SPEAKER_00: This Week in Startups is brought to you by Envision Find out why so many hot startups are using Envision to prototype, present, and collaborate on design in real time. Sign up for a 90-day free trial today at envisionapp.com slash twist and Wistia Take control of your video marketing with powerful tools and analytics built specifically for business. Go to wistia.com slash twist to get your free Wistia account today.

SPEAKER_09: Hey, everybody. Hey, everybody. Welcome to This Week in Startups. This is our 2015 recap episode.

SPEAKER_11: We're going to go through the biggest stories of 2015 and talk about them and how we think they'll play into 2016.

SPEAKER_12: With me, Dave Matthews, famed inventor and now with Newair doing all kinds of crazy stuff in the wireless space location. And, of course, Dave, you are now, I think you're now becoming like the Steve Martin of This Week in Startups. I think this is maybe your, are you getting close to 10 appearances on the show?

SPEAKER_13: Probably, yeah. The pay has gone up significantly. Thank you for that. Yes, we doubled it, in fact.

SPEAKER_09: And your bonus is 20% of what you've gotten paid previously.

SPEAKER_15: That's why I'm here. 2015, I needed the year in bonus.

SPEAKER_12: But you prepare for the show and you have an opinion. That's why the fans love you on the show.

SPEAKER_15: I love the show. And thank you. The comments are great on the YouTubes and the internets and the webs. Everything. I love it. The show's getting huge.

SPEAKER_17: Thanks for having me back and thanks for you guys for tuning in because if we didn't get that love and hate, really, I do it all for the hate.

SPEAKER_19: You do it for the hate. And, of course, everybody knows Dave Matthews created the most failed hardware device in history.

SPEAKER_09: He was one of the first hardware entrepreneurs creating the QCAT. Yes. The episode would not be complete without me bringing that up. That's true. Early and often.

SPEAKER_15: The first Internet of Things device, really way ahead of its time.

SPEAKER_17: To this day, companies are still trying to banter around how they can be so innovative as we were in 1997.

SPEAKER_24: And, in fact, QR codes, you know.

SPEAKER_09: 2005, yeah. Exactly. So much later. So passe. And you brought through $100 million of investor money.

SPEAKER_16: $205 million. Of investor money. Strategic money. Not a single VC was harmed.

SPEAKER_09: When you're in therapy and you're talking to the therapist about this.

SPEAKER_16: No therapy at all.

SPEAKER_25: I just have so much. Just like the entrepreneurial spirit is strong with this one right here.

SPEAKER_09: There you go. And Ari Levy is with me.

SPEAKER_19: He is from CNBC Senior Tech Reporter. Ari, welcome back to the program.

SPEAKER_26: Thanks, Jason. No patents. No patents. Nothing. Not even working on the first one.

SPEAKER_27: But you know what I love about you, Ari, is you're like a classic journalist.

SPEAKER_19: Every time I see you, you've got like real questions. Like you actually care about the craft of journalism. You do actual phone calls and research when you do these random acts of journalism at CNBC.

SPEAKER_28: Yeah, it's crazy.

SPEAKER_15: Pick up the phone.

SPEAKER_30: That's amazing.

SPEAKER_15: I just had yet another story come out about the QCAT. And the guy quoted me in the story. But it was from a quote from 10 years ago.

SPEAKER_25: And no one does research anymore. So I applaud you, my friend.

SPEAKER_32: This is great. You have to do research. Yeah, it's like the easier it gets to contact people, the less likely we are to do it.

SPEAKER_34: What is it about this younger generation of journalists?

SPEAKER_12: Because you don't, it seems to me when I come to CNBC every week, every other week, that everybody seems to be 30 and above. There doesn't seem to be a lot of 22, 23 years over there. But a lot of these blogs and tech sites, they do zero research.

SPEAKER_33: Is there no mentorship left in journalism? Why does it suck so much?

SPEAKER_32: Yeah, I mean, that would take me a long time to address that question. But I do think one thing that has changed fundamentally, at least for the younger generation, is there's less of a recognition, I'm going to do a double negative here. There's less of a recognition that you as the reporter don't matter. The story is fundamentally about the subject and digging up great stuff and writing great narratives. And, like, you know, the byline doesn't really matter. It matters to you and it matters to your family and maybe a couple friends. But, like, the reader typically doesn't even see it. Right. And, you know, there's just a lot of first-person narrative involved in storytelling these days. And I think it just makes you less... When you lose the idea... When you start to insert yourself into the story, you naturally make fewer phone calls. You make less of an effort to make sure that all of the storytelling is based on facts and other people's views.

SPEAKER_09: But we have random acts of great journalism going on. I don't know if you saw Spotlight or the film Spotlight. Have you seen it yet? Have you seen it? I'm going to just take a moment to highly recommend it. I think it's the film of the year, Spotlight.

SPEAKER_40: Is it streamed or at theaters?

SPEAKER_09: It's in theaters now. You know, if you are, you know, on the inside, you might be able to get a screener. I'm just saying. But I actually saw it in the theater because I'm an old school guy. I like seeing stuff in theaters. But it's about the Boston Globe going after the Catholic Church. And it really did... It's perhaps the best journalism film ever made. Shattered Glass, All the President's Men. I think it's better than both. So I highly recommend it. All right. Let's get right into our picks.

SPEAKER_19: So right off the bat, Jack has his day. But it's a little bit tumultuous.

SPEAKER_12: Obviously, he took over as the CEO of Twitter. It didn't seem like that was going to happen for a while.

SPEAKER_11: Everybody on the board was against the idea of a part-time CEO. They came out and said, we will not accept Jack part-time. I was getting the inside line that Adam Bain was the guy. They were considering everybody outside of the company. Nobody was that good. And then the inside line I hear is that Adam Bain says, I'll do it if Jack does it. I'll do it with Jack.

SPEAKER_34: I want to be partners with Jack. When that happens, the board has to eat crow and accept Jack half-time. What is your take on all this, Ari? How did they wind up publicly stating, Jack cannot be CEO of two companies, and then accepting it?

SPEAKER_44: And how is the market accepting this?

SPEAKER_32: Yeah. It's just been a really bad year for Twitter from a business standpoint. I'm still a big fan of the product. I still use it all the time. I still think it has tremendous potential. I probably shouldn't say that as a journalist. But it is something I use with great regularity, and I do see a lot of value in it. But the company just hasn't been able to get out of its own way. And Dick was basically defending his position way back at the Code Conference early in the year when Kara was pressing him hard on whether he was going to still be with the company a year. And his sort of the party line was, you know, the board and I are totally in sync. And he repeated that. And then, you know, within a couple months, it was clear that that was not the case.

SPEAKER_46: And it just seems like they've been a step behind or two steps behind every step of the way. They weren't prepared for Dick's departure, it felt like. They had absolutely no clue. Why did they do that?

SPEAKER_12: Why did they have him leave without the successor in place? Because this, to me, was the stupidest thing I've ever seen a board do. They should have said, he's going to finish out the year.

SPEAKER_11: He's going to help us pick the replacement.

SPEAKER_48: Was it so necessary to drive him out of the building while they didn't have the successor online?

SPEAKER_49: I mean, I don't have a great answer for that.

SPEAKER_32: It felt to me like there was some impasse that was reached and that Dick couldn't take it anymore. Or that there was something that, you know, Dick wanted something and the board wasn't willing to give it to him. And so it seemed like it happened pretty suddenly. And they did their best to make it appear like it was a mutual decision. Jack and Dick came on CMDC together. They both looked like they hadn't slept in three days. And that was contentious and weird. Yeah.

SPEAKER_26: It was contentious and weird.

SPEAKER_32: Yeah. It was a very uncomfortable interview.

SPEAKER_12: And then the most uncomfortable was they asked Jack about his beard.

SPEAKER_26: And Jack's reply, do you remember what he said? It was as if he was completely unprepared for it. Yes.

SPEAKER_12: He comes on with a Grizzly Adams beard. They say, hey, is the beard going to bring you luck? Or something was like a very, like, just throwaway TV moment, recognizing, like, the audience obviously is going, who's the guy in the beard? I mean, it's a ridiculous.

SPEAKER_54: Clearly, it's a mission hipster that was in.

SPEAKER_12: Listen, it's the top 2% of beards. He didn't come on there with, you know, an understated beard. He came on there with the top 2% of beards.

SPEAKER_55: It was kind of weird, like, the world hadn't seen the beard and now all of a sudden.

SPEAKER_12: No, it was uncovered for the first time.

SPEAKER_55: We got the scoop on the beard.

SPEAKER_12: You did. It was breaking beard. It was breaking beard. It was breaking weird.

SPEAKER_26: But do you remember what Jack said when they asked him, like, what's up with the beard? Well, one of his responses was, I think people should be judged by their accomplishments.

SPEAKER_32: Exactly. Yeah.

SPEAKER_56: And that, to me, was like the metaphor of how he's going to be CEO, which is, are you really judging me?

SPEAKER_48: Like, just this incredibly contentious, like, he is on a different plane in terms of, like, where his head is at.

SPEAKER_12: Like, he's thinking about, you know, the Black Lives Matter, you know, the pay gap. He looks at Twitter as, you know, being a democratization agent around the world. Like, he is way up here thinking, like, in graduate school land and, like, big picture land. And, like, there's just a moment of levity on the show. And it just, whoop, he doesn't get that they were joking.

SPEAKER_60: Yeah. Or he didn't have a, it just, it seems like he would have been having enough conversations about his beard that, like, he would have had some built-up jokes.

SPEAKER_62: You've got to have a couple jokes locked and loaded. Yeah. All right. Dave.

SPEAKER_15: You've got to think, there was a big talent pool leading up to this of drain, drain, drain.

SPEAKER_65: All the engineering team was going away. People were getting their money and literally running from that organization.

SPEAKER_15: And I think a lot of those engineers, some of the stuff that, look, they were in a world where text messages were 160 characters. Twitter was 140 characters. And then when you'd start putting people's ad names in there and URLs, they were late to the bitly kind of URL shortening game. Images would take up way too much length. So, as a tool for normal people, Twitter was a pain to use. If you just want to send out breaking news, like Egypt's under attack from the, from our own government and things like that, Twitter's a great tool. But they started shutting off the fire hose. So, they were alienating the people that were utilizing them.

SPEAKER_12: It was a lot of, they were slow, is what you're saying.

SPEAKER_15: Slow to react with technology.

SPEAKER_12: Yeah. They were not executing. Their product pace was the biggest problem. The revenue was great, but product, what do they call that, cadence, was not good.

SPEAKER_72: Will that change under Jack in 2016, Dave?

SPEAKER_73: Will he increase the cadence? I don't think so. I think the passion's gone. The passion's gone from the product.

SPEAKER_17: From Jack? Not Jack. The team. You have to, to be a leader, part of being a CEO is getting, keeping talent. Right. Recruiting new talent. Staying. You don't think he's going to do that? I don't think he can. I think the product, I think the ship's sailed. You agree?

SPEAKER_12: Is Jack's going to have a slower cadence, both, you know, same cadence or increased cadence?

SPEAKER_60: I think that they, you know, Periscope and Vine are two areas where there's a lot that can be done, where you're basically taking the short clip and providing a different medium. I don't think anyone is as well positioned to do that as Twitter, just given the built-in

SPEAKER_49: audience. But, again, democratizing that so that it's useful for someone who only has 100 followers versus someone who has a million is a challenge. So, it becomes much more of a, you know, of a vanity play. But, you know, but they were able to figure that out for the core product.

SPEAKER_26: I think that is one area where clearly they can differentiate versus Facebook, which is really the only other social platform that seems to matter right now.

SPEAKER_34: A year from now, where will Twitter be at in terms of user base? Will it have increased at all? Will it have decreased or will it stayed generally the same? Start with your answer, Dave.

SPEAKER_64: Twitter is dead. Twitter is dead. Twitter will be gone. It will only be complainers and robots. Complainers and robots. Yep.

SPEAKER_83: What about the journalists? The journalists love it. Where are they going to go?

SPEAKER_64: I think we fall in the former category. Oh, we're the haters? No, no. The journalists are great because they post a story.

SPEAKER_17: It gets automatically, robotically placed onto Twitter. Right? So I use Twitter as a search tool. If there's a... That's true.

SPEAKER_85: It's a great... It's a newswire. Real-time.

SPEAKER_15: Real-time newswire. Okay. There's helicopters above my house in Noe. I search for helicopters in Noe.

