This Week in Startups - 11x in Trouble and China's AI Acceleration | E2103

Episode Date: March 27, 2025

OpenPhone - Streamline and scale your customer communications with OpenPhone. Get 20% off your first 6 months at www.openphone.com/twistLinkedIn Ads - To redeem a $100 LinkedIn ad credit and launch your first campaign, go to linkedin.com/thisweekinstartupsBrex - the financial stack founders can bank on. Get the business account trusted by 1 in 3 US startups at brex.com/banking-solutions.Today’s show: Jason, Alex, and Lon dig into the controversy around 11x, the Andreessen-backed startup accused of misrepresenting revenue and using fake logos, and what that says about early-stage accountability. Then we break down China’s dual-front blitz in AI and EVs: DeepSeek’s open-source model rivals GPT-4, and Xiaomi’s $30K SU7 is a straight-up Porsche clone shaking the EV market. Finally, we unpack the “4-persona framework” that helped Wiz rocket to $100M+ ARR faster than anyone — a must-know concept for any founder looking to build, sell, and scale like a beast.Timestamps:(0:00) Episode Teaser(1:27) Introduction of co-hosts Lon Harris and Alex Wilhelm(3:23) New set design and color analysis(5:43) Announcement of "Twist OT" and potential Patreon model(8:09) Gamestop's Bitcoin strategy and Michael Saylor's influence(10:15) OpenPhone - Streamline and scale your customer communications with OpenPhone. Get 20% off your first 6 months at www.openphone.com/twist(14:26) MSTR and their shift to Bitcoin(17:01) Michael Saylor’s conflict of interest(20:40) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups(23:09) Investment strategies for company treasuries(25:10) Allegations against Eleven x startup(30:35) Brex - the financial stack founders can bank on. Get the business account trusted by 1 in 3 US startups at brex.com/banking-solutions.(32:56) The importance of transparency and accountability in startups(42:31) Chinese advancements in AI technology and ChatGPT features(55:09) Insight from Israeli VC Gili Raanan on successful startups(1:04:26) Founder Friday March Pitch Madness bracket competition(1:10:26) How to start a Founder Friday chapter and community(1:11:21) Bracket competition and Launch Accelerator's 34th cohort*Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcpFollow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelmFollow Lon:X: https://x.com/LonsLinkedIn: https://www.linkedin.com/in/lonharrisFollow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanisThank you to our partners:(10:15) OpenPhone - Streamline and scale your customer communications with OpenPhone. Get 20% off your first 6 months at www.openphone.com/twist(20:40) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups(30:35) Brex - Get the business account trusted by 1 in 3 US startups at https://www.brex.com/banking-solutionsCheck out Jason’s suite of newsletters: https://substack.com/@calacanisFollow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.comSubscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

Let's talk about 11X, the startup backed by Andreessen Horowitz. TechCrunch put out a story about this. In this case, one of the things that they covered was the misuse of customer logos, essentially. 11X, according to Zoom Info, kept using their logo for at least four months on their site, on its AI dialer in sales calls, and they spent four months demanding they stop, they said, And they're threatening legal action over this. Oh. It's hard for me to believe that for four months,

somebody from Zoom was angrily emailing any member of the team at 11X, and that person didn't communicate to the website team. Hey, pull this logo. Like, that to me is not a satisfying explanation on any level. This week in Startups is brought to you by Open Phone. Streamline and scale your customer communications with Open Phone. Get 20% off your first six months at openphone.com slash twist. LinkedIn ads.

To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash this weekend startups. And Brex. The financial stack founders can bank on. Unlike traditional business banking solutions, Brex has no minimums and no transaction fees. And you get 20 times the standard FDIC protection. Get the business account trusted by one and three startups at brex.com slash banking dash solutions.

All right, everybody, welcome back to this week in startups. He's Lon Harris. He's Alex Wilhelm. We're going to do this week in tech. I heard in two weeks, Alex, together. I was talking to Leo Laporte. Oh, and I. I added you to my calendar invite just so you know.

We're both going to do it on. I think it's April 6th. We're doing it on a Sunday. So you and I will be making, we'll be bringing Twist to Twit. To Twit. Yeah. We're just going to drop the S and show up.

That's going to be hilarious. Hilarious. Now, we'd get Molly. Would you show up? We'd have the great. This week in tech, this week in tech by Leo Leport. He was the godfather of podcasting along with Dave Weiner and, of course, Adam Curry. He tried to hire me away in the early this week of startup area. You remember that? Oh, I didn't know that. That's great. Yeah, he tried to poach me. Oh, I actually didn't know that story. I didn't want to move to Petaluma, so I turned him down. Okay, Petaluma. Oh, beautiful. I've been there a bunch of times for Twit. Lovely. I love going on Napa Valley.

Yeah, but it's just you're an L.A. guy. You're an L.A. I didn't want to get. It's too small town for the for the cosmopolitan Lahn Harris. Exactly. Anyway, long story short,

April 6, tune in. Twist on Twit. Drop the S. And Alex and I will be there a talking shop with our guy. Yeah. Neil Leoport, who, you know,

really did inspire a lot of us. He was a radio guy who then started doing tech TV and G4 TV. Kevin Rose. got inspired. That's where Dick came from. I got inspired. That's where Twist came from. A lot of people inspired by Leo Lipport, who was just the radio guy, who figured out how to do live streaming. And he has done so many episodes of Twitter every Sunday. I think he does it at

2 p.m. Pacific time. And it's just a great roundup show. I wanted to thank the team for painting my shelf. As you can see, guys, I have a new set. Beautiful blue. Beautiful blue. And we're going to be suiting up here. We're going to be taking the job seriously because we want to make clips that look extraordinary. And let's face it, like our clips look okay and the clip team's doing great. But we really want to be tight, tight, tight,

4K all the way, all day and beautiful. And you know how I got these colors, Lon? Ask me how I picked the colors. How did you pick out those beautiful colors here? Thank you. Look at those empty bookshelves. It's coming to Austin. It's going to be on this road.

It's all in boxes. All in boxes. Right. So over the Christmas holiday, I was in New York. I had Christmas, or no, sorry, Thanksgiving holiday. I had this little holiday in New York. See, my family had my three daughters with me. I'm a girl, dad, like Kobe. And they were going to do this color analysis. So there's a color analysis that Korean people use. You can look it up online and they have a storefront or they have an office in like Midtown Manhattan. And we went. to do a color analysis. Turns out my colors are these blues. And so I'm leaning into my blues and my greens. And my wife and the team here just spent weeks and weeks dialing in this beautiful blue. And I'm getting the lighting right.

I'm just taking total ownership of set design for myself. But I got the color analysis done and my daughter's got it done. It's really interesting. They put these little swatches on you and then they move them back and forth. And the guy from CNN, yeah, there it is. So this is like a color analysis. So I did what you're seeing here where you sit there and they do this color analysis where they put these different colors in front of Yilan. Red's not your color.

No. Not your friend. Really? It's not? No. The last time I wore this shirt on this show, my mom wrote me was like, that shirt looks great on you. No. What it is is, is red is not good on anybody, almost anybody because it creates too much flushness in your face and everything.

But this, what do you have on there? Black or is that like a gray, Alex? It's like a navy blue? Navy blue? This is a blue-green athletic shirt that I like because it breathes. Beautiful. It looks good on you. That color might be working there.

