SPEAKER_00: I love the term graduation problem. So this is the graduation problem that you do a great job, your customers leave. eHarmony, number one graduation problem. We're gonna make this one of our themes here, the graduation problem. eHarmony was really a challenge business because they were so good with their science of relationships, of finding a husband, that your 40 or 50 bucks a month, they were charging a lot at the peak,

SPEAKER_01: would go away because if they did their job correctly, do your job correctly, you lose the customer,

SPEAKER_02: you know, and job boards have this issue. And, you know, you're basically like, when do you get the person back? When they get divorced? Okay, yeah, that could be 10 years and 50% of the time it doesn't happen, so.

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SPEAKER_07: All right, everybody, welcome back to This Week in Startups. I'm Jason Calacanis, our editorial director, Lon Harris here, and my co-host, Alex Wilhelm. Hey, everybody, how's everybody's Friday going?

SPEAKER_09: Good, I'm having a great day.

SPEAKER_07: All right, we saw the Odyssey in IMAX. Lon and I share a passion for cinema. And I thought when I saw that, oh my God,

SPEAKER_12: I just rent me the IMAX theater. You and everybody else,

SPEAKER_15: Universal did this on purpose a year ahead. It doesn't come out till next July. A year ahead- Next July. They announced we're gonna start selling the IMAX tickets for the Odyssey a year out. Like, a lot of movie fans are freaking out. They're like, because it's selling out already. It's like, oh, it's a year ahead and I already got beat out for opening night of the Odyssey. They're doing it just to get people hyped and it's working.

SPEAKER_16: Like, yeah, there's a Lincoln Center in New York, sold out opening night for the Odyssey next summer.

SPEAKER_07: That's crazy. He comes up with a unique story to tell, you know?

SPEAKER_22: And I'm really interested in this one because it's evocative of something I feel like I've heard before. There's like a warship and oars. And so I'm like, wow, this is great. Cause you know, like Tenant, obviously,

SPEAKER_26: and Inception, these are all unique IP in the world. This is what makes him unique.

SPEAKER_16: Although I feel like this one I may have heard of before. How crazy that a guy named Odysseus ends up on an Odyssey. I mean, what are the chances?

SPEAKER_12: What are the chances? But this is a departure for him. Is this the first time he's doing some library IP?

SPEAKER_32: Certainly like, yeah, well, no, I mean Batman.

SPEAKER_16: He memorably did those Batman films. Oh, right, sure, yes, yes. But this is definitely, this is not like doing a comic book or adapting somebody's novel. This is like, you know, how many, we don't really get a lot of like ancient mythology movies. It's not really that viable a genre for most filmmakers. So I think Nolan using the post Oppenheimer massive, you could do whatever you want, cred that he now has to mount a huge shooting,

SPEAKER_20: the whole thing with IMAX cameras, like mythological adventure, like it's really cool. It's very exciting.

SPEAKER_38: All right, let's just go to meme processing here. So they got along here. What's our take now? 48 hours. I think we've meme processed enough that collectively, I call meme, you know, I like to come up with terms. Sure. Static team size, meme processing.

SPEAKER_42: It's like the 48 to 72 hours after the meme hits

SPEAKER_16: where we all just have to digest it, get our jokes out, deal with what the story is, and then we could start thinking about it rationally.

SPEAKER_45: Yeah, so where are we at? I think we're at the 48 hour mark.

SPEAKER_15: With the concert, the CEO at the concert?

SPEAKER_46: I think I found out about it either two nights ago.

SPEAKER_16: Yeah, I think we're just past the like 48, 48 hour mark where now we're starting to talk about, you know, there's all sorts of stories, backstory lore that people are adding

SPEAKER_50: and you're not sure what to believe or not.

SPEAKER_48: Yeah, where do you wind up, Alex? Yeah.

SPEAKER_50: Well, first, let me catch people up in case you haven't been online. So there was a Coldplay concert.

SPEAKER_51: Coldplay is an American band. He's English, they're an English band. Coldplay is an English band, if you didn't know. And they were playing a show

SPEAKER_50: in the United States and in Boston. They have a camera that shows people a bit like the kiss cam on the NFL.

SPEAKER_16: Right, I learned about this. This is actually a bit that they do at Coldplay shows all the time. They have their like kiss cam that goes through. So if you're bringing your not wife lady

SPEAKER_15: you're dating to a Coldplay concert, you're taking a risk. I mean, you're throwing the dice.

SPEAKER_55: And one particular person threw the dice and lost

SPEAKER_50: and was put onto the kiss cam with his arms around a woman. And the moment they realized they were in view, Jason, they ran away like scalded rats. They like ducked and tried to hide themselves.

SPEAKER_51: And the lead singer of Coldplay, who was an Englishman, not American. He said that those people-

SPEAKER_56: By the way, it's an easy mistake to make. The English hate Coldplay and Americans love them. That's true, that's true. Chris Martin does-

SPEAKER_24: Oasis is their band. Coldplay is our watered down English ballad band. Okay, so- That's kinda how you, that's why you're juxtapositioning it.

SPEAKER_61: In England, they hate Coldplay.

SPEAKER_51: So Coldplay is the American Diet Coke version of full sugar Coke UK Oasis. Okay, I got it, yeah.

SPEAKER_50: And this moment, because it was so clear that these two people who were caught together on this camera did not want to be seen together publicly, everyone then went out, found their LinkedIn's, and it became an absolute- Since the dress, if it was black and gold or blue and white or whatever,

SPEAKER_51: it has- I've not seen a phenomenon this crazy.

SPEAKER_15: It turns out he's the CEO of this company, Astronomer, this tech- It's a tech startup.

SPEAKER_67: Yeah, but there's an angle here because now I know what Astronomer is.

SPEAKER_16: I was seeing that, they didn't capitalize yesterday. They were the talk of the world.

SPEAKER_22: I mean, in another timeline,

SPEAKER_24: the right thing to do would be to talk about the virtue of the company and for the CEO to come out and just maybe try to save his job

SPEAKER_69: by saying, hey, listen, I made a huge mistake, but you won't make a mistake by taking a demo with our SaaS team.

SPEAKER_71: Check out these compliance tools, yeah.

SPEAKER_69: I mean, if you want to comply and, you know- And then there was a meta version of this where somebody said, this is a staged concept to promote the company.

SPEAKER_24: And I was like, bridge too far. Yeah. There's no actors you can pay to have that reaction.

SPEAKER_74: True. It's also, it's not a, if it was a consumer facing product,

SPEAKER_16: I would be more inclined to believe like, oh, this is just a marketing gimmick to get the name out there. But it's a kind of hard to parse-

SPEAKER_51: Orchestration first data ops platform built on Apache Airflow, which is obviously the core Coldplay demographic is exactly people looking for that.

SPEAKER_76: It's like a weird tool for developers.

Chamath Palihapitiya: You're saying that obviously, like in jest, I think Coldplay is actually probably 70.

SPEAKER_24: I don't know if there's another band that overlaps with their demographic more than Coldplay, if I'm being honest. I'm asking chat.

SPEAKER_67: Because that sounds pretty appealing to 40 and 50 year old white guys. Yeah. Maybe imagine dragons. With data structure compliance issues.

SPEAKER_86: Yeah. Muse maybe. I don't know who could possibly be more aligned.

SPEAKER_88: Okay. So here's what I want to say about mean processing. This is, I have, I'm working on this theory about it. Now, this is something that you, if you follow me on Twitter X, I've been talking about it for a long time.

SPEAKER_07: The intensity is 10,000 X, what would ever happen. When I was growing up, there was a big scandal on seven. It was a big scandal on my block in Bay Ridge. One couple, two families, one wife and one husband from another family had an affair.

SPEAKER_88: And it broke out when we were 10, 12 years old and it became the talk of 76th Street. Why?

