This Week in Startups - Acquired’s Ben Gilbert & David Rosenthal on private markets, ZIRP impact, future of Amazon | E1706

Episode Date: March 24, 2023

Acquired co-hosts Ben and David are BACK to discuss the state of the VC market and YC shutting down its Continuity Fund (6:20) before diving into industries that benefitted from ZIRP (26:35). They also break down which social apps they want to own and why (45:29). Then, Ben and Jason wrap up the show by discussing the future of Amazon and Starfish Space, a new space startup (1:11:48) (0:00) Nick tees up today’s topics (1:36) David’s time at Stanford (6:20) Ben’s private market snapshot (8:49) Microsoft for Startups Founders Hub - Apply in 5 minutes for six figures in discounts at http://aka.ms/thisweekinstartups (10:19) David’s private market snapshot (16:19) Reacting to YC closing down its Continuity Fund (25:35) QuickNode - Go to http://quicknode.com/ and use the code TWIST for a free month on their feature-packed Build Plan (26:35) Industries that benefitted from ZIRP (35:08) House of Macadamias - Get 20% off at https://houseofmacadamias.com/twist by using code TWIST20 (36:36) How compelling is AI?  (45:29) Owning either Instagram, Linked In, or YouTube (48:15) Rational and Wildcard: Who is likely to acquire TikTok?  (53:44) Twitter product development (1:00:51) Reclaiming lost time  (1:11:48) The future of Amazon  (1:19:57) Apple to spend $1B on producing theatrical releases + Project Titan (1:25:21) SOTD: Keeping satellites on course with Starfish Space   FOLLOW Ben: https://twitter.com/gilbert FOLLOW David: https://twitter.com/djrosent FOLLOW Jason: https://linktr.ee/calacanis Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1 FOUNDERS! Subscribe to the Founder University podcast: https://podcasts.apple.com/au/podcast/founder-university/id1648407190

Today on this week in startups, Jason's joined by Acquired co-hosts, Ben Gilbert and David Rosenthal. They break down the current state of the VC market, the year of retrenchment, how startups have had to adjust in 2023, and they also unpack the news about why Combinator shutting down its continuity fund. They also cover some distortions created by zero interest rate policies and so much more. This week in startups is brought to you by the Microsoft for Startups Founders Hub helps all All founders build a better startup at a lower cost from day one. Startups get up to $150,000 in Azure credits, access to open AI APIs, free dev tools like GitHub, technical advisory, access to mentors and experts, and so much more. There is no funding requirement, and it only takes minutes to join.

Sign up today at aka.m.s. This week in startups. QuickNode gives blockchain developers unparalleled reliability and speed with access to unlimited endpoints across 18 chains and 35 networks. Get one month free by using code Twist at go. .quicknode.com slash twist. And House of Macadamias is the next big health trend. Get 20% off your first purchase and a free bottle of cold pressed macadamia oil at House

of Macadamia oil. Academias.com slash twist by using code Twist 20. Hey, all right, everybody. Welcome back to the show. Every quarter, I like to have my boys, Ben and David on, from Acquired FM. If you don't know Acquired FM, where you've been? One of the great business podcasts in history. I'd love to go in there and do deep dives on the history of awesome technology,

business, startups, companies that made it or time periods. Ben Gilbert is at Gilbert. And David Rosenthal is at DJ Rosent on the Twitter. Gentlemen, how we're doing? We're doing great. One of our favorite listeners just yesterday described, acquired to us as we like to crawl inside of a company history and live there for a few weeks. So then come out and tell the story. It's a great format, Ben, like to just do a case study.

This is what happens in business school, right? They do case studies. Maybe you can learn something. I've heard that. I've never been to business school, but I do hear that they do things like this. You went to business school, David? I did. I went to Stanford for business school, which was wonderful.

And I was just listening to your wonderful interview earlier this week with one of my professors from there, Andy Rackler. Ah, yes. Andy's amazing. Product Market Fit. He created the word. He co-founded benchmark. Wealthfront. He's the chairman of now.

just an amazing like the resume yeah pretty pretty good what was what course did you take David when you were at the GSP at Stanford

with him GSB so sadly Andy I think he coined the term before but he teaches a course there called a something aligning startups product market fit

like aligning startups with their markets or something like that he didn't teach that my second year because he was going back into the CEO role at wealth front but he did

co-teach the legendary venture capital course there, which I did take with Peter Wendell and Eric Schmidt, the three of them were our professors. It was pretty awesome. That's wild. I mean, celebrity professors coming in. And they're just twice a week, every week. It was like amazing. Well, I mean, here's the thing about Stanford. People live 15 minutes away and you go and, you know, you can find great investments or great potential hires there. So it's a pretty productive use of time, I think, for folks. I go there for Jeffrey Pfeiffer's class twice a year because he wrote that power class.

I don't know if you took that one. Did you take that? I did not, but I read the book and many of my classmates took it. Yeah. So he did a case study on me and how I accumulated power as an outsider. I go there and I go there and I talk to case there. Oh, that's fun. Is that in the book?

It's, I think his latest book, he mentions me. But he did the case study a couple years ago and it's quite, it's quite charming. You go to Stanford. you meet all these students and I've been going there for like founder pitches they held the founder pitch night for me,

classroom of 60 or 70 people and 150 showed up and then we went out to like some really terrible on campus pub and ate bad pizza and was that interesting lead gen for you

or deal flow? Like did that lead to any launch companies? It hasn't led to an investment yet but it was these were solid pitches but I think it will eventually lead to one if I keep doing it consistently. You know the kids

coming out of Stanford. they have a lot of, because they're starting on second or third base there in terms of VCs assessment of them, I think they can raise a larger round, you know, faster rather than a seed round, right? They might skip that step or they might immediately go to third base. But that was basically the career path, I think, was like, if you go to GSP, Sandhill Roads right next door to Stanford, and you can just after school go raise money. Some astounding percentage, like 20% I believe of my class, started companies after we graduated out of a 400 person class. And I'm sure that continued to go up and we'll probably go down now, which is a good thing.

Pretty diverse group now at GSP. I don't know. When did you graduate? 2014. Yeah. I mean, it is very diverse right now 10 years later. Gender, just people from around the world. It is astounding.

like how diverse it is. So I think it might have had a reputation 20 years ago of being a bunch of folks like David Sacks, Keith Rabeoy and Peter Thiel and now maybe it's less white guys from South Africa. Yeah, it was like along that transition when I was there, but it was still two-thirds men, one-third women. And yeah, it's continued to go in the right direction.

All right, well, let's take a look at the market. You, all three of us, like to do early-stage investing. And I would just like to ask, generally speaking, are you seeing more companies now than you did during the peak years, 2020 and 2021, the same amount of companies. And then maybe qualitatively, what are you seeing, valuations, maybe attitudes, business models, level of seriousness. Ben, what's, what's it been like for you in 2023 now that the horrible 2022 years

in the books? Yeah. Well, in 2023 so far, it's just been all up into the right. Oh, of course. It's interesting. I mean, I think, so first of all, the stage at which I invest is basically just formation stage. So for PSL Ventures, 70% of the times or of our initial investments are within two months of the date of incorporation. So super early stage firm up in Seattle.

And so it's kind of the same thing we've always done where we run a super concentrated portfolio. we invest two to three million dollar checks and each partner invests in one to two new companies a year and the interesting thing is I don't think the volume of companies has changed I think the at least

from like literally just the when I look at my own calendar but I do think the physics of company building has changed so when when founders are pitching it's less about you know, I want to raise five on 20, and then our goal is six months from now to go raise a big series A.

It's less about the goal is the next round. And it seems like a lot more of my goal is to see if this is enough money to build a profitable business. And then maintain the option value to go figure out if we need to raise a bunch of money or not. And I think that's a, as long as your competitors are playing the same game, That's a great position to be in. But if your competitors are playing a game where they can show up with $100 million investment from SoftBank or someone under Tiger, then you kind of can't play the maintain your option value game. You have to play the go big or go home game. And so I think we're, I kind of like this phase of the cycle where we're seeing more traditional entrepreneurship.

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Thanks to Microsoft for the Microsoft for Startup Founders Hub. David, what are you seeing? it's interesting. I do, well, I do some formation, early stage investing like Ben, often alongside with Ben. Um, that's a smaller part of what I do. Mostly I do late, you know, mid to later stage stuff. Um, that has been interesting. Deal flow went from extremely high in 2021 to, uh, slowed to a trickle. But I maybe this is counterintuitive. Like, we're seeing and doing some investments that I'm pretty excited about, that are opportunities I think wouldn't have necessarily come around in other markets.

Two examples. One, we actually just invested in longtime partner of both of our shows Tiny, who I know you know, Andrew Wilkinson's company. Yep. They are using kind of this opportunity along with several other things to double down and go bigger of what they're doing. So they're raising extra capital. They're actually going public, which is going to be, it's going to be totally transformative for them.

