This Week in Startups - Casey Newton’s Superhuman misfire, Apple’s backdoor, 5G crypto network, WhatsApp’s Taliban problem | E1266

Episode Date: August 17, 2021

Podcasting from Italy after a 2-week break of news, Jason covers Casey Newton's failed dunk on Superhuman's $75M raise (2:58), the privacy implications of Apple's approach to preventing child porn distribution (23:14), the Helium Networks internet project (35:02), crypto regulation (43:03), and how WhatsApp is handling Afghanistan (49:45).

Okay, everybody, I'm back for a news program, but I'm still in Italy. I got one more week in Italy, the longest, longest vacation I've ever taken to my life, and I'm absolutely enjoying it. But I still need to do my podcast because I miss y'all and I got a lot I want to talk about. I want to dunk on Casey Newton, who dunked on superhuman, which I'm an investor in. I want to talk about Apple opening up a back door to scan phones for child pornography. I finally, finally found a really interesting application for cryptocurrency. It's the fourth or fifth best use case I can find. And this is a cryptocurrency company.

You're not going to believe this that I would actually invest in. And I might even buy the tokens. I believe in it so much. Finally, I'm going to talk about WhatsApp in Afghanistan. I'm not going to talk about the wider Afghanistan issue. I'm going to specifically focus on Zuckerberg, the CIA, WhatsApp, and the Taliban. Stick with us. This week in startups is brought to you by LinkedIn Jobs.

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Hey, everybody, I'm still in Italy. This is the longest vacation I've ever taken in my life. I kid you not. Just two years ago, right before the pandemic, I took my longest vacation, which I think was at that point 13 days. And I've worked really hard my whole life, but I decided at the age of 50,

I'd start taking slightly longer vacations, taking the kids, and doing some fun adventures, long overdue after 30 years of grinding it out in the industry. So three weeks in Italy I'll be back in the United States next week But I wanted to I took two weeks Basically off the show

I did two interviews during that time One with Splice and one with Redfin Did not want to lose those interviews They were great gets by our producers All three of them Now we have three producers here Because we're five days a week most weeks And I really enjoyed doing those two interviews

Well worth it But this week I'm going to be back to doing news For most of the days this week and taking two weeks off, there were a lot of stories that I missed that I wanted to comment on. So the first one up is superhuman. And so Casey Newton, who is a journalist, who I'd say is amongst the best journalist out there, in fact, most respected, has a very successful substack. Previously, I think he reported for Recode or Vox, I can't remember. It's not important.

He now has his own newsletter. I think he's one of the people's substack paid hundreds of thousands of dollars. do to quit. So that newsletter is called Platformer. And it's pretty good. You know, as far as journalism goes, and two weeks ago on August 4th, Superhuman announced a $75 million series C at an $825 million evaluation. For those of you who don't know, I was one of the first investors, not only in Superhuman, we put $500,000, I believe, into the seed round before Raoul, the founder ever and for of the show. You've seen him on many episodes here, including episode 1214, episode 993, and episode 867, among many. So I'm obviously a big fan and I'm a superpower user of superhuman.

So Platformers Casey Newton quote tweeted the announcement and tried to dunk on Superhuman and Raul. I'll just read Casey's words, so they stand it on their own. And Casey seems to be like a really nice guy actually, very affable. I've met him in person. He's quite nice. So I don't think he intended this to be, you know, super critical yet it was. And he said, ah, the founder of a seven-year-old Gmail skin, who took a year off of product development to start a venture fund, has raised 75 million from the chain smokers to build an early version, in quotes, of an outlook compatible service that will be available and in quotes next year. And so this is riddled with errors. And so, of course, that was quite embarrassing for a journalist to have this many errors in one tweet. It also is dunking.

It's just straight up dunking. So you've got to be very, very careful when you dunk, because if you're wrong and you get blocked or you hit the rim and you fall on your face, it's quite embarrassing. And that's what happened to Casey here. Again, I like Casey. I think he's, you know, as far as journalists go, I would say very good. Obviously, he wouldn't get a substack deal for hundreds of thousands of dollars. He probably was making 100, 150,000 working for Vox or Recode. And then he probably had a salary doubled or triple by going to substack. That is the case of the virtuoso elite journalist. You know, the people who are the top 25 journalists in tech, are we going to make 100 to 200,000? And if they went to substack, they're going to double, which is quite ironic. We'll get into that in a minute. And then he followed

it up with superhuman is the most juiceroy product to come out of this town since Jucero itself, which is super inaccurate and horrible. What Casey doesn't know, and I think this is a very important thing for founders to understand is journalists have about 5% of the information. A great journalist like Casey or Kara Swisher, they might get 20% of the information. of what's going on in a company. If you had 20% of the information about what was going on at a company or in a newsroom,

would you have the clear picture of what was going on? Probably not, right? And so this shows how ill-informed a journalist can be at their worst. Now, sometimes they get the whole story, they nail it, and they get a Pulitzer, that's certainly not this.

