This Week in Startups - E1043: News Roundtable! Bloomberg Beta’s Roy Bahat & Coelius Capital’s Zach Coelius on how tech is helping during the crisis, how startups should approach SMB loans, when VC funding will bounce back, Notion’s $50M raise, Zoom’s security issues, Luckin coffee & more!

Episode Date: April 7, 2020

0:54 Jason intros Roy Bahat & Zach Coelius, and they discuss their current quarantine situations 6:04 What is the timeline looking like for going back to work? What needs to happen before we can get back to normal? 14:51 Has government & media failed the public? How is tech (both big tech & startups) helping during the crisis? 28:33 How should startups approach taking PPP, EIDL & other SMB loans? Should startups begin working more closely with the government? 37:14 When should companies plan on being able to raise capital again? 41:37 Why Jason believes the VC market will bounce back strong & how he is planning on deploying capital? 46:12 Are we going through a generational change & witnessing the creation of "Generation V"? 55:06 Jason's thoughts on what the crisis will actually change 1:04:36 What should permanently change after the crisis: government reliance, UBI, listening to experts 1:11:45 Notion's $50M raise & $2B valuation 1:15:29 Is Zoom trustworthy? Is any software trustworthy? 1:19:13 Luckin Coffee fabricates sales and loses $5B of value in 5 minutes

This week in startups is brought to you by, Delighted is the easiest way to measure and monitor your NPS. Claim your free lifetime account, complete with a complimentary advisory session with a Delighted Concierge, over $1,000 in value at Delighted.com slash twist. Clavio helps brands deliver more personalized digital marketing experiences via email, SMS messages, social ads, and more. Get started for free at clavio.com slash twist.

That's K-L-A-V-I-O dot com slash twist and LinkedIn Talent Solutions. A business is only as strong as its people and every hire matters. Go to LinkedIn.com slash twist and get a $50 credit towards your first job post. Hey, everybody. Welcome to another episode of this week in startups. we're social distancing and we're wearing our masks. Masks could be the path out of this. And we're taping this on April 6 for an April 7th release.

And it is good news across the board with the battle against the COVID-19 pandemic. Lots of good news coming out in New York. It's very early, obviously, but a number of people being admitted, number of deaths going down a bit. They speculate they may have hit their peak. Instead of hitting it at the end of April, they may have hit it in the beginning of April. Let's pray that that that.

is what's happening. Additionally, San Francisco, we started distancing early, the Bay Area. We've had only eight deaths in San Francisco, a fraction of what's happening in New York. We don't know why this is. Could be the density of New York. Could be subways. Could be that we got to a quick. Could be all of these things. Could be age. But we're getting there. And we're going to get out of this. And we're going to have a great news roundtable today. We have two great guests. Zach Collius is back on the pod. He's a managing partner at Colius Capital. He's been on the pod. I don't know, 10 times now. Welcome back to the pod. Zach. Thank you. Thank you.

I'm going to take this in your mask as well. This is complete nonsense. We don't need our masks, but we do need to not shave. When's the last? We're showing solidarity. We got a little solidarity being shown. This is my homemade t-shirt mask. People really need to wear them when they go outside. Roy Bahat is with us,

and he is the head of Bloomberg Beta. And he did a great talk at our accelerator episode 981. He's also wearing a home made mask. Looks great. Indeed. Yeah. But we don't need to wear them.

But we do have a lot to talk about. And I'm wondering, first off, how many days in quarantine have you been, Zach? And how are you holding up under this psychologically and on a business level? And do you have anybody, hopefully not impacted by it in your family or friend group? Yeah. So I started quarantining on. the 28th of March. So I'm, what are we, four or five weeks in at this point? And, you mean February?

February, sorry. It's all blending into one giant thing. Yeah, it's all one big blur at this point. I'm losing track. February 20th, you started. Wow. 28th. That was my life. I started social distancing maybe like mid-February where I stopped going to parties and stopped going to events if I could avoid them. But my last meeting where I met somebody in person was in February 28th. Wow. And yeah, yeah, it's good. I mean, yeah, thankfully my family is holding up well. Everyone's good. My friends, I don't have, so far, the consequences have not hit yet. I believe we're still in the very, very early endings of this, but so far, so good. But you don't know anybody personally in your circle who has tested positive.

Nobody admitted to the hospital. I do. Oh, yeah, yeah, yeah. I have a lot of friends who have it. Okay. How many? Walp. Um, probably probably a couple dozen across my sort of like, but that's my wider sort of like professional group of, you know, five, five thousand people all over the world. So, um, and none of them, uh, have been admitted to the hospital. None of them are acute. Yeah, so far, yeah, no one has gone to the ICU that I know of. But, you know, it's hard to keep track of these things, right? Because like somebody will post, hey, I caught COVID, you know, a week ago. And then. And then. And. And. And. And they're not putting up regular updates and no one knows what's going on. And I imagine that the last thing they want to worry about right before they go into the ICU is posting, hey, I'm going to the ICU. So I don't know. I expect that we will lose friends and family members during this process. Yeah, that's interesting.

I have my brother's in-laws and some family members seem to have got it and their high risk because they're older. And then my friend Doc Sands, the poker player, is fully recovered, but he's a young guy who, did a lot of social distancing, but that's it for me. And so I feel very blessed in that way. And a lot of family, obviously, and friends in New York, and we've been doing some food outreach there to the hospitals and to the front line and just in of those health care workers, janitors, and people delivering food on the front lines there, really taking a lot of risk. Roy, how are you doing with your quarantine? How many days in quarantine are you? Less than Zach. I can't keep track. I feel like I need one of those like,

chalk marks to scratch into the wall. Last week, my wife and I were like, was this week two or week three or week four? But, but, you know, like I feel like a lot of us have this sense of, I feel like there should be some long compound German word for I'm safe and healthy. My loved ones are safe and healthy. I'm really worried about other people and it is like a horrific tragedy out there. Yeah, my mom and brother are in New York for unfortunately not together in New York, but they're both in New York City and judge that it's safer to stay put than to risk moving. And my father-in-law lives with us. So we're focused like you guys on the older folks and on folks who are more in need. But, man, what a time to live through. Yeah, it is very unique. And the psychological impact of being

at home and not seeing other people feels like it's starting to hit this week for many people. People seem to be getting a little antsy in New York and went out this weekend. But the good news has been coming in. I'm an optimist. my current thinking is we'll be back to work here in some kind of tiered way. Maybe starting May 1st is my thinking because there's nobody being admitted to hospitals here in San Francisco. It seems in the hospitals are emptying. New York seems to be maybe a couple of weeks behind that.

And then there might be some of this technology testing seems to be ramping up and testing populations that are not symptomatic or lightly symptomatic hasn't occurred yet. Tracing and then wearing masks outside of the house does seem like there's going to be some stage rollout of going back to work and maybe being less social. So staying out of casino, staying out of events, and maybe just going to work with a mask on. What's your best take on the Zach of when we start? this process of going back to work. Let's start with the Bay Area, and then, you know, which I think is pretty, maybe the got on at the earliest, and then maybe New York, which has obviously

had a much bigger challenge. Yeah. I mean, I think you're correct on sort of the stage rollout. I'm, I guess I'm a little less hopeful than you are about May 1st, because clearly, until we basically have 100% test coverage and we have basically population surveillance testing in place, you're just opening the door to like letting this thing take off if you allow people to start, you know, mingling again. And it appears that they're still not testing everyone who comes into the hospital. I mean, that's just like the first order of business. If you show up into the hospital, you should be getting a COVID test immediately and they're not doing that yet. And they clearly will have to put in place that testing regime before they start opening the doors.

So, and to the extent, I'm assuming they would announce when they're going to put in place that level of testing regime beforehand. So, and they're probably going to have to run it for a couple weeks before they let people out of doors. So I think four weeks is, three weeks is super optimistic. But we'll see. I'm very, very cynical about this whole process. Like, I go back to like when I first started paying attention to this, the epidemiologist said two things. They said, one, the flu generally will infect no matter what you do, 30 to 70 percent of any population. Two, trying to contain the flu is like trying to contain the wind.

