This Week in Startups - Apple’s App Store Loss, AI Persuasion, and an Interview with Tyler Denk of Beehiiv | E2120

Episode Date: May 2, 2025

Today’s show: Jason, Lon, and Alex break down a loaded week in tech: Apple’s 27% App Store “link-out” fee gets shut down by a judge—unlocking margin for startups and slashing CAC; AI bots on Reddit’s r/ChangeMyView are now 6x more effective than humans at changing minds, signaling a seismic shift in online discourse; and Beehiiv CEO Tyler Denk joins to discuss building in public, rapid product iteration, and the irony of being critiqued like a market leader for innovating too fast. The big takeaway? AI is evolving fast, gatekeepers are falling, and founders who build through chaos are best positioned to win.Timestamps:(0:00) Episode Teaser(1:20) Introduction and venture capital power law(4:14) Economic data and labor market trends(8:19) Mimicking trades and Dub's Series A funding(10:05) Kyte - TWIST Listeners: Go to https://kyte.com/ and download the Kyte app today. Use code JASON to save 10% on your first rental.(14:48) Apple App Store ruling and startup implications(19:44) Atlassian - Head to https://www.atlassian.com/startups/twist to see if you qualify for 50 free seats for 12 months.(21:44) App store fees and antitrust concerns(27:34) Fivetran's acquisition and Lena Khan's impact on VC(29:58) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups(32:02) Venture capital scenarios and M&A future(37:23) Jason’s Starbucks tweet and union perspectives(45:02) Reddit's AI experiment and online discourse(48:16) Interview with Tyler Denk from Beehiiv(49:52) Beehiiv overview and customer base(51:02) Beehiiv's revenue strategy and Boost feature(57:06) Balancing revenue streams and feature quality(1:04:30) MRR growth and founder transparency(1:08:05) Brand marketing impact and staying focused(1:11:44) Hiring challenges and platform comparisons(1:14:01) Twist 500 initiative updateSubscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcpLinks from episode:Beehiiv: https://www.beehiiv.com/Follow Tyler:X: https://x.com/denk_tweetsFollow Lon:X: https://x.com/lonsFollow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelmFollow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanisThank you to our partners:(10:05) Kyte - TWIST Listeners: Go to https://kyte.com/ and download the Kyte app today. Use code JASON to save 10% on your first rental.(19:44) Atlassian - Head to https://www.atlassian.com/startups/twist to see if you qualify for 50 free seats for 12 months.(29:58) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartupsGreat TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarlandCheck out Jason’s suite of newsletters: https://substack.com/@calacanisFollow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.comSubscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

I would say I need to coin this phrase. I don't know what this framework is, but there's something that I have observed where we have launched so many features that are totally unique to us that other platforms that we compete with just don't have. But if we launch this feature and let's say it's four out of ten, like maybe there's some bugs, it's like not as smooth. People ding us and be like,

oh, I don't like this platform because this one obscure feature isn't that good, although it's not offered by any other platform. I don't know how to like better phrase that. I got this. Do you know DJ Khalid? Of course. Yeah, of course. Okay, so here's that album, like,

suffering from success when he, like, does the thing. That's what you're doing. You're building so much stuff that you're going so far ahead of competitors that if you stumble a little bit, people think you're tripping even though they're not in the picture. This Weekend Startups is brought to you by Kite. Looking to get out of the city? Rent a car with Kite.

Kite delivers rental cars to your door. No counter, no lines, no hassle. Download the Kite app today and use code Jason to save 10% on your first rental. Atlasian. From MVP to IPO, Atlassian for startups provide your team the right tools to plan, track, and collaborate on work. Head to atlacian.com slash startups slash twist to see if you qualify for 50 free seats for 12 months. And LinkedIn ads to redeem a $100 LinkedIn ad credit and launch your first campaign go to LinkedIn.com slash This Week in Startups. Hey, everybody. Welcome back to This Week in Startups. I'm Jason Kalakan. You know me for the All in Podcast. You know me from Angel investing the award-winning book in 12 language. It didn't win any awards, but it's a

12 languages and I got paid a million bucks for it, so that's good for my first book. It works out. Angel, 12 languages. You read that, you learn how to angel invest. If you want to angel invest a little bit more, we have something called the syndicate.com. If you're an accredited investor, I'm starting to sheer deal flow on there. We've done about 300 deals. A couple of them have done extremely well over time, like Calm.com, grin, and we've had some great

returns, but you need to read the book. You need to understand angel investing before you get into it because it all follows the crazy power law. We had a great episode with Stephen who wrote the book, The Power Law, an outsider who wrote just about the power law. Lon, you know, the Power Law, the Pareto principle, the 80-20 rule. I have not read the book, but I've heard a lot of discussion of it on this show and from you and videos over the years. So I feel like I'm roughly familiar. And that's Lonn Harris and our headquarters in Austin. I am in Miami for F1.

Allens doing a little event. And he's Alex in Providence, Rhode Island. Yes, sir. Alex, explain to Lon, simplest way you can, what the power law is. The power law. Don't GPT it. No, hands. Okay, good.

Hand check. Power law indicates that most of your returns come from outlier outcomes. So essentially, if you want to think about it in the 80-20 context, 80% of your revenue will come from 20% of your customers. And you can also apply this in reverse. You might think that 80% of your complaints come from 20% of your customers. So essentially, it's always the outside. outcome the far end of the chart.

That matters the most, both in venture returns and also pretty much everything in business, actually, Jason? Depends. You know, if you ran a supermarket, there would be some power law, like maybe the eggs and the mill outperformed everything else, but it might be a

more fair distribution. Wouldn't be as extreme. And even amongst the power law, the Pareto principle, 80-20 rule, that's actually would be delightful in venture if 80% of your returns came from the top 20. It's typically 99% of your returns come from your top 2%. So it is as polarizing as possible, which means it's confusing, which means everybody works really hard. And then sometimes people hit. And that's what we talk

about here at this week in startups. We also run a program called Founder University. You can go to founder.com university where we teach these concepts and we teach people how to build companies. typically they know 60, 70 percent of the curriculum we present to them, but the 20, 30, 40 percent they don't know. Oh my God, those could be the things that change the fate of a company. We like to talk about big tech news here because that affects little tech. And we like to talk about little tech because that means startups and once in a while we'll delve into politics if it has an impact. And there is always economic data that we like to just take a cursory look at and understand if it is meaningful to startup. So what's in the economic

data here on Friday, May 2nd, 2025, Alex. Well, the big news is that jobs data for the United States came in a little bit better than expected. There was some information from ADP that came out earlier this week that said that, hey, maybe only 60, 65,000 jobs were added in April. Turns out the number, according to the Bureau of Labor Statistics, is plus 177,000. This has brought people lots of joy. The downside Jason sticking to the macro picture is that the stronger the labor market is,

the more reticent the Fed will be to cut rates. So it's kind of good news, but also a little bit of bad news. Yeah, and you know, for entrepreneurs who are building startups, talent is critical, but we are at a junction in talent. And that's really important for people to understand. You can do more with less. Startups are crushing it. How are they crushing it?

Well, the way startups are crushing is they're doing my ADD philosophy, automate, delegate, deprecate. What does it mean? You can automate a task using AI. I go ahead and do it. And then let everybody in the company work on something else that's higher level. If you can delegate it, hopefully to another region or an outsource firm, you probably want to do that if it's not core to the mission. Why? Well, if you delegate it, you can focus on what is core to the mission. The example might be, you know, if you worked in a

restaurant and you had this great, amazing Michelin-Star restaurant, yeah, you might want to go die for scallops if you couldn't get them and you happened to have scallops, you know, and you're on the beach where the best scallops in the world are, but you might be better served, finding the best scallops, sourcing them from an outside vendor and then having them die for scallops. Silly, stupid example. We live at the lowest unemployment of our lifetimes, Lon, and people don't realize this. And this is one of the things, you know, again, here we go, politics. You know, a lot of this election was based on people's feelings about the economy.

one feeling that is absolutely incongruous to reality in the United States is the employment. There are so many jobs available here at great rates. However, Americans always want something a little bit better and they may not want a certain class of jobs and the jobs might be in regions where they're not and they're unwilling to move. But there's a reason why everybody wants to come here. It's because we have 4% unemployment. The only caveat to that lawn is if you look at, labor participation.

