This Week in Startups - AI on the blockchain, Waymo's rise, and the truth about tech layoffs | E1996

Starting point is 00:00:00 And in fairness, the Jessica, the job of the editor-in-chief is to always have the back of their writers. So she's saying, like, we got it right. What did we technically get wrong? And it reminds me of the story we talked about the other day where, you know, they put the MAGA hats on Felicia and Ben Horowitz. And I said, you know, they could have been more clear. But somebody, you know, like the editor-in-chief is probably like, hey, listen, it's obvious because there's two blue smurfs on there, you know, people. That's an illustration. and we put in the, you know, tiny little minus one font size that this is an illustration.

Starting point is 00:00:33 So, you know, people defend themselves. The truth here is the company feels like it's a little shady. Oh, oh, Jason, going with the British understatement there. A little shady. Dude, this guy is, this firm is essentially underneath a canopy of trees. There is so much required shade to discuss it. This week in startups is brought to you by lemon.io. hire pre-bedded remote developers.

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Starting point is 00:01:27 Visit command bar.com slash twist to get a custom live demo. All right, everybody, welcome back to this week in startups. He's Alex Wilhelm. I'm Jason Kalakannis. We are going to talk about a lot of news today. This week in startups, you can find us on all the major podcast platforms and YouTube and TikTok and all those other places for clips. But what do we got on the docket?

Starting point is 00:01:51 What are we going to talk about? So we're going to start with the current kind of, cause of the day, the thing people are talking about, which is the information, a scoop on bolt, what's real, what's not, and some criticism of them. It's kind of what's turning on Twitter today, or X, if you will. Then Waymo and their rapid growth and also a couple notes on open source self-driving, which is a whole new category that I dug into today for us. Then we're going to talk about layoffs. And then from there, we have some notes on a major deal that happened called Tabular Databricks bought it. Some notes on that. But first things, first, Jason, people are

Starting point is 00:02:23 beefing. Okay, so this brouhaha, I saw Shiel, I think Monat is how you pronounce this last name? I'm not sure. I've met him once. Nice guy. He has been getting into it with

Starting point is 00:02:34 everybody. Explain what's going on here. All right. So the information is a technology news website. I have a bunch of friends that work there. I'm sure everyone's heard of it. It's behind a paywall.

Starting point is 00:02:44 They have a kind of a hard paywall model, a bit like the financial times, if you will. And they have a focus on scoops. And when they broke some news yesterday that Bolt was seemingly raising $450 million at a $14 billion valuation.

Starting point is 00:03:00 It sent enormous waves around the world of technology because, one, everyone thought Bolt was doomed. The CEO, Ryan Breslau, originally a co-founder who left, got sued, was supposed to be coming back. And then also the dollar amount to make any sense. Who's going to give this company $450 million? And then also the valuation didn't make any sense

Starting point is 00:03:18 because why would it be worth $3 billion more than it was? when it was a much seemingly healthier company back in the day. So, Jason, my thought reading this was, huh? What the hell? And I didn't want to like, I hadn't done any reporting on it. So I didn't want to say to my friends, well, what's this?

Starting point is 00:03:35 But I was, I was very perplexed when I saw the headline. Certainly perplexing. Let's start with what does Bolt do? This is a fintech startup. Was founded in 2014. The guy who started as Ryan Breslo. he is a unique a snowflake in all the world

Starting point is 00:03:55 he's the guy who said that Y Combinator Paul Graham and everybody were part of some bully stack they were like the mafia in tech and they were trying to kill Bolt there was another startup called Fast and what these I guess

Starting point is 00:04:10 startups did was when you get to a checkout the idea is to help you check out faster And I see this all the time because I guess Shopify, when I buy a shirt like this one from Roan or cuts or some of these brands, and I go to log in, it already has me cookieed and I'm logged in already. And then it sends me an SMS on the checkout page and says, hey, just type in this SMS code to your phone number and we'll verify it's you through

Starting point is 00:04:41 two-factor and you're off to the races. That makes it really brisk to checkout. that reduces friction and merchants like that. Because if you have to put in your credit card, log in every time, it's a pain in the neck. So there was fast. I think that company went under it. There was Bolt.

Starting point is 00:04:58 And there's Amazon checkout and Shopify checkout. So there's big players in this. And then there were these upstart players. I thought these companies had gone out of business. I'm being honest. Well, there wasn't a lot of revenue behind them. But there was a lot of, I think, enthusiasm at the time for making e-commerce,

Starting point is 00:05:15 faster, easier, cheaper, better, because keep in mind that we're talking about the 2021 era, which was very close to COVID, supply chain disruptions, people ordering more. A lot of future e-commerce growth got pulled forward in the market. And so everyone was like, oh, man,

Starting point is 00:05:28 we got to get on this. I think if memory serves, the thing that made these companies look very attractive was they told people, hey, we are building out this enormous user base as we do one click check out, a network. But I think what they were doing was they were creating profiles for people for them

Starting point is 00:05:46 when they checked out using Bolt or Fast or whatever. So it wasn't like Jason was going to a website and signing up for Bolt. He was just trying to buy something somewhere else and then they were counting it as now a Bolt user. And so to me, there was always a little bit of BS in this, but also fundamentally Jason, point solution,

Starting point is 00:06:04 incumbent competition. And I would say to some degree replicable by a functional development team. So the companies got big, raised money, and then I kind of fell apart. And so when they said they're back, It just not a single ounce of it seemed to mesh with my understanding of where the market is today and where e-commerce is today. And just to give people back to the business model, you as a merchant, let's say you were 1% of the user base. Like you were a large merchant and you had a, I don't know, a million customers and both aspired or fast aspired to have 100 million customers.

Starting point is 00:06:39 And you were contributing your million customers to their checkout, you would then, and also be paying fast or bolt, in this case, bolt, I think a transaction fee, I think it was 2% or something. So now you're paying 2 or 3% for your credit card, 2% to bolt, maybe you're paying some amount of shipping and everything like that.

Starting point is 00:07:01 So that 2%, depending on the business, could be material. And I guess that's why people got excited about this. Hey, what if a certain number of transactions go through this? And every time you get a new user, if you were doing Acme company,

Starting point is 00:07:14 I was doing Delta company. Let's say we had no overlap. You know, you were selling sneakers and I was selling coffee mugs, you know, thermases, and we had zero overlap. You would be saving me time and I would be saving you time if our users went to each other's website. So that's kind of cool, I guess. But I never thought the value prop was that good.

Starting point is 00:07:34 I'll be totally honest. I don't know that this was like an actual acute problem in the world. I don't think it was. I think everyone just wanted Amazon's one. one-click checkout solution. They wanted to bring it to their website. And I think, you know, when we were watching Amazon at that time post those insane growth numbers, everyone wanted to buy to the Apple, you know? And maybe people were being pressured to have exposure to the burgeoning e-commerce startup sectors. They wanted to pick one company to back, whatever. But in the

Starting point is 00:08:02 end, a lot of capital got effectively incinerated. And in the case of Bolt, when they raised that really, really large series E, some of their investors said, hey, we think that you were not entirely upfront and clear about your company's performance to date. And therefore, we bought in at too high of a price. And then there was also Jason the, there was a loan from the company to the founder. So here's a question for you. If one of your founders that you've invested in came to you and said, hey, hey, Jason, we just raised a bunch of money.

Starting point is 00:08:28 I want to loan myself $30 million from the company. What would be your response? Yeah, that's dangerous because you now have a CEO with $30 million in their pocket. and they have to pay interest on that loan and they're distracted, right? So there's the distraction of $30 million in somebody's buying. Also, somebody didn't buy the shares. It's a loan.

Starting point is 00:08:51 So now if the CEO goes and blows that money and can't pay it back, what do you do? The CEO comes to you and says, hey, listen, by the way, I blew through the 30. I need another 30. I can't service the 30. Like, I need you to extend the loan. And then you have board members

Starting point is 00:09:07 who are massively conflicted. because they have to manage the CEO. And let's say the CEO is not doing a good job and you want to fire them, but they have a $30 million loan. You call the loan when you fire them. Let's say the CEO is doing a great job. And he says, I want another,

Starting point is 00:09:23 now I want $100 million loan. It is ridiculously bad hygiene. That's why other parties, Goldman Sachs, Morgan Stanley, whatever, might give somebody, and you saw this in the WeWork TV show, some third party bank, who says, hey, both shares are worth this,

Starting point is 00:09:41 we work shares are worth that. I'll give you a $100 million line of credit against your private company stock. They'll do that with the venture capitalists. I've got people come to me and say, hey, this is what your holdings, your future potential on the first four venture funds are. Do you want to have a loan that you can go start spending some money

Starting point is 00:09:59 and pay us, you know, when it was two or three percent, no big deal, but now six, seven, eight percent, a little bit of a bigger deal, bigger vague. So your company has to be growing faster than that, Vig, a little bit harder to do in a higher rate environment, but it's just horrific, terrible, disastrous conflicts on a board of a private company. As we say in the business, no conflict, no interest. So what happens is board members sometimes will pay off bribe, otherwise influence the founder by giving them these kind of loans or buying their shares.