Explain what Tiny does. And so if we will don't know. Tiny, the goal that thesis has always been to build the Berkshire Hathaway of the internet. So just like Warren and Charlie at Berkshire acquire wonderful, profitable businesses and have always said they don't understand technology and they're scared of it and stay away with it from it, despite Apple being their best investment at all time. but that was that was the investment managers Todd and Ted, not them. Tiny, Andrew and Chris, like, this is what they want to do on the internet. And they had this incredible insight 10, 15 years ago that there are businesses like that on the internet that have not raised venture capital that are spitting off cash flow,

that have great margins that are growing, and that the owners of them want to sell for whatever reasons. And so they started buying them. they bought, well, they started one themselves, Metal Lab, which is the premier UI design firm in the world. That was the kernel of what they built. Then they acquired Dribble, which is an incredible design marketplace. We work remotely, a bunch of job boards, stuff like that, and they've just been scaling it up. It's a great idea.

Now they do 150 million in revenue and, you know, very, very high cash flow margins. It's incredible. metal labs of course famous well maybe controversially or famous for Slack it's Slack's beautiful design yeah yeah for Slack for Coinbase for

and then people were upset they're like you didn't actually do it but you did do it and just sort of like a weird debate online I guess when something is that beautiful and successful everybody there's lots of fathers every other one so credit

yeah the other one they did is a partner I think of both of ours as well Vanta oh yes of course I'm a little piece of Vanta yeah yeah they I did a very large for me,

SPV and Tavanta, alongside one of your fellow besties, David Sachs and Kraft. Oh, great. They just did a pretty great acquisition for them, that they used the extra capital for a company called Trust Page. So something like, for the best companies at the kind of mid to late stage,

they're being pretty opportunistic right now. It does seem like as the late stage has cooled off, people are less distracted by that noise. And that goal, as you're saying, Ben, to build some giant war chest or just using valuation and money raised as a scorecard. And now we're back to basics, customers, customer delight, margins, revenue, growth, efficiency, all of those things. We're back to 2010 again where, hey, we have to build a real business. And we're going to get funded based upon the milestones that we set and we hit and our credibility with the venture. community, which has been wonderful for us too, because now I see all these companies that we

didn't invest in or we passed on investing in previously coming back. And their valuation expectation is no longer the TPG around, as you mentioned, Ben or KOTU, whoever was, you know, dancing around and making these huge bets. Now their valuation is, hey, whatever we can raise, whatever the market says is market value. We're comfortable with. We don't want to dilute too much, but we're realistic and we want our partners to make money as opposed to we want our investing partners to take a haircut. Bow down and kiss the ring and- And bow down and kiss the ring and whatever it is.

So it feels like more normalcy, I would say. But it's not cool, right? It hasn't cooled off completely. No. But the fun thing about early stage is it can only get so screwed up. Like, the median precede valuation that I was seeing before was like 10-ish million. and there's some people that are raising the like 18 cap YC safe type thing in the that was sort of the median of YC graduates a year ago or a year and a half ago. But now it seems like the median of most companies raising this super early stage twoish million dollar round has shifted from like 10 million to like $6 million valuation, $5 million valuation.

So, you know, it's a half of what it was, a little bit 60% of what it was. When you're looking at these growth stage rounds, people were raising it 100x, 200x revenue multiples. The public market's paying 7, 8, 9x for SaaS multiples right now in some of the best companies. And so, you know, you've got to give private companies a little bit of a better situation than that because they're growing faster. they're in these big emerging markets. So, you know, you could see giving those companies 13 to 15x revenue multiples. But for a company that raised a year ago at 100x, 150x, I mean... This is shocking.

Yeah. It's shocking to go from... It's like toddlers. They don't have far to fall. They fall a lot. And like, it's fine. They get back up. Yeah.

Kids when they're skiing. Yeah. There's not a big large distance from the... from the ground. So you probably saw Y Combinator shut down their growth group laid off 17 people. What was your immediate thought in terms of Gary Tan who was taken over as CEO, really friend of the pod and awesome.

I think we, yeah, I haven't spoken to Gary about this. Obviously, a friend of all of ours. I think this is the same thing that you're seeing in every smart company right now, which is retrenchment, looking around, figuring out where we were taking cheap capital and leveraging our brand and sort of finding these new growth opportunities. And we're kind of looking at them now and saying, is that paying off? Is that the right thing? Should we kind of niche down and go back to our core? And I think every smart company is doing this. And so it's no surprise to see YC, who did have a very large growth fund and some very talented people managing that fund.

Like, come on, what are they? They're YC. They are an early stage startup accelerator. They're the best one of those in the world. And so they should probably lean into like making the main thing the main thing. You agree, David, because I guess the counter argument would be, hey, if you do find a company like Airbnb or GitHub, you want to plow as much money into it as possible. So does this say to you that maybe it wasn't they wanted to focus? but maybe they were having, maybe they didn't have great returns on that fund, or maybe LPs didn't have the same appetite for it. I don't know what the situation is.

So is it, do you think retrenchment or maybe the LPs just weren't as interested in doing it? I don't know. I can't speak in not having talked to Gary or any of the folks involved. I've found it a little puzzling because, well, I definitely agree with Ben too. I mean, it's focused in doing what you're best in the world at is how we think about acquired too. It's why we do like one episode a month. Yep. But, uh, but, you know, I think what we've also learned from studying lots of venture firms is that while there are many paths to success, you do the best when you get access

to the very best companies, you partner with them as early as possible and you invest in them all along the way. You know, nobody's been better than this at Sequoia. than Sequoia. And I thought it was really smart when YC added the growth fund, the continuity fund to what they were doing for that reason. I was like, oh, wow, they have earned the right to do that. I agree with you.

The thing I added to my game was follow-on investing and trying to build a larger position, copying what happened with Sequoia and WhatsApp. I explicitly changed that because when I started to meet with LPs and my second and third funds, they were like, hey, what is your follow-on strategy here? I didn't have a perfect track record end or answer. And I solved that.

Now we do get to 10 to 20% ownership in our winner. So I did find it a little perplexing. That's what led me down the rabbit hole. Again, without having information, I haven't spoken to Gary either. Maybe they had some resistance to it in terms of raising money. Or the other possibility I thought of Ben was maybe the resistance is they don't like competing against Sequoia and Andreson in those rounds. and they found it was creating maybe less investment in YC companies at the early stage because people felt like, oh, well, YC is just going to slurp this up.

Any thoughts on that? I don't know. The continuity fund was not a high volume fund. And so I think that they made sort of few enough investments that I'm not sure a Sequoia would say, like, we don't want to do business with YC because the continuity fund might fight us later for ownership in this company. I believe it if they were doing super high volume checks, you know, if they became Tiger,

but I don't think it was that. It was 700 million that continuity fund. That's pretty big. But they were big checks. They were like $50 million. Oh, were they? I think. Yeah, they were writing fairly large checks, I think.

Oh, you know what it could have been to in terms of, David, conflict? The conflict of why don't you believe in us anymore? We gave you a great deal. We gave you 7% of our company for 150. and now you're not continuing to invest, therefore the founders felt ignored by the continuity fund. Yeah. Or otherwise.

I wonder if you might be on to something. I just thought of that. Paradoxically, for YC specifically, in this type of market is where the conflicts paradoxically are worst because they position themselves as we're on the side of the founders. And now the founders are like, hey, markets are tight. Times are tough. We need growth capital. We need continuity fund.

Yeah. Right. and they don't want to be in a position to be funding thousands of companies at the later stages. This is what happens. You have two smart guests and we sit here and we chop it up. We can do our little Colombo investigation and figure out, hey, which theory is the most? I think that's the theory. How do you handle this with your launch companies?

I have had to. Hundreds of companies. Yeah, yeah. I've had to really work on this because no matter what you tell founders, they will believe they should be the exception. Yes. And so what we said was, hey, when you graduate from the, accelerator, we will likely do half the round. We'll let you know. And we actually have a super pro rata

right to do that. And if they're growing and they have a lead and somebody else prices it, we'll participate. I would say maybe four or five out of each seven graduates. We participate in the round. Maybe one does a party round and we don't participate or the terms aren't, you know, what we think they should be. And then maybe one or two don't choose not to round. Maybe one doesn't do a round because they don't need to, and one maybe doesn't clear market, right? So I think the track record's been five of seven, and then the two times it's not, it's sometimes not our fault. They just, they don't raise or they don't want to raise.

So it's kind of involuntary our participation. And then we tell them in the future rounds, and this is why we take board observer seats when we have over five or 10 percent, so we know when the round is coming. We will probably take our pro rata for the next two rounds if it's, if you get a lead. and you have growth. And if it's not growing, we'll take a look. But it is hard because people believe growth is they want a startup competition. They added five employees.

It's not the growth we're talking about. So we've been more specific. We're looking and we just ask them, can you send us these five numbers for every month since you've been around? How many customers do you have? What's your revenue? What's your spend? We'll do a number there, which is, we'll subtract one from the other. and then tell us your churn if that's a relevant number.

