This Week in Startups - FTX's leaked financials, $AMZN ramps up healthcare interest + Swayed Founder Arjun Shokeen | E1541

Episode Date: August 23, 2022

Back with a big Monday news show: Jason and Molly recap last week's All-In (2:09), before covering FTX's leaked financials (17:19), Amazon potentially going further into healthcare (40:34), and more M&A in the e-commerce space. (58:55) Then, Molly wraps the show by interviewing LAUNCH portfolio founder Arjun Shokeen, Founder and CEO of Swayed (1:11:27). (0:00) J+M tee up today's topics! (2:09) All-In recap, Climate Syndicate, and more (16:10) Neo.Tax - Get $500 off R&D tax credit fees at https://neo.tax/twist  (17:19) FTX had its 2020 and 2021 audited financial results leaked to CNBC (28:07) Odoo - Get your first app free and a $1000 credit at https://odoo.com/twist (29:26) How to frame crypto going forward, what is crypto's main product? Did the SEC miss the boat on crypto regulation? (39:19) MasterClass - Get 15% off an annual membership at https://masterclass.com/startups  (40:34) Amazon is reportedly bidding to acquire Signify Health (58:55) M&A: eBay acquires trading card e-commerce platform TCGplayer for $295M (1:11:27) Molly interviews Swayed Founder and CEO Arjun Shokeen

Hey, everybody, it is Monday. Welcome back to this weekend startups. We got a lot of news to talk about today. Yeah, we'll do a little recap of all in episode 92, a lot of great feedback on that. And then we're going to talk about crypto currency, yes, because FTX had some leaked documents, massive growth from 2020 to 2021.

Massive growth. So, you know, we're going to speculate that perhaps when you financialize a product before it actually has any value, that might be backwards development. We'll see. Yeah, we'll see. Interesting discussion. Then we're going to talk about

Amazon's reported bid to buy Signify Health and what Amazon might do to the health care system. And spoiler alert, we just hope they freaking fix it. I'm super excited about competition coming to healthcare and innovation. And then we'll touch on eBay buying a trading card marketplace in our M&A segment and what you can learn as a founder or capital allocator from a niche marketplace forcing eBay to buy them because they kicked eBay's ass. Yep. It's just that simple. And then I'm excited. I'm going to be interviewing another launch accelerator founder at about a business that is just really,

really close to our customer service diva hearts. All right. It's going to be a great show. Stick with us. This week in startups is brought to you by Neo Tax. Don't leave money on the table. Claim your research and development tax credits with Neo Tax and get $500 off any service fees related to Neotax products. Learn more at Neo.tax slash twist.

O-Doo is a fully customizable and fully integrated suite of business apps that lets you build and scale your stack as you build and scale your business. Your first app is free forever and right now O-Doo is offering $1,000 off your first implementation pack at O-D-com slash twist. That's O-D-O-O-O-O-com slash twist. And Masterclass. Learn from the world's best minds. anytime, anywhere, and at your own pace. Get 15% off an annual membership to Masterclass at masterclass.com slash startups. Hey, everybody. Welcome. It's Monday. How's your weekend, Molly?

Monday, Monday. I had a nice, like, at home. I planted a bunch of new plants. I did a bunch of hiking, took care of the doggies. It was nice, because, you know, I've been traveling. It's good to be domestic. It's nice to be domestic. I just came back from my little Tahoe stint. My 12-year-old started school up again today. A big seventh grade. I took her out to a seventh grade dinner last night, as is my little tradition, taking her out to dinner to get ready for the new year. So cute. So cute. And then my six-year-old started, I guess on Monday or Tuesday, so I'm back. It's peculiar here in the Bay Area because depending on the school you go to, a lot of the teachers are gone. Poor Burning Man. What? No way. Yes. I was part of Alt-School.

Remember that alt school, the Googleist creator school for the first year? And then I was talking to the founder and they're like, yeah, you know, like, so we're starting school, like, but we're going to have a lot of people out or whatever because of Burning Man. And we want people to be able to go have their burn and then teach your kids. And I was just like, hmm, let me link this for over a second year. The Bay Area is amazing. Also, pretty amazing. I'm glad that you reminded me about that. I am now going to make plans in the city for this weekend, drive to San Francisco because there's no better time to drive to San Francisco than Bernie Man.

Nobody's here. I'm going to eat at every restaurant. all week long. Yes. Oh, hot damn. So it was, yeah, but I'm kind of bummed to be back from Tahoe. I just had a great summer, you know, just lakes and beaches. Yeah, I just, I think I'm a country boy now.

Like, I think I hate the suburbs. I love cities and I love the country. I think I'm like not a suburb guy. I'm kind of out on the suburb tip and I just want to either be in the mountains or I want to be in a city. Yeah. that would be my ideal life. I can actually totally see that. I don't hate, I like my, uh, I call my, my life in Oakland er bourbon. Like, yes. It's kind of suburban my neighborhood, but I'm in

Oakland. And I like that. So I still have the sort of all the access to the city and the occasional side show around the corner, but I have like sidewalks and. All right. So, uh, do you get to catch all in this weekend? You caught the all in? I did. I did. I listen on Monday morning and make that part of my, like, a dog walk and drive home from school routine. Do you like Free Burger's moderator? I liked it. It was nice for me to comment. I know. How was that for you? Were you like relaxed or was it stressing you out? You're like, I would have on my best time minutes ago.

It was delightful to just shoot the basketball. Usually I got to bring the ball up the court. I got to pass it. People don't like where I put the ball. Everybody's complaining constantly. I challenge somebody. They get upset that I'm challenging them. I'm not picking any one bestie. but you know, some besties feel like they shouldn't be challenged ever and they should just do a monologue. And I'm like, well, then it's not a conversation. But I like how you put the monologue at the end, by the way, and what I'm now calling the mega minute. I think that's a great segment. You're not the only person who refers to it as such.

Well, I just decided I'm out. I don't want to talk about politics anymore. I'm so burnt out on the Trump talk. Yeah. And I feel like, you know, I want to have first principal discussions about each instance. And, you know, when you're. have people on either side, it quickly sometimes devolves into that tribalism or like talking points or people like, why didn't you bring up these three talking points, Sacks brought up these

three points, you should have countered with these. I'm like, I don't want to be Cinderella cleaning up that mess. I want to have a first principle talk, you know, which like when it comes to some of the things that are occurring, let's say, with Trump, I'm like, I trust law enforcement. Yeah, there could be bad apples, but I overwhelmingly trust law enforcement. I come from a family of law enforcement, overwhelmingly trust them. And I would say, in this instance, they're going to be like super, you know, buttoned up because it's the president, former president. So I'm like, I'll just wait, maybe. Yeah. Yeah. Maybe I can wait. Well, it's the, it's not a politics. It's not a, it's not a philosophy or a point of view or whatever. At this point, it's a religion conversation,

right? Like, it's just religion. No minds are going to be changed. So it's, it doesn't feel, it doesn't feel productive, whereas I think you had some really interesting productive. Like, I mean, also, of course, I was super excited to hear the mention of our climate syndicate. I was like, I was on all in this weekend. I mean, my name. Yeah. Which is thrilling. But that was a super, yeah, that's true. I had a big Friday. Fun Friday on the internet. I got several messages from people who were like, oh my God, I didn't know you how to climate syndicate. This is awesome. Excellent. Let's go. Oh, yeah, I did shout out that we've made some measurement stuff. What this is, we talked about this.

I don't want to make this into VC Sunday school, but you and I have been talking about, like, you know, being a great investor is, you know, about the bet, it's about the companies, and, you know, building these frameworks in your mind, and we're learning the climate space, right? Which is evolving, and there's a ton of people who want to be involved in climate.

Just like there's a ton of people want to be involved in crypto. Yeah. But in emerging categories, you get this rush of people who want to be involved, some of which are capable of building world-class lasting companies. The majority of which, you know, might have tremendous enthusiasm but may not be able to

execute or their idea might be small or unfeasible or they just don't have the depth of knowledge or experience to pull it off, right? And so you're trying to figure out, well, what is the opportunity here, right? Because it has to match both things. You have to really have three circles. Can this be a good deal? Is this the right founder? And is this the right business, like idea, product, whatever?

So you get this like Venn diagram with three circles. And, you know, you find great founder, great idea, but maybe not a good deal. You find a great deal, great founder, bad product, whatever it is. And you really got to check all these boxes. But I'm really happy about the first two measurement companies you found. I think so too. I think that's a really interesting. I talked about this actually on Pivot, which is that part of, you know, there's been this,

just like you said, there's been this big rush into climate tech. And there's these kinds of, there's this sort of question about that we're literally, is happening in real time, right? Like, what is investable in climate? So there's like founder, product, deal. And then in climate, you almost have to add like, does this exist yet? Right?