SPEAKER_12: But this idea that there'll be a community on Twitter or civilians on Twitter posting... No. Over. It'll be... Is that the big problem they have to solve, Ari? Is to get people to actually post bar mitzvah pictures and death announcements, birth announcements, and all this kind of stuff that Facebook is famous for, relationship status, etc.? No.

SPEAKER_60: I think they're fundamentally different platforms. You know, I find Twitter to be really valuable around events, whether it's, you know, a sporting event or, you know, the new series on Netflix or certainly political events happening in other countries. Star Wars. So as a real-time news feed, but with news that it's going to take a while for the actual

SPEAKER_32: newsrooms to get there.

SPEAKER_89: Yeah. The journalists are going to take a while to assemble it.

SPEAKER_90: Yeah. In fact, when you're reading it on Twitter, you can be sure the journalists are reading it as well and assembling stories. Yeah.

SPEAKER_55: And probably even posting. Right. They're posting, too.

SPEAKER_49: It used to be that we wouldn't post on Twitter until we had the story published. And now, by that time, you know, you've been scooped by a thousand other tweeters.

SPEAKER_34: It's pretty amazing, too, that the NBA has taken the approach of, like, anything goes. People are literally taking vines and periscoping, or really vining and making short Twitter videos of, like, the best plays. So when there is the Ronda Rousey knockout and the whole fight or whatever, the other guy, the male champion now who had a fight in, like, six seconds, it's literally you can vine an MMA fight.

SPEAKER_16: Interesting. What about Chris Saka? When was his post? A year ago?

SPEAKER_12: It was about, I think that was probably the spring right before. I think he knew. This is my take on it.

SPEAKER_09: And listen, everybody knows I'm personal friends with him.

SPEAKER_73: Brilliant guy.

SPEAKER_09: Brilliant guy. Personal friend. We co-invest in a lot of stuff. In Truckee. Look him down. I just want to say, I don't have, I don't know that he did this. I'm speculating. But I do think he probably, because he's got a lot of inside information, he probably knew

SPEAKER_34: Dick was going to go. Yeah. And I think he probably released that missive, I bleed blue, which was whatever, 10,000 words, knowing that that was going to happen to try to maybe even prop up and keep people's faith in the product, because he's a large shareholder.

SPEAKER_97: Not that large shareholders would ever talk up their book. By the way, I've tried UberPool this week. It's such a delightful product.

SPEAKER_15: You get to meet interesting people. How about my big fail with UberPool is when they drop, they pick you up, they pick someone else up, they drop someone else off, then they pick someone else up. Oh, yeah.

SPEAKER_33: You know what they call that? What's that called? That's got to be, we got to come up with a name for it when we get back from the commercial break. You think about that.

SPEAKER_102: It's called, I don't do UberPool anymore. That's what we call it.

SPEAKER_12: Well, that is a very rare thing. That's like getting, you know what, that's like getting sucked out on. It's like runner, runner, suck out on, in poker, right?

SPEAKER_09: Like somebody just sucked out on you so bad. You had them dominate, they hit a runner, runner. Let me just take a moment to thank our friends at Envision.

SPEAKER_12: They make beautiful software that I use here at Inside, at this weekend, and with all my portfolio companies at the Launch Incubator. What do you do with Envision? Very simple. Instead of sending mockups, PDFs, PNGs, animated GIFs to people who are

SPEAKER_19: stakeholders in your product development, and listen, we're talking here about product development. The whole point about Twitter, is Twitter advancing as a product fast enough?

SPEAKER_12: Is Yahoo going to release any product, right? Product is at the core of everybody's success. How do you make successful product? Well, you have stakeholders. You need to discuss it. You need to share it. And you need to grok your product. How do you grok a product in real time without building it? Envision is the answer. You take your designers, you put them on Envision, your UX people, your sales executives, your management team, even your board members, and you send them, and sometimes your alpha users, your really powerful insiders, the power users, and you share with them a link from Envision. They load it on their phone, their desktop, and they can see and click a real-time mockup of your product or your 2.0, 3.0, et cetera. You can even test these, and you can post comments on it, so goodbye to all those confusing email chains and people in chat rooms talking about a product, not knowing what version they're talking about. Here, you just hit the comment button. You put the crosshairs on the part of the product you want to change. You type your comment. You put your question. You check off who in the organization. You want to see your comment, and boom.

SPEAKER_19: It's essentially like the ultimate management tool for product development and design. If you're not using it, you are going to get your ass handed to you when your competitors do. I love this product, and I've loved it and used it long before they were a partner with the program. Who else uses it? Ah, speaking of Twitter, Twitter, Airbnb, Evernote, Adobe, everybody uses this product. It's easy to use. It's affordable. Go ahead and visit envisionapp.com slash twist for a free 90-day plan, envisionapp.com slash twist, and if you're a super fan of the show, you know what to do. Thank Envision App on Twitter, Envision App, at Envision App on Twitter. Thanks so much for making a great product to the team over there and for supporting independent media like this week in startups. Okay, let's move on. Twitter is a disaster, but we all still use it every day.

SPEAKER_12: What's the first thing when you look at your phone in the morning, where do you go first? That's always the test.

SPEAKER_106: I first got email. Email. Email. Killer app.

SPEAKER_107: Yeah, and then Twitter. Email Twitter. Twitter's probably second. Yeah. And if you look at your battery usage on your phone, Twitter's half of it. I bet. Email the other half. Instagram. I'm loving it. Instagram is getting super popular. That's why I took the time to get the Jason handle, because I was like, I think Instagram's going to be very big. I think it could be better.

SPEAKER_112: But you get tons of spam, I'm sure it was.

SPEAKER_12: The problem with having a single name like that is literally somebody resets their password 10 times a day, I get those emails. And then people, I can't use my activity feed because these numbskulls are all like trying

SPEAKER_19: to let Jason Emraz or whoever the hell this guy is know about their like C16 party, and I'm getting dragged into this Jason Emraz nonsense.

SPEAKER_15: You might want to go with something different. Let's still keep the one name moniker, but like Madonna or Unabomber or something like that. Something a little more, yeah. Keep that in mind for your next ad name.

SPEAKER_115: All right. Listen.

SPEAKER_12: Next up, Dave's pick, mass shootings and drones. Guns don't need to be registered, but drones do. The FAA has created a drone registry. Drones have blackout GPS software because one of them landed on the White House lawn. Insane. Another with low volume of radioactivity was on a roof of a Japanese government official. That was crazy. And recently, I saw an animated GIF slash Vine on Twitter that I retweeted of a drone almost landing on a skier. Did you see that one?

SPEAKER_15: On national television. On national television. Sixth blade. This is like a three foot diameter drone. This would kill him. Yes. And it grazed him.

SPEAKER_65: Literally grazed him. Oh, did it graze him? It grazed him. Because it didn't miss a beat. I think it hit the back of the ski.

SPEAKER_120: When I saw that.

SPEAKER_65: If we could get a, there's an animated GIF of this. Yeah, we'll pull it up. If we could pull that out. We'll pull it up in a second.

SPEAKER_12: This is, for me, when I saw that, I just thought, okay, this is the moment. The drones are attacking. They've become sentient. That's right. This is it. Terminator. Skynet has been unleashed on us.

SPEAKER_48: The FAA is expecting one million drones sold this Christmas.

SPEAKER_15: DJI is printing these things like money. Unbelievable. So I've been buying them wrecked for the last year on eBay. I buy them crashed. I look for the kids. I used to do this with motorcycles. I now do this with Vespas. I know. You've got to hook me up with that. Just bought a 74 Mini Cooper, a little baby one now.

SPEAKER_17: So that's my current. I like bringing things back from the grave. That's my- Absolutely.

SPEAKER_90: You know what you're like? You're like a Jawa. You go, you- I am just- You're like a Jawa. Just like a Jawa.

SPEAKER_34: You go, you're not a sand person. You're like a Jawa. You go, you collect all the droids, and you try to resell them and clean them up. Yep.

SPEAKER_15: So I've been Jawa-ing drones, and I'm from the Midwest.

SPEAKER_17: Like my parents grew up-

SPEAKER_113: What do you buy a used broken drone for?

SPEAKER_17: 10 cents on the dollar? 400 bucks instead of 1,400.

SPEAKER_131: Got it. And then you fix it, and then you sell them.

SPEAKER_17: Yeah, I buy multiple broken drones.

SPEAKER_15: I kind of, I've got this cool magnetic board, and I can put all the parts on the magnet so they don't roll around or off the table. The hardest thing about it is what's called the gimbal. It's what holds the camera. And it's essentially like what you'd have inside of a watch. Very small screws, very precise electronics, electromagnets, like everything the gadget guy loves. Right. And I get to rebuild them for fun, and then I sell them, and generally I- Profit 500 bucks? Make a little bit of money. Not a whole lot.

SPEAKER_134: But for me- You probably lose money, and you just do this because- Probably. It's cheaper than therapy, though. Let's just be honest. Exactly.

SPEAKER_113: Right. You're working out a $205 million scarring.

SPEAKER_136: But you're definitely not building in labor costs.

SPEAKER_113: I'm not building in labor.

SPEAKER_137: What is the impact of this FAA story to get back on track? So, but here's the thing.

SPEAKER_15: I grew up in the Midwest. My grandparents lived across the dirt road from one another. I'm all about the amendments and the right to bear arms. You like guns. Freedom of speech. I don't own guns. I think we need to be-

SPEAKER_128: We need to- Free? Huh? Free? Allowed to do what we want to do? Free to do what we want, right? Okay.

SPEAKER_65: The drone deal, if you'd have to register a piece of plastic that has no weaponization,

SPEAKER_15: but for guns to be so readily available and ridiculously available to you. And look what happened after Thanksgiving. The joke was, after all of this, the presidential speeches on gun control, everyone went out

SPEAKER_65: on Black Friday and bought more and more guns.

SPEAKER_142: Every time there's a shooting, San Bernardino, Paris, the gun sales go crazy up.

SPEAKER_12: So, we've reached a level of insanity where the FAA is getting people to register their drones.

SPEAKER_144: Literally, if you bought a drone this Christmas, how do you register with the FAA?

SPEAKER_17: Is there a website? Yeah, you go to a website. Up until the end of January, it's free. But after that, it's $5 to register, essentially a tail number, just like you'd have a tail number on an FAA plane. But this is for something that-

SPEAKER_34: And it's for drones that are over a half pound. Half a pound. So, the little one I have that I got my daughter, that's a little spinning, flying, like,

SPEAKER_112: a fairy, it's under- Oh, the fairy. So brilliant. That's such a great toy. I love that toy.

SPEAKER_15: This is a fairy that has an optical sensor on the bottom. When you put your hand under her feet- Put your hand under it, it goes higher. These are for something like the DJI or the 3D robotics, or the drones that carry a camera.

SPEAKER_17: Those generally weigh just over a pound, a pound and a half or so. Gotcha. They have batteries that go for about 20 minutes. And the problem is, because of these incidents that we talked about at the beginning of this segment, the drone ending up on the Chancellor's house with a little bit of-

SPEAKER_150: Or this one. Or this one. This is incredible. Look at the size of this, bam.

SPEAKER_11: For those of you not watching it, I mean, was that the DJI, like, Inspire 4K one, you think?

SPEAKER_65: No, no, no.

SPEAKER_15: That was, I think, a larger one than that. Wow. And that one probably had an SLR camera hanging below it. An SLR? Probably. It looks-

SPEAKER_154: Wow. That's a lot of weight. That's a couple pounds. Yeah, I didn't- So that's, what is that, a five-pound drone, you think?

SPEAKER_65: That could be. But just the way it bounces, the inertia that it fell out of the sky. And they said the group that the governing- I mean, I can watch it all day. Yeah. People have.

SPEAKER_97: The sanctioning body for this, they said- I mean, what is the number of loops on this thing? This copy of it from six days ago, which is a copy, got three million loops, right? I think we added about 30. This is what happens.

SPEAKER_17: And they said that it, the sanctioning body for the ski team or the ski group here, they said that it wasn't allowed to fly overhead. He had to fly off course.

David Friedberg: So- So he, so the guy broke the rules. Broke the rules, but- Yeah, if you're buying a drone, you're breaking rules. And they said it was a software error. Yeah.

SPEAKER_15: And look, these things have a lot of software in them to take GPS readings and be able to stay fixed. In fact, the latest DJI units, they actually have sonar systems and downward facing cameras that are independent into the telemetry system. So you can literally fly the new ones without GPS. The technology in these is phenomenal, but we're essentially seeing blackout zones. The drones are programmed to not fly within a 15 mile radius of the White House, et cetera, et cetera. I think that technology can solve this problem. They're never going to have full compliance.

