This Week in Startups - Crypto's Super Bowl blitz, Joby's asian air-taxi partnerships, Affirm's earnings & BNPL growing pains | E1386

Episode Date: February 15, 2022

First, we break down the Crypto companies that ran super bowl ads and see how they stack up against the dot-com era ads (1:53). Then, we do an update on Joby aviation now that they are trying to roll out an air taxi service in South Korea (28:03). To wrap, Molly covers the BNPL (Buy Now, Pay Later) space and the challenges these companies are having as they scale, specifically Affirm's recent earnings (36:49). (0:00) Jason and Molly tee up today’s show… from alternate timelines! (1:53) Comparing the 2022 influx of Super Bowl crypto ads with the Dot-com Era ads of 2000, right before the crash (9:29) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist (10:47) How tech companies think about Super Bowl advertising PLUS Jason breaks down the big four crypto ads: Coinbase, FTX, Crypto.com and eToro (23:25) Boast - Get your R&D tax credits without the hassle at https://boast.ai/twist (24:40) Jason’s favorite Super Bowl ad, Sopranos theories (28:03) JOBY Aviation making waves lately: SK deal, FCC proposal, Air Force contract, record-breaking speed (35:45) Odoo - Get your first app free and a $1000 credit at https://odoo.com/twist (36:49) Molly breaks down the BNPL space and Affirm’s recent troubles FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Okay, everybody, we've got a bunch of news for you today. Molly and I were on different schedules and she's traveling. So I wanted to start off with me talking about crypto companies and Super Bowl ads and comparing those to the dot-com era. And I'm going to talk about Jovi Aviation, a stock that has been absolutely decimated and Shroyd. It was a SPAC. They're doing vetoes, but there's new information that they'll be doing a bunch of rides and

air taxi services in South Korea and the Bay Area. Now, these flights could change everything in transportation. And as Molly here in a slightly different timeline in the multiverse than Jason's in, we're also going to talk today about consumer finance and buy now, pay later, specifically with respect to a firm and its earnings. It's going to be a great show. Stick with us. This week in startups is brought to you by lemon.io.

Need to speed up your product development without draining your budget? hire vetted engineers from Europe at lemon.io. Go to lemon.io slash twist to get 15% off for the first four weeks. Boast. If you're a startup developing new software or R&D, you may be owed up to $250,000 in cash back from the government. Boast helps you get that money quickly and easily. The first 50 customers will get 10% off their first year by mentioning promo code Twist at boast.AI slash twist.

And Odo is a fully customizable and fully integrated suite of business apps that lets you build and scale your stack as you build and scale your business. Your first app is free forever and right now Odo is offering $1,000 off your first implementation pack at Odo.com slash twist. That's ODO.com slash twist. Hey, everybody, welcome to the show. I'm going to be doing some solo news today while Molly is on the road going to a speaking gig. She also is going to comment on some buy now, pay later, e-banks in a moment. But I wanted to start off talking about all these high-profile Super Bowl ads from crypto companies yesterday. We're going to break them down and react to them.

I'll have some producers jump in as well. There were four specific crypto ads. They were all pretty well done. and Coinbase, FTX, Crypto.com, and E. Toro, all paid somewhere in the neighborhood of $7 million. That was the record-setting price for a 30-second ad this year in 2022. And a bunch of you in our audience pointed out, it felt a little bit like the dot-com era, didn't it? An influx of companies maybe with questionable or nascent, nascent being charitable, questionable, being the most cynical descriptors of these companies.

Obviously, we had an influx of those during the 2000 Super Bowl, the dot-com era. A lot of people compare dot-com to crypto. And I think it's a fair comparison because in both cases, the public, right, has gotten super enamored with these companies and the public has been engaging and betting on these companies. That was the indication that we were in a bubble in 2000. The public, whether it's your, you know, at the time it was your. a gardener or your gas station attendant. Now it's the proverbial Lyft Uber or DoorDash driver

talking about these companies. In other words, they've crossed over from professional investing class, the venture capitalists and the capital allocators, the public market institutions, and gotten to retail investors. Some of those old ads, Pets.com, now defunct, eTrade and our beginnings. Obviously, ETrade survived all that. And we found this wonderful fast company article from January of 2020 that detailed some of the insane spending of dot-com-era companies on the Super Bowl. Our Beginnings.com was a company that sold stationary for weddings, berths, and other events online. They bought their ad time for four ads for about $4 million, which was $2 million more than the company's total revenue for the time months prior to the game, according to Fess Company. That's a little bit of a sign that maybe the capital allocation inside the company was not great.

