This Week in Startups - $AMZN considers dropping “Basics”, FCC Commissioner Carr on banning TikTok + more | E1509

Episode Date: July 16, 2022

Today, we cover the WSJ reporting on Amazon thinking of exiting the private-label business entirely (2:26). Then, Jason talks to FCC Commissioner Brendan Carr about banning TikTok in the US (15:23). And of course, we wrap with another episode of OK Boomer from Producer Rachel (56:17). Check out BuzzFeed's report on TikTok: https://www.buzzfeednews.com/article/emilybakerwhite/tiktok-tapes-us-user-data-china-bytedance-access (0:00) Jason and Molly tee up today’s show (2:26) WSJ spoke to anonymous sources who told them Amazon is talking about exiting the private-label business entirely (14:09) Vanta - Get $1,000 off automating your SOC 2 at https://vanta.com/twist (15:23) Jason speaks with FCC Commissioner Brendan Carr about potentially banning TikTok in the US (21:56) Prometheus - Go to Prometheusalts.com or download it on the App Store and use the access code TWIST to sign up! (24:14) Reciprocity with a potential TikTok ban (31:55) UserTesting - Get real human insights from customers, try for free today at https://usertesting.com/twist (33:06) Should the military ban on TikTok mean it should be banned by Google and Apple? (44:40) Concerns over DJI drones (56:17) Producer Rachel tees up this week’s OK Boomer segment (1:01:10) OKB: Producer Rachel speaks with Eric Button, co-founder of Contrast (1:20:42) Outro + Plugs

Hey, everybody, hey everybody. Welcome to This Week in Startups on a summer Friday. That's right. We know you're not working this afternoon, so we have lots to entertain you. A little bit of news and two great interviews. You know, I did a survey, Molly. It turns out like 30% of people are smoking weed when they're remote working. So I'm not passing any judgments.

Maybe it makes you work better. Anyway, yeah, big show today. First, we want to talk about some big news around Amazon basics, the Wall Street Journal reporting from anonymous sources that Amazon is talking about exiting. the private label business entirely. Yeah, this is fascinating. We talk about what this means and what other moves big tech companies.

Jason's got advice for every big tech company to keep those regulators at bay. And then speaking of regulation, he's talking to FCC Commissioner Brendan Carr about potentially banning TikTok in the U.S. Please, that would be my dream. Banning TikTok in the USA. It sounds like a good summer anthem. And then after that, we will have another amazing. amazing episode of everybody's favorite segment. OK Boomer with producer Rachel.

It's going to be a great show. Stick with us. This week in Startups is brought to you by Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at Vanta.com slash twist. Prometheus Prometheus solves the problem of visibility and access to alternative funds in a way that benefits investors, fund managers, and wealth advisors.

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User testing. Real human insight. Hey, Molly, you know, we've talked about regulators. and their attack vectors on each of the major companies in big tech, right? If you were going to attack Facebook and Google, they have overwhelming market share, and there are just amazing privacy issues as we've seen and social issues and maybe elections and misinformation on Facebook, right? So those are attack vectors for those two companies.

If we were to look at Apple, well, they do privacy pretty well. So what's the attack vector there for regulators? What would you say, Molly? The attack regulator for vectors for Apple. Oh, it's the app store 100%. Of course, right? It's that cut and they cut on digital purchases and all of, yeah. You can't play in Apple's ecosystem without paying the 30% VIN.

Perfect. Now, what is the attack vector for Amazon? Because it's an open marketplace. Anybody can sell anything, right? And prices just keep getting lower and lower. And where's the downside? So what is Amazon, the e-com? business's attack vector if you were a regulator.

Yeah, and separate from cloud, which we should note. Yes, that's why I say they're right. We can go to cloud next, yeah. Sort of, yeah. So the complaint about Apple has been that what it, about Amazon is that it has all of these third party sellers. And then what it does is collect data on what sells best on its platform from third party sellers and then copy it and make their own.

Right. And, and prioritize in some cases, its own results then in its internal. search and push those products first, Amazon's choice, Amazon basics. It created its own store out of this. And all these third-party sellers were like, wow, thanks for nothing. Right. So if you think about this, why does Amazon do it? Because they can, I guess, but in the grand scheme of things, is it worth having this massive attack vector on your company? Is it worth having it, Molly? Right. Well, and considering the fact that Amazon's e-commerce business is effectively zero compared to its cloud business,

If Amazon Basics was making you all the money, it's definitely worth it. If it's nominal, not really. And these are the lowest margin products by definition. Right. They're called basics. And so if Amazon were to do this to your point and it was printing the money, well, okay, yeah, maybe you say, listen, deal with it. It's competition.

If you don't like it, make cheaper products. The reason for Amazon to do it is, okay, it builds their brand, I guess. to have more Amazon logos around? Okay, everybody knows what Amazon is. I don't think that that's necessary. So why make, you know, around a quarter million of these products, right? And I'm obsessed with them. I love them.

I think it's great. It takes simplicity out. But there were other people like brandless and other companies that, you know, try to do this. Uniclo does it for clothes. So is it worth it for Amazon to compete with everybody in their ecosystem? I think what they've learned is the answer is no, because they said only 1%

of their retail sales account for house brands. So if 1% of your sales creates an attack vector, what's the logical thing to do? Dump it. Cut it loose. Shut it down. Well, anonymous sources today told the Wall Street Journal that Amazon has discussed the possibility of exiting

the private label business entirely to avoid regulatory pressure. And over the last six months, Amazon executives instructed the private label team to cut the number of items offered and to not reorder many of them. Interesting. So this is amazing. This is such a smart chess move. And I think it's something that the other services need to learn from. Yeah.

Because it is meaningful, right? Like, despite what we have just said about the money, as a pure dollar play, it, it, it, is, it. is meaningful. Like in 2021, Amazon generated $241 billion in net product sales. One percent of that is still almost $2.5 billion. So it's a big number. Not nothing. It's not nothing, but it's only 1 percent. Nothing compared to getting split up. Exactly. So do you want to get dragged in by regulators for 1% of the business? Do you think if Apple could make the App Store business problem go away for 1% of App Store sales, they would do it? Of course they would. Yep. If Facebook could get rid of their privacy issues by losing one percent of private information collected or

one percent of revenue would they get rid of that of course they would do that just to get out of depositions and getting dragged into you know you know getting pulled into congressional hearings and to the EU and their different you know groups so this got me thinking let's look at the playbook for everybody else doing this here's my best advice to Facebook if you want to pull what Amazon is doing here and just totally neuter completely neuter any attack vector

and I've said this before so it's not a new idea when everybody logs into Instagram Facebook say would you like to have Facebook Prime or Facebook Plus would you like to have Instagram Plus it's $5 a month we will not track any of your data

or you can use it for free and we'll serve you up custom ads game over it's game over there's nothing to discuss with regulators anymore that's true now apple how could they do it very simple apple says would you like to load one of these other app stores there are other app stores out there if you load this app store on your phone you are no longer under warranty so your phone if you bring it to the genius bar or you bring it back to apple and it's not working that's because you chose to use software that we didn't vet,

which is your right. It's your device. Yeah. So if you load this, you are no longer supported. You can't call customer support. When you call customer support, we'll say this is a open phone that is no longer supported. Boom. How many people are going to do that?

Okay, five or 10% of people. If you get 10% of people, well, you know what? Who cares? Now regulators can't. Exactly. Now, here's my big one. You're Google. Yes, I was just saying, now do Google.

Now I've got Google. Remember when Yahoo let you customize the homepage? Remember that? No. Yahoo would let you customize your homepage. You can say, I'm interested in the stock, I'm interested in these topics. And there were all these homepages that were customized homepages of the web. So you'd say, when I open my browser, I want to see the Nix, I want to see Uber stock, I want to see startups as a topic.

You would be a custom homepage of the web. It was all the rage. And there were 10 startups in the space. And when I was at AOL, we wanted to have this customization of the homepage because Yahoo let you customize your homepage and you would move widgets around the homepage. It turned out less than like 2% of people ever took the time to do this. And of course, algorithms took over, which is another way of saying it won't cost you anything. So here's my big idea for Google.