SPEAKER_11: Should they be regulated, Ari? What do you think? When you see these things flying everywhere, and obviously they're very dangerous, and

SPEAKER_12: they're going to fall from the sky, everything that goes in the sky will fall from the sky.

SPEAKER_94: It turns out.

SPEAKER_12: It just happens to be a rule of gravity.

SPEAKER_26: On this planet, when you put something up in the sky, it does come down at some point. They have to be regulated to some degree, given that they're flying in the sky, and certain

SPEAKER_49: other very large objects that we count on to get from city to city are also flying in the sky. Yeah, these planes. So there's no question they have to be regulated to a degree, whether or not that means every one of them needs to be registered with the FAA, and therefore, call it a personal privacy

SPEAKER_60: issue or issue or whatever. I mean, there's certainly a debate to be had there.

SPEAKER_46: But they are kind of scary, not just from falling from the sky, but looking up at the sky. I mean, I was at Dolores Park in San Francisco probably six, seven months ago and looked up and, you know, there are three hovering above, and this is kind of, these are like playful little drones, but, you know, it's, it is. Disconcerting. It's disconcerting. That was before this holiday season.

SPEAKER_33: I have to say, I had the same experience at Dolores Park. I was there with my, at the time, four or five-year-old, and this schmuck starts flying

SPEAKER_34: one of these things over the kids' park, and I was livid, and I was there with a friend of mine, and I said, if I find this melon farmer, I am going to take this drone and smack him in the head with it. I'm not a violent guy, but, I mean, this is pretty unconscionable to be flying it over the kids' park.

SPEAKER_170: Yeah, that's interesting.

SPEAKER_12: And I looked for the person. I couldn't find the person, and the drone just sort of zipped off into the thing. This person might have been on a roof. I believe the person was on a rooftop somewhere, and he launched it from the roof, went over

SPEAKER_34: the park, and then went back. But people are taking risks with these. Here's my prediction for 2016.

SPEAKER_105: In 2016, in the United States, somebody is going to die when a drone lands on their fucking head.

SPEAKER_171: Guaranteed. We almost saw it in 2015.

SPEAKER_12: It's guaranteed to happen. You know why? We sold so many. Yep. And people who buy these things get a false sense of security, because, like you said, Dave, correctly. They're supposed to be idiot-proof. What's that? They're supposed to be idiot-proof. And you know what? I'm sure under most circumstances they are. But when two idiots crash into each other in Dolores Park, there's no sensor that's going to solve that.

SPEAKER_15: That's right. These things are autonomous.

SPEAKER_17: And what the self-driving cars know is they know their surroundings. And drones could have the technology for- Come on.

SPEAKER_174: How far is that LiDAR off, and how expensive is that?

SPEAKER_175: Where they would be 360-degree able to avoid each other going 30, 40 miles an hour in the air.

SPEAKER_15: Yep. They're not thinking about it. But self-driving cars are. So what I'm saying is technology will extend into that space.

SPEAKER_176: Will somebody die in 2016, Dave?

SPEAKER_17: I think they're too lightweight. I think they'll be-

SPEAKER_176: Too lightweight. There'll be somebody who would just get, what?

SPEAKER_17: Look at Enrique Iglesias. He had his hand slid open, because during a concert, they were using a DJ Inspire, the big one. And he reached for it during the concert to grab it close to him to do kind of a cameo shot, and it's sliced up. Did anybody tell him it's a helicopter?

SPEAKER_13: I guess he forgot about those four moving blades on the corners.

SPEAKER_60: But how much of the registration is for the physical harm that they could cause versus the surveillance issues and being able to track-

SPEAKER_34: FAA would be concerned with death and running into other planes, right? The FAA.

SPEAKER_17: But this is, you're supposed to put the tail number on the plane, so if it does crash, they can track it back to you.

SPEAKER_34: So, I have a really easy idea for this. Insurance. And this is my idea for gun control as well.

SPEAKER_12: If you look at cars, you have to have insurance, right? I think there might be some states where you don't- It varies by state. I think there are some states where you don't need to have certain levels of insurance, but most states agree there's a minimum amount of insurance you have to have. I think for a drone, as they go up in price, you have to have a certain amount of insurance. And if we know that if something falls from 40 feet, it's going to kill you, like one of the big ones, it might be $500 or $1,000 a year. And if it's a small one, it might be $50 a year.

SPEAKER_26: Insurance is the solution. But you pay more if you're an 18-year-old than if you're a 35.

SPEAKER_11: Well, and you know what? I don't think- Same with cars, though, too, right? I don't think this is crazy. If you want to take it out in public, on private property, do what you want.

SPEAKER_12: And if you ride a car, a bicycle, you don't need insurance because it doesn't kill anybody generally. Generally. Generally, yep.

SPEAKER_189: But a car often kills people. Yep. If something kills people often, then insurance equals on.

SPEAKER_17: And the lithium batteries that they use, I don't know if you've noticed this lately, but my iPhone, when I was in New York last week, it was cold. When I was in San Francisco, this week it's cold.

SPEAKER_15: My iPhone is shutting down, just blacks out immediately. Because the lithium batteries inside of these, if they're not maintaining a certain temperature,

SPEAKER_17: the cells drop immediately. I don't know if you noticed this. Even today, when I was paying for my meter, pulled my phone out of my pocket.

SPEAKER_12: I don't know what's going on with iPhones, because everybody I know is having all kinds of wacky problems with it freezing when you double-click to the task switcher. This is always nine.

SPEAKER_34: And you know what the thing about Apple users is? They all think it's them. Yep. It's always nine. They've all been convinced. Like, if you're an Android user-

SPEAKER_196: Or the device is just too old. What's that? Or the device is too old.

SPEAKER_12: Maybe, but I think Android users, when their device crashes, or a Windows user, they're like, Microsoft's fault, Google's fault, HTC's fault. When an iPhone user has their thing freeze, they go, you know what? I must have done something, because Apple makes perfect products. And my iPhone's never crashed before. You know what?

SPEAKER_33: iPhone, the iOS is so junky right now and freezing constantly.

SPEAKER_46: If they could fix iCloud and make it so that it is just, like, every time new files are on my phone, they automatically get uploaded to iCloud at the end of the day. Perfect sync. And perfect sync. And then it frees up. It frees up. Like, you say, how much space you need at the end of every day. And it makes that space-

SPEAKER_107: There's a company doing this.

SPEAKER_12: We had them at the festival, at the, I'm sorry, the mobile event, where it's a cloud phone. And what happens is, if you don't use your apps, it takes your app, and it makes a mirror image of it on the server. So, over time, you're keeping, like you're saying, like, three or four gigs free. Everything's in the cloud. And then if you click on, like, the app you haven't used in six months, you know, oh, I'm going to start using the Showtime app again because Homeland's back. When you click on it, it re-downloads it and streams it, but it has all the perfect

SPEAKER_19: state. What you've watched, your login, whatever's been cached, it's all perfectly stated. All right. When we get back from commercial break, looks like the battle of the billionaires, Elon and Jeff Bezos, both landing rockets, although Elon's rocket was a lot bigger than Bezos' and went a lot further. And they're trolling each other, or I should say Jeff is trolling Elon on Twitter, which is hilarious. And, of course, Tesla is just absolutely crushing it. We'll get back and talk about the race for space after these important messages. And the important message is, ah, Wistia, what a great, great ad for me to read because we use Wistia all the time. Why do we use Wistia at thisweekinstartups.com?

SPEAKER_11: Again, I was looking for a business-to-business solution because I did not want to use YouTube for my site because what does YouTube do?

SPEAKER_12: When you put it on your site, it drags everybody from YouTube back to YouTube, on your site, back to YouTube to watch Gangnam Style. That's not in my interest. What I wanted was a white label one. So when you watch my videos on my site, my most important people, and there's thousands

SPEAKER_11: of them a day, hundreds of thousands of them a month coming to the site, I want to capture your email and send you more episodes.

SPEAKER_12: And I don't want you getting sucked into the YouTube vortex or other people's vortexes. I don't want to promote other people's content. I want complete control over the experience. And that's why I use Wistia. And Wistia gives me incredible, incredible analytics, lets you capture email, which is the best thing. You can either say, watch this video. You need to give me your email or 10 minutes in, you can pause the video and say, hey, would you like to get invited to the next This Week in Startups Live?

SPEAKER_19: Put your email in or at the end, you can ask for it. And they give you tons of support. They always are releasing new tools and features. And the reason they do that is because people are paying them. Who's paying them? MailChimp, Moz, HubSpot, Zendesk, Herman Miller, Sam Adams, and This Week in Startups, 140,000 customers. When they started as a partner on the program last year, they had 50,000. And I attribute those 90,000 to my ad reads, of course. But no, the service is growing because it's great and people are telling each other about it. Go get a two-week free trial. If you're doing any kind of videos for your startup or any other company, you want to control 100% of the experience. And that's what Wistia is for. It is brilliant and easy to use. Wistia.com slash twist. W-I-S-T-I-A. Wistia.com slash twist. It is a great, great company. And I love it. And video is what consumers want when they come to your site. They do not want a bunch of texts and a long TLDR message. All right. Let's go to Elon, who I think has probably got it in the bag for Entrepreneur of the Year. Although, one might argue that Travis had a pretty great year as well. Obviously, SpaceX had historic landing. And that was following the just horrific explosion with a bunch of stuff and payloads. So that was a nice comeback for Elon and the SpaceX team. The Hyperloop, which is not an Elon Musk project. It's a Shervin project with a former SpaceX engineer. I'm an investor in that Hyperloop project. Elon's not involved in it, except for writing the white paper. And they hired a major Cisco exec to run the company. So it's in the shadow of Elon Musk, obviously. One of his side projects, I guess you could call it. And obviously, Jeff Bezos started his Twitter account or started using it specifically to try to troll Elon Musk because, I guess, Jeff landed his rocket from Blue Origins. Is Elon Ari the Entrepreneur of the Year in your mind?

SPEAKER_203: Did anybody accomplish more in 2015 that you can think of?

SPEAKER_36: Yeah, I don't even think it's close. Not even close, right? Yeah. Why?

SPEAKER_19: What do you think is so impressive about SpaceX, Tesla, and just Elon's performance in 2015, if you were just to go over the highlights?

SPEAKER_46: Yeah, I mean, the magnitude of what those two companies are able to accomplish, given what

SPEAKER_36: they're going up against. Ah, so it's not just what they're accomplishing. It's who's trying to stop them.

SPEAKER_46: Oh, yeah. I mean, when was the last time? Tesla is the first new automobile company. Since Jeep, I think. I mean, and so what's fascinating about what Tesla is able to do from a consumer, a customer perspective is all of the technology that is available for consumers to buy stuff is available to Tesla to make the buying experience better. That stuff post-dates all of the other car companies in this country by like a century. Correct. So it's like the unfair advantage that he has building now that he has the brand and he's got the distribution, he's got the supply, and he's won all these awards. You know, talk about just a matter of execution. I mean, it kind of seems like the sky is the limit for that company. SpaceX, you mean? Is that a space show? Yeah, there you go.

SPEAKER_34: No, he's talking specifically about Tesla because buying direct and, you know, having all

SPEAKER_36: of these, you know, features in the product, the iPad in the product. Controlling the supply chain. Yeah. Yeah.

SPEAKER_60: So now, just execution, it is an automobile company. He is dealing with, you know, electricity, which has its limitations given the current state of the industry. But so I just like that in and of itself would probably make him entrepreneur of the year,

SPEAKER_49: even though he still has really only delivered the Model S, you know, to...

SPEAKER_222: Right, the Roadster was a proof of concept. I have one and it's a rough experience.

SPEAKER_19: Yeah. The Model S is a perfect experience. No, Siri, I don't need anything. That's funny. Hey, Siri, just came on. The Model S is a flawless experience and boy, has that product advanced. And now you have the Model X, which a couple of my friends have already and I'm going to get one. I got a founder series coming.

SPEAKER_172: It's pretty, pretty amazing in and of itself.

SPEAKER_17: Yeah. I think automobiles, all they are is suppliers that come together to put a bunch of parts together in one chassis. So Elon had to play catch up. He bought a Toyota joint venture factory, 5 billion square foot factory. Yeah. So someone else...

SPEAKER_229: 5 billion square foot or 5 million?

SPEAKER_17: 5 million, correct. Yes. He took batteries from Panasonic. Yeah. Panasonic essentially what are C-cells, which are inside of all of our laptops for the... Not Apple laptops, but essentially the battery technology for Panasonic. He took a computer manufacturing approach to automobiles. Yeah. Right. But you... I've only had one conversation with him. You've been a customer since the inception.