It's impossible. And so my expectation is if we're looking at 30 to 70 percent infection, and right now the infection rate is maybe, you know, a few million around the world, we have a long way to go. I'm not sure if I agree with you on that because it does seem like Japan went back, Hong Kong went back, South Korea went back. They may have had flares up again, but some of this wearing of the mask seems to really help the situation. And some of the, you know, maybe the big events and the subway system seem to be a contributing factor. I'm curious, Roy, what your thoughts are on when we will get to go back to work in some staged way? When will that process start if you had to pick for the

Bay Area a week? Honestly, I have tried as a matter principle to avoid like making a point prediction about what's going to happen because who knows. And I'm also not sure, like if I told you it was going to be May 10th versus May 17th versus May 24th. I'm not sure for myself. I've been trying to figure out how would that change my behavior? And I'm not sure if it would. And the things I see are, you know, I kind of feel like this is the moment in my life that where the cone of possible paths in front of us is wider than it's ever been. I mean, I think Jason, you were in New York around 9-11 and I worked in the government just after 9-11. The moment that feels, there's no moment like this. We've never experienced anything like this. But the moment that it feels most similar to me is the morning

of 9-11 after the Pentagon got hit, because that day we're like, well, it might not be over yet. Like, the whole country might be getting attacked. And this might last for a day. It might last for forever. And I kind of feel that there's that same moment of, I just don't know what to expect. And I've been trying to follow the epidemiologists. And, you know, I just read this morning that Wuhan still seems to be quite locked down, which sounds like an awful data point. point, if that's true. And most of all, I don't know what it means to just open up the Bay Area because you can't really control borders. And so unlike past events that have happened, natural disasters, this one is geographically widespread. The second we let up on the methods

that we have to control it for now, it could pop back up. And then, of course, you have this awful intertwined public health calamity and economic calamity. So honestly, I don't even know. I just don't know. Yeah, it seems to me that the lack of a national standard here where, you know, Trump doesn't, Trump wants to leave it up to the states. And that seems to be, and we try not to get into too much into politics here, but that does seem on a leadership basis, the wrong decision. We do need to have some national referendum on this to say, hey, listen, we're going to stop people from crossing borders in these regions. We're going to just take the northeast and make that a corridor, nobody in or out,

southeast, whatever, and try to contain this until we get a vaccine or cure. When we get back to a quick break. It's interesting you say about kind of avoiding politics on that, though. I feel like this is this moment. And I'm curious, Jason and Zach, if you guys agree, where, you know, we love in tech to sort of consider ourselves to be in a somewhat different plane from the normal political struggles. And I think in some ways we succeed at that. At this moment, it's like, how can you, forget about politics. It's about government, for sure. And, you know, forget about what you think about the current president. The current presidency, it feels like it's deeply relevant to all of us every day exactly what they choose to do. So I don't know, I've mixed feelings about how to, I'd also love to leave politics out of it, but I'm just not sure how to do that right now. All right. When we get back from this break, let's talk about the politics of it and the local governments taking the lead and private industry taking the lead.

when we get back on this weekend startup. When we're evaluating startups that we want to invest in, we ask them, hey, tell us about your NPS scores. Do you record your NPS score? Do you know what that is? Net promoter score. It's a way to indicate if people really love your product and if you have tight product market fit.

Well, Delighted.com is the easiest way to measure and monitor your NPS. We've started using it here at this week in startups and at all of our portfolio companies. It's so easy to set up. and you're going to get customer feedback within minutes. Delighted is built specifically for startups and has a suite of great features, including a clean, simple survey template for NPS. In fact, they have many templates. So you can pick one that you like as well as C-Stat, C-E-S and others.

That's C-SAT. All the channels you need to reach customers, email, web, SMS, QR code, and more. And the built-in best practices will get you great response rates. And you get robust reporting so you can see and analyze your feedback in real time with actionable insights, which is why you're doing it to begin with. You get seamless integration to tools like Slack, Zendesk, front, and more. And that's why Delighted.com is such an amazing asset. Here's my associate press setting up a Delighted campaign

to track the net promoter score, the NPS of This Weekend Starves, this very podcast. And he's customized in the form and emails. And it lets us segment our twist mailing list all from the Delighted dashboard. As soon as it's sent, we can view the responses in real time and see what our listeners think of the show. What do I think of the guest? I think of the segments, the quality of the audio, video, etc.

Show notes, you get the idea. This allows us to understand our audience better. That's you. And it shows us how we can improve the show, which is the goal. So join companies like Instacart, envision, and rent the runway right now by claiming your lifetime, delighted.com account, complete with a complimentary advisory session with a delighted concierge. And that is a $1,000 value, and they're giving it to our listeners for free. So go to delighted.com slash twist to get that $1,000 delighted concierge offering.

Delighted.com slash twist. D-E-L-I-G-H-T-E-D dot com slash twist. Okay, let's get back to this amazing episode. Welcome back to this week and start-ups, our news roundtable with Roy Bahad. He is R-O-Y-B-A-H-A-T on the Twitter. He's the head of Bloomberg Beta. And Zach Collius is with us. He's Zach Collius, C-O-E-L-U-S.

He's the managing partner of Co-O-E-H-A-C-L-U-S. we angel invest all the time together. And we're talking about the impact of the COVID-19 on business, on startups and our lives. And we're wondering, I guess, what's going to happen. One of the things we are seeing happening is a lot of entrepreneurs and a lot of companies trying to help out Amazon distributing meals, Airbnb, helping housing, the first responders, Tim Cook is using his supply chain knowledge and his ability in China to bring in many more masks. And IBM, Google, Microsoft, Domino's on Web Services, and a group of others have

created a high-performance computing consortium to fight the COVID-19 virus. Bill Gates is going to spend billions of dollars doing seven concurrent factories that is firing up to go after this. So is what we're seeing here, Zach, a lack of leadership on the national level being filled by entrepreneurs and companies on a local and national level? What are your thoughts on this? Yeah, I mean, I think it's actually relatively interesting. You know, I've been geeking out about this since early January. And, I mean, it's amazing how sort of the hive mind was so far out in front of the

this compared to the sort of our traditional political institutions. I mean, if you look at the failures of the CDC to get testing in place early on, the failures of the FDA to basically allow wider organizations to do testing, the clear failures of the White House to just simply get their head out of their ass. I mean, calling this a hoax when it was clearly not a hoax is just like just so the utmost stupidity. And so, like, that, you know, if that alone, if that alone, was what we were looking at, I would be terrified about what's going on. But then I look at the hive mind of sort of like folks on Reddit and folks on Twitter and folks in these, you know, big companies that have made really big moves, like having their employees work from home weeks ahead of anyone else.

And the way that they have pushed, really aggressively pushed the sort of agenda and pushed the thinking behind this. And it gives me a lot of hope. I mean, I'm like the mask thing we started with, right? That literally started with like a. a group of people on Twitter, a bunch of us were like, hey, this is silly. This is spread by droplets. When those droplets come out of your mouth, when you cough and sneeze, they get on things, people touch it, and then they touch their mouth and their face. Why isn't everyone required to wear a mask? A lot of us on Twitter started talking about that weeks ago. And now of a sudden, people are like, oh, maybe we should all wear masks. And everybody seems to think that we should

put our faith into these government institutions. And it turns out they're failing us. And even the media has failed us, right? You watch all these clips of the media downplaying this, whether it's Vox or Recode or Fox. I mean, it's not a left or right thing. They just universally seem to dismiss this and then even make fun of people who were taking too serious that they're being alarmist. And I had Belagia on the pod and it was, you know, he was so far ahead of everybody on this and he's got such a deep knowledge.

It does seem like one of the things that will come out of this to your point, Zach, is that we'll have a permanent rethinking of, of who is credible and who is good at executing. And we've had this very anti-tech, tech clash going on. And we've had this very, you know, polarized political space. And now you look at something like this. It really is the scientists and the entrepreneurs who are taking action. And even this kind of weird, like you're saying, social mob that usually spends their time doing silly things like trending, you know, change a movie, ruin a movie with one word.

are now saying, well, wait, no, masks work. Let's make a website and let's teach people how to make masks at home. How anybody could downplay the value of a mask, like you're saying, when it takes no IQ horsepower to know that if it's in droplets, the droplets don't make it past the mask. Yeah, exactly. Yeah. So I think the thing, you and I have talked about this a lot, right, is that we have fake news has been sort of this like cancer that has spread via social. media. And we've had a lot of conversations about how horrible that's been for our society and how detrimental it is. But now we're seeing the flip side of the coin, which is that these open

platforms are enabling smart people to get out in front and tell the world about things that the world needs to be paying attention to way before our institutions and our journalists realize what's going on. And they're helping to move the narrative in a powerful direction. So I'm, I'm terrified about what our institutions are doing. And I'm very, very, very, very, very proud of what our smart people are doing. Roy, you seem to think AI is going to have a big part of... Well, hold on. Can I just say, I guess I just say on that, I think you're way over simplifying it. Whoa. Like the media, to say that the media was saying this wasn't an issue, I think is a way over simplification. I mean, the most widely read newspaper, I think, still in the U.S. is USA Today. And at the end of January, you had Biden in USA Today saying, we need to take this much more seriously. This is a big deal. And, There was one recode piece that the tech kind of Twitterati got. And Bology, by the way, it was way ahead on this.

And but for him being ahead, I don't think I would have paid as much attention. I'm grateful to him and many others who sounded the alarm. But then somehow this one piece that got written, and I read it carefully, you have to read it pretty carefully to say that it was saying anything more than Silicon Valley is taking this more seriously than everybody else is. I didn't see. Panicked about handshakes. And then it went on to say.