And it's kind of based on what U.com showed us when we did our little story about you.com the other day. you click customize Google search and it says please pick who you would like to use for local restaurants Yelp, TripAdvisor or would you like to stick with Google Local?

Who would you like to use for news? Apple News? Bing News? You know, pick your news provider. Who would you like to be your default shopping? Amazon? Google Shopping. shopping,

et cetera. Nobody's going in there and changing those settings. Right. But then when you get brought up to regulators, you say, it's up to you. Just like when you load

your browser, we ask you, which search engine do you want to use? So I think this is going to be a new era of neutering any criticism, which all comes from

strategically thinking about where your profits come from and the cost of regulation. So I just went through all of the big companies and I told you how they,

they could avoid ever getting pulled in front of regulators again. The end. The only thing I would do want to add, yes, we should know, Google actually last week proposed moving its ad business because the Google complaint is manifold comparatively. There's the search thing. There's too many vectors. Exactly. Google's got more than the one vector.

Like the search tweaks, which they should 100% do. Let me ask you, would you pick Yale? or would you pick Google local? Would you pick Amazon shopping or Google shopping? Like, I haven't used Google in years. Oh, okay. You're one of those weirdos. Okay.

Almost a decade. You are such a weirdo when it comes to product. I'm not even a terrorist. I just, well, but that gets to like Google's multiple vectors is they've got the search thing, but they also have the advertising. They're part of this advertising duopoly.

So one thing that Google recently proposed was, oh, we're going to spin off our ad business and put it under Alphabet. Yes. so that we can neuter this regulatory question, although it wouldn't necessarily fundamentally change anything about the ad business. So I feel like you might have a better suggestion for them on that. Yeah, I think that's a stupid. I mean, it's that stupid for them.

It's, that's a shell game for them. They're like, oh, yeah, the ad business doesn't know the search results. They don't need to know the search results. The organic results come below the widgets. So that's them thinking regulators are dumb. Yes. And it's just stupid on Google's part. Google should do the two things I'm saying.

One, let you customize which services you use. So all the stuff that comes up top, you could. And then here's your second one. 10 bucks a month. There we go. No ad Google. Totally. That's what I was in a year.

Or $10 a month, you can have no ads on Google. You just see organic results. And there's a button that says, you know, we would have shown you these ads. Click here to show six ads. And so the person does a search. You know what they're going to do? I think half the time they're going to say, show me the ads. I just want to see who's paying for this.

Yeah. But yes, now it's, now it's perfect. Now it's perfect. Okay. Chef's kiss the end, exactly. So that's it. Notice, how did I do? Oh my God.

Somebody sent us a super chat. I know. Okay, here we go. If you send a super chat, 100% of super chats are going to charity. I need to keep a running total of how many we've gotten and how much money. Okay, Nick, can you do that for me? It's probably in the interface somewhere. It's so exciting.

It's in pounds. Oh, wow. So PR gives us pound $449, $4.4 and $4. 49 cents. Tech News with Molly. Oh, it's like C-Net Always On Days. Oh,

and a rainbow emoji. Thank you. Oh, this is like, just like the nicest super chat ever. Okay, so we're going to just

give that to charity. I have a cool charity I like. Also, thanks for being to be in a charity. If anybody else wants to do that, it's all going to go to charity. All charity.

Love it. You can go there, YouTube.com, such this weekend, and I guess you can do what's called the super chat and you can give 50 bucks, 10 bucks,

whatever your bag is. And I will read it on the air. People who are listening to the pod don't know. We do this at 10 a.m. Pacific most days, five days a week, Molly and I, and a couple hundred people show up and we talk to them. You get about 30 percent more show. We talk in between the stories that you hear on the podcast and we banter at the beginning about our personal lives. So it's sort of like a, it's like a zoo boarding a zoo kind of thing. And thanks everybody. Okay. We do mattress ads. Yeah, exactly. It's really important for founders to understand what SOC2 compliance is.

Basically, if you're a SaaS company or a services company that stores customer data in the cloud, then you need to be SOC2 verified from a third party to close major customers. It's really simple. If you're not SOC2 compliant, you can't close the big deals. But SOC2 verification is brutal. The process is tedious, time consuming, and expensive. But now there's Vanta. Vanta SoftwareM.

it much easier to get and renew your SOC2. On average, Vanta customers are SOC2 compliant in just two to four weeks. Compare that with three to five months without Vanta. And they partner with over two dozen audit firms who have been trained to file SOC2 reports directly within Vanta. And congratulations to Christina and the Vanta team for raising $110 million Series B. What an amazing company. I loved it so much. I thought it was such a great opportunity. I invested in that round. So here is the best part. Vanna's going to give you $1,000 off. I kid you not. They're going to give you $1,000 off at vanta.com slash twist. That's Vanta, V-A-N-T-A-com slash T-W-I-S-T for $1,000 off your sock, too. All right, speaking of regulation,

next up is my interview with Commissioner Carr where we talk about TikTok. Enjoy it. All right, everybody, you've heard me talk about TikTok on this program for the last couple of years. Obviously, I have grave concerns about an app from China, the communist country being able to track all of our citizens and have access to their location, their photo library, and more importantly, perhaps even than all that sensitive information going directly to the CCP at scale, is the fact that you can program the algorithm. And that algorithm is incredibly powerful. We've seen this from Instagram, Facebook, and Twitter, the ability to impact elections,

the ability to impact sentiment, perhaps even to impact the things like the Russians did during the last couple of elections, that are the most challenging to us as Americans, race in this country, abortion, gun control. The Russians knew those were key issues, and they literally used social media, try to make Americans fight with each other even more and create chaos. Doing siops and in other countries is something that governments have done for a long time. And to sit here and think that TikTok, this incredibly powerful company, is a not in the control of the CCP. To me is incredibly naive.

It is a huge risk for the United States. And there is a very simple, simple way you can test this and backstop it. We are not allowed to have TikTok, Facebook, Google, Twitter, in China. And in fact, the Chinese don't allow TikTok in China itself. So to show you exactly how crazy

this situation is, you need only look at the facts and trust your gut on it. Now, I was, pleasantly surprised when the FCC actually decided to make a statement on this. And we've had a number of different statements here and people have taken different positions on what should happen. But Brendan Carr from the FCC is with us today. Brendan, welcome to the show. Good to be with you. Thanks so much. So you heard my little preamble there. You are a commissioner at the

FCC. Can you just explain to folks and I know you've been there since 2014. What does it mean to be a commissioner at the FCC. How many are there? And what is your job? Yeah. So typically the FCC has five commissioners, three of the president's party, two or not. So I became a commissioner of the FCC in 2017. I started, as you noted, at the FCC as a staffer before that. So I was in the majority under the Trump administration where there's three Republican commissioners. Right now that we're two, two Democrats, two Republicans. We're still waiting for the Biden administration to complete the confirmation process for a third Democrat. And probably the easiest way to think about the FCC is, We're basically sort of a mini Congress when it comes to things within our jurisdiction,

tech and telecom. So we adopt rules, everything from spectrum to 5G to national security issues as well, including a lot of entities beholden to China, whether it's Huawei or ZTE. So it's an interesting place with a lot going on. We're independent, meaning we don't sort of take direct direction from the president. The Democrats here don't. We didn't. When we were Republicans, in fact, we famously didn't agree with Trump on everything and got some tweets sent our way for that.

But right now we're working pretty well. It's very bipartisan right now. Obviously, it has to be with 2-2, and we're getting along really well. So when did you become aware of TikTok and these issues? And why did you choose to write this letter just in the last week or two? My interest in these issues really goes back to the work we've done on Huawei and ZTE. That's where I really first gained inside knowledge into data flows back into China. And with Huawei at first, people were sort of skeptical as well.

what's the big deal? You know, it's in all over Europe, South America, Africa. We went to our colleagues in Europe and said, hey, this is a problem. And they were sort of skeptical. But the tide really changed on that. Now we've taken concrete steps of the FCC against Huawei ZTE. We then expanded it into China Mobile, China Unicom. These are telecom companies that wanted to connect to the U.S. network. And we either revoke their authorizations or deny them authorizations. And TikTok is one that I've come to, you know, really only in the last, you know, a few months. And it has to do with some really bombshell reporting that came out of BuzzFeed news. You know, a lot of people look at TikTok and they say, well, it's just another app for sharing, you know, viral videos or funny

dances. And the way I look at, that's just the sheep's clothing. If you look beneath the surface, it is a sophisticated technology that is pulling all sorts of data, you know, biometrics, face prints, voice prints, location, draft messages in some circumstances, keystroke patterns, search and browsing history. Now, some of your viewers might say, well, you're naming every single app that's built out of Silicon Valley. And in some extent, that's true. But what's different here with TikTok is two things. One, for years, TikTok has been asked point blank.

