This Week in Startups - E1101: News! Apple vs. Epic Games, TikTok CEO resigns, SPACs, Unicorn IPOs & more with Acquired’s Ben Gilbert & David Rosenthal

Episode Date: August 28, 2020

Check out Acquired: https://www.acquired.fm FOLLOW Ben: https://twitter.com/gilbert FOLLOW David: https://twitter.com/djrosent FOLLOW Jason: https://linktr.ee/calacanis Thanks to our partners... Vanta - $1k off your SOC 2 at https://vanta.com/twist Dell for Entrepreneurs - Save up to 50% off select products, and take an extra 5% off by going to https://launch.co/dell Modloft - 15% off and free shipping at https://www.modloft.com/twist

This week in startups is brought to you by Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at Vanta.com slash twist. Dell for entrepreneurs. It's small business month at Dell. Save up to 50% off select products and take an extra 5% off by going to launch.co slash Dell and Modloft, the only modern furniture

brand that offers elite design, fair prices, and delivery in days, not months. See why founders, venture capitalists, and celebrities choose Modloft. Get 15% off and free shipping at modloft.com slash twist. Hey everybody. Hey everybody. It's your boy, Jay Cal and I am so excited to have back on the program. Two of my favorite guests, yes, Ben Gilbert and David Rosenthal are back on the pod. You know them because they have a great podcast

called Acquired FM, and they have a paid version of it, which is called the LP show, which I listen to, because these two cats are smart and they're opinionated, and one of them has a delightful radio voice, and his name is not Ben.

David has that sultry radio voice. David, go ahead. and give us that NPR. Welcome. Oh, yeah. Well, as my dad likes to tell me, I have a face for radio as well. I mean, you literally sound like you have double the testosterone

of Ben and I combined. Ben, say hi to everybody. Hey, how's it going? I am the lesser half of acquired. Ben, of course, is the co-founder of Pioneer Square Labs and Startup Studio VC Fund in Seattle. He's good at what he does,

and David is the co-house. host and Angel investor along with him. If you don't know about Acquired FM yet, go to Acquire.com. They do a great pod. We did a crossover episode and we had great chemistry. I think we had great chemistry. Yeah, boys, went pretty well. Fantastic. Yeah, I mean, we tell the story of epic institutions and normally that's a company, but in your case, it was the story behind the Jason Calacanus Empire. So that was a special treat. That was a guest on yours. We did a two-parter. And I love when you break down, like these epic stories on the pod. Now, when you break down an epic, story of a company, is that only available to the LP listeners? Because I just paid for it at some

point. It's in my feet and I don't even know the difference. This is one of the problems when you have two podcasts, one paid, one not paid. No, that's for everybody. It's so timely and appropriate, you're saying an epic story because probably right around the time this comes out, we will drop our acquired canonical episode on Epic Games, which we're also going to talk about here, I think. Yeah, we're going to talk about it right after I look up the word canonical. I think that means the history. Is that what the fancy way of saying, the history or the order something's in, canonical? Definitive. Official, definitive. Okay, good. Love it. But anyway, I was listening to you where I was driving back from L.A. because I like to drive L.A. San Francisco when it was just

took my girls on a little beach vacation, do a little surfing with them. Do you do it on autopilot? Actually, interestingly, my wife took my Model 3 and I drove our minivan, which we have this beautiful Honda Odyssey, which is delightful. And it actually has like stay in the lane and adaptive cruise control. It's a Cadillac a minivan. So I was kind of rocking a minivan. And it was a good humbling experience for me to not drive a Tesla for a week. But I was, I did listen to your seven powers.

You had the guy from seven powers on. Oh, Hamilton. That's a smart cat. I like that guy. And I think that's worth it. Two books I wanted to recommend to both of you. I just read a book called I Love Capitalism. Have you guys read that yet?

No. It's the guy. Ken Langone or something, the guy who did Home Depot. And it's a pretty good book. I think you guys would like it because it kind of has that canonical storytelling that you're so fond of. And then I'm about a third. Is Home Depot venture backed? I think that's like rattling your mind in my head somewhere. What it is, that's the best part of the story. And we're going to have them on our pod, but you'll probably get them before I do. But anyway, we, it's basically a banker guy who is

like an M&A guy, like an Allen and company. type banker who was working with the previous home hardware stores and then put together with Ross Perrault and other investors. And it's just like this like, it's a kind of like what the 70s and the 80s and the tail end of the 90s. And it kind of ends with Elliott Spitzer and Hookers. So I'm going to leave it at that because it's so goddamn good. And I saw the name of the book.

I love capitalism. And I was like, oh, can't wait to read this one. This is a J-Cal book if there ever was. God, love capitalism. And then the other book I just started was The Hot Hand, which is about the concept of streaks. And it really is a very good book because it talks about people who've had streaks that have ended. And it goes into the history of Steph and Curry and him having that Madison Square Garden game when he was a bench warmer. And then he breaks out.

And, you know, it's a lot of stuff that we've all heard about the hot hand and all this stuff. And it's not real. statistically. That's the, not to be all Michael Malbison on you, but that's what the book comes. Let's leave it to the, we have to read the book

and before you actually come to that because there may be some things that are true about the hot hand. But let's get into the news. You guys, what do you guys reading this? Give me a book you're reading over the summer if you have one. You have any books you're listening

to a reading over the summer? Well, tomorrow, as we say this, we're going to have our next acquired LP book club meeting with Jason. You should join. I'll try and make it. Yeah. Will Thorndyke, author of The Outsiders.

Awesome. Awesome. What is the book about? It's about, it's case studies of eight outsider, quote unquote, outsider CEOs, CEOs were often first time CEOs, you know, didn't have MBAs, didn't do investor relations, but just like were. Was there one that stood out to you as your favorite of those outsiders, those eight outsiders? I mean, Warren Buffett's on there, so. Oh, okay.

Yeah, that one. It's like, it's John Malone. Catherine Graham from the Washington Post Henry Singleton, Teladine. This is like classic. It's what I love about having you guys on the show. It's just like we, if we were out at a bar, instead of talking about sports,

we talk about CEOs and companies. Like we're such capitalist nerds. It's ridiculous. Ben, do you have a book on your short list? We should have a podcast. We should have a podcast on this. But anyway, the two books I mentioned are in the This Week in Startups Book Clubs, which is Mondays at 6 o'clock once a month.

you guys were course, are invited. So we're doing those two books the next two. What do you got on your short list of summer reading, Ben? It's an old book, but I just finished reading Creativity, Inc. The history of Pixar. Oh, my God. It's somewhere right behind me. I had Ed Catmo on the pod for a two-parter.

Nick, send the link. I will try and get his email and send the intro. When I kid you not, I'm going to give you boys a tip on, as your big brother in podcasting. this took Emmy a award winning producer Jackie 18 months and I said to her there's the book right above my head see it right there creativity ink boom yeah yeah yeah and I just was so taken by this book

and I was like I need to have Ed Catmull on the pod it was episodes 665 and 666 a lot of our people refer to the episodes as numbers because we got so many of them now and man what a great book

Yeah, I mean, I'm excited to go listen to those couple episodes because the thing that Pixar has nailed that is an incredibly difficult thing for any organization to do is being creative. So trying lots of stuff, but being successful repetitively. Yes, the street, the hot hand. And did they not have a hot hand? And Disney previously had the hot hand. If you read the Michael Eisner book, did you read, I'm sorry, the Robert Iger book. Did you read? Yep.

Right of a lifetime. I'm so good. So good. And if you think about it, he talked about the streak of the Little Mermaid, the Lion King, and Beauty and the Beast. Yep. Yeah. But then they went cold.

Tarzan. Oh, then it got weird. Yeah. Lilo and Stitch. Those were the Katzenberg, Glory Days. There was some wax shit in there. I'm sorry, Nick. I'm sorry to ruin your childhood.

Not that we have Nick screaming from the background there. Producer Nick's crying. Listen, talk to you by your therapist about her, okay, not here. But your girls, probably right in a frozen age, right? You know what? They did frozen for a heartbeat. And then I was like, you know what?

I don't want my daughters on the princess industrial complex, as my friend soccer called it. So I was like, they started getting into dinosaurs. I was like, this is literally to my four-year-old twins. I'm like, Jurassic Park is the most terrorizing movie for children. It's completely age and appropriate for four-year-olds. You need to be eight years old to see it. And they said, can we please see it?

And I said, sure. I said, but I'm warning you. right now, a dinosaur is going to eat a lot of people and it's going to be bloody. Are you willing to close your eyes if you get scared and we'll pause the movie? And to my daughter's credit, they did that. I have now watched all five, the three original Jurassic Parks, one, two, and three. One in the order is really one, three, two in terms of how good they are. And then Jurassic World, which is actually pretty fantastic.

The Jurassic World Series Fallen Kingdom. And there's another one coming out, Dominion, because they want to know what happens when dinosaurs take over. So the final, the sixth one is going to be the dinosaurs have taken over the world and humans have to live in a dinosaur world with pterodactyls and musesauruses and Tyrannosaurus rexes just roaming freely. Yeah, there was no direction to go but there. I mean, that's the like standard Planet of the Apes playbook as we're now in their world. Yeah. So, thanks for tuning into media selections for the rest of this stuff for the pandemic. I thought that's what we were doing on this show. It's supposed to be a news roundtable, but let me just

preview for everybody as we do this. Oh, by the way, well, since we're doing it, let's just do TV shows. Let's just do TV shows and get it out of the way. And then we're going to get into the news. Best thing you binge watched, that's been great in pandemic, for whatever reason you like it. Yeah, I just finished watching Man in the High Castle four seasons. It's a great show that ends so unsatisfyingly. So I just want to say that for anyone who hasn't watched it yet. like you're in for sort of a Game of Thrones like finish and just know that going in but enjoy the ride you're on. Okay. I started it and I got into a situation with my wife because we kind of have this agreement about

I don't want to cheat on my wife with streaming. Let's just leave it on that because the new version of cheating is if you watch a show without her and I started watching Clone Wars with the girls and she likes Star Wars and then she's this has been like a big fight. This is what we fight over. What do you got for me, Dave? What have you been watching? My wife and I have been watching Schitt's Creek together, which is like the perfect quarantine.

What is Schitt's Creek? I don't even know what that is. Oh, what is Schitt's Creek? Oh, man, Dan Levy and he's the son of Eugene Levy. Remember the American Pie guy? Yeah. Super famous comic. They, well, it's all, Dan, his son created this whole show and the whole family's in it.

It's so good. What is it on? Is it? ABC, Netflix, Amazon. on one. It's a Canadian show. They're Canadian. So it's on, it's on Netflix, all except the last season. This is what I love doing is finding those obscure shows on other networks. So a friend, let's not, let's not give this credit for being obscure. Like, this is an incredibly mainstream thing that just somehow, you missed it, Jason, but this is like, this is like a blockbuster top 10 show.

A lot of great things are from Canada. But it's in the top left box of Netflix for lots of people. Oh, is it really? Okay. Yeah. All right. I'm going to check that out. My pick is I May Destroy You, which is an HBO series, which deals with a lot of issues around race, sexual identity, and memory, and drugs, and assault, or the gray area of assault. And it is a tour de force because the woman who stars in it wrote it is. a spoken word artist and also seems to have an extreme talent for storytelling. And it is, it starts off a little bit like, where is this going? And then it just gets to a pace. It's not for kids, obviously. But, and it's very kind of millennial slash even closer to Gen Z in its approach. But it's so, you know, HBO just knows how to spend money. Every time I watch an

HBO show, I'm like, that's an HBO show. It's just the quality is just too good. They spent too much money on this. And hopefully that keeps up. I mean, that's been the hallmark of their brand forever. And then AT&T bought it. And now they're like, well, what else can we jam into this pipe that people seem to love? I hope these guys don't screw it up.

When we get back, we're going to talk about screwing it up. We're going to talk about Apple screwing up every single aspect of developer relations. We're going to talk about TikTok's CEO resigning and deciding he would resign from the Chinese Communist Party. We're going to talk about the bidding war from Walmart. And the SEC is changing accreditation laws. Oh, I love you, SEC. Thank you. Finally.

Finally, it's been a long road. It's huge for you. But this is big for JCal, and I'm excited. Stick with us. All right. This deal from Vanta is so good. I want to start my ad read with it. Vanta is giving our twist listeners.

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they put a shit ton of work into every episode. And the LP stuff is the hotness. I think it's about, I don't know, I think it charges about, it's about $100 an episode. It's about $5,000 a year for that content. What are you guys charged? It is not. It is the low, low price of $100 a year. Jason, I just have to say that.

So ridiculous. It should literally be a thousand. I don't want to mislead people to, like, think that it's this thing they shouldn't go listen. The main show, we do tons of work, we do deep dives on companies. Like, we tell the two and a half hour epic story of epic games. Like, that's totally free and available to everyone. For people who are actively, like, building companies and want to go deep into things like,

how does a VC firm work and who makes decisions there and what do titles mean and all that stuff? That's what we do sort of on an LP show. A lot of basics, but also deeper dives. Anyway, it's literally, honestly, if it was $100 a month, I would still think it was underpriced. Get it now because I really think they should. raise the price, Acquired.fm. Our first story is Apple fighting Epic Games. For those of you don't know, Epic Games is a publisher and software developer.

They make Fortnite, which is, I believe, like, the most successful game, one of the most successful games in the history of video gaming. But importantly, they make the Unreal Engine, which is a video game engine that powers other games. The founder is Tim Sweeney. He's the founder and CEO, and he owns over 50% of the company. 10 cent owns like 40% of the holding company. They got a $17 billion valuation. And in June, Epic CEO, Tim Sweeney, sent emails to Apple, saying, hey, listen, Fortnite makes a lot of money.