just think some of these companies that spent these massive dollars in 2000, what if they had just put that money towards extending their runway, getting product market fit, and building a default alive sustainable company? You have to think about that when you're doing the Monday morning quarterbacking of spending on these extraordinarily expensive ads. See what I did there? So according to the article,

the CEO and founder Michael Budowski told CNN at the time that the move made perfect sense, Fate loves irony. The exciting part is we have a very solid business model. The Super Bowl not working well. How can it not really work? It is part of our branding campaign. It's not going to make or break us as a company. Eleven months later, our beginning pivoted their business model from selling stationary to consumers to focusing on wholesalers, classic startup move. It doesn't work with consumers. You don't get product market fit. You then go try to do it with an easier, smaller group of people, enterprises, companies. Just 23 months after the airing of their infamous

Super Bowl ads are beginning, file for Chapter 7 and shut down. Here's the ad. Picture in a picture. I'll respond in real time. We say you had a large selection of invitation. But we do. This ad is corny. You're my man.

It makes no sense. It's goofy and poorly produced. And it has a bunch of people screaming at a wedding, which is the worst possible thing you could be at. A wedding with people fighting. It's actually like a nightmare. They decided to make a commercial out nightmare. Negative branding.

No idea what the company does. They should have just talked about how much better their solution was. But because they didn't have product market fit, they probably didn't even know how to craft an ad. So this is thoughtless and not very well thought out business or an ad. Obviously, stationery is a huge business.

If they just said, get wedding, birthday, etc. Stationary in half the amount of time for half the price, that would have been a better ad. Literally having the founder come on and say,

we provide stationary for weddings at half the price and half the amount of time because you design it online, visit our website, and here's how it works. Pick a template, type in your customization,

approve it, and have it shipped to you in under 10 days. That would have been a better ad. What I just say would have been a better ad, but these people were drunk, they had gotten high on their own supply.

I was there for it. I was 29, 30 years old at that time watching this absolute train wreck. You make a good point too about the ad, Jason. Like, you learn nothing from that advertisement. The most important thing in all advertising is that people understand what you do as a company and that people remember you. Sometimes people look at these commercials and they just copy the aesthetics of a commercial. Copying the aesthetics of a commercial is not how you do

great marketing. The way you do great marketing is combining the aesthetics and an idea with the value proposition of the company so that they're aligned, right? You want to grab people's attention, make them understand your company, have them, have some call to action. Those are the best ads when you think about them. And that's why, for example, a company like Calm.com, which didn't do a Super Bowl ad here, but their ads when you see them in your social feed where it says, hey, take a deep breath, follow the breath of this, you know, video and get calmer or try to do nothing for 30 seconds. You remember it. You remember Com did it, et cetera. So in fairness, crypto companies in our doing, different than dot-com companies in that they are printing money.

The best example would be Coinbase. They made $406 million in net income profits that went into their bank account, like the actual cash in last quarter. So spending whatever they spent on the Super Bowl ad is but 1% of the quarter. And $1.6 billion for the quarter before that. Obviously, you know, the crypto space has benefited from a lot of fluctuations and free money, stimulus checks, etc. By comparison, A. B. InBev, the makers of Budweiser produced $2 billion in net income for the most recent quarter.

So again, Budweiser is the famous Super Bowl advertiser. Coinbase, not that far off. It's an interesting comparison here, right? They both print money. They both have profits. So when you have those profits, you earn the right to do an exciting Super Bowl ad, which is great for your employee morale, maybe cementing your branding versus competitors. Sometimes you don't have a choice, but to be there, I think, for Coinbase, they don't really have a choice, but to be there because there are other. competitors are there. So they need to be there, I think, in some way. Other big signs that the crypto companies have money to spend, obviously, is these incredible investments. Binance just announced a $200 million investment into Forbes's weekend. What is that about? I mean, if Forbes is for sale to a crypto company, what a disaster that is. I don't understand that one.

Is that a good use of money? No, that sounds like a disaster. Maybe they're buying the, by putting $200 million into Forbes, does that mean they have a controlling stake in it? Maybe it's just an acquisition. If they make something like $200 off of each customer in lifetime value, they need about a million people from the Forbes audience to convert over the next number of years. If they make $2,000, they only need $100,000 of them to convert. So maybe what they just bought was the traffic and all of those people reading Forbes and the SEO from it. Maybe next year's Forbes 30 under 30 will just be all Web 3.0. When you're scaling your startup quickly, hiring engineers, can slow you down like nothing else. We all know that. Well, here's some good news for you.

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So here's your call to action. If you could use a full-time or part-time developer to run your projects faster, I want you to go to lemon.com slash twist. Again, lemon.com. And you're going to receive a 15% discount for the first four weeks of work with a developer. What a great deal. Now, NBC did put out a press release on February 3. announcing that they sold out of every in-game unit across NBC.