Like, does this market exist? Does this technology exist? Does the infrastructure to support this technology exists? Does pricing exist for one of the commodities that you're talking about in your equation? You know, like there are so many parts of this ecosystem. that are still being figured out in real time. And so many in, you know, it's great that I'm like, simultaneously a new investor in a new field

because we're also all figuring out together what is investable. And like when I was listening to your carbon tax conversation and like the problem of ever creating a global carbon tax comes down to measurement. It comes down to measurement. That's exactly. It comes down to measurement. It's so great.

And if that's our category. Yeah. Great. And maybe it is. And maybe that's not the only category, but if that's like, Right, maybe that's the first category. Exactly. And you learn a whole bunch specifically.

So we get to make great investments while we're learning. Yeah. And then the metrics would inform, okay, what's the next one to turn over? It's almost if you look at the history of the internet, it was like, okay, we need servers, SGI, you know, Sun Microsystems, okay, we need fiber, AT&T, whatever. Okay, we need modems, Hayes modems. We need Cisco to make routing equipment. Then I was like, okay, what can we put on top of this?

Okay, Google and Yahoo are indexing this shit. We can help you find stuff. the home relay. Yeah. Okay, what's an application we can build on this? Okay, Amazon, you want to buy something?

I don't know. Bank of America could have an app. Oh, wait, we have apps. Okay, now we have, oh, we have mobile in our pockets. So, like, each of these things builds. And then, you know,

it might be that some people are building for the 10th floor when we don't have the foundation built yet, you know, which I think a lot of crypto people talk about often. Absolutely. And that's absolutely what's happening. And so there's this, like, I hate any conversation that doesn't acknowledge an evolution that's currently. in process, right? That's nascent.

So if you're yelling at me about what VC should be doing in climate or what they shouldn't be doing or what they think about this and whatever, it's like, guys, we're literally figuring it out in real time. Yeah.

Right now. We are building the plane. If you can't even measure what's happening. Right. Like, how are you going to tax it? I mean, we should give a shout-out to the two companies we invested in,

right? It's known now. Yes. Okay. So maybe just... One of them is like an embargoed press release as of tomorrow. Oh, okay.

Well, then we won't mention it until tomorrow. Well, we can mention the first one. Okay, yeah. So just explain the first one we did. Yeah. So we, um, yeah. So the, the first deal that's super exciting

is about measuring shipping emissions. The company's called sale plan. They just actually had a big write-up or a big piece in WWNO, the New Orleans public radio station. Shout out public radio. Because they signed a deal with Port-Four Sean. They measure shipping emissions. And they do it like ship to ship,

installing software and some sensor hardware on commercial shipping vessels, which are like a massive emitter, obviously, right? Huge. And they can... Don't they use a type of fuel that is a little more raw than the fuel we use in our cars, right? They do. And actually, they use two kinds of fuel at once. And so one of the things that's, things that's interesting about the sale plan measurement is that they can say to the captain of a particular vessel say, hey, you're emitting a lot right now, which means you're actually using the bad fuel and the bad fuel costs more. So there are times when they use a fuel that's less polluting and times when they use the more polluting raw fuel. And if they are accident and if they just like haven't switched the system yet, then they might be

emitting more and also paying more. And so it like saves these shipping companies money and all. also reduces emissions. It's sort of like the double goal. And then, you know, they're in port for Sean, which is a big oil and gas port. America's biggest oil and gas. Oh, my God. Learn my picture on the website. Oh, wow.

There's your board. Look at that. You're on the website. Oh, my biscuits. Oh, m g. What, what? But yeah, like, it's about taking, when you have to solve a big problem, you have to break it down into its component parts.

Every problem has multiple chunks that you need to bite off in order to solve it. And so the investable part for us might be in software that measures emissions. There are probably lots of other ways to chunk that out. But like, awesome. That's a great place to start a lot. Yeah, I'm really excited to see where this goes. And then we'll be announcing the other one tomorrow. Right.

Yeah. And so if you're interested in this and you're an accredited investor, the syndicate.com slash climate, the syndicate.com slash climate. We also have a syndicate for SaaS. So if you're an accredited investor, you only want to invest in SaaS. The syndicate. dot com slash sass. And if you just want to invest in my deals,

that's the syndicate.com was like the big one, and those are the Jason approved deal. So what we're going to do with the syndicate over time is have like verticals, and there's the deals that I do. And then there'll be deals that originate from our syndicate, 11,000 syndicate members. But, you know, some people don't want to even see climate.

Some people only want to see climate. So you can join multiple syndicates there. And then you look at the deals. The average investor puts in six or seven K per deal. So you get to like, You know, if you're an accredited investor, at least, you get to make small bets on things that you think could get a return or that you want to see in the world, right? Or both. Ideally, both. We're not impact investors in that way. We're not like the concessionary kind. Yeah. Well, I mean, here's the thing about being like an impact investor. We all want to see good impact in the world. I like how you said that. You don't. You know, the problem is if you know, no returns means no more investments. So, So, you know, if you take a bunch of investors money, your structure, that's charity,

and your investors know it, and that, you know, and they're like deliberately and you got a double bottom line, and that's the whole agreement. And everybody's like, we want this to exist and we'll take two X instead of 10. Fine. Or take no X, right? I mean, I think that's... Or maybe take no X, right. Yeah. And then it becomes like charity. So I'm always a fan of, yeah, just being what they call Evergreen in our business. All right, lots of news. And before we switch to the news, one very exciting thing happened over the weekend on Twitter, which is that someone called me a cold-hearted blood-sucking PC? Aw.

I know I thought you were so proud. Oh, Molly. You're a free market monster. I know. Look at that. One of us. One of us. You went from like, queen of public radio,

super woke in the hills. Typical blood-sucking PC. You're a Bay Area. I've arrived. Liberal and now you're a free market monster. Look at you. Like you must be, I can see the interoperable. conflict in you. There must be good left in you. It's like just turning it to draw. I don't know.

Turning to the floor before my eyes. I guess we'll see. Will I chop cities in half or not? I don't know. We'll find out. We'll find out. We'll find out. I mean, listen. I mean, it's good to there's like in the matrix, you take the pill and you kind of see how the world works is one of the things that happens as a journey when you're on the outside. And then when you're an insider, When you're a commentator, critic, you know, commentating on the world, which is, which is a valid thing to do in the world. I spent a large part of my career doing it and still do randomly here. And then there's like when you build stuff, right? And when you get to see both, you get to sort of have this appreciation where, like, criticism in the world is a valid pursuit.

And, you know, people can write criticism of a restaurant or journalism at its best, investigative journalism. All very helpful in the world. And then you see how things are built. And you're like, ah, yeah, it's hard. Yes. Exactly. You have a whole different, right, totally. And humans are flawed. Bad things happen in the world.

So true. So true. So true. Hey, speaking of flaws. Yeah. Right now, it's important for founders to save everywhere they can. And this includes the R&D tax credits, which are a pretty low-key way to save up to six figures every year, year in and year out. And Neo-tax will help you claim up to $250,000. if your business qualifies. The best part, there is literally no downside to using NeoTax.

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Yes. Yeah, and this is actually pretty much. Not about tether. This is not a flaw. So leaked audited financials show that FtX revenue grew more than 10x and profits more than 20x from 2020 to 2021. We should probably start by explaining what FtX is and does. This is, of course, the San Bank bin-Fried exchange, the guy who is buying up the entire

crypto industry as it falls into disrepair or parts that are falling into disrepair because he can because he's making tons of money at FTAX. They're the one who is headquartered in the Bahamas and he's a matured guy who yeah, is very unique and outspoken. Fascinating. So an FTCS itself, like you said, is headquartered in the Bahamas. It's basically Coinbase on steroids. So it's an exchange. Users can buy and sell futures, options, leverage tokens, NFTs, even fiat currency. It has a retail and an institutional business, and the institutional traders are served by this sort of over-the-counter platform, and then they make money with a tiered trading fee structure. So the more volume you trade, the lower your fee, very typical, actually, in institutional

investing. But in this case, with more of a crypto focus, they also charge traders a daily interest rate when they trade on margin, so 0.03% daily with a 0.10% redemption fee. And then they also charge a 5% fee on both sides of NFT trades, just as a little explanation of how that revenue grew 10x and profits more than 20x. And so, you know, the question I always have with this stuff is, like, I wonder what's happening now. Did it go back down?