Starting point is 00:10:34 And it's really problematic. I'll leave it at that. The way that this was described, to me back in the day was, secondary is a bad idea. It disillines incentives, full stop. The exception being, if you want to de-risk a founder with 500K, a million dollars,

Starting point is 00:10:50 something small so they can school, a house, something very basic, enough money to give them more focus on the business and less distractions in their personal life.

Starting point is 00:11:00 That was the only exception made to me. 10% of your holdings, 10 million bucks, no problem in my mind. So if your holdings were worth a bill, and you sold 10, 20, 30 million. No problem. If you sold 100 million, now you're like, well, the person's buying jets. They're distracted. And maybe they don't care about the outcome as much. So that's the balance that people find. Right now, startups have to do more with less.

Starting point is 00:11:27 We all know that. And founders have to be smart with how they deploy capital. Investors are very tuned in to being capital efficient. So if you need great tech talent, but you don't have have the time to interview dozens and dozens and dozens of candidates you need to check out Lemon.io. They have thousands of on-demand developers to choose from, and these devs are vetted, and their experience, and most of all, they're results-oriented. They're going to get you the result you're looking for. They're not going to leave you hanging. And guess what? They charge competitive rates. Great developers can be incredibly hard to find. We all know that, and when you do find them, it can be hard to integrate them into your team, but Lemon.io will handle all of that for you.

Starting point is 00:12:09 startups choose Lemon.io because they only offer handpicked developers with three or more years of experience and strong portfolios. In fact, only 1% of candidates who apply get in. And if something ever goes wrong, Lemon.io will get you a replacement ASAP. A couple of launch founders have worked with Lemon.com. I.O. And they've had great experiences. So here's your call to action. Go to lemon. dot i.o slash twist to find your perfect developer or tech team in 48 hours or less and twist listeners get 15% off their first four weeks. Stop burning money, hire developer smarter, visit lemon.i.o slash twist. Also, just a note about this. People borrow money against their public equity holdings all the time. And that makes way more sense. If you're thinking about this, they're liquid.

Starting point is 00:12:56 And you can tell what they're worth minute by minute. Private shares are illiquid. order to value, and as Jason said, much more conflicted. Anyways, the company is probably not raising the 450. The investors don't appear to be entirely, they're not your sequoias, Jason. These are not firms that we expect to have this kind of capital. And this was all in a letter to shareholders, right? The preferred shareholders got a letter. And it said, and I'm looking at this newcomer, Eric Newcomer's story,

Starting point is 00:13:26 we are finalizing a $450 million series. funding round from UAE and UK-based investment firms. Okay, that's weird because they're just describing geography is not the actual firms, which will elevate, elevate for total valuation to over $14 billion, a considerable leap from our $11 billion dollar valuation during Series E1 round in 2022. That's a little bit weird language, by the way, considerable leap. Who wrote this? In addition to the investment from these investment firms, two investments in five words,

Starting point is 00:14:00 it's not good. We just say, in addition to the investment from these firms, Bolt may receive additional amounts from existing both investors who may participate in a series of funding around. Yes. And this is where we get to the pay to play bit. So keep going. Information around with a credulous headline this morning, Boltonier deal to raise $450 million at $14 billion. They have since updated the story. So I guess this is where maybe they felt that headline was not accurate or they didn't do enough work. What do you think next is important here? So then Sheal, an investor that you know, that I know, and I'll just, I don't want to be in the game of, of, you know, pumping up VCs, but Sheal is, in my experience, very nice and patient.

Starting point is 00:14:39 And he's given me, he's a kind guy. Yes. Yeah, he's giving me time when he doesn't need to. And so I bring that up just because when he goes critical on Twitter, it's a, it's not a normal thing for him. He's not a guy who's out there flinging mud usually. Anyways, um, she'll said that, uh, the information kind of rushed out this story. Here's this tweet that we're talking about right now.

Starting point is 00:14:59 And that he says then it, wasn't true. The money and investors aren't real. Eric got the story right. And then he says, look, I would have been completely fine with it if they acknowledged they got it wrong and issued a rejection. Instead, he says, Jessica Lessen, who runs the information, was smugged in his words and incorrect, saying the details were correct. And then he's like, yeah, yeah, but they edited it afterwards. Then we get to a response here, Jason. Jessica responds. And then he goes, look, one. When accused of smugness, don't start with as said yesterday. I'm referring to the piece, not the headline. And then two, he says, you know, we all make mistakes. People in your newsroom

Starting point is 00:15:38 disagree with you on this. And so the bump sound you just heard was she'll throwing his friends under the bus because that bus is going to back right back up to the newsroom with Jessica. That's interesting at a trail meeting tomorrow morning. Glad I'm not going to be in that one. I do really. they'll agree, and I wanted to read all that because I think Sheal is dead on. If you make a mistake, people actually, I think, have a pretty big band for saying, oh, okay, cool. If you go like,

Starting point is 00:16:09 watch this, I made a mistake. My bad. We're going to fix it. But there is this era in the current moment they're in, and this goes way beyond Jessica, to be clear. People, we're in the age of bluster and BS and no shame. And I do think this is partially driven by our recent political climate. But I think people just have this like, you know, show no weakness, never admit a weak. or a mistake, always punch back twice as hard.

Starting point is 00:16:30 And it just, I don't think always leads the results that people would like. And I think this is one of those cases. You are referring to the Trump playbook of Never Apologize. They hit, you hit twice as hard. You know, he's a he's a counterpunch or whatever they say about him. And so, yeah, I think, and in fairness to Jessica, the job of the editor-in-chief is to always have the back of their writers. So she's saying, like, we got it right.

Starting point is 00:16:53 What did we technically get wrong? And it reminds me of the story we talked about the other. day where, you know, they put the MAGA hats on Felicia and Ben Horowitz. And I said, you know, they could have been more clear, but somebody, you know, like the editor-in-chief is probably like, hey, listen, it's obvious because there's two blue smirfs on there, you know, people, that's an illustration. And we put in the, you know, tiny little minus one font size that this is an illustration. So, you know, people defend themselves. The truth here is, the company feels like it's a little shady.

Starting point is 00:17:26 Oh, oh, Jason, going with the British understatement there. A little shady.

Starting point is 00:17:31 Dude, this guy is, this firm is essentially underneath a canopy of trees. There is so much required shade

Starting point is 00:17:37 to discuss it. I mean, okay, Ryan also went on and found to another company called Love that he raised

Starting point is 00:17:43 money for. I just, I wonder what it would be like to wake up with the sheer level of confidence that some people

Starting point is 00:17:50 have in, in their own infalliability because ask Adam Newman. I, I've never met Adam. Well, no, I mean, these are the same type of entrepreneurs, which it's like I threw a Hail Mary pass one time.

Starting point is 00:18:07 Right. So the Hail Mary in this case might be that series E, F, you know, two or whatever in P-Gerserb when they hit $11 billion. And then they think, well, I can hit half-court shots. I'm Steph Curry. I should shoot from the logo. Steph Prairie doesn't shoot from the logo. He shoots as close to the three-point line as he can get an open shot from.

Starting point is 00:18:29 He's not saying like, I'm... Just because I can, and I have hit a full-core shot, a half-core shot, that's not my default. I'm going to try to, you know, be a consistent discipline player. And so, yeah, this guy's a little bit effervescent and the firm seems a bit on its surface, shady.

Starting point is 00:18:48 When I read the language there, you know, you and I are writers. We pay attention. person who wrote that was not a good writer, just from that little thing where, you know, they say these investment firms, investment investment firms, those are little details that tell me this is not well written or edited. And then to say a UAE firm, that's like saying a Canadian firm. What does that even tell you as a preferred investors? Like we, I mean, they could have said Mill Eastern investors. They could have mean it investors, European investors.

