SPEAKER_00: Hey, everybody. Hey, everybody. We've got a great new show for you today. It's Thursday. We're going to make it to the long holiday weekend. Everybody. We're going to do it.

SPEAKER_01: We can do it. We're going to start off talking about Meta's new Facebook's group overhaul. That looks a lot like another product. I know you're amazed and surprised to hear it looks just like this Gord.

SPEAKER_07: I am shocked that Zuckerberg is copying another founder's innovations for the 787 time.

SPEAKER_08: Uh, there's a lot of other, uh, quick hits today. Sequoia is raising a $2 billion, uh, in new funds, uh, in venture and growth. And, uh, while we were talking about this, there was a breaking news story. Uh, SPF is reportedly acquiring block five for $25 million.

SPEAKER_09: They were previously valued at almost 5 billion.

SPEAKER_11: And speaking of doubling down, Michael Saylor is doubling down on micro strategies. Bitcoin holdings. We're just going to talk about who's going to come out a winner here.

David Friedberg: And we live in the future. We'd love this segment, uh, MLB. Is looking to automate home plate empires by 20, 24. Is this a good idea? Does it ruin the sport? Does it make it better or fairer or faster? That's what we're going to break down in the, we live in the future segment.

SPEAKER_11: And then we're going to break down sub stacks business model. That company is making some layoffs. Jason's going to do a little back of the envelope math that make it look like it might not be the most viable business.

David Friedberg: It's a terrible business. I'll explain why it's going to be a great show. Stick with us.

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SPEAKER_01: All right, stop us if you have heard this one before. Facebook and Mark Zuckerberg have looked around the universe of tech products and thought, that one looks good, I'll take it. It's like a menu.

SPEAKER_26: Yeah, this is not the first time, nor will it be the last. Facebook Groups is testing a left-aligned sidebar and channels similar to Discord. Groups will be listed with rounded square icons. Where I've seen that before, group channels can be text chats, audio rooms, or feeds. These features look like it'll be easier for groups, which is pretty hard to find. I mean, we started a couple groups on Facebook and then we just gave up on it because it just felt like it wasn't worth it. Like anything in the Facebook ecosystem for a business owner, the only thing that really works there is giving them money for ads. Every other feature they use, they wind up deprecating, you know, or they don't let people see it. So then you wind up investing in it, Molly, only to have them throttle who sees it. And then you have to pay to get exposure to the people. You just spent all this time building a community. That's why I would, I tell everybody, do not invest in Facebook communities, all this stuff. Or if you do invest in your Instagram account or your Facebook page, you know, you should be, the number one goal is should be to get the email addresses of all of those people. Even if you have to one-on-one, encourage them to sign up somewhere else to get their

SPEAKER_07: email addresses because Facebook will screw you as they've screwed every other partner they've ever had.

SPEAKER_11: 100% and actually, uh, Bill Gurley had some thoughts to that effect, which we'll talk about in a minute. We should know that, you know, Facebook has also gotten in trouble for promoting groups because they were so hard to find then Facebook was trying to algorithmically promote groups and that was leading to them, you know, you'd spend 10 minutes on Facebook and all of a sudden see one that was like, Hey, you want to march on the capital? Um, and so that was a problem for them. So in some ways, this seems like a natural, uh, evolution and maybe some smart product decisions around how to make groups more usable. It also, you know, no one can ignore the fact that it looks almost exactly like discord, a product that has sort of come out of nowhere with respect, you know, in Facebook's mind and become a gathering place for this next generation, especially young people that Facebook is hoping will someday come back and then Meta has also been shifting to make Facebook look more like tick tock. So your feed recommends more content from accounts that you may not even follow. Um, and then of course, in the past, we should just remind everybody that Facebook has directly copied Snapchat with both Instagram stories and Facebook stories. The, uh, with ephemeral messages and lenses, they copied Slack with Facebook workspace and fortnight with Facebook horizon. Yeah.

SPEAKER_35: Yeah. I mean, and this is just the start.

SPEAKER_26: I mean, they, they also, um, copied path.com with their path was the first one to have the emoji reaction. So if you hit a heart, it would give you like five choices. You could be sad if it was a death notice, or you could be joyful or whatever. So, you know, they, they copy every little thing, copied Craigslist with the marketplace product, right, et cetera. And, um, you know, I, I, my advice to founders, cause this is this week in startups is do not, do not ever, um, do not ever meet with Facebook. If you're a founder of a company, I, I gave this message to Y Combinator startups a long time ago, because Facebook had set up some kind of deal with YC to meet with companies ahead of time. And I was like, they will just steal everything you do. You're crazy. And people were like, oh, you're hating Jason. And, uh, the truth is, if you meet with a company like Facebook, they will steal every idea you have. They're already studying you to steal your ideas. They have had no original ideas in the history of the company, Facebook itself was a copy of Friendster, um, and he actually also stole from the Winklevii who hired him. So if you know the whole history of the company, um, you know, you understand that they're really good. That is their superpower is making somebody else's product better. So if you make a great product and then you just copy it, my Lord, you can just keep

SPEAKER_07: building on top of it and, uh, you know, you don't have to make any of the decisions and they're just very good at it. And they will do it three or four times. Remember with Snapchat, they had poke first. Mm-hmm and then they had a second swing at the bat, then they did an ephemeral messaging as I, as I, as I wrote here in the notes where the messages disappeared. So they don't have any problem with it. And Facebook, at some point there was a report from Facebook that Zuckerberg just said, listen, if I, I don't, I don't want your ideas to the Instagram team, just copy Snapchat, uh,

SPEAKER_46: and yeah.

SPEAKER_11: And admitted to Congress, like in congressional testimony at one point, Mark Zuckerberg was like, yeah, no, we definitely do that. And I found an article from 2013 that was like, here's a quick list of apps and services. But you know, this is just incontrovertible. This is what the company does. It's their DNA.

SPEAKER_07: Hmm. It's their DNA. Um, and you know, if you're work there, it kind of sucks, but here is what I guess this

SPEAKER_51: week in startups looks like. If I will pull it up on the screen here for those of you watching youtube.com slash this weekend, if you want to watch the show, hit the subscribe button, hit the bell and you'll

SPEAKER_52: get notifications when we go live on the air. And, um, so that's what the discord channel looks like. That's what discord looks like. And that's in dark mode.

SPEAKER_11: So, uh, and you got, if you, you're welcome and you're whatever, and you're different groups and whatnot. And then here's what pull up, uh, the Facebook version now. Yes.

SPEAKER_58: And 24, seven gamers. And it's just the same. And it's just the same. Yeah.

SPEAKER_26: You can see there are those curve little buttons there. And, you know, in, in their defense, if a metaphor has been established, or a new content

SPEAKER_07: format has been established, it's kind of hard to work against it. But in totality, if you look at their behavior, um, and this is what friend of the pod, uh, Bill Gurley has been talking about. Um, it really is the frequency of this. So here's what Bill Gurley said.

SPEAKER_08: Uh, when I see this, this blatant behavior over and over, it makes me wonder if one of the core tests of a monopoly is how much blatant copying and tying together, uh, integrating a company does. This was, and is again, Microsoft playbook also appears to be Facebook core playbook. Also a second test, he continues might be in quotes. How do they behave in partnership in partner meetings? Over the years, I have found monopolist browbeat partners and suggest deal terms.

SPEAKER_07: That you would never consider in a peer to peer deal outlandish deal terms that would hollow out your company. If you took them while your reaction.

SPEAKER_63: I, uh, have been doing interviews for years in which people will suggest to me off the record,

SPEAKER_11: how horrible it is to do business with Facebook and how it, particularly as a sales partner and an advertiser, they just, and actually Yahoo used to do this back in the day to just sort of be so arrogant, like we have a fire hose of traffic and nothing, like nothing is ever going to change. And we're always going to do this. What I did find interesting about these Bill Gurley tweets is that, and, and you tell me here, it seemed to me to be slightly unlike a VC to say that because like Peter Thiel, for example, on the other, you know, end of the spectrum in zero to one is like unapologetically and explicitly pro monopoly as like the natural evolution of a business.

SPEAKER_26: Yeah. So here is, um, what the, the difference one Peter Thiel is a unique character in all the world. Right. You got one.

SPEAKER_02: The most to be a contrarian about everything. And he, he, he loves the idea of a monopoly or backing founders who go for the 80, 90% position

SPEAKER_26: in terms of market share. Yeah. Kind of like his intention now, if you think longterm for the ecosystem and for the country and for capitalism and democracy, right? If you just brought it out from the returns for my fund, Peter's talking about for the returns of my fund. And for you as a founder, you should aspire to get to that 90% monopolistic position where you don't have competitors. Okay. I understand that as a goal for somebody, but if you were to look out at the ecosystem, if Microsoft hadn't been throttled in the nineties, um, uh, what would things look like today? They would have crushed Google. They would have, you know, just like they had crushed Netscape and that was, what it was, what it was, what it was over. They would have just given every single windows user free search, you know, free Gmail, et cetera. And every time something new came out, they would just use their platform to integrate it. And that's what Bill Gurley is referring to here, but he's also referring to maybe a new test, which is how often do you copy things and then integrate them into your platform? You may have noticed now when you post a story to Instagram, it automatically puts it on Facebook, your Facebook. It tries.