30% heck of a take. Can we get a discount? Can we not pay for or change the take rate of the NAP purchases, which also happened to be the subject of the Senate hearings? The antitrust hearings. The house antitrust hearings. And so this is front and center for everybody. Our boys over at Jason Freed and David Hammeyer Hansen, both have been on the program in the last year with Hay.com. They also got in a big fight with Apple.

And Apple is getting horrible PR about this. And then Epic, from what I understand, decided, screw it. We're going to jump the fence. We're jumping the fence. When you asked to buy something inside of Fortnite, we're sending you to a website, which is, Ixnay on the rules nay, according to Apple. And Apple is like, we don't ever change the rules for anybody, except when I think. Except they do.

Except they do, like where they did, had Eddie Q, gave Amazon a better deal. And then now they're in court. All of the developers are slowly lining up behind Epic. Quietly. Quietly, because you, obviously it's quietly because you don't want to poke the tiger that would feature you and you don't want to mix it up with Apple, which goes to show that Apple has too much power. If your partners are that scared of you, they're afraid to talk to you. And the only person who's not afraid is a maniac like David Hamire Hanson, whose pastimey are starting fights,

or Epic, who's, you know, 50% control by a- Or Jason Calacanus. Or Jason Calacanus. Like, if the only people who are willing to fight with you are crazy people, that's one thing. But if all of your partners- Who have control of their companies. And have control their companies. But if you're scared of them, That says something else. So let me just drop it to you, David. What is your take on what is happening right now and the insertion of Epic into the fight as opposed to this being a fight with this little hey.com thing on the side, which people can, I think, dismiss.

But Epic dropping this bomb after those hearings seems to me to be a double punch that I don't think Apple is going to recover from. What do you think, David? Yeah, I think this is a huge deal. This is a major, major crisis for Apple. I mean, you mentioned a little bit about Epic and its CEO Tim Sweeney. I mean, this is like, this is not a normal, you know, this is not another public company with shareholders. Of course, he has outside shareholders, but like Tim is, you got to understand. So Epic is based in Kerry, North Carolina. It is a very, very, very, large company. Of course, it makes Fortnite, which lots and lots of people play and have heard of 350 million players worldwide, I think. But more importantly, that they make the Unreal Engine,

which powers so many other things. Like, not only does it power other games, it powers PubGy, a player unknown battlegrounds, one of the other largest, largest games out there. It also, like, The Mandalorian, we were talking about Star Wars earlier. Like, literally the television show The Mandalorian was filmed on a sound stage, all of it with a screen, like a 360-degree screen in this room that was made in unreal. I was talking to John Fabro about that, actually, and how he shot it and how he's able to do it so quickly and the cost of it, because he did use real models for certain things, but the actors were on stage in this essentially...

They call it the void. It is a gigantic ring. exactly made out of screens around you that is all rendered using the Unreal Engine by Epic. So this is not just picking a fight then, David, as I let you wrap here and then we'll get Ben in on this. This is not just a fight with Epic and Fortnite. This carries with it the possibility that anything Unreal related, Unreal the engine could get in on this fight. Yeah, I mean, they are in on this fight, whether they like it or not. And the thing about Tim, like, so Tim owned, he owns a little less than half of the company, but he controls the company.

It's a private company. Tim lives in North Carolina. He's not married. He doesn't have kids. He doesn't hang out with celebrities. He has, like, some fast cars that he drives every now and then. But basically, he just works on epic. And, like, that's all he cares about.

Like, he drinks Diet Coke and he eats, like, Bojangles fried chicken. Like, he told the Wall Street Journal, like, that's mostly what he does. So there's this, like, epic. literally epic YouTube video of a like MTV crib style tour with him from the like 2008 right Ben and and it's just so classy he's just like an engineer he's like this is my dining room I've never eaten in it I just work all the time like so he's like a legit principled guy as a way of saying this so how does that contribute Ben to his positioning of this and do you believe that this fight was timed with Tim Cook Tim

Tim Apple being, you know, grilled. Tim Apple being grilled. Barbecue. No comment on where Tim Apple comes from. But the, so was it timed with Apple's antitrust hearing? Absolutely. Like, I think that is, they perfectly planned it. But is Tim a principled idealist, Tim Sweeney here, of course we have the battle the Tims.

Is he a principal idealist who's doing this for some greater good? Also, yes. Like, right. This is... It's not just about money because what percentage of Fortnite's Rev... Because Fortnite is a desktop game mainly.

I don't know how many... 12% from iOS. All right. So this is chump change for him because if it's 12%, then he's talking about 30% of 12%. So it's 3%. It's chump change,

but it's 200 million per year. Which is exactly chump change. It's 3%. So he... In other words, if you were hay.com, if you're not on an iPhone, there's no way for people

to use your product. business. You're done. It's like literally it's 80%. This is 3%. Right. So he can fight this fight. So no, what it's about for Tim. And he wants to give all that savings back to players anyway. He doesn't want that extra revenue. What this is about is having an open app ecosystem, app store ecosystem and not just store, but like all of the infrastructure and services to run games, to run experiences, to run entertainment, that's what he wants. And that's what Apple has not been providing. Like, there's a reason why the most innovative, you know, besides Fortnite and PubG, which runs on Unreal Engine, the most innovative games and experiences of the past, you know, 10 years,

League of Legends, Dota 2, Overwatch. There's a reason these things aren't in the app store. And it's this. Wow. So this is amazing. I had an interesting idea. I want to run up the flagpole with you boys, see if anybody salutes. Okay, we'll put a little toast in the toaster and see if it turns brown. I want to know, this is a crazy power move. If Epic bought or partnered with something like, remember HTC phones, everybody love those, where there's like the one phone that some Apple, some Android nerds use, I was thinking about getting one. I just kind of like the pixel. let's say there's somebody with an axe to grind against Apple. Oh, I know who's got an axe to grind against Apple.

Android phone makers have an axe to grind inherently. They're at war with them already. If they made a Fortnite iPad competitor and a Fortnite phone, and it was, let's just say they partnered with HTC or Samsung, and if you use that phone, you would get a certain amount of, are they Fortnite dollars? What do they call them in Fortnite? V bucks.

V bucks? You buy this phone. You get 10 V bucks a day. What is the value? What do people spend on average? Do we know? People spend a dollar of 10 V bucks a month? It's a Wales business.

It's a Wales business. Yeah. All right. So let's just meet. Let's just, let's just set the table here. You buy the phone. You get 10 V bucks a day for by, with the phone for the first hundred days. you get a thousand V-bucks.

Now, they partner with somebody for that and the tablet, and they get that OEM, the original equipment manufacturer, to co-brand it as a Fortnite one, and it has one or two buttons that make playing the game even that much better. Would that not be the come-over-the-top moment for a $17 billion company like Epic that could crack the back of Apple?

Answer that question. We get back at this break. Hey, everybody. small business month at Dell, and this means you can save up to 50% off on all Dell products. Check out launch.co slash Dell. That's our domain name, launch, L-A-U-N-C-H dot CO, slash Dell. And you're going to get an extra 5% off. It's almost over. It's going to end on August 30th. So get that 50% off right now, whether you want to get their new 15-inch latitude 95-10, the world's smallest, lightest and most intelligent 15-inch business PC,

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here, follow Ben Gilbert. You got the G-I-L-B-E-R-T on the Twitter. And David is D-A-A-I-R-S-E-N-T. D-J-R-O-S-E-N-T. Are you dropping fat beats, David? Is that what I get from that? In my radio voice. Yep.

Your radio voice. All right, so before we went for commercial break, I had this interesting idea that coming up with a, I believe Fortnite is so powerful that if they came out with a tablet, it would be a bestseller, especially if it had a built-in number of bucks, v-bucks, and it maybe had some buttons or, you know, hardware that was just a little bit more specific to it. Like, let's say the back of it had an LED reading that showed which of your friends were online. You know, some people are putting those like little quick displays on the back of phones. Imagine it was a quick display on the back that showed your friends who were online

at the time or something. And you wouldn't replace your phone. Would this just be another thing you pull out of your backpack and you can play with? What do we think of this idea? You know, of them competing and, or I should say, helping an Android manufacturer take market share from Apple. They're not going to beat Apple, but they're going to just stick it to them. No. No why. Jason, you are the consummate founder optimist. I think you are dramatically underestimating the lock-in effects that Apple has on their ecosystem.

They will take, there are a few people out there, much like there were a few people out there that went and bought the Facebook phone. These are the true believers in Fortnite who don't care at all about literally any other feature on their iPhone. It's an incredibly rare thing and a much smaller crowd. And I think, you know,

another allegory here is in the podcasting ecosystem where you see the luminaries of the world say, you know what? Who? Exactly. People love this show so much that they're going to change their existing behavior to go and get this content

on a different platform. form. And people just don't do that. It is an incredibly rare. Too much friction. Totally. And I think there exist apps that could do this. Another one is a different 10 cent property, which is WeChat. So I mean, you could imagine in China if WeChat decided to pull off the iPhone, you'd have hundreds of millions of people that would leave the Apple ecosystem and go and buy whatever phone had WeChat. So there are nuclear options. I don't think Fortnite is one of them. But you do think WeChat coming out with a we chat phone

in a partnership with an OEM could have legs. So there is something... In partnership with Xiaomi. I mean, yeah. Okay, all right. I like it. All right. So I think we're spitballing here.

David, get in on this. What do you think of this concept here? That's the other dimension of all this that I don't think people understand as much. You know, Epic and Tencent are major allies here. And Tenzan is so. important, like literally what Ben said is so true. Like if iPhones in China did not have we chat on it, Apple's market share would go to zero. Apple gets 15 to 20 percent of their entire

revenue across the entire company from China. Like that is the ultimate hammer at play here. And I think that's why, you know, there are many reasons why this is a big problem for Apple starting with. It's just like they've lost faith of a lot of developers. But that's like there is way more at stake here. I have another idea for Apple. I want to run it by you too, and I want you to give it your consideration. And I have great respect for the people at Apple.

I'll say that. And I think that there is a value to them curating the store, and I think there is a value to them having a closed safe ecosystem, especially if you have kids, you can kind of feel better about them being on an iPhone than an Android phone. and you can feel better about what's in the app store. And I think there is something to that that consumers want and they should be able to provide whatever product they want.

I'm thinking, because it did feel unfair that subscriptions would be 30% year one and 30% year two. So they conceded 30% year one for your subscription, 15% for year two. I have another idea. What if they said we're going to take 30% and then when you hit this threshold, it goes down, just like a threshold might go up for a venture capitalist

who hits certain marks. You know, you return three times the money. Now you go from 20% carry to 30. I'm thinking the opposite of tiered carry, which is a discount. Like, listen, if you break it, it's 30% on the first, you know, 10 million. It's 25% on the next 10 million. It's 20% in the next 10 million.

And then anything over 50 is 15%. And anything over 100 is 10%. They could make a very simple stage thing, which would be like what a supermarket does. If you move a lot of product in a supermarket, you get a different price that if you don't move a lot, right? And there could be some easy concession here for Apple, but now I feel like Apple's been backed into such a corner that they have to go to the mat. And that's a bit of a problem for everybody involved.

Is there an exit ramp, David? I'm doing this one, which is like a tiered structure. Is there a tiered structure exit ramp to end this madness? Or do you have one? Well, I actually... What's the exit ramp? I think it's almost zero possibility that Apple will do this, but I think actually Epic provides a really good example of a tiered structure that works here,

which is for the licensing for the Unreal Engine, it's 5% of the revenue of your game or experience, which is way, way, way less than Apple's 30%. Arguably for a piece that's just as if not more important. But I think they announced this last year, they waive fees on the first million dollars of your revenue. So that means you let a thousand flowers bloom. Like if you're never going to get that big,

well, Epic's never going to make that much money from you anyway, but there's no incentive not to use it. Like, everybody can come on the silver. So it's a tier structure with generosity for experimenters. For the little guys. I love it. I love that idea. Now, in, and you just popped another idea into my head, which is, well, if Unreal

made a device that was for gaming that also happened to have phone service on it, and it had 5% that actually could make an impact. Putting the Fortnite phone or the Fortnite tablet aside. Yep. an unreal tablet, an unreal phone with only 5%, and then make all other apps available on the phone available for 5%. That could be a game changer. Yeah, let's think about Fortnite, Roblox, PubG, Minecraft. 5% across the board.

Yeah, 5% across the board with half or more of those savings passed onto consumers, that's going to be really compelling. This would fall in line with the epic playbook as well, because they started as a game manufacturer, and then they moved to the layer of making the game engine, and then they've since launched the Epic Game Store, and then they launched the Epic Online Services. So they're basically launching these sort of different components of the value chain,

and what they expect the developers to do and the consumers to do is adopt them piecemeal. Hey, we're not going to bundle. We're not going to take sort of the surplus economics we deserve or could take for our monopolistic behavior of bundling these things altogether, and then forcing you to use the option that's bundled in, I could actually, even though they're not a hardware company, I could actually see them being like, and another modular way that you can experience our experiences

or anyone else's experience is through the epic hardware. Jason, I don't think it's that crazy. Okay, so the mistake I made in my first iteration was limiting it to Fortnite, but to make it the epic Unreal phone and the Epic Unreal tablet, and here is the kicker, Ben and David, what if for but $1,000,

all of the game manufacturers could get all of Jason Calcanus's content no no that's available for free for all time listen I I I I I I was a separate subject but I do have I do believe the only way to make paid content work is to have 50% or greater of your content behind a paywall which is what you're doing you it's like one for one or the red scare podcast is one for one or a hundred percent which is what or Sam Harris is doing like I think 30% you listen to the first 30 minutes and the other 60 minutes behind it has to be the majority in order for it to work on any level but what i'm thinking here is what if they said to all of their all the games made and all the apps for one dollar you can put yourself on the phone and then we could have up to 200 apps preloaded we will then take 200 dollars off the cost of the phone and you get to permanently be on the phone that that that's that app cannot be deleted.

