SPEAKER_01: you know circle is doing it all right they're got you know major audits going on as opposed to attestations and that kind of stuff and so the devil's in the details if you have i think tether got up to 70 was it 70 billion 80 billion it was it's pretty large amount of money and people

SPEAKER_00: were really concerned that maybe their holdings were in chinese commercial paper because that's where you used to be able to get a return so maybe they're getting 78 on that chinese commercial

SPEAKER_04: paper loans essentially in china but maybe it's not that stable then all of a sudden we have inflation interest rates go up tether started bragging that they've got like billions of

SPEAKER_07: dollars in revenue a year so you're the sucker at the table perhaps if you're keeping your money in stable coins because you're not getting that interest that you could get if you kept it in a

SPEAKER_09: money market so everything you're saying is dead on a couple of small quibbles though i just pulled

SPEAKER_11: it up there's now 112.8 billion dollars worth of tethers out there wow this week in startups is

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SPEAKER_18: northwestregisteredagent.com twist today all right everybody welcome back to the program he's alex

SPEAKER_21: wilhelm i am jason calacanis he's x.com alex i'm x.com jason first name club got a big docket today

SPEAKER_09: and uh how are you doing alex i'm doing fantastic it is a glorious summer day where i live i am full of caffeine we have time there's news to talk about and jason i made you a gift i made you some memes to

SPEAKER_24: kick off the show so we can have a little fun uh we have the first one up are you familiar with this

SPEAKER_04: format of me okay this is a format of meme with a bunch of statements and a line drawing of a dude yes dude represents there's different types of dudes there's like a crying dude there's somebody with a mask with crying behind the mask there's a lot of these different reddit style yes line drawings okay

SPEAKER_29: but explain this meme to folks who aren't seeing it so if you're not watching us on video or youtube

SPEAKER_09: live what we have here is a meme from glyph dot app they have an ai meme generator all you do is give it someone's twitter handle or name if they're well known enough and then it will make a series of jokes owning you and essentially making you look ridiculous so for example my meme which gives me a lot of hair which i thought was a pretty good troll from the media and a bunch of water bottles i don't know about that i mean i do drink a lot of water but the meme so my text is like i'm leaving this hell site tweets five minutes later i'm not owned gets ratioed by a 14 year old here's why that's problematic one of 97 and it's uh it's actually not bad not bad yeah let me explain economics

SPEAKER_04: to you has never held a job you're all bots argues with mira for three hours got it okay so these are

SPEAKER_36: ai generated roasts uh in meme format not bad not bad it's not bad now we have one for you of course

SPEAKER_39: oh um it took away all your hair and gave you a serial killer beard okay great uh i am an early stage

SPEAKER_41: investor invests after series b i discovered uber was thousandth customer ai will save humanity can't

SPEAKER_04: figure out alexa i'm a self-made millionaire started with small 10 million dollar loan from dad if only i predict the next big startup invest in 500 companies hoping one succeeds that's actually the

SPEAKER_48: best one so far i'm a podcast pioneer discovered podcast in 2020 okay i get it i'm friends with you i like one of elon's tweets once web 3 is a scam secretly bought 10 million in bitcoin kind of accurate actually so okay i mean what i'll say about jokes and ai is great for brainstorming it's

SPEAKER_49: you know like when you're in a brainstorming session no bad ideas like even if these don't land they at least get you working right so part of the game of writing jokes is to come up with themes and ideas so here's some themes right and it got the themes right and then if you get the themes right yeah maybe

SPEAKER_24: one out of ten actually land so good job well one more thing about this that's a b plus set of jokes

SPEAKER_09: from an ai tool that i used for free because i saw someone else post there's on twitter worked backwards through the watermark to make these for us i think that just goes to show a couple things one ai is being put into things everywhere and not just in like the enterprise and two you know what not bad i i was i really thought these were gonna be like laughably terrible we were gonna joke

SPEAKER_24: about how poorly the ai did but actually you know it got us pretty good so glyph.app if you want to

SPEAKER_56: have some fun uh i have to say i've been using the new claude ai i guess they call it sonnet and

SPEAKER_49: i've been using uh chatchip t4o i'm noticing it understands what i'm asking for more consistently i was

SPEAKER_04: looking to hire a position in a specific city and you know normally you can go to like glassdoor salary.com indeed and you see those like here's what a journalist in this city gets paid high low

SPEAKER_00: average tenure all that data they have from job listings and i said give me five sources of salaries for this position in this city give me the high low average put it in a table and then give me the average of the averages now this is like something you would explain to a knowledge worker like an

SPEAKER_61: athena assistant right uh you know wow.com uh if you want to get like a month off or something and

SPEAKER_00: if you were to do that you probably spend a couple of minutes explaining it they get it back and then you probably would get a decent result uh maybe two hours later an hour later and this got it perfectly well right out of the gate now previously this would have taken five six prompts and back and forth and it's getting kind of nailing it on the first one so i think their ability to and i i've been doing cite your sources and it is citing sources really well now so i found myself while i'm doing interviews with people over zoom if i don't i was doing this one with a space company that you wrote

SPEAKER_49: the notes for very well done and i was just trying to remember some things about kinetic weapons and hypersonics and i just said hey explain hypersonics to me and what's the latest state by country and what

SPEAKER_04: they're working on and boom it brought them up and i was like ah that would have been a producer of a podcast job for one hour which means all of us producing podcasts or doing research you kind of

SPEAKER_49: start on second base you've kind of got the knowledge and then i opened everything up all the citations looked at them and checked them and said yeah you know i trust those citations those are pretty good yeah the hallucinations going down and the ability to follow instructions going up feels like a

SPEAKER_09: winning trend much like a child kind of becoming an adult like i feel like ai is going through that like less fantasy more reality better context uh the question though is after you did all this research and had flawed 3.5 sonnet do this work for you what is the average cost of a senior butler in san

SPEAKER_04: francisco exactly uh interesting you bring up butler right when i was uh at a friend's house when i was in

SPEAKER_49: italy one time they had a butler and i had i actually had a butler for three days and then actually there was one time i stayed at the ritz carlton and i happened to be at a speaking gig and they gave me a suite very nice of them and the suite came with a butler and it is the most have you

SPEAKER_80: ever had that experience of a butler in life no but i i have uh in my in-laws house they converted part of the old servants quarters area to uh an apartment so i've lived in you've lived in

