This Week in Startups - Bob Iger joins VC firm as venture partner, Twitter whistleblower hearing, KKR tokenizes fund | E1559

Episode Date: September 14, 2022

First up, J+M discuss Bob Iger joining Thrive Capital as a venture partner (2:09), then they break down the most interesting moments from the Twitter whistleblower hearings (24:48). After that, they discuss KKR tokenizing part of its new healthcare fund (57:43), before wrapping on the Launch House allegations. (1:06:22) (0:00) J+M tee up today's topics! (2:09) Legendary former Disney CEO Bob Iger joins Thrive Capital as venture partner (12:23) Revelo - Get 20% off the first 3 months by mentioning TWIST at https://revelo.io/twist (13:45) How Iger linked up with Josh Kushner, false perceptions of VCs (23:32) Dell For Startups - Apply for Dell for Startups and get an additional 10% off at http://dell.com/twist (24:48) J+M react to clips from Twitter whistleblower Peiter "Mudge" Zatko's congressional hearing today (33:13) Assure - To get 20% off your first Special Purpose Vehicle (SPV) visit https://Assure.co/twist (34:33) More clips from the hearing and reflections on Twitter's security issues (57:43) KKR tokenizes part of its new healthcare fund to allow QPs to invest more easily (1:06:22) Launch House allegations FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

Hey, everybody, hey everybody. We thought Tuesday would slow down. We're wrong. It's just chaos out there. But I got to talk to you about Disney Bob Iger as becoming a venture partner. But I'm just, what firm? I know. So like, does this mean, though, we're straight up peers with Bobbiger right now as investors?

I'm just saying straight up peers. I got to zoom with them later. Straight up peers. We do have questions, however, about where he went, which we will discuss. We will also talk about the Twitter whistleblower hearings featuring former head of security, Peter Zatko, aka Mudge, just saying it all on behalf of security professionals everywhere. This is explosive stuff, folks. And then we're going to talk about KKR, that big, huge financial firm. I guess, you know, they saw what I was doing with publicly raising. And I guess they're

going to publicly raise from QPs, qualified purchasers with some kind of token angle, which I don't understand. We're going to double click on that. And then we're going to as quickly and efficiently as possible dispense with the gross story about the allegations regarding launch house. Okay, it's going to be a great show. Stick with us. This week in Startups is brought to you by Revello. Looking to affordably scale your product development with global tech talent in U.S. time zones,

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completed transactions and $2.5 billion under administration. Swiss listeners can get 20% off their first SPV at assure.co slash twist. That's assure.com slash twist. Remember that fun time yesterday when you were like, I don't know if this is going to be a big news week or not? That was funny. This is bonkers. I mean, we didn't get through the docket yesterday.

People are. We didn't even come close. They're like, what about this story? What about this story? What about the story? And then I wake up this morning and I start, you know, doing my little 6.30 to 8 a.m. discovery process of the news as we do in our little secret group. And it's like, you know, Disney, bov. Iger, boom. You know, launch house. Boom, boom. Oh, mudges on Capitol Hill right now. Boom, boom. Oh, man. It's too much news. There's probably like a bunch of other stuff that broke while we were doing all that. And, we just, you know what? We're just going to pretend it didn't happen because we don't know. All right.

Whatever it is, don't tell me. We're going to be super efficient today. That is my commitment to everybody. Yes. We're going to no more banter. We have founders to mentor. It's true. We have been a little unfocused the last couple shows.

And you know what? I'm fine with that. I think it's fun as hell, but we're back on task now. We have to be on task. Okay. Now, my guy, Bob Eiger, this is a man crush. This is an ex, you know how I am. I just love a great executive.

Yep. For me, if I could put posters on my wall, it wouldn't be Megan V. Stallion, although I am a fan of the stallion. But I probably would put a Bob Eiger poster up before a Megan V. Stalian poster. I'm just being honest here. Listen, I am, I know Chapic is in charge now and we just have to like accept that. But I'm team Eiger for life. I'm not having any Chapic right now. I got Chapic concerns as a shareholder.

I feel like we need to sit. His style is a little dated. he gets the parks, but he got booed. His little 90s. What do they call the Disney thing whenever we gets together? I know they have like Marvel does their thing, but Disney has a thing where they all get together.

Oh, they do? I think it was D23. That was like the name of it. They call it, it's not DisneyCon, but that happened, I think, last week where they were showing off a bunch of new stuff. We talked about this, a little mermaid. We'll talk more about it with Lon on this week and streaming Thursday.

Yeah, we will. Yeah. We're all wondering what's going to happen with Bob Iger. He spoke at the Code Conference. He said he's looking at, looking for interesting deals. I'm trying to get in touch with him because I got a great deal for him that I want him to look at that that I'm on the board of. I'll leave it at that. So shout out, Bob Iger for anybody knows him. But what else is the news that broke today? Call us. Call us. Well, yeah,

exactly. Now he's ready to co-invest because he has officially joined New York City-based VC firm Thrive Thrive Capital as a venture partner. We lost, Jason. Sorry, I spent out my coffee. Did you say Thrive Ventures? He said, Bravo. Bravo on that bit. Bravo. I got you.

I told you. I just want to make your laugh. You do it. Hold on a second. It's Thrive Capital, the Kushner. Um, yet.

It is, dude. So crazy. Okay, so, like, legendary lib, Bob Eiger. Super Lib. Super Lib. Mega Lib.

Has now. joined up with the Kushner family to be an investor at Thrive Capital. I mean, I'm just saying, we're right here. He could come here. Come work with us. He could go to Sequoia. He doesn't have to move to the valley

to invest alongside. He could work with Sequoia and Drieson, anybody. He could have a pick of the litter choice. He chose to work with. Now, I know they're brothers. So it's separate, right? This is Josh Kushner's firm. Josh, I understand, is not in favor of Trump.

I mean, who even knows? But Jared Kushner obviously worked at the White House, whatever. But didn't Bob Eager spend the last like whatever number of years fighting against Trump? It's really weird. It's such a strange tie-up. Like, it really is. I mean, I don't know anything about, you know, Josh Kushner and his politics. I know that Jared Kushner was involved and maybe was even a co-founder of Thrive Capital

and divested. as much as anybody in that family did during the administration. It's an odd tie up. And then, of course, they're both the son of Charles Kushner, who I think went to, like the big. Yeah, he did. Yeah, that was a whole story to tell. Prison and it's a whole, yeah, it's a thing. I mean, if you want to look up a crazy story, those, their parents, the dad and his brother

did like all kinds of crazy stuff to each other, like set each other up and like got to, I mean, it's gnarly, the family story. It's like, what was the, what's the CNBC show that I was referencing the other day? American greed? There must be an American greed on this family, right? There's got to be. It's sorted and crazy. I mean, it's, but yeah, exactly.

Like, as Nick points out, yeah, sounds like just the kind of people you want to get into business with. If you are Bob Eiger and you are taking your impeccable reputation, Keroswisher called him smooth jazz on the last pivot episode this morning. Because he's so well, he's so cultivated, he's so delightful, he's so polished, he's so smooth. IEQ. He has done everything right in his entire career. And then he's with these knuckleheads? And he just joined up with Thracke of all of the firms and all, all the gin joints. I mean, it's a little weird.

I mean, and I do recognize that like the brothers could have different opinions. I mean, that's completely possible. But that's really weird. Here's Alex from the notice. One Cush brother set up the other brother with a hooker and taped it and then blackmailed him. I didn't want to get into all the details because that is a, that's, See, that's my understanding of it. And was one of them, Joshua?

Remembering this. Like, this was in all the tabloids for like years. I mean, I guess nothing matters. Reputation does not matter. It's all like in the past. Well, it doesn't because let's look at their investment history, right? Here's like, if you really want to get down to all that matters. They made some good late stage investments.

Like, I think they did Stripe and Spotify, Robin Hood. But they were like. They did early investments in Instagram. I don't know if that's true. Spotify, Robin Hood. I don't know if those were early. Really? totally honest? I think they were later. I don't think they were seed or Series A investments.

I could be wrong. But I think they were doing like the B's and Cs. I think they've had a good track record though, yes. Twitch. But yeah. But still. Like I mean, you know, right at the end of the day, like, but still, that is a very, I would say, surprising choice. It's a really weird choice. I mean, if you're Bob Iger, there's only like five venture firms you would want that could even hold a candle to your reputation. This is not one of them. It's like he's kind of slumming it. I'll be honest. It's kind of weird. Right? Like, I sort of, anybody, anybody would take him.