How much of your data is being accessed from inside of China? And they have engaged in just a pattern of gaslighting on this. They've either dodged the question entirely and said, well, don't worry, all U.S. data is stored in the U.S. and we don't share directly with the Chinese government. Again, that's not answering the question of how much is being accessed by China. And two, unlike Silicon Valley companies, any entity that is doing business with the approval of the CCP is doing so for one reason, which is to help maintain the CCP stay in power or you don't get to do business in China. These aren't, you know, profit-seeking entities.

So when you combine those two, I got interested. And then again, that bombshell report from BuzzFeed a couple weeks ago said contrary to TikTok's representations, quote, everything is seen in China, according to Elite's internal audio recordings between TikTok and their Beijing-based bite dance. So that's what was concerning to me. And so I decided to write a letter sort of in parallel to the national security concerns, which is to say, Google and Apple, you have app stores, you represent that they're safe places to go and download things, and you have policies that directly deal with data flows. And if an entity is misrepresenting where your data is going, that's a violation of your app store policy.

And they've enforced it before. They've kicked apps out where data has touched servers in China surreptitiously or otherwise engage in surreptitious data flow. So my view was, while the federal government needs to get its act together, we can talk about that. In the short term, again, sort of separate from Apple and Google making a national security determination, just apply your app store policy to these misrepresentations about data flows and give them the boot. But I understand that's a big ask of those companies. Hey, everybody.

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It's a big ass, but I think it's the right ass to make, to challenge them on it. And also, as you heard, my little preamble there, TikTok is not allowed in China, as my understanding, nor obviously is Twitter and Facebook and Google and other services. The fact that we do not have a reciprocal arrangement with China, what does that tell you? Yeah, I think reciprocity is a great starting point for international relations. And while I have focused up to now on these data flows back into China, there's a lot of concerns, and you've gotten into it before about foreign influence campaigns.

And what is these videos and these messages and the virality of it? I mean, you've talked about minions and getting kids to buy suits, you know, and unprecedented thing. I mean, it's hard enough to get someone to vote. We try getting a kid to go out and buy a suit. and wear it to the movie. So there is a lot of concern as well on the foreign influence side as well. And look, if they're not letting that type of influence and that type of campaign take place inside of China, I don't know why we're allowing it to take place here. And I'm not at a point yet where I would say, you know, any entity tied to China should be kicked out of the U.S.

Although I do think long term we need to be looking at a broader decoupling strategy. But I look for plus factors. And again, with Huawei, for instance, it was ties to China. but plus factors about misrepresentations about data flow. And I see that same thing with TikTok, not just that it's got, you know, a parent company with a headquarter in Beijing, but that sort of campaign of gaslighting us

about where that data has been going for the last couple years. And that was, I think, a big part of the BuzzFeed article is that it, those leaked audio documents made it clear that even with the action that was taken under the Trump administration to say, hey, where's the data stored? Where is it physically stored?

Now, if we're all accessing information here in the United States from our computers from all around the world, it does not take a genius to understand that where data resides on a global high-speed internet does not actually matter. It could be in the U.S. and be completely compromised by the Chinese Communist Party, correct? Yeah, that's exactly right. And going forward, TikTok, I said, well, don't worry, we're working right now with this committee on foreign investment we call Sipheus based out of Treasury. And we are negotiating with them to allow some set of data to continue to go back to Beijing, but going forward, it's going to be under tighter restrictions and tighter controls. And to me, this is like an IQ test because I trust Sipfias. I trust that they're smart, but I don't trust TikTok.

And in fact, in that BuzzFeed article, there's a quote from a TikTok policy person. It doesn't disclose who they are in the article that looks at that future control and says, at the end of the day, it remains to be seen whether that data can continue to be access. by product in engineering, presumably in Beijing, because at the end of the day, China built those tools. They were built inside China. So at this point, with the level of trust that I have in TikTok, I think the only thing that should be happening right now is a full and public disclosure of all data that was accessed

inside of China. Where did it go? And to your point, there's no way to wall off access to data once it's inside of China. They have a national security law that compels people to assist China in business. business industrial espionage and other activities. There's over 100 CCP members that has been reported just inside of bite dance, the parent company's single Beijing office. And again, just last week, Christopher Ray, the head of our FBI, did a rare joint appearance

with his MI5 counterpart and said, you know, our greatest long-term threat is China. And they're going to use any tool at their disposal to achieve their nefarious ends. And to just recap the starkness of that moment, with the UK and the U.S. coming together and saying to all tech companies, assume you've been compromised already, assume there are people inside your organization from the CCP. It's very clear that if you can be infiltrated in an American company and have your data compromised, which the Saudis did at Twitter as but one example in a long list of examples, what would they be able to do in a company they own and control?

they said in these recordings, if you haven't heard them as an American, go to BuzzFeed and go search for them, these recordings were obviously done. We don't know who taped them, but somebody who is very concerned on the technology team. There are consultants involved.

There's Oracle's Cloud that's involved, and then there's the American employees of TikTok. They're all discussing that they have no idea how any of the tools work, how the algorithm works. It's all a black box to them. And the quote that one consultant said to the other colleagues was, and I'll just read it here, so we're clear exactly how dire the situation is. I feel like these tools, there's some backdoor to access user data and almost all of them, which is exhausting.

They don't even understand the people working at TikTok, the consultants who have been charged with separating and handled this issue. They have no idea, and they could be working in good faith, I'm sure, but they have no idea how they work, which means they're all backdoors. The level that the Chinese government goes to in spying is unbelievable. Why would they not take this easy buffet of information and data that they already own? Yeah, it's concerning. And, you know, the federal government here, we're sort of pointing in a few directions like the scarecrow from Wizard of Oz. You know, we've got almost every military branch, Army, Navy, Navy, Coast Guard, there's now bar tick-tock from government devices.

We've got our national security agencies that have taken. taken the same type of action. Even the RNC and the DNC campaign arms have warned their politicians about using it. And yet it continues to proliferate. In fact, I'll be testifying later this week at a House hearing where we're talking about TikTok in the context of the military in the sense that it's still very, very popular, even though it's banned from official devices, there's sort of a viral sort of meme on TikTok where they're telling people to upload videos inside their barracks. And they have now have that stuff uploaded from around the world, not just multiple U.S. installations, but, you know, the UK, Kuwait, you know, you name it. And it's one of the most

popular things on TikTok is videos of U.S. military equipment, you know, people jumping out of airplanes, and it's like, it's fun. It's like breathtaking stuff. And again, it's multiple fold. It's, one, what are people seeing once that stuff is viral and going up there? Two, what is all the data that's being pulled location and otherwise while that recording is taking place? And to your point, what sort of foreign influence is going on once they're getting, you know, deeply embedded with influencers that are part of the U.S. military. So it's concerning, and we've got to move faster at the federal government. Again, there's a process being run out of Treasury right now called Sipheus that's looking at this. The Commerce Department has its own process that's

looking at this. And then just recently, two stalwarts of national security, Senator Mark Warner, Democrat, Republican, Marco Rubio, the chair and vice chair of Senate Intel wrote to the federal Trade Commission, basically raising the same set of concerns I did in my letter to Apple and Google and said, we think there's been misrepresentations about data flows. We want the FTC to investigate. So we've got a bright spotlight on it here in D.C., but we got to go faster. We can't just sort of have the status quo of data going back to China. We've got to get going. You know, Trump raised this a couple of years ago, but like, you know, all things Trump, you either, you know, we're all in or all against it. But now it feels different. It feels like we're

getting some thoughtful, bipartisan appreciation for the threat that TikTok presents. Experience what your customer experiences with user testing. Whether you're launching a new product, a prototype, or a marketing campaign, you'll get great video feedback straight from the people who you want to reach most, your customers. The user testing human insights platform lets you understand it all from your customer's perspective. And it allows you to target your exact audience, ask any question or request to perform tasks and most

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User testing.com slash twist. User testing. Real human insight. If our military has banned it, should that not be just a snap auto ban and an easy layup for the Biden administration to say, listen, I know you love this app and this functionality now exists in a bunch of other places, so you can go use those other platforms. And I'm sorry if you've fallen in love and are addicted to the app. We understand it's a delightful app.