SPEAKER_231: Well, the drive train is from Mercedes, right? Mercedes put a little bit of money in. So the steering column was from there, but everything else he built.

SPEAKER_102: The motor windings he built.

SPEAKER_12: The thing about Elon that's pretty fearless is with the... It was an assembly of different third-party stuff with the Roadster, but with the Model S, steel comes in the factory on one side. Yep. And he uses all these presses and he cuts the frame and everything himself. Yep. Which, by the way, people don't understand the connection between the two companies. The first time he showed me SpaceX, which literally there were...

SPEAKER_19: It was a huge football field size factory down in Hawthorne, and there were like 30 people there. Now it's packed. Wow. He literally had spools of metal and a printing machine here that would go bomb, bomb, and he would literally make the rocket. And he's like, this is the same thing that's going to make the cars in the future. Wow. But here's what I love about him.

SPEAKER_12: And he learned how to make the Tesla Model S is Elon learning how to mess with metal and make stuff for rockets.

SPEAKER_17: Unbelievable. And he made a little bit of money with PayPal. What was it?

SPEAKER_240: A couple hundred, two or three hundred probably. A million. A couple... I don't think it was that much. Well, I think after taxes, I was saying, but yeah. Okay.

SPEAKER_128: And he lost it all. He lost it all. Yes. 100%. And that's why... I was with him the night.

SPEAKER_87: I could tell you like yesterday, when the financial crisis happened, we were having dinner in LA.

SPEAKER_34: He's in his... The first P model of the roadster. I have the 16th roadster. We went to dinner. The valet is like... There's 20 people around the valet. And we're sitting there at the valet. And he was distraught. And I said, how bad is it? He said, I got two... I got like three weeks left of cash in Tesla. I said, how are you doing personally? Do you want me to loan you a couple of million bucks? Because I said, I can get you a couple million. He said, don't bother.

SPEAKER_17: He goes, that's lunch for me. No.

SPEAKER_34: He said, don't bother. He's living off of a loan. And he's been very public about this since. So I'm not telling the story out of school. But he's been public about it. He was living off a loan by one of our mutual friends. He was loaning him money every month to keep him solvent personally.

SPEAKER_82: So this is why he's Entrepreneur of the Year. Of the Decade, as far as I'm concerned.

SPEAKER_33: I mean, did Steve Jobs... Is he probably the only other person who had to like go negative and hit rock bottom? I don't know if Steve ever did. I don't think he did. No.

SPEAKER_15: He never did, right? The money he went and put into Pixar, that was very controlled. What he did was very timely. And it was just really...

SPEAKER_34: Did he almost go bankrupt with Next? Or he still had all that Apple stock? He had all the Apple stock. Yeah. So I don't know if any entrepreneur has ever gone to negative and then had a comeback. So on a comeback basis... I love it. It's unbelievable. Why is Bezos trolling him? Bezos should have... What is Bezos doing?

SPEAKER_17: He looks so petty, doesn't it? It's so bad. And I've had conversation with Bezos as well. With Elon, by the way, it was a burning man. I was telling him, like, you are amazing. You're building things to go to outer space. And I'm building a broken down 747 to drive wasted people around the playa. I said, I'm glad that we have our roles in this universe. Absolutely. And keep shooting for the stars, my friend. Bezos, I talked to him at another event I was at. And he should have risen above. Blue Origin and everything he's doing.

SPEAKER_116: Look at AWS.

SPEAKER_65: AWS, that's like, for him to turn up a business of extra capacity out of what he just needed to run his own business...

SPEAKER_72: What is that, a $50 billion business now, Ari, if you think that AWS spun out? They just did that $5 billion.

SPEAKER_65: If you spun it out, yeah.

SPEAKER_72: It'd be a $50 billion business. Yeah. And that's like his spare time. Right. Extra stuff. Bezos doesn't need to troll Elon Musk. That's right.

SPEAKER_36: Is he goofing off Ari, you think? I don't know. Can he just not settle for second place?

SPEAKER_264: In any... I guess that's probably what it is. That's a really interesting way to put it.

SPEAKER_49: I mean, there's the e-commerce game is, with the exception of Alibaba, there's nothing that gets in his way at this point.

SPEAKER_60: And then, yeah, AWS, I mean, you have Microsoft chasing his tail. Bizarre.

SPEAKER_26: That's got to feel pretty good. IBM and Google. Oh, yeah.

SPEAKER_174: And also Google and Ratspace. All four of them have what are considered great products, and they're still not catching up to him.

SPEAKER_49: Microsoft's the only one that's even close in terms of actually selling the right product.

SPEAKER_63: Right. The others can save their revenues.

SPEAKER_17: But Zappos and Twitch, and he's augmented himself very well, just like YouTube has attempted to, and Google has with YouTube. I'm sorry. Yeah. He's pulled together other companies.

SPEAKER_60: And so you could say, you know, the one other market where maybe he's playing catch-up,

SPEAKER_49: maybe he's in second place, would be in original content, playing catch-up on Netflix. But guess who the biggest beneficiary of Netflix is streaming content? It's AWS. So, you know. He's making it hand over fist. He makes plenty of money from Netflix.

SPEAKER_12: He saw the bandwidth that Netflix was using at Amazon Web Services and used that data as a signal. He doesn't even need to look granularly. He just looked at what they're paying him every month. There's nothing wrong about that. He needs to know what the biggest client is paying. When he sees that Netflix's bill is going up and up and up and the bandwidth they're using is going up and up and up, do you think he looks at that and goes, I should do my own video service, Ari? Do you think he, like, Google would look at, like, oh, the number of clicks going to movie showtimes and shopping sites is huge from search. We need to build our own. We need to build our own Yelp because we're seeing how much click-through traffic is going there.

SPEAKER_46: No, it's an interesting thought. I mean, my view of what Amazon is trying to do, particularly with Prime, is just, it seems pretty obvious,

SPEAKER_60: but just the bigger the, you know, the bigger my spend, the bigger the company. And they've proven their willingness to sell everything at zero margin or most things at zero margin. And so, you know, what's throwing, you know, a few hundred million dollars into the content game and adding it onto my Prime, you know, adding it to my Prime account and making sure that I never.

SPEAKER_204: Do you want to use more, Amazon Prime, video, or Netflix? I probably use Netflix a bit more now because I... Two to one?

SPEAKER_46: Maybe two to one. I'm a big fan of all the new shows. Not all the new shows.

SPEAKER_60: I think Netflix has done it. Jessica Jones? Jessica Jones is unbelievable. Netflix has done an amazing job picking winners in content.

SPEAKER_34: Yeah, Daredevil and Jessica Jones alone is like, it feels like that's going to be a 50-show run in the Marvel Universe.

SPEAKER_60: Yeah, and, you know, they may go a little bit long with things like Orange is the New Black. You know, that season three was significantly weaker than the first two.

SPEAKER_46: But they have so much, given how few shows they've actually purchased, they've done an incredible job nailing the winners.

SPEAKER_49: If Amazon is a significant player in that market and just makes it a significant value add so that we never cut off our Prime accounts,

SPEAKER_55: then, you know, that's a win for them.

SPEAKER_129: And the team that built Prime, that's $79 a year. What is Costco membership? I think it's $99 now, yeah. It's $99 now. They've slowly boiled the frogs. What was Costco? $49 or something? $49, I believe, yeah. And the team that worked on that... Is Jet. Huh? Is that Jet now that team?

SPEAKER_17: Well, it's Jeff Holden. He's at Uber now. Ah. And when they put together this warehouse model, this membership model, Bezos laughed him out of the room. He goes, no, why would people... This doesn't make sense. And they came up with this arbitrary number. And I think to follow...

SPEAKER_288: Two-day shipping. They picked the biggest pain point and they arbitraged it.

SPEAKER_17: And you know what I do, too, is I hit that $35 limit. I need something for $14, but I'd really like to have it in two days. And I've doubled my spend. And my parents were laughing for, I think, for Christmas.

SPEAKER_87: Well, I thought with Prime, it was no minimum for two days.

SPEAKER_15: For Prime, there's some... Depending on the price of the product, there's...

SPEAKER_87: And now there's pantry. You have to have like a... If you want to order like food page, you got to get... A box full of it. You got to fill the box.

SPEAKER_290: Yeah. Which is brilliant. What is that gaming?

SPEAKER_291: It is. They've gamified commerce.

SPEAKER_34: You know what my biggest Amazon gaming thing is?

SPEAKER_11: I am in a game with myself to see if I can never go shopping again. I literally went through deodorant, razors, hair gel, everything in my life. Coffee. And I put it on subscribe and save. And I've been tweaking the months.

SPEAKER_12: And it's like a video game because if you get to five in a month, I think you get like an extra 5% off.

SPEAKER_34: So I'm like literally walking through the house like an idiot.

SPEAKER_294: This is Amway. You know, Amway did this in the 80s.

SPEAKER_296: I'm like, I don't need to say 5%. What am I doing here?

SPEAKER_12: And I'm literally going through it. I'm like, I love this Tom's main. So I'm like, I'm literally went and I tasted the two Tom's main. Do I want the peppermint or the spearmint? Because I'm putting it on.

SPEAKER_17: How many dash buttons do you have in your house? Do you know what I did? This is the button that came out on April Fool's Day. I don't have the dash thing. Forget that.

SPEAKER_11: That's what, you know what? Dash is for, that's for plebs. If you're really going to do this properly, you'll need to set up, you'll need to be at your

SPEAKER_34: desktop with a keyboard and you just set up your subscribe. And I literally went, I went spearmint and I was like, I'm going to get spearmint every whatever, four months, a double pack. And then I alternated my coffee. So I get a different brand of coffee every other month.

SPEAKER_301: So when you say never go shopping again, do you mean never set foot in a store or actually

SPEAKER_36: never shop on your- Never click a button.

SPEAKER_301: Never click a button.

SPEAKER_36: So everything is just-

SPEAKER_34: One touch is too much pain for me. I want a one touch and have my toothpaste for life. That's what I'm going for. Everything's subscription. I want to put everything on subscription.

SPEAKER_305: Are your bills auto-paid? All your electric bill, your-

SPEAKER_306: You got people for that kind of stuff. Yeah.

SPEAKER_17: See, my- Come on. I hate paying bills every month.

SPEAKER_15: Everything's auto-paid. But this is, Netflix is spending a billion dollars on content. Yeah, let's go to this because this is interesting. This is amazing.

SPEAKER_48: This is a good segue here with killer content in a killer rally. Netflix and Amazon were the top two in the S&P 500 this year, each up over 100%.

SPEAKER_19: Jessica Jones on Netflix, Man in the High Castle, I'm one episode in. Don't know, spoiler alert here, please. We're two of the three most popular TV shows this year. Netflix has jumped into movies with Beasts of No Nation and more. I guess they got Adam Sandler doing movies now, which I don't know if that's a sign. That's an interesting subsection because it was an interesting Howard Stern interview about that. But Wall Street-

SPEAKER_311: Netflix brought in the Top Gear guys to do that.

SPEAKER_19: The Top Gear guys, and it looks like Wall Street is totally willing to subsidize these businesses.

SPEAKER_12: Ari, what impact does this content rally have on- My employer? Yeah, mainstream media, in fact. NBC or Universal or Disney.

SPEAKER_19: These services are willing to spend a lot of money to buy NBC shows from them. I was talking to some executives from NBC on a different matter, and they were telling me that, you know, it's like a very interesting name because those people pay them huge checks

SPEAKER_34: for their content, but that also can affect the subscriber base. So what impact will this have in the coming years on, let's say next year, on the mainstream media companies?

SPEAKER_46: I just, I think the obvious thing is that you have a lot of people who have been contemplating

SPEAKER_49: cord cutting for several years now, as we've all been talking about the fact that it's actually going to happen.

SPEAKER_46: You get to a point where you've got as much content over the top as you do on live broadcast, and Netflix and Amazon are bidding for the best content. They're always in the game for the shows that are going to perform the best because they have better data and analytics than anyone else on what's going to work.

SPEAKER_204: Why is that important?

SPEAKER_319: Explain that for a second, the data analytics on what's going to work.

SPEAKER_60: Well, if you know what your ROI is on a show when you go in to buy it, then you know exactly how much- ROI defined as well. Oh, sorry. So the return on the-

SPEAKER_11: Right, but I know what the definition is, but what is the, in this case, what is ROI? Yeah. The number of people who watch it, the number of people who watch all nine episodes. How do they look at that data?