SPEAKER_45: Because one would leave 76th Street and 20 minutes later, the other car would leave. And that's how they got busted. Their cars were leaving in sync. And in Brooklyn, the parking spots are, even in the eighties, kind of few and far between. Getting a spot in front of your house or within, you know, on your block was a little bit of work

SPEAKER_07: even then. Now it's impossible. Kind of like Boston in that way.

SPEAKER_02: And so this became, and that was kind of how like the Columbo detective work was like, wait a second, the cars aren't here at the same time. Put it all aside.

SPEAKER_16: This was an old school thing too. Because when we used to live in New Jersey over the summer at my grandparents' place, the block was just full of busybodies. Everybody just always knew each other.

SPEAKER_74: Communities just were like that.

SPEAKER_95: The block was the timeline.

SPEAKER_74: Yeah. Like people were always like looking out there.

SPEAKER_69: Your feed for you was the block. Anyway, I want to make a couple of points about meme processing. Number one, it's obviously this is like a million times more impactful, maybe 10 million times. But these are high profile. These people are now low profile, unknown people who have made the worst decision of their life on all likelihood or amongst it. It's been captured and shared with everybody, but they're humans and they have families. So I was really feeling like, oh my God, you guys have to stop the memes, the memes,

SPEAKER_101: but the memes can't stop. It's just the nature of it.

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SPEAKER_45: No, you're going to get opportunities to check out the latest HubSpot updates and demos, of course, but you're also going to hear inside level insights from visionary leaders and personalities. Dario Amode will be there, the CEO of Anthropic. They make Claude, and I am obsessed with that product.

SPEAKER_88: And this is how you're going to level up as a startup founder. You're going to level up by going to Inbound 2025. Work from home is over, folks.

SPEAKER_45: It's time to get back in person. You need to meet new people, interesting people, kick around these big ideas, do a jam session.

SPEAKER_88: So if you want to hear from these experts, like Dario, like Victor Riparbelli of Synthesia, HubSpot founder, Dharmesh Shah, my favorite guy, and many others, we're going to see you there. Inbound 2025. It's all happening September 3rd to 5th in my old stomping ground where I am right now, San Francisco. Use the promo code TWIST10 at checkout for 10% off your GA ticket at inbound.com slash register. Inbound.com slash register. There's no holding back memes.

SPEAKER_15: Well, it's the Streisand effect. Yes. You always, anytime you're trying to clamp down on something on the internet,

SPEAKER_16: you run the risk of accelerating it by letting more people know about it than otherwise would have. So there's really no clear way. I felt the same thing. Like, I think you can't help but think from a personal perspective, like if you knew the entire world was currently laughing at you, like you've done something so embarrassing, it spread so far. People in other countries, you've never met other parts of the world. I had the same thought. Remember the Australian breakdancing lady, Ray Gunn from the Olympics last summer? Yes.

SPEAKER_69: Which I thought when I saw it was an SNL skit. Right. Which obviously it became.

SPEAKER_16: And I was laughing it right away. It was funny when it happened, of course. But like within a few days, I started to think like, imagine being this. Well, like she did a silly thing, but like, wow, I don't know if anybody could mentally

SPEAKER_55: deal with that. No, I think that's a really good point, Lon.

SPEAKER_50: And one thing that I've noticed in the few times that I've gone viral viral on Twitter, not just inside my community, but like several circles outside of it is how awful everyone is. And so when I see a story like this, I mean, yeah, I mean, I laughed. I'm a human. I saw it and I was like, oh, that's not so good. But then much like Jason said, after I processed a little bit, my thought was just, man, they don't deserve this. Yes.

SPEAKER_55: They deserve to get in trouble with their spouses.

SPEAKER_00: What I will say is number one, they're humans. Let's give them some grace on the, you know, after meme processing occurs and we get to the 72 hour mark, my Lord, like, just let's extend like some human grace here to these individuals

SPEAKER_88: so they can carry on their lives. They have kids. They're going to have to live the rest of their lives.

SPEAKER_74: And it's so tough because they, yeah, they're doing something wrong. Like we all agree cheating is wrong.

SPEAKER_16: Like they're doing. So I think that that does make people on the internet feel like, well, these guys got caught doing something wrong. So I have a license to be as mean to them as I feel like they got, they got caught. They broke the rules. They did something. And it's like, yes, people do. Everybody has done things wrong.

SPEAKER_49: Like it's like, that doesn't mean that you deserve this torrent of ridicule. So if you don't agree with lawn, think of it this way.

SPEAKER_51: Imagine the thing you would like least known about you. You know what it is. Think about it. Now imagine if a hundred million to a billion people were joking about you and that thing, and you had no control over it. And whoever you hurt, you went to call and tell them, by the way, we just went hella viral.

SPEAKER_55: Think about this guy's spouse. Think about her husband.

SPEAKER_88: As chairman of the interwebs, I have given my edict. You have 72 hours to get it out of your system. Laugh it up, folks, giggle in class. But come Monday, everybody needs to get, it's like a class laughing about a fart or something. You know, like, okay, laugh it out, get it out of your system, kids.

SPEAKER_00: 72 hours. I don't want to see any more jokes at 73 hours. It's just, this is the number now. I've given everybody their instructions. You can go buck wild, 73 hours. That's it. I want you to move on to the next meme or get back to work, which is what we're going to do right now.

SPEAKER_02: I'll get back to work. All right. Thanks, Lon. I'm going to take Monday to be with my kids and my family in New York. And then Wednesday, I'm going to be doing this AI Summit in DC.

SPEAKER_00: So Monday and Wednesday, you all get a big treat. Alex is interviewing members of the Twist 500.

SPEAKER_45: Yes, sir. Three great companies per episode. That's three. One, two, three. 20 minutes each. I gave Alex the hardest thing to do. It's easy to do an hour interview. It's easy to do a 45 minute interview. I said. So true. So easy. I say, give the audience what they want. I want to understand what the business is. I want to understand who the customers are and understand how big this could get. What if it works? So those are my instructions to Alex, classic, great journalist. But I want to also get the perspective here of what investors, how they would look at this company. So who is this team? Why are they uniquely qualified? What is the actual product? Like in a really simple sentence, what does this product do? Why does it exist in the world? And then, hey, if this works, how big could it get? Which is a really hard assignment I'm giving you, Alex, which is, hey, project out 10 years from now, what's the footprint of this business? Five years from now, 10 years from now. If it works, how many people are using this consumer product or going to Airbnbs? What if it works? Because you're really good, Alex. One of your superpowers is looking at those 10 Qs, the quarterly reports, and figuring it out. So what I want you to do is try to build a mental model in about 20 minutes of how big could this company get? What would it look like in five and 10 years from the inception? How much revenue of the footprint?

SPEAKER_00: Almost like if you were meeting Google or Facebook in the first three or four years, and you said, hey, I could see this having a billion users. I could see those users making $40 a year. So at the end of each interview, it doesn't have to happen in the interview, by the way, Alex. At the end, you could even do like Alex's recap. Jake Allen asked me, what does this look like 10 years from now? Here's my model. And it's a back of the envelope model you hear me doing here. But that's what we do as investors. We try to look at these things and say, if everything goes right, Alex, what is the footprint of this business? So it makes it essential to watch these episodes. Three members of the Twist 500, the top 500 private companies.

SPEAKER_88: Thanks to Coda for building the software that we built this on. Yeah. We just picked the best piece of software to do it.

SPEAKER_120: And what you just saw was me adding more notes to my what Jason wants in these interviews docket.

SPEAKER_50: But we really are trying to narrow them down so that way they're incredibly useful, incredibly dense. And also hearing from the people who are absolutely feet in the clay, in the trenches, doing the work, building the future. And that's why there's so much fun.

SPEAKER_122: Honestly, Jason, I freaking love doing them because everyone who's a founder is just so interesting just every time.

SPEAKER_45: Well, it's the great thing about this week in startups and this Twist 500 project, we're kind of nearing completion here, which means we're going to start looking at

SPEAKER_00: each of the categories and rotating people off the list. So when we look at the robotics category, you know, there's going to be a robotics company that we say, hey, this company is got to be on the list. And if there's 27 other robotics companies, that means two got to come off or we got to go to the SaaS section and look at them and say, hey, this company's not growing. This company had a down round, whatever. They're not the Twist 500 anymore. Twist 500 is going to be competitive going into the second half of this year.