Starting point is 00:19:20 I mean, it just the whole thing screams and then that pumping it up, like, what did he say it's an extreme increase in valuation? Like when I hear that kind of nonsense. Leap, I think it's a leap. A leap. You know, like, that's not how normal people talk about fundraising. When you talk about fundraising, you just say, we're raising X amount. You don't have to say it's a considerable leap.

Starting point is 00:19:43 That's almost like trying to get somebody to invest. And you have to be very careful about that, because if you're trying to try and, to influence people in making their investment decision, then the way the law starts to work is maybe you'll get held to a higher standard because you're giving investment advice. I just got a secondary offering from a venture firm I'm in. Very high profile venture firm, very high profile deal.

Starting point is 00:20:10 And they were saying, we are considering selling some of our shares in this company. You are in this fund. You have the ability to request to sell a certain percentage of your shares. This is not investment advice. Please consult with your lawyer, accountant, financial advisors to make the best decision

Starting point is 00:20:28 for you and your circumstances. We cannot give you investment advice. Like, it is written by a lawyer, and it is not saying a considerable leap. They're not steering the witness. This is why when I do J-trading on the program, I'm going to bring J-trading back next year. I was very happy with my performance.

Starting point is 00:20:47 I beat Nancy Pelosi. I think that's big since the year. I don't have any of Saturn information. J-trading.com. But jatrating.com is going to start in January again, and I'm going to get some of your advice here of what I should be J-trading. But, yeah, when I was doing the J-trading,

Starting point is 00:21:01 I just told people like, here's what I'm thinking, but don't copy my trades, unless you're doing it with money you can afford to lose because I've never publicly actively traded. I've always been a private market investor and index funds for everything else. So anyway, that's nice for coming to my tattoo.

Starting point is 00:21:18 No, I appreciate it. The last thing I want to say about this is the technology watching media world just seems much smaller than it used to be. Because here we have like the information, right? And we have Eric and his newsletter, newcomer, which is very good. And, uh, I know, I guess tech rush could have weighed in.

Starting point is 00:21:37 Venture beats still there kind of somewhere. But I mean, like, it's not, I remember the blog days, man, when there was like, you remember like the giga-oh network? And like, there was just so many more properties and more voices and and more like discussion and it just felt more alive than it does now. And I wonder if I'm just looking at like what's left of media and just I'm slightly disappointed that there's just so few names out there. Like I'm glad the information is doing well.

Starting point is 00:22:01 They hired some of my friends. They heard two of my last co-hosts on my last show, jerks. I cannot speak highly enough about the staff over there. But I mean, it's not that huge. Information can't have more than like what, I don't know, 50, 60 people. And it just made me kind of sad. Let me make you less sad. I have been through this three or four times.

Starting point is 00:22:20 I had my Silicon All reporter print magazine. I had in gadgets, sold it to AOL. I helped Mike with TechCrunch in the early days. We did the conference together, yada, yada, this week and startups for 12 years, and all in, and now the Twist 500. I have, you know, been in the mix in this and watched it over the years. And what I'll tell you is, there is a, the media business got rocked because advertising works better, much better.

Starting point is 00:22:50 Advertising works much better on TikTok, Amazon, Uber, meta, and of course Google, than it does on TechCrunch or Business Insider or pick your publication to contribute. What that did was it took a business that had a lot of independence and an enormous amount of people throwing money at them for advertising and to the point, at which, you know,

Starting point is 00:23:18 TechCrunch writers started making six figures. Some of the top ones were, you know, there was a competition to see who could fund them versus who could land them as, you know, writers.

Starting point is 00:23:31 When the advertising went away, the whole thing blew up, and now it's creative destruction. And what you'll see is there's still a need for news. There's still a need to understand the world. So we're doing that here. We have the Twist 500,

Starting point is 00:23:44 and we're going to hire a writer full time to just work on the, twist 500. And to cover each of those companies, maybe do one company a day, interview them, and then add that to the database. So we're taking a database approach and the podcast approach, new model. Jessica with the information, she worked with the Wall Street Journal, she hired those people. She's like, you know what, if you can't afford $300 a year, we're not for you. Full stop. So she has less audience, but she's got to have how many, how many subscribed is $10,000? Oh, a good number. I don't actually know that metric. I haven't pumped that out of

Starting point is 00:24:17 friends yet. But, you know, there are two ways you can go. One today is ads. One is subscriptions. And I spend, you know, years at TechRunge. Actually is my, the thing I did there when I went back, building a subscription business into the seven figures. It's tough. It's hard. It's a grind. We got there. TechRunge eventually chose to go a different certain path. Particularly hard, though, if you're doing both at the same time. Yeah. That is a tension that I could never resolve. Well, then you're sitting there and the tension is, does this story go behind the paywall or on the free site. The advertising sales seems like, put it on the free side, get more pages. And the sales and the subscription team's like, no, it's a scoop, put it back here. And then the author is like,

Starting point is 00:24:56 well, I want the maximum number of people to read it. And then somebody, everybody rips it off, rehashes it and it gets aggregated. And everybody's like, well, I only need the first three sentences here. Sheal is doing a better, is doing such a good job summarizing. You don't need to subscribe to the information. If anything's important in the information, it's going to get summarized in Business Insider or on Twitter and you don't need to have it. The end. That is a good breakdown of the incentives, uh, conflicts and issues thereof. But I do think though to have a successful business, you have to pick a lane and just do it.

Starting point is 00:25:29 Because the tension about, uh, in front of her behind the paywall, I was the guy for years who went to people and was like, may I please put a paywall on your story? No. Okay. Like, I mean, that, that was, you know, you go home with your hat and hand quite a lot. Now, I had a team that was just behind the paywall. but we needed more total stuff, you know? So anyways, it's difficult, and I hope that everyone can learn from this,

Starting point is 00:25:51 and we can all do better down the road. And I really do hope that there is not $450 million in very dumb money that people would put into both, because I can think of a lot of things I could do better with that. I want to know the revenue from this company, and I just want to point out, Sheel did another follow-up. And, you know, who knows what's true here or not.

Starting point is 00:26:12 I'm not saying Sheel would ever. lie or anything like that, but I'm wondering what exactly is going on here. Here is, if we could pull this up, his update, and this update came out August 20th yesterday at 7 p.m. So it's last night. The actual deal proposed is even wilder. Shareholders had less than two days to approve a pay-to-play deal. We've talked about those here before. They need to invest more money into the company or Boll buys their shares for next to nothing. What this means is the existing shareholders, if they don't put more money in, those shares get wiped out, right?

Starting point is 00:26:45 And so that's pay to play. Breslo would get a $2 million bonus for returning a CEO. What? Doesn't he own a lot of the company? Plus an additional $1 million of back pay. What? Isn't he already rich?

Starting point is 00:26:57 Why would they be giving in $3 million? $750K of back reimbursements and an $80K monthly travel security budget? This can't be right. This cannot be right. Is this? Security. Who does he think he is?

Starting point is 00:27:08 Taylor, freaking twist. He must be. be like, this must be comedy, right? This is a joke. Shield's making a joke here. Yeah, it's got to be a joke. Bolt would invest in Brussels other company love and equal-friendly marketplace.

Starting point is 00:27:22 The terms are amazing. Bolt would invest $15 billion in love at a $1 trillion. Okay, so he's joking. Yeah. I guess. But the rest of this seems pretty reasonable. Like, you know, lost $100 million. I can see that.

Starting point is 00:27:33 $250 million on the thing. The article claims that Brad Pamnani, who refers to who is representing Abu Dhabi, e-fonds, but whose LinkedIn says he's with silver bearer and investment bank. Plants who invests $200 million in London Fund would give $250 marketing-related services. Okay, so this is all BS. Joe Lonsdale replies to that tweet goes,

Starting point is 00:27:53 Can't tell it this is satire. Yeah, Joe, we feel you. I mean, we're literally saying is a satire. And when I said shady before and you were like, you know, it's almost like they're in the Amazon and those trees go up like a hundred and there's a canopy and then all the leaves. Like, when you're really on the bottom there, like, pretty darn shady. I mean, I-y-dainty day shady in the Amazon. I wouldn't put $5 into Bolt at a 1.4, let alone a 14.