I would guess that it reverted and they're doing what they did in 2020 or 2019. You think, yeah. I would think, you I don't have any insight into what institutional investors are doing, but it does feel like, you know, and this is a private company, so we don't know.

That's why the leak is kind of notable. Private companies don't have to disclose their information, but they have investors in all likelihood. And so some investor leaked this or somebody they were raising money or some associate or whatever, in all likelihood.

That's how this got out. Or it could be somebody internally who got laid off or disgruntled or whatever has an axe to grind. But you have to wonder, what are these people doing here. Why are they buying cryptocurrencies? And it does feel like this has a gambling aspect to it, right? Like these people are trying to find ways to gamble on cryptocurrency because there's no

inherent value in almost any of this stuff. So this does feel like a house of cards to me in some ways. Probably was right. It's the big crypto craze. So of course there was a ton of. And since they make money on volume of trades, much like Coinbase, you would imagine that yes, it's all these people getting into this craze in the House of Cards. Speaking of House of Cards, another interesting thing from the documents shows that, so like Sam, you know, there's, here he is buying up all these component parts of this industry. It seems the more you dig into any of these companies, the more you seem to uncover that like they're all each other's customers, lenders, borrowers, and, you know, and at some point

collateral providers. In this case, Sam Bankman-Fried also founded Alameda research, a trading firm. Okay. Which, according to the documents, accounts for about 6% of FTCS's exchange volumes. Okay. Yeah, he's dogfooding his own product, right? He trades a fund on his platform. So this would be like if...

So this is not like... If Ladd at Robin Hood had a hedge fund where he was trading stocks on its own platform and he was 6% of the platform. Got it. That's kind of how I interpret it. It's kind of weird, but okay. So he's one of his own biggest customers. Yeah.

sort of. I mean, if it was 60%, you'd be like, well, that's weird. But if it's 6%, it's 6%, probably fine. I mean, it's not nothing, but you could take the 6% out and still be, I guess, abstensibly if you're an investor, a good business. Yeah. Okay. About two thirds of revenue came from futures trading fees.

Fascinating. Well, roughly 16% came from so-called spot trading. Yeah, you know, it's fascinating to me that all of this energy is going into this space, and people are spending all this time. trading it when they're getting no value out of the core currencies. So what are they doing with the core currencies? It's almost like we created, you know, a virtual casino where people get to trade on currencies and they have to play some game here, but there's no underlying value to those things. So if you're j-trading stocks, you're like, well, Amazon, I use it. I got Amazon Prime. I got,

you know, I'm getting packages to my house or I use Robin Hood. I invest in Robin or I take Uber's, you know, I stay in Airbnb, so I'm buying those things. I use that product. Here, you don't have anybody who's buying and selling these things and flipping them actually using those products and understanding those products. And so that's why I think this whole thing is such a house of cards. And I think there's more collapse to come, if I'm being honest. It is really interesting because it's like, these are all financial products, right?

So this is just a pure FTX in particular, as the NOTES point out. And we just said it's one of the few places you can do options in futures trading and derivatives, and those are more profitable for exchanges. So those are all financial instruments. Yes. That people are engaging in trading. Now, all of those exist in public markets and equities trading. Sure.

But they're based on something. You're trading options and futures in like hogs or corn or mortgages. Exactly. Gas, oil, things that go in cars, more people's homes, an actual commodity that's in use. Like, what is Ethereum? What is Bitcoin? And forget going down the long tail of these things. So this is like you created a thing out of air.

And sure, right, we are all aware that there's sort of like various projects being created that may or may not end up having lots of value and whatever. But at the end of the day, these were like things created out of air. And then they sliced and dice and financialized the pieces of air and traded that. This is like how I feel about buying apartments. Like I'm such a Montana and that I'm like, that's not. That's buying air. You're buying a floating box.

Yeah. Even that is hard to comprehend when you're earthbound, you know, country girl. You're like, wait a second. Like I'm like, do what you don't on the earth under your bed? That's right. How is that investment? What you buy is dirt. You buy the dirt.

You don't buy air. Well, I mean, even think about this. Like, in its worst example, the stock market had inventory like. AMC, a movie theater changed, is bed, bath, and beyond thing, which we haven't talked about here, but that whole manipulation that's been going on for the past week. Like meme stocks, even in their worst iteration, the most abused, shorted, you know, group buying pump and dumps scams, there's, you can still go to a bed, bath, and beyond and buy some soap and drapes.

You can still buy tickets to an AMC movie there. Even if it's a hundred to one its value or 50 to one and it's being manipulated to all there's still an underlying company there where people work and provide value to consumers, I guess, right? It's not like these things are trading on air. If you build all this infrastructure to trade some ephemeral promise of something to come, it's very, very, very strange. Even private market. We're talking about sale plan. When we made that investment, we're like, okay, there's a couple of customers. We'll talk to those early pilots. There's some product here. We could look at the product. We could go look at the interface. We can talk to the founders.

Okay, there's something going on here. We can look at some financial statements. We could look at some bank accounts. We could do some kind of diligence. The diligence on a cryptocurrency is like, okay, how many commits were made to this project? And it's like, oh, yeah. And then this guy created nine different personas to put commits in. Like, what exactly are you investing in here?

And then let alone trading futures on, it's wildly ahead of itself. It would be like us betting on, you know, this person. inside of Stanford or, you know, Berkeley says, I'm going to create a company when I graduate. We're like, great, here's a million dollars. And you're like, what am I supposed to do with this? Like, yeah, put it in a bank account and start thinking of ideas and write white papers. That's what's happening in crypto. I just invest in your future. I invested in your future.

Right. Right. Yeah. And again, not to say that this won't turn into. Could turn into something. It could turn into something. But like when you look at, and it probably will. But it's imagine if in the early days of the interim, internet, people started like creating financial products out of the concept of TCPIP.

It wouldn't mean that TCPIP wasn't real and a valuable protocol and a way to interconnect computers. But if somebody's out here making billions of dollars trading derivatives on TCPIP, then all of a sudden you start to think that maybe TCPIP isn't the product. In fact, I am trading on margin now, RSS feeds with enclosures because I think podcast is going to be big. What these people forget about open protocols is they're open protocols. Anybody can fork them. So where does the value actually manifest itself? It manifests itself on the application layer.

So let me explain what I'm saying here. Okay. Who's the biggest beneficiary of the RSS OPML attachment standard that Dave Weiner worked on? Not Dave Weiner. Yeah. Not the people who contributed to that. It's Joe Rogan. It's Spotify.

It's Apple Podcast. It's us. It's people who built either a podcasting application and advertising business, a property, call her daddy, this weekend startups, whatever. Joe Rogan, that's where actually the value was captured. So if you are making an open source decentralized product, and then you're hoping to capture value, and then you're saying the token's going to capture the value, but the whole thing, if the tokens were too expensive, somebody could fork the whole project and start over from zero and then own it and make it proprietary in some way. So I think

people haven't thought this through, if I'm being totally honest. Now, there is, some, there are some examples. I mean, Sam Bigman-Fried has, right? He was like, great job creating this like totally open standard thing and there will be a bunch of them and I will financialize the shit out of them. Yes. Good job that guy. He created a whole new product and that product is how to make money trading stuff that other people invented for free. He's just taking a Vig on people's belief that there's something here. Yes. Before we get to the ad, it makes our team so happy to see our partners celebrate big wins. And I was so thrilled to hear. about this huge funding round for our partner, Odu.

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and all of your apps will be supported by that same customer support team, that 20 different one. And here's the best part. Your first app is free forever. And O'Doo, is offering a thousand dollar credit on your first implementation pack. Amazingly generous $1,000 right now. Odo.com slash twist. O'DOO dot com slash twist. I kind of liked the way Howard Linsen framed it two Fridays ago. Some people loved that interview.

Some people hated it. But he just said it's more internet. And I was like, yeah, that's kind of what it is, isn't it? Like we had distributed, you know, BitTorrent and, you know, other Khazah. We had these open source distributed computers. computing platforms before. It's just more internet. Blockchain, just another database, kind of a shi database that's slow and doesn't work very well. But it does at least, you know, let everybody see the transactions and it's immutable and nobody controls it.