And that would be the case with John Kerry, right, who did the incredible Theranos story. So let's pause for a second there and realize journalists are at an information and disadvantage, and in today's day and age, they want to dunk. Why do they want to dunk? Well, Casey wants to dunk on Twitter because he needs paid subscribers now. He is, in fact, an entrepreneur. And the more he dunks and the more salacious to take or the more, you know, hot to take, the more he will be reported with paid subscribers. So the idea that journalists are

suffering with $50,000 salaries and doing it because they want to, you know, be at advocates for the truth, that is not this. Just be clear about that. If you're talking about a company like Vice or Vox or Substack authors, they are venture-backed businesses or they are entrepreneurial journalists. They will only make money if they get subscribers. And so link-baiting headlines at Vox or BuzzFeed, you know, generate the traffic they get, which turns into pages, at its worst. You get things like Gawker's worst moments. And, you know, in terms of getting paid subscribers, you might have something like stratetry where, you know, that journalist, or really an analyst, he, Ben Thompson is like a different beast. He is like, you know, 10 times more knowledgeable

than a Casey Newton, who is 10 times more knowledgeable than a BuzzFeed, you know, rank and file entry level reporter. And that's because of networks, raw intelligence, business experience, any number of factors or even the approach. So Ben Thompson's approach is, listen, I want to impress the hell out of Bill Gurley or Bill Simmons, you know, or Kara Swisher or some other business leader, really the business leaders is who he's writing to. Here, Casey Newton is really angling for like the woke mob and maybe dunking on people. It's a different thing. So he's doing something link baiting. Now, I'm on a Twitter break. I said, I'm taking off Twitter because I got to write this book. I don't have to write the book. I want to write this book. It's just burning inside of me. I got

thousands of words done in my first 24 hours on my little, you know, sabbatical here of my vacation and making great progress. But a bunch of entrepreneurs then basically picked up the mantle for Raoul. And just to give you even more context, I am not only one of the first investors, and I've told the story here many times about how Raul came over for bagels when he had the idea, and I put in 500K immediately just hearing about what a great idea was to take on Gmail. I was the first or second investor in his first company, reportive. And I'm an LP in the fund that Casey is dunking on. And so where Casey gets this wrong, I'll give you my opinion here. Number one, he doesn't understand Casey how many paid subscribers there are for superhuman. He doesn't understand how that's

growing. He doesn't understand the velocity of product updates in superhuman. I've never seen anything like it. It's Tesla like, really, like literally, I would say Raoul. on a product basis is up there with Alex from Calm, Vlad from Robin Hood, Steve Jobs, Elon Musk. Like, if you look at those four folks, these are contemporaries in building product. Let me say that again. Steve Jobs, Elon Musk, Raul, and Alex from Com. These are some of the elite product creators in this generation. Obviously, Steve was a little bit earlier than this generation.

But they're absolutely comparable in the velocity of updates and how well they're crafted and the engagement and the growth of those companies. How do I know this? I think you know how I know this. I knew Steve Jobs, not well. I know Elon very well. I am an investor in Raoul and Com, you know, superhuman and Com Alex and Rul's companies. I have the inside information. Someone like Casey does not.

When you're reading journalism, you should assume you're walking into a house. house of mirrors. You know, one mirror makes you fat, one makes you short, you know, one makes you wobbly. That's a journalist's view. They're just trying to do archaeology. They're trying to, they're really like archaeologists would be a good way to look at it or a paleontologist. Like, they're looking at these bones and trying to make a story out of it. They don't know if they got a T-Rex or a teraductal sometimes. And that's the case here. Again, Casey Newton, I'll say it again. I like him. I like his writing. I'm a subscriber to platformer. I thought about unsubscribing from it, but I was like, eh, it's 10 bucks a month.

I like to know what the journalists are thinking because even if they're uninformed, I have to deal with it as an investor anyway. And I think Casey probably gets a lot of things right as well. So the job is hard being a journalist. But this is uncasie-like. I don't think I've ever seen Casey dunking on people. It's a really bad look for him. I actually diminished my view of him because I always thought he was more considered than this. But who knows?

He could have a glass of wine. He could have had a rough day or he could be trying a different approach. I don't know. Before we get into the ad, let me just tell you straight up. LinkedIn.com slash twist, your first job posting free. I'm not kidding. LinkedIn.com slash twist, your first job listing free. Nothing to lose. Okay, now on to the ad. Too many small business owners are busier than ever. They spend time searching for and interviewing the wrong candidates for a job opening. And it would be much better for them to spend their time growing their business. That's why LinkedIn jobs has made it easier to get the candidates worth interviewing faster. and that's why they're giving you the first job listing for free at LinkedIn.com slash twist. They know it's going to work. Here's how it works. You create a free post in minutes on LinkedIn jobs and you reach the world's largest professional

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more positions using, you guessed it, LinkedIn jobs. So LinkedIn jobs will help you find the candidates that are worth interviewing faster. Every week, nearly 40 million job seekers, visit LinkedIn. So post your job for free at LinkedIn.com slash twist. Terms and conditions apply because they're giving you something for free. Okay, let's get back to the program. another fact that's wrong here, or that maybe Casey doesn't know. He did not take a year off to start a venture firm. That is false. That's a lie. That's misinformed. He did not take a year after the venture fund. One of his good friends started the venture fund and he's using Raoul's popularity because he's so good at product to Raul sending his deal flow to his partner. Raul is the

front person. His partner's doing all the work. How do I know this? I know this. I know. this because I'm an LP in that fund. What is Casey know? Nothing. So he makes this huge mistake there. And then he's dunking with the chain smokers being involved in this investment, ignoring the fact that the other people investing in this are the greatest investors in the world today. So the correct way to say this is, hey, listen, the founder of a SaaS company that is growing fast and charges a dollar a day, for a service that is 10 times better than Gmail and super addictive and that the top user spent three or four hours a day in, I can't give all the statistics because that is Roble's job, not mine, was invested in by the top investors in the world. To compare it to Juicerro would be so

stupid because Jucero had, it didn't work. It was a product that didn't work. And here's a product that did work. So terrible take, a lot of dunking. Who knows why he did it. Sahil said, Hey, Casey Newton, you're a bully. I've been dealing with bullies like you my whole life. So if you got a bone to pick with founders and startups pick on me, you're an unkind dismissive critic that writes misinformation role has been working his ass off. So that's actually nice to see founders come to it.