SPEAKER_81: serving quarters so yeah you're halfway there remodel service court anyways what happens they

SPEAKER_83: greet you in the morning with your robe they lay out your clothes like an outfit they prepare your

SPEAKER_01: coffee to your specification they lay out your newspapers and then at night after dinner they have your port and they get your favorite cigar they cut it they char it they light it for you and

SPEAKER_00: hand it to you so literally the pouring of your coffee the laying of your it's basically like what things do i do for myself that another human could do and like one of them is when you get out of the pool holding the robe up for you to put your arms in it is the height of luxury thinking uh and also packing your bag this is something i didn't anticipate when i left all of my when are you planning on leaving okay we'll pack your bags for you i was like what this person packed my bags and unpacked my bags at the risk halton like i've never done in my life the the level of perfection and when they hung

SPEAKER_90: my clothes they steamed them ah i didn't ask but they were all steamed and laid out i was like oh my

SPEAKER_09: lord yes this is living this is living i want a butler this is like the the only regret i have from leaving my economics track at u chicago and not going to wall street is that i'm not going to end up with both a cocaine addiction and a butler and i think it's a loss on both counts because in the old days in the 1800s you could have hired help and it wasn't that expensive now we have a housekeeper

SPEAKER_96: that comes once a week and that feels very luxurious also butler's great at uh chopping up lines of cocaine and preparing them for wall street analysts so no i think that's outside the scope of work i don't

SPEAKER_99: think you should ask your butler first do not ask your butler to prepare your drugs for you just

SPEAKER_103: coffee cigars keep it in that range you'll be fine folks hey founders hey startups when you're hiring for

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SPEAKER_09: terms and conditions do apply we got a packed show today on the docket we have how a new venture could shake up the landscape of american stock exchanges yes we are going to texas then the idea that i am excited about i wrote about this this morning lots to share there we have a hassle of new insurance or possible interest for the twist 500 and then we have ai music and lawsuits including a couple of clips of jason first taking a look at suno and udio trying to get it to play dire straits we'll talk about how well it does but jason first up you brought this to my attention somehow i had missed people were considering building a stock exchange in the state of texas so right how long have you

SPEAKER_36: known about this and why do you care this is something that was in the news about two weeks ago uh and there have been attempts to do the long-term stock exchange by eric reese of the

SPEAKER_49: lean startup movement i think maybe two people are listed there and the concept there was like maybe hold shares for a longer period of time and now texas is uh got some investors committed to creating

SPEAKER_00: a new exchange there why would you create a new exchange i guess is the question i had and jurisdiction matters competition matters and how ipos are done listen it's been a bit of a racket right there are specific jurisdictions there are specific places it works really well the nasdaq the new york stock exchange but maybe those places because they don't have a ton of competition maybe they get to dictate a little bit too much uh for people's liking and if you start thinking about jurisdictions

SPEAKER_01: like we start in delaware where somebody with nine shares of a company can sue and the lawyers can make five billion dollars in commissions suing over a pay package that you know all shareholders did pretty

SPEAKER_00: well uh in getting and people like bill gurley say should be the standard in compensation practices so

SPEAKER_01: people are getting a little concerned about jurisdiction specifically delaware and maybe they don't like the way uh the nasdaq or the new york stock exchange is doing business and they want

SPEAKER_00: something a little more fluid and a little more competition and so the great state of texas

SPEAKER_49: which allows you a lot more sovereignty to build homes real estate companies etc is maybe going to become a new jurisdiction where people will incorporate more often and trade shares more often

SPEAKER_73: because they don't want to deal with california's red tape and regulations or new york cities or delaware's

SPEAKER_93: okay so there's a couple different things going on first of all the company that's doing this is

SPEAKER_09: trying to create um a new exchange costs a lot of money so they've raised about 120 million dollars they announced that the latest news item is that blackrock is going to invest and there's a little bit of context here just to be clear the texas stock exchange is not live it has not passed regulatory hurdles yet it's early has a lot of capital has momentum it's probably going to get there but right now you can't go trade on it so don't go look for it it is their website has an image and a press release we tried to find some cool graphics for everybody there wasn't much actually to go on now on the point of concentration you're dead on jason because if you go back in time we know for example that the nasdaq and the holding company for the nice have bought up the cincinnati stock exchange the chicago stock exchange the boston stock exchange the philadelphia stock exchange and it goes on i stopped counting at that point yeah there has been a historically more smaller regional exchanges that have been rolled up into the big two and you know two competitors is not the number we always want to see and that's not taking into account the chicago board of exchange which is a little bit different etc i i like that the thing that i dislike here is that it feels all very virtue signally to me

SPEAKER_124: because the public and virtual signaling oh yeah like anti-woke signaling anti-esg anti-dei

SPEAKER_09: anti-esg is the thing here dei doesn't come into it as much as i as i can tell reading all the articles of coverage and digging into why people are excited about this and so it may be sit back and go okay one why is blackrock investing in this well it turns out that they were proponents of esg which is environmental social governance it's a framework for investing texas got really mad about that because you may have heard there's some oil down there at least historically so they're not as much into the environmental stuff pretty far right not as much into social and governance you have your take on that i we can get into what the g officially stands for in esg framework but whatever the point is this all feels very much like um we don't like lefty states on the coast we're going to do our own thing and so are the companies they're going to list on this essentially just trying to wave their republican flag because if that's the case i care less if it's going to bring competition i care a lot yeah

SPEAKER_36: it's definitely going to bring competition and i think the environmental social and governance scoring

SPEAKER_49: system and the criteria i think most people feel is a little bit corrupt or easy to game so maybe it started with good intentions but you know there's a group of people who are capitalists and who don't want to have this esg rating over their head or have to deal with you know those kind of regulations

SPEAKER_130: and so if it could be more fluid and have less esg score based so uh so that but that that's the thing

SPEAKER_131: much like dei or woke it people just say oh esg well what does it mean i went to i went to some

SPEAKER_09: definitions i pulled them up and i looked at them deloitte's definition pretty good in the e category things like water and ground pollution are you using recycled materials water usage critical in texas where there's not as much water there's a lot of data centers deforestation on the uh societal side on the s it's essentially like employee development labor practices uh supply chain labor so you don't have forced labor safety standards like i mean this is not this is this is not like you must not have a all white man board this is pretty basic stuff and on the g shareholder rights executive comps your point and then also like are they using anti-competitive practices so to me this list is not that crazy because if you're not caring about water and you're using a ton of it you suck there's

