This Week in Startups - Amazon’s AI driver supervisors, OZY media fallout, rising FEMA flood insurance, OpenScouting | E1294

Episode Date: September 30, 2021

Jason does a full news show breaking down: how Amazon monitors drivers with AI cameras (01:54), Tesla's new driver score (22:05), OZY Media's continued fallout (32:45), and new proposed changes for homeowners in coastal zones (42:08). Plus, Jason explains his new program OpenScouting.com

Okay, we have a great show for you today, everybody. Amazon drivers are being monitored by cameras to make them more productive and to make them safer, and it is having a dramatic effect in terms of distracted driving, people blowing stop signs. But there are privacy issues. And it leads to a bigger discussion about pilots and surgeons. Should they have cameras too? Let's talk about that. And Tesla, in a related story, has released a new driver score, which across five vectors

makes you a massively safer driver. That's something you can opt into, and it is awesome. And the Aussie media fallout continues. We'll get into that. Let's talk about beachfront homes and how they are now, people in flood zones,

are going to be asked over the next 10 to 20 years to pay their proper share of their insurance because they've been subsidized up until this point. Plus, I touch on a new program we're doing that could help you become a venture capitalist and break into venture. It's called openscouting.com. and I'll talk about that at the end of the program. Stick with us, everybody.

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Get $500 off your first hire at marketerhire.com slash twist and use code twist. Okay, everybody, first story up, really important one, and there's a lot here to unpack. Amazon drivers are being monitored by cameras to make them more productive and safer on the road. So is this fair? Is Amazon overreaching? Is this in everybody's best interest? Is this big brother? Very complicated. There's a lot of layers here. So let's dig in. First off, thought experiment. Are airplane pilots under camera? Do we record doctors when they're doing surgery? I mean, those are life and death, right? But my understanding is those professions, which take a lot of training, a lot of education,

then say being an Amazon driver or a package driver, they are not recorded under camera. And I think that they would not allow themselves to be recorded under camera. There might be liability issues, and I think they have a lot of power, right? So according to gridwise.io, you start delivering for Amazon Flex within a week of giving them a valid driver's license. Amazon conducts background checks that you should take anywhere from two to five days and just as an anecdote, producer Nick on this podcast, his friend got laid off during COVID

and got hired as an Amazon driver within 10 days of applying. Startups move fast. Amazon still runs like a startup. So it's very important to note here how Amazon works. They have a delivery partner program which employs 2,000 small delivery companies and has 115,000 drivers in the U.S. So you'd ask yourself,

why isn't Amazon 100% employing their own drivers? Well, the cynical approach and the truth is, they may want to pay less and they may not want those employees to have the same rights as their internal ones. We have seen this before. Amazon and Facebook hired third-party companies to do what we would call menial, repetitive tasks, and then they could lean on those managers who would then lean on those employees to be super productive, but those employees could never say, like, I work at Google. Why don't I get the free $15, you know, Neiman Ranch Steaks for lunch, right?

And so there has been a little tension about this, sort of second class, third class citizens at big tech companies. Another one that comes to mind is Apple, you know, the Apple employees at the mothership get treated a certain way. How do the Apple store companies get treated? Well, they get treated really well, but it's a major step down because they're retail workers. But they're not outsourced retail workers, right? they work full-time for Apple. And so Amazon works with a lot of these partners, and they require these delivery partners

to follow rules around hiring, the driver's appearance, routes, safety mechanisms, etc. And these rules around safety include Netrodine cameras, N-E-T-R-A, D-Y-N-E cameras. And there's a motherboard article, Weissbought motherboard.com.

And the article is very good. and I invited actually the author, we invited the author, to come on the program because she points out a lot of important things. So Amazon has installed AI cameras in more than half of its delivery fleet in the U.S. already.

The cameras and software are made by this, again, tech company called Netradine. Netrodine is a vision-based dash cam that runs AI coaches drivers on how to be better and safer, which is awesome. We do not want drivers to be getting an accident

and God forbid, people getting hurt. And there has been a lot of criticism of Amazon specifically, and their drivers driving too fast because they want to hit unrealistic goals or, you know, really hardcore goals. So this company, we've also invited Netradine on the program, but we didn't want to not report on the story. So I'm going to report on the story here, but we always want to follow up, right? Here at This Week in startups, we want to follow up and give everybody a chance to talk about their intent. And I think that's really important because it's very easy for, you know, somebody like motherboard or vice or somebody who's incredibly union-based, you know, an employee-based,

worker-based to criticize this. And then it's very easy on the opposite side for, you know, people in tech, perhaps myself, to think this is awesome, right? And which I don't. I am figuring this one out for myself. And that's really what I want the audience here to do. And when we do this show have a really open mind to thinking about this from first principles. Just think, what is the goal here? What is the intent? Why are they doing it? And is it good for society? Is it good for everybody? So, according to Pitchbook, this company, Netradine, was founded in 2015. It's raised $200 million to date. All right, I'm going to pull up on the screen here if you're watching on YouTube, how the software works. This is an image that motherboard acquired. I'm not sure how. And it just shows a

driver with their face pixelated and it shows that they didn't stop at a stoplight. So drivers and Amazon delivery operates told Vice that the Netterine cameras often punish drivers for events that are normal or out of their control, such as looking at a side mirror or changing the radio station or stopping in front of a stop sign when at a blind intersection and getting cut off and congested traffic. Here is the caption from that image. the Netronine interface can be accessed by Amazon and delivery company that employs a driver. So this means there are some privacy things. It means you could be watched at any time, I assume.

