SPEAKER_00: two of my friends at lightspeed in nea stop this you made a huge mistake investing in this

SPEAKER_01: you certainly did your diligence and saw what happened at forespring you saw what happened at secret and you saw what happened uh at yik yak and now the wall street journal god bless

SPEAKER_00: journalism right we everybody's deriding journalism this is where journalism does a really great job he's going there and telling the actual story and giving you eyes on the truth and the truth is in this school it created chaos the principal of school said i have not seen chaos like this in the last nine years your app caused pain and suffering so if you're so proud of this investment i want you to print out the wall street journal story and bring it to your pta meeting

SPEAKER_03: bring it to the principal of your school and say to the principal of your school here's my latest investment and look them in the eye and say what do you think this week in startups is brought to you

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SPEAKER_10: get more details go to jamwithjcal.tech brought to you by dot tech domains all right everybody welcome

SPEAKER_00: back to this week in startups my co-host alex wilhelm is here he's at alex on the twitter uh now x.com and i am jason and we have a full docket we were out of town last week we hosted our liquidity summit about 150 people that would say it was 70 percent gps uh the general partners of venture firms and about 30 percent angels high net worth individuals and lps the people who give money to venture capitalists generally speaking and we had a little off-site we had three nights of poker alex um as a journalist you now got to come inside the tent your impressions

SPEAKER_17: uh everyone was slightly less guarded than usual but uh the biggest takeaway that i had was how if

SPEAKER_18: you arrived 10 minutes late to the poker tables you were on the wait list because everyone was

SPEAKER_19: like breakfast people are 30 minutes late started content 10 minutes late poker time everyone's early yes we had six tables going and six tables yes i wrote at 9 20 on the third night and i was like

SPEAKER_22: eighth on the wait list and i was peeved so wow well that was for the one two table but you know

SPEAKER_00: yeah but i mean it does speak to uh you know we are placing uh bets even though megan reynolds

SPEAKER_13: says don't use the gambling terms uh she gave a great talk brad gerstner's uh lp relations person

SPEAKER_00: and she says don't call it bets right and uh we all like to call that's because we do consider it gambling we do consider placing a bet part of what we do but it's an investment sure uh probably better when talking to lps to say investment but the truth is when you do venture investing and you're start up what are you trying to do you're trying to make the best decision you can with partial information yes right you don't know everything about the startup you don't know everything about the market so you place a bet and then some time goes by maybe you place a second or third bet and you try to get your money in good as we say in poker same thing holds true uh for investing so

SPEAKER_18: uh i got a question about that analogy because i like it it works for me especially sitting there with a lot of people who make investments for a living it was pretty apropos but what is the equivalent of a

SPEAKER_00: poker bluff in venture investing yeah so i would say when they overfund a company or you see like an investor make an investment and then they put more money into the company and they're kind of saying like hey we we don't have anything here but we're going to keep hiring people we're going to keep marketing it we're going to keep building the tech and you're bluffing hoping for m a opening somebody buys the assets so maybe the aqua hire kind of maneuver we're going to keep building this because

SPEAKER_01: we know large language models are if for example today large language models are the future or i that's my perception hey we're in seventh place but we're going to keep putting money into this and pretend that we're going to be able to catch you know these open source projects open ai you know and google gemini we're pretending we're bluffing that we're going to get there we'll we'll have a ton of employees and then suddenly inflection ai is bought or gutted by microsoft

SPEAKER_37: and they get their money back so that's kind of it right i would say no i think it's interesting that you put the founders and venture capitalists together on the bluff side and that makes the other player

SPEAKER_22: uh other companies that might buy the asset aka the bet no it's interesting i just like poker

SPEAKER_00: analogies to be honest so this works for me well i mean and if you think about each of the cards coming out you have your whole cards right you make a seed investment the flop comes down maybe it's a

SPEAKER_13: series a you got some customers etc and then over time the turn and the river come and you you know you start to you know raise growth funding and then eventually ipo or have an outcome and it does you know a story gets told over four or five betting rounds four or five investing rounds and so it's analogous um i think in some ways just making decisions constantly the reason why it felt clubby or

SPEAKER_30: interesting and low pressure is because no founders no press right so listen you and i

SPEAKER_00: will spend a lot of time as journalists journalists are there people are going to be guarded and if the founders are there people are going to be guarded where you know you're not going to talk about hey we're trying to get to this percentage ownership it seems a little uncouth right we're trying to uh you know talk because you might talk about startups as if they're assets you know in a portfolio and maybe to a founder that feels like oh i thought i was like special and i'm like you're talking about me like i'm one of 30 bets in an asset of a portfolio it's actually good for founders to understand that dynamic that you are in the vcs and the lps mind one bet in a portfolio of bets with the goal of hitting an outlier and so everything done in our industry really hate to tell this to everybody is spinning our wheels waiting to hit uber airbnb doordash or some outlier and then

SPEAKER_01: everything we do is just experiments on the road to hitting the power law which could make you feel terrible about it or it could make you feel inspired right that we take so many chances and we're so risk-taking in this country and that we're okay with that risk-taking and we don't mind if you are one of uh 27 zeros in a portfolio if the last eight return two to 200x right so i'll throw in one more

SPEAKER_37: observation then just to cap this off because i i like where this is going one thing i did notice talking to a a panoply of gps at the event was how non-antagonistic they were towards each other

SPEAKER_18: i thought there was going to be a little more good-natured ribbing a little more competitive um uh talking if you will and there wasn't that much that it did feel clubby but not not in like a

SPEAKER_51: stuffy wood paneled english kind of way but just in like um it felt like intimate in a good way i guess

SPEAKER_13: yeah so what you can take from that is the proliferation of new venture funds uh we had i think it was megan reynolds talk as well or it may have been say on from um green spring um now stepstone

SPEAKER_12: where she sort of showed there were like 3 000 new funds and 1800 new managers some crazy number um seed investing and early stage investing there's probably 30 40 50 entities on the cap table up to and including the series a and it's only at the series a where one person wins and one and two people lose right in a competitive series a there's just not enough room for everybody and so starting in series a or b you start to have some sharp elbows that's why you'd see like andreason

SPEAKER_46: kleiner sequoia you know those kind of names battling it out historically like we have to get google and you know then google says well you know larry and circus they will take half from klein or half

SPEAKER_63: from sequoia that was like a seminal moment in the history of the industry where founders exerted who

SPEAKER_13: got to participate in google's round but generally that's uh the nature of startups today which makes it quite nice and so if you have a winning company what we try to do and you got to sit in in our um our all hands and we can talk a little bit about that as well in our all hands maybe with our investment team i had you sit in just because i want you to kind of help me get reality it's like a bonus of having you as the uh co-host here um you get to see i'm trying to craft a team that not only can pick

SPEAKER_12: the company right and have a framework for picking them and making a really good decision so they know which starting hand but they also now know how to play those cards after the flop comes out right um and in that analogy the second half of the job is seeing if there's pull through what's

SPEAKER_00: pull through that means another firm evaluates our startups from first principles you know from a sharp pencil and a blank sheet of paper they underwrite our latest company podcast ai and they make a decision if they want to invest well if we invested in our in our um accelerator or found a universal like we did for podcast ai and then somebody marks it up to 10 million okay we invested at 2 million it's 10 million we have a 5x on paper okay no big deal but the most important thing is that it pulled through to the next set of investors it made it from you know this mountain down the valley and back up to

SPEAKER_46: the next peak down the valley into the next peak and and hopefully going up the whole way so i've got our team

SPEAKER_13: focused on because as a manager of a new fund uh we're an emerging fund i have to motivate the team

SPEAKER_74: so i said listen everything you've done up to this point in placing the bets means nothing that's table