Starting point is 00:28:20 So, like, I mean, you're just sitting here scratching your head. But it does, again, remind me of how much fun we had in 2021 as a broader ecosystem because my gosh, was it a good time. Okay, founders, I had Ramsey from Uptrends AI on the pod last week for a jam session. And what's a jam session? It's where the founder pitches me their company. And I ask some questions and we try to move the ball forward. We try to help them solve their problems. I was fascinated by what he's building because it's helpful for trading stocks, right? And even better, it uses one of those gorgeous dot tech domains. So if you want to come on and tell me about what you're building, have your startup featured here on this week in startups. Join me. Join the Jam with JCal contest. Jam withjakal.com. We need a couple more people. You have to have under two million. funding and you got to grab one of those great. Dot Tech domains, head to Jam WithjCal.com. and tell me what you're building.

Starting point is 00:29:14 And then we'll have you come on the podcast like Ramsey did. Okay. And then you pitch the world and it's great. Don't forget to get a great. Dot Tech domain name. Apply for the Jam WithJCal session at Jam WithJCal. Dot. All right.

Starting point is 00:29:28 Let's talk about some good news. Talk about some good news. So I'm an enormous fan Jason of self-driving cars. Can't wait for them to be everywhere. Me too. Take the teenagers out of the SUVs. need kids and tanks. Let's do this. Now, back in May, Waymo said that they had 50,000 paid rides each week. Then June comes around. Waymo says, if you're in SF, it's now open,

Starting point is 00:29:49 come aboard, hop into your Waymo, let's go. Then, in August, they said they have now surpassed 100,000 paid trips per week. So a doubling from May to August with the addition of Morse-Basin San Francisco. But to me, that smells like product market fit, massive consumer. or demand. Yeah. And I would say given that there haven't been more headlines about Waymo's running into new children or dogs, that the tech is working at that level of capacity. Very exciting.

Starting point is 00:30:18 Yeah. It's really great to see all this autonomous stuff working, which is awesome. And if you're hitting 100,000 rides a week across three cities, I believe it's across three cities, right? L.A., San Francisco and then Phoenix, Arizona. Now, you have to put all this in context. And we did this on a previous show. Uber is doing a quarter million rides per week.

Starting point is 00:30:44 Quarter million rides per week. Okay. So 1% of 250 million is 2.5. Okay. And 0.1% would be 250. So Waymo is doing 10 basis points, right? 1 tenth of 1% I think of what Uber is doing right now. Uber is doing less than 1% of all rides in the United States, like globally.

Starting point is 00:31:07 So ride sharing, as opposed to driving your own car, is like literally 1% of the overall market of rides. So, you know, people are asking like, how does this affect your Uber investment? You're still long Uber. Of course, I'm still on Uber. They're still growing 30, 40% a year in terms of rides. I think what's happening is this next generation or two will not have driver's licenses and they certainly won't own cars. And autonomous will be part of the mix. I drive Tesla full self-driving every day.

Starting point is 00:31:37 I can tell you it is absurdly impressive. It's got, I would say, nine out of ten miles dialed in. It does not have that last mile. And those are going to be really the hard one. So I don't think the Tesla full self-driving can be as meaningful as Waymo is. I think Waymo has a lot more experience right now,

Starting point is 00:31:58 but I do think in China and some other places, there'll be others. And I think BOD is going to be the big player here, Uber has ordered 100,000 of those electric vehicles with them that have autonomy. There's six or seven players in China doing autonomy, so I think China will be the big market for this. And I think we will go from 1% of rides being done by Lyft, Uber, Waymo, etc., to 10%. And then the question is, you know, what percentage does Uber get of that next 9%?

Starting point is 00:32:28 My guess is they get three or four of the next nine percent, which would put them at half the market share, because there are seven or eight people, I think, who are going to reasonably get to the promised land. Of those seven or eight people, I would say, let's just say it's eight people get there in the next 36 months. They're not going to be able to build enough cars for the entire market. I think of those eight, five of them will just put their cars into the Uber and Lyft marketplaces. They'll just go to Uber and Lyft and say, how many do you? you want and depending on jurisdiction they'll get deployed there. And then there's the cost. Then there's the cost of these cars is the other main issue. Waymos are like over $100,000 all in

Starting point is 00:33:11 and they have to be cleaned. They have to be maintained. And in the Uber or in the ride sharing model, those are the existing cars that people own. They're being used when they're sitting there, typically unused for some portion of time. But the maintenance, the storage of the car, the cleaning of the car, that's all maintained by the Uber driver or the lift driver, door dasher, etc. So I think this will grow to 10% of the market, which means Uber will be five times bigger,

Starting point is 00:33:42 is my basic premise in the next 10 years. Uber is five to 10 times bigger and has 5 to 10% of all markets. And then I think Tesla could be number two or even number one. But I think the big winner is Uber and BYD. I think people are underestimating B. Where do you, so in this stack rank of, of major companies that we know, Uber, Tesla, Waymo, and BYD, and also BIDU, it's Apollo Go, taxis which are in Wuhan, and actually think there's 500 of them live there now. Where does Waymo fit into this ranking?

Starting point is 00:34:18 Because you didn't put them into your top two there, which surprised me. Are they third or fourth? Oh, no, I think they'll be top three. Yeah. I think it's Uber, Waymo, Tesla will be the three. B-Y-D, those are your top four right there. Cruise seems to be asleep at the wheel, so to speak. And, you know, I think there'll be a long tail of other players.

Starting point is 00:34:40 I actually think this could all become commodified if somebody starts an open source project that actually works in the way Android does. So then you might have like a high-end version of this, like the iPhone version, which would be Tesla and Ramo. And then you might have this incredible global Androidification. of the industry where B-YD or somebody decides, you know what, we're going to open source this whole thing. And, you know, that's that suddenly then all at once concept in technology.

Starting point is 00:35:10 Yeah. And so we looked into open source self-driving. And there are a couple of names that are worth looking at. One is called comma A-I. Yep. This might be coolest company that I hadn't heard of in my life. So if you haven't heard of them, what they do is they, they have an open source bit of software.

Starting point is 00:35:31 They've raised about 18 million. Actually, ironically enough, they raised one point, sorry, 3.1 from Andreessen back in 2016 to go way back in time. But they've open source software and then they'll sell you a kit, which we have up on the screen right now called the comma 3X. And you just stick in the front and back of your car and you can have a car that has automated lane centering, adaptive cruise control, and lane change assist, not level for self-driving to be clear Jason, but, yep.

Starting point is 00:35:56 But it's going to keep getting better. They do claim down over 100 million miles driven. So I wonder if you're right. The core substance here does get commodified, a bit like how LLMs are now all pretty good. And then the question then becomes, how do you defend it? How do you make it better? But to me, like once you solve this, is there really a better way to do it? Like navigation, I'm sure that Bing Maps and Google Maps are roughly as good at getting me directions to Boston from my house, right?

Starting point is 00:36:21 And Open Maps is going to be there's an open mapping project. So the open mapping project, comma AI. And we had George HOTZ on the podcast eight years ago, eight years ago with comma AI. And he actually almost went to work for Tesla. I think there was a little dance publicly there. But yeah, I do think these open source projects, the commodification in China, Tesla has a massive fleet already out there waiting to be woken up. That's their secret sauce.

Starting point is 00:36:50 And, you know, the thing about Tesla is when they do figure this out, they have, I think, $30 billion in cash. They could just say, you know what, if you want to buy Tesla's, feel free. And hey, but we're going to just produce a million cars a year and put them into the Robo Fleet. And then next year we'll put $2 million to World Bo Fleet. Next year we'll put $3 billion. And Waymo can't do that. So you have Waymo with a head start in terms of the number of rides, but they have to buy,

Starting point is 00:37:16 are they on Volvo's, Audis? I forgot what they're using. And then I guess they're going to make their own eventually in partnership with people. But you understand, like you'll have to make you. these things, put them into service, and then a large portion of the time, they're unused, and then there's peak times. And so, you know, it's going to be, it's almost like thinking about e-commerce, right? If you were looking at Target, Walmart, and Amazon, you know, and we were sitting here in 1999, 2000, 2001, 2003, 4, would you want to own those stocks? And the answer is,

Starting point is 00:37:50 yeah, those three figured it out. And right now, man, do those three companies, brush it on e-commerce, right? People are constantly going to those three websites and shipping stuck to their house. You know, now you probably would want Amazon as your number one, but you would also want to know those other two stocks. Yeah. I did a fact check on your Tesla cash thing. I regret to me, Jason, that you greatly underestimated.

Starting point is 00:38:14 It's not $30 billion in cash. It's $30.7 billion. Come on, man. You've got to be better than that. That's seven. I mean, it's just so weird, mind. I have this, like, really weird thing where I remember certain numbers. No, no, you were very close.