Wait. I've heard talk of this thing. Are you profit? Is that what it's called? We call it the chart. So we have something called the chart and the chart has revenue minus expenses. Revenue minus expenses and we call up the chart internally. So I just say to people, can I see the chart and they show me the chart?

And the chart will show the trend line. It doesn't have to be perfect. It's obviously going to be spiky. So we just try to have honest discussions about that. And we tell people if you're growing two or, it used to be 3x, if you're growing, two or three X, you should let us know. And that's why we like to get monthly updates from folks, or we'll ask them every three months if we don't hear from them.

And we get those updates, we will originate a term sheet in some cases if it's 3X growth year over year or more. But of course, founders will be like, why are you abandoning us? You hear those discussions. And we are a seed fund. We will place 100 bets, follow on with 50, and then follow on with 5.

So you just have to understand in the funnel that for our LPs, we tell them we're going to increase our position in the highest growth companies, 3X or more. We're going to maintain our position in the growth companies. And we're not going to take the, we're going to stand pat. And that's the term we use, stand pat, poker term, because it's less emotional. We're going to stand pat with our investment. We're not saying no, but we're just going to stand pat. And I think that's reasonable. And I've had to try to become less, I've tried to take the emotional.

emotion out of this. Because early stage startups is just so emotional because you get so caught up in it. And that's what I think j-trading and being a public trader has done for me is I am completely unemotional on the j-trades. I don't know the management. I'm just making a trade. So I've tried to bring a little bit of that, which is the investment team meets and I have them give their recommendation. Hey, give me the president and two managing directors, give me your votes on if you think we should continue to invest. And then I can overrule it, of course, as a solo GP, but generally I don't. So I like to have them have that dialogue. So it's a great question. You know all the complaints about building apps on the blockchain. It's slow. It's

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And make sure you use that promo code Twist so they know we sent you. Who have you, I'm curious, have you, because this is all sort of new-ish, relatively new muscle for you. Like, have you learned from, you know, my sense is that your other besties are very good at this. Have you learned from them?

Are there other folks that you've modeled? I think, you know, Sequoia is one. And they will prioritize other investments, I think, is the language they will use. We have to prioritize other investments. So I have become really, now that I'm raising our fourth fund right now, and it's not easy to raise money in this, I have become ultra-focused on what works. and getting our team focused on what works. And what works is making a lot of early stage investments and then four or five Xing our position

or at least three Xing are the size of our position going from 5% to 15%. Be a good back of the envelope math on the ones that are high growth. And that really is the early stage game. It's not about one bet. It's about making three bets on the winners. That's my one.

Can I throw out something I've been sort of thinking about to you guys about interest rates? I mentioned earlier it's nice to sort of feel the physics of business again where your competitors are kind of competing on the same field as you capital is scarce talent isn't getting hoovered up for two million dollars a pop from the big companies you can actually hire great people and I sort of think this higher interest rate real cost of capital thing is good for the world. It's certainly good for investors and owners of capital to see better returns on that capital.

But I'm curious to get your thought on, is it good for the world? And more particularly, was there any sort of innovation benefit for the world from free money everywhere forever? Or was that all just sort of like value disruptive? David, what do you think? Good question. David? Sometimes I feel like the guy asking the question has an answer ready to go, Ben. You obviously have, I'll put it.

Yeah, flip over your cards. I'll pose, since Jake out through the ball to me, I'll pose two, two, uh, potentially controversial ones of, um, where yes, I think it was. In general, for most companies and sectors, I think, no, it made the game on the field harder and slowed down innovation paradoxically. But, uh, in AI and in a, like, electric vehicles, I think ZERP, zero interest rate policy, helped advance things. Because the amount of capital that both of those sectors took was just enormous.

If it was impossible to raise a billion dollars, you couldn't enter either of those markets. Yep, yep. That's a great point. So if you need to sort of will something into existence. I think what this ultimately, the answer is, ZERP will help push through a very hard innovation breakthrough. So self-driving is another one that got massively overfunded. And now you're seeing all of those get unwound.

Uber and ride sharing also overfunded. And now you're seeing that get unwound. And Uber is going to be the last startup standing. And now they're getting the network effects. You see Lyft deprecating every quarter, just worse and worse performance. And that makes sense. But then it didn't work with crypto. So I guess it ultimately.

means does this product, does this sector have product market fit ultimately? Can you achieve a great outcome for humanity? Self-driving looks like it's getting close. But boy, that's taken a long time and a lot of capital. I mean, what is the number? I think it's been an unequivocal success though. Which one? Electric vehicles, yes. In the second decade. Tesla most dominant amongst them. But like you look out on the road today, at least in California, and like, it's not just Tesla's. It's hard to find a tailpipe. Yeah. There are not many tailpipes left on the highway. So that's a, I think you nailed it. What do you think, Ben? You got any off the top of your head? Crypto was a disaster. Well, okay, so this is interesting. I think we've sort of narrowed in on what the, what the answer is here.

It's if there is something that will provide a lot of unit economic positive value to real customers, but it takes a lot of money to like will it into existence, then ZERP is great. But so far we haven't found that thing for crypto. Like, what is the mass consumer use case that people actually, you know, want that makes their lives better? And so it doesn't really matter how much free money you throw at the problem if there's not actually a value for consumers. Like, there was so much water in the pond that like, and even anybody who was like a legitimate product just got drowned. Like, so I think it was actually worse. You know what? It's actually, it might even be too many fish in the pond as opposed to much water.

so many fish that they just all ate all the algae, all the insects or whatever, and then you have this like collapse where it just never became a sustainable thing. And I would say just firsthand watching Uber, it created a five-year period where people just never believe these businesses would ever be union economic positive. And now, finally, people now believe it. But I think probably a third of the market still doesn't believe. I still hear people on CNBC saying like, DoorDash and Uber will never be profitable. These businesses are toast. and it's like, free cash flow. Possible positive quarters.

Yeah. What do you mean? Yeah. It's just, it's an overhang. It's an overhang of people believing that the drivers don't make any money, despite the fact that drivers continue to flock to the platforms, and that it can never be profitable,

despite people are paying, people are seeing their own Uber Eats and DoorDash bells and see themselves paying $25 in fees for $60 bucks in food. And they still don't believe it can be profitable. It's like, you just pay $20. $25 in fees to deliver your dinner. You can say one or the other.

And people tweet those things back to back. You know, you're like, you can make fun of the fees or you could say it's a great business, which is it? Well, it's the same thing with the drivers. I mean, this was the thing that made me mad was the insincerity of the press. They hated Travis so much that they would lie about what was happening with the drivers. And here was the game they played. And this is why being a capital allocator and being on the inside, you actually have to trust your own analysis. the press would have you believe that these drivers were making $3 an hour, $4 an hour.

And then you have to say, well, wait, why is a driver showing up for $5 an hour when there are an unlimited number of jobs at the Apple store target, you know, Starbucks, all offering $16, $20 an hour, right? We saw that escalation where people blew past the minimum wage because they just were desperate for workers. So you're like, hey, why would they do that? Is it just for the convenience? They would work for $5 an hour.

Oh, wait a second. The person is putting the cost of the car, like the initial purchase of it, and then the wait time into this. And it's like, okay, the wait time, you're not supposed to count the wait time for this. If you're, you know, a hairdresser doesn't get paid waiting for the person to come get a haircut. An attorney doesn't get paid to sit there and wait. If they have to wait six hours and then they get a customer and they work for six hours,

they get paid for this six hours, not the wait time. And that, when you eventually calculated it, they Uber started calculating the time. time to go pick the person up. So they conceded half the time, which was the pickup time. You're getting paid for that. And it turned out to be $36 an hour. I think that was the number that Dara recently said. It was 36, 35, something like that an hour.

And there's just the insincerity of, oh, I bought an escalade to 120,000. You're not supposed to buy a $120,000 car to be an Uber X driver. You put $120,000 in there nobody doesn't make any sense. But if you use a Prius, that's, you know, three or four years. over a ride sharing, you're going to do pretty well. Anyway, that was very frustrating for me was that people just couldn't. And the other thing that was weird,

okay, they're doing a billion rides. They're losing 50, they lost 500 million. They're losing 50 cents a ride. Okay, if they raised the price $1, would it impact consumption? No, it would just impact who got certain market share versus Lyft versus Uber versus sidecar.

So they were in this crazy market share battle. And now that that's normalized a lot now, these companies are making cash flow. Now the distortion is gone, right? If you love snacking, like I do, finding the perfect snack is just impossible, right? You want something that's going to remove your cravings, you want something that fits your dietary goals,

you want to regulate that blood glucose level for sure. And most importantly, it has to be something you look forward to eating to, right? It is a snack, it's something, a little bit of a reward maybe. Well, I found the perfect answer of macadamia nuts. Macadamias have really unique health benefits. They are the only nut. rich in omega-7s, which are linked to, natural collagen production, reducing inflammation, stabilizing glucose levels, and healthy fat metabolism. And macadamias are the lowest-carved nut.