Anybody would have a, I don't know Josh Kushner, so I'll leave it out there. Me neither. Jared Kushner is obviously horrible, but I don't know Josh Kushner. Josh found it thrive without Jared. Yeah,

is, okay. I know that he was involved. So I don't really know, but he was involved and had to divest. Yeah, because that became a little bit of a back channel amongst venture circles because, because remember, now, in the tech industry,

I'd say it's 80% liberal moderates and maybe 20% conservatives. I'm just painting with a really broad brush here, but if you went and you took a survey at Google or whatever. Now you go to the venture class, I think it's maybe 65, 35, 35 moderates and liberals putting them into one bucket. And then maybe conservatives would be 25 to 35% amongst the venture capital class because they have obviously maybe more into finance and less go. government, less spending, balancing the budget kind of thing. So just painting with a broad brush here, there was this, are we going to ever do a deal with that firm? Because it's got the cushioner name.

And people saw Trump as in existential risk, yada, yada, yada. So there was a back channel, Molly, of like, I don't, would you, would entrepreneurs take money from that firm? Really? Yeah. I mean, it was, people felt very scared when Trump got in office. I mean, for a good reason, you know, closing the borders and some of the, you know, stuff he did.

So that's where this like politics stuff, I think, getting too close to the Trump brand. Mm-hmm. You know, like if you're, here's the thing about the Trump brand. If you're a nobody. If you're Bannon, if you're, I'm just speaking just strictly on a brand affiliation basis. If you're Bannon, if you're Roger Stone, if you're Alex Jones, if you're like some dip shit, standing next to Trump, who's president, that lifts up your image. Right.

if you are Bob Eiger being two steps removed or one step one step removed here if you're you know anybody who is just good in business uh it kind of became a little bit of a liability peter tiel another perfect example right like i think people were like i'm not going to work with founders fund because of what peter teal supported trump and i think there are people who would never take money from founders fund for that reason um and i think that's why you saw teal kind of not talk about Founders Fund or do speaking gigs about Founders Fund for the last six years? Right. And then you saw, is Teal off the Facebook board now?

He announced it. I don't know if he's officially off. Oh, yeah, I don't know if he's actually officially left. So that caused a bit of a problem, right? Peter Teal is a big brand. Peter Teal's really smart. Peter Thiel's a great investor, great executive, brilliant person. And that was like a big reputation cost in Silicon Valley, I think.

And so that's the only thing I'm talking about here, putting politics aside. You do have to think brand-wise, when you're making transitions, what brand do you want to be associated with. Absolutely. I mean, everyone thinks that way. It would be naive to say that people don't think that way. And this is 100% I would say a bigger, this is a get for Thrive. Right. This is a reputation washing. Right about now, everybody in Hollywood is like, what's Threatf Capital? Like, they're just Googling it. Right. Whereas if you went to Sequoia or Andreessen, Excel, Kleiner, you know, any of that short list. Or if you went, the other way, Tiger, Koto, you know, more PE, you know, they'd be like, oh, makes total sense,

right? Like, that's where that person's brand belongs. So this is a, um, but now here we all are talking about. This is a big risk for Iger to, you know, dip down. If you're looking for highly qualified elite international developers, but you don't want to deal with the crazy time differences, I feel you. That's why I use developers who are in my time zone. And that's why you need to know about Ravello.

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We both have model wives. That's how this came to be, evidently. Uh, okay. Per. That's interesting. Wall Street Journal. With our... shoot together?

I don't know. Maybe are the active model? I don't know. I've heard of Carl, Carly Clause is an influencer or an actual model? She's an actual model. She's like a super big deal. She's a super big deal supermodel,

but I know, I understand that it's hard. It's like hard to know who really is and who isn't. I just want to say. Like I'm a big STEM activist. For me, there's like super models is like there's 12 and like one or two come out and then one or two go in. But like the super model term is now everybody's a model.

I think I'm going to be a model now. Same. She does girls who code. She's really big in STEM. I mean, like, she's no dummy. That's actually super cool. You know, I don't assume that Willow Bay is that she's a journalist. But maybe also, I don't, look, I don't know.

All I'm saying is that's, journalist model? That's how they met. That apparently is how they met. Maybe they really had a great connection. I'm not denigrated models. I do think it would be fair to say, though, that if you are one of the entrepreneurs, evidently, like, one of the things that Iger is going to do at Thrive Capital is like mentor and offer advice.

to founders, which is a huge value add for that. Yeah, that's a big thing. Now, to be clear, he's not going full-time. This is a venture partner thing, which basically means they give him cash to invest in companies. They give him the lion share, I bet, to get him of the carry. And they take a small percentage of the carry. So I think this is a way for him to get access to maybe $250 million of their,

maybe 10% of the fund. They have a $3 billion fund or something like that, if I read correctly this morning. Whatever billions under management they have, you know, maybe he's now got access to 100 million a year, 50 million a year to invest in startups. If they get 25% carry, maybe they gave him 15 or 20 of the points just to get his name on the website and to attract founders. In fact, there would be an argument to just give him all of it. Like, whatever, you know, we'll take 10% of whatever you make. You take 90, we'll take 10 just to have you in the family.

And for him, then he's plug and play ready to go. But I think he would have been better off going to Sequoia or somewhere like that. But Sequoia actually doesn't have celebrity. A lot of times these celebrities don't actually do the work. So that's the other thing with these celebrity investors. Do they actually want to do 10, 20 meetings a week? Kind of what it takes. If you're going to be a VC, it's going to be a 60-hour week,

and it's going to be 10, minimum 10 companies a week to meet with. If you're going to be successful, I mean, it's pretty, unless you have some magical deal flow. I think a lot of celebrities underestimate the actual effort in time. You're coming up against this. Like the amount of time mistakes. Exactly. Yeah, we have a slightly unusual situation in that regard. Well, we have to record the pod for a six-day-a-week show, you know.

You know. I mean, I was thinking about this the other day. I was just like, my lord, to be successful with this job, I think I'm trying to figure out if there's a way to be successful as a venture capitalist and put in less than 50 or 60 hours a week. I just don't think it's possible. Like, my contemporaries are six, seven days a week. Like, I'm getting emails from them seven days a week. You got to put that extra hour in at like 11 o'clock when you put your kids to bed. It's just, yeah, be careful what you wish were. A lot of people are doing this VC job. I know, I'll stop my little tangent here. And this might be something for Sunday, VC, Sunday school. A lot of people are doing this job and they're kind of phoning it in. And I can tell

you that's not going to work in a down market. So a lot of people who were throwing darts and be like, this job's easy. I'll just, you know, whatever Sequoia did the series A for, I'll just overpay for the series B and I'll just throw money at it. I won't read the term sheet. I won't do diligence, that's not going to work anymore. That only works for that last 25% of the up market. And I think there's like a percept, there must be a perception that that's happening because there was some tweet the other day that was like, you know, look at a VC's calendar. Like, oh, I don't have time to squeeze you in today.

And it was like, it was funny because it's the first. Oh, yeah. It was like a lunch and then some meditation and then do this thing. And then it was like two meetings on there. And I was like, mother trucker, like come. No. Come and look at my. Let me just screenshot this for you.

Like, are you kidding? Like, there are 55 hours. There are 11 hours a day just on the calendar, just calendar hours. I only saw the all in part of this. Do not deserve all in podcasts. I kind of can get behind this. I mean, that made me laugh a little bit. Wait, what did they say catch up on Twitter?

But then it was like, founder pitch, like one founder pitch, catch on Twitter up on Twitter for an hour. Take a founder to lunch. Meet with Twitter Ghostwriter. I mean, the fact that Twitter is five hours is kind of the best part of this. It's not an act. 10.30 a.m. This one founder pitch, pick up kids. Do not work day over.

Yeah, that's the problem is the pickup kids work day over. So all in thing is fine. Anyway, I'm saying there's clearly a perception that VCs are like goofing off and going to burn man. And I will say, I don't know. I don't know any of them. I'm trying to teach you the way I learn, which is old school, which is it's a numbers game, how much time you can spend with founders, how many founders you can meet.

I'm just trying to teach the whole team like this is a numbers game. I was relentless in meeting with unbelievable number of companies. And that's how you build that signal and you put on Cerebro like Professor X. And you're like, oh, there's something going on in Alaska. Fire up the jet, Cyclops. We're going to Alaska. There's a mutant there. And then you go find Logan.