SPEAKER_49: Well, so, I mean, Netflix is probably a little bit of an easier model because Amazon, it's bucketed into Prime, and so it's hard to know exactly, you know, your churn numbers can churn, you can churn for any number of reasons. But with Netflix, it's new subscribers, churn, engagement.

SPEAKER_12: So people who quit, and the people who churn, did they watch anything? And if they didn't watch anything, you know that you effed up.

SPEAKER_49: Right, so as you buy these new shows, do you get more subscribers? Because you spend a lot of money on marketing, you promote the show, you get word of mouth out, people subscribe because that's the only way they can get the show. Do you reduce churn, so you lose fewer users than you had been before these shows? And then with the ones you've got, are they more engaged?

SPEAKER_55: Are they watching more shows per day, per week, than they were previously? So they won't leave.

SPEAKER_12: So you're getting people to the top of the funnel, and you're keeping them from leaving. And if people hear over and over again, House of Cards, House of Cards, Orange is the New Black, Orange is the New Black.

SPEAKER_49: And they're cross-promoting all these shows against one another. So they do a great job of, you know, you like this, you'll probably like this. And now they're just cranking out a new show every week, every two weeks. And it's like, you know, the more hits that you have, the more I trust that I might as

SPEAKER_60: well start with episode one. And maybe episode one sucks, and I don't watch it, but guess what? There's another one for me to watch in a week.

SPEAKER_49: So, I mean, two years ago, I may have questioned whether or not my $8 a month for Netflix was worthwhile. Now it's like the best $8. How is it not worthwhile?

SPEAKER_334: It's the best $8 spent. It's $100 a year.

SPEAKER_49: In fact, I don't know anyone who questions their $8 towards Netflix anymore. And two years ago, that was a very hot topic.

SPEAKER_12: Yeah. Is it worth the money? Because they didn't have any original shows.

SPEAKER_11: That's a really interesting point, Ari. They didn't have any original shows two or three years ago.

SPEAKER_335: And they didn't have a great library.

SPEAKER_11: And their library sucked when they went from DVD to regular. Like, where are all the movies?

SPEAKER_12: When you had DVD, you were like, in the mail, you're like, I can see anything I want. I have to wait two days, but I see anything I want. Now, this is a crazy idea.

SPEAKER_11: I think in major markets, Netflix would be very interesting if they had same day delivery, if they did a red box service in the back of Ubers. Or this could be a business for Uber. I'm going to write this down. I'm going to tell Travis this. If in the back of an Uber, they had every DVD, and because they're in sleeves, they're so easy.

SPEAKER_12: And then you just go out to meet the Uber driver, and the Uber driver hands you Avengers. And let's say Avengers couldn't be bought by Netflix or Amazon. It's like whatever they have it on. HBO gets it first for three or four months. Any Uber driver could, within 15 minutes, bring you whatever movie is like the first run.

SPEAKER_17: But from what I heard about Redbox, and they were bought, right, by the Coinstar owners. What I was told was they were buying movies, I wouldn't say illegally, but they weren't really licensing the content.

SPEAKER_342: Oh, you have to pay specifically for that?

SPEAKER_17: Yeah, it's a special relationship. And Netflix was able to pull that off. Walmart had their own DVD delivery service, too. Blockbuster tried it.

SPEAKER_47: So if I buy a DVD at retail, I cannot rent it.

SPEAKER_17: That's correct.

SPEAKER_107: That's a different agreement that has to be made. So Blockbuster had a different agreement. That's right. Interesting.

SPEAKER_17: So Redbox was able to fit under the radar with this because they were, you know, building the point-of-sale kiosks inside of the store. Hold on a second.

SPEAKER_107: Let's stop for a second and think about my idea. Would this work, Uber, for DVDs?

SPEAKER_17: It'd be a lot of weight. That polycarbonate is not lightweight. So it's, sure, they're skinny, but you have a trunk full of DVDs.

SPEAKER_344: Okay, let's just say it's got the top 200.

SPEAKER_17: Then you've got to drag all that weight around, so fuel consumption is going to go up.

SPEAKER_345: We need some sort of a... Look at the engineering. Wait, top 200, nothing in sleeves.

SPEAKER_204: What do you think, Arne? Why? Wouldn't Netflix rather spend that money on digital? Yeah, they would. But I'm saying, but if Uber had it. If Uber just did it, it did a separate service.

SPEAKER_12: Oh my God, I have such a brilliant idea. Uber Prime. If you spend over $100 a month with Uber, you get unlimited videos.

SPEAKER_353: This is a great idea.

SPEAKER_15: Sounds distracting. And considering they don't control the workforce, right? I think if Uber had their own drivers, Uber could put mandates down.

SPEAKER_355: And the only X number of cars have it. Yeah.

SPEAKER_356: Yeah, I don't know that you want a new business line to be selling... Too many business lines.

SPEAKER_58: But look what they did with... But also doing physical objects in a digital world. I'm not sure that's the jerk.

SPEAKER_17: What they did with Quirky, rest in peace, Quirky. They did the air conditioner delivery, right? They're doing Uber kittens, Uber puppies. All right. Now here's what you're saying. They are working with physical kittens.

SPEAKER_359: Quirky went down in a blaze of glory this year. You're an inventor.

SPEAKER_15: Yeah. Heartbreaking. Their facility was amazing. I love what they were doing. Community invention.

SPEAKER_12: Explain to the audience that doesn't understand what was Quirky and why did it go down in flames?

SPEAKER_17: Quirky was the democratization of invention. What it allowed is for me to come up with an idea on a message board, which is kind of what the Groupon, Andrew Mason, was doing early on.

SPEAKER_89: Yeah. We all want a discount for this restaurant. Let's all get together. Yep.

SPEAKER_17: Let's all get together.

SPEAKER_89: Except these guys said, let's all get together and make it...

SPEAKER_17: A better widget, right? So this widget, it needs to have a bigger handle.

SPEAKER_137: Specifically, they did what products? They did an air conditioner?

SPEAKER_17: Well, that was a partnership with General Electric wanting to get in on some of that juice. But the most common and most popular one was a flexible power strip. I have it. I bought it. When you plug in your...

SPEAKER_362: It looks like a snake.

SPEAKER_17: It looks like a snake. Yeah. You can bend it. When you...

SPEAKER_363: And the point of bending it was what? So that the big clunky things could fit in? Yeah.

SPEAKER_17: Like your adapter for your MacBook is this big square and the adapter for your router is another big square. And it was cool. Yeah. But we did a product when I was the in-house inventor at Radio Shack that looked like an octopus. So we would pull the wires that you'd plug into the end of an octopus. I remember that one. Oh, you were involved in that. That was one of my babies, yeah, back in the day. So what they did by twisting and turning it was clever, but it was yet another spin on the better mousetrap. But they did this time and time again. And one of the things that led to their demise was they were paying the inventors little percentages of how much time and energy and effort. There was a core inventor and then there would be hundreds of sub-inventors that would make the product better.

SPEAKER_369: So if I did the packaging, if I did the electrical engineering, if I did the product or whatever.

SPEAKER_17: It was more about ideas, right? So they had their own team for packaging. They had a unified messaging on their packaging. It was more about making the widget better. Tom says the handle should be bigger because Tom has big knuckles. Jason says it should be a little bit thicker.

SPEAKER_76: So did they make Franken-gadgets? Was there a risk of making a Franken-gadget in other words? They did.

SPEAKER_17: That was the... The egg conditioner? For me, that was the egg minder. It held 14 eggs and it used a photo sensor so you could put egg... You'd buy eggs from the store. You'd open up the eggs from the carton. You'd put your own eggs in the new quirky carton. That quirky carton was Wi-Fi connected and it was tell you which egg to pull next.

SPEAKER_192: Tell you which egg to pull next.

SPEAKER_181: Is this a problem that we have with eggs? Salmonella is a terrible thing. Sounds like maybe you're getting to the problem with the business.

SPEAKER_87: You could also look at the carton and save the time to take it out, but you also know when you're out of eggs. You know when you're out of eggs. All right.

SPEAKER_107: So basically, they couldn't even come up with a decent application.

SPEAKER_65: The products...

SPEAKER_107: They lost a hundred million or something. Jackie will look it up, but a hundred million was pumping that?

SPEAKER_65: The products were few and far between. They were really out of this world phenomenal.

SPEAKER_34: Let's get the guy from... Hey, just a note for Emmy award-winning producer Jackie. Can we get the founder of Quirky when he gets done with therapy and whatever on the program to do a recap? I love this idea of getting the founders on the show to do a recap of the failure.

SPEAKER_374: His commercials were amazing, though, too.

SPEAKER_34: They were spending a lot of money on commercials. I mean, you know what I heard is people blame Andreessen Horowitz. Big spending, go big, give people lots of money at high valuations. That this was like if they had never met Andreessen Horowitz, maybe they would have taken a more realistic, slower approach to the business. That's what another VC said to me. I don't necessarily agree with that, and every entrepreneur has got to run their own company. So, you know, listen, I know that the Andreessen Horowitz guys are just, they're wacky. Like now Mark Andreessen is blocking me again. He was like following me. He's an LP in my fund. Then he unfollows me.

SPEAKER_376: Is this on Twitter?

SPEAKER_34: On Twitter.

SPEAKER_376: Then he blocks me because I think I was talking about... You crazy kids with your tweets. He's either a hater or a robot. Mark Andreessen is just weird. He's just weird.

SPEAKER_33: I mean, I like Mark. He's brilliant. He was going to invest in one of my companies, but he's just a weird guy. Like, why are you blocking me?

SPEAKER_12: And then somebody told me, oh, were you talking about Theranos?

SPEAKER_87: And I was like, yeah, I was talking about Theranos. Everybody was talking about Theranos. This could be the Enron of our industry. How am I... I mean, I talk about... We're talking about quirky here.

SPEAKER_34: How am I not going to talk about Theranos? But he blocked you because of that. He blocked anybody who talked about Theranos because his wife is friends with Elizabeth Holmes, supposedly.

SPEAKER_379: Okay.

SPEAKER_19: Anyway, what do you think is quirky and interest in Horowitz just dumping money into it? Do you think that theory carries water?

SPEAKER_46: There are a number of companies, some of them in the Andreessen portfolio, that probably raised

SPEAKER_60: more money at bigger valuations than they could have gotten anywhere else in their, say, B, C rounds. There were obviously other culprits in this when you got to the D, E, F, G, H, I, and J round.

SPEAKER_382: Nobody will ever get fired, though, for following on after Mark Andreessen.

SPEAKER_36: Hard to get fired if you're a fund... It's like buying Microsoft...

SPEAKER_49: Well, see, I mean, they've only been around since 2009, so we haven't seen a downturn. We haven't seen how it plays out in a market downturn yet. Right. Keep going. Quirky...

SPEAKER_60: So I don't know the business well enough, but this sounds quite plausible. I mean, you think about where would Kickstarter be if not for the Oculus, Oculi of the world, if not for the $2 billion outcomes, the Pebbles.

SPEAKER_26: $20 million. They get 5% of that. That's $1 million. Yeah. I mean, if 99% of your projects fail, but you're responsible for kickstarting Oculus or

SPEAKER_60: Pebble, you're at least going to maintain the momentum, and then you kind of figure out the business around that. But if you don't have that, I mean, I don't know. Did Quirky have any significant hits? Not really.

SPEAKER_21: No.

SPEAKER_17: Because good partnerships, I think GE talks about innovation with their commercials, right? That's their branding as a corporate. But really, GE's just like the big companies. Like when Radio Shack hired me, it wasn't an innovative company. They had lots of stores. This was 2003, long before they went bankrupt. That was not my fault, by the way.

SPEAKER_388: Can't pin that on you?

SPEAKER_17: No, can't blame that on me. So, but this idea of big companies finding the innovators to help breathe new life in the industry, I think that's what they did with the EOS air conditioner and some of these other products that they partnered with.

SPEAKER_09: By the way, you've been replaced by Nick Cannon.

SPEAKER_19: So, just so you know how Radio Shack feels about you, the rapper, actor, and America's Got Talent host, which obviously, if anything, is going to put you in the innovative bucket, it's going to be hosting America's Got Talent, has named Radio Shack's chief creative officer, has been named. So, clearly, Radio Shack, a buy with Nick Cannon at the helm.

SPEAKER_34: But he's a DJ, so I guess there's something there. If you have a chief creative officer, if you're, are they bankrupt, didn't they?

SPEAKER_390: Yeah, Sprint kind of bailed them out and took over locations, but there's bankruptcy protection.

SPEAKER_17: But then, while I am, he's at Intel, and Intel is one of the investors in my company, New Air. So, while I am... It's brilliant.