The folks at House of macadamia are obsessed with making the highest-quality macadamia products possible. Now, me, I love the chocolate-dip macadamia nuts. Oh, for me, a much better choice than, let's say, peanut M&Ms, right? Because I love their chocolate. It's a higher-end chocolate. And I love macadamias. They're so. rich and delicious. And the chocolate coconut coconut macadamia bar is also amazing. I take that when I go skiing. And they just launched cold press macadamia oil with a buttery flavor and a high smoking point, so it's perfect for cooking or drizzling over your other meals. Here is your call to action. Use the code twist 20 and get 20% off. What a great deal. And for a limited time, they're actually

giving a free bottle of that premium cold press extra virgin macadamia oil with any purchase. So all you have to do is go to house of macadamias.com slash twist and use the code twist 20. Let's shift to AI. Ben is AI going to be flooded with this? And is it worth the flooding of cash into the space? I think so. I mean, you just look at the incredible flocking of regular people, like not us, like regular or non-tech people to chat.openaI.com. I mean, it has found product market fits so quickly.

And we can all get mad that like, oh, they're using it to generate essays and people are using it to, you know, who cares what they're using it for? People are using it. And there's a hundred million of them. And it's super, super fast. It is so clearly the next technology wave. And like, it is massively high. hyped. Is it overhyped? I don't know. Is it

economic positive? I don't know. I know these things are incredibly expensive to do the training and the inference. So there's going to be like, it's like capitalism and innovation at its finest right now out on the battlefield. And I think it's like the most exciting time to be playing with new technology

since the iPhone. I have to agree, Ben. I'm sorry, David. I feel behind the times on this. I need to spend more time on it. I'm... Did you pay for? to 20 bucks a month for the pro?

No. I did. I did. I need to re-engage. I forced everybody in my company this week. I told everybody in the company that they have homework on the weekends. I'm giving people homework on the weekends now. I said, if you want to be an investor and be a great investor, seven-day-a-week job, you got to do homework.

And I said, the homework this weekend is to pay for Jet Chippy T. I'll pay for it. You can expense it. And then figure out how to do your job better with it and then share it on Monday morning. So I gave everybody homework this weekend. because I did the sales team and the sales team got great results from it. And I was like, wait a second. Sales seems like an amazing use case for GPT.

Pretty great. Yeah. I mean, and so anyway, just making everybody pay for it. But you think this could be it too, David? No, I think I have a lot. I was pretty bearish on it. But I think I got a little bit of false. Yeah.

What was your initial. Well, because what we do, what we do at least, what I do. 98% of my professional energy goes into making acquired episodes, which for us means researching, deeply real, like, you know, we tell a four or five hour story of like a company. And so when the first iteration of chat GPT came out, I was like, oh, well, I wonder how this would help me write scripts. So I write a, for my side of the research, I write a 30 to 40 page script for each episode.

And I was like, huh, well, let's see what this does. and it would generate these scripts. I was just like, we can't use this. This is wrong. It's just wrong. Yeah. So I had a violent negative reaction to that.

And I think it caused me to write off a lot of it that maybe I should re, I need to reassess and think about other ways that it should be used. I think this whole thing is a red herring. This whole like, oh, it lies. It hallucinates thing. Like, I mean, in 2002, the number of people who made the joke, oh, it's on the internet, you can't really trust it. Yes.

It's like, it's going to go away. They're going to get better at it. We're going to find ways to say, like, sorry, what's that citation from or figure out where the facts are being pulled from? It's just, it's a short-term problem. They're afraid to put the citations in right now because my understanding is the number of lawsuits against Microsoft and chat GPT or chat, OpenAI, I should say, the lawsuits are going to, over not doing citations and who trained the data.

There was just a story, I think, in the journal about this, is that everybody's kind of gearing up And there's a lawsuit for a GitHub co-pilot. I guess open source person is suing for that. And then Getty images were suing, I think, stable diffusion. They should sue stable diffusion. They put the logo in there. There's so many times I get the watermark when I'm like, really, guys, come on. But I give credit to Poe, which is the landage.

Because I talked to the founder and he said from Cora that the. I'm going to put citations in it. And then the other one, there's another one from that search in Neva. Is that the search engine? Neva. Yeah, the ex-Google exec. The ex-Google exec, he's putting citations in it already. And then I did Bard.

I got into the bard. You have to use your email account. Like you can't use your Google Docs account. You can use Gmail. I got into it. Freeberg got me in. He knew somebody at Google. And I started playing with it.

And it. It is up to date. So this whole thing, like I just asked chat GPT. Right. It cuts off in 2021. September of 2021, it's cut off. But it said at that time, Wycomit had raised two continuity funds.

First was announced in 2015. I don't know if this is true. Second one was raised in 2020. We'll see if that's true. But Bard was getting information. That was much more recent. And so I think Google with their real-time crawling is going to roll over open.

AI. I know this is crazy to think of, but I think Google's going to have the better product, and it will be like this leapfrogging thing where Bing and Azure will leapfrog, and then I think Zuck's going to release one of these because he always loves to copy people. And then I think this puts Zuck in the search space, right?

In the knowledge space. And then Reddit supposedly was in discussions with Open AI because they had been indexed. And I think they were not pleased about it, is the back channel, I guess. For a company like Reddit, this will be a huge new revenue stream for them to license

their, all their $100 million. $100 million is what I would offer if I was Reddit to Open AI, five-year contract, $500 million. I think they get it. If I was core, I'd offer the same thing. $100 million a year, $500 million

to whoever wants it, but nobody else gets it. The end. Oh, you do. Exclusivity. Of course, exclusivity. That's why it's worth $500 billion. If Google, Google will go and give $100 million to Reddit. charge $100 million to all of them?

No. I think what you do is you give an exclusive. Just like the search box on Apple is exclusive to Google. I think Google just splashy-cashy, $100 million to Quora, $100 million to Reddit, and then maybe $100 million donation to Wikipedia, although Wikipedia was created under

Creative Commons, so I don't think you can do that. But clearly citations have to come to this space. What do you think of the API potential, Ben, or any other comments on the business development that could occur here? Well, one thing, talking about this 2021 cutoff is that if your model of the internet is a pre-GPT model of the internet, it's a really good thing to train on.

If your model of the internet is the internet today that has already had hundreds of millions of lines of GPT generated text on it, and you are training your models on that, you sort of have a polluted model. And I'm really curious how both of them are going to handle this as the internet becomes more and more AI generated, mm-hmm, the model you would think would have to evolve

to discount things created by itself. This is where this whole thing collapses on itself is you're going to have to remove stuff that is poorly created

by AI. But they seem to be able to have, I think there's plagiarism detectors that are figuring out if something was created by an AI. They're only like 80% accurate though. Like unless GBT is keeping a record of everything,

it's ever spit out, the genie is sort of already out of the bottle on having 100% certainty. So maybe you discount anything created after 2022 on the internet, after GPT4 came out, and then you try to identify and you say, hey, listen, the corpus of Quora, the corpus of Reddit is even more valuable. Right. I don't know if you saw Adobe Firefly internet. Yeah. Pre-GPTadon. Adobe Firefly just came out and they're doing like generative AI for creativity. creators, they licensed everything.

So they guarantee that everything in there is properly paid for and sourced. In other words, they didn't steal anything. I don't know. It's fine, but like users are going to use whatever the best one is. And users do not care what deals were signed behind the scenes. And as we saw with LinkedIn, when they were first getting started, being super aggressive on, you know, doing things that were, I think illegal. according your address book. Yeah, to send all your contacts.

Like a slap on the wrist later kind of pales in comparison to the enterprise value created by becoming a technology leader in the space. You found out the other day that blew my mind. LinkedIn is a $5 billion a year advertising business alone. They're like a huge social network. I believe they're well over $10 billion. 875 million members now. Yep. So they will hit a billion.

It's a juggernaut. doesn't stop growing. So, how would you ever stop? How would you ever stop it from growing? We need to revise our top 10 acquisitions of all time and definitely put that one in there. Like, what a steal. Microsoft bought that for $26 billion. I got to think, which would you rather own?

YouTube or LinkedIn? I go YouTube. Yeah, YouTube. YouTube. Okay. But now we do. LinkedIn. LinkedIn.

versus Instagram. Instagram. Today? Today and for the future. You got to own it for the next 10 years. We're not talking about 10 years ago. We're talking about today. We're talking about I could gift you one or the other.

You've got to run the business for the next 10 years. I go LinkedIn over Instagram. I think probably if we're to look at the numbers, Instagram is probably just so much bigger that you should take. But I think Instagram is very likely to decline. And I think LinkedIn's just going to continue to grow. I'll take the opposite side of that. Oh, really?

Go ahead. Explain. Yeah. Because I think they have so successfully cloned TikTok that for creators, whether you use YouTube shorts or TikTok or Instagram shorts, uh, or Instagram reels or Facebook reels. Things.