No, it said terrified about coronavirus. please no handshakes. We weren't terrified about coronavirus. It was an accurate story. So, you know, I think this moment is actually a real Rorschach test of how you choose to think about things. You know, for example, there's the read of like, well, we don't trust institutions. We should trust the social, you know, the crowd conversation. And, you know, I just say, of course, if you neuter the federal government for decades and underfund critical programs, for example, the federal government pulled funding on a pandemic preparation program working with Wuhan before. the virus came out, just before the virus came out, then of course it's not going to work. But like if you, you know, go back to New York City, just because it's an example I know, the Giuliani and then the Bloomberg administrations were exceptional, I think, in their immediate rebuilding recovery response after 9-11. And so I do trust, one of the things that I believe that I think tech folks don't as often believe is I think most radical change tends to come from experts. And a guy like Bologi is a guy who has direct credentials, academic experience studying this stuff. So he saw it.

It wasn't some hobbyist who happened to be reading a few articles on Medium and put the pieces together. And at the same time, I am thrilled with the way tech has responded here. Like, one of the questions I've been thinking about is, and Zach and I were talking about this earlier, is what are the things you believed before COVID-19 started to happen that you've changed your beliefs on? And I never would have guessed that the startup ecosystem was as capable of coming together this fast to do as much as it's done. And there's like endless private WhatsApp groups of everything from coordinating testing that Zach I know has been involved in, promoting, you know, meals for frontline folks and restaurant support. And Jason, I know you've been doing that. And that's all been awesome.

And we should applaud Bill Gates and we should applaud Mike Bloomberg for helping coordinate cities. And at the same time, that doesn't mean sort of see, you know, the government doesn't know what they're doing. And we should just rely on tech in the private sector, which I think is where some people, not you are taking it. I mean, do you think actually Trump government? going on saying, I'm not going to wear a mask. It's optional. No, he's a moron. He's obviously a moron. Okay. I just want to make sure that you're not like, to be fair, no, no, no, no. Back during this into like Trump's a great leader because him saying he will not wear a mask.

I am saying. I am saying. Is ridiculous. The guy's nuts. And then the whole thing about chloroquine and how you should take it seemed nuts to me too. Another surprise, though, is if you had said to me, which governor is going to be first in the country at taking this seriously and really pushing, I'd have been thrilled if the answer was news. And it turns out, I think it was Gavin Newsom. I think he was way out ahead. I think London breeds done a good job in the city of San Francisco.

I mean, for all of us who complained. Which is bizarre because San Francisco is too dysfunctional, but they got this one right. Zach, tell me about the testing stuff you're doing and reply to which part of Roy's comments you would like to. So I was simply a helper on the project, but David Freeberg, the founder of Climate Corp, so very successful entrepreneur. He had started working on this recently where he found. a test out of China, an antibody test out of China, and bought a large number of them, I think a few thousand of them. And then what we did is we found people all over the city of California, or city of San Francisco who could distribute those to their friends and neighbors.

And the goal being to basically, it's a simple blood test, and it tells you if you've caught COVID in the past, to know if you have antibodies in your bloodstream. And the goal was to figure out what percentage of the population had caught COVID but was asymptomatic. So therefore, how closer we just starting to develop herd immunity? And, you know, obviously the hope was that lots of us had caught it and then it had just been a mild case of sniffles and then it'd gone away and we were all good. We were only able to get about 300 tests done. And if you go to David Friedberg on Twitter, he posts all this data and you should go read it. Fantastic. Yeah. But there's only about 330, 350 tests done. But even from, and it's only a very small sample size, but even then it was pretty

clear that a very tiny number of people had actually caught COVID. I think we found one new case that we didn't already know about one or two in the city of San Francisco. We found a few outside of San Francisco, but people were mailing tests to their friends who had pretty severe symptoms but hadn't gotten a real test done. And so that's, but I think that's an indication started to go back to what Roy was saying earlier. I think Roy's right that the reason why our institutions are failing is that we've underfunded and demonized them. I mean, there's people in our political system who've demonized institutions for the last 30 years. You know, when Donald Trump said the most scary, or when Ronald Reagan said, the most scary words are, I'm from the government. I'm

here to help. When he said that, you know, that's been built into the American consciousness for the last 30 years. And if you're a smart young person, do you really want to go basically be part of that demonization or, you know, the cutting of funding for very important programs like the pandemic response team in the White House or the CDC, like that there's consequences to this. And so I think Roy's right that like we have destroyed our institutions over the last 30 years as a result of political ideology. And if we had competent institutions, this sort of thing like David Freedberg had done would be being done by the CDC. The CDC could go. I mean, the fact that Elon Musk has to go and make ventilators. I don't know if you saw last night's video. The engineers at Tesla are

showing what happens when a group of highly qualified engineers who've been working together for a long time take some of the components from a Tesla Model 3's basic supercomputer and then apply it to a respirator and like a ventilator and massive results. But the government does not seem it's able to do this. And then you have people like Cuomo come out and say, hey, here's an idea. why don't we just have a roaming set of equipment and it's like, well, that's obvious. It's called the on-demand economy. We've been doing it for a long time out of year. When we get back from this quick break, I want to know how startups are going to survive this. And I know, like, listen, we're now into that second order effect. We have to protect everybody's life. We've got that dialed in. We handled that in the first two segments here. But we need to start talking about in this third segment here, people's livelihoods. And we have a lot of people applying for these loans. And I want to drill into those loans. and some of the discussion and controversy around the stimulus package and how it affects startups when we get back on the swing startups. Plavio knows that modern e-commerce is moving fast between email, mobile, and the web.

It can be really hard to keep up with your customers and to personalize their experience with your brand. So, Clavio, you can think of as the central command center for all your digital marketing needs, obvious things like your email marketing, but also dynamic web content so different people see different things and social retargeting as well as SMS automation and more. You'll take back control of the customer experience and own your own business growth using Clavio. That's why Clavio is trusted by over 30,000 brands. You heard about it right, like Casemate, Custom Inc, and Brooke linen. So here's your call to action. Ready to find out how Cleveo can help your business grow? Get started for free at cleavio.com slash twist.

That's K-L-A-V-I-O-O-com slash twist. Once again, K-L-A-V-I-O-O-com slash twist. Thanks for joining me this week and start off family. We're in the thick of this pandemic. If you're watching this as a historical document 10 or 20 years from now, I'm going to be really interested to see how this holds up. We are taping this on April 6, 2020, and it will be published on April 7th, 2020.

my guest, Roy Bahaat and Zacholius, both investors, and we're going to talk about the livelihood that and startups, which are on, some of which are on the breaking point because their entire businesses have been shut down. And then other ones are going to have our anti-fragile in some ways. If you're com.com or your FitBod or you're selling software that helps people with remote, you could be seeing your business explode right now in terms of usage.

there are two different stimulus packages that founders have been looking into and a big debate over who should apply for these. One is called the Paycheck Protection Program, PPP. And the principle is forgiven. And listen, you've got to look all this stuff up and figure it out for yourself. But the idea here is to use it for your payroll. You apply through an SBA platform. You talk to your banks.

And then there's the EIDL, which is a 10-year loan with low-interest payments and a possible emergency $10,000 grant. And people, you fill out these forms, you apply and seem like 100% of our startups in our portfolio were looking at them. Maybe 50 or 60% were going to apply and maybe 30% were really needed it. And we got into this very interesting debate online of who should apply or not. Roy, let me throw it to you. What have you learned about these two programs? what percentage of your startups are looking into them and doing it and have applied? And what insights do you have?

Well, first thing I'd say is this, you know, we were talking earlier about how some institutions got weakened by a lack of funding. One way in which I think the startup ecosystem could get stronger is more familiarity of how to work with government. So this stuff starts coming out. And it's just clear how many founders and venture capital firms just never had to deal with a real-time government issue. To be fair, because it was rare.

We just do things in another context. Why waste time on those programs when you have free money everywhere? Totally. Totally. It was rational for the circumstances we had. And maybe now this is one example of a way the world's changing. And then the first wave is just as you hear the high level, does it even apply to us? And there was confusion about that.