The red maybe creates too much vibration. Anyway, putting all this aside, it's a very cool thing, and it actually works. And so shout out to them. And yeah, you can go get your color analysis. There's like a bunch of people who do this. Anyway, that's how I got the blue colors here. A little announcement for this weekend start us. We do it live, Monday, Wednesday, Friday, 12 p.m. Texas time, 10 a.m.

left coast time, 1 p.m. right coast time. I got it right. Okay. I decided. I made a decision. I was talking to Leo Lipport about politics. And it's like ruining every conversation about tech and startups, right? It just, it finds a way to inject itself, right? Like, we're all sitting here and we want to jump on the signal story, I bet, because that's the crazy story of the week. And there's a lot. There's a tech angle. There's a tech angle, obviously. Here's my announcement. We're going to focus on founders, startups, how to build your startup, how to build your team, how to work on your product, and how to really absolutely adore and study your customers. We're going to talk about big tech, obviously, because that affects little tech, right? And then we're going to talk about technology.

But I'm going to backload. We're going to do OT, twist OT. I just came up with that right now. That's the overtime. Where we will just go, YOLO at the end of the show about political topics, about all this other nonsense, pop culture, etc. So if you listen live, you'll get O-T. But if you get the podcast, we're not going to keep inserting this stuff into it because it's maddening. We can't talk about tariffs every week

when we've got so much other great content. So let's get right to the great content. If you want to do the overtime, go to YouTube, search for this week in startups, go to X, follow TWA startups. We're also streaming on TikTok and Instagram. So there's right now between zero and three people on each of those platforms,

please go search for us and follow us. Any thoughts on Twist Overtime? My one thought is I feel like, even though the money angle we're not like desperate for the cash like a lot of other creators, there is like this would be perfect for like a Patreon

or like you could have those YouTube subscriptions where people kick in like an extra buck or two a month to like subscribe. And then it's like if you subscribe, then you'll get the, extra 20 minutes too hot for twist. Exactly. You're like Caleb Hammer, that financial audit channel. He does the post show, but you got to be a member of five bucks a month, and then you get to see the post show. And that's where they delve into all the tea, you know, all the like,

the huge idea. All right. So two ideas there. We got twist overtime. We've got twist over time. What do you think, Alex? I think it's a really good idea. And in fact, when you said, I bet you guys want to talk about the signal story, I looked at the docket. And what's interesting is that we don't have it in there, Jason. Because I felt like, I don't know if we could add much that would actually move the ball forward because I think every angle in that story, it being such a bomb shell. Yeah. It's been, light's been shot at there from every possible side. We could go over some stuff, but I don't know if we could really move the ball forward for founders. So I like it. I want to ask a question, though. So I always try to find something that we can all kind of laugh about

to start the show. And love a little laughing. Yes, please. Yeah. And so when GameStop announced that they're going to become a Bitcoin treasury company, I found that to be intrinsically hilarious.

And so I stuck it in the intro section. Is that too far away from the founder focus? No, I think that this is an interesting commentary because founders aspire to be public companies and founders fail and they have to pivot. So I do have a take on this. For those of you don't know, Michael Seller, friend of the pod.

He's invited him on a million times. He has to come on. He begged to come on. And then when I invited him on, he unfollowed me and stock-com-up. I haven't reached out to him. I mean, I'll keep reaching out to him. I would love to talk to him. I don't have a personal problem with Michael Saylor.

I think he's doing the most audacious betting strategy I've ever seen in public markets. I don't know why more people are not talking about it. It is audacious and insane and brilliant, depending on if Bitcoin has, hits, let's call it $500,000. If Bitcoin never hits $500,000 or it crashes, he'll either be a modest success or it'll be a complete disaster and everybody will say, who didn't see this coming, right? So it's got basically three possible outcomes. If Bitcoin goes down to $30,000 a coin again and he gets liquidated or some craziness happens and the stock collapses and it trades at 80% of the $500,000, 500,000 bitcoin he owns, people are going to go.

So, well, we all saw that coming, didn't we? He's speeding into the turn. Of course, he flipped the car. Founders, every time you miss a call, you're losing an opportunity. And we all know, customers are busy, and if you don't pick up, somebody else will. They're going to move on to the next product or service. That is not yours. So with open phone, you're never going to miss another call, and you're not going to lose track of who followed up with you. It's the number one business phone system. It's the one I use at my companies because it's built for entrepreneurs. Fifteen bucks a month, what a deal for open phone. You get a dedicated business line and that lets you keep your business and your personal life separate. Plus, you get AI powered call transcripts

and summaries, so you never forget something in the call that you needed to follow up on. Maybe there's action items. Maybe your customer wants you to follow up with pricing or a feature set. You're going to know exactly what was to see. and what you do next. Also, you can set up automated messages to ensure no customers left hanging and Open Phone works through an app on your existing smartphone or computer. And this makes it easy to manage your calls from anywhere, whether you're on a desktop, you're on vacation, you're a remote worker, you're on your phone, you're in the car, you're at an airport. It's just easy to manage. So here's your call to action. Open Phone loves this week in startups. Open phone loves startups.

They love founders so much that they're offering 20% off your first six months when you go to openphone.com slash twist. That's O-P-E-H-O-N-E dot com slash twist for 20% off for your first six months. What a deal. And if you have an existing phone number with another service, open phone will port those over at no extra charge. Thanks again to our friends at openphone.com slash twist for supporting independent media like this week in startups. If it hits 100, 200, 300, 400,000, he's going to look like, wow, that was a really good trade. Yeah. He figured out how to triple people's money in a time period where it doubled, right? And he basically has to double from here to hit break-even because he's trading at two times,

I believe the value is Eishon is roughly two times. Roughly, yeah. So if it was two times, he has to hit like, I don't know, Bitcoin has to hit like $150,000 for him to have the valuation of Mr. MSTR, is his stock nimble, for him to be like at one-to-one. is the value of the company equals the value of the Bitcoin, something like that. Ballpark. And there's a bunch of websites that show you the net asset value, nav to the valuation.

So what is it now? It's one point. I was trying to find it for you, Jason, but I ended up on this chart here. Sure. And I'm not entirely sure where I'm supposed to look. So if you've seen this and you know. So this is net asset value, right? So he has 500,000 coins.

And at 500,000 coins at 80,000, right? five times eight is four. So we know it's got to be something like the value of the company is 40, the value of his Bitcoin is 40 billion, correct? Yes. The value of his company, if you were to look at a stock ticker,

right now might be 80 billion. I'm taking a guess right now. I don't follow the data deck. You're so close to nailing this without even having the numbers, Jason. I found the data point in the chart that I showed for a second. And according to MSDR-dra-dracker.com, the finest of all resources, the NAV premium or NAV premium is 1.93X today.

Okay, fine. So he's trading roughly at double the value of the coins. It's $80 billion company, $40 billion. I think because it's in a publicly traded company and you don't control the Bitcoin, he should be trading at point eight. If you believe he's trading at point eight, the value of the company is like $35 billion or something in that range. So I believe he's doubled the value on the public state of stock. So essentially, if Bitcoin was worth 160,000 a coin, I think the valuation makes sense. Let's put it all aside for a second.

The company, Mr. which is short for, they call it Mr. Micro Strategy, right? Short for micro strategy. Micro Strategy existed for, I think, 25 years as a public company. It's a long time. And as a public company that had a software product that is now, I would say, I don't want to say failing because it's hundreds of millions in revenue, but it's stepping down.

It's deprecated. This happens from time to time, right? You have some big successful thing and it deprecates over time. Blackberry, you know, whatever it is. So he started buying Bitcoin inside of that company. Now the company has this huge resurgence. Other people are watching this.

And he is goading people, encouraging people, or running a Ponzi scheme, depending on how cynical you are. It's a little, yeah, he's pumping. He's pumping hard. It's definitely a pump. At a minimum, it's a pumped. You can call it a Ponzi at Max if you want.