SPEAKER_88: I'm going to put people on. That means companies have to come off if they're not in the top 5%, or really is probably 20,000, at any given point in time, between 10 and 20,000 venture-backed, you know, concerns, you know, really significant companies, which means the Twist 500 represents the top 2% to 5%, I think.

SPEAKER_00: And then for angel investors who are in my network, I've tasked the syndicate.com with taking over the Twist 500 and meeting those companies after, and then looking at the potential of us buying shares in those companies. So this is like editorial meets the syndicate's investment. I've got 11,000 people in that syndicate, 4 or 5 million of the, 4 or 5,000, oh wait, yeah, 11,000. I think 4,000 have actually participated in a deal. So I'd like to get those people activated for us to go buy and invest in those companies.

SPEAKER_127: Okay, here we go.

SPEAKER_128: It's almost like I'm creating an index.

SPEAKER_00: Yeah, like the Fortune 500, the Twist 500. Okay, what's on the docket? What's our, what's our top story right now? And I got to catch a plane and go see my dad and my family in New York City. I'm really excited.

SPEAKER_120: All right, well, I'll tell you what, let's talk about three funding rounds in quick succession, because I think each one of them matters and talks a little bit about the market.

SPEAKER_50: So first of all, Jason, and we'll do these in order of size. We'll start with Substack raising $100 million. We've talked on the show quite a lot about media economics, the impact of AI on journalism and just copyright more generally. Substack is a company we've had on the show. If you go back to January 6th, 2020, that's an amazing correlation and date and historic days.

SPEAKER_122: Episode 1016, we had Chris Best, the CEO of Substack on Twist. If you want to go back and look at that, that was Jason when they raised their Series A.

SPEAKER_50: All right, so now Series C, $100 million, $1.1 billion post-money valuation, which is a pretty impressive revenue multiple for the company. Reports are out that it's at about a $45 million run rate for its newsletter, blog, and social app business. Jason, this round surprised me. Bigger than I expected and sooner. First thoughts.

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SPEAKER_22: Visit Lemon.io slash twist. Well, Substack came out of the gate raising a lot of money for a platform that monetizes by taking 10% of the revenue of newsletters. They have added live

SPEAKER_07: video and they've added communities. And so Joyce Vance, who is a district attorney and she does stay

SPEAKER_88: tuned with Preet, which is, you know, the guy who, Preet Bharara, who was the Southern District, head of the Southern District of New York, another notable attorney general's office here in the United States. And I was shocked to see like the activity when she is in the chat in the app. So now it's become basically like Patreon, but Patreon was kind of more artistic podcasters, you know, donations. Substack feels more like an industrial and Beehive, their competitor, which doesn't take a percentage of your revenue. So if you look at those two platforms, man, they both have an incredible offering. Beehive is like starts and we use that for one of our newsletters really well. And it's, I think it's like 20 bucks or 30 bucks a month. So you have these two competing platforms. I always

SPEAKER_01: like to think of the two competing platforms and Beehive, what are we showing here?

SPEAKER_50: This is interest in search traffic for Substack, Patreon and Beehive over time. Jason, just as you can see here, Patreon is still the incumbent. But if you take a look at the graph here for Substack, it's clearly accelerating quite a lot, which I think puts context around

SPEAKER_00: why it's raising the Patreonism. And so if you use Substack or Patreon, your, those, you know, Patreon being the OG, Substack being the next, and then Beehive being the most interesting, it's a really interesting chessboard here. If you make over, I don't know, a hundred thousand with your Substack, you would be paying Substack $10,000 a year for what piece of software? It doesn't make any sense to pay for that. You would obviously want to use Beehive because you would pay, but I don't know, $1,000, $500, depending on the guests, the size and the, and the offering you're looking to have. So you have a pure SaaS play, and then you have the two other ones, which take what is an insignificant amount of money from you at 10 or $20,000, one or 2K, but a ginormous amount of money when you get to a certain amount. Like if you have a million-dollar franchise,

SPEAKER_69: I think the Free Press started Barry Weiss's on Substack. Now, I don't know if they still use

SPEAKER_144: Substack. They are, they're still on, and they might get sold. And also, if I think memory serves Jason, Substack is building out a publication version of itself. And I think the Free Press was

SPEAKER_88: the first publication they brought in. Got it. So maybe they have a unique deal. That would be the piece of information I need here. These are going to be, you know, Substack, Patreon, these have been interesting businesses to get to a certain level. How they break out is going to become the question. Now, some group of investors think this business has caught up to their valuation. What was, do you know the last round of funding? Because I remember when Andreessen Horowitz did Substack, people were like, this is a crazy amount, a crazy valuation back then. So, and the distance between their two valuations has been, the two funding rounds, I think has been a

SPEAKER_50: long time. It has been. So, Series B, 2021, a $65 million round led by Andreessen at a $650 million valuation. Then they went out, couldn't raise again, so they did an equity crowdfunding round, and then raised a very quiet $10 million late last year. And now, thanks to the election, thanks to the

SPEAKER_148: traditional media landscape flying apart, 1.1. So, people seem, the bet, you have to ask, what's the

SPEAKER_88: bet bond? B-O-N-D is leading this. Churning Group, which is a media-centric one. Peter Churnin, I believe, who had News Corp. So, people are starting to look at this and say, there's something here. So, what's their thesis is what you have to ask. They had this four years in the wilderness,

SPEAKER_00: let's call it, where they did an equity crowdfunding, which, you know, arguably they did, I think, maybe to have their constituents get to participate. Very interesting move. Most people see an equity crowdfunding round like that as maybe a sign of weakness. Venture capitalists won't invest, but the consumers will. It kind of goes back to the earlier discussion we just had, Alex, of the distance between critics, which in this analogy would be venture capitalists, and the people who are the consumers, which would be equity crowdfunding. Sometimes the equity crowdfunding or the consumers know better than the critics, the VCs. VCs have a hard time with Patreon as a business, with Substack as a business. They have an easy time with Beehive as a business. It feels like software, scalable, high margin. The real question is somebody has to look and say, when somebody gets to

SPEAKER_45: $250,000 in revenue, giving 25,000 of it to Substack makes absolutely no sense unless Substack is

SPEAKER_00: bringing you more from their network and they can prove it. So, when you use Substack, it will say inside of it, here are the people that the Substack network got to subscribe to anything. So, when I look at it, I'm like, oh, that's interesting. Of my 100,000 subscribers for my Jason from All In newsletter or Jason on startups, I separated them into two concepts. So, startups and folks, and it really haven't been doing too much of it. I just started doing it again. That really becomes the key issue. And so, they've convinced Bond and Churning Group that there is a business here that will go from $1 billion to at least $5 billion or $10 billion. Nobody's placing that bet of $100 million if they don't think they can 10X it. So, how does it become a $10 billion business? And this is, as we just talked about with these trio of startups we're doing for the Twist 500, that's why I specifically gave you this really hard assignment. So, let's look at Substack right now,

SPEAKER_88: and we can just do our back of the envelope math. At $1 billion, 20 times top-line revenue for a high growth company or 30 times top-line revenue. That's what AI companies are getting, right? Or a fast-growing SaaS. So, that means they have to have $50 million in revenue, $30 million in revenue. Do we have any insight into Substack's revenue? Yep. So, the reporting around the time of the round is that

SPEAKER_50: they were telling investors they had about a $45 million run rate, which would put them at a roughly 24X run rate multiple. Perfect. So, here you go, folks. You're learning here on

SPEAKER_88: This Week in Startups how I can do this back of the envelope math. So, that means there's a group of people who believe this can get to in under five years, under 10 years, between those two numbers, five and 10 years, maybe five years, taking 10X revenue. Now, that's a big bogey. $500 million in revenue means at 10%, they have $5 billion in top-line subscription revenue. That's a lot of money. So,

SPEAKER_93: right now, they have $500 million in subscription revenue, or $450, based on that 10%. So, $450 million

SPEAKER_88: in subscription revenue. That means do they have 1,000 pubs making $450,000 each? Do they have 500 pubs making a million each? I don't know, but you could actually back into that. You could look at

SPEAKER_00: their top pubs list, which somebody must have a list of, look at the paid subscriber base, and you can start to look at that. Another way of saying this is, are they earning that money for their publishers?