Then there's an application mystery wave of like, wait a minute, you've got to apply through your bank. And arguably one of the companies in our portfolio, a company called, Newfront that's an insurance broker thinks insurance companies are a better way to deliver the money than banks, which is a whole other conversation. We've got to apply through bank. The bank doesn't even have the application form ready on the day when you can apply for this possibly first come, first serve thing. Then the banks start rolling out their forms, and I think by today virtually every bank has a form available. And then founders start looking through the forms, and they're like, wait a minute, this thing has phrases like me asserting that due to the economic uncertainty caused

by this crisis, you know, I may be, I can't remember the exact phrasing, but I may be, you know, unable to continue my operations. And, you know, if I've got a year or more of runway in the bank, is that true or is it not? And so you have this ethical question that comes up. And I think that's the thing every founder right now is looking at and or should be looking at. And my simple-minded view on it is founders should not be in the position of having to decide whether they're more worthy than some other applicant. That's really not the job of any individual business owner. That's like the government should do that. The banks should do that. But you got an application, you need to be able to answer every question on it honestly. And if you have to, if it's not a

threat to your business, then, and the question says, is it a threat to your business? Then you can't lie. Period. End of story. But I think that's the mess we're in right now. My guess is some founders will get it. Some startups will get it. Hopefully it's the most deserving ones. I mean, I saw Sarah Canon on your earlier episode, and she said something about individual assistance that really landed with me, which is, look, we've got to go fast. And so if we end up being a little messy and some of the money lands not exactly where it should, much more important to just get the dollars out there as quickly as possible, which I totally agree with. I mean, this is all about speed. Yeah, and Zach, what are you seeing in your portfolio? And then I'll circle back to mine.

Yeah, I mean, so I've, there's a lot of people on Twitter who basically believe that startups shouldn't take this money. I think that's a pretty silly view. I think that end of the day, like, you know, this is, we're in a Kenzian period where our job is to helicopter money out as broadly as we can to basically deal with the incredible destruction of demand that's occurring across the economy and to basically help save jobs. And startups, I think, have a moral and social obligation to take this money just like every other business and to grow their businesses and to hire their, keep their people employed and to not go through layoffs. I mean, I'm looking across my portfolio and there's a, like you said, there's a bunch of companies

they're getting hit really hard by this. But there's other companies that are growing, and I'm telling them, hey, take this money and grow faster. Like, hire more people, build a bigger business. Like, this is important for your job. It's to help us keep this economy alive because an economy is a, you know, unfortunately, it is a system that feeds on itself. So when we have a negative kind of shock like we're currently having, the growth rate will create a bigger negative shock as we start to see all the knock-on effects.

I mean, leverage loans are going to be a huge problem in like three to six months. All these corporate bankruptcies that are about to come down the pipe are going to be a huge problem. Personal bankruptcy is going to be a huge problem. Like, startups have an obligation to help all of us keep this thing going up because if it starts going down, it's going to go down, down, down, down. I mean, we could be faced with the depression in the next three to six months. So I give the marching orders when people ask me for feedback was, you know, obviously investigate everything. Take a look at it.

To your point, this money. is intended to keep the economy going. That is the point of it. And I agree with Roy's assessment that it's a government's job to do this. My sense is they want people to take this money. They want people to stay employed. Therefore, you're doing the American thing by taking it and keeping people employed. Now, if your startup is profitable and you have 24 months of runway, perhaps it is not wise to take it. Perhaps you can, you know, wait and see. But we've had a range of outcomes with this pandemic and this panic of I have friends who are hysterical for the last three months saying it's an 8% death rate, 100% of the population is getting it. Therefore, 24 million Americans are

dying. And I'm like, this does not match the reality, but okay, that's the outside historical person's view. Then I have the view of, you know, Trump's view that it was a hoax and the Fox crowd saying it's a hoax and the deniers. And then you have this, hey, it's going to be two or three times the flu season, you know, which is on average 40, 50, 60,000 people a year. So we'll have two or three flu seasons on top of the current one, which is horrible, but it is survivable. So it's very hard for you as the founder to know. And that's the point is you don't know. So take the money. If you don't need it, you can pay it back. And then, there's this idea of is it going to be recourse or not, is it going to be a gift or not?

All of that's going to be figured out in the review mirror. So if things do well, pay it back, be a great citizen and give the money back to the country. But take the money down now and be conservative. And across our portfolio, we're seeing everybody doing bell tightening and starting from the bottom up and saying, let's do our forecast over again. Let's start from first principles. what do we think, you know, the worst case scenarios of people coming back to work and demand coming back. Okay, it's six months from now.

Okay, how do we get through the next six months? I believe that these massive unemployment numbers are a function of people furlowing people, not firing people. They're saying, listen, we know there's unemployment out there. We know you qualify for it. We're going to run out of money in this restaurant group. Like the Houston Rockets guy has 40,000 employees or something he laid off or furloughed. if you're a restaurant company, you have no choice but to furlough everybody immediately and put them on the dole until such time as you can rehire them. So I think we're going to have the economy

snap back faster than people think because it's such a massive amount of stimulus that and the intention of it is, but nobody knows. So take the money now. And if you don't use it, you can give it back. What do you think of my assessment, Roy, going around the horn here, passing the ball? You might be right, but I think the worst. So look, I mean, I've got an economics background. but I'm not going to call myself an economist. Still, we have never had a shock like this. So calling it two to three flu seasons implies that it's made of Lego building blocks we've seen before. You know, you have the numbers, the Goldman numbers that we might lose a quarter of the economy.

We've never had a shock that has been a health catastrophe, globally widespread. It's affecting demand of how much people can buy. It's affecting supply of how much people are able to work. I mean, it is, this is, you know, like the chaos monkey idea of you throw in, a wrench and you see what the effect is in the system. This is like the chaos king con. And we just have no idea what's going to happen. I think the plausible worst case scenario,

if I could sound the alarm on it, is so much worse. I mean, the guidance we gave to portfolio company that said, when do you think it's going to be safe to raise money again in one quarter, in two quarters? Like, listen, I talked to former treasury officials, you know, public health folks, lots of folks.

And my safest, nobody knows. And we're terrible at predicting in the best of times. My safe assumption is when can you raise money again? Never. And we have roughly half, a little less than half of the value in our portfolio is in companies that have 24 months or more of capital. We're paranoid about availability of capital. And still, I think people ought to be assuming the worst. Saying that you'll never be able to raise money is a bit hysterical. There are deals closing. No, I didn't say you will never be able to raise money. I said the safest assumption about

when you'll be able to raise money is never versus making your plan. I'll give you a live example. We were looking at a company that was thinking about should they cut enough that they could get profitable and possibly grow but very slowly or cut a lot less and need to raise money 18 months from now. I push them hard to look at the model where they wouldn't be in a position where they had to raise 18 months from now because one is under their control. They might be able to grow fast. The other one is just putting your arms up and hoping the universe takes care of you. Yeah, I agree with Roy. You do. I told Mike, yeah, absolutely.

So I wrote a piece on this basically on LinkedIn that got a lot of, you know, a lot of people read it called the venture capital market is frozen. And I also talked to my founders and told them that you need to cut right now so that you perpetually have 12 months of runaway in front of you from now until forever. Because right now, if you told me there was going to be an active venture funding market in 12 months, I would be surprised. When we get back from this quick break, I'm going to address why I think you're being. both of you being too gloomy about this topic. We love disagreement. Tell us more. I learned by being wrong.

Here we go. Good job, boys. It's fired up. Hey, everybody. Instead of me reading you copy in an ad about LinkedIn Talent Solutions, I thought, you know what would be a great idea? Who made LinkedIn Talent Solutions? Who's the product manager?

Give me the head of product. And let's talk about why this product is so awesome. We've had so many great hires with me today. Blake Barnes, the head of product for LinkedIn Talent. Solutions. Welcome to the pod. Thanks for having me. Big fan. All right. Thanks for that. When you are a growing business, SMB, a quick startup, whatever it is, you really want to focus on growing your business, right? That's where your energy and your focus needs to be. And so you don't really have much time to think about your end-to-end recruiting needs, like to build an sense of strategy, these sorts of things. You need solutions that do that for you,

that bring it to you. And we have a whole range of tools that do that. You're mentioning one of them, but there are plenty of others. So let's talk about screening tools. We have a whole suite of screening tools that help you to understand more about the candidate as soon as they arrive in her inbox. There are specific questions you can ask your candidates. So every candidate gets that question. I love that part. It's really cool, right? And it's interesting.

With screening questions, we find that 80% of jobs that have this one or more screening questions get a qualified applicant in just 24 hours. And so these screening questions are really effective and useful for our hires. It's been pretty amazing so far. Find the right person for your business today with LinkedIn jobs. You pay what you want and you get the first 50. for free. The $50 bill. Just visit LinkedIn.com. Slendcom. You got that

in your URL already. Just add slash twist. TWIST and you get that $50 for your first job post. It's $50 for terms and conditions. Of course, apply. Thanks, Blake, for coming on the pod. Thank you for having me. It's been a great time. Let's get back to this amazing episode. All right, we're back on this week in Startup's News Roundtable.