Like if you want to find the mutants, like you've got to put Cerebro on. You got to really search. It's a good analogy. Nick, fire up that mean machine. We need Jason with Cerebro on. Well, you know, my friend Alexis O'Han made a really cool piece of software where he's tracking, apparently, I think it's a really brilliant idea. He's tracking post investment support and somebody tweeted it. So he just, you know, he made Reddit, which is like a very elegant, simple piece of software and great software in that Web2 era is elegant.

And it kind of just does what it's supposed to do. And I get the sense he took that community stuff and he built it into his version of Cerebro, searching for mutants. A metaphor, you know, many of us have used, which is when you look at great entrepreneurs, make a two-by-two matrix, easy to get, hard to get along with and, like, ability, you know, like how hard working and, you know, their general aptitude for it, you know, their ability to be a founder. And it's like, which quadrant do you think we make our money? And it's like, the ones who are hard to get along with and who are really driven. Like, yeah. The end, like, they're mutants. They're not easy to get along with. And you're going to fight with them over, you know, all kinds of details. And, you know, you might not agree with them. But that's how you make money. It's just going back to...

I like a little freedom to be unlikable in the relentless pursuit of success, frankly. Well, I mean, I hate to make it a genuine. We are going to, though, later... Well, yeah, I don't get that permission. We are going to later talk about times when that can go awry, potentially. I think you'll be the greatest climate investor in history. I'm putting it out there right now. I think, given your work ethic,

and what I saw in the first six months and your heart and desire to do this and the commitment you've shown, I think you will become the greatest climate investor of all time. I think it would be like you, John Doer, and then Vinod. Like, it'd be one, two, three. Because they're kind of done and you're just getting started and you got,

I'd say 25 years to do this. I think you'll do this till you're 70, 75. You could put it in 25 years in this job and everything you do in the first two years is going to be like the epilogue. And then it's going to be like, oh yeah, year three, she met this company. and she backed them before anybody else did, right? And then that will be the Uber of the space or the Google of the space. But it really is about work ethic, you know?

And I think that's the thing that's going to change. Thank you. And second, that is my plan. I think so much about the other day when we had that conversation about adding a zero to your expectations. I have thought about that every single day and like specifically done that inside my mind. Like, yes, that's the plan. Let's go. It really is about work ethic.

Somebody's going to be why not mean. You can't say it, right? I mean, I say all the time. Listen, I'm trying to be the best investor in the history of venture capital. Like, that's the goal I have. I know I'm top 10, Angel, you know, probably top 25, you know, in terms of who people would want on their cap table right now. And why not go for being number one?

Listen, if you wind up being Steph Curry to Jordan, you know, and, you know, LeBron and Kobe, okay, fine, so be it. It's great people to be, you know, standing behind. We're at the foot of Mount Rushmore because they've felt. up those four spots. But I said the other day, I'm the best moderator in the business. And people were like, yeah, that's probably true. I was like, okay. And then somebody was like, I don't think you are. I was like, okay. Names.

Tell me more. Tell me the names. And they're like, Tim Ferriss was like, okay. Yeah, Tim and I are on par. Sure. Like, find me, when is Tim moderated three maniacs? Well, I was going to say, there's, what you said is a very specific thing, right? You weren't like, I'm the best podcaster. I'm the best co-host. I'm the best host. You were like, who can manage? a bag of rabid cats. Exactly. Tigers, three tiger puppies. Three angry.

Tigers. Three soaking wet tigers. Pretty funny. But Seamabody was like, a woman could never say this. I was like, fair. But, yeah. Yeah. Why not give a shot?

Right. I mean, you can. It's just that everybody will try to shout you out of existence or whatever. But yeah, they do that to me too. At the same time, just say it. Yeah. All right. Okay, we got to move on to this bigger news. We do. We actually do. See, look. Oh, we're just goofing off this week. Okay.

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By Dell's semi-annual sale. Just head to Dell.com slash twist. That's Dell-D-E-L-L-com slash twist to join the program. The other thing that was happening today while this Bob Eager News was seemed like the big deal was that Peter Zatko, aka Mudge, Twitter's former head of security, had his whistleblower hearing today in front of Congress. We just went ahead and grabbed the best clips for you.

Does it seem like the best, I feel like the best strategy is just like show you some clips and then talk about him. First up, we have a 59 second clip where Mudge just sort of sets up the scope of the security issues at Twitter. I'm here today because Twitter leadership is misleading the public, lawmakers, regulators, and even its own

board of directors. What I discovered when I joined Twitter was that this enormously influential company was over a decade behind industry security standards. And when an influential media platform can be compromised by teenagers, thieves, and spies, and the company repeatedly creates security problems on their own, this is a big deal for all of us. When I brought concrete evidence of these fundamental problems to the executive team and repeatedly sounded the alarm of the real risks associated with them. And these were problems brought to me

by the engineers and employees of the company themselves. The executive team chose instead to mislead its board, shareholders, lawmakers, and the public instead of addressing them. Okay. That was a big opener. He went for the rafters.

I mean, this is so explosive. We're just going to talk about. talk about the whistleblower here, not its downstream impacts. I'm not going to talk about other issues with Twitter and their corporate development. Also, I'm in the opinion, as are many legal experts, that they are unrelated. Well, yeah, or, or they're admissible all of a sudden, apparently. So, let's put that other case on the side and talk about this case. No comment. Is our official position on that other thing? We're only talking about this one thing. I'm only talking about the whistleblower. So he says they're a decade behind. That's stunning.

for a modern company with unlimited resources to be a decade behind, and then misleading the public and the board, this is where you start to realize there's a cover-up, and that much is super credible because he has very specific instances of what he's claiming here, the cover-up, and we'll get to them in a minute. But the misleading of your board of directors,

this is like where this could tip over into a fine and sanctions that are perhaps unprecedented. I don't know if you remember the Facebook fines, but I think they hit a billion dollars. It was the largest one ever. Five. I think these fines could be very large. And he gets a percentage of the fines, by the way, because of the whistleblower laws. And I just want to say, like, shout out to whistleblowers, like Francis Howgan. Am I pronouncing her?

No, that's no correct? Hogan. Hogan. She was not in a top, I think probably much as position was top seven in the company, something in that range. She was far below that. And she had really explosive stuff. Like, oh, my God, they know that they're damaging children. And then this is like a next level thing because this ties right to the board and to these claims

of don't write anything down and suppress information and mislead people. And it's always the cover-up, not the crime, as they say in the business. When you see the cover-up start to feel really suspect and, you know, like, okay, well, why did you, you know, delete these documents? Why didn't you tell people? Why didn't you write it down? That's when you're like, ah, you know, we got you. And I think that's what I got from only the first hour and a half of this I listened to on double speed. Yeah.

What do you think? We'll keep going through the clips. I think, you know, my overall takeaway was, yes, Twitter security is pretty obviously a clown show. It's to a pretty dangerous degree. I didn't hear specific examples of that. Like at no point was much like, I know this happened. I know a public figure was impersonated on Twitter. I also didn't hear.

And under quite specific questioning about the FTC, he was not able to say, I know for a fact that Twitter misrepresented to the FTC. TC, the terms of the consent decree, right? I also thought to myself repeatedly, this is so bad. And I guarantee that almost every other company has almost the same security issues. And that if any whistleblower had come forward about security issues at a lot of high-ranking companies, they would be pretty similar. Like how he was like, you know, the laptops don't conform to the security parameters. Yep, that's every company everywhere.

Like, it was interesting to have, there was a great tweet where somebody said, every CISO or CSA, you know, every chief information security officer who's ever been fired for surfacing internal security risks, every security exec who's ever made a hard call and been blamed instead of supported, watch the feed and watch Mudge get to say all the things you didn't get to say.

Like, I think this is common. The scale of the danger is in question, but I was like, yep, now do Facebook. Well, here's the thing. Now do Google, which has like an unbelievable amount of personal data. I actually think if you look at those three companies, I was going to bring both of them up as the examples. They are known for being tech-driven leadership.

Zuckerberg, Larry and Sergey, like the DNA of the company was technologists, developers, and they have incredible security put in place. And then Twitter was always known as not being able to keep the service up and running, the farewell, not never having great tech leadership, never being able to ship products. So I do think, you know, when Zuckerberg called them the clown car that crashed into a diamond mine or whatever that famous quote is, I think it is sort of like that. They struck a chord in product design. They struck a chord in, you know, the format and the interactivity, the U.X level. That was their expertise and genius.