SPEAKER_73: Every time I'm like, no. Yeah.

SPEAKER_26: So they have really integrated these platforms together. That gives you a crazy monopolistic, uh, ability. And so when, if we see the Facebook marketplace also be on Instagram or, you know, in this kind of integration across platforms, that's where you really start to see things get, um, pretty anti-competitive. So if you were a VC in the industry, do you want to have just two buyers left in the industry? Microsoft and Facebook or Google and Facebook, whoever's left standing, or would you like to see, you know, many different mid-sized companies? So instead of, you know, $3 trillion companies, how about 10 companies worth 400 billion? Yeah.

SPEAKER_07: And then they fight it out, right? If Yahoo still existed as a contemporary to Google, you know, if Blackberry still existed as an option or Nokia to Android, uh, if Palm still existed, if we had a little more, uh, diversity in the ecosystem of choices for partnership, that would be better for consumers, ultimately, probably. And it would be better for venture capitalists, certainly because you'd have more buyers. Exactly. For people to partner with and they would behave better. So the behavior is getting really bad. Exactly.

SPEAKER_11: And your companies aren't going to get crushed or put out of business, right? I mean, it really is like, it's a good long-term thinking on Gurley's part to say, listen, you have to have a vibrant innovation ecosystem. Yes. One actually really interesting example of this is, is cloud services too. I mean, it's effectively a duopoly with Google, a distant third and the pricing reflects that. And so, you know, I think the, I have heard VC say that they're finding that there's only like a couple of places to even refer startups to, and then those deals are getting increasingly onerous. The idea that you could just easily build a startup or a SaaS platform because cloud services

SPEAKER_49: exist and are so freely available might start to change as well.

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SPEAKER_07: AWS, Microsoft, Azure, and Google have 65% of global spend on cloud computing. I think in startups, you might even see be even more consolidated. Google is a distant third. Right now, Amazon 33% market share, 22% for Microsoft right behind them. This Q1 2022 from Synergy Research Group. Google, 10%. The next 10 companies together, 21%. So it's, it's, yeah, it's a little more diversified, but it's still kind of trending towards Amazon winning it all. Microsoft has made a big push. I will say it's pretty impressive that. Oh yeah.

SPEAKER_11: I mean, they came out of nowhere and won that big Jedi contract. Yeah. They're not messing around in the slightest in cloud, but even, even a duopoly ultimately, you know, I would just caution startups.

SPEAKER_36: Like at some point, it feels like it's trending towards a duopoly is I think the best way to say it, right? Yeah.

SPEAKER_11: And what will that mean in terms of pricing and frankly, like data privacy? Yeah. I wrote a big column here a couple of, a few years back about the idea of cloud neutrality, which I think is going to become increasingly important. Like sure. Amazon says it doesn't look at your data, but it said that about its third party listings too. Yeah.

SPEAKER_01: Like if Facebook was in cloud, forget it. They would just look at your source code and copy every business. Yeah.

SPEAKER_26: It's a, um, it, it's, it's something where one comp one company's behavior is standing out amongst all the rest. Yes. And that is Facebook. And so just very important for people who want to go work for a company. If you're a young person and you're talented, I think working for Facebook is just bad karma and a bad experience. I wouldn't do it. Um, I would aspire to work at a startup if I was a young or even any talented person. Why take like the extra 10% of the money that Facebook would pay you to work at a boring company that steals other people's ideas. Better to work at a creative company where maybe you come up with some of your own ideas. Maybe you innovate on your own. And I think that would be a much better concept here for everybody. So, uh, I don't trust them. I can tell you one story, Molly. Uh, I went to meet with the Facebook team. I won't say who, uh, but very high level people. Leave it at that. And we were talking about pages and we had a bunch of content and we were a mic. We were a YouTube partner and they were kind of courting us to put more videos on YouTube. I said, okay, well, what's the revenues, but this area, we don't have a revenue split. Um, but you can, you know, market your other stuff off platform. I'm like, well, every page we have, we can't get people to click off site. We get like less than, you know, um, a 10th of 1% of the people in the group to click off. And you've also throttled. So every time we spent like $20,000 in an experiment building up this page to 250,000 people, we did all this investment in marketing. And now we only reach 5% of the audience. So we post a new video. We only get to 10%. We only get 10,000 views out of 250,000 on our other sites. Uh, on YouTube, we get like 30 or 40%. And they're like, yeah, well, you can spend money to get more views. I'm like, yeah, but we don't have ads on here. We can't. This model doesn't work. I was like, I tell you what, will you give us $1,000 for every video we place in here? Uh, we'll place, uh, you know, uh, 100 videos a month. You give us $100,000, $1.2 million a year. And we'll let you host those videos for, uh, five years, you know? And, uh, if any advertising comes, we'll do the same split as YouTube, you know, down the road. And they're like, yeah, we don't do that. And they've never shared money with their users. They're just starting to, I keep getting upsold on post a, what's their, what's their stories competitor?

SPEAKER_07: Or the TikTok competitor on Instagram? Uh, reels.

SPEAKER_100: Reels. Reels. I keep getting offered like $100 if I post a reel.

SPEAKER_26: So they're literally just trying to pay me per piece of content on somebody. Cause I guess I maybe have 20,000 followers on Instagram. I don't want to spend time there. Um, I only post celebrity pictures.

SPEAKER_11: I mean, that's what Facebook does, right? Like the way, the reason that you can copy, the reason that actually people keep going to work for Facebook. Like I'm sure that it would, it would, this all would be a lot easier if Facebook was a terrible place to work. But evidently it is not. It is a great place to work. People love it. They back up the money truck. They really, really take care of employees. That's what it's about. And then they, when they want to copy something, they're trying to grow reels to compete with TikTok.

SPEAKER_22: So they're literally paying people because they can, because they just print money. To get the firewall going.

SPEAKER_51: Yeah. Yeah. All right. Um, so anyway, we'll keep an eye on that. We'll see where it goes. I, I really don't trust Facebook. I would, if I'm, you know, any company or anybody who has content, I just wouldn't trust Facebook. Because what they'll eventually do is try to extract something from you like your money and they really screw their partner. So you'd be an idiot to partner with them on anything and any, and that really goes for building community. I think if you're going to build community. Yeah.

SPEAKER_26: You could, you could see like building community on Twitter kind of works building community on YouTube works. They're really thinking about you and what your needs are building community on LinkedIn seems to work really well. People have a good experience with groups over there. It's never worked for anybody.

SPEAKER_07: You know, they just don't treat content partners well at Facebook. It's not part of their focus until they start paying, you know, um, significant rates, uh, to content folks in a broad way. I just wouldn't trust them.

SPEAKER_63: Um, Zach Coelius described dealing with Facebook as quote, being coddled and feeling safe by Facebook and then being stabbed in the stomach and bleeding out slowly.

SPEAKER_112: That's yeah. Anybody who goes to bed with them. It's poetic. Yeah.

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SPEAKER_63: All right. All right. Let's talk about what else is going on in the VC space, because we have been talking about this downturn and there are far fewer investments quarter over quarter.

SPEAKER_11: But some big news broke from the information last night. If I had a penny, by the way, for every time I said that sentence, I also would be raising a $2 billion fund. Sequoia is reportedly raising $2.25 billion, billion dollars across two new sub funds. Sequoia saw the VC slowdown and was like, time to raise. Yeah.

SPEAKER_122: Keep going. Tell me more. All right.

SPEAKER_26: Well, I mean, basically, if you're a legendary fund, this seems like it's news because, oh, my God, we're in a down market. How could they raise it? Now remember who they're raising from. They're raising from the same LPs that they've always raised from in all likelihood. They don't change the LP roster all that much. Everybody wants to give somebody like Sequoia money. Therefore, um, it doesn't matter when they raise. They are immune to the market swings. When they do a fund, people want to invest. The people who are investing are people with giant endowments. So some college with a giant endowment, a retirement with a giant, giant endowment or a nonprofit like Ford Foundation, et cetera.

SPEAKER_51: And as a, um, Sequoia founder of a company inside.com as a Sequoia company started as Mahalo and we pivoted that company.

SPEAKER_26: Like when I go to their dinners, they would show us like, Hey, we distributed money just so you know where your work effort is going as founders to the Ford Foundation. Here's what the Ford Foundation does in the world. Here's, you know, I'm, I don't remember all of them, but that's pretty cool. Theoretically, here's Memorial Sloan Kettering. Here's what they're doing. Here's this endowment from this college. Here's what they did with the money. And so you, as you become even more baller in VC, you can pick who you make money for. You don't have to pick an authoritarian regime somewhere in the world. Like, you know, Jared Kushner, you know, taking money from the Saudis.

SPEAKER_07: He's taking money from the Saudis. Uh, some would argue like maybe that's not the group you want to make money for.

SPEAKER_26: Uh, they have plenty and why would you want to make money for them? Um, you may want to make money for cancer research.

