Tech Brew Ride Home - (TWTR SPC) Techpocalypse Now! W/ @EricNewcomer @loganbartlett & @alexrkonrad

Episode Date: May 14, 2022

Techpocalypse Now! W/ @EricNewcomer @loganbartlett & @alexrkonrad How bad is it? How bad can it get? How do we get out of this? Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome everybody to the TechMeme Ride Home Experience for Wednesday, May 11th, 2022. We have a very exciting guest in a very strange and challenging moment, I suppose, in the tech world. Eric Newcomer is here, and we're going to be talking about whether it is game over in the tech world.

Brian? Yes, I said it. I said to Eric just a minute ago, Eric writes the newcomer substance. which is a must read for me for covering sort of exactly the space we're about to talk about. And the, I think I, Chris, didn't I put this one in the long reads last week, right? It's called the end game. Yes. The tech down term persists.

I think the image is game over, but I think you're right. I think it's at the end game. Yes. So the tech down term persists, forcing startups to grapple with reality. hey, by the way, NASDAQ was down another 3% today or whatever. Okay, Eric, I think the way that we could do this is let's start with the stock market first because it's almost like going down the funnel. We can talk about what that has to do with everything else down to like someone starting a company today.

So my first question would be, by the way, thanks for coming on. Yeah, that's right. Do you have a theory for why now, why the apocalypse now, or at least the apocalypse since November? Yeah. I mean, yeah, set the table. I mean, the NASDAQ composite, which reflects a lot of tech stocks, you know, down 3% in one day, down 11% in five days, down 15% a month, down 28% and 6 months. You know, we've just been steadily going down. I think what's amazing about this moment is that, you know, it's falling because interest rates are going up.

You know, it's not, it wasn't the global pandemic that killed us. You know, we saw stocks fall off around February, bottomed out in March of 2020. You know, we had this sort of head fake stock market crash, but then we actually entered boom time and it was a great moment to be investor. And now, sort of coming out of the pandemic, but with inflation and interest rates, I think interest rates being key going up, you know, there's a sudden shift, turn against equities and particularly sort of speculative equities. Or risky assets full stop. And am I misremembering this? the first sort of real headlines about inflation being at 30-year highs, that was right at the beginning of the year, right? So if you draw the line to that, it's not really mysterious.

Right. I mean, and, you know, it's, you know, inflation and rising interest rates are obviously intertwined. Interest rates need to go up to combat inflation, you know, inflation has a complicated relationship with the stock market. But interest rates, you know, higher interest rates provide a clear alternative to investing in stocks. Why invest in an uncertain stock if you know you're going to be able to get sort of a guaranteed rate of return from an interest rate, so that pushes the stock market to behave, you know, just to behave more conservatively and has investors sort of flee equities. So that's sort of what's going on on the most fundamental level. Okay, so getting to sort of my funnel thing, so right now what we've seen is sort of like someone, who turned me on to this? A sassaker.

That's good. That's good. Yeah, yeah, yeah. Wait, I'll have to figure out who did that because it is good. But it is, I've said on the show even today, I think, that it is a lot of the companies that went public the last. I don't know, let's say five years or so. So this generation of companies of which there were a lot of SaaS, a lot of, I don't know, dev tools and things like that. But high growth companies that showed growth on the top line but not the bottom line, right?

And so people were giving them on the public markets insane multiples. Right. Well, like Snowflake has been one of the hottest. Okay, dude, I'm so glad you said that. My theory is, is Snowflake like literally the emblematic company of this period? Oh, Snowflake is down 65% over six months, 59 year to date, and 7.5% today. I, my take, I just think it's, I think SaaS comes first. It's easiest for the market to reprice SaaS companies because there's such a historical truth, right?

I mean, you can just, you can easily compare them to each other. You know, it's sort of the historic rates have been. You know, we had this sort of delusionary period where people thought maybe the multiples for SaaS companies would be forever changed, but then it doesn't seem like the case. So it's just, it's much easier for SaaS companies to reset. So we've seen those fall, you know, more than I think we've seen, you know, like a Tesla or sort of like the sort of, you know, electric vehicles or other sort of speculative sectors potentially falling. So I think there's still time for it to play out.

They can translate from the things where investors know how to reprice them to areas where people, well, I mean, we saw with coin maze today, you know, people waiting for earnings or other signals to send the price down. Well, so sticking with a funnel analogy, you know, my assumption is that 60 to 70% of the listeners to this podcast work for startups or work in the tech industry as what I say. We got some messaging me as we speak. Yes, yes. I'm seeing other friends in the room as well, too. But so number one, what is Noah Smith was tweeting today about like talking to friends and seeing their compensation expectations for this year being halved. things like that. So number one, for the people listening, if you're working at a public tech company, you know, even Apple is approaching down 30%, I think, from its high. So the question is, whither the people that are sitting on stock options that could be underwater right now,

what does this do for folks? Because, okay, let me rephrase it a different one. You know, there's a podcast that I listen to that says like the greenspan put is over, and that's the problem for the larger market where, you know, because interest rates were so low for so long, stocks were so cheap, and tech stocks led that way. And so investors don't know, aren't used to stocks going down. But I've thought all this week about employees at tech companies will be facing for the first time in at least a decade, maybe 15 years, the idea that their options would be underwater. Right.

Right. Somebody was tweeting, you know, if a startup doesn't give you an extension, they're basically saying, like, screw you. You know, you're not, that's my equity now. You know, the company's keeping it because it's hard to justify paying for it. I mean, I don't know. It's going to have to play out. We're going to have to see how many layoffs there are. You would think there would be some advantage, you know, to public companies in that they reset valuation expectations overnight. in the way we're going to see private companies in denial about their lower expectations. You know, I love to talk about just sort of the data bricks versus snowflake comparison. I mean, Snowflake has been able, you know, it's painfully suffered a falling market cap. But at least that means, you know, if you join the company, you know, your stock grant is updated. Whereas, you know, a company like data bricks, you might sort of get a compensation based on a liquid private valuation that was that signed in the boom times. I mean, we saw Instacart reset,

but we haven't really seen sort of many public announcements of large private unicorns resetting their 401A evaluations. So, yeah, definitely employee, you know, people going to go into new companies are going to have to decide whether it makes sense to go to a private unicorn that raised a super high upround last year. Right, because there was a shit ton of that. Like you even said in your piece that, like, you know, it was not uncommon last year for companies to raise twice in a year, three times in a year.