And then their Achilles seal has always been technology. And I think maybe you had Ev, DeCostolo and Jack. I mean, they've never ignored it for 15 years. Exactly. Like Twitter has never taken its own product seriously. whether it was in terms of its impact on its users, its impact on the world, or its security. I think that's 100% true that they have not taken it seriously, probably to a worse extent than other companies, but I will say there was a part of me listening to this that was like,

I don't know that you can hold this up as the gold standard of insecure companies, because I'm sure that these problems exist. I'm sure there's much worse. But it also was very bad. And it's also the scale of it, right? And the influence of it. So if let's say your SaaS company was just as bad with 10,000 paid customers, you know, like, okay, what's the footprint of damage? The footprint of damage here, when you have world leaders on the service, the president is using it, you know, president of every country is using it, every media outlet's using it, every celebrity is using it, every, you know, C is using it.

The fact that those people are being compromised and then the internal stuff, when he said like half of the people have access to everybody's accounts and that low level people are turning. off accounts or looking at them and they have no controls in place to see who's looking at stuff. Facebook went through this. There was somebody on the Facebook team who was stalking their X and that got discovered and then they created a system. It's a very simple auditing log. Anybody who logs in to check on another person's account, it gets logged and a person looks at it and they have to write, why did I look at this?

Just like a cop or a detective when they use the database to look at license plate numbers, they have to log in so that you know, hey, Detective Callicanis is looking at license plates, and I have to put why I'm pulling up this license plate. Mm-hmm. And you take a risk, right? Like, that's why when some people says, run a license plate for me, people are like, I don't know if I want to do that. Right.

People were running license plates at Facebook to spy on their ex-girlfriends to find out who they were DMing with. Yeah. On private. I mean, it's really scary stalkers. But I'm just saying that actually happened at Facebook, and then they locked up and then Mudge. Like in your two.

And then Mudge was like, theoretically, that could happen. but I don't know of any times that it did. I'm just saying. I think we're going to find out a lot. If you're an accredited investor, you need to know about special purpose vehicles. What's an SPV? It's an investment vehicle

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So what are the problems I discovered? Two basic issues. First, they don't know what data they have, where it lives, or where it came from, and so, unsurprisingly, they can't protect it. And this leads to the second problem, which is the employees then have to have too much access to too much data and to too many systems. You can think of it this way, which is it doesn't matter who has keys if you don't have any locks on the doors. Yeah, I mean, basically management doesn't understand the problem. And this is where data is really problematic.

I'm making data decisions at inside.com, right? and I'm like, do, what is the benefit of us having that data? Should we keep it or not? Right. Right. And I think your data is my liability is how a lot of companies are looking at this. Now, when you have an ad-based business, you're kind of like, oh, your data is how I make money.

So collect, collect, collect is the default. And I think a lot of startups now are looking at saying, like, I really do not want to have your data. Please, for the love of God, I don't want to have any access to your password hash it. I do not want to have access to your location. just scrub that data from the system. Just don't keep it. But this is really troubling that if his accusation turns out to be accurate,

that the management team was subverting this information in order to hit their bonuses, it's pretty dark. Pretty dark because they're putting everybody at risk to make their money. It's kind of like there are no stuff, you know, like, yeah, we're going to make money and be famous so we can cut corners. But we'll see. You know, this is one side of the story. They're going to pull up Parag next.

and we'll be the other side. Yeah, we should probably say allegedly. And Twitter was not there to respond today. So here he is responding to a question about hiring a security company for an internal review and then Twitter management intercepting the results. This was the most damaging for me. So far. Your complaint also details how Twitter's executive team was concerned that the report that

you'd commissioned would be damaging if it got out and that they worked to intentionally remove or modify information that might be especially embarrassing for Twitter. Is that correct? Yes, sir. I found that very disturbing. The company that I hired, with the knowledge of the other executives and the head of site integrity, which did not report to me, but that this independent organization was going to analyze and do gap analysis, the company reached out to me and said, hey, Mudge, Twitter is jumping in and making us open a separate contract. and telling us not to provide you the results to your own work. This does not feel right to us.

What's going on? This was the one I told, I asked the TM to clip because this felt like the smoking gun to me. What do you think? Yes. I'm so torn on this because I think, I think nothing ever happens in a vacuum and Twitter is a a f***ing disaster. So you're saying it is a disaster. It's a disaster as a product.

it's disaster with respect to security. Like, all of that is true. And also, I just don't know of a single company that, you know, like, it's just. And also, this is what companies do. They prioritize profits over user safety over and over and over and over. And every time you see that happen in social media, the results are just devastating. So. And nobody is out here protecting personal data.

For God's sake, there aren't even any laws. Like, I think every, I really. agree that every chief security officer would have some version of this story to tell if they were compelled up to Congress. I don't think that they would have this specific piece. So let me just break down what I think's happening here. I think that Mudge was brought in by Jack because Jack said, we need to clean this up. This is an existential risk to the company. He brings him in. Then I guess there is a management change and now Parag's the boss or maybe Jack hasn't been working there as much full time and doesn't have time. So Parag's the one kind of working with him or whoever. And then he says,

okay, I'm going to shine light on anything. He's, he's there to clean up. Right. So you bring him it to clean up. No one wants that. Yeah. And it's like, it's sort of like, and I've been involved in this where I've had three companies in 350 where, no, yeah, three different instances where we had to do a kind of an audit, let's say, for various reasons. Sometimes it's HR, sometimes it's accounting, sometimes it's people's expense. Reporters can be any number of things that the board becomes aware of, and then the board is under an obligation to investigate those things. Or a review.

Sometimes you don't use the word investigate, you just do a review. But you need a third party to do the review. What happens when a third party review comes in? Well, if, in fact, there's been shenanigans, this whole, let's call it a dance occurs. So I'm just giving you like the inside of what happens. The dance occurs. here's how the dance works. This group of people management

know there was a screw up. The board is like, we didn't know about the screw up, we need to CYA, but we're loyal to U.S. management because we're getting shares in the company we're paid, we're aligned, we want the share price to go up.

But we also, we don't want to be in a New York Times story that the board didn't do anything. So now there's evidence of wrongdoing. There's management, trying to clean it up, perhaps. There's a board that's trying to CYA but knows they have to throw somebody under the bus possibly, but they want to be loyal, but they want to do the right thing.

So they want to give them the benefit of the doubt. Then you have somebody like this who's the third party who came in to clean up. They have only one mission, clean it up. That's what you're hiring me for. So let's play out the dance. Clearly, management has been inept. There's no question about that. We know that.

We see it. We literally seal it as a democracy. So we see it as uses of the product, all the releases. We know that they're not good at this. And especially not compared to the cameras. We know Mudge is great at this. And we know the board, they didn't invest their money. These are people who are ceremonially put on the board and they all got, you know,

a couple million dollars in shares. And we know they are CYA. They're not the founders of the company. So what would happen in a situation like this? executive team races to clean stuff up and to spin it to the board to squash the issue. That's typically what happens. And there is a negotiated settlement. Maybe this wasn't as bad.

Maybe how can we spin this? Oh, somebody went and spent $50,000 on stuff they shouldn't have spent. Oh, they accidentally used the wrong card where they were traveling and their personal card didn't work. they used their professional one, they forgot to change the expense report. I'm just using the classic expense report thing. And it's like, oh, yeah, no, it was a complete oversight. He paid the money back and they put interest on it.

We can squash this issue. Oh, there was a misunderstanding between two people who dated at the company. Oh, yeah, we paid for that person's two years of salary. They said nothing happened. They signed this agreement. It was just a misunderstanding. That's the dance. And here we are.

we're in the middle of the dance. And now you have to ask yourself, who's the most credible? The CYA board, the CYA, cover your exact team or parrog or this guy. I'm going with this guy.