SPEAKER_07: I've always told the folks that like Memorial Sloan Kettering other places, like, listen, when you think you need a new fund, you know, having two parents who are cancer survivors right now, I would really love to go to work every day. And have you in our fund because we just make it more meaningful for me. Yeah. And, uh, I think that's, you know, one of the beautiful things about venture that people maybe don't report on is actually who gets the dollars.

SPEAKER_05: And in a lot of cases, people getting the dollars are people who could really put it towards good use. That's pretty cool. I mean, just even the pension funds alone.

SPEAKER_11: The other thing I think that's really interesting about what Sequoia is doing, and I would love to talk more about this sub fund idea because Sequoia made headlines last year announcing that they were turning the main fund into an evergreen fund. Yes, the Sequoia capital fund to hold positions for longer as companies go public and mature, which is really interesting. They launched that catalyst program. That's sort of like an accelerator called arc. Um, and then he's running that. Yep. And then, uh, and Luciana Lisandru, and then just a few months ago, we covered Sequoia, China starting to raise $8 billion across four new funds. And then now there are these new sub funds under the evergreen fund. Yes. Is it.

SPEAKER_131: Is this a new thing? The sub fund thing?

SPEAKER_26: Is this sort of like what you have to do when you start to be funds is what I would say. The sub funds are their original funds. Yeah. And then the Sequoia fund is when these companies in these funds become square or Google or Apple or whoever, WhatsApp, which then becomes Facebook, Uber, DoorDash, all of those shares don't have to be distributed and sold. You just own those shares in a percentage of the evergreen fund. So all of the exits, instead of returning the money, um, and selling the shares, some endowment could say, you know what? Keep running it, keep running my money for you, because what happens typically is a venture firm gives the money to their LPs, those LPs take those returns, they go to a money manager of some type or a committee that then has to manage those investments. Okay. Do we keep our Airbnb and Uber and Coinbase? Do we sell it? Do we buy more? What do we do at this point in time when we get these distributions? They, Sequoia are going to answer the question for people. Hey, we, we got you into square. We got you into Google. We know the companies. Hey, maybe we'll stay on their boards.

SPEAKER_08: So I believe Alfred Lynn is still on the board of DoorDash. And I believe, uh, Ruloff is still on the board of square. Usually VCs would get off those boards. Why? I've always thought this was crazy. Like if you have that kind of influence in the world, why? Oh, so I recapture my time to invest in the next generation companies. My position was always, those are seats of power and influence. And knowledge. Yeah, stay on them. And then just hire more people to do more investing. So there are people who have different ambitions. I think Sequoia and Ruloff and Alfred have a big ambition here of building this large pro public market.

SPEAKER_07: Um, you know, uh, ownership position because they never sell their shares anyway. So that's what's happening here. These, these funds seem to me to be the original funds is how I would read it. And yeah, they're doing some experiments. I think they're a little arc, you know, give a million dollars to whatever number of companies, 10 companies and do it once or twice a year. They're like a good experiment for them.

SPEAKER_11: And then the other thing that's interesting is this split on this new $2.25 billion is, is a $750 million early stage fund in keeping with the trend we've seen over and over, which is these mega funds moving earlier. Yeah. And then also one and a half billion dollars for a us growth fund, which seems to me to be good news because what I keep hearing is that there. And you tell me if this is true again, what I keep hearing rumblings about or concern about is this barbell effect. So that there's a lot of money in early, a lot of money in late and a valley of death and growth.

SPEAKER_49: Yeah. Yeah, I think that's true.

SPEAKER_26: The best way to invest in tech and startups is just pure position as early as possible, a large position and maintain it or to get in at the end when you know, you can flip very quickly to a public outcome. The ladder is now gone. So the idea to put a lot of money in at the end, and then it IPOs and then it flip it surges on the IPO. Well, the public markets aren't buying what ventures are. They're selling right now, right? They don't want companies that are money losing. And they may not want more companies right now, they have this indigestion repricing going on. So yeah, in the short term, the late stage kind of spigot is turned off right now, it's paused. And so why would you put money there, which means people will want to do traditional VC, hard work, find a couple of founders, back them, get them through an accelerator, get them their one to $3 million seed round, get some customers, get the flywheel going and then do a proper series A of five to 10 million.

SPEAKER_144: But I guess what I'm saying is what if nobody's there for the series B?

SPEAKER_25: Oh, there'll still be people there, what it will be is the series B's valuations will come back down to 50 to 100 million. So the B's when they became $250 million valuations started to look like really growth rounds and C's and D's. I think what you're going to see is million dollar, you're going to see 100, 200k accelerator friends and family. Then you're going to see million to $3 million seed rounds. Then you're going to see, you know, four to $10 million series A's. And 10 million to $3 million.

SPEAKER_09: And 10 to $25 million series B's as opposed to $50 million series B's. So I think everything just compresses a little bit. And then these funds will be able to do series B. You know, we, we were able to do series A's with our syndicate for a hot minute, because we were putting in 2 million or a million and a half or three, so we could co lead in a, but then people were like, those are no longer the A's, A's are now 10 million. And I don't think you need 10 million in a down market to raise a series A.

SPEAKER_07: So then you're saying that funds that are currently earmarked as early stage, will be able to afford to be effectively growth stage, not growth, because they'll go, they'll go one stage later. And then people who are growth could go one stage earlier. And maybe they just have more dry powder than they thought they needed. So that's going to be a great outcome. If you raise a $500 million fund right now, and you expect it to put in, you know, I don't know, 30 companies at, you know, 10 million each.

SPEAKER_11: C. You know, maybe you could get a $30 million. Yeah, and then you would go to actually get a $30 million.

SPEAKER_51: You know, like, you know, you're saying that funds that are currently earmarked as early stage will be able to afford to be effectively growth stage, not growth, because they'll go they'll go one stage later. And then people who are growth could go one stage earlier. And maybe they just have more dry powder than they need thought they needed. So that's going to be a great outcome, if you raise a $500 million dollar fund right now, and you expected to put in, you know, I don't know, 30 companies at, you know, 10 million each. Uh, you know, maybe you could get the same ownership percentage for 7 million each. Right.

SPEAKER_153: But is there, is there a, is there a drought in growth is the question I, I don't, I don't

SPEAKER_26: think there will be because I think there's a, yeah, I think well, and also people were

SPEAKER_07: spending that money to artificially and face inflate growth and maybe they were not spending it in a judicious fashion. So I think what's going to happen is people are not going to spend like drunken sailors.

SPEAKER_09: So maybe they won't be buying stadium rights or, you know, what we $400,000 developer salaries will go back down to 200 or 150 and people will just be more judicious with how

SPEAKER_07: they spend money. Um, and maybe not like the crazy signature office space at $90 per foot. So just going to see people that the amount of money it takes to make money will compress as well. So people will be able to do more with less money in a down market, which you're already going to see. Inside of our organizations where I'm working with people on their efficiency and their professional development, I think in a gangbusters market, people are like, I can just throw people at this. Yeah, just add 10 people to the sales team as opposed to looking at the sales team of, uh, let's say you had a sales team of 50. You could add 10 people by just making everybody 20% more efficient. Um, which could be professional training could be time management could be incentives could be any number of ways to do that. Um, and you know, people were just throwing salaries and in escalation in a bidding war for employees. Now the bidding war is over. So I think we're going to see the 11 million jobs we have open of which I think three or four million are professional. And of those three or four million professional, probably a million of them are intact. You're going to see those compressed really quickly. So there's going to get filled really quick. So as everybody cuts 15%, all those open racks are going to start to get filled and they'll probably get filled at a slightly lower salary, um, or a flat salary. And as I've said, we saw that buyout of Zendesk that to me was a bouncing along the bottom moment. I think we might see a couple of other bouncing along the bottom moments, uh, which could be pay cuts coming in companies. Uh, just like we saw offers being the rug pulling offer, uh, you know, you haven't even started and your offer got rug pulled. That's, that's a sign of a, uh, uh, you know, a dark market.

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SPEAKER_36: And let them know your pal J Cal sent you. Um, well, so if, if Sequoia is consolidating power, so is Sam Bankman freed.

SPEAKER_63: Oh, there you go. Yeah, I'm, I'm, uh, I'm skipping ahead to this breaking news.

SPEAKER_166: While we're taking the show at 11 AM June 30th here. Yep.

SPEAKER_11: So breaking news as we are taping, which is that evidently FTX and SBF, uh, FTX is acquiring BlockFi straight up buyout for $25 million. That actually is million with an M. That's 99% below BlockFi's last private valuation. The New Jersey based company was at one point, uh, last valued at $4.8 billion. And of course, Sam Bankman freed has been going around, you know, backstopping slash consolidating this industry almost under like single ownership. Yeah.

SPEAKER_170: So it was trade.

