SPEAKER_00: hey everybody all right it is tuesday happy valentine's day happy galentine's day happy palentine's day happy momentine's day whatever it is that you're doing today to celebrate love in the world which you should celebrate because love is great it's all right i agree i'm wearing

SPEAKER_04: earrings the hearts wearing a sweatshirt with hearts i feel like i'm ready this is my holiday

Jason Calacanis: i love it i love it and uh in case you are listening to the show and you're like wait that's not jason because you would definitely never wear heart earrings you are correct jason you never know you never know um jason's at a speaking gig today but rachel and i rachel reporting and i are going to do a little bit of news and then we have a great interview

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Jason Calacanis: sign up now at fitbod.me slash twist all right so it turns out let's let's go into a little bit of news here because there was a little bit of a bombshell report from the washington post yesterday actually i think this published monday but we made we definitely want to talk about it today

SPEAKER_17: um about apps sharing all kinds of our data rachel give us the give us the overview here

SPEAKER_04: if you wouldn't mind so it's it's pretty crazy americans mental health data is being sold from

SPEAKER_21: telehealth and therapy apps and it's perfectly legal even without the person's knowledge or consent i think we all kind of knew that our data was being sold but we didn't kind of know at this scale especially in the health data department and a research from a team over at duke university's sanford school of public policy not stanford by the way it's sanford i thought that was interesting okay they found that i know right they found 11 companies too that they were willing um they found 11 companies were willing to sell bundles of data that included quote information on antidepressants people were taking whether they struggled with insomnia or attention issues and details on medical alignments including alzheimer's disease or bladder control difficulties according to the washington post and if you remember back on episode 1469 we actually talked about a telehealth company called cerebral and basically it's fast and loose prescription method and it was probed by the doj at that time for over prescribing um a lot of prescription medications and some of the data that was offered during this research um was in a format that would have let buyers know information like how many people in a zip code might be depressed and other brokers went even deeper offering identifiable data names addresses and income um and by the way cerebral is not one of these people actually identified um they just said that there were 11 companies that were willing to sell bundles of data right but we right we should specify here that in this case because we had already

Jason Calacanis: talked about cerebral and rachel in particular was like this company seems like they are pushing the boundaries and indeed there have been investigations since but so you could imagine a company you know like cerebral being an example of a company that had collected a lot of data like you would do this uh intake with these companies where they get a lot i don't know if you've ever done any kind of a mental health intake whether it's with an app or even a doctor but it is a very invasive procedure if you will right they get a lot of information about you and one of the things we should point out here is that uh the data brokers offered personal identifiable information names addresses incomes about people they would even show lists called things like anxiety sufferers and consumers with clinical depression in the united states which yikes it was described as a tasting menu for buying

SPEAKER_17: people's health data and rachel one of the things that you found is that this is just 100 legal

SPEAKER_32: right it is it is totally legal um because everybody is like wait how is this legal because of

SPEAKER_21: hipaa and that was definitely my first first thought it turns out after looking into it hipaa only restricts how covered health entities share americans health data and covered health entities by the way that means places like hospitals and doctor's office um this does not protect the same information when it's sent anywhere else so that means app makers and other companies can legally

SPEAKER_00: share and sell data just however they want i mean that's absolutely bananas and it just to me like points to how overdue we are for freaking federal privacy legislation in this country like as soon

Jason Calacanis: as we realized we could apify mental health and prescriptions and now you have all of these companies who are doing some version of supplements right like all of these things that are kind of medically adjacent and are intended to treat the same issues that you would see a doctor about but instead you get ashwagandha instead of you know hormone replacement therapy but then they have all of this information and there's nothing stopping them from sharing it like in retrospect i can't believe

SPEAKER_17: that congress had a big hearing about ticketmaster and not this like what the hell yeah and what do

SPEAKER_21: you think i guess the main problems are with companies actually having this data one example that the washington post used was they were doing more targeted advertising um but is there anything else you think consumers should be worried about with this data um really being handled by people we

Jason Calacanis: don't know about yeah i mean this is sort of like you could imagine that if you have access to this data among the many things you could do is like crappy social engineering to hack people you could pull all kinds of scams you know and also this is one of those where it's sort of like maybe the harm is hard to imagine maybe the harm is like well certainly there's the privacy harm right like let's say you start getting targeted with advertisements for your clinical depression and like someone in your family doesn't know you have that right you're underage or you're a wife and maybe you are somebody who's in an abusive relationship and you sought help for that and then all of a sudden you get like a flyer in the mail that's like being abused and all of a sudden your life is in danger right like the harms

SPEAKER_00: here aren't even particularly hard to imagine but then there's just the sheer sick absurdity of the fact that

Jason Calacanis: we have hipaa rules that are in some cases so ridiculous that you can't even like email with your doctor

SPEAKER_00: yeah on one hand but on the other hand the exact same information is just like packaged up and sold and it's like you're all depressed you could get dropped to buy your insurance if this data got out you could get fired you know or put on some sort of leave like you could be discriminated against at work

Jason Calacanis: because it can comes out that your clinical depression suffer like absurd it is beyond unacceptable

SPEAKER_21: that this is just like la la la yeah this has been an issue do your job right it's been an issue for so long back in 2013 uh pamela uh pam dixon who is the founder and executive director of world privacy forum which is like a research and advocacy group testified at a senate hearing then illinois pharmaceutical and marketing company had advertised a list of uh reported rape sufferers and it had over a thousand names on it and that whole list was going to be sold for 80 bucks and they were selling it um and after this testimony it was removed shortly but dixton even commented now on what's happening with this health data and she said quote um they're building inferences and scores and categorizations from patterns in your life your actions where you go what you eat and what are we supposed to do not live and i think that's a great point um like there's no real way of getting around this and now it's even targeting what we saw during the pandemic as something great telehealth because not everybody can reach a hospital and afford to go into a hospital so it's like what do we do now if these are if telehealth is the option for a lot of people right what are alternatives and it's where the

SPEAKER_00: government has to step in yes a hundred percent i mean we have been like consumers privacy advocates have been asking for federal privacy laws for i think close to a decade at this point like it isn't

SPEAKER_17: it is a truly unacceptable failure of governing at this point get it done get it done and the

SPEAKER_04: government's had also issues i guess like regulating pharmaceuticals coming out of these telehealth