But, you know, I just wonder, like, the amount that's been invested in, here's what I would like to see. And this is an analysis we have to start thinking about. How much has been invested into crypto by venture capitalists, by the public? Where did that money go? And then what money comes out of it. So I'm going to say, you know, investors put tens of billions of dollars into this. Somebody must have the statistic of how much venture capital has been put it, just venture capital, professional investors, has been put into crypto projects. Okay, let's say it's 50 billion. Okay. Let's say they own 20% of those projects, 30% of those projects. Okay, a third. Okay, so now there has to be 150 billion for them to break even and to hit venture

numbers, there has to be 500 billion. In other words, you know, like a Google or a Facebook or a Tesla has to come out of this or 10, you know, or seven Ubers or Airbnbs have to come out the other side. Have we seen one? Right. Coinbase, it's still a trading platform. Exactly. It's not a crypto project. Exactly. The product in crypto is trading. Like, that's what nobody wants to admit. The biggest value-creating product with obviously fantastic product market fit is gambling. Yes. It's trading. It's financializing a thing that only barely exists and is super nascent and making billions off of it. And that is flipped. That's just flipped. Usually when something has value is when you start trading in it. Correct. When has it ever happened in history before,

that before a thing became the thing it could be, we started. We started, financially trading the crap out of it and making billions of dollars. Normally, value is created in the world and then derivative financial products are created on that value. Yes. So this home provided value to the family that lived in it. This apartment complex provided value to the owner who had 12 tenants, who became a millionaire. And those tenants got value as well because they could find a place to live. Okay, now let's bundle these together and make some sort of reet, you know, whatever. Oh, this smart group of people in Silicon Valley decided to invest in 30 companies. Let's create a venture fund and a venture ecosystem where

LPs put money in and then something comes out because they found some value here. Right. What we have here is no value has been created, basically. I mean, unless you consider like some of the NFTs value, which I do, I guess some are. And then people who have created, I'd say 90% of the value has been in the financial derivative products on top of the 10% of value that's and create it, it makes no sense. Like, even dark web transactions. I mean, that is valid, but. Right.

But again, I mean, it's just, it's the backwards nature of this. And I am not engaging in the question of whether fiat currency was also invested, by the way, in what backs the U.S. dollar. It's the full faith and credit of the United States. That's what backs the dollar. It's a lot of battleships and nukes. A lot of productive people. As we created this thing, it could have a lot of value.

I'm not even arguing that it couldn't. But it doesn't yet. And because we have flipped the process, we're going to make it even like we've actually literally created a system where it's going to be near impossible for Bitcoin to ever become a currency because it's too valuable as a financial product. And then here's the thing that's come out as regulation. So now regulators are like, okay, what game are you playing over here? Right.

So we need to get involved in you created a casino in the sky to trade things that have no inherent value. How do we even regulate this mishogunah? And part of this leak was that the FDIC, you know, you hear FDIC insured in those commercials like the federal deposit insurance corporation is supposed to backstop. You won't lose your money if it's in a bank account kind of concept. They issued a letter to FTX and five other companies that, and the agency demanded they take immediate steps to correct, quote, false or misleading statements on products being eligible for insurance protection. In the letter of the FDIC said FTX U.S. President Brett Harrison posted on Twitter content that contained misrepresentations about deposit insurance. Harrison responded to her writing,

quote, per the FDIC's instruction, I deleted the tweet. The tweet was written in response to questions raised on Twitter regarding whether direct USDA deposits from employers were held at insured banks, i.e. Evolve Bank. We really didn't mean to mislead anyone, and we didn't suggest that FTCS US itself or that crypto slash non-fayette assets benefit from FDI insurance. I hope this provides clarity on our intention, is happy to work directly with the FDIC on these important issues. So this is just the thing that keeps coming up is like some of these companies have seemed to suggest, what was the other one?

Was it Voyager? There was another one that got in trouble for seeming to suggest that if you consumer made an investment here, made a deposit, that that deposit would have protection, right? There are all these screenshots from Reddit threads as some of these big, you know, companies have collapsed in Celsius and things. And they were like, wait, but they took our money. They can't just, it can't just be gone, right? And it's like, yeah, it looks, walks, quacks, and acts like a duck. But it's not regulated like a duck. So your money's gone. It's hard enough. It's a bonkers scenario. The whole thing's bonkers. Everybody who's participating in this knows their gambling from the civilians all the way to the people running the casinos. Everybody knows they're gambling. everybody's expecting returns that do not match the reality of returns historically. So that's what makes me say,

anybody participating in this is going in knowing they're gambling. I have sympathy for dopey people in the world who take their life savings and gamble it. I also think that's part of like the lessons you learn in terms of being the sucker at the table that make you wiser in the future. And I'm not saying the people running the virtual casino are not more culpable. they are. But let's be honest, anybody buying something they don't understand because they heard about it at a cocktail party or on a Reddit forum. And they're trying to 10x their money when everything else in the world says, expect 7% a year in the stock market historically and your double your money every 10 years. If that's the common wisdom and you think you're going to 7x your money a year instead of 7%,

Well, I don't have too much sympathy for you. I think this whole thing is going to be looked back on us like, you know, tulip mania 2.0. And then two or three interesting projects will come out of it. Right. So definitely well. I mean, I have to. No doubt about it. There will be products with value.

But right now there is like a gambling frenzy and all these things are chips and there isn't even any cash in the back room. The SEC and our government should have been more proactive on this. I'm being honest. But I understand their position, which is the rules are here. If you choose to break them, then we enforce them. We're not here to tell you how to innovate. And so I think people took the innovation card and ran with it. Hey, we're innovating.

We're doing something new. And that's kind of how American society works. Like, you know, here's the laws. Read them. Go build what you want. We're a free country. You can try to innovate. But I think a lot of these people, their innovation,

was let me find a bag holder. Yeah, let me like create an investment. Like as soon as, right, there's innovation. And then there's the part where the SEC could have been like, huh, you created an exchange, you say, for buying and selling and investing in a thing that is a derivative or a whatever. Like that's a security, the end, right? Like the SEC still is not meaningfully. The FDIC is engaging on this topic more than the SEC is.

And that's the part that makes no sense. It was so easy to create a parallel shadow banking system with no rules because the SEC was like, this isn't innovation. That's true. It's literally turning the crypto industry into investment banking, but without any rules. They were like, this is new, so therefore the rules that exist in society don't apply to it. And that's just not how society works. Right.

The rules apply. Right. And you chose to ignore them. And the SEC chose to let you ignore them. They should have just gotten in earlier and just said, listen, not. And then even when they went to build products. It would have helped create products, that certainty. But here's the dialogue in crypto.

Hey, you know, XRP, they did a lawsuit against XRP. We think XRP is going to win the lawsuit. So even the crypto people, when was the XRP lawsuit like three years ago? Yeah. Even since then, people are like, yeah, they're going to win. So therefore, we can still break the rules. Keep on doing. That should have made everybody go, oh, the SEC's.

sued XRP and they're saying it's a currency, everybody stopped what you're doing. Did everybody stopped what they're doing? No. Everybody's suspended disbelief. And to this day, people suspend disbelief. Oh, there was that lawsuit for Coinbase. Hey, these eight things that you were front running is a security or our securities. And then everybody's like, yeah, I think they're going to win that case. I think the SEC's wrong. So like, hmm, you know, there's a, there's a lot of knowingly ignoring this stuff. Listen, Masterclass is the best. way to learn from world-class instructors at the top of their fields. I love this product. We use it in our household. We've got a yearly subscription, and their amazing courses include my guy, Steph Curry,

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the instructors now. And the lessons are about 10 to 15 minutes long so they can fit into your busy schedule and you can get unlimited access to every single masterclass. That's the big innovation here for 15% off an annual membership. Go to masterclass.com slash startups. Masterclass.com for 15% off. According to Wall Street Journal sources, Amazon is attempting to invest even more in healthcare. It is evidently one of the bidders now for, again, this is Wall Street Journal reporting at this point, for the home health services provider. signify health. Signify is for sale via auction.

It could be valued at more than $8 billion. Its technology provides in-home health care evaluations. So its customers are like health plans, governments, employers, health systems, physician groups. It has this network of over 10,000 in-home clinicians. And it's part of this value-based care model. This is sort of an interesting evolution that's been happening in health care, the idea that you as a provider should get paid based on the best. value you provide, as opposed to the number of services you provide. So you don't have to

like overload people with 50 million tests that they don't need. You actually like take the time to hone in on the right one and get paid for the value you provide, for example. The final bids are due around Labor Day. So they come to your home and provide health care. Healthcare evaluations. Got it. Yeah. So if you, I wonder if that includes like having your blood drawn. Yeah, I don't know if they can do that or not, but that'd be great if they could. I wish they could come. What do they call that? Flobotomist. Oh, God, yeah, right? Mobile phlebotomy? Like, why is that not a thing? Why don't they have that? Like, I would, having to go to one of those clinics to get your blood drawn, like, come to my house.