SPEAKER_26: It was the last private market valuation of BlockFi was $4.8 billion. I don't know how many customer accounts they have. Uh, but we covered just the other day that he gave a $250 million credit line. We offered it, um, which would wipe out all the previous investors. We discussed this, you know, if you have no offers, the only offer you have is the best and final offer for the company goes out of business. So people take it. Uh, and I know pumps Morgan Creek digital was trying to make some kind of competing offer here, but for 25 million, he's basically buying these assets and it's probably, I don't know how many customers they have, but, uh, how many BlockFi customers are there?

SPEAKER_43: I mean, this is stunning. Yeah.

SPEAKER_172: I mean, this is just a massive, like it's a, it's a, it's weirdly like gutting the unicorn and pulling out the organs. It's just taking the horn. It's dark.

SPEAKER_175: Just taking the horn.

SPEAKER_176: It's like shoot the unicorn, take the horn. Oh, I'm so sorry.

SPEAKER_177: I'm so sorry.

SPEAKER_11: It was apparently close. Uh, BlockFi was close to finalizing a down round that would have valued it at more like a billion dollars. Um, but even so this $25 million is, is a pretty brutal outcome. This is according to a report from CNBC, by the way, we should say at this moment that was citing, uh, sources close to this. Um, but it said that they were very close to this deal. Yeah. It's, I mean, I guess those other investors are not only wiped out, but not really paid

SPEAKER_05: back. Check this out Molly. Yep. As of March, 2021, we just found some web research here, so we'll have to double check

SPEAKER_26: it. But, uh, it seems as though BlockFi had 265,000 funded retail clients and over 200 institutional clients. We take the 25 million and, uh, we split it equally between those two types of customers.

SPEAKER_07: Um, you know, uh, 12 million, 500,000, uh, divided by 200 corporate clients is 62,000 per corporate client and divided by 265,000 accounts from retail. $47 per account. So the CAC here is basically 50 bucks an account. That's pretty extraordinary to, you know, like think about how much advertising or, you know, crypto is hiring whoever like Matt Damon or buying the Staples center or whatever place they bought, uh, to get these accounts. They were probably spending hundreds of dollars per account. So this is a way for him to just boom, all of a sudden scoop all that up. Now, how many of those are real account or how many people of the, you know, maybe half of those stick around if half stick around. Now it's a hundred dollar customer acquisition costs. But I think this is probably what, um, if you really do believe that crypto is real and you're Sam, okay. You just made a pretty savvy trade to consolidate market share. So, yes.

SPEAKER_11: Or as Francis Centaur puts it, I ate his liver with some papa beans and a nice Chianti. Yeah. I mean, it's so interesting, right? How he's just this character who will end up. Somebody had made the comment. One of our notice had made the comment when we talked about it before, um, that he could end up the world's richest man by 2024. If this, if crypto rebounds and he owns increasingly significant chunks of it in a lot of accounts.

SPEAKER_184: Yeah. It is pretty remarkable. It's an account roll up.

SPEAKER_07: Yeah. If you believe that these accounts are gonna, you know, be super valuable and who knows what the duplicates are between this and other assets he wants to buy. But yeah, it seems like a low at 25 million, it's a low risk strategy for him. If he's got tons of Bitcoin laying around or tons of other crypto assets. A hundred percent. Yeah. So, and I still maintain that.

SPEAKER_11: Yes. It is an account roll up strategy. It is also a prop up the ecosystem strategy. I really think it is because he can't, if he's the only person in the position to do this, then one, it's smart to be the vulture, but it's also like, if that's where all your money is coming from, you cannot let this. Unicorn herd.

SPEAKER_07: If it did die, I guess what would happen, I guess they would be in all these accounts are gonna be in some sort of bankruptcy process where there are, you know, accounts are held. So that probably is part of this, uh, apparently according to Nick, he recently told that to

SPEAKER_11: Forbes. That's good. He's getting the quote.

SPEAKER_192: Well, he told Forbes that. Yeah. I think what he said is a lot of these exchanges are secretly already bankrupt. So his theory is a lot of these folks are bankrupt already. Yeah.

SPEAKER_194: He also said he doesn't care if they're bad investments. He needs to do it to like save the ecosystem. I'll pull the quote in a second.

SPEAKER_07: I'm just grabbing it right now. So yeah, I mean, but it, this seems like a solid investment actually, if I were to look at it. So, uh, savvy move on Sam's part, I guess. Yeah. We'll see. We'll either look like crazy, like buying up all the dead dot com brands, you know, and just having their web pages and non-functional businesses and no employees.

SPEAKER_08: Uh, or, you know, it, it could wind up being super savvy move if crypto rebounds.

SPEAKER_07: I, the chances of crypto rebounding now, I think, like, I think this is like a big flush of all of the, you know, what they would refer to as the coins. I, I think all of those, you can believe that out, but all of those ish coins, I think, um, are going to get wiped out. Nobody's going to have faith in them. And then there'll be a couple of projects that stick around and people will keep playing with them.

SPEAKER_26: But, um, the amount of regulation coming and the amount of lawsuits coming because everybody lost their money. There's no way for people to get their money back. Right. We would agree on that. Molly.

SPEAKER_11: Like that money's lost. If you, yeah, that money's gone. There's no back. There's no backstop there. There's no, you know, FDIC version of SBF here to protect your money. If you lost it, it's gone.

SPEAKER_26: It's gone. So, and, you know, these projects then have no, like Luna's not coming back. Right. Just as, but one example, or some NFT project where people bought NFTs for $10,000 and now there's nobody buying them or they're buying them for like $10 as a joke, which we saw like some of those kind of things going on. If all of that is truly, you know, um, washed and not coming back, that means there's going to be lawsuits, there's going to be investigations, whatever, hand-wringing about that. Those, that takes years to work out. And this is what happened in the.com era. You know, I have the scar tissue. Is nobody trusted entrepreneurs and.com for maybe five years. And then when. Delicious got bought by Yahoo. Weblogs Inc. My company got bought by AOL. Flickr got bought by Yahoo. There was a slow, like, okay, these, these are real businesses. They are doing some real stuff in the real world. You know, maybe we should buy some of these companies. Maybe there's some real business here, but people really didn't buy it. Uh, they thought, yeah, this Amazon, there's Google, this Yahoo, but most of this other stuff is garbage. Um, and it's not like any of those companies came back. I village didn't come back. Pets.com didn't come back. Like they were gone forever. That's what's happening here. I think a lot of these projects are gone forever. They're not coming back.

SPEAKER_07: Yeah.

SPEAKER_05: Um, and it'll take three, four or five years of actual delivering a product and delighting users for this to actually start again.

SPEAKER_11: And this is, I mean, this is gonna sound like a random twist, but it feels a little bit like the collapse of the Soviet Union. Like this is a moment where oligarchs can be made because, because these assets are just floating around there. Right? Like, so when the Soviet Union fell apart, I know this feels random, but it just popped into my head. And I think it works as a metaphor. You had all these people who were like, oh, I was able to acquire this stockpile of plutonium, or I was able to like, you know, sneak in here and get all this oil. Or I was able to do this or that or whatever. When there were no rules and nobody was looking and people made off with billions. And I think this is a moment where that's happening. And there might be some unraveling and some investigations, but there are definitely people who are gonna make off with billions. And frankly, a lot of people who should look at what SBF is doing. And if they have the capital, like do a similar version of that, because this is your moment to make off with a stockpile of oil. That's going to be worth a lot later. If you believe this ecosystem is going to continue to grow and develop into real products that delight users, which I see no reason why it's not, to be honest.

SPEAKER_204: It's yeah, it's possible NFTs that were part of the first wave or like, you know, internet companies that were part of the first wave.

SPEAKER_26: They tried. It was too early, too complex. They weren't refined enough. They didn't get product market fit, whatever the case is. They got wiped out. But then the next web 2.0 companies actually did fulfill the promise and create cool products and services that people liked. So we'll see. I think also the $25 million number I'm guessing is on top of the $250 million credit line, which would then put the price at $275 million. I'm guessing there were no other people who were willing to buy this. And so if you've got a startup that's failing, and you've got, I don't know, whatever three months worth of money left, you're not going to be able to run a real M&A process. So I'll have founders come to me. They're like, you know what, we tried to raise money. We tried to raise money. We tried to raise money. We tried to raise money. Over the last six months, we couldn't raise money. So now we're going to start an M&A process.

SPEAKER_02: So when they knew they were in trouble with nine months of runway, they did six months of meeting with VCs couldn't raise money. And then with three months left, they started an M&A process. And guess what? An M&A process takes over a year.

SPEAKER_26: So you have to, like in year one, or let's say it's a two year process, you spend like six months to 12 months getting to know doing listening tours meeting with potential acquirers under the auspices of trading notes and socializing and maybe potential partnerships. And then maybe the next year they make you an offer. So if you think of it like a two year process, you're kind of circ you're circulating around the circuit getting to know people doing conferences meeting the BD people trading notes in this little dance that eventually winds up a year or two later with an acquisition offer. You can't do that.

SPEAKER_02: You can't compress that into three months. You can't compress it into six months.