SPEAKER_36: not enough like the colorado river is not doing great the thing i think probably that this group

SPEAKER_49: is most tweaked by is the board diversity and structure that's part of the governance and the g and then the diversity efforts and the dei stuff which is kind of contained in the s the e is actually i think i i agree with you the least controversial like these companies are opting in generally to reducing carbon footprints being aware of it energy efficiency and we can debate it all day long it's going to be more competition uh and people are going to go to the region that is the most fluid and pro business and if you look at the trend in the northeast a lot of people leaving new york and new jersey

SPEAKER_00: for florida a lot of california's decamping for florida and texas why people want to build factories faster people want to be able to build housing faster and you know this is the great competition uh that we have in america between states and this is actually high functioning the taxation in some states got so high and overbearing that they basically pushed the headquarters of some great companies out of california new york new jersey they lost one of the great hedge funds in new jersey i heard that put like a massive hole in the budget because one of those hedge fund billionaires like you know what

SPEAKER_01: this is getting ridiculous i don't want to pay 50 60 taxes i'd rather pay 40 there's some reasonable number here and 50 60 isn't it screw it i'm just gonna live in florida i can always come to new york and see a broadway show or watch a nick's game on my private jet and then come back and so if you

SPEAKER_49: overplay your hand as a jurisdiction like china has we talked about that uh on the show i think on monday yeah if you overplay your hand like california has in terms of the dei stuff or like even weird stuff like you want to know one that's really tweaking people do you know about this um like uh mansion tax in california homes over a certain amount have to pay a couple of percentage points to sell their

SPEAKER_04: home so you know listen it sounds crazy like who cares about people who own homes over five or ten

SPEAKER_49: million dollars yeah but it's actually the extra two or three percent that people are having to pay to exit uh and selling a home is making people just annoyed and they're just like you know what i'm just not going to buy an expensive home in that state i'm going to buy an expensive home in another

SPEAKER_146: state exit fees it sounds like the entire oracle business model yeah if you want to break up i mean

SPEAKER_00: breakup fees are kind of putting aside all the ticky tacky issues i happen to agree with like trying to have a diverse set of employees there's nothing wrong with that i do think you want to have

SPEAKER_01: a meritocracy but i don't think trying to recruit a more diverse set of individuals to work your company is anything wrong with that i do think like should it be mandated i'm not sure it needs to be mandated i think the free market will sort it out um and here it is the free market is sorting

SPEAKER_09: all this stuff out in real time maybe i mean we'll we'll have to see how deep the liquidity is on the texas stock exchange and who lists there and so forth but it wouldn't shock me if texas companies listed there for example um but i i don't really anticipate a stampede of like 30 percent of the nasdaq decamping because the reason why people list in the us we actually had some data in our last show docket it's because when you look at the relative price earnings ratio for companies in certain sectors on different uh exchanges the u.s exchanges have the best one and so that's why people come here because it it works really well but if the texas one can do better

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SPEAKER_09: squarespace.com twist the reason why i'm not jumping out of my seat with excited about this is because i was looking at the long-term stock exchange approach that i've tracked for a long time and i think it had three companies i think twilio was on there too well yeah of course has had some changes in its structure and so now there's just two it's asana and thread up i think we have a picture of their entire portfolio there it is too and people were raving about this because the idea was longer term holdings get away from quarterly reports get away from the hurly-burly of your stock price going up and down so much yeah align the company with investors and then no one

SPEAKER_49: really picked it up i was surprised by it i think it was a one-dimensional idea that maybe people didn't care about so you know it's worth an experiment but this idea that if you hold my stock for two years i'll give you a different price than if you could sell it tomorrow i wonder if that was just a failed experiment that shareholders didn't care about on either side right yeah the discount wasn't worth it for the liquidity i'd rather have the liquidity and so sometimes you make a product and you think intellectually it sounds like it's a good idea and maybe it just doesn't work and

SPEAKER_00: people don't want it practically speaking or maybe the right company hasn't listed there yet you know if spacex decided like or stripe like some really desirable company no offense to these other two companies but a really desirable company said you can buy our shares but only on the long-term stock exchange or only on the texas stock exchange and you can only trade them but you know quarterly and these redemption periods or you know we're going to give you a discount on them or more rights

SPEAKER_49: on them if you hold them for two years whatever it is you know maybe it would work and that's i think going to be the key if they attract spacex or stripe like the texas stock exchange if they attract a

SPEAKER_04: company like that then it's going to be what they say fait accompli like it's going to be a done deal

SPEAKER_49: they will get other folks to follow suit yeah and it really is i think about the regulations and so

SPEAKER_169: well i mean texas does have a a a a own take on that especially at the ag level but when we reduce

SPEAKER_04: the compliance courses right so maybe it'll be riskier to be with that cohort of companies if they reduce the compliance course and maybe it's a boss and maybe it's a little freewheeling maybe the

Chamath Palihapitiya: inventory there will be more risky more risky more rewarding it's actually pretty common to see uh

SPEAKER_09: there being kind of a smaller exchange to focused on uh higher growth companies i think it's called the star board in china memory serves and so there are you know this idea that there are higher risk exchanges for companies that want to have a different set of rules there's precedent for it and honestly what we need is more public companies there have been a decline in the number of public companies for some time now so you know to me sure it may feel from my perspective a little virtuosignally but if it gets more companies public total then i'm i'm so here for it because there's just not enough but one company that is going public is circle jason i cannot tell you how excited about this

SPEAKER_01: uh do you own any stable coins out of curiosity i i don't own any stable coins i'm fascinated by the

SPEAKER_00: sector i had jeremy allaire on the program i've known him through a couple of companies we're not like best friends or any type of acquaintances but he's been on the program and you know stable coins seem to be an incredible way to move money around really fast in the case of tether uh which has been dinged with human trafficking and all kinds of dark web kind of activities uh perhaps too easy to move money around and too hard to trace uh money etc and they had a bunch of compliance issues but circle

SPEAKER_49: has been doing this in a very buttoned up way here in the united states and the fact that they're able to ipo now there are there's a fundamental question of should somebody be able to have their own currency