It's literally the exact same format. So I don't have to do anything different. Unlike the past where like Twitter videos were different than Instagram videos, which were different. So it's like all the exact same format. All the feeds are algorithmic. So your followers matter less because the content is just going to get promoted to the whole world if it's good content and no one if it's bad content. If it's good content for you too.

So, you know, if you're into fly fishing, I don't have to buy ads to get fly fishing people. I just have to make great fly fishing content and tag it properly. Are you in fly fishing? Is that way your TikTok feed looks like? That sounds like death to me. I want to do skiing in Hokkaido. So here's why I'm bullish on. on Instagram is like, if there is a thing that happens where the Biden administration forces

TikTok's divestiture, which causes a downward spiral for it because no one's, I don't think anyone's going to pay $80 billion or whatever to go buy TikTok. I don't know that there's a buyer for it that actually has that kind of change. If they do force a divestiture or a shutdown in the U.S., whatever this sort of looks like, it's really good for Instagram and they're super ready to absorb on the traffic. So building on this, who is, now we play the next part of the game with three podcasters who also invest and think about business incessantly. Who is your most likely buyer, if there was a buyer, let's put a price aside and let's put, no, we won't put antitrust aside, but the most likely landing place, which means meta has no chance of buying it. We'll agree on that.

So we take matter off the table for antitrust reasons, everybody else on the table. That's how we play the game here. Who's the most likely buyer? And then we'll go to wildcard. Most likely buyer makes the most sense. And then a wild card buyer. My most likely buyer is sort of a boring one. But I think what might happen is...

I bet you have the same one. They IPO it. So the American public becomes the buyer. Bite Dance is forced to liquidate its stake or go below a 5% position. No problem. And there's some particular clause, which says, that the U.S. government has an inspection right on

data as a publicly traded company. Algorithm audits. And forced to host with a U.S. based cloud provider. Okay. And so I think that's the only deepest pockets because otherwise like

Okay. So if an IPO, I'll just restate the game. If an IPO is off the table but it gets sold and was bought by somebody. So we're going to qualify it again. David, you go first. Now that Ben keeps filibuster. here. Who is your most likely buyer? I know filibustering when I see. You're trying to think who's the most likely buyer? The caveat that this is

a hot take because I'm not researched It's a hot take. I can give you mine if you guys are struggling. I'll go with Oracle. I go Microsoft as my most likely. I'll tell you why. I think it is the most friendly, fun, jovial of the

social networks, right? Twitter is just all these intellectual people battling it out and politics and vitriol and it's just full contact, right? Instagram, Facebook can't buy it. But Microsoft did a pretty good job with Minecraft. They're buying studios. They're getting comfortable with content.

And this is content. It's video content. They're doing the ads for Netflix. They obviously have Bing ads. And they have Azure for the cloud. So they got all these components there. They could just plug it right in. Google never understood social.

So I think I take Google off the table because they never understood social. Their cloud is trailing. I think they're number three or four in cloud. Three. Still number three. No, I don't think their cloud's bad. I just think they just haven't made it a real super focus. So I go with Microsoft as my most likely destination.

If an IPO and meta stuff. Okay. Who do you got Ben for you most likely? Or if you want to go to Wild Card, we can go Wildcard. I don't think Microsoft buys it. I think the brand risk is too high. Okay. There's too much that can go wrong owning TikTok.

Mm-hmm. The government might like them to own it, though, because there's a very tight relationship between the U.S. government and Microsoft and sort of a trusted, a trusted partner. Super wildcard. Yeah, wildcard it, then, wildcard it. Samsung? Wow. Wow, with their billions of dollars in free cash flow and their phones, and you buy the Galaxy 17 or whatever the number they're up to now and you get the beautiful cameras. What a wildcard pick.

I like it. I like it. $300 billion market cap company, 25th biggest company in the world. I mean, even if they have to like cut off a quarter of the company to go buy it and they don't have the cash to do it, man,

might just be worth it. What about, what if they sell an incremental, how many incremental phones if they sold? As Samsung's margins, a lot. A lot. And Apple's margins, not that many. What if they made a,

what if they made a special TikTok phone that had a better front face? camera than a back or something crazy like that. They could make a premium phone. Or some unique access to a distribution on TikTok or something like that. Oh my God. But what's such an interesting idea about that is you're saying their margins are so low, what if TikTok gave them the ability to have a high margin device and could drive margins?

Is that even possible? Young people love TikTok. David, you got a wild card. Who's your wild card? I have an interesting one of a great wild card. But the more I think about it, the more I'm with you, Jason, that, uh, the reason at first I was like didn't want to say Microsoft was because what Ben said of like Microsoft's family friendly blah blah blah TikTok's too controversial but I think the most controversial

thing about TikTok is China exactly solve for China then Microsoft would love to own it and they according to the CEO who was testifying for hours and did a terrible job he has 40,000 people and they have have no problem censoring stuff. If you're doing something that they think is in a abrupt, they're like, yeah, we'll take it right off. Because they're Chinese. Censoring's like, kind of in the DNA, right?

Like, yeah, these books, no good. Like, they love censorship. To your point, like, TikTok is not about vitriol. It's about entertainment. No, dancing, fun, yeah. I mean, the obvious wild card. I got a fun question. Okay, can I ask a fun question for you?

Yes. Given your personal history. Would you rather, would you, if you could own one, Would you rather own Twitter or TikTok? Great question. I am. He's conflicted. He can't answer this.

I'm a bit conflicted. Feel free to pass. I would, no, I'll tell you how I would assess each. I think Twitter, you know, is so intellectually stimulating

and has so much of the digirati, literati, those kind of folks, that would be more interesting for me. Yeah. It's also, I can I just say like Twitter, for all this stuff.

We have made, like we have generated millions of dollars of revenue in BD from Twitter. Like, of course. It is, it is unbelievable what you can, who you can connect with on Twitter and DMs are incredible. Yep.

It's unbelievable. I mean, I mean, listen, I'm not trying to do this to, um, show off or anything, but since all in broke out,

you know, of the past year or so and became like it was number eight in the world two episodes ago. Like, that's, that's pretty high in the rankings. That's real scale. That's,

okay. We got, we got a pin in the world. in that combat. I want to hear how your life has changed. Oh, man. It's crazy. Anyway, putting that aside, like Jeff Bezos follows me. Bill Ackman follows me, right?

Like, it's, I see followers who started following me who I didn't know they were following me. I don't watch, I get so many new followers now. You know, I get like a maybe 500 or a thousand a day now, new followers, so I'll hit a million. Like, every time the podcast comes out, it's just a little spike. 699,000 followers, Jason.

When I started the pot, I think I was at 300, 350, and I'll be honest, with the at Jason handle and me getting started so early, I have a large number of dead accounts. I would say 90% of my followers when I was at 350 were, you know, just dead accounts. Were you on the who to follow list when Twitter first started? I never was. I offered a quarter million dollars for five years to be on it in a famous blog post. We talked about this a few episodes again. Yeah, yeah. I did it was like a joke. I think we did that when we did our sessions. Sessions. Yeah, yeah. sessions. We did a session. Right here in this room. Right here in that room.

Oh, yeah, how's the new place? You're all cozy it up. And the baby? She's great. She's walking. How old? She's like, she's 18 months. She's not a baby anymore. It's wild. Wait. You too, Ben? No, no, but I got married last year. Ben got married. Yeah, no, I remember you got married, but yeah. Okay, so you're practicing. Okay. I highly recommend you do it. Yeah, can't practice forever. At some point, you got to actually make the baby.

So that's my standard joke. My standard dad joke. It's like, you know, you practice for a little while and then, you know, actually make one.

Uh, twist after hours. Oh, that's great. That's great. So, yeah, what is the,

TikTok, I think might be a bigger global opportunity than Twitter even. I mean, I think it's neck and neck. Because I do think Elon's going to figure out some things with Twitter in terms of what he wants to do with payments

because he's got some DNA there. It's been pretty public about that. I think with the DMs, where he's been pretty public about it being pretty good. Also, videos gotten better on Twitter. Yeah, video already has gotten a lot better.

I find myself when I watch a video watching five. So I'll watch a Nix video. And it used to be like, I never swiped up against all the next one. And now it's five Nix videos. And I'm like, oh, somebody fixed that,

you know? And so. The person that fix that needs to go fix DMs because it still feels like I'm in like 2007. DMs is always the forgotten feature there. And I remember, remember when Ev was running it. I remember Jack was running it.

DMs is the most valuable part. Well, the problem is for... It's crazy. 0.1% of Twitter DMs are the most valuable part of Twitter. Exactly. I had a killer idea for it. And people told me I was crazy. But I thought they should have DMs built into the app.

But I thought creating a DM product for Twitter that was just DMs. Like just a messenger. Remember when Facebook did Messenger? It would give everybody. And I know it doesn't make sense to have two apps and to split the baby and and be ranked twice. Facebook was incredibly successful. But Facebook was incredibly successful at that.