SPEAKER_93: And that's going to be their natural tension. If you're free press, there's no way at $10 million in revenue, let's say the free press was at $10 million in revenue. I'm picking a number out of

SPEAKER_88: the air. There's no way Bari Weiss is giving them $500,000 a year. You would be much better off using

SPEAKER_00: Beehive and deploying the other 400, hiring a full-time developer for 150K to customize it and be

SPEAKER_45: 3.5% more profit, $350,000. That's going to be five journalists, four journalists. There's no way

SPEAKER_00: you can afford to give that money to Substack unless they prove, hey, we're earning it. Now, the podcasting rub and the live streams is how I think they sold it. We're right now sending this out to our Substack for the This Week in Startups Substack live on their new app. So I'm just testing and we test every platform and I don't know that we're getting views. I don't know that anybody cares. I don't know if we went subscription for This Week in Startups, if it would ever match the

SPEAKER_156: advertising revenue in year 14 of this program. I don't think it could.

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SPEAKER_55: description. So you're right, Jason. If they want to 10x their subscription revenue base,

SPEAKER_50: it's going to be a lot of work because they've already gotten a lot of the low-hanging fruit people that brought their own audience, etc. But people would think that the advent of the churning group on their cap table indicates that they're going to go heavily into advertising. And the company actually told the New York Times they're going to be doing that. So I think what they've done is they've said, look, Jason's right. We can't just keep taking 10% of everyone's subs and then keep people around. Call the graduation problem. You get to a certain size, you leave. And then they're stuck with less people and slower growth. Okay. So you offer them an application, a mobile app that brings some other services and some distribution. That's a nice bonus. Then you mix in native advertising products where they centralize the demand and then federate out the money to the publications. Similar to Beehive, which is what they do right now. It's working great for them. So I think they told their investors, look, our free subscriber base is growing by, let's say, 2x the paid subscribers. We have this enormous audience that is uniquely positioned to attract a certain type of high-dollar advertiser. Because let's be honest, it's not your average person who's reading subs. It's like people that are more educated, wealthier, and so forth. And I think they can see a path from here to that revenue mark, thanks to advertising and growth in paid subs. So I can see it,

SPEAKER_161: it's ambitious, but I like that. They seem to be smart cats. So I give both of those teams, Beehive and Subsac are incredible products. Patreon, I subscribe to three or four things over there.

SPEAKER_88: They're all legacy items. I'll say that. So it does seem like Patreon is falling behind these two product teams in a significant way. So sometimes being first means really qualified people look at what you built and say, I can do better. And they just make a much better product. I think they're good businesses. I don't know that it's a great investment, but the fact that they haven't given up and they're still grinding and adding new features, the top two publications at least, the top two platforms at least, I haven't seen new features on Patreon. The app feels very stale. Patreon's app feels incredibly stale. It doesn't work very well. Like when I go into it, I'm seeing very old posts, et cetera, but I do subscribe to Brett Easton Ellis, Red Scare, Blanco Lirio, and maybe one or two other pubs. And I, a lot of times I

SPEAKER_00: subscribe to pubs because I want to see them exist like Blanco Lirio. I subscribe to his because I think it's important to have people doing analysis of plane crashes for safety reasons. I'm like, this is like my little, if they told you donate $10 every time you buy a flight to make flights safer, and it goes to this flight safety fund, I would do it, right? Everybody would, or half the people would pay that $10. And so I feel like that's what I'm doing by having him out there. Blanco Lirio, highly recommend. Juan Brown, incredible. He like, I just love watching these videos because I learned so much about aviation and like everybody have a natural fear like of dying in a plane crashers. I take planes a lot and watching him do these, I say to myself, I'm going to avoid

SPEAKER_88: these planes. I'm going to avoid these airlines. I'm going to avoid these situations. I'm not kidding.

SPEAKER_00: It's always the same thing. Pilot era, co-pilot communication, certain airports, certain conditions. And I'm like, you know what? If there's a flight during a snowstorm, I have said I'm not flying. I just move my flight. I can afford to do it. I have the flexibility to do it. I will literally move my flight and I don't take regional airlines. After watching his videos and hearing how regional flights work,

SPEAKER_88: et cetera. So anyway, I love Substack. I love Beehive. And I even love Patreon. I love the whole category. And would I invest in it? Hmm. That's, I guess, the key because you would have to look at the price they paid and what the potential return is. A 10X return to me is interesting in 10 years. I'd have to hear the pitch directly from the Substack team. Is Substack and Beehive, are they in the Twist 500?

David Friedberg: They're both in the Twist 500. Yeah. These are companies that we've been keeping an eye on for,

SPEAKER_02: I mean, for ages because we use them. Let's have them both on. I'm going to give you the assignment to have them both on and hear the pitch directly from them. I remain impressed with those two teams

SPEAKER_88: specifically and their product velocity. So when I see two really great competitors adding features constantly, it kind of makes me interested. It reminds me of DoorDash and Uber, you know,

SPEAKER_02: Airbnb and VRBO, you know, pick your poison of, you know, people going at it, Instagram,

SPEAKER_00: Facebook in the early days. So yeah, I'm a fan of both products. I'm a fan of both product teams

SPEAKER_121: in those cases. I wonder what's going on at Patreon. Yeah. Well, one last data point, Beehive

SPEAKER_51: told the world that they're at 20 million ARR now. Wow. Pretty impressive. They're going pretty

SPEAKER_138: quick. I think Tyler Danker... So they've caught up to half? When did Beehive start? Because Beehive

SPEAKER_00: started five years after Substack. So that's impressive that Beehive's catching up. Maybe that's what got Substack's butt in gear, respectfully, is like the emergence of Beehive. And that's great for all

SPEAKER_88: content creators. And I love the idea of the ad network going out and selling it. That's what

SPEAKER_00: John Battelle was doing with Federated Media. He didn't have the platform, but he was representing the advertising for Boing Boing famously. And I know this because I was doing Weblogs Inc. and Nick Denton was doing Gawker at the time. And we weren't part of that. And then he sold out like Federated Media, pissed off the Boing Boing people because they didn't get any of that money. And Boing Boing, I think at the peak, was like maybe two-thirds of their revenue. It was like their tip of the spear. And I remember the Boing Boing people were a little upset at him when he was able to sweep all that cash off the table in some sort of secondary transaction. I don't remember the details

SPEAKER_168: exactly, but I do remember a Boing Boing person being upset. It's just evidence that you and I have

SPEAKER_155: been doing this for a long enough time because I bet you half the people listening to us in this

SPEAKER_51: moment are like, what's Boing Boing? And I guess you had to be there. Still going. Boing Boing

SPEAKER_173: came up in my feed today. I will say this as well to end. I love the term graduation problem. So

SPEAKER_00: this is the graduation problem that you do a great job, your customers leave. eHarmony, number one graduation problem. We're going to make this one of our themes here, the graduation problem. eHarmony was really a challenged business because they were so good with their science of relationships, of finding a husband, that you're 40 or 50 bucks a month. They were charging a lot at the peak.

SPEAKER_01: would go away because if they did their job correctly. Do your job correctly, you lose the

SPEAKER_02: customer. And job boards have this issue. And you're basically like, when do you get the person

SPEAKER_00: back? When they get divorced? Okay, yeah, that could be 10 years. And 50% of the time it doesn't happen, so you lose it. The other graduation problem is ad rep firms. Somebody represents your advertising, they do a good enough job, you hire your sales team, and then they go away.