Labor participation is at about 62, 63%. Peaked under Clinton, about 69%. Alex loves pulling up the Fred chart of this as well. To make me look smart, but you can see in the unemployment, just, you know, I think we're looking at the history of unemployment data. Of course, people are going to debate. Do you trust data? Are you X-Files?

Do you think that somebody is, you know, cloning people or lying about the data? The reality is the data is directionally correct. 62% right now. 62.6% April 2025. You can actually see COVID very clearly. And what's interesting about this chart, I think, is that we were at a bit of a point of stasis before COVID hit. It was actually trending back up after some declines after the Great Recession.

But right now, if you look at the edge of this chart, it's actually trending down, which, you know, I'm going to start asking this. Are we seeing AI show up in these numbers? Maybe. Maybe. Maybe. Okay. That to me is suspicious.

Too soon for that. I think it will, but you have to understand. 63% of the workforce population is a pretty big number. You would have to have millions of jobs replaced by AI. And then if there were millions of jobs, it would be in certain categories, again, talking about the power law. It would be drivers. It would be cashiers.

It would be retail and having robots or people. So if it was happening acutely, you would have groups of people fighting AI in the streets, in the unions, et cetera. So until we see that, it's probably not having it. What's in the news? All right, Jason, one thing you mentioned another couple episodes ago was people mimicking traits, people out there trying to say, hey, Pelosi's doing this or J-Call is doing that. Well, one of these companies called Dub just announced that it raised a $30 million series A.

Now, I'm going to tell you about the company and the investors and everything else first, but I have a very important thing to point out before we get to that, which is that the founder took the world's best photograph. And I'm going to share this, and I want you guys to get me feedback on how excellent this headshot is. Observe. Here we go. Yes. This is a 1980s school photo style, like crazy background, crazy lights. Neon background. I just, I love that. That is

actual swag, I believe, as they say. I think the addition of the Steve Jobs turtleneck with the rest of the aesthetic is a very nice that. You got to admire that. I know the people who do Pelosi tracker. And that's called autopilot. And autopilot, basically mimics people's trades. And I guess their concept is you would pay to subscribe to that. So if I was a more active trader, you would then, you know, every month I might give my trade. And I would say, oh, I'm putting money into K-Deft. And this is why I believe Korea's got really smart people. Samsung, you know, what is it, Hyundai, you know, like a lot of hardworking people in an interesting

region of the world. And they're good at physically building stuff. And they make hardware and they make software. Kind of reminds you of America, industrious, you know, 1950, 60 aesthetic, I think, or, you know, a culture in terms of wanting to grow and build stuff. So I kind of like the people. I like the place and I like the category. And yeah, you know, as Tony Stark said, dad did it. We do it. I'm going to keep doing it. Selling weapons. It's all good. So autopilot's the other one. If you travel a lot, you got to deal at renting cars. It's just a fact. It can be slow, confusing. And most of the time, the experience is stuck in the past. It takes an hour to rent a car, two hours to rent a car. And I recently became aware of a really cool startup called Kite, K-Y-T-E. With Kite, instead of going to a dingy desk tucked into the bowels of some airport parking garage, a car is delivered right to you. That means you can get a new professionally maintained car brought to your door without dealing with the lines. And I use this. Many of you know, I moved to Texas, I'm in Austin, and I was in the Bay Area. I was going to be doing a lot of meetings. I was going to be traveling around. I needed a car. All my cars,

in Austin now. So I popped out the kite app. Bing, Bing, Bing. I had my car waiting for me at SFO and I avoid waiting around. Kite doesn't do extra fees. It operates in large cities around the United States and I've used it in both L.A. and San Francisco and love it. Here's a call to action. Download the kite app or book online at KYTE.com. That's KYT.E.com. Go ahead and download the app now so you have it ready to go. Use the code Jason at checkout. You get 10% off your first rental, which could be significant. Don't forget to use the code Jason. Download the app. A-Y-Y-Y-Y-E-D-C-E-D-COM. Right now. All right.

So, DUB, raise $30 million. It's a series A, led by Notable Capital and Neo, which we mentioned on the show because of their Neo-Scholar's program just a couple episodes ago. Oh, yeah. Jason, the company claims a million downloads. Now, that's not a DAU or MAU number, but the company's still pretty young, so I'll let that slide. On the business model front, they charge a SaaS fee, so $10 a month to subscribe to the service,

and then you can follow somebody. It'll do the trades for you. And I dug through their FAQ, and Jason, this one's for you, because I know you're a big Robin Hood guy. They do, I believe, also get revenue from payment for order flow, the original impetus behind Robin Hood's amazing growth. So I think this is one to watch. The thing is, how many of these do we need?

Because Robin Hood had a great quarter, Jason. So I'm curious how much room there is for more consumer-facing trading applications. It's basically what autopilot's doing, except I think they actually make the trades for you here. So whereas I think autopilot doesn't make the trade for you, they want to work with Robin Hood, etc. I think that people want to copy people's trades, but then I guess do you want people to copy your trades becomes the issue? And maybe you don't want people copying your trades because it's a lot of responsibility. So people have pitched me on doing an ETF, you know, and, you know, I might make some margin on or whatever, you know, when I'm doing my own book. I don't actually want that

responsibility. I don't think it's, it might be like a zone of excellence I could have, but I feel like my zone of excellence is podcasting. and picking, you know, really early stage startup. So you've got to focus on that. And so much of then your persona is going to be caught up with, well, are you making people money or not? Think of the anger that those people will have for you if your trades don't work out. Even if it's not you promote like Jason promoting it himself, like, hey, follow my trades,

invest with me. I still think if people are following your example and you lose them a bunch of money, they're going to be mad at you. You're going to be creating this whole. When's the last time you read a 13F filing? 46 years. It's been 46 years. I'm sorry, I'm being a brat. A 13-Def filing is what institutional investors have to file with the SEC. And you can often see what they have. So it's not like Billy Ackman's going to be like, you know, posting notes and throwing them to dub to let them know. I think, Jason,

you can pull this stuff from filings and then whether they want you to or not, you can kind of play along. Also, people now explain their trades on social media as a regular practice. They talk about what they're doing and why. They do it because, really two things. One, I think they really genuinely want feedback on their trades. Like, they want people to understand, hey, here's my thesis, here's why I'm doing it. And then there's, well, they want people to then either follow their trade or go against it, etc., and get that level of market feedback. So, you know, if you look at the funds like Hindenburg research, which I think is winding down, I think they made enough money, they're going to wind down. But they would find a target.

They would say, we believe this company is not worth what it's worth. We think that there are some issues with this company. Here's what we found in our research. By the way, we have shorted it. Now you read our research. If you think this is a good company, by all means, keep buying it. If you don't, feel free to short it or sell it. And then obviously that starts a preference stack. So people can question the motives of all this, but in a free market theory, a great company that has a bunch of shorts against them, those shorts will get burned and incinerated and it will be painful, which is what happened to Tesla shorts after they actually ship the model three, right? When they ship that, it was like, oh, my God, this is the best selling car on the world.

Oops, we made a mistake shorting the stock. It's an interesting company. I think the biggest news, obviously, in the industry that we should really get right to is Apple's control over the app store because paying a 30% tax to Apple is really does break a lot of businesses in the consumer subscription space or in the subscription space, music subscriptions, video game subscriptions. This is too high of a tax. And people have to be. have to rat around it and then Apple has too much control over what gets put on your iPhone. They consider that a feature. Most of us consider it a nuisance. Like, I should be able to low what I want on my phone. And if I load spyware or something silly, well, that's on me, just like on your

desktop. But here we are. What's the news with the App Store ruling that just came down? This all kicked off with Epic Games suing Apple over this. Now, there was kind of a split decision from one court. The Supreme Court declined to step in. So that, it ended. up holding Jason. And so Apple responded to the court telling it to open up its app store policies and allow for people to send customers to the internet and so forth by inventing a new tax, which is that if you send people to, I don't know, Jason's app.com, Apple still demanded a 27% cut instead of a 30% cut, which was the most blatant example of Apple saying we are going to try to technically comply with this ruling in a manner that does not disrupt our business.