But this is a national security risk. And I need to do an executive order to tell Google and, you know, Apple to ban it. That's what should happen right now, isn't it? That's what I think should happen. I mean, look, India, the world's largest democracy has taken that action. Now, maybe you could say, well,

there's some unique situation between India and China given, you know, border disputes, and whatnot. Maybe that sort of influenced that as well. But yeah, I think that that's where we should be at. I mean, again, we've taken hard action on Huawei and ZTE. But again, a lot of this stuff, when you scratch below the surface, there's still some holes there. Like, even, most people assume Huawei is booted out of this country. Not so. What we did at the FCC was we prevented with this federal subsidy program that we used to support internet builds and rural communities. Almost all of the Huawei gear was being funded through that initiative and we cut

Huawei off so you don't get any more funding. But there's a loophole where you can use private sector dollars by the same Huawei equipment and put it in the same point in the U.S. networks. And so I sort of called for closing that loophole. In fact, Congress gave us some additional authorities at the FCC to do that. And we're close to finishing up a rulemaking there. But I mean, this has been a really big effort to turn the ship with respect to our approach to China.

And I don't think we're moving fast enough. Maybe that's because of business interest. Maybe it's because of supply chains. We don't want to see retribution there, but we've got to get going. The FBI has been incredibly concerned about election interference. You know, and the Mueller report made it super clear what was happening. You could debate, you know, is Trump, you know, like the, I know a lot of people have some beliefs that like this was all this was like fake news. But the fact is the Russians are trying to influence every election and trying to create chaos on all sides.

That is something we cannot dispute. So if we know that that is happening with the Russians and our true rival in the world on the global stage is China and we'll be going forward. And that's the most acute issue for us on a foreign policy basis clearly and will be for some time. Do we not think that election interference alone and that possibility is out there for the Chinese government to say, you know what? We're just going to tweak the algorithm and make this candidate do better because this candidate will have more. or China-friendly policies. Or we want to distract America, so therefore we'll take something like race, abortion, gun control,

things that we have a very hard time dealing with as a country, and we're going to dial those up. Is that not the obvious reality that we're going to be facing in the next election? Yeah, I think that's a real concern about foreign influence campaigns. And if my memory's right, there was some election, I can't remember in New York, and one of the candidates,

either was an outspoken sort of critic of the Tiananmen Square crackdown or otherwise, and we saw sort of evidence of China sort of weighing in and trying to put a thumb on the scale against them. I'm not saying that was a TikTok effort, but yeah, I mean, once you have these things in people's pockets, once people have people's eyeballs on these screens, you know, who knows what can happen? We have rules of the FCC. If you want to buy, you know, a broadcast TV station, one, you can't reach 100% of the population because we have rules that limit the percentage of the population that any one person can reach through a broadcast radio or broadcast TV. and two, we obviously do a very sort of studious foreign influence, you know, foreign holdings review. And frankly, I think that's what, you know, Sipfias should be doing as well, is taking a look at that serious potential for sort of foreign influence operations through TikTok. If you were going to build the perfect app to do an influence campaign, the obvious way to do that would be to make it delightful and very light and fun and playful. and if it's become that popular and that's what it's known for,

wouldn't that also indicate that that's the perfect cover for a nefarious app? And how much does the popularity make your job harder? Yeah. Yeah. I mean, look, the sort of product placement analogy, right, sort of putting a can of Pepsi in a movie and making you want to buy it is oftentimes more persuasive than, you know, the direct beating you over the head to buy something. That's certainly something you can accomplish through TikTok.

And it's a challenge. Again, most people just look at this and like, I don't get it. Like, it's just my cat video. There's no espionage value in it. And they don't understand that that underlying data that's there. And again, if you're just, you know, one parent and one kid, is there a lot of value to China having that? I don't know. But, again, when we have millions and millions of Americans that have downloaded these and they're getting all that data and they can, you know, speak directly to them, that's a big risk.

an easy way to test this would be for Americans to try to trend Tiananmen Square on the app. Yeah, I'm not on TikTok, but people tell me, yeah, if you search for certain things on TikTok or other social media, you know, it's a very distorted perception feedback that you get back. So if we ran advertisements to discuss Tiananmen Square and the plight of the U.Gers, if Amnester International bought an ad campaign, human rights watch, the UN, we could really test, you. you know, a number of thesis here. So I'd encourage the audience if they would like to test this to put up some videos about the Uyghurs, put up videos about Tiananmen Square, and talk about human rights violations in China, Hong Kong, which you will have a never-ending stream of them. In fact, I'm going to start doing that as part of this.

Well, make sure you use a burner phone for that. I don't want you, you know, getting your data sucked back into Beijing. Exactly. I will literally do that on an answer to burner phone. How do, how does the Chinese government's approach to, you know, the Chinese government's approach to regulating their own citizens through smart devices and apps, inform how we should think about what they would do here? You know, look, they're right now amassing probably the world's most sophisticated data

collection and AI operation, you know, for one and only purpose, which is to keep the CCP in power. And the idea that, you know, we're going to feed millions of data on millions of Americans back into that AI machine, I think is just, you know, unconscionable in my mind and yet, you know, we're here. I mean, again, this is not like, you know, people say, oh, well, you know, Google's getting all this and look, I got my concerns with that. I mean, you got, you know, barometric pressure devices that know, you know, when a car door closes or what floor you are in a building. There's some challenges with data collection in the U.S.

by Silicon Valley. And Congress is thinking about, you know, some national standards there. But again, you know, there's capitalism. There's profit motive, you know, love it or hate it. That's largely what's going on there. That's not taking place. The only reason why bite dance exists in China is because they are, you know, helping the CCP to stay in power. If they weren't, they wouldn't be there. In fact, we've seen over the last year or two, the Chinese government has really sort of reined in a lot of their technology companies to make sure that they can stay under their control and not, you know, pursue other interests.

The analogy for people to think about would be, what if Trump or Biden owned all the data on Google and had free access to it and had the influence over the algorithm for Google search or the algorithm for YouTube or the algorithm for Facebook and Instagram. That's the analogy we're talking about here. And that's where people, I think, get tripped up. Sure, both of these companies have algorithms. Both of them have data, both of the, both cohorts of companies have perhaps too much data. But one of them is controlled and at the behest of the Chinese Commerce Party. And here in America, Google will fight you. You have to fight with Google over we're getting data. The government agents.

If the FBI wants something from Google, they have to file through a judge and a court to get that information, correct? Yeah, you're right. You know, there's a pretty robust process of, you know, subpoenas and Google and everybody has these transparency reports. You can look, they get, you know, hundreds of thousands of requests from the U.S. government for data, whether it's Congress or a national security agency. And by and large, they push back. They fight. They defend their user's rights. That doesn't exist in China.

You know, it is a national security law. That's no court review. no independent anything. Once that data gets inside of China, Katie bar the doors, it goes right to the CCP. Who are you coming up against as friction for your position? When I saw it, I said,

hey, this is a pretty bold step. You must have gotten blowback. Is there blowback from one political party or the other? Is there blowback from certain agencies? Is there blowback from lobbying? And then, well, let's answer that one. Who's giving you resistance? And then who's given you,

support. Well, you know, I asked for responses from Google and Apple for last Friday. They both said they weren't able to put something together by Friday, but I do still expect to get a response from them. You know, some of the pushback has been, well, you're just a single FCC commissioner. Your letter isn't official government action, you know, meaning that it's not an official action of the FCC, which requires a vote of all of us. You don't have legal authority to compel Google and Apple to do this, or they've said, you know, you shouldn't tell a private business what to do, which generally I agree with. But in the context of national security, I think it's entirely appropriate that all of us speak up. I mean, not to be glib about it, but we say in national security, see something, say something.