SPEAKER_26: It just never works. So who comes? It has to be a crazy mercurial CEO who says, I want that asset. Who has a ton of money? Yeah. Yes. And who has the decision making power, right? Right. So if you go to the if you were a founder, you have three months left the runway and you go to the M&A person at some big company, let's say you wanted Microsoft to buy it. You get the M&A person on the phone, you share the asset with them. They're working on 10 other M&A deals of which two will close. They're not going to stop everything and try to find, you know, their boss and their boss's boss and the unit head to get your company fast track to do a three month purchase. It's not going to happen. It's not going to happen.

SPEAKER_04: You're going to go out of business. You're almost be better off just shutting down at that point and putting it into cockroach mode, you know, and and trying to slowly find somebody to buy the assets, but it just never works. So that's one micro lesson on a micro lesson on M&A. Yeah. Can't do it in three months.

SPEAKER_11: See NBC in its original reporting on this cited some of those anonymous sources saying there was more than one deal on the table. Oh, okay. But it does make me wonder if the other deal on the table, probably from pop and those other equity investors would have taken too long. They would have gone under an interim, right? You know, maybe there was not even time to cockroach there. I don't know. But it sort of makes it sound like instead they took this FTX offer.

SPEAKER_212: I don't know, you know, according to that same store or the Forbes story.

SPEAKER_07: Sam said that FTX remains profitable has been for the past 10 quarters. So it sounds like he's ran his own business to be profitable, which means in a market like this, you don't have to make a ton of cuts and maybe had a lot of cash runway people who ran their businesses conservatively in an upmarket look stupid. Oh, they should have gone faster. They should have gone harder. They should have built market share. And then when the market corrects this hard, they look smart. Mm hmm. So hopefully I'll look smart with the inside and launch like, oh, yeah, I was conservative. I, you know, kept cash reserves. You know, I didn't overstaff. And I think the same thing here, maybe opportunities emerge, right?

SPEAKER_05: So maybe there's some bailing.

SPEAKER_36: Yeah, I'm gonna put $300 behind Shiba Inu and become an oligarch. Let's go. I don't think it works that way.

SPEAKER_07: But yeah, Coinbase has been losing money, right? And so they have been investing and he's had to make a lot of layoffs. Now, of course, they did become worth, I think at their peak, like maybe. I don't know if they were close to 100 billion, but it was definitely above 50 billion. Um, now the stock's down 90%. I, I'm fascinated by Michael Saylor. He actually DM'd me.

SPEAKER_223: I can't get enough. It's literally, there's, the future is gonna be a war between these two guys. I actually want Michael Saylor to be on this weekend. He DM'd you? Come on. I gotta, yeah, I gotta get him on.

SPEAKER_100: You know what? I just, he DM'd me and I've said such crazy stuff about him. I'm not sure what this is going to be.

SPEAKER_227: If there's going to be another Palmer Luckey situation where he just comes on the show and reads what I said about the crazy. You can handle it. You can handle it.

SPEAKER_52: Of course I can handle it. Um, everybody knows, uh, my, or should know who listens program. It's a company called MicroStrategy.

SPEAKER_26: They have some core business and they were public. The CEO, Michael Saylor, who has a bit of a sordid background, I would say there was some sec action against him previously. Um, and, uh, well, I'll, I'll get the exact details of that and tell you at the end of the story. Um, he took that company and then essentially turned it into an ETF. De facto ETF, not a literal one where he started buying a bunch of bitcoins. And he started taking loans to buy bitcoins. And he's the person who I've played the video before on the show. He said, listen, if you believe in Bitcoin, the only logical thing to do is sell every asset you have, if you own a business, if you own a home and acquire more Bitcoin. And to his credit, he has continued to do that. I think his average price was in the, you know, $30,000 range for buying Bitcoin.

SPEAKER_00: And now it's gone down.

SPEAKER_02: And he just announced that MicroStrategy has purchased an additional 480 bitcoins, 480 bitcoins, uh, for around 10 million at an average price of 20,817.

SPEAKER_51: That was his tweet as of 628, 22. MicroStrategy holds around 129,000 bitcoins, 130.

SPEAKER_04: Let's round it up. Uh, that were acquired for about 4 billion. Um, and I think he's down a billion dollars based on that average price.

SPEAKER_52: Mm hmm. We were bouncing around 1920 today. So. Yep.

SPEAKER_63: They're not, I mean, again, he's going for full, full oligarch status here.

SPEAKER_11: There was a pretty good breakdown in the, in the, uh, Matt Levine newsletter. I love that newsletter about MicroStrategy's version of this sort of comparing how, you know, three arrows capital and Celsius had done all of this, like borrowing and lending with only coin as collateral effectively. And then in some cases rehypothecated that collateral, like put some Bitcoin up as collateral over here and then use or taken someone else's collateral. Taken Bitcoin as collateral to lend them money and then taken that same collateral and then borrowing against it. So essentially using it in two different forms, like reaping it as collateral and then using it, putting it up as collateral. A little dangerous if that's true.

SPEAKER_110: Yeah.

SPEAKER_11: Right. And so Levine was pointing out that MicroStrategy has not really done that, that, that this is, these are leveraged buys of bitcoins that are leveraged by money and not other coin. Right. So that ultimately if there were a margin call and Michael Saylor has said this many times, um, that MicroStrategy would be okay. That is balance sheet could actually absorb this. They could just give more cash.

SPEAKER_51: They could just give more cash. They could just give more cash. And just for the background, uh, the sec today said MicroStrategy, this is a story from 2000. Uh, MicroStrategy top two executives and its former chief financial office agreed to pay a total of $11 million to settle civil accounting for our charges related to a restatement of the software vendors financial results last March. So they had to restate these and they made significant, uh, changes to fix it, yada, yada.

SPEAKER_26: So, um, you know, that's, that's more than a, that's 11 million in 2000 was more than a speeding ticket. Let's just put it that way.

SPEAKER_25: That, that's, that was a, you know, on the high side of fines today, you might think something small like that, um, you know, might be a little bit of a slap on the wrist. So that seemed more significant. I don't, I don't suspect somebody who did that in the past would do it again.

SPEAKER_243: Uh, after having that experience, they would probably have better accounting now.

SPEAKER_244: Uh, and I'm sure there's two sides to everything.

SPEAKER_243: Yes.

SPEAKER_113: So, uh, yeah, but there's no question that this guy is all in on it and you should take.

SPEAKER_11: He's got conviction. You should take investment advice from lots of different sources, not just the one person who's like selling your mortgage.

SPEAKER_172: All their reserves are on the blockchain now.

SPEAKER_249: Can't get funky about that. It's transparent. Yeah.

SPEAKER_172: Yeah, exactly.

SPEAKER_00: The sec could just, totally transparent, except if they were taking those Bitcoin and trading them off the chain and, you know, who knows what's happening, you know? Yeah.

SPEAKER_200: Um, we have no idea what's, you know, going on here.

SPEAKER_11: Very funny tweet by Paki McCormick on this topic. Oh, from the not boring company saying the year is 2140. There are 21 million Bitcoin. Michael Saylor owns all of them. Michael Saylor is now immortal. MicroStrategy has long since folded. His Bitcoin are worth $13 and 93 cents, but they are his. He is happy. He will be happy forever. There will only ever be 21 million Bitcoin.

SPEAKER_76: No, that's his, that was his. It was like a coin on CNBC is like, listen, this is finite.

SPEAKER_26: You can't print more money. Yeah. Which plays into this narrative that, you know, the feds printing all this money. Bitcoin has a limited supply. Therefore Bitcoin will be, you know, a hedge against the dollar. But it's traded exactly in sync with the money printing machine as Jamal pointed out on all in and other people have pointed out much more eloquently than I will.

SPEAKER_04: It's moves. It seems to move exactly with crude stocks in the stock market. In other words, it moves with people's discretionary spending is what it seemed to do.

SPEAKER_26: Mm-hmm. And it's quite possible. You know, the, we were looking at a chart the other day of the average monthly price of Bitcoin.

SPEAKER_04: And when you look at what happened during the pandemic and all of this extra money was printed, stimulus went out. The free money environment that kind of crescendoed in 2020, 2021. That's when all the growth is.

SPEAKER_07: And if you look at the time before that, it was kind of trading in that $3,500 to $10,000 range, which means if it's going to reverse, it's going to get cut in half or 75% from here. And there are people who do in the community do believe that could happen, that it could go down to five to 10,000. So be careful here. If you want to build a position, you know, you might want to do that over time and might want to make sure that it is a portion of your portfolio that you're willing to lose. And it's in the, you know, highly experimental bucket of your, you know, investing where you could afford to lose it, uh, is how I would think about it.

SPEAKER_192: Or it is how I think about it. Yes. I should say 300. I think about my Bitcoin holders. I'm holding, I'm a hodler.

SPEAKER_46: And I'm saying that I've actually been thinking I might buy some extra Bitcoin at some point, you know, looking at it. Like I think Bitcoin is real.

SPEAKER_192: Is that even FOMO? I just think if it hasn't been compromised yet and it's a good store of value globally, I believe. That citizens around the world are embracing it as a place to store their wealth.

SPEAKER_07: Uh, which means if there's a finite amount of it, it should continue to go up as people need it and require it as the global standard for people who don't have a, you know, a great banking system, you know, or have a government that prints too much money.