That cadence has got to be over. Right. So hopefully the companies have, you know, have money, right? I mean, there was money to be had. So I do think it'll take a while, you know, if people think this is some, you know, the end of the world, you know, when we actually see, I think, you know, SPAC, companies, when we talk about this later, are sort of maybe the earlier bankruptcy sort of candidates, whereas the unicorns, you know, I think are pretty well capitalized. And there's more of a question of whether they just sort of aren't, you know, have sort of that, if you

remember the Dropbox 10 billion period where they just lived under sort of the cloud of their really high valuation for a long time. And it made them sort of less sexy than they wanted to be. Right. And so if you're a company that managed to raise, let's say, $400 million, last year. In theory, if you did it right, that should get you, you know, enough runway that you could maybe eke this out. But the other problem would be if you didn't do enough and you did raise at a really high valuation, it's unlikely that you're going to be able to pull that out again. So, like you said in your piece that like down rounds are coming and are probably healthy, right? Yeah, I mean, somebody said to me, you know, what, great companies will have flat rounds and good companies will have down rounds.

But that's going to take time. You know, I think right now we're still in this sort of why would I do either if I have plenty of money. If you don't, yeah, I think we're going to see, I mean, companies can always like extend their round, basically take new money at the old price, which feels less painful, even though you would think, you know, with hopefully improved metrics. you should be able to raise a higher price. You can't because the market's corrected, so you just extend. Or, yeah, you have to raise a down round. But that might not be, I don't know, we might not see big, interesting down rounds until the end of this year or something because companies are capitalized enough. I mean, yeah, it's not, like, I don't think we've seen a lot of, like, private down rounds yet.

I mean, more we're seeing layoffs and people trying to manage costs. And we're seeing up rounds. You know, I do think the crazy thing, Logan at a red point said to me basically, you know, the beauty of the private markets is that, you know, as long as somebody's drinking, you know, the bar stays open, you know, with the idea where the private markets are sort of auction-based system. As long as there are people, investors willing to pay a high price in the private markets, you know, sort of the party goes on. And, yeah, there's a truth to that. I think we saw, I mean, Rippling raised, announced a raise today at a higher valuation. Deal announced, I think it was like a $12 billion valuation. So we're seeing SaaS companies on the private markets still raise these sort of opportunistic upbrowns.

Well, so, okay, that's the final third of the funnel here, which would, be companies that haven't raised yet, companies at the seed stage or whatever. And you and I DM'd about this earlier this week where I'm like, there's still some big valuations out there in the seed and precede things that I'm seeing. But like, here's my thing. I feel like right now it would be more perilous to be a company that had raised a big D or E round, but then know that they probably can't go public for a while than to be a seed or an A company where everyone expects that you still have years and years and years to go. Oh, yeah, definitely. Yeah. I mean, first of all, the valuations reset working backwards from the public markets.

So you're the worst if you're a pre-IPO round and you're the best if you're a seed round. I think there's also just still a continued belief. I mean, everybody still believes in the technology sector that it produces interest in companies. I mean, the downturn. have to continue and we'll have to suffer through it a long time until we have more people say, I don't believe in it. So given that, people are willing to make sort of risky bets on seed in series A companies, because those valuations are more just like uncertainty for the company, not clearly rooted in, you know, the matter. It's not clear what like the correct series A multiple for a SaaS company is, right? I mean, it's sort of the market to side. So those seed and series A remain super,

frothy, hard to say what the perfect valuation is for those companies, driven by the market, given by what people will pay. But I mean, pre-IBO rounds, you know, it's much easier to say, like, I could just buy Salesforce. Why do I, why would I invest in you? This is their growth rate and size. This is yours. So it becomes much harder to sort of cover your eyes and ears and and invest anyway. What do you think this means for, I guess, maybe product development, making risky bets? It feels like this is going to require a lot more discipline from companies. And you look at other companies that maybe have like one idea or we're trying to,

for example, capitalize on the Amazon one-click patent expiring, like Bolt and Fast. And I'm trying to understand, like, what is the real lesson here? Because it feels like in some cases, like the emperors really had no clothes and what they were building on just wasn't really going to turn into an actual business versus an overall correction in the broader macro economic trends with inflation and with interest rates and with a kind of, as you say, correcting or maybe redistribution of where people are seeing upside or upside potential. And, you know, later stage startups, you know, or series DEF, whatever, companies are less attractive because the upside over the next several years is, as you said, like a less

or some more risky bet. Right. I mean, Darikaz Rishai at Uber, I think, was smart and got out sort of ahead on this and wrote a letter basically saying that the market was going to shift wanting cash flows and away from speculative bets. I mean, that sort of fit the evolution he's been trying to do at Uber anyway, so a good message. But yeah, I do think there's a truth that, you know, there was just this sort of grow, grow, grow. I mean, I wrote late last year about Rivian going public.

I called it a horseman of the apocalypse. I mean, just the sort of raw sort of, I mean, there was just a lot of bullishness around that company when it had like no revenue, you know, no proven track record of producing things at scale, which is what car companies do. And, you know, now, yeah, that stock is being punished. I mean, product within new companies, I think, you know, it's about. much easier if you if you're generating cash flow right if you're a business that's actually proven that you can survive without outside capital then you you know you can make this trade off between coming up with new products and yeah i think that's what i wonder about in this moment you know like whether it's Airbnb or uber you know where they have like you know real

businesses and you know something of a moat versus a lot of these s companies which are quite virtual and possibly replaceable, like they were providing a convenience, you know, maybe like a vitamin. And also half of their business might be selling the other startups as well. Exactly. Right. Well, that's a huge problem. I mean, Airbnb, I think the Airbnb Uber contrast is a good one.

I just think that people, the investor world believes that Airbnb will stay around. You know, that that's like a business model that makes sense is good. And so much of its brand is predicated on like product innovation. So it's hard for me to see a world where Airbnb, you know, we just saw them roll out sort of their big updates, I think, this week. Today, yeah. I mean, that makes sense. It's so much their brand. I don't know.

I don't know that there's so much fear that you're going to say Airbnb shouldn't be doing that. But I do think just given the historic skepticism of on demand and this sort of blitzscaling world that Uber represents, just like Uber being able to say, we are cash flow positive is just like a very clear. clear answer and getting to that point just reassures, you know, skeptics. And, you know, it's just like, you can say we live on our own. It answers the question if anybody has it in the back of their mind. Like, when is this thing going to be solvent, essentially? Right. Exactly.

It's like if you know that you are going to produce the money to stay alive, that's like reassuring to people. So I do think there's a big difference between companies that are like, oh, how do I manage how much cash I show versus like companies where you're like, you know, like a rivian or something where you're like, how will you ever, you know, what is the path? Those are really different situations. And these companies that don't, investors can't even sort of figure out how you would get to profitability are going to have a lot of problems because you can't just say, well, the revenue is growing so much. So actually we have, Logan is up on stage, who's going to

Oh, great. I thought he might chime in, actually. Logan, how many points of yours have I already stolen and heard it as my own? I actually had to sign off when you were talking about it. I accidentally requested to speak when I heard some smoke like slander. I'm not slandering them. No, not you. Chris was slandering stuff like.

No, it was probably me. That was Brian. Logan, do you want to just introduce yourself? Introduce yourself briefly? So, Logan, I'm a partner on the growth fund here at Red Point Ventures and spend too much time on Twitter and paying attention to all these markets stuff and joking about it. And I spoke to Eric last week about everything that was sort of going on. And so I think I was featured in this piece. And it sounds like someone texted me, quoted while I had to answer a phone call and do actual work.