SPEAKER_21: and pharmacies like we mentioned earlier with cerebral um and how they they were getting probed by the doj and i know and there's a bunch of stuff kind of on twitter about this about people lying about um their symptoms and getting medication and stimulants and any presence or whatever online and i wonder um do you think this amount of data that is probably false could impact data brokers and how that impacts like in turn the consumers that are being targeted by these data brokers sure right

Jason Calacanis: potentially like there's a million problems with it is the data accurate is it and then are people going to be wrongly targeted with advertising because they lied about stuff like it's just

SPEAKER_17: it is a huge mess and should probably become i mean congratulations to the washington post for publishing it because it should probably be a way bigger story right and um if you go on the subways

SPEAKER_21: in new york there's actually an advertisement right now for lexapro which is an anti-anxiety medication i believe also a antidepressant and it's by a company called hers hymns and hers i think yeah um and it's really interesting seeing that marketing out of when i was on the subway i was like i wonder if this is one of the companies um was able to get data and target it in like this certain area because there's more people that um suffer from anxiety so interesting to see where this

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Jason Calacanis: too good too good to be true let's uh let's talk about this interesting development in ai accuracy yesterday on the show of course we actually in a conversation about you know how to moderate this technology and how to deal with the content we made the point i made the point that this

SPEAKER_17: is very like alpha level tech that we're sort of presenting as though it's ready for prime time and now here we have a story take us through it if you will a story about how it's super not so i'm sure

SPEAKER_21: remember last week during google bards unveiling it recalled false information about the james webb space telescope and that was super embarrassing the mistake caused the stock to tumble and wipe out 100 billion dollars worth of market cap so that was a super expensive mistake and now um a report and a blog post from this morning suggests maybe bing's new chatbot isn't accurate as everyone thought it was so i guess it's not just google during the microsoft event last week the company shut off new capabilities in the edge browser and included a demo where bing's ai could consolidate the key takeaways of gaps third quarter results as well as compare the numbers to lululemon's quarterly results um but the

SPEAKER_72: demonstration you know we thought it was short and sweet and accurate but it turns out it was not

Jason Calacanis: turns out it was not there was a blog post uh that went up today a dkb blog shout out to dimitri baraton and we hope we're saying your name right um wrote a post breaking down some of the information that the ai bot presented that was inaccurate and in some cases apparently invented which is kind of bananas um so a couple quotes from the post he said bing ai starts off fine with a statement that is totally correct probably a direct copy paste from the financial document and in that case he's saying you know gap inc reported net sales of 4.04 billion up two percent compared to last year and comparable sales were up one percent year over year then the chatbot uh reply went on to say gap inc reported an operating margin of 5.9 percent adjusted for impairment charges and restructuring costs

SPEAKER_00: and then baraton reports no 5.9 percent is neither the adjusted nor the unadjusted value this number doesn't even appear in the entire document it's completely made up so producer brian went and

Jason Calacanis: checked the actual gap earnings report and found that yep uh the operating margin including impairment is 4.6 percent and excluding impairment is 3.9 percent none of those numbers are 5.9 percent

SPEAKER_78: so it looks like my job is safe for a while though i think it probably is producing jobs that is good

SPEAKER_80: definitely not right like ai and that is not the only thing that it just made up like it said the

SPEAKER_00: bot presented a diluted earnings per share of 42 cents adjusted for impairment charges restructuring costs and tax impacts according to baraton again this number is fabricated and does not appear in the

Jason Calacanis: earnings report the adjusted diluted earnings per share are 71 cents and the unadjusted is 77 cents

SPEAKER_88: and again the bot said 42 that's like it's just bonkers and there are multiple examples like this in his

SPEAKER_51: blog post where it's just like whoa have you used ai yet where it has given you a super wrong like data

SPEAKER_21: point because i have i was on notion actually and what i was doing is i was taking bullet points for my resume and saying hey can you write these in paragraph format so i can put them up on like a personal website or just do something else with my information and it came up with like data points that were just pulled out of the blue on when during the notion ai um uh use case and i was like where is

SPEAKER_93: it getting this like have you have you had any of these experiences like using generative ai to try to

SPEAKER_27: like create text no and i guess i'm glad that i am weirdly like too busy or too lazy to go try to

Jason Calacanis: like i'm always just like i'll just do this thing and i haven't tried to do that yet but now i'm

SPEAKER_00: not going to i mean and this is like i think what probably more and more people are going to discover because you only have to get burned by this once or twice and if you were like let's say you're a

Jason Calacanis: financial reporter and you pulled numbers from chat gpt or bing right open ai like or whatever google's barred and it just literally like the during this demo the bit of the edge demo the bing demo they compared gaps data to lululemon's earnings and it the bot reported that lululemon's gross margin

SPEAKER_00: was 58.7 and the gross margin reported in the earnings statement was 55.9 58.7 does not appear

SPEAKER_04: anywhere in the document that's crazy pulling numbers out of thin air and producer brian made

SPEAKER_19: a good point and he was like ai ai is like the new nft it's overhyped um with a really poor user experience what are your thoughts on that i mean i think the user experience is actually probably too

SPEAKER_00: good okay yeah it's too good in the sense that like if something just confidently gives you if it's like who like who in their right minds and clearly this is why this happened like it's easy to be like

SPEAKER_17: was maybe you would go okay was the james webb telescope the first to see an exoplanet right like

Jason Calacanis: when i went to journalism school one of the things that we was drilled into our heads was to always be uh wary of superlatives so when you hear like first best greatest any of those exclusive only those are words that you always want to double check they should ring an alarm bell inside your brain

SPEAKER_17: because it's like you will always find a case of something else right it's very rare for something to truly be the first or the best or the greatest or the only but like 57.8 cents you know diluted

SPEAKER_00: earnings per share or whatever you're just like yeah that sounds i mean what would make you think i should go check that so that's a case where the user interface is perfect it's like here's here's

Jason Calacanis: some super legit sounding information and i got it for you in six milliseconds and you're like amazing

SPEAKER_32: but then it's wrong yeah and it's crazy how it like started off i guess like chat gpt and everything

SPEAKER_19: was super open and others more paywalls and stuff being opened up but there are other startups and other companies coming out that don't have paywalls so and unlike nfts nft is where there was always a kind of a barrier of knowledge or a barrier at least financially chat gpt it feels like every time somebody tries to put a barrier on one product or generative ai in general every time somebody tries to put a barrier on one product another one pops up and says hey it's free at least for like this