Roy and Zach both believe that the capital markets are going to be potentially shut down for some time to come. They're advising in Zach's case, at least 12 months of runway and keep that refreshed Roy saying, hey, just get to profitability now grow slow. I'm in agreement that we don't know what's going to happen, but I do know that we will have the market come back because venture capital firms have so much dry powder and people are not going to back out of their LP commitments. And we can look at the previous end of the world scenarios.com bust, the Great Recession, 9-11.

and now this, and we can look at those and know that it took between 12 and, you know, 24 months for funding to really start up in earnest. And I believe that that's the likely scenario. So much so that to Nisha's question in the YouTube chat room, which we did Secret Live, secret live stream on the secret this being startup Slack, asked me, how am I going to change, how I invest. I am going to increase the number of people that come. to the accelerator because I believe this is a unique opportunity for us to put those 100K

checks to work, much like a stimulus package, and then help those founders and get on those cap tables. The founders who maybe wouldn't have considered going to an accelerator previously, I'm willing to take that risk with my thinking being if I give them the 100K and that gets them that extra six months of runway or nine months runway, whatever it is, if they're low burn culture, I'm going to get on that cap table early, be the white knight, come in there and write those checks, and we're doing it all virtual anyway, so we can scale because it's virtual. the accelerator up and people are willing to do it virtually, both investors. And then I think we come roaring back sometime in the second quarter next year with a lot of people saying, hey,

these valuations are great, the companies are strong. And what always happens, always happens in these crises is the people who put money to work, do better than the people who don't. So I think there's going to be some of that recent, recency effect from 2008 where people say, you know what, if I invest when everybody's fearful, this could be a good outcome for me. So I think that thinking is going to permeate as soon as the fourth quarter and into the first and second quarter. Now, I'm not saying as a startup, you should then burn money like you're going to close a deal in Q4, Q1. You should be conservative as Roy and Zach are saying, but I believe it comes roaring back. Counterpoint, Roy. No, so with the exception of the timing prediction,

I am on the same page. I mean, look, we plan to continue investing. at just the same pace. We just started our third fund. And we've, you know, we got fresh capital and we're ready to go. I think what I think is different is I think the physics of what kind of businesses may work might be forever changed. We just don't know. And that's the question that I'm asking myself. I mean, for example, you know, our funds only focused on the future work. We are the first fund to say we wanted to focus on AI. And I actually think that this may accelerate the adoption of AI in a ton of different ways. And so it could be good for the progress of technology. It doesn't mean that if I'm sitting there as a founder, I should predict whether it's going to be Q4 or Q1. So generally speaking, I agree with you. And look, the best startups are always forged in time of trouble because that's true. The best, as I always tell everybody, fortunes are made in the down market. They're just collected in the up market.

But Roy, what you're saying is you're telling everybody to get to profitability. You're telling them to be wildly conservative. And at the same time, you're saying, I have a fund and I have a ton of dry powder. My LPs are not going to back out. and I'm going to put it to work next year. That's right. Do you not see these things as... Those two things are not inconsistent.

No. Not contradictory, Jason. Why is that not a contradiction? Roy, you can explain it, Roy. Then I'll back you up. I mean, it's basically what I'm going to do versus what others are going to do. And you will see, there are so many investors, and this is one of the things that I talked about with your accelerator group, there are so many investors who their actual way of

thinking about who to fund is who's going to get marked up by the next investor as opposed to who's going to build the most valuable company for the last. the long term. How are you going to raise the series B kind of logic? And I'm allergic to that logic and always have been, but now even more so, if you're an investor who thinks that way, you're going to be frozen to just to use Zach's word. You're not going to know what to fund because you're not going to know what the next guy is doing. And so I'm, look, we like profitable businesses even at the seed because they don't have to grow slow. I mean, look at Bloomberg LP. Never raised any outside money. Mike owns an ungodly percentage of the company as a result, you know. And so it's,

That's why, to me, it's not a contradiction. Zach may have other views. All right, Zach, but what I was going to say is that, like, we need to understand that what we're going through is truly a generational change. So you think about, like, the history of generations. I've got a piece I'm about to post on LinkedIn tomorrow basically says, thus enters Gen. V, Generation Virtual. And the children of this generation are going to be fundamentally different than those

who came before them. And the experience we're about to go through will be equivalent to 9-11, equivalent to the Vietnam War, equivalent to the 60s, equivalent to the Civil War, equivalent to World War II in terms of its consequences in changing the environment that we live in. And the startups that we've been building over the last five years were designed for the world that no longer exists. And so the startups that are going to get funded in the next 12 months and the next 24 months are the startups who can grow.

And the growth that will occur is not because you were doing what worked 12 months ago. It's doing what we were doing what's important today. So, for instance, one of my companies is this company called Fireflies, and they basically record your Zoom call and create this transcript full of really information and searching searchable data about what was happening on your Zoom call. And they're growing like a rocket ship. I mean, literally they can't keep up with the number of servers they need to basically like keep up with their growth, just like I'm sure Zoom is. On the other hand, if you're out there basically trying to sell travel services right now, you should just shut your business down because there's zero chance that basically that business is going to come back in the way it was before. even in 24 months. But we are about to go through a cataclysmic change in travel that no one has ever basically predicted.

Yeah, one way I heard it described was, you know, some folks have called this the great unwinding of startups. I don't think it's that. I think it's the great separation. The direction that gravity is flowing is now different. And businesses that do remote services, telehealth, I mean, those are some obvious examples. And the real interesting question to me is, what are the less obvious examples? of the kinds of companies. I mean, who would have guessed that if you wanted to stockpile something, you should stockpile bread flour for the incidents of a virus. But like everywhere you go, there's

no bread flour. King Arthur's must be so happy. And so it's those things that are the unexpected changes in the physics that I think the great founders will identify and take advantage of. What percentage sure are you, Zach, that this will be a permanent shift and virtualist taking over in this distancing world, you're defining with this Generation V, Generation Virtual, what percentage sure are you that this is going to occur? And then, Roy, I'll go to you for the same question. I'm 100% sure that Gen V has begun. You're 100% sure. So think about it this way. Like, we basically invest in infrastructure and the infrastructure leads to fundamental changes in human behavior that then leads to a new normal. So think about we built the highway system in

America. And the highway system in America originally was designed to move troops from one side of America to the other side of America to fight a war. The consequences of that was the suburbs. The consequences of the suburbs was a generation of people who grew up in the suburbs who were fundamentally different than people who grew up living in the tenements and living in cities. So infrastructure changed the world that we lived in. Right now, we are all moving to this virtual world that is this. That is going to create a massive inflow of capital and cash to the tools and people and teams that build virtual things. As a result of that, they're going to be able to build better virtual things, much, much better virtual things. And entrepreneurs are going to

recognize new organic things that nobody else realized because now we're all in this new virtual world. And that's going to lead to this sort of upward flow, this self-reinforcing cycle of virtuality. In the same context that we fund all this awesomeness, we also basically are now experiencing this for the first time in a way that before no one else did. So we're we're going to think about it differently. Like there's so many people who've never been in a Zoom call before who are now on Zoom calls being like, oh, this is amazing, except this needs to happen or that needs to happen or these things, these changes need to be made.

And now you've got the product feedback loop. You got the investor feedback loop. We start to move to a self-fulfilling prophecy in your mind that people just don't want to live in cities or don't want to get on the subway. Do not want to go to an office. Do not want to put pants on. And it's a permanent restructuring. Roy, what do you think that the chances are?

of Zach's, on a percentage basis, that Zach's world emerges. So Zach's world, I'm much more uncertain about exactly that description, which is I'd call it like 60 or 70 percent. What I definitely think is true is it's going to change. That's a big percent. Yeah, yeah. But I mean, still, it's not good enough to bet the whole future on. And I mean, let me share a couple of reasons why.

I think for sure the parts I agree with, 100 percent, the rules of the game are going to be changed. People's relationship to the virtual world is going to forever be different. and the same way that mobile phones and Facebook opened up all of these opportunities as they became widespread, video conferencing is just now going to do the same. So that part I agree with. That said, first of all, I think it's really hard to separate our view as like white collar people who have information-era jobs from the economy as a whole. There's a case to be made.

Truck drivers are about to get a lot more valuable, for example. I'll give you an example of a company in our portfolio that's not really virtual. have a company called Cobalt that does a robotic security guard. Guess what? That robot doesn't get the virus. And so it's now all of a sudden much more valuable in tons of ways. Would you have predicted it in a virtual only world? Not necessarily. And I don't know if you guys are hearing this, but I'm getting just as many people saying to me, man, this work from home thing? Like, I get that the tools work, but A, it's exhausting. B, I really miss being around other people. And do I think CES is going to happen in the same way? I sure hope not. Like, I don't want to be in a sweaty

I would never go. I stopped going. Every time I go with a gadget, I come back six. I haven't been for years for that reason. The CES flu. Some of the stuff I think is gone. But this is the great separation. And we just don't know who's headed to the left and who's headed to the right.