SPEAKER_50: Yep. Well, all we need is more Coldplay concerts to ensure a better market for eHarmony to pull from,

SPEAKER_177: and then everyone will wait. Yes. Okay. So who do you got on the next one?

SPEAKER_50: Next up, Lovable. We had Lovable on the show, February 3rd, 2025, episode 2080. The CEO, Anton Osaika came on. And at that time, Jason, they were just a little Swedish company that had grown to 10 million in AR. Now they're at 75 million in AR, and they just raised $200 million in a round, led by Excel at $1.8 billion valuation. If you don't know what Lovable does, I'll catch you up. They are one of the leading lights of the vibe coding and use AI to build yourself an application game. Really fast product velocity to Jason's prior point, and a company that I really, really like. And they had raised just $22.5 million previously. So Jason, this is a huge increase in their capital base, which has me slightly worried, to be honest, because it can be distracting to have that much money. But really impressive. I'm really happy for them and just shows that Europe can still build. Thoughts?

SPEAKER_00: Okay. Yeah, I think vibe coding is really interesting. These companies capture people's attention, and we are in the sampling phase of AI. I'll pay for anything for a month or two. I'm paying right now $200 for like whatever, and Claude and ChatGPT. I think I'm paying probably, you know, I'm getting towards $1,000 a month personally for AI products, or I'm halfway there, more than halfway there. I pay for Grok. I don't know if I'm on the $40 or $50 plan. Because I feel like even at $1,000 a month, it makes me $1,000 better. Now, the franchise of Jason Calacanis is worth millions of dollars in revenue a year. So it makes no

SPEAKER_88: difference to me if I do that, right? If it gets me incrementally better for one speaking gig, that's a lot of money right there. So I have a reason to pay for it. But on All In this week, I had an interesting discussion with Gavin. I have put a, and I talked about it here before, I put a valuation on artificial general intelligence, not super intelligence, but general

SPEAKER_161: intelligence. General intelligence is what you and I, and everybody listening does every day, a lawyer, an accountant, a podcast host, a researcher, a journalist, a programmer, general

SPEAKER_00: intelligence, writing the show notes. When you write the show notes, what percentage bet, or let's just take you out or I out of it, because we're virtuosos at this, in this category. But an average producer summarizing the Substack news story we just did, versus Claude, I wouldn't be able to tell the difference. Today? Probably not. Honestly, today. No. I mean, I did it the other day with a story. I hit the assistant button. It was a breaking story. And I put those notes into Slack. And those notes were as good as, you know, whatever, a 50, 60, 70K producer, not as good as Alex with his domain expertise or me with my historical expertise or inside information, but essentially there. So I have now, my belief is there's a billion people in the West, in the modern world, in the developed world, let's call it in the West, where people make salaries of above $50,000 a year on average.

SPEAKER_88: There's a billion people on the planet who are going to pay for some amount of AI software. I just described mine. I'm the tip of the spear, but you might be spending, you might reasonably spend $50 a month, $25 a month. Doesn't seem like a lot of money. SaaS software, people are paying that amount.

SPEAKER_161: But 1 billion people, $100 a month in spend, or 75 bucks a month, something in that range, equals 100

SPEAKER_173: billion per month out there, which is a trillion dollars a year.

SPEAKER_120: Yeah. That's the number that, that surprised me is that we got to a trillion pretty quickly.

SPEAKER_161: Yeah. Okay. Billion people, 100 a month, trillion dollars, times, you know, whatever, 12 months, you're at a trillion dollars, 100 billion times, you know, thereabouts, trillion dollars a year, 10 times that, it's a high growth category, equals a 10 trillion

SPEAKER_88: dollar incremental business. It will eat away at some existing businesses, but I believe this is incremental spend largely. Why do I believe it's incremental spend? Because I don't think anybody's like canceling Slack or canceling HubSpot to use these new products. These are new products

SPEAKER_00: that provide a new offering. Therefore, people are going to be very frisky. I believe there's a trillion dollars in spend available for general intelligence. Super intelligence means it's doing

SPEAKER_45: novel creation and problem solving beyond what humans can do. Okay. You know, what's that worth? You know, if you create fusion energy, if you create the cure for cancer, like you actually have an

SPEAKER_00: analogy for that. What have GLPs become worth? Ask producer Claude, what is the GLP market worth in 2025, 2026? That new category in revenue in 2025, I think there's like a hundred million people on GLPs already paying $2,000 each or a thousand dollars each, you know, this is already. Yeah. So I don't know, what does producer Claude say the revenue of GLPs are right now? I'm curious. That would be the novel super intelligence. Now humans who are not super intelligence got there, but it took them a long

SPEAKER_50: time. About 63 billion in sales are expected next year, according to producer Claude, growing about 18% a year, more or less, quite a lot of money, Jason. Yeah. Yeah. So times 10, you know, you're,

SPEAKER_161: it's trending towards a trillion dollars. This is half trillion dollars in value, unique value created

SPEAKER_01: just by GLPs. Uh, when those become pill format, you don't have to shoot yourself with a needle. Oh, then I'll, then I'll do them. Yeah. It'll be 10 X and people are going to do them for things

SPEAKER_161: other than that. So that would be super intelligence. I'm going to just take that off the table. There's 10 trillion dollars at stake here. I believe a company like lovable is part of that, that $10 trillion in market cap. So they're $1.8 billion valuation. If they had a 10 billion, if it's a, if it's 10 trillion in market cap, 10% of 10 trillion is 1 trillion. And then 1% of it's

SPEAKER_88: a hundred billion. So they're a fraction of that movement. Coding vibe coding is going to be, that's gotta be on its own hundreds of billions in market cap. So I would put vibe coding at maybe

SPEAKER_161: a trillion of the 10 trillion I just described. In other words, software development is a trillion

SPEAKER_88: of the 10 trillion. They are about a fraction of that. I think it's an easy bet for venture capitalists to make that they could 10 X, I think it a hundred X from here. Uh, but there are going to be, have some stiff competition and you're buying a group of people who have proven, look at their traction. They went from 30,000 paying subs in February of 2025 to 180,000. That's this year,

Chamath Palihapitiya: really this year, they five, six X, they four X 4.4 X their annual reoccurring from 17 million to 75.

SPEAKER_00: So that means they're valued at whatever, 25 times, uh, their sales. They, uh, are doing that by the way, with only 45 FTE. So back of the envelope, it's they're, they're trending towards $2 million per employee. This is like an incredible run rate here. Um, there's an amazing kind of split

SPEAKER_120: screen that comes up because we just talked about sub stack raising roughly 24 X run rate

SPEAKER_50: here, roughly 24 X run rate, but growing a lot faster. So you can kind of see different bets, different timelines, different companies. Uh, why do they have the same valuation? I think it's because of what you started off with the sampling problem. How many of these customers are still going to be there in a year? Substack has a much longer monetization history. So you can have a little bit more faith in the durability of its revenues. Here's the thing though. We've been saying sampling problem, people will test anything for a long time now, and these companies are still growing. So I wonder if, is it time to start setting that concern down a little bit?

SPEAKER_161: No, uh, it's probably increasing because you have, you have artificial general intelligence and

SPEAKER_00: super intelligence as the possibility and the fear, a reasonable fear that what lovable does will be

SPEAKER_61: built into Claude, um, and Grock and Gemini and Meta and, you know, Microsoft, Apple and Amazon,

SPEAKER_88: Amazon, actually somebody emailed me, uh, was like, by the way, we have our own language model. I was like, you do, I never hear about it. Um, but Amazon actually has their own language model. Maybe you

SPEAKER_00: could look it up. And so I think you'll see Microsoft, Amazon and Apple have their own large language models in the next year or two of the three, or if Amazon already has it, I don't know that Microsoft is working on a lot, a large language model. They're obviously aligned with open AI. I would be shocked if they weren't covertly building one. Microsoft has made,

SPEAKER_208: I think it's the five PHI family of models. And then from Amazon, it's the Nova series,

SPEAKER_55: which we actually, I think we brought it up on the show as like a, an aside a while back, but we didn't double click on it because I think to your point, we don't know anyone who uses

SPEAKER_51: it. It doesn't show up on leaderboards. It doesn't show up on open router. Our friends don't use it.