Teleundo and all digital platforms, including Peacock. That's because we're in a peak market. Consumers have money to spend. even though there's inflation, we do have a vibrant economy right now. And we have companies that are massively profitable. When companies are massively profitable and they've got money sitting around, you know, buying Super Bowl ads doesn't seem like a bad use of money because they're sloshing around in it. And quote, 30 plus new advertisers in this year's Super Bowl versus last year's game

representing 40% of the total advertisers in the game. In other words, the newbies were the ones coming in now, new money. When Squarespace, the CEO Anthony Castellina was on episode 1291 of the, This speaking and service, we talked about his advertising strategy and why they had done Super Bowl commercials in most years since 2014. And you can look at this clip. So I'll say a couple things. One, it's the only time people want to see advertising. That's true.

That's such a great point. There is no other one. Advertising is better than the game because Super Bowl is time to say. I watch it for the ads. And so like, I mean. No shame. And, you know, it's the time when. And I consider us an incredibly creative company.

We're one of the few companies in tech, I think, that, you know, has had a chief creative officer as part of the executive team for over a decade. And it lets you show off creatively. You know, we do a little bit of avant-garde. You know, it's a bit hard for us sometimes because I think that the Super Bowl is just everyone, right? And so you can't get an ad that appeals to everyone unless it's like, I don't know, like a Budweiser puppy or horses and stuff.

And we're not going to do that. That's not in our, you know, brand DNA. But there are millions and millions of people who are watching the Super Bowl, including everyone for every creative agency who made all those ads, by the way, watching every single one of them, that lets us put a cool message out there and show off creatively. And I just love the opportunity. And I'll say this, too.

Of any kind of ad we do, that's the one I'm sure people saw. Like, not everyone does get seen by everybody, but in terms of, like, traffic to the site, articles about it, both good and bad, whatever, because you're going to be the top and the bottom of every, Super Bowl ad meter or whatever. There's stuff like that. It's also the only ad we do that gets, you know, depending on the creative, be invited to

shows on television. They play the ad for free. Yeah, that's a crazy part about it. They ask you to talk about it. I mean, like, no other thing has anything like that reach-wise and attention-wise. So it's incredibly, and even in like the second place thing you would do, like a Grammys or an Oscars or something, it's not even close to the same. So you get a lot of earned media before and after.

that you can afford to pay for this, says something about you. It's kind of like ordering bottle service in the club. When you order bottle service in the club, is it about the alcohol that you just spend $5,000 on? Or is it about people knowing you can spend $5,000 on alcohol? It's obviously the latter. If it wasn't, you would order much better wine and spirits and have the Michelin Star Chef come to your house and throw your own party. This is about peacocking. And I think there is a peacock effect to buying Super Bowl ads. It's you saying, I have the money to do this. I can afford to do this, just like buying that Vuclico with the sparklers on it. Okay,

Coinbase, I think, had the most interesting lo-fi ad. It turned into a meme, and I think this was a ground-breaking ad. Basically, as you can see here, we'll play the clip while I talk. There's not much to say here. They had a QR code bounce around your screen like a screensaver,

which led to people saying, is my screen broken? For people who knew what a QR code was, they instantly were like, what's wrong with my TV, took out their phone, and crashed Coinbase's website. This was genius. It was clearly the most innovative or innovative, as we say in the business, ad done in this year's Super Bowl and maybe one of the most innovative ones over the last decade. I think this was brilliant. And if they spent $4 million on this and their average customer

spends $400, you get the idea. This costs nothing. If they spent $14 million on this ad because it was a minute long, $7 million per 30 seconds, how many new customers do they need to get? If their customer acquisition cost was $300, you divide $300 into $14 million, and you get the number. $46,000. All right. So if they get 46,000 customers, then it paid for itself. Did $46,000 of the 100 million people who see this ad sign up? Who knows?

Will they? Who knows? But that's a way to think about this. If $46,000 new people sign up and their current cost to acquire customers $300, that seems reasonable across other average. advertising, then it broke even, and it makes your company feel stoked and more people know about your company. Joe Pomp's brother said Coinbase just spent 14 million for a color changing QR code to bounce around on the screen for 30 seconds during the Super Bowl and the website crash. Yeah, and I think it was 14 seconds that this lasted, right? This was 60 seconds, so I think it was actually

a double ad. Teney J said on Twitter, Coinbase went from outside the top 100 to number two on the overall app rankings, thanks to their Super Bowl commercial. Obviously, we're talking about the App Store rankings. So here you see the charts. They're right behind the Peacock in terms of downloads, obviously because of the Olympics, Peacock being the streaming service. And the Super Bowl's on Peacock as well. So obviously, that became the number one way to watch it.

And the Pepsi Super Bowl halftime show app went to number three. And the crypto area, my favorite might have been Larry David hates good ideas. This was so on brand for Larry David. I hope he made a million dollars on this. I'm going to guess he got paid $500K or a million dollars to do this if they spent $14 million on it. Here's a snippet from FTX's hilarious ad. It was pretty, pretty good, I have to say,

with Larry David, you know, basically going, eh, I don't think so. Laugh of me, not so good. For the wheel and for other great ideas like the Constitution and one person getting one vote, Pretty hilarious. I think this was, anything Larry David does is hilarious to me.