So it gave them ability to get people to turn on DMs again and turn on messaging. You can only have your app. This is like really in the weeds product design. You can only have your app asked like I think one time or two times to turn on certain features like on an iPhone like notifications, etc. But on a system level to be able to start everybody over and then have a product that was just like super DM and it had like some great features in it. like maybe it could have, um, uh,

it could just be like a, a modern WhatsApp competitor. Like, let's call it what it is, which is I think what Facebook did with Messenger. Just make a really modern signal, group chat. I got to dedicate,

especially for an account like yours with 700,000 followers. Dude, it is crazy. I turned on. You can't like, it must just be chaos. I turned on open DMs again. And then I also was permissive in following people.

I followed 25,000 people, I think. So I just followed everybody. I used to have a little script. I had a tool. where anytime anybody would follow all in or this week in startups, I'd follow them back. Because I know it makes people feel good when I follow them back.

So I was like, yeah, I just spread the love. And I use lists for the subsequent group of people I really need to. And now that you notice Elon set it up so you can swipe over to the second list, I had shown him lists early on. And I was like, when we were talking about, you know, Twitter. And I was like, you know, I use lists. So how do you follow somebody?

I feel good with the follows. And then nobody really knows who I'm following because I follow everybody. and then I use lists for my portfolio companies, for my team, you know, my friends, etc. That's awesome. And then now you can slide that, right? So this is a forgotten product. The slideover thing predated the Elon's acquisition.

I don't think so. Did it? Oh, maybe it did. Oh, that was a blue feature. But the addition of for you. For you. Oh, you know what? You're correct.

He did tweet about it after we talked about it. So he talked about how you can do lists, right? So I think lists and DMs will be a big focus. So I think with all those. he's cooking with oil over there now in terms of new product releases and I think they got stability I'm not over there

should people know but the stability looks really good right? It's tight, stable it hasn't gone down despite what the fake news kept saying. I think they were kind of rooting for it to go down to be honest.

It looks like he's got the cost structure under control so. I think it's pretty stable. Twitter was like you know, what's the the current thing for the moment. And so I think whenever you have a new current thing,

like everyone needs to pick a side of the current thing. And then there's a certain set of people who are incredibly vocal for it. And then you sort of enter this like kind of the worst part of the human psyche where it's like, you know what? I got to drop everything that's important to me in life and focus on the current thing and see if my team can win the current thing. And it is crazy how fast, like it feels like every two weeks or so. there's a new one now, and it flies all over the place from tech to banking to war,

but there's always a current thing. It's so weird. I am so out of it. Like, I literally have started to decline everything that people want me to get involved in, just to focus, again, back to, I think, the lesson of 2022, 22, 23. Retrenchment. Yeah. I mean, austerity and retrenchment, focus, the year of focus, retrenchment, however you,

Everybody phrased it's Brad Gersner's favorite book, Essentialism. Yeah, yeah. Brad's running the get-fit campaign for Facebook. Time to get fit. Yeah. Yeah, it reminds me there's this great quote in Morgan Housel's book, The Psychology of Money, where there's this whole chapter where he's talking about how you got to remember that like newspapers and the media and everything that's a publication,

needs content. And so they need to print something. There's a need to be a story today. But sometimes, like, there's not really actually a story. But like, what are you going to do? Take some pages out of the newspaper, run less blog posts. Like, you got advertising to sell. You promise people content.

And so, like, content gets printed. And most of the time, good news happens super slowly and bad news happens super fast. So bad news is the stuff that you print because that is like what happens quickly. and nobody cares about the things that happen slowly. And Morgan's point is, like, actually what most people really should be observing is that they open the newspaper and it says, today, a little bit better than yesterday in most ways, worse than some, go about your day. And, like, there's, but there's not, our society has not evolved with a business model for that type of thing. But in reality, that is actually how you should start your day is like, yep, pretty much the same as yesterday, nothing to report. Yeah, it is, I mean, I think if you look at Ukraine, I realize like with David, you know, and on the podcast, and he, it never ends for him, right?

Like, it's, he's so passionate about it. And for me, I have an opinion on it, I guess. We can talk about it. But I don't want to talk about it every week. Like, as bad as it is, as terrible war is. Like, there's only so much you can cognitively do. And I literally just deleted off of my phone, TikTok, and Twitter. and I posted to Twitter and I said

I'm going to do Twitter on my desktop I'm going to check on it a couple times a day I have specific things I need to do so I need to like talk about Angel Summit you know whatever like I have to let the audience know but I needed a social media break from it because it was getting so toxic especially with my tweets

over the banking crisis when I was like using all caps and like all caps quote was a little much Jason well it was yeah it was kind of a joke so people weren't following me for when I was doing based cow when I was doing like after midnight I was doing base cow an AI version of myself that would say very base things and caps people didn't understand the joke of it but it was also like you know people were like I got violent threatening DMs like

I will kill you kind of DMs and I was like wow this is pretty dark man the world is dark yeah really weird which is why podcasts are so great because we can have a real good conversation. I won't say that that never happens in podcast, but like, it's just not, it's not the norm. Well, we can have a conversation here. That's really thoughtful.

We see where it goes and share it with the world. But exactly my thinking was, I need to start doing less. So I'm taking this week and start off from six episodes a week to four. Literally turning down the money. And my team hasn't sold out until I think May. Nice, June. And then I was like,

I'm going to do two news a week and two interviews a week. Because six days a week or five days a week news. Which for most mortal humans, even that is a lot. So like literally. And then I was like, okay, so starting May 1st, I want to do this. And they're like, oh, we had all these contracts that were waiting and they all signed. So now it's, you know, it's June 1st. And I'm like, okay, fine, June 1st.

And I want to do less and put more wood behind less hours, right? Arrow so I can focus on other things. And I think that's like. Can you renegotiate some of those deals to basically say like, we're going to give you, obviously, the same number of episodes, but they're just going to happen, some of them a little bit later. You know, we were sold out for 10 years and at the peak six months. And that was incredibly frustrating for folks.

And then when it was at six months, I was at four days a week. And I was like, fine, we'll do five. And it filled up so quickly. Then I was like, well, fuck it. We'll try sick. And I always wanted to be like Howard Stern or like a daily talk show host. Yep. And then I realized, you know, like Howard Stern is miserable at times and talks about

how miserably is? It's because he has to talk every day. for three hours. So literally he created a trap for himself. He wanted to be a talk show host. He got his wish. You know why Oprah quit her show? Because she was doing it every day.

Oprah was a daily show. Right. With 40 million people tuning in. She walked away from it. Viewing. She walked away from a show with 40 million people listening to us. Ellen, is Ellen retired now, too? I thought Ellen was retiring, right?

She was talking about her dying. I'm not sure. So you wonder why, like, certain people walk away. from these things, it's because at a certain point, it becomes your entire life and you have to take the rest of the day off just to clear your mind. Yeah. And then when I realized that, I was like, you can't. Like the Colbert, I listened to Colbert talk about a day in the life. This was probably like six, seven years ago.

And every single minute in the day was accounted for in creating the production and then he needed to do it again the next day. Like when you need to deuce content about the news and you need to add layer, on top of just reporting, like being clever, having guests, uh, creating sketch segments. It's just like,

you wake up to go to bed always in production mode. And it's like, it's done five minutes before you walk on stage. This is literally what I experienced. Literally I would get to bed and then my DMs would be going crazy for tomorrow show. And at night, you know, like what's going to be on the show tomorrow?

It just never ends. And we were after a staff of nine or something. Like, it's getting crazy over here. It's like, I just need to reclaim a little bit of my time. reclaim it we have. So hopefully. I always go through this thing where I'm like, I wish I could pay less attention to the news and I wish I could delete apps. And then it ends up being incredibly

useful for my life to know what's going on. And I think we're all sort of kidding ourselves a little bit, especially being investors. Like you early stage technology investors, you got to know what's going on. Like you just have to. Yes. And I think David sort of, I'm curious your thoughts on this, without really meaning to by shifting acquired away from current episodes like we just did Nintendo which is 130 year old company the narrative on Nintendo is not meaningfully changing

I literally save the episode I haven't watched you hour by hour super excited so we have all these people begging us do SVB do SVB and I'm like first of all there's some amazing people covering what is happening with SVB we are not reporters that is so not our bag go read Matt Levine go read Dan Primack but

But if I can interest you in a 130-year-old story told over four hours that I took two months to prepare that will be evergreen for 10 more years, like, I'm working on that. And I found that like that totally helps my psyche to not for the work of acquired need to pay attention to the hour-by-hour changes. Yeah, there's something about timelessness versus ephemeral stuff. And that's why I wanted to get back to founder interviews more and do a little bit more founder interviews. reviews for me, that really gets me inspired. Like, when I can get a great founder interview going, and I just had two of them in, like, the sustainability space. Like, one of them was doing fabrics and one of them, one of them was recycling fabrics and

the startup, like, blew my mind. Like, they're using spectography. Is that the word? Like, infrared, near infrared spectography to look at clothes and then, no, this is wool, this is polyester, and then sort it automatically, and then rip it up and show. shred it and then make it recyclable and then make new clothes out of it. I'm like, wow, this is like science is awesome. I was like, wow, science is awesome.