Yes. I mean, do you, one question we were asking, you're like an expert on SaaS. I mean, do you think SaaS is going to come out of this the worst? Or you think SaaS, it's just clear now? I was sort of defending SaaS a little bit. But like, are you worried SaaS is really going to get caught out here? Or are you think SaaS is going to do well relative to other parts of tech in this downturn? Yeah, well, I was joking that like SaaS, it's not the bottom until someone like fundamentally questioned SaaS business model.

Like if that's actually a sustainable business model or not. So that's when we'll know at the bottom is like some prominent investor coming out being like, I don't know about the SaaS thing. Well, I did ask about like we don't know about the stickiness of SaaS in a real terrible market yet. But, uh, yeah. I don't know. I mean, certain types of SaaS, I would agree.

But I feel like, you know, both through the pandemic as well as the recession, there were at least some SaaS businesses out there. I do think there's probably some stuff that like exists out of the core HRIS. But I think, unfortunately, software is replaced and become intertwined in so many ways with, it's really a tradeoff between labor, capex, and op-x, right? And I think the operating expense ultimately wins, unfortunately, in most of these situations. And so I think SaaS in the situations that you can find will often be picked over, you know, certainly capital. You're saying you're getting fired before they get rid of the software. Layoffs before they get rid of you.

But I heard, Eric, I heard a little bit of what you were saying that, like, I agree. I mean, SAS one has, like, whatever, 78 or 72 or 65 or 80, like, different data points, right? And the business model is fairly understood and consistent. Like, gross margins hover between, you know, 50% and 80%. Like, you have the spectrum of free cash flow and all of that stuff. And so if you look, I mean, honestly, like, has SaaS been hit? Yes, but it's really just a proxy for high growth, right? And so box hasn't been hit in the same way that, you know, whatever Cloudflare has, for example.

And so it's like the companies that exist on the more in the orientation to high growth. I mean, if you think about what's going on, right, what had happened over the last couple of years is a discounting back of projected growth and free cash flow when interest rates were where they were. And so now that you have these companies that are growing at 90%, 100%, you were really projecting a meaningful growth rate in these companies going forward. And so the discount back when the interest rate changes, it hits these companies particularly hard. Right. And so I mean, the big question to me, just like to really zoom out, beyond stats and everything, is just is this going to be mostly a valuation problem or is there some correlated reason that like the revenue these. companies expected to grow is not going to grow at the same rate, right? Like is there and I mean some there's certainly the argument and I think we've alluded to

this that businesses that sell to startups when it's less appealing to be a startup that we can see some correlated revenue problems there. But do you see other problems trickling out besides just multiple correction? I've yet to see it in the portfolio and in my companies. Like I think Someone, maybe Primac or someone was talking recently about what's going on in some of the softness in Q1. And I don't know why that would be the case for most of these companies. Now, if you sell the startups, I certainly understand that. If you have business in Russia or the Ukraine, I understand that.

If you have things associated with like, I don't know, global supply chain or inflation index stuff, like I understand that. But like at a fundamental level, this seems like a valuation question. And these businesses are fundamentally healthy. Right. Now, if we find our way into a recession, then that's obviously going to be different. But right now, it seems like it's just a valuation question. And that certainly has implications for employees and stuff. But I don't know. I haven't seen the indication that we're headed into a recession and buying cycles are going to change, at least in my portfolio. But I'm also not a macro prognosticator. Eric, let me step on you real quick. Could I throw a theory out there? I'm going to quote you, Eric, in your piece, you're talking about how lofty valuation. for delusional companies, help drive up valuations for even the most reality-based companies. Certainly we saw that in the dot-com bubble era, although 97% of the companies in the dot-com bubble were bullshit.

But here's my theory. Did the SPAC mania of a year ago bring a bunch of companies to public markets that were garbage? And that has contributed to this idea that it just sours so many investors. They're starting to wash their hands in a similar way. Does that make sense? To me, I think, I don't think it's that investors are disillusioned in the good companies because there were so many poor performing SaaS companies.

I think that there's been a general willingness of investors to dilute themselves about companies, and that's being exposed early by the SPAC. Sorry, if I said SaaS, I meant SPACs before, but by the SPAC companies. I don't know. I think, I do think there are a lot of business. I mean, put positively, businesses have been given an extremely long leash to figure things out.

I mean, Uber's like cumulative gap net losses was something like $23 billion. So Uber has been given, I mean, I don't know. know what that is in cash flow terms, but Uber's been given many, many, many billions of dollars to figure this thing out and to build a scale to be a huge business. And I guess there's no reason necessarily that companies should have that long of a leash. And we might be entering a period where they don't. But what, so does that mean to imply that you think Uber itself just isn't really great business and should have had a short leash? Uber's been, I mean, will, I was asking today, like, will Uber make enough money to justify all the money that was put in?

Like, that question doesn't really have anything to do with how you figure out Uber's like market cap today. It's more of a question of future cash flows. But I do think there's this question of, yeah, how much cash flow can it produce and does it justify how much was invested? I mean, I think Uber's got to the other side of, I mean, they're much more precarious. carious businesses than Uber. I mean, like, go puff, dinner. We have a whole next generation. We have a whole sort of segment of companies that are like, Uber wasn't risky enough, you know. So that, I don't want to pick on Uber before I'm criticizing. But I think it's a really interesting, I guess, point, like, relatively speaking, because after Uber, right, like Uber almost at the bar for a certain type of aggressiveness and. growth at all costs and just grow, grow and burn money like a mofo.

And the next generation of startups came up after that with almost like an imperative to go even harder and go even faster, which in some ways is kind of how we got fast and bolt and those guys. So like what is the lesson that startups that are either starting now, you know, we'll take away from this or for startups that, let's say, are one or two or three years in and, you know, we're pursuing that strategy. And suddenly, you know, the jet fuel is, you know, no longer available. for their planes, you know, which were just little tinker toys. And now they're like, oh, my God,

like, we are, you know, sort of we haven't achieved escape velocity yet. What do we do? How do we weather this? I mean, this is going to be pretty scarring for a generation of startups. Is it not? Yeah. I mean, if you want to build a super cash intensive company, you might have missed the best window in history for it. I mean, just, I mean, just if you think about the availability of capital, I mean, there are questions about how much Tiger has to invest in private companies. SoftBank is superchased. Like, you just look at the pools of capital. I am going to interrupt again.

