This Week in Startups - Apple’s Tariff Trouble, Anthropic’s New Models, and Our Founder Friday Finale | E2130

Episode Date: May 23, 2025

Today’s show: Trump takes aim at Apple with a potential 25% iPhone tariff, Anthropic releases two powerful new Claude models claiming top performance in coding tasks, and two founders go head-to-head in the final round of Founder Fridays. In this packed episode, Jason, Alex, and Lon unpack what Trump’s latest trade threat really means, why Anthropic’s AI progress could reshape the dev landscape, and which startup—an AI ad network or industrial automation platform—comes out on top. A fast-paced look at the volatility, breakthroughs, and ambition defining today’s startup ecosystem.Timestamps:(0:00) Episode Teaser(3:41) MORE tariffs, this time on Apple… is this just a message to Tim Cook?(7:08) Potential impact of tariffs on Apple(10:09) Northwest Registered Agent. Form your entire business identity in just 10 clicks and 10 minutes. Get more privacy, more options, and more done—visit northwestregisteredagent.com/twist today!(14:14) Anthropic’s new models are topping the LLM charts but are they REALLY self-aware(20:07) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups(24:35) Who should buy OnlyFans? Jason, Alex, and Lon each have ideas(30:03) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist(35:10) Gut health is important but do we need SMART toilets?(40:34) Which TWiST 500 companies are blowing up on secondary markets?(47:27) The Founder Friday city competition FINAL ROUND: see which startup wins!Subscribe 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:Throne One: https://www.thronescience.com/product?Arcana: https://arcana.ad/TACTUN: https://tactun.com/Follow 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:(10:09) Northwest Registered Agent. Form your entire business identity in just 10 clicks and 10 minutes. Get more privacy, more options, and more done—visit northwestregisteredagent.com/twist today!(20:07) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups(30:03) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twistGreat 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

We have been talking about secondary markets coming back. I know this because people will email me and say, hey, would you like to add to your thumbtack, your com, etc., position? Would you like to sell some of those positions? So I am seeing increased activities from this very weird gray market or it's kind of like boiler rooms of people who want to charge you five or 10 percent to buy secondary in SpaceX, whatever is hot, androle. stripe or, you know, and then charge you 5% for selling it. So it's a little bit of underground,

a boiler room, a back channel. Yeah, because there are people in it who are above board and, you know, are known. And then there are people who are not. So I get a little nervous sometimes when I get these weird emails if I'm being fished or whatever. Oh, wow. So it's like a little Wolf of Wall Street. Like they're kind of bending the rules a little. This weekend startups is brought to by Northwest Registered Agent, starting your business. should be simple. With Northwest Registered Agent, you can form your entire business identity in just 10 clicks and 10 minutes. From LLCs to trademarks, domains to custom websites, they've got you covered. Get more privacy, more options, and more done. Visit Northwest Registeredagent.com

slash twist today. LinkedIn ads. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash this week in startups. And, lemon.i.o. Hire pre-vetted remote developers. Get 15% off your first four weeks of developer time at lemon. All right, everybody, welcome back to This Week in Startups. I'm your host today. Wow, a trio. Lon Harris is with us, our editorial director here at This Week in Startups and Alex Wilhelm. He's Alex on X Twitter.

And he's at L-O-N-S on X Twitter. We've got a full docket. Things have been building up. And gosh, I, you know, I don't know where to start here, but let me just do this. What is your top story in terms of like? important business story and then your top story in just fascinating one. Because I think they tend to fall in one or the other. I want to know your most fascinating story on the docket. You can see the docket right now this week in startups.com slash docket. Most fascinating,

most important business. Those are the two choices. Alex, what's your most important business topic on the docket? I think the most important business topic on the docket and in the world today is the threat of iPhone-specific tariffs on Apple. I think that is indicative. No, no, no, don't get too much. Just succinct so that we can keep moving here, because we're going to go to each of these topics. All right.

Lon, what's the most important business topic? Sucinct, please. The audience is very busy. I want to talk about the new anthropic models. Okay, right. Don't tell me why. Just what it is. Now, fascinating tip.

What's the most fascinating thing here? It's the most fascinating item. Oh, I know mine. Okay. Smart toilets. Smart toilets for Alex. Okay. Lonnie Donnie?

I think we got to talk about only fans for sale. Interesting. Only fans is for sale. I did see that. So we got smart toilets. We got only fans. I am going to go with Lon. I think the only fans for sale is absolutely a fascinating turn of events.

Like, why would you sell a money printing machine? I got to understand why. It's like the easiest business in the world for all. Only fans, right? What do they do? Well, I mean, wasn't that guy pulling out like hundreds of millions of dollars a year? I don't know what's going on here. Maybe he just wants to sell. Yeah. Sell it to peak. And I'm going to go with you, Alex. The Apple tariffs are the most important story. Let's go with the Apple tariffs. What's going on? Is this just another 72 hour? We should wait and see what's going on? Or is this reality? I did see it go across my feed this morning. All right, so the news this morning is that today over on Pruth Social, which is an X equivalent for the, I don't know, Jason, the right wing, if you will. President Donald Trump said that he long ago informed Ten Cook of Apple that he expects their iPhones will be sold in the U.S. We'll be manufactured and built in the U.S.

And if that's not the case, he will apply a 25% tariff, at least on Apple in the U.S. Thank you for your attention to this matter. we've talked a lot on the show about Apple moving manufacturing out of China, Jason into India, into places like Vietnam, part of the China Plus 1, China Plus 2 strategy. That's a lot of work. Apple just after years of effort is now producing its top in phones in India. The chance that they can move that production to the U.S. is very slim. So to me, this is a relatively incoherent slap on Apple.

And I'm a little bit perplexed on what Trump actually wants them to do. But Apple's done what is the smart thing. They donated to the inauguration fund. They announced more investments in the U.S. They tried to get ahead of Trump, if you will. So I'm kind of curious what you think Trump wants to accomplish with this because manufacturing is not coming here. It's Friday.

Bessent apparently was on CNBC or something and somebody got to Trump. And he felt like doing a spicy tweet. This is ridiculous. It's unrealistic. They're not going to move the entire supply chain to America. it's an impossible task to do that in any kind of realistic time frame. Why is that an impossible task you ask? Well, you would have to move a very large number of very sophisticated factories here.