SPEAKER_106: limited time and everybody just starts using that one until the next one um comes up and it says it's free and the first one they used puts up those barriers again totally yeah i mean i think the

Jason Calacanis: takeaway here and and really everybody really should go read this blog post it's it's quite shocking the degree to which huge chunks of i mean and again like let's not over let's not skim past the part where google lost a hundred billion dollars in market cap over putting out an ad with inaccurate

SPEAKER_37: information in it that somebody happened to catch microsoft has been booming soaring right everybody's like microsoft wins google's not ready for prime time and in fact microsoft's tool was literally inventing

SPEAKER_00: financial performance yeah and that's not all that's in the blog post he basically fact checks almost

SPEAKER_113: every part of that bing demo and is like nope it's pretty sure brian went and fact checked him yes so we have like so many people fact checking be like wait a minute wait a minute something sounds

Jason Calacanis: fishy maybe maybe the upside here is that human fact checking will start to have more value but

SPEAKER_17: yeah do not like microsoft really got away with one here and the real takeaway should be is that like

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SPEAKER_19: house of macadamias.com twist and over under five years when will it be ready for prime time

Jason Calacanis: i mean honestly i've been using the self-driving car analogy which is like everybody i was at the darpa the second darpa grand challenge in 2004 i know that is so sick very old it was a really fun

SPEAKER_00: day in the desert but that was 2004 and they were like we'll have self-driving cars on every road by

Jason Calacanis: 2010. wow and here we are in the year of our lord 2023 and like amazon i think just today launched some self-driving taxis with like really really limited rollout and we're like still so far from

SPEAKER_00: that technology and if you assume that actual ai that is accurate and trustworthy and safe and all of those things is in the early innings i'm taking over okay i'm taking over on a decade even oh wow okay

SPEAKER_19: yep i the only thing i can think about where it's under would be education just because i have college age siblings and even if it's not for doing something like writing an essay if they have a prompt it at least gives you like an outline and so i do wonder about that use case but that's really been the only one that i've seen and i guess small copywriting like over um i've seen a company called tribe scaler he was actually an okay boomer alex banks great company where they made short tweets and

SPEAKER_133: i was like that is that is smart but i haven't seen anything like long form yet where i'm like that

SPEAKER_00: seems like a great idea right i think it'll be an assistant yeah in some ways but it's it's an assistant that you have to monitor very carefully it's like having a toddler i like that i like that

SPEAKER_19: it's like an assistant that's actually so true that is a good that's a good analogy i i guess

SPEAKER_138: there's another um so right now producers are safe but ea's you know keep an eye out yeah i mean

Jason Calacanis: the fact that google can call it like its chat bot can call and make you a restaurant reservation and then you know that you have that like that's true that's a very scary one but still it's not even as good as that it's like it's going to be an extremely narrow use case yeah i predict for a very

SPEAKER_00: long time yeah definitely um all right next up we have an awesome interview uh jason talked to

Jason Calacanis: ivp partner tom levero and if you are a listener to all in you heard a reference to this or maybe you just saw this thread on twitter tom's thread about a mass extinction event coming to startups it went viral recently and so jason was like get them on and they had a apparently quite interesting conversation about tom's startup and vc predictions for the second half of 2023 and early 2024 you might just want to like steal yourself for this conversation um but it's a great it's a great

SPEAKER_145: interview it's coming up right now all right everybody uh last week a twitter thread went viral

SPEAKER_146: about a mass extinction event that would happen to startups late in 2023 and into 2024 you might have heard

SPEAKER_145: me talk about it a little bit we referenced it on all in uh last episode so i thought i would invite the author on to this week in startups to talk about it tom levero is a general partner at ivp institutional venture partners has been there for eight years welcome to the program tom thanks for

SPEAKER_66: having me all right so you wrote this tweet storm did you expect that this would get so much attention

SPEAKER_152: number one to be honest um the amount of attention it's gotten has been a pleasant surprise but that was also kind of the point to get the founders advice out there and and hope folks paid attention but

SPEAKER_154: yeah i think it struck a chord we weren't really fully expecting all right yeah 2.7 million views uh in

SPEAKER_145: less than a week here uh yeah in exactly a week actually uh so you said prediction there's a mass extinction event coming for early and mid-stage companies late 23 and 24 will make the 08 financial crisis which we live through uh look quaint for startups below i explain why and how it will start and offer detailed advice to founders surviving the looming die-off uh so let's start with why is this going to happen because the prevailing wisdom is a ton of dry powder was raised during the up market 2020 2021 2022 not so much but we are told there's this massive amount of dry powder wouldn't

SPEAKER_152: that dry powder go right into these startups it's a great question and to me it's kind of like when you hear the old adage um don't make hope your strategy yeah i would say don't make dry powder your fundraising strategy okay um and what i mean by that is this is kind of the point of the thread the world has changed and i do think there's going to be an extinction event this is not an asteroid hitting earth though this is climate change it'll creep up on you very slowly and quietly and if you don't notice it you could get burned and so you know what what happened well you know a lot of young younger founders entrepreneurs and vcs alike the last couple years and then beginning of 20 just were very atypical it was like the laws of physics were suspended you saw public companies trading at 50 times revenue lots of private companies getting valued at 100 200 times revenue it's like the laws of physics have set back in you look at the valuations of public companies and when gravity returns things fall and so that's where we are now and it's not like the economy is in bad shape it's in fine shape it's just that when you go back to normal times there's this hangover effect and that's what folks need to be careful of and i think there's some knock-on effects from a lot of capital having been deployed the last couple years there's going to be less capital in a pickier fundraising environment

SPEAKER_145: ahead okay and you point out correctly many startups they did uh what are the what's the expression make hay when the sun was shining they raised intelligently in 2021 uh and maybe even in 2022 when the window is still open a little bit and they raised typically a startup raises 12 18 months i think we would agree and some of them made cuts and got that to maybe two years of runway so there's many startups here sitting on two years of runway as of 2021 but that means in 2023 we're going to see them arrive and you point out that january adventures said for did a survey of 450 founders and four in five of early stage

SPEAKER_146: companies said they had fewer than 12 months of runway um and so this means a flood of folks will start raising at the back half of 2023 based on this sort of multi-signal data that you're you're you're uh picking

SPEAKER_169: up on correct that's correct i think it's going to be a busy fundraising uh time the back half of this