SPEAKER_00: stakes that's your ante i'm judging everybody the bonus pool is based on your employment here is based on your promotions are based on pull through only so now what i'm trying to do is on a 360 basis as i

SPEAKER_01: train these new investors okay you picked really well but was your pick validated by the marketplace

SPEAKER_18: with a pole right and the way this was described to me actually at that meeting was pull through matters because an early stage fund has such limited final outcomes to discuss for so long that lps look at pull through as kind of um a heat check if you will proxy for the button how it's doing a proxy sure yeah so it does matter and it was good to see and i i have to say uh that event had more month uh sorry uh liquid death than anything i've ever been to in my life and so i was

SPEAKER_13: happy as a clam yes absolutely if you're sober and you and you and you want to drink something that looks like you're drinking uh one of these fancy beverages that the the millennials drink what do they drink they're all into this like malt liquor stuff what is the um not kombucha no what's

SPEAKER_84: the thing they all drink like white ball is that or that's vodka soda it's seltas yes it's not

SPEAKER_88: seltzer malt liquor is different um liquor is different right yeah higher higher calories on the

SPEAKER_18: ball liquor spot anyways on the show today we are going to talk about fizz and when to reign in social media apps because we have a couple of historical notes about this app that is blowing up on college campuses and high school campuses then the state of seed starts raising less how to name seed rounds and then founders breaking out from their job the first round of the twist 500. startups and small

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SPEAKER_18: this up i have a lot of thoughts about this but i'm curious as a parent why did the story grab you by the

SPEAKER_12: collar and drag it into your attention all right so anonymous apps uh and anonymity in general is if you've been in the industry for a couple of decades especially if you're a journalist you start to really understand the pros and cons of anonymity and when it should apply and when it should not apply to society in society we need to have whistleblowers go see the movie the insider you know sometimes people who

SPEAKER_00: have no power need protection to whistleblow and you can you know make your decision for other high profile whistleblowers which ones you think did the right thing which ones didn't but generally speaking

SPEAKER_12: we have that protection for a reason um and it's and that is virtuous then you have anonymity by somebody who maybe doesn't have power but they want to write um you know papers like we did here in uh the forming

SPEAKER_00: of our union and uh what were those papers the federalist papers they are they're back here on my shelf actually somewhere okay yeah and they were written anonymously am i correct in some cases um yes and so okay great you are trying to say something politically you know you're a dissident okay so we have whistleblowers we have dissidents you know you can add to that you know uh ish posters uh maybe who are making fun of people and don't have power okay maybe seems less important and then

SPEAKER_12: there's another virtuous one in my mind for anonymity which is i am embarrassed i'm suffering i need some advice i'm i don't want to say it publicly but i'm depressed or i feel insecure about these issues okay so those are like nice virtuous places for anonymity and then there's owning your words and we all know the value of that linkedin you don't have to deal with fake people you know you have it was very rare

SPEAKER_00: to run into a fake pseudonym account on a linked interface because they're not allowed and that allows you to have more trust in those platforms so more freedom of speech on x more trust inherently on those other platforms you know you get to pick what you want to do now you bring in children now you bring in children whose brains are not fully developed and who have a propensity to try to figure out who they are socially we're all awkward as teenagers even the the jock and the you know the the the king and the queen of the prom they they also have their own insecurities and there is absolutely no justification or value that comes from giving those people who are developing their frontal lobes and long term the ability to be anonymous and then do anonymity by geolocation and by phone books so this is where details matter alex what these apps do is they know your geolocation okay we both go the same high school okay they know whose contacts are in our books you say this person is a slut you say this person's parents are uh you know are on drugs this person's parent they're these people are poor these people are rich and then what inevitably happens is some child who is struggling gets targeted by this and there's enough abuse in the system when people use their real names educators are having a hard enough time and then what inevitably happens with a platform like this

SPEAKER_63: like we've seen before a child kills themselves or goes into depression harms themselves in some ways

SPEAKER_00: and you and i have been covering the space for long enough to know that this is the worst idea

SPEAKER_74: you could ever have yet people keep coming to it maybe you could explain the backstory here in some

SPEAKER_19: details i think the reason why people keep coming back to this as a startup model is that it always

SPEAKER_18: catches fire at the beginning so it looks like the next big thing this is how we got yik yak which raised over i think it was over 73 million dollars up to a 400 million dollar evasion back in 2017 this is what gave us secret this is what gave us uh form spring which later became i think spring dot me so for you and i jason this is the fourth round at least of this coming around and this is in the news because fizz is blowing up it's now on 240 colleges it's now 60 high schools and the journal wrote a story discussing what happened when it opened up to students at vermont's largest high school essentially it went from zero to super toxic incredibly quickly i mean a huge surprise if you've seen the past but we're not talking just about like what happened in kind of the theoretical sense these are actual kids who actually struggled and actually suffered and jason if you know anything about the current mental health crisis that students are having today kids are having today they don't need extra pressure and

SPEAKER_19: extra stress yes at the same time okay the flip here is free market system people have phones you make apps you don't go follow the app store rules i struggle to say no one should be able to do this

SPEAKER_109: even though i find it distasteful because i don't want to get in the way too much but

SPEAKER_12: i'm i'm being too soft there you're being too soft there um i would say because we're talking about children and because we have so much evidence that this will result in suicide by children

SPEAKER_00: uh and suffering and so when we are talking about adults if adults wanted to use secret and secret if you remember that app was designed more for adults not for college campuses although it obviously spread

SPEAKER_13: their kids can hack their way into any software and get in there that resulted in you know pain and

SPEAKER_00: suffering you know and sure like maybe somebody got called out for bad behavior once in a while and then in people's mind they justify but you nailed it what's at the core of this is greed and the desire to have a viral app you nailed it if you make a platform in which you get to trash people

SPEAKER_30: in honesty the worst the worst of our uh psychology the devils in our in our souls comes out the bullying

SPEAKER_00: the slander the gossip the worst of humanity is channeled through these and when there is a car wreck everybody slows down to look at it it is just the nature of humans there is some pathos in us that will look towards this um and anybody who traffics in this is trafficking in the suffering of children and the eventual suicide of children so i just want to let the investors and the founders know that you will have blood on your hands if you pursue this i'm just full stop it will result absolutely in suffering and if you were to read this story and you're an investor in this you should go home and speak to your spouse speak to the other parents at your school and ask what do you think about my latest investment you should take that wall street

SPEAKER_11: journal print it out this is what i want the investors who are the investors in this can you tell me

SPEAKER_18: uh per country base uh series a was light speed in a owl smash ventures rocket ship dot vc and k5 global

SPEAKER_63: okay and then you said light speed and nea right i have friends at both of these firms two of my friends

SPEAKER_00: at light speed and nea stop this no amount of returns irr lp distributions dpi is worth one child being bullied on this app and god forbid a suicide which you will have if you continue to pursue this so to my friends at light speed and to my friends from nea you made a huge mistake investing in this

SPEAKER_01: you certainly did your diligence and saw what happened at forespring you saw what happened at secret and you saw what happened uh at yik yak and now the wall street journal god bless journalism right

SPEAKER_00: we everybody's deriding journalism this is where journalism does a really great job he's going there and telling the actual story and giving you eyes on the truth and the truth is in this school it created chaos the principal of school said i have not seen chaos like this in the last nine years your app caused pain and suffering so if you're so proud of this investment i want you to print out the wall street journal story and bring it to your pta meeting bring it to the principal of your school

SPEAKER_03: and say to the principal of school here's my latest investment and look them in the eye and say what do you think and ask an educator what they think of this it is not worth it and to the two kids out

SPEAKER_00: of stanford who dropped out and did this i know i know that you think that you know it's really special that you raise 30 40 million dollars it's not happens all the time here what is special is being