Well, this week, the judge came back and said, you guys are being. quite bad, I'm annoyed, and you have to knock it off. And the judge went pretty hard here, saying that they hid the truth and that VP of Finance Alex Roman outright lied under oath. Like, this judge is mad about what Apple did. So the news is that now you can send people to your website to check out there, which means that effectively all revenue you can generate now on the iOS app store is higher margin because you're not giving 30% of it or 27% to Apple, which means, Jason, my thesis, is that now any company that distributes via the iOS App Store, which is a lot of startups, is now inherently more valuable. So to me, this is a very

bullish moment for startups because you can now build and sell on mobile phones to the most valuable customers iOS compared to Android and not have your face ripped off by Cupertino. 30% is a big take. You know, Stripe takes 3%. Apple has an argument to get paid some amount for being a digital retailer. They will handle promoting your app in the app store. They'll handle, you know, making sure that all the apps in the app store have been checked for viruses and malware and that they hit a certain standard and that they have a certain level of decorum. They're not spying on you. They're not checking your location. They're not, you know, so there are valid reasons for Apple to get a cut of revenue through the app store for maintaining a great app store. Just like a retailer,

you know, they might not put anything on their shelves. They might not put clothes that will light on fire when they're on your kids, God forbid. Like, and they're like, yeah, we want fire resistant or we want non-GMO or we want no hormones in the milk at Whole Foods, for example. So should Whole Foods for running that building and for making sure that the food in Whole Foods hits a certain standards, should they get compensated, of course? Really the question here is, is the amount of the take rate. Nobody begrudges 3% to Amazon, to Visa, to strive, right? There's some margin in there. Nobody would, you know, if you were selling a physical item in a physical location with people in it, would say, you know, okay, yeah, we'll make it for $5. You sell it for $10. The question really is,

the amount here, and it really does break economics. I saw this up close and personal with many of our startups who would tell me their revenue. And then I'm like, oh, my God, we're profitable. and oh my god our customer acquisition cost is 50 and you're selling the app for 70 so we made 20 bucks and they'd be like ah oh bad news actually you got to take 30% of the 70 we're actually making $49 when people go through the app store and we're acquiring people for 50 so we're losing a dollar

every time somebody buys the app this is going to give more room for CAQ which is to be good for ad networks because they're good people going to be able to spend a little bit more money Jason Kack for folks who don't know the acronym? Yeah. Customer acquisition costs. So, you know, you want to buy ads like everybody sees ads on TikTok or YouTube or Google search or Facebook meta, et cetera. Hey, go buy my app.

There's like a whole formula that goes in. What's the lifetime value LTV? What's the customer acquisition cost? Lifetime value. Hey, do people sign up for year four or five or six of your app? Spotify? Probably yes. Netflix, probably yes.

You know, your fitness app, your dance app, your. or learn to play guitar app, maybe not. Maybe people keep those for two years on average or three years. So the stickiness of the app really matters too. And yeah, couldn't happen to a nicer company. All right, if you're shipping a product or rolling out an update, you're building a company, you need to be organized, right? We know that.

Atlassian has exactly what you need to streamline your work and smash her goals. And the Atlassian for Startup program is packed with all the tools you need, like Jira, where you can track every task, sprint, and bug. That's the industry standard. Confluence, another industry standard for team collaboration and documentation. And of course, Loom for quick video explainer creation. Now, Loom is really brilliant. My team started using Loom on their own.

They started paying for it on their own. Why? They wanted to get credit on the investment team for communicating to me, the general partner of the firm, why they wanted to invest in a company. So they would do a loom where they recorded over a recording, of an interview they did with a founder or visiting their website and going through why they want to invest in a company. And this was so great for me. I would be skiing in Japan. I would be on a flight to New York to see my parents. And all of a sudden, I get a notification

for one of my team members. Hey, watch this loom. And I get the link for the loom. I click it. And then I can put comments at any time. So it's like doing a conference call, but on my time, asynchronously. And I can communicate right there on the video. Also included in that Lassian for startups is Compass, Gera Product Discovery, Bit Bucket, so much more, all powered by Atlassian intelligence. That's their built-in AI. Atlassian software helps companies like Canva, Cloudflare, and Riving, keep growing and innovating. Whether you're brainstorming on sticky notes or scaling to the big leads, Atlasian is here

to accelerate your startups growth. Check out Elassian for startups where eligible startups get up to 50 seats for free for one full year. That is absurdly generous. Why can they be so generous at Atlassian? Because they're the standard. Atlassian is the standard. And they are generous to startups because they were once a startup. I remember meeting them 20 years ago in Australia. What a great company. Head to atlasian.com slash startups slash twist for complete details. How close to 30 would you, would you let Apple go before you got mad? I would. And now this is going to seem even more cutthroat. I would have a preferred partner program that gets you marketing and top level distribution for 30%. cut and then I would have the standard cut be 10.

And would you recommend to startups that you back, average case, I know there's always exceptions, to go for the 30 or the 10 in that dichotomy? Depending on what Apple does for you. So now you would be forcing Apple to go above and beyond just making sure that, you know, the marketplace is generally clean and has standard rules. I also think they should have a VIP tier that gets your app approved same day, guaranteed within, you know, 12 hours of you submitting it. You go to the front of the line because that's another thing.

You have everybody in the world making apps. It's so easy to make an app. So you have this really long line around the corner. There needs to be like the equivalent of clear. You do need to provide value. And I think one of the problems with a monopoly or a duopoly, which is really what the apps are are, it's a doopoly. Yes.

And the doopoly magically apps has the exact same fee structure and the exact same issues. It's very strange. Like, wait, Google Play has the same rate as Apple? Huh. You would think in a competitive market. that there would be some argument. Maybe Google would say, I'm going to give 15% and maybe get more app developers to launch better versions over there.

So this is where Alina Khan, you know. I was going to say, if only someone at the FCC were willing to take on these antitrust situation. Well, this is a, and this goes back to tactics. This feels, and, you know, if you go and you price fix, which many people did for drugs and other devices and everything on a golf course and you're like, what are you charging? Like, 899. Like, what are you charging?

999. You know, 849. seems like a pretty good price or 839. It's like, yeah, okay. Yeah, and we'll just, we'll keep it between those two numbers. You want to get a beer in the clubhouse. We're going to play $100 a whole. Like, that's how this stuff goes down, I think, is people just sort of, even if it's not

explicit, they kind of lightly trend towards this. And that's a tactic where you could say, hey, we're going to launch an investigation because you have the exact same number here. And we would like every piece of information you have on how you came to that number. And we want you to record every conversation and give us all that. And by the way, we're going to send three lawyers over to meet with your team because it's the exact same number. And then people might get the idea like, hey, maybe, you know, you should be more competitive with each other instead of price fixing. And price fixing and price dumping are very specific tactics that are easily determined by behavior as opposed to future competition, you know, which I never liked.

But this is great. I would love to see Financial Times, Economist, Wall Street Journal. when you open up the app, it just says, go to our web page and sign up. And do they need the extra revenue? Man, now more than ever. We talk about this in a media context, but I'm more excited about like small game developers who can now generate so much more money from their application. The vibe coder who's building their first app and will now keep all the money that,

well, maybe all the money that they make. I mean, to me, it's the little guy that wins here at the expense of all of our 401Ks because everyone holds Apple stock. This is all being done because of epic games, the makers of Fortnite, am I correct? Yes, sir. And they have this guy, what's the same, Sweeney? Is that his name? Tim Sweeney.

Tim Sweeney. This guy's like a hardcore mofo. I love this guy. He's like, I'm going to take on Apple and I'm going to do it for five or 10 years. And then he's like in our app store because I think he's got his own gaming app store. He's like, there's no revenue share until you hit a million dollars. So to your point, if you're an indie developer, hey, you'll take the first million. That would be like substack or another subscription service saying or Stripe saying, yeah, you know, until your account hits 50,000, the first 1,500 fees, that's on us.

If you break 50, then we'll charge you. Or substack saying, hey, Alex, you know, your first $100,000, we know you're an independent journalist. We're not going to take any of the 10% until you hit 101,000. You'd be like, I love this company. Interestingly, the Steam store, you know, like the video game platform, Steam, that's the opposite. They take a 30% cut of all game sales. but if your sales exceed 10 million, they reduce their cut to 25%.

And if your sales exceed 50 million, they reduce your cut to 20%. So you get to keep more money if you're already making a killing, but if you're an indie developer, you lose 30%. They do that because they can. Yes. And because Steam, you can list your game on Steam or not.

And that's the difference here between the Apple situation, the Steam situation, and I would actually say the supermarket example, because if I want to go to Whole Foods, I can also go to Trader Joe's or any place by car will take me. But on Apple's iOS, you know, platform, I only really have one option. You have no choice. Yeah.