I think some of what Zach said for sure will come true. I'm a little more, you know, I agree with you, Zach, that we don't know these consequences of infrastructure. Another example I give is World War II, women go into the workforce in large numbers. And then all of a sudden, all of a sudden, all of a sudden, they're like, oh, no, for sure, this is just fine. And yes, they went out of the workforce briefly after the war ended. But then that loosened the top of the jar for probably the single most significant change in work is the gradual and still monumental entry of women into the workforce. So my basic thing is it's going to be surprising. It's the breadflower effect.

You just can't know which things there's going to be demand for more of versus less of. And you just got to watch carefully. I'm going to take the counter once again to my boys, who I respect greatly. Love it. But we love you, Jason. I went through this on 9-11. Everybody said after 9-11, irony was dead. You cannot make jokes anymore.

And that the world was changed forever. And I rattle my brain to say, and I was there for it, and I think your description is very right. I remember coming out of my building on 26th Street, which had the CIA in it, and they had their secret base in there. It's not public that is there. And I remember coming out and looking a guy in the face, and he grabbed me by the shoulder said they hit the Pentagon and my stomach sunk because we had watched the towers go down

and then we hear the Pentagon got hit what and I see guys what you can hit the Pentagon like I thought that wasn't possible I thought it had a dome of some kind of over it. And then all of a sudden New York has F-16 fighter planes on the Hudson that are lower than my third floor 50 foot up ceilings looking out on the Hudson River. And I said what? This is crazy. And that was some crazy PTSD for me like legitimate PTSD I had to get treated. When I saw those planes go by, I heard those planes. I said, those planes are not coming here for any other reason, but to knock civilian airplanes out of the air because there's six or seven planes missing. And the report that day was there were 20 planes missing and that these were going to be landing everywhere and that the West Coast was going to get next.

So I understand that fear of people are feeling right now. But I also understand that the only thing that happened after that besides the wars, which are obviously very significant, but now have been wound down was the TSA. And now the TSA's been unwound down because you can get TSA free and you can get clear. And then I looked at the financial crisis 2008. What was the last thing that changed? I guess people weren't allowed to get as much leverage. And the last five or 10 percent of people who were, you know, tricked into getting mortgages

that they should never have had to begin with because they didn't have the revenue base. That got unwound a bit. And then I look at the dot-com bust. Okay, maybe people weren't going to invest large amounts of money. money and businesses that were completely speculative, and then here we are, and that's the big criticism of this unicorn moment, but at least these companies are different in that they have revenue. In other words, I believe that people, when they're scared, believe, and I'm not saying this applies to you two necessarily, but people get scared, they think everything is going to change,

and then very little does. I believe we're out of this. We're back in restaurants in San Francisco by May 1st. And June 1st, we're back in restaurants in New York, and we're at Warriors games and the Yolo Springback is going to be like nobody's ever seen. Instead of old people. The best burning man, anybody has ever seen. I've never been. I think that's exactly what's going to happen. I think 60 year olds are going to say, 50 and 60 and 40 year olds are going to say, you know what? That lockdown made me mental. I'm going to go live my life. COVID 20 might come. I should live it up. And I want to go to the office and I want to go get ramen. I want to live my effing life. That's what I think. But I think the generation

Ving that Zach brings up is brilliant. Because there. will be a generation that is like the 9-11 generation or the dot-com generation or the Vietnam generation, et cetera, and getting on a Google bus to drive 75 minutes from your $4,000 apartment in San Francisco to the Facebook office will seem as stupid as it's always been. And the fact that Facebook and Google and Apple have this like overbearing three-hour commutes to three-hour commutes will make no sense and nobody will buy into it. it. And then also people are going to say, what is this consumerism? Like, do I actually need to upgrade my phone every cycle? Do I need to have an apartment in the city? Maybe I should live in

the country or the suburbs. Maybe I should live a slightly different lifestyle, see my kids more. I do think that on the margins, this is what's going to happen. And companies are going to free up the idea of working from home. I know I was an anti-work from home person. And I'm looking at the Slack channel for this weekend, to startups go to 2,700 members in a weekend. And I'm looking at at the accelerator and having more investors show up for the Slack, I'm sorry, for the Zoom of the accelerator class than in person. And I'm like, you know what? These things might coexist. So I think this is going to be a massive adoption of virtual technologies and that this generation, you might be right. But I do think there's going to be a counter. I just funded a bus company,

so I'm going to hope you're wrong. I know the bus company, yes. Jason, I think you hit the nail in the head. Okay, go ahead. The everything will change and yet things will often seem very similar. So if you go back and you look at American history over the last 200 years, you can see a whole bunch of through lines that don't go away. Like the fact that people want to be near and around people and have physical proximity, the fact that people enjoy basically going to do the things that, like go into a Warriors game. God, as soon as we all have the vaccine, we will be at the Warriors game like in a heartbeat. I don't even fucking like the Warriors. I don't even like basketball and I would like to go to a Warriors game. It would be so good. But the other thing is that the

trend lines that we're happening that are going to happen anyway. Like, we all know work from home, virtual reality, all this stuff is happening. It's going to keep happening faster. So now we've dramatically accelerated our basically investment of time, people, energy and ideas into those spaces. And it's going to create an entirely new world. Like I've predicted for many years that in our lifetimes, we are largely going to live in a virtual world where we basically like plug in and we can do whatever we want, wherever we want, however we want, however we want in a virtual world. world because how else are we going to deal with carpet change?

Ready player one. Yeah, exactly. You know what's interesting, Roy and Zach about this is I think VR was the head fake. VR was a head fake. It doesn't work for everybody. It's not ready for prime time.

There's always the friendster. There's always the friendster before there's the Facebook. Right. But I think what it, I think the Zoom slack combination, the video and the podcasting having a great microphone,

a green screen, I think the actual ready player one is you have a CNBC studio. Everybody's got a podcasting studio. Everybody's got a podcast grade microphone. Everybody's got a podcast grade camera. And everybody understands just natively how to behave on a Slack channel. People don't know how to behave on a Slack channel. I started this goddamn this week and started up Slack channel and people don't know how to thread comments. And people don't understand that. The first thing you do when you join a community is not say buy my ebook.

Or I'm giving a 20% discount. Use the code COVID and COVID 20 to get 20% off. And I'm like, dip shit. That's, would you walk into a dinner party and say, hey, everybody, get a 20% discount. I was like, you just walked into a dinner party. Behave yourself. Go ahead. Right.

Totally. No, I was just going to say, I think that for those of us who've seen more than one generation of tech, we've always seen this, right? The beginning of email, I mean, everybody used to send those damn chain letter forwards. and then we figured out that that's not what you do. The first 3D movies, it's like, remember that scene where they like, show you the spear sticking out into the screen, just to show you what the stuff can do. And now I think we are going to have, you know, to Zach's point about Generation V, I think what comes with that is maturity around the use of the tools where we just become better at it. And as we become better at it, it unlocks new things.

It's part of the reason I think we're going to see a bunch more automation is I think a bunch of corporate managers are going to be like, well, I couldn't have used robotic process automation for that. And then some like, you know, the first person to try something in a big company is usually Looney Tunes. It's usually not the most talented person. And they misuse it. And then all of a sudden somebody else tries it. And they're like, oh, maybe that Zoom thing, maybe that Slack thing, you know, maybe that insert your company here thing is not so bad.

And so I do think we're going to see that loosening of the top of the jar. And I'm really excited for it as a person who, I don't know if I'm an optimist or a pessimist, but I solve for the distant future is how I think about things. I'd rather 40 years from now be good than three years from now be good for better for worse. And I think 40 years from now is going to be made better by this moment. We are inoculating ourselves, I hope, as a society against future pandemics like this one. I just hope people stop shaking hands. I have two tips for people.

Barbaric. I'm going to show people the tip. This is my tip. This was a patented J-Cal move that some of you have experienced and didn't know it was patented and it was a move. But I've opened the patent. Here's what you do. You're at an event, you're at a party. You put the cup in one hand.

You got a nice cup of coffee, a chardonnay, whatever your beverage of choice is in your vessel. Then you have your phone in the other hand. It used to be for me the New York Times when I was running around New York. I would carry the New York Times the whole day and my Moleskin journal. And people would come up to me, oh, my God, Jason, can I shake your hand? And I'd say, oh, elbow, fist bump, and wouldn't let them shake my hand. Because I told them, listen, my hand's a petri dish.

You don't. And some people would insist on shaking my hands. You really don't want to shake that hand. I've shaken 50 other people's hands. Then the other one is when you're going to never touch the door handles. Never touch the door handle. Or the goddamn square where you sign with your finger on an iPad, I would always be like, yeah, I'm not going to sign that, but go ahead and you do it. Or I would take out a tissue and then I carry with me wipes.