SPEAKER_85: So, why did Quirky fail? Just to wrap it up with a bow.

SPEAKER_17: The gist is they paid a lot of these micro-inventors money before products started shipping. I heard that it was... That's a mistake. It was... Yeah, I don't get... That, to me, seems like a fundamental business model problem, that you wait till...

SPEAKER_64: Cow-yard chickens when they're hatched.

SPEAKER_63: Yeah, you can't share revenue if there's no revenue.

SPEAKER_12: Yeah. And you probably want it to come out of profits, too. It sounds like a mistake. I mean, what these... If this was a good business, what they should have done is they should have charged all of those creators to be members of the platform, 25 bucks a month, so you have some basis

SPEAKER_34: to run it. Then, so they all pay in, so you get serious people. Then, if there is a hit out of it, they take some, but they have to put it on Kickstarter.

SPEAKER_12: So, Quirky would then kickstart stuff or Indiegogo stuff... Pre-sell. Pre-sell. If it doesn't pre-sell, they don't make it.

SPEAKER_11: What they effed up, I believe, is that they didn't get product validation from the market. Pre-orders are the way to get that.

SPEAKER_12: Now, I'm not saying pre-orders are bulletproof, either, because I've invested in a couple of hardware companies that did well on Kickstarter, Indiegogo, got a little bit of traction. I can tell you that, almost universally, the companies that raise money there need three, four, five times, ten times as much money as they raise to actually execute on the business, vision. That's why so many of these things come out schlocky, is people are like, well, I'll sell it for 300, it's going to cost me 200 to make, then they're like, oh, yeah, we have to hire a PR firm, a design firm, we have to have an office, oh, I didn't think of that.

SPEAKER_97: It's going to cost us $500 a unit to sell it for 300, I'm going to lose $200 on the first 2,000 units, I'm going to lose $400,000 getting this business started.

SPEAKER_82: Hardware is hard, even the first Fitbits took two years longer than they expected to come out.

SPEAKER_105: All right, here we go, robotics and self-driving cars, this is a good one for us to end on.

SPEAKER_19: Tesla shipped the Autopilot, the summer Autopilot, of course, is not fully driving, it's like level, I don't know, there's a couple of levels here, level one, two, three, four, producer Jackie will look it up and tell me what level the driving is, but did either

SPEAKER_404: of you try the Autopilot?

SPEAKER_17: I haven't, I've seen videos, my friends own the Teslas with the Autopilot capabilities. So here's how it works. Those cars just started shipping one year ago, the software didn't come until the summer.

SPEAKER_19: When you hit the change lane, the blinker, if you're in Autopilot mode, it will change the lane, and it does it pretty perfectly. It does not drive you to work.

SPEAKER_34: People have a misconception that it's going to take the off-ramp. It doesn't automatically change lanes, go to the off-ramp or on that stuff. It automatically keeps you in your lane.

SPEAKER_17: Essentially, it's steering cruise control. You get it started, you let go of the steering wheel.

SPEAKER_34: It's adaptive cruise control, and it keeps you in lane.

SPEAKER_17: So adaptive means the car in front of you, if they slow down, you slow down.

SPEAKER_19: And it's really neat. You can pick a dial, and you can pick how many car lengths. Cool. So you can be two car lengths or seven car lengths. It's pretty neat. And then if it knows that it's in the lane, it will keep you in the lane. But if it can't visually determine the lane, it turns the Autopilot off. But it's only level two. However, Elon has said he thinks he can have a fully self-driving car in two years, and this is not the person to underestimate. He just, after all, landed a rocket.

SPEAKER_34: On its tail. On its tail. Unbelievable. Which is, like, if you watch the video, it looks like it's CGI, does it not? Did it look like the real world to you? It looked like Rewind of the launch.

SPEAKER_27: It looked like, right. It looked like CGI. So Mercedes is planning to develop a luxury version. Don't hold your breath.

SPEAKER_15: No, Mercedes has a version now. You have to have the weight of your hand on the car. And as a hacker, I love what other hackers have done. They've taped a soda can to the wheel, which gave it just enough inertia to seem like a human's

SPEAKER_17: hand. Brilliant. And it'll maintain its own lane. It won't do the lane shifting like the blinker mode will. But a Mercedes at CES this year, if you're in Vegas, check out, or even if you're not, watch what Mercedes is going to be showing at CES.

SPEAKER_63: Oh, they're going to show some more autonomy? But in every case, the driver's controlling acceleration and brake, right? No. No.

SPEAKER_290: Tesla is fully automatic.

SPEAKER_19: It will adapt to the speed, but you do need to be ready to take over because it will turn it off if you take your hands off the wheel. So it knows you're on the wheel.

SPEAKER_390: The adaptive speed control has been around for years.

SPEAKER_193: And this is level two, by the way. It's the steering that you make.

SPEAKER_105: Jackie, just give me what level three is defined as in level four and level five in the chat there and I'll read it out to everybody.

SPEAKER_193: Now, Google has their little toy cars. Google has theirs. Right. But those have no steering wheel in them and those are not allowed. So no jurisdiction is going to allow you to do it without a brake and a steering wheel to take over.

SPEAKER_112: But they got a limited use in Nevada. Oh, they are limited use in Nevada. So they're doing tests in Nevada.

SPEAKER_296: Why do the states, let me ask this question, Ari, why do you think the states are allowing this kind of stuff?

SPEAKER_34: Are they just bought and paid for by lobbyists or do they think it's going to make the city greater because it seems to me that just like my prediction that somebody is going to be killed by a drone, it's pretty obvious that at some point a self-driving car will make a mistake. It's inevitable, in fact.

SPEAKER_12: Now, it's going to make a mistake on a ratio of a thousand to one or ten thousand to one versus a human driver.

SPEAKER_218: You just answered your own question.

SPEAKER_12: Why are they taking the risk, though?

SPEAKER_60: I, the evidence that humans driving cars is such a bad idea, the evidence is so great that humans driving cars is a bad idea that it's, despite all of the skeptics, there's just, there's, there's too compelling a reason to, sorry, the promise is too great to not go forth with it.

SPEAKER_11: Got it. In other words, we suck so bad at driving that there is a huge upside.

SPEAKER_26: Thank you. I was trying to avoid that. Yeah.

SPEAKER_431: The impairments that are involved in our driving are so bad that anything we can do to eliminate them will be, is worth testing. And I think even the skeptics acknowledge that.

SPEAKER_204: Right. So that's why it's worth the risk. Where's drunk driving in terms of deaths in this country is number two? It's up there.

SPEAKER_12: It's definitely drones are number one. I just checked on the thing here.

SPEAKER_87: Drones are number one since December 27th. Once people got their batteries charged, we'll see when the data is released.

SPEAKER_175: When the data is in for December, early January, it's pretty much going to be drones.

SPEAKER_12: When will a self-driving car, when will a city have more than a hundred self-driving cars commercially operating? Let's just start with that as an easy bet, Dave. More than a hundred? More than a hundred operating commercially, not in a test.

SPEAKER_303: When will there be a hundred commercially? Because who knows how many Google has? Yeah.

SPEAKER_436: Google probably has that alone. They've driven one million miles.

SPEAKER_303: I don't think they have a hundred of them on the road concurrently. So what I'm saying is- Probably not concurrently. I'm sure they have a hundred in their wheelhouse, right?

SPEAKER_12: When will we have a hundred of them commercially operating in a city, which is to say either somebody privately owns one or Uber has a hundred of them on the road?

SPEAKER_438: Let's ask the realistic question, which city will have a hundred of them and when?

SPEAKER_17: I'd say because Nevada has so much land space and so much lack of vehicles on the road. I think 2016, we're going to have BMW, Mercedes, Tesla- Wait a second.

SPEAKER_296: Not a test. Let me restate the question because apparently you do not understand the question.

SPEAKER_440: You're saying fully functioning driverless cars?

SPEAKER_33: Level four, I'm going to define level four. The vehicle performs all safety critical functions for the entire trip with the driver not expected to control the vehicle at any time as the vehicle would control all

SPEAKER_34: functions from start to stop, including parking functions. It would include unoccupied cars. 2017, Volvo. So level four.

SPEAKER_273: Volvo Trucks 2017.

SPEAKER_34: Okay. I didn't even ask for the brand, but Volvo will have trucks and you think trucks will come first? I think trucks will come first. So, okay. A hundred commercial cars driving themselves. That's right. What would you like to bet? Because I am going to win. Let's go. And I will give you two to one odds.

SPEAKER_174: So that's a thousand dollar sushi lunch.

SPEAKER_446: We could do your 500. That's too much. Here we go.

SPEAKER_153: Too much sushi. Too much sushi. 500 to 250. Okay. Let's do that.

SPEAKER_449: All right. Book it. Jackie, book the bet, please. Thank you. Ari, let me hear yours.

SPEAKER_26: I'm not going to take either side of that bet. Well, you know I'm going to win. Come on. I gave two to one odds here. I have a rate in a different bracket. We'll come up with that. I think-

SPEAKER_451: When will we have a hundred commercial level four vehicles?

SPEAKER_204: 2017 sounds a little early to me.

SPEAKER_49: A hundred commercial level four vehicles. But 2018 sounds reasonable. But I would go more conservative and say 2019. I remember distinctly- That's a good line. I remember distinctly 2014 South By. So that was not this past year, but last year. Five years was sort of the going, that was the going bet. And so-

SPEAKER_281: All right.

SPEAKER_455: Here's why Ari is right.

SPEAKER_11: And Dave, sadly, you're wrong. There are a number of issues at play here. One of them is the jurisdiction allowing it. The technology could be, you are correct, Dave, available in 2017. However, Ari has the right year, 2019, because the jurisdiction is going to have to approve it. And a hundred is a large number of commercial vehicles operating at level four. Ari, you set the line right. It could be 20, I would have a hard time predicting the under. I would have a hard time predicting the over, which means you really set a good line on a gambling basis, 2019. Don't you think it's a good line? But you would take the under in this bet.

SPEAKER_34: So here, you guys can bet each other. You would take the under to his, obviously. Yep. So you've taken the under. So $100 sushi lunch, gentlemen. I can handle 100.

SPEAKER_87: Okay. There you go. Book it. Ari versus Dave. So Dave has $350 at stake right now.

SPEAKER_12: He's going to be totally barbecued. All right. I love it. All right. Let's end on IPOs. IPOs, IPOs. It was the weakest year since 2009. Uber and Lyft, obviously, people are wondering when these companies will go public, as well as now rumors of Snapchat with only 50 million, considering going public. A bold move. What do we think, Ari? I'll start with you, since you work at CNBC, which I'm lucky enough to be an official commentator on, regular commentator.

SPEAKER_203: See you every Tuesday. Still every Tuesday?

SPEAKER_296: We're trying to do every Tuesday. My schedule's a little bit rough. And then over the last month, we had all this horrible stuff with the Paris attacks and everything.

SPEAKER_19: So I got preempted a couple times. But yeah, we're trying to do Tuesdays with Jason is the kind of idea here. But what is 2016 going to look like for tech IPOs and IPOs in general?

SPEAKER_34: What is the climate around IPOs?

SPEAKER_72: And why is it so goddamn muted when every other part of the sectors are so hot?

SPEAKER_32: Well, CB Insights had a good line in there.

SPEAKER_60: I think their latest report where they said 2016, and I'm going to paraphrase here, but it's the year that companies get pulled kicking and screaming into the IPO market. So what's going to happen is many of these late-stage investors that are not seeing returns on their investments because private market rounds are priced way too high. So they're not seeing returns when these companies go public, if they go public, are simply going to stop doing the deals. So you've had – that is a new class of funds. That sort of mezzanine pre-IPO funding didn't exist even three, four years ago in any big way and has been huge the last couple of years. That starts to go away. And so what you're left with is the same market that you used to have, which was the IPO market, for those companies that could actually go.

SPEAKER_46: So it's going to be – like at some point, you don't raise $300 million, $500 million, and then a billion dollars in the private markets. There's just – that doesn't happen unless you're Uber once a century. Once a decade. Yeah, once a decade.

SPEAKER_466: It does seem like once a decade.

SPEAKER_36: Facebook did a similar thing. Google was able to raise lots of money too. Once a decade seems fair. We've had a bunch of them, maybe not a billion, but many, many hundreds of millions.

SPEAKER_11: Where are the retail investors, and do the retail investors need to come back, or do we have enough of the sovereign wealth funds, high net worth individuals, pension funds to buy up all the stock? Is there enough money in the world to buy all this up, or do the retail investors need to get excited?