Right. Right. So at a minimum, he's pumping. And then the synog, so, you know, an objective person says he's pumping, a cynical person say it's a Ponzi. I say this also peer pressure now. So what he's been doing is this peer pressure. And this is where I, this is where I don't want to say distasteful, but this is where I get red flags concerns. When you start pumping and peer pressuring people to the extent he is, so he had just in recent history, he's been telling people. like how much will you respect GameStop as a Bitcoin maxi? How much Bitcoin do they have to buy for you to respect them? Did you see that survey that he did today? You can throw it up. That's a massive amount of peer pressure. He's trying to goat the CEO of GameStop into buying more and being part of the Bitcoin.

Again, you could be a cult, whatever. So he says, what's the minimum amount of Bitcoin GameStop needs to buy to be respected by Bitcoiners. 50 million, just larping, 250 million, Mr. Starterkit, one billion, Tesla tier, three billion, King Moon. So 47% of people want them to do three billion, 30% want them to do one billion, put those two numbers together. You got 77%, 78% of people doing this full core press. But of course, the people following Michael Salern voting on these are Bitcoin people who are desperate for more people to buy in so their prices go up. We're not saying this is a poll that is representative of the national view on games

the maxi view. The maxi view. Right. Yeah. This is the maxi view. I do think the $3 billion number is very interesting because I looked at GameStop's cash holdings at the end of their most recent quarter, around $4.8 billion in cash, Jason, no debt, really.

Turns out that at today's prices is $55,000 Bitcoin if they spent all of it. Okay. Which would be 10% of the Bitcoin, uh, he owns. and then he personally owns like 20,000 bitcoins or something in that range, maybe the 17,000 or something, which is the, of course, huge conflict of interest I've explained here before. No matter what happens with MSTR, he will have taken his Bitcoin,

which I think he said he owned on average for like 10,000 a coin. Yeah. Every thousand dollars it goes up, he makes $20 million. Every 10,000 he makes $200 million. Every 100,000, I think he makes $2 billion. So no matter what he does, he's going to personally make essentially hundreds of millions to billions. That is such a conflict of interest that he disclosed it in a tweet and said before he moved

MSTR, and I retweeted this tweet. It's like an ancient tweet from the 2020 era, I think. You can find it maybe. I've retweeted it. It's basically he said he informed the board that he owned these before he went on the strategy. That was his CYA, right? If you have a conflict. Now, people are saying it's not a conflict.

actually is a reason to believe that he believes what he's saying. But it's a conflict because, you know, like, say, I don't know, a president or something, you know, if you were owned a certain number of coins and you put him in the treasury, that'd be good for you. Here, some have asked, this is dated October 28th, 2020, 2020. Somebody read it. Let's see what it says. Don't know how much BTC I own. I personally hoddle 17,732 Bitcoin, which I bought. at $9,882 each on average. I informed micro strategy of these holdings before the company decided to buy Bitcoin for itself. Okay.

So, Alex, you know what that is, that tweet. Yeah, that seems like, CYA. Don't sue me, yes. Don't sue me, brough. I told the board, and he, you know, as if he's not in control of the company, right? He's not in control of the strategy. Pretty clear he controls the company. I, you know, I don't know the exact governance, but he's, he's, he's the CEO.

He's on the board. I don't know how many shares he owns. I don't know if he has super-voting shares. Or is he just the chairman. There's some strange names they have inside of the org. But let's be honest. If you think about Microseragogy, do you even know the name of the man who runs the software division?

No. No, couldn't tell you anybody. He's the executive chairman and co-founder of Microstratage. So who knows what level of control he has over it, but he wants to make sure people know, hey, it is a conflict. He's admitting there. It's a conflict.

And it's a serious enough conflict that I have to inform the board and make sure I get their approval. Because if he didn't and he did it covertly, that would be like SEC or like the classic SEC. I don't know about this new SEC. You know, come down on them with the bag of bricks. Pressuring GameStop into it. I think it's a great move for GameStop to put every dollar they have into this. All right. And then just because GameStop has no business, right?

Yeah. I mean, GameStop's got to do something because it's like going to the mall to buy a physical copy. of a video game is just that's done. That model's not coming back. So they need they need something else to do. This is the, if you're watching the video, this is the GameStop announcement from their investor relations page. It reads in full, GameStop today announced that its board has unanimously approved an update to its investment policy to add Bitcoin as a Treasury Reserve assets. They are going to do this in some capacity, hence the sailor tweet. Jason, the thing that I'm curious about Just bringing this back to founders is simply, have you heard of any non-public company putting Bitcoin on their balance sheet?

And as a follow-up, if a launch accelerator back to company said, Jason, we're going to buy a Bitcoin to have on our balance sheet and just cash, what would you say to them? Hey, founders, I want to share with you an experience I love. It's when I get an ad that is relevant and not some nonsense. Like the other day, I got an ad for a fund management platform, and it was like a new one I'd never heard of. I clicked on the ad because, well, I managed four venture capital firms. We scheduled to call with them, and it was amazing. How did this happen? Well, I was on LinkedIn because I'd like to share links from the podcast, the speaking startups, right on LinkedIn.

In fact, we live streamed to LinkedIn three days a week, and we get a great audience over there. And I happened to be presented with this fund management platform, and it was a direct hit. Like, I mean, talk about hitting the bullseye. If you're in business and you're making a product or service, it's really hard to find customers in the business to business space. And doing B2B advertising is hard, but LinkedIn makes it so easy because, you know, their tools let you target people by job title, industry, company size, and more.

So this fund management platform obviously was looking for people in venture capital, who had a fund size and a number of people, maybe 10 people, maybe 50 people. And they found me. They got me. They split the arrow. Boom, right on target. And there's two things you really need to. know about LinkedIn going into 2025. First, they broke a billion members, and a hundred thirty

million of those billion are decision makers, and 10 million of the billion are C-level executives like myself. Where can you get to those people? It's really hard. And the second thing you need to know, LinkedIn makes an impact. B2B markers report two to five times higher return on ad spend or ROAS return on the ad spend. You should know that acronym. Compared to other social platforms, 79% of B2B markers say LinkedIn is the best platform for paid media. LinkedIn's going to let you build the right relationships. It's going to drive results. And you're going to reach your customers in a super respectful business environment. It's not a place where people are dancing around saying inappropriate things or debating politics. Nope. LinkedIn equals business. Business equals LinkedIn.

Start converting your B2B audience into high quality leads today. We'll even give you a hundy, a hundred dollar credit on your next campaign. Go to LinkedIn.com slash this week in startups to claim your credit. That's LinkedIn.com slash this week in startups terms and conditions do apply. was less than 5% of their holdings, I'd be like strange, but okay. You know, I do see frequently companies with a large treasury buy treasuries, by municipal bonds of short duration. So because you need the money. So if you buy two-year treasuries, one year, whatever, and you can get three, four, five percent on $10 million, you get an extra $500,000 into the company. You have to pay tax on that interest typically, unless it's a non-taxable muni bond. I've done that in the past myself. When I did that,

I had to go to my, you know, board and say, hey, I'm going to put of this $15 million, we have seven and a half of it into bonds we can't touch for, you know, between one and three years or one in two years, and they're going to roll every quarter off and every quarter they mature and we get that money, whatever. And it was nice. We had like, you know, at some point, you know, maybe it was 50K a month and interest coming in. So it was just nice when you're, it winds up being five more, you know, developers for your team that are being paid for by interest, but the VCs don't give you the money, and investors don't give you the money to be a hedge fund manager. So they're giving it to you to grow a business that goes 100x. That's the problem here.