Yeah, because, okay, right, I did the story on Tiger. It was yesterday, I think it was, or was it today? I can't remember. I know what I owe today was crazy. But in the same way that smart companies were raising as much money as they could over the last 18 months, huge VC raises were happening. I mean, the biggest we've ever seen, everybody loaded up. So on the one hand, there's no reason to think that the money is going to dry up right,

because that has to be deployed somewhere. I don't see the startup ecosystem, like the supply of startups drying up. I know after the dot-com bubble, there were funds that returned money to investors because they literally said there were no companies to invest it. I don't see that happening. And so all of those raises are going to have to go somewhere, right? Well, first of all, I mean, Logan and his competitors have lots of money. I mean, there's still a ton, and Dresen has raised a ton of money. I mean, light speed was working on a big, you know, they're just, all, all these multi-stage, you know, traditional venture funds are super well

capitalized. I mean, some of them have invested a bunch, but they've raised a bunch. They can slow the pace down. Yeah, I still think, you know, there's just so much money that this startup world, as we know it, is definitely continuing in the sort of hardcore engineering companies are going to keep raising money. And, like, you know, I'm not saying that, yeah, I wasn't covering tech. I was very young during dot com, but I don't think it's sort of, though, I'm not saying, like, nothing's good. I mean, I'm defending SaaS.

I think there are lots of compelling businesses. I just think the long leash of like burn unlimited capital because, I mean, burn unlimited capital because there's almost in the demand for capital to invest. Like your capital inefficiency is almost a strength because we need to deploy capital and you burn it. You know, like that's the environment we've been in. And it does feel like there's a move against that. Right. Again, I want to stress because there's a lot of investors on the stage here. none of us are saying it's garbage and things are going to shit.

We're trying to see to what degree things are going to shit. How big is this correction going to be? And I definitely get very serious investors text me like, this is dot com. So they're definitely, the investors know that professionally they're public optimists, but in the DMs, you know, there are people who are very fearful.

Can I ask you, Eric, are you, and I'm sure Logan probably wouldn't want to speak to this, but he can if he wants to. Is there LP pullback to the folks that you're talking about, by which I mean for people listening, the VCs have to get money from their limited partners, and if what's happening is people are derisking from assets, are VCs seeing that happen from the LP side? That is the question I would like to answer. I mean, it's hard, you know, it's harder to know. Let me, let me, I'm happy to answer that, actually.

I mean, let's just do it in terms of pure math. Like, LPs have targets associated with private companies or private funds, right? And so if I'm an endowment and I want to be 10% in venture, right, that's going to be a target of, hey, I'm going to try to get the 10% of venture. And that could be, you know, whatever. If you're Harvard, that means you have a $1 trillion endowment, and of that trillion, you know, $100 billion is going to go to venture, right? If the rest is, or let's say 30% in the public markets, well, now that 30% has been cut in large part, right?

I don't know if it's in half or if it's by a third or if it's by two thirds or whatever it is. It sort of depends. And so now the basket of stuff you have on the private markets has gone from a target of 10%, now you're at 14% or 16% or 18% or whatever it is, right? And so when one side of the water bloom gets squeezed, then, you know, the other side gets impacted. And so inevitably there's going to be a pullback from LPs, right? And so it could just be, hey, they're going to borrow from the real estate portion or from whatever, they're illiquid portions. Or it could be that they got to the number they wanted to. They wanted to be at, you know, 10% in the next three years. And

they got the 10% just by the other part of it squeezing, or it could be they need to cut managers, right? And so my thesis is it's going to be some of all of that, and you're going to see a lot of, like, the mid managers that had delivered really good returns because they've been indexed to software or internet or, you know, some of these businesses, and they got out at good times, are going to struggle to raise just because of this effect, right, the supply and the demand effect. And you've also been compounded with, you know, Eric alluded to some of the, of the names, but a bunch of people raising huge funds that has dried up coffers as well. And so I think this is going to have a material impact on GP's ability to fundraise.

One thing that we haven't actually talked about yet is crypto and whether or not there's a different type of exposure or, you know, you think that money is going over in that direction. There's been a number of startup companies that have also bought into crypto. By the way, as of as recently as this week, the big raises. have been still in crypto. So just food for thought there. Yeah, crypto's art because this is hard to know

the fundamental bottom to it, right? I mean, that's sort of, that's part of what we were talking about in the SaaS conversation. You know, there have been so many times, you know, I spent, what, many years in the early 2010 has been skeptical of crypto. So I think a lot of people have watched, booms and bus and have learned to measure their words a little bit.

But I mean, certainly what, like NFTs have been blown out. I mean, the currencies are all way down. The stable coins are in crisis. Like, definitely big, big problems in crypto world. And yeah, I mean, the crypto funds, that's basically where I've been reporting for the last couple months have been the thing that for a while was saving, you know, venture. Venture was sort of worried end of the year. slower early this year, but the crypto funds were well capitalized and sort of deploying

and Ethereum was doing better than Bitcoin. You know, there were always sort of different things happening. But now, yeah, Bitcoin, which is supposed to be a hedge against the world imploding, you would think, is not performing as such. And so it's just very hard to know what the bottom is for crypto and presumably firms like Andresen and Paradigm are just going to continue to deploy as true believers and believe they're getting good prices. But a lot of people who are just sort of onlookers are going to chicken out and leave the market. Eric or Logan, what do you make about the fact, again, as I've said this week on the show,

that crypto is almost one-to-one correlated, not just to the stock market, not just to the NASDAQ, but to the specific sort of companies we're talking about, like the Shopify's, the sasses. What do you make of that? Because to me, it makes it feel like they're all in the same basket of sort of like the sort of Wall Street Betts style investing. Do you feel like that that's true? I mean, clearly it's sort of factually true at the moment.

I mean, I don't know. I'm sure there's some crypto person who's, they analyzed, the correlations a bazillion different ways. But yeah, I mean, if I had to mount a defense for that, it would just be, you know, the audience of people who are early believers in

crypto and these stocks are similar, but in the long term, you know, different sets of people would invest in them. But yeah, certainly I think I agree with you that the reality at the moment has been that those two things are very intertwined.

this is moving backwards slightly, but under normal circumstances, like some of these depressed public companies at this point would be leading to acquisitions, which seems to kind of be impossible for the usual suspects at this point because of the regulatory environment right now. I'm thinking of like a Shopify approaching like a $40 billion valuation, which there's no way Amazon could take them out or whatever. but like there's others that are like you know 10 billion dollars 12 billion dollars and so do you expect to see some sort of movement towards M&A to some of these low flyers um i mean shit

peloton could get so low all of those rumors of amazon even apple would make sense if they're down so far that they're on the pink sheets there's five dollars yeah yeah i mean i was talking to Rick Heitzman at first mark on my podcast, Deadcat. And he was saying that he thought there would be a lot of small acquisitions. Definitely the sort of the cleanup, you know, startup finally admits it's multiple isn't what it wanted. And like a smaller company buys a tiny company. I mean, it feels like on the big side, the regulatory problems persist. So that's been super hard.

I mean, you know, you could see just sort of, you know, these, the mega caps are still so large that, you know, and very savvy about where technology is headed that you could imagine them buying sort of non-competitive businesses. Just, you know, what? Well, Microsoft bought LinkedIn, right? In a similar sort of moment of market panic. And that's been a great investment. you could see sort of even more sort of unrelated businesses getting scooped up by big tech that just believes in them. But definitely it's a hard time to buy a business that is competitive with you. Yeah, I think we're going to see it takes a recalibration.