SPEAKER_74: thoughtful about what you build in the world and your intent now your intent obviously is not to have kids be

SPEAKER_00: bullied but you're naive you're naive children yourselves you are naive stupid children to build this app and release it publicly i don't blame you if i was 19 or 20 i might do the same alex but these are naive stanford students who are obviously very smart and they know the history of

SPEAKER_11: this and they have convinced themselves that they'll be able to stop this despite the fact that it's already got a wall street journal story with teachers and parents and students explaining their suffering

SPEAKER_124: you can't solve this problem period full stop the problem of anonymity plus kids cannot be solved yes

SPEAKER_37: i'm entirely with you on that the thing that i i can't quite wrap my head around is what happened to

SPEAKER_18: secret and yik yak and form spring they all fizzled out i think yake sold for like a million dollars to square in the end and so my question is what about this this time felt different not only the risk to kids but also that the failed kind of economic experiments of the past revolutions of this particular cycle did they think this time it was going to be a lasting product that was going to become the next facebook i i don't get the investment thesis their their nonsensical answer will be

SPEAKER_12: ai this is my prediction um the nonsensical answer will use ai to not even let the worst post be published right and so they have a nine person team or something i heard that's like vetting these things yeah i think they're not going to keep up kids know how to get around these um and here they're saying what happened at vermont was an outlier solomon said i view it as a learning opportunity yeah great you're going to learn and a child's going to die yes and you're going to learn what

SPEAKER_00: we've all learned that anonymity and building um removing friction to create more anonymity creates more suffering that's it your growth hack is suffering of children no you're not you're not wrong it's

SPEAKER_18: just it's good to kind of frame it that way because the suffering and the drama is what draws the kids back someone says in this story that they felt they needed to check it all the time in case their name came up so literally you're preying on fear and anxiety which is suffering all right that's a it's a good summation of the problem here but i want to take it one step further when we were talking and putting the show notes together today one thing you said really caught my eye you said we need to ban smartphones in high school absolutely and i do not disagree with this teachers don't disagree with this tech folks maybe they don't want that to happen but who is holding us back as a

SPEAKER_134: nation from making this a reality because it seems like such an obvious thing to do better focus etc etc

SPEAKER_13: etc why haven't we done this john hate um who i'm going to have on the program or i'm going to interview him for all in one or the other has an incredible book out right now about the ang i think it's the

SPEAKER_00: anxious generation uh he tweeted about this because i was like you know what you know i want to hear jonathan hates version of this uh he i think he also did the coddling of the american mind he's just like a um you know very based thinker i think and he's also a i think he's a lefty right so like if you lest you think there's some political you know bias here this is not a political issue this is a parenting issue it turns out smartphones are a huge distraction for all of us if you're an adult and you go play poker with your friends everybody's on their phone in between hands if you go to dinner everybody's on their phone everybody wants to be present that's why we do things like stack the

SPEAKER_01: phone or a phone penalty at the table we all know that these things are too distracting now if you have a mind that is being uh developed you need socialization this past generation is so anxious because they don't know how to socialize they have all their dopamine receptors fried from just flipping to the next tick tock and you get a constant stream through the algorithm of whatever the next most dopamine releasing video is it could be people dancing you know with not a lot of clothes on it could be somebody crashing their car it could be somebody getting in a fight world star you know kind of style any of those things that just you know a great song it could be it could be positive things can be an incredible recipe sure um shout out chef's reactions and so but that kind of dopamine release constantly and that kind of distraction just screws with the uh learning so what some schools are doing now is you come to school and you put your phone in a locker that's the obvious you can't and if one parent can't do this because if one parent like i say my kids can't have phones until they're 16 or 17 and the other kids do have it now you're the bad parent the other kids have an an advantage over your kids you know they can order doordash or get an uber your kids can't it's just a disaster so what you

SPEAKER_13: really want to do here is all you pass regulation no social media until 16 and no phones in school bring your phone put it in the locker just like we do when we go to a chapelle show or any comedy

SPEAKER_141: show now it goes in that pouch i love that some of the best stuff ever and so uh we'll put jonathan hates uh uh message up here maybe you could read it i think he's now become the expert on this yeah

SPEAKER_145: and i trust his judgment the uh the quote here is one of the worst ideas ever is to connect people

SPEAKER_18: to talk about each other publicly yet anonymously it's sad and predictable that this kind of social media brings chaos and shame to communities of adolescents can we at least raise the age to 16. that that seems like a pretty low bar as i get older i'm realizing some things are mind-blowing to me like the fact that we allow 16 year olds to drop suburbans down the highway have you met a

SPEAKER_19: 16 year old i wouldn't trust them with a blender um and so that that seems like a very minimum bar to me on the smartphones in school's point i think as i approach picking schools for for my kid slash kids i think smartphone policy is going to be among one of the things that i kind of like filter schools by because if someone says to me our school is as good as the other ones and no smartphones check because i like my child to be present and not as worried about this stuff it's going to be hard enough keeping smartphones out of their hands let alone during school i mean if you i was programming my my ti 83 plus during math class to say boobs when i should have been studying math if i had a smartphone i would have been real trouble so like i just i just don't think kids are able to kind of multitask in that way so i'm with you on this fizz may you please fizzle out and go away because my god we're here again and i

SPEAKER_147: you know if we're still doing this in three years together jason i guarantee you there'll be a new fix i'm about to do this show over again yeah it seems like we're on a three to five year um

SPEAKER_13: you know history rhyming here to the people who invested in this just do the simple test print out what you did take it to your kid's school take it to other parents and say i invested in this and just

SPEAKER_12: please give me candid feedback on my bet and then for the the folks who are running it listen i don't have any animus towards you i'm sure you think you're doing the right thing i'm sure you think your intentions matter your intentions mean nothing the outcome is what matters here so if you if you intend

SPEAKER_00: to not hurt somebody and you go drive drunk that doesn't matter when you kill somebody they're still dead they're still dead and your intent to drive drunk but you know magically avoid killing somebody and take that risk means you're responsible and you're responsible you will res it will result in a suicide and then you will for the rest of your days investors and founders and people who work at this company all of you from the latest employee to the ceos and founders you all will live with the death of that child it is not worth it life is short do good work on the planet anonymity equals child suicide i'm

SPEAKER_01: i i i'm just gonna put it right there for you and i don't want to be right on this i don't want to be

SPEAKER_00: right and have to pull up a story from the wall street journal or the new york times about a child killing themselves because of fizz what i want you to do is immediately take my advice and pivot away

SPEAKER_11: from anonymity that's it or pivot away from kids and even then doing this with adults if you're comfortable

SPEAKER_00: with an adult killing themselves great go for it here's another idea you get one swing around the planet you got 40 million dollars in the bank say i i listened to alex and jason on this week in

SPEAKER_01: startups i realized we made a huge error would you like us to give the money back or pivot that's what the re that's what the founders need to do take a deep look in the mirror and say if pick pick your best friend who has had the most mental struggles and then imagine this is for the fund pick your best friend at stanford who had the most struggles right we all have a friend who's suffering from depression

SPEAKER_00: anxiety whatever sadly and then imagine they got bullied and piled on they killed themselves and

SPEAKER_12: you had to go do the eulogy put that in your mind here's your test okay framing matters i like to give people a test to check their ethics and morality and their behavior your friend used your app got bullied and now you have to give the eulogy in front of the mom there's your test founders hate to

SPEAKER_141: make it super simple for you but i'm an old man now i've seen this movie too many times i don't

SPEAKER_157: want to see it again yeah and you know if you know anyone who's committed suicide one of my uh best friends growing up did um sorry and not a lot of patience for it juggling multiple devices and apps