But for GameStop, if they can't come up with a good idea, and the best idea they have is to follow Michael Saylor and the Trump administration down this crazy crypto rabbit hole, which I think is going to blow up inevitably. And when it does blow up, it either can be the total risk. of ruin, look up risk of ruin. When you have a bankroll, you have to be careful to avoid the risk of ruin. That means you don't put all your money on one bet. You need to be able to weather the storm. Risk of ruin is what happens in poker when you take your entire bankroll, if let's say you were a professional poker player with a million dollar bankroll, and you play in a million dollar buying game. People with million dollar bankrolls play in 25,000 dollar buying games,

and they limit themselves to four buy-ins, so the most they can lose in a single session is 10% of their bankroll. You know, and if you wanted to play a million dollar games, you'd want to have a $10 million bankroll. So you're not putting more than 10% on the line. Anyway, risk of ruin, interesting concept for people to know. But if you were pivoting, you don't have any ideas. And if I was a shareholder in GameStop,

let's say I was the co-founder and I own 10%. And I'm watching these folks for years try to get out of the retail game and they don't have a thesis and they can't get out of it. Sure, why not? Let's talk about 11X. the startup backed by Andreessen Horowitz. TechCrunch put out a story about this. Some of the notes included that the company had customers signed one-year contracts

with a three-year, three-month break, and that it may have been misreporting revenue after customers had broken. Essentially, they turned their annual contacts into trials. An employee said that they were kind of massaging the numbers. They may have left some logos on their site too long after they weren't really customers. The company has pushed back, Jason, but I want to start with that and get your feedback. Okay. So it's all alleged, right? Yes. And the allegation is the platform is denying the TechCrunch report. That's important to point out. Yeah.

Okay. So the company made, the company made, they had customers, sign a one-year contract with a three-month breakup clause. This turned the annual contract into effectively trials. This is not in and of itself anything problematic. when I do one-year contracts with people, I'll have a 90-day out. I'll sign a three-year contract somebody with a 90-day-out, a 30-day-out. What it means is, I just have to give you notice so we can off-board, and then that company doesn't have if they had dedicated some resources to it, let's say, you know, an account manager or, you know, a contractor to work on your thing. You just have 90 days to let that person go and to inform them, hey, you know,

we're going to just off-board you, whatever. So that in of itself, not a problem. But when you start using the logos of customers, and you start using weird terms, contracted ARR, car, this is a very abused number. I have been getting, and I have had situations. I'm going to make an amalgamation. Okay. The founders told me they had this amount of revenue. And what they meant is the contracted revenue.

And then the contracted revenue didn't match the money coming into the bank account. when you're dealing with any type of investor who is, let's call it smart, any of these words you'd like to use, Alex, any smart investors who say, what was 2024 revenue? What is 2025? Give me a chart of monthly revenue. I have had people. Then give me a chart of contracted revenue. And I said, no, no, no, no. Who's your accounting firm? I want. the actual accrual-based accounting where you take your 12-month contract, let's say they paid it in advance. They gave you $100,000 in advance. It's $10,000 a month. You give them a discount of $20,000. I want to see that $100,000 divided into 12, and I want to see it, you know, put into each month that the service was delivered. And we know that it could get canceled. So if you have churn, which people do, typically 5, 10, 15% churn a year, some people have negative churn, which because

people are adding to their existing contracts. So you have the same number of contracts lawn, but you go from 10 people to 50 people in your Slack account, so you're paying five times as much. So 10% of people leave the product, but then 50% of the people, you know, 10x their usage of it. You get this all this, you know, math and fun with numbers. You know, just fun with numbers is a very dangerous game

because if you're selling shares of a company and you confuse a person buying the shares, then you will get, a knock on the door. Hello, SEC here. We would like to talk to you about a special term

called securities fraud. You never want to hear those words, by the way. Those are not good words. Is that not coming up on the microphone? Oh, it absolutely is. We can hear the SEC. Hello.

Laude? Alex. Is the SEC here? Yeah. It was a scary moment. I remember opening the door and somebody... Oh, really?

You've had the SEC knock on your door for security. I've been served. You've been served. Boom. And I look at this piece of paper. Got the SEC logo on it when I pull it out of the back. That's no good. Whoa.

You don't want to have like. Yeah, exactly. Just sit down. Breathe. You got to go in your box of documents stacked in the powder room and start going through them. No, this is a moral logo. What is this? What is this?

Turns out I had somebody on the pod. They were telling me, we had invested in the company, they were telling me what incredible prospects they had. They didn't have their accounting dialed in perfectly. They ran out of money. It was during a down market. Nobody, no white nights come to the rescue. The SEC had somebody tip them off

that not only the company claimed to be profitable or break even, but then they are out of business because they couldn't make payroll. And then they submitted Jason's an investor. The person was on the podcast, you know, 30 days before this whole thing blew up. Oh, wow. And they said the following things.

So the SEC says, we would like every correspondence, we would like this, with this, I got to hire, I kid you not, an $1,800 an hour attorney, the most I've ever paid. You start getting into this level. So now. $30 a minute? That's wild. That's 50 cents.

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United States. Let's get that up to one and two. Get the financial stack that founders trust at brex.com slash banking dash solutions. Once again, B-R-E-X.com slash banking dash solutions. Thanks again to our friends at Brex, who make a great product that we use. every day. I mean, I'm trying to think of when I've lost. They come into the office, set a briefcase down, take a sip of water. You're already out like, yeah, that's a car payment. You're out five grand just for that. I want this guy at Tomahawk steak every 10 seconds.

That's insanity. That's interesting. Anyway, happy to pay it. Shout out to. Set it in prison. I'm like, they're like, you have no exposure. Don't worry about it. Then I get the 30,000. dollar bill for my no exposure. I pay the, I, I give, I buy a Prius to my attorney's son or daughter or their housekeeper got a Prius on J-Cal. Yeah.

Happy to pay it. So happy. I'm not grimacing the law here. I'm not in pain. No. And, uh, I'm like, okay, well, did they clear me? Oh, no, they don't do that. What happens next?

Just, what you're seeing here is a shrug. I'm doing a shrug in front of my beautiful blue shelves. Yeah. It's just a chock-esque. It's just like... They don't tell you. They leave you on the hook indefinitely. There could be another knock.

Hey, remember we talked to you 10 years ago about the startup? Turns out, oh, we pinch this person. We would like to talk to you again. That's the problem, I think, with how the SEC has run, respectfully, is that they have so much power. And they have a very important mission. And they're very principal people. But, man, they need to be a little more... interactive, you know, and like maybe wrap things up so I'm not sitting here sweating

bullet? I don't know. I think they might want an environment where people feel like on edge and scrutinized, you know, like they don't have that many agents working the way to enforce these rules is to make everybody feel like you could be being watched at any time. Yeah, well, they did also tell me if I didn't get the paperwork to them in time, I was going to go to El Salvador to stay in a camp. That's what you go for your tweets.

I was going to be going to a camp. I want to go back. I want to go back to contracted ARR, Jason, or C. ARR versus ARR. My understanding of this is that contracted ARR includes future annual recurring revenue that has not yet manifested as cash. So my question is, if I signed up for Jason's SaaS product on a monthly account, say, I haven't paid yet for some of the ARR you might count if you presume that I'm not going

a churn if I'm monthly. So to me, the actual distinction between C.R and A.R. is a little bit muddy. Can you, an idiot turns explained to me? I was trying to prep and I couldn't quite. So I think the way most people do it. And this is a term that I've only seen the last couple of years people lean into. Okay. Any contract signed.

I signed a 10-year deal with you for 100,000 a year. I have a million in contracted revenue. So now my contracted revenue number, which was 9 million, is now. out 10. What are the chances you stick around for another nine years and 11 months? I don't know. What this does is it incentivizes the team of sales executives. I think if you have an incentive, if you show me an incentive, I'll show you a result, right? I'll show an outcome. This is not the incentive you want. You don't want your team to start playing fun with numbers. There's a pipeline report. The pipeline report is how much is the contracts worth? So now you've got salespeople.