Starting point is 00:38:26 And $30 billion, to your point, is 6x what Alphabet is committed to Waymo, because they dropped in another $5 billion as a commit during their last earnings call, which was a lot of money to be there. $5 billion is $5 billion. But Tesla has a lot of money. So I'm excited about this. One last note, Autoware is another open source project. Founded back in 2015 by Shempe Katow at Nagoya University.

Starting point is 00:38:49 And they are building something that I couldn't actually get my mitts around as much. because it isn't like a hardware project, it's an open source driving thing. Anyways, the point there is lots of folks are working on this. And so hopefully we do have a slowly than suddenly thing coming up

Starting point is 00:39:04 because my God. I'm going to save a lot of lives too. I mean, that's the best part of all this. So, um, you know, I mean, listen,

Starting point is 00:39:11 I believe, I've been telling people, I think Uber hits $88 and $88 in the next year. Um, and because I like the number, 88, this is good luck. So when I buy in and I play

Starting point is 00:39:24 poker, I buy $8,800 typically, because it's good luck. So 888, I think, is it. And then I think 10 years from now, we might be looking at it, you know, an Uber stock, that's $8, $8,000, $8. I just like the number 8. I just like the number 8. So numerology has come to twist.

Starting point is 00:39:39 We are now just trying to strip. I like the number four. So I'm going to go with, well, I mean, look. Anyway. But you're a gambler. I'm a gambler. I get it. I get it. I get it. Okay, founders, we all know that building software is really hard. and so is getting people used to your code. Worse training new users to use your software intelligently can feel downright insurmountable.

Starting point is 00:40:02 And I have to tell you, most tools built to help users get up to speed with new software are annoying, like chatbots that users don't like, or maybe they just ignore them. Thankfully, one company uses generative AI to help users on board without annoying them, and that startup is called Command Bar. It has this incredible chatbot that gives personalized responses to user questions instead of like a basic Q&A. So it will show your users around your product like a live guide, a guide by your side. And CommandBar can detect when a user needs a nudge, right? So it's kind of watching saying, hey, maybe I should give him a product hint or maybe a special offer to close a sale.

Starting point is 00:40:42 And Command Bar is used by a lot of the unicorns you know, like HashyCorp, Gusto, Sixth, Angelist, and others. Here's your call to action. integrate an AI powered guide into your software. You got a guide by your user's side so that your customer can navigate your product intuitively and quickly, visit commandbar.com slash twist to get a custom live demo. So I have brought to you a round that you will not like,

Starting point is 00:41:07 but I want to talk about it anyways. So we're going back to the World of Web 3, and we're talking about a company called Story that just raised $80 million. Now, the background for this is that OpenAI is now doing customer tuning for their 4-0 model, Open AI just landed a deal with Condi Nast, and Anthropic is getting sued. So I'm thinking a lot about AI models and data for training still, and that brings us to

Starting point is 00:41:31 story. So Andresen Horowitz's crypto team puts $80 million into story, $2.25 billion dollar valuation. And Jason, I'm going to walk you through what it does. And then I want you to tell me. Did you say $2.2 billion valuation? No, I said $2.25 billion dollar valuation. So in the real world. world where that was a stock trading in the market, you would have to have one fifth of that

Starting point is 00:41:58 in revenue. So it would be $400 million in revenue, $500 million in revenue roughly. Okay, got it. Yeah. And you'd have to have, just to have that, you have to have SaaS gross margins. So in your high 70s to low 80s, and you would need to have probably positive free cash flow and at least 15% growth and, you know, the retention of 100. The points, it's a lot of money, you know? A lot of money. So what are they building? They're building a blockchain framework. that will tokenize, don't laugh, I'm being serious. They will tokenize IP

Starting point is 00:42:27 to get it on the blockchain. No, I'm not. I'm not. Is this like you're punking me? No, I swear to you. It's just an I-CO. Okay, keep going, sorry. With the Breslo story and this story,

Starting point is 00:42:38 I feel like we're just like going back to an arrow where I was banging my head against the desk in confusion. But sure, keep going. Then they're going to monetize the IP that is on the blockchain by, quote,

Starting point is 00:42:48 giving creators the ability to set the economic terms for how AI can use their IP, and then all of this is programmable so you can call it if you need to and then access it. And release the website, I had court pulled this up

Starting point is 00:42:59 because I think they put a lot of clearly budget into graphics. And the reason why that and Reason has done this, Chris Dixon and Carol Wu from their team said that, you know, these AI systems today are likely trained on original human created content,

Starting point is 00:43:16 but often don't credit or cite their sources. If there's no attribution or compensation, what incentive will there be to publish original creations on the open internet? Okay. So I agree with that. I like a venture capital round. Not a big crypto guy, but hey, you know, I'm flexible. Knowing all that Jason, how much money would you put into this deal at the terms that

Starting point is 00:43:34 Andreessen Horowitz just accepted? Oh, on these terms, $0.0. And I would say this is foolish. And Chris Dex is a smart guy. But I think they have a giant vent, I think they have a giant fund of LP money sitting there and they need to put it to work and they need to make big bets here. But if they put 80 million in at a $2 billion plus valuation, they own 3% of the company, 3%.

Starting point is 00:44:00 It's nothing. It's less than a seed investor's target for a seed round. Exactly. I mean, why Combinator owns 7% of a company for 125? So if you just think about where you're putting capital, this is dumb. Now, listen, we haven't, I don't know the founders. They could be the biggest geniuses in the world. This could be Sergey Brin and Larry Page and maybe.

Starting point is 00:44:19 it's worth overpaying, but I don't think so. And I do think that although this idea makes some logical sense, I think, and I do think it should exist, and I am an investor in a company that is doing a clearinghouse model like this, and I think there will be many clearinghouses, one for books, one for music, just like the music industry has clearinghouses. So the clearinghouse concept will exist. Large brands, New York Times and County Nass,

Starting point is 00:44:47 will cut direct deals, Reddit, it because they can, Twitter, etc. And those people will go direct. And then there'll be the fat, medium, the medium part of the tail, and then the long tail will need services like this. I think it's going to be a grinded out business. I don't think it's going to ever make the amount of money necessary to get a what needs to be like at least a 10x.

Starting point is 00:45:11 A 10x here means this becomes a $25 billion company. A $25 billion company would need to have $5 to $10 billion in revenue. It's not going to have that. There's not enough money here, but we could be missing something. The other weird thing, I don't know if you saw, the SEC was looking into some VC firms in the crypto space. I'm not saying that it's in Driesen Horowitz, but I, you know, the idea I have here is, I think the SEC is very interested in venture firms, putting money into crypto projects, having tokens, and selling those tokens to retail or to anybody. and I've talked about it more here. So I don't do crypto deals at all.

Starting point is 00:45:54 People send me crypto deals. I'm like, I'm out. Why? Because they're overpriced like this one. Two, they are incredibly speculative and none of them, literally none of them. With the exception of Coinbase, maybe some NFTs, companies that are now close to worthless

Starting point is 00:46:11 or extremely low value, the only thing that's worked is, the crypto exchanges. In other words, the marketplace where they sell the tulips works. I think there's one other thing that does work, which is stable coins. Okay, tell me, please.

Starting point is 00:46:26 Stable coins. I think Staplecoins have gone. Oh, sorry, I forgot stable coins, yes. Circle is a company that's going to go public. I mean, we're actually, we're going to have, spoiler, we're going to have Circle back on the show in the not just future. Yeah. You're getting that locked in extra by now.

Starting point is 00:46:39 And so Circle, Coinbase, and the list gets pretty short, frankly. I mean, I know a lot of people have made. Yeah. Crackin. Okay, fair enough. But again,

Starting point is 00:46:50 that falls into your exchange. That's an OG business model that has one foot in Fiat and one foot in crypto doing quite well. And so to me, that's like a hybrid versus a full crypto business. By the way, on the SEC thing, were you referring to the point in which the SEC was looking at VCs to see if they

Starting point is 00:47:09 were acting as unregistered securities dealers? There's that piece. And there. U-SWWP News. That came out a couple of days ago. Yeah. So Block Tower reported this. There was a podcast where somebody talked about it.