I actually don't think Casey Newton's a bully. I don't have other instances of him being a bully. And I do think that this speaks to the adversarial nature of journalists today and entrepreneurs. I tell all my entrepreneurs, stop talking to journalists. No good will come out of it. a journalist calls, don't answer. When a journalist wants to get on the phone, don't answer. Just say, I'm happy to answer questions by email. Let them send you an email. If they say no, I'm on the phone, just don't respond. Because nine out of ten times, no good is going to come out of it.

And what you should spend your time doing is competing with journalists by creating your own content. Create your own blog, create your own podcast, create your own YouTube channel, create your own TikTok and then grow your audience. Do not let yourself be interpreted by journalists. Why? Because journalists, at their worst, have an agenda. At their worst, have the need to get attention to sell subscriptions or get advertising and clicks.

Or typically, journalists are anti-tech today. There's no other way to say it. Tech went from being underdogs to causing a lot of damage in the world, a lot of good in the world and having an oversized footprint in the world. And in today's climate, journalists are just super anti-tech. So Sol Savvy's co-founder, Dionne Prolika, which I am an investor at his company, Sol Savvy, which went through the launch accelerator, mentioned how large sums of capital can blind journalists the impact of a product. He says, and here's the quote, this feels a lot like what happened with us. Money blinds people and warps reality. What we know, and superhuman knows, is that we have

thousands of happy customers who love the product and who will continue to support. I gladly pay $300 a year to SAH, H, superhuman, because it adds a ton of value to my life. And Dion's product, Soul Savvy, has a similar price tag, and they raised a lot of money at a very high valuation, which I'm very happy about. And this goes to what journalists can miss because they don't have the inside information. I learned this. How do I know this? How's J-Cal so informed on this topic? I started as a journalist. People don't know this because some of you listening are 20 years old. Well, 30 years ago, I started as a journalist. 25 years ago, when I was 25 years old, they start my second magazine, second, called Silicon Island Reporter. And I had 75 people working for me, 30 of which were journalists. And I know that we had partial information and we're trying to constantly unpack this information. But what we didn't do was we didn't have social media to go dunk on people. We started. to the facts, we kept it simple. Carbon Health's director of product, Alex Cohen, also shared a good perspective on superhuman surviving when others did not. And he says, man, this tweet is not sitting

well with me today. Imagine spending 70 years of your life building a gradium of a client that has survived a graveyard of dead companies who have tried and failed only to get called lazy by a reporter with 130,000 followers. And I think this is a, this is a, you know, again, I think Casey's a good journalist. I subscribe to what he does. But I think this is actually something for Casey to maybe refine maybe refine here and maybe take a different approach, which is, do think about how much effort founders put into this stuff, right? And, you know, that may be before you use your considerable falling to dunk on them and to dry them, which could actually damage their business. And I don't think so. I don't think it's going to damage the business too much here because the people who use

that love it. And superhuman has 300,000 people in their wait list. So I don't think you're damaging their business. If anything, it's going to damage Casey's reputation for further founders who will not meet with Casey, will not give information to Casey. And that's the gentle balance for journalists. You really want to, and this is really inside baseball, you have to be careful when you pick your targets. Here, this felt like, you know, like it was an incorrect take and you're hitting somebody with a bat in the back of the head who doesn't deserve it. So be careful. I have done this as a journalist myself. I've taken on, you know, causes or people or had opinions that were off. And now people won't talk to you. There are people who don't come

on this week and start us because I said something about Facebook 10 years ago. And I have to live with that. And I think that's what Casey's going to live with here is, you know, Raul is an investor in many companies. And maybe Casey doesn't care, but access is important for doing great journalism. Finally, Delian, who is a wild man on the Twitter. And he's one of those founder fund, Peter Thiel, Acolytes, or, you know, part of Peter Thiel's squad. And he has no problem dunking on people. I like this kid. Critiquing Raoul has to be the silliest thing I've seen on here, referring to Twitter. Superhuman makes 20% faster than any other email

client I've ever used. I've even built some custom mods on Gmail. I get it's not for everyone, but as someone who lives in email, $2 a month is a no-brainer. And this is, I think, another thing Casey missed, which makes them look kind of uninformed. There have been many failed email clients, Sparrow, et cetera, who competed with Gmail.

And nobody ever got it right until somebody said, you know what, I'm going to go after the top 1% to 10% of users, charge them a lot of money, and be relentless in studying them and making the product better every single day. So that is the big myth here as well. Not only are all the incorrect facts and the misinformed opinion, but it does actually make people a lot faster. If you're in Gmail versus superhuman, the superhuman person is going to get things done much faster.

Period. End of story. Raoul did not respond directly, but instead responded to people in Casey's replies by either thanking them for complimenting superhuman or asking how he can make the product better to those who were critical, which is an absolutely savvy, brilliant move. Raoul is, and I've watched Raul grow as an entrepreneur over a decade. He is one of the most considered, humble, hardworking, diligent founders I've ever bet on, and I've bet on some of the best, as you know.

and I will keep betting on Raoul as long as he is willing for me to invest in his companies. So, you know, Casey, something to think about. You could have done better. And, you know, just play the long game. Casey is my basic point here. Don't play the short game trying to get subs and have bad takes and dunking on people. Actually, maybe pick up the phone and talk to superhuman or talk to some superhuman users instead of dunking on them.