They have a pipeline report. So there's a hundred possible customers. I'm in active discussion with now, Lon, and each one of them's worth a million dollars. They have a hundred million in pipeline. And then there's the people who sign contracts and how much revenue that will generate this year. Okay, great. So now I can look at those two numbers. A hundred million in contracts, you signed one of them in the first quarter. You signed one each quarter. You signed four of the hundred. So we know that a hundred million in pipeline results in four percent, on average, in closing. So now we judge you. 90, you have a four percent close rate. So either of those hundred million in the pipeline, you didn't actually qualify. Qualify means they can afford the

product. It would be like me saying, you know, a bunch of people come on the lot and they look at the Corvette and they all want to test drive it and they all look at and say they're interested in it and I convert 4% of them. Maybe the people that were there not for a Chevy Corvette, they were there for a Chevy, I don't know what the vault. I don't know what the lowest Chevy is. I'm going to be a drive a Corvette. Anyway, putting that aside, then you could look at the contracted. So now you start getting into the fund with numbers on the contracted out. Should follow me here? Those four million dollar contracts are 40 million. So now the sales executive, when they go into their review and they want to get a raise or whatever, I had $100 million in pipeline. It resulted in 40 million. I'm closing 40%. You close 4% of the names. You close 40% of the dollar value per year. But actually, you said you were going to have a billion dollars. So you still have 4%. So people get into weird, fun with numbers. And then they start playing games to build the pipeline up or to build the contracted. And in fact, you actually need to know just how much money you're making every month.

That's why subscriptions are the truth. The subscription business model, it really does give you a center of gravity as an investor, as a team, as a board. So just look at the monthly, quarterly, and yearly numbers of money into the bank account. I go directly to the accounting firm. So when we're on the board of companies and they're giving all these presentations, say, hey, you know, to somebody on the team, make sure you talk to the accounting firm, you know, once a year, once every six months.

If you can, if they'll give you the contact info, and just check the numbers, check the numbers. I'm trying to weigh, Jason, the reporting, which comes from two people, Dominic Madera Davis, and Marina Timkin, who are both very serious people, and they're not, they don't report frivolous things. And the company's response. So in this case, one of the things that they covered

was the misuse of customer logos, essentially, claiming customers that may not have been the right customers to claim. For example, Zoom Info used 11X, and this is a quote from the company. Well, actually, no, they used it for basically, it looks like a month. And then 11X. They trialed it. And then, oh, it was a pilot. There you go.

And then 11X, according to Zoom Info, kept using their logo for at least four months on their site, on its AI dialer in sales calls. And they spent four months demanding they stop. they said, and they're threatening legal action over this. And then the company's response, 11x said, just to be fair here, 11x said, we have never claimed customers we did not have. The customers named in the article paid for and used our product for a period and then churned. We regret not having better processes to remove logos from our website more promptly,

but they said that they told them over a multi-month period to stop doing this. We spent the last four months demanding they stopped to explain our logo and falsely counting us as a customer the spokesperson said. So to me, even if you're willing to go, the C.A.R. stuff is just accounting nuance and maybe it's a little more aggressive, but it's kind of inside the realm of normalcy. To me, that shows either incredibly poor internal organization or too much rule bending from my tastes. I don't even mean.

I don't even mean. I keep saying this on a range of subjects to people. just if it appears to be inappropriate, it is. Just take that philosophy online, right? I have to say, as an outsider who knows nothing about these companies and has not been part of any of these interactions, it's hard for me to believe that for four months, somebody from Zoom was angrily emailing any member of the team at 11X,

and that person didn't communicate to the website team, hey, pull this logo. Like, that, that to me is not a satisfying explanation on any level. Obviously, they're in a Slack room. Somebody sent that message. This, it was deliberate. It wasn't just like, oh, we don't have a good process to update our website. If you can take the time to put the logo up.

You can take the time to take it down. Exactly. So they had the procedure to put it up, but they didn't have the procedure to take it down. Doesn't make sense to me. Doesn't make much sense, right? Doesn't, yeah. Then there's Airtable, which they also had on their site for a while. Airtable told TechWrench it wasn't a customer and never gave 11X permission to use its logo.

Airtable conducted a quote very short trial of the product and yet as of March 21 11X was still claiming Airtable as a customer on its website. So to me, it's hard to say that all the accounting stuff should be obviated as a concern here because there seems to be a pattern of, I would say, lacks management. So I guess what I'll just say is this. Everyone's going to give early stage startups a little bit of breathing room to be bullish to be enthusiastic, to go fast, to try stuff. Shout out people who are building stuff from the ground up.

But if your last round was 50 million, I think Andresen led it, you're no longer a scrappy startup with one or two people. You need to behave like a real company because you're almost to scale up at that point. I mean, just the fact that we've spent 15 minutes of it on this week in startups and tech crunch wrote an article, like, is it really worth it to keep the logo up for whatever number of months and then just create the imperance of impropriety. the founder, whoever the CEO is, has to be fired. I mean, just accountability-wise,

we live in an age where there is no accountability. I do think, like, there is something to be said for just owning your mistakes. Please, just own your mistakes, folks, man. It's just we made a mistake. We'll do better. I just want somebody just, will somebody say that? Anybody on any topic, just say, you know what?

Eh, could have done better. I say it all the time. I say it all the time. Could have done better. How would change my behavior there. I would refine how I said something. I'm always like trying to just be a little bit better. Anyway, let's keep going here.

All right, Jason, you wanted to talk about Chinese AI. There was a great piece in Bloomberg digging into a diffusion of AI technology across China in the wake of deep seek. And also a deluge of releases from leading Chinese companies in the tech space. I had been keeping tabs on this, but I hadn't actually quite noticed how many big things had dropped. So just to give people a little taste. In the last couple of weeks, Alibaba dropped QWQ32B. This was a new 32 billion parameter reasoning model. That was quite good and cheap.

Also, Ernie X1 and Ernie 4.5 dropped from, I think it was Baidu. That was a new reasoning model and a new foundation model. And then Alibaba's former subsidiary aunt, I'm not quite sure other corporate ownership there works today. They came out with a cool new way to train models more inexpensively and also use a mix of homegrown and Nvidia chips to do so. So the AI market in China is cooking. Yeah. The way I would position this is in the same week, we have grok dropping stuff. I think chat GPT drops some image stuff that's going viral today.

They baked in basically like a dolly type image generator into the main chat GPT. So you can request images right from the main. interface. I have an example. Oh, okay, go ahead. I have an example of Jason and I, so I'll bring you up. Oh, hey, look at that. So I uploaded a picture of a still from Twist to test this out. And you guys are the film, guys, Studio Ghibli. Jibli, thank you. It's Miyazaki. They did Princess Monanochi, spirited away. Okay, question. Are they paying Studio Jibli for the rights to this opportunity? I'm sure they are not. I'm sure they are not. I don't know. I mean, this is so, such a copy, this is, if it's Studio Ghibli's iconic style, I assumed that they're making money from it.

That was my assumption. That is, I don't have, I don't think there's a lot of basis for that assumption. I don't think that I've heard about a licensing deal. And I honestly feel like Miyazaki would have put the kibosh on a licensing deal. Yes, I think that's absolutely correct. He's not an AI fan. I think this is a lawsuit then, and one that they will win because, and I can. style like this that confuses the user, I'm the user here, I know Studio Ghibli, my kids have watched

their movies. Sure. I know that this is something that people have made money from in the past. There are people who've made like a South Park character generator, and South Park released that themselves. So you can, in fact, copyright an iconic style. You can copyright that. Well, we're going to find out in the court of law. But I will say, though, that I did do Jason a little bit dirty because it made him look like a grandfather. It does, yes. It is what it is. It doesn't have to be perfect right now.