SPEAKER_02: Like there's no, there's no. So here's what I'll say, let's look at the leaderboard.

SPEAKER_88: Uh, you know, that we've been talking about whatever that leaderboard is with the collection of human tests and some number of those tests, you know, the answers ahead of time. And some of them, you don't know the, I'm sorry, you know, the questions ahead of time. So they're easy to now other ones, they present you with new questions each time. So they're harder to now. And, um, Gavin Baker was explaining that nuance to me. That's really what's at stake here is, are they able to answer new novel questions? Let's just look at that, the top 20, let's say,

SPEAKER_00: and as a concept, I just want to know when new entrants break the top 20 or ones we don't know. So just let's keep an eye on that as a concept, new LLM. Okay. Entrance.

SPEAKER_55: Uh, the Amazon Nova experimental model, the highest ranked one on the L Marina dataset, Jason, I just looked it up is ranked 62nd. Okay. So that's, that's work to do much work to do. Uh, but no matter who builds the best model, as long as level, it gets to sit on top of them,

SPEAKER_50: they can do well and kind of take advantage of all that progress that we're seeing.

SPEAKER_69: Uh, let's move on. No, no, no, no. Think that through for a second. This is what

SPEAKER_88: cursor has had as a problem. Cursor was built on Claude, right? If I remember correctly. Winsurf was. Winsurf was on Claude. What was Cursor built on? Cursor had. I think they also used Claude. ChatGPT. I think they were also Claude. So as explained to me, Claude now has their own AI assistant, uh, AI coding assistant. So, you know, these, uh, wrapper companies, uh, that are working in coding specifically, have a very unique challenge.

SPEAKER_00: The person you're building on top of wants your business. They consider it a key piece of that $10 trillion AGI prize I've outlined and Cursor, there it is. You just showed it, right? Or you

SPEAKER_144: just showed the Claude version. The Claude code that is now competing with Cursor. Okay. So then,

SPEAKER_50: Jason, just to play devil's advocate here, if you do expect the foundation model companies to go out there and try to take some of the market that other people are collecting Cursor's fast revenue growth. Winsurf's fast revenue growth. Does that mean that you're bearish on the potential success of non-foundation model coding assistant tools in general? I think that specific vertical is so key

SPEAKER_88: that the language models are going to want it. So I think it's going to be tough for lovable and Cursor and Winsurf and these kinds of companies to actually make it work when the platforms themselves say, we want that business because there's so much revenue there. The fact that Cursor has 500 million, Winsurf got to a hundred, I think more or less in 75 here for lovable. The fact that these are high growth categories, it's kind of like, um, Hmm. What's another high growth category that people said, you know what, we need to have this as part of our offering and bundle it. The example would be Slack. Microsoft said, it's gotta be part of office. It's too key. And Zoom is the other example. So

SPEAKER_00: they were like, you know, we have to have Google meet as part of the Google suite. We have to have

SPEAKER_93: Microsoft teams, which is what they call their video product and what they call their Slack competitor is still teams. It's one combined package that everyone hates. Yes. Yeah.

SPEAKER_191: Yeah. Um, I mean, it's, it's just that Zoom is so flawless. It just shows you what a single,

SPEAKER_00: you know, and then you look at Zoom Slack offering. It's so bad. I'm just like, it's so interesting focus as a founder. So if you look even at this day and era, this era, Slack has still carved a niche and Zoom has still carved an independent niche. Slack has huddles, which I'll use once in a while. Yep. And Zoom has a Slack competitor built into it, but they just can't seem to chew gum and walk at the same time. These two companies and take each other's markets. Uh, but office does seem to be able to extend, which would mean if that trend continues that a best of breed can co-exist. So cursor can co-exist. Lovable can co-exist. It's just going to be hard. And it's going to be such a headwind that Slack could not remain an independent company. Right?

SPEAKER_51: So I think Slack could have, I just think Brett Taylor won. Uh, yeah, but I think, you know, Mark Benioff talks, uh, I mean, he's very persuasive and he has a lot of money and they gave him a lot of cash for it. Um, on the Zoom point, I just want to point out that Eric, uh,

SPEAKER_50: uh, Yuan with the founder of Zoom and CEO and a person that I've had dinner with and quite like, um, he was at Webex, which got bought by Cisco and he was there for a while. Then he left to go build Zoom. So his back, his background professionally is I make online video communication work. And that's probably why he's so good at it and not as good at taking on Slack, but I like that they're distinct because I have a best of breed in both things. I don't need my

SPEAKER_55: lawnmower to also be a blender, you know? So I'm fine with that.

SPEAKER_88: So both things can exist. It's just the headwinds will be severe. You're going to have to be, as we talked about on a product basis, all these things come down to how lightning focus can you be on the product? So when you see me obsessing about the product that is this week in startups, it's because I know you cannot survive if you're not paranoid and you keep making your product better, which is why I was like, I want to have three interviews and I want to know how big these things are. I want the twist 500. I'm always obsessing about product because I know the audience is going to be looking at other products and saying, oh, are there other options for my attention and my time and my money? So if there's any lesson here for founders, be paranoid and obsessive about product.

SPEAKER_00: Everybody was thinking, oh, Grock, you know, is toast. You know, they're falling behind. Elon's in Washington, DC. And then I watched him. I watched it because I, as I said here, I went up and

SPEAKER_45: spent a little time with him and I watched him get laser focused again. And then they drop Grock 4, and they leapfrog everybody and take the pole position again. That's just the nature of certain individuals can get so locked into product. It's so inspiring. When you're feeling scared, when you're feeling fear, when you have anxiety, you're falling behind. It's a very simple thing for founders to do. Lock into product, just get locked in, obsess over it. Do not stop thinking about it. Do not stop having meetings. Do not stop arguing, fighting, hand-wringing. And all of a sudden, what comes out the other side is something that delights a customer. It's not that complicated, folks. Substack, people thought that product was never going to work or whatever. And then I watched them. They launched that notes feature, that community feature, the video feature, Beehive, the same thing. They keep launching new features. And then Patreon doesn't launch new features. And now I'm like, Patreon's the afterthought to those two others when they were the original. And that's the fault of the product team over there of not being laser focused, or at least not capturing our attention with really unique, cool features. The fact that I can go live in the Substack app right now, I'm like, oh, that's kind of interesting. I thought it was a newsletter app. Hmm. Okay. Got my mind just thinking about the product. So what are you doing to get people thinking about your product and believing that this is a product

SPEAKER_00: worth investing time in because the product team is investing time in it? People can laugh about this new Ani. I don't know if you played with Ani, the anime assistant inside of Grok.

David Friedberg: I don't have, I have the app cheaper version of Twitter. I don't have the super. Ah, so anyway, there's this new avatar Ani, you can pull her up. It's a Japanese anime,

SPEAKER_173: you know, in a, in a, uh, you know, like kind of my outfit and she talks to you and it's going to

SPEAKER_88: be the interface. I think for a lot of people's AI, it's an interesting experiment. It's not for me, you know, I'm, I'm, I'm a Claude, deep research, Gemini, Comet, you know, like, I like the deep anime. I don't like the anime assistant, but I could see, you know, a lot of people liking to have a celebrity, her, Scarlett Johansson. That's why Sam Altman went after Scar, Scar Jo to get her voice for, uh, opening AI. And I mean, what a dumb decision on both of their parts. They should have

SPEAKER_93: come to terms. Scar Jo should have asked for 1% of the value of opening AI shares. I bet she would

SPEAKER_88: have gotten it. Man, that would be worth $3 billion. Because at the time, I think the company was worth $30 billion. And I think she could have negotiated 1% of that $300 million, which would be worth $3.5 billion. She'd be a billionaire just by licensing her voice. I, I'm telling you right now, Grok, Claude, anybody out there give Scar Jo 1% of their company, she will make the company worth more than 1% as the licensed voice and likeness. And Scar Jo, like, you'll make more from that one deal than you would make from every movie you ever made times 10. So, you know, like every, I mean,

SPEAKER_00: if she's getting paid 20 million for a Marvel movie, uh, and they're not making any more Black Widow ones or Jurassic Park, I'm sure her ticket price is what, 10, 20 million. You can look it up on producer Claude, man, she can make a, she can make bank, but here it is Grok. And they're coming out with like, they've got two of them now. Another avatar. They got a male one coming. These, um, companions are an interesting modality that I think not for me, but maybe they got 10% more

SPEAKER_01: people to use the product or try that feature and maybe they're going to become addicted to it and like

SPEAKER_122: it. So that's, so I don't care about people making jokes. Honestly, Jason, it does not really bother me. I think people should have fun. And honestly, I think we're a little bit prudish as a society.