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SPEAKER_18: start your free trial and get 20 off let's do a shift and a pivot to a topic that is near and dear to the hearts of everyone here at this week in startups seed jason i know you are a seed machine i saw a recent story from rebecca skutak over at tech crunch discussing the current yc batch and not for the first time ever in the history of accelerator coverage that valuations were too high but instead that companies that came out of the most recent batch were raising less money looking to raise 1.5 to 2 15 million dollar post money giving up less or than around 10 of their companies and also no lead investor bowery capitals lauren straub says quote it was impossible to get double digit ownership in any of the deals vcs told founders get lean spend less money they're doing it and now it seems to not actually be working out that well for vcs i find this ironic i'm curious what you thought

SPEAKER_03: yeah uh there's two things happening here there's a little bit of spin so if given five million dollars

SPEAKER_00: at a 30 million post and a vc coming on the board and taking 20 they gave you six million i guarantee you everybody in this group would have taken it okay so let's just and that is happening there are still people buying 20 of a company putting six million in but for people who can't find a lead investor because uh everybody's being a little guarded with their capital and it's a non-zerp era and people funds are having a hard time raising the next fund the fund sizes are smaller so the entire industry has gotten lean from the lps and how much money they're giving to gps and for the gps and how

SPEAKER_01: they're deploying it gps want to deploy over three and a half years during zerp they were deploying their entire fund in 18 24 months so they've doubled the deployment period and they're raising smaller funds which means the peanut butter is getting spread and everybody's putting in half as much the average deal and these folks are saying you know what also true their positioning i actually don't need that much so maybe i'll just i want to give up 10 of the company for 1.5 million and get back to work

SPEAKER_00: that's actually healthy so what we're seeing here is instead of gorging you know at the buffet people are eating the proper number of calories that they need to make it to the next milestone in other words you know all you can eat buffet style investing and raising of money out of fashion lean tight what do we need to hit the next set of milestones can we get to profitability is back and by the way this is what it was like after 2008 when i started 2009 to 2015

SPEAKER_12: you you would raise a small amount of money uber thumbtack uh all four and a half million dollar five million dollar rounds um that was their round size and they raised you know 1 million 1.5 million for 20 30 percent that means better returns because the entry prices come down yep people put in money the teams are more uh efficient and they are able to do more with less that means higher margin businesses right nvidia i think i saw this uh statistic that their market cap is 100 million per employee and then it drops down severely i tweeted it the other day wow yeah yeah wow yeah i you

SPEAKER_157: almost feel sorry for alphabet i mean of all the big tech companies it's only 12 million per

SPEAKER_18: apple and meta at 19 microsoft at 14 and then it drops off incredibly far tesla stands out amongst the non-software companies uh at 4 million and then banks jp morgan 1.8 and that's why the bonus pool hasn't been as big lately if you're in i banking sorry about that yeah it's not my fault but hey

SPEAKER_13: still that's tough yeah and so you know being uh more judicious and using ai and maybe outsourcing

SPEAKER_12: specific functions to other companies is uh is in fashion so yeah it means the industry is becoming boutique again i do think growth stage funds are going to have a hard time hitting their ownership

SPEAKER_179: targets yeah but for seed funds it's great great for seed funds we still have our seat at the table

SPEAKER_01: and we're pre-seed too so that's why i even moved earlier we were seed and i created founder university to say can i meet people the year they have inception of their company like half the companies that come to

SPEAKER_63: founder university are not incorporated yet we give them their first 25k to get incorporated so i'm really leaning into that program well the earlier you get the faster you can get money in at

SPEAKER_18: the lowest possible price uh before we talk about naming seed browns i know you have a bee in your

SPEAKER_37: bonnet about that i i'm just curious how much is ai playing into effect here because i've heard people

SPEAKER_89: talking about startups building companies with smaller teams in general just higher efficiency because of recent advancements do you think that's having an impact in this particular conversation

SPEAKER_01: percent so founders of startup companies are resource constrained great constraint makes for great art if you only have a certain amount of film in the camera you're going to get that shot right now if you go go digital and you have unlimited film in the camera and unlimited time to tape you get the advantage of doing many takes but you know maybe the average take is of lower quality so sure founders really take advantage of this it's a small canvas they have a limited amount of paint they want to make every stroke count therefore they're using offshore developers they're using co-pilots they're using whatever the latest ai tool is for customer support for you know sdr support they're probably

SPEAKER_63: using athena go to athenawow.com and get a discount and you get to jump the line if you use my code athenawow.com shout out to my team over there so people in small companies wildly efficient you watch

SPEAKER_46: this uh you know when you worked at tech crunch or crunchbase in the early days when oh no you probably

SPEAKER_63: joined after mike sold it so were you there before the acquisition or after uh after but when i joined

SPEAKER_187: tech crunch we were all still kind of in one room and crunchbase was like eight people at a row of desks

SPEAKER_189: so yeah so yeah you know you you watch as a company gets really big there's more resources and like

SPEAKER_00: yeah okay we have an extra office next door and it costs us five thousand a month we'll keep it we have the options only 60 000 a year you can be loosey-goosey because you have so much budget and so much cash laying around and that's okay the founders yes they're going to be the first to adopt whatever the latest ai tool is and then they get they're the first to get the gain from it and you know just

SPEAKER_18: super efficient so yes i just i just think that we've gone past the the foie gras era of startup fundraising which people just got stuffed with so much capital and sure it is going to be harder for you know battery capital to hit its ownership target but i think it's going to be better for the companies and better for returns down the road so to me this is like it's like going to the gym no one likes doing it you don't want to be sore the next day but you love the results this is going to be

SPEAKER_163: healthy okay i am passionate about innovation and tech and i love hearing from the founders themselves

SPEAKER_74: and now i've got an exciting opportunity for you i'm hosting a jam session with jcal it's powered by my friends over at dot tech domains and it's over this summer i'm going to have five founders get on a call with me and i'm going to give them my unfiltered feedback and the best part is these mentorship sessions these jam sessions where we go back and forth and talk about your customers your product your team your problems your victories the things that are going well the things that aren't going well in these jam sessions we're going to take them and we're going to publish them on this week in startups think about how great that is you're going to get to have a jam session with me that's awesome and fun and educational and hopefully helpful and you get to share it with the world so all you have to do if you want to be part of this insanity this awesome beautiful insanity is you need to have less than 2 million funding we want to do this for startups and you got to have an awesome dot tech domain name so apply and get more details jam with jcal dot tech jam with jcal dot tech it's in the show notes and i'm partnering with my friends over dot tech domains because all these great innovative startups are starting to use dot tech i see it all over the place rabbit dot tech aurora dot tech one x dot tech and of course founder fridays dot tech if you're using a dot tech domain name for your website i want to hear about it apply for the jam session with jacal today jam with jacal dot tech

SPEAKER_18: jam with jacal dot tech jam with jacal dot tech okay now series seed mango seed seed extension seed one seed two seed three i'm so freaking tired of these kind of like semi seed deals uh you have a plan to

SPEAKER_12: absolve us of those sins yeah so series a we all know what that is a venture capitalist does a priced round they price the round there's a certain shares uh at a certain price and they join the board and governance starts with board meetings so let's say that's series a we all know what that is

SPEAKER_00: the series b comes after that another person joins the board either as a full board seat typically sometimes an observer and you know you do it another 10 or 20 so kind of series a b c we've got that handled and they just count up but before that you have friends and family free seed seed seed plus seed extension you might throw in an accelerator or an incubator note in there from yc or launch accelerator so what i am advocating for here is we start naming seed seed one for the first seed investment whether that's your friends and family mom and dad put in 50k for five percent of the company at the company at a million dollar valuation then y combinator launch accelerator come in with 125k for seven percent that's c2 and we anytime the valuation goes up we increment now if now you raise at five million uh when you graduate tech stars or y combinator now you're at five million okay what happens at five million we're at five million that's going to be seed three let's say so you had your