But I do think they should... It's pretty good. I mean, it's recognizable in that style for sure. Why wouldn't they pay them for a license and have an exclusive? Why wouldn't you reach out to them and say, hey, we want to do this. It would be a business opportunity. If they, for every time they do this, I think Studio Ghibli should get like a buck or 10 cents. A buck would be a lot, yeah.

I think their argument would be a lot. be how is this different from an artist watching their movies and then teaching themselves how to draw like that? Because an artist doing it is going to not be doing it at scale and not confusing the public. And then this is an opportunity for Studio Ghibli to make money from their IP. So with derivative works and IP like this, it should be the opportunity should be given to the IP holder. So if you made it one that was Disney princess, you know, then the Disney princess opportunity should be Disney's. I think we would all agree. Yeah, of course. And here, to make a twink jibly. Yeah, so I share this relatively whimsical tweet from Sam Malman just to point out that he's very aware of the trend.

So it's not like this is something that Open AI is trying to like pretend isn't happening. I mean, in fact, is his avatar on X now. Yes, now he has studio Jibli. No, I think he paid for it. This is the exact same as using Scarjo's voice. It is literally the exact same. You're taking somebody's IP, like, you know, Michael Buffer owns his catchphrase. What is it? Are you ready to rumble or something like, but let's get ready to rumble? Let's get ready to rumble. Let's get ready to rumble. Like, it's his brand. He owns it. Now, I can say, let's get ready to rumble here describing his thing, or I can make a joke about it on Saturday Night Live. But if I started doing it at the beginning of every NBA game or the beginning of any episode here,

I should pay some license to him for that since he did take the time to trademark it. You can trademark styles. So I think that they paid for this. If they didn't, they should. Well, we'll find out. I don't see any news about that exact point. I guarantee you to do it. We'll be in touch with them.

Let's just talk a little bit about Chinese, the pace at which they're going. Yes. There's no reason for an American to use any of these products coming out of China because their security concerns and they're not hosted and easy to use. And you have a hosted free version you can use anytime called Gemini or GROC or ChatGPT. So the fact that they're copying stuff at an incredible pace and doing some of their own innovations, let's give them credit for that. It doesn't really matter all that much. It just shows that everybody all at once is making apps in the, like in the previous thing, or everybody all at once is making websites, or everybody

all at once is making movies. We should expect that. The question becomes, at some point, will these free options, if they are flooded free open source with the MIT, you know, whatever. License. Will they then have downward pressure on pricing? So I don't see Americans going and using these things because, like, who's going to go seek them out or whatever? But I do see them creating downward pressure because if you're a developer, and I did see a developer saying this in a forum recently, why would I pay this amount for this many tokens from chat GPT if I could install this on five M4 minis or I could buy two Nvidia cards and run it on a local PC? Ah.

So this is where you do start to see downward pressure on pricing. I think some of these models will be good enough to do. things, like let's say the Studio Ghibli thing. Studio Ghibli would partner with Chat ChippyT, or their team would pay to use Gemini's, you know, back end or an AWS or an Azure version of this. But if somebody who's a developer at Studio Ghibli says, you know, I can set this up and stand it up for ourselves on an open source server here, and we can do it for a hundred grand, instead of giving a million dollars a year in licensing fees or whatever to pick your hosted

version and we can save the 900,000, here we go. And as Derek is saying in our chat room, we do this live three days a week for those of you listen to the pod and you're part of the replay gang in the pod, you know, Derek says, hey, age of abundance. And that's what's happened. There is another corollary to this. Type in, if you don't mind, we'll pull up ShaoMay's website, which I think, yeah, I don't know where to find it. I think it might be MI.m.global. It is. Okay. Now, Xiaomi. makes incredible. Facumes, electric toothbrushes,

scooters, camping lanterns. Have fun going through their website. Yeah, this is insane. Like, go to lifestyle for a second. Air compressors, sunglasses, I'll just do this live. Routers. Lifestyle.

Photo printers, hair clippers, scales, massage guns, anything. Sunglasses? This is what is what Chinese companies do, just like Sony might. If you go to their massage gun page, did you know, Xiaome,

who used to make your Android phone, has massage guns? Okay, that's like the Zara gun that I use. That's incredible. Shout out to them,

awesome gun. And they just knocked it off. Now, are some people going to buy these in China? Of course. I would like you to, now,

it's not on their website. I don't know why, but type in Shaomei 7, Ultron. Yeah, I know, I know where we're going

with this. SU7. Ultra. Well, the Wikipedia paid for the SU7. Show people what we're working with here. I'm going to put up now, and you're going to be... It's not just camping gear or massage guns, lawn, or smartphones. The ambition of Chinese companies has been unleashed. And if you go look at this car, this Xiaomi

SUV car, it's a large, luxury version of the Porsche. I forgot what Porsche named their four-door... Not the Panamara. Is it the other one? It is the Panama. I think you're right. Yeah, it's not the SUV.

This is like a four-door sports car. People are losing their mind about Xiaomi's cars. They're making a range of cars now. This is a phone company. Let me say that again. ShaoMay Auto, Xiaomi Auto, which is ShaoMayeV.com.

We pull that up, which people know is spelled X-I-A-O-M-I. I'm going to let Long pull that up. Well, I just point out that the SUV-7 Ultra we just showed on screen opens at 530,000 R&B, which is about 73,000 USD, which is not that much for a car.

This is a $300,000 car in America if you were to, you know, buy it, this, we're getting to like a level of, oh my lord, I don't know, that's the, that's the ultra. I don't know what the SU7 goes for. These cars are being sold at some de minimis amount to profit, right? And obviously the other main company in this regard is BYD. The S&7 stars at 30 grand USD.

There we go. Okay, thank you. Here we go. This is like next level. This is a phone company 10 years ago. It's now making cars that will rival Germany, America, and Japan. And these cars are cheaper. I don't know that they're better.

They're certainly not safer. But if you are living in Brazil or, you know, in Germany, or in Africa or Singapore, maybe this is the right car for you. Maybe this is half the price. And so the copying now is getting faster and better. We had TK. Travis from Uber on all in a couple weeks ago, and he was talking like, he said,

I can't understand, I can't overstate how quickly this all occurs. And that was his experience 10 years ago building Uber in China. They can copy so fast and so great that, they will create downward pressure, which then, of course, makes more choices for customers, and you're not going to need as much money. I just want to say to underscore Jason's point about Deepseek's really rapid rise in the AI game to make the point about Xiaomi getting into cars.

I put together a timeline just for our notes, but I'm going to share it here because it's pertinent. So I didn't realize that it was only back in last May that DeepSeek dropped V2 of its foundation model family. Then September was 2 and a half. December was V3. That was the real kind of breakout moment for DeepSeek, I think, in the AI community. Then they dropped R1 their reasoning model in January.

That's the one that blew up globally. In March, they dropped an improved V3 and R2 is supposed to be coming quickly. So inside of one year, we could go from Deepseek V2 to R2. That's insane. And I think it's very bullish, not for the price of AI models, not for the price of AI inference you can charge commercially, but for the impact of AI technology writ large. And if I was a startup that used AI models in my tech, I would be stoked because everything that I build is going to get 5% better a month for the next couple of years.

And that's just a great technology tailwind to have underpinning your products. I want to jump to this Israeli VC, Jilly Ranan. Yeah, I think it's probably, I'll look it out. It's probably Gilly Renan. That sounds right. He, I guess, was an investor in Wizz. He was on Invest like the Best. a really cool podcast that I've been on from Patrick O'Shaughnessy.