I'll pay an extra 50 bucks or 100 bucks. I come and take my blood every six months and then put it into some AI. That's what I really want. And there are some companies doing this. But that would be really cool. If you just had your markers done every quarter and they just told you over time, what's happening and then you could have all that data. So in the future, if they figure something out, they could go look at your 20 years of blood work and say, oh, yeah, by the way. That's what Chloe said from the land be. I had never heard that before when we had Chloe on from the land bee. And she was like, oh, you need to have your blood work done every quarter. I was like, what? You do? Because it's like if you're taking a supplement, you need to know if it's working or it was,

that was absolutely fascinating. Anyway, so yeah, I'm not, it's actually kind of hard to find out. always an interesting pink flag. Like, we as a team spent quite a bit of time this morning, Nick in particular, and then I came in late, we're trying to figure out exactly what Signify does with these in-home health services. And it's not super clear what they do. Yeah. So maybe there's some phlebotomy, I'm just saying, but it's not 100% obvious what they do. I think it does, there is some, they work with like Medicare Advantage and some other government run managed care plan. So they might actually do in-home care, like, provide.

that for seniors or other people? I think they're doing a lot of senior. Yeah, I think there's a lot of seniors that they're going in and checking on them and seeing how they're doing. So I don't know how that compares to in-home care, but this is evaluations. So that's different. But I can see this being a very big business for Amazon. and what a great company to take this on.

This is where when you have big companies, we have this whole fear of big companies, but sometimes when a big company takes something on like this, they can take a 20-year approach to it and everybody benefits. If you look at cloud computing and the benefit that's provided to society that anybody can create a startup

and have access to this giant computer network and then instantly scale it around the world, it's pretty dope, you know, when you think about it. Or any merchant can put their stuff, a third-party merchant can put their stuff Amazon and have access to all those prime customers and fulfillment and distribution. Those platforms have provided great benefit to consumers. And so I really would like to see Amazon challenge healthcare.

And I'm sure there's a third of healthcare services that can be Amazonified to create a new term where it's just like a platform and it goes to the lowest cost possible. Like why not do that? We're seeing it with drugs, right? with the two companies you interviewed on the pod. We need to take each of these components and then just make them cheaper, faster, and easier. And more customer-focused.

I mean, that's also, right? What is also, like, if you look at Amazon's whole approach to everything it's done, it's been this customer love, this customer focus. And granted, that should manifest as like a redesign of their terrible website. But at the end of the day, it is about providing people with a service that's easy, seamless, and that they love.

And we would all agree, harketing back to Chloe from the land being, that's the opposite of what health care does in America right now. Like, it is still, I think, a very open question. What, how Amazon might actually do this? And I think the Whole Foods acquisition and their attempt to, like, own grocery is a cautionary tale. But it's really interesting that this is the thing. more now than it was, I'm sure it's grown more and sells more than it did. But, you know, this is all about those pillars at Amazon. We had Ben Gilbert and David Rosenthal on episode 1530,

and we talked about with the acquired host and some of the great podcast. We talked about the three pillars, prime, which were all members of, marketplace, people selling stuff and third parties getting on there. And then obviously cloud computing, AWS. So what would the fourth one be? Bradstone was been on this podcast before, a friend of the pod, who did the Everything Store and Amazon Unbound, two books. She just wrote an article for Bloomberg. He thinks the advertising business isn't the fourth pillar because that doesn't have to do with consumers really, right?

Yeah. The pillars as defined by Bezos in a shareholder letter from 2014 were a core pillar, this is what, this is Bezos's words, quote, customers love it. It can grow to very large size. It has strong returns on capital and it's durable in time with the potential to do endure for decades. So, yeah, healthcare fits out. You don't really see health care.

Yeah. 100%. Whereas advertising, is it loved by customers? No. Yeah. No. You heard us ranting about what might happen if Apple starts putting ads up in our business.

It's just too much. Oh, dear God. Well, no thy brand is, I think, like a key piece of this. Although I guess Netflix is doing it. I guess everybody's just like, let's go. I mean, just because they're doing it doesn't mean people are going to like it. But yeah.

Amazon Q2, AWS revenue, 20 billion, basically. I mean. Marketplace Q2 online and third party, $78 billion. Low margin, obviously, the kind of break even on that, I think. Prime Q2 subscription revenue, $8.7 billion. Damn. $140 a year for Prime. And that's high profit, I think.

And to be clear, like AWS, which is, I'm sure, high profit, by itself is on a $79 billion run rate. More that, like, is bigger, you know, compared to the marketplace business at 78 billion. Like marketplace business means e-commerce for those of you wonder. Right. I don't know. The E-Commerce, but basically is a conference. Yeah. Which is common for them, which is common for them.

Yeah. AWS, the profit center marketplace. Lost leader aggregates a bunch of people. At some point, they could just turn the dial, and I'm sure they will. At some point, when they kill a lot of competitors and we're all addicted, they'll be like, you know what? Let's start making a little bit more. And they'll just turn that.

dial, as I've talked about before, the big companies can pick their revenue because am I going to change my buying behavior because it's two, three, four percent more money to buy an Uber and Airbnb or stuff on Amazon? No. And certainly, you know, if you change it to 10 percent, nobody would. It's only, you have to get to 20, 30 percent price change to actually see consumers change their behavior. Under 15 percent, consumers don't change their behavior, just as a general number. Fifteen percent is the just noticeable difference in terms of perception as humans. So, you know, if you change the brightness of something or the hue of something or the sound level of something, humans don't notice until it's above 15%

as a general rule of them. You can change prices. 10, 12%, people probably won't notice. So it's interesting. Bradstone predicted in this piece in Bloomberg that either healthcare or home automation would become Amazon's fourth pillar. And it's kind of interesting because the two companies that Amazon just bought, confirmed, you know, setting aside these rumors, are I-Robot. Yep. And one medical. And they've previously bought Ring.

They previously, exactly. And they've got like obviously strong Alexa penetration, even though all she does is give me the weather and then annoying me by saying, by the way, and try to tell me all the other crap she can do. But like, I wonder if there's an internal, Amazon's very famous for sort of pitting things against each other. And I wonder if they are pitting these two things, right? It's sort of like a highlander.

Like there can be only one fourth core pillar and they're trying to figure out internally and make them compete to the death to see if it's a home automation or healthcare. I've never seen a chair or stool with five legs. Exactly. I don't see why they couldn't have five legs. So the metaphor might be unnecessarily. They're going to murder each other. It could be that.

But I think they're going to have a five-legged stool, you know. I think that's where this is going. I think they'll keep going until somebody stops them. that's what I think. And the question is, do you want to stop them or not? At this point, you know, this is where Alina Khan and our government has to think, well, what's, I mean, healthcare sucks in this country. If Amazon wants to blow tens of billions of dollars trying to make it better,

do we want to stop them or do we want the government to be responsible of this? Or do we want the free market? Right. And I think we want the free market to work on. Exactly. We freaking do. And health care is so vertically integrated. and there are monopoly choke points all throughout healthcare that I'm sorry, if this was the thing

that Lena Con tried to block Amazon from doing, I actually would be pissed as a consumer of healthcare, the worst system in the world. There's nothing to lose. Health care sucks in this country. Yeah. You know, it's kind of like education as well. Like, please let Amazon or Google get college accreditation and let them compete in that space, right? I mean, this is where when you look at credits for schools, right?