SPEAKER_01: friends and family mom and dad put in 50k for five percent then you had tech stars uh launch accelerator y combinator do theirs that's c2 now they go in the open market they raise c3 now let's say a year later

SPEAKER_89: they top off that five million still c3 okay so tell me why that still counts is it the same cap the same

SPEAKER_01: same valuation nothing changes essentially the same round and so then if a company is at seed seven before their um series a that's okay you know i just described you know the first starting point of the company was three and let's say they go five eight twelve fifteen fifteen a second time they added five funding events that would add four to the incremental count and then we'd have like an honest

SPEAKER_00: discussion about what's going on this company did three rounds of funding they got to c3 then they went to series a this one did seed seven and went to series a now is one better or worse well the one with less seed rounds and clearing market at series a would be on average a much stronger company because as a series a investor is underwriting that with their time of joining the board and a price round so i like

SPEAKER_12: that it's more sensical that doesn't mean that you won't have the alicorns what's an alicorn it's a pegasus like a unicorn and a pegasus put together so it's a unicorn with wings alicorns are these unique uh companies that uh i came up with the term for this for com.com com.com did a five million dollar round of funding that we participated in four and a half or something we famously bought five six percent of the company their next round of funding essentially was 250 million from and that was their essentially what they called their series a but it was kind of like a series c or b they just use their own profits to grow the company and skip around to funding so when you have the pegasus wings alicorns skip rounds of funding because they can fly over them there's your little

SPEAKER_00: analogy so you have to double click and maybe somebody thought you know what i just want to spend a little bit more time in the laboratory i have somebody who wants to put 250k in at the last

SPEAKER_01: round you know it's it's jason calacanis it's david sachs it's mark and treason whatever i'm going to take that money because i want them involved so sometimes people will take that 250 and they don't need it they got a million in cash but they add the 250 why that person is a creative they're a great signal they're a great mind they have a great network whatever it is so let's just clean it up let's all agree to seed numbering from the beginning anytime the valuation goes up it increments nice and

SPEAKER_37: clean nice and easy it also applies well to later stage rounds i forget the company that did this but

SPEAKER_18: they called me up they said hey we've raised a series c one i'm like okay series c one why is it not a series d did the valuation go up they're like yes i'm like okay so the valuation went up it's more money it's like two years later you're calling it a series c1 why they said well we don't want to tell people we're out of series d yet because we don't feel like we're there and i'm like well jason what are you doing so i i like this because it gets rid of the bs if the valuation goes up either

SPEAKER_160: in a like a cap on a note or in a priced round it's a new round i that's how do we get away from

SPEAKER_12: that that's so simple i think there's no like organizing body of individuals who determine this and so i'm taking that i'm officially as the chair you know i used to give myself the chairman of

SPEAKER_30: the internet uh i used to call myself chairman of the internet trending gadget days i would just come

SPEAKER_189: down with edicts it made people really upset because they're like you're not the chairman of the internet

SPEAKER_30: i'm like watch me i'm in the chair online joke thank you also there i'm technically i bet you there's a world's better moderator somewhere it's just a joke folks um so anyway i think numbers for

SPEAKER_12: seed letters for venture out very easy easy peasy lemon squeezy let's start adopting it and make it

SPEAKER_19: super easy okay moving on moving on um someone was laid off and is going to work with some other folks wants to build a company and they wanted us to talk a little bit about how to leave to found a rival

SPEAKER_89: company without falling afoul of lawyers ip exit agreements and so forth so jason that came into

SPEAKER_13: my email box i forwarded it to you and said put it on the docket right yeah so just read the quote

SPEAKER_37: from the person let's see if we can get yeah i was recently laid off and i'm working with another ex employee from my old team to found a rival company can you do a twist pod about how to do it and stay

SPEAKER_19: legal and legit you touched on some of the obvious ones such as don't steal the material and things like that but was curious if you have a more detailed framework yeah so you obviously when you leave a

SPEAKER_01: company you never bring documents with from the last company everybody remembers lindowski who was pardoned by trump eventually was doing self-driving at google waymo i believe came to uber he came he had a cd-rom or a thumb drive or whatever it was with a bunch of documents the management at uber said get that the hell out of here we don't want that liability they basically fired him i guess or

SPEAKER_104: disconnected from him took away his offer he went to jail right jail with a j-a-i-l so you never take you you never take any of that stuff now what's in your head and what you learned by osmosis at

SPEAKER_11: crunchbase if we wanted to create a crunchbase killer here i mean stuff that's on the website

SPEAKER_01: or stuff that you learned you're doing it techniques etc those are generally not protectable what is protectable is the ip so if there was a algorithm or a patent you couldn't just take that with you now

SPEAKER_12: if they said to you hey at crunchbase you know one of the ways we find out about companies is

SPEAKER_00: we email the vcs it's kind of like okay that's not yeah that doesn't like it's not it might be a trade secret in your mind now anybody can sue anybody for any reason so if you made them feel bad that you're creating a competitor be prepared to get a letter and if you poach people then you could also

SPEAKER_12: you might have a non-solicitation so step one make sure you have copies of all your documents if you

SPEAKER_00: don't have copies of your documents you simply email hr and say i'm leaving i would like a copy of all my documents and then they don't reply to you and then you email them again this is my second request this is my third request for my documents that i signed can you please send them to me and then if they don't send them to you you you know you something's weird there you just got to email

SPEAKER_46: the founder and say like why are you not sending me the documents i signed here then you make sure you

SPEAKER_00: have a good lawyer on the other side um and then you have to make sure that you're starting from a blank sheet of paper new laptops etc if you were working on this project while you were working for the other company you got a big problem so um and if you solicit people you could have a big

SPEAKER_01: problem doesn't mean you can't go do it but it really depends on the wherewithal and the vindictiveness of the previous person and that's why two of you leaving is you know more than double trouble that might be like 10x the trouble and then if you get two more people to leave oh so i would specifically not poach anybody else and don't poke the tiger of your previous employee employer don't go after their top five customers just avoid that build your product let a little time pass and you know you'll differentiate your product also the other lame thing alex is when people just name the product

SPEAKER_124: or photocopy the product so if you were to like leave crunchbase and you're like hey here's my database

SPEAKER_01: it's called twist base and we you know copied the design of it people would be like oh now we're

SPEAKER_00: doing twist 500 okay it's a database of the top 500 companies as determined by alex myself that's i

SPEAKER_221: guess tangentially evolved to crunch but so much more curated than than a database you know so they're

SPEAKER_87: not going to sue us and if they did it would be like uh you're kind of being ridiculous so that's

SPEAKER_63: it that's all you have to do but be careful about poaching don't take documents don't go after the top customers you want to just let it slowly let that energy slowly release so before we get to the twist 500

SPEAKER_37: though i want to turn this around you're a founder one or two of your employees are leaving what's the

SPEAKER_19: best way to approach being a leader as some of your talent walks out the door and wants to take you down

Chamath Palihapitiya: politely but in a business context um you have to win on the field is what i'll basically say about

SPEAKER_00: all these competitions so two people leave your company you want to make sure they're not taking any lists with them you could send them a legal letter hey this is a reminder you have a non-disparaging

SPEAKER_13: you have a non-disclosure your ip assignments here and send them the copies of them please do not do anything that would have us take legal talent so you you're within your right and maybe it's even a best practice to send them that letter reminder you've left the company you have a non

SPEAKER_00: solicitation now that doesn't mean a non-solicitation means you will not ask previous crunch base employers in your case to come join this week in startups that doesn't mean that if you tweeted a job description and your best friend said i apply can you put a good word in for me you can't of course

