber.

SPEAKER_30: If you look at Calm.com and meditation, the why now was that people had smartphones and subscription services. I believe the subscription service coming to consumer apps and people getting trained on subscription because of SaaS, enterprise software, and consumers getting trained by Netflix and Amazon Prime.

SPEAKER_37: We've primed consumers to be cool with subscriptions. So if there wasn't Amazon Prime and if there wasn't Netflix, I don't think Calm.com would have been able to stand on their shoulders and say,

SPEAKER_30: oh, let's take a Netflix-like subscription and have an app around meditation and wellness and health. That's why it worked in my mind.

SPEAKER_37: So I do think looking at a new technology stack and then looking at previous companies is magic. So if you think AR is going to be big and you think AR glasses are coming in two years,

SPEAKER_05: what can you do with AR now that would time it perfectly around the restaurant or food experience? Very simple. You put on your AR glasses, you look down at your dinner plate, and you see a dinner plate on your desk. And you swipe through it, and you see beautiful videos in front of you of the dish that you want to order. And then when you're on the dish, you swipe off the French fries, and you swipe through a bunch of choices and pick a Cobb salad or some green beans. And then it changes the nutritional palate. And then you pinch and zoom to make the portion and the percentage of green vegetables to your burger or whatever it is hit the number you want. Well, that's truly innovative. In fact, I would invest. That's a great idea. Somebody do it. An AR where you can look at a plate and then say, I want to pinch and zoom to make the portion of vegetables bigger. And I want to zoom in and make my portion of meat better.

SPEAKER_30: And I swipe them one way or the other. And all of a sudden, I see, oh, this is the nutritional profile I want to have. I want to have this lean chicken or elk. And then I want to see if I have green beans or Brussels sprouts. But if I fry the Brussels sprouts, what impact that has on my health. And then it just lets me order it with one click. Oh, my yum yum. What a great idea. Well, it's sort of like ordering from DoorDash or Uber Eats or going through Yelp. But it added these extra features that are so yum yum exciting. And that's how my brain is trained now. When I see somebody do something like, oh, you can order.

SPEAKER_37: And it's better than DoorDash and Uber Eats because we do free delivery. Or we don't require tipping. Or we get it to you five minutes faster. I was like, well, I don't know if that's going to be a big differentiator. Now, the AR glasses might be a huge differentiator. And the portion sizing might be an extraordinary innovation for people who are health conscious and giving them that kind of pick.

SPEAKER_05: So I think that's what you got to think about, David, is how much different is it? YouTube's the classic example. Putting your videos online used to cost money. YouTube made it free. Syndicating your videos online required syndication tools that didn't exist back then. And they had the first syndication tools where you could take a little clip of Lazy Sunday and put it on your blog. So there were two really big innovations there for YouTube. One, making it free. Two, making it easy syndicatable. So great job, David. Great questions. I hope that helped. Let's take another call on this all Ask Jason special.

SPEAKER_193: Hi, Jason. This is Kirsten Barnett from Bruins territory, Boston.

SPEAKER_30: Oh, Boston. How are you?

SPEAKER_194: Good. Good.

SPEAKER_196: Okay, Kristen.

SPEAKER_30: What's your question?

SPEAKER_196: First of all, I love the advice that you gave to Matt about the email to sort of find angel,

SPEAKER_198: make angel investors out of people who are already in your space successfully. That was great advice.

SPEAKER_200: I agree. It was brilliant. I just made it up on the fly.

SPEAKER_196: No, it's great because you show that you've researched, you know, the person, you've shown

SPEAKER_203: an interest in their background, and you're not asking for money, so you're not crystallizing a no from the very beginning because somebody who's never invested before is probably not

SPEAKER_198: going to do it with someone they just don't know. So it's like, it was great advice. I loved it.