I now carry the chlorox wipes at me. I open every door handle with the chlorox wipes. Now I'm not touching it, which I never want. would, but I'm wiping it off for you dipshits who are touching with your bare hands, your animals. That's for me, this is, and in Japan, the wearing of the mask, when you're sick to not get other people sick, we have to have these things carry forward for the next one of these. I believe we're going to get through this in the next 60 days, and we're going to be smooth

sailing from that point forward. Other people think it's six months, but we need to have a better response next time. And for God's sake, they've got to close those wet markets. because if this stuff is originating in the wet markets like they say with totally with the with the eating of bats and the pangola i don't want to make any i like to eat some exotic food myself pangolians are they called pandolin i don't know if that's how to pronounce but that's how it's spelt and and like they they shut these down after the last pandemic they got to shut these things down permanently yeah i mean you know my son who is a vegetarian

because of climate change was like look this is all this because another thing that happens because people like to eat meat. And it's hard to disagree with him about that. I mean, I think, by the way, for the people who use this to say they hate government, you know, had the Chinese regulators had more stringent health standards at the wet markets, we might not be in this position. So of the many things that had to go wrong along the chain to get here, I think that's one of them. And people are afraid to have this conversation because as if it was some kind of a xenophobic or racist comment to say, don't butcher animals in close quarters with no hygiene procedures and exotic animals that are known to carry diseases. It's like, this is not a radical

or in any way against anyone's country. Because these wet markets exist in all over Africa and other places as well. We just have to have to be in fun of that. And by the way, I mean, look, watch what's his name, Joe Exotic on Netflix. We got some pretty unsanitary things happening in our own country. Absolutely. all of that needs to be taken care of. We just have to follow Japan. They bow. They wear masks.

They clean like OCD. We have to have an OCD level like Japan when it comes to personal hygiene. The taxi drivers wear white gloves. Absolutely. And no more shaking of the hands. We're barbarians in America for that. And they're barbarians in China for eating these slaughtered species that are known to carry. This is barbaric stuff that has to change.

Zach, what permanently needs to change? What permanently needs to change? because of this. What are we going to learn for this? What are we going to learn from this? What needs to change on a global basis? Government, business, personal. My view is that our country has sort of reached an apex of decadence.

You know, we've been the most rich and powerful nation in the world for the last 50, 60 years, 70 years, 80 years. I don't even know. It's a long time. I keep losing track. You know, and that's led to, I think, just a willful ignorance amongst our population that things are hard and they require smart people working on hard problems. Yes. And instead, we have this sort of like, oh, well, I don't like, I don't like her, so I'm going to just vote for a moron for our president. or I'm annoyed by the fact that like I have to pay my taxes so therefore like I want to pay less taxes.

We should just cut all of our government programs to protect us from pandemics and everything else. Or, oh, I don't really believe in like when the government tells me that's a social distance, I'm just going to keep going to bars. Like I think there's just been there's been a cultural decadence that that has entered sort of American society. And I think it's scary. It's a little bit selfish. The tribalism is terrible. And the non-belief in science is bonkers. I'm hoping that that can change, that people say the age of expertise comes back.

If somebody's a goddamn expert, believe Belagie over the recode reporter. The subjects of the stories, the experts need to be respected for their expertise. Yeah. I mean, I don't know about that particular example, but I think for sure, you know, the epidemiologists need to be respected. And in general, I think that my wife likes to say that we should think like a we instead of like a me. And I think that that transition is one that we've just, you know, we've been in such a period of prosperity in our country that we could afford many of us, not all of us, the luxury of thinking like a me. And it's just not okay. I also think our expectations about government and what it provides are forever changed.

I mean, Jason, you raised last time, UBI. I was early on the studying UBI looking at it train, the biggest philanthropic. check I've ever written. My wife and I wrote was to the test program in Stockton that's trying to test UBI. I mean, I just think that people are now going to turn to government and say, enable me to participate in society by taking care of the worst case scenario. And I think that's okay. I just hope, though, I'm actually really scared about the sort of whiplash reaction to this process where people look at the failure of our government and they say, oh, I want more government. And instead of basically doing it in a thoughtful and forward-looking way, they do it in a reactive

sort of like, oh, the old answers that we figured out, which were wrong about sort of the fundamental tenants, tenets of communism around work, or the fundamental tenets around individual freedom, oh, we're just going to go back to those because like the individual freedom thing failed. Like, that terrifies me. Or the lean towards authoritarianism, like, I do believe that. This crisis could lead to some really bad outcomes. I mean, one thing I'll say for America, like one of the things I fundamentally believe about the American model is a thing that works in the American model is we have different sources of power. And so when the federal government botches something, we have strong private institutions.

And I think that's amazing. In a way, we're the states, of course. The cities, everybody. And in a way, what we're getting is sort of an ode to that pluralism on some level. and, you know, it's also about entrepreneurialism, not in like the tech founder way of like, let me make a unicorn, not just in that way, but in the way of being of self-employment. I mean, self-reliance at a moment like this of not being as reliant on institutions to take care of you is also a healthy thing, even if your expectations change. I mean, you know, Reid Hoffman always says the American business model is entrepreneurialism. And I totally buy that.

And I think we're going to have a lot of folks who are unfortunately going to be forced into it, but maybe we'll see that some good comes of it. I don't know. Well, I'm very interested to see if what this giant UBI test we're doing now is, because all these people who have been furloughed or fired or laid off or their jobs have been gone away, are now going to get probably some extended UBI, essentially, unemployment. So let me just stop you on that. It's not really a UBI, though, because the reason I think it won't test it, it will test some aspects of it.

It's definitely a cash grant. But the big thing that some of the nonprofits who are expert in this stuff, like the Economic Security Project we're pushing, is there's a huge difference between a one-timer and even a much more modest, continuous payment. Because one of them I can plan against. Yeah. So that's my only thing to quibble with there.

I'm wondering if this becomes like a 12 or 24-month stimulus, which I think it will be. I think both sides of our government officials want to spend the money. They want to spend trillions of dollars and get reelected and to take the edge off of people losing 30 million people losing their jobs. They have really no choice. Like we said, there's a one-time event in our lives so far in capitalism. What would be the motivation of somebody who now has learned to be self-reliant,

who is making 70% post-tax of what they made by going to work and dragging themselves three hours in a commute? What is their motivation to go back to work? I got to tell you, I think that that question is based on this kind of, of view of human beings that were just math and incentives. And the data from all the places where basic income has been tried, and there's limited data in few places, is actually people work more. Is actually people work more?

And who knows why that is? I think part of it is a lot of people would like to work more. We actually exist in the first, we've had this historical inversion where it used to be the richer you are, the less you work. And for some years now, it's the opposite. A lot of people want to work more, but it's not easy to go apply to a job if you're worried about the $400 bill. if your car tire blows out. So I actually think that we won't have that problem in practice. I think

people want to work. They want to be productive members of society. They want to be creative. They want to be needed. They want the dignity that comes with that. And paid work or unpaid work, caring from elderly family members are paid too. Because classically the way unemployment has worked is you've had to go there and say, I looked for work. Here's proof that I'm looking for work. And that becomes your job. As opposed to, I have 24 months of runway. I'm going to use it to build a small business. Unemployment is stupid. Not stupid. It's good that it exists, but that aspect of how unemployment insurance works is terrible, in part because it says only certain kinds of work are valid, and in part because, as you said, it makes it your job to seek the benefit as opposed to your job to create something valuable. All right. I'm going to just do a quick two news stories that happen

to break during all this. One of them is notion has raised $50 million at a $2 billion evaluation. In the show notes here, I don't know who did it, but I believe it was. Index. Sarah Cannon. Your friend Sarah Cannon, I think, had built a relationship with them over a long time. Okay, $50 million at a $2 billion evaluation, $100 million would be 10%, 50 million would be 5. So they bought 2.5% of the company for $50 million. What do we think the revenue of notion is right now?

What do you think, Zach? Tens of millions tops. I heard so 30 million. Okay, let's put it at 20. 20 million times 10 is 200 times 100 yeah but come on 100 times revenue i mean look jason jason i think i think what we're going through right now viral growth is a perfect example of why that math doesn't make any sense okay no i'm i'm just trying to set the table here of yeah of the investment this is on this is on the order of a hundred times revenue in all likelihood we would agree is this a good

investment yes or no and why if it grows five x next year and five 5x year after in a really fast viral way, then it's an amazing investment. There's 500 million in revenue if it does 5x 5x, 5x, and you paid four times revenue. No, no, that would be 750 million. Oh, 20, yeah, 2,500 million. 20 times 500 million. Yeah, you paid $4X revenue on a 5x grower. That's the best investment of all time.