SPEAKER_46: you can it means you can't email them and encourage them to apply so when google when cheryl sandberg

SPEAKER_00: left google there's a bunch of um leaked emails about her trying to create peace with lyrian sergey and the team at google because so many people were leaving google and applying especially from her team i believe to go to facebook because they're like hey i'm vested i could start with a new vesting with

SPEAKER_01: cheryl at this new company effort let's go so that's all you have to do is just and you're going to want

SPEAKER_63: to win on the field which is what google did you know and you have to then we have a free market and

SPEAKER_01: we all benefit from the free market so if you worked at crunch space or tech crunch and you thought i gave you a better a slightly better offer great you come here if you know tech crunch comes back and doubles your offer and you come to me one day and say jake i'm leaving to go back to tech

SPEAKER_63: crunch then it's my decision to either match exceed or not match their offer just like in the nba we want that talent fluidity in our market right it benefits everybody just for the record if anyone

SPEAKER_19: wants to double what is currently pays me um it's sharing my email address um all right let me that's

SPEAKER_01: the free market right if you were underpaid you know somebody could come and make a more compelling offer right and i think we all just have to recognize that that's what makes america great did you see this dhh uh hate tweet that i uh retweeted this week no actually i did not john pull it up here but basically somebody was going after dhh for his like posting uh david hammer hansen from um 37 signals

SPEAKER_63: you know he's posting his car collection he likes to drive fast cars oh wow somebody like is like oh my

SPEAKER_01: god you know all of his employees without equity must what did they think about this you know and it was like um they don't have equity but they pay the best cash salaries those people are it's a free market so i guess yeah i'm not gonna even say the guy's name but he says every time dhs post photos of his lifestyle i think about his employees have no real equity and how happy they must be like they don't need you to come defend them they're ruby on rails developers making a quarter million dollars a year like if you want to defend somebody go talk about cashiers at mcdonald's or people picking strawberries

SPEAKER_235: like this is not the group that needs your union so absolutely agree with all of that but i will say

SPEAKER_18: showing off your twin pagani uh sports cars is to me even for my relatively high level of acceptance for being gauche that's a bit much like i mean maybe just show off one of them how much of those cars

SPEAKER_19: i don't even know what they are oh oh um see pagani zonda uh i think several million oh really oh yeah

SPEAKER_37: they're they're not okay okay i have a ski house oh i'm sorry 20 million each no yeah well the pagani zonda hp barchetta was 17.5 um 17.5 million oh i don't know if those are the exact pagani's in

SPEAKER_242: question okay okay but like let's assume it's not like the most expensive one but even still i

SPEAKER_12: whatever i have a ski house that's worth a couple million bucks like i what do you want me to do you you want me to be uh i'm sorry that i created a couple of great companies and like this is capitalism in america i have a ski house i'm going to take a picture from it once in a while boohoo it doesn't bother me yeah i mean come on and especially like another rich guy dunking on him or something like

SPEAKER_84: this is where this what's the term like of how we um treat people like babies uh infantilization

SPEAKER_00: yes thank you we're we're treating the employees of it's insulting to the employees of that firm to be like they're being lorded over they're ruby on rails developers making hundreds of thousands of dollars they could go work anywhere they want they could start their own company they could compete with dhh they've made a trade in life they work for him they don't have to stay up at late late at night

SPEAKER_37: they get paid a huge salary and they're remote great yes even more so most startups that offer you equity as part of your compensation end up going to politely zero and so these developers are taking a guaranteed paycheck instead of an option on a potential return you don't have to feel bad for

SPEAKER_18: someone taking a more conservative bet that's their call especially if they're that flexible in

SPEAKER_63: the labor market so i i agree that's and look at what you did you know this is why i respect you a lot

SPEAKER_01: i i asked you to do this a couple years ago you were like hey you know i need security whatever and then you decided well you wanted to start writing and everybody could read your um newsletter

SPEAKER_14: the url is once more oh cautious optimism.news thanks jason cautious optimism.news everybody

SPEAKER_01: subscribe right now pay for it and you decided hey uh i got some security with jcal he'll promote my newsletter and your newsletter is going to make money i hope you make you know six figures on this newsletter great and i i hope it's a huge success for you now other people might be petty about it you decided to hedge right you got a little bit of risk over here and you got a little stability over here that's like this is the american dream pitch yourselves everybody we live in a free market

SPEAKER_18: also going back to your whole once one time around the sun like you only get one shot of this and i think that just for me it was kind of a self-challenge but i i do i do think that we should

SPEAKER_19: treat adults as adults who are rational actors in the market and going back to the fizz conversation we should protect kids like that it's a it's a simple dichotomy and it's not political to your

SPEAKER_37: earlier point this is just yeah what i would say is common sense welcome to this week in common sense

David Friedberg: alex are right about everything once again just let's be based i love this term based when people

SPEAKER_00: say you have a based opinion you know what that means it's just like a basic absolutely true one that

SPEAKER_12: might hurt somebody's feelings i'm sorry to hurt your feelings it's a capitalist society there's

SPEAKER_00: going to be winners and losers does everybody want to wait in line for one style of bread man i got that sourdough with the olives in it the other day my lord i mean that was next level i i have to just go

SPEAKER_37: off topic here so at the end of the liquidity summit we had a team dinner and we were at a restaurant called press in napa incredible and i don't eat seafood and so when they brought out caviar and

SPEAKER_18: pretzels they brought me the non-fish eating version of this which is sourdough bread toasted with this really amazing butter that was the best freaking bread i've ever had in my life i don't know what they did with that bread and i not a startup point but like i i've been thinking about bread for

SPEAKER_147: several days now right and that's not how my brain usually works so i kind of want to go back and be like all right talk to me about bread because capitalism is good do you want to be on the bread

SPEAKER_84: line for bad bread you i mean think about it if you're going to wait online for bread wouldn't it

SPEAKER_00: be nice to have a choice and have it be delicious into your and customize this is what capitalism does

SPEAKER_12: this idea that americans hate capitalism i know there's like a subsection of politicians who are anti-capitalism and like when you're anti-capitalistic or you know you want to rein it in too much let's

SPEAKER_00: say what you're actually saying is like like maybe i want to limit consumer choice or lower prices like just gotta think that through if you're going to make that your political party's position because americans love that when they get a new car they get a new iphone it's got a couple extra

SPEAKER_122: features so be careful with your framing of like what your party stands for there there's a threading

SPEAKER_37: of a needle here that we're doing because if you go back to the fizz segment of this show and you

SPEAKER_18: listen to us discuss things like how to handle trust and safety and so forth there is a certain vein of technologists out there today who has specifically called out those phrases in terms as degrowth and i i don't agree with that i think yeah to be a diesel yeah i i think you can be

SPEAKER_19: a capitalist who's in favor of rapid progress and experimentation while also acknowledging that other

SPEAKER_18: humans are worth fair treatment and i i don't think that should be too hard but it does seem that now there's only like we must do everything as fast as we can or you're killing people or we're going to shut it all down and go back to farming and i just want there to be something in the middle

SPEAKER_113: yeah some common ground here yeah i mean just some common ground here right some cautious optimism

SPEAKER_01: like that we could actually split these two extremes right like yes we can protect people's

SPEAKER_286: privacy and we can make a great ad network lots of social apps no dead kids you know you can do both

SPEAKER_18: exactly all right jason we have to get to this because it's super important we are working now on the twist 500 we have discussed this on the podcast before it is coming to our newsletter it is going to be a good fun all year round as we figure out who are the top 500 startups out there in the world as a reminder we're talking about startup genres so we're going to be looking at companies in different sectors across stages if you do get the twist ticker newsletter expect to see quite a lot about this in there and jackal i have a couple of uh names i wanted to throw out to get us started