No choice. The other option would be to force Apple to allow other app stores. I think that might have happened in Europe. That might have been part of one of the European settlements that they are going to have to have, I think on Android, you can load an alternative app store. And some people do. And I think this is also where cooperatives, I know this sounds silly, but I think cooperatives where, you know, everybody says, I'll give one percent of my revenue to this

nonprofit organization to run an app store across all the platforms that is, you know, governed by vote, you know, by, you know, this board that represents small medium and large size app developers. Something like that consortium could be a great counterpoint here. But, you know, this is all impacting startups. Yeah. On brass tax and on their profit margin. So if you can get people to sign up on your website, you should certainly do that.

And that's what a lot of people wind up doing is they do all their marketing, all their advertising, come to our website, sign up at our website, you know, and they just really kind of bury the App Store subscription. We mentioned Lena Con earlier, and I was going to troll Jason with a studio Ghibli style Lena Con hero portrait with a Halo. It took several iterations to get this done, Jason, but just because I've been doing it in the background, I present to you. Our Lord and Savior.

It's Lena Con. Oh, there she is. Oh, there she is. There she is. I mean, I don't have any personal, I know. What's the word? Personal.

Anomosity? I know. Animus or animosity? Animus is what I would use. Animus, okay, I'll go animosity, animus, any of those. Towards her as an individual, other than she cost me a lot of money.

So other than effing with my paycheck, I think she's great. She seems like a wonderful person. But she killed M&A in the country and she's really screwing up the ecosystem. I'd say she's the number one reason that venture capital in our country. She was the number one challenged venture capital in the world. Well, first they came for the billionaires,

and now they're coming for the cent to millionaires. Who's next long? It'll be us. Well, you know, I was just going to say. And the employees of every company who can't get bought and shuts down. I'm tweaking. I will say, I think that image looks, if that's a little bit more like Fist of the North Star, Lena Con,

than Studio Ghibli. but I'm going to reference that five people in the audience love. What do we got next? Let's get through this. All right. So I want to talk about a startup acquisition, Jason, a company called FiveTran, bought a company called Census.

Now, if I'm not familiar with these two companies, that's because they work deep in the backgrounds of the Enterprise Data Movement game. Now, FiveTran, you may have heard of and mentioned everyone listening because they were valued at five or six billion dollars back in 2021 when they raised a nearly $600 million. dollar series D. So an absolutely huge company. Now, census does something very specific, which is called reverse ETL. ETL stands for extract, transform, load. They do the reverse of that, taking data out of, I believe, data leaks and putting it into software applications. Turns out, that's a whole business. And now they've sold. We don't know the actual dollar amount of the

transaction, but the company, census was last valued at $630 million as a post-money valuation in 2022. My thesis, Jason, is that because and Jason Horowitz backed both of them. This is probably a marriage of convenience, but I wanted to ask you if I'm being too cynical about this schmushing. Hey, founders, I want to share with you an experience I love. It's when I get an ad that is relevant and not some nonsense. Like the other day, I got an ad for a fund management platform,

and it was like a new one I'd never heard of. I clicked on the ad because, well, I managed four venture capital firms. We scheduled to call with them, and it was amazing. How did this happen? Well, I was on LinkedIn because I'd like to share links from the podcast this weekend start up right on LinkedIn. In fact, we live streamed to LinkedIn three days a week and we get a great audience over there. And I happened to be presented with this fund management platform and it was a direct hit. Like, I mean, talk about hitting the bullseye. If you're in business and you're making a product or service, it's really hard to find customers in the business to business

space. And doing B2B advertising is hard, but LinkedIn makes it so easy because, you know, their tools let you target people by job title, industry, company size, and more. So this fund management platform obviously was looking for people in venture capital, who had a fund size and a number of people, maybe 10 people, maybe 50 people. And they found me, they got me. They split the arrow, boom, right on target. And there's two things you really need to know about LinkedIn going into 2025. First, they broke a billion members.

And 130 million of those billion are decision makers, and 10 million of the billion are C-level executives like myself. where can you get to those people? It's really hard. And the second thing you need to know, LinkedIn makes an impact. B2B markers report two to five times higher return on ad spend or ROAS return on the ad spend. You should know that acronym. Compared to other social platforms, 79% of B2B markers say LinkedIn is the best platform for paid media. LinkedIn's going to let you build the right relationships. It's going to drive results. And you're going to reach your customers in a super respectful business environment. It's not a place where people are dancing around, saying inappropriate things or debating politics. Nope. LinkedIn equals business, business equals LinkedIn, start converting your B2B audience into high quality leads today. We'll even give you a hundy, a hundred dollar credit on your next campaign. Go to LinkedIn.com slash this week in startups to claim your credit. That's LinkedIn.com slash this week in startups terms and conditions do apply. If you have two partners at a firm and they both are having coffee and it's like,

this company's thriving, doesn't have this other company's feature set, that company is less than thriving and it or like let's say it lost its founder went on to do another company or has competitors that are you know

nipping at its heels because everybody discovered it's a really great market or maybe it reached its natural audience size the venture capitalist has to come up with a result

for that company what are the possible results when you hit year 15 in a venture fund the venture funds are typically 10 to 12 years in lifespan when they hit 15

you kind of want to wrap it up, folks, and shut that fund down. And what that means is there might be five stragglers. Companies that still exist, they're making a million dollars a year. What happens in those situations? The investors encourage the founder to sell the company or buy back their shares for a dollar, or a third party might come along and say, we'll buy the 17 names in this fund for $1. Then, if that fund was a 5x fund, then those 17 investments, if they were 1 million each and were 17 million, you get the tax benefit of that loss against the gains. And in order to realize that, though, of course, you have to sell it. So you sold those 17 million investments for $1. Now you got 16 million $999 in losses that you can take as LPs, as you're supposed to do. That's the name of the game in

America, right? Losses offset the wins. And then that person who's buying all those shares is going to hope, maybe in that $17 million somewhere, there's a million dollars that will pop out of it, or they could even get a pay to fee. So they're going to buy it for a dollar and you're going to pay them a fee for a year to wind them down or something to facilitate that transaction in some way. So that's typically what happens at end of life. In these cases, it could also be, in recent Horowitz hosted a retreat for their founders. The two CEOs were hanging out at the bar at night. They vibed and they came to this conclusion on their own. So all, of those are possibilities, and with the larger the firm, the greater the chance that they have

their fingers into multiple pots. So the idea of non-investing and competing companies seems to be going away for the Andresen Horowitz's, the light speeds. They seem to have so many different funds that, you know, they may have angel invested or seed invested in something and then the growth team invested in the competitor or one of their old investments bought a company and then suddenly started competing with a company that they never invested in or they launched the same product. So the industry's changing and these large funds are now so big that they're kind of becoming private equity-esque. They're even doing this move where they're looking to buy companies. So if they see an undervalued company, a number of them, I'm not sure who's on this list.

I know Andreessen has been talking about it. Thrive Capital just announced it, Josh Kushner. He announced he's going to start buying companies and then they try to run them. So kind of Berkshire Hathaway kind of ownership levels or a private equity firm levels. Venture capital exits do not generate enough total liquidity to make a seven or eight billion dollar venture capital fund make economic sense unless you accrete to yourself like 80% of the exits for the next 10 years. So I think it makes a lot of sense to see probably lower IRA expectations for larger checks and also some private equity things rolling over deals between funds and also, yes,

buying stuff and being more experimentative. In this case, Five Trans doing very well. Well, they announced Jason last September that they surpassed 300 million ARR. Essentially, the just there is that AI, lots of data. If you'd move corporate data in the era of AI, you have a lot of business. So I'm actually kind of, my hypothesis here is that 5TAM is doing great, census was doing fine, better together, full spectrum package. And tech weren't you did right. They had sums of the same customers.

So probably pretty easy just to tie up those relationships in one bucket and move on. Yeah. But I'm going to see M&A. Yeah, it's great. And this is what I'll call it. single and double M&A. This is not even past, I don't think this is past the billion dollar mark.