And so I did. And so we'll see what Google and Apple say. Again, they're deep supply chains into China. I understand we'll put them in a tough spot here. My fellow FC colleagues, I've spoken to all of them about this issue. And I guess their view potentially not speaking for them is that, well, maybe it's not core FCC the way Huawei and ZTE were because those were FCC fundings or China. mobile, which was an FCC license. But I'm more than happy to sort of recede and let the Federal Trade Commission, you know,

take the lead pursuant to that letter from Senators Warner and Rubio. So some of the pushback has just been about, you know, who are you at the FCC? Why don't you focus more on, you know, this other stuff? In my view is, you know, I'm a guy that, you know, understands data flows into China because of my work here. And I'm going to speak out when I see an issue. Did the other three commissioners support you if it was put to a vote? Would they vote yes or no? I don't know.

I don't know where they would come down. I mean, again, it's not something that's in our wheelhouse of direct regulatory authority the way Huawei ZTE or China Mobile is. Got it. But as a general matter, you know, look, pushing back on CCP is a rare bipartisan issue in D.C. Schumer was on a letter a couple years ago with Tom Cotton raising concerns about TikTok. We have followed through with some tough actions on various entities tied to China. So I don't sense any softness inside the FCC. Any pushback would probably be. be, you know, do we have direct enough regulatory authority to do something? Conspiracy theory out there is the the Facebooks of the world are trying to ankle TikTok.

Your thoughts? I saw that. It's pretty funny. I mean, I lodged more than my share fair share of criticism at Facebook and their practices. But, you know, for me, you know, this is simply an extension of what we've done on Huawei on ZTE and the BuzzFeed. news reporting. Great. DGI drones,

maybe we could pivot to that for a quick moment if you have time. Yeah, I'm concerned about that as well. I mean, look, to some extent, it's very similar

of what's going on with TikTok in the sense that these are very sophisticated platforms. And so I put out a call almost a year ago now, again, asking our national security agencies to give

a thumbs up or thumbs down with their final view. I think there's enough there for me to be concerned. You know, they obviously can collect everything from, you know, facial recognition

to body temperatures, to high-resolution images. Some people say, well, this isn't really any different than Google Earth? And I'd say, well, it is. It's actually, it's much more high-resolution. You can get the serial numbers off of telecom equipment with a DGI drone, which you can't get from Google Earth. So I think that's another area where we need to be very careful.

And again, we've got to be definitive. If the Biden administration or the national security agencies don't think there's a problem there, let's be clear and definitive about that. But this gray area where we're looking into concerns, but we're not saying anything. I don't think that's where we should be. If Apple were to take TikTok out of the app store, would there be blowback on their ability to make phones and sell them in China?

I think it probably would be. Again, we haven't seen too much retribution with our actions on Huawei's ETE, but again, that was sort of a pure FCC action rather than a private sector entity doing it. And I have no doubt that they would see some pushback. But long term, I just think we've got to start, moving these investments, moving the supply chain out of China. I sent a separate letter to Apple maybe a month or two ago.

Tim Cook came here to D.C. and gave this really great flowery speech about how Apple stands up for human rights and privacy. At the same time, they're actively sort of removing apps from the Chinese version of the app store that the CCP doesn't want, including ones that include VPNs and sort of privacy protections. And so I think long run, we've got to square this circle of our positions on human rights and free. freedom here in the U.S. And how do you square that with continuing to do business with the CCP, which in my view and in fact, even the Biden administration's view, is continuing to engage in a genocide

campaign against Uighurs. So I think we've got to move in that direction. We also have some infrastructure laws right now that have Buy America provisions in them. And some of the companies are pushing back. They're saying, look, we just don't have, you know, the fiber supply, the chip sets to do this massive infrastructure build with only American companies. can we get waivers of that? This, again, isn't a direct FCC issue,

but my view would be, to the extent you're right that we don't have that available, not just in the U.S., but somewhere outside of China, that's a problem. If you want a waiver, maybe my view would be, you can have a waiver limited and conditioned on you sort of coming up with an aggressive timeline for getting your supply chain out of China

over, you know, three years, five years, ten years, or something like that. Yeah, it seems clear that we're going to have to have some resiliency in our supply chain. Japan is, as you know, you know, and other countries are now subsidizing, and we have the Chips Act that is in the news right now. For helping companies, even though it would be more expensive to be in other locations, reduce our dependency for critical infrastructure items like chips. And obviously, we have drugs and other things that we need to be absolutely resilient on because these are communist countries.

These are dictatorships. As we're watching with Ukraine and Russia's war in the Ukraine and their invasion of the Ukraine, you really cannot predict what these dictators will do. And you can, as Germany is learning some hard lessons, you cannot be dependent on them because they're unpredictable. And they will use that dependency against you. Yeah, you're right. And I think particularly with, you know, the threats that China is making towards Taiwan, we need to be very clear, I think, up front to China what those consequences are.

With Russia and Ukraine, I mean, Russia doesn't have a lot of, you know, FCC approved entities or anything like that. But there's no piece of electronics equipment that is allowed to be used in this country that doesn't go through the FCC's equipment authorization process. I mean, just look at any device around you. There's sort of some sort of FCC stamp on it. And I think we should publicize a list of every entity with an FCC equipment authorization or license with ties to communist China and publish that list and say, look, if you make

a move on Taiwan. I mean, there's going to be very serious economic consequences that come to you. And I just think we need to continue to deepen our relationships there with Taiwan. You know, on the FCC side as well, you know, we play a role in authorizing Starlink and they played a great role in Ukraine as well. Because one of things that we've seen, we saw this in Cuba as well, is when you see freedom movements around the world, the first thing that people do now is they raise their smartphone, they take pictures, they take videos. It shoots around the world at galvanizes support. The first thing that an authoritarian regime does is they shut down the internet. They don't turn the internet off entirely. They have, you know, sophisticated ways of

identifying, you know, chats and messages and stopping that stuff from getting out. And I think Starlink, in other technologies are a great, great way of preventing authoritarian regimes from shutting down those, the internet. I raise it now because, you know, this is the, this week is the one-year anniversary since those massive Cuban protests that we saw last summer. Yeah, I mean, in fact, Tiananmen Square and the tank man, that one video changed a great perception of what was going on in China if you don't know what the tank man video is and you're under the age of 40. You can go just type that in and you won't be able to see it if you're in China, but you'll be able to see it everywhere else of a man standing in front of a tank.

Tell me more about Starlink and low. There's obviously two or three other competing products coming. What impact could that have on communication freedom, you know, in communist countries? around the world. Maybe you expand on that a bit. I think it's really interesting technology. I mean, a lot of people, not you, but a lot of people think of these satellite technologies. They think of the original systems, which were these school bus-sized satellites located far away from Earth, high, you know, latency that didn't make sense for internet connectivity. But these new generations of low-worth orbit satellites

are really providing remarkable speeds and throughput. We're excited about it at the FCC. It's not the solution for 100% of the country. A lot of politicians, in D.C. will say, well, great, we spend over $10 billion a year right now subsidizing rural internet. Let's just shift everybody over to Starlink and stop spending $10 billion, but the Starlink system can't handle the entire U.S. population. So there's going to be an important role for particularly in rural America. But to your point, more broadly, you look at Cuba, you look at Ukraine. There's a real need for the ability to stay connected either when terrestrial networks in Ukraine or damaged or in Cuba when there's an authoritarian that shuts it down.

you know, look, we've long seen that, you know, the free flow of information over the modern means of communication accelerates the downfall of those that govern without the consent of the people. And this started with, you know, leaflets back in the revolutionary area. We had, you know, radio-free Europe. In fact, right now we continue to send radio signals into Cuba. And the modern-day version of that is the Internet. So I've long said that we need the strategic capability. I think Starlink and others can be a part of that of, of Stubber. standing up robust internet services in foreign countries.