And I don't know if this is in real time where you can see and turn on a live feed. That is not clear. But of course, none of these systems are perfect. So as Amazon delivery operators told Vice, and let's face it, nobody wants to be on camera all day, unless you're like like a Kardashian or me, or a news hanker or an actor or a reality star. Yeah, I think the majority of Amazon delivery drivers do not want to be watched on camera all day. And so of course, they're going to give the downside here and their feedback is, of course, valid. The good news about this kind of feedback, and even this process of the press, you know, sort of taking the side of the drivers

here, changing the radio station, well, maybe that's an opportunity to give them a a Siri-like interface or an OK Google-like interface where they don't need to touch the radio station. Looking at the side mirror, well, that's something the software can obviously fix. And stopping in front of a stop sign went out a blind intersection. This can all be fixed with software. And if you did get cut off by somebody and you ran into them, the upside here is that you would have video footage of it, video footage that your eyes were on the road. And now you, if you did get an accident, you don't get blamed for it and get fired because you just say,

hey, look, here's the receipts. So there is an upside for good drivers as well. The Netrodine camera also requires Amazon drives to sign a consent form. So, you know, you're basically signing away a lot of rights here, which is the nature of employment. If the camera detects an event that they deem unsafe, if the footage will be uploaded to an interface accessible to Amazon, and sometimes a robotic voice talks to the driver stating, distracted driver or maintain a safe distance. Distracted driver or maintain a safe distance, I wish that was in every car. don't we all wish that was required in all cars?

If I could tell you today, all cars, and you have your finger above the switch, would alert a distracted driver they were distracted? Would you push the button? Of course you would push the button. 100% of people would push that button. Nobody wants to die on the highway. Nobody wants a loved one to die on the highway, whether they're the distracted one or somebody else's.

Maintain a safe distance. That should be in every car. If I put your finger over the button, I hate to get all squid games here. And it said, you get to press this button. And every single person has to maintain a little. a safe distance and get that alert, you would do it, right? So we're all in agreement there. From websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build a beautiful online presence and run your business. With Squarespace, you know,

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Yeah, sure. Instead of using a robotic voice, use a beautiful, you know, text to speech, you know, one of these recordings. And, you know, say it in a nice way. Potentially distracted driver. Are we maintaining a safe distance? Like, you could say it in a non-accusatory way. And I think anything that gets reported, I think a nice thing would be anything that gets reported, the driver should get an alert about that as well.

And they should be able to respond to it. So, you know, the thing here is you really want people to be able to measure their driving and manage it. And perhaps, you know, the driver companies could say, listen, we know you're going to get a certain number of these. It's only going to become a discussion after X number of these are reproached. and we'll just have a discussion about it and how you could be a better driver. So that is kind of not in the story here. We're assuming bad faith.

We're assuming the worst. You know, I think people don't trust big tech. They don't, or, you know, the sort of left doesn't trust big tech. And they trust the press a lot less, to be honest. If you look at all this surveys on trust in the United States, big tech companies are trusted massively more than journalists. So I'm just putting that out there as well. Journalism has a serious trust problem.

and it predates Trump and the fake news, you know, attacks. So Amazon drivers and their delivery partners are going to be scored on their performance, or they are. And the uploaded events obviously impact their scores. Good scores can result in bonuses, prizes, and extra pay for drivers. So, yeah, put the carrot out there. Safety and compliance make up 40% of a delivery service is partner score. This is good. Safety is good, right?

And so we have privacy running into safety. who gets to win in that battle is what we're really talking about here, isn't it? How much privacy are we willing to give up in order to make this safer? Is the next step? We're going to actually have the heart rate of drivers, make them blow a breathalyzer test to make sure they haven't been drinking. Are we going to ask them to give us their sleep data from their smart watch or their Fitbit or their Apple watch to make sure they got eight hours of sleep?

If they didn't get eight hours of sleep or they didn't have enough REM sleep, we don't let them drive? that seems overreaching, right? That seems crazy. Maybe not the blowing into alcohol. I mean, if there was a real problem around people being driving drunk, and they actually give that to people who have been convicted of driving drunk, they will make them blow into a breathless before using their car.

But I think the sleep one would be the next domino to fall. So does that feel too intrusive? Kind of feels too intrusive. I don't want to give my sleep data if I'm a driver to them. Now, what about your pilot? What about your pilot? should the pilots have to share their sleep data to make sure if we knew that 50% of accidents in planes were the result of sleep issues?