It's like the OEM model of flip phones. I sure hope we don't go back to that. Well, no, no, but here, it doesn't mean it's on the front screen. They'll all be like in the, it's being, it's like a feature listing on any other Zillow or Redfin or Yelp. You get like basically a feature listing. So you put whatever you want in your first couple of screens, but the third and fourth screen, if you choose to, instead of paying $600 for this phone, you can pay $400 and it comes with $200. apps who each paid a dollar. So this is like when you buy a Kindle, you can buy the Kindle with the special offers and you get it for 20% of us.

Yes, yes, I think this could actually work. So now I want to flip the conversation to get back to China and the fact that Tencent and we sort of dabbled in their involvement in so many companies. and when we get back, as predicted, as I predicted, working for the communists is not a great idea for any American. And literally a couple of months after I said Kevin Mayer has lost his mind and is a traitor to America for going to work for this Chinese company, he has resigned. But he may not have resigned because of his realization that working for communists isn't the best. look, he may have resigned because he was going to be excluded from the discussions about the acquisition that is inevitably, I believe, going to occur. When we get back, we're going to get both Ben and David's opinion on the crazy hot potato

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Speaking of good design, let's get back to the rest of this podcast. All right, listen, we're ripping through a lot of important information at a very difficult time. And I just want to take this moment to say, I know many people are suffering from the pandemic and the economic,

aftermath that we're in the middle of. And to those people, I am very sorry for what you're going through and suffering through. And I hope as Americans, we can all do our best to vote for people who we believe are qualified for whatever side of the aisle is. But I hope you all vote. And I hope you vote up and down for people who are qualified to deal with a crisis. And I'm going to leave it at that. And then to our black brothers and sisters who are suffering under unfair policing. Again, this is not what this podcast is about, but I feel obligated to say it's just devastating to see what's happened. And we stand with you. And I am putting a lot of thought and time and effort into finding more black women, black men, and people of color to invest money in. And I'm

very proud to say that our team, especially Jackie on my team, has a program called founder. dot university that we taped that we did this week for 10 hours and we had 260 black and brown founders female founders LBGTQ uh and we found three or four uh we always find three or four great investments and I am working my ass off to work with my team to make this a top priority to bring not just you know I can't affect policing I know that I mean I can vote but I'm not going to be able to change these murders that are happening on the street. But the thing that's in my wheelhouse is investing in founders of color. If you're a founder of color, if you're a woman, and you want to spend time with me and my team, we are available to you, whether you've just got an idea,

we've got a prototype. And we're going to do it, and we're going to do it for free. And we're going to give you every piece of advice and support we can. That is our promise to you. And we do it through something called founder.com university, which we're hosting six times a year for women of color, Latinx, I think is the preferred term now, LGBTQ, anybody who's underestimated and underrepresented, we want to work with you. And I just want to put that out there. And my good friend Arlen Hamilton and friend of the pod has started her own backstage syndicate. I implore you if you're a limited partner in what I do that you go sign up for what she's doing.

And I've been mentoring her on how to run a syndicate. She's done two deals already, both oversubscribed. And I think she's a great human being. And I think she's a force of nature. And yeah, maybe she swings a couple of elbows here or there, but I swing twice as many and I get half the criticism. So go support her as well if you're an accredited investor. And we need to change this situation because it's goddamn unacceptable. I'm going to leave it at that.

I don't know if David had been. I don't want to put you on the spot. Amen. But, you know, I don't know how you're dealing with this. But I really am having, you know, a very hard time getting to sleep at night. And I consider myself one of those people who never, who could just power. hour through anything, but it's very hard for me to deal with what I'm seeing, you know, it's heartbreaking.

I mean, look, David and I, you're preaching to the choir here. I think one thing that, or at least I'll speak for myself, in a way grateful for is having our eyes open to the way in which our country and our whole system has been broken for a very long time. Awful that the way that it's coming to light, but as hard as it is to watch and as is to talk about, I mean, these are these are murders. I am grateful that

I mean, that is the word. It is the word. It is the word. It is the word. And you know what? If the three of us were in any of those situations, we would not have been murdered. And that's basically all you need to know. That's the beginning and end of the discussion. So anybody who's saying

you shouldn't resist arrest, I would invite you to imagine that your neck was knelt on for nine minutes and you died or you're a black man and you saw that. And then think about, well, would you resist if you think that getting handcuffed is going to result in you being suffocated to death? I mean, that's the level of insanity this has come to. And I'm from a family of police officers and firefighters, right? And I know the overwhelming majority of people

have good intent. And I know it's an incredibly hard job. But we as society have to come up with creative solutions. And we have to, this has to end. And we need to have leadership that is willing to discuss this and take measures. And I'm well, I'm on common. Maris. And I know that she's like the imperfect candidate and Biden's the imperfect candidate. I wish Bloomberg had run. That would have been my preference, Bloomberg, Kamala, Bloomberg, Hillary, whoever. But things need to change. It's not a political show, but we need to have qualified people in office, period. It shouldn't be political to say that we shouldn't murder people in the streets. So I, you know what? Thank you for saying that because I do think that, you know, we live in this

crazy bubble on Twitter where you and I and we all hang out. And it feels like if you say, my God, this is a murder. And people are like, oh, no, there's a million reasons of why that murder could occur, you know, and it's just, it's a murder. It's a murder. A murder is a murder. When somebody is unnecessarily, when there are other options, you take the other options, tackling a person, when they say they can't breathe, getting the hell off their neck with your knee. Like, there's a training issue here. Police in this country are training. for six months on average, I understand. Like, if people are going to be giving guns and they're going to be asked to get into the

most crazy situations out there, let's increase their salary 50 percent, let's move their training from six months to, you know, four years. And maybe they don't have a gun for the first two years. Maybe they're peace officers for two years and then they become police officers if they can show a track record of learning how to use a gun in a proper situation. And, you know, I did look at non-lethal weapons and those things and safety cams as a category for venture investing because I said, you know, maybe there's a way, and I'm sure somebody will clip this and be like, oh, here's a white venture capital, I think you can solve

something with an investment. But the truth is, there are ways and there are devices and there are things out there we could create that could make more non-lethal interactions. There's a, there's training, and there's equipment, and there's procedures, and all of those can play a part, and we need to work on it. Yeah. I think the thing that just sucks is like all that is true, but like The whole thing is just so broken. Everything is broken. Like, this happened again in Wisconsin. How the hell did this happen again?

Like, what the fuck? That's such an important point because it must be in the minds of every police officer. What happened with George Floyd? What happened? What happened? It's in their mind. They must have this. They must be having a morning briefing and memos and retraining and discussions.

So for this to happen again, so, brazenly where you shoot somebody in the back seven times. I understand he's resisting. I understand he might be reaching for something. Tackle the person. Shut the door of the car. Do something other than shoot somebody in the back seven times. It's an unnecessary use of force. God, it's just infuriating. I'm sorry for getting emotional about it. It's very hard to shift gears. It's very hard for me to sometimes to host this podcast. I'll be honest with people. It's hard to talk about business when you see Rome is burning, but carry on we must. And I think actually talking about TikTok and talking about the Chinese Communist Party and what's going on there is also a human

rights issue. We don't have human rights fixed in this country and China is involved in and a lot of people in our industry don't like to talk about this. Genocide right now. You know, the, the Uyghurs are being round up. You've seen the videos and I think we really start to need to think about the relationship of these companies to the United States through the lens of human rights, what's happened in Hong Kong, et cetera. And TikTok, obviously, is the first, you know, tip of the spear, right after Huawei, I would guess, in terms of this discussion. Everybody knows Kevin Mayer, or if you don't, was Disney's head of streaming, and he ran Disney Plus, which is the most successful thing at Disney since, I think, Marvel, and I think it will ultimately

have 500 million paid subscribers, and will be the driving force of that company. legendary CEO Bob Iger who wrote the great book we talked about Rite of a Lifetime is a lifelong corporate executive let's face it he's not a founder type as a corporate executive and in February

there were two finalists for the job and the head of parks Bob Chepec have I'm pronouncing correct got the job and the head of streaming Kevin Mayer didn't I think that's a mistake without knowing either of them personally I'll fight you on that

you will okay definitely fight you on that okay I don't know so let's just take that the top, who are these two individuals and why did Cheapac get the job over mayor? Yeah, David, I want to kick it to you for, because you know the strat planning story better than I do. Yeah, so Kevin was put in charge of Disney Plus and streaming because he

wanted operating experience and as part of his development as an executive within Disney running a business line. But for many years, he was running the strat strategy and planning group, which is legendary at Disney. and so important to the company, I mean, along with Bob Eiger, the Strat Planning Group and Kevin, did those, you know,

the Marvel acquisition, the Pixar acquisition, the Lucasfilm acquisition. And they had to redo Strat Planning, right? Because Strat Planning used to screw up every deal. Well, that was under the Ovid.

Izner. Yeah. Yeah. They were great for a while, and then the Ovid Eisner later year is not so great. Basically what they said in the book was every time they brought a deal

there, it died. and there was no boldness in Strap planning before Iger reded it and took it from, I don't know, if it was hundreds of people down to like 40 or something. Yep, yep, totally streamlined. And Kevin was a big part of that. But I think it's totally unfair to call Iger, you know, hired gun executive. I mean, I think he is like, oh, I'm sorry. Did he ever start a company?

No, but he worked for 50 years in the same organization and ended up being the CEO of it. No, but no, no, no. But listen, there's a difference between a founder and some. who runs organizations. I'm not saying one is better than the other, but it is two different career paths, clearly. I think yes, but in this case, he really, as close as you could ever come to having something like a founder mindset and DNA in a 100-year-old company like Disney.

Okay, fair enough. I'll give that to you. He spent his whole career, except for one year, one year out of college, and then he spent the rest of his whole career starting literally at the bottom and rising up to the CEO in the Walt Disney, you know, what became the Walt Disney organization. It's just amazing. So I want to take it on why Chapic was the right CEO. So Iger had this like, for anyone who read the book or, you know, listen to, I'm sure Jason

talked about this or else talk about this. Iger had this sort of three-point plan where he wanted to, and of course it's a three-point plan. But he comes in as CEO and he says it's about digital distribution. It's about international. And it's about owning first party just like unbelievable IP. Star Wars, Marvel, Pixar. So we got to own the IP.

We have to go international. And what was the other one? International own IP. Direct digital distribution. And direct to consumer, which they never had. It was always obscurified. ESPN, the customer of ESPN was a cable channel, not a sports fan. Got it.

Yep. And I think technically it may have been more like we have to use technology as our future. It may have been a little bit broader than that. But basically saying Disney started because of technological breakthroughs and how to do animation and we need to use technology to create innovation in the same way that was a founding principle of this company. Anyway, Iger comes in, he completely changes the strategy of the company and reorganizes everything, does the Fox acquisition in addition to those three big properties, Marvel, Pixar, Lucas film, and like sets the direction of the company for the next 20 years.

So he was a, you know, he was the guy taking the boggle thing and shaking it and then sort of like letting everything settle out. And what you want to do after that is harvest the returns from that strategy. You want a person like Bob Chapic that's going to come in and sort of just execute, a COO type, a hammer who is not going to come in with a brand new vision again and shake everything up again. And so I think... So like you need a Tim Cook post Steve Jobs, not a Steve Jobs after Steve Jobs. Absolutely. That's an interesting approach. That's so important is Iger was both of those in one. It's not like he came in from the outside, shook everything up. He had spent 30 years in the organization.

ABC Cap City. Yeah, he was the CIOO. And then he was like, nope, what got me here isn't going to get Disney there. We're going to shake everything up. And I've got the cred to do that because I actually did this. And the crazy part of that story, I don't know if this resonated with you, was that the person who gave Iger the job was Michael Eisner. And Michael Eisner was the one who got Disney to,

a new height. And Michael Eisner was the one who said, do not under any circumstance by Pixar or go down this path. That is the great blind spot of blind spots. Is it not? When you think about being a great entrepreneur, the innovator's dilemma, the ability, and you said it, what got you here will not get you there. There's a great book by the title. Have you read it? What got you here won't get you there? Put it on your list. It's great. Basically, the concept of the book, and David, you said it without even knowing that there's a book written on it, is what high performers do typically is they put the weight of the project, the team, the problem on their back, and they will their team to win.

And sometimes that works. And then sometimes you have to make the people around you better. In other words, your individual achievements and your individual ability is not enough to get to the next level, i.e. Michael Jordan. He needed to make Pip been a great player. He needed to make Steve Kerr a great player. He needed to make Rodman a great player. And you saw that in that incredible documentary.

Or it's like you see LeBron with, you know, becoming an assist machine now. Yeah. I mean, listen, I mean, J.R. Smith is like the ultimate person to lose a game for you. And every time J.R. Smith makes a mistake, LeBron is like, it's okay, little brother. I know you're an idiot. I know you do stupid stuff all the time. We're going to just keep you on the team because we know you can hit four, pointers in a row, and you have no fear, even though you're untying people shoelaces on the court

for no apparent reason other than you're bored. J.R. Smith. I mean, he was one of the greatest Knicks ever because just we were so bad and he was just so dumb. Literally the only NBA player ever to block me was J.R. Smith because I tweeted, congratulations to the Cavs on losing another championship because of J.R. Smith. And he blocked me. Oh, so brutal.

So entertaining. So, so entertaining. Where were we? What were we talking about? Oh, yes. All right. So you were telling us that, that, uh, okay, well, let's talk about Kevin. We were vehemently disagreeing that Iger was a corporate guy.

So, but, so you're saying if, if I'm reading you correct, Ben, you're saying, if you put Kevin in, he would have shaken the bog, the bog, and then you got to do all the pieces again. When really what Disney needs to do right now is just solely focus on making. Disney Plus have more subscribers than Netflix, and the job is done. Disney Plus executing on making sure you continue to build great franchises like those three, and then of course growing internationally, which is what Fox was all about. But yeah, like continue, basically executing those three plays. Just execute. You don't need another idea because no company can execute seven things at once.