So in the private markets, like you raised in December 2021, you think you're still worth that. And maybe the CEO and the executive team are saying, like, okay, we raised it a billion, but in today's dollars, you might only be worth 300 or 400 or 500 or whatever. But like all the rank and file employees and the board members, depending on the growth rate, still sort of think they're worth a billion dollars. Maybe if you gave them truth serum, they wouldn't actually say that. But they're still anchored around that price. If you look at the public company CEOs, like, they're forced on an hourly basis to reckon with the fact that they're not worth what they were worth in December, right?

they're not even worth the new work two weeks ago. And so at some point when the either people are going to look for life wraps, right, like now and think it's going to get worse and say, hey, you know, forget whatever we were priced at in December or January. Let's get out if we can get out where we were priced at three weeks ago, right? I don't think that's a big group of people. I think that's just like hard from a psychological standpoint. But when it ultimately, when you spend a month or two months within a certain band of pricing,

I'm sure, you know, Catalyst Morgan Stanley Goldman Sachs, the phones are going to be ringing off the hook in June, July, August, where, you know, you've already seen it with Anna Plan, got out, and the Toma Bravo, and, you know, there's been rumors of Zendesk. And I imagine we're going to see a bunch of those companies trade private equity and potentially a sales force or an Adobe or some of those on the B-to-B side. On the consumer side, I don't know what you do. Like I think any of the logical acquires, it's, it's a lot of it's probably not worth the headache for them to buy any of these businesses, except for Microsoft, which somehow is like the Teflon Don out there. I'm so ironic. Yeah. I want to give Eric the chance to exit if he would like to. He's met his quota for time if you would like. But also, please plug. I have one more question.

One more question. And then Eric can stay or go. Sure. My question is thinking about maybe the end of Q2. You know, it's relatively soon, but not that far away. What do you think is going to happen between now and then? Like, what are you sort of expecting, you know, are we going to see a continuous, you know, drawdown through the rest of the year, the rest of the quarter?

Like, do you have any predictions on what we should expect and sort of brace for, or is it kind of like level off? That's a very dangerous question. I won't make any predictions about sort of the stock market. Sure. falling, I mean, I guess I wouldn't be surprised. It feels like there's still like tons of shoes to drop here. I don't know. I feel like... Are there certain areas or verticals or kind of sized companies? The big investors that are sort of like really sort of over the barrel on this, like what happens to them? You know, the startups that are really cash dependent when the world is sour, like what happens to them? And then in the SPAC, I mean, we haven't talked a lot about them because Silicon Valley tries to hold them at arm's length. But if some of the spacks, like, go bankrupt.

And if bankruptcies all of a sudden seem like a real possibility and not a thing that annoying cynical reporters wonder about, then is there sort of more general fear? So to me, there's a lot of worry. People are losing money, but it seems like there's still plenty of apocalypse that could be ahead of. us. Okay, so the bloodbath will continue. Eric, if you do want to bow out, yes, thanks so much for having me.

People can read my stuff on newcomer.com. It's a substack. Perfect. Subscribe. I'm going to keep covering all these themes. And yeah, I have my own podcast, Deadcat, where we are very interested in these topics as well. And thank you so much for having me. Awesome. Thanks for something.

Bye. We've also, oh, he just vanished. And Logan, too, if you want to, stick around or if you want to promote anything now is also an opportunity for you. Sure. I mean, every person that gets me on a microphone has to have a podcast. So if people want to click into that, it's on my bio. And yeah, thanks for accidentally having me. Well, but by the way, Logan, we're reposting this on the tech main podcast. So please tell us what it is because it's a great podcast. My podcast is called Cartoon Avatar's. So it's every

Saturday morning. This week, I have Aaron Levy on and we're seeing who else, but kind of covering we didn't pack. So. Perfect. Awesome. Well, thanks for showing up. We have another guest in Logan, if you want to stick around or Eric, you know, by all means. We have Alex Conrad here, and he's the senior editor at Forbes covering VC and tech. So we thought we'd have another perspective, given that Alex has been listening to the conversation so far. Welcome, Alex, if you want to say hello, introduce yourself, and let us know what you think. Yeah, hey, Alex Conrad here.

I'm at Forbes, as noted, and I've really enjoyed the conversation so far. Lots of think on, not really sure where I would exactly jump in. You may have to call on me. Well, I'll tell you what, here's something that, here's a question that we didn't get to that I'm curious about. But we alluded to it earlier, which was, at least so far the last two weeks, the sort of big monster raises have all been in crypto.

I'm curious if you're hearing or feeling like that's sort of the one that's been surviving. That's the sector that's been surviving recently. And if all of a sudden we stop getting the $300 million crypto round, if that will really be a canary in the coal mine that would be, be bad for us. Well, the first thing I would say for anyone listening is there's a

lag with some of these funding rounds. Because it takes months to do to close around, yes. Yeah, I mean, like, I've been talking to companies about potentially writing about them that raised rounds months ago and weren't announced. So that

definitely makes things tougher to try to track. So So there could be big rounds out there that haven't been announced, and it could just be that the crypto folks are the noisiest. But that said, I mean, I think that there have to be big rounds still coming because there's just so many multibillion-dollar funds that need to deploy some of this capital. So I think what's probably happening right now in my mind is more of a repricing, where companies may not necessarily want to raise a big round at terms that feel much worse. than they could have gotten three or six months ago. So I think there's probably a bit of a pause there where, you know, I don't want to raise that dilutive big round if I haven't already,

but I feel like the money has to be deployed. One of the things, and I'm pulling from Eric's piece again, so I have to credit him for that. To me, the biggest question now is whether we're going to see startup valuation multiples contract or if we're actually, going to see the fundamentals falter, right? Because, and I think, you know, we talked about that maybe

20 minutes or 30 minutes ago. As far as we know, and you tell me, Alex, have you been hearing that people's portfolios, that the companies in their portfolios are sort of whiffing on metrics and things like that? Yeah, you know, I think that I was just hearing about a company that, said it would go from 10 to 100 million in revenue and went from 10 to 30, which is in normal times really good for a lot of companies, but is not good if you said you're going to hit 100, right?

So I think that's definitely happening. I also think that I was talking to a VC earlier today who is out fundraising and said that their LPs seem to kind of be a bit shell-shocked. And so I definitely think that- We talked about that earlier. So you're hearing that there is pullback from LPs. Interestingly enough, I was listening to that. This VC, who I literally spoke to today, doesn't, like, hasn't seen that the results happen yet. And I think Logan's points were really apt, but said that just the emotion in the room was not good.