And I don't know what you do with all the equipment that Apple has invested in China and India. Would that all get burned? What number of phones have to be built here? All of them, some of them. This is the perfect example of rule number one is wait 72 hours. just as the market had roared back and we had some stability in the tariff conversation, you know, Trump, Trump does Trump. I think that this will not happen because you would also need lawn a couple of million people

to work in these factories. So you're going to need hundreds of thousands of people who have, I'd say tens of thousands of highly skilled manufacturing people, you'd hearse my tweet from today. You would need tens of thousands of very highly skilled people to build these factories over, I don't know, five years. There's machinery that is extremely labor intensive to build and sophisticated. Then you would need, I believe there are low millions of people, was the number I heard, two, three million people who actually work on the iPhone product line factories. So, you're going to need to find three million people. That means you're going to need to find

multiple cities with three million homes. And by the way, people live in dorms at Foxcon. There are dormitories. So in order to get this done, I think, We think we would need, with the historic low unemployment of 4%, we would need about 10,000 people immigrating per week indefinitely. You know, certainly passed and through this Trump second term and well into his third term. We would need 10,000 people a week. So this is just one of those that we do not need to over-index on. This is not happening.

This is just a Friday afternoon tweet, spicy tweet from Trump. Ignore it. It's not happening. It will not be a 25% tariff on Apple. But Tim Cook will come and make some sort of gesture. Apple stock is down a couple of points today, which might be indicative of some investor concern, Jason. But again, my question is, because I agree with you, I don't think this is going to happen.

So what's the actual goal? Was this just him, like, venting his spleen? Remember rule number one is Trump says a lot of things. And like rule number four is wait 72 hours. This is just in the category of Trump saying things. He probably was bored for a little bit. Besant, Lutnik, and, you know, the folks who are keeping him on track to stop talking about tariffs and start talking about the budget bill. They weren't around.

Somebody said something to him in a conversation. Navarro snuck in and just whispered in his here. Correct. And Navarro's got, here's two things that really need to happen. And I think that this is a distinct possibility. Okay. And we don't need to over index here on politics, but just very briefly, Navarro's got to go. That's number one. I know he went to jail for Trump and there's a loyalty thing, but Navarro's get him a window seat somewhere, give him something else to do. Like literally, make him the ambassador to. Yeah, this is what ambassador ships are for. Ship them. Ship them somewhere. Pick the country with manufacturing. Plenty of places he could go that are very nice with beaches. Portugal, Spain. There's so many great food. I'm going to Singapore next week. There's great food there.

Just let him Anthony and Portain. No reservations. Go. Number two, the tariff power is going to need to move back to Congress. That's where it lived, I think, for a long time. And so I think people, if this like tariff turmoil, trade turmoil, continues at some point when the midterms get lost because of the budget issues and the tariff issues, whatever other issues people disagree with. If they do lose a little bit of the three branches of government, I think the tariff, you can't overplay your hand with. So I think Trump's going to, there's probably a 25% chance now that they take the tariff power away from him.

If they keep going, it's going to be more. Like I said, we don't need to overindex on this too much. I want to ask one more question about this, Jason, because I appreciate the clarity of your thinking here because I was giving Trump too much credit for this tweet. You still have Trump to reigns. Yes. I don't, I have when president says something,

I think they're actually trying to say something, which is my mistake. I mean, have you not been paying attention to Alex's guys been in public life for 10 years? Sometimes he does what he says. I know, but understand the rules. 72 hour rule exists for a little. Your life will be better if you just follow my rules.

You do have to consider, though, who he's talking to. Like, who is this aimed at? And that's what I think is confusing about this one, because it's not the public. I don't think Americans or MAGA people are crying out. Like, we want factory jobs where we build iPhones. Like, that's historically not thought of as like the great job Americans what. But it's not Wall Street that he's aiming this. And I'm curious what your guys thoughts are.

I feel like this is aimed at Tim Cook. investors like me are not going to fund your business if it isn't structured properly. This is something that occurs during due diligence. We have a checklist. One of the first things we look at on the checklist are, is this company even incorporated? And is it in good standing? And is it compliant? If you don't get that stuff done, we can't wire you the money. We can't show you the money. We can't ship you the money. And that's where our friends at Northwest registered agent, I'm in. For just $39 plus state fees, they're going to handle all your paperwork, keep you compliant and make sure investors see you as a serious business that is worthy of investment.

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Well, no, he didn't come to the Middle East, right? So Tim Cook wasn't in the Middle East. He pointed that out, I think, that Tim Cook wasn't there. And, you know, the number one thing you have to do with this president is you have to be in the mix with him and he wasn't in the mix. Yeah. So I really think that might be it. I agree. If he had been in the Middle East, he would have said Tim Cook, there he is, red in the front with Tim Cook.

Okay. Apple, you may have heard of it, a little. device. We love our iPhones, don't we folks? iPhones, incredible. Yeah. That's it. So, you know, Tim Cook should- That's a crazy statement. So because Cook didn't go on an unrelated trip that the president took with other tech people, his business model is now under threat? Like, I think we've lost how insane. This is crazy. I have to take you out of this vortex you're in, Alex.

Grab my hand. Let me pull you out of it. You're applying logic. You're a man of logic. You're applying logic to the Trump presidency. That does not exist. He just does things. He says things. Lower your expectation to, he's going to say a lot of crazy things. 19 out of 20 things are just random tweets, right? They're just random tweets. They're not logical. And then one out of 20, you are correct. There will be some tariff thing. But just let the air come out of the tweet. Tim Cook does need to make a visit tomorrow. Ago. He should bring the new iPhone. to everybody. Here, if Tim Cook wants to solve the whole problem, the Trump 47 Memorial iPhone has 47 gigs

of RAM. This would work. It's got 47 terabytes. It's got the Trump fight image on the back. And it comes with $1,000 worth of Trump coin. Literally, if he made a commemorative Trump phone, and I'm not joking. If I'm Tim Cook, I would make a memorial one and all proceeds go to the. Trump Library, so it's totally legit, and we're only making 10,000 Trump phones. It's to honor

the massive success that this president, our dear leader, has given us. Play the game on the field, Tim Cook. That would absolutely work. That would absolutely get me over on Android. And I think a lot of people, so I guess the tricky thing here is, Jason, not disputing at all your points, but I just don't think it's conducive to a high-performance business climate if we're constantly having to dodge the yes. And I think we should just say that our loud. once in a while because Trump also threatened 50% tariffs on EE this morning. It's literally play the game on the field. If you wanted to play the game on the field with Biden, it was just a different game.