That would be real journalism. If you actually talk to 10 users who were crazy about it and said, why are you crazy about it, then you can have an informed tweet. This is why Twitter is why Twitter is bad for journalists. Twitter is bad for journalists because it makes them look stupid and it makes them look petty and it makes them look biased. And sometimes they are petty and biased and stupid. But Casey is not, I don't believe, stupid and I don't think he's cynical or bitter. He just came across that way. So a lot of less is there. And finally, if you're in the arena building things, ignore the haters, ignore the critics, focus on your product, which is what Raoul is doing.

and Casey, now he's a founder. So people should start criticizing his product, which is a newsletter, which is, you know, something he's opening himself up for here. So maybe at some point somebody will create like this would be super meta. Somebody could create a substack about journalists and how they're doing in their careers. Does that exist in the world? I wonder. That sounds like something Peter Thiel would fund.

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Okay, let's get back to this amazing episode. Also, when I was away, Apple made an announcement on August 6th. that they would be rolling out, quote, a system for checking photos for child abuse imagery on a country-by-country basis depending on local laws, according to Reuters. This means Apple is joining Facebook, Microsoft, and Google who have taken similar virtuous measures.

Nobody wants to see people trafficking in child pornography. And if we can stop it and we can catch these people and put them in jail, that's a fantastic thing for us to do in society. However, Apple's announcement is a little different than the other big tech companies which are scanning basically the cloud. This time, Apple seems to be screening the photos before they're uploaded to the cloud. Now, this is because you need to know the architecture of this. Apple has said, we're going to keep all your stuff on your phone, not in our cloud. We're going to be the anti-Facebook and the anti-Google. We will keep your stuff on your phone, we'll keep it encrypted, and you'll be on your own. However, what that does is it triggers. a bigger dilemma, which is if you're a terrorist, if you're a criminal, if you're trafficking in this kind of horrible content, it's locked up on your phone. So here comes the backdoor. Now, if the backdoor to the iPhone seems familiar, it's because the San Bernardino shooting, done by terrorists, was controversial because Apple would not allow a backdoor to be given

to the phone. So if you protect people's privacy with encryption and you don't give backdoors, to that, to the government, which the government has always had, then you protect individuals' privacy in aggregate, but you allow criminals to benefit from that. This is a big dilemma. There is no easy solution here, but I think we can all agree that if there's a terrorist attack, Apple should unlock the damn phone. And I, you know, the end, period, end of story. So now we get to the next thing. Okay, child pornography. Seems like an easy one. Give the information to the government, put these people in jail. Should not be controversial, except that now we have a technological edge case here.

The entire concept of the iPhone is that it's its own black box. It's its own black phone, which is what I think the CIA and other intelligence agencies call these phones. They're phones that can't be unlocked, can't be unencrypted. You get the idea. And so according to the AP, here's how the technology works. It's using something called neural match, which is designed to detect images of sexual abuse, of children and it scans for these images before they are uploaded to iCloud while still on the device. If the technology locates a match, the photo in question will be reviewed by a human.

If child porn is confirmed, the user account will be disabled and the National Center for Missing and Exploited Children will be notified. I also think there's some database of child pornography that is also scanned for on the web. I don't know what that's called, but I remember reading about that in a wired story as I believe. Here's the Reuters quote. Apple says we'll only scan in the United States and other countries to be added one by one because obviously laws will be different in different places. But according to the Reuters story in an internal Slack channel, 800 messages long, many Apple employees spoke out against the plan, as told to Reuters by an anonymous employee who saw the thread. Now, again, back to the Slack channels and the

discussions, 800 messages, not a lot of messages in Slack channel, and we don't know how many employees are in here. Royters doesn't have that information, so there's no context. We don't know if this was 10 people in there doing 800 messages, 800 people doing one message. We don't know. if it was one person who was upset and is, you know, like a super privacy nut or if there are 800 privacy nuts at Apple who are going after this. And we don't know the denominator. We don't know how many employees there are who have access to this room or whatever. Tech feature analyst Jane M. Wong, who is the woman that always scoops Twitter's new features. If you remember, she tweeted the following, I am concerned. Apple cannot and will not say no to potential

request from China given the market and factories. And that is something I've been talking about on this program for a long time, which is in other countries is another key angle of the story, which is in countries that tell you give us the entire eye cloud of everybody, which is China, well, and they're probably doing this, and they're definitely doing the same new TikTok in my mind, is no question. So every piece of information on TikTok is now on China servers. If TikTok has access to your entire photo library and you have things in your photo library, you don't want to share, I'm betting the Chinese government has it now. If you're the son of a senator or a congressman or the president and you have things

on your phone, the Chinese government has it. They now blackmail the senator. Hey, we have the nudes of your child or whatever it happens to be. And Hunter Biden, anybody? You know, this is actually happening. This is not some kind of hypothetical situation here where somebody could be blackmailed or it could cause political interference. So there are genuine concerns.

here. And if there's anything, you know, that can be learned from this, it's that these issues are not going to be easy to solve, especially not for Apple, who now wants to have the high ground on privacy, but they're now proven that they can stand your phone and deliver stuff. For me, any way to catch these people, I'm for. Period. End of story. I know that that might be controversial coming from a tech person, but I also think they should unlock the San Bernardino phone. Sorry, if you disagree with that. I understand why you disagree with it. I'm sure. all debated with my besties on the All In podcast. But when it comes to certain crimes like this and terrorism, I have zero sympathy and I'm willing to give up some of my privacy in order to have

that happen. I know that's a risk. That's a controversial thing for a tech person to say. But I trust Apple. Maybe I'm stupid, but I do have some trust for that brand and for that company. The EFF, the Electronic Frontier Foundation in the Center for Democracy and Technology, the CDT, each released their own objections to this, which is something you would expect. The article also mentioned that Apple has more plans to help authorities with their technology, quote, including dropping a plan to encrypt widely used iCloud backups and agreeing to store Chinese user data in the country. I talked about that in a previous episode.