And the fact that he commissioned a report and then they went and told the people doing the report to not give him the information but to give it to them and to not include certain information and the people making the report felt so uncomfortable,

they told Mudge if this is true. Because that's the next group that's going to get pulled up is that security team. And they might have the receipts that they said, do not put these three things in the report and do not give it to Mudge. That's the cover up. That to me is the whole game right there. If that's true, it's game over for the entire management team there. And it's a, it's a, it's hundreds of millions in fines and settlements with shareholders. That's my

prediction. Um, here is there, it, it amazingly gets even worse in this testimony. But you understand the dance. Because then pretty soon, of course I understand the. dance. I'm a 20-year journalist. Like, I understand the dance. I am just saying this dance occurs at every company all day, every day. And there are so many sins. There are so many sins that I think, like, I'm just trying to keep a lot of things in my head at the same time. One, Twitter is a security nightmare. Two, Twitter may be no more or less a security nightmare than Facebook or Enron or T-Mobile, been hacked like 10,000 times in the last like 10 years, right? And I don't, I think there's a there's a no comment part of this that is an eagerness for Twitter to be in the wrong here

that I am holding in my head at the same time. Yeah. And also Twitter is a disaster and has historically been a disaster. For the only I just, I think you're giving him way too much credit that there are anywhere near the technical ability of Google or Facebook. I mean, there's a reason why Facebook has 10 times the user base and Google has 10 times the user base. They're just not comparable and technical ability. Yeah, exactly. I mean, they are definitely better at building horrifying surveillance machines and monetizing

the crap out of them and then turning down any potential opportunity to take care of their users in favor of growth and revenue. They are technically better at screwing their users and ruining. But technically better nonetheless. If you were to rate on a scale of 1 to 10, technical ability in interwebs, you would put Google and Facebook out of web. Absolutely. No doubt about it. And you would put Twitter at 6.

100%. Yeah. Let's go to the clip where and this is like, it's, you know, things are legit scary. Here's your question about his claims that the Indian government installed and operative at Twitter. This one, 73 seconds. You wrote in your complaint, the Indian government forced Twitter to hire Indian government agents who then had direct and unsupervised access to data. And a former Twitter employee was convicted last August of working as an agent of the Saudi

kingdom. How common do you think it is for foreign entities, for hostile agencies to successfully install sympathetic actors at Twitter? And why might they do so? There were many of reasons why you would do so, in particular to not just identify people of interest or track groups of interest, but also to maybe look at. whether or not Twitter has identified your agents or your information operations,

what other governments has Twitter possibly identified. And remember, outside of the ability to access large amounts of data on the engineering side, you would want to know what Twitter's plan is as far as whether they will seed to your demands for control of information within their environments or not, in order to change different types of political pressures, such as strong arming,

and as we saw, that that country was even threatening to put Twitter employees in jail if Twitter didn't change particular activities. I mean, Twitter definitely seemed to have an infiltration problem, right? Like at one point, they had those Saudi employees. I think he also, in his testimony, said that they had like a Chinese agent. Yeah. And then, and then finally, to wrap it all up, like, this is what happens when you neglect

your product to the extent that it does actual. damage to public discourse, democracy, and maybe national security is that you have stuff like this being said by Senator Lindsey Graham. So here's what I promised to you that we're going to take your testimony. We're going to learn from it. We're going to create a system more like Europe, a regulatory environment with teeth, an agency that came about after 1914, with a power to deal with privacy issues, content moderation. If you're going to to be in this space, you have to harm your sites against foreign interference. You have to protect your sites against criminality. And if somebody takes your content down, you'll have an appeal

process outside the group who did it. Does that sound kind of like where we need to be going? Those all sound good to me, and I would hope measurable and transparent. And thank you, sir. Well, we're headed that way with my good friend, Senator Hawley, who's going to join the Graham Warren team. We're going to come up with. with a regulatory system to make sure that people in this space pay better attention. They have consequences if they don't change your behavior. It's long past due. So for those who are watching the video, we didn't see him, but that was Senator Lindsey Graham,

saying that he was in a team up with Elizabeth Warren to, he talked about potentially like CEOs of social media companies having to have a license, creating the ability for users to sue social media companies if they cause them damage and then literally saying the words, we're looking at a regime more like Europe. That is where Republican senators are sitting right now. Lindsay Graham, who then one minute later was like, P.S., I'm going to use the power of the state to make sure that women can't have abortions. Like, what?

I would think Lady G would be more sympathy for the ladies. When you don't take care of your sh-shund. I thought ladies stuck together. Okay. I'm just, I'm locking up by that one. I don't understand why every time they talk about him, they just, my feed is just all Lady G. Where did I like Lady Gaga? I went to see Lady Gaga.

Why do they refer to him as Lady Gaga? I'm walking by. I'm still walking. I don't understand the moniker. And it trends. All the way. This is the problem on my Twitter. Speaking of Twitter, Lady G trends.

I'm like, oh, Gaga dropped a new track. I'm a Gaka stand. And it's always Lindsay Graham speaking. I don't understand. Okay, I'm going to put that aside. Lindsay Graham teaming up with Elizabeth Warren is like the riddler teaming up with Robin from Batman and Robin. Like, what is going on here? Yeah.

I mean, I don't even know if he really is. I would be so curious. This is the team up I did not expect. But I think what we're really talking about is like this is the consequence. And look, I hate to be the one who keeps saying this. But it's not like Twitter was not warrant. Right. It's not as though.

They're under a, they're under a, fine. It's not as though people have not been saying for well over a decade like, hey, you need to clean this up. You need to clean up all of it. You need to clean up the harassment. You need to clean up the part where you let everybody say whatever the hell they want and you don't do anything about it and you let them brigade and you have all this coordinated inauthentic activity and you don't respect user privacy in favor of targeted ads and you choose growth over everything else. It's not as though we have not been saying this to Twitter for 15 years. And now you are in so much trouble, you have

sh-h-de-the-bed so completely that we have to burn the house down. All right, listen, I'm going to name this super team. These two geriatric centers, I'm going to call them the Cairns. Lindsay Graham and Elizabeth Warren, the Cairns.

They're coming in, they're going to regulate your social media. I have a very pragmatic view on regulation. These social media companies are dumb because they have flaunted their absolute disregard for the impact of their products in the world. And they have snubbed their nose at regulators. And so what happens when you do that for too long? Well, then people get upset,

the public. And the public puts pressure on their representatives and then you get regulated. And the regulation, of course, is done by people outside your industry. What you always want to do is regulate yourself. And the best example of this is the movie industry. industry. The movie industry was getting in a lot of hot water. People were upset. Oh, this movie's too violent. Oh, this movie's got too much sex in it. And then the motion picture association said, okay, we hear you. You don't want your kids to see whatever happened in the exorcist. That was way too graphic. Whatever happened in this movie, that was too much sex, whatever it was. And they said, no problem. We'll create our own organization and we'll rate the movies. We'll have

rated, and we'll have R rated. Then they're like, you know, that's not enough. So they went to G. Then they went to PG. And they said, well, this kind of like, third. And then they were like, well, this is kind of a little too much for a 10 year old. They're like, okay, we'll come up with PG 13. And then we'll come up with not rated.

And then we'll come up with X. And they self-regulated Molly. And they created a board that looked at every movie. And if you wanted to be in movie theaters, the movie theaters required, at least the big chains, you submit your movie to the MPAA so they could put that parental warning at the start of every film. Then the government was like, okay, fair enough. I gave Zuckerberg and Cheryl the answer to this question. I gave them the equivalent of the MPAA. When somebody logs into these services, it should say, would you like to pay $5 a month,

we will track nothing? Or would you like the free advertising version? We're going to track everything you do and serve you ads. If they had that, that would be the equivalent, Molly, in my estimation, of the MPAA self-rating. Because they could say, look, at 7% of people paid us half of what Netflix costs. Our average user spends more time on the service than Netflix, so we think we're worth at least what Netflix charges.

And if people want to trade their data for that, who are you, the politicians, to say no. We put this, we remind everybody on the first of the month they have this option. And we link to what data we're using. And they can go see their profile and see their data. And at any point, they can click delete all my data,

I'm paying and put their credit card in. If they did that, they would have the high ground. That's my belief. Yeah. I believe they brought this on themselves. Oh, they 100% did. Like 100%. I blame Zuck most.

With just, like, arrogance, greed, and complete lack of empathy. It's disregard for the impact of your product. The negative, there's negatives to almost every product. I wouldn't say all products. but there's a negative for all products. Listen, if you make Coca-Cola. If you drink too much water, you'll die.

There's a negative to everything in excess. Take Coca-Cola. Yeah. It's got a lot of sugar in it. But we also make sparkling water. And we also make a diet version. So you chose Coca-Cola, and it says how much sugar it is.