SPEAKER_152: year and next year and we're already seeing it begin to tick up just in the last few weeks um and we're seeing more structure on deals we're not imposing that structure but hearing about structured deals getting done down rounds it's all very quiet it's on the hush but it's beginning to happen and so this is kind of the you know the quiet before the storm so to speak let's talk about

SPEAKER_145: structure because many of the founders listening to this weekend serves may not know what you mean by structure structure generally means a liquidation preference or a cram down round or warrants why don't we explain mechanically maybe you can give an example of something you've seen but obscure it obviously to tell us the companies but give us an example of structure being put into a deal and how that affects say founders and employees at a startup yeah so um typically when venture

SPEAKER_152: investors make an investment they have a what's called a one times liquidation preference which means um if the company sells for an amount where it's not you know a a huge number they're not um converting into their ownership percentage they're just getting their capital back and so it's sort of a safety mechanism it almost makes the venture investment debt like in in downside scenarios um and what you see begin to happen is in good times that's the only the only feature is that 1x lick prep that's considered very plain vanilla run of the standard totally standard no

SPEAKER_145: lawyer is going to tell you take this out where this is non-standard uh founders attorneys uh venture capital firms attorneys okay yeah 1x participating uh or 1x liquidation preference not participating

SPEAKER_149: preferred but just a 1x reference okay yeah that makes sense and incentives are pretty aligned at

SPEAKER_152: that point but what happens when companies raise a lot of money and then maybe the price goes down where they the entrepreneur just loses leverage um especially in times like this uh entrepreneurs will see term sheets that have 2x liquidation preferences meaning you know if they put in uh 5 million and the company sells let's say for more than the capital invested in the company but less than the price um you know on the term sheet less than the valuation that investor doesn't get their 5 million back they get 10 million back so they're earning a return in this sort of downside scenario and it can get worse than that um you can have participation features which means basically it's sort of an equity like kicker for for investors they get extra um so extra returns after you subtract out uh the liquidation preferences and you can have just funky things like blocks on different parts of the business sale of the business just the investors exerting more control um over every

SPEAKER_169: aspect of the business once once that sort of negotiating power turns around yeah and so this

SPEAKER_145: liquidation preference it was designed to preserve the downside of oh hey the founders sell the company for only 5 million we put i don't know 3 million into it in a seed round okay we get our 3 million back there's 2 million left for the comment to split up um which kind of sucks that means 60 went to the investors and maybe the investors had only bought 10 of the business but because they get that out in a short sale they get the majority of the money just like if you sold your home and it didn't appreciate the the mortgage you would have to pay back is there and then there's this concept of participating preference which is just a another way of saying you get your money back and you get your pro rata you get your percentage ownership so all this funkiness you're starting to hear and i actually had the first example of it just last week where somebody was trying to close in on a company and just buy it for a dollar and basically foreclose on it um and and that i haven't seen since yeah the dot-com era i didn't even see that in the 2008 era so we're starting to see these funky things

SPEAKER_146: get proposed or even some deals get closed with some of this funk in it huh yeah and you know it's

SPEAKER_152: unfortunate because what a lot of structure can do is create disaligned incentives between classes of investors say between your seed and your a and your b um and between the founders and so many vcs are hesitant to use a lot of structure and and are hesitant to do down rounds because they don't want to upset entrepreneurs or just get themselves into complicated situations like that and so that's just another reason why the sort of notional amount of dry powder is less than it appears because vcs are trained to generally by and large keep things pretty clean and incentives aligned and psychologically it's harder to invest in a company if you know um they're in a tough spot than something that's just

SPEAKER_166: clean and up and to the right okay so now this requires a little unpacking venture capitalists are humans

SPEAKER_145: in a way that's what's happening to the founder and the founder of the founder of the founder and we've had this founder friendly environment and the founder last valuation let's just pick a number

SPEAKER_191: here was a hundred million and they had a million in revenue in today's market even if they hit two

SPEAKER_172: that hundred x no longer applies they're not worth 200 million on two million in revenue even if

SPEAKER_191: they doubled their revenue since their last round in 2021 that two million today might be worth 10 times that and they're a 20 million dollar company and if they're a 20 million company and

SPEAKER_145: they've raised 15 million that overhang is going to lead a venture capitalist if you were to look at that deal what would you think you like the company you like the founder or let's just say you love the founder and you love the market and you love the fact that they doubled revenue in a challenged market

SPEAKER_149: but they have a hundred million valuation and there's been 15 million put into the business and you

SPEAKER_193: valued at 20. what are you going to do as a an investor tom how are you going to look at it what's

SPEAKER_184: your internal dialogue going to be so this is where it gets it gets a little thorny um and i think it

SPEAKER_152: comes down to the investor's conviction um if you absolutely fall in love with an opportunity a market a company and of course and most importantly the founder you'll figure out a way to get it done um i think the trick is there were uh some vcs out there trying to put a lot of money out very quickly there were funds getting deployed in six nine twelve months um now as a vc if you're you know maybe a series b or c investor like myself you normally do maybe two three investments a year um we kept that pace the last several years there were folks doing 10 investments a year you have to imagine if you go

SPEAKER_169: from doing 10 investments a year back to two or three some of the ones where your conviction was a

SPEAKER_152: little more marginal you don't do that deal and that's where i think the ones that are down are going to be harder for a lot of folks in the venture industry to do um i've only done two or three deals a year for you know basically my whole career um so i hope and i and we have a pretty good track record these you know last several quarters in 22 and 23 of announcing deals and getting deals done where we have high conviction but it's hard it's harder in a down environment um and that's where i think a lot of the the dry powder you know begins to sort of sublimate and go away and and some of the deals um you know the bar gets higher for a lot of firms as they slow their pace to a normal

SPEAKER_169: venture pace of two and a half to three and a half year fund cycles okay so this is critically important

SPEAKER_145: people were going at a pace that was unsustainable venture capitalists and some of the public market investors who dipped down into our world they just started sprinting and they were running at a breakneck speed they're doing a deal a week a deal every two weeks they're racking up 50 deals a year sometimes two deals a week sometimes they're barely meeting the founders they're just putting money in after a basic diligence and talking to the series b investors or series a investors and just throwing an extra 10 or 20 million on top they're gone they're not on the board they're not company builders to begin with uh they were making a late stage bet and trying to deploy capitaling and they were even

SPEAKER_199: outsourcing their diligence right so um you know in in basically a very scaled way they were giving giving this diligence over to us venture capitalists and saying we assume you did with the work now