In fact, the way they're doing any China, my understanding is from various reporting is that they are using a partner for their cloud. So Apple does not provide cloud services. They outsource that. Eva Galpernan from the EFF. She's a director of cybersecurity. Hopefully I got your name, Eva, correct. In their new FAQ, I'm quoting Eva here. Apple says they refuse government requests to use their

CSAM scanning technology to scan for other forms of content. How exactly will they refuse? Will they fight in court? Will they pull out of the country entirely? This is not a time to get vague. So if somebody said, I want to kill the president of the United States in an SMS message, on I message, and they sent it to a friend, now the government is saying, hey, you got any death threats against against the president? Okay, yeah, let's scan everybody's phone. And now we're in a police state. So this needs to be very considered. We need to really have the government and private industry and citizens involved in this process, which is what's happening right now. When technology changes things, we have this dance and this debate. We need to be able to have this debate with no politics.

And we have to say, we agree that terrorism, we agree that child pornography are unique in how damaging and horrific they are to society, we agree as a society will allow for this, but we're not going to scan everybody to find messages for words as an example, even if it means somebody says something as threatening as, I want to kill the president. If somebody says that on their phone, we don't know if they're joking, you know, we don't know if they're frustrated, we know if they're drunk. They don't need to get a knock on the door. They don't need to have their phone scanned for that. But she makes a great point, which is once the cat's out of the bag and this technology exists, it's going to happen. My suggestion,

is understand that your phone's probably already hacked. Don't keep anything on there that you wouldn't want people to see. Matthew Green, a cryptography professor at Johns Hopkins, tweeted what he's hearing from Apple regarding the backlash they're receiving. And he's verified on the Twitter. That helps a little bit. People are telling me that Apple are shocked. I'm guessing people at Apple is what he means, that they're getting so much pushback from this proposal. They thought they could dump it last Friday and everyone would have accepted it by the end of the weekend. I agree. I think a lot of people would be like, yeah, this is a no-brainer, but I get it. People are also concerned with what's on their phone and their security and privacy. So I understand both sides of

the argument. Again, this is one of those issues that's not easy and it's going to be a case-by-case basis and we're going to have to have this debate for many years to come. I think that reflects Apple. Again, this is Matthew Green, and I'm quoting him. I think that reflects Apple accepting the prevailing wisdom that everyone is just fine having tech companies scan their files as long as it's helping police, but that's not the country we actually live in anymore. So, you know, one thing you have to realize here also is the people who are trafficking in child porn are likely not using an iPhone. They're probably using some very, you know, secure version of the TOR network, which is kind of another problem is, you know, which the CIA and the FBI are reportedly, you know, have already hacked

into that tour as like a network that anonymizes internet traffic. They're probably using other services that are more encrypted and not centralized, like Android phones, et cetera. So I wonder if this is even going to work. As difficult as this is to handle in a democratic country, imagine what it's like to handle these kind of things in an authoritarian country. It is not easy. We're going to have to follow the story for a long time to come. But I do think directionally, Apple is correct in what they're doing.

And I do think anybody who's nervous about their privacy is also correct. It is possible for both of these things that seem to be in conflict are actually correct. Your right to be worried about your privacy and you have every right to be worried about your privacy and concern that Apple has such sophisticated technology to do this. And you could also agree that Apple should do this and that controls need to be in place. And we have to really think this through because it's going to get worse and worse as time goes on. And these are not easy issues. Okay, let's do another story.

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Okay, next up, a blockchain 5G network set up called Helium just raised $111.11. Interesting. I wonder if they did that on purpose. From a venture firm called A16C, haven't heard of them, and others to decentralize 5G. Okay, this seems interesting. I saw a lot of ICO concepts of building decentralized Uber, 5G, Y, and Airbnb killers, none of them ever built a product, and they all seem to have absconded with your money if you're a crypto-ICO investor, and they all seem like scams.

This one is backed by a real venture firm. So let me explain what helium is doing in terms of mining crypto. It's actually kind of interesting, and it might be one of these ideas that actually has a chance of working? So in plain English, you're going to be able to mine cryptocurrencies, run algorithms to make these coins like Bitcoins or Ethereum tokens, by installing hotspot devices and providing access to Helium's 5G network. In other words, you buy this device, you give people 5G, and you earn cryptocurrency on the network. You have a financial incentive to buy this device, put it on your network, and give people access to it. Very interesting. So,

according to the Yahoo finance story, helium has over 11,000 global city locations in 112 countries, and users have already deployed more than, get this, 112,000 helium hotspots in just over 24 months since launch. That is not insignificant. Their stated goal is to decentralize the 5G.