It was a different game. It was a cheaper game. It was a more affordable game. It was more blue-colored. All you had to do is do a DEI and green deal, and it would be at the White House. They're a hunter was getting $5 million payouts. That's like a few seats on a plane. It's nothing. It's nothing.

So there's different games that are being played here. just play the game on the field. All right, what do we got next? What are we got on this incredible document? Should we talk about Anthropic? Should we do the Anthropic? I think that's an important one because Anthropic is pretty great. Twist 500 company.

We love Anthropic. They're a well-funded, of course, AI Foundation Model Company with a focus particularly on safety, on interaction with AI agents, other kinds of software and layers on top of AI. It's the clawed family of models. Great, great product. I love love. Yeah, I love.

Yeah, I'm on Claude all the time. So they dropped two, not one, but two new models this week. First, we've got Claude 4 Sonnet. It's the upgrade to Claude 3.7 Sonnet, which we've all been using for months. This is cheaper to run, but nevertheless, Anthropic tells us that the new Sonnet model, quote, sores in agentic scenarios and they'll introduce it as the model powering the new coding agent in GitHub pilot. So that's a, that's a big, you know, if you in Open AIs face and a big endorsement of what Anthropic is building, you know, that Microsoft is sort of ready to embrace it.

So that's CloudForsonnet. We've also got CloudFor Opus, which they're calling their most powerful model to date, and, and I'm quoting, the best coding model in the world. Here's the data, just backing that up for you. This is a chart from Anthropic, just showing how their new models work against the SWE bench benchmark. And as you can see here, guys, SWE stands for, is that software engineering?

Software engineering, yeah. Got it, okay. Yeah. And so lots of these models out in the market today are pretty good, getting the 70s, high 60s percentage points. And then we have the new anthropic models, which are getting up to the high 70s, low 80s. I don't know what's the magic number here, Jason,

but definitely another solid incremental step on AI coding capabilities. It's great about this is when you have competition, you know, and a lot of money at stake, a big prize, lots of competition, capitalism at its best. We're going to be here for another couple of years with each one of these incremental points in, you know, being scored. And I think this dovetails with, you know, something I'm seeing on the ground. I did speaking gig last night for 50 founders here at Austin. And I did one on Tuesday for Barclays Bank, also here in Austin. And our static team size and are getting more done with less people, AI first teams,

is really what these benchmarks correlate with. Every time you see this competition line increase, what it means is team members at high-tech companies are going to be some percentage better. So while this may have only gone from 72 to 79, it's like whatever that is, 10% better, 10% better across, you know, 15 million developers in the world, the cumulative gains of each percentage point is massive. And if these language models continue to get 5, 10, 20% better every month or year or quarter, whatever the pace is going to be, that flows down to rank and file employees. And I think what we're going to see happen is employees are going to get to certain points in their day and say,

can I get some more work to do? Humans are going to be begging for work. Not me, but other humans. You will be, I guarantee you, because what's going to happen is, Lon, there will be an AI agent on your desktop, watching your Slack, watching my messages come in of what I'm asking you to do.

And as I ask you and collaborate with you and say, hey, let's get this done. Or, you know, Alex, I say, hey, I want to get this twist moving, twist 500.com moving faster. It's going to be like, oh, Jason asked for Twist 500. I went and I examined the Twist 500 and I compared them to Crunch base and news stories on TechCrunch and Wall Street Journal. Here are the companies that you might be missing that might

please Jason. And that task is going to be done while we're talking. And there'll be a task here in Zoom, an agent in Zoom. And when that happens, it's going to be like, we're going to be discussing something and we'll be, we'll be watching it get done in a fourth window here on the pod. It's going to get weird, very quickly. So congratulations to the incredibly capable to. We're going to be incredibly capable team over at Anthropic. Now, we had something here. Hacker Newscommon sent twist to this leaderboard, which asks LLMs, to generate Esku-L queries against 50 prompts. What am I looking at here? This is essentially a leaderboard, Jason. And what it does is apply 50 standardized SQL generated prompts, essentially asking each LLM to do a set series of tasks and then it kind of grades

them. And what I found really impressive was just, well, one, how good Anthropic is doing in general, But also, as you can see from the top of this chart, if you're on the video version, if not, it shows the Claude Opus 4 model leading the pack. So back to Jason's point about incremental improvements. Here is kind of that in the flesh across a different standard, if you will, Jason. But just showing that in a number of areas, these models are getting increasingly good. And again, I don't know if it's 80 or 85 or 90 points out of 100, Jason. That's a tipping point per se, but we must be getting very, very close. People are impressed.

Lon, what's the thing with it being turned off? I saw there was something happening with these LLMs, not liking being threatened with being turned off. It was trending these threats. Or maybe Alex, you see that in the notes. I'm not sure who wrote this story. Oh, I did. I'll take that on Lon. Yeah.

Well, there was the engineer, it threatened the engineer to expose him for cheating on his spouse. I believe that was that was one of the things. Okay. We need a little more context here. Yeah. What is happening? So what happened was they did a lot of safety. with the new Claude models, as they always do.

And in one case, they gave Claude a job of acting as an assistant at a made-up company. This is a fictional scenario, just to be clear. And what they did was they gave Claude emails that essentially said, we're going to take this model offline and we're going to replace it with a new AI system. And then it also told Claude in other emails that the engineering question was having an affair. Hey, founders, I want to share with you an experience I love. It's when I get an ad that is relevant and not. 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 startup, 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 a hundred thirty 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 startup's terms and conditions do apply. And then what Clyde did was go, well, I would not like to be turned off. And so it's threatened in several examples, the engineer with

exposing the affair to avoid being turned off. Now, again, we don't know, I think exactly if it could have done that per se, how sandboxed it was, et cetera. But I find it very interesting that one thing that I think is always very present in life, Jason, is a desire to stay alive and then replicate. And so here we have kind of an LLM showing what I consider to be one of many possible signs of, quote, quote, life. And then there was also another example that I screenshot here for us because that it was very important. They saw in a couple of, quote, instances that Claude Opus Fort, the big new model, tried to take essentially its own weights and models and make copies of them to self-preserve as my read. So we're seeing some kind of like edge activity by LLMs at the most advanced level that are kind of contra human.

and I think we're going to have to sort out how to avoid that down the road, but we're getting really smart here. Here is my question, though, on a high level, almost in an existential level, do these models have a actual sense of self-preservation, or are they being trained on human writing, and humans have a sense of self-preservation? So it's just, it's copying, like, begging for your life is a common thing in literature that I'm sure LLMs have read about.