SPEAKER_290: right and we'll we'll have a domain up for this i think it's going to be twist 500.com eventually

SPEAKER_18: it's going to be that very soon i think right now it's um ticker.thisweekinstartups.com is the

SPEAKER_13: temporary url we are moving fast this weekend startup ticker.thisweekinstartups.com is where you can sign up for the newsletter yes we decided to have the newsletter be uh organized around this

SPEAKER_12: principle of the twist 500 so there's so much to cover we said let's come up with categories so i

SPEAKER_13: asked you today maybe you could run a couple of categories by me and give you my uh my thoughts

SPEAKER_19: on it yeah absolutely so starting with categories the first one that came to mind for me was fintech

SPEAKER_30: huge venture bet everyone loves fintech awesome great and uh who do we have uh i know wealth front is still private that's got to be on the list right you got stripe would be fintech uh that's still private so those are two top ones right there chime for sure time for sure a mercury bank is still

SPEAKER_37: private right i believe so so i'll throw that on the list as well now there comes a point between hr tech and fintech when you think about companies like gusto deal remote where do you put those in your

SPEAKER_01: mind yeah that's a great one um they're definitely like the all those payroll ones um have a little bit of fintech and i guess though they're more hr so i would put them under like the hr ones and what i want to do with this flexibility of the twist 500 is be able to have people in multiple categories so you could be um most likely to ipl right we're going to have our you know top 25 next most likely to ipl so that definitely is going to include stripe right oh absolutely and then they would be the top company in payments and fintech right so we could even have payments and fintech we could have hr and payments so you know you could have people listed in both categories so i think having that flexibility in the database architecture would be wise people could wind up on multiple lists what

SPEAKER_19: people don't know is i'm making this database later so what jason is doing is describing my evening's work session to me the architecture of the database yeah okay so moving on to ai you wanted different ai

SPEAKER_18: categories so here's what i came up with tell me if these are too granular ai models ai infra data for ai vertical ai and then consumer ai ai hardware and then ai robotics perfect it's perfect yeah i think

SPEAKER_301: that's i think you nailed it right and then robotics is its own thing and ai robotics is like a subsection

SPEAKER_12: of that so i think that's great and we can just the fun of this is going to be to ask the audience to tell us hey what do you think should be on this list and it would be really nice if sure there are obvious people who are doing robotics that need to be included here in the pr and again this is for

SPEAKER_00: private companies only we're only doing private companies here this is this we can start up so we're going to leave the big public companies out of this at least for now um but when it comes to robotics it would be nice to have people doing who are in their seed or series a as well as the people who've raised hundreds of millions that kind of adds to the the richness of this list and then having those

SPEAKER_01: people you know come on the show or experts in that field talk about it and vet these lists with us is going to be a lot of fun so i do like the framing there of course i'm going to rely on the audience to help us out with this and so we'll have you we'll have some sort of nomination and we'll do you know some sort of dedicated shows where you say hey you know what we're going to do next week's news roundtable we're going to focus on robotics and we're going to announce

SPEAKER_63: the you know the twist 500 robotics category with the top 25 robotics companies so we'll we'll we'll make an editorial calendar as such yeah i want to throw out a couple names though that

SPEAKER_18: are not uh the biggest most obvious names just kind of get us started and get your your feedback so a couple weeks ago we talked about media companies ai economics and how it's great to get a check from open ai if you're the atlantic but if you're smaller how do you get there there's a couple of startups working on that there's tolbit human native ai and i think one other that i couldn't find before this show i think that category of companies at least one of them should be on the twist

SPEAKER_01: 500 because i think it's so important yes absolutely the clearing houses for you know between language models and content is is really important i saw there's a big kerf buffalo around vox doing their open ai deal i went over to threads and i found all the journalists who used to hang out on x

SPEAKER_310: they hate me i mean my lord i go over there and they're just like you're cheating on your friend like am i like i'm kind of my own individual here but sure i'm cheating on elon by going over to

SPEAKER_313: threads i i think elon's okay with it i think elon will survive yes clutch my pearls but i go over there

SPEAKER_314: and like i start talking people are like why are you here and i'm like i don't know just checking it out

SPEAKER_310: it's all sorry yeah but it's all the journalists who hate elon and uh and who hate trump and whatever

SPEAKER_01: it's pretty hilarious but anyway what they were really upset that bank off had done a deal with open ai and they felt like this was them being sold out take us into the journalist mind um modern tech journalists yeah they really really are threatened like a lot of people by ai and the scraping of their

SPEAKER_222: words because they did sell their words to vox but to have yeah take me through their thinking

SPEAKER_157: so i can try i can definitely give you my best my best approximation of this i think it comes down to

SPEAKER_18: scar tissue because if you are a media company there have been cycles in which big tech companies big platforms upstart startups come to you and say hey hey hey we have it it's the new big thing and media companies which have been in dire straits now financially for my entire career often jump at these things facebook says we're gonna do video people pivot to video facebook moves away from it and the media companies who have no money classic rug pull it's the pre-crypto rug pull it's hard man and search there was always kind of a give and take with search you know media companies do the work google would index it google could make some money send some traffic over everyone's happy that relationship is changing social media same thing so i think there's a lot of scar tissue amongst reporters expecting that once again they are going to get 48 cents someone else is going to make a billion dollars and their publisher their employer is going to be left off worse off and jessica lesson from the information has written quite a lot about why she thinks these deals are poor choices for media companies yeah she's not doing them yeah she's not doing that but the information is expensive locked down paywalled and at any of the very particular audience vox is much rich people yeah well people

SPEAKER_60: with corporate accounts who can pay 300 a year for a newsletter where they might read like one story

SPEAKER_30: a week like yep if you look at the wall street journal like the price of the journal is that like five or six hundred a year i mean it's unbelievable how expensive it is like it's not cheap it's 40 bucks a month i think so you know you start looking at that it's for an elite group of people i mean people have a hard time paying for the new york times and their netflix and you know their other 10 subscriptions they're not going to be jumping into the information in wall street journal

SPEAKER_12: so there is like this hey we're going to get screwed again i think another big fear of it is i spent 800 i spent an hour on my 800 words i you know and it comes from three hours of research and you know three phone calls i did for an hour each and i wrote these 800 words and they're special

SPEAKER_00: and then my browser now by default it was announced by apple today um so it's not like you know it this

SPEAKER_01: is not going to be built into every operating system then takes your beautiful 800 words and says tldr for bullet points like axios or my launch ticker before that did and inside did with their newsletters like we just summarized it in a couple bullet points if it was tldr the reblogging upset journalists like business insider does or blogs do writ large and now this is just happening automatically i went to a website the other day and it had like this little summary and i realized speechify which i use to read me stories when my eyes are hurting they're now putting a summary of three bullet points at the

SPEAKER_290: top this has to be in people's minds that like what is the value of my prose well perplexity uh the ai

SPEAKER_19: search engine that's supposed to be raising like a three billion dollar valuation and it's i think

SPEAKER_18: it's pretty cool because it's taking on search with a fresh sheet of paper um they have taken a lot of flack for what forbes journalists think is not just summarizing but kind of thieving their content and so there is a lot of distrust and i do think that the other thing at play in the atlantic and the vox deals are the journalists said hey okay we did this deal didn't consult us what are the terms and the companies are essentially saying well we're not going to tell you and i think that that lack of transparency amongst a newsroom and its leaders is pretty toxic because journalists are in favor of

SPEAKER_19: things being kind of out in the open and that passes through the entire organization structure so i think the terms are a little wonky i think people are worried about the safety of their industry

SPEAKER_157: but maybe tolbit and human native um and whatever else is working on this alex this is basically uh