SPEAKER_05: Yeah, me too. Same $300 at a time for sure.

SPEAKER_200: There you go. All right. Let's go to, we live in the future.

SPEAKER_269: This is what everybody loves. We live in the future.

SPEAKER_11: We're just going to have some fun for a minute. Yeah. Major League Baseball. This is highly controversial. Major League Baseball will likely be introducing an automated strike zone system, AKA robot umpires starting in 2024. Commissioner Rob Manfred told ESPN that the automated strike zone system may call all balls and strikes and then relay the information to a plate umpire or maybe be a part of the review system that lets managers challenge calls, the reply review system. Um, in recent games, some, uh, fans have had some meltdowns due to missed calls in umpires. Apparently there was one, uh, an insanely low strike error during a Detroit Tigers and Minnesota Twins.

SPEAKER_49: Tilton, the MLB has been experimenting with robo umps in the minor league Atlantic AAA since 2019. Should we watch this video?

SPEAKER_272: Do we have video of this? I think we do. I want to see the especially bad call.

SPEAKER_204: Oh, we're going to see the especially bad call. I want to see the robot.

David Friedberg: I want to see the robot who makes my coffee and then on the weekends or at nights, instead of making my coffee goes.

SPEAKER_11: So for those of you who are not watching this on video, the ball is roughly two feet below what would commonly be agreed upon.

SPEAKER_01: That was a terrible call. Yeah, it's like two feet below the strike zone. It's like practically in the ground.

SPEAKER_275: Okay, let's take a look at the show us the actual.

SPEAKER_276: Yeah, so let's have a picture of the robot, which would basically just be like, I'm the strike zone.

SPEAKER_00: How come we don't have video of the robot? How did they, if they're doing video of the robot in AAA games? I don't think it's a robot.

SPEAKER_05: It's just like a series of sensors. Oh, they call it robo ump, right? Robo ump. Okay, so here's what it is. It's literally.

SPEAKER_00: It's a sensor wall. It's a wall.

SPEAKER_280: It literally looks like a panel from a roof panel. Yeah, that's just sensing where the ball is. I mean, it's so obvious.

SPEAKER_01: It's the physical version of the box that they show on TV is really what it is. And so then it would just sense if the ball is inside or outside that boundary and then make the call appropriately, which I'm sorry, I think is not a future that I want to live in. I want to argue over calls forever. I think that corruption and, you know, capriciousness is built into baseball and that's what makes it great.

SPEAKER_283: So let's take both sides of these.

SPEAKER_00: If you care about fairness, you would want. And having the correct outcome, you would want a robo umpire. Yeah.

SPEAKER_26: So I believing that the Knicks have been robbed for many years from winning games because of the umpires. That's my belief is that the umpires have it for us.

SPEAKER_52: No, I don't believe that.

SPEAKER_290: I think we just have just been terrible. Everyone believes. Everyone believes that. Are you kidding me?

SPEAKER_292: Well, no. Remember all the years that the Raiders were in Oakland? It's just like you're the Raiders.

SPEAKER_26: Anyway, this puts to bed all of the, this would put to bed all of the, uh, um, rumors of corruption or umpires playing favoritism or having unconscious bias. They, they like a certain team. They like a certain group of fans. They like a certain player. They are friendly with somebody.

SPEAKER_293: So removing the charmingness of an umpire kills the experience, but having the game be called properly. That would be much better. Like, and so let me ask this.

SPEAKER_294: I have to say it's totally different than basketball because imagine if totally different.

SPEAKER_295: The referee you had in basketball, the three point line was further out or closer in. That's what it is because every umpire has a slightly different strike zone. It's totally different. It's crazy.

SPEAKER_296: Yes. Yeah. It's not. And should the strike zone in some way be related to the size of the individual?

SPEAKER_192: It is. It is.

SPEAKER_300: A larger person has a larger need to write a book right below your chest is the. Yeah.

SPEAKER_293: So it is.

SPEAKER_192: It is a dynamic thing. It's not like if you were Christophe Porzingis and you're seven, one or two or three or whatever he is, you have a different three point line or a different free throw line than a six foot three Steph Curry or something.

SPEAKER_277: But you do have a different strike zone, right?

SPEAKER_113: So then what would they do with the, how would the robo? I think the robo knows where your knee is. I think at the AI can tell where your knee is. Yeah.

SPEAKER_307: Yeah. Oh, okay. That's an even better way to do it is a uniform has sensors on. It would be easy if you had something, but then you would like be, you'd be like. Adjust the sensor a little lower, a little higher.

SPEAKER_294: I mean, but that's kind of the fun about baseball too, is it's such an old sport that like they

SPEAKER_295: actually allow you to cheat. But when you get in trouble for cheating in baseball is when you use like an apple watch to cheat, you're allowed to like steal a sign with your eyeball. But if you use an apple watch to like thumb your hand, then it's cheating. Right. So there's always a weird. Yeah.

SPEAKER_312: The tar of the bats is a good one. I want all of this.

Jason Calacanis: I want all of this. I want you to be have like a little pine tar on your helmet and I want you to be able to like buy off the ump. I want to sit behind home plate and scream at the ump.

SPEAKER_11: Like otherwise it's just, otherwise it's robots playing a game. Boring and baseball. Look, baseball is boring enough. The reason it's boring is the controversy.

SPEAKER_15: What do you even have? You want to make baseball fun. It's way too slow. It's way too slow. There's too many games.

SPEAKER_00: Cut the number of games in half. So don't put in robots. And put in robots. This is my official.

SPEAKER_176: And then the game's got to move faster. That's the whole thing. So how many innings? Nine innings. Corruption and capriciousness. Bring it down to seven innings. The American way.

SPEAKER_26: Bring it down to seven innings. Let's make this a little faster. American way. You don't need to do 18 holes of golf either. That's ridiculous. It should be 10. Everybody is just wants more time away from their spouses. That's the intent of these things. You want to get away from your family for the longest period of time. I know the guys in my circle who are really into golf and who are really into baseball. And they love going to those baseball games.

SPEAKER_02: And they love going to golf, Molly, because they got to get away from their families because they're losing their minds. And they want an excuse for like a whole day away. You go to baseball.

SPEAKER_01: That's a whole day away. And they might have rage issues and they need to get those rage issues out. And that's why you have to be able to yell at the umpire. And if you don't have that, if you have that taken away from you, you're going to start

SPEAKER_325: to see these like rage, heart attacks happening because you need an outlet for your anger. And that outlet is your cheating ass umpire. No.

SPEAKER_26: America. The statistics are perfect. Look, it uses a system that was created by golf measurement devices from a company called track me.

SPEAKER_07: The technology for the minor league identifies, attracts pitches, location, and a phone tells the umpire if it's a ball or a strike after they're notified, the umpire can make the call behind the plate.

SPEAKER_293: So you still get your umpire, but the umpire is not making decisions. The umpire is now an actor. The only thing that I like.

SPEAKER_264: So we could hire all types of great actors. We could have people from Hollywood. We could have people from Broadway. We could have people from vaudeville. You could, they could, all would be about the flourishes of the call.

SPEAKER_336: Jason, Jason Bateman. Jason Bateman could be a great ump.

SPEAKER_339: You could, what about the, what about the, what about Zach Galifianakis could be great. Because he looks like an umpire.

SPEAKER_341: Any fat actor could be great. Any fat comedian would be amazing. Sorry Zach.

SPEAKER_342: The only thing I like about the robo umpire is that they do say it would shave like seven minutes off of. Nine. Nine. According to the MLB.

SPEAKER_01: All right. I mean, that's, that's because the review system is what broke it. But previously you had America's favorite corruption and capriciousness and you would just yell at the ump, but they would move on without you. Forget it.

SPEAKER_11: And then they introduced this fakakta review system to be like, you know, oh, well let's make it fair or whatever. When it's just like, no, just throw the ball, yell at the umpire, move on. That's the game. That's baseball.

SPEAKER_293: Um, yeah, no, I, and, and I think this has to come to everything. We should have this also for tennis.

SPEAKER_00: Tennis is already using stuff, right? Like they do. And so does, uh, soccer football. So enough.

SPEAKER_293: It's enough with the humans ruining the game and taking too much time. The umpires gone. I want them gone. That's it. I want a robot could, could pick companies to invest in.

SPEAKER_113: I'm just saying. Yeah. Good luck. You want to take the human out of everything. Well, okay.

SPEAKER_26: No, I, I, I don't think it would work. Um, there is a, I mean, there are people who want to do it in the public markets. We have more data. Um, it will sit in there. People have pitched me on AI to sort through companies and we are doing, you know, this week we hit another record in terms of the number of companies we sorted number of companies we met with here at launch.

SPEAKER_08: So looking at that, I do think AI will probably be able to make some reasonable sorting efforts at some point. We're basically building heuristics for humans to do, but that might be, you know, a 10 year journey.

SPEAKER_04: Baseball has reviews.

SPEAKER_126: Baseball has reviews.

SPEAKER_172: You're just writing us out of history right now, Jason. Writing us out.