Somebody from Carnegie, these three founders from Carnegie Mellon were like, hey, we can put this on the line in Sri Lanka or Pakistan where we ship all these old clothes, resort them and then not throw them away. Because previously you just throw them away because the labels are wrong. Even if you look at the label and it's like polyester, it'd be like, yeah, it's probably not. It's probably something else because people lie on the line. labels because different things have different prices. Then I saw another one where they're guys making organic fur, not from animals, but from plants.

So he's making plant-based faux fur for, you know, theoretically Gucci or whoever to have fur. That will be better than real fur, but doesn't require 15 chinchillas to die for your jacket, Ben, which I was going to talk to you about when we had dinner. Well, that's why I was really a little bit. I was trying to hide that part of myself. Thanks a lot. I was just like, who is this guy? I thought this guy cared about the world and he's killing chinch.

He didn't do that. He did not feel chinchillas. All right, David, you got to go. It's time to take over from the nannies. Go be a super dad. You're amazing. Everybody go back. Try my best.

Back, David's next. Did I just call you Ben? No, I'm Ben. Oh, okay, great. God, sorry, guys. I am, I did three. This is my third podcast of the day. Oh my God.

You need to go take a break. I had my podcast, the twist. Then we taped all in. And then I was trying to get you guys on. Because I missed you. You came back from all in for us. Oh, thank you.

We're so hard. David Rosenthal is kindergarten ventures. I'm an LP. Is the fund closed? Are you publicly raising or not? We are not publicly raising. The fund is closed right now, but but more to come in the future. You never know.

Yeah. And we greatly, greatly appreciate it. I'm very excited. I'm just a tiny little LP. your, you know, modest fund. Tiny fund. $12 million fund.

Oh, did you get to 12? Yeah. Well, that's awesome, man. Real quick, funny story.

I think I can say this. Yeah, we were over 12 and, um, that's great. But one of our larger LPs was may or may not have been an entity associated with a crypto exchange that, uh,

may not any longer be in business. So they're, so maybe it's a little less than it used to. Yeah, yeah. No, no. That large. No, no, no. No.

No. Small. That's probably not getting into. We're not banking on that capital call coming through. Yeah. I got to go. I mean, unless it does, it might be coming in from Sing Sing. Okay, good luck to you.

It might be. Jason, thank you so much. A pleasure. Take care of him. Hey, so, Ben. Are you, should we talk about him now? Yeah, let's talk about him now. You watch this, uh, what do you?

I know you like me really love Amazon. I just bought more stock in Amazon. I sold it laid off 9,000 people and I bought more shares. Amazon is my worst trade for J trading I've been buying it for the past year Yeah it has not What is It has not been performing well for me either

What is the problem How does it get solved Do you think Bezos comes back Because he's like I need to write the ship Because I'm looking at this And I'm if I'm Bezos And I'm out there doing all this good in the world

And I'm watching my baby You know on the stock going down I'm just thinking you know what If he comes back get back in the game. What does the stock jump in one day if he does? Okay, well, let's say. It's trading at $90.

It's currently at $98. Yep. I would say in one day it goes to $150. And it's all-time high. It looks like somewhere around $180. I think I would not be surprised if the day they announce it goes to $130 and within a week it hits $150. Now, I'm not sure it stays there.

But I think $150. What do you think? 50%. I think that's about right. Yeah. I don't think he's coming back. I think he really trusts Andy Jassy. I think Andy Jassy is the correct

the correct type of day two CEO. Like I think it's day two at Amazon. I think everyone just needs to admit that. And then I think the shareholder base needs to get on board with, you know, there's probably not a next AWS. And Amazon really wants there to be a next AWS. but it seems unlikely to me. So maybe less focus on another pillar like hell and more focus on just the growth of the current pillars.

And they've got a ton of running room in e-commerce and cloud. These are two of the biggest markets in the world. They're dominant in e-commerce, but they're still lagging Walmart in overall retail. Walmart just crossed 600 billion in annual sales and has grown really fast in e-commerce. So they have a formidable competitor there, but really, really potentially large industry. or a really large industry with like way more running room ahead of it. Cloud, I think they have a hundred billion dollar revenue backlog committed on top of their

$80 billion annual run rate for Cloud. So like that's a freaking juggernaut where they're in first place. It's theirs to lose. So I do think it's like it's day two time, which means scaling back on things like Alexa. Like I don't think there's a pot of gold there. That's funny. Mine just turned on.

You know. Well, if they had invested heavily in language learning models, you would say yes, but to ask that certain assistant for help right now is not a great experience. And neither are all. I mean, and it wasn't a platform. I mean, there are zero successful apps. The things people do isn't even shopping. So it doesn't really fuel their music. It's set timers.

So it's this thing that sucks up, I don't know, two, three billion a year. It's a, it's a, done a quarter of meta's metaverse bet per year for something that we kind of now know is not a successful business, whereas at least like Zuckerberg might will the metaverse into existence might. Yeah, I think it's time to cut that bet. That's an easy bet to cut. I think really starting to think, do they want to be in prime video? Is that an essential business for them to be in? Is music an essential? Is media an essential business?

I don't know. Will they actually compete? not sure. I think the advertising business, they're crushing it. But they don't consider that like a business line because it doesn't touch consumers. Isn't it like a 30 or 40 billion dollar run rate business now? It's all free money. Like it all just drops right to the bottom line because there's no cods in advertising. Literally air dropped. It's an air drop of money. And you got to think if they just made the everything store even more. Yeah. I would, I think a really bold acquisition for them would be.

lift, DoorDash, or Uber. And I'm not just talking my own book here, but... And I don't want to see them buy Lyft. That would be scary for me. But if they bought Uber or DoorDash, and they just said, you know what? What would it cost to buy Lyft right now? Lift is 20% premium over a market cap of $3.7 billion. Amazon could drop $5 billion and drop and buy Lyft.

I don't really want to accept that, but I mean, if they did that and then they made it part of the delivery network, I think it would be better for them to buy DoorDash. Uber or DoorDash, because Uber is a global footprint and they don't have a global footprint in Amazon, so it'd be really cool if it was Amazon's Uber. Now, what would they have to pay to get Uber? They'd probably have to pay a lot.

80, 90 billion? Yeah, it'd be a lot. It's a big number. The interesting thing about... DoorDash and Uber Eats is like, Amazon tried three times in this local food delivery market and couldn't crack it. So they clearly are extremely interested

and they feel like it's a perfect compliment. Frequent purchase. I mean, DoorDash is expensive. It's a market cap, $23 billion as we're recording. So that's an expensive. I mean, that's like to take it out is probably over two whole foods of cash. You've got to drop on that. But they, you know, they're still so innovative, Amazon.

Did you see their palm scanning product? I haven't yet. Yeah, I haven't seen it in person yet, but it keeps coming up in the news and I keep seeing it. So I think it's getting more popular. I think they're going to make it available at other stores. So it's at all the Whole Foods, this Amazon 1. Oh, I have seen that Whole Foods. Yeah.

Have you done Amazon checkout yet, like on another person's website, kind of like Clama or something? So I was just on a website, and it was like Amazon checkout came up. And I was like, okay, you know, normally I just use my credit card auto fill from Chrome to fill my credit card in or whatever. And I was like, oh, Amazon. And they did it. And I was like, oh, look, in my orders tab at Amazon, I now have that purchase. That's convenient for me. Now I can put it in one place.

Interesting. And then this Amazon one, you just, your palm, I guess, is unique. And you literally can just hold. Or is it like a line? I think it's the size, the lines, it's all of it. So you put your palm over, you don't have to touch it. So you're not putting your palm on like a pad and scented. You hover it.

So it's not like. like it's COVID saved. You put your hand over it, you walk out of the store. Not that COVID is transmitted by touching, but yeah. No. Sorry. We don't want to spread this information here.

Anyway, I just thought Amazon is just, it's time for Bezos to come back. I did see the 9,000 people that are laying off. And the inside line is the sense of urgency inside of Amazon since work from home is, and since no Bezos

is there's not, this is what I'm hearing from insiders. There's not a dogged, cutthroat sense of urgency like there used to be. It's a date-bump company. That sounds right. But I think it has to do with work from home. I believe that. I think it doesn't have the intensity that it used to have when there was a there. For what it's worth living in Seattle, most of the people I know and all, you know, these things are

vast overgeneralizations. Yeah, that's an anecdote enough. Amazon does seem to be a more hard driving place to work, even today, after COVID, after work from home, all this stuff, than Microsoft, Google, meta, all the other companies that have enormous presences here. I think the trope about Amazon being a hard place to work is still true. So I think there's a lot of fat to cut, but I don't, compared to their peers, they're not as fat and happy. Weird story came out. Apple is going to spend one billion per year to produce movies to be released in theaters.