And by the way, we make a Coca-Cola in those little cute cans, you know, little cute six-ounce cans. We make a 12-ounce can, a 16-sounce bottle, and a 32-ounce bottle. You, you, if you're blaming us for being fat, why didn't you just drink one of the six ounce ones? Yeah.

You drank two 32 ounce ones a day? Did you ever consider the diet? Or maybe you take, maybe drink two sparkling waters, have some desanae in between guzzling sugar water? You can't sue Coca-Cola. They provide a range of options to you. Right. I mean, Nick puts it perfectly, actually, producer Nick, social media started as Coca-Cola and became cigarettes. They doubled down.

I mean, that's beautiful. And then they double down on lying about it, on covering up how bad it was. The cover up is worse than the crime. The cover up is worse than the crime. I mean, that is beautiful. Like, that is 100% what happened. And they never. 100% Zuck's fault.

Took control of the tumor. Ever. 100% on Zuck. If Kevin. I'm sorry. I'm putting Jack in here. Like this is this. What Mudge said today, there's no way I'm letting Jack off the hook for this.

No way. But I will say the, the social media standard. was set by the leader who bought Instagram and WhatsApp and just was like, we're going to make this about your data and selling it to the highest bidder. And, you know, that makes it hard for everybody else to come up with a competing service. I think if at some point, it's not only Twitter, it's also we're going to let whatever, we're going to let everything go.

We're going to let everything fly on this platform. We're going to let people say what they want. We're going to let them like, you know, pile on, harass people off of it. Like yesterday when I was talking about speech, I think there was the impression that I thought that the problem was that the platforms don't regulate speech enough. It's that they spent so little time regulating speech that now my speech is infringed by a bunch of like bots who make it no fun to say anything on Twitter. I don't even mean bots, actually.

I mean people. Actual just a-holes on Twitter who make it not fun to be there. You saw what I did on Twitter. I'm not if I like a free speech lawsuit that's basically about other users. You sure what I did my Twitter? I now am following anybody who quote retweets. I talked about yesterday. on the show. Anybody who quote retweets me, anybody who likes something, I just follow like 500

those people a day. I only let those people who I follow now comment. And then people who want to comment on myself, they now DM me or they quote which you may, hey, Jake out, can you follow me so I can comment? And I'm like, okay. And then if they say something obnoxious, when I, when I unfollow them, they can't reply. It's made it to life. I mean, that sounds like a full-time job. It is, but I have some tools. I have some tips and techniques and people helping. Let's just leave it at that. I have a little social media team. But this This experiment is working. So I don't know how you productize my little thing, but there is a default.

Make it the default. It would be great. Yeah. Like I mean, I have a private Instagram. I have to approve every follower. I know. You prove. Let me have a default.

Let me start a default profile on Twitter. No one can follow me unless I want them to. That's the closed following. So there's, yeah, they just, again, they're just not studying the user behavior because they kind of have half of that, which is you can have a private account. But what if you, it's not that you don't want to have a public account.

You want a public account. You just want bots. The amount of bots I'm getting is also insane. I got MAGA brigading combined with bots. And so now Twitter is not livable for me anymore. And it's, it's getting worse for some reason. I don't know what's going on.

Maybe they're just not paying attention to the problem. It's the all in bond. Oh, okay. It's also talking about the Ukraine and Biden and Trump. That's causing this brigading. Yeah, it's a fair point. Oh, my God. All right.

So let's talk about this sort of interesting, like really fascinating move, actually, by the storied investment firm KKR, which is tokenizing part of a new fund in order to let individual investors put in more specific amounts. Let's break this down a little bit. KKR manages $491 billion in assets. At the end of Q2, $70 billion. of that $491 billion or 14.2% was from individual investors. So what KKR is trying to do now is say,

we want to create a vehicle for more individual investors to be able to participate in our fund. So they're actually going to, they're turning to the blockchain. KKR is tokenizing part of its second healthcare strategic growth fund on the avalanche blockchain. They just finished raising that fund, a $4 billion fund earlier this year. They said this is the first time a major private equity firm has ever made a portion of a fund available on the blockchain in the U.S. Let's get to the like how the heck this is going to work. What it'll do is let qualified purchasers. So individuals with five million plus in investable assets, which is obviously high net worth, but not the like ultra high net worth that they usually deal with. They're trying to let those single digit millionaires have a vehicle here. They will be able to invest with a one year lockup period. They'll have to create a digital wallet.

and sign up with Securitized to invest in the fund via what Wall Street Journal is calling a tokenized feeder fund. Got it. So I, all right, there's a couple of different pieces here. Obviously, we talked about 506C for venture funds, and we are raising launch fund for publicly. I talked about it an all-in. I talked about it on this podcast and starting next week, or is it this week that I have my first webinar. I have a webinar on my calendar for this week, yeah. Oh, when is it?

tomorrow or Thursday? Do you know? I think it is Thursday. Okay. So anyway, on Thursday, I think 600 or 700 people are going to be on a webinar. I'm going to share with them, hey, here's the performance of the first two funds. Here's the third fund what we invested in. We don't have performance yet. It's recent. And here's our plans for a launch fund for four. Yeah, it's put the cards on the table. If you want to invest, if you want to come on this journey with us, if you want to do risk capital, you know, here's the possibilities and the options for you. And so I did this because I just thought, well, all of the folks doing the $10 million, dollar funds that I've started backing with little 25K checks to support like the next generation

of fund managers, really lending my name more than capital, although it could be, you know, whatever, a small percentage of it. You know, every little bit helps. What I noticed about what they were doing was people with no networks, just by using Twitter, were able to close a $10 million dollar funds. So I said, well, I wonder what would happen with my reach if I told people I was raising a fund because what always happens is I meet somebody and they're like, oh, I would love to be in your fund. I'm talking about high net worth individuals. And I'm like, great, I'll talk to you in three years because

you raise them but every three years. And so I just want to make sure people know I'm doing it more because a lot of my friends don't know I'm raising a fund. And lo and behold, since I've been tweeting it, a bunch of my friends are like, can I be in your fund? I'm like, of course, come to a webinar, get informed, make an informed decision if you want to do that. And so I get, I'm getting about 25 to 50 emails a day now from people I know and don't know. And I say, great, tell me about yourself. Have you been in a venture fund before? So I'm kind of coming up with a whole little script or process for vetting people and getting to know them. And that's what KKR is doing. They're just saying, you know what? Let's let let's open up access. Now, it's not to

accredited people with 200,000 a year, but it's opening up access and giving more people the chance to participate in very sophisticated financial devices. And I think that's good. With education. I will say one primary difference. Okay. For whatever reason, we didn't feel like we needed to use the blockchain for this. No. But KKR is.

And that part, I want to understand a little better. Well, what do you think the reason is? What do you think the value of doing it on the blockchain is? Can you think of a reason why a blockchain would make this better than just filling out the paperwork? If you invested this way and there were smart contracts attached to it, Like, I could imagine this actually being legitimately efficient so that if you, if you as a firm are the, I don't understand the tokenization part. But in terms of blockchain, if you as a firm are recording everything you do on the blockchain,

you have a returns situation, need to return some money to your investors. That's all executed automatically. You don't have, you know, there's no need for anybody to issue the tax paperwork or send someone to check or or actually. They still have to do the tax paperwork. to do a lot of that. Yeah, yeah. So the, this is what?

Yeah. I guess maybe the onboarding could be easier. Like, I don't know. Your confusion is exactly what I was hoping to get because there is no reason. Thanks. Thanks for the setup, boss. I just set you up. Sorry.

You are right to. I'm confused with what's the point of this. And I have had no less than 300 companies tell me they'll tokenize my fund. And when I say, what's the benefit? they start talking about like the general blockchain and it's immutable and it's transparent. It's like, well, we don't actually want it to be transparent. We don't want people to actually see this because it's privacy. Oh, yeah, it can be private.

I'm like, okay, so it's a private blockchain. So this is a private blockchain. So the only thing would be liquidity, right? So let's say you and I are QPs and I own a million dollars worth of this. It's now become worth two million. I get divorced. I need liquidity. My kids are going to school, whatever the case is.

a liquidity necessity becomes a liquidity event is required by me, the original purchaser. It's worth two. I paid one. I say I'm putting it on the market for 1.9. You get a 5% discount if you buy it. Theoretically, I could sell it directly to you. However, KKR does not want me selling it to a random person. They're not going to allow that.