And he explains really how unique Whiz was because they were selling into, we talked about sales earlier in the program, how they were selling into four different personas and that those four personas were actually one. Let's just do 30 seconds from Gilly. When you sell a product, you're going to face a product. face four personas. The person that has the pain point, that has the problem, the person who has the budget, the person that has the authority, the person that would actually use the product.

Now, as a startup, if those four personas map into a single person in real life, that's a mega hit. Okay. So we were to look at something like, I don't know, HubSpot, right? It's a marketing solution. You might have a marketer on your team who is on the front line who does email marketing and builds your mailing list and does, you know, marketing online and they need a CRM. Okay. They have to go to their CMO who has the budget and say, hey, can I buy HubSpot? And they've got to do a little justification there. Then the CMO, has to either have the authority or they may have to go to the CFO. I'm sorry. Then the person with the budget has to go to a person who is the IT manager

who manages SaaS software at the company and say, hey, can we install this solution and put our customer's data in? Oh, well, the customer data is already in these three different places. So yes, but we've got to build a bridge to do that. And then finally,

who's going to actually use this? Well, there might be another person who is in the sales team who has to use. use HubSpot to send out their mailing to come join a webinar, right? It could be four different people have to get involved. Now, what he says here is when you have a mega hit, a mega hit, and I've never heard anybody frame it this way, so that's why I wanted to bring this up.

A mega hit in the business, like Wiz, is that the person who has the pain point was this security person, a developer of some type, who also had the budget. to buy it because they were the one installing it, 0.3, and they were going to use it every day. And that means the product rammed very quickly. We were talking about WIS on this program and on all in a week or two ago and just saying, how did they ramp so fast? You guys can pull up the chart of the revenue, WIS's revenue over the years. We were stunned when we talked about it here, Alex, of just how quickly WIS had gotten to 100 million and whatever it had gotten to. This is an incredible insight that I have never seen framed in, you know, my 30 years in the business, that I have

heard, of course, you have to get consensus in the sales process and there's multiple people, but I've never heard of like, oh, there's a product that, boom, you can just buy. It is the equivalent in consumer, we see this all the time. You need to get a ride, you download Uber, and you buy it. Now, in some cases, a kid might need to get a ride, so they have to get their parents involved and get their credit card to set it up. So there's two people involved in the decision. You do see that in consumer sometimes. You, you know, kid wants Disney Plus. Parent has to sign up for it.

Maybe there's a technical person in the family who has to put it on the TV. So you have to get three people in the family to, you know, one person's good at installing it. But this is a very interesting framing that I'd never seen. And here's the chart of the Wiz Revenue. This is from Sakra.

And essentially just shows them ramping. I think they did 100 million error in 18 months. And then they scaled to, I think it was a half billion. And they were looking to hit a billion this year in ARR. And then they were going to go public before, before Sundar Pachai, CEO of Google, somehow thought it was the right thing to do

to remove what would have been the hottest IPO of like the last 10 years and instead bought the company for a paltry $32 billion, ruining my fun and taking away my good newsletter fodder. Thanks, Sundar. Pull up the fastest to $100 million

that's in the Slack chat room. Got it's another really good image to take a look at. You know, people were really amazed by how quickly Shopify and Slack had, you know, gotten to $100 million. in revenue. And then whiz, just poop, straight up. I think there'll be a moment in time where

there'll be a consumer product that goes right to $100 million in a day. Yeah, we're getting closer to that. Yeah. This is SaaS products. I wonder like if somebody were to release a really cool product like Tinder or, I don't know, chess.com all at once as opposed to iterating and it just caught viral and viral. It'll happen. I mean, I think we've seen exponential growth like that all the time. Like, I remember the era when it was like posting a video and will a video get a million views in one day? And like, now that's it. Get a million views in 45 minutes if you play your cards right and you are a pop act or something. Let's just go to show how much the bar is changing. I mean, the old, you know, half a million error raise a series A just feels about as archaic

as a buggy whip now. One thing I would add is Gilly does say if you watch that whole clip, that not every successful company needs like all four of those personas to map onto one person. It's just when it does, it's like this magic formula. Like there was one guy. People talk a lot about ICPs or ideal customer profiles. Yes. And when I was at CrunchP, we actually had a number of different ICPs at the time that they were kind of going after out of sales perspective.

Is it possible to have like too many ICPs in question? Because it feels like in the WIS example, they discovered that they felt they had four, but they really had one, and that was a turbo-charging element. So how far down should you boil that? Yeah. So the concept between the ideal customer profile is that that's one, single.

Okay, got it. And that there are other customer profiles, of course. So for something like CrunchBase, people didn't know this, but I had built that business like 20 years ago. We called it Venture. There was Venture Source, Venture Wire, and we did Venture Reporter Reporter.

And we would sell for 500 bucks a year the ability to go into this database and see all of the people who had raised money in the management team. And we did a little interesting thing. We had a V-card. V-card was this like thing you could click on. It would add it to your address book. So this is 20 years ago. I did it, 25 years ago. I did it in 2000. I created this little database. And we had sold like a thousand people. I paid us $500. You had a half million dollars in revenue for it. And it would turn out salespeople all wanted this. And what they were, would do is they would sit there all day and we told them they could download up to 20 V cards a day

for 500 bucks. And there were people who bought four of these, gave it to four different salespeople, and they down and they hit the limit every day, including weekends. And they're like, can we just buy the entire database? We're like, no, we don't want you spamming everybody in here, but people were doing it to get the email addresses. So salespeople for Crunchbase is one of the ways they sell it. If you were to pull up Crunchbase and they probably have a sales page, or if you just typed in crunch base for salespeople or account executives, so it's probably a landing page that sells them on it. And it says,

hey, you can find people who've just raised money, et cetera. And then there's VCs. And then there's people at corporate development offices. So you work for corporate. Yeah. So finding new prospects.

Yeah, there's literally a landing page for this customer. I'm going to guess. Oh, yeah, here we go, for prospecting, for investors, for market research,

enriching your own database. And so it's exactly what you said. So, you know, one of these is the ideal customer profile. And that would be the one that you go after first and you spend most of your time on. And then, of course, you go down the line, right? People, the ideal customer profile for Uber, blah, was, and for Uber at the early days, was a CEO or a VC, a finance person. Somebody with a six-figure salary who traveled. That was your ideal customer profile.

You get the CEO VC who does two trips a month. They need to get picked up at the airport. those are big ticket items. And you know they're going to be driven to the airport, driven from the airport and their destination to their hotel, driven from their hotel back to the airport and from the airport at their home, back to their homes. Four rides of $150 each, $600 every month, $7,200 a year,

just for that one monthly travel. That doesn't count when they go to dinners and want to have a glass of wine. So that's another 50 of those, you know, so 100 rides there and those are $50 rides. So that's another, you know, you start to get into like, how much is that CEO worth? A lot.

Worth a lot. You know, they're spending literally $2,000 a month. They're worth $25,000 a year minimum. That's a Prius. Sorry. I think everything now comes in Prius size measurements. But yeah, it's close to a Prius. You're right.

It's upwards of a Prius. So that's what you're doing with ideal customer profiles. We should talk about Founder Friday before we get out of here for today. We've got the Founder Friday bracket ready to go. We have 16 companies. So just to give everybody a little bit of background here, we're doing a Founder Friday city-based bracket March Madness Competition. We had Founder Friday events happening all over in cities around the globe, not just America.

Okay. 16 of these cities picked a winning startup from their community. Those 16 are now competing in the This Week in startups. Look at this. March pitch madness bracket. And I've got a little bit of info. I've got the log line for all 16 of these companies. Wow.

Look at this. We have Houston, Boston, Austin, Quincy, New York, Philadelphia, Zurich. Zurich versus Florianopolis, Brazil. Brazil. Sydney, Arlington, Chicago, Denver, Yeravan, Armenia. Armenia, Los Angeles, San Francisco, and Portsmouth. And Portsmouth. They're very excited in Portsmouth.