So this means, I think, that you buy tokens to use the 5G, like if I'm a business traveler, I buy it, just like I used to buy Boingo, or I used to have GoGo Wireless. There were these services you could buy or I think if you're on Comcast Xfinity,

you see the Xfinity routers. You can kind of log into them, but it's closed to their network. It's a private network just for Xfinity users. So it doesn't actually grow that much. This one seems fascinating. I could take my Verizon, my Comcast,

whatever connection I have. If I'm out of university, I put this hotspot in my university dorm, I mine coins, I give access to the other students and whatever, the business across the street access to my 5G. Kind of interesting, right? So in an April blog post, they announced a partnership with Freedom Fi, a company that

manufactures open source 5G devices to provide a gateway to Helium's network. I didn't even know FreedomFi existed or that there was this open source 5G movement. So this is very interesting. There have been other open source Wi-Fi movements. We saw that 20 years ago when Wi-Fi first came out. But this is taking cryptocurrency and mining and a financial incentive and adding it to something people desperately want and need and when they don't have it, they will pay for it. Internet access, right? If you don't have internet access, man, you will pay editing for it. HNT is the name of their

cryptocurrency, Helium's cryptocurrency, which can be mined by having your hotspot provide and validate wireless coverage over Helium's network. Very simple. It's a fancy way of saying, giving people internet. According to their website, mining HNT is done by installing a simple device on your office window. Very simple. You put it on your window, slap it up. Okay, now how do you earn HNT, right? They're cryptocurrency. Think of it like earning Bitcoin. So the way you can earn it via your hotspot is, hotspot, something other people can log into, just like you make your phone a hotspot. Completing proof of coverage. What this means is passing random wireless tests on the network called challenges. So if your network is discovered, I guess, you get paid,

right? So if you put it up and other people see it, you're going to get some tokens. Great. And witnessing proof of coverage, i.e. your device would need to be in close proximity to another device to witness and verify their proof of coverage test. In other words, they police each other and you get some HNT or, you know, the Bitcoin in this case. It's not Bitcoin, but just to make it simple for you understand. Now, the network data transfer that you provide is another way for you to get more HNT. So the more data that goes across your hotspot, the more you get. So HNT's price tag has gone 16x since January from $1.29 to $20. $60.68. sense as of the taping of this recording.

And I think before I print this, I'm going to go buy a thousand dollars worth of HNT if it's on Robin Hood, because it seems like one of the few crypto ideas that actually has an application. Other applications for cryptocurrency, obviously NFTs I believe in. Obviously, a store of value, I believe in, and money transfer. And I obviously believe that it's good for laundering money and gray market transactions and terrorism. So I'm now up to, this might be the sixth use case, I think. broadly speaking, NFTs and collectibles.

I believe in that, yeah. Storing money, a store of value, I believe in that. Money transfer, I kind of half believe in. It kind of works. It's maybe unnecessary for many people. And then dark web transactions. So I'll put those in one bucket. So that's four.

And then this fifth one, I actually believe in this, I think. I don't know if it's going to work. It will require a big footprint. But I kind of believe in the idea, at least. And I like the start here. So Helium also published a one-day breakdown of HNT, distributions, which is more transparency than some other cryptocurrencies have given us lately. 30% of HNTUs went to network data transfer, 35% went to hotspot infrastructure,

that proof of coverage we talked about there, and 35% went to founders, investors, and organizations that will manage blockchain governance. So they basically swept 35% for themselves. The founders get that. So if this thing becomes worth $10 billion, the founder's going to make $3.5 billion in the investors. So that's a little bit more, that's a little bit more transparency than we usually say. And maybe that's the model. Maybe when you make a cryptocurrency going forward, you give a third to your investors and founders,

you know, in tiders, a third to, you know, people who are in one group of usage, you know, the buy side and one group to the sell side. I don't know how it exactly work. But then you get speculators. So this is the perfect example of what's called the utility token. There is actually utility to the tokens. The tokens do something. get you internet access or you make them for giving internet access.

So this is where it doesn't feel like a security, but it actually is because I'm going to buy it to speculate on it. And this is why cryptocurrency is so, so intriguing to so many people. Because if you can get the utility and the investment part together, man, that's never really existed in the world. And that's why when you don't have the utility, it feels like a security. And when you do have the utility, it doesn't feel like a security. but if the price goes up, it is a security.

So here we go. This is clearly a security. HNT, as the coin, should be under security law, even though it's a utility in my mind. And I think a really easy way, because this has come up with the legislation, which I didn't cover on the program yet, because it's still in flux, but part of the infrastructure bill was regulating, you know, cryptocurrency. I have a very simple plan for regulating cryptocurrency. And it's coming up on the next segment.

We'll get to it in a moment. So, HNTs can be burned to acquire data credits, which will help the helium devices powering the data transfer, basically providing access to the network, makes sense. And data credits are like cell phone minutes or airline miles. They are non-transferable and are going to be used by the original owner. So that's a very interesting one. You can buy, sell, or hold HNT as a currency or burn them to power your helium device. It's kind of interesting, right?

You can use them like, you know, airline miles or, you know, quarters in a video game or Chuck and Cheese tokens. So I would say this is somewhere between a good idea and a very good idea, and it could work. So you're not going to believe it. But I think this is interesting. I would have invested at this at the earlier stage, and maybe I'll put in a small bet for their tokens. Okay, as promised, next up, how should the U.S. handle cryptocurrency regulation properly? Last week, the Senate officially passed the $1.2 trillion infrastructure bill.

The bill's passing was delayed one week due to arguments over proposed amendment. on crypto tax reporting. The amendments wound up not passing. This bothered some members of the crypto community, including Coinbase CEO and founder Brian Armstrong, who we've had on the program, who Brian would love to have you on the program again. So much has gone on crypto,

including you going public and crushing your last quarter. So come on the program soon, open invitation there for the folks over at Coinbase. So the main issue in all of this, as I understand it, is the definition of a broker in crypto, which, according to CNBC, was, written in language so broad, one could interpret it to include anyone involved in any kind of crypto transaction, i.e. a server, hosting company, whatever. The bill considered a broker

anyone who is, and in quotes, responsible for regularly providing any service, effecturing transfers of digital assets on behalf of another person. So, like a bank, like a venture fund, like a private equity fund, if you're involved in this moving of money, money, but it did not exclude miners, the software developers, and others in the crypto economy who don't have customers, essentially. And one would argue the miners do have customers and the software developers ultimately do have customers, but you could also make the argument, I guess, some people reasonably, listen, I'm just a software developer in this where I'm just a minor. I'm not involved in the transaction. The bill would also require crypto brokers to report customer information

to the IRS, which is what I've told you will happen in crypto. And I've said this since the beginning. The government will let it fly under the radar for only so long when it comes big enough and it's costing people money and people see it as a way to avoid taxes. The IRS, the government will come down on it like a ton of bricks. And that's what happened in China. And now it's going to happen in America. And you know what? I know this is unpopular for a technology person to say there should be some rules. Again, news flash. You don't get to avoid taxes. Newsflash, you don't get to be involved in money laundering or allowing black market or gray market transactions, pay your taxes, play by the rules.