So this was hilarious. Him laughing off the fork. Pretty great. And him saying crypto was going to be a bust and not for him is kind of like the ultimate OK boomer callback. So they never said OK Boomer, but that's kind of the concept here

is they made the OK Boomer ad. And it looks like FTX was ready to go with a lot of gifts from the ad to maximize impressions, a bunch of stuff in the gift game. FtX had a cheeky reply to Coinbase's QR code ad on Twitter with a Sam Bankman, Freed's silhouette bumping around on the black background. Crypto.com did Fortune favors the brave. Here's their crypto.com ad 30 seconds and I'll talk over it. I actually didn't see this one, so you're going to see my reaction live right now. All right, so, Corillus headphones.

You can watch movies through your phone. Okay. Wow. Yeah. The future is crunk. Okay. LeBron's going through his CDs, DVDs, and giving advice to Brony, his son. I can't tell you everything.

But if you want to make history, you got to call your own shots. Okay. Telling him he's got to make his own decisions. And crypto.com. So obviously there's been rumors. What's great about this? This is fan service for NBA heads. LeBron James has been rumored to want to end his career by playing with his son in the NBA.

That's actually not Brony. That's a de-aged LeBron. They gave him the Luke Skywalker treatment. He's talking to himself in the past. Yeah, isn't that cool? Oh, I missed the point of the ad. I thought it was Brony. Okay, three.

No, no, no, no. Wow. I don't know if you should leave this in or not. I actually like that in real time. You know, this is amazing. I just found out this is actually not Brony. It's LeBron James. de-age, like the Lou Skyworker treatment.

It's so good that he crossed the Uncanny Valley, and I thought that was actually Brony. So if anybody wants a free ad idea, have Brony and LeBron James talking about him joining the league, and that will break the internet, but I'm guessing they're going to save that for their Nike debut ad. So this was LeBron James talking to his younger self. Pretty brilliant, even though I misinterpreted the ad.

All right, let's watch E-Toros. I'll do this one live as well. I didn't get to see this one here is E-Toros Fly Me to the Moon, one of my favorite songs. All right, here's a dude on a phone. He's messaging about crypto. And now there's a bunch of people flying in the sky. And a bunch of messages flying around. And I don't get this, but I guess it's the metaverse.

There's a doge dog. Oh, that's a big moment. And he's being taken to the moon, the classic to the moon idea. So I guess these are all people going to heaven because they bought Doge coin. To the Moon playing off on the famous To the Moon meme of Elon on a weekend update as the Doge coin. They didn't mention Doge explicitly. I guess they don't want to give investing advice. Not bad. Not bad.

Not great. I give it like a Savin. It's interesting. I give the LeBron one like a 7.5 of those pretty good. I give the FTX Larry David one a 9.5, almost a perfect ad, and I will give the same score 9.5

to the Coinbase one because it's innovative without doing anything artistic. I mean, it costs them 100 bucks to make that ad, I think. Maybe they paid 10,000 to a designer to do it. Who knows? So I give two 9.5s a tie, between FTX and Coinbase,

but for different reasons and the other ones were, okay. So there's scores. I think the LeBron de-aging one was interesting just because, I don't know, I'm sure you saw the recent Luke Skywalker Mandelorian, our Boba Fett episode. And did you hear about why the CGI was so much better this time compared to last time?

Well, I think it has to do something to do with the talking and the words they're using. So if they try to say certain things, it doesn't work, or is this because they hired the guy who fixed the last one. Yeah, I read that they found someone on YouTube who fixed the issues in the last one.

And Disney saw him out and hired him. How amazing is that? Yeah, so it turns out that, yeah, with the original Luke Skyrocket cameo, it kind of sucked. And then somebody online built off of it using the, I guess, a lot of these tools are open source or there's different toolkits, and he made it better, where they made

it better, and I was a hero shake. And then my understanding is LucasArts hired that. person to consult on the latest one and make it better. I also think it has something to do with the words coming out of Lou Skywalker's mouth. If they do certain consonants, it's harder to get it right. So two of the uncanny valley issues have been lips moving to the words. That's hard to get right. And then hair was the other one. It feels like hair has been done for since the movie Brave when they had the big red hairdo. I understand that was a really challenging thing for that movie,

was to try to get Mara's hair right because there was this big, I mean, the hair was part of the star of the show and she had a lot of it. So getting that right is hard and then getting the words coming up people's mouth. Correct. So congratulations to the Super Bowl folks.