Starting point is 00:47:28 And what I believe is happening, and I did listen to the podcast where this person talked about it, speaking on the Unchained podcast on Wednesday, R.A. Paul, the chief investment officer of Block Tower Capital said the SEC has launched a, quote, bunch of investigations into VCs were acting as unresistered securities dealers, as you're saying. The discounted token deals that some VC's Inc. with crypto project puts them in violation of the regulator's strict securities laws, Paul says. And so what's happening here is if you were to buy, you invest in one of these companies and then they have a token, where does the equity value set, Alex? Is the equity value in the corporation that you invested in? Let's, I'm going to make up a company there. this company is Ubercoin

Starting point is 00:48:19 and it's going to make a decentralized ride sharing network you put your car up there you have users it matches them it puts it on the blockchain and you don't you just disintermediate Uber there doesn't need to be any central location you just add your car to the blockchain

Starting point is 00:48:35 and it knows the location blah blah blah okay silly idea but whatever okay I invest 80 million dollars in there and I own 3% of the company like this deal we just saw. And then they launch a token. And the token has, you know, they launched 10 billion at 10 cents each. So there's a billion dollars now in value in the token. And I as the VC get my 3% of those tokens. So I gave you 80 million to invest in the company. But because I own

Starting point is 00:49:10 3% of the company, they said, I'll give you 3% of the tokens as well. There's a billion dollars. that's $30 million in tokens. And the token spikes goes 10x. Now I have 300 million. So I sell half my tokens. I make $150 million. I send it to Harvard and Yale and, you know, Mubodala, whoever the LPs of my fund were,

Starting point is 00:49:34 and they get that money from the public. Consumers, Randos, bought the token. Then the token collapses and becomes worth, you know, one temp of one cent. Yep. And you know what that is? That's an engine that takes money from people who don't have a lot of money but are chasing the Jin bet philosophy or chasing a big win.

Starting point is 00:49:59 Oh, good tech. Good call. Yeah. It takes that money from Gen Bet, funnels it through a fee structure involving VCs and founders. And then it takes most of the profit from those poor people and gives us two foundations that have tens of billions of dollars.

Starting point is 00:50:11 It's not exactly economically accretive. the way you lay it out. I'm not stoked by this model that you were describing. So if that had occurred, would Gary Gensler, Elizabeth Warren, AOC, you know, in that contingent of people who, let's say, are, what do they call themselves, Democratic Socialists? I don't think Gary Gensler would, would, come himself. He considers himself a capitalist, whatever. But, I mean, those people who kind of support this legislation who represent,

Starting point is 00:50:43 constituents, they're going to look at that and be like, wait a second, wealth transfer, and they're looking for the wealth transfer to go the other way. They want to see a more balanced society. What you described sounds like stealing from the poor and giving to the rich. It does sound a lot like that. What they want to do is steal from the rich and give to the poor. So this is going to cause, if this is true, and any venture capital fund did this, the optics would be so crazy that if this, and that's why I think the SEC started double-clicking and asking questions. And, you know, I've had the SEC come to me, you know, and other folks.

Starting point is 00:51:27 And when they think they see fraud, and this is a case where I think I had met with a founder, but I didn't invest, but they knew I had met with the founder. Sure. How did they know I met with the founder? Well, obviously, they got records that I was. on their calendar and high profile name, you know, SEC calls you.

Starting point is 00:51:47 And then I'm paying a $2,000 attorney and I'm submitting information saying, yeah, this is my notes from the call, and here we are. And then you never hear from them again. So you just send it in and they ignore you afterwards. Precisely. Wow.

Starting point is 00:52:00 It's kind of like, I don't want to say they're on a fishing expedition because I don't think that they have some nefarious purpose, but that's how it feels to you. Because you, natural, as a curious person, are like, why are you asking?

Starting point is 00:52:15 And they're like, yeah, we're asking. And you're like, am I involved in this? Is somebody on my organization involved in this? Well, we didn't invest.

Starting point is 00:52:25 Why would you want our information? Like, yeah, information. And you're like, okay. It's like if you see a cop car parked outside your house, and you're like, did I break the law?

Starting point is 00:52:34 Did I do anything wrong? Yeah, just eating donuts. Anybody, but your blood pressure goes up, several gradations and your doctor begins to get mad. So I,

Starting point is 00:52:41 I have to ask you, are you talking about Solana in this analogy that we're discussing? No, actually wasn't, you know, and I think that one has come up because some of my besties were involved in, they had invested in a fund that then were investors in Solana. And so far,

Starting point is 00:53:01 everything I know about Solana has been on the up and up. But, you know, all it takes is like, because I had said on the All In Podcast and it became like a clip where I was like, I don't understand the valuation. Like, are you guys wrong this thing? Or you're selling it?

Starting point is 00:53:16 And we kind of joke like, ah, because if something doesn't make sense in terms of valuation, you sell your shares. Going back to the Ryan Breslo thing and $14 billion. Hmm, interesting. If you were a shareholder and was worth $14 billion and somebody offers your secondary, you'd be like, okay, that's how much do you want. Exactly. And, you know, I had that happen once or twice, you know, during peak ZERP, some people offered

Starting point is 00:53:40 to buy us, you know, buy some of our shares. We took advantage of that secondary. And then I, you know, I had people who were LPs or people who were in syndicists, hey, why are we selling 10 or 20%? Because you as the fund manager are trusted to make these decisions for better or worse. And so, you know, you sell just a little bit of your calm or a little bit of another company or a little bit of your Uber, you have to then justify it. And what I would just say to people is, we don't know what's going to happen in the future, but we do know that this offer came in and these offers don't come in too often. Therefore, we thought it was prudent to sell 10 to 20% of our position. And if the offer comes again at a higher valuation or the same, we might sell another 10 or 20%.

Starting point is 00:54:24 So that's always been my philosophy, which is, you know, on the way up, you can pair your position a little bit. Do you feel like an idiot if it goes 10x after you do? Maybe, but it depends on where you put that money. If you took that 10% you sold at a peak value, you feel, you. and put it into Nvidia and then that went 50X, you would feel pretty smart, right? So you always have to ask yourself, well, what did you do with the capital after you got it back? And then some industries,

Starting point is 00:54:48 you just have to return capital at some point or you're not in business. If you're a private equity firm or a venture firm, if you do not get DPI, as we discussed the other day, you're out of business, right? So you just... Oh, absolutely.

Starting point is 00:55:01 I think shaving off 10% to de-risk and return cash to make everyone happy makes perfect sense. It's the old farming point. Pigs get fat, hogs get slaughtered. And so I think a slight de-risking is okay. But that's also my personal philosophy towards risk, which is I like to have a roof. I like to have a job, you know.

Starting point is 00:55:19 I'm not willing to have the variance go so high that it all goes away to any point. I bring up Salon not to accidentally sub-tweet your friends. That was a mistake. But the thing, no, no, no, I mean, it wasn't the intent, I mean. But the reason why I bring it up is I think there was like a big venture investment. I think in Theresa was involved. There was a token pre-sale for Solana. And it was called a VC coin for a long time in the crypto community.

Starting point is 00:55:40 Now it's street cred seems to be pretty good. But I was always kind of curious if you bought it and then you sold some. And then it turns out that it was a security, how much liability might you have retrospectively? And I don't think that's been fully tease out by the legal system yet. One last note for me on Story. We've talked about Tollbit, we've talked about Human Native. These are companies that are building trad web platforms to let people take their content and put it into the bucket and then get some payment for it. we are now going to get to see a natural experiment between a database that is private and a database that is public.

Starting point is 00:56:11 And we will see who comes out on top. We did have told it on the show a couple weeks back, lovely people, and we'll see how they're going to do. You know, the other thing about these pre-sales is when you do a public offering, you have a lockup period. You have audited financials. You have like a road show. You have filings. with a lot of these pre-sells,

Starting point is 00:56:36 there was a massive discount, there were not lockups or the lockups were negotiated one-off. In other words, you're the founder, I'm the VC, you got five VCs, you got three angels,

Starting point is 00:56:46 you cut two, three different style of deals with us. I say, I'm going to buy, you know, 10 million of the tokens, but I don't want a lockup period. The other people say,

Starting point is 00:56:55 I just want to buy 100,000 to be locked up for two years. And I'm like, okay, well, I guess that's all I can get. Can I get 18 months? Like, okay. Now, the person who wasn't locked up, they start selling on some schedule, and then the other people who are locked up don't, then collapses.