This is something I brought up on all in last week. You have the same people in Atherton fighting housing. And then also being against school tax credits. What people don't realize is in California, your little Atherton community, your little Palo Alto, whatever it is, they keep all their education dollars and make their own schools in their little bubble where they don't allow multifamily homes and then the town next to it,

East Palo Alto or Milbray or San Carlos gets none of those dollars or Redwood City, but they have to have all the apartments as well. And then you're against the tax credit, but all your kids go to private school and you're not impacted by this. I kind of have come around to parents

getting a tax credit. I know it's unpopular, but I'm just thinking pragmatically. If there's no competition, well, if I was a parent, I would like to have the option of getting that $16,000 and coming up with my own solution

if I didn't agree with the solutions that were provided by the government. I think that's the same thing with health care. Like, sometimes the government sucks at doing things and having competition might kick them in the ass. Yeah, I don't know. How do you feel about those school credits? I was torn on this issue for a while

until I just saw like, public schools not getting better, so why not have competition, one I'd have charter schools, why not have choice? It's like a, yeah, I know, it's a real, this is a really tough question for me because I get very frustrated with the lack of innovation schools and all the different ways that they are stuck and don't want to change. But also like every solution that we come up with, including a tax credit, sucks money away from public schools. So it's this sort of like, it's this chicken and egg argument about schools where we, we cut, like, if you gave me, if you paid me, you know, $8 an hour.

and told me I had to do 11 different jobs, then you would be like, you suck at your job, you're fired. And I'd be like, yeah, but you paid me $8 an hour and gave me 11 jobs to do. And that's kind of what we've done to public schools. Like we've stripped away funding more and more and more, like the pay is really low, right? So we've created crappy public schools,

and now we want to create all of these fixes that would just continue to siphon money away from public schools. And we don't actually know if they would work if we just funded them properly. And they now have raised the prices on teacher salaries and still can't find people. So it's like, my view of the world is at this point, having watched us up close, it's if you don't have competition, you wind up having the product becomes less crisp. You know, it becomes less innovative.

And we need innovation. So it really is that simple. If we had competition in schools, it would be there. So you could still, all these other things can be true. We're underfunding it, whatever. But without competition, there is no... I mean, there could be inter-school competition. Like, I agree with you.

And also, schools are a complicated issue. But I think you're absolutely right. Like, at some point, you do have to be pushed to do better. And one of the best possible ways to get pushed is somebody else coming for your job. They're coming for that 16K. Because I have kids in public school and private. So I have both of these things. And I watch it, you know, like, and I'm lucky enough to live in a community where we're overfund.

you know, not just similar to Atherton and the public schools are unbelievable. They're better than most private schools in other areas. And I can see in the public schools. They're like, hey, we need your child to during the pandemic. They're like, we need your child to hit this many days, whatever. And I was like, well, I'm going to do my own school situation.

And they were pressuring me. And I realized, oh, they don't get this like 17K or 20K from the government. If my kid doesn't hit these things. So they have in their minds, we need your kid in school. Okay, that's healthy, right? funded for butts and chairs. It's like... Exactly.

What? Well, and then if they were losing butts in chairs because parents had a choice, then they'd be like, well, we got to make this more attractive to parents. And so that's where competition comes in. Right. But they are on a limit. They are on a fixed income. So they can't. That's what I'm saying. That's the chicken and egg problem with schools. It's like they're on a fixed income because governments have said, this is how you get funded and this is how much you get the end. Like, yes, you can do a.

little bit more with less, but like, thank you Bill Gates, by the way, for creating Common Core and a standard that they all have to teach to. So they actually can't innovate even on curriculum in the ways that they would want to, right? So like, if you, it's not a free market. Schools are not a free market. That's why I'm saying the competition thing is a little bit flawed because they will never be able to compete on the same playing field. I think they would then be forced to compete. And it turns out But who is they? They would then be forced to like change state laws all across the country? Because what what happened is you'd have parents going to this private, this private school with their 16, 17K tax credit for a school voucher. And then the public schools would say, hey, look at, they're all

picking that one that has this innovation. We need to have that innovation as well. And boom. And the state would be like, you can't have that. No, the state would have to change that because then they would like, okay, the schools are not competitive. They would have to look at that issue of why. But it turns out right now, public schools are paying like 50% more than private schools. So that's the other thing you're looking at us. Oh, they pay teachers more for. sure at public schools. Yeah, the paying teacher. Like I was looking at public school salaries in California, 80,000, 100,000, 120,000. And that's after a private school, 50, 60, 70. That's after a decade or more. Like Berkeley. Yeah, yeah.

Right. Berkeley's starting salary, according to one of our notices, is $58,000. Right. I mean, what? 10,000 more than, 10,000 more than Vox's starting pay. Just so you know what comparing to journalism. Because I happened to look at these because I was looking at the inside salaries, which are all $65 to $80,000, you know, for analysts and stuff like that. And I was like, what does Vox pay? I was like, $48,000 is the starting pay of Vox? You know, the whole union thing we were talking about last week. Yeah. Well, then it goes up from there. But, you know, I think, you know, if you have five or 10 years experience, I have a feeling being a teacher at a public school pays more than being a journalist right now at like a Vox.

I'm not singling off Vox. They just have to be, I mean, I'm sure BuzzFeed has the same pay scale because they also have a union. And Gawker, I think, did before they kind of got sold for part. So you put it together, a public school teacher with a couple of months off, I think makes more than a journalist on average, you know, in a major city. Interesting. Right. Which is fascinating to me, I guess. It is fascinating. That's also like only one of the many structural problems of schools, to be clear. Like there's a ton. I think I, to be honest, I think before states changed the rules to allow public schools to compete on a,

even playing field, all the schools would close. I really do. I'm like, I don't want to be a downer about it. But like, everything about that structure, that infrastructure is just, a disaster. It needs to be broken up. The unions are a bit of a cartel in New York. Bloomberg was trying to break the union there because they were keeping the worst teachers employed. You couldn't fire a teacher. Like the level of debauchery and insanity in New York, like it took years and they had a building of the worst teachers. And those teachers couldn't be fired in New York. So they put them in a building where they just sat at desks and did nothing all day. It was like a no show job, but they had to show up and sit in this place.

And there was nothing for them to do, but they couldn't fire them. It is possible for a union to have too much power. Just like it's possible for people to not have enough power and need a union, it's possible for a union to have too much power. And then, you know, you don't have the ability to fire people. I mean, who are just really bad at their jobs. All right, listen, we have some M&A. We can touch on here. Startup M&A, critical part of what we cover here.

maybe let's go to that. Yeah, small companies still getting bought and eBay still making moves. Oh, wow, eBay. Who knew? Yeah, eBay is acquiring an e-commerce platform for trading cards called TCG Player for $295 million. eBay's current financials, its market cap is about $25 billion. $212.21 revenue was $10.4 billion. It actually had a little bit of a COVID bump as well, net income, $252 million. TCG player serves individual users and businesses,

and it's like gamified e-commerce. So the more you sell, the more new, like, abilities you have on the platform, which is kind of interesting. Yeah, trading cards. For people who are selling like Pokemon cards

and like Magic the Gathering cards, all this kind of nonsense. Pokemon. Sports cards, big time. Yeah, evidently, trading cards among all of, you know, And I mean, there was that whole entire alternative asset boom. You saw like sneakers and wine and fractional ownership and art.

And trading cards was a huge part of that. So what is awesome is that eBay was like, ooh, during the pandemic, everybody got really into trading cards. And then a year later bought a company that trades. Well, here's the thing. You know, when you have a vertical, this speaks to verticalization, right? Yeah. eBay is a wide platform. I'm sure people are trading Pokemon cards there.

But is eBay and those buyers, what's more compelling to them? A vertical site where you only sell cards. And then every card has a chart. And they've got a database of every card. They say, hey, this card is in mean condition. This is Class B condition, class C, whatever it is. And we'll certify the cards and we know the cards. And we can show you the price of that card over time in a chart, which is what this TCG player does.

They just can build an experience. where 100% of the real estate on the website is dedicated to the needs of card traders. Now you compare that to StockX, which is just sneakers. Okay, eBay sell sneakers, but it's eBay validating and saying, hey, these are the right sneakers,

and do they have the database, and they have that dexterity? And so you want to, as an entrepreneur, eventually be able to do everything, but having specialization is an equally valid path. And so what you're seeing here is eBay, you know, ran the table on all auctions, but then people started chipping off verticals.

And this was a play that Airbnb did. There was a section called couch surfing. It probably still exists on Craigslist. We can pull it up and show you if it does. Couch surfing is where Joe, one of the co-founders who just left, Airbnb, I think, found the idea. And he famously shared the email that he sent to Brian saying, hey, I think we could rent our apartment to keep our startup alive.

that's how good that idea was and that was but one little section of crisis another little section was buy and sell stuff right which became Facebook marketplace or even eBay then there was also like dating casual encounters and that became Tinder yeah what was the other one Molly missed connections

I was going to the dating thing too remember miss connections oh that was so sweet that was some of the best reading on the internet I feel like yeah misconnections could be a screenplay I was like, I saw you on the bus. You were wearing Doc Martins. I was reading this book. I was reading Fahrenheit 51.