You know, that the LPs were kind of like, you know, wanted to complain to the VC fund manager. like justify what's happening here in your world. So I think that, similar to my last point, I don't think that the shoe has dropped yet. We're all kind of in this in-between reshuffling of the chairs. What do you think is, sorry, Brian, but like one of the thoughts that I have is that there's a lot more people who have entered into the VC world in the last four or five, six years,

you know, since the downturn. And so I would think that, the level of skittishness might be just generally higher. And so some of that emotion that you're sort of encountering, you know, might be just due to that discrepancy or that dichotomy. And I guess I'm asking, you know, if that is reasonable or real or, you know, whether this is just part of the game. And so, you know, it's, it's normal.

How much do you think like that, that level of lack of experience is informing, you know, what might happen now and whether things will continue to go down because people are freaking out? Yeah. I think that's, that's a good question. You know, it can take LPs historically. I've often signed on for firms for kind of a three fund tour with a sort of group of key partners. And so that second fund, you know, you need to be really showing some results. And then that third fund, you know, they really want to be the big winner.

And then it's like kind of emotionally they reassess the relationship. But often, you know, it is kind of a three fund cadence. And so I think if you're in that second to third fund cycle right now, now they're wanting to see some of that liquidity, right? And I think that's also tough when obviously no tech company wants to go public right now. Right, right. That's interesting. Wait.

Actually, Eric was seeing this on his podcast that it's been the longest since there's been an IPO in ages. Yeah. I mean, it's just obvious, right? Like, we were, think about all the companies last year we were talking about could go public this year. Right. And now it's like maybe next year. And if you're a private company looking at the bloodbath that you guys were talking about earlier, like, why in their right mind would they want to join that? Right.

Well, I remember saying at some point last year when the SPAC boom was happening that, like, it was taking out an entire generation, an entire cohort. And by taking out, I mean, you know, in a positive way, getting them to public markets, getting them liquidity events. do you think that maybe that's part of it too is that like we front-loaded in the same way that in the same way that COVID times front-loaded all of this growth for specific companies like last literally a year ago all the spec business that the markets being to the moon sort of cleared the decks and so now people are looking around and you know God forbid you didn't get to go public you didn't reach public markets but like maybe this cohort It's going to take some time for healthier, more mature companies to reach that stage?

Yeah, I mean, I think if I'm the CFO of the growth stage company right now, I'm probably looking at the metrics very differently in terms of profitability than I was before, because as we talked about with, you know, are these SaaS companies kind of the canary in the coal mine with their valuation multiples, you know, I think if you're going to be identified as the so-called high-growth stock, what does that mean for you? Right? Like, I think it was Trace Cohen tweeted that in January Square bought afterpay for $28 billion, and a firm has been trading around $4 or $5 billion this week. Like, that's insane, right? Oh, my God. Well, let's not even get into whether or not the Twitter deal is going to blow up, because

what would Twitter's price be right now today? Let's end this conversation with this question. Let's bring it back to most of the people listening to this. Are workers, devs, engineers, people in the trenches at tech companies. I don't remember if we asked Eric about this, but Alex, are you hearing rumors of layoffs and hiring freezes at the moment? You know, we, there have been a few that have been publicized and my team is, you know, kind of asking that very question. We are, we are looking around. Right now, I still feel like it is kind of a, things are happening at the margins where the top, the top 10% of low burn companies or kind of like extra, extra hot companies are still raising these crazy up rounds like Riffling this morning. and they're not being affected, and then the bottom 10% of highest burn companies are freaking out.

I think for people listening who are at kind of the middle pack companies, like, yes, your company will probably raise at a lower valuation. No, I don't think you should be absolutely panicking that the company won't be able to raise at all. And so if you have a long-term conviction in the company, this is just going to probably cost your, you know, the value of your shares, maybe a year of time or something, which of course sucks, but like I don't think we're in that panic mode yet. Of course, stay tuned. Like, you know, if there are a bunch of high profile layoffs at so-called healthy companies, that would, or at least companies that are not considered high burn type companies, that would be a whole different in kettle of fish.

So I have one more, actually. Just in terms of the advertising space, like it feels like that's a headwind that is part of this soup of things that are, you know, going on. There's a lot of things happening in the world, but structurally, fundamentally, advertising has been so important for a lot of these hypergrowth companies, either participating as advertisers or as building their business around advertisers. Is that a factor in this mix right now, especially with what's gone on with app tracking transparency, changes for Facebook's marketplace, et cetera? Yeah, I mean, I'm less than expert there except that I work at a company that depends. Exactly. Well, that's kind of why I want to ask you. And I know that my marketing colleagues are still going to Cannes in a few weeks. So that hasn't been canceled, right?

But I do think that broadly speaking, pricing pressures there will kind of have this trickle-down effects. I just think it will take longer. I think that right now the market, the volatility in the market and what's happening, whether you're a crypto or a public tech company, is just moving way faster than, like, people's budgets. So I think like a couple months into a reset in the market, we can start talking about that. But I feel like that's kind of like a real next order concern compared to like just this musical chair is happening right now driven by, you know, everyone checking their accounts and freaking out. You know, and Coinbase having to say, hey, guys, we're not going bankrupt. You know, never good.

Don't, please don't take your crypto out. It's not a good idea. Exactly. Just leave it. Yeah. Brian? Alex, we're going to pivot to the last 10 or 15 minutes

and we're going to do a little bit on Google I.O and then pour one out for the iPod. So you're welcome. Please stick around for that if you want. We're literally going to share our first iPod. Bump me back to the pack and I will gladly listen. Thank you. Okay. Well, before you go, please plug whatever you want

and thanks for coming on stage. Yeah, I would say I have a few fun, big stories about some of these unicorn type companies still coming in the next few weeks. So if you want to get this heat check, just keep watching what I write about because we'll see. So yeah, thank you. Well, thank you, Alex, for jumping up. So, Chris, did you even get a chance to listen to my mad eight and a half minute rundown of I.O? I did not, honestly. Please. I mean, if it was

only eight minutes, give me the 45 second version. Oh, well, it was the, usual in terms of. Were you surprised? Like what's the high level take away emotion? I do. Okay. So I do have a couple things that I want to point out. But, you know, this one is the hardest one for me with the caveat being that when when

Amazon does their yearly, here's all the hardware shit that we're going to do. And they announce 80 different things. That's, that's worse. But it's all, if I can find a good piece to summarize what I think is, you know, Google. Google's overarching sort of move towards, you know, what their product vision is. I'll share that tomorrow and maybe some thoughts on that. But two things that did catch my eye that I wanted to talk about, because there will be no real way to do it tomorrow.

The Apple Watch, or not the Apple Watch. The Google Watch, seriously integrating, what's the company that they acquired? Fitbit? Yeah, and all that stuff. They didn't give a lot of details on that, but some of the reporting subsequently has been that it was largely the design was led by the Fitbit team, so it's going to come with health and sleep tracking software.