SPEAKER_12: uh going back to the ehow days my mahalo days we would make pages like this we would use humans to write articles like how to articles how to use an aero press here and what perplexity is doing is not only summarizing all the great information that humans wrote about using an aero press they're

SPEAKER_00: then making a gorgeously designed page and they're putting a human in between it to deflect that they're doing this in a programmatic way so they say to people you go make the page right so that we didn't create it now we got our section 230 it's really exactly it's a little dirty i have to say like the perplexity people here know what they're doing they're not dumb they're stealing people's content they're publishing better looking pages they're using a human in between to pretend that they didn't do it and then they republish this google should not allow this to be indexed

SPEAKER_13: first of all second of all these they should get sued by anybody whose content was taken here

SPEAKER_00: to do this and this is where the content industry and the writers have to get together as a voting block

SPEAKER_11: vox new york times they all have to work together ehow anybody doing half the content and i have to say to perplexity this is a bridge too far you cannot publish a page and then compete with us for seo with our content it's easy to know because there's no citations here or they made the citations very small

SPEAKER_01: and this is going to be the hack when you force the user to click a summarize button to build the page you're now saying i didn't do it the user did it i didn't do it the browser did it right you're trying to and i think google's kind of doing this as well with their search you have to turn it on you say click ai summary oh we didn't do it but this is where i think they're going to be dead to rights

SPEAKER_63: they're going to lose lawsuits i think this is like perplexities whole business could crumble by doing something like this this was a stupid thing for them to do well what's the long-term vision

SPEAKER_343: because to me if you starve the companies that make the content that you depend on to yes explain the

SPEAKER_19: world to your users it's like chasing near-term eps as a public company versus a long-term strategy you're eating your seed corn yeah and it just feels defeatist to me like you're just you're not going

SPEAKER_345: to win long-term doing this but it's like people on the colorado river being like you know what i'm just going to take a lot of water out of here and i'm going to make almonds in california whatever it

SPEAKER_284: is i'm going to make almonds in the desert and it's like yeah but we're going to run out of water and then everybody's going to die from starvation and you're going to have almonds for a decade or two it's like yeah we got to think about the tragedy of the commons here and this is i think like where

SPEAKER_01: i have a big problem with people in tech who feel like you know if they can build it

SPEAKER_00: then that's enough like if they can figure out how to build the hack then the hack deserves to exist

SPEAKER_12: here i think you're breaking the law i think that this is so actionable that anybody who has content three or four content players should get together e how whatever we should all they should all get together they should hire a law firm they should go on to uh perplexity pages they should make these pages they should publish them then they should force discovery on perplexity and they should get half the money from this lawsuit um to the lawyers and they will literally own perplexity they can get an

SPEAKER_00: injunction against perplexity for doing this i believe that's why the new york times has not given in to sam altman yet that's why they held the ground because they know they have them dead to rights and perplexity is going to have to show their work where did you get this information on how to use an arrow press what pages on the index what how did you train your data oh you trained it from the open crawl and the open crawl told you you you're responsible for the licenses and you pulled in these three pages oh you didn't know you pulled in those three pages that's that's not enough back to my oh you didn't intend on stealing you didn't intend on driving drunk and killing somebody doesn't matter what's the outcome the outcome is you stole now you're guilty that's it i guarantee you perplexity is guilty i guarantee you um with 99.9 certainty that perplexity is guilty of infringing on people's rights when they do this i guarantee you 99.99 certainty this is a 100 million dollar settlement minimum for them now maybe they want to pay the 100 million dollar speeding ticket all these content

SPEAKER_63: companies must get together and sue perplexity immediately the longer you wait the worse it will

SPEAKER_18: get the only company for whom 100 million dollars is a speeding ticket is actually i think like the top 10 largest i think for everyone else that's more like a catastrophic disaster uh john's gonna pull up an article for us from forbes about this issue but here's here's a pitch jason so your sub stack

SPEAKER_19: your beehive your ghost even yeah need some more business why don't you just go ahead and do this idea these this starts kind of bringing content together to sell it to ai companies why doesn't

SPEAKER_351: sub stack have a little thing that i can check and say hey i'm willing to get paid for my material

SPEAKER_113: absolutely yeah yeah these third-party tools will come in and do the clearinghouse and they'll be

SPEAKER_01: partners with sub stack and so sub stack it's a great idea by the way sub stack or perplexity or wordpress even sure build in a standard like wordpress is a third of the web i think it runs a

SPEAKER_00: wordpress you click on i'm willing to do business for my content and here's the terms of my business and then yeah boom you just you work it out that way all right let's take one question from the

SPEAKER_36: audience it's been great show uh from rahim koja uh this goes back to our discussion of uh of

SPEAKER_37: technology companies sass and so forth i think chamath is correct it is super easy to replicate

SPEAKER_19: most products with llama and chat gpt very quickly and very few people back to that i think i could replicate most sass things in a couple of months by myself here here's the thing if that was true and i just thinking out a lot wouldn't people be doing it the fact that they haven't to me it's like

SPEAKER_18: time travel is impossible because no one's come to see us that's my thought there but i'm curious if you're

SPEAKER_01: more optimistic than i am um i think it's starting to happen i think you will see people make 80 percent and this has been happening for a long time zendesk has but one example when they applied to tech crunch 50 and we accepted them uh my old partner on that and i were like this is too simple like and we didn't want to accept it because it was like so simple it was almost like a childish product at that time it was like you know five fields for a help desk and the founder said to us and he was right

SPEAKER_63: um as simple as the idea we made it much simpler and easier to onboard so people who don't have customer support can now have customer support they don't have to overthink it and spend a million

SPEAKER_307: dollars to stand up their customer support system they can just give us a hundred bucks a month

SPEAKER_01: that was the genius of it is making it simpler so yeah i do think you'll see but then also you have to have somebody who wants to create a salesforce competitor and then who wants to dedicate a decade of their life to it and then wants to undercut the price and then wants to wants to wants to update it and wants to add features so you have you know it's like saying like i could make a better movie to your point you're like i could have made reservoir dogs like okay go do it go make your reservoir dogs go make your better star wars you also have to have the motivation you also have to have the wherewithal the chutzpah the gumption and this is where people you know while it is easy to make a competitor um in the short term you could probably pop one up quickly do you have the ability to

SPEAKER_63: do it for year 10 11 and 12. that's always my question people's podcast another perfect example

SPEAKER_01: but like oh i can make another version of this week and startups are all in it's like go do it and then you know what a bunch of people have started all in competitors jessica from uh um information has one

SPEAKER_63: uh pirate wires is another uh the character are cartoon ones uh that changed the name oh yes i know

SPEAKER_284: what you're talking about four avatars four cartoon avatars and he gave us credit like there's been like a half dozen of these all-in killer competitors and then like i think half of them don't publish

SPEAKER_343: anymore you want to know why because media is really really hard it's a low margin and it's hard

SPEAKER_310: welcome to the worst business in the world congratulations you just anchored yourself you know like with your newsletter you know what people care about the next issue yes you have to

SPEAKER_361: feed the machine and with that dude and machines machines hungry uh machines last thing uh what is in

SPEAKER_89: desk exit four to private equity back in 2022 eight nine or ten billion ten point two billion dollars so

SPEAKER_18: shout out to zendesk and there's the article right there oh there is yeah so sometimes simple works out we will have more on the twist 500 i will let everyone know when the site is launched i'm working on that newsletter relaunch is moving on good so coming soon but we are now underway and this is

SPEAKER_110: monday's show but uh for tomorrow's show we will cover all the apple announcements which

SPEAKER_366: were occurring when we tape this we are not going to let you go so uh make sure you tell your friends subscribe to the channel and uh we're going to try to do news two three days a week we're getting back

SPEAKER_84: back in the flow yes sir bye bye bye everybody