And they will, but probably not for five or ten years. Right. You want to add something every couple of years, AirPods, the watch. You can't add the watch and AirPods and the glasses in the same year. You need a certain number of cycles to, you have to have focus, right? Well, and then the other dimension is Iger didn't actually go anywhere. Like, the only reason the CEO succession happened is one or the other of Kevin or Bob forced the issue, clearly. Like, Iger was not intending to retire.

Well, he's also old now. So, like, I mean, I guess when you're Bob Iger, is he seven? now. Somebody look it up. Nick producer, Nick put in the notes. He's right around. But he had a plan in place that he wrote about in the book. Yes. 2022.

I don't know. Let me ask you guys a question because we're all on the younger side here. I'm 49. I think you guys are like 29 and 34 or something. Can you imagine being Bob Eiger and Bob Eiger is 69 years old and not doing it for another five years? I mean, how does Bob Eiger not keep going? It's so amazing. Or do you think he just wants to be president?

I think he wants to be president. Yeah. There's only one other job that would be more challenging. Yeah. Or better. What's a better job? Give me the better job than being the head of Disney. At this moment.

Being the head of Disney last year. Okay. Right. Okay. Give me, I mean, but seriously, is it being the head of Tesla? No. That's going to be hard. Is it being the head of Microsoft or Facebook or Apple?

No. what's a better job right now? President, that's the only thing I can think of to check a checkbox or a guy at Iger's level. I think you have a better job. Like, I think we all have better jobs than any of those sound to me. I think it depends what you want. Yeah. I'm talking about like, you know, we know the type of power.

We're talking about an archetype that wants to do, wants to reach the pinnacle of business and personal achievement. he's not going to be the MVP of any sports league it's too late for that it's not going to be the head of the frontman for the rolling stone's what's left potis yeah that's it's all it's left for Oprah and him well I think it just depends how much you love what you do like Buffett and Munger are they're like they don't want to be potus they're loving what they do yeah that's a really interesting one they're unique yeah the mental maze that I was going through is what is a because we're talking about achieving some combination of money,

fame, and power here. So we're not optimizing for quality of life. Greatness, sure. And so I was navigating through what is an organization that actually where it's sky high right now in terms of revenue or stock price

or public sentiment that doesn't have all the downsides that a lot of the big tech companies have coming under fire right now. And like David, that said, Berkshire Hathaway is a very interesting one. I mean, I think they have a, they're very good at what they do.

They have product market fit, and they've had the, the compounding of the last 60 years that they're now sitting on top of. It's a, what is the secession plan there? They've got some lieutenants. Yeah, it's, um, Ted Coombs and, um, uh, Angie Jane. Yep. Fascinating. I wonder if they changed the strategy.

I mean, talk about what got you here doesn't get you there. So let's talk about. best they get free money from insurance float. Yeah. That is amazing when you think about it. Everybody wants to be in the insurance business. I can't think of a worst, like most boring way to wake up every day. So Kevin quits.

He resigns. What is our thinking on why he resigned? Because it's unspecified, I believe, unless something broke when we're taping this. It's unspecified why he leave. Why did he leave? What's your best guess? Didn't he say, or maybe it was just reporting? that he got left out of the negotiations.

I think that that's the rumor. He was, yeah, being left out of it. But I don't know that he has, I don't believe there's a formal state from him saying that. But that seems to be the case, in which case, that would confirm that he's just a hired gun.

He's just a face of the brand. If you can't be in the discussions, then you're not important, you're expendable. He was made to feel expendable again. Yeah. I mean, I also think he realized that part of his job over the next however many months or years was going to be testifying, and that sounds awful.

If you want to break the spirit of any CEO or any leader, depose them. You guys ever been deposed? No, hope never. Oh, God, I got deposed one time, yes, for Cyber Surfer magazine. I got a trademark dispute with the publisher. I created CyberSurfer. I didn't have a D.L. He thought it was worked for hire.

I brought the name and I trademarked the name. sued me in federal court when I was 23 years old and I got deposed. Oh, man. Yeah, every 23 year old getting deposed when you have $4,000 in your bank account, that's kind of fun. Shout out Starlog. Brutal. It's being deposed is one of the most painful and arduous things because basically a group of lawyers sit there and ask you mundane question over and over again. And then your lawyers object, but there's no judge.

So they just argue with each other. And the job is to try to tilt the person. And so basically... Wait, there a mediator? Who decides at the end? That's the thing. You can basically say, we're not going to answer that.

And the person's like, you have to answer it. And the person is like, well, I'm not going to answer it. And then they're like, okay, let's move on. Because then you have to go to court to say they wouldn't answer these questions. And then they have to mitigate if they are, in fact, have to answer it. So it's almost like it's a good faith. Like, I'm going to answer questions. You're under oath kind of situation.

kind of situation. We have it here on tape. It's like a Jan Levinson Gold situation that were, it's like that from the office. That's how I should think about this. Yeah. It's a very surreal experience because it feels like you're in court, but you're not. You're in like an office and everybody's just sitting around some like, you know, $90 square foot office space with some view of some city. And there's eight lawyers in the room, two transcribers, a video camera, backdrop.

and if you watch any of the videos and it's it's a surreal experience. So he didn't want to get dragged into that, I agree, which is, by the way, the reason why Sergei and Larry put Sundar in charge is because they get dragged into so much stuff. They just wanted to say, well, we're just on the board. Right.

The CEO goes. You notice that they were not, you notice who wasn't in the firing line? No, Larry or Sergey. They're the smart ones. Nobody said they're not smart. They're not smart. They're brilliant.

So what? Let's go through this step by step. And I'll treat you guys like witnesses. So number one, Ben should, and a yes or no answer, should TikTok be banned in the United States. Ben, and I'll remind you you, you're under a... I think that... TikTok should not be banned in the United States. Why should TikTok,

which is owned by a company in a communist country, not be banned in the United States? I think it is harmful to the American consumer, and it is a shame that we can't get along to basically enable...

It's value destructive, and not only value destructive to corporations, but value destructive to people's lives. Oh, let me ask you another follow-up question there, Mr. Gilbert. Does TikTok use the phone, the phone's camera, and the phone's microphone? Yes, it does. Does it use the GPS location? Yes, it does.

And does the Chinese Communist Party have access to other companies' data in China? Yes or no? It seems likely I don't know. Did Yahoo have to give the names of dissidents over to the Chinese Communist Party when they were running mail servers and their search? services in China? Yes or no? I have no idea, but I would guess based on your question that yes. The answer is yes,

I'll submit this document. So knowing what you now know, Ben, that Yahoo did give over the names of dissidents and email addresses, to the Chinese Communist Party, and they can will any Chinese company to do that at any time, and they have a history of doing that, do you now feel comfortable

with 70 million Americans having their microphones locations, what's in their cut and paste clipboard, three, every three seconds. Every three seconds. And their microphones, do you feel comfortable with the Chinese Communist Party having access to 70 million Americans, microphones, cameras, cut and paste, clipboard, and their GPS location,

Ben, yes or no? So now you're asking me a very interesting question, which is sort of like thinking as a patriot on behalf of America, is it the right thing for China to have this? And if that's the discussion we're having, it needs to go a whole lot deeper than TikTok. because I don't think it's just TikTok. I think there's tons of apps that have Chinese developers or data on Chinese servers. But we're talking about TikTok right now. The number one app should be a part of the conversation here.

Great. I do think, and I want to talk about this, like, I think philosophically we all screwed up by saying how awesome it is that China will take all of our internet in, but will sort of selectively decide what they let in. And yet, we are happy to take whatever stuff they put out. on the internet. Should Twitter be allowed in China? Yes or no?

Mr. Gilbert, I'll remind you you're under oath. I mean, now am I acting as if... As an American, yes. Like, if I'm acting on behalf of the Chinese Communist Party, like, I don't know. Is the Chinese Communist Party involved in the rounding up of millions of Uyghurs

as you see in these photos? So you mentioned this. This sounds terrible. I actually don't know much about this. Right. Anyway, I'm going to stop the rope. But anyway, the point is, you're a pretty freaking smart guy, and you are not convinced of what I believe should be obvious to anybody, which is any data that TikTok has, the Chinese Communist Party has that already has. Probably.

Probably. Okay. So now, if that is not terrorizing to you as an American, then I think you need to pause for a second and say, are these good actors or bad actors, good actors or state actors, they're communists. did they or did they not just remove all freedoms from Hong Kong? They could be capitalist, but they can also be communists at the same time. Is Hong Kong an independent region anymore? And can people vote there? So this is why I'm like, I actually don't know.

Like I'm just not enough on my geopolitical. And so this is the problem. I think people of your generation don't understand what communists do with information and data. What they do is they round up their opponents and they torture them. and they spy on people. And that is the crux of the issue here. David, I'm not going to put you under the same grilling, but what are your general thoughts after watching?

That's not fair. I appreciate you playing a long bet. By the way, if this had been Taylor Lorenz from the New York Times, she would have been like, you're harassing me by asking me difficult questions. By the way, Jason, I love Taylor. Like, I know you're in like a thing with her, but Taylor's great.

I think she is great. I think she is great at reporting on memes. And I think there is a place in the world for memes and reporting on memes and style. I think that her position on the Chinese Communist Party and TikTok is idiotic, literally idiotic. And I think her position that people who want to go to work are stupid in a pandemic is a very privileged thing to say for somebody who makes $100,000 a year writing behind a keyboard. about memes and style. Look, I don't know enough to really get into this argument. Which is why she deleted the tweet.

I think Taylor's great. I think she's a wonderful person. I think she's one of the most talented reporters of her generation. And I just don't, like, I'm uncomfortable being on the show when you want to sort of end the discussion on and negative attack on her personally. Like it just doesn't. No, it's completely professional. It's completely professional. I'm only comment.

I'm sure she's a wonderful human being. I'm only referring to the complete insensitivity of a person who makes $100,000 a year writing that other people who are essential workers who have to go to work to pay for their kids are stupid, which is what she tweeted. That was how the whole beef started. As I said, this is a stupid tweet. Like, if people have to pay for their family and they're an essential work and they go to work, that's not being stupid.

That's essential. That's how the whole beef started, by the way. And the fact that she wrote that, like, TikTok is like this super important thing to a general and it's going to cause them and that it should exist. But anyway, let's put it aside. Let's keep going on TikTok. TikTok. Let's keep going on TikTok.

We're not going to agree on the madness of, yeah, New York Times. On TikTok, though, it's like, Jason, yes. Here are all your points on that. But TikTok is owned by Byte Dance. Bite Dance is a Chinese company. Correct. However, 70% of the outside shareholders in ByteDance are U.S. entities. How does that complicate things?

tremendously. Are you counting Sequoia China as U.S. entity, David? Yes. That's an interesting question because if who knows who the LPs in that fund are, there's no transparency. I believe by, there is no transparency, but my understanding is by and large, it's a similar LP basis. So what do you think, David, is the best thing to do if the, if the United States is not allowed to operate and there's no reciprocity in social network, works, then what is the right thing to do in this situation? Is it for them to divest? Well, I don't want to say what I think is right or not right, because A, I don't know, but I can say what I think is likely to happen. It's uncharted territory for certain.

Certainly uncharted territory. Yes. Here's what I think is likely to happen and probably the best outcome. I think a terrible outcome that is definitely not going to happen because all of the economic incentives on all sides are against it is TikTok shuts down. I think that is very, very unlikely to happen. That is a 0% possibility. Literally zero. Yeah. I agree with you. But I think what is likely to happen and what I hope happens because this would be for the best is that TikTok ends up when all is said and done as an independent third party entity with the U.S., Canada, maybe Europe, you know, Western operations, being its own independent entity with its own data on its own servers, not in China. I think that's probably likely

to happen. That seems like the overwhelming majority, yeah, likelihood. I agree. And I think the two putt to get there is all this new cycle right now is about a sale of TikTok, Microsoft, Walmart, Oracle, somebody's going to buy TikTok. You know, Walmart. That's not the biggest Walmart. I love Walmart being in there, but let's Let's add Walmart to Fing. Let's put it in there. There's no way that that's the end game, though. That's just like the necessary required step to have a company come in with the infrastructure,

data infrastructure and server infrastructure and cloud infrastructure to offload all of this data. Yeah. Then once the dust settles, TikTok gets spun back out. It's an independent entity. There's so much investor motivation for that to happen. I mean, Sequoia, General Atlantic, KKR, the big American shareholders in Bight Dance, they wanted this to be the first step. It's just not going to be possible, but it is going to be the second step. And the first step is going to be an acquisition.

An acquisition. So there will be some sort of acquisition that makes this an independent company eventually. So a two pod is... It would be part of Microsoft or part of Oracle. But it's more like they're giving it a home. Giving it a home. a home to onshore. What do you think it will wind up being valued at?

There's 700 million global users, 70 million. We wrote a blog post on this. Okay, great. And I'm only like saying, ooh, because we've only ever written like one blog post. But the, what do we come up with, David? 30 billion. I think we said, we think we said about 30 billion. Okay, so the 700 million users.

Is that right? That was the global. Well, that's global. So you strip out China. You're talking about, depending on which geographies are included in this, 100 million in the U.S. Plus, call it another one to 200 million. Okay. So let's say 250, to pick a number.

250 times $100 a user is $25 billion. I would say that $25 billion would be the high end of normal because the monetization, we already know that something like Facebook in the... The developed world, I think is the proper word to not get me canceled, is... I know third world will get you canceled, so that's the emerging world. Somebody tell me what Facebook's current average revenue Arpoo is in the United States. Is it $78? Of user?