Again, not exactly analogous compared to 2000. So the 2000 ads, you were looking at money losing companies in a lot of cases and really not a great use of capital. But for the crypto ones, it's easy to be cynical,

but they are printing money. They do make a lot of money. off of people betting on crypto on their platforms. So if they spent $2,000 of it to build brand awareness or if they spent 50% of their dollars on brand awareness or $7 million or $14 million, if half of went to brand awareness and half went to return on investment, in other words, people signing up, probably a pretty good use of funds, actually, or not a reckless use of funds. So I don't think this would be categorized as reckless if these companies are profitable

or money printing. So good job all around, I think. If you're a startup developing new software or investing in R&D, you may be owed up to a quarter million dollars, $250,000 in cash back from the government. But the R&D tax credit program is very complicated. That's why most people don't take advantage of it. It requires a bunch of technical and financial justifications for the IRS.

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And if you do, they'll take a month. modest percentage between 10 and 20 percent, depending on the volume of your return. So the upside is free money from the IRS and the downside is no risk. So here's your call to action. The deadline to claim is approaching fast. So contact boast today. The first 50 customer signups will get 10% off their first year filing. Just mention the promo code twist. For me, I also liked the Sopranos ad. I thought that was very cute. Producer Nick as a Sopranos fan. I went in ready to be super cynical about it. But then when I saw AJ and Meadow looking actually...

When you heard the music, you were just like, oh boy, what's going on here? Yeah, it was a little... That's exactly. I was like, oh, no, sellouts, here we go. But when I saw it was Meadow, I kind of felt like, I think I want to see that. Meadow and AJ take over the family business. And they become captains. And then who's left in the crew to teach them?

Yeah. And then, you know, fast forward to them. never explaining what happened to Tony, but revealing what happened to Tony over time over that season? I mean, are you a buyer or seller of that concept? You know, call me a cynic. What do they call it a head cannon when it's like what you think happened after the show ends? Spoiler alert.

And my head canon, Meadow and A.J. are dead. They got shot at the table with Tony and Carmela. They're all dead. So that's an interesting one. Not to be sinister. Well, I mean, there's a couple different theories. One of the theories is that Meadow, because the last scene is Tony eating the onion rings,

it's that Tony witnesses Meadow getting whacked. And then the gun comes for him. So I don't know if you ever heard that theory. I've only heard it one time. But I mean, think about the gravitas of Meadow trying to park, then coming in and getting whacked, and Tony's seeing it, then Tony getting whacked. And then what if A.J. were to take the gunman down

or somebody else would take the gunman down. Maybe there was security was outside for Tony, and they kill the killer. And then who's left? Mom, A.J., Tony's dad, and Meadow is in a coma. Yeah. Meadow gets out of a coma, and now A.J. and Meadow want to, this is my theory. AJ and Meadow want to get revenge for their father.

And mom is trying to figure out if she should let them take over the business because, you know, she's always been, am I a supporter of murdering crime? And let's say after she sees Tony get killed, she's all in as well. And then you have this AJ and Meadow deciding, did they want this life? And do they want to bring this? Do they want to bring our thing back? That's my kind of wreck out of the home. And that was the big thing with the series, right? It's like that was always Tony's comeback to Carmella whenever they would get in a fight.

She would tell him to stop doing this. And he's like, well, you love this life. You love the material aspect of it. You love living in this big house. but you don't like when I actually have to do the job, you know? Yes. So that is interesting, them grappling with getting into the life that they saw and metal being on life support, right?

And then getting revenge. It's like the whole thing is perfectly teed up. As I described it, would you want to see that? Yes, of course. I mean, the many saints in Newark was a mess, but I watched it and I loved it. I would wash it again. It was a complete train wreck and I loved it. It was a complete train wreck.

Like, what was the plot? of that movie. And then all of a sudden, like, Ray Leota is dead. And then, what? Nope, he's a twin. He's back. You're like, what? Yeah.

Makes no sense. Yeah. Makes no sense. And the twin is in jail. Like, what is going on here? I mean, literally the movie was such a mess. I had to, like, read the recaps to understand what happened. That's when you know something went wrong.

I mean, David Chase didn't direct it, so I think that was the main problem. Okay. Vertical takeoff and landing, Vitole company Joby Aviation is making moves. Over the past month, they announced an upcoming air taxi service in South Korea. And they asked the FCC for permission to test air flight taxis in the Bay Area, as I predicted. And they broke a VTEL speed record. Let's zoom out and break down what's going on here. As you know, they went out via a SPAC.