SPEAKER_03: in you know the united states and will that in some way compete against the u.s dollar and the fed i guess that's i guess the big issue here in the united states but yeah tell us about it

SPEAKER_09: well i i want to start right there because to be on the other side of that to flip it i think that the rise of stable coins in the decentralized world in general has been the biggest endorsement of the us dollar that you can possibly come up with so to me it's a strengthening element um because well i mean look at the two biggest stable coins which are also i think two of the top six cryptocurrencies by market cap feather and usdc both of which are dollar stable coins pegged to one dollar no one really wants a euro stable no one's dying for a pound stable i'm not seeing anyone hacking their way to create a chinese yuan stable uh people want dollar and i think by giving people access to a dollar equivalent if you will um has been awesome and this is one of the two use cases that crypto has nailed one is bitcoin's worth a lot of money hashtag stored value i'll let them have it two this is a way for everyone to buy dollars around the world no matter where they are

SPEAKER_145: or what their onboarding point is and great for them it's great for people who have a currency that is less stable and they might appreciate half their dollars or 25 of their dollars being in usd

SPEAKER_09: yes absolutely and one more thing these stable coins the whole idea is they're backed one-to-one with our asset so if you put a dollar into circle which makes usdc they buy a dollar worth of cash a cash money market account or a short-term treasury exactly so this money that someone from iran is putting into not iran i don't want to get circle in trouble a country we like with high inflation there we go uh buy some stable coins that money from circle goes into us treasury making the local economy stronger so it's a really virtuous cycle and i i think this is an awesome company i loved it when it was going to go out via spac it raised that price and then moved back from that filed privately and i'm counting down to when it lists this is going to be such a cool company to see jason because interest rates have gone up so much since 2021 when it tried to list via spac that i presume it's grown dramatically because think about it 32 billion dollars worth of stable coins under its belt now call it i don't know four or five percent interest on that it's a billion billion five a year in revenue

SPEAKER_185: because it's incredible and this is i think what people who own a stable coin have to realize

SPEAKER_49: you buy a stable coin you get no interest you're just getting a stable coin so every year as inflation goes up the value of that stable coins going down the hedge against that obviously is what the stable coin provider gets for giving you that technological service and so tether which had a myriad of

SPEAKER_00: questionable assets according to multiple sources and was only doing attestations a very light form of uh verification by dare i say unknown accounting firms on islands known obscure perhaps sure perhaps yeah you know circle is doing it all right they're got you know major uh audits going on as opposed

SPEAKER_01: to attestations and that kind of stuff and so the devil's in the details if you have i think tether got up to 70 was it 70 billion 80 billion it was it's pretty large amount of money and people were

SPEAKER_00: really concerned that maybe their holdings were in chinese commercial paper because that's where you used to be able to get a return so maybe they're getting 78 on that chinese commercial paper

SPEAKER_04: loans essentially in china but maybe it's it's not that stable then all of a sudden we have inflation interest rates go up tether started bragging that they've got like you know billions of dollars in

SPEAKER_07: revenue a year so you're the sucker at the table perhaps if you're keeping your money in stable coins because you're not getting that interest that you could get if you kept in a money market

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SPEAKER_177: to my fidelity account and look at how much free money i got from the we keep our emergency fund in

SPEAKER_09: the money market account there yeah just makes us money for free so everything you're saying is dead on a couple of small quibbles though i just pulled it up there's now 112.8 billion dollars worth of tethers

SPEAKER_80: out there wow yeah right i thought i i thought it was 75 82. yeah that was the last time i heard last

SPEAKER_126: year but they've grown significantly and i was doing some research on this and i ran into a really

SPEAKER_09: interesting question because if you hold usdc on coinbase and coinbase is a partner company with circle in the usdc universe they will give you i think about five percent yield on your held usdc uh and i was like wait a minute is circle just paying people to hold it and then does that take away all their revenue so i chased this down through coinbase's last earnings report and what we found out is that the company in the second quarter expects 150 to 180 million dollars in sales and marketing costs quote driven by significantly higher usdc customer reward so i think that coinbase is using its sales and marketing money to pay a yield on usdc holdings to incentivize people to use it but that doesn't mean circle is which means their business i think is going to be stellar because they don't

SPEAKER_205: have to have a lot of staff to have an account with a lot of money one of the things people have learned

SPEAKER_04: over time and this was one of the value propositions of robin hood is it's hard to get somebody to open

SPEAKER_00: a brokerage account or a bank account or a credit card and probably a brokerage account is really hard a bank account's less hard and a credit card hard and so that's why the rewards that you give like the affiliate fee or the cost of acquisition to those things is typically hundreds of dollars like so to get somebody to open an e-trade account you know if you were to do that through an affiliate network or you were to spend money on television ads you might spend two three hundred dollars doing it four hundred dollars to do it so that's why robin hood was like hey give your friend a free share you get a free share we'll give you 10 bucks worth of uh an uber share an apple share or something and they basically said instead of paying cnbc to put e-trade ads on or robin hood ads on we'll

SPEAKER_49: just give the money directly to you and your friend and it will spread virally and you may have seen robin hood now it's like if you move your money into robin hood and you move your equities into robin hood from another service i think they give you like a one or two percent

SPEAKER_04: one-time fee for onboarding so if you move a hundred thousand dollars in shares from your

SPEAKER_209: whatever account they just give you two grand or something like 500 you get 10k free exactly so if you move a certain amount of money you get like this free money but you have to keep it on file there

SPEAKER_04: for x number of years two years three years you have to pay it back or something anyway this is called customer you're just taking customer acquisition cost money and you're moving it around in the same way uh uber when they didn't and lyft when they didn't have drivers would say to the drivers when you hit 100 rides we'll give you 100 bucks so you know one of them could steal drivers

SPEAKER_49: from the other and drive it goes under driver acquisition cost so you can move these things around the balance sheet um but eventually you're going to need to yeah pay the piper you have to make

SPEAKER_53: that money back and so be careful folks yeah but one thing that that has changed is just the the pace at which interest rates have gone up and we have a chart that we're going to pull up about