And they don't want me selling it. They don't want you selling it. They want you holding it. They don't want this being a revolving door. So that's why they had said there's a lockup period. And maybe they'll let people in and out once a year in an orderly fashion. So if you do want to liquidate, you probably have to let KKR know, whatever. I would say they're doing the...

But a one-year lockup period could still be accomplished contractually minus the blockchain, right? Like you still don't... Of course. We close the fund on November 1st. Starting November 1st, 2023, people can trade. Right. There is a Google sheet.

There is a database somewhere, walked up with limited access, talking about security. And if you want to trade, you email some representative, which is what happens to us and say, I would like to change the ownership of these shares. We will have people come to us every year at the syndicate.com and say, I'm getting divorced. I need to liquidate these shares. Or the shares are currently in this trust. It's now going to be in these two trusts under these two names. I'd like to split it in half.

Or it's going to go to my ex-husband, my ex-wife, my ex-partner. They're going to have ownership of this shares. I'm going to have ownership. This happens all the time. I get it all the time. Sometimes I have to do it. Oh, I renamed my trust. I have to go tell all the venture phones move from this trust to that trust.

So this stuff happens. There's back offices that do it. I think this is like a gimmick. And there is no smart contract. Now, if it was freely tradable and there were a pool of people in a Slack instance, I don't know if they want to give access to these people, but if it was freely tradable and I could say, I own 1% of the pool for KKR Health Fund 6, Anybody want it?

Email me and I could sell it directly to them. Well, that would be quite transformative. That is not this as described. No, that does not appear to be this. Maybe it's dipping the toe. I would say people are dipping the toe into this. Maybe they're just dipping the toe and they're seeing if there's any value in that. I will say the good news is we literally have the two guys coming on tomorrow that we can ask about this.

Yeah, Vinnie. Sundeep are coming up. We have Vinny and Sundee and Sundee and Sundeeb coming back on tomorrow for another crypto roundtable. and we're going to ask them what is up with that. Because we have had this week, just as a teaser, KKR, get into this and Starbucks, talking about issuing NFT so we can all have a better coffee experience. So maybe we are getting, and the ETH merch. So maybe we're getting to a point where things are becoming a little more like mainstream and usable.

I guess we'll find out. Do you want to just give me the top level on the watchoff stuff and then I'll just pass judgment? Should we get this off the docket? An investigative piece by a box reporter. Oh. Uncovered allegations of misconduct, sexual assault, and security risks at Launch House, which is that startup incubator slash social club that got $12 million in Series A funding from A16Z. Allegedly, I guess, we have to say.

They definitely got the funding, but allegedly there was sexual assault. Yes, these are allegations. Allegations. Vox Senior correspondent Rebecca Jennings was the reporter for the in-depth piece. And in theory, Launch House, you may recall, was intended to be a reality show. In 2020, they wanted to be the hype house for the tech industry. And over time, I mean, you can't even really say this is astonishing. Like, they put, like, mostly men and a couple of women in a house.

In Hollywood. Paris Siltry's old mansion. Which I've been to Paris's old house, by the way. My friend, I have a mutual friend, and I went over for, like, a cocktail potter at air house that apparently they're using. Her house had a club. I'm related. I kid you're not.

A club. What could go wrong? There was literally a club, like a blacked out room, painted black with, you know, go-go pedestals with dancing poles on them and a DJ booth. Like literally in her house, she had a club. That could fit 50 people, 100 people. It was like a double-sized giant living room. Anyway, putting that aside, you nailed it. The article noted the heavy reliance that launch house had.

I mean, it was meant to be an entrepreneurial community, but it was a heavy reliance on the idea of community. people started to think evidently that they were in a cult and that it just got out of hand, you know? All right. Like that Launch House, we should say, provided Box with a statement saying, this is important, quote, launch house has a zero tolerance policy for drug use and unwanted sexual advances. Anyone confirmed to have violated the code of conduct, conduct has had their membership revoked, but the spokesperson admitted that incidents did occur and said, quote, a very long time ago,

in the very, very early stages of the company, certainly before the statement notes, certainly before they attracted outside funding. Here's the issue. I've read the story. Obviously, it's horrible. But they were studying religions to try to build a cult, apparently. This is where this kind of goes off the rails. But a lot of people were saying the founders were obsessed with cults and how to create trust

between members and make them loyal. And this thing has like MLM-ish kind of vibes to it. This is my warning to founders. Number one, there should be no co-living, frattingizing. There should be no business like this because it always winds up in the same place. You know, if people want to go self-organized, that's fine. But if you start putting 10 people in a house, add alcohol, add drugs, add young people, whatever, it's just not going to result in anything other than a problem.

in my experience. And so it's just a bad idea from the get. Second, they were trying to build this like an MLM where people would convince other people to come and whenever founders

are being asked to pay to be part of a community, it's a bit of a red flag. Right, you did have to pay like $1,000 to join. It's a thousand. Listen, okay, I don't know if that's a month

or a year or what that is and what you get for it. Listen, the sole house costs money, other places cost money. People don't live at those places. You know, the battery here famously. I was a member in the early days. I think it was $200 a month. It was $2,400 a year. So, you know, there are expensive private clubs that exist in the world. But this was like

praying on people who wanted to be part of crypto, praying on people who wanted to be part of it. So this is the part I really don't like about these things, is how they take young people and they say, give us money and we'll kind of fast track you into this world. And, you know, young people don't have a lot of judgment. And then you put them in a house like this and bad things are going to happen. So for founders, if anybody's asking you for money, that's a problem. We have, I'm trying to think of the instances where we ever ask people for money. When we did launch festival, it was free for founders. The only time we ever charged was if you wanted to come to the dinners. And that was mainly because we had 15,000 free tickets and the dinners could only hold 250 people.

So we just charge for those tickets. For Founder University, we charge $700. If you come to all 12 weeks or have an excuse absence for one or two, we charge back to $700. So the reason for you we charge that is just so people finish the course. It's a deposit. And we have a 93 or 94%. So we're basically just, it's a little bit of a game mechanic. But anytime people are trying to charge you to be part of something as a founder, there's so much free resources out there.

Don't pay people for this kind of stuff. It's really sketchy. Community is important. Sure. However. However. You're working. And so the fact that like when people got to Launch House, when these new cohorts come,

they organize team building exercises called the Founder's Circle that mimic religious confessions. Each member is encouraged to share the most difficult experiences of their lives. Deaths of a loved one, sexual assaults, grave financial losses, a practice that employees refer to as trauma bonding. Right? Yeah, this is where it goes off. Once that stuff starts happening and you're at a work party, it's time to go. Like, I just, I understand that there aren't as many boundaries as there used to be between work and your personal life. but run that's run not a safe and run that's not no that shouldn't be happening there is uh there was a

book five dysfunctions of a team uh patrick lansoni where they talk about offsite culture and one of the things in offside culture is to build trust between team members you would talk about your childhood and say hey these are my siblings this is where i grow up so there are trust exercises and so i understand people doing trust exercise and wanting to share stuff to the extent they feel but this is different trauma bonding. Trauma bonding? I mean, that's a phrase? I've never heard that term.

Me neither. That's not a thing. If you're going to deal with trauma, do it with a therapist or go to a circle run by a therapist. And if, you know, five people had rough childhoods and they all opt in with a certified professional running that group, like there are people who have grief groups or narcotics or alcoholics, anonymous, or this anonymous,

that anonymous. Of course, those. are professionally run. Some d-a-h-hruing a startup incubator reality show should not be doing

any trauma work. Even if they brought in therapists to run your trauma bonding session, it's work. It's work. That should not be happening.

You should not be trauma bonding. I just don't, I, yeah, anyway. This was a terrifying situation.

I do want to tell you. And somehow people thought it was an investable business. This business should not exist. Period. Full stop. I'll share some trauma with you at some point,

Molly. You know, after a Warriors game, we'll go to Miller and Lux. We'll get the Wagu steak and the side, the Caesar table. Florence will come out. Or we can just keep a professional. We can have Don Julio.

I'm going to go professional. We can have Don Julio, but I don't need to talk about trauma. Like, no, it's work. Exactly. I know I'm like a Gen Xer here, but you shove your trauma deep down inside forever. Just do it with the therapist, people.