Wow. So I wonder what the response would be from Russia or China if we were to send or Saudi Arabia, or Middle Eastern country, if we were to fly a sortie of low Earth orbit satellites, I'll leave Starlink out, but these could be government ones, over those countries and said, hey, you know, with this and sneak in some on the ground, some satellite receivers, hey, here's your internet, and all of a sudden you,

or long-distance Wi-Fi, however it's done, this could, this could be just groundbreaking in terms of the impact it would have. Yeah, there's mentioning technologies. When we were looking at Cuba last summer, one of the ideas that I floated,

there's a technology that you can use high altitude balloon, stratospheric platforms. And we approved those at the FCC for Puerto Rico after 2017 hurricane took out the island's communication network. There's a handful of balloons that would circle around the island. You can beam directly from a stratospheric balloon to someone's smartphone. You can tether similar balloons to ships in international waters to get to the island as well. And that made sense for Cuba. That's more challenging, obviously, for Ukraine.

But yeah, I mean, look, we've been pushing this for a while. There's certainly some State Department concerns. and apart from any sort of individual deployment like that, there is still a concern that I have about low-worth orbit generally getting jammed up. China is not beyond setting up a rocket and blowing up one of their satellites, and it can cause a very serious cascading effect in low-worth orbit. So, you know, there's a very, very high upside to these constellations, they have high maneuverability to deal with issues like that,

but there's still sort of a fundamental challenge if Russia or China decides to, you know, It would be seen as a hostile act by them if we were to do that. And they might take a very aggressive response. And that response might be going into space and blowing up satellites. And nobody wants that. I mean, it's one thing to send a radio signal in. But yeah, the proportionality of this tells you everything you need to know. They're afraid to have their people know the truth.

And they would start a war over them knowing exactly how horrific their reign of terror has been inside their own countries. Listen, I really appreciate you, Brendan, coming on and being so honest, I appreciate the work you're doing and standing up for, you know, what is to me one of the most confounding things I've seen. I know there are some Americans who are disappointed with some aspects of our country or our government or agencies, but I think all Americans need to understand the existential risk we are facing with communist countries and their ability to track our children or to

change sentiment in this country. These platforms are incredibly powerful. TikTok is unbelievably powerful. It is not what you think you're using when you see CAD videos or dance videos. That's the content we're creating. That's not the data they're collecting. These are two distinctly different things. And you need only look at their track record to understand if you should give them the benefit of the doubt.

They have a million people in concentration camps as we speak. It is not a debatable subject. and if you buy the wrong book or you use a VPN in China, you will be re-educated, which is translation for raped, beaten, tortured, and imprisoned until you

change your position. So this is a pretty sadistic and insane group of people that we're dealing with and there is absolutely no justification for taking the risk and why would we give this business to them anyway?

We should kick them out of the country. We should do that now. There's plenty of other platforms that will make a delightful app. Thank you so much, Brendan, for your time. Yeah, thank you. Really appreciate. Enjoy doing the doing the pod with you.

Thanks for all the work that you're doing. I'm an avid listener to all the stuff that you do. I learn a lot. And it's interesting to hear your voice in actual real-time speed. I listen to my podcast at one and a half. And so you sound just as good in normal speed than one and a half speed. Thank you, Commissioner. I appreciate it.

Keep up the hard work and we'll see you next time. We'll have you on again. Hopefully we get some resolution in the coming weeks to your very important letter. Thanks. Thanks, my friend. Cheers. All right. All right, it's time for OK Boomer.

It's Friday. Where's Rachel? Is she here? Is she here? Where's Rachel? Hi, guys. Hey, Rachel. How are you?

It's crazy hot in New York, but I finally got an air conditioning unit, so I'm pumped. Oh, wow. You got a lot. Is it hanging out the window? Well, actually, that's not true. We only got one AC unit for the whole apartment, so we keep our doors open unless I'm recording, and then I turned it. I have to close my doors.

So right now, I'm on the AC, but I promise. It's a hashtag NYC Life. That's right. That's right. I remember those days 100 and 100 degrees. And 100% humidity. Nothing like July and August in the city. You're one of the few people working.

I was the same as you, Rachel. When I was in New York, I would work. I'd be there in July and August. All my friends, they would go decamp for the hammies and go to the Hamptons. Or upstate New York is now, they go to Woodstock now here with kids. Yeah, well, I actually had something to say. I thought you made a really good point the other day about this is a big thing that I've noticed where I work pretty late because we work West Coast hours.

And the longer I've been at Twist. the earlier I get off work because the better I get at my job and things like that. So I thought it was, I think the discussion we had this week or you and Molly had this week over talking about like hours being put in in particular was a really, it's something that I feel like I'm starting to see a lot in my career now with my friends complaining about their longer hours. I'm like, well, if you learned how to do your job better, could you cut your hours shorter? Time management, right? I mean, people in Daly and time management when you have kids becomes required because when you have

child Rachel, Molly, and can tell you, they will need 100% of your attention for some number of hours. And so you need to whip through that punch list. And nothing acts like a forcing function more than having to either pick up your kids or drop them off or feed them dinner or put them to bed. Those become sacred times. You have to cut out. And so you become cutthroat and you start using time management techniques. But let's get to it. Who do you got on the show? So this is the first time I've ever had a reoccurring person come on the show. Eric Button was actually on episode 1372 to talk about his experience as a founder at Miami Hac Week. And his company finally came out of stealth.

He is the founder of a fintech company called Contrast. Okay. What does it do? Yeah. It enables credit card users or debit card users to get cash back when they buy goods made in America. So I thought that was really interesting, right? Yeah, really, really cool. Leap out of the app.

America. You know what? You know who loves America? Heck yeah. Molly. America. I'm just saying you could have gotten a lot of cash back on a Peloton until like yesterday. Yeah, now it's in Taiwan.

So no more Pelotons for you. But you can buy Tesla for America. Wow. That's interesting. All right. So you're going to talk about how he became a founder, why he thinks the space is important. And I love this, why he chose to stay in New York City and not move to Miami. Yep.

So that has been, I know more, I feel like more Gen Z people that I've had on the show talk about Miami. than SF as another place that they want to locate. So that was a really interesting conversation here from another party. It feels like if you were going to pick Austin, Miami, New York would come above San Francisco for most founders today. One of those three. Now, it's three cities versus one. But I think collectively founders would rather go to those three because I think the cost of living would be lower. And they're just cooler, safer cities.

And it really is just such a shame that San Francisco went from being this permanent destination. and you basically had to come here and suffer. And now it's like, yeah, I can get myself a $1,500 apartment in one of those other three cities and the boroughs, whatever, and make it work versus coming here and having a $4,000 a month apartment, which is basically what you're in for. So don't come to San Francisco, people. It's too expensive.

You're going to blow our angel money and seed capital way too fast. Come to San Francisco and get involved in fixing the city. Just saying you always say that about moving often. Not fixable. I don't think it's fixable, Molly, because they won't build. more units. They do have to build more housing. The housing thing is, okay, but that is a separate issue.

All right, all right. Let's get to OK Boomer. We'll go to OK Boomer. We sound like boomers now, bitching about San Francisco. Well, you know, Molly, they did change the DA here in San Francisco. So I do think it's just the start of it's turning. And the woman Brooke, who is the new DA is, you know, going to take a hard line on fentanyl, which is a super drug, which I really think is the key to, you know, the safety issue is like,

It's a drug that exists in the world unlike any other. It's a boom and bust city. It's a boom in bus city. That's another way to look at it. We're in the bus period now. So, yeah. Okay, boomer. Okay, boomer.

Thanks, guys. Thanks, Rachel. Sorry to pull you into our boomer discussion. Totally. Okay, boomer. I understood the assignment. Thank you, Eric Button, for joining us again on an episode of Okay, Boomer, or a segment of okay, boomer, on an episode of This Week in Startups.

might remember Eric because back on episode 1372, he was actually the one who gave me the little tour of Miami Hack Week, which was super awesome. And since then, Eric has had a startup come out of stealth. He's the founder of Contrast. Eric, let us know what Contrast is. Thank you again so much for joining us. Totally. Yeah, it gets me back on for a second time. So Contrast is a credit card and debit card that gives you cash back when you buy for Made in USA businesses. So before we dive into everything, I keep saying that the first time we met in Miami was a super awesome experience. However, we both live in New York. Why do you not live down in Miami?