SPEAKER_50: So this is all fine with me, but you said the word that really catches me, which is addicted to, and you know, we were talking about Jeff and talking about people getting called,

SPEAKER_144: they call it Chad GPT psychosis, people turning to these services.

SPEAKER_55: That is a theory for Jeff is that he's got a Chad GPT psychosis. Yeah. And so when I see this Grok tool,

SPEAKER_50: I'm just completely divided in my mind because on one hand it's harmless, go, go have fun. On the other hand, some people who are less well-adjusted right now might become even more invested in AI friendships and AI models are not humans. They do not respond the way humans do. They are often a bit sycophantic and can kind of feed into what you're saying. And so I wonder if stuff like this in general, not pointing fingers at any one company, but could lead to more problems in that way. And,

David Friedberg: and it will lose some people guaranteed. I mean, but kids became obsessive with their Dungeons and

SPEAKER_88: Dragons character with TikTok. Kids are going to get obsessed or even adults who maybe have a vacuum in their life. They will get obsessed. And then the pendulum will swing the other way. Right now, like the biggest trends, you know, in the world are people going back to doing things in person. So every time people get too addicted, it swings back the other way. I remember my friend created meetup.com, Scott Heiferman. And man, people were so addicted to online, their email, their Facebook, and he created this online to offline and people became obsessive about that. I was obsessively

SPEAKER_00: going to bulldog meetups. There was a bulldog meetup in LA and my wife and I, before we had kids, would take Toro, rest in peace, my beautiful first bulldog, to all of these things. Man, when you come up a hill and you see 30 bulldogs playing and you take your bulldog off leash and they're just, there's 29 other bulldogs there, it is like the greatest, you know, thing. So yes, people become addicted to this. Society will create some ground rules on it. And then people have to become mature enough to understand you can become addicted to alcohol. You can become addicted to Alp. These pouches that, these nicotine

SPEAKER_247: pouches are like, you know, use the promo code JCAL. It's always right by your computer. Every time you

SPEAKER_249: bring it up, I'm always like, how does he have it there? Did I realize you're just taking them all

SPEAKER_88: the time? I don't, I take them like maybe once every other day when I need a little pick-me-up and I want to get off caffeine. I realize I'm taking a toxic amount of caffeine some days.

Chamath Palihapitiya: What? Toxic caffeine? No. Well, it turns out the sixth cup, you're starting to get into toxicity, I think. And so I always, I gotta be honest with myself, maybe it's my ADHD and I don't take Adderall or anything. Um, you know, a fifth and sixth cup is almost assured in the afternoon for me.

SPEAKER_00: And I'm three, four cups in by noon. So I am trying to stop caffeine at 1 PM. That's my new thing. I did it yesterday. I'm going to do it today. And then what I decided was I'm going to pop an Alp in the afternoon instead to get my little pick-me-up. Um, all right, listen, great show. I think we, uh, we got enough show here for everybody. We didn't do the Uber mega move.

David Friedberg: There's so much more on the show today. Like it's been like this news cycle is nuts. Just to tell

SPEAKER_50: people what else we had, the Hadrian round 260 million precision manufacturing in the U S the house passed three crypto bills. Okay. I talk about that by the way, on all in,

SPEAKER_168: so you can get that over at all in on the weekend with David Sachs. He came on the show.

SPEAKER_50: Open AI dropped chat GPT agent, which brings together chat GPT operator and, uh, it's deep research product. Super cool. Trump wants to regulate AI via an executive order. That's a bad idea. That's not going to happen. We have some, uh, notes on the meta team, Jason, that we've pulled together. Oliver and I worked on that. We're going to save that for the next time we're together because that's a lot of information. Um, and then also Uber is teaming up with both Neuro and Lucid motors to bring 20,000 cars to market and starting next year. And I even did the math, Jason, of how many rides per day out of Uber's total ride share volume, but. Oh yeah. What would

SPEAKER_153: that be? So if you had 20,000, yeah, take me through your math and pull it up on screen here.

David Friedberg: All right. So I'll just, uh, walk everyone through the little back of the envelope we did for the show. And you can get the docket and follow along to all this great math. We do this week in startups.com

SPEAKER_63: slash docket. And so here's, here's my thinking 20,000 cars and they say over six years, let's just

SPEAKER_50: say 20 K all at once for the sake of math. Um, 75% uptime that leaves 25% for charging, cleaning, repair, all that good stuff. Let's presume a 15 minute ride and 25% idle time in between rides. So three rides per hour that works out to about 56 rides per car per day, 20,000 cars. That's about 1.1 million rides per day that they can do at full capacity. Uh, it works out to about 101 million per quarter. And that Jason is 3.3% of Uber's Q one ride volume. So if they get all these cars out right away and they were all working in all at max capacity, it's a dusting of market share. And this underscores your point you've made, God, I don't know, five times on the show that we're

SPEAKER_00: going to need a lot of cars. And this is a little bit off. My understanding is 40 rides a day is what to expect. So two rides an hour, you are correct. 20 hours a day. You got to take them off the road for a couple of hours, clean them up, whatever. Um, so it's probably more like 40 rides a day is the more realistic expectation, but you're, you're in the ballpark here. Um, the thing that's interesting about this is Uber put $300 million into Lucid 300 million or in some amount into Nuro. Nuro has very good self-driving, but they don't make cars. It's going to be built into the Lucids.

SPEAKER_88: Lucids is owned by 53% by the public investment fund, the PIF from Saudi Arabia. Saudis, uh, own 53% of that company, Lucid. It makes, uh, a really great car that has competed with Teslas and other

SPEAKER_00: EVs. It's considered, you know, I was looking at car drivers review of their SUV. So it's, it's right up there, but let's face it. There are 20 incredible EVs right now. Tesla has the top four or five, but you have Lucid Rivian and the Volkswagen ID buzz and their series BMW series. So let's just say there that EVs have been commoditized and the only thing is self-driving, which I think is the case. EVs are commoditized. You know, they're, everybody makes a great one. Now mission accomplished for Tesla. They wanted to get more people making EVs. They did it.

SPEAKER_88: So then you're really just down to the driver software, Neuro driver, Volkswagen driver, Uber driver, Waymo driver, we ride and pony. They're all in the same zone of excellence. So then it becomes who can deploy these and understand the local market and the nuances of each one, the quickest. In other words, who can roll it out per city, the fastest.

SPEAKER_00: What people have learned is when Uber and Waymo, when Waymo went into the Uber network, their deployment curve. Um, and I think you had this in a previous docket, but we didn't get to it.