SPEAKER_19: And obviously when I say retail investors getting excited, that sends shivers up anybody who lived through 99, 2000's spine.

SPEAKER_60: Yeah, I mean there's plenty of money on the sidelines in the public markets. There's been a dearth of IPOs. So there's, you know, pent-up demand. You could say that a lot of the money that would have gone to – retail money that would have gone to IPOs has instead gone into Netflix and Amazon and Google and Facebook and, you know, the high-growth consumer companies.

SPEAKER_26: So some of that would get distributed.

SPEAKER_11: In other words, people would, even if they had a balanced portfolio, say, you know what, I'm going to put whatever. I'll take – I'll pair my Google, I'll pair my Apple, I'll pair my Amazon because maybe one of them, Snapchat or Uber or Lyft or somebody has to be the next big thing.

SPEAKER_60: Okay, so here's the problem is that Airbnb has said no IPO for two years at least. Uber seems in no hurry whatsoever.

SPEAKER_49: Lyft, you know, maybe they preempt and go out before Uber. But there just seems to be so much risk in the Uber Lyft market right now that for public investors to take that leap, it doesn't seem likely in the next year, maybe in two years. And those companies look like they'll still – those will be the ones that can still tap the private markets.

SPEAKER_60: Then what are the most exciting companies beyond that? You know, is it Pinterest? Is it Snapchat? Those are not – I mean, those business models have a lot of growing up to do before they can justify their valuations.

SPEAKER_46: Really, you get into a lot of the enterprise stuff. And a retail investor is going to get that excited about –

SPEAKER_369: They're not going to get excited about it.

SPEAKER_11: They may get excited about the earnings or dividends that those companies could pay. Because if they wanted to, SaaS model businesses are such high-margin businesses that they could become dividend-paying stocks.

SPEAKER_19: Sounds crazy for a tech company to do that. But if people are looking for protection, I mean, God, Salesforce could just throw off dividends until the cows come home or whatever, just like Microsoft did. Dave, let's go to the lightning round here.

SPEAKER_12: Theranos is under fire, obviously. The Wall Street Journal just clobbered them again today with an engineer on the record, which is new. And, obviously, the co-founder committed suicide, sadly. The wife says he committed suicide because of Theranos or was related and that he was distraught and didn't believe the technology worked.

SPEAKER_11: There must be a leak from inside the company in my mind because if this information is getting – if an engineer, and you correct me, as an engineer and as a scientist and inventor, would an engineer allow their powers to be used fraudulently forever?

SPEAKER_12: Or if you're an engineer, are scientists and engineers not higher level enough, enlightened enough through what they're doing if they chose the health space to work in, that they would have a conscious – what do they call it of consciousness? Like a challenge that to their morality, their ethics, a challenge of conscience to leak this information to the press because they know that people's lives are at stake.

SPEAKER_15: This is very similar to what happened with 23andMe. They were beat up by – was it the FDA?

SPEAKER_449: Yeah. For slightly different, they were legitimately disclosing how they did what they did.

SPEAKER_34: There was complete transparency, but they were giving advice, which the FDA doesn't want. So it's a completely different type of issue, I think.

SPEAKER_82: But as an entrepreneur, every day you get up and people tell you, no, no, you can't do this. No, no, no. Yes, yes, yes.

SPEAKER_17: Correct, correct. And you have to maintain this face, say, no, what we're doing is working, this is legitimate. Is that called lying? It's not called lying. Sometimes it's called – Being delusional? The reality distortion field. Okay. Fair enough. Steve Jobs made it very famous.

SPEAKER_33: The iPhone did not work. It was on a perfect script. That's what they said.

SPEAKER_408: Okay.

SPEAKER_33: When he released it.

SPEAKER_34: Did you hear that story?

SPEAKER_408: Makes sense.

SPEAKER_34: They had like five or six phones. None of them worked. And they had them all on a perfect script where he would click through.

SPEAKER_17: Yep. Amazing.

SPEAKER_34: If he deviated the path, it would explode.

SPEAKER_17: Doesn't surprise me. But look, you got it working and it does work. But a lot of times with engineering, you have time and money. And there's never enough time to build a demo. There's never enough money to put engineers on it. So with what they're doing, when it comes to having a higher level of government bodies, regulatory issues, with this, I think there's no doubt MIMS, which is the circuitry, which will read blood and all this advanced technology coming. And 23andMe and Thermos was just the tip of the iceberg for what we're going to do with biology. And ultimately, I'm going to have little nanobots running through my body attacking the viruses that invade me. Right? We're going to need this because everyone takes too many antibodies. So antibodies will be dead in the next five years. All right. Another prediction of mine.

SPEAKER_97: So is it going to, in 2016, will we find out Theranos is a complete and utter fraud, the Enron of our industry? Yes or no?

SPEAKER_17: I don't think so. I think it just needs some time for refinement.

SPEAKER_12: Ari, what does your gut tell you as a journalist, putting aside that you are not, you know, the Wall Street Journal with a bunch of investigative reporters on this, on a percentage basis or just on your signaling, does your signaling lead you to believe it's closer to an Enron or closer to misunderstood? What is your spidey sense to you? I'm going to tell you.

SPEAKER_46: Obviously, I'm not. It's hard because I don't think it's built on a house of cards like Enron was. Like, I don't think it's a total sham. Okay. Which Enron was a sham. Correct.

SPEAKER_60: I think they just, such a private company that didn't expect to be exposed, and there was a lot there to be exposed, and there weren't, you know, Elizabeth Holmes didn't have the advisors around her to keep her honest, keep her in check.

SPEAKER_26: Her board was filled with a bunch of old generals. Unbelievable. I mean, that's one of the most unbelievable stories.

SPEAKER_12: Isn't it weird? And her dad is some ultra-connected guy from government. I don't know exactly, but he's got, what does he got, Henry Kissinger and all these other, like, 70, 80-year-old.

SPEAKER_205: Dick Kulasevich from West Varga, the former CEO of West Varga.

SPEAKER_48: But they had 70, 80-year-old guys who have no science degrees on her board. There's nobody challenging her on the science basis.

SPEAKER_26: And, you know, some of the earlier VCs talked about getting basically no information out of the company. That's a major smoking gun, isn't it? So I think, you know, there are real problems.

SPEAKER_60: The Journal has done an amazing job on this story.

SPEAKER_12: There's a Pulitzer for the Journal. Yeah. I'm predicting right now Pulitzer for the Journal. Yeah. And I'm going to make a prediction right now. If the whole thing's going to collapse.

SPEAKER_11: Now, I say the whole thing is going to collapse because I don't think the scrutiny level that this is under, combined with the progress they made, is going to allow them to recover. I don't wish that on them. I'm not saying they're a fraud.

SPEAKER_12: What I'm saying is their progress and this amount of weight and the distance between their progress and reality and getting caught, like you're saying, Ari, in this gap, is too great for the company to recover from. No investor is going to put money into it. The current investors are all going to run. The talent drain. The talent drain will occur. And they're going to be just left there holding these little micro vials that never worked. And they got way ahead of their skis. And there's somebody in the PR department. And when this story gets told, there is going to be somebody in the PR department who said to Elizabeth, you might want to not compare yourself to Steve Jobs and wear the turtleneck and be out there doing crazy press. And there might be some advisor who's going to say, hey, you know what, Elizabeth? Maybe you shouldn't go for a $9 billion valuation before this thing works. Let's go a little bit slower.

SPEAKER_303: And there's going to be somebody on the other side who is saying, get out there, be doing the press, and raise as much money as you can at the highest valuation.

SPEAKER_49: You are Steve Jobs. The movie? No, no.

SPEAKER_32: There are people telling her that you can do it. You have the Steve Jobs.

SPEAKER_48: Right. So there's some group of people who are pushing her to do this insanity, raising ridiculous amounts of money before it's advisable, doing press before it's advisable.

SPEAKER_12: You don't get out there and bang the drum when your core technology doesn't work.

SPEAKER_175: This is a massive mistake for any startup to do.

SPEAKER_46: So, yeah, I mean, one of the amazing things about it, too, is the number of supposed partners that have come out and basically said, yeah, we've never really, like, we haven't really used the technology.

SPEAKER_60: We haven't really tested it. They got duped as well. But, like, those names have been out there for a long time. You know, shame on us reporters.

SPEAKER_49: But, like, I wonder, you know, could we have just called the Cleveland Clinic at any point and had them basically tell us what they ultimately told?

SPEAKER_11: This is one of the things is we started with, Ari, on this whole episode, we're 70 minutes in, me asking you about the death of journalism. Is Theranos not emblematic of the fact that there are no or few tech journalists left with the budgets to do investigative reporting and the teeth and the gumption, the gall, the sharpness, the aggressiveness that we saw in 70s, 80s, even the 90s in journalism is gone. And it's just few pockets left of people who want to challenge this powerful, you know, group of people.

SPEAKER_46: Yeah. And I think, you know, that may very well be right.

SPEAKER_60: I do also think, you know, look at the kind of commentary that comes out after a story like that and the level of criticism towards the journalists. Unbelievable. From entrepreneurs who, you know, the criticism being basically that we're haters, right? Yeah.

SPEAKER_76: Oh, you're not a billionaire. Therefore, you know, your commentary is negated.

SPEAKER_60: Or you can't make anything. So you're, you know, you're a cynic. That's the default response. And, you know, that was the default response. And granted, it's a totally different story. And you can, you know, you can, you can agree with one and disagree with the other. But the New York Times story on Amazon's work culture, you know, you can be critical of that story.

SPEAKER_36: But 500 people commented or they said was hundreds of people.

SPEAKER_12: Gave feedback. Yeah. Hundreds. They can't, there has to be something to it.

SPEAKER_345: Yeah.

SPEAKER_60: You know, journalism has made plenty of mistakes in recent years. So there's no reason to believe that everything that gets reported is the truth. Right. It's a balance, right?

SPEAKER_17: The entrepreneurs are always saying, we are the powerful, we are the innovators, we're the mighty. And the journalists and the investors, for that matter, needs to knock a little wind out of the sail. And there needs to be the right sort of balance. Everything in life is about energy and balance. So we, I can't, as an inventor, even claim to know an ounce of engineering when it comes to biology. And I just did my 23andMe. They just opened it up again recently. And I just send it in when they open it up. I'm like, all right, let me get a feel for this.

SPEAKER_19: Here's the thing, Jean-Louis Gassier, who worked for Mr. Jobs, and he's, he's, this is a pretty serious dude, obviously. I mean, he involved in Apple for a long time. He, he did a story, Theranos Trouble, a first person account on October 18th, when this stuff happened.

SPEAKER_12: And his, I'm pulling it up here on the screen for those of you watching the video. But after two failed attempts to establish a Theranos account, I gained access to my numbers, platelets 430, given my condition, that's high, hematocrit 44.1, a passing grade, but uncomfortably close to the 45% limit. Stanford hematology disagrees, platelets 320, no concerns, come back in two or three months. Hematocrit 41.1, ditto, no concerns. The difference quite, you know, quite alarming, 34 and 7% higher than Stanford's, whom should you believe? Theranos retests, they get a 13% drop in 24 hours, and they go 8.6, and he's down in the safe zone. In other words, they basically went to the Stanford level, and then he retests it, and Stanford is down 7% and up 1.5%. So these are incredible swings. He emails the founder, and you can guess what happens next, he writes, nothing, no response. I shrugged it off and went on to other topics, but the question nagged at me. Theranos' stated aim, inexpensive, painless blood tests, is admirable and I hope achievable. This is people's health.

SPEAKER_34: If this, if you work at, this is a message to every engineer at Theranos, looking in the camera right now. I want somebody to clip it. If you know an engineer, if you know a scientist at Theranos, this is a message to them.

SPEAKER_19: You have a moral obligation, if there are shenanigans going on in this company, to leak that information, to give it to the press. Now, you're going to get yourself in legal trouble because you've signed all kinds of documents. You're going to have to be very careful, PGP encryption. I'm not encouraging you to commit any type of a crime. I am telling you that a scientist who knows of people's health being rigged or fudged with, I believe, is under a moral obligation to expose that. If you do choose to expose that, and I believe morally any scientist or person who knows about corruption or fudging going on needs to do that, you will have a lawsuit.