Like, what are a bunch of 22-year-olds trying to find product market fit going? Why are we distracting 23-year-olds? It was always supposed to be a reality show, so I guess that's why Trauma Bonding came into it, but yeah, it's just not safe. And also. Remember, save your trauma for your mama.

For your mama. That's it. That's it. Your trauma, talk to your mom. And if your mama caused your trauma, can't help you. Go get a professional. That's totally professional. Yeah, exactly. Totally a professional.

Anyway, listen, this is gross, disgusting. But we'll reserve, listen, I even hate to bring these stories because it's all alleged and it's sorted. And I just want the people who are founders listening to this startup to understand the red flags. Do not live with anybody. Anybody offers you to be in a startup house.

You do not need to go to that. Do not share your trauma. Do not be involved. If anybody asks you to go to dinner one-on-one to talk about an investment, whatever, like have coffee. an office in a public space, like, just don't get dragged into this cult nonsense if it is in fact a cult, but allegedly. Allegedly. I'm putting allegedly in front of this, but there's multiple people saying that their

strategy was to develop cult things. I mean, right. It is always the, I mean, everybody uses the strategy of cult building to build community. Like, it's all, because there's a very, very, very fine line. And it's all in the, it's all about who's in charge, whether it becomes a cult or a community. It's fine, fine line. Almost every time it's one of these cults, it's some dude running it. I don't know.

I'm not saying this case. I'm just talking about like actual cults in the real world. It's always some dude who's just got some weird relationship with women who can't just be in a normal relationship with a woman. It's always some dysfunctional guy who's trying to have some like harem or polygamous thing. It's gross. Run for the hills. Run for the hills when you see this kind of stuff. Right.

Disgamous. Speaking of Colts, tomorrow we got our crypto roundtable. Just joking. Yeah. Hey. That is different today. Every time I come out of that, I'm like, what crypto am I buying? I know, totally.

It's really dangerous. I have to deprogram every time. I think something's coming out of this. I got to be honest. I think now is the time. This is why I wanted to start the every other week crypto roundtable with our two besties who really understand this, Molly, is because I do actually think this is the moment that all of the charlatans.

and quick hit grifters go away, 80, 90% are going to go out of business. There's no money to be made. And somebody's going to build something real here. Yeah, the real stuff is I could not agree more. Like, this is how, this is the circle of life people. Like, there's always. Boom bus cycle.

And boom bus cycle, exactly. So if Starbucks is in the game, it's getting real. I couldn't believe the coin, the file coin data they were sharing. Because that's the kind of update I want. I want the updates on the projects that seem promising that can. kept delivering and that eventually delighted customers. Because as we know, the time between raising money, pitching, grifting, whatever, and delighted customers in this world seems to be between five and ten years. And in our world, it's five months or five weeks. So I don't know what the big

delay here is. I guess the infrastructure is harder to build or people spend so much time on the financial architecture slash grift. I think everybody, yeah, everybody just got distracted by the investability part of it. Yeah. It was like once it became a, I mean, if it becomes a gold rush, it's going to take a minute to turn into a real. I want to figure out a way to create my own fluid coin that allowed people to trade freely in a venture fund. I can't do it for Launch Fund 4, but I would even create a sidecar fund.

If somebody could explain to me how to create a coin that tracked even my personal investing, I would do this as an experiment. If I could take my J-trading portfolio and sell, I don't know, $10 million that mirrored my million dollars in trades like 10 to 1. And those coins existed in the world. People could trade them, but they tracked my trades. And I made a Vig on it of whatever percent. I would do that. Sure. Like if people could buy like a small amount of it and nobody got hurt, but I don't think

that's legal. Right. I was going to say, I'm pretty sure that makes you an investment professional in some way that you. Well, I am, but I was just wondering if there was a way people could. No, I mean, yeah. Hmm. Hmm. I mean, that makes it investment advice. Yeah, but I mean, there are people do invest in, you know, mutual funds. So if this was the J-trading mutual fund, then there was a way with crypto to do that. And anybody in the world could buy a J-coin or a J-trading coin, and it mirrored my portfolio. And they didn't have to think about it. If I'm making trades, they could see them or not see them.

I would do that just for the fun of it. And I would donate whatever proceeds I got to charity or something, like as an experiment. That's the kind of stuff that I would like to see is things that actually makes sense. I mean, I love the idea of just making. that a bullet point for Vinny and Sunny every every other week too when they come on and just being like, what's real? What's real? Let's end every show with them

with what's real in crypto right now. There is a, actually, one thing we should put on the doctor for tomorrow. Because the file coin thing was a super interesting conversation. Well, somebody created a white combinator Dow called Orange Dow. So if we could put that on the docket, I would like to talk to them if they could be prepared tomorrow to talk about the orange Dow. Basically, the guy from

Eiken has Cheeseburger, if you remember that meme site, I believe it's, Him, yeah, I think Ben is doing this. So my understanding of it is, a thousand alumni are in this Dow and they provide services to the Y Combrating companies they invest in, but it's an actual fund. So they created an actual venture fund to invest in YC companies, but then they took a portion of the carry and said, we have a Dow over here. This is my understanding of it, which probably is wrong.

But I want, we'll have Vinnie and Sending. So then they put in the Orange Dow some amount to the carry. So let's say half the carry, 10 of the 20 points, goes to these thousand members. Those thousand members do work and then they allocate somehow. I don't know how this happens. A carry to the founders who either found the companies and scouted them or who mentored them in some way. So pretty good idea to create a helpful Dow to YC companies that invest and does post investment support. It sounds like it would also be fun to be part of, right?

So I like the idea of like it's fun to be part of this discord. and help companies. So I think that might be an example of something to come out of this that is actually real and helpful to the world. Yeah. Well, that's coming up tomorrow. And, you know, lots happening in crypto this week. There's also the eth merge, which is in theory going to reduce the electricity usage of mining

eth by 99%, which is great news for all of us, assuming that miners stick with us. We'll talk about that tomorrow. That's important. And I see that eth is down. And so it might be a good opportunity to buy some eth. own Eth. So maybe that would be my J-Trade for the week. Who knows? Maybe I'll just get a little Eath on the board. All right, everybody, thanks for tuning in. Follow at Molly Wood.

Give her a retweet. Give her a heart, whatever you want to do. Follow her. She's a great follow. Follow at TWA startups. Follow at Jason. And yeah, be kind to each other. Okay. Be kind to each other. I love that. Be kind to each other. I'm just tired of jerks right now. I'm just having a zero jerk policy. Yeah. For my brigaded weekend, I'm just like, wow, everybody's a, I mean, criticism is fine if it's constructive. So I just, I have to teach people how good criticism. I said to people, if you think I'm interrupting Sacks or Freiburg too much, just give me the timestamp and let's discuss

it. And, you know, like one or two of them, like, okay, yeah, I guess I didn't need to interject there. And then the majority of them was like, that's perfect moderation, actually. I broke it down. I was like, okay, the person droned on with repetitive information that we've all heard before. And I said, give us forward-looking information. And I, like, and then intelligently, when, went to another bestie. Like, that felt like perfect moderation. And other places, maybe not. But I just thought, for people who want to give me feedback, time staping.

Most of the time, this is not ever about mechanics. It is only about philosophy. I did notice. I will say, four out of five times when people have an issue with my moderation, I go look at their profile and I look at their likes and their MAGA. One out of five times, it is somebody who's, you know, whatever, neutral, left, right, whatever, doesn't matter. But they actually have a good point.

And so I'll take a note anytime. As Steph Curry of moderating, by all means, if you can tell me how to hit another three-point or a game or increase my shooting percentage by one or two percent, I'll take it. Like, that's why I'm Steph Curry of this. But make it constructive, folks. Give me a specific timestamp.

Even on this show, if I talk over Molly or whatever, I get excited, just tell me, hey, let it breathe this timestamp. Then I, you know, and DM it to me. By all means, DM's open. That's really generous of you. Because, sure, we do all want to get better, but also like people, you do it. Like it's, it is, this is live off of the cuff, right?

Like we've got no, I don't know. Like I get, I have zero tolerance for people who are like, um, you misspoke in this situation. I was like, oh, really? In the course of a two hour extemporaneous conversation, I misspoke or did not have a fact directly at my fingertips or may have slightly interrupted someone one time out of the 10,000 in conversational. only drive you like you know what when you're alive 10 hours a week for 10 years yes you can talk to us

zip your twitter all right everybody we'll see you tomorrow okay bye sorry let's get off our chest