It's a company that raised, what, a hundred million or something? Yeah, a loss valuation six to six 50 back a couple years ago, but that was bubble valuation era. Yeah, so, I mean,

this is the, there's a lot of cleanup work that's going to happen in the next couple of years of companies making hundreds of millions, tens of millions, hundreds of millions, maybe even a billion,

that aren't growing fast enough to go public. So you may, you're making a billion, but maybe next year you're making 1.1 billion. Maybe nobody really wants that stock. You can't really tell any story. You've had 15 years to figure out how to, or 20 years, how to get this thing to grow faster. All of that, all of those zombie corns, you know, companies going sideways, but they're still billion dollar companies. They have to be dispatched in some way. So there's going to be a lot of this M&A, I predict, or selling of assets in the coming years.

and, you know, singles and doubles, like I've always talked about, kind of make the industry work because they give LPs like little bits of hope, you know, dribs and dabs of, you know, little distributions that build confidence that, oh, there's really an industry here as opposed to a four-year, you know, winter has arrived and everything's frozen. What else do we got? Did you see my Uber Starbucks tweet I sent you? Yes, I saw the Starbucks tweet. Let's get into this one because I, you know, I'm, I'm in a... I'll find it, hang on. Okay.

I'm leaning into my villainous, capitalist era. And this one, I thought was going to tweak people. In fact, when I wrote it, I was like, this is going to get a large amount of hate.

Because people are going to think it's too Orwellian or it's too heavy-handed. But I watched these people on, if you look at the, I was quote, retweeting myself, which is the true sign of a narcissist,

but if you look at this union video, if you just play it for a second, it's kind of interesting. Like they are... Starbucks love to do. It allow partners to be themselves or whatever that PR that they want to push. I don't understand how that's in good faith

of letting us express ourselves. I don't understand how that's supposed to embody craft and culture and bring us back to that hockey house. Okay. Okay. So you said, The most annoying niece or nephew or Dave M is really upset that they cannot wear what they want to Starbucks. And I said to this, like, it's enough already.

Like, we're not going to Starbucks for your creative outlet as a barista. We want coffee that's delicious, served correctly and fast. And Starbucks can't get orders correct. 50, 60% of Starbucks orders are wrong. Now, it's kind of their fault, too, because there's too many options. but I'm just infuriated by Starbucks because I have to go to it because my daughters love it.

And I just want them to get the order right. I don't care about your flare. You know, some places, like in office space, they want you to do flare. Chachkes. The restaurant's called Chachkis in office space. I'm not going to Starbucks for the personality of the barista.

If I'm in Spain or I'm here in Miami and I want to get a cortado or a cafe with leche and, you know, And like, yes, I do want a little bit of flavor there. I'm looking for consistency at Starbucks. Anywhere in the world, make it right. Is this kind of Starbucks own fault? But like, I'm not disagreeing with you.

When I go to Starbucks, I just want coffee. Get me in, get me out. I don't want to worry about it. But I do feel like Starbucks themselves kind of created this. We're the neighborhood funky coffee shop. Enables the right word. They leveraged that. They leveraged it as a place for cool people to be.

It used to be. Correct. Don't forget. 15 years ago, a place to do. out. Right. And this, I think this barrisse is correct. Like, that was the vibe. They, Starbucks changed. There's a new sheriff in town.

I am officially the CEO of Starbucks. I am the Shadow CEO. I'm Darth Calacanis, the Shadow CEO of Starbucks. We're getting back to basics. Okay. Do not bring your personality. I always like, yes. Put a uniform on.

Yes, sir. No, sir. Yes, ma'am. No ma'am. Is that acceptable? And here's my idea. I can break this union. I can break these individuals and get this back on track. Darth, this is my Sith Lord era. And I thought this would tweak people. But look at my follow-up tweet. This is my plan. You order, because I love the Starbucks app. I use the Starbucks app. It's great because you get to skip the line. You guys use the Starbucks app? Absolutely. Absolutely. It's great because the promise of the Starbucks app is faster, better, cheaper. I'm going to get my drink faster.

It's going to be better because you're not going to make a mistake. And it's going to be cheaper because you're giving me some rewards. Correct. I'm putting an Uber rating on not only every order, but every beverage, just like DoorDash and Uber eats and Lyft and everybody else does. And that feedback will go back to the entire team at that Starbucks in aggregate. Because you don't want like, they know your drink long. So if they're like, oh, this cherry macchiato with three extra egg yolks in it,

thinking of like, oh, that's lines drink, whatever nonsense you're ordering. I don't. 1,200 calories. You've seen me order coffee. It's black can't. Black Americano. That's what this is. Black Americanos are the absolute way to live.

It is a legit order. I'm going to tell you guys that. If I'm not getting cafe coal lece, yeah, I'll get a flat white. I'll get a cortado. I'll get an Americano sometimes. I'm all in on keeping it simple. But now imagine, so you get the aggregate. Okay, as a team, today, we got rated this.

Yesterday we got rated. Last week we got rated this. You can measure it. You can manage it. Great. Here's where it gets really interesting. I want you to rate every drink. How is every drink? Then we're going to fire the people who get poor ratings, obviously. But I'm going to encourage people. Hey, you gave it five stars. You said it was great service. Would you like to give a tip or an additional tip? You gave a dollar. Want to say something nice to the barista? Pick one of these choices. Want to add an extra dollar, go right ahead. And then put a picture of that person. I didn't put this in the tweet, but put a picture of that person if they opt into it or, you know, if that's the standard, you know, whatever. And just a sentence about the person. So again, like bringing your whole person to work, oh yeah, meet lawn. He's a screenplay writer and his favorite drink is Americana. Just a little something to kind of guilt you into giving that. And then if you're amongst the top 20%, you get equity in Starbucks. You get RSUs. You get stock. And take this from an entitled group of lunatic who have been over generations distancing themselves with the purpose of Starbucks, better, cheaper, faster, quality, no mistakes, hot, not cold, cold when I want a cold, not lukewarm.

Make it right, keep it tight, and they give them equity. Carrots and sticks, folks, you have to bring this to Starbucks. I feel like they, you know, like ever since the founder left, Charles Schultz, like Howard Howard Schultz, right? Howard Schultz, yeah. Charles shows us the peanuts guy. The penis guy, yeah. Similar, similar things. They tried to make people happy with basic stuff.

And ever since he left, they just have been involved in so much shenanigans, not focused on what matters. Yeah, I feel like to me, and this is me personally, but the viral secret menu, millions of ingredients and all these drinks. Like, I really, that was the beginning of the end. It's enough already. Guys, guys, guys, guys, we're starting this out a little bit like old man yells at cloud. Yes. Jason says something very important earlier in this segment that undercuts our entire point here. Oh, and I look, guys, I drink more coffee than I should. I drink a lot of fancy coffee.

You have to five cups a day? I mean, I would say no less than five. Ooh, that's a lot. You're not too much. Small children. That's too much. That's too much. I mean, I have a coffee and a red bowl at my desk right now. Get those numbers up. Those are working numbers. Those are rookie numbers. But here's the, here's the thing. We are talking about what we would like to see from Starbucks. Yes. Jason said something earlier. I wouldn't go. but my daughters love it.

That's why the secret menu, that's why the flare in the chotchkes, that's why they want you to have a multi-frapped, whip, cold foam, whatever. I like Mark Merritt-old suggests. You need two lines. You need like the people are there for fun and then the hardcore users.

Like that's... All I'm trying to say is that one. That, I think that's the, like, a window or a little side where if you're just getting like a black coffee, a drip coffee, a cold brew, just go right there. You get your fix and you're out. And if you, yeah, you want dragon fruit, Boba with Aramel Whip or you go to the other side.

All right. We got anything fun in, you know, Reddit or blue skies falling, any of these great bits and reoccurring segments we have. There was one Reddit thing that we had flagged the other day that we have not talked about. Okay. In a post to R slash change my view, this is the subreddit where you can go debate things, convince people to come around to your point of view. moderators this week inform the community that researchers from the University of Zurich have been conducting a scientific experiment on them. Without telling the moderators, without telling the community, researchers from the University

of Zurich were posting AI generated comments on CMV, Change My View, threads in an effort to study how AI could theoretically be used to change people's minds. Let me guess. Let me guess the results. I'll tell you the experiment. 13 bots posted close to 1500 A.comments to the subreddit

Over the course of just a few months That's a lot. They're looking at how You know, because when, when If you're a Redditor and somebody's post on Change My View changed your mind, you give them what's called a Delta. You give them like a thumbs up.