SPEAKER_09: this to show the the scale of the change and this is important because i think this is going to dictate how quickly they do go public so if you're looking at the video this is just the federal funds rate for five years it's gone up very very steeply and it just looks right in history i think i that's i was looking at the chart to prove that and there's been some really wild stuff over the years yeah at least in recent memory in the 70s yeah it it times used to be very different but rates went up very dramatically very quickly recently which made a lot of businesses better including robin hood because it held a lot of cash which it now makes a lot of money on but here's the here's my bet jason and i wrote about this for my newsletter i think that they're going to want to go public like before rates begin to come down because right now they have rising aum at the highest rate we're going to see for a long time so their growth story is never going to look better than it does at this moment so just just stress test that for me to make sure i'm not insane yeah you're right if rates

SPEAKER_04: went back down to one or two percent then this business would be making a lot less money and rates

SPEAKER_49: will go down slowly i think most people are realizing higher for longer was the right call a number of my friends made that call higher for longer to try to you know keep inflation from coming back and roaring back to six seven eight nine percent whatever i think it peaked at 9.2 percent or something uh last year and now we're down to you know the free handle and maybe we see a two handle soon right and so yeah they'll they'll make a cut later this year maybe two this year and yeah so it'll be peak interest rates this year and then slowly we taper off and yeah the revenue will go down and then that means they have to have more assets under management to make up for that um but you know there's i think there's a lot of interesting things that these stable coins are going to allow people to do you know in the same way venmo paypal bitcoin have you know in a way this is kind of like bitcoin in that it's going to be pretty frictionless to move it around and pretty immediate so you and i have to settle a poker debt are we going to use venmo are we going to use bitcoin you know are we going to hand each other

SPEAKER_00: cash or in the future will there'll be a stable coin inside of twitter x.com right like maybe elon

SPEAKER_03: makes his own stable coin and puts it in there um you know since he's going to make banking a big part of x according to the public reports i have no inside information so yeah well i mean i have

SPEAKER_223: no no i know you have to it's just it's it's it's almost like you're the guy in the commercial like

SPEAKER_224: this drug will save your life may cause diarrhea death hemorrhages i listen i mean just people

SPEAKER_153: the re-aggregators might just say like you know elon's friend jason says stable coin coming and i just

SPEAKER_01: always have to like cut that off at the past i don't have inside information but you know he has talked about doge and um why not have an x.com stable coin that would be a great idea actually i

SPEAKER_148: should tell him like to look into that because then you could just move money back and forth you

SPEAKER_03: know after you have a meal or a poker settlement or you're chopping up a birthday present yeah it's

SPEAKER_00: all great and if there's no and the whole point of this crypto stuff wasn't it supposed to be that we could transact without huge fees and then it's huge fees transact well it's worse it's worse than

SPEAKER_09: that it's huge fees for slow transactions and that that's not good but people did say this is going to be great for remittances this is going to be great for an inflation hedge in certain economies to me stable coins actually fit that bill bitcoin is a pretty variable asset still so to me stables

SPEAKER_165: really plug that that like crypto promise from 10 years ago hey don't tell this with our story from

SPEAKER_49: last week of um wells fargo letting people pay their rent on their credit cards and then having to pay

SPEAKER_160: three percent of that back to them in in miles if if there was a wells fargo or used usdc then yeah

SPEAKER_93: no no fees there's a lot of cool stuff this is why i'm excited about this this ipo i will i will say

SPEAKER_09: that i have one last chart i want to bring up just to show you why this came to my attention i wrote about it this is your from visa's crypto dashboard showing essentially volume now most data sets show tether being far more active than circle but you can always strip away certain crypto transactions to see what's real what's spooked or what's essentially just bot activity but that to me shows a lot of actual usage of usdc this is a chart just comparing the two and it goes up to the right so i'm very curious what this s1 is going to show us jason i uh yeah i think i'm counting down to this one more

SPEAKER_237: than databricks more than stripe i think this is so this chart's interesting because it has usdt which is

SPEAKER_145: tether kind of flatlined and it's not tracking a lot of these um transactions so that means i guess

SPEAKER_21: those are off market transactions a lot of those are going on with usdt and usdc is a lot more trackable or traceable i'm not sure what's going on here there's there's also a multi-blockchain

SPEAKER_09: component to this because you can buy for example usdc on i think 10 or 16 different chains so there's a data aggregation question but no matter what way you want to look at it what that chart says at a minimum is that through a particular prison that visa prefers activity is going up quite a lot for usdc you want to strike while the iron's hot get the s1 out there make a bunch of money huzza huzza huzza

SPEAKER_126: i'm stoked about this but uh this is a startup show where are they going to go out i'm waiting i'm trying to i'm trying to manifest so they filed but they haven't yeah they filed privately in january

SPEAKER_01: like it's been a minute man nearly half a year like market wants inventory so i think it'll do quite well i mean market is this is the crazy thing everybody you know wants to talk about how terrible the economy is and every time i kind of point out facts people are like you don't understand poor people i'm like about my life being poor lower middle class like i do understand i worked all the

SPEAKER_00: worst jobs you can lowest unemployment of our life real wages going up inflation's been tempered down to three almost in the two percent kill zone and stock market at all-time highs what am i missing

SPEAKER_09: so i've struggled with the exact same thing that you mentioned because when you look at the top line indicators it's going great um it's like you're in a car and there's no warning lights you're going 65 and someone in the back is getting like motion sickness and blaming you and you're like but the car is fine yeah i think we're seeing a partial k-shaped recovery so v-shaped it goes down it goes up a k-shaped recovery is one with this bifurcation of the the the state of the economy for people and i think that for a lot of folks things are great personally my family doing fine you're doing fine exposure you're great if you don't you're struggling and i think that people have i'm going to abuse a concept but a lot of like inflation ptsd i think is still going up in a lot of people's a lot of people's wallets and if you haven't gotten a raise in the last two years you're probably really hurting so i think there's also some lag but i mean if this isn't a good economy for most folks then i don't think we actually know how to define that as a species because

SPEAKER_04: everything looks pretty good there is some pessimism i think because of the political overhang and the

SPEAKER_49: political rhetoric going on where people want to incessantly frame it as this is the worst economy of our lifetime when it in fact is one of the best economies of our lifetime um and you are right about inflation if inflation comes down to three percent there's still inflation it's three percent inflation so your hundred dollars in groceries now 103 so it's not 100 going to 109 which is sticker shock but i do think you're right in the k uh analogy because if you are a wage earner without equities yeah you're just you're only focused on that three percent right now and you've got the sticker shock of the nine percent and you've got loans so instead of getting five percent on your money when