You don't get to just take people's money without having to play by the rules. In venture, at equity crowdfunding, sites like seed invest in Republic have to play by a certain set of rules in terms of documenting what they do and making sure investors don't lose their money in diligence in reporting and how much people can invest. and in ICOs and in crypto, it's the Wild West. There is a very simple solution to this, which I've come up with. And I can explain it very simple. Just to put a final note in this, there was a lot of funky back and forth here with, you know,

the sworest trading that occurs by senators. There's a senator named Richard Shelby from Alabama. According to CNBC, he blocked this amendment because, quote, his unrelated $50 billion defense amendment was blocked, i.e., people were going to spend money in his state, I guess. So the infrastructure bill was passed with the original language of the industry is now back at square one. So, you know, that's one of the things in our system, this horse trading and, you know, this pork in our pork barrel spending, I think they're referred to it as. You know, this kind of stuff is gnarly. And when you mix it up with a complicated issue like this,

It's particularly gnarly because then people can in the crypto community say, hey, this person is just trying to get grift from the people who donated to their campaign to be elected and they're just looking out for themselves. I'm going to put all that aside. There's a very easy way to do this. We want people to innovate. We want them to take chances. So I'm just going to pick some random numbers here.

You obviously understand this is a back of the envelope proposal. It's not meant to be the final one. It's meant to be the start of a conversation. But if you're under $5 million in tokens, go have a ton of fun. You need only register the project you're working on with like some central database with the IRS or FINRA or wherever, some governing body. So if you want to take money for tokens, if it's under a million, maybe we say you don't have

to file. But when you hit, you know, one to five million, you register. You just have to register. We know the project is listed in this database. So as we were talking about previously, you know, this helium. network for Wi-Fi, if they were going through this or, you know, Ripple, which people think is a giant scam right now, or something like Tether, which has legal action taken against it by the New York Attorney General's office, which said it was a scam, basically. If they're under

a million, you can kind of operate freely, maybe. One to five million, it doesn't mean you commit crime, but you don't have to register. When you get to one to five million, you register. So we know who you are. Your social security number, your name are tied to it. You're responsible in some way. And then when you hit 10 million tokens, you have to do some amount of regulatory work like I do. I have to do a bunch of work as an angel investor who has a syndicate at the syndicate.com. So maybe you start registering transactions with the IRS or maybe transactions over $10,000 just like banks have to register them. That's why I guess some people take out $9,000 in cash because they don't want it to be reported. I've never understood that. I would think that

the IRS or whoever was doing that would say, you know, $10,000 they have to do it, but secretly they want to get it at $8,000. Then at $50 million, you have to do KYC, et cetera. And then at $100 million, you really need to have a bank charter or you need to have an accounting firm do an actual audit, not in a testation, but like an audit. Maybe you have to do quarterly financials, maybe we have to do monthly financials. So just like we have limits on these private company investing. As an example, when I do a syndicate, I can only have 250 people or $10 million.

those are my two caps. And then Rague A, there's another set of caps. Why do I and Seed Invest and Angelist, Republic, private equity firms, venture firms have to live by all these rules? And then you say it's a token and you can do whatever the heck you want. It's kind of BS. It's time for crypto to grow up. And actually, that'll be good for crypto. But we don't want to strangle crypto because, as I said in the last segment when we're talking about the helium network,

there's a lot of innovation going on here. And so you don't want to strangle it and smother it. So I would say a light hand, some basic guidelines. As it gets bigger, the rules and the requirements increase. Very simple. Okay, let's get back to the present day. There's a terrible situation going on in Afghanistan. I have very mixed feelings on it as a New Yorker with a brother who's a firefighter

and having been in Manhattan and watched the towers come down firsthand and having PTSD, literally had PTSD from 9-11. It was a very traumatic effect, a very traumatic event for me. my family and my friends and my fellow New Yorkers, which I still think about deeply to this day. On 9-11, I have a very melancholy, you know, day and the day before and the day after I think about the people who died and how terrible that was. And of course, we went to Afghanistan because the Taliban and Al-Qaeda were involved and orchestrated that. So, as you know, we've been planning on withdrawing our troops, and this has all gone down, you know, the last couple of days while I'm

here in Italy on vacation. And according to the New York Times, the Taliban now effectively controls southern Afghanistan, the country's entire western border with Iran as the U.S. moves closer to completely withdrawing. Biden said the following in his address last night, which I caught a piece of, if Afghanistan is unable to mount any real resistance to the Taliban now, there is no chance that one more year, five more years or 20 more years of U.S. military boots on the ground would have made any difference. In other words, all the time and money we spent after killing Osama bin Laden and killing the Taliban members who were actively involved in 9-11 and other terrorist attacks. Everything after that, trying to build a new society,

a new government, and a new military, we did the best we could. It's futile. We need to get out. But here's the tech angle, putting this aside. And I don't want to talk about my position on this. I'll save that for the All In podcast next week, next Thursday. We took two weeks off because besties were on vacation. In a vice article published yesterday, it was reported that the Taliban is using WhatsApp to, quote, to spread its message and gain favor among local citizens. The Taliban sends messages to those living in Kabul, stating they were in charge of the city's security now and any irresponsible behavior should be reported to them, according to the Washington Post. An example of irresponsible behavior for the Taliban could be anything that goes against