I saw a few tweets from them today. They're fired up. We're going to see each of these hitches for two minutes on this week in startups. And then I pick the winner. I've got all the videos. So if you want to watch the pitches on Friday show, we absolutely can. I also have just like a very quick description of all the companies if you'd rather do it that way.

Well, I think the way to do it is these are two minute pitches. We've got not everyone said we've got two minute pitches from, I believe, 14 of the 16. Nice. So what we should do is on Friday show, Monday show, Wednesday show, Friday show, four shows. 16. We just have to do two brackets a show or something like that to get to the next round. Sure. We could do two matchups per show, and that would be, that would take us four, four episodes.

Yeah, so we do four matchups per show, two minutes each. Four times two is eight minutes, eight minutes of deliberation. We do it in 15 minutes per show. Why don't we have Lon and I, each assigned one of us, one of the two companies, that's going up against each other. And then why don't we also help kind of pitch them? And then Jason can kind of. But one issue with that is Monday and Wednesday show. I will not be here because I'm driving to.

That's okay. I can do it with Alex. Yeah, yeah. I trust you two. I trust you, too, to do it in my step. I mean, we could also try to go faster. We could dedicate a half hour to it and do eight of them and just boom, get through it Monday, Wednesday, and then we have the excitement for Friday or something. So why don't we start Monday? Okay. Today's Wednesday. So we'll take Friday off and then we'll start this Monday next week. Okay. We have Friday off. What do you mean we have Friday off? No, I mean, we're doing a show on Friday. We won't do this bit on Friday. Well, we could start on Friday.

maybe. And we'll see how much show we have. Let's get started. Yeah. So let's start Friday. We'll just get started immediately. This is great fun. We could do this, you know, twice a year or whatever. All these companies are getting a great promotion. Go to founder Fridays. Tech is our website. What is founder Fridays? You get six founders around a table, no more than six. I'm locking this in. It has to be six going forward. And then you have to start a new pod. So you could have multiple pods, but I want a leader per pod. So let's just make sure we communicate this with Ray, who's managing with us and whoever Maddie and Corinne from our team or I think are doing this as well.

We want to lock it into six, always six. We know that's what works because six people can go around the table and talk for 10 minutes about their startup, their wins and their losses, their wins and fails. That's the format of a founder of Friday. You can do it every Friday. You can do it every other Friday, but we're doing first Fridays is what we want you to commit to with six founders. You could start with two. The format is, it has to be this. You go around a table, you talk about your wins and your fails, one or two minutes for each. Then you have the

remaining seven minutes in your 10 minute allotment for the other five people to give you feedback on your wins and your fails. I think the best way to do it is to go around the table two minutes each. Wins and fails, wins it fails, wins it fails, everybody writes that. Then anybody in the six, So you go around the six again, they ask people, and they give their best advice to the other five people, pick one of them that you can give courage advice to. So for example, Lon, let's say you had a startup and you had a fail. Give me a typical fail. Oh, I, you know, our runway is down and I didn't let go of any people. So now I'm behind the eight ball. Got it. You're running out of runway. Perfect. Let's say you have a fail. Alex, what would your foul mean? I did not properly manage my cybersecurity risk, and I just leaked half my customers' information thanks to a leaky AWS database thing. Perfect.

Okay. So you got a cybersecurity issue, you got a runway issue. Now, I'm in year three as an entrepreneur. I got hacked and I had less runway. I say, after we go around the first 10 minutes, you know, one and a half, two minutes each, I say, you know what? I have a cybersecurity expert who helped me. And we did, and I hired this crisis PR firm. Here's how we handled it.

I'll put you in touch with them. You take out your laptop, you go do the intro right then and there. Boom. You've now taken something that's really hard for Alex. Then a lot says, I don't have a lack of runway. You say, well, how many employees you have? You have seven. Great.

Wanting to put four of them onto an hourly basis for 10 hours a week each, starting next week, two weeks from now, you give them a little bit of runway, and you tell them, hey, I can only keep you for 10 hours a week. Is that okay? If not, I understand. And then you've extending your runway from two months now to seven, and now you have the time. You'll hit break even, and then you can raise money.

I did this, it's hard to do, and you get that encouragement. That's what I'm looking to happen here. If you want to sponsor a pod as a lawyer accountant cloud company, you go to the founder Fridays. Tech site, you pick what city you want. You wind up on River. River is our platform we're using to do this. If you have a podcast or a community you want to build, I think somebody's going to, instead of taking a podcast and building a community about it, I think somebody's going to just start by

building a community. I think somebody will be like, I want to create a community of vibe coders and they create a vibe coding community on River. I'm not going to do this. I don't have time, but ours is for founders who have existing companies. So start a founder Friday chapter.

It has to be six people. It has to be one hour. You have to report back. The reward you get is you get to be on the program. So we're going to start having also cities come on the program every two weeks and talk about their biggest lessons. So, Lon, I think this should be a pre-produced package. They can either come online

or we can just have them do a video where they say, you know, hey, wanted to let you know, these were the three biggest challenges we had and here's how we handled them and we just play that video for a minute and then we respond to it or they can just give it to us in text

and we respond to it or they can come on the show. Have three founders come on the show. They explain their problems and how they solved each other's problem. But I want to kind of, I want to know the top 1% of the audience. That's the goal of founders.

More excitement to come. More excitement to come. I love a bracket. I have my college women's basketball brackets fulfilled in, so I'll do another one. Lon, thank you for this together. Yeah, yeah, yeah. And we really, I mean, we put a lot of thought to do it. We, this bracket is seeded.

Like, we didn't put the numbers on it. We don't want to hurt any feelings, but we really thought out how this is organized to create the best competition. Let's also put this in the docket at the top of the docket so people can see it this week in startups.com slash docket. You can do the docket along with us. Also, launch accelerators 34th cohort. is starting in mid-April, and we're still taking applications you can apply at launchaccelerator.co,

launchaccelerator.co, it's going to be in the notes. How does it work? Just like We By Combinator, Techstars, or any other accelerator, we give you $125K,000, we work with you for 14 weeks, we introduce you to hundreds of investors, we help you with your pitch, we help you with your growth. We tell you how startups are made, you get exposure to a bunch of speakers, and hopefully, you raise money. Of the people who want to raise money, 60, 70, 80% of people who intend to raise money raise money within in the accelerator or within like six months of graduating. So we have an incredible hit rate of people being able to raise money because we accept people who are kind of trending that way. 5K a month in revenue, 25K a month in revenue, product in market.

Product market fit, heavy, light, somewhere between those two. And then we help you grow it. We introduce you to founders. We have something called the Whisper Network, which is a database we created where you as a founder can come in and say, I would like an introduction to this person, or I want to sort the database by investors who invest in consumer products versus SaaS or SaaS versus consumer and marketplaces. You click who you want an intro to, and we automatically send those, and we track how we're doing that. I was inspired by Alexis Ohanian, who created Cerebra, where he tracks all the work he does for his startups. Now, we don't track every time. tweet we do, whatever, but we're just tracking how many intros we can do for you.

We probably do on average for each of these accelerator companies, 100 or 200 intros. These are warm intros. They turn into meetings often, and then sometimes meetings, if you've got a compelling product, we'll turn into an investment. Our mission is to support founders and inspire innovation. Thank you, Lon. Thank you, Alex. Follow Lon's L-O-N-S on Twitter.

Follow Alex. And unfortunately, I have one more character, 20%, 25%. less efficient than my guys here. I'm at Jason. How dare you? I blame your parents. Dispoigning. Sure been named Bob. All right, everybody. We will see you next time. Bye bye.