And then what do we do? We cancel a flight if the person had a restless night's sleep. Would you want every pilot to have to pass a breathalyzer before getting on the flight? I don't know that I'm opposed to that. I mean, what's the downside? I mean, is there some pilot union that's going to say, yeah, we want the right to have a couple of drinks before we get in there. Back to the Amazon story.

drivers have emailed Amazon asking what they did wrong and requested photos from the cameras, but Amazon did not respond according to the Vice article. So there you have it, folks. I think in fairness, if there is an issue, and this is where a union or employees or the press can actually have a good impact in this negotiation, it's completely reasonable. If I'm being accused of something that I should have a copy of that video, right? And I should be alerted to it. And we can have a positive discussion around it. The article also notes that many drivers believe the cameras are just a cost-saving measure for Amazon. Okay, so whenever new technology is introduced, people are going to look at that and

their minds are going to wander and they could wander to dark places and they'll take the least charitable, the most cynical look at why these cameras are in there. Are they there for safety or are they there for something else? When drivers try and tell their delivery partners about the camera issues, the partners don't see the issues as a priority because their main concern is getting the packages out. Okay, whatever. I think these companies are probably the third party delivery companies. I don't think they're being run by like, you know, Harvard MBAs who are, you know, trained

and how to manage people. Of course, they're going to be run haphazard. That's kind of the idea. I'll be honest, like to tell you from the inside, a lot of times when people hire third party companies when Facebook hires third party companies to manage hate speech on their platform, it's so they can say they don't have to take responsibility for it. Let's be honest. And they just don't want to have that, those employees under the umbrella.

of, oh, they work for Facebook. They want to be able to fire them. And I think that's what's driving Amazon with these third party ones. If that company gets into an accident, God forbid, kills a child because the person was drunk or driving recklessly, Amazon can just say, we have terminated our relationship with that driver partner. That's really what it's about. I'll be honest.

And that's not cynical. That's practical. Sometimes it's also because they want to be able to scale up and down in different regions and have lots of different options to deliver packages. so that is part of it as well. Some drivers told Vice that they end up covering the cameras with stickers to avoid problems. That's a quick way to get fired. I mean, if it knows when you're looking at the mirror or changing the radio station,

they're going to know when you put a sticker over at Newsflash. So should they just train the drivers more? Should they have these cameras? I think these cameras will be a net benefit for society and for the drivers themselves. On Reddit, allegedly, a driver released a screenshot of messages from their delivery company, owner stating that drivers who registered an event on Netdyne would not be able to get a bonus. Good morning. Team, I'm quoting here. I just watched about 12 videos of someone here on the team with no seatbelt on, the text reads. This will damage my revenue and our scorecard for next week.

Several thousand dollars gone. If you show up for any event on Netradine, your incentive will be gone automatically. Okay. So it's a little severe. But if you're driving without a seatbelt and you're a professional driver for a living, you kind of shouldn't be a professional driver for a living. This would be the equivalent of a surgeon not washing their hands or wearing a mask during surgery. Vice previously reported back in June that delivery companies were telling drivers

to turn off their mentor app, that monitor safety to hit Amazon delivery quotas. So there's a little bit of this sort of delivery quota thing. And I think people probably think that this is also part of why they're doing this. It seems Amazon is telling drivers deliver as much as possible as fast as possible, but then if they cut corners and play with the radio, they're getting yelled out by the AI camera.

No, I don't let, I don't, that's not actually what I think is happening here. I think Amazon wants to make it as safe as possible. I honestly do. And I think there are probably a lot, there's probably a lot of turnover in these jobs, and there's a lot at stake because they are asking people to go fast. And if they're asking people to go fast,

you can't have people, you know, working at a brisk speed who are cutting corners. Amazon has reported that driver's safety has benefited from the Netradine cameras since the cameras have been put into vans Alexandra Miller, a spokesperson for Amazon, told vice there have been

48% fewer accidents, 77% fewer stop sign violations, 60% fewer drivers not using seatbelts, 50% less following distance, and 75% less distracted driving. Does that seem like success to you? That is a dramatically safer world we're living in.

So looking at those statistics, what does it tell you? It tells you probably before this that the drivers were filling pressure and the drivers were cutting corners. When you see stop sign violations, 77% fewer ones, pretty clear Amazon was pushing the drivers too fast and that this is probably a corrective measure. And if people are distracted, we all know people who distracted driving. It's incredibly hard not to look at your phone. Well, if you're going to get fired for looking at your phone and not stopping at a stop sign, that's probably a good thing for a driver. So it's a job.

You're not driving your personal car. You're driving a big truck. And the company that makes the cameras framed it this way in a tweet from Netrodine. Many driver safety solutions are built to see what went wrong. Resulting in fleets prioritizing, fixing bad driving behavior rather than rewarding good ones. But imagine if you flip the system priorities understanding who your best drivers are. I think that's very clever framing. by Netredine, I would like to see the numbers.

If an Amazon driver has no accidents, maybe they should get $100 every month. They don't have an accident. And then at the end of the year, every year they don't have an accident to get another $1,000. Show us the numbers, Amazon. Let's make it like, if you want to put something like this in,

if I was running this, I would say, there's $100, $100 Amazon gift card, right? That would be even better. You get a $100 Amazon gift card if you're a full-time driver, if you get no accidents and no alerts. And $1,000 at the end of the year if you have under 10. And if you have none, you get something even better. So if you want to deploy stuff like this and get the results, I think you should be public about what the carrot is. Okay, it's time for another R crowd deal of the week.