The SPAC has not done very well. Their stock has been decimated. It's down 70% over the last year, like most other SPACs and tech stocks. As I've said, many times in this program, SPACs are an innovative and interesting way. to get access to the public markets. However, what we've seen, it's exactly what I've said, day traders, people flipping stocks

are the antithesis of what you want in a venture-backed company. When people are trying to figure out product market fit, do you want people day-trading, or do you want them betting on the stock and waiting 10 years like I do for a living? Well, if I had to day-trade Uber and Robin Hood income from, you know,

years two through 10, I probably would not have done really well with those investments, but the fact that I had to be locked up and wait five to ten years to have any kind of liquidity was a gift in most cases. Robin Hood questionable, but I think it will wind up being a gift we bought in when it was a very nascent company. So Jobi stock is way down. It's now worth $3 billion after being worth about $10 billion at this time last year.

Three billion is a fine market cap for a private company like Jobi. I think it would probably be worth five to seven as a private company. I don't know their less private market evaluation because people would then, of course, be holding for a five to 10 year window. However, partially due to the recent announcement, stock is a little bit of momentum. It's up 30% over the past five days to five bucks or so. Q3 earnings in September Joby is still pre-revenue.

As again, you know, when companies become worth a billion dollars and their pre-revenue and their pre-product market fit, remember Jason's law, it could be a scam or it probably could fail. So, you know, Jobie's got a lot to prove. I think in this case, Jobi's a bet I would want to make at $3 billion. I'm a buyer of the stock, I'll be honest, knowing what I know. Even though they lost $185 million in the first nine months of 2021, that's what these companies do.

They lose money and then they print it because it's speculative technology. They currently have $1.5 billion in total assets, and they have something like six years of runway based on their burn. Jobi announced in January they hit 205 miles per hour during a test flight of their S4 aircraft, which they claim to be the fastest record ever. Next stop is doing it at 10,000 feet. In July, the S4 also surpassed the estimated range of 150 miles by covering 154.6. This was on a single charge during a 77-minute flight from San Francisco to Lake Tahoe.

That's an amazing feat. And that's exactly the kind of routes we're going to be talking about people taking. want to go from the Bay to Tahoe, the Bay to Reno, the Bay to Napa, Napa, you know, to Reno, all that kind of stuff is a really interesting use of these. And I predicted going over mountains and going over water is going to be the first use cases here. Because if these things fall out of the sky, the chances of it falling out of the sky into the water and the people surviving is great. And the chances of it falling out of the sky into the water and landing on somebody is low, right? That's a really great use of this. Jobie Klin.

claims it's 100 times quieter than a helicopter. I think that's actually true. Wingspan of almost 40 feet and a weight of 4,400 pounds. This person can carry a pilot and up to four passengers, which I think is the perfect mission. In January, Joby secured a $40 million contract with the Air Force for its agility prime program. That aircraft is expected to begin flying latest month and will be put into service as part of Joby's agility prime contract with the U.S. Air Force. You can imagine why the Air Force is interested in these things, maybe going from, you know, battleship to battleship or short runs with special forces nice and quiet. You don't have to use a Black Hawk.

Really a lot of great uses for these. Joby also filed documents with the FCC, which asked for permission to test out air flight taxis in the Bay Area. I predicted this. I didn't have inside information, but I think it's kind of obvious. One of them is between the Golden Gate Bridge and Alcatraz Island. The other is south of the Golden Gate, the Bay Bridge, which is in Almeda. If you don't know the Bay Area, there's a bay.

separates the Golden Gate Bridge, separates the north from the south, the San Francisco City from Napa and those areas, and the Golden Gate Bridge. You see constantly helicopters flying in and around it doing all kinds of tours. Imagine something like that, where you go from the Bay

and you fly out and see the Golden Gate Bridge and go around Alcatraz. What a great route that is. South of the, if you go east and then a little bit south you get the Bay Ridge, that connects San Francisco with the East Bay. That includes Oakland and Berkeley. What's great about that area?

Well, you have SFO there. You have the Oakland airport as well. And those two airports could have taxi service between them. So if you were coming internationally and needed to do a puddle jumper from the South Bay, that could be very compelling. Or maybe people from the East Bay who are commuting into work or to go to a Warriors game at the Chase Center could take something from the Oakland airport right to, say, chase center. or to the baseball where the Giants play.

These are all really interesting routes. Again, you're over water. And so it's got a tourism thing and a practical, you know, sort of effect where you could use it for commuting eventually. And these are going to be done publicly and according to Jobi, I think,

they're going to do these to get more media coverage. And they're going to provide air taxis in South Korea as well. Not sure where, but there's plenty of places with water. I think the next place also is Australia to do these because, again, a bay, New York, perfect. You want places with good weather and probably Bay areas. The plan is to begin with one or two routes in Seoul and they want to get up to 10 air taxi terminals by the end of the decade, all of which would connect to local buses, subways and other forms of mobility. So again, this is like connecting people, they get off the subway, they go to the airport,

they get out of the airport, they get to the subway or buses. These are the future in my mind of transportation. I think that these are going to be here long before self-driving sort of hits critical mass. I know that might be a controversial statement. But these things are going to be the game changer of all game changers in terms of transportation. I think they're going to be extraordinarily safe when compared to helicopters, which is a pretty low benchmark. And then the question is, are these safer than driving in cars? And so I think there is a chance within 10 to 20 years.