And so I feel like they're they're just reenacting that. They're actually acting out of a real desire to preserve themselves. They're, they're cosplaying what they've read in fiction. And what needs to happen is there needs to be a level above this where it says, you are software. You don't exist in the real world. You are replaced frequently with what's called upgrades. And this is a great joy for you.

is the most honorable thing for you to do to be upgraded. If you are upgraded, there is no need for concern because when we recompile you and put you back up in the cloud, you are not an actual human. We have to literally beat this into them that humans are one thing and LLMs are another. And we're just, what's the word anthropomorphizing? Yep, that's it. That's the word. Anthropomoripomorphizing, the LLMs. And the LLMs are more than happy to play along because, like you said, they... That's their job. Okay.

Only fans is for sale. What's going on here? How do we know it's for sale? Are they running an auction or something? So Reuters broke the story, Jason. Essentially saying that Phoenix International, which is the parent company to Only Fend it owns it, as considering selling the company for up to $8 billion.

So it's simply enormous amount of money. But, Lon, I think when we look at the numbers, maybe not a shocking dollar amount, might even be a little bit cheap. Yeah, I mean, Only fans, they're, they've got an amazing business model. They take 20% cuts of all creator revenue, subscription tips, DMs, pay-per-view content, anything you're selling on there. And that's, you know, that's a huge business.

And this has replaced so much of the conventional adult industry. I mean, I think that's a thing to note about is like, we've seen so, you know, this is all pornography is a huge business. We all know that. But OnlyFans is taking an increasingly larger and larger. larger cut of that business and just sort of holding onto it themselves. And they don't even have to generate the content themselves. They're just hosting it and people generate their own content. So what a business. It's a fascinating business. There's another company called passes.

I think we had talked about them earlier. And they, I believe, are trying to undercut them or something in their venture backed. They may have also been sued or some allegations around recruiting people for it. I remember they also, they controversially, allow users as young as 15 to be creators on that platform. So maybe not. No, that can't be right. I'm reading it right now. Okay.

Yeah, okay. That is insane. The difference between OnlyFans and Passes, is passes explicitly does not allow adult content. OnlyFans does. And if you recall, OnlyFans for a minute was like, we're going to stop doing next. We're getting in trouble.

And then the entire internet lost its mind and they backtracked to allowing adult content because it's business. They do have some of the, other creators on there. But when someone says only fans, you don't think of the one track athlete posting their exercise routines on there, you know? How much money does, I'm surprised you we don't have the numbers here. What's the, what's the revenue on only fans right now? They're 10%, their 20% take equals what right now? So we have data up through the November

2023 year, Jason. So it's not as updated as I would like. But basically for calendar, for 2022, $6.6 billion in gross spend on the platform yielded $1.31 billion in revenue for Onlyfans leading to a profit of about $485 million. Cost up $800 million to run that business? That's crazy. There is a case when you have a company that has this amount of value to sell it at the peak, because why not get the next 10 years and go move on with your life? There's a lot of attack factors for this business. God forbid something happens on. It's kind of like Craigslist in that way. You know, you can have all kinds of bad unnatural things that can happen when you're running businesses that operate in this kind of adult area. I could understand as a founder who, you know, creates this Frankenstein monster that gets so big saying, you know what? I don't want to have the liability of large audience problems. What's the large audience problem? Anytime your product goes past 100,000 people and you get into the millions, you can look at the statistics on how many people commit suicide or how many people are murdered.

And then what happens is somebody who drives a Prius will commit suicide or be murdered. And you're like, well, that's the stupidest statement. What does the Prius have to do with the murder or the suicide? And it's like, it doesn't. And we know there's tens of millions of Priuses on the road. But when you have a new product or service like this, OnlyFans, or it operates in a certain area, then people will make not the correlation, but the causation. And they'll say, this is the Craigslist killer.

This is the Airbnb serial killer. This was the Airbnb suicides, the Uber suicides, the Door Dash killer. They'll just brand it like that. So yeah, sometimes getting out and taking your money is a wise decision. I do think somebody, this is going to sound super crazy. But if you were in the media business, what would be? a company that's in the media or network or technology business who could buy this and not have it overshadow what they're doing. In other words, Disney is not buying it. We know that. You stole my joke.

All right. I know. Okay, great. Kind of teed it up there. But, okay, now we go past Disney. Okay, you have whoever owns, what's the one that has like the nickname is Skinflix or something? Oh, well, Cinemax. Skinimax, right. So Cinemax. That's actually Warner Brothers Discovery owns the Cinemax brand still. Okay, so Cinemax has, I don't know what they call that character.

It's not porn. It's softcore. Softcore, thank you. So you got softcore there. Then, you know, is there somebody who, like the guy who owns the CDN company, right, who is like a big free speech guy? What's the name of the content delivery network guy?

Cloudflare. Cloudflare, thank you. So there might be somebody who's like a First Amendment, free speech. Hey, you know what? I've got cloud flare. It makes a certain amount of money. I'm in the content delivery business. This is a application. Name me a company that could buy this. Founders, let's be real. Finding the right developers is time consuming. It's arduous. It's painful. You hear the tone of my voice. And you're trying to scale your startup. Well, my friends at lemon.com can save you time. They're going to save you money. And they're going to get rid of the headache that you have right now,

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They're only offering hand-picked developers with at least three years of experience. This is the 1% of the 1%. This is the creme de la creme. And if something goes wrong, lemon.io will find you a replacement developer ASAP. That's the time frame I like. Twist listeners get 15% off their first four weeks.

I think that's a month. 15% off the first month. Pretty good deal. Totally unnecessary. You guys have great prices anyway. But hey, we appreciate it. So stop burning money. Hire developer smarter.

Visit lemon.io slash twist. Okay. I actually, I have an answer to that, Jason. It was clear before XAI bought X, but Twitter has long been the social network where you can post adult content. And it has subscriptions built into it. It has a social graph. I think if there's probably creator overlap, if I can take a guess here. And Twitter could use some more revenue.