SPEAKER_03: you wake up and you see your money market they're seeing their credit card come bill come in or their mortgage or their variable mortgage come in or their variable car payment come in and it's higher so

SPEAKER_00: yeah that's exactly what it is it's which side of the trade are you on are you on the get five percent

SPEAKER_93: or give five percent so one thing that people outside of the us might not understand is how partisan

SPEAKER_09: everything is in this country yeah and this chart shows the two major political parties and their views on the economy during different times so during the bush years uh republicans or people that leaned republican thought it was doing great the moment obama took over the economy is terrible worsening of all time did not change their mind until trump took office at which point democrats began to ease off a little bit their views so i also think that when people discuss the economy they're really discussing their political priors in terms of how they want the economy to be doing under an administration so for example right now if you think that biden is not a good president you don't want the economy to be strong because then yes that goes against your narrative and i i saw the all

SPEAKER_93: in segment when you were like economy's doing good and people were like no and you're like well let's go

David Friedberg: through it yeah and i went to the facts and they got really upset you know sax was really tweaked about it and i was like i'm sorry but facts yeah like data well i thought when people go i don't trust the

SPEAKER_09: data but then they trust it immediately when it's in their favor that is the thing about partisans

SPEAKER_49: you and i are both pretty independent i think um and you know i i might be starting to move back

SPEAKER_04: into a libertarian era i'm just kind of so tired with how oppressive it is to have these two parties constantly want to involve themselves in our lives that i'm like you know what i just less from the government it's just it's too much everybody wants the government to solve everything i'm like i'm starting

SPEAKER_48: to get so frustrated i'm just like can you just leave us alone do less do a lot less let local

SPEAKER_264: governments do more i mean look i haven't been really good at taking direction my entire life you can just go look at my uh elementary school um uh disciplinary records and so forth so you're not

SPEAKER_09: uh i i look it's not popular amongst my friend group to say this but i've never fully shed my late

SPEAKER_93: teenage uh young male libertarian streak because i've always found structures to be kind of silly and like a lot of norms are a little ridiculous like the reason why i made fun of you wearing a tie the other day yeah was because one i like you but also two like to me whenever you turn on like the capitol hill tv and you see like eight people for a podium and they're all wearing a suit and tie and i'm just like what are you proving like really like but in my youth my parents

SPEAKER_263: if i'm being totally honest yeah i was gonna wear the suit and a shirt and not put the tie on i had

SPEAKER_49: been at a wedding and my friend bought me that gorgeous pink tom for a tie for the wedding so we all the groomsmen had the same tie and i was like you know what i noticed the other guys weren't wearing ties like this is the ultimate troll so at the last minute i turn my camera off i put the tie on

David Friedberg: we're like we're supposed to be 10 minutes from showtime well my turn my camera on the tire was

SPEAKER_271: like you're wearing a tie and then everybody was like freeberg was like oh do i have to wear a tie

SPEAKER_48: and the everybody started second guessing their decisions that's really pretty funny but i think

SPEAKER_263: i'm going to start wearing it just to troll people because they really got into this better call

SPEAKER_49: sol serial killer phase for me let's talk about twist 500 i mean this is coming along nicely we got

SPEAKER_00: the website up go to twist 500.com it's a coda website right now it's a database uh we have maybe 20 companies in there and we're every week trying to add some so here we could show it here and the goal here is for us as a community just to understand who the 500 most important private companies are we know there are probably venture backed you know some amount of backing uh for maybe 30 40 000 companies i would say active companies right and so and a couple of thousand funded every year so to pick 500

SPEAKER_162: it's probably like one percent i think of the pool and so we're starting with the obvious categories yeah and the obvious largest ones that are not yet public yeah and so one thing that i did just because

SPEAKER_09: we're trying to chipping away at this week by week it's going to take us a long time to fill the list and then we'll recycle names as we take them off but i went and grabbed some of the most interesting companies that reached a one billion valuation or greater this year with the following caveat i ripped out most biotech because i don't understand it we'll have an expert help us with biotech and i didn't include chinese companies because it seems that we're discussing the world economy and chinese tech companies are a little bit bottled into their borders and given that i don't think the twist audience is super concentrated in shenzhen and shanghai lovely places um they're probably blocked there so i'm focusing on x china so that's what we have in this i think those are two good calls for

SPEAKER_04: now is to leave out biotech until we have the expertise on board to do that and leave out china

SPEAKER_24: because they've opted out essentially yes they have said not so much so a couple of names to go through one is huntress now this is a company that's doing cyber security for smbs i like that because everyone needs to have a better cyber security posture and jason they just raised a series d from kleiner and meritech 150 out of 1.5 seems to me a shoe-in just because it's big enough big backers cool

SPEAKER_145: market oh yeah and to get that valuation they're probably in the tens of millions of dollars of

SPEAKER_04: revenue a year just so people understand in private markets you know 25 50 times revenue is possible it may not be possible in the public markets but you know people have protective provisions on their investments so if this is at a billion plus valuation maybe they have 50 million 25 million in revenue i'm just taking a ballpark guess here in terms of how valuations work

SPEAKER_80: yeah i was thinking like 35 to 50 would be my guess give it a nice solid 30x uh multiple and

SPEAKER_09: you pay a little more because you're expecting the company to grow a lot with the money you give them yeah yeah so you're not you're not buying a dividend stock when you're buying a startup share okay so huntress is on and then there's a new one this is called creatio it is a low code company and i feel like we have not talked about low code and no code for years because i think it became like cable stakes inside of software like of course i can drag and drop and define my own logic yeah but i think it's still pretty cool and this is a this is a company that was bootstrap for a long time raised around in 21 22 and then just raised a big 200 million dollar round wow that gave it a 1.2 billion dollar evaluation growing it over 50 per year and if memory serves might hit cash flow positivity this year so growth scale i mean it's got some great backers to me this is a super cool company i don't have a use for it so i wasn't able to test it but clearly jason people like it enough to pay for it because they wouldn't have raised that kind of capital today without a big