This post actually changed my mind. Okay. They're evaluating the rate of Delta's awarded to AI posts versus human generated posts. Like how did AI do it changing people's mind versus human responders. You know what? I have an AI in my life. His name is David Sachs. And he is actually an AI in some ways on like the Ukraine. Right. The war in Ukraine. Putin just

fed in all of his data. He just keeps speeding in. But, you know, there is something to not giving any room for disagreement and just pounding the same points over and over. It's a debate tactic. So the bots were stalking the post histories of the Redditors to who, they were responding, learning about them, and thus crafting arguments specifically designed to appeal to those people. Correct. Okay. So Jason.

Also, the bots were hallucinating. So sometimes they would make up arguments that were not true. All right. It's obvious to me. I don't know the results of the study. I do know that the study occurred. I got to think this might be, I wouldn't say a hundred times, but I could see it being three, four, five times more effective.

Wow. than a human. But a magnitude. So out of 1,500 AI comments overall, over 100 Redditors awarded deltas to the bot, suggesting the AI had changed their mind. That's about six times the rate of a human responder. So you almost nailed it. You got very close.

I was three four, five, six. Yeah, the AI did about six times better than a human would in terms of changing people's minds. And by the way, this is what's happening across all systems. this is the argument, Alex, for getting rid of TikTok. Because the Chinese government is doing this right now. Words out of my mouth. I'm terrified about what this means just for the broader internet, because I don't think we have the bought problems sorted out.

I don't think we have any way at scale to filter out AI generated content. And I think that the average person is such a low information voter to borrow a term from elections that they don't have defense mechanisms. Should we go to Beehive? We got Tyler from Beehive. This is a pretty great company. I love their product. and it's a super competitive space they're in.

Tell us who you're interviewing on today's show. I'm interviewing the indefatigable Tyler Dank from Beehive, which is a substack competitor, a little bit different. We talked earlier in this show about a cut of revenue that an app store might take or substack. Substack 10% Beehive, just a SaaS company, built in advertising stack, interesting boosts features.

Lots to dig in. Lots to dig in. Let's go. Social networks, they come and they go. Internal work tooling seems to come out every couple of years and replace what we used before. But no matter how far we get from the birth of the internet, one service has shown essentially unstoppable staying power. And that's email. Yes, everybody's favorite communication tool to love and hate really does appear to be

unkillable today. But that means that we all use it and therefore startups have a really big prize to go after. And a couple of them have shown recently that email is still so powerful today, it's possible to build a big business on top of the venerable technology. One of them is Beehive, a super impressive company that we use every day here as Twist. This is now our Twist 500 email. Now, I added Beehive to the Twist 500, not only because I use its product every single day, but also because it's growing incredibly quickly and appears to have a very unique shipping culture.

So to better understand how Beehive has grown so quickly and manages to drop new features so very, very often. Please welcome to the show. It's Tyler Dank, Beehive's co-founder. and CEO. Tyler, how are you, man? This guy's a pro. Honored to be here. It's been a minute since we've talked. Beehive is shipping like Matt. We'll talk about that in a second. But before I get into my questions, I want to pause and let you tell the people

exactly what Beehive is in your mind. Yeah, very simply, we help people send email newsletters. A more official stance would be we help people create, distribute, grow, and monetize their audience primarily through email. And so we have large publishers like Time. We have talent like Arnold Schwarzenes. We have journalists like Oliver Darcy. It's like a very wide range of people who leverage email to distribute content and grow their audience. Do you have one particular customer profile that you think is the best one?

When I think of like Substack, for example, a competitor of yours, I think about independent media. Is there like a leading group of customers of Beehive that I should think of? Twist. Twist is our ideal customer. Well, we do send out five to six emails a week with you guys. And it's very, very smooth. One thing I do get in response from Beehive corporate is a lot of the notes about.

about boosts and potential ad deals. And that brings up the fact that Beehive has a multi-part revenue strategy and has that for a long time. Can you tell me just a little bit about when you guys branched out from just being a SaaS company and what led to that choice? Yeah, I'd even go a step further back in saying previously to Beehive, I was at Morning Brew and Morning Brew eventually got acquired by Business Insider for $75 million. Morning Brew primarily made revenue via advertisements.

And so what you see at the top of every Morning Brew email is Apple. full visa sponsors to the newsletter. They get 150 words of copy. There's a few other advertisements down below as well. What they don't see is that there's probably 20 people in that brand partnerships team that's talking to ad agencies and advertisers. There's a team of copywriters. There's an ad operations process to put the ads into the newsletter, to get all of the data, to package it up, to send it back to the advertisers, and then to renew the advertising process again, right? And so in seeing that and building the infrastructure and tools while I was at Morning Brew, like that really was.

the impetus and the opportunity of a lot of these writers are just like a one-person team. They're amazing at writing about sports, politics, heck, whatever it may be. Just because you're amazing at writing about sports doesn't mean you know how to sell an advertising package to Nike or Adidas to monetize your content. I am that person with my own little newsletter. And if you ask me to sell to Nike, what would I show up with like a clipboard? I have no idea. Yeah, fetal position, right?

No idea where to go from there. And so that is like the value prop that we initially started with, right? We didn't launch the ad network day one because, as you know, building an ad network, you need scale, you need impressions. Absolutely. We can't go to Nike and say we have seven email newsletters on our platform that send up 30,000 people. Like, they won't pay attention.

Now we do two and a half billion impressions a month. And so it's enough where you can go to Nike, Netflix, HubSpot, Roku, which are a lot of the advertisers on the platform and say, we can identify your target audience and get in front of them in a medium that's less switchy than TikTok or Instagram and like a proven platform and medium that works, which is email. And like, inversely, as the content creator or publisher, you don't have to talk to the brand representative at Nike or Netflix, but you still monetize and get the reputation of having these big time brands in your newsletter.

So it really is a win, win, win. And the sense of advertisers get this long tail of audience, publishers get premium advertisements without doing the work. And then we obviously take between a 10-20% cut as being kind of like the facilitator in the ad network. And just for the other founders out there, Has that 10 or 20% cut? Is that grown into a material chunk of Beehide's revenue?

Or is it more of a sweetener to the greater pot? We're about 70% on SaaS revenue, 30% on ad network. So it's a growing part of the pot. Obviously, we started 100% SaaS. A third is not small. That's a real chunk. 5% would be a sweetener, 10%'s real, 30% is chunky. Now, Tyler, where do boosts fit into this?

You guys have another way of driving revenue at Beehive, not just SaaS, not just advertisements, but also we'll explain boosts. probably better from you than me. Yeah, Boost also was born kind of from the Morning Brew experience. I ran growth at Morning Brew, and one of the best channels for us finding other email subscribers was go figure people who read emails. And so we would sponsor other email newsletters or do what is like a classic acquisition strategy on the internet, which is like co-registration.

We sign up for something and like towards the end of the sign up, one click, I also want this other thing. And by sending that person to that other thing, that other thing sends you money, right? So it's like basic co-registration on the internet. That was always a huge growth strategy for us at Morning Brew, and I wanted to systemize that and make it available to like a wider network of people within Beehive. So quite simply, boost is it's a two-sided marketplace, so maybe not as simple to explain. But if I want to grow faster, I can say I am willing to pay $2 per lead.

Everyone in the Beehive ecosystem sees that offer. They can apply to boost my newsletter. And if I accept them, every subscriber they send me, I pay them $2. So it's like a growth channel for me as someone who wants to grow faster. Conversely, if I want to make money on the platform, I can go through the marketplace and be like, oh, this person is sending $3 per lead. They're doing $4 per lead.

So I can kind of aggregate these other publishers that I want to recommend. And for every subscriber, I send them, I get $3 or $4 back. And so it ends up being like a very easy, passive revenue stream. And it's like, again, another win-win. People on the platform want to grow faster. They already have a paid budget. They're willing to put money to. to grow their audience. Other people are growing quickly and they want to monetize this new growth

and that they can earn revenue from that. And then we take a 20% flat rate on that. And then to answer your initial question of like, where does that fit in? Who's just smaller? It's probably like between two and four percent of our monthly revenue. So according to your scale, I think it's a sweetener. To be clear, that's the scale I made up during this chat. That's not my absolute hardcore mental model. But 30% definitely was big. And two to four percent, I would say like nascent growth business perhaps. Yeah. I mean, it serves both sides of the marketplace really well, and it's non-negligible revenue for us. I think that's actually more important that it serves a function than like bottom line revenue for us. Yeah, it's probably more contra churn than it is plus revenue.