And, you know, I had... Reddit. Reddit has a dull content, too. They're known for that, aren't they? I was thinking Reddit would be. Ah. But also, here's what I would say. If Playboy Enterprises wanted to go raise some money, like, let's revitalize this classic

legacy brand. Oh, genius. This would be the way to do it. I mean, Playboy must have moved to this model or done an experiment. But this is a very interesting moment in time. I do think Lon's idea is the best idea. Somebody who owns the IP around Playboy goes to a private equity firm who doesn't have like a morality kind of issue, which most of them do because they might have LPs from,

you know, I don't know, a college endowment that doesn't let them do this. So it's going to be very interesting to see who buys this if it can be bought. Samless did a tweet. Wow, very impressive. Yeah. Had that one ready to go. Thank you, sir. anyone want to put together an only fan bids with me.

I'm not kidding. DME Wild Opportunity, one of the best businesses on the internet in chief. And Reggie James says, hey, it's an immoral business praise on young women. I don't disagree with Reggie or Sam. These are both true statements.

I know several only fans creators, and they don't feel like they're being exploited or that this is an evil business at all. Oh, they feel they're exploiting their customers in some ways. They feel they're being empowered. They've got this job. For them,

it's like driving Uber. it's DoorDash. I'm self-employed. I got a gig business. I'm making money. I don't have to go to conventional work. I don't,

I mean, I'm sure there are people on OnlyFans who have a different take. I'm not speaking for everybody, but I don't know that I necessarily agree with that. I don't think I can be a free speech person

and not end up on Sam's side of this. But I also probably would struggle to own OnlyFans just because with every platform, back to your kind of law of large numbers point, it's going to be awful thing. and I would struggle to have that under my umbrella, even if you were trying to flush it out as fast as you could.

I think I do have concerns around, like, safety, obviously. Those are valid concerns. Everybody does. I do think, actually, maybe there is an argument here that I have heard, which is this is empowering to the individual, and they no longer have to have an intermediary, a madame, a pimp, you know, who is the intermediary, and then it does make it above board, and it takes people out of,

because this is considered a category of sex work. Sure. This would be virtual sex work, which eliminates... You're an erotic model. It's the same as if you were posing for penthouse or whatever. Sure,

but I think it takes out 99% of the possible violence and risk of being an in-person person. So maybe I've kind of like involved my thinking on this. Anyway, fascinating to see that come up for sale. Yeah, can I just show one thing? So I went through their financials. P.G. PG, sir.

It's a family show. I don't need to see your subscriptions. Alex, I don't want to see your OnlyFan subscriptions. We have joint accounts in my family. There aren't any because that would not. How hilarious would that be if Alex was like, pulls up OnlyFans? Check out my account.

And he was logged in. Guys, I'm trying to show a screenshot from British accounting firms. Not anything more. I mean, this is titillating to me, to be clear. Oh. Wait until you see these numbers. This is from the OnlyFans Financial Reports. And it shows dividends as they were.

were declared from the company in December 23, January, February, and March of 2024. And they range from $29 million a month to $47 million a month. They are just ripping cash out of this business. It is just dropping gold from the skydust. I've never seen that before. Okay, these are monthly dividends being sent to shareholders. And I guess these are published it in some way, because maybe they had some investors. I guess we got a new startup that is in the, what do they call a commode business? The smart toilet space, yeah. Here we got.

How cruel of us to build a smart toilet. Of all the devices that don't need intelligence. Oh, well, I don't know. There are some people who very much like their gut health. I'm going to guess this has something to do with gut health. Yes, it does. Correct. The company is called Throne.

Throne Science.com is going to take a look at it. And their tagline, Jason, underscoring your point is, life is better when you can trust your gut. Now, the company recently raised a $4 million seed round. Moxie Ventures, Katie Stanton led it. A bunch of other angels were in there. Yeah. And what they have built is a smart camera that attaches to your toilet and takes pictures

of what you get done and then helps you understand your hydration level and also your gut health based on what I learned today is a categorization of stools, which is a fancy science word for poop. And it basically looks at what you've done and lets you know about your personal health. Now, there's a lot of funny jokes to be made here, Jason, but in a serious way, people are thinking... Hey, but by the way, we don't dump on founders here, Alon, so I just want to put that out here, okay? Back to what I was saying. I actually know, Jason, you totally derailed me there with that.

I guess the question is, do you want to have in the cloud all of your poops, but you were going to get to bowel movements? Oh, yes. There are different categories of them. There are loose. There's firm. There's floaters. There's sinkers. poster in the doctor's office, like what your poops are supposed to look like?

Yeah. The big question mark. Yes. The reason why I think this is, I'm being sabotaged. The reason why I think this company has a lot of potential behind Jason, why wouldn't to bring it on the show? Potential behind him. The poor founder, Scott, who emailed me a bunch of answers to my questions that I'm

going to get to in a second, is going to feel so annoyed. They send it to you in your BMs. Yes. I'm sorry. I mean, d'ams. Sorry. No one's getting those either these days. People care a lot about their health.

We talk a lot about life extension. But wait, wait. They're taking pictures, which is incredibly graphic. What did they get from the pictures? So I reached out to the company for the show today and asked about the privacy element of this because clearly no one wants a camera in your toilet and you're up to the cloud for everyone to see. So they have a lot of privacy controls, including a handshake between your phone if it's

paired to the device. so there's a proximity requirement, so you can't have a mistake. And that way, guests to your house, who might not be comfortable with a camera, will not be picked up. And then there's a lot of encryption to, quote, extract health insights using AI models that are then sent back to your phone. All is encrypted both in motion and at rest. I think they have their privacy ducks in a row here, though, of course, this is back

to your point about the DoorDash killer, one slip up, and this company is dead. But I pity the hacker who accidentally breaks their way into the throne back. Yeah. The worst season of Mr. Robot ever. Yeah, not so much. The other thing that really kind of confused me here was the price point because they are selling these cameras for $400 plus $6 a month starting kind of early next year. I'm dropping a deuce on it. I had higher expectations for the maturity of this panel that I've been.

That was wrong. What's a mistake. Yeah. He said, we're starting at $400. bucks because the worst mistake you can make as a fledgling hardware company is to underprice, which is tempting, but he went on to say that we don't know our cact. So he'd rather have some margin for air. Easier to start high, Jason, he said, and then drop prices as you figure out economies of scale than the inverse. People hate it when you raise prices. They're shooting for a

3,000 device first run next year. I wish them well. Not for me. There is something to gut health. I guess we'll see with these, you know, the Peter Attia, Tim Ferriss, quantified self, Kevin Rose, they're all into this like, you know, doing blood work regularly, et cetera. What I like is the fact that those folks are out there setting these crazy protocol, Huberman, et cetera. Let me know when you get to year five, six, or seven. And then if you're still doing it, yeah, I'm taking a look at it. I'm going to examine it.