SPEAKER_145: those people are not going to even pick up the phone are they they're just they don't even have the dry powder themselves to invest or do bridge rounds so what what happens to that relationship that a founder

SPEAKER_200: might have had with some let's call it what it is people who got excited about venture but maybe just

SPEAKER_169: for a year or two yeah you know the industry term is venture tourists uh that i've heard quite a few

SPEAKER_152: times and i think um it's you know during the tough times that the tourists tend to leave um but that's why you know it it's an adage in venture but like your board is so important um and the quality of your investors is important and i think there is a bit of a you know a deal with the devil so to speak last few years where folks took money um from lots of different sources they knew that might not be around forever um but the incentive was probably to take it because you know when it rains you turn your upside your umbrella upside down and you and you take that capital um but you know now it's the sort of other edge of the of the the sword there where the downside is they might not pick up the phone i've heard from some of our founders where they've texted some of that type of capital and they

SPEAKER_149: literally don't get a response wow these are people on the cap table and they're not even minding the

SPEAKER_152: store or the investment incredible yeah it's it's unfortunate but you know that's where i think founders like if you're thinking about as a founder what can i do better how can i avoid these sorts of situations um you know frequent communication with your board members and your investors is really critical um you know there are probably some founders who thought they didn't need to communicate with their found uh with their venture investors over the last couple years now is a good time to change that monthly communication um is best quarterly can work um but the better you know insight and the better relationship you have with your founders the more or with your investors the

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SPEAKER_212: m-e slash t-w-i-s-t for 25 off there is a where there was uh some advice going around to founders

SPEAKER_145: that governance was not cool board meetings not cool don't need to do them control provisions you know that venture investors were asking for also not cool uh and maybe that comes from uh you know a past where maybe venture investors had a little too much power pendulum was swung another way and founders were replaced uh obviously we know the history of that in silicon valley but make your best

SPEAKER_191: case for when governance is a great thing and governance can help in times like this absolutely

SPEAKER_152: um i mean first of all i think hearing from founders is really the you know hearing it from the right source uh if you look at my twitter thread the other day some of the founders i work with retweeted it folks like uh arman dadgar the co-founder cto of hashi corp um i think when you have a really engaged board like dave and arman and mitchell uh from hashi corp they will work with you through the hard times they will be there for you giving you good advice because it's their job and they have a sense of urgency a board will ask tough and uncomfortable questions which is tough and uncomfortable but the good news is it makes you stronger and we've noticed that the best founders tend to opt in to having things be more under a microscope they want the you know amazing vp sales who's going to push back on them at times and the cto who's not just gonna you know do as they're told but ask good questions and so um i think it's the process that dialogue with a board that makes a company better and it's not just about having brand name board members and it's not just about like you know legal governance it's really just about having a relationship having people you can bounce things off of here and outsiders perspective and the best boards are really good at asking hard questions and also being influential with a founder you've also started to give some advice in the tweet

SPEAKER_145: storm uh you gave seven uh prescriptions here number one raise money now before the great great flood later in the year this makes sense and i should say if you raise now and you don't get the you don't close the deal at least you tried and you're not part of the deluge that might overwhelm investors at

SPEAKER_152: the end of this year maybe expand on that a little bit yeah um it's a little bit of the hope is a strategy thing that i'm trying to combat with that piece of advice which is well you know we'll hear from founders hey maybe the economy will be better uh in six months multiples will go back up yeah but multiples could go down further you could miss a quarter yeah vcs could be more scared deploying slower there's a lot that could go wrong and if you go out now and you get a frosty reception you can always go back out again go to a broader set of investors go to strategics whatever it is you you have more time and if that fails you have a chance to either cut burn again uh you know potentially try and sell the company the the most dangerous mistake is to make it a high wire act and just really be out there with without much room for error where if you can't raise fund uh your funding in a given period of time then you're barely making payroll and you'd be surprised how often that's happened now i haven't seen that in several years but after the dot-com boom and the great financial crisis this was something that was pretty commonplace in venture where you had investors bridging companies that have three weeks of payroll together and those bridges are almost always you know throwing good dollars after bad meaning it's not really funding the company enough to get them to a substantial milestone or even to a sale and so you back into it and you say we need to raise capital at least i you know i say a minimum of six months before you need it and and that means starting the

SPEAKER_169: fundraising process probably nine months before you need it making a list of targets starting to set up

SPEAKER_145: the meeting so if you've got you know 12 months of runway right now in the next three months you're going to want to start this process up you're not going to want to wait six months or nine months for the market to get better that's just not worth it you need to have that runway when you only have a a couple of weeks of runway what does that do in terms of vcs in this kind of market even being

SPEAKER_199: able to get consensus inside of their firms yeah i mean once you're i think within under that three

SPEAKER_152: month mark um the clock is ticking first of all just from a you know negotiating point of view i would counsel our ceos hey you've lost leverage because they know the longer they draw out this process or the longer the process gets drawn out um the less cash you have as ceo and the less negotiating leverage you have so that's that's thing number one number two um if you're out there you you just you have to

Chamath Palihapitiya: find chemistry with with venture investors you have to find investors you really like this isn't just about the capital and that's a process that doesn't happen over 30 minutes in zoom you have to take your time on this stuff um and you know what a vc might do in a partnership to you know directly answer your question is they may say you know hey i really like this company and somebody asks

SPEAKER_152: how much cash do they have you say two months of cash another partner may ask well does that mean every other vc on earth has passed on this company that's a you know that's a tough dynamic especially for a younger investor who's maybe newer to their firm to answer like why why did the ceo let it get to

David Friedberg: this point um so if that's a legit question down to the end you just say hey what is this person's judgment if i do give them 18 months of runway are they going to do this again yeah why weren't they

SPEAKER_152: cultivating relationships with vcs for the past two years you know why hadn't they found people they clicked with and venture firms that really got excited about them and you know why did they not cut burn earlier it just it begins to introduce all these questions that you're now in the wrong territory you want the vcs excited thinking about the upside you've got the venture investor thinking about all the potential downside within three months all right your second prescription which

SPEAKER_200: you just uh teed up was hey listen you did your layoff you cut burn great yeah maybe we cut it even

SPEAKER_145: more you got to get rid of good to have everything's got to be focused on the core that's super important point three you want people to focus on survival not valuation why don't you unpack that and how sometimes people get themselves into a little bit of a trap anchoring off the last price or what the market looked like last year as opposed to maybe what it looked like five or ten years ago yeah so