SPEAKER_204: So my question is, I'm an active angel investor, and, you know, the area of investing that I

SPEAKER_203: think can get trickiest is the sort of subjective qualities that you're looking to make a determination on with respect to the founder or the founding team. So you're looking to figure out, you know, do they have resilience? Are they street smart? Can they pivot? So I'm not talking about sort of pure intelligence and computer science and things that you can actually get a handle on in a pretty quick way. I'm talking about the more difficult qualities and characteristics and integrity. So I'd love to hear from you what you do to get to those things.

SPEAKER_211: It's a great question.

SPEAKER_05: So we talk a lot about intangibles, right? And intangibles to me are things like resilience, grit, creativity, ability to lead. And sometimes there's not like a piece of paper where people can take out a certificate and say, I'm resilient, or they could say, I'm a great leader. So what you have to do is look at your interactions with them over time and determine if they show those characteristics in the interactions with you and in the product and in the company. So going and visiting the company and talking to the other employees would tell you a lot about the ability of that person to lead, wouldn't it? So as would maybe if you don't have a sense that this is a great business and you don't have enough information, wait. I have a lot of founders who are a lot of investors who I mentor and I talk to, and they're like, I can't figure out if this person is going to get this done. And I say, okay, that is a signal for you to say to the founder, I'm not ready to commit right now. I would like to see over the next three to six months how you add team members and how many of these clients renew or expand their spend with you and how you do with fundraising with other investors. And then I might be able to invest six months from now. Would it be okay for me to get your monthly update to people who passed on investing so that we can stay in touch? And what I try to explain to angel investors, especially people who are new to the game, is that there are usually three, four, five times to get on the train.

SPEAKER_33: The early way to think about early stage investing is it's a local train.

SPEAKER_05: And angels can get on board at any of the five or ten stops that that company and that founder is going to make. From the friends and family round to the angel round to the seed round to the seed extension to the pre-series A and even the series A. They typically do five to ten investment rounds. Now, when they get their series A and a venture capitalist takes 25% of the round and they say,

SPEAKER_37: everybody's got to pass on their pro rata or I'm not doing it or I need to hit this percentage. Anybody else you add to the round after that doesn't come out of my percentage. It comes out of yours. That's when the sharp elbow behavior starts, series A or pass that. But in my experience here in the Silicon Valley, it's five, six or seven rounds of funding that occur. So if you see they've done two rounds of funding, there's probably three left that you can participate in.

SPEAKER_30: So wait and see if what they said they were going to do is what they did. Right. And then, you know, if the person is full of ish or if they have credibility and that's what I'm looking for.

SPEAKER_37: I'm looking for somebody with resiliency. So I'll say, you know what? You're not ready for the accelerator, but I'd love for you to stop by the accelerator and audit a class. When I see that person comes across the country to a Thursday and they come on a Thursday, which is when we have the accelerator and when we're always going to have it, it's always going to be Thursdays because I like if I have to travel, if they come to the accelerator on Thursdays, they're showing me something. They haven't given up on getting me, Jason Calacanis, the world's greatest angel investor as an investor, even though I passed. And then I tell them apply. And then I tell them talk to Jason DeMond and spend some time with him. Those are all tests. And you wouldn't believe it. People fail the test. I invite them to come hang out on a Thursday and get a burger with me and the team afterwards. And you know what they do? They say, oh, you know, I don't have the time or it's too far or I'm a little bit busy. And coming all the way to the accelerator from San Jose is hard. And I'm like, oh, okay, I totally get it. Taking an hour train ride or a 45-minute ride on your car from San Jose to San Francisco is too difficult. I get it. I am not the right investor for you because I'm a grinder.

SPEAKER_05: And if somebody told me that I could, in my early years, I could have got their money to invest in one of my companies and all I had to do was go to Tokyo,

SPEAKER_30: you could be sure I would have found the cheapest flight to Tokyo and been there because I was trying to make something happen in my life. And these snowflakes who can't be bothered to show up and put in the time, thank you so much for telling me what I need to know. Oh, you can only start your business after I give you 250K? Okay, sounds good to me. You are a precious, unique snowflake. And there is no other snowflake in the world like you. But there are a billion other snowflakes in this snowstorm. And there's going to be a million other snowstorms to come. So enjoy your precious life before you melt on the ground and be our forgotten forever.