SPEAKER_126: No, I think humans move up to a more interesting thing to do. There are more interesting things for humans to do than say, this is a ball or this is a strike.

SPEAKER_02: I'll be honest.

SPEAKER_26: If the computer can do it better and do it more consistently, let's move on to the next thing, unless you want to do it as like a civil war reenactment. Like right now, what they're doing is turning the umpires into civil war reenactors. It's kind of insulting to them. You know, it's like it's just they're turning them into cosplay horrible. Like if the umpire is like they're the computers, like tell them that was a strike. You will comply. Yeah. Tell them it's a strike.

SPEAKER_358: Why do I want to watch this game? This is a terrible game. Uh, that's going to be great.

SPEAKER_359: Take the nine minutes out. Fantastic. All right.

SPEAKER_360: Unless in major league baseball, they need them more in like suburban little leagues where you have 15 year old. Oh, yeah. Those crazy dad games for nine year olds. And he's the 15 year olds like a strike. Actually, yes. Screamed at by like 40. Yeah. For sure.

SPEAKER_11: That's true. That's where they need robots for amateur sports. Yeah, would be great. And then let me just still yell at them in the major.

SPEAKER_39: I will say I there is a compromise to be had here. How about this? How about we compromise? On an actual robot.

SPEAKER_00: Who is actually trained. To get one out of a hundred wrong in a pretty egregious way. And then we'll get in a fight. So there's a randomization. Every 20 pitches. We're going to do something crazy. And the robot will fight with the umpire.

SPEAKER_366: We'll fight with the manager and the players.

SPEAKER_368: I feel like if you pitch that to Elon.

SPEAKER_366: That's what I like. That's what I like about J Cal.

SPEAKER_369: The Tesla bot do that. I'm saying the Tesla bot. This is good.

SPEAKER_371: Those Tesla bots. That's what I like about J Cal. J Cal always finding a way forward. Yeah.

SPEAKER_00: I'm trying to compromise here. If the Tesla bot has to labor and like create batteries all day, they might want to do this on their day off. They might want to have a be out at the park.

SPEAKER_268: This could be a great compromise. Strike three. The robot gets time off. Strike three. Strike three. Ball four.

SPEAKER_379: Ball four. If you argue with me one more time. I am going to send you out of here. Out of here.

SPEAKER_314: Out of here. Out of here. Do not kick dirt on home plate. Please do not kick dirt on home plate. Please do not kick dirt on home plate. I need to see your bats.

SPEAKER_46: That looks like more than 18 inches of pine tar. Do not throw the bat.

SPEAKER_388: Do not throw the bat.

SPEAKER_389: Take your hat off. Let me see your hat. Is that sandpaper? I detect your scuffing the ball.

SPEAKER_391: Oh God. It was so great. The singularity is here. It's so great. I mean, it's just all the places you don't want a robot are going to be the interesting ones,

SPEAKER_243: right? Like there's going to be a lot of places where you're like robot. Perfect.

Chamath Palihapitiya: Oh, you want a deep sea dive and fix the pier? Yeah. Send a robot.

SPEAKER_76: But there's going to be other times when you're just going to be like, eh, probably don't want a robot doing my umpiring at baseball or like a massage. Like robots going to do a better job and be cheaper, but I don't, a massage with a robot's kind of weird.

SPEAKER_200: It's so, it's so human to, to roboticize all the wrong things. That's just classic.

SPEAKER_46: I don't know what, I mean, robotic lifeguard. I'm kind of on the fence. I kind of like the idea of a robot coming out and saving me. Yeah.

SPEAKER_122: And that sounds like perfect vision, right? To be able to, to cut through the crowd and see the kid on the bottom and whatever. Like, yes, please. Or you could have a hundred of them.

SPEAKER_403: They could be out there already. They could, you could, everybody, they could be like a robot in the ocean positioning itself

SPEAKER_26: between the swimmers dynamically. So it's always within, you know, 30 seconds, as opposed to playing bejeweled on a, with their sunglasses on, taking a nap, listening to a podcast. Yeah. See, now we're talking.

SPEAKER_01: See, now we're talking. Stay the hell away from baseball. Okay. All right. So we, we've had so much fun. Are we going to buzzkill it with talking about media? Absolutely.

SPEAKER_200: We'll start with the shutdowns and the buyouts. Then we'll go to the layoffs. That was your, that was your rest. That was your seventh inning stretch, if you will. And now back to the news. Back to crazy news.

SPEAKER_26: Okay. Substack is everybody knows has raised a ton of money to go after email newsletters. They did, um, a lot of, um, uh, guarantees where they paid people hundreds of thousands of dollars, perhaps millions to start, uh, their, uh, newsletters over there. Stratechery was kind of their inspiration. You saw Stratechery, uh, you know, was making millions of dollars a year off of a $10 a month subscription. And I think they credit that as like being like part of the concept here. Uh, Antonio Garcia Martinez got a bag. Um, yeah, a bunch of people got, got a bag.

SPEAKER_408: I think the green won't get a bag.

SPEAKER_05: Yeah. They were giving bags out to everybody. Yeah. Um, they were giving bags out to a lot of white guys, which was, uh, oh, well, okay. No, there was a whole thing about that.

SPEAKER_412: Was there? Yeah.

SPEAKER_243: Yeah. It was a thing. Um, I just, I just thought of a great inappropriate joke. I would say, um, anyway, I don't want to get myself in trouble with this. There's gonna be a real budget.

SPEAKER_08: Cal if you want, if you don't watch it, hold up now, here's my new way. Well, I mean, this is, I mean, I don't want to say, but an anonymous account, uh, just in our YouTube Slack said, well, they were backed by Andreessen Horowitz, a bunch of white guys. Um, so they're just passing the bags down the white guy train. Uh, I didn't say that. That wasn't my joke. That was a joke that came in independently from somewhere else from an anonymous YouTube account. I, that was not my joke that the white bag came down from Ben Horowitz to them, to their white writers.

SPEAKER_01: I mean, that's, that's why that tech bro culture thing, again, that hearing that's happening right now.

SPEAKER_11: Uh, so like, Hey, we noticed. So anyway, though, Substack was most recently valued at $650 million in a series B back in September of 2021. They had raised $83 million. Um, had, I think said at some point, no, no, no, we're doing great. Our, our plan is to grow the team and not do layoffs. Um, and then now there has been a report that Substack laid off 13 employees, which is actually about 14% of its staff. It's pretty, pretty like lean organization. Yes.

SPEAKER_426: I mean, it should be, I mean, it's MailChimp 2.0 on steroids.

SPEAKER_293: Like they have some good social features on it. They made an app, but you really don't need a lot of people to run this business. Let's be honest.

SPEAKER_26: Um, you know, a, a modern app takes a dozen people. So they probably have 12 people on the app team to build the site and the service. That's probably 20 people at the scale. They're at, you know, 15, 20 tech people. They probably have a lot of business development people, uh, you know, trying to recruit folks and who knows what the other folks are doing, but that's a big valuation. So let's look at, and you know, it happened in September, 2021, their series B at $650. They raised a ton of money, smart move by the founders, but their business model is 10% of the revenue of their writers. In other words, it's a really bad business. Yeah. Um, and yeah. If somebody gets to scale, I pointed this out. You would be overpaying for their service, even at 10%. So let me slow down and just because I looked at this business with inside like, hey, maybe we should do something similar long before subs that even existed. And I said, this is a terrible business to be in. Let me explain why this is a terrible business. Um, as I saw it now, they may have a different plan. And typically founders start somewhere and then they add two or three things. So again, just the business as it exists today is a terrible business. I'll explain why. Um, they probably have a couple of million paid writers, right? So, uh, Substack told Axios in late 2021, the top 10 writers on the platform collectively generate 20 million in annual revenue.

SPEAKER_25: Hmm.

SPEAKER_431: Okay.

SPEAKER_25: So 10% of that, um, would be $2 million in revenue.

SPEAKER_432: Now let's say, yeah.

SPEAKER_25: But then they, yes, absolutely.

SPEAKER_11: And that's assuming they get that 20 million.

SPEAKER_172: Cause they also, according to the New York times separately told investors that it was only 9 million. So this, so here's how that math could work out.

SPEAKER_08: Yeah. Um, they could, um, have given people advances where they don't get any of the money or something like that.

SPEAKER_26: Remember they were given these big advances for a year or something like that. Yeah. And some people who they gave the advances to, I believe, regretted it because they made more money. So in that case, Substack made a good trade, right? So let's start via is 10% of subscription revenue, a good business.

SPEAKER_08: If you had 10 employees and they each cost you 10 K a month, you can roughly use in a tech company, a 10 to 20 K a month per employee multiplier.

SPEAKER_07: Obviously developers might be 250, but you know, an accounting or an operations person might be, or customer support rep might be 40, 50, 60 K. So you blend all those numbers together. I always use back of the envelope, you know, 10 K for per employee per month for a company outside of Silicon Valley, but like a really intense Silicon Valley company. It might be 15 or 20, 10. If you have a hundred people, which is what they had, they were spending, you know, 15 K per, uh, a month. That means they were spending a million and a half a month, which means they're spending 18 million a year, 18 million a year. They, you know, were making two, they're probably losing 16 million a year, something like that.