I was listening to everyone but the girl. You were reading William Gibson's virtual light. Neuromancer. Totally. We were on Bart. I was tripping on a microdose of yellow sunshine mushrooms. You had a lime green iPod and I was on my way to my to pick up my Bernie man trailer.

I was going to my Bickram yoga class. Sweety. I was coming back. Drinking my filled cold brew. Oh, man. You were polishing your blue bottle, chickory coffee. The Notties are saying that misconnections now still exist on Reddit. Thank you for the evening of entertainment.

Done and done. So anyway, congratulations to the founders of this. Yeah. that's great. And I think it's a smart move. And this is what you see in M&A, Molly. Some startup carves a niche out of a big company. Then the big company ignores it.

And it's like, we can do it ourselves. But they get out executed. They can't. Because you're the CEO of eBay. You've got 150 categories. Autos, this, that trading cards, shoes, music, you know, autographs, whatever. And you try to get somebody to head up the creating card.

And there are a schmach. and they can't make it great. And you're like, but look, there's a startup doing it better than us. We're eBay, we have more resources to them. And the person's like, yeah, I'll do that. And then the person doesn't show up for work or they're just lame. And you get your ass handed to you. eBay can get their ass handed to them in a category.

And then eBay has no choice. But they're like, geez, look, these guys are going to run us over if we don't buy it. And that's what happened here. It's a great. This should be a good note for VT's Sunday school too. Because you talk to a lot of companies and it's like, why would an Amazon, right? Oh, you always have that question. Why wouldn't Google just build this? Why wouldn't Amazon just build this? And most of the time, the answer is we just, we have just

enough of a competitive edge that it would be easier for them to buy us. Because weirdly, a company will never plow $300 million into building a trading card's vertical, vertical, but they'll take it out of a different budget and buy the company. And you know what the key factor is that you can look at to determine this as an investor? If they're going to win? Yeah. Product velocity. Yeah. So here's the thing. Nice. Who's going faster?

This TP, whatever, TCG player, is TCG player adding more features that delight customers or is eBay? Now, if you look at a company like Facebook, my lord, you know, Zuckerberg locks the doors and says, we have to be better than Snapchat, Instagram, TikTok. And their product velocity has always been faster than anybody in the industry. Amazon incredible product velocity. They say we're going to release the Kindle, Amazon Fire TV, tablet, Amazon Fire Phone, ring, whatever it is.

They move faster, faster, faster. And that's when you can tell the big company. Now, eBay obviously did not move faster than TCG player. So if you're a founder or a capital allocator, you must accept that you have to out hustle the big player in the space and go faster. If you look at Coda and Notion, they're going much faster than Google or Microsoft in that document creation wiki space, right? Does it mean that Microsoft and Google aren't going to wake up one day and go, you know what, we need a competitive product here.

They will. But I don't think they're going to catch up because the product velocity, if you look at Coda and Notion Slack has been extraordinary. And then Slack got sold. And now their product velocity hasn't been as good as it needs to be. And now Microsoft teams can catch up to them. So this is where product velocity, how quickly you ship features matter. I am obsessed with this in this company and this podcast. I'm always thinking about new features.

How fast are we going? It makes people disturb sometimes unless you have the right people and you explain to them what you're doing. We have to move fast. And then some people, Molly, you may have witnessed it firsthand, are like, well, wait, we just decided this and now you want to decide that. And it's like, we got new information. We're obviously going to need to go faster here because look, there's other people going faster than us in this direction. We need to be competitive.

And that relates to the school's discussion or the healthcare discussion we should have. Product velocity in education and healthcare sucks. Where does product velocity thrive in small teams and startups? So if you're in a small team, accept the fact that you have to run, not walk or jog. That is the job of startups. If a startup is walking or jogging and they're lollygagging,

don't invest. Don't work there. quit. And if you're a lollygagger, don't go to a startup. Go to eBay. Yeah. Go work at eBay. Lolligag at eBay. Yep. That's for lollygaggers. Say lollygaggers again. Just one more time. I can't take it anymore. Too much lollygagging. Who, you know who's not lollygagging? Not even a little bit.

Tell me. Launch Accelerator cohort 25. Oh, right. Yes. How are those interviews going? We just wrapped up the accelerator, the 25th one, which is bonkers. And so I've been interviewing the founders. And so we've got one today. I'm interviewing launch portfolio founder Arjun Chokine. He's the CEO and founder of a company called Swade, S-W-A-Y-E-D. This is one of those companies where when we were talking to the founder, Nick and I were

basically slacking back and forth that like, I love this business. This is genius. This is so up your alley because what Swade does is takes your. customer journey in a hospitality setting like a hotel, you the customer opt in to this, you know, sort of like membership loyalty thing. They shape and map your customer journey, meaning the hotel will, you know, pay you in some way to take in a ton of user movement data. And then they use that data to make the hotel or the hospitality experience like way more delightful and way more Amman level. And I'm like, thank you. But it doesn't have to be

at expensive hotels. It's for everywhere. It's amazing. Imagine you go to a hotel. You opt into using this software. You have the app or whatever. They know that you went to the gym, and then they send a fruit plate or they offer you a protein smoothie to your room. And they text you and say, after the gym, would you like you to do this? Now, in a great hotel, they're monitoring your movement just because they're staff around.

So the staff says, hey, you know, guest Calacanus in room 40, a guest, Ms. Molly Wood and room 30 is at the gym right now. This is a good time to turn over their room. We saw them leave their room. We saw them go to the gym. Let's go turn the room over. Also, this would be a great time to offer them, again, this protein smoothie or maybe they want to get a massage later and upsell them on that. And this is, if you've ever stayed at some of these nice hotels, like in I'm on, you know, you go out for a run. When you're coming back, they're handing you a bottle of water and a cold towel. That's always, like, so refreshing.

So the first time I ever stayed at shutters on Sony's dime when I worked for Sony for a year, I came back from a run, and the guy handed me a cold towel and a water, and I said, oh, how much was it cost? He's like, it's complimentary. You're paying $400 for the room, dip shit in so many words. And I was like, oh, can I get two bottles of water?

He's like, there's a refrigerator right there. You can take as many as you like, sir. And I was like, I'll take two? And he said, by all means, sir, take two. And I'm like, this cold towel. I was like wiping myself with the cold town. He was, wait. Yeah.

So imagine having that automated throughout your entire hotel chain so that everybody can experience a version of that service because they have opted into it from a technological perspective because all that stuff is there throughout the hotel, right? The room key, swipe, the swipe to enter the gym. We need this at flow. You're flowing around the space and then I can bring you the good stuff. Green smoothie.

I bring you the. the tequila smoothie. Okay? Banana, avocado, and the Don Julio. You can, you will never smell meat in your room, Rivka. That would never be a meat smell. Everything, you flow for vegans. David Friedberg is on the board.

We've decided if you want to live the flow lifestyle, no meat. No meat. No meat in the whole place. That would actually be, that would be great. You imagine if they had vegan only flow places? I mean, for the, for the climate conscious out there, That's actually like not the worst idea. People would totally go for it.

Anyway, super interesting. It's a great business. It's a really interesting interview, Arjun Schoquin, coming up right now. So the launch accelerator just completed its 25th cohort. I am going to sit down with some of the founders over the next few weeks to dig into their businesses. Up today, Arjun Schoquin is founder and CEO of Swade at SwadeAI.com. Welcome, Argin. Hi, Molly.

Thank you for having me. of course thanks for being here and for you know being part of our cohort what i'm going to start with the easiest question of them all what does your what's your company do yeah so swayed uh we map and shape customer journeys in hospitality settings so before swayed i was working for my family business we own and operate hotels and we were developing a project here in l.a where we had this key question of whether we should put a pool in this location or not and i think we really quickly understood we had no idea of what people actually did once they arrived on property. So I ended up making the decision by climbing on top of a parking structure, spying at a neighboring hotel's pool,

and seeing if anybody was using it that day. But I think what we identified immediately was just we had no idea of what people actually did when they arrived at this physical location. And if we lack this knowledge, then we would be guessing at every level of operations, ownership, and even development. And so we started swayed early 2020 to see if we can address this issue. And we've been doing it ever since. So how do you sort of productize that problem? Absolutely.