The question will be to what degree when they do a full launch on this, will they attempt to leapfrog what the Apple Watch is right now? It's always curious to me, how Google puts the pedal to the metal and then pulls back in their competition, you know, especially with the pixel phones. But now if they're going to go into wearables,

which you would think they're going to do because of the Fitbit acquisition. And by going into this watch, it's a good looking watch from everything that we've seen. It's round. It's round, which, you know, that's a differentiator right there. The other thing that I thought was super interesting, which I did say, I did manage to get into the show today, is the sort of groundwork that they're laying for AR, not ARNVR, specifically AR, okay? And it made me think, and maybe I'll write up a rant on this, that'll be more coherent than what I'm going to do right now. But in a way, Google is the best positioned company to win in AR, which is ironic, given the whole,

ha ha, Google glass shit. But because they have the information layer in the real world more than anybody else, and I would argue that, like, saying, hey, Google is way more, you're more likely to get meaningful information out of doing that than saying, hey Siri or Alexa. That one of the things that they showed, one of the demos was someone wearing, you know, because as we said, the ultimate form factor of AR glasses are glasses, the size, weight, and general shape of just regular glasses, right? So they were showing a demo of being out in the real world and people meeting each other

on the street, speaking different languages, and in real time being able to communicate, and it's just nothing. And like that is that is the use case, not having dragons appear on your coffee tangle and play. I mean, that's fun and stuff like that. But it reinforced to me that I do think that AR being the next thing can happen in this decade and can be meaningful. And there's all sorts of other things that they introduced. Right, right, right. But there's other things that they demoed or at least tease in terms of the Apple Maps stuff that they can do and stuff like that.

What it made me think of, and I'll pause after this so that you can share your thoughts. But the actual efficacy of being in the real world with AR is it is the true sense of wearable computing where the difference is we've got all of these computers in our pockets, but we have to pause. and, okay, open the phone, bring it up to my face, find the app, do the thing. And so that is the key, that's the thing that when someone can crack that, where it's, you don't have to do the thing because it is overlaid across your real-time life as you're experiencing it, that's actually, I knew that that was the promise of it, But it reinforced to me that that is possible, and that is maybe closer than certainly the fucking Metaverse. So thoughts on that.

Yeah, well, just on your last point, you had me all the way up until the end, which is... Oh, interesting. And I suppose it's because when I think of the Metaverse, it's something of an arbitrary delineation between what happens kind of in what you might imagine as like a Fortnite, you know, immersive VR space versus augmented reality. I mean, I can answer this. What? I can answer this with what the definitional difference is in my mind. Okay. Tell me.

To me, the metaverse is different than Meatverse. The metaverse is a different world. Like with different zip codes and addresses? It's jacking in as going back to Neuromancer. It is you're leaving. To me, I think this is like an arbitrary distinction. I understand what you're saying.

And I also kind of want to maybe draw the distinction between like immersion and extroversion, you know, being out in the world and being able to interact with and being partial. Like I would say that when I'm cooking dinner and I have my AirPods in, I'm sort of in an augmented reality. It's immersive, but I'm certainly able to. interact with, you know, the meat space, as you're suggesting. I don't have a headset, you know, an Oculus or anything like that or a metalist. But when I'm sort of jacked into my matrix, which is a two-dimensional surface, which is my, you know, Apple ProXDR display, that is a view

that I'm fully immersed in and I'm, you know, there. I'm surfing the internet. I'm in email and Slack. Like, these are two-dimensional surfaces that are sort of a version of a metaverse, which is not super immersive. So that would be the spectrum that I'd be looking at or considering. And the glasses, what's interesting about them is that they are blending worlds in a novel, I guess, nexus between the way that you normally live your life, the way that you typically will, you know, pull out your phone or look at, you know, glance at your wrist to see your watch and get information. Overlaying information directly onto your eyes just removes that, that context. This is debatable, but this is where we differ. Definitionally, I think of AR as cyborg stuff.

To me, cyborg means you're augmenting your body in the real world. It's Licklider's man-computer symbiosis versus, definitionally, when I think of the metaverse, I'm thinking of leaving your body behind. Your body... I mean, I am quite disembodied when I'm like, you know, really working in and flow on my computer. So again, I hear what you're saying. I think that in some ways almost like the sci-fi has polluted like your ability to kind of see these things on a continuous spectrum, as opposed to being like two separate worlds where you completely where all the gravity is different

and the way that you interact is different. You still, so much of what Zuckerberg talks about with what he's building with meta and the metaverse are affordances that come from the real world. So he's attempting to try to recreate the way in which we know. navigate and move and understand and feel and touch and all the emotions that happen in meat space in a virtual space. Why? Because it's disorienting to be in a digital space where those, you know, with that scaffolding of experience doesn't exist. So glasses seem to be, again, kind of trying to bridge the divide and the form factor has been the problem. To your point about Google I.O., the fact that Google Glass had a lot of the, maybe the information primitives

you know, 10 years ago, but didn't have the form factor right, is the journey that so many big tech companies are on. How do you miniaturize and shrink down the size of the computing platform so you can fit it on someone's head? It doesn't get too hot. It can be used for several hours. And it's kind of, it provides you with in-context information overlays that, again, obviate the need to pull out a device that is inconvenient or hard to operate with your fingers. Well, and I mean, maybe we're arguing different sides of the same thing. Because what I want to express that, you know, the I.O. keynote reiterated to me, when you say that you are fully immersed in your Apple display and like, so you, and when you're in, on your AirPods, like, you're immersed, you're immersed.

What it reinforced to me was that we haven't done as much. work in the in the meat space computing stuff right in the same way that we didn't know how useful really it was to have a computer in your pocket so that computing left the desk and it went around with you in real life is the babblefish the example that you're kind of thinking about when you think of meat space computing like the translation I'm thinking of I'm thinking of the ability you know they were they were doing things like you look at like you apparently you can do this now with your phone like You can scan the world around you, and it's like, what is this flower or like books on a shelf.

Yeah, like Google Lens kind of already exists for the phone. So Google Lens is moving beyond text and things like that, right? So essentially, I just noticed, sorry, a second, whatever, but if you go to Google Photos, if you have the Google Photos app, and I'm an iOS user, so maybe this has been the case on Android for a while, but now Google Lens is part of the experience. So you can literally take a photo that you've taken and use the photo as, as a search input in Google lens. So you could take a photo of someone.

I take a photo of you, for example, and I put it into Google lens, and it'll find all the photos that have things detected in that photo in my photo library. Right. Now, imagine doing that in real time in the real world. And Google has been on this. And it's personalized to you.

And it's personalized to you. And they have been on the ambient computer stuff. Yep. And so even the promise of like voice activated personal. assistance, which again, Apple is way fucking behind on that sort of shit. So it made me realize, I used to feel, I feel like five or six years ago I felt

this way about Google that they were the best positioned for the future and then it never sort of panned out. And so it sort of sparked that in me again because I can see a world where if I've got their glasses on and I'm walking down the street and sure, I can ask questions with my voice and things like that. But also, it is sort of the ambient computing stuff where they would

know where I was going. They're talking about like, well, we're reaching a point where the TV, you don't have to hit a button. It knows because you stood up, it's going to immediately pause your Netflix show and stuff like that. It's like I do think that they're and we can end it here and let's let's end with the iPod

stuff. But I'm just, I was, hey, Google, you did your job. The spark was relit and I regained some faith in your vision. I see. So it was inspirational. It wasn't just kind of like a grab bag of like new feature updates and, you know, oh, it was. Well, it was.