Their goal, get more subscribers to its screaming service and raise its profile in Hollywood. Two major motion pictures coming out next year, Martin Scorsese's Killers of the Flower Moon with Leo, Apple co-financing and co-distributing with Paramount Budget 200 million, and Ridley Scott's,

my favorite director, Napoleon starring, one of my favorite actors of all time, Joaquin Phoenix. also in Gladiator. Pretty amazing. It's a very weird bet to me. It's a very weird bet.

What does this have to do with? I don't know. I think it has to do with Apple needs to find a next growth avenue, and they're hoping that Apple TV more meaningfully adds to the services arm,

and while they're, like, it's weird. So doing the studio release, let's do some quick math. So if you drop 100 million in budget per picture, which is typically what, I mean, unless you're making Avatar,

which I think is 250 million. Yeah, it's a lot more million per picture. How do you get it to pay back if you're releasing it in the theaters rather than driving new subs to your streaming service? Well, I think the idea is to get the patina

of Oscar Patina, Oscar Buzzy kind of situation. It's just a cost of entry to like that community. Yeah, and you know, you put it in there for six, eight weeks, and then you just shift it over. But to have Apple winning Oscars, to have Apple doing tent pole culturally relevant stuff, I think if you were to think about it half marketing and half ROI, maybe you get there pretty easily. 200 million is nothing. I mean, they have, what is it, 5,000 people working on a car that was going to ship five years ago. What happened to Titan?

Is that going to ever happen? It just keeps getting decapitated. So the person leading has changed three times. And I don't know anything. I'm just reading the rumor sites. But that's happened a bunch. The ambitions get scaled way down. So originally it was full autonomous, full EV.

Now it's EV, but not autonomous. You know, they still have that like test track. And they're constantly testing concepts at the test track in a I can't remember somewhere in the southwest. And there's a ton of people working on it, but I think it's been, they keep sort of killing it before it gets too far in the process. I guess they really,

I guess they really want to build something extremely special that's category changing like the iPhone was. And it's kind of hard to do something category changing when you're up against you know, Elon and Rivian and I guess there's a category that's already recently been changed. It's not like the smartphone market

where they were able to come in with something that looked super different than all the competitors that was literally 10 times better than all the other crap out there. Like in the last five years, all cars got way, way better. Largely, thanks to Tesla

finally pushing the industry into some innovation, I will say I am shocked at how fast particularly the American automakers were able to catch up or sort of adopt a lot of the, you know, long... Like, I would have thought, oh, 4 will come out with something. It'll be like a short battery and like none of the stuff will work together nicely.

But like all the reviews of the Maki and the Genesis, the Hyundai one... Reasonable. Are like, yeah, battery life is great. It's super reliable. No moving parts, just as promised. Now, they're like using Bosch and a bunch of other component makers to like, make all the guts and then the car companies are just kind of assembling it, unlike Tesla, which is vertically integrated.

But like, the way it ends up showing up to consumers is that all these other companies were able to observe the very difficult path that Tesla blazed and create compelling products quickly. And I think that probably has sort of been a big thing changing Apple strategy here, which is like, we thought we were making something 10 times better. And then the market caught up and now we're only making something 50% better. Like, what do we do? Scrap it again, start over.

And maybe you'll never launch if they don't feel convinced that they are really head and shoulders above. Yeah, I mean, Volkswagen's ID4 seems to be getting decent reviews. Yeah, I see a bunch around my neighborhood. Yeah, I see them once in a while. It's not for me, but it seems like it's a reasonable car. The Model Y is crazy. I mean, that thing is selling.

My daily driver is a Model Y. My wife has an X. Just a perfect product market fit. It's like the perfect car. I told them, I like, this is the perfect car. and my wife who loves, proclaims her love for the X, jumps into the Y and gets out of there real quick and likes the nimbleness and the sporty feel to it

because the X is obviously a much bigger car. So like the S and the X are better cars, yes. There's something about like a fun zippy smaller car when you're running errands and stuff that I just like much. I think it's like the perfect. I could drive the Model Y for the rest of my life and be happy. All right. It's been an amazing episode.

Anything you've invested in recently that you want to give a plug to or that you've really really excited about? I actually just, so from from PSL, we just doubled down in a big way on this space investment. We've made a couple of years ago called Starfish Space. And this company is like, it is so cool to work with the founders because what they're doing is like real hard science breakthrough technology with like a phenomenal business model behind it. And it's, you know, I say a lot of board meetings of like SaaS dashboards and stuff. And when you go hear about people repositioning satellites, it's crazy. So here's the pitch. Satellites generate a bunch of money when you use them for like taking images of the earth or communications, like millions and millions of dollars per year per satellite.

That's why Starlink is a great, a great business. They fall out of orbit. Yes. Over time, their orbits decay. and you need to decommission them or you need to nudge them back into place so they can keep generating revenue for years and years and years after that.

How do you do that? How do you nudge them back into place? This is crazy cool. The founders of Starfish figured out a way, a super low cost way and a super lightweight way to make a satellite

about the size of a mini fridge, launch it on SpaceX rideshare, go up and then slowly approach a satellite. my god, I'm watching the video. Use static electricity to dock to the satellite so they can attach to any satellite

on any surface without needing some specialized docking thing so everybody could be a customer and then slowly apply, get this electric propulsion to nudge it back into the correct orbit. Wait, electric propulsion, which means it's not physically touching it? Something.

So it's docked with static electricity on the front and then on the back, it's got an electric propulsion engine. I got it. I understand now. So it gives it a nudge. And then does it stay on it forever or detaches and then? It can, but it detaches and then goes into a graveyard orbit itself or it sort of spins off or it can go down and burn up in the Earth's atmosphere.

Oh, my Lord. This video is next level if you're not watching the video. Isn't that cool? They just announced. So they're on a summer rocket heading up on Falcon 9 and then the mission, the initial demo mission will be later this year. Hmm. So this is a big bet for you, huh? It's exciting. It's, uh, yeah, they, they raised the last round was around 8 million and then this round,

I don't remember the exact number. I think it's around 14 million. Um, and like they're doing this whole demo mission. I think the all in costs are seven-ish million to build this first version. And like, thanks to Elon and everyone that sort of transformed the space industry over the last 20 years, like, it's crazy to be able to do something like this on seed venture capital money, not on like, you know, a $100 million, $500 million investment from the government lab in this. That is extraordinary. So this is when people ask, like, why is it important that the cost of going to space has

gone down? I don't know what has gone down. Is it 50%? 80%. Almost 100x since the beginning of the shuttle program at the end of the late 80s. Wow. So it has gotten completely possible to put up something like this. without you bankrupting the company.

Because moving the satellite with this thing just might not have been financially viable. But if it's piggybacking and it's somebody else's flight and they can fit a couple extra of these up there to do a mission, more power to them. Genius. Yeah, you know what? They could build also.

It's something to clean up space. So they just put these up there and just have them float around and look for debris and then try to intercept debris because that space garbage thing is becoming a bit of an issue, I understand. Yep, absolutely. put a magnet on it. All right, listen, great to see you. Thanks for taking the time. Everybody, stop what you're doing. Type Acquired FM into this very podcast player that you're listening to or YouTube and just type in Acquired FM. Listen to the four-hour Nintendo Opus. What's going to happen with these things? Do it? Has anybody ever said, like, hey, we want to take your Nintendo thing and make it into a movie? Has anybody done that yet?

We've had a few discussions like that. There's a lot of people that want to do book stuff with us. book would be interesting. I would do book. Yeah, book makes sense. Yeah. You could do a 50,000 word book, get a great writer. Oh, you know what you should do? Oral history.

So you take your bones and then you find five people, you interview them, and then you slot them in. So these oral history books, there's an oral history of CIA. Amazing. It's so good. Absolutely. It's so great. Because you read, who is Mike Ovitz?

Yep. And then you read, Ride of a Lifetime by Iger. And then you put the CIA in between it. And now you got the entire. The entire story of that era and all the characters interweaving, that's a really good idea. You know who you should talk to is my guy, Bill Simmons from The Ringer. He might be really jazzed about what you're doing. Because he's doing, you know, he's done the HBO stuff and he did 30 for 30.

I feel like you're the 30 for 30 kind of, right? That was one of your inspirations in the beginning. Yeah, it's always been hardcore history and 30 for 30 for tech and business is sort of the idea. All right, brother. Oh, and everybody follows. as easy as it is, Gilbert. He's not in the first name club. He's in the last name club.

Follow Jason, follow Gilbert, and follow DJ Rosent, DJ R-O-S-E-N-T. You know, David just got in that way. He didn't get Rosenthal. He didn't get David. He didn't get David. He was slacking.

You and I were baller in Acquired FM. That's all you need to know, Pioneer Square Labs. When are you raising the next fund? Maybe I need to put a little, maybe put a little bad in there. Not for a while, fortunately.

All right. Well, put me on the potential LP list, okay? Thank you. We'll see you next time on this meeting service. Bye-bye.