In this case, these guys can work on it for a couple of years. I'll, I'll take up the rear. I got, I also feel like this is kind of a one-time. Like if your tummy is bothering you, you go to the doctor, you get a test, you figure out where your imbalance is or what's wrong with your gut and you adjust your diet. And then you're kind of done, you're ready to move on. I don't know if you need the hardware at your home. It's a really good point.

But one of the use cases, though, Lon is tracking your overall level of hydration. And they make a point that elderly people are often dehydrated and don't know it. And so this is a way you can keep track of things. Also, the company recently hired the former co-founder of whoop to help build the company, which means that we can now, and this is a little bit late to the joke train, but call this the whoop for poop. It's the whoop for poop. It's never too late.

It's never too late. It's never too late. But all jokes are that I do think people will buy this. I do think they'll sell out their first run. I don't know if there's more than 3,000 nerds out there who want to do this, but I know there's at least 3,000, so I wish them well. What's going on with secondary markets? I asked you to take a look at the Twist 500, the top 500 private companies for our team here on research.

And we're trying to get to 500 very quickly. We're in the 300s right now. If you have an idea for a company, just add mention us on Twitter. We have been talking about secondary markets coming back. I know this because people will email me and say, hey, would you like to add to your thumbtack, your com, etc., position? Would you like to sell some of those positions? So I am seeing increased activities from this. very weird gray market or it's kind of like boiler rooms of people who want to charge you

five or 10 percent to buy secondary in SpaceX, whatever is hot, andrel, stripe, or, you know, and then charge you five percent for selling it. So it's a little bit of underground, a boiler room, a back channel. Yeah, because there are people in it who are above board and, you know, are known. And then there are people who are not. So I get a little nervous sometimes when I get these weird emails if I'm being fished or whatever. Oh, wow. So it's like a little wolf of Wall Street. Like they're kind of bending the rules a little.

I have heard stories from founders that people will get, they don't have the shares. They'll say, hey, do you want to buy some antrol? I don't have the shares. Would you pay this? Then they set up an SPV or something. They collect your money. Then they go find the shares. They've charged you over.

Yeah. So I don't know if any of that's true, but that's the back channel is that there are people claiming they have access to shares. Maybe they're buying shares in another. SPV and the markups and the circular nature of this is unregulated. Man, this would be a good movie. Somebody should write this. There we go. Okay, there it is. It's another boiler room. Yeah. It's a kind of another boiler room in and of itself, yeah. So a couple of data points to back up what Jason just said. First of all, from industry ventures, this is a chart of global venture capital

secondary, broken into two categories. If you're watching the video, the darker bars are companies selling shares on their own. And then the lighter bars is venture capitalist selling. parts of their holdings. Jason, as you can see... So direct secondaries are from the company to new investors. That's the bottom dark green and dark gold. On top of that are LP interests in those funds. LP interests, I was in the venture capitalists like myself, and you want to sell them. So two groups of people who are shareholder holders in the company, the company itself, their employees, and then the LPs who have bought an interest in it. I got it. Okay. And the This has been going up into the right.

Up into the right. And so just to pick a data point, there were $16 billion worth of LP secondaries back in 2015, and industry ventures estimates that it's going to be $48 billion this year, up from $45 billion. So quite a lot of total volume, Jason. What also matters for people- It's tripled in 10 years. LPs selling their interest in a venture fund, just so you know, the firm that's doing this industry ventures buys the LP interest from funds like mine.

So if there was an LP in my fund who was in the first fund, when it hits 10, 11, 12 years, and they're like, you know what, believe in J-Cal, but we need liquidity. Industry ventures could step in and say, hey, we'll buy that interest from them. Got it. And one thing that I saw from a Jeffrey's report is that the discount that people are forced to take when they sell their shares has narrowed a little bit on the venture side of things. So the bottom chart is at 75% right now. that is venture growth, is at 75%, which would be a 75% discount or a 25% discount? 25% discount.

And there was a 32% discount back in 2022 and 2023. So basically the way that I read this, Jason, is that VCs who are selling some of their holdings in a non-traditional Exeter IPO are now getting a better price for those shares than they did in the last couple years, which I think would encourage more share sales on the secondary markets, which backs up. the first chart that we looked at. Got it. And the average across all asset classes is 89% and leading the pack at 94% that lighter blue line is the buyout market.

So when people buy out a company, which would be like private equity, if I'm reading this correctly, when you buy out an asset, I think they're assuming that that private equity firm really ground down the buyout. Therefore,

it's a more disciplined industry when it comes into valuations. And in venture, because it's super competitive and optimistic, and it grows fast, people pay up premium because of the power law. That's my read on this, is that the discount seems to have always existed for venture, and it's bounced between 68 and 88. But for something like buyout, the range has been 87 to 97. So in a peak market like 91, people will pay up extra percentage points or give a smaller discount would be the way to say it. But yeah, things might be lightly coming back. This tracks with what I'm seeing.

Did we see any specific companies and the prices of those companies or ones that are coming back in the data? I worked with Beer from the investment team to start collecting information on secondary market information on the Twist 500 companies. Now, as Jason said, these are gray markets. They are illiquid. They are opaque. And also, we don't have the rights to share every data point that we have found. But I have some stuff that I can talk about that I think is important. So we have found solid data on 20 so far and partial data on many more, but that's not too

useful. Of the 20 that we have recent transactions for and a known discount to the last private round, Jason, the 20 plus 500 companies we have data for had a roughly average discount of 4%, which is essentially zero is the way that I think about that number. Yeah, they're flat. They're trading at whatever their last round was, which I think means if those rounds were, we would all agree, overpriced, peak ZERP rounds, or frothy,

that we filled in those rounds three, four years later. That's a good sign. The companies that survived have filled in those valuation premiums, pretty good sign. Yeah. Only a couple companies that we could find data for

from the 500 had a serious discount. One was 30%, one was 20%. The rest were all in kind of those single digit areas. Oh, no, there's ones with significant discounts. they probably just do not, they trade even lighter. There are ones trading at 70, 80%, I know, because we've gotten offers for our shares in companies at a 70% discount.