SPEAKER_152: this is human psychology at work it's what's called anchoring bias um you know we often believe something is worth the last reference point regardless of how the world or the environment has changed around us um and listen there are good reasons why it's nicer to raise up or flat rounds versus down rounds in venture down rounds can be messy but the truth is at the end of the day public companies as i said in the thread their stock prices go up and down you know look at facebook look at google amazon these largest market cap companies on earth can fluctuate wildly within weeks months um startups seem to think if their valuation fluctuates a little over a year or two that you know it's absolutely devastating and the truth is no if you have cash you're still in business even if you have to take a lot of dilution and and it's complicated because of a cram down or investors losing some of their money because they're the the next round is at a lower price fine so be it you know what investors lose their money too when when the price of a stock goes down it happens very quickly and nobody really talks about it i think culturally ceos need to understand um you know it it is a little it will feel um emotionally hard but at the end of the day it's the market that sets the price not the last round and so you know what i advise founders is sometimes listen it's a clear case you're going to raise an up round or you've justified a flat round um other cases it's unclear is this going to be a down round is this going to be a flat round ceos almost never assume it is they say oh it's good it's going to be flat at worst right i think that's when you let the market decide you don't say you don't go out and say hey this is the price unless you have supreme confidence i think you say hey we're raising this much money because it's the right thing to do for the business and the way you get

SPEAKER_145: the price up is you get multiple bids ah so let people put a price out there and when you have multiple people bidding then you say hey listen you came in at 50 this person came in at 60 and another person came in at 80 to the two people who didn't hit 80 is this something maybe you want to reconsider your offer and feces take that well that means okay yeah we did diligence here this is a real company and anchoring is one of these what we call in the business cognitive biases this is something you and i do and a lot of folks who are making investments we look at our bias right we look at hey when are we thinking straight when are we making good decisions because we're placing large bets maybe talk just a little bit about the different cognitive biases that we face as investors

SPEAKER_152: you must have thought of many of these over time yeah um there are you know a number of biases that venture investors can have there's some of these cognitive biases like a recency bias like you you know heard about something recently an availability about availability bias which means um maybe you uh see it more often or more easily like a consumer investment might seem more appealing especially earlier in your career versus some deep infrastructure type of stuff that nobody's talking about and then an anchoring bias um certainly comes into effect and that that cuts both ways right we can um as venture investors we can be anchored by the last round in a negative way or a founder telling us hey it's got to be at least x but it's kind of always trying to ask yourself why do i believe something um and evaluating it uh that you know as analytically as you can that helps

SPEAKER_145: overcome these biases yeah and the anchoring one you see it all the time people will offer you an

SPEAKER_149: 800 wagyu steak um and you're like no i don't want the 800 kobe steak but yeah i would love the tomahawk for

SPEAKER_152: 150 let's go with that and and you know the the venture version cheap right hey this ai company just raised at a billion and they didn't have revenue and so you know we're worth at least 750 to a billion right like that's a different that's a different company you know and maybe that round was three months ago or six months ago um i think that's one of the most common forms of anchoring we see for for entrepreneurs is another company or a friend perhaps raised a while back and and that's

SPEAKER_169: sort of the target or the bogey that the ceo has in their head all right number four on your list for

SPEAKER_145: mid and later stage startups bring on seasoned operators in c-level roles and for some companies that scale might even mean bringing in professional ceos why is this so important in a down market and

SPEAKER_169: in the fundraising process because of the focus on unit economics your growth's going to come down

SPEAKER_152: as you get more efficient uh and cut burn um so what investors are going to really evaluate is well if we put more capital into this business could i imagine it growing at a faster rate or potentially keeping its current growth rate for a really long time because the inherent unit economics of the business are so good bringing on operators is really a way of saying you know experience hopefully the right type of experience can help you achieve that operating efficiency because they've learned some of the hard lessons they're not going to waste you know an experienced cmo won't waste a bunch of money for instance in you know uh poor performing customer acquisition channels they're just going to hit

SPEAKER_169: the efficient frontier as soon as they come into that role and i think that extends to all roles

SPEAKER_145: which leads it to your fifth point trade better you know economics for growth let's give an example here what's an example in this last 14 year bull run where people were trading growth for unit economics and now we see maybe they've got to change that and go for unit economics over growth i have a bunch of different ideas here i'm sure you have some at the tip of your tongue so i mean this is what's going

SPEAKER_152: on in the boardroom of nearly every series b and later company certainly that i'm involved with which is you're saying okay well we could burn i'm just going to make up some numbers here you know we could burn 65 million and uh you know we're going to grow 90 this year but what happens if we wanted to burn less and we wanted to burn 40 million what would the growth look like at that pace or 30 million is that an acceptable trade-off okay instead of growing 90 we're going to grow 65 but be efficient and our magic number on sales is going to change from x to y um and then you know some deeper questions become well what are the benefits of growth is this a land grab is are we early to the market is there a strategic reason that we want to get out there and get customers before others almost all founders and boards think they're in a land grab situation but it's not always a land grab um it can be really hard to quantify why it's important to to grow a little faster this year but i i think um you know the truth is in a time like this you're being comped against and i realize this is like later i think maybe the next tweet um but you're you're really comped against your sort of peer group and if in 2021 at your scale you know growing a hundred percent was the benchmark 2023 it's probably not growing a hundred percent right forecasted growth rates for companies are coming down and so you get a little bit of a gimme from venture investors at least the savvy ones are saying you know what that's okay we see you're growing a little slower but you're pretty efficient um and we respect that

SPEAKER_145: right now a lot of us are concerned about if we were to use a metaphor people finishing the race in one piece and you know if you're going so fast that you're going to flip the car and i'm talking about growth you know it's and it's unsustainable man it's very hard to change that inside of an organization if you look at the dogged fight lift sidecar and uber went through doordash uber postmates

SPEAKER_199: and a you know another dozen forgotten delivery services for uh food you look at that competition

SPEAKER_149: they were all being judged in a zero interest rate environment when there's plenty of money by their top line growth you said it before hey what is the price to sales ratio here how much was the total sales and let's give them 10 times that now everybody's going to go and hey is can airbnb actually be profitable on a unit economic basis each room going to be profitable and that is hard to change maybe we can talk about how hard that is for an organization just on a

SPEAKER_184: a culture basis to change that thing yeah um i think that's right especially the part about it being