SPEAKER_49: customer yeah and i think a lot of this is the consolidation of sas so just looking at what they provide a lot of apps available for customization so you're running a large company and you know maybe you don't need this particular vertical sas software you don't want everybody to have to log in again you want to kind of take some off the shelf sas software and customize it and and you know it's good enough right and which is what chamath is doing with this 80 90 company um which is like 80 percent for 90 80 of the features for 90 percent less uh cost and so i think that'll be a trend and you know some lps and gps are showing some concern in the sas space because you know what if my company becomes a feature set and gets 80 90'd by a company like this or hotspot or rippling or gusto you know decides we're going to put expenses in there and then what happens to expensify you know all these discussions are starting to happen where you used to be want to be best of breed and now people are bundling like microsoft office and we just saw some action uh in the government about bundling

SPEAKER_01: around microsoft's products again and so bundling is kind of happening in sas it's just your vertically

SPEAKER_264: sas company is my next feature that's a quote that we should hold on to i'm going to burn through a couple of these quickly uh altruist and clear street altruist is selling software to uh registered

SPEAKER_09: investment advisors now worth 1.5 billion um 550 revenue growth last year that's why it's doing well and i oh i'm sorry that's the company that might be cash flow positive this year not uh creative my bad and then clear street uh it's essentially selling software to brokerages um now worth 1.7 billion raised a 165 million series b so proof that fintech is still in the mix 2024 new unicorns off the back of fast revenue grid harder than ever to get a billion dollar valuation on fintech i think but still happening still pretty cool two companies to watch and then just for the sake of time i'm going to throw one at you that you might not want on the list so oh interesting so monad labs or the other crypto one that i now of course oh yeah forecast so there's two crypto unicorns that i want to talk about yeah forecast it's a web through social network raised 150 million at a flat billion dollar valuation in may it had 80 000 users at the time jason would you have a fixed a 1 billion dollar valuation to a web 3 crypto social network that had 80 000 users yeah so obviously that's a

SPEAKER_04: large amount of revenue on a per user basis so if you had a million users and you have a billion

SPEAKER_145: dollar valuation i think that's a thousand dollars a user you have a hundred thousand i think that's ten thousand a user right you've had a billion and it was a billion dollar valuation would be a dollar a user right so you can kind of do this math pretty quick here there's no way to make that money

SPEAKER_04: back um even if it was a subscription service uh which i do think they do have some number of early subscribers paid subscribers on their system and there's like a currency built into it and i think the founder is very clever so there's some intangibles there but it doesn't make economic

SPEAKER_49: sense if you were to pencil it out like that so then why would investors make an investment like this well you know then you have to start backing into some intangibles here uh what is the prize if this warpcast uh and decentralized social media does win what what do you win you win not just twitter uh you

SPEAKER_00: win a piece of tick tock you know facebook instagram etc the whole social media space the whole social media space you know makes hundreds of billions of dollars in advertising revenue so yeah this theoretically if you know this uh federated nobody owns your data system works it's like a very intellectual argument that's been going on for over a decade you own your social graph yeah is it worth a billion of course

SPEAKER_01: not is it worth a billion with 150 million in cash in the bank right they raised 100 or 150 or something

SPEAKER_04: i think uh let's see farc has to raise 150 yeah so okay so if it's a billion dollar valuation you you back out the 150 million in cash it's 850 still not worth it but you know you have the protective provision so when you place a bet like this you're placing it's going to go to 50 billion but this is going to become a 25 or 50 billion dollar asset you're making a later stage investment a series b or c level investment essentially even if they call it a series and they called it putting the naming aside they're betting it's going to get to 25 to 50 billion is that possible yeah it's a probable no

SPEAKER_103: of course not that's why it's a bet yes downside protection if this gets sold for 150 million they

SPEAKER_04: get their 150 million back yeah and they might have a liquidation preference of 2x in there so they get 300 million so the first 300 million sold goes to these investors they've got some downside protection they believe in the founder so that's sometimes what happens here um but it's a big prize if they

SPEAKER_49: yeah this is why these would include them of course the end is also the nature of the investment this is fred wilson and union square ventures i think are involved to some degree i think when you see a

SPEAKER_93: crypto round of this size it tends to have a lot of players behind it you've heard it the same way

SPEAKER_09: that i did which is either this is going to go to zero or it's going to become the decentralized facebook and therefore it's going to be worth a squillion dollars and if you have a thesis that crypto is coming for the mainstream and the mainstream consumer there will be a social play this one has momentum okay i love to see a bet that i look at and go no because that to me is is venture capital not banking and sas got a little boring there for a while all right some other names we will throw on the list include weka and qi tech cognition and sayera and monad labs we'll have notes about all those in the twist 500 newsletter tomorrow morning so if you want to get that make sure to grab that now with the last time that we have left jason can we talk about ai music please please yes uh

SPEAKER_49: the music industry is uh one of the most protective of their rights i would say the most protective uh the most litigious if you've run a startup that in any way bumped into the music industry like peloton did it can be lethal uh or like spotify did uh and the majority of spotify's revenue goes to musicians right uh it's just a very hard group of people to align yourself with because they are savvy some people might say cutthroat and for if there's a dollar of revenue they're gonna squeeze every cent out of that you know uh and you're gonna get pennies on the dollar uh if you're involved with music

SPEAKER_00: industry of course it's probably one of the easiest things to replicate with ai so now you've got a great paradox what could ai be the most disruptive to and who's the most litigious okay it's going to be the most disruptive to music and coding uh you know and writing you know today okay who's the most

SPEAKER_153: litigious well writers are the least they're suckers at the table journalism and media suckers they never

SPEAKER_00: defend their rights we're poor sir we don't have you're also uncoordinated right they've always they've always been uncoordinated they don't fight as one group i thought you meant physically

SPEAKER_314: uncoordinated i'm like how'd you know my basketball team was absolutely yes turnover central no i mean

SPEAKER_00: look vox jim bankoff's like i'm sorry how much money are you going to give us open ai we'll take it and the new york times was like how much money are you gonna give us we'll fight it which jim bankoff and the salzburg should have gotten together and said how much can we extract out of these guys how much can we take them to the cleaners for let's file a lawsuit let's have our starting negotiation b we're shutting you down with an injunction that's what the music industry does

SPEAKER_319: and that's not what journalists and media companies do generally speaking well there's also the the

SPEAKER_80: public benefit element of journalism and how the debates about should it always be free or not