SPEAKER_88: The deployment curve, the altimeter guy who looks at these Atlanta and Austin, Waymo using Uber, it grew 50% faster or even double in those markets by just being, you know, included in the Uber

SPEAKER_00: network, which means if you're in the Uber network, you're going to deploy faster than anybody, which means Uber is going to have 10 partners. I think they can probably have 20 partners globally. And in any given city, three or four of those will be available inside of the Uber app. Is this the chart that you want to use? Yeah, that's the chart. So if you look at this chart, there's some blips there with that green, by the way, is I think when, um, the Los Angeles riots happened recently with the immigration ice raids, the same thing in San Francisco, and they had to take their cars off the market because they

SPEAKER_88: were being burned. But if you look at the, um, the green, the ATX and the Atlantic curves,

SPEAKER_161: like those are the ones to watch how quickly they're being deployed. And, uh, the deployment when you have, when you're part of the Uber network is going to be much faster, which argues that Uber will be a neutral player for 20 different AV companies to either participate in or not. And I

SPEAKER_88: think 19 of the 20 will participate and one won't, which would be Tesla won't participate. Everybody else

SPEAKER_00: will. And all this is going to do is take, you know, we're looking at the percentage of rides here. I think the percentage of young people who don't get driver's licenses to what to look at. I was talking to somebody who, uh, in my friend circle, and they are having a hard time convincing their 15, 16 and 17 year olds to go get driver's license. If you talk to any parent today, they're trying to

SPEAKER_45: get their kids to get a driver's license. The kids have no interest in a driver's license. That's really

SPEAKER_263: weird. Parenting has changed, Jason. The first time I could get in a car and drive away from my parents, I was like, get me out of here. Kids want to be on their phones in an Uber. Uber has teen. Waymo launched

SPEAKER_00: a teen version, um, which means your parents pay the bill and can see where you are at all times. So the

SPEAKER_88: nanny state, the helicopter parenting, safety of kids, you know, that's very attractive to parents. I can't say I, uh, you know, as much as I'd like to say, I want to raise free range kids, I want to know where my daughters are and that they got home safe from the concert. While I want them to be able to go to the concert and have a little bit of freedom, I would like to know that they safely got home and know that, you know, the car's picking them up. So what everybody's looking at Waymo versus Tesla versus Uber versus Lyft, that is not

SPEAKER_00: the, they're totally missing the big picture. The big picture is 1% ride sharing growing to 50% ride sharing in a generation. Nobody's going to own their cars. Nobody's going to have driver's licenses. The idea of going and getting a driver's license would be the equivalent of

SPEAKER_88: getting your horseback riding certification, your, pick a certification that's completely unnecessary now. That's what we're seeing here. It's a minimum of 20,000 cars. The thing people

SPEAKER_93: don't know is the PIF is one of the largest shareholders of Uber. I'm absolutely not shocked

SPEAKER_122: that those two companies have an agreement because why would, why else would you pick Lucid?

SPEAKER_45: You could have picked two. Well, and they're not picking just one. Uber's going to buy as many of

SPEAKER_88: these cars and give them to their, Uber may or may not maintain these. They're going to give them to fleet managers because Uber, they also, people don't know they have fleet management software. So Uber would much rather have a fleet manager manage these, you know, 500 cars in Austin, 500 cars in Atlanta, 500 cars wherever. And then they're just, the fleet manager keeps the tire pressure, cleans the vomit, but Uber will do it if they need to. It's, I think what we're going to

SPEAKER_00: see here is Lucid, Neuro, merger, Volkswagen, Uber, merger, Uber, Tesla, merger, the consolidation

SPEAKER_88: in five years. Everybody right now sees all these different players and fragmented. I've watched this movie so many times in my life, Alex, when it's this fragmented, and the prize is

SPEAKER_00: 50 times the collective market cap in 10 or 20 years, maybe 20 years, 50 times, 50 X in 20 years, usually you would double twice. So you'd be four times bigger. This will be 10 times bigger than the normal growth rate. So just let it sink in folks. We're going to be sitting here in 20 years and 50% of rides will be in an autonomous vehicle, not owned by the driver.

SPEAKER_120: All right. So just to put this into perspective and why Jason's not talking absolute nonsense here, because you're thinking, these are big companies. How can they just buy one another?

SPEAKER_50: Well, let's just take Waymo, for example. Let's say Waymo went to buy, I don't know, Chrysler. They work with Chrysler on their minivans for their self-driving cars. Chrysler's part of Stellantis. Stellantis is worth $23 billion total. Uber's worth $200 billion. Even like Lyft, which is

SPEAKER_173: roadkill at this point is worth $10 billion, $15 billion, I think. Less, but that's-

SPEAKER_120: Okay. $5-10 billion. My point is Alphabet's worth trillions.

SPEAKER_161: And so these car companies- And the Waymo unit, I understand is worth $30 or $50 billion in the last valuation. That sounds about right.

SPEAKER_00: For an unprofitable company with but 2,000 cars on the road. So I think Tesla becomes,

SPEAKER_88: I think it's a two-horse race right now. Tesla and Uber plus Waymo. Waymo plus Uber. I think Waymo and Uber are going to merge and much rather see my two favorite companies, Tesla and Uber merge, but Elon said he doesn't need to buy Uber, which it makes sense. I don't think he has to buy it, but if he did buy it, that would be $1.2 trillion in market cap. Yeah. If Tesla and Uber were the same company right now, do you know what people would think

SPEAKER_00: who was going to win the gold and the silver and the bronze medal? Oh, yeah. Those two companies, for sure. It would be those two companies. They would win it all. They would run the table. So if Waymo, Volkswagen, and Uber were to combine,

SPEAKER_100: Volkswagen is the second largest auto manufacturer in the world.

SPEAKER_198: And it's worth 46 billion euro. These companies are so cheap.

SPEAKER_01: Well, they're low margin businesses and nobody wants to buy cars anymore.

SPEAKER_88: And they're hyper cyclical. Yeah. And if you're wondering why there's so many cars, there was this incredible race to innovate in car technology that inspired everybody. Tesla did that. So now everybody has been inspired by Tesla. So now there's a lot of really great cars. I go on car and driver. I'm like, Oh, I want an ID Buzz. I want a Corvette E-Ray. I want the new Tesla.

SPEAKER_00: You know, I want the, I bought the new model Y. Now there's gonna be a YL. So I'm going to trade that in and get the YL at some point. I wouldn't have a third row. Long story short, 50% of rides,

SPEAKER_88: 1% ride sharing now will be 50% within 20 years. Model that out. And then model out of the top

SPEAKER_00: five players right now, how they divvy that up. And then five new entrants. It's going to be incredible for humanity. The 20, and I think the PIF might be a little tired of running Lucid because it's been, they're doing a 10, one stock merger. Reverse split? Reverse split. Yeah. Thank you. Because their shares got to $2 and most large

SPEAKER_88: funds, you know, like hedge funds or whatever, or some of these can't, I understand they can't buy stocks under $5 and under a dollar you get delisted. So they're going to do this reverse merger, reverse stock split. The stock will go from whatever it is now to 10 times. What is Lucid

SPEAKER_284: trading at now? Five bucks, four bucks? $3 and six cents. And that's- So it'll be a $30 share. Yeah.

SPEAKER_88: It went up 50% with this announcement. Because they only make right now, I think 3,000 cars a quarter.

SPEAKER_93: They're expensive cars. They don't have an entry level car. It's a luxury car.

SPEAKER_50: It's 60, 200. Delivered 3,109 in Q1. That was up 58% year over year. Revenue of about

SPEAKER_121: 235 million in the first quarter. Yeah. It's going to be awesome, folks. I mean,

SPEAKER_00: they're figuring this out. The other big news was the expanded territory in Austin of Waymo. And Uber and Tesla. They both expanded their territory massively. And, you know, listen,

SPEAKER_121: Tesla's got the safety driver. It's the right decision. They should keep the safety monitor, rather, not driver. They should keep that until, as I've said, 10,000 rides, whatever it is, 100,000 rides in the city, and then start taking them out. There's no reason. There's no shame in the

SPEAKER_00: safety driver game. Great episode. We'll see you all on Monday with three great companies and how much revenue they'll have in 10 years. Brought to you by Alex Wilhelm. He's x.com slash Alex. I'm x.com slash Jason. This week in startups.com slash docket to get all this great research, the stories we didn't do. And we'll see you all next time. Bye-bye.