Yeah, so globally, it's $7.50. Facebook, I believe, does 5x that... So it's 35 per user. Globally. the U.S. is the number that matters, the U.S. in Europe, because the U.S. and the global number is like, in some countries, $2 or $3 per user per year. And I'm sorry, I messed that up. So $7.50 is YouTube's global are poo. And this is how we valued it. We basically said, well, if we knew YouTube's U.S. Arpoo, how would we value YouTube users? Because we think about TikTok users, exactly. I would go five. I would go somewhere between five and ten. So between five and ten, so between five and ten, seven times seven,

49. Let's call it 50 bucks per user. That means over five years you make $250 per user. If you have 250 users... You're trying to do some discounting in your head on those future cash flows?

Something like that. I agree with you, 30 billion seems really fair, actually. I think 30 billion would be a fair for price for both parties. Let's just say, forget revenue in the future. Let's just say $50, dollars per user now, like at some point in time.

Are they making money now? They are. It's growing very quickly. Do we know what it is? Hundreds of millions of dollars just in the U.S. Yeah. So you could just 100x that too. I mean, that's the other possible.

Yeah, you could 100x that, but say, easy. 50 bucks here, that's easy. So 50 bucks times 100 million. Five billion. Five billion. And then just slap a 10x revenue multiple seems very fair, given where everybody else is trading. Yeah, $30 billion.

Yeah. 40, 50 billion, and we could do that with the SPAC. Doesn't, uh, yeah, spack the hell out of that. Do you want to get into SPACs? Yeah, let's go right to SPACs. It's a nice segue. Thank you for, uh, for keeping me on track here. Well, from PitchBook's U.S. VC. VC. VCU VCU

2020 and Pitchbook now is an official partner of this week in startups. Thanks for doing that. It's a non-cash. They're not sponsoring it. We just decided they would give us data. Great Seattle organization. Uh, yeah. Um, actually the person, John,

Gabbert, who started it, worked at venture source, which bought Venture Reporter Reporter Reporter, which was one of my publications. And Dow Jones, this is our shared history. Yeah, very short history. And John was a really smart cat. I met him literally in San Francisco, and I got fired two weeks after they made the acquisition. By the way, these tangent, but these data businesses, great businesses. There's a company called Market that merged with IPrio and, uh,

IHS publicly traded data company. Yeah, I mean, if you were, if you may, the problem with the data businesses, they, they can very quickly get to 20 or 30 or 40 million dollars in business. And then somebody makes some cheaper version of it. And there's a limited supply of people. And they can be highly profitable. It's very hard to get them to a billion dollars in revenue. You should, you should ask John Gabbard about that.

Because, uh, I think that's why he sold does very well. I wonder what Pittsburgh's at now. 60, 70. I think they do very, very, very well. But that's why what these, what morning. which bought, I think it was Morningstar, bought Pitchbook and then IHS Market. What you do is you just aggregate all these businesses because you need them in every single industry.

Which is what Dow Jones did. Dow Jones had a group that had private equity venture source, venture wire, venture reporter, and they just took all the brands and consolidate them had one price. And then they started making them piecemeal. And then they went back to single pricing for it. So I want to talk about the accreditation laws. I want to talk about SPACs. And I just want to give everybody just a little feedback on where we're at.

This is verbatim from Pitchbook's USVC. evaluation report for Q2 of 2020. While macroeconomic headwinds and the COVID-19 pandemic have battered the public markets, Angel and seed stage valuations have been largely insulated from volatility, given how upstream in the venture life cycle these deals typically are. This, of course, only includes angel and seed stage deals completed during this period of uncertainty. While angel valuations have held steady, the median.

Equity stake acquired for angel financing in the first half of 2020 was 7.7%. That would be, I think, corrected my experience of people selling about 10%, and has been decreasing since its peak of 21% in 2013, indicating Starz's abilities to command similar evaluations while giving up less equity and ownership in the company. While check sizes for C-stage companies tend to be considerably larger than angel deals contributing to muted C-Sage. stage deal activity in H1, investors are still acquiring a median of 25% equity stake, as many seen focused firms continue to turn their attention to existing portfolio companies. This vibes with me. How does a vibe with you, Ben?

Sounds right. Sounds about right. Are you doing more or less deals during the pandemic or the same? The same. How about you, David? Same. my aim is do one angel investment or company I advise a quarter. I am doing that pace.

I am doing double. Well, but you're a special man. No, I am not special. I just, I think that right now, because the accelerates, there's a very specific reason. I didn't think accelerators would be possible remote. And I think I was right. Nobody wanted to come into an accelerator remote when,

you could go to one in person. They thought it was stupid. Then we moved ourselves to remote, and I had a big fight with members of my team who are no longer here, and literally two members of the launch team would likely have been here had I acquiesced to their request

of work from home and doing remote. But I didn't, because I said, that's stupid. Like, what founder is going to go to a remote accelerator? So dumb, like the whole point is to meet people. Anyway, the pandemic forced 100% of people to go remote. So I just doubled the number of companies we're investing in because half of the angel investors and venture friends I know very quietly told me that they are, I would say one third told me they're doing no deals until 2021. They're just going to take the time off and, you know, work with their existing portfolio. And then the other two thirds said they're, you know, either going to do only their own companies and focus on their winners.

and then one third said they're going to do new deals, which meant, okay, now is a time. Was that early in the pandemic or you still hearing that? That was May and June and July. So that's been the last three months, I've been hearing a similar thing, which is if we have a winner in our portfolio, we're going to give them the money.

Because there is a theory going around amongst that group of scaredy cats. The scaredy cats think that there is going to be, be a massive crises and that this is going to go on through 2021. There will not be a vaccine until 2022 and that there'll be a prolonged recession and that companies are going to run out of money, not this year. They're going to run out of money in Q1, Q2, and Q3 of next year. Therefore, they should reserve their dry powder for that window. That's what the scared eat pants think. I disagree. I think now is the time.

to double down on businesses that are close to profitability, which there are many, and founders who are mature enough to say if this does extend itself, like, let's say, God forbid, the virus of COVID morphed and became more deadly or something, and the viruses and the anti-vaccines don't work. Like, that is a potential scenario. It's a hard one to think about, obviously. They would know how to shift gears, and they would be willing to cut their staff size by two thirds to survive. And so I just have that conversation, frankly, with each one. Therefore, when we do remote accelerators, we don't need to have a location, which means we can do three times as many because the team doesn't need to go anywhere.

And twice as many investors are showing up. And how do you maintain the quality bar when upping your quantity on accelerator companies? That is a very good question. It turns out the number of quality applicants has gone up roughly three to four X. So we're getting the same number of applicants, but people who wouldn't previously have considered an accelerator are now considering them because the quick hundred K and when we decide we fund, we ship the money immediately. Like if we say we're doing this deal, like I found a deal of remote hour.com, which is a pretty cool piece of software that you may have seen me playing with on Twitter yesterday where you can set up a room where you do three minute or five minute or a 10 minute calls and people just queue up and you can just zip through them and they can sign up an email. And when you say, I've got an hour and you can embed it. So let's say you were a real estate broker.

You could say, I have office hours between three and five, Monday, Tuesday, Wednesday, and then they're on your website. They click it and all of a sudden they're connected. It's almost like, it's like real office hours, but the countdown clock ticks. So I tell founders you have three minutes or you have five minutes, and I have a button I can click that says add five minutes. And then you can add stripe to it, right? And you could say, I'm charging for this. I obviously I'm not charging, but I could charge and say, I'll give you 10 minutes.

Can you keep hitting the button and charging their credit card? Well, it's sort of like that, you know. But anyway. Early stage, David, it could do a number of things. RemoteHour.com is just fantastic. And I bring that up as an example of, I was like, you know what? This is a founder who's awesome. He's not going to clear market.

He's a Japanese founder who's a solo founder. He just added a second person. Like, he's just amazing, but there's nowhere for him to go because he can't take 20 angel meetings because nobody's. taking meetings or it would be very hard to get those meetings. And so that's my theory is there's more quality companies. That's exactly the thing that I think all these scurdy cats miss that I miss at the beginning of this.

So many people, it's just like people are just going to adapt. Like all that COVID is going to do is it's accelerating change that was going to happen anyway. I mean, there's lots of terrible things that are happening. I don't want to discount that. But in terms of venture investing landscape, either lots of new companies like RemoteHour.com,

which is amazing. are going to get founded to serve these new and different needs. I'll get you in early. Yeah, get us in. By the way, I just want to let you two boys know. Any deal I'm in, I get you in. And since you're so good on here, if you want to do it, even a small like 5K bet through my syndicate,

no carry for you two. Zero carry. You guys get a free ride. Whoa. Free ride, okay. Free ride. We apologize to everyone else out there who's paying carry. I mean, thank you, man.

I'm not paying you guys to come on the show. and you come on the show and you bring it and you're prepared. I can't tell you how many people want to be on the podcast. You probably have this yourselves. They come on the podcast and they just want to talk about themselves and promote some bullshit. And they don't want to have a real conversation. They don't want to disagree about stuff. And here we are.

We sit here. We disagree. We disagree with you any day, Jason. Do the work. Do the fucking work. Okay. Do the work. The SEC is changing accreditation laws.

We knew this was coming, but they released a document. And it's a starting point. So it's not exactly where I want it to be. But the SEC... Because you said when you came on our show, you said you were watching the SEC like a hawk. Like a hawk on now. So you are forefront. This is it for me, boys.

I am in love right now. This is a message to the Securities and Exchange Commission. I love you. I love everything you do. I am in love with the SEC because there's a woman at the SEC who said, Americans shouldn't have to ask the SEC for permission to invest. But today's a critical. investor rule at least offers people a path to ask permission based on their education,

rather than simply telling them no, unless you're rich. This is from the SEC, which is what I've been saying for a, since I started Angel investing, 10 years ago I've been saying this. You can go to Vegas and bet, but you can bet on sports. You can do whatever you want with your money. You'll flip quarters for a dollar each. Right. And we know for a fact those things are expected value negative for the person betting.

Startups at least have a chance of being expected. value positive. Of course, and they could have the outlier of being generational wealth, which is I believe why the American dream is not believed in anymore. They're just getting started. They want to dip their toe. So they said the spousal equivalent, so basically you can pool your resources with your spouse, which has always been an issue for my syndicate, Angelist, and others, which is, can my spouse read the deal memo? Does my spouse count? It's like, well, of course, if you're married, like, you're a unit already. This is how the law looks at you. You file your taxes together, yada, members of an investment team, a fund, can put money in.

So if Nick, the producer of this week in startups, is sitting with me in all these meetings, and he doesn't meet the accreditation threshold, he can't invest in a syndicate, even if he wanted to make a 2K bet. But he can go on Robin Hood, God bless him and do 2K bets, but it can't do a 2K bet on remote arrow. Yeah. Did they change? The way they used to describe that was using this ridiculous language, a sophisticated person. Do you know if they reuse that for the, like if you worked in an investment firm, you were a sophisticated person and therefore were able to invest?

I love the word sophisticated. That's how they say it in Australia. That's their version of accredited. But I love sophisticated. But here's the kicker. And this is where I think I'm going to actually play a role in this. And I'd literally email the SEC Commissioner yesterday. Those with a Series 7's license, which is hard to get, but 65% of people pass it on their first.

try a series 65 and there's another one like a series 81 or two i don't know any of these i mean i know of them because kids i went to high school with tried to get their series seven so they're going to work on wall street but and other financial certifications are going to be able to be accredited but there was no like here's a test from like my angel university course or the acquired fm course yeah that's the that's the problem is like a series seven is was built to be you know a traitor on wall street like it was nothing To do with private company invest in private companies? Yeah.

So what I want to make is my own test. And so I submitted to them the Angel University course and the book. And I said, hey, if people read the book, take the course and I gave them a test, would that count? And could I certify somebody who's an Uber driver making $50,000 a year to be allowed to participate in the syndicate forcom.com? And I'm hoping that, you know, somebody clips this. Jason, shout out.

Thank you. Calm.com. After we came on your show last time when you were talking about com, I became a member. It's great. Oh, thank you. Have you done the sleep story yet?

I haven't been using it for sleep. I've just been using it for meditation, but it's what the scenes, the scenes are. Yeah, it's a sophisticated person. I'm a sophisticated comm user. I would say, if you're having a rough night sleeping,

which I have, you put on a calm story and you will, they literally study, I mean, I shouldn't say this probably, but they studied science of sleep. And let's just leave it at this. I thought you said this wasn't a political show. Exactly. They studied the science of sleeping and they designed the sleep stories.

And I won't say how with science to put you to bed. I'm going to leave it at that because I don't think they want the secret source revealed. But anyway. They work with the UC Berkeley guy who. I don't want to say anything beyond what I've already said, but maybe Matthew Modino. Okay. Okay, okay. Okay, so Jason, I'm curious on this because I think this would be a really good idea for you to do, and this could be huge for the syndicate.

How do you manage, like if I'm the chairman of the SEC and you come to me and say, I want to make a test? And I'm like, yeah, but you will financially profit from more people joining your syndicate. How do you manage the conflict of interest between like you would be incentivized to crank out as many accredited investors as you can versus making sure that, you know, they are sufficiently educated? I think if we took on the burden of the cost of the certification, that would be one thing. So if we said you can zoom into a call and we are going to pull up the quiz and we're going to ask you the question and we have a battery of 100 questions, we have 25 important questions and we have four versions of each, right? So you can't kind of steal it or record it. And we will have one of our people do this 20-minute assessment with you.