SPEAKER_93: and blah blah blah blah the thing is these ai music startups especially suno and udio you have talked about on the show with sunny oh that's right to get people a taste i want to play the clip from you sunny and suno because i think it's illustrative of the quality and kind of state

SPEAKER_263: of the art so just uh listen to this clip everybody okay here we go we say here a rock song in the

SPEAKER_83: progressive rock style with finger picking electric guitar about a rock band playing in a dive bar and kind of alluding to sultans of swing here okay that is literally it doesn't sound like mark exactly

SPEAKER_35: like mark knoffler but it is definitely like a bluesy it's more john mayer who is influenced by

SPEAKER_09: i i was kind of blown away by that clip because there's even little flubs in this finger picked guitar to make it sound like a person's doing it yep personally as a big music guy myself much like you i am very uh emotionally wedded to certain records certain artists and certain um sounds and times of music i know that i'm a freak right most people just want tunes they just play whatever's up so to me i can see that really coming into this but there's been a news item past the riaa lawsuit which is that the ft reports that youtube is working right now with record labels to give them a bunch of money up front so they can build their own model so they can offer this to consumers and this sets up this really kind of crappy thing when youtube is doing it right because they're rich and suno and udio went around the legal system because they weren't and so we're in a situation it's almost like music is anti-innovation because they are so extractive as we said that now we're going to see suno and udio prop in my view probably lose these suits and then we're going to end up with google youtube and their bank account getting the ai music business for themselves which just is not what i want to see as a guy who really likes startup and i also don't see a way to fix that jason uh this is going to come

SPEAKER_49: down to training data and so if soon it's called suno right that one that we were just demoing yes and

SPEAKER_254: that's the one that's been sued uh they've both been sued you know and udio have both been sued so

SPEAKER_03: what suno needs to do is license some music and tag it and train it if they want to do that there's

SPEAKER_00: a very simple way to do that you raise a hundred million dollars you hire a bunch of artists you have them sign work for hire agreements and you say play whatever the hell you damn want from this list of blues folk country etc and uh put it into our database and we'll sell your music as a license so people can take that clip so just play the blues now uh they sign a work for hire agreement

SPEAKER_49: they also sign an indemnification agreement that it's their music they're playing it you tell them do not play john mayer or dire straights play your own stuff come up with your own licks come up with your own songs just sit in a studio we'll pay uh you know 500 bucks a day as a studio musician to just

SPEAKER_21: jam out and train based on that and then you're in the clear and then you can go tell the music

SPEAKER_332: industry to f off right that's not what they did would that be as good though because in the other

Chamath Palihapitiya: clip we don't have time to actually eventually after two or three years of doing it yes they just

SPEAKER_160: chose to cheat is my guess and they went to the open crawl and they went to one of these open crawls

SPEAKER_04: and said just find every mp3 put it into this music thing or it could have been even more sinister they could have just gone to bit torrent or spotify or radio stations and said just play radio stations

SPEAKER_00: pull the metadata you know like there are all these now that i'm getting into high fidelity stuff with my name uh n-a-i-m you know digital audio thing that i plug my high-end headphones into and they play this high bit rate there's like infinite number of high black incredible radio stations that are streaming and they have the metadata they could have just taken all those streams and just fed it into their language model and that's they said i saw on the documents that in their response that they couldn't tell them what we trained on because it's proprietary data that's not

SPEAKER_80: going to work no you can't say business secrets when the thing behind this curtain is my stuff no but there was an interesting quote from the uh the uh antonio rodriguez um over at matrix uh

SPEAKER_09: venture firm that we've all heard of of course and it goes something like honestly if we had deals with labels when this company got started i probably wouldn't have invested in it i think that they needed to make this product without the constraints essentially arguing for uh freedom of operation if you will for these companies to to mess around and we'll see how this plays out youtube of course is going to get this right because google already has relationships with labels through google music uh or apple or android whatever the hell the google thing is i don't use it um i use spotify because i'm boring uh but i i i just hope that this sets a precedent of proper compensation for training data because i it would be pretty much a bummer i think if it worked out for music and then no one else's copyright was was treated with similar respect so could there be a precedent setting here jason i think

SPEAKER_04: there's going to be some presidents set if these things aren't settled for large amounts of money so usually what the music industry does is they'll go to the startup and they'll say we caught you

SPEAKER_49: here's all the infractions you now owe us 17 million dollars how would you like to pay us and you say well we've got eight million in the bank they're like great so now you owe us nine million how would you like to pay us to nine and this is pretty much their approach you say well i'm going to shut the company down they're like okay that's great we'll just have a judgment against your company and i guess sell the ip and we'll get whatever the ip is worth that literally is their approach they will

SPEAKER_03: just you know and they've got a lot of people stealing uh their music and using it illegally in all kinds of different ways and um yeah you gotta you gotta pay to play and they're smart and they're savvy and they're organized and you know the the voxes and vices and washington posts and you know news corps they don't have their own like united front and so since they're not united in the way the music industry is they all cut their side deals and they divide and they get conquered we'll see if the new york times takes their case to the mat that's the case to watch and we should put it on our docket to

SPEAKER_72: just keep an eye on jason i have to say of all the shows we've done together this is the first time that

SPEAKER_80: i'm leaving one kind of bummed out because i think you're dead right on the media world and their lack of a united front i hadn't quite pieced it together in that way why do we always get bullied around why did we always lose and uh yeah i i think that's correct and i don't see a way to fix it they

SPEAKER_03: take the quick check so what happens is somebody like sam altman or google or facebook they go or you

SPEAKER_00: know they go to buzzfeed and they're like facebook's like hey can we here's like uh five million dollars to make some videos for us and like oh my god five million dollars that's a big ad buy they're not thinking about like the value of facebook and how much of facebook's value is based off of their content

SPEAKER_03: being shared on the facebook network and what would facebook's value be if they couldn't share a new york times story they couldn't share a buzzfeed story and those people said you know what you can't share any of our content on your platform that would be enormously useful for the world of media economics

SPEAKER_24: and uh we haven't done that and that's why the riaa is feared and uh no one else really is um we have to leave now guys we will be back with a lot more chat gpt is out for mac users we've been testing that

SPEAKER_134: we gotta talk about buy juice right down that's super interesting more twist 500 and we'll see you all next time on this week in startup see ya