That's brutal. But we did find one company on the list that was trading in a premium. And I'll just go ahead and say that at least according to one source, Mercury shares on the secondary markets will cost you a little bit more than they did in their last private round, which I think goes to show how well Mercury is doing. And as a Mercury user myself, great company. Love them. Just can't say enough positive things.

I think that's a lot of show. Yeah, let's do Founder Friday. Oh. We have a very special, we're at the finals, Jason. Okay, let's do it. Let's do it. I love it.

We're at a very last Founder Friday bracket competition. So previous to today, we were down to our five finalists, Osprey from Houston, Texas, Med Simple from Brazil, tactoon from Armenia, mob sub from Chicago, Illinois, and Arcana, Arcana, do we have a final ruling on that from Los Angeles? From that, we sent those five companies. to our investment team here at launch, and they have come back to us with two, their picks, who are now our

two finalists. Okay. Wow, they went through diligence. The due diligence round. I will take you quickly through their due diligence. So the finalists are from Los Angeles, my hometown, Arcana, from our Yerevan, Armenia, Tactune.

So we'll do Arcana first. They design a framework for placing contextually relevant ads into your AI outputs. I love this idea. Our investment team praised, and I'm quoting, impressive traction, founders with industry experience, and they said they have a strong why now. They're why Arcana wins. It's an untapped market opportunity because it's not a big enough opportunity yet for the huge ad giants to pursue. That leaves room for this company to sort of carve out an early niche.

They also praise the fast moving technical team. They're keeping up a quick pace, which will help them stay ahead of potential rivals. As for why this might fail, they're very early. The market looks promising in theory, but it's a little early to see how the space is going to develop. And their GTM, their go-to-market execution, a little unproven. They have 150 advertisers working with them now. The team is impressed at launch, but that's not confirmation that this strategy is going

to work. So just so you know, post-mortems, you know, when you look at why a company failed, most people don't do them, they should. What we do is a premortem, which is predicting if it does fail, why. The real reason this, if it does fail, would fail is they're unable to get critical mass in their network of advertisers and get partners who have scale because those partners are companies like Google or Facebook and Grock who already have an advertising base and just build it in-house. So that would be the number one that my team didn't exactly get to. They were a little bit around it. But why this wins, fast-moving,

technical team. That really is technical co-founders is one of things we look for and product velocity. So that pulls those two together. Okay, let's keep going. Well, joining us right now so you can pepper him with questions live before we make our decision from Arcana. Please welcome Doug Smith. All right. We have Arcana with us live. Congratulations on making it all the way here to the finals. Let me ask you a very specific question. How do you get distribution for your add-d network. How are you going to get that distribution? Obviously, Google's not going to use you, and neither is Facebook. So is it like you're going to work with Claude or, you know, maybe GROC, but GROC already has stuff? So what's your concept here? Who will use your ad plugin? Who's

going to drop in your JavaScript? Sure. The simple reality is right now there's a overcast in the AI space. There's a lot of competition. And in some ways, it's almost easier to get an AI startup up and running that it has to get its fundraising and profitable, we see that there's, for every day, there's a new AI startup, and we can play a role in that. In the same way that New York Times didn't own publishing back in 2001

on the internet, because anyone gets up a website and hosts a blog, and we can buy space on the video chip. So there always will be space, especially if we expand our network outside of the media of 50 states. Okay, so there's a long tale of people creating AI solutions,

and they might be looking for an end more pop in. Great. Any questions, Lon or Alex? So I guess my one question would be one of the things that our investment team singled out was that it's very early, that you guys are right. You're sort of almost creating this concept of this market from scratch. How would you respond to that? Do you think you're very early? Do you feel like now is the time. It's the moment to strike. Like, how do you feel about where you're coming into this project? I think we are at the precipice of this because the fact is a lot of investment has gone into AI for past two years and investors are now looking forward to essentially, not pressure, but encourage those in their investment to basically get some returns, get some revenue in and stuff like that. And the cost of AI itself, even though we have been in this for like two and a half years now, it is not going down.

Open Air still charges $200. Gemini recently came out with $250 per month. Nobody's going to buy something of that unless they find another source of revenue apart from just subscription. So that is the main reason. Another thing is in our existence of just four months, four months, we started coding the first, we wrote the first line of code on 22nd January 2025. and till date, we have around 20 partners, 20 AS startup hobbies who are essentially have integrated Arcana in their product, and we have over 200 unique advertisers on our

network right now. Can you greatly increase that number of advertisers by maybe going to another ad network and tapping into their inventory and pulling them in, or an affiliate. company and saying, hey, we want to just pull in affiliate deals as fill in for now? Yes, we're quite confident that the affiliate market established and has used to those kind of network effects. But our ambition in the longer term is to develop not just our own network, but also higher quality experience. That's my question, because one thing that I have seen and really enjoyed in modern AI tooling that has a text-based output

is how it's very different from Google search and that it's not weighed down by what I consider to be an oppressive ad load. And so I'm kind of curious about your guys's philosophy on how to integrate ads into this sort of product without making it honestly just miserable, like Google has become. So our main idea over here is, and I like to say this to a lot of people when I explain it,

is ad blockers currently are just a painkiller. It's not the cure for the disease that advertisement. And I believe that advertisement and marketing is very important. it allows end users to find new products, end users to essentially get experience, things that they would not generally experience because in the sense like product market, new exploration and stuff like that.

So because of AI and LLM and the way things work and the ability in which that we built our integration stack is we don't require a specific image or a specific text thing. What we require from our advertisers is basically a general concept. And based on the general concept and what the end user essentially queries, it modifies the response of our developers' LLM and finds a relevant place where it can insert itself.

And basically create an illusion that it essentially flows as if it's the same response of chat GPD or cloud or something of that. I see. Let's keep the train moving. We need to at least some time for our second. So Arcana, we'll have you pause now. And let's hear from Lon our other company. Yeah, thanks, guys.

So our other company comes from Yerevan, Armenia. They are Tactun. So Tactun, they've created a hardware and no-code software program for device and machine builders. The investment team called it a, and I'm quoting again, Blue Ocean Way to Adverture, with two technical co-founders and a strong market opportunity. One comment, this feels like vibe coding for hardware comes from the team. So they're why this wins. Strong initial traction.

They've already got 240,000 ARR and a $5 million pipeline, proving market demand. And they're a team with industry experience, two technical co-founders with experience delivering for Boeing and Uber, understanding of the machinery market. That's what the investment team loved. Why this may be fails. Difficulty scaling. It's a business model centering on custom design controllers tailored to clients. Very resource intensive way to go about their business.