SPEAKER_211: Jesus, people, let's do some work here.

SPEAKER_215: Are there any other, are there any other sort of tasks that you do or any specific questions that you ask? Sure. Any other, yeah, thanks.

SPEAKER_33: Look at the product. And then when you look at the product, pick a feature you think is interesting.

SPEAKER_05: And then ask them, this is interesting. Com looks very interesting. Why are you doing one single meditation a day as opposed to having a library of thousands of them with hundreds of teachers? And then that's it. Ask a question about the product. Why don't you allow tipping in Uber? Lyft does. And then listen to the response. Why is there surge pricing on Uber? I don't get it. I've never seen surge pricing in a taxi before. When I asked that to Travis, that answer was so sharp and so inspiring that I couldn't help but invest in that company. When I asked that exact question to Alex at Com, those are actual questions I asked. And those are my two biggest investments to date, or returns to date, on paper and in some cases in terms of selling a little bit, yum-yumskies. Those two are actual questions. And how considered the answer is. If somebody says, yeah, well, I don't know, or they don't have a really well-built answer, and you ask three or four of those in a row, short, tight questions about the product, you are going to just, when you listen to that answer, you will know. A neon sign above their head will say, loser, loser, or winner, winner, or somewhere in betweener. And you'll know, because you want to invest in the winners, who, when they make a great product, they know why they're doing what they're doing. They have a thesis. They have a test. They have an opinion. When I talk to Henry from Cafe X, and I say, hey, why did you do iced beverages before? He said, iced beverages? That's everything. People drink iced beverages in the winter. There's a group of people who love iced beverages. I know this. I did the research. And here's how we're going to make it happen. And that's the most important thing for us to do right now. And I was like, in the board meetings, like, really, Henry? I'm not sure. And sure enough, he does it. They're my favorite drinks on the menu. And in February, and in March, and in April, when it was cold here in San Francisco, they blew the doors off of sales at the three Cafe X locations in San Francisco.

SPEAKER_30: He was right. And I could tell from his level of just craftsmanship, deft, crisp answer. And that's what you're looking for. And you know you get a crisp answer from somebody. You ever ask the waiter, hey, what's great on the menu?

SPEAKER_37: And they're like, everything's great. And you're like, oh, literally, everything's great?

SPEAKER_30: And then I rephrase the question. What do people come back here for the most? What are the signature dishes?

SPEAKER_37: And they're like, yeah, you know, I'm a vegetarian. I really don't eat much on the menu. And you're just like, well, that's super helpful. Thank you so much for that. And then you have other people who are like, don't get the swordfish.

SPEAKER_94: Just trust me, don't get the swordfish. It gets sent back all the time.

SPEAKER_203: And you know what I love about this too is you can do your homework ahead of time going into the meeting. You can already have your, you know, three or four questions that you want to do on their product. Yeah. Right? Perfect.

SPEAKER_237: Yeah. So that's great.

SPEAKER_236: All right.

SPEAKER_237: Anything else along these lines of getting to character, integrity, and intangibles?

SPEAKER_05: You know, anytime a piece of data comes up when you're in the meeting, write it down in your Moleskine or other high-end VC book, not an iPad Pro with a pencil.

SPEAKER_20: Write it on a piece of paper like an adult. You sound like an adult.

SPEAKER_05: And then when you go into diligence, you can ask to confirm those numbers either by just asking them or you can have your diligence person do that. In other words, have an intern, have your cousin, whatever, say, I'm doing diligence and here's what I want to ask you. And if you do that, what you'll find is we had people lie to us in diligence.

SPEAKER_45: We had it recently happen where somebody said, I have this many customers, 7,000, and they pay $12 a month each. Therefore, I have this amount of revenue.