So I think, you know, what's great about hotels is they have an existing infrastructure and data collection that really enables this. So they're capturing massive amounts of data in terms of who their guests are, how much they're spending during their stay. loyalty statuses and different ways to segment people. And on top of that, they have these very robust Wi-Fi infrastructures that allow us to use the data that devices paying off access points to start building and knowledge in terms of where people are spending time and money

within this physical location. So for all intensive purposes, after a guest opts into an enhanced experience on property, we're able to link their mobile device to a central profile that exists within the property management system of a hotel. And this link is what enables us to understand who this device is within physical space. And then based on where they're going on property, their device pings with access points, where they're spending on property real-time activities such as transactions or changes to their reservation, we can start building together a really cohesive understanding of how this

person is spending their time and money at this physical location. And this is kind of the core data set that we're using to, you know, enable a bunch of operations and also eventually smarter decision making above property. I never knew that hotels were this dialed in. I mean, it sounds like you're saying that there was a sort of a built-in opportunity for this at hotels the whole time, but nobody ever pulled it all together and obviously asked the guests for permission, which seems like the important part of what you're doing. Correct. I think, you know, there's just huge issues that hotels in particular face and, regards to just bandwidth and skill set. So I think the on-property teams constantly overwhelmed with their ability to, you know, gather information, access systems, create insights, and then drive action. And I think, you know, that, you know, problems kind of just increased since the pandemic with lower head counts across the board. And there's not really a skill set to go into these,

you know, kind of complicated systems, which are collecting all of this data. And then asking kind of an hourly employee to go in there and go through data and then come up with actions out of it. It's kind of out of the question. So I think, you know, we've identified this opportunity where there was this existing infrastructure. So it's a key win for us that we don't have to, we have to tell, you know, hotel operators and owners install a bunch of new sensors because I think that's a losing proposition. We can really just be a purely software-driven solution and drive value for everyone. Do the customers who opt in get anything in return? Absolutely. Bottle of champagne in the room. Yeah, no, I think it ranges and I think it ranges in the

type of property as well. You know, some of our four-star hotels, it can be as simple as, you know, no coupon attached to it. We know that you're a business traveler and you're in your room at 8 a.m. we'll shoot you a message just about the breakfast available on property, and then we can measure, hey, that these people spend 50% more on breakfast over the course of their stay. And so I think what we've identified is guests, especially in hospitality settings, are eager to share who they are, so they get treated better and differently. And I think that, you know, the more times you stay at a place, the more tired you get of explaining to the front desk you've been there before. So I think you can create this really automatic and, you know, non-human driven way of recognizing

previous behavior and creating these experiences. And that can range from a free drink to an upgrade to, you know, at one of our more higher end hotels, we're actually creating a white glove experience where we're messaging staff to surprise and delight guests. So like leaving a green juice in their room if we know that they're health conscious. Got it. So that's the shaping part. There's the collection, the data collection part that benefits the hotel and offers them insights in terms of what they can do to improve, you know, get increased revenue and improve the experience. But then there's also the guest side where they're incentivized to spend more or keep coming back. Yeah, absolutely. And I think, you know, what's key for us is this isn't a

foreign concept to hospitality. You know, back in the day in the 90s prior to the married acquisition, Ritz Carlton was, you know, highest end in terms of their ability to increase lifetime value of their guests. And they used to run this program called Mystique, which was a very manual process of gathering and acting on data. So you would drive up to a lobby. The valet guy would see that there's golf balls in your car. He'd enter it into the system called Mystique. Then the next time this guest walked by the concierge, they would recommend T-Times. And it created this really magical experience of gathering and acting on data. But it was really dependent on employees. And back then, they used to have one employee per guest. And now they have six guests per one

employee. So you need to use technology to kind of make up for that experience gap. Right. How do you make money? So we've adopted a simple SaaS model in the early days. And I think, you know, we price based on how hotels are used to purchasing, which is a per room basis. And so we just keep it very simple. And that's what's going to allow us to scale to the first 10 million or so, where we price, you know, based on the category of hotel and the number of integrations on a per room basis. And at our current level of pricing, we would just need to hit on average, an average size hotel, about 128 hotels. And so about 1,000 to hit 10 million. But I think really on a long-term basis, we view this initial phase as a way to build

intelligence on behavior and physical spaces and use this data set to inform smarter decisions above property and beyond. And so to hit 100 million, we really want to incorporate a data as a service model where we're essentially equipping large decision makers with large portfolios and even the brands with data in terms of how different segments of people are using and engaging with space. And then making those kind of multimillion dollar decisions such as pool, and how you're allocating budget on a development or how you're allocating operational efforts with the status set, which is very valuable.

I just really want this to work. I just really want hotels to be psychic at every level. Like, do you see this as something that is applicable to hotels at any price? Yes, absolutely. I think it's a no-brainer proposition for hotels because for the on-property, team. We're driving, you know, without staff, incremental revenue and guest experience. So for the hotel, it becomes a no-brainer. From a guest perspective, they're receiving a more personalized and better stay on property. And then from the owner, they're gaining this visibility that they

haven't had previous access to. And we've spoken to the largest companies in the space. And, you know, they are similarly reliant on intuition and past experience when making large decisions, uh, because they lack this fundamental knowledge of the guest journey on property. And I think, you know, every time I stay at a hotel, I do get tired of explaining to them I've been there before or I see, you know, a space that has no relevance to anyone and sits empty. And I think, you know, every time I see that, it makes me sad because I know there's a smarter way. And so could be better. And I think, you know, one thing that's been interesting is we've seen that it's not just hotels that this is resonating with. We very recently were approached by Austrian Airlines.

looking to create, you know, a hospitality experience at the Vienna airport. And so for us, what's interesting is the points of kind of integration are very similar to hotels with a central reservoir of data and, you know, a mobile application and access points. And so I think this push for personalization in physical space is going to happen in tangential environments as well. And then last business model question, the white glove product sounds a little bit like consulting where you're telling hotels, you know, what to do and what to put where. Is that going to be a core part of the business going forward? And how do you scale that? Yeah. So the white glove experience, I think, just to clarify, is, you know, we're using the same mechanisms and interacting with a guest,

right? So in essence, instead of messaging a guest during their stay, we can message a, you know, a manager or an employee who similarly has a device connected to the access. points on property. And so if Mr. So-and-so walks into the lobby, you can message a staff member instead of Mr. So-and-so, and you could say, hey, why don't you walk up to him and kind of create this experience for him? So I think it really for us, it's not a lot more in terms of customization. I think we really look at, hey, the core product is this data set in terms of guest journeys on property. And this data set can be employed and deployed in many ways, whether it be engaging with guests directly, engaging with staff, improving operations or experience, or even above property, making

smarter decisions based on benchmarking and markets. Love it. For the record, the only two things I care about are a coffee maker and a bathrobe. I can just put that in my profile now. We're good to go. Arjun Shokine is founder and CEO of Swade, which you can find at Swade, S-W-A-E-D-I-I-I-D-I-com. Thanks so much, Arjun, good luck. Thanks, Molly.

All right, everybody. What a big Monday. Remember, remember, remember, if you would like to be featured on this program, come to the launch accelerator. We interview every company that graduates here. You get to have an interview with Molly. Launch Accelerator. You can just go to launch.com and apply. We invest 100K, just like, you know, tax dollars, my combinator, whatever.

And we spend 16 weeks with you helping you build your company and you're senior investors. And we follow on and invest in probably 90% of the companies ourselves. So pretty great. Yeah, it's a fantastic program. We also have a fantastic week coming up. We're super excited that we're going to have Sebastian Malaby, the author of The Power Law, the book that every, it's what did they call MFD, FMF Doom? He was like your favorite rapper's favorite rapper.

The Power Law is like your favorite VC's favorite VC book right now. This is the one that the whole industry has been obsessed with and we're really stoked to have him on. It's just a great overview of like 12 great moments in the history of Ventura. or so I read it, I knew 10. I experienced six of them up close. Like I knew five or six of them having been either in the room or adjacent to the room where it happened and knowing the principles. But there were three or four I never knew and I'm in this industry my whole life. So I thought it was like a very good book and I actually had our entire staff read it.

And that's going to be our book club in a couple of weeks. But we're going to have the author on of the power law. It's going to be great. And then a really great week for another crypto roundtable. I'm excited about this one. Yes. So we'll have Sunny back and Vinnie Lingam back, Sunny Madra, Sandeep, because they had such a great time and everybody, the show broke out. So we think every two weeks we're going to do a crypto roundtable till we figure this thing out. And so Molly will join me for this one and we'll have a lot of questions for our two experts, including what cryptos would they buy at this point, if any? If any. Benny Lingham still owes me $300 from getting me kind of drunk

and convincing me to buy Solana at the Holland Summit. Oh, there you go. Just saying. It's going to be an awesome week. Great weeks. So stay tuned. We'll see you tomorrow.

Bye.