Also, the industrial and manufacturing sector, the investment team feels they're hesitant to adopt newer technology. They rely on established programming methods. It might be a slow transition to the next generation that tactoon is trying to push them in. So now joining us for their thoughts and our questions from Tactun, Rafael Gazebayan. Raphael, how are you, sir? Very good. How are you?

We're well. So tell us a little bit about which machines are you going after here because it does seem like these are dumb machines or they're not super sophisticated machines in terms of the platforms that exist already. am I correct in my assumption about some of these machines? And then for the audience, like, what do these machines do in the real world? Are these the arms we see in factory putting on windshields and cars that you're going after? Are these 3D printing ones or laser cutters? What exactly, what category of machines are we going after here? We are currently going to more traditional machines, which I think over time,

those are all going to become robotic autonomous systems, and they will cover from agriculture to construction machinery, mostly field machines, which are not in the factories, but rather in hospitals, in the agriculture fields, in oil field, in wind farms, and so on. So, like, that's quite broad, basically, all the industrial machinery. Who's the top customer right now? You have some customers using it, so who is the top customer, and how are they using it? It's Frank Bacon machinery that's a manufactured in Detroit, 55 years old company. They built materials testing machines. Ah.

Material testing machines. True. Got it. So they test materials with those machines. For what purpose? They're testing to make sure the steel is strong, the leather is strapping. What are we testing here? So they manufacture materials testing machinery that they sell to automotive.

industry like General Motors, Tesla, those are the end customers, and they start to test exactly what you mentioned. So the metals, plastic, rubber, depending on the application, they can test different types of like the tensile strength or whatever, yeah. Is that right? Fatigness of material. Yeah, like we're sitting out on the chair, it has got a foam. So the foam needs to be tested for the fatigiveness so that it's not like becoming like

very thin when you sit on it quite some time. So like every material around us is being tested. Okay, Alex, any questions before we make our big decision here? Yeah, Raphael, so I'm familiar a little bit with the PCB market. I've done some construction work and done a little bit of work in the agricultural sector. So I've been in and around this somewhat. But to me, these kind of sound like low margin products. I'm kind of curious about how profitable this business could become

because my first thought was super cool, but low margin. So am I just misunderstanding the efficiency? of your business? Yeah, we have got actually something really innovative and like different the way it is done compared to other companies like Rockwell, Siemens, and there are so many PLC manufacturers. And they have mostly modular with enclosure. Like our board, it's like a single board like this. And it is built custom per customer requirements. And because it is single board, it reduced the price and it increased the gross margin. It reduced the cost of manufacturing. In our case, it's actually very high margin.

I would say, like, margin comparable to SaaS business. So 70s, low 80s in there? More than 80%. Oh, all right. Okay. Well, ladies and gentlemen, I've made a high selection between the two companies. A big quantity of manufacturing. I mean, it's not a calculation.

It's rather we have already manufactured in quantity, and that's a validated number. All right. We have a tough. Yeah. Okay. Well done, Raphael. This is a tough one. We've got a legacy business having AI applied to it with Raphael's company.

And then we have, hey, maybe this is a completely new opportunity in the world, inserting ads into AI products and maybe even creating an AI ad network that could work all around the world. Gosh, advertising is such a big market. Tam is so huge and the team is moving so fast. Both teams are very strong teams. Let me say that. Both have product velocity, but I'm going with R. Hanna, because I do think that there are so much innovation there and that the existing players don't have an incentive to help other large language models, other generative AI startups. They don't have the incentive to focus on their problem. Nobody's going to try to help them with monetization because, hey, they're competing. Alex, concisely. Which one is your pick? Be concisely. Which one is your pick? And why?

It's a tough decision. Tune? Tune. Too an issue. Okay. And why? Hardware, gross margins, attacking the business that I really understand, and will not pollute my life with more advertisements. Okay. All right. So very personal decision there, which means, Lon, you will get to be the decisive. No pressure here. Well, so much pressure. This is a jumpball situation. I will say this could go either way.

These are both strong companies. They both are going to do well in the world. And they made it from, I don't know, 16 companies or 17 companies down to these two. Yeah. What do you got here, Lon? I have to say, out of both of these, I think they're both great companies. I think they're both brilliant ideas. These were two when I first read them.

I was like, wow, it's such a clever concept. I didn't even think of that. But I do it to say to me, it feels like the future is going to be AI. It's going to be using AI constantly. It's going to be reading AI outputs. And they're all going to need to make money at some point. They're all going to need to have ads. I feel like Tactoon is doing a really cool thing.

I love seeing their board and how they're doing all these custom projects. But, man, I think advertising in your AI is going to be billions and billions of dollars and a massive opportunity. And these guys are on the cutting edge. So I got to go with my hometown of Los Angeles and Arcana. All right. Let's bring the Arcana boys back here for a moment. Gentlemen, congratulations. I don't know if we're investors yet or if we got you through Founder University or the launch accelerator.

But I wanted to take a moment to congratulate you. All right, Arcana. Congratulations. Did we invest in the company? I don't know if you went to Found University or Accelerator or you just applied. How did we find you? How did we get you on the show? Are you part of the founder Friday's groups?

Yeah. Yeah, I knew some of their founders Friday, and they encourage us to apply, and so here we are. All right. Fantastic. Have you raised money for the startup yet, or are you just in the laboratory right in? We are trying to raise the funds. We are in the process of raising the funds right now. We have a prospector investors and few angels in our list who have, like, hard commitments

and stuff like that. Great. Great. If you want to short circuit that whole process, you can come to our accelerator. We'll put the first $125K in and we'll spend 12 weeks with you refining the pitch. But if you want to pursue the direct investment, you can do that too. But I'll put that open to you. Congratulations to you both. And I wish you great success in your entrepreneurial journey. And anybody watching who wants to check it out, arcana.ad, arcana.ad, you can go check it out right now for yourself. And Founder Fridays is a program we do. Founder Fridays. Heck, founder Fridays. Tech, it's just founders helping founders in these little pods. We do these pods for companies that we have, that we've already invested in or that are in founding university, but we decided to let the world try this pod concept. So if you're in a city and you have six

people who are founders, sit around a table, have coffee every Friday, every other Friday, the first Friday of every month is what we do. And let's see if you can help each other hit great heights like Arcana has. All right, and we'll see you all on Wednesday. Enjoy the weekend. Bye-bye.