SPEAKER_05: And it turned out of the 7,000 customers, 1,000 were paying, 6,000 were on free trials. And we kind of sat around as a group and we're like, oh, they gave us the potential revenue, but not the actual revenue. Is this somebody we need to be in business with or not? And we didn't exactly think the person was purposely dishonest. We kind of put it into the like, so excited to potentially work with us, they kind of got ahead of their skis. Because I said, oh, you have 7,000 customers times 12, that equals this amount of money. And they were like, yes. And I was like, okay, great. But it turned out maybe they were just in the heat of the moment. So you'll find that happen where people say, we have 6,000 customers and we charge $99 a year. And you think, okay, great. Okay, $100 a year, 6,000 customers, they make $600,000. And you find out some people aren't paid trials. They didn't have a business model or they used to charge $10 a year and then they made it $100 a year. And they grandfathered those people in and you're going to have to make your own decision on, do you think it's intellectual dishonesty, a lie, securities fraud, et cetera? Or is it spinning a yarn and do you want to deal with those people, right? And life is short. There's so many people who are upstanding and have high integrity that I like to go with that group of people. Now, if somebody bends the rules like Airbnb or Lyft and Uber did and they reinterpret the rules and it's on the side of the consumer and they're fighting the good fight, that's different. And I've talked about that a lot in this program because people like to challenge me on the Uber investment. I said, listen, with ride sharing, I think that the rules were unclear and they were written 100 years ago about taxis.

SPEAKER_30: And every jurisdiction is different and they're going to fight it out in every jurisdiction to give more choice to customers. And I think that's virtuous.

SPEAKER_37: What you don't want is people cheating like that Biome company did or other companies did. Okay.

SPEAKER_08: Or Theranos. Or pick the company that just was an outright fraud.

SPEAKER_203: With the situation that you outlined with the, you know, part of the customers were non-paying, I think I would be in, I mean, I would be inclined to, if I loved everything else, okay, about the person, the product, the market, et cetera, I think I would be inclined to go back to that person and actually tell them candidly over the phone, not in writing, over the phone.

SPEAKER_250: Or even in person, you know, that made me hiccup. Let's have a, you know, let's have a conversation about it. I mean, I, I, I would not probably want to go ahead with the investment without actually having a conversation with the founder.

SPEAKER_13: Which is exactly what we did. Yeah.

SPEAKER_05: And we took the approach of.

SPEAKER_250: And I see how they react.

SPEAKER_05: Well, yeah. And they were very apologetic about it. They realized they blew it with me. And one of our managing directors talked to them and we just said, you know what, let's talk again in six months. Let's see where you're at. But once we kind of put the ball back in their court, we gave them like a six month penalty, if you will, or a cool off period. Let's see how they perform. So we just kicked the can down the road. And so let's just take a, because we're, you know, listen, we are at the height of, you know, deal flow here at launch because of my profile on this podcast and the team. We don't have to invest in every company to win. You know, we can miss the next Facebook and hit the next Google. We can miss the next Google and hit the next Amazon. And that's one of the lessons about, you know, angel investing I try to teach is you don't have to hit everything. You have to hit one. And so, you know, you can forgive yourself if you make a mistake and you miss a big one as long as you hit a big one. That's really what it's about. And, you know, hitting a big one takes 30, 40 investments in my experience.

SPEAKER_260: And I also like that you went back and, you know, you did a big friend and you told them candidly, you know, what happened, you know, because a lot of people would just walk away.

SPEAKER_20: I agree.

SPEAKER_260: Yeah. All right.

SPEAKER_20: Great talking to you. Stay in touch and we'll see you soon. Cheers. Oh, my God. What an amazing episode.

Chamath Palihapitiya: And now for those of you who are doing the Patreon for this week in startups, I am going to give you the best question of the entire session exclusively for our Patreon supporters.

SPEAKER_225: Thank you for joining the Patreon for this week in startups. And with the rest of you, get in here.