Starting point is 00:57:10 You get the idea of what can happen, right? When Robin had went public, it was like $50, $60 before we distributed at, I think, I don't know, was 18 or 22 or something in that range. Well, I mean, but that valuation was never real. You know, Kathy Wood was buying a 50, 60 a share, if I remember correctly, and then it came back down. it was like a one-day spike. And so again, we have to then go to LPs. And they're like, didn't it hit 60? I was like, yeah, there was like an AMC weird thing that occurred that we didn't get to participate in because we distribute in six months, the end.

Starting point is 00:57:46 Well, that's good to have a pattern. I mean, companies, I forget if it was Sequoia or someone else, said they were now going to hold equities in their companies that invested in after they go public. And then because they did that, they got their face ripped off and the market turned. as long as you're consistent, I think it's fine. As long as you have it like, we do this, we do this, we've all agreed to this. But I think if you try to start timing the market after an IPO, if you're a private market investor, you're just asking to make a mistake because that's not your game. That's not what you're paid for.

Starting point is 00:58:14 And some people are good at the game. You know, you look at a Sequoia, they have heritage. They had a family office offering and they were very good at it. And they knew holding Google and other things post going public was a good idea. So, you know, hopefully, you know, and those investors, I think get to choose if they want to be in that public thing or not. Well, I mean, again, back to about a clarity, optionality, and, you know, just being above board. Basically, everything that's not going on in the Bult deal leads to very good business results,

Starting point is 00:58:42 normally speaking. Just do whatever Ryan doesn't. And maybe that'll work out for you. And we have one final story, I think? Oh, yeah. Just something really quick about layoffs, just because I wanted to touch on this, because I have a, we've been talking a lot about static team size. You're on the show.

Starting point is 00:58:56 Basically, companies not hiring mold. As they grow, you get more leverage out of each employee, greater profitability. And Jason likes to say about how AI is going to help people do more faster. So each person is more productive. You can essentially have leverage. And then Jason, I'm watching some companies in the tuck world that are big names, Cisco and Intel, just take out the knife like they're trying to cut off an arm. Absolutely brutal.

Starting point is 00:59:22 And so Cisco's cutting 7% after it cut rolls in February. Intel is cutting 15,000 people and they're trying to save $10 billion next year. Here's my question. I get static team size because often adding people is just at least less productivity and more complexity and so forth. But if you're looking at a company like Intel

Starting point is 00:59:43 that is clearly behind the innovation curve and you're slashing that many people, we have a chart here of the biggest tech layoffs of the year. You can see that Intel and Cisco are both rather high on that list. Yeah. This is by raw numbers, right? you have 26,000 people at Dell, which is 20%.

Starting point is 01:00:00 Yeah. So there's percentage and there's a raw number. These are big percentages and big war numbers to your point about the cleaver. Yeah, just, I mean, blood's flying here. And so when you see these massive layoffs, is it the company saying that we made a mistake and we overhired and we're just trimming the fact? Or are they saying we can't afford to do what we need to do with these people or 15,000 people from Intel and 7,000 from, or sorry, 7% from Cisco. It's just an enormous production. Okay.

Starting point is 01:00:29 Okay. Permission to speak freely? No, go for it. Okay. I'm going to say some thing. I'm going to say some things that are going to hurt some feelings. Okay. There's a war right now.

Starting point is 01:00:41 There is a war between management and shareholders and employees in America. Okay? It's a war. And it's a multifaceted war, but people, because this is their paper, it's their jobs, it's a very sensitive topic, right? And this is a multi-variable war. There's work from home and return to office. And then there is efficiency.

Starting point is 01:01:08 There's each discrimination. And then there's top-heavy organizations. And then there's natural efficiency. You know, there are people like Jack Welch, Russ and peace at GE who felt 5% should get cut every year. There are people like Netflix, Patty McCord, and, the team over there, they felt you had to, everybody in the team had to get re-hired every January, you had to state your

Starting point is 01:01:31 case if you wanted to keep going at the company. So, what we're seeing in the market right now is you never waste a crisis. And because of the over-hiring in tech, the legacy companies are looking and they lag, but

Starting point is 01:01:47 they don't lag forever. They saw what Twitter, Zuckerberg, Microsoft, and Google did in terms of right-sizing. they saw the productivity gains and they said, you know what, we want a little bit of that.

Starting point is 01:01:58 We want a little bit of that because management knows that in a company like a Cisco, right? When you brought up Cisco, we're in town. There are people who've been there for multi-decade.

Starting point is 01:02:09 And I have great sympathy for these people because there are generation, they're boomers, they're Gen Xers, and then even millennials and like I told you, we took you in the Gen X draft

Starting point is 01:02:18 because you're cool AF and smart, but the millennials can claim you as well. The point is, boomers massively overpaid at the end of the career less energy less desire to crush it generally speaking I'm painting with a broad brush here then you go to gen Xers maybe they're slightly overpaid you know and you've been out of the company and then they're looking at this next generation or you know the AI native generation that people talked about sundy mondra was talking about that on the

Starting point is 01:02:46 AI program recently just this you know AI native generation is more efficient and so I saw this in the PC era where, you know, legacy people didn't have computers on their desk and Gen Xers who didn't know how to use computers were 10 times. They're just not wasting the crises. They're using this as a way to get rid of the, in their mind, the overpaid old people. Okay? I don't want to hurt anybody's feelings, but there are people who, you know, were at Intel or Cisco for 2030, maybe even more years. They got five, six, seven percent raises every year. They doubled their salary every seven, eight years.

Starting point is 01:03:21 They got stock options. And now the company's like, you know, we just don't need this many people because your job is now being done by AI. And so they're just trying to get rid of all of that, what they consider fat, dead weight, overpaid, old people and just cut them. It's really brutal.

Starting point is 01:03:41 And then I watch these people because they're on TikTok crying. I have a great sympathy for them. And, you know, it's almost like it's hitting my age group too. I know people who are in their 50s, you're in your 40s, you know, like, people in their 50s are starting to feel this. I have contemporaries who are like, I don't know if I'm going to be able to get another job.

Starting point is 01:03:58 I don't know if I'm going to get a job at the same salary. What am I going to do? Because I still want to work 10, 20 years. And so, and then forget about like international and globalization where you could hire people in Portugal, Manila, South America, and Canada at a 25 to 75% discount to do that same work and, you know, AI doing some amount of them. So the war continues. Oh, okay.

Starting point is 01:04:24 I've a couple of thoughts about that. I do so capitalism is. Do you think it's true what I said? I mean, the thing that I quibble with is the amount of people because Cisco couldn't have had enough people that have been there for 20, 30 years to fill the scale of the cuts we're talking about. Intel didn't have 15,000 of them.

Starting point is 01:04:46 So I think they're probably also cutting down some other places. and if they are making these cuts as absolutely painful, one or two time things to clear up cash flow, to put it into the right part of the business to grow. Okay, painful, I get it. But if the company was so poorly run that up until 20 minutes ago, they thought they needed all these people

Starting point is 01:05:09 because they hired them, they staffed them, they insured them, etc. I doubt their ability to actually chart the right path forward. And then the third thing that I, I've seen at companies that go through layoffs, having been at companies I've had layouts, is once you begin to do that,

Starting point is 01:05:25 all the people who can leave go, oh, it's that now. Okay, and then they bounce. And you end up cutting what you think is the dead web, but then you lose the top of the pyramid. And there's some great performers who feel like there's a chunk. Yeah, and you go, I think anything under 10% in this kind of market

Starting point is 01:05:40 is probably pruning. And, you know, when you're in that 5 to 10%, it's kind of in the Jack Welch, pruning, not a big deal, efficient. When you get over 10%, something more is going on. Also, people were hired, you gotta remember, we went through a very competitive decade

Starting point is 01:05:59 where people were, rightfully so, you know, and it's a pendulum, but talent was scarce and there was massive competition. And what did that lead to? It led to people correctly, getting the best deal they could in the market and maybe leaving jobs to get, you know, 30, 40% raises

Starting point is 01:06:19 and they do that twice in a decade and all of a sudden, you know, somebody who is making X is now making X times three and then people wake up and go, wait a second, how does this person want to get in the salary? Wait a second, that's a big number. Oh,

Starting point is 01:06:33 you just, you just explains me to me, this is why everyone gets a 1% raise because that way you can never end up doubling your, like I add my last job, which was owned by Yahoo, which is owned by Apollo.

Starting point is 01:06:45 Like the end of the year will come around and they'd say, you really appreciate your contributions. You get 2.25%, which is more than most people, they got 2%. And you look at them, you're like,

Starting point is 01:06:52 bro, inflation's 5. Like, well, you're going to pay me less than you. No, I mean, it's like cost of living adjustment.