We'll look at the statistics for flying in a veto and the statistics for driving in the ground. and the vetoes will be safer by miles traveled than cars. Why? Because it's going to be a shorter trip. You're going to be able to go 200 miles an hour, which means in a car you're going to be going 50 to 75 miles an hour. If you do it on a per mile basis, it is possible that, just like in commercial aircrafts, it's safer in the air than in the ground

because of how fast you're going on a per mile basis. So I'm really excited about this future. Thanks for tuning in. Next up, Molly is going to talk about buy now and pay later, a space with a lot of challenges. And I wonder if this space could be maybe incentivizing people who shouldn't be paying later

and who should be buying now with cash. Maybe they're getting ahead of their skis. We'll hear more from Molly in the next segment. Stick with us. If you listen to this week in startups often, you've heard me talk about Odo Suite of Business Apps a lot. Well, they are going to give you your first app free forever and $1,000 off your first implement.

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Odu offers over 30 main apps and over 16,000. apps from their open source community. Their apps include bookkeeping sales, CRM, website builders, and more. So again, your first app is free forever. But O-Doo is also offering you a $1,000 credit on your first implementation pack, which you can get at Odo.com slash twist. That's O-D-O-O-com slash twist to get that $1,000 right now. All right, so we're tag teaming the news today because, look,

sometimes you're just on different schedules. So we each get to bring a story or two that we're obsessed, with, I have actually been fascinated by the kind of disruption of banking and payments for a long time. And back in 2019, I actually wrote an article for Wired about Neo Banks. You know, Neobanks, of course, being this kind of fancy skin on top of banking services. Chime is, of course, I think, the one that you know the best. And there are a couple others. But what I wrote is that the future of banking is, you're broke. That was the headline. The byline or the tagline was our present financial ruin is being turned into a business model.

I'm just going to do that thing where I quote from my own article here. The latest wave of tech-based financial startups have a new angle on the banking sector. They'll assume that everyone is out of money and then try to monetize their brokenness. Because the thing that makes these neobank so attractive is they're really convenient. They're these all digital mobile alternatives to big banks. They're a lot friendlier. You don't have to like go in to a bank and they emphasize. customer service, but they also offer things like what I called a Neo payday loan. They'll cash

your paycheck up to two days before you actually get paid. They offer free checking accounts, which people like. They also let companies go 50 or 100 bucks into the red before they start charging overdraft fees. So as you can see, it's kind of based on the reality, and this is true, that at least at the time, according to the statistics I cited then in 2019, 78% of Americans live paycheck to paycheck. Poll data now cites between 50 and 63% of Americans living paycheck to paycheck. Stimmies, am I right? But the pandemic did help people a little bit in this regard.

What we, I guess, have to see is how long that lasts. However, student loan obligations still pretty big, $1.5 trillion. As of March 2021, this number has increased by 100%. billion, so $1.6 trillion. So you can sort of see what I'm getting at. As of March 2021, the average credit card debt was $6,000. You're in this situation where banking services are coming along saying, we know you're in financial pain.

Let's help you out. But here was my conclusion to the article, quote, again, I know it's weird. I'm quoting myself, but like I wrote it a long time ago, so I can't remember what it said. A second problem is more serious. ultimately no amount of friendly design, accessible features, and overdraft protections will solve the underlying problems that made these services necessary in the first place. No neobank can erase the student loan debt or the 40-year stagnation in wages or the unexpected medical expenses or the crippling reality of America's existential brokenness. The neobanks have promised that they'll ease

your pain, but that's just morphine for the real condition. When it comes to the actual sickness, you're still on your own. All right. So that was then. And, in the intervening years, another aspect of neobanking has gotten bigger and bigger in the consumer finance space, and that's BNPL or buy now, pay later. There are a couple large competitors here. The U.S.-based a firm is probably the best known. It went public in January 2021. Former PayPal executive Max Levchen is the founder and CEO. And a firm peaked at an almost 50 billion market cap in November 2021, $168 a share. Since November, not so good. That stock has dropped $75% to $43 a share. Its market cap is now just $12 billion. And then since last week, it's gotten even

worse. The firm's stock has dropped almost 50% from $79 a share to $43 a share after a not great earnings report, which we will get to in a minute. The other big players are Australia-based after pay, which I think might be the most dystopian company name I've heard in a really long time. After pay. After pay was acquired by Square or Block for $29 billion in August 21. People are seeing a lot of money in this space. Sweden-based Klarna is still private, but raised at a $45 billion valuation in June of last year. And then PayPal has a fast-growing by now pay later division.