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Now, there's a dovetail here with this story. In similar news, Tesla recently released a safety score for their drivers, which I cannot wait to turn on in my car. I was out of town when they turned this on, and I haven't updated this offer yet. But this, I can tell you unequivocally, that Tesla has made me safer driver because I put the speed limiter on, so I no longer get speeding tickets,

I no longer accidentally go over the speed limit. And their safety score is based on driving for the past 30 days, as you can see here in this image, 90% or a 90 score. And on their website, Tesla states, the safety score beta is intended to provide drivers transparency and feedback of their driving behavior. So this is more like a Fitbit, this is more like having a coach. You're electing to put this on.

you're electing to have the car make you a safer driver. And so it's between zero and 100, obviously, and higher the number, the better. Tesla looked at five factors that impact safety scores. Ford collision warnings per 1,000 miles. And you can set that in your car as like really sensitive or not. I had it on really sensitive. And like, you know, when I go into my traffic circles or if I, you know, I'm getting on a highway, it can really go off really quickly.

hard braking, aggressive turning, unsafe following, and forced autopilot disengagement. That last one means if you don't hold on to the steering wheel, it will disengage the autopilot.

So to calculate a driver's score, they use a formula to predict how many accents could occur per one million miles driven based on their driving behavior. The formula is called the predicted collision frequency, PCF. So, let me be honest

about what's happening here. And this is basically like the system the NICs are using for their three-point shooting. They have a system that watches everybody shoot three-pointers and tells you like why they're hitting them and why they're not. And the NICs were the most improved, I believe, last year a three-point shooting team. It's a very expensive system. They gamified three-point shooting at the NICs,

and my NICs were the fourth seed in the east last year, and this year we're going to go even further. We're going to get to the second round, I hope. Here's my hot take. Tesla is gamified driving. You're going to be a better driver because they are going to tell you exactly what you're doing wrong. If you can measure it, you can management,

manage it, and I think all of us are thankful and would want these to be standard. These should be standard on all cars. And Tesla is the tip of the spear here. So it's very easy to criticize Tesla for autopilot and disengaging. And yeah, they're letting people use autopilot and people might, you know, do stupid things. Like, you know, you see these stupid folks who will leave the front seat or they will put a weight on the seat or a weight on the thing to try to trick it. those idiots are the same idiots

who will ride on the top of motorcycles and put the video on YouTube and sadly they're the same idiots who will stand on top of a motorcycle and flip off and you know die. There are reckless people in the world who do stupid things with automobiles, motorcycles,

and other stupid things in life. What we want is we're kind of working on the average driver here. Whether it's the average Amazon driver or the average Tesla driver and we should have this be required in the next decade for all cars. We should have everybody opt into this. And you know what? Insurance would plummet if this was available.

If you have, and you know, listen, if you want to not have this, you should buy an old car and you should pay a higher insurance rate. Because I just know, watching people drive, how many times do we see people, you know, on their phones, putting their makeup on, eating a slice of pizza. I'll be honest, when I was younger, I'd be eating a slice of pizza and drinking a, a, you know, uh, Coca-Cola and, you know, maybe I was not as safe as a driver as I am now. And, um, this type of stuff is going to make the world better. And we have far too many people dying, especially young people. If you look at, you know, how young people die tragically today, or it shows how safe the world is, uh, young people die in the, in the modern world from, uh, overdoses from opioid, suicide, and cars. That's it, you know, and, uh, that, those are the

leading causes of death. And a lot of, uh, that, that, those are the leading causes of death. of age classes and we should aspire to cherish every human life and to have every one of the matter and giving up a little bit of privacy is okay. Do I think people sleep data? No, but if we're going to have this conversation, I want to have the conversation about pilots and I want to have the conversation about surgeons as well. All right, and just to give you a little background on the three-pointers, the NIC's three-point percentage rose six percent or so from 33 percent in the 2019-2020 season to 39% in the 2020-2020 season, and they took about 300 more three-point shots. So their volume went up, their efficiency went up. Those usually have a negative correlation.

You start putting up more three as you're probably taking worse shots. So this is indicative of a massive improvement, which is what we're seeing with the Amazon drivers. So without passing judgment on privacy issues or unions or Jeff Bezos's personally wealth and how you feel about capitalism, If you measure it, you can manage it, you'll get better, and you can get dramatically better through these systems. How do they do it? They added a four-point line in practice. So here is a quote from Tibbs in the athletic. The big thing was we knew we were going to have to work on our shooting.

The four-point shot, we like the concept of it. It also provides a good line for spacing so that when you do get movement and penetration spray out, pass, pass, that a guy can get into a rhythm, into a shot, an attempt, or step into a three. so his weight is going forward. There's a lot of benefits to it, and I think that's where the game is going. So essentially, the four-point shot is just being five feet behind the three-point line. And if you're practicing that, how easy is it to hit the three-point shot?

The equivalent here would be, well, if you're making sure I'm not changing the radio or looking at my, you know, phone or distracted, like if you're taking this to a little bit over-the-top, you're going to get over-the-top results. Surgeons and pilots do not have to be required. Surgeons do not have cameras as it would be a privacy concern, according to Staten News. According to Bloomberg, there have been problems with patients suing hospitals for recording their medical procedures. Only some large airplanes have cameras installed in strategic places, according to USA Today.