Starting point is 01:06:56 It's like half of the cost of living adjustment. Yeah. And so I think that's probably been instituted to avoid the situation that you're describing in which if I got a 7% raise every year, I mean, I would retire making the oodles of money, you know,

Starting point is 01:07:08 that would be fantastic, but not super viable. That's why people always say you have to, if you want to get a big jump in pay and you're an elite performer in the top 10%. You have to basically go out and test your worth in the market. And, you know, that's a fine thing for people to do. It's struck me as inefficient from the corporation side because you know how much it cost to staff up,

Starting point is 01:07:28 to have an HR department, to source candidates, to bring them in. And then they leave because you won't give them more than a 2% raise. The incentives there are strange. But Jason, you ask for a question. We have one. Our dear friend, Mr. or Mrs. Petushy, let's say. Okay. Hey, Jason.

Starting point is 01:07:47 What do you think of future uses of blockchains that deal with storage? Would it replace today's clouds and does it seem cool to store yourself on a blockchain, but not sure to invest in it? Essentially, do you think that file coin is the future? You know, sorry. Storage keeps getting cheaper and cheaper and more reliable. And so anything to do with blockchain and storage, you know, and making it theoretically.

Starting point is 01:08:14 cheaper is just not going to because every time I go to put a hard drive into a new computer or into a rack or a server I have, I'm just like, what? Have you seen how cheap hard drives are? Oh, it's absolutely insane. Like, Jason, give me the price of a two-terabyte drive right now. What would that cost us?

Starting point is 01:08:39 A two-terabyte drive? I don't even know if they make two-terabyte, but I'm going to think it's 50 bucks. Yeah, 10 terabyte drives. I think most popular hard drive size now is probably eight. I think eight is, oh, you're talking about portable. That needs it got to have a power supply and a casing. I'm saying that I found a two terabyte one. It is portable and it costs $80.

Starting point is 01:09:01 So the point is that yours is going to be 35. Yeah. So, you know, if you were to look at the cost of, you know, I don't know, like I think 8 terabyte are the standard enterprise ones now. An 8 terabyte might be 100 to 200 bucks, 4 terabyte, 100 bucks. So, you know, we're down to guess that's like 10 bucks a terabyte, 20 bucks a terabyte. Yeah, it's 20 bucks a terabyte right now. I mean, it's bonkers.

Starting point is 01:09:30 So blockchain, and this is the thing, blockchain is a very inefficient database style. It's because you're replicating it across many servers. It's immutable. It can't be changed or it can't, easily be changed. It might be able to change it with like all the servers agreeing to take something down if you are protected that way. But almost nobody wants that database format. The only people who want an immutable public blockchain is people who, you know, want to know the custodianship of like, I don't know, an NFT and it really matters that you can see who

Starting point is 01:10:04 it changed hands with. And it seems like it's obscure. Like nobody wants it. And so that's, That's always my thing. Bitcoin is now a almost two-decade story, and we don't have crypto writ large as a two-decade story. We don't have anything outside of stable coins and exchanges to shelfer it. All right. I have a spik, I have a spicier question for you. So Keith Cretellis asks, do you think the net job-destroying companies or automation, things like AI and robotics, should be taxed differently than job-creating companies? Now, this is, this actually fits into my unified theory of economics, human progress, and robotics that I haven't written down yet. But I'm curious what you think here, Chase. Yeah. I mean, it could come to that. I think that's, you know, why Sam Waltman did the UBI thing.

Starting point is 01:10:55 I think there are some delusions of grandeur here where it's like, we're so amazing at what we build that we're going to get rid of so many jobs that therefore we have to be the God, kings and queens and float down. and sprinkle all of, you know, small percentage of the money we make on you peons to let you live at home and suckle, you know, the teeth of AI, you know, it's a little deranged of I'm being honest. But that is an interesting idea of, you know, putting a tariff on a robot that kills jobs and then redistributing that well. It's not insane to think that the, you know, there's a analogy here, Alex. You could take the toll road and say, we're going to charge for this toll road and put that money or some percentage of it toward public transportation. So you're paying to go in the fast lane, five bucks a day. We're going to take $2 of that and make it for the subway system. And people have thought of that kind of scenario. And I kind of like those. I like the idea that be congestion tax in a city like London or Manhattan would go towards improving public transit. So you have this thing where like the billionaires, you know, Mike Bloomberg is zipping down

Starting point is 01:12:17 Broadway in his, you know, Maybach, I don't know what he drives or whatever he gets driven in, you know, his suburban. And he doesn't hit as much traffic, but he's got to pay 20 bucks to go in that zone, right? And these debag bankers in London go in the finance center, they, I think they pay 50 bucks as a congestion fee or something crazy like that. Like a day to drive their Ferraris there, yeah. That's up. Yeah. Let me ask you to you before.

Starting point is 01:12:41 What is the cost of the congestion pricing in London? Jason called the lawyer's debags, not your friendly friendly Alex over here. Oh, it's actually not that bad. Let's see. The lending congestion costs are as follows. Standard charge 15 per day, auto pay 14 per day, and late payment after the day of travel, 17.50. So it's 15 pounds a day, which is a little. a little bit more than dollar, so it's $18, 20.

Starting point is 01:13:08 But if that $20 goes towards making the tube better, kind of like it. The tube's great. My first time on the tube, Hapting spent a lot of time both on Amtrak and the New York subway and Calteran and Bart, I was like, wait a minute, you can have a really nice subway. This place is spick and span. It was warm. It was lovely. There was no, didn't smell like pee.

Starting point is 01:13:30 I was in Manhattan for two or three weeks of my daughters. And, you know, I'm T-Mube. obviously, but, you know, it's like in Manhattan, there are times when taking the subway five stops is a lot faster. And even going to Brooklyn to see my family, I took the subway, I would say three out of four times. Now, it's literally taking a hundred or two hundred dollar Uber Black, which is what I take. I take the Uber Black most of the time. It's not, it's not cheap. But it doesn't make any impact on me. But I prefer the subway because I want to get there. And I like the subway. I like seeing other humans. I like being part of the mix. I don't want violence or a crazy person attacking me on my daughters. But I kind of like it.

Starting point is 01:14:15 I like the vibes. I like being on the subway. My daughters prefer it as well. Yeah. I remember in San Francisco during kind of the peak at the last, the pre-COVID tech era when I was there, you know, if it was less than a mile and it was across anything in Soma, it was always dramatically faster to walk because traffic was so locked up.

Starting point is 01:14:35 because not only was the slow once you got into your Uber, but they would have to start seven blocks away on the wrong part of Market Street and then noodle their way over to you. And then I actually, I think I lost a bunch of wake because I was just hiking everywhere across the city. So, Rashah, you know, that's what works out. Hey, and I just asked Chat GPD 4-O,

Starting point is 01:14:51 and when I open a new window, it goes there, and I asked it, where does the congestion charge money go? How does the government spend it? And according to Chat-GPT, 4-0, public transportation improvements, walking and cycling initiatives, environmental programs, ultra-low emission zones of electrified buses,

Starting point is 01:15:09 road maintenance, and traffic management technology. All that hippie communist stuff, we don't do in Texas, you know? London's congestion charge generates approximately 230 million pounds annually. Wow. Pretty amazing. That is pretty amazing.

Starting point is 01:15:26 And then they net 155 million of it after operational costs to invest in public transportation and cycling. So I kind of, like it. So if you, to the original question, if you make robots, if you got the optimist or the humane and it takes a factory job, maybe that goes towards, um, reeducation or food stems. I don't know. Like, I mean, would a 10% tariff on it just to slap, figure out what the replacement costs is. Tax 10% of it. They get a 90% savings. The robot company makes a sale. Everyone wins. Tough, tough to do. Um, all right, everybody. Thanks for tuning in. Yeah.

Starting point is 01:16:00 Twist 500, Twist 500.com. We've picked over 80 of the companies. We're looking for a full-time journalist to join us here. We'll probably work for Alex and do one interview a day. If that sounds interesting to you, email Alex at launch.com. Alex W at launch.com. If you're interested, we're looking for somebody full-time to do this. Okay. Maybe it's awesome. All right, everybody, that is our show. We are back with more interviews, more news, and the Twist 500 before you know it, stick close to us. we are on YouTube, every podcast app and social media. We'll see you there, Jason, bye. Bye-bye.

This Week in Startups - AI on the blockchain, Waymo's rise, and the truth about tech layoffs | E1996

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