What experiences have you had between the two cities? Yeah, so we started our startup in Miami. I think that was just an outgrowth of a fellowship we were in that was located in Miami. But we are a fintech startup. New York is kind of the ground zero for fintech startup. so it makes sense to be in New York. And also, you know, Miami is great. What I love about Miami is there's so much optimism around startups,

but it just doesn't quite have like the density of startup people quite yet to make it worth it for us. Have you ever thought about moving out to SF? It's crossed up mind. I have a lot of friends that are trying to get me to go out there. Actually, some friends that are moving from New York to there. Wow. Yeah, I think it's definitely a little more of a down-to-business kind of focus.

on your workplace. But like I said, New York is the center of fintech. It just seemed like, you know, the best place for us. And before New York, you were living in Miami to do a fellowship. The fellowship that you did was amazing.

I've actually spoken to other founders, including Patrick, who was the founder of Flapjack that was in that same circle with you. And I've heard amazing things, but were you living in Miami before that? Or did you just, just moved down there for that experience.

Actually, I was in New York before that. And yeah, just in and out of New York, I grew up kind of near the city. So that probably honestly factored a bit into the decision to kind of stay in New York with our startup. Yeah. So outside of this weekend startups, Eric and I have become friends since he was first on. And I got to learn a little bit more about your life before becoming a founder. And New York is not the only cool place that you've chosen to live. You lived abroad for a little bit, and I get to, I'm going to brag a little bit for you,

but you have a crazy cool history with being a pilot. So at 21, you became the youngest professional Gulf Stream 280 pilot, and have spent over 2,000 hours flying private jets across North America and Europe. That is awesome. And for what I know, you lived in Europe for a little bit, too, correct? Yeah, you did a better job than I would kind of describing. I am flattered. But yeah, my first career, I skipped college, went straight to.

to flight school, ended up flying private jets for high net worth individuals and some corporations. That took me to London for a bit. So Rachel's from Germany. We've been to a lot of the different esoteric places in Germany. But yeah, that was my background. Ended up realizing that I love building things and I started a business on the side and grew that to a point where it actually made more sense to pursue that marketing agency over flying. And then that took me to some startup clients, which kind of drew me into the startup world, and ended up running product and some design and light engineer roles for some startups. And that kind of got me interested in consumer tech. And that is kind of the road that led up to contrast. Very cool. I don't,

I don't really hear the private jet pilot to founder pipeline often. So that's super cool. And do you ever think that there would be a time where you would move back to London and try to operate your startup over there? Absolutely not. I love London for visiting, but yeah, United States is home. I really appreciate what this country has given me, and I think it's the best place to start a startup and it'll be that way for a few decades more, at least. It would be pretty silly, I guess, too, if you moved over to London when you're making

a cashback, you know, when you made, what is it? The contrast actually gives you cash back when you buy in America as your whole thing, right? Totally. We're an American focus company where our goal is to get more people spending dollars that stay here in the United States. So it definitely makes sense to be here in the United States. And that's like, you know, a very big part of what we do. Like the clothing we wear, like I wear Made in America clothing as much as I can. I kind of cheat with the stands with the sneakers because it just looked too great.

But even there, like, I'm thinking like, how do I get, you know, buy shoes that are made in America and our whole company, you know, our customer support will be here in New York as well. Why is that something that you are passionate about? Yeah, I think maybe that was probably an outgrowth of also being in Europe and seeing what a economic environment that is less risky or a little more risk-aversity in the United States, seeing what that does to culture and to progress, we have something really, really special here where ambition is celebrated, failure. there's usually a decent kind of soft landing if you do fail.

And we have just like a lot of things. We have AC in our houses, a lot of people outside this country don't have that. So we're blessed more than we tend to realize. Yeah. Away actually has a really good ad, like Away Suitcases where I think it was really interesting. I think it was 4th of July a few years ago. And I'm not sure if this is anything you believe in or anything. But this is a good ad nonetheless.

It says if you want to be a better American, get out of America. People who travel know what it's like to not belong. They're the ones making a choice to be different, taking strange trains, saying the wrong things, experiencing the world on someone else's terms, and then they come back, less afraid of what they don't understand and more empathetic to everything around them. We could use a few more people like this. So this Fourth of July, think about leaving home. It's a good way to love a country.

And I think that is a really great ad, like I keep saying, but I also think that your story really reminded me of that. 100%. I think that's so on target. I actually spent this Fourth of July working at a coffee shop for a few hours. And two individuals walked in and I couldn't not hear their conversation. And they were just complaining about the United States for a full, you know, 45 minutes. And the conversation alternated between talking about a business they were starting in the United States and wanting to leave the United States. and wanting to leave the United States because they're tired of this place. And I couldn't help but think, you know what, that business would be excruciating hard to build in Europe, but you're wanting to leave the United States. Obviously, it wasn't a logical conversation, but I think once they get the perspective

and hopefully they do move out of the United States, they'll realize what they've had here. Yeah. And do you think that this is something that the younger generation, our generation, do you think that the national pride from other generations differ, detrimentally with Gen Z in particular. Like I've noticed kind of a big shift of national pride between generations. This is also coming, I guess, to preface this, to back up, I did not grow up in America. My dad's in the army, which is very cool.

But I grew up in Germany. Didn't really live in America until I was much later in life. So right before I went to college where I spent, I think, a year and a half in high school here. And then when I went to college, I went to Penn State, which is in the middle, middle of nowhere. It's wonderful, but definitely got the full American experience when I went out there. But so I guess this is much, very much coming from like an outside perspective still looking in because, you know, growing up on a military base, it was kind of like everybody's dad had the same job. Then growing up in Germany, obviously, that's not, that's not the United States. And honestly, when I was over there, a lot of my German friends thought, you know, America was really, really cool. I come to America. People, I feel like are a little bit less gung-ho about the whole living here situation. that people might think.

I think there's definitely an element of that. I didn't go to college, so I think that may have actually been a benefit to kind of make me want to think for myself and evaluate things for myself instead of just kind of getting caught up in the memetic attitude towards, you know, whether this is a great place or not,

which I think it really is. Yeah. So you think these big changes in like whether or not people are really enjoying living here come from those four years, like once they leave high school, Yeah, I think college has a way of, you know, changing people's opinions and thoughts and outlook on life, right? When people still have a brain that can, you know, is forming opinions and thought patterns.

So I think as, you know, a way, it's kind of a dangerous cycle there. But, you know, I know plenty of people my age who are, you know, getting perspective. I just had a friend come back from a month in Spain. And he told me last week, actually the same friend that's moving to SF, he's ready to buckle down. build things that he saw that he clearly wouldn't be able to build outside the United States. Yeah. I guess it takes a little bit of perspective

seeing from the outside. I think I think I very much agree with the ad in terms of like it goes also to like the grass is always greener on the other side and you don't know what you have until it's gone. Very much all encompassing like I was just talking to a friend very different than the startup world

but they're trying to make it like in the music industry and they don't live in America and they were talking to me about oh like if I live in the States, like, it's so much easier. You know, like, there's so much more opportunity. And I'm like, wow, like, this is so interesting to hear from, from somebody that's, like, never been here, never lived here. And, like, how much, like, the Hollywood and the media that, like, Hollywood surround

has really impacted, like, their thought of, of the States. So always interested in hearing anybody else's other opinions about what their experience is living in America and how you think it's impacted your national pride. I'd love to hear it just because it's something that I didn't necessarily, like, I wasn't surrounded by a whole lot growing up other than, you know, I guess my short time in school during, I went to an American international school overseas. So that was kind of cool. But all my friends were on the economy and like off.

So really cool to hear about that experience. And do you think that being a pilot, if you weren't a pilot, you wouldn't be a founder? Like what happens if you did go to college? Good question. If I did go to college, good question. And I might be a little more track profession. That's really hard to say. But I've always been a contrarian from day one.