You'll pay $50 for it. and you get through it, and we have a video recording of you saying... So there's an audit trail of making sure... That's what I... That's what I would like to do is say, we'll take the burden on of accrediting it,

and when we accredit you, we will have that video, we will give you a copy of the video of you taking the course, not you taking the course, you're taking the test of the course. So here we are in our Zoom. We put a type form,

you know, this is all these people who can attach a video to a test, right? That's existing for certification already. We take one of those platforms and we just walk people through it. One of my proctors, one of our employees, does this. And then we save the video file

and we put it in a secret location, maybe we put it on wistia.com with a password. And then if you join the syndicate.com, but now you want to join Seed Invest, Angelista, Republic, you can say, here is my certification of me answering questions. And we could ask a question like, what is pro rata?

please define for me the word pro rata please define for me what information rights are and why they're important please define for me um what uh what would be a good question both the answer to both those questions is everything you're going to learn on the acquired LP show the answer to both of those questions is it depends which is the dangerous part of this racket but okay how about just define what pro rata rights mean. It depends. It depends. Right. Or, but okay, you could be pro, should you review the dot, I mean, when I took my gun test to get a gun,

they literally, I went to the gun store in Culver City. Natch. I said, uh, I want a GP 100, which is, uh, you know, a pretty nice gun that you only have to fire once. Let's leave it at that. Um, and, it's a service revolver for police officers for 50 years before they got into Glockes. And so basically, you could throw a GP-100 in the bottom of the pool.

That's what the guy told me. You could use it to hammer nails, and then it would still fire. Like, it's that rugged of a gun. And I was professionally trained on everything. But when I took the test, they handed me a test. And the guy says, here, take the test. And I said, well, I never read a book.

He goes, just give it a shot. I take the test. And it's like, I kid you not. It said, the safest way to, hold a gun is in the air, pointing it at the ground, pointing it away from the target, in a holster with the safety on it. And you're kind of like, huh, let me think about that. I think I'm going to hold it in the air straight up. You know, like, these were the stupidest questions. And I got one or two questions of 20 wrong. You need to get like 16. And the only question I got

wrong was like about the caliber sizes of bullets. It was like some obscure thing that has nothing to do with gun safety. So it's just like a driver's test. You know, they throw in one or two. It's kind of close to like a driver's test. Like when you, the only one that people get wrong

on the driver's test is like, what do you do at a yellow light? It's like, you're supposed to stop. And most people are like, speed up and go through it. And you're like, that sounds more dangerous than stopping. Like, yellow light means stop.

So is that a, is that a national gun? Like, or is that certified by a state thing? I think, like, are they all that easy? I think it's a California state thing. And then in other places,

you can buy them without taking the quiz. And then in California, You know, they literally give you a little card and you sign it and it says, I am certified to have a gun. The end. Like it's, it's so like literally you can buy guns. You can go to Vegas. I think if I recorded a test where I asked you 25 questions about angel investing. And then what I want to do is I want to limit people in our syndicate to the minimum for the first 10 deals.

Oh, that's a good idea. So I thought that would be a pretty good idea. I was to say, listen, if you're, for your first 10 investments, our minimum is 2K, you can only put 2K. So then if there's a super crater, and I always talk to my team around this, the average size right now for our deals is $4,000, I think for $4,000 to $5,000 for each deal is the average size. And you get some people who are well, so put in 50 and 25, and you get some people who are just like, I'm going to put the minimum and hope I hit a com.com or a density or whatever. And so this is big for me because imagine if I was on this podcast right now, and remember I talked to you about remote hour, if I was able to say, hey, guys, I got 5K for each of you in remote hour. And anybody listening who wants to be involved, you can put in $500. You know, and you can do this, you can do $500 up to five times a year.

And then if you show us your tax return or your accountant sends us your tax return, we will let you invest up. up to 20% of whatever your tax return says. That's the way I think it should work, which would be like if you went to Vegas and they're like, how many chips can you buy? And they're like, well, you can buy 500 at a time as much as you want, but if you wanna buy more than 500, you either need to be an accredited investor

or we have to have on file your tax return so you can't blow your whole life savings. So you're saying you want a threshold amount, even without having, whatever hoops, you know, the hoop has been lowered now, great. The bar's been lowered. But you want a threshold amount that you can do without it and no hoops.

I would say some, there could be some common, I'm thinking out loud here, there could be a combination. So if you want to not have a cap, you have to take the course and you have to have the video recorded test and you have to have 23 of 25 questions or whatever is reasonable. Yeah. If you want. And there's person for this like, you know, Vanguard, the wealth managers, like you want to go by equities? Like, sure. You want to trade options. We're going to have to talk to you.

Exactly. And by the way, Robin Hood, one of my. great investments of all time, you know, they are going through a process now because tragically there was a suicide that occurred. And, you know, we don't know the details of that. So you want to be very cautious commenting on it. I have to be extremely cautious as an investor because when you have a pool of 13 million people, some number of people commit suicide per 100,000. And I think the number in the United States, sadly, is increasing. Yeah, it is.

live very long and suicide is becoming tragically an option for some people. And so we don't know in this situation what role, if any, Robin Hood played or, you know, I'm in the professional gambling space with my poker playing. I've seen people lose millions of dollars. I've been at the table when I've seen people lose more money than they can afford to lose. I've seen people go negative. I've seen people be on $500,000 payment plans for 10 years. I kid you not. And these are poker games where not paying, you know, might not be a great life choice. And I've seen people sign over titles to cars. I've seen people, you know, like serious shit, like crazy shit in private home games.

You know, like, and these are rich people. And so I think having any rules of the road, just like you have probably seen your friends, even in college, gambling with a bookie. For sure. And there's nobody telling them, like, by the way, can you pay this off? the bookie's like, yeah, I'll take that action. Yep. You know, like, they're not, I, the way I look at this is I'm going to be successful either

way, and I want you to have a great experience. I want you to only bet the amount of money you can afford to lose. And I use the word bet all the time. And I say in my deal memos, which, do you guys read my deal memos? Mm-mm. Can you, Nick, make sure, you're both accredited, correct, yes? Well, now I am for sure. Okay.

Can we make sure they're accredited and get them on, if you, if you email, join, If you email join at the syndicate.com, Heidi, who works with me, we'll make sure you're credited. I want you guys to read my deal memos because I always put the bet I am making on this company, the risk I am taking

is that they're able to do the following. And then here's their deal memo, and I force everybody to do a webinar, and I use the term bet all the time because it is a bet, and only bet what you can afford to lose. And then people ask me what percentage? And, you know, what percentage?

Well, it depends on how old you are, how much you need the money. Do you have three kids in private school? But if you were a single individual, making $100,000 a year, you know, post this changing, I'd say 5% or 10% of your net worth would be the upper bounds of what would be acceptable if you were doing this and it was your passion and you wanted to make it a career. Because if you lost 5% or 10% of this. Gargrell's idea is a good idea.

I like guard grower. Anything else is just paternalistic. And like, I mean, the thing, like, this is the thing about regulatory capture. regulatory capture exists to serve the current market leaders not to explain regulatory capture for people who don't know what that means so like these these regulations now you're trolling me I love you bad

I love you bad for anyone out there who might be wondering for the nature of the audience who don't understand what the word regulatory capture is can you define that while I'm looking it up on Wikipedia I have an idea because Bill Gurley says it all the time So I don't know the history of the accredited investor rule, but like, who does it actually protect and who does it actually benefit? It actually benefits all the large financial institutions that have used the fact that you need to be a,

well, let's see, there's an incredible, but then there's qualified institutional buyer quib, right? Yeah, something like that. You have to be rich. You have to be rich to invest in venture capital funds. To get rich. in startup. Like, yeah, there,

markets are supply and demand. If you're artificially limiting the supply of capital to go into the highest growth assets, you're capturing it for yourself. Like, that's what's going on here. Yes. Yeah. And more abstractly, regulatory capture is just that the, it's kind of like when

two lawyers see each other in court all the time. So they have reason to be fraternal with each other based on that long-term relationship, more so than the people they represent. At the end day, these regulators have been regulating the people in a certain business for a long time. They get to know each other really well. And you can make really compelling arguments when you're the one being regulated that the rules should change in some way. And they, like, the regulators tend to listen to you because you've built up this relationship over a long time.

It's like real estate broker should be another one. Like, is a real estate broker working for you? Or are their client buying the house, the seller, or are they working for each other? They're playing an iterated game, not a single turn game, where their relationship with that person across the table, they need to preserve for future transactions. Right. And the person we're talking about here is the other real estate broker, not the buyer and seller in all cases. And they're doing all kinds of shenanigans. I had my real estate broker. I'm going to leave it at that. Who was like, listen, Jason, I think this is the right time to accept his offer because Joe Biden, you know, is going to get an office. It's going to change this. And I said, I'm going to stop you

you right now. Don't ever give Jason Kellan Countess financial advice. Don't ever give Jason Calihanis's regulatory advice. I gave you a copy of my book. Your job is to get me the highest price, do you ever sell me on anything. I don't want a piece of advice from you other than, like, what's the best new restaurant to open? And I said,

capish, and he wrote about capish. And my wife was like, you're too hard on him. And I said, no, these brokers are always trying to work you because if they sell your home for a million dollars,

$900,000 or $1.1,000, they make, you know, whatever that is, the two or three points on that, it makes no difference. So this is actually, I heard this. I can't remember where I read this the other day, but somebody had this great idea. Real estate transactions and real estate agents and brokers, perfect use case for tiered

carry. So like you sell my home for a million, you get, you know, three percent. You sell my home for over 1.2, you get 5% of the ups there or you get 7% of the 100%. They should get 1% of the million. they should get for, once you pick what price, the Zillow and everybody agrees is the right price for this house, let's say it's a million.

Okay, you get 1% of a million, you get your 10K. You get 2% of anything from a million to 1.1. And then you get 3% of everything from, or it could even be more, it could be 10%. Right. It could be, you could get 1% on the first million and then 10% on everything past then. I think it's cute that the three of us are sitting around,

talking about... But they won't do that. But I sold the other house I sold recently. I did a buyer-to-buyer transaction. You know what my legal fee was? $12,000. It's a lot better than... This is on a significant house, too, gentlemen. Like, this is not on a $1 million house.

I'll just leave it at that. We're shocked. Yeah. I mean... You've been in this game a little longer than us, Jason. No, boys, you're going to be there because I'm getting you in remote hour and we're going to ride that into the sunset. I love it. I got a couple. I got a couple. We got to do some deals, boys. We've got to get some deals going, man.

You guys got my phone number. Let's get on a little phone thread going here. I message. Let's just start sharing some deals, making some money. Let's get some conflicts going. I bet it happen to SPAC. Well, that's the next topic, and we'll close on this. SPAC IPOs per year, special acquisition, special purpose acquisition companies, corporations.

One of those two words. My friend, corporation. Corporation. My friend, Chamoth, brought these back to life. Three years ago, I was out. the poker table talking to him about him when he did IPOA, was looking for a company. As you can see in 2016, we had 13 of them, 2017, 34, 2018, 46, 2019, 59, 29, 2020, 80, and counting. And so this is taking off, and you can see the chart there if you're watching the video,

YouTube.com, subscribe to this week in startups to see the video. And I just literally had a wonderful moment. My friend Rick Fullop DM'd me and said, I need to talk to you. and I was like, okay, here we go. We sold desktop metal, which he got me a little yum, yum, yum slice of in the early first round. And he said, I got some good news. I said, hit me, what's the price?

And he said, we're going public. And I said, what? And he said, yep, it's backing it out. And that was announced yesterday. So now JCal has Uber desktop metal and a little company called Waiter that we have a de minimis number of shares in, but at least I get three IPOs. These are your public companies?

These are three public companies in, you know, the first hundred investments. So 3% gone public. Plus, it's still early. Who knows? Maybe it's the first 150. I'm not sure of the desktop metal occurred. I'm losing track. But, I mean, obviously, Robin Hood Com, there's a couple of other companies, you know, that are being spiked, thumbtack, data stacks that are being speculated.

But these spacks are changing everything. And our good friend, Bill Gurley, who has been lobbying against the wealth transfer that occurs during regular IPOs. He was on the direct list. The regulatory capture. He was talking about direct listings, which Spotify did, but are very hard and painful. Spacks are very easy and painless. And he just wrote a blog post, which I'm sure the two of you read, called the Third Door. And he is now on board.

I would not be surprised. I do not have any information if Bill Gurley, who is on his last fund with benchmark would pop open a couple of benchmark spacks. I don't know that. I'm completely speculating there. but my best DC, Chimoth, is now on his third or fourth spack. And I don't have any insight information on those, but I would never bet against Chimoth or Bill Gurley.

What are your general thoughts? David on Spack. One question. First, though, to Chimath literally brought this thing, well, not back from the dead. No, he did. He did a Sophia won. Yeah. What inspired him?

Where did you get the idea? That's a great question. I think, you know, he at one point, we had a deep discussion about this, You know, he, he grew up very poor. We came from Sri Lanka. He had nothing. He worked his way to where he got. He got a series of lucky events.

We were both at AOL at the same time. We were both at what's called an SVP, which is below an EVP, which means you're basically, you get to go to meetings with Ted Leonesis and, you know, Steve Case or whatever. But we were basically in charge of nothing. Like, he was in charge of ICQ as was crashing into the ground. I bought Weblogs, Inc., which became basically the entire AOL business after that when they were. what Huffington Post and TechCrunch and a bunch of other content sites. So we were there. We were kind of hungry.

He went to Mayfield. Then he found out about Facebook. He took the job there famously. I started Mahala, which became inside. And then I became the first Sequoia. So a series of lucky events occur. And we had a deep discussion about how we were both meeting as we were raising our funds over the last five years. We had all invested in each other.

But, you know, we were going to the. let's call it the halls of endowments, right? Like all the classic LPs that you want it. Yeah, you've been there. And you think you want that money. And you want that. Then what we realized is what we were both looking for was validation. Right?

And we had a deep discussion about this. And I've had a... If Harvard of Princeton, you know, invest in your fund, then you're like, oh, great. I always tell everybody. I went to Harvard twice. I went to Harvard Business School twice. And both times, I tried to come back the second day and the visitor pass didn't work.