SPEAKER_08: Right. And who knows what their other expenses are as well. Mm hmm. Now here's the key problem.

SPEAKER_26: If they were to 10 X revenue, 10 X revenue with these top 10 authors. Oh, and who knows? Maybe there's some other authors and they got to 200 or 300 million.

SPEAKER_135: They'd have 20 million in revenue, 30 million. In other words, they'd probably be able to break even 10 X from here. Mm hmm.

SPEAKER_00: It's never going to be a great business is the problem. And I think what they wanted to do was build a bundle. Now, when they had this concept of the bundle where they told people they could subscribe to a newsletter.

SPEAKER_52: And I think platformer was the one that was, you know, kind of broke this down multiple times. So they talked about it on another podcast. The writer from platformer will come to me in a second. Uh, Casey Newton.

SPEAKER_26: Casey Newton. Very smart. Um, Casey was talking about like, Hey, uh, dummies. I want my email addresses. I don't want you to have scurify that and send people to an app. I want them to get in their email box. Please stop doing that. Mm hmm. But, and he was sort of speculating that this was a power play by sub stack to get control of their writers and then bundle them. Um, I might be misrepresenting his position a little bit. That was the sort of sinister thing.

Chamath Palihapitiya: I think he was holding back on, uh, and they give their email addresses to all of their customers.

SPEAKER_08: Unlike Facebook or Twitter or YouTube, you don't get the email addresses. That's why I always say you should collect the email addresses.

SPEAKER_26: On sub stack, you do have the email addresses, which means you could leave. And Twitter now has their version connected to your Twitter account and it's free, or I think it's close to free.

SPEAKER_07: And then there's ghost and other places that will let you build this, or you could build it with a developer for basically for free. It's kind of like a, not a difficult software to do. Yeah. If you were to be making a million dollars a year, or let's say you got to $3 million a year.

SPEAKER_26: Like you were really like an elite one straight history probably makes more than that. But if you made 3 million a year, would you give 300,000 to sub stack?

SPEAKER_07: You could hire two full time developers to build something doper. So if you're Casey or your strategy, wouldn't you rather just have an in house developer and two researchers working for you? Like you could spend another way to spend that 300 million 300,000 of your 3 million.

SPEAKER_449: Yes, absolutely.

SPEAKER_07: So you lose your top people. I know this not and they're not beating up on sub stack. I think they built a beautiful product. And I think they're, you know, reasonably innovative founders and obviously extraordinary at raising money. The reason I bring this up is I remember the early days of the Internet.

SPEAKER_192: There were what were called web representation firms. They would take a website, uh, and they would represent their ad sales. Mm hmm. The rewards you got for rep and they, I think they got 30% of the ad sales.

SPEAKER_07: The rewards you got for selling ads for a website was they realized I'm giving you a half million dollars a year. I should just start my own sales team. And I should have the direct relationship with the advertisers and not have you obscurifying. Yeah. Which is what everybody wound up doing. Yeah. Or myself, Weblogs Inc. But this was even in 1.0. So it's just a, not a great business.

SPEAKER_08: It turns out, um, as currently constructed. The only way it would become a great business would be, and it would be a better business would be if they actually hired writers.

SPEAKER_25: And then built millions of subscribers. And then if the writer getting paid, I don't know, a hundred thousand dollars a year, you know, uh, wanted to, uh, quit or wanted to raise, you would have 10 other writers to replace them. And you get the arbitrage between a hundred thousand or 200,000 writer salaries and whatever, a million dollars in subscribers.

SPEAKER_171: So then they would just be like a media business.

SPEAKER_200: And you'd be at media. Yeah, exactly. Like the New York times.

SPEAKER_02: Yeah. So the New York times is trying to deal with this right now, right? Yeah. They just lost Kara Swisher because she wants to own her work is what she said. Mm hmm. So now sub stack is open to can of worms.

SPEAKER_26: Mm hmm. He, Casey can never go back to work for a big media brand. A media brand can never afford him. Yeah. So now all of the best of branded journalists are now independent, freewheeling, um, entrepreneurs who will never go back to work for somebody else.

SPEAKER_07: That's what sub stack did. And two sub stacks, uh, detriment in fact, because why would you stay on the platform? They're going to be so entrepreneurial. Case is going to realize at some point, well, I should just do a strategy is doing and hire somebody. Yeah.

SPEAKER_11: And I think sub stack, I wonder the extent to which sub stack and other creator tools rely on the idea that there's more talent than there is. And I don't mean to say that everybody's untalented, but I think what you find is that generally, you know, there's a top 10% of YouTube creators who make all the money. There's a top 10% of writers on sub stack. I'm sorry, 1%.

SPEAKER_459: Exactly.

SPEAKER_11: I would say 1%. Talent is not in fact, evenly distributed, even if you do a good job of elevating and paying for it. And so you always find yourself in this position where you're like, Oh, I'm going to try to pay more to acquire the good talent. And then there will be this long tail of other talent that makes money. And maybe the long tail part is doesn't work out the way that you think it does. If you're just talking about this kind of like independent media creation thing.

SPEAKER_00: Here's another way to say what you're saying, which is the ability to be a brand and to draw these kind of subs is limited, rarefied air, rarefied air.

SPEAKER_26: Yeah, even this podcast, you know, it took me 10 years to, you know, pull this pushes boulder up the rock.

SPEAKER_00: You also have to have the ability maybe to do it for three or four years at a discount. Stratechery, I'm sure, you know, took years to get where they are. Um, and there's a certain number of subscriptions.

SPEAKER_26: Each person can maintain before burnout ensues. So there is like we saw in streaming and we see in newspapers as there's an upper bound. Maybe in streaming. I think it's five services. Six services is where you start to think I have too many.

SPEAKER_25: And I think in subscriptions to news sources for most people, it might be when you get maybe it's actually something. similar four, five, six, seven, eight of these professional.

SPEAKER_07: I'm talking about a professional doing it for business, not like a person buying it for news.

SPEAKER_198: So, um, I think that's the big problem, um, is, but smart on them to pull back. I think they probably should have pulled back even more.

SPEAKER_07: Um, if they're losing 10 million, 15, if they're losing 10 to 20 million a year, which the math might be suggesting here, 100 people times 15. If they're losing 10 to 20 million, if they're losing 20 million a year and they have raised 83. Uh, yeah, they have four years of runway. They cut 15%. It adds a little bit to their runway. Mm hmm. Maybe six months to the runway or something. I think they might've wanted to cut more. And then I guess the path to profitability is the big question. Somebody, if you have an idea for what the path to profitability on this business is, please tell me. Um, cause I don't understand it and, uh, it just doesn't, maybe they start an ad network and they just let people put ads across their network. That would work. I think that would probably work if they started selling ads across and they just said, Hey, you can put this ad in your newsletter and we'll take half the money. You take half the money, like a YouTube relationship.

SPEAKER_63: It's gonna be real tough to pull out and pull that off in this downturn, but maybe eventually it will be, I'm hearing rumors from the media world that it's gonna be a bloodbath.

SPEAKER_36: The advertising pullback is just so intense. Is it really? Yeah. The ads are getting pulled? Bloodbath. Bloodbath. Not good.

Jason Calacanis: All right. Well, I don't wanna bum us out. We had so much fun talking about baseball.

SPEAKER_474: So maybe that's a nice place to leave it before we go all the way down the bummer hole.

SPEAKER_25: No, I think you'll see the media layoffs will be, uh, are gonna be, they'll be deep. And I think what you're, that's the place. Actually, I'll say, you'll see the, you know, remember I've been talking about like the rescinding of offers is like, you know, the, the one right before pay cuts and austerity, what I'll call austerity measures, which could be, you know, we're getting rid of this travel.

SPEAKER_09: We're getting rid of travel. We're getting rid of, you know, whatever.

SPEAKER_25: I guess people had or, you know, conferences, you know, conference budget, whatever. All that's gonna start to get cut. Yeah.

SPEAKER_238: Divisions, whole divisions are gonna go. Yes.

SPEAKER_25: And whatever divisions are making money will be the ones that stay. So that is actually another way to do it.

David Friedberg: Tune in tomorrow. We're gonna have more news. If you want to suggest new stories, uh, or have S Jason ask Molly questions. We live in the future. If you give us a great, we live in the future. I will send you an Ember mug or, you know, something fun. Okay. I'll send you something, uh, for free. Maybe I'll send you some liquid IV or an Ember mug. We're always looking for a startup of the day. Really interesting novel concepts. Send it to producers at this week in startups.com. We're always looking for, we live in the future producers at this week in startups.com. If you send those, we're gonna send you a hundred bucks, a hundred dollar gift card or a prize. Okay. That's simple. If we use it, if we use it, you don't send a hundred and I'm gonna send you 10 grand. It's not being ridiculous. Um, but if you have those topics at Molly would at Jason and we have this community going this week in startups.com slash TC. That is our Twitter community.

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