Or not really, but it would be a great investment. Okay. Roy, how did it's all by reality. It is a big number, and I'm thinking people are trying to unpack this. So go ahead. So I assume this all closed before. all this went down, and it's just getting announced now. I'll say, as a future of work investor, I should be and am embarrassed that we are not investors in Notion. Because to me, it's

sort of like when Microsoft did that round priced at $15 billion into Facebook, a little different in terms of strategic rationale. It looked really done at that moment. It looked really dumb at that moment. And, you know, the way I look at it is writing, typing words onto documents and collaborating with them is obviously a big field of human professional endeavor. If you think there is a meaningful possibility that any one company ends up being the platform on which that happens and end up having the network effect, in other words, the increasing return to scale where the bigger they get, the more valuable they get, that they end up being the default standard, then they end up being ridiculously valuable. And I also think given how capital conscious the team has been, not that good venture investors really think this way, but for a $50 million check, it's not nothing. I don't know if they were the only investor in the round, but it's not nothing. it's also pretty downside protected in the sense that this is clearly a team that at least from afar seems to have been very careful. Does that make it worth $2 billion? I don't know. We also don't know if there were any other terms in there. So it's a little hard to just react to the sticker. But let's just react to the sticker and say, if you think there's a chance that this is the default platform for that lane of professional life, then for sure it's a good investment.

Look at Zoom. Like two months ago, I looked at the public price of Zoom and was like, that's very well priced. Now, who knows? I mean, it's 200. They went for, what, was it 10 or 20 million MAUs to 200 million MAUs in the space of two months? And one way that we think about it is how many quarters of advance execution credit are you giving the company? In other words, they're here today. And one way to think about it is like, what's the revenue multiple?

Another way of thinking about it is, if they keep going at this pace, how far do you have to roll the clock forward for that valuation to make sense? Maybe for a company like for that investment, the answer might have been a year or 18 months. It doesn't seem that crazy. We've had that happen a few times with companies. It's not nuts. Right. Let's talk a little bit about Zoom and the fact that there are some security issues. Privacy.

What's that? Privacy. Privacy. Security. It's not encrypted. There might be servers in China. There are developers in China. Let's just say that it, let's just assume there is some, you know,

Chinese developers on it and there's some data going back and forth through Chinese servers. Should we trust any software, if we care about privacy, that has any affiliation with the Chinese government or China? Take that another step. Should we trust any software ever? I think the generational change that we're going through is a realization that software is not trustworthy. And you should not put your trust in software. And you should build a life that is resilient to the continual breakage that software has exhibited over our lifetimes and will continue to exhibit in breaking our privacy, breaking our trust, breaking our everything. Okay, we have to live a life with the assumption that somebody is.

Let's take TikTok as part of this, TikTok coming out of China, a Chinese base company. so we know it's a whole, because we don't know exactly which parts of Zoom are under, you know, could be impacted in that way. But we know TikTok is 100% in China. There's a Chinese company. Should we allow those apps in the app store knowing that the CCP, that the Chinese government probably has access to that data? Yeah, but I don't understand your fear there. Like, what is the Chinese government going to get a bunch of teenagers dancing?

I'm afraid. I don't understand the TikTok fear. Oh, here. I'll tell you, the TikTok fear is they have the location of every American. They know which ones are Navy SEALs and they know where all the Navy SEALs in the country are and they can track that data to then find out when we're mobilizing troops. I mean, I don't know many Navy SEALs who use TikTok, but my Navy SEAL friends are. I would bet you, I know people in the elite armed forces and that this was an actual issue, was that people were being tracked because of their Facebook usage and default location data. And that I wouldn't say which unit of this. There was a whole intervention that occurred because they were using certain apps controlled by Zuckerberg that did have location data in it and they were compromised and they knew that these assets and where they were moving. Yeah, that's their job.

I think what I said earlier is that like we should assume that all the software that we use is basically tracking us, tracing us, and is not trustworthy. And so therefore, if you are in a sensitive profession where if your location is important, you should not use that software from anyone, not just. Roy, you have any thoughts on this Chinese software and the escalation? Not an issue about which I'm a deep, deep expert, but other than to say agree. I mean, we're transparency zealots in our fund. Like you go to our website, you can see the questions we ask indiligence.

I used to say at my old company, put a video camera in every meeting room, record everything and publish it to the internet. Not going to help anybody. And I try to live that way as often as possible. Obviously, sometimes you forget or sometimes there's a sensitive conversation. But I think, Zach, you know, on the Generation V idea, I think part of Generation V is that it all gets recorded and it's all potentially public. And we start to just develop the habits of doing that. I mean, man, please don't get my emails from when I was in college because I'll be ashamed. But now, you know, I'm a little more careful.

I think that, yeah, your privacy is an illusion, right? Every text message as if it's a tweet, right? Every email as if it's a blog post. Because it's probably already been compromised. speaking of China, Luckin coffee has lost $5 billion, 80% of its value in five minutes due to fabricated sales according to reports. They, for people who don't know, Luckin is like an instant coffee where you get delivery very quickly. And they beat out Starbucks for becoming the biggest coffee chain in China. 4,500 shops.

They had scooter delivery. It was rapidly adopted because it was massive. cheap and it now seems like the COO was involved in some fraud of overstating and fabricating online sales up to 88 percent. And there's no way that this was one person who did this. This seems like it's a very big coordinated. And Muddy Waters research is the one who published this analysis and they had a short position and they got paid off in a major way. Do you guys trust any of the data, whether it's COVID data or revenue data coming out of China at this point? I don't trust any of the data coming out of anywhere, basically.

I mean, I hate to put it that way, but when I look at many, it's not just them. I mean, look, I was in my first job out of grad school that one of the first things they did in training was make us watch a video from the then CEO of Enron about the value of intangible assets. and we were all told to like really, you know, bow down before that deep strategic insight. It's all bullshit. And so frauds happen. Frauds happen everywhere, which is why you've got to build in to your, you know, I'll often see in our like team slack, somebody say, look at this number. And I'm like, I just don't believe that number. And it might be true, but you know, trust but verify.

So I don't think it's unique to China. Any thoughts on this luck in collapse? Well, I think there's a couple things that are important. One is the tide is going out, and I think we're going to see a lot of naked people here relatively quickly. I mean, we've been on, you know, China has been on a much longer bull run, but we've been on a bull run now for over a decade, and a lot of leverage has been built into the system. And now that the tide is going out, we're going to realize, you know, what's bullshit? And there's going to be a lot of it. Can I say something about that, Zach?

I mean, one of the things that we've struggled with over the last eight years as a fund is we're rarely the high price bidder on any deal. and people, sorry, founders often think that the valuation an investor gives them is like the score of how much they like the company. It's usually, by the way, separate conversation, more about fund size. And one of the reasons why I've felt like our valuations were right is I'm like, look, we're going to be in this company for a decade. We're taking macro risk. You know, we are holding the bag on a decade worth of risk that the world holds together. Now we're seeing that. And so I think that this, you know, the tide going out and revealing that a bunch of people are naked,

phenomenon is something that should be always priced in to long-term investments, always. Because you want us with you for the long-term, let's not do like a hot market, you know, funny terms kind of a deal. Let's work together in a way that's built for the long term. All right. On that note, great show. Let me thank Roy Bahat. You can follow him, R-O-Y-B-A-H-A-T. He's the head of Bloomberg Beta and Zach Collius, Zach Collius on the Twitter. And everybody stay safe. Everybody put on your masks. We'll end with our masks. Put on your masks. If you want recommendations about where to give money, Zach and I got them. Masks up, please. Homemade or otherwise. Thank you. Thank you. Thank you. The janitor. Great questions. Yeah. Thank you to the janitors.

Thank you to the Amazon delivery people. The at the Uber Eats, the Instacart. All of you on the front line making sure people stay home. Thank you to the police and the emergency workers who are out there picking people up and bringing them to hospitals at great risk to themselves and giving people tickets for not social distancing and doing stupid stuff. Now, the one video, the viral video, I saw the person paddleboarding in the Pacific Ocean. I don't think you need to arrest that guy. Pretty good social distance there, except from the dolphins. But I get the point.

And to those health care workers in the ICU, the doctors, the nurses, the attendance, the security guards and the janitors, all of you are heroes. We appreciate the sacrifice you're making by putting yourself right on the front lines and putting yourself near this COVID virus, which when you do get it, if you're in that high risk group, it is a brutal and horrible death. And to do that, to make that sacrifice, we're in awe of you. I know I speak for Zach and Roy as well. Absolutely. Absolutely. Thank you. All right. Thanks everybody for supporting the podcast. and thanks for coming on, Zach and Roy. Thanks to everybody on my team working hard.

We're working harder than ever. And if you have a great idea for a startup company and you want $100,000 and come to our accelerator, which will be virtual for now, you just email Jason at calicanus.com. You follow me on the Twitter. I'm at Jason. Tweets. DMs are open. The best way to pitch me a company is to just show me the product, a link.

I know Zach and Roy care about that too. As a matter of fact, you can just email Zach, Roy and myself on a, I think, all of our DMs are open and just share the same share the same growth chart show us a growth chart show us some revenue show us customers who love you do not send us ideas and business plans all right masks up stay safe boys we'll see you all next time on this week in startups