And I interviewed Chumath at Harvard Business School. We got 15 minutes into interview and he said, you're all morons for putting 250K in this and four teachers walked out of the room. You did that. I was at GSB right shortly after he started social year or two. And I think, you know, we both got to the points in our career

where the, idea that we would be tap dancing and putting our hats out and saying, please validate us, uh, institution, we started to realize like, well, maybe that is more work than just building your own brand. And that's why maybe you saw Chimoth follow me onto CNBC. Uh, and no, and I'm not, and I'm not saying that I took credit. I literally told CNBC, they, CMBC called me and said, we saw your interview with Chimov, because the CMBC, uh, and no, and I'm not, and I'm not, and I'm not, CNBC producers watch this podcast and they say can you put us in touch with Chamoth like to have them on and I was like you should have Jamoff on all the time

he's amazing and those performances you know he went from having 50,000 followers he's a money printing machine now he's got more followers than I do and I think what happened was the disillusionment with begging the institutions for your very existence I think for guys and gals who are outsiders it's it's a little demoralizing to get where you get and then you're kind of, you know, bending the knee, you know? And it's like, why am I bending the knee in service of some institution that's existed this long? Like, if anything, shouldn't they be bending the knee to me for tripling or quadrupling their money? And that's why he famously, when he shifted gear said, you're welcome to all the LPs I made

all this money for it, you're welcome. And he just came out gangbusters. And when he found out about when he, and he'll tell his own story when he's on your podcast, and I'll help you get him as a guest if you want. You just email me and I'll see you. He, I think, with the SPAC thing, found out about it. He had known, we'd all known about it, but it was always Fugazi. But then we started realizing the size of these deals were getting so big that going to these big institutions and begging them for crumbs and then having them run you through the, the grinder. I mean, the way they brutally grind you for your $50 million or $25 million check, well, if you're a personality like he is or I is or I am, I can just say I'm investing in this company. Does anybody want to come along for

the ride? And my syndicate says, hell, yes, we do. Right. Hell yes, we do. You're good at what you do. And the same thing for him, except at a bigger stage. Right. This gets to, I mean, this is why Warren has to announce his investments after he invests because he moves the market. I mean, in a very micro stage, that kind of happens with you in early stage investing where you're actually value creative to a company, but because when you decide you want to put your 25K in, the company gets a hell of a lot more than 25K more valuable by the nature of the other capital you attract, the legitimization it brings to it. You know, it's the argument that the, you know, tier one venture firms the world have been making for a long time, that we bring more value to

you, ignore our platform for a minute. But, you know, But your company gets more valuable by taking our money more than just the cash investment. It's almost like a momentum trade. It is, I always tell people you're like putting a stamp in your passport. And when you go to the next place, they see the other stamps. And whether that stamps YC, Tech Stars, launch, Jason, Saka, whoever it is, it just makes the next stamp get stamped a little bit faster. And you get that momentum. But what's really happening, I believe, is there's a new.

lane that's opening up. It's a hyperloop. And the hyper loop is syndicates. It's accelerator, syndicate, SPAC. And this is going to be a new lane that's going to open up. And I have two of the three. I don't have SPACs right now. But I literally got a phone call. I wonder what you guys think of this. If somebody said to me, have you considered spacking what you're doing with your accelerator and the syndicate? And I said, I don't know. if there's an equivalent of a venture fund accelerator going public, but tell me more, and I'm literally going to have a meeting next week. That's literally not at all what I thought.

Yeah. I was like, you should totally raise a spec, but this is interesting. Is there enough internal enterprise value in the entity, or is it more of an investment holding company? Yeah, that's the question is like, if, let's say the, let's say I was sitting on $300 million from a spec, and then you valued the company. of that $300 million and then, I don't know, put $100 million in value on my enterprise. They have $400 million in value there, $300 million in cash.

Then I deploy that cash and we get 20% of the returns each time. Now we've got our own holding companies back. Yeah. And then you can buy shares in the company and then we just disclose what our holdings are. So now you know, oh, we own 5% of com. Oh, we own, you know, this many shares of Uber. we know, you know, it would have to happen from this point forward, obviously. Right.

But the idea would be... It's not that there's enterprise value in you as an operating company. It's that you're an investor. This is your fund. It's kind of like a fund and it would be rolling. So, okay, we just keep investing that 300 from the SPAC. The money comes back. Do we actually then deploy that or do we just own more of future businesses?

Do we just blow the mind of VC Twitter by coming up with the name rolling SPAC? Rolling SPAC. Hold on a second. Before we publish this issue, can you get rolling spack dot com immediately i'm not joking rolling spack dot vc rolling spack dot com

but it would be like a rolling spack right like and i and i did consider it one thing i love about what i do right now is i answer to nobody and nobody knows exactly what i'm doing except for what i explained to you guys on your podcast of the grand vision which is you know if you pay a hundred bucks you can hear the grand plan in for two this is what it's better to be you and us then oh that one was free okay bye bye bye

Yeah, I mean, and it looks like right now, the backlog looks like, and I'm going to go through the companies here about the notable tech IPOs. I don't know which ones for SPAC, which ones aren't, but we got Airbnb. I want you guys to think these through. And I want you to pick your top two in terms of not at what price. Okay. I want you to pick your top two. Let me think of the question here. You're a top two that if you could only own a million, you're going to, you have $2 million, and you get to put a million dollars into each one, at whatever price they wind up going at. We just assume each one goes out at the reasonable price.

Okay. So assuming they go out at the right reasonable price, SPAC or whatever, you have to put $1 million into each of these, and you get to take that $1 million out 10 years from now. But you cannot touch it. You have to choose between Airbnb, and I think we understand it's going to go out of 30 or 40 or something like that. You have Asana, Threat up. Qualtricks from Ryan, who was on the pod,

was acquired for $8 billion by SAP, and now they're going to IPO it again, I guess. Palantir, Peter Thiel's Secretive Intelligence, company with $742 million, and financial, which is a Chinese mobile payments company I don't know much about. That's formerly Ali Pay.

Ali Pay, okay, right, Ali Pay, right. And the J-Cal SPAC. So those are your choices. You got the J-CAL SPAC. You got the J-PALs back. Okay. Do you want to be invited back? No, leave mine out.

Leave mine out. I'm literally a joke. But okay, here we go. I'm going to do it again while you think. You guys can use your pens here. They can throw Airbnb ASANA, thread up, Qualtrix Palantir, and financials, formerly Allipay.

You put a million dollars into two of them. You get to take it out in 10 years. So now you're making a bet here that which one will increase in value, most and you have to take the money out in 10 years. So you're making a 10 year bet. Would you make a 10 year bet on? Airbnb Asana thread up Qualtricks, Palantier, or Ali Pay.

Do do, do, do, do, do do, do do do, do do do. You're looking up and that means you know the answer. Who is your number, who is your first choice? Just pick, just tell me one, Ben. I'm putting both into Ant Financial. Oh, all in. Wow, he went all in. You took your, you took your river, you took your turn and your river bet and you added them to your flop bet.

That's a power move. You shipped. You shipped it. I am on the wrong J-Cal podcast, apparently. No, that isn't all in right there. Okay. Well, then that leaves it to you and I to do the hard work, David. Who, who is your first that comes up that you?

All right. Well, my first is Airbnb. Why? Well, I think there's two important dimensions, many important dimensions, but two really important dimensions in investing, long-term investing. There's, what's your IRR hurdle? Like, what's your, how much compounding do you think? How much room to run is there in this company? And then the other dimension is your margin of safety.

And margin of safety gets expressed in the price. Now, you're talking about the bottom. In other words, losing money. Well, it means like, because you could be wrong. You don't know what the future is going to hold. Sure. And so the margin of safety, like if you're buying into something that is at a very, very full price, you have a very little margin, very low margin of safety. If you're buying at an undervalued price based on your estimation of what a fundamental value of the company is, then you have a high margin of safety. So I think it's likely Airbnb is going to have a decent margin of safety, given everything that's going on right now. They're already bouncing back. And I heard by the way, and I don't know if this was public or not if I heard a whisper, but the whisper was they had the best July ever in the history of the company. Was that publicly known? Somebody said it to me at a party. Yeah, I'm not sure if it was reported or not.

It was said to me either I read it online or somebody read it online said it to me in a party. Can't remember. It's material, possibly public information. In other words, I may have dreamt it as well. I think I heard at some point, don't trade on anything I say. So then there's the like, what's the upside? What's the compounding potential? Okay.

So I think there's probably going to be more margin of safety in Airbnb right now on the price than any of these others. Beyond that, gosh, it's so hard to say. Like, I'm not familiar enough with any of these names. I'm tempted to say Ant Financial like Ben, but I'm really worried about WeChat Pay, which my understanding is taking huge share away from Ali Pay in China. Now, I do think Amt Financial has a very robust and growing wealth management business, but I just don't know enough. So I think that's probably my number two, but I need to do more work. Okay.

So if you had to pick your number two, you're going with that financial at this time. All right. I, too, was attracted to the Airbnb possibility, and I do think that that's a company that will be here in 10 years. However, I do think they will face competition at some point. I do think they are fully valued here. And I'm going for return. I'm not going for safety because I'm looking for big returns. I need some of that moves the needle for me. I believe that Qualtricks is run by an absolute beast of a CEO. And that's my first choice because I think that that business is, just going to continue to be a juggernaut and has run so professionally, it's crazy. And then that leaves me with Asana and financial and the fully valued Airbnb. Threadup, I don't know enough about. And, you know, Palantir is interesting, but it's tiny. And I think if it was going to break out, it would have broken out already. I kind of feel like maybe that's a niche business and it's not, doesn't have a lot of room,

for customer and more customers, right? So I'm going with Qualtricks because of the professional of the management. And then I don't like the idea of investing in opaque Chinese companies because they don't trust the market. So you may find this shocking, but I don't like to play in a rigged casino and I consider anything out of China is a rigged casino. So I take end financial out for that reason. but I do applaud you for being a maniac who wants to shove all his chips in in a casino

where you could be using a marked deck or the value of your currency could suddenly change rapidly now I'd love the product Asana and I feel like that could become the standard for what they do and I do love Airbnb and so it's really down to between

Airbnb and Asana and my gut tells me Airbnb is very valued, will be here, but it's not going to be a 100x return. I think in 10 years it's going to be a 3 or 4x return. I do think Asana has the chance to be a 50x return. So therefore I'm going with Qualtricks,

which I think is a 10x return, Asana, which I think is a 50x return. I'm going for cash on cash return. I am going to, in my bet, Nick, I want these bets put on a long-term betting site. There's some betting site where you can put a long-term betting. Longbets.org.

So we're going to go to longbets.org. I'm putting Qualtricks in as my number one. I'm putting, no, I'm putting, yeah, Qualtricks and Asana, and I'm going to even stipulate that I think I could 10x Qualtrix and I could 50X on Asana in 10 years. So let's make that bet. Do you guys want to put what you think your cash on cash multiple will be? No, I do not. I have no.

I don't know. I mean, at the end of the daily. This is what I say in poker with somebody, when I shove all my chips in and somebody takes their time to think about it, this is why I don't get invited back to a certain poker games. This is a good point, though. Can we talk for a sec about like what we'd actually do? I think what we'd actually, what I'd actually do is just put the two million bucks in Amazon. Companies grow in 40% year on year.

They have unlimited cash. Unlimited cash. Incredible cash flow dynamics in the largest markets known to man. Hard to bet against them. So it's growing the same, it's growing faster than all of these companies while being much larger and much more defensive. It is actually crazy looking at the performance of Amazon over basically any venture vintage. Like you look at like, I don't know, the third, maybe fourth quartile like anybody but the top decile venture investors probably underperformed Amazon in the last 10 years. And so then the question becomes, is it become overvalued because people are looking for a place for safety much

like New York and San Francisco real estate. And so that is an effect, I think, that people need to be wary of is in a crisis, there's a flight to quality and things people think will grow and sustain. And when the Chinese and the Russians were looking for a place to hide money and to wash money, they went to New York and San Francisco and bought places. Which, by the way, that is the exact description of what the early stage funding market looks like right now. Like when we were talking about that earlier. I think this is the most succinct way to describe it. The same amount of capital being deployed in the top tier, quote unquote, top tier of companies at the highest prices. Clubhouse. Flight to quality. Clubhouse. Well, no, I mean, Clubhouse would be the one that you would say

had the highest, most insane valuation, a $90 million valuation when they were at 2,000 users, and they're not even in the app store yet. By the way, boys, I have, I have talked to no less than 10 founders of companies that have products either in market that are being pivoted towards Clubhouse and spontaneous audio. I have test flights on my desktop, on my application, on my desktop.

And I have mock-ups from serious, you know, entrepreneurs who are not to be trifled with. And they're all got quite a different spin on Clubhouse. But Clubhouse has, Spice. Like House Party, if it hadn't gotten sold, because did House Party get bought by Epic? Yeah, great. If House Party hadn't been sold, I think it would have gone public. I think it would have been one of those companies that, just like Twitch would have been a public company right now, would have been spacked out. And this is an important lesson, right? Like these things would have, if Spacks had been here five years ago, Twitch's spacked hands down, House Party gets spacked. We would have had a spacked. No way, but House Party has no revenue, right? And they could. I mean, House Party is what, the 18th most important thing that Epic?

does, like how does House Party ever come on the radar of the CEO of a company with Fortnite under it? Well, I think it's, it's, see, I don't think Tim Sweeney actually care, like, this is going to sound wrong. I'm going to say, I don't think he cares that much about Fortnite. Of course he cares about Fortnite, but he cares about what it's all accomplishing, which is bringing more gathering and creative acts and creators into an online environment. that Epic's infrastructure is powering.

That's what Fortnite's about. Got it. And has parties, same deal. What makes more money, since you're doing this on the Acquire.comfm breakdown. We just went real deep on this. So if you go to Acquire.com and sign up, you'll get the full detail. But just in the abridge version, Fortnite is what percentage of their overall revenue?