The NTSB, the National Transportation Safety Board, is calling on the FAA to mandate cockpit video recorders on commercial aircraft, but pilots remain opposed. They are opposed because the film could misinterpret and lead investigators away from accurate conclusions if an issue does arise according to them. That's very convenient. I wonder if you had your hand over the button and you got to decide that all cockpits in commercial flights had cameras, would you press the button as a civilian, as a person making the decision for society? 100% of passengers would click that. And 100% of flights would be safer because of it.

The reason this will never happen is because the union. So this is in time to just pause for a second and think, the union is acting, as they are constructed to do, to protect not the passengers of the plane. They're there to protect the interest of the pilots the pilots are but two of the 300 people on that flight the other 300 people

would press the button to record what was going on so 100% and I'm curious if you're a commercial pilot out there would you if you weren't a pilot want this to occur and what is the expectation of privacy when you're at work and you're responsible

for the lives of 300 people I would argue you have no expectation of privacy. You should not expect privacy in the cockpit of a... So there's something that society should get behind. And that's something where I think motherboard or any of the people who are on this sort of left here, take a moment to think about. When you see a story like this about Amazon drivers, yes, they don't have the power to fight this. Either do it or you don't have your job. The unions have so much power, whether it's teachers or for these pilots that they can actually act against the best interest of society. And I believe that's what's happening there.

There is no misinterpretation of what's going on in the cockpit. Let's be honest. What are they going to misinterpret? Like, you're just, that's a CYA thing. And then in terms of privacy concerns for surgery, I would put that in the hands of the patients. The patient should say, would you like your surgery recorded? You can get a copy of it.

And would you elect to share that surgery with other surgeons with your face blurred out or not having any identifying information to make that procedure safer for others and just check those two boxes? Easy solution. So whenever we talk about these things, let's have a real first principles, basic discussion. And let's put everything on the table and think about it critically here at the sweet startups. Don't you wish you could hire a ringer to help scale your startup and get your marketing. tight. Well, with marketer hire, now you can. Marketer hire gives you access to expert freelancers on demand with no long-term contracts or risk. You can hire experienced specialists across the most valuable marketing disciplines. Mink paid social, paid surge, growth, SEO content, and even fractional

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You can also get started with a consultation call where they'll advise you on who to hire based on your needs and goals. That's 500. Hyundai. One, two, three, four, five hundredie. Right now, marketer hire.com slash twist. M-A-R-K-E-T-E-R, Hire.com slash twist. I want to do a follow-up on Tuesday's story, today's Thursday, on the Aussie Media Fraud, Fiasco. bizarre behavior.

The fallout has been Swift. It has included a formal board investigation announcement. Some high profile talent are resigning. And the COO in question has been placed on leave and CNN did an expose on the

working conditions there. The Aussie board of directors released a statement after we recorded on Tuesday announcing they had hired a law firm to conduct a formal investigation and that was first reported by the Wall Street Journal. The board also asked the COO and co-founder Samir Rayo take a leave of absence pending the results

of the investigation. Remember, he's the guy who they said was suffering from mental illness and that caused him to pretend he was a YouTube executive and create a fake email address apparently and to use a voice modulator to pretend he was a YouTube executive to lie about Ozzie's

incredible performance on YouTube and what a great investment this would be. When you lie about facts related to your company while selling shares in the company, it's called security fraud, and you go to jail for that. And the SEC does not take it lightly. And this is a premeditated act of securities fraud in my opinion, my professional opinion, as an investor in 350 companies who's been doing it for 10 years, over 10 years, but not a lawyer. My professional opinion is kind of the definition of a premeditated act of securities fraud

similar to Bernie Madoff or Elizabeth Holmes. So why did it take so long to do this board investigation? It's because they got called out. So this is an example of the press doing their job and holding people accountable. And then who will be the beneficiary of this? Investigators at organizations like the SEC and the potential investors who are going to lose all their money, who will absolutely get all their money back immediately. So Katie Kay is a popular journalist and broadcaster who formerly worked for the BBC.

She resigned three months after joining. Kay co-hosted a podcast with Carlos Watson, the founder titled When Katie Met Carlos, which covered the 2020 election. Here is a resignation tweet. I guess that's the thing now. It's not going to be a resignation letter. It's a tweet with a note. And whenever you're screenshoting notes, we all know this, whenever you're screenshot in the notes app and post it to Twitter, it's not good. It means you need more words to explain what's going on than the 280 character limit.

Yesterday morning, I handed in my resignation to Ozzy Media. I was looking forward to working with the talented young reporters, but I did not expect this, exclamation point. And here's the screenshot of our notes app. I have resigned from Ozzy Media period. I had recently joined the company after my long career at the BBC, excited to explore opportunities in the digital space. I support the mission to bring diverse stories and voices to the public conversation,

but the allegations in the New York Times, which caught me by surprise are serious and deeply troubling, and I had no choice but to end my relationship with the company. CNN business reported today that Aussie media had difficult working conditions for their small staff, and employees were often overworked and exhausted, which is not, I'll be totally clear. Being overworked and exhausted in media is kind of the tradition, whether it's the New York Times or a startup publication, especially in ones when we had to file a daily or weekly or monthly in a print publication, it was arduous.