Like for my personal newsletter, Big Desk Energy, like I have which I read by the way. Growth budget. I hope you read this morning. This morning's was good, I thought. I have not read this Morton's, I am slightly under the weather, so I'm behind on, I think, 65,000 emails, but keep going. Yeah, it's all good. You could have lied and said yes, and we would have kept on rolling, but I appreciate the honesty. Yeah, once a boy scott, always a boy scout, I think, is the way that works out. Yeah, but like for me, right, like, I actually depend on the Boo's network to grow. I think it gives me between two and three thousand additional readers per month. So, like, yes, it's not like driving tons of revenue for B.I. Bottom line, but it serves a function

for our users, and it's not good. And ultimately, we just want our users to succeed. Also, it's kind of cool that you're putting up your money to use a paid service on Beehive because it actually works for you. You wouldn't be putting up 5K a month on that if it wasn't a good use of your money, frankly. So that's an endorsement. And maybe something we get to later. But yes, me being a user of a platform, I do think is one of like the key competitive advantage that I'm in in the weeds building this newsletter as if I am just an ordinary user. And people like to say like, oh, but you're the CEO. You know how everything works.

I publicize everything that I do so anyone could do it. But yeah, I do think that helps build a company. So definitely cool. You guys have a multi-part revenue strategy has helped grow the business very, very quickly. I was going back through your ARR milestones. You said you came within a couple million of 20 million ARR last year, shooting for $30 million this year,

so a company at scale. But was there any loss of focus by having a multi-part revenue strategy early? One thing we hear a lot from folks out there is that founders need to be laser focused on their ICP and their revenue plan. So talk to me about the balance between adding revenue lines and staying focused. Yeah, so going back to us, like, needing to hit some level of scale before we even, like, started building the ad network.

I think we didn't start building it until, like, 18 months into the business. Okay. It's like day one, day zero, the plan was always like, we are going to build like a SaaS business. We are going to layer an ad network on top of it and go multi-revenue stream. But like we didn't start building or doing anything behind that vision for 18 months. So focus for the first 18 months. I'd say it's hard then splitting, like, what I like to describe to the team is like, it's hard enough to build one successful business.

What excites me the most about Beehive is I actually think we're taking two massive home run swings and a successful SaaS platform that can serve being a website builder, a newsletter builder, automation, like everything that we do as like an ESP, in addition to building a globally scaled ad network, which is an entirely different set of problems. And they're both so interconnected that one not doing well also impacts the other. So we're kind of taking two big swings here. Well, it seems that when we talk about this, the SaaS revenue is pretty easy to understand, but the other stuff makes it better to be on the platform. So to me, it probably drives customer loyalty. Also, it's probably a good selling point to bring people over. So it doesn't actually feel that distracting per se.

It feels actually more complementary to helping people grow, stay on the platform, and also get bigger, so they buy more of Beehive services. So I guess, in retrospect, it looks very well threaded. I presume it was tricky to build, but it looks great from the rearview. mirror, Tyler. I would say I need to like coin this phrase. I don't know what this framework is, but there's something that I have observed where we have launched so many features that are totally unique to us that other platforms that we compete with just don't have. But if we launch this feature and let's say it's four out of 10, like maybe there's some bugs, it's like not as smooth.

People ding us and be like, oh, I don't like this platform because this one obscure feature isn't that good, although it's not offered by any other platform. I don't know how to like better phrase that. I got this. Do you know DJ Khalid? Yeah, of course. Okay, so here's that album, like, suffering from success when he, like, does the thing.

That's what you're doing. You're building so much stuff that you're going so far ahead of competitors that if you stumble a little bit, people think you're tripping even though they're not in the picture. It is just something as like a founder, I think, to be aware of those. Like, once you build this reputation of like the value that you provide, there's some certain bar and threshold of an expectation of what every additional feature will offer to users.

and when a user turns, like, hey, this one feature that just wasn't good. That's why I'm leaving to this other platform. That platform doesn't have that feature. And they also don't have half the other things we do. But we got dinged for not having a 10 out of 10 experience for this new thing that's totally unique. So that's something that I've learned over time as we've launched more and more features. Does that slow you down in terms of releasing things?

Not in terms of building more stuff, but in terms of actually hitting go on a new feature, have you slowed down and boosted QA to ensure that you don't have. have that problem? So we have boosted QA. We didn't, I was QA for the first maybe two and a half years. And I'm also, I'm QA on one side and on the other side, I'm getting D-N by dozens of users being like, if you don't launch this feature, I'm turning next week. So I'm typically the engine as pushing things forward against the will of like the engineering

team product team because I'm the one that's dealing with all the customers who are saying that they need these features to continue to grow. That being said, like we've come a long way with QA and have definitely gotten a lot better. I also have a philosophy of, you know, if you leave it up to engineers to choose like the perfect time to launch something, nothing ever launches. Right? Because there's, in software, there's always the ability to make something 10% better. And you know, like, the fourth features that you kind of like punted on, but it could come

back into the future. And so one of, and I think we're getting to like just the shipping velocity, a lot of it is just totally arbitrary deadlines where I'm like, hey, we are launching this next Wednesday. And whatever state it's in, like, that is how it's going out. Typically, engineering product QA falls in line. And I'm also okay with not perfection, right? So if we launched something at 80%, you actually get to 100% much quicker

because the users will relentlessly DM me and tweet at us, like, hey, this doesn't work as I expected, or this is cool, but it's missing these five things. And then those five things immediately become top of the list things to do. And a lot of times those five things weren't even on our roadmap before we launched it, right? So I actually think we get to a better product, albeit a much more stressful process

by shipping things at like 80, 90%, but that's kind of been our philosophy from day one. All right, I want to bring up a tweet from you that talks about the number of things you guys launched from Beehive in Q1. New website builder, direct sponsorships at Marketplace, multiple sending domains, newsletter builder 2.0, blah, blah, blah. It goes on and on and on and on.

But the new website builder, you guys discussed, I think it was on LinkedIn, how quickly you were iterating that product, shipping new updates to it and so forth. So I'm curious, has your QA and dev team decided to throw you out of a window yet, or is everyone holding it together as you ship this quickly and also iterate to improve what you have released?

It's a huge competitive advantage to be remote because they haven't been able to physically throw me out the window, but if we were all in the same location, I do think that they would want that, yes. The website builder is extremely exciting to me, right? I think my philosophy and thesis on the broader creator economy is that we're going to see a conversion, are a lot of companies acquiring others

and converting into be like this all-in-one solution, right? So you've seen Circle and Qigab who started off primarily as forces and community. They launched a newsletter feature last week. They're kind of doing some website and link in bio things. You've seen Linkin Bio platforms also launch email or website functionality. And so we start off primarily. We always had a website component and an email newsletter.

were like our bread and butter. We acquired Type Dream last summer, which was an AI native website builder. Like a website builder that competes with Webflow, WordPress, etc. And that was June of 2012. So about 10, nine months ago? Yeah, nine, 10 months ago. And so that was like our move to say,

like our users are already using our extremely mediocre website builder. And all I do is get complaints from our users saying like, hey, I want to launch this custom page. I want a lead magnet. I need a splash page. And like it became, very obvious that our out-of-the-box website builder was, we were going upmarket and getting more sophisticated users

who expected more out of their website. And again, our value profit is like the all in one. And so, like, yes, you could build a WordPress website and integrate it to your Beehive newsletter, set up some API calls. You could set up like an embed. But like now you're managing multiple accounts and plugins and data not syncing properly.

And so there really is an advantage to have it all under one roof. Especially if you're selling to writers, man. Like, I mean, no offense to us in the writing. But it's not like I get excited about setting up a new API call. In fact, it makes me want to die inside. I just want to mess around with my commas and m-dashes. Now, the release of the website builder seemed to help contribute to a pretty banger Q1 for the company. You said that you added around 260,000 MRR or a little bit more than $3 million

of annual recurring revenue. Talking about like, you know, February being better than January. Seems to be that things are going pretty quickly here. Is there one particular feature that you guys dropped lately that has been the key driver, or is it more the aggregate impact of all the stuff you dropped in the first quarter? Yeah, depending on who's listening, they either think this is extremely cool or extremely lame, depending on how large the company is. Last week, we just had our best week ever and added 30K of MRR,

which maybe it's because it happened so quickly. Like just three and a half years ago, we did 2K MRR in the entire month, right? And so, like, being at a stage where we're adding $30,000 of recurring revenue a week, to me is, like, crazy. Like, I'm super hyped up on that. But to answer your actual question regarding, like, Was there any individual feature? What I've always said, and some companies have some inflection point where it just goes

pure vertical. For us, we've gotten 10% better every single week and consistently listen to users ship new features. And it's just like an incremental at our size. We probably grow MRR 5 to 10% a month. But there's not like, hey, we launched this. Things went money printer turned on. We went full vertical.