SPEAKER_12: You will be sued. You could go to jail, all this kind of stuff. It's very, this is very serious, like all the president's men inside the insider. Was that the 60 minutes one with Big Tobacco, the film? Yeah. I mean, this is like serious stuff. This could be, this could be like one of the great frauds of our time. If you are a scientist there, you have a moral obligation to tell people, I believe. Interesting. And that's the reason why I think that this story has legs. I don't think this is a case of purposely committing fraud. I think it's a case of getting out ahead of your skis as a founder and then not being able to rein it back in, losing control of it. And there's probably a bunch of people who did fudge numbers or didn't tell the truth or didn't tell the complete truth or have complete honesty. You know what? It's unacceptable if it's people's health. You know, you could be like, you know what? Larry Ellison doing vaporware or Bill Gates saying he's going to launch a Lotus Notes competitor and then doesn't, whatever it is. Like, okay, you know. Life goes on. Life goes on.

SPEAKER_72: In this case, if Jean-Louis Gassier gets, you know, doesn't get the Stanford numbers, does treatment based on this, people could die.

SPEAKER_46: Yeah, and the sort of obfuscation in their responses has just done them absolutely no good. Unbelievable. Every time, you know, the New York Times had a story on Saturday or Sunday.

SPEAKER_60: Yeah. Where it looked pretty clear that Theranos had set up an interview with them specifically to, if not set the record straight, at least try to flip the script a little bit. And it was just the same, that there was nothing, there was nothing there that, I mean, I have to believe the Times would have reported if there was something there.

SPEAKER_220: But it was just, it provided more pile on.

SPEAKER_17: But this is like 23andMe, they kept getting requests for more information for the government and they sat on them and sat on them.

SPEAKER_11: Well, here's the thing. They believe, I think it's a completely different thing because the science behind 23andMe was public, vetted, 100% rock solid. The debate was, should 23andMe be able to give you medical advice based on it? So that would be as if Theranos' blood testing was 100% rock solid and double blind tested. And then they were just telling the consumers who got it, like, by the way, you have, you know, whatever. Or just telling them, like, based on what we see in your blood, you should do this. That's the big debate. Should you be able to tell people in the 23andMe case, you have a predisposition for Parkinson's, these are, should they be able to tell you you have a predisposition for Parkinson's, or should that information go to a doctor and the doctor has to interpret it for you? The FDA, my understanding is, believes you need to go to a doctor and the doctor needs to do that.

SPEAKER_12: In Canada, Mexico, other places, you can get 23andMe and not have a doctor interpret the results for you. This is our patriarchal, whatever society that we've got.

SPEAKER_532: Electoral College for Medicine, yes. Whatever. Anyway.

SPEAKER_12: This has been an amazing episode. We could go on for days. We've said everything. Mass shootings, drones, robotics, self-driving cars, Theranos. And I hope it's not, you know, listen, I don't want anybody here to think I want Theranos to fail. Somebody I was like, oh, you know, you're anti-Theranos. I'm like, well, I'm anti- Fraud. Fraud. And it seems that if the co-founder commits suicide and his wife says he had a crisis of conscience, what more do we need here to know that this needs to be frozen, stopped, and investigated, and absolutely turned upside down?

SPEAKER_48: Yeah. That alone to me is enough. I feel like sometimes, Ari, we are living in some bizarre world where the facts are out there and people refuse to see them.

SPEAKER_36: Yeah, well, you know, if Theranos was a publicly traded stock. It'd be zero right now. What would it be?

SPEAKER_176: Honestly, if it was trading at 100 pre this and this happened, what would it be trading at right now?

SPEAKER_49: I mean, you would have some value investors who see money, who see value in the IP. And so it wouldn't be zero, but it would be slightly north of zero, probably. But you know that, I mean, interesting, I mean, you know, there are no, because it's not publicly traded, there can be no short sellers pumping the story. So the story that's out there is the story that's being reported.

SPEAKER_60: It's not.

SPEAKER_315: Yeah. My logic on this is a really interesting point. See, this is the thing.

SPEAKER_34: I think that in order, if, back to this crisis of conscience theory, if you're a scientist in healthcare, you kind of have that oath. Hippocratic. Hippocratic oath to kind of, it's kind of baked in, right? You're not a doctor, but it's kind of baked into scientists' minds. The Wall Street Journal would only have this information that they have from insiders.

SPEAKER_12: They would not be so voraciously attacking the story if they didn't have it buttoned up, because there would be a huge price to pay on a legal basis if they got this wrong. Even a little bit. Even a little bit. They would be sued, not out of oblivion, but we're talking a very serious settlement, I mean, tens of millions of dollars in a settlement. Against very powerful people who have a lot of money. Therefore, I believe there's an insider leaking all this information, or multiple insiders leaking this information to the press. And I believe that there is more information that's going to drop, including, I have had a person on Twitter telling me over and over again that Elizabeth Holmes, and I don't want to spread rumors or anything like that,

SPEAKER_19: but there was some kind of relationship on a personal nature between Elizabeth and the COO of the company.

SPEAKER_12: Now, I don't know if that's public or not, but that has been speculated now by multiple people hitting me on Twitter, and that there's something going on here, either Svengali or something. I don't know if that's true or not, but if it's been publicly said to me on Twitter, I can publicly say, like, publicly on Twitter, somebody's telling me, Elizabeth and the COO live together. Now, somebody's telling me that publicly on Twitter. That's something that's got to be vetted as well. And then the guy committed suicide. This thing looks really bad. Yeah. And I'm getting these, like, weird accounts telling me information, which usually I discount, but in this case, I don't. Like, I think that there is going to be so much more to the story that the Wall Street Journal is sitting on right now. I think it could be explosive.

SPEAKER_48: The Wall Street Journal does not put its reputation on the line. Ari is shaking his head in agreement.

SPEAKER_86: No, I mean, they've done this before, you know?

SPEAKER_34: Big tobacco. Right? This is like a big tobacco Enron kind of situation, I think. It's all pointing towards that. All right. Story of 2016. Here we go.

SPEAKER_115: What will the story, we'll end on this, the story of 2016 be?

SPEAKER_97: What do you think is going to make the biggest news in 2016? We talked about autonomous cars. We talked about drones. We talked about a lot of different things. What do you think it will be?

SPEAKER_17: For me, it's VR will crash and burn just like 3D TVs did two years ago.

SPEAKER_551: Wow. Unpack? Why?

SPEAKER_17: It's too isolatory.

SPEAKER_551: Isolatory.

SPEAKER_17: Right? You're in your own cocoon. You're cut off from the rest of the world. It's cute. It's clever. It's fun. I love my Google Cardboard, but I hold it up. I don't strap it on. I do it for a few seconds.

SPEAKER_336: So consumers are going to reject the technology.

SPEAKER_17: That's right. Just like 3D TV.

SPEAKER_336: Interesting. Ari, for you, what do you think the story of 2016 will be?

SPEAKER_60: So it's maybe not as exciting a story as I would like to have come up with, but the Facebook monetization machine has been so incredibly powerful because they're the only ones that have really figured out mobile. And they have such a head start over – they're leaps and bounds ahead of everyone else in figuring out mobile advertising that it seems like they can kind of do whatever they want right now.

SPEAKER_46: They can pull any number of – they basically are managing growth.

SPEAKER_60: The number of advertisers that we talk to that want to spend more money on Facebook than they can because the inventory is not there for them, there's a lot of those. And so you end up with a situation where everyone wants to spend more and more money on this platform. There's a level of tension that starts to emerge. You have a bunch of developers that have basically grown up spending all of their ad budget on Facebook. What happens there? What happens to TV? What happens to TV? So I think the Facebook as a mainstream advertising platform that is even – it's hard to say bigger than we think because the valuation is insane. But certainly from a revenue standpoint, it seems like Facebook can kind of pick its number right now.

SPEAKER_32: And I think a lot of that starts to materialize in 2016 as TV budgets start to go on to Facebook.

SPEAKER_11: So my prediction for 2016 story of the year is going to be, neck and neck, Apple and Elon Musk are going to launch new groundbreaking products that we have not seen before.

SPEAKER_203: And we'll see which one is bigger. It's going to be Elon's product. Elon launches something groundbreaking. To compete with Apple?

SPEAKER_557: No, I'm not saying it competes with Apple.

SPEAKER_87: I'm just saying both companies are going to release a product that we don't expect.

SPEAKER_105: And Elon is going to have a mind-blowing new product in 2016.

SPEAKER_330: I base this on him releasing a mind-blowing product every year for the last five years.

SPEAKER_433: You could say that you use the word launch, which is a word that you like. I like launch. And Elon likes.

SPEAKER_303: Elon likes to launch things too. This has been an incredible episode. Thank you, Ari, and thank you, Dave.

SPEAKER_203: Thank you to our, and that's Levy News, L-E-V-Y News, and everybody, of course, follow CNBC, and you'll see me there on Tuesdays on Squawk Alley, 8 a.m. with Jason.

SPEAKER_303: That's it. So what's the vibe there with my performances? Am I pushing a little? Beautiful, amazing. No, no, no, no, not saying that.

SPEAKER_12: I'm looking for candidly. Do people, is there like a contingent? It's like, why do we let that blowhard on? Or he's just a little bit too crazy or just crazy enough? What's the vibe at CNBC with my performances?

SPEAKER_26: I mean, I think, you know, if they didn't like you, they probably wouldn't invite you back. Fair point. You know. Weekly's a pretty good slot.

SPEAKER_49: That's how I exactly feel about this show, too. Yes. There you go. I've only been on twice, so I can't, sometimes it's, you know, I may just be, yeah, I'm a replacement. But, no, I think, you know, it's good. But we're looking for more Silicon Valley voices to come in the door and, you know, show off our San Francisco bureau.

SPEAKER_319: But they're not, everybody's on message so much. Yeah. It's kind of annoying.

SPEAKER_11: Especially when you only have three, six minutes on air, if you're on message, you can filibuster the, you know, hosts with your stump speech. And I watch my contemporaries on there.

SPEAKER_34: And with the exception of, like, Bill Gurley, who brings it, and Sokka, who brings it, I think there's a lot of my contemporaries, our contemporaries, are...

SPEAKER_49: Well, you just named two people who, like yourself, are basically self-employed.

SPEAKER_34: Yeah, that does help a bit.

SPEAKER_19: And you don't, and also, if you don't have a publicly traded stock that you're the CEO of, you don't have to be on message as much. It's true. Investors have a little bit of an advantage there.

SPEAKER_97: But Bill Gurley is great. That's my Bill Gurley impression, which we do at our broker game.

SPEAKER_115: Hey, and thank you, Dave Matthews. GGDM, GGDM. I have no idea what GGDM is.

SPEAKER_17: Gadget guy, Dave Matthews, from my old TV career of being a gadget guy on air. There you go. So, I like the short monikers, and I like alliterations.

SPEAKER_580: And everybody follow New Air, spelt incorrectly, A-E-R. New, A-E-W, A-E-R.

SPEAKER_15: Proximity platform. We just launched something with Lufthansa for children traveling unaccompanied for Christmas.

SPEAKER_17: Oh, how brilliant. So, instead of having to have a cell phone, they can use a tablet or an iPod Touch, and they can keep in touch with family as they travel abroad. But wait a second.

SPEAKER_290: You don't have Wi-Fi on the tablet. How does that work?

SPEAKER_17: It works on the New Air proximity platform. Got it. Winner of 2011 launch, best technology.

SPEAKER_581: What about all these, like, low-energy, like, networks that we've been seeing people talk about that new standard?

SPEAKER_17: They're really not working. The best example of that, we were all at Summit at Sea, Travis and I were in the hot tub, and everyone thought that they could stay in chat with one another, and they all break down. So, proximity is a tough nut to crack, and we figured it out at New Air with our proximity platform.

SPEAKER_303: All right. There you go. There's the plugs. Thank you to Wistia, and thank you to, who was the other sponsor today?

SPEAKER_12: Who was it? Oh, Envision. Ah, yes. When I get off the program, I'm going to be using Envision because I have to look at this new stuff that they're making for me with the new This Week in Startups app that's going to come. All right. Listen, amazing episode.

SPEAKER_19: Thank you so much. It's been a great privilege and honor to do another year of This Week in Startups for you, my loyal audience, the superfans, the Jason Nation, the haters, the jaders, everybody. Thank you to all the people around me who do literally 99% of the work, and I show up late and take all the credit. Jackie, Bryce, Ashley, Luke, Matt, everybody in the organization is working so hard. Jake, of course, new Jake, Master Jake is doing very well. Well, you know, it takes a team to do something as great as this program so effortlessly over so many years, and I've been so lucky to be surrounded by so many great people.

SPEAKER_105: I am in awe of all of you and thankful for you guys and gals for making me look good every week and every day, and that's very sincerely, it's my honor and privilege to work with all of you, and I'm looking forward to a big 2016. We'll see you all next time on This Week in Startups. Bye-bye.