Sharia law, like reading a book if you're a woman or showing your ankles, the punishment would obviously be very severe. So this is basically saying tell us who to rape, torture, kill, murder, imprison, violate, and otherwise destroy. So on the fact page for WhatsApp,

they state that they use end-to-end encryption. We all know that. This makes it hard to identify who is using the app. And the vice article notes that end-to-end encryption would be, could be, could, for journalists. Could be the reason why WhatsApp hasn't banned accounts used by the Taliban yet. Again, back to the first story, we talked about journalism, and they only have 5% of the story.

However, the Taliban is included in Facebook, the owner of WhatsApp's WhatsApp. They're on Facebook's list of dangerous organizations, which means any content promoting or representing them should be banned according to Bloomberg. That's pretty obvious. But we're not talking about public stuff here. So again, these are journalists dancing around the issue, trying to figure that. things out or just filling stuff up in a story. We all know that they're going to ban stuff that's public. That's not what we're talking about here, Bloomberg. Facebook's head of Instagram, Adam

Musari, who we might have on the program at some point, stated the following in an interview of Bloomberg in relation to the Taliban. We were relying on that policy to proactively take down anything we can that might be dangerous or that is related to Taliban in general. It's just like taking Nazi stuff down or any other propaganda from authoritarian's. you know, or bad people. Now this situation is evolving rapidly. This is a quote. And with it, I'm sure the risk will evolve as well.

We're going to have to modify what we do and how we do it in response to these changing risks as they happen. That's just a word salad of saying nothing. Here is a quote from Pete Singer, a senior fellow at the New American Foundation from the vice article. Many think of the Taliban as archaic, but they have leveraged everything from social media to drones. We build it.

They use it. This is another generic quote. No offense to Peter. It's just filler of the article. We know they use drones. we know the social media. It's just filler in the article. This isn't actually the important part.

Let me, if I may, give you some possibilities to consider here. Do we know that Facebook isn't intercepting or otherwise cooperating with the U.S. military? Do we know that? Do those stories actually mention that? I don't mention them doing that. Couldn't we also use WhatsApp and Facebook, even if it is end-to-end encryption, to spy the Taliban? And if one person was identified, you would probably know the medicate. data who's talking to who?

So while WhatsApp, and I know this is probably too sophisticated for, you know, an average journalist or an average citizen to understand, but metadata like location, the idea of your phone and who you talk to, once you know one person's WhatsApp, then you know everybody they talk to, you know who they talk to, you don't even need to see the messages. It would light up like a brain and neurons firing or fireworks in the sky. Who's talking to who? Once you know who's talking to who, now you can track down every talent band member. So you actually don't need to know what's going on in the messages to actually use it.

And might Facebook, if approached by the CIEA, and they said, we would like you to create this bogus version of WhatsApp. And in Afghanistan, when somebody downloads it in Afghanistan in this region or on these specific phones that we sold to operatives in that area into the black market, these black phones that we put into the black market with special IDs on them, we want to preload this version of WhatsApp that we've built together in collaboration that not only tells us the supposedly encrypted data, but also lets us turn on the microphones and turn on the cameras in those. Again, you're going to think, am I crazy or a conspiracy theorist?

No, this is what the CIA, the FBI, and intelligence has been doing forever. If we want to get onto those phones, we're going to get onto those damn phones. You can be certain of it. And I just gave you but two ways to do it. It could very well be that Zuck and WhatsApp are actually in cahoots with the FBI and CIA and intelligence to go into Afghanistan and provide a bogus version or an alternate version of WhatsApp that does much more than unencrypted data. And you can be certain that in a terrorist-like situation, even though Apple might make one

decision, I actually think Zuckerberg would make the opposite one. Apple would make the principal decision. Zuck would make the pragmatic decision. Zuck is facing getting broken up. If he wants to curry favor with Biden and he says, yeah, I will sign this NDA or this judge's order or whatever agreement they have to make in those, you know, back rooms, he's going to do it. That's my position. Zuck, in a heartbeat, would sell out the entire Taliban and privacy and every citizen of Afghanistan. Zuck would sell out Americans and has. Zuck would sell out anybody to grow that service or protect his empire. That's who he is. He's shown us that for 20 goddamn years. That's who Zuck is. He does not have a moral compass other than growth and dominance and money and the reach of his services. And anybody who works there is complicit in that philosophy, period. End of story. And in this case,

it happens to be a good thing. The fact that he will make this decision to flip and give over the Taliban in my worldview of what's actually happening here. Again, somebody can clip this and an aggregator can say, I'm crazy in a conspiracy theorist. Just look at history. This is how this has gone down many times. I can assure you that before, you know, the modern day cell phone, there were plenty of people, plenty of people making bogus AT&T phones with spyware in them or television sets,

you know, from, you know, any number of people. or light bulbs with listening devices. This is how it works, folks. When the country is at stake, when this has to do with life and death, companies, CEOs, and the government work together to protect our interests.

And maybe there's an argument that they should. So what you're reading in the link-baiting press is probably not aligned with reality. And I'm guessing the closer reality is the kind of backdoor dealing, handshaking that I'm describing. We'll see you all. Next time on this weekend startups. Bye-bye.