So I don't think I would have gone to college. And if I would, I would have probably done some absurdly esoteric thing, like being a firm scientist or something. Yeah. I can see that. One reason why Eric and I kept in touch after Miami is he has great book recommendations and really good Wikipedia rabbit hole. So I can totally see you have gone to college.

somewhere where you can do one of those, like, build your own majors and done something, like, completely absurd. And I still think you would have made your way into founding a company, honestly. I feel like you're very much like a natural go-getter. I know your brother also works with you. Do you mind talking a little bit about what it's like working with a sibling and how that might differentiate working on a small team with people that aren't necessarily related to? Yeah, that's a really good question. I think we're fortunate because my brother and I have the same macro goals, but at a micro level, we approach things from a different, different levels. So we're both, we both recognize that we're very risk-friendly. We have very high-risk tolerance

at the macro level for our life decisions. But at the micro level, we're very different. He's a little more cautious. He wants to see the numbers. And I'm more like, let's just get that meeting on the books. Let's sign that deal. And he's more like, let's slow down. Let's, Let's diligence this for a minute. So I think we complement each other well because we're heading in the same direction, but we might not take the same route to get there. Yeah, no, that totally makes sense. Do you see mistakes made by other founders around your age that are being made that you

think are really avoidable? Yeah, as far as mistakes made by other founders, I think one thing that's worth shying away from is trying to catch a train that's leaving the station versus maybe thinking ahead and thinking for yourself. So maybe a bad startup to be doing right now is jumping on a crypto train when you could be thinking towards health tech or hard tech or maybe the future of AI or just an unpopular opinion because our startup, we run into some headwinds where we're slightly unpopular from the stance that

we're building something that is slightly political, which is a little bit of a headwind, but it's also an advantage because it's kind of like a wide open space for us. Have you seen any pushback from the contrast debit card yet? No pushback. No pushback yet. But I'm sure there's some people we've talked to that have quietly decided they, you know, don't want to invest or do business with us, which we're, you know, completely okay with.

And have you had people coming to you then on the opposite side of things, been like, wow, I can't believe this doesn't exist yet? And to that question, why doesn't this exist already? Yeah, that's a good question. Actually, we have a tiny link at the bottom of our website, which says careers at contrast. It just pops open your email browser, so you can send us an email. And pretty much every day we have someone being like, hey, I love this to death. I want to work here.

So there's so much support pouring in every day I get a little DM from someone being like, hey, I love this. Let's grab coffee or let me know when your next round is open. I'd love to put in a personal check. So a lot of people are on this train. I think we're writing the beginning of a wave. We're seeing a ton of manufacturing jobs come back to the United States. If you look at the Google search trends for Made in USA,

it's double what it was in 2019. So it's the beginning of a wave and we're getting a ton of support. Wow, that is insane. Are there any other competitors in this space right now? Because I feel like this, this would be something that a lot of people would be. Like you already said, you're getting incredible, incredible amounts of support from it. But I feel like maybe just a few years ago,

there was a big push towards like the whole Made in America pipeline, especially for consumer goods. I remember there was a bunch of fashion brands that really popped up and they were talking about onshoreing things. I'm surprised during that whole wave of consumers being really conscious about the clothing that they wanted to be made in the States that a credit card or debit card didn't follow. Why do you think people were hesitant to dip their toes into the space?

Yeah, really good question. We're seeing some startups or some companies like Walmart. They're investing $350 billion over the next 10 years to get more products made in the United States. But on the other hand, you see Amazon, they're funding lobbying efforts against legislation that's trying to force them to mark what's actually made in America. It's not. Amazon does not want to go there for obvious reasons. So I think we're seeing a space that is just not strategic for a lot of these big brands to move into for startups. there's, you know, we have our own headwinds moving into the space, which I love.

I think that's just a really great signal. And, you know, the few people that are in the space have not executed at the level we plan to. Really? And what do you think the biggest issue is with executing of what is the big problem that people are running into? I think no one's just assembled a really talented team to tackle this problem. There's so many people, like if I wanted to buy a pair of Made in USA shoes today, I wouldn't know where to start. I'd probably have to start a Google search

and that would take me to Reddit and I have to read a few comments or go to a Facebook group and kind of start digging and find out, okay, is it just Alan Emmons that has white sneakers in the United States or does someone else actually make those?

And no one's actually doing that research because you have a buyer that is a high willingness to pay, actually a willingness to pay extra because they're probably going to be expensive sneakers, but no one's connecting that consumer with the brands. So that's what we're doing.

Very cool. And what has, what have you, I guess what issues have you run into on the fintech side of things? Do you see any other difficulties that other people and other industries don't see for those that are interested in breaking into the space? Yeah, fintech is very compliance heavy. We spent an awful lot on compliance and legal, but it's worth doing right the first time. For fintech founders, yeah, I would say just do vendor selection very, very carefully and get it

right the first time. Yeah, totally, totally. And what advice do you have, I guess, for any other people that are looking to become founders, especially those from untraditional career paths? Yeah, I've seen some of my friends who are also starting companies now. And one thing that they're doing that I've just been inspired by recently is talk to VCs from day one. Worst case, they shut down their idea. Don't let a VC shut down your idea, but they're a good way to sharpen your thinking because they're coming at it from an approach of, you know, they have skin in the game when they're talking to you of like, all right, is this going to make money for me or not?

And best case, you start a relationship from day one and they could become, you know, an investor and change your company. That also has a really great effect of making VCs feel like they got in not only at the ground floor, but like before you even entered the building, right? It's like they might feel like they have a special deal just because they kind of happened to know you before you were even raising. before you even incorporated. So I'd say talk to VCs from day one.

Most of them are pretty accessible. And just sharpen your ideas like that before even you start building. That's awesome. We actually haven't heard that advice before. So I think that's really interesting. Super duper excited to see what you're up to. And super excited to see you again around New York. Yeah.

Let's grab some more dim sum or high food. Right. Of course. Awesome. So thank you so much, Eric, for coming on the podcast. Where can people find you? Yeah. Twitter is a place to find me.

I tie most of my self-force to my follower account there. It's Eric Jacob button on Twitter. So my first name, Eric with the C, Jacob, and then my last name button. Give me a follow there. Send me a DM. I will definitely respond. Awesome. Thank you so much again, Eric.

And if anybody else has a recommendation for who we should have on a segment of OK Boomer, you guys can find me at at underscore Rachel Braun also on Twitter. And I do not tie myself worth to my follower account. So if I don't answer the DM, just DM me two more times. I'll be sure to see it. Yeah, or DM me and I will call Rachel. Perfect person. Awesome. Thanks, Eric.

All right, everybody, have a great weekend. But don't worry, you don't have to go very long because we'll be back on Sunday with another edition of this weekend climate startups and VC. Sunday school. And we've got a ton of interviews coming up. We're going to do a lot of interviews this summer. Molly sat down with the CEO of Mark Cuban's new drug company Cost Plus. That is just an outstanding interview. And if you remember back to our interview with AJ Loyakino of Capital RX, we're starting to put together a real deep picture of what has happened and what has broken drug pricing in America in these two companies that are trying to fix it. And it's, it's newsworthy.

It's a real newsmaker kind of conversation. Yeah, I love when we thread together a couple of different CEOs, founders, and experts on a subject and tell you that story over time. And you can go into the show notes, of course, and we'll link back to them. And then next week, we're going to talk to the former anchor founder. You know, he sold to Spotify. And that should be a great discussion as well. Dishy. Good stuff ahead.

Don't forget to follow us on Twitter at Mollywood at Jason at TWI Startups. And join our Twitter community at this week in startups.com slash TC to keep the conversation. You guys have given us some great tips and heads up on stories already. And it's just a fun conversation. We were training a password manager recommendations the other day. It all happens in the Twitter community. It all happens in the Twitter community. And we're hiring three more video editor producers.

So we're looking for people who love startups and who can, you know, basically come up with segment ideas and also edit the videos, make clips because things are growing so much over here. We're going to be launching two more podcasts in the fall. And so if you are a video editor and you love the topics we cover like tech and the future, and All In and This Week in Startups and the two new podcasts that are coming, you can just email your resume to producers at this week in startups.com. The producers will get it and now we'll set up an interview, but we're looking to build the team here because things are going so great in podcast land for us.

Get in here. Get in here. Join us. It's a fun time. We have a fun time in our group Slack and our I message group. And we'll buy you the latest gear and you get to work from home and you get paid a good salary and you get a little piece of the carry too. So it's unlike any other video editing job.

You're actually going to be like in the center of power. So it's kind of a cool gig. I join us. Good stuff. Good stuff. All right. Have a great weekend, everybody. Have a great weekend.