We would do overnights, two or three overnights in a row or go home for four or five nights sleep, get back to the office at 8 a.m., leave at 1 a.m., get a couple of hours sleep, come back. Some people would sleep at the office. It was brutal, and it was known for that. CNN spoke to a lot of unnamed former employees, so you could take this with a great assault, obviously,

but one woman was, quote, hired as a graphic design intern when she was still in college and was promoted to creative director just two years after she graduated. It was an experience that one of the former staffers said empowered them and would likely not have been available

a legacy media outlet. So the good news was, I guess they gave people a lot of opportunity and in exchange, they wanted people to work really hard. One former staffer recalled, and I'm quoting from CNN, that in the publication's early days,

Watson seemed to expect a full-time editorial staff of about four writers and two editors to produce 40 high-quality magazine articles a week. So that would be 10 stories per writer, if my math is correct, which would be two stories a day, six hours. Six hours to do a story, I guess, if they were working a long 60-hour a week. That's insane. That's bonkers. This person obviously had never run a media company and was completely unqualified. A magazine level article of 1,500 words would take a week to two weeks in my experience. In the old days, back in the 90s, people got paid $3 a word to do them, and they might be under contract to do six a year for Wired or four a year for the New Yorker or something.

And those outlets would kill two or three of those. Those would be three, four, five, ten thousand word pieces. But you're in a normal magazine, yeah, you could work on a story for two weeks maybe. So this is a magnitude more in terms of expectation. But that tells me as this person was unqualified. So why did I see keep their team so small if they raised a bunch of money in the 2010s? I guess maybe because they were seeing a bunch of layoffs

and other companies, but I think this is more about inexperience and running a media company. It seems that Watson would often call last minute meetings on Sundays, have people waiting cars outside his house, then push the meeting back two hours, then show up 20 minutes late to the meeting. This is indicative of a Machiavellian crazy founder.

I've seen this behavior. It's manic. It's one thing to be a busy founder and you're 20 minutes late or meeting gets pushed back two hours. But to have people outside your house and do this and create fire alarms, that's not your job at a company. Your job is to try to create a very brisk pace that gets done, but not make it feel like it's, you know, people's hair is on fire and that it's definitely. on five or four all the time. So this would basically turn a one hour Sunday meeting into a four to five hour event and was especially hard on people who live far away from his home.

Yeah, this just seems like an erratic Machiavellian crazy founder who maybe had a sense of grandeur that this was so important that people needed to jump at his whims. I'm very careful with this stuff. Like, I like to go fast and build a lot of new projects. but I don't want to destroy people's life and I don't want anybody to ever think that they work harder than me and I think that's the difference

if you're working as hard or harder than anybody on your team then I think they can respect that you're setting the pace basically this person seems like a deranged person to me who maybe have delusions of grandeur and is a terrible leader

I ran Silicon Allie reporter my first magazine as a tyrant with very ambitious goals. I would be particularly rough on people if they didn't bring it, but I would be there and I worked more hours than anybody. And I told people very upfront, we're going to, we are up against it. We have no money. We have no budget. We have no business doing this.

If you want to come here, I'm hiring 24-year-olds, 23-year-olds. I'll hire you for first job. OIS is that you work 60, 70, 80 hours a week like me. And when we have to put the magazine to bed, you just work until you drop and we get that out the door. And you know, people like Rafit Ali or Will Leach who went on to work at Deadspin, Brian Alvey, you know, countless great people, Chenny Jardin all bought into that. And we all crushed it together. And it was an esprit de corps.

We all were in it together. So this is a train wreck. Luckily, this isn't a blood testing company or a money management firm like Madoff. nobody read any of these articles or watched these YouTube videos apparently so this one is going to leave a crater

of dozens of people losing their job I guess and they're better off because this is not a job they would want and a bunch of rich people including Lorraine Powell Jobs I guess who backed this individual but who was from what I'm hearing in the back channel is incredibly frustrated in trying to disentangle herself from this mess for a couple of years now

You know, this guy is just a disaster and should never been put in charge. But sometimes people who are a disaster are able to delude other people through sheer force of will to give them money and start projects. You've got to be crazy to start a company. And, you know, sometimes you put people in charge who should not be in charge. It's just the nature of our business, whether it's the media business or the tech business or just entrepreneurship writ large. So I'm sure more horrible things will come out.

but thankfully, nobody's blood tests or bank accounts were drained and ruined because of this schmuck's behavior. Beachfront homeowners may have to pay market rate for their flood insurance going forward for a little bit of a history lesson. Since 1968, flood insurance has been subsidized by our federal government through FEMA. And the average premium is $739, and flood insurance is priced based on whether or not a home is inside the 100-year flood plain, which is land expected to flood during. a major storm. So according to a New York Times article, quote, the result has been a program that

subsidizes wealthier coastal residents at the expense of homeowners further inland, who are more often people of color or low income, according to New York Times. So in 2019, FEMA announced it would start pricing flood insurance based on the particular risks facing each individual property, which they called risk rating 2.0. The new system takes effect next month for people purchasing flood insurance and for existing customers, rates will rise in 2022, April of 2022. According to the New York Times article, quote, federal officials say the goal is fairness and also getting homeowners to understand the extent of the risks they face and perhaps move to safer ground, reducing the human and financial toll of disasters.