SPEAKER_152: cultural um if you tell your employees hey um you know set set the speed to maximum you know on the accelerator like let's let's do everything as quickly as we can get to market with the product sooner more features as big a sales team as possible um you're conditioning your employees to think that's what matters that growth at all costs is what matters and so you know i'm on a board of a company uh that's in education called paper um and uh the ceo their co-founder phil cutler great founder and he basically had a meeting you know told employees recently hey we want to make sure you're on board like with what we're doing today um it's about efficiency and growth and it's not growth at all costs um and and phil gave this speech but every single one of you know my great ceos is giving this speech internally today making sure it's not just about changing the expectations that hey what we care about is being good stewards of capital about product market fit happy customers all those great things um it's about making sure that your employees are still on board with that there's going to be employees who you know we're there for the good times and they and you know they might not want to opt into this next harder chapter of life um for all companies um and you know we saw this certainly uh at coinbase um rose uh a board observer there during the crypto winters a lot of employees opted out and listen crypto is an extreme um you know people wanted to get in while the money was good and things were up into the right and then you know as soon as some doubt seeped into the market a lot of people um you know decided hey this is too much for me but like sometimes you learn from the extremes and crypto is an extreme but i think that also happens day to day in regular startups where you have some folks who are in it because they think the value of their options is going to you know 5x in a year and as soon as that stops happening you know they were just there for the money they're they're not bought in and so i think it's not only a good time to change the um the goals and and and set and set that up for your employees and tell them what matters but also make

SPEAKER_145: sure they're bought in missionary versus mercenary is how it was taught to me early on you know there there are people who are mercenaries they'll come in they assume this is going to be the next uber airbnb coinbase whatever it is they want to get that four-year grant they want to hit a big win they did it before because they were at google or facebook or both and those folks if they aren't true believers when you know you hit a bump in the road and listen airbnb uber doordash coinbase all

SPEAKER_152: companies hit bumps in the road literally all companies like name one company that didn't hit a

SPEAKER_266: bump in the road at some point and it's it's only because you didn't know about the bump right like

SPEAKER_199: every disguised it yeah exactly facebook mobile and vr ar right and they've had to survive both of

SPEAKER_263: those missteps right every single company it always seems smoother from the outside and and those are

SPEAKER_152: tough points for founders they're tough points for boards um but you know those tough moments like listen i don't want my thread to seem all doom and gloom because it's not like maybe we can flip a little bit to talk about some of the bright side like the yes positive aspects of all this let's

SPEAKER_145: talk about that what is the positive here for founders who are missionaries well you know i think

SPEAKER_152: this is like when this is the the cauldron or you know that that sort of forges a lot of startups because they have to refine their product market fit um competition tends to go away it's no longer about a race you refocus on what your customers need on the core product um and honestly this is like the times that i think you know the best startups can make hey they their customer acquisition costs are lower you can hire better engineers you can hire better talent because not everybody's you know obsessed with changing jobs every 12 months and optimizing pay they begin to optimize sort of you know more globally around everything they're looking for in life and passion um and so you know there's all these reasons that like if if you're really committed to your startup um you know this is the best time by the way like for a regular rank and file employee getting promoted easier if you survive the cuts getting promoted is easier your startup comes out stronger they're not burning as much what does that mean you're not taking as much dilution from raising capital and from option grants and so from

SPEAKER_147: the from the founder to the vc to the rank and file employee like well if you can survive these times

SPEAKER_273: these are some of the best times to grow a company yeah i have to agree and you know this is where uh the people will get the people who you know put their heads down and do the work are going to get

SPEAKER_145: rewarded they're going to get another stock option grant the companies uh are going to reward the employees who remain even after the riffs and the layoffs and you're going to get more experience and you're going to get more responsibility and that's really what it's about when you're in the startup game how much can i be responsible for for the right person for the person who's dedicated how much can i be responsible for how much of an impact i can make if the company's main product is raising the next round that's really not great for the employees then they're just doing all these projects are working on 17 different things it's really about that core business and making it profitable just think about all the talent that's going to be available okay maybe you could speak to just how challenging it's been to get great talent on a team because of the number of teams and the fact that a startup is being asked to compete against google amazon apple and alphabet for an employee i mean these are places that have essentially money printing machines they can make

SPEAKER_149: any offer they want and that really doesn't work in a startup does it yeah if you look at the board

SPEAKER_152: decks for just about any of our companies uh you know 2021 you'd see that you know in this sort of a lot of times founders use this green yellow red um you know uh metaphor for what's going well what's not going so great and what what needs to be fixed and in the red every single company for the last few years had talent um attracting top talent um not churning talent not losing talent to to the large inner you know large cap internet companies that you mentioned um and lo and behold um just in the last you know few quarters all of a sudden that moved from red to yellow or yellow to green in many cases where all of a sudden they can meet now they're hiring fewer people so the goals are less aggressive but they're they're hiring you know on average i think more tenured more talented people for for the same

SPEAKER_273: role and compensation well and there you have it you know if you have 10 people fighting it out to get

SPEAKER_145: this one position the chances of you having a true all-star take it go way up as opposed to hey you're trying to you found somebody and they have 10 offers it's literally night and day and the same thing is happening i think in terms of customer acquisition cost people are going to be able to spend marketing

SPEAKER_152: dollars more efficiently no i certainly hope so um you know that's one of the trickier things especially on the b2c side um with the changes in apple um you know that affected facebook for ad targeting um and and the ability for folks to opt out there was a you know i think a massive change that's that's gone on in the in the past uh year or so um and i think folks are still trying to recover there so i you know jury's a little out on that side on the b2b side it's more straightforward i think competition's receding and and cacks will or recover a little bit um better in terms of cacks going down um and i hope that's true on the consumer side i imagine um anybody who had a covet tailwind and now is facing a covet headwind i imagine those cacks are going down but there's some more

SPEAKER_145: complications on the consumer side for sure as we wrap here what's the ideal stage uh for a company to approach you for investment for founders and what are the what are your uh personal signals that hey this is a match for me as an investor and somebody i want to partner with for the next decade