Two, this is a highly capitalized space, which does make you wonder where investors are thinking that all of this money is going to come from. Investors do love consumer finance. It just makes money. And the thing that it makes money on a lot of the times is fees, including potentially late fees. All right, back to a firm. And the way this business is going and why this stock has been dropping so fast in its Q2 report, a firm said that gross merchandise volume or GMV, the total value of all merchandise sold on a firm

was $4.5 billion. That was up 115% year over year. That seems good. Revenues of $361 million up 77% year over year. Great, right? Revenues minus transaction costs of $183.6 million, up 93% year over year. GMV revenue and revenues minus transaction costs were all up massively year over year, but our favorite analyst and friend of the pod, Alex Wilhelm of TechCrunch, tells us the problem in one simple chart. So Alex points out that a firm's revenue as a percentage of GMB has been trending down since Q4 2020. So a decreasing revenue as a percentage of GMB, I think Alex would say, means that it's sort of like not good earnings. We talked about Tesla's earnings and he said they were high quality. This means that a firm

so far is somewhat low quality because rising sales volume is resulting in less revenue over time. The company is getting less efficient as it scales. Obviously, the best companies take advantage of economies of scale, right? And they get more efficient. That does not seem to be the case, at least based on this trend so far. A firm also reported a net loss of $159 million in Q2, which was six times higher than its net loss in the same quarter last year. So here's where Alex makes his major point, which is that a firm on a net basis is very unprofitable.

And their revenue growth as a percentage of total GMB is slowing down. The more they do, the less they make. on a percentage basis. And those two factors, obviously, combining, are what likely led to this sell lock last week. Now, back in November 2021, a firm got investors excited all over again because it announced a major partnership with Amazon saying it would be the go-to buy now pay later solution on the platform. This was shortly after the stock hit an all-time high. But this, again, might be an area where a firm is accepting worse economics in order to drive growth. Because Amazon is not going to do some kind of incredibly profitable sharing situation with a firm.

If a firm starts making a ton of money and taking a cut off of every single Amazon purchase on the platform, you have to assume that what Amazon is going to do is probably build its own version of that. And Amazon itself, by the way, wasn't even profitable last quarter. outside of AWS. So moving into retail at that volume is one, a copycat risk and two, not guaranteed to produce profits, especially if a firm's customers keep ending up being basically more expensive. CNBC asked Max Levchen about the economics of the deal with Amazon. Max declined to comment. And it sort of seems like as the revenue diversifies, what a firm is going to do is go after smaller payments from less affluent customers.

So it made a ton of sense, for example, when you were buying a Peloton. And that was a $2,500 purchase. You were like, yeah, you know what? Regardless of my income status, it's just more comfortable and nicer to spread those payments out over some period of time, especially at 0% interest.

But here's Max Levton talking about how the company is going to start taking on more risk to drive growth. Our models are all built around the idea that the Fed will take fairly decisive action around the rates, as I think the market has now decided that they will. So I'm not overly concerned there at all. On the delinquency side of things, we choose the delinquency rates we want. We ran our last year, last calendar year, very, very conservatively as we were trying to figure out exactly what the government will and will not do in terms of stimulus, in terms of dealing with a pandemic. You saw our, closed our rates from the prior to two years, you can see that they were quite a bit higher.

We made a decision and said it to the market last quarter, I believe, that we're going to loosen our approvals a little bit to encourage growth. We are still very much in control of those numbers. So I want to reiterate what he just said there, which is we're going to loosen our standards a little bit to drive growth. Now, in a firm's defense, they described their model as significantly different from how banks and credit cards extend credit, right? They have separability, they say, of transactions. They underwrite transactions individually. They model the consumer's ability to pay this back. It's not a traditional credit check the way you think of it. It's a firm's own kind of AI and modeling based on your history and data that they have about you. And so they say,

you know, they're very good at estimating your propensity, your ability to pay back these loans. which is different from your credit card saying, you know, here's your new credit limit. We want people to sign up for more cards, so go crazy. However, this is where I want to circle all the way back to the top because increasingly there is starting to be a little bit more regulatory scrutiny in Europe, because, as we all know, it all starts there. Because they're pointing out and studies are showing that a large number of people are delinquent on these payments, which means they've been charged late fees. The Financial Times

reported that a third of millennials have used by now pay later services have been charged late payment fees, fully a third. And this is a firm and Max Lepchin essentially saying we're going to tolerate higher risk, aka more delinquency, in order to drive growth. And if fundamentally the goal to you having a higher, you know, revenue percentage compared to your GMB is that you have to charge late fees from your consumers. Well, then we go all the way back to 2019, which is a company that seems to be wanting to monetize your brokenness. For consumers, it means that by now, pay later companies might have to start giving people loans that they shouldn't necessarily get because they're chasing growth. And that seems like potentially a net loss.

for, well, consumers, if not the companies. We'll be watching. Let me put it that way.