So it's a private company. So we don't know for sure. Oh, so they wouldn't tell you. No, but Fortnite has... Obviously, it's double digits. So, well, so I think Unreal does about 50% right. Yeah, about a little more than a billion and a half in revenue. And Fortnite did over $2 billion in revenue a couple years ago.

It's come down a little bit. So I think it's, they're comparable businesses with Fortnite being a little bit bigger right now. Got it. Okay. So Fortnite is designed to prove how great the Unreal Engine is and just did too good of a job. It's like, I mean, that's not wrong. Well, yeah, I think they thought about it like Amazon is AWS's first and best customer. That's kind of how Epic thinks about it is like, we are making this whole suite of tools from an engine to online services to live ops to payments to a store.

They turn their case study demo into a money printing machine. Yep. There you go. It's like, oh yeah, we can demo our software. Oh, by the way, our demo makes more money than like the top five video games. Again, not that dissimilar from Amazon. Amazon. Not that, exactly.

Like Amazon's like, what costs us money? Oh, the servers? Great. Let's make money off them. And it's like, that's just such an amazing concept is to look at your business and be like, my God, you know, this podcast makes so much money that it was what underwrote my first five years of angel investing is because this was so profitable. It was a very interesting, bizarre turn of events.

How are you guys doing with the money on your podcast? Does it make money? Does it make enough to sustain you two guys? Or is it pocket change? Is it rent? What is it? Where are you at? It's a great question.

I mean, it, uh, so it is not enough to sustain us. I don't want to pretend it's like our day jobs. Right. But, uh, the way that we sort of think about it is that the LP show is a huge leg of the stool. It's around half of what we make. Um, the sponsorships are the other half. And we've been sort of like insanely curatorial on,

sponsorships to date with the idea that anybody who's sponsoring the show has to be value creative to the content. And that's, you know, it's probably held us back from full monetization potential, but that's how we thought about it. I call it white listed advertising. So we turn down, you know all these guys doing these like payday loans against your SaaS revenue? I don't know if you saw me getting into it with them on Twitter. I was getting into it with the guy from pipe.com who's created a marketplace. And he's like, your bestie, David gave us money. How could you not like us?

And I was like, listen, nice try. But we're trying to ask you what the percentages that you charge and you can't answer the question. And then this other one, I'm not going to say the name of it, but they were charging, one of our founders just had a very bad experience with them. But they were charging 6%. And they were like, I was like, okay, you charge 6%. They're like, no, no, we charge $6,000 on the 100,000. I'm like, that's 6%. They're like, no, no, it's just a $6,000 fee.

I'm like, over what period of time? They're like two months. I'm like, okay, what is compounding interest 6% over six time periods? That's 100%. No, I'm sorry, it's 50%, right? Or something like that. It'd be 50%, I think. Because the rule of 72 is if you divide 72 by 6, it would take 12 months for it to 12 periods for you to double your money.

So anyway, it's like, 50% a year. So I was like, do credit cards charge that much? And they're like, oh, no, no, this is just to float, don't worry about it. It's just to float your receivables. And I was like, wait a second, that makes no sense to me. If I have that much unreceivables, VCs are going to throw money. I mean, a high valuation, why would I do this stupidity? And I literally, they beg to be on the podcast.

I told, and my salesperson is ready to get a big commission. And I just said, you know what? I can't get behind it. I can't get behind it. I'm sorry. If one of my founders tells me they had a shitty experience, and you can't explain to you. But the pipe one is very interesting. They take, let's say you sold your SaaS product for $100 a month per seat.

And you had somebody who had 100 seats. So they were paying $10,000 a month. You had $120,000 in ARR. But they're paying you monthly. You could put your $120,000 on their marketplace. And then somebody could say, I will give you $100,000 now for $120. And then you could bid, I'll give you $105. They take the $105.

that person makes 15,000, so they're making 15% interest, essentially. If you're still responsible. I like anything where you create a market price. That's why I like that one. So I might let them advertise. Because that to me, I said, if you give me three customers,

they gave me one already, because they asked publicly on Twitter. I said, if you get me two more customers, I'll, and they, because the first customer loved it, they said, listen, Jake out, we're charging this amount of money. We put $40,000 in this contract.

We got, you know, whatever it was, I don't know, $36,000 now. I can put the $36,000 now into my funnel. I know I'm not going to lose that customer. And if I lose one out of three customers, I can deal with it. So they do some sort of formula. They don't let you, like, put all of it in. You can put a portion of your ARR in or something. And then they make a marketplace.

And I was like, well, I might actually want to bid on this. I want to want to make 15% on a million dollars and put a million dollars in here and buy some ARR. And they don't take warrants or anything. So I was like, oh, okay, well, this seems. pretty cool, right? Wait, Jason, so I want to turn this, the question you asked me, I kind of want your advice on it.

So we do Acquired as a side project. It's a labor of love. It's learning in public. We both have learned so much from doing the show. And like, I love investing in companies and I love the work that we do at PSL starting companies. So, like, how do you think we should think about acquired and what it is as a business and kind of what it is in our lives?

Okay. If you need the, I'm just going to guess you are eventually we'll have a thousand people paying $100 a year for it. I'm just taking a guess. Am I in the ballpark? In the ballpark? Yeah. Pass that, but not much. Okay.

You can call it order of magnitude. Okay. All right. So if you're making $200,000 a year from the paid one and you get, you know, another $200,000, $200,000 from advertising, whatever. So you make a half million dollars a year from it. This is what I would do. Take a little bit each to keep the lights on. your lifestyle. Then I would take 10%

of it and 20% of it and put it into marketing of the podcast and see if it grows, see if it has a possibility of growing. We will do that with our clips. Sometimes you'll see us put clips on and sometimes you'll see they're boosted. So we'll put a boost behind a couple of clips because I'm always wanting more people to get access to the content. And if you love doing this

and, you know, listen, we've been talking now for two hours and we could go for another two hours because we're passionate about what we're doing. Now, if this was a podcast about politics, I would want to kill myself and I would be want to be off the podcast. So as long as you love what you're doing, keep doing it. Keep it high quality. Um, and it's deal flow. It's community building and you enjoy it. Like, what could be better? And if it monetizes or it breaks even, it's great. When I started 11 years ago, we just did, I would just, it was called Calacanus cast. I did like 40 episodes.

And I literally would take a, a recorder back when it was tapes. And I still have the tapes. And I just put on the table, Ron Conway was like, can I visit you? And I was like, sure, can I tape an interview with you. He's like, what for? I was like, a podcast. He said, what's that? I was like, Dave Weiner's doing this podcast thing. And I recorded. Ev Williams was doing audio, so he knew what podcast was. I was like, I want to tape you for the podcast. I'd tape it. I'd hand it to somebody and say, digitize this and let's go. And then we had a digital recorder, obviously. We would put two of them on the table. We're literally recording it on open microphones. And now we got a $150,000 studio. And I bought it for a million seven. And it's a three thousand square foot studio.

Like, it's a professional operation now. No, there it goes. Look, that's what it makes. That's what a million. Behind the scenes. That's what a million seven looks like. No, I literally bought a loft in Soma to record the studio out of so that I'd have a permanent place

in the pandemic. But anyway, I think Peter Rojas said in Gadget told me something that was the success of his success early on with Gizmodo. Then he created Engadgett. And he said, I said, what's a secret to blogging?

And it really is a secret to podcasting, which is showing up. And you just, it doesn't really get interesting, I think, as a performer, as an interviewer, until you get to a year three or four,

how many years in are you guys? How many episodes? Five, and I would completely agree with you. Right. So this is why you guys are good at it. Like, when you guys came on the pod,

I was like, these guys are magic. Get them on all the time. And, you know, Keith Roboy is magic, right? There's some people who are just good at this. And when you get to year four or five, you two can get on a podcast

and I could put, a mystery guess on and you'd be able to interview them with no show notes. And it'd be a great fucking interview. Like literally, I could just take a founder, put him in the seat and all if you do is ask him, what are you working on? Listen and then do it. I specifically told my assistant six, seven years ago, no more lunches. I'm never going to lunch with anybody. Anybody says, can I go to lunch with Jason, tell them, Jason doesn't do lunches with people because he's got to get home in time for dinner or his family. He doesn't do lunches. He eats a little something at his desk. but but if you want to come on the pod

he'd love to sit with you for an hour on the pod and you can get a cup of coffee or a burger I'll have a burger delivered afterwards and so then I just exchange lunch in my schedule for this and if you if you guys were in town I'd love to go to lunch with you but fuck it let's just do a pod and then I'll order some ramen or some belcampo burgers and we'll pound those after we go off the show done so keep just keep doing it is the bottom line and you do it twice a week or once now? No, we do it twice,

about twice a month. You got to get to weekly. Frequency is also important. So I think you're not, I think the other thing you could do is you two could separate. You could do an interview each and do shorter episodes that you put less into. So I wouldn't be afraid to experiment. You've locked into something that works,

but try a quick hit. You find a founder you love and you just do a 30 minute one. I don't know if you saw me do the emergency pod where I talked about the house from, the antitrust stuff. I just did an emergency pod and I said, Nick, these are the clips I like. Give me four other clips. I played the clip.

I gave my two cents on it. I played the clip. I gave my two cents on it. Nick put it together and I, well, I copied it from Bill Simmons. And I used to do emergency pods and I called them emergency pods back in the day. And I don't know if Bill Simmons copied it for me, but. For sure.

Let's go with it. No, I don't know. I don't think so. I think it's an obvious idea, which is some breaking news happens. You run to your microphone. morning you record. And so when I remember when Kauai Leonard got traded to Clippers, there was like, you know, a little bit on ESPN, but you know, it's a, it happened on a Sunday. And I, Sunday night, Bill Simmons, you know, is on, does an emergency pod. And he talks for 45

minutes and you know what? That's what I want. So I, you guys need to do a little more experimenting. I think you should try doing a solo one each. Um, so you can just fill in between because I, if you notice with this week in startups, you're getting three a week from us now, I think, is they're pretty consistent. And then I added a fourth, which is I do a weekly recap, which I just started,

which was talk about the three people who were on this week and do a highlight episode. And then the people who hit the top of the charts, Ben Shapiro, Joe Rogan, are five days a week, six days a week. So frequency matters. But you don't want frequency to fuck with quality. Right.

And you... Well, I think this is what we've been. been thinking about we need like we need to a few different we have this already with the IP with the LP show and the main show but our main show episodes we do weeks of research we want it to be like those are we want to know more about epic than anyone those are you know your hardcore like foundation of what you do but that doesn't mean you know like that's the steak right but that doesn't mean you can't have a little side order or you know an amuse booze or a special dessert or some petty for is at the end. Like, give yourself permission to experiment, right? Because some other things

might hit. Ten questions for. Boom. And Tim Ferriss does this pretty well. Like, Tim Ferriss is like, I mean, talk about Lean Startup. He's like, you know what? I get paid so much money for this podcast. Let me have somebody else to it. Nival, do me a favor. Answer 20 questions. Naval's like, sure, I'll get your entire audience and answer 20 questions. So Naval, instead of doing his own party. It's a great deal. It's a great deal for both parties. And then, you know, he has the audacity. Tim's a friend. to be like, oh, fuck it. I don't want to do another episode.

Can you come on, I know you were a guest, and just tell me the 10 books that you love. Give us your 10 books you love. And I don't know if he gives half the money to those people or whatever, but what a great racket, right? And we did something. We didn't experiment. I stopped it.

But after people were on the podcast, I let them do an AMA on a Zoom call within the Slack. So we both have slacks. And they didn't come out great. They didn't come out bad. But they did, you know, like a little AMA. format. Yeah.

I think it's a good format for Reddit and text. Yeah. It doesn't work well when you have professional people doing interviews versus the audience, because we can ask questions and frame them, listen to the answer, and then ask a follow-up question, whereas an AMA is just, it's kind of one-dimensional, I think. Mm-hmm. Mm-hmm. Well, cool.

I mean, Jason, I appreciate it. Always great to get your brain. Listen, I do appreciate you guys coming on the pod because you bring so much. and it's just, you know, listen, like I said, you know, if we were in the same city, we'd be, city we'd be go get ramen together or burgers and just chilling. It's great. I'm here in San Francisco. Oh, you are?

I bring Ben in. All right. Well, I was just saying that to be nice. I'm not going to take you from my line. I get it. I get it. No, no, if you are in San Francisco, I got the ramen place for us. And if you do want to get rob in.

No, no, no. You got to come down to San Mateo. There's a place called Tai Shokin, T-A-I-S-H-O-K-E-N. They just opened up last month, the month before, to do outside seating. And I went there. It was delightful. You'd make the trip down to Samantay.

It's my treat. I know the owner. And Tai Shokin started in the 50s in Tokyo. And they specialize in the Sukiman Raman, which I never liked ramen, but it's dipping noodles. Yep. So you have buckwheat noodles on one side. And then you have this thick sauce, which is, you know, ramen is just like this watery soup. I never liked it with those, like, terrible noodles in them that are like from the dried out

noodles, not for me. These are fresh pasta noodles that they make on-site buckwheat noodles. You dip them into this like anchovy dip, thick, thick, deep, riching sauce. It's thick, yeah. It's thick, and you slurp them up, and then you have a little bit of sauce left, and then they come with a hot water kettle, and they pour hot water in at the end, and they top it off and make it, you know, two-thirds with hot water, and then you drink that like a soup. Maron, we are going, literally, we'll do it, and then we'll talk about it on the pod. thanks again to our sponsors. Thanks to Ben, thanks to David.

I want you all to just listen to your boy, J-Cowel right now. Let's get another couple of hundred paid subs for them at Acquire.fm. Well worth it. And we'll see you all next time on this week and starves. Bye-bye.

Stay safe.