Things are absolutely crushing. The website is probably the closest thing to that. but it's still like in a private beta now. And actually your MRR growth in January was about 6.6%, something that I know because you share more information about your company than pretty much anyone else. There's always been a handful of startups out there kind of building it in public, and this makes me as a reporter on the space so happy and thankful so one.

Thanks, Tyler. On the strategy of emailing people, listening to DMs, posting on LinkedIn, your Twitter account is super active. You are ubiquitous, Tyler. And I'm curious if you think that approach to talking to the market, talking to potential users, current users, is a model that other founders should emulate because it's effective? Or is it more of the Beehive-specific approach that works better because of the business

you're in, the types of users and customers you have and so forth? I don't think it's necessarily Beehive-specific. I do think there's a layer that our users are content creators and are the ones that are sandwiched aside me in the Twitter feed or whatever because they're also creating content themselves. And I wouldn't, I don't think there's ever like a should. This is just something that there's a level of like I get enjoyment out of it, right? Like I love startups. I love tech. I love this entire journey of building this company. And I have made countless and countless mistakes along the way and think that there's plenty of things that I wish that I had known that

most founders either feel more secretive because if they're onto something, they don't want other founders even in like other industries to know that they have found some secret to success or because Because out of fear of like on the venture capital flywheel, they can't ever show a sign of weakness because they might not be able to raise that next big round. So they keep things very close to the chest. And what that does is it hurts other founders from benefiting from the mistakes and learnings of those founders who have been through those experiences. So part of it is slightly altruistic of like I do want to help other startups and founders.

I think more startups and companies being built and having success is like net goods for the world. And if people can benefit from my shitty mistakes that I've made, and I can summarize that packaged up, send it, and people will not make that mistake in the future. And that increases the odds of their success. That's not good for everyone unless it's our competitors, and that's great. It's the former brand marketing, I think,

which actually, we don't have really a time to get into this, but you guys just talked about dropping. I think it was like a half million dollars on subway ads and that sort of thing, which was overall pretty effective for the company. So the first time we've ever done brand marketing, when you get around to reading my email newsletter today, that's what it was about. Oh, well, then I read it on the web then.

Good. I actually did read it. Perfect. Yeah, you read it. Full circle moment here. So first year of business, we've never spent a dollar on acquisition, right? I think a lot of startups very quickly fall into we raise money. Let's put money into the Facebook and meta machine and the Google machine. And like, that's how we're going to scale users and revenue.

We didn't have a ton of money. And I just thought that it would be healthier as a business to figure out how do we grow organically from word of mouth, from product-led growth, build our funnels. And after three and a half years, it really. relentlessly building features and with the road mapping Q1 that you displayed earlier, I feel like we finally reached a point of Beehive stands alone as like an incredible product that has feature parity with all the incumbents in the space with the newsletter builder and the website builder that now expanded the market of who we can serve.

I felt like it was the perfect time to kind of reintroduce ourselves as the campaign is the one place to build. And it's encapsulating whether it is a newsletter, a website, a landing page, a community. Beehive can do that. And so that is like the lead up to doing this brand marketing campaign, which was a subway ad as well. One less question before I let you go. It is a particularly busy news cycle out there. And I mean, right before we jumped on this interview, I was just thinking about what does 104% tariffs mean on China-U.S. trade relations.

And there's also, as you mentioned earlier, some AI startups that are going from zero to a kajillion dollars in revenue seemingly overnight. So for founders out there who are working on something and building it, possibly in obscurity, what can you tell them about staying focused, stay motivated, and keeping around the prize while the world's prize to emulate around us? I did write something about this recently. I think it's one of the most difficult things, right? When you see a company go from zero to 20 million in revenue in three months, and I'm like, dude, I've been doing this for three years.

I have so many gray hairs from doing this. No, you don't. I don't see a single gray hair on that head. They're on the side. They're on the side. Okay. All right. The fact that they went from, they're doing more revenue than we have done.

We've been building this for three and a half years and I've had so many lessons. Like, it's very humbling. And it's also, I think, the earlier you are in your journey, the less do you have to lose. So the easier it is to get wide-eyed and see that next shiny thing and try to jump on and latch to it and like, jump onto this AI hype cycle, try to like pivot to something else. And again, some pivots are good. But I think the thing that every journey is very different. For us, it really has been just like, how do we get 10% better every single week? we have a very opinionated roadmap.

We listen to users, and we do have, like, we have an opinionated roadmap that I think takes up 80% of the roadmap in every given quarter. The remaining 20% is the users ultimately know best, and they will let us know when we're messing up, and when they want something that we don't offer. And so we have like 20% of like flexibility to lean into user demand. And so that's kind of like how we remain focused,

but it is hard. The new cycle works for you and against you, for you if you ever make a mistake and it feels like the world is like crashing down around you and every employee is like, holy shit, this is like the biggest mistake ever. It's like very humbling to remember like all of the crazy shit that's happened in the past few years, people will forget about this in 48 hours and everything is going to be okay. But it does mean frequency and consistency with creating content and making yourself relevant. It's just as important.

Well, Tyler, I appreciate it so much. I want to have you back on in six months to see how you are tracking towards your 30 million error goal for 2025. But in the meantime, it's B-E-E-H-H. h-I-I-V-com. And what is one role you're trying to hire for that's currently a bit tough? Ad seller. So we talked a lot about the ad network.

We're doing about $2 million in ad sales per quarter without an ad seller. So that's like the demand from advertisers. Like they want to advertise. We're looking to hire our first ad seller for like more legitimize this. And if you do ad sales and you heard $2 million without a seller, that's the opportunity, right? So I think it's a great position and hoping we find someone great. All right. Someone's going to call it and take that from 2 to 4 million. But in the meantime, Tyler, thank you so much.

We'll have you back on. In the meantime, this is a twist. Appreciate it. Thanks. What would you say, Beehive Substack? Is there a number three? I know there's that company Ghost that is like the open source project with a hosted one. Are there any other people in that space? Because there was this thought that maybe the space of, it's not content managed,

more like an email management system. I was going to say extra features. Wouldn't Mailchimp be another big one in that? Not anymore. No, MailChimp was for marketers, really more than a subscriber list. But I mean, I'm sure they fancy them.

But is there anybody... Medium, Patreon? No. Those are the other names that come to mind, but they're a little bit different. I think really it's ghost beehive subs stack are the three that are pursuing the newsletter slash blog with a clear focus on monetization.

And I think three horses is a good number for that race. Because I think we get different approaches and different products. and I think they're keeping you one another sharp. Okay. So Beehive, flat rate, SaaS, they don't take a percentage of revenue substack. They take a percentage of your revenue ghost. Open source, you're going to need to be a little technical and work on that.

Three great choices for folks. And a great interview from our guy, Alex Wilhelm. We'll see you all. And if you want to see the other companies in the Twist 500, go to twist 500.com. We built it. It's not brought to you by exactly, but we built it using Coda. And Coda has been a sponsor of this program in the past. Coda.io slash twist.

Twist is the code they gave us and they'll give you some free stuff there. And they also bought Gramerly, which is one of my other favorite products. So those two companies are together, but I don't know, Gramerly might have sponsored the program at some point. Anyway, I love both those products. And it has been a great way for us to try to find the top 500 private companies. Where are we at? What's the number?

What's the numerator? There's 318 in the list right now. And I have the next, I'm just pulling my spreadsheet. I have the next 16 picked out and I have another 8. on the short list. So hopefully Long and I can get the next 20, 25 locked in today if we finish up on time. I really think we've got to look at also valuation tables from some of the other parties and maybe what's trading actively on some of the secondary markets to fill in if we missed anybody. If it's trading on a secondary market, then it's kind of, that's a small set of 100 companies.

Let's just make sure we cross-reference the secondary market companies. Make sure we didn't miss any of those because buyers of secondary shares is like one of the great indicators that they're one of the top private company and we'll see you on Monday. Bye.