There was something more. No? It was. But they didn't have a headline grabbing thing like they did two or three years ago with that sort of, um, calling into a, uh, 1,800 number. Yeah. Yeah. Oh.

God, what was it called? Yeah. I can't remember. It was during the whole conversational commerce, you know, a moment. Yeah. Yeah. Um, nothing like that. But, um, it did.

Their overall vision, like I said, re-inspired me. So, okay. Let's end. I said on the show today, which you haven't heard, that isn't it funny how Apple always manages to make headlines around anything Google does? And one of the things conveniently that they did was force everyone like me to talk about how the iPod has reached the end of its, of its tether, of its life as a product line. And I made the point on the show today that you, can argue that, you know, there were Palm

pilots, you can argue that of course there were other MP3 players previous. You could argue that the Game Boy was a computer in your pocket, but in the 80s and 90s, gadgets that were in your pocket were not necessarily computers. Computers were on your desk or your lap. And what

I think the iPod did was usher in the modern era of gadgetry where gadgets were computers, whether it be the size of a paper clip or You know what I'm saying? The modern gadget began with the iPod, and that doesn't even get into design

and culturally what it did in terms of music and things like that. So, you know, I just wanted to mark that, pour one out for the iPod and ask you, Chris, what was your first iPod? Oh, man, my first iPod. You know, I think actually it was an iPod Nano. It was red. I think it had a 128 gigabytes of memory maybe. I remember, like to go way back, I had a Diamond Rio.

Do you remember that? It was like a round little player. I had one. And I'll tell you, not to interrupt your story, but because I was not a Mac person in those days, when the iPod came out in 2001, I was so jealous of it, I found an equivalent, which was called the Rio Riot, which allowed, I think, 30, 30 megabytes? Yeah, right.

Or whatever it was. It had a larger size storage than the iPod. I'm sure someone will look this up and correct me. But then also, it was like three times the size of it. So I remember, because I remember going for a run on 9-11, because the iPod didn't come out to October, but I had this before the iPod came out. And it was like a good three-pound thing,

and I would have to hold it in my hand. If anyone looks it up, it was a big MF. It's like one of those bones. And then the iPod came out and I was like, God damn it, that's the size of a pack of playing cards. And that's a lot better. But I wasn't an Apple person at that point. You know, I will say just to build on what you're saying,

so many of Apple's inventions and innovations have really been about removing, if not the mystique of technology and computing, but to make it, one, you know, fit in your hands. to make it not feel really like technology, you know, especially like with a click wheel and just the ability for direct manipulation. You know, the funny thing, I was quoted in a source for an information piece about TikTok a couple weeks ago. And I was using the phrase information waterboarding, which is kind of the consensual experience of, you know, being inundated with videos and content for hours and hours, you know, without even thinking about it. And the reason why TikTok works so well is

because unlike with Instagram, where you're scrolling to the feed, at least when it was static photos, you'd kind of do this like flick motion where you like flick up and then pause with your thumb and flick up and pause and flick up and pause. And that is how you would consume the feed on Instagram. And TikTok sort of ingeniously decided to kind of remove the pause action of your thumb and allow you to just swipe up and then it stops the content, you know, fills the screen and then you swipe up again. And that little. removal of friction seems to be such a huge and important aspect of the TikTok experience. And if you think back to the first iPod and the click wheel and the ability to sort of like move through thousands upon thousands of items where previously you were tapping a button like up and down to go between folders or whatever types of directory structure there was, the efficiency of that interface, again, made it feel magical, made it feel like it wasn't technology, made it feel like you weren't stupid or slow. And I think that's one thing to keep remembering about how those iterations in hardware design enabled more and more generations of consumers to adopt and bring technology into their lives in ways that previously, like you said, like that brick, like, it just, there's people who would be like, it's too heavy. It's too bulky. I don't like it. Like it just, it feels gross.

Also, how much, how much, how much, and the, the, the Walkman, the Sony Walkman, captured this as well, how much bringing your personal music with. you. Again, this is coming back to our previous conversation, into the real world. Yeah. Like, bringing your personality with you into the, you know, on a train, going for a walk with your dog. By the way, I brought up Wikipedia, the railroad ship in 2002. So I wasn't listening to that on 9-11. It was probably my diamond reel. And by the way, it had 20 gigabytes of storage. Okay. It's still a good amount. But the other thing is that I was thinking about the iPod today is how apocal it seemed, how big it seemed, and how quickly, like, literally it's an app now.

It's Spotify, right? The whole idea of music and tying into hardware and things like that is just an app now. And it's a subscription that you pay every month. And it's weird to think about how things like the MP3 and MP3 players blew up a, a $20 billion a year industry. Well, that's just that. But actually, you know, to think about, I think what you're pointing out, and it's

interesting to think about this, like when we think about the internet and the purpose, at least for many of us, of democratizing media and allowing anybody to publish and consume, you know, Steve Jobs had the idea that people needed to own their music. You know, like you wanted your record collection. You wanted your

CD collection. You wanted to burn those CDs onto your computer and to own them and to have that. And we did. And we did. We wanted that. Absolutely. But over time, with the creator economy, we've actually eroded kind of the middle person purpose of record labels and whatnot and how they were necessary to distribute content because you had to put it on physical media to now where anybody can produce songs and produce music. And so it was impossible to ever get enough CDs or content that way. And so that is why it has become a service. I mean, Spotify is just a browser that surf is that surfs, that surfs, the music web. And there was no way that, you know, at least if you see that the power and the

inclusivity of the web as a platform, you know, that iTunes would have remained the only way to get your music for a $1.29 apiece forever. At least it seems to me. I do, I still have, you've been to my house. I still have bookshelves everywhere. When we cleaned out Lisa's storage unit in Ann Arbor last year, we got rid of my 400 CDs that would have been on the walls. Yeah, I do miss the ownership. Yeah. Well, I mean, the physicality, right? Yeah.

I miss that. Yeah. Yeah. Well, we could keep going on in this for a while, but, you know, we've probably Yes, yes, yes. We started in a very interesting place. And we're back to optimism. So I appreciate that we can continue to have that conversation, even during this bloodbath.

Yes. Indeed. And thanks to all of our guests. Thanks to everyone that's listening. And anyone that is listening that's not familiar with the show, this will go up on the Tech Memer at Home feed on Saturday, if you want to listen back. And let's have a better week next week, tech industry. If not, we'll be here again, you know, and we'll talk about that.

Indeed. All right, everybody. All right. Later, Chris. Thanks. Thanks, guys. Ciao.