The article uses of Florida homeowners rising rates. As an example, one woman currently pays $480 a year for flood insurance, but it will eventually have to pay $7,147. and they don't say how much her home is worth. But I'm assuming if it's a beach run home or in a beach run community, you know, it's probably that's 7,000. Maybe that represents 2%, 5% of the home value. So it's worth 50 times to 7,000,

maybe a 350K home or more. This new insurance policy comes as tropical storms and hurricanes. Obviously, have been in the rise in recent years. You know that. And when you abstract the cost of something from people, you really screw up incentives. And the incentive here should be that people stop building in flood zones so that we don't waste money. And you don't want to give people an artificial sense of what something costs.

What's another example of this? Healthcare. Right now, when people pay $10, when they go do a co-pay or they pay $50 to visit the doctor, they don't know what the actual cost was. There's no customer in health care. When there's no customer, there is no competition. when there is no competition, there is no excellence. What's another example of this?

Well, another example would be public education. When there's a public school and teachers unions, and it's a city, state, region without vouchers, where parents can take their tax money and then go spend it on a private education or there's not charter schools. If there's not competition, well, then there can be no excellence. And if a school has to fight for students

and there's other options, parents could homeschool, parents could go and take a voucher and go to a private school, parents could go to a parochial school, a charter school. You will see all schools get better. You want to have competition in the system. In America, one of the most dangerous things we've seen in the last two decades is this group of winers who want to remove competition from the system and want to remove striving from the system. The reason America, as a 300 million plus country, is so powerful, despite our modest size being 20%, 30%, the size of India, China, etc. The reason we have punched so far above our weight is because of our competitive spirit, because we have a competition in us, as they would say in there will be blood. I have a competition in me. That competition is what makes for excellence. Now, does it mean it equals outcomes? No. But we do have hopefully a relatively fair starting line. That's why everybody around the world has wanted to come to this country. So we need competition. These people are being abstracted from that competition and that reality. And so it's completely unfair.

So obviously I'm in favor of this, especially because they're giving them, I think a decade, and there's a cap on how, I think maybe 18% a year I read of how much they can increase these. So they're going to get people like 10-year landing. They should sell their homes. And if there's other rich people or affluent people who can afford the insurance, who want to take that risk, and they're okay with living, you know, on a beach in Miami or somewhere where. floods, Louisiana, that's their choice. But we want to actually incentivize people to move out of those areas, right? And so this is the right decision. And according to the Center for Climate Energy Solutions from 1966 to 2009, the average number of tropical storms was 11 per year, with about

six becoming hurricanes. From 2000 to 2014, the average was over 15 tropical storms per year, including seven hurricanes. So up, you know, about, up significantly. Here's a chart, if you're watching on YouTube of hurricanes and major hurricanes from 1850 to 2014. It's just a steady rise. It's not actually unmanageable. We just need to move where people are living over time and incentivize them to do it. Show me an incentive. I'll show you an outcome. An incentive that abstracts people and obscurifies the true cost is going to mean they're not going to be incented to move their homes or to put their homes on stilts and all those kind of things. So here's the The pricing data released by FEMA, quoted in the article,

flood program ensures 3.4 million single-family homes around the country. 2.4 million homes will see their rates increase by no more than 120 in the first year, so nothing. Anybody can afford that at an average $15 minimum wage, an average $15 wage in the country, $20 wage in the country, this is nothing. $627,000 will actually see their cost fall in year one. $230,000 will see an increase of $240,000 in year one. 74,000 will see an increase of 360 in year one,

25,000 will see an increase of up to 1,200, almost half of the 25,000 homes seeing the largest increase are in Florida, and all these increases are year one. So this would be a yearly increase of a couple of hundred bucks for, you know, 10% of these people. So it's really only going to affect 10%. Here's the quote from the article, because federal law prohibits FEMA from raising any homeowners flood insurance by more

than 18% a year could take 20 years before some current homeowners are charged their full rate. So how is Congress responding? From the New York Times article last week, 38 members of Congress signed a letter urging House Speaker Nass supposed to block the change. So stupid. This is a change that's good for everybody. We want to start to see people pay a fair rate. And as I just said, these numbers are de minimis. Why should people with beachfront homes and who are living in these crises get a free ride for everybody else? I mean, it's nice as a country that we're looking out for other people who, you know, through no fault of their own. you know, maybe have to deal with this. But at this point, you know, if you're buying homes in those

regions, I think anybody buying a new home there should just get no discount. If you're buying a home for the first time, there should be no FEMA discount. You're, I don't have any indication here. Maybe one of, you know in the audience or a researcher can pull it up for me. I don't know if new people are actually subject to getting this kind of FEMA discount or not. Quote from the letter, we are concerned about the burden of potential double digit rate. hikes on our constituents by FEMA untested pricing methodology. So this is a perfect smarmy, you know, manipulative quote, double digit rate hikes. Double digit rate hikes on a really de minimis amount of money is nothing. So they should talk, the reason they don't put the real

numbers in here is because they know their argument would fall apart. So always with numbers, you want to know the absolutes. When people start giving you percentages, ask for the absolutes. When they give you the absolutes, ask them for the percentages. You always want to show both numbers. This is just from dealing with startups and investors. somebody will tell me, oh my God, we're growing 78% on average for the first six months. And I'm like, or for the last six months. I'm like, okay, what was the number of paid users you had? Like, 10.