SPEAKER_152: to build this business yeah great questions um we are very focused on series b's and series c's which means we like meeting companies right after they've raised their series a we want to get to know them you know months if not a year or two before we're funding them um i want to develop chemistry rapport with a founder i don't want to meet a founder you know when he says hey we're kicking off a fundraising process you know in three days that's that can work um but it's not the preferred route to go if i can meet a founder you know months before they raise that's better i think that's better for the founder too listen it's it's hard to say what makes a great founder and they come from all you know different stripes so i don't think there's any one thing that makes a great founder to me but a sense of you know there's some characteristics maybe um an incredible sense of urgency is is one thing and the second thing for me is an ability to distill a different perspective on the world in plain english

Chamath Palihapitiya: like if if it seems complicated when the founder says it it's going to seem complicated to the customers it's going to seem complicated to their perspective um employees like this ability to kind of

SPEAKER_152: take what's complicated and really distill it yet it still be compelling um is just a magic quality i'm not sure i have it but good founders do the the brian armstrong's and and armand's uh of the world they've they've got it um and you know you just you just kind of feel it in the air when you when you

SPEAKER_146: meet that founder yeah the ability to communicate well super critical and that sense of urgency to get

SPEAKER_145: things done and speed uh you know intelligently is super critical all right listen uh great job on the program great job with the tweet storm come back again soon uh and continued success uh in filling out those series b's and c's without maybe some of the venture tourists which had to be incredibly frustrating to do what you do and then have people come in and let's just be honest like do

SPEAKER_152: it in a less thoughtful way i guess would be charitable uh i think that's right it you know i like to think this is both an art and a science and um you know it feels like we're we're getting back to the like artistry uh of venture here more of an artist and thing and not you know it's not costco we're trying to be personal with founders here yeah this i mean the the i tell you the thing that stood out for me in

SPEAKER_145: our discussion it's just the idea that somebody could put some large check into a company and then just ghost the founder in one way it makes sense because they were doing two deals a week one deal a week um and they had a portfolio approach hey let's just buy the index but then you look at

SPEAKER_191: the reality of a founder having that kind of overhang that kind of slug into the company

SPEAKER_145: and then they're not participating when you need them and there's no follow-on investment from them there's no i mean gosh even to get signatures from them you're going to need to get some signatures

SPEAKER_199: at some point to approve the next round where are these people what are they doing i think a lot of

SPEAKER_168: them left the firms they were at in some cases gotta think of your investors more like building your team like hiring an employee than just taking money it's not a bank it's another team member what what do you

SPEAKER_145: think founders should look for you've seen bad behavior on boards from crazy venture capitalists what's the worst thing you've seen a venture capitalist do without getting into specific names please we don't want to get ourselves in trouble here but what's the worst behavior you've seen from investors and what should founders look for in terms of finding great investors you want an

SPEAKER_152: investor who has conviction and they should develop that conviction as they do their diligence they don't necessarily need it when they're uninformed you know on on day zero but as they learn more about your business you can sense their excitement and by the time they give you the offer you sense listen venture funds are 10 years for a reason they may be with you for a decade you know they say it's harder to get out of a board or a investor relationship than a marriage and that i think that's largely true especially in california um so you want to be sure that you're finding the right person so conviction personal chemistry if you don't want to grab a meal um with your potential board member or investor you know step back a second and ask yourself is this my preferred investor i think they should know about your vertical they should understand your industry but you're not trying to hire another engineer you want them to have a broad perspective and feel like there's somebody who can have a chemistry with you where they can ask hard questions and push back if the chemistry isn't quite right or you think they're too conflict avoidant they're not going to ask the right questions they're not going to be a good board member and in terms of like the worst behavior i'm not going to call anybody out um but i think generally like the pattern recognition for for bad behavior is folks who aren't reading the board materials they're not paying attention to the industry but then they come in with really strongly formed opinions and aren't willing to change them you know in spite of what the founder is saying um it's it's lower eq you know combined with not doing the work and so you want an investor who's you know not on 55 boards they're going to have the time for you because if they don't have time they're not going to be informed yeah being informed and

SPEAKER_200: being able to have that intelligent conversation man being a you know dictating to the founders i see

SPEAKER_145: this sometimes on boards where people think they know how to run the company better than the founder and then listen you you do get some signaling when you're doing this for a while and you can see some you know potholes ahead and you know turns to slow down on and be careful with and be thoughtful about but man you you can't no founder is looking for a boss they're looking for somebody who's that guide on the side who can really have a good conversation with them right and uh man i i do see that archetype of somebody who's ill-informed underprepared but then have these incredibly strong opinions you

SPEAKER_199: know like what is that exactly based on like some company you founded 20 years ago or some you know incredible investment you had five years ago like what about this moment right like we're in this moment with this company and this management team like it's first range but it is an archetype huh

SPEAKER_152: yeah i mean i think you know the meme out there in founder land is that that's 75 of vcs in my experience it's not like at least with the quality of companies i've been privileged enough to work with it's pretty rare to see that most board members are very engaged work really hard for their founders um but you know it only takes one bad board member to really poison the chemistry of a room um and so i think being really choosy about who you bring onto your board um is a really really important thing um otherwise you know you can derail a really high quality eight person conversation with one person who doesn't know what they're talking about i think in the cognitive bias list

SPEAKER_145: it's salience bias tendency to focus on items that are more prominent or emotionally striking and ignore ones that are unremarkable right like sometimes people just will look at venture capitalists or founders and they see i don't know adam newman do something walking around in bare feet

SPEAKER_199: and they think oh well all founders are working around in bare feet and smoking weed on g650s and oh all vcs are doing this bad behavior and replacing founders and it's like no you just you're remembering

SPEAKER_145: those because they're so memorable what we do in building companies is much more pragmatic it's tactical it's strategic it's a lot of blocking and tackling and just showing up every day every week every month month after month quarter after quarter year after year and doing the work and i think i think that is i think a good place to end when you said like doing the work and being prepared come

SPEAKER_199: with a prepared mind everybody come with a prepared mind to that board meeting and to that business and

SPEAKER_145: that opportunity listen great first appearance here on this week in startups and i would love to have you back on again continued success and uh we'll see you all later uh have a great day thank you all right

SPEAKER_00: that's it for today folks we will see you back here tomorrow wednesday thanks to producer rachel for filling in for jason look out thanks for having me on your job is safe from ai but is jason's job

Jason Calacanis: safe from you dun dun just kidding just kidding boss tomorrow we have another episode of angel this season of angel is like beyond fascinating yet another three cycle investor devin parek of insight is going to be come on coming on tomorrow with some lessons learned you do not want to miss it we'll

SPEAKER_307: see you then awesome bye bye guys