I'm like, so how many do you have now? Like, 80. I'm like, okay, and what does it cost? $10 a month? I'm like, so you have $800 a month in revenue? Great, congratulations. But let's put the percentage number in context with the absolute number. So, yeah, future homeowners may not qualify for as high of a loan, right?

if you're giving a loan and you're a mortgage broker, you don't want to have to be left as the bag holder here. And, you know, even if you've paid off your mortgage insurance rates will continue to rise yearly until they're no longer subsidized, which is the right idea here. We want to have people who want to buy these homes be the risk takers and we don't want the government subsidizing them. If anything, we should be putting this money towards buying more affordable housing and not, not subsidizing people who are living in. beach communities and who are being who could easily sell those homes to people who want to take the risk, right? It's totally fair and people should pay fair market at this point and giving them a 10 year, 20 year, looks like it's a 20 year, a landing is more, more than reasonable.

I'm guessing a lot of these people are 50 years old, 60 years old. 20 years to pay your fair share, not a problem. So I thought I'd bring that up because incentives are really important when you're thinking about building businesses. all right, everybody, I want to tell you about a new program I started, which could be your start to becoming a venture capitalist. That's right. And what experience do you need to have in order to do this? You need no experience. You need an internet browser, you need a brain, and you need a little bit of time. Here's how it works. I call it open scouting. What scouting, many of you know,

famously I was Sequoia Capital, a very famous venture capital firm here in the Valley. first scout. And I made a bunch of investments as a scout. One of them was Uber, one of them was Thumbtack, one of them was data stacks. And it worked out really well for me. And it actually started my career as an investor. People don't know this, but previously I was a journalist and an entrepreneur. And now I'm only known as an investor.

So that just tells you something about your career. Like you can reinvent yourself over time. What we do here with open scouting is instead of you having to apply to become a scout and me anointing you as a scout, which is what happens in typically in scout programs is they pick people they already know and they say, bring us companies, we'll give you some of the carry. What's the carry? That's the profit that comes from an investment.

If there's no profit, you get nothing. If there's a lot of profit, like in the case of Uber, did okay, you get to buy a couple of houses, and that's a great thing. So we started OpenScouting. I got the domain name, openscouting.com. So I'm flipping the script a little bit. I'm saying anybody on the planet can become a scout. I don't care if you're a kid in Bangladesh,

if you're a grandmother in Boise, Idaho, or anything in between. You could be working as a receptionist, you know, and have seven of your eight hours a day available for you to surf the web and you're bored out of your mind. I don't care who you are. Here's what I care about. You find a great startup, which you can find them all over the web. And then you go to open scouting.

Maybe you've met the startup, maybe you haven't, and you submit, you fill out a form. And when you see on Open Scouting here, you fill out the form, and you tell us about the startup and why you think it's going to change the world. Now, I do know we're going to get a lot of low quality submissions here because it's open. But I got people.

I got researchers. I got associates. I got principals who will look at this incoming stream. And if you submit something like, I don't know, Uber in year 12 of the company, like we're just going to be like delete. We don't need that. But who knows, you may find the next Uber. Or maybe you find an app you love.

That's brand new. It's in the app store. Nobody knows about it yet. Maybe you find a website you love. And you tell us about it. and you tell us why you love it and why you think it's a good investment, and it will take about a minute or two to fill it out. We made the form purposely very short right now. We're going to probably build a longer form and maybe we'll ask for more information as time

goes on. If we invest in that company, right, so if we invest and we're not already in touch with the company or somebody else hasn't submitted them, because we are in touch with a lot of companies. And if you tell us about a company, we've already invested it and we're not going to give you $5,000. That makes no sense. Or if we're already talking to them or they've already filled out a form on our site or somebody else has submitted them. So you've got to get there first, right. You submit the company first and we invest. We give you $5,000 in cold, hard cash. Cash. Why cash? Well, because carry, that splitting of the profits from it, could take 11 or 12 years. Like, that's what it took for Uber to go public. So there's a long cycle here between when you

would get paid. Or if you already have money and the $5,000 is not important to you, you can take 10% of our carry on that first investment. So we make that first investment. If that million turned into $101 million. We get 20% of the carry. That's $20 million. You get 10% of that $20 million. You get $2 million bucks. Pretty sweet deal, right?

So that's how it works. It's new. It's different. Nobody's ever really done this before. I should give credit to Bryce from something called IndyVC, which is, I think, now defunct, but he came up with the idea of paying cash for referrals. I think he was the first to do that because he wanted it to be more open to people

who needed cash now, maybe people were a different station in life, they weren't already affluent and they could have used to cash. So that's the program. And it's an experiment. We'll see if it works, but we're getting a good number of people submitting stuff every day. This is all done privately. So we don't tell the company that you submitted them, nor do we want you going out there saying you work for Jason Calacanis and you're part of the launch team or you're part of this being startups. You can tell people that you're going to submit to open scouting and it's an open way to submit people and yeah that's fine but don't say you work for us because then I do then I would need to in advance clear you and make sure you're not a criminal or you represent our company

have to train you etc so this is you're just filling out a form submitting a company and if it happens to work out you get your beak wet that's it