This Week in Startups - How to Make Billions from Exposing Fraud | E2234

Episode Date: January 13, 2026

This Week In Startups is made possible by:Netsuite - https://www.netsuite.com/twistLumaAi - https://lumalabs.ai/twistSquarespace - https://squarespace.com/twistToday’s show: Government fraud and waste has become a prominent issue in the last month.That’s what we are looking at.On Today’s episode of TWiST, Jason interviews Alex Shieh of the The Antifraud Company.Under the False Claims Act, enterprising Americans, like Alex, can receive up to 30% of fraud dollars they uncover! Jason digs into the business of fraud with Alex Shieh and how a generational company could be built around it!PLUS Alex Wilhelm and Marcus Brotman take a look at the history of BOOM, $1.5 Billion dollar startup bringing back supersonic commercial travel!Jason first interviewed Blake Scholl almost 10 years ago in 2016. Back then, BOOM was a dream to bringing back supersonic travel. The Concorde’s failure, and why BOOM is different, is central to Blake’s thinking. What is fascinating is Blake’s mindset and vision for the early stages of this future unicorn startup.THEN, Jason answers live Q/A at Founder University Tokyo! In partnership with JETRO, Jason and the LAUNCH team are bringing Founder University to 35 Japanese startups over the next 9 weeks!Timestamps:(00:00) Why the Concorde failed and how BOOM Supersonic is bringing back faster than light travel(08:34) The 30% efficiency rule for Mach 2 flights(11:46) Netsuite - Get the free business guide Demystifying AI at https://www.netsuite.com/twist(17:12) Building million dollar planes on a startup budget(20:22) Luma AI - Stop guessing and start directing with Ray3 Modify from Luma AI, the AI-powered post production tool. Explore it at: https://lumalabs.ai/twist(24:11) The Checklist Manifesto: Lessons for pilots and founders!(26:02) How to build a team that can go supersonic(32:49) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://squarespace.com/twist(33:55) Private Sector Doge: The Anti Fraud Company(38:48) The $500B in Fraud uncovered(48:34) How Alex Shieh’s team uses AI to hunt down fraud(52:48) How you can win 30% of exposed fraud with the false claims Act(56:27) Founder University Tokyo Q&ASubscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcp*Follow Lon:X: https://x.com/lons*Follow Alex:X: https://x.com/alexLinkedIn: https://www.linkedin.com/in/alexwilhelm/*Follow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanis/*Thank you to our partners:(11:46) Netsuite - Get the free business guide Demystifying AI at https://www.netsuite.com/twist(20:22) Luma AI - Stop guessing and start directing with Ray3 Modify from Luma AI, the AI-powered post production tool. Explore it at: https://lumalabs.ai/twist(32:49) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://squarespace.com/twistCheck out all our partner offers: https://partners.launch.co/

Well, now he's built a company that wants to do exactly what you just said, use investigative journalism and also the power of AI to uncover fraud and collect fat penalties from the government for saving us all some money. And we talked about investigative journalism and how important it is. It turns out there are whistleblower laws. Whistleblower laws allow you to get 50% a third of the money recovered. I think that we're probably not like any other company that is in the world because we don't have any customer.

So this, it turns out, is a way that you can monetize. information, investigative journalism about frauds that haven't been previously reported. We're not a law firm representing the whistleblower. We're not a law firm at all. We are the whistleblower. This weekend startups is brought to you by Squarespace. Use offer code twist to save 10% off your first purchase of a website or domain at Squarespace.com slash twist. Luma AI. Stop guessing and start directing with Ray3 modify from Luma AI, the first AI powered post-production tool. Explore it at LumaLabs.A.S. NetSuite, get the free business guide, demystifying AI at netsuite.com slash twist.

Welcome back to Twist. This is Alex, and today we're going back in time. One of my favorite founders in the world is Blake Scholl. He's the founder and CEO over at Boom. Had him on the show a couple of times. I got to catch up with him in late 2025. And if you want to learn more about that, go check out episode 2168. But we've talked to him through the years. And I don't just mean a couple of years back. Jason actually had Blake on the show back in 20. 2016. This is when Boom was more idea than product. It hadn't put a test aircraft into the sky yet. It had only raised a few million dollars and was miles and miles and miles further away from its

goal of getting a consumer supersonic passenger debt into the sky. So I'm very glad to be joined today by producer Marcus. Marcus, hey, how are you? Hey, Alex. How are you doing? I'm doing great as we go through episode 638 and pull out the key moments from our first chat with Blake. Here's Jason and Blake talking about why the Conquer died and how Boom got started. Taking off on the wrong runway, over max weight, they landed just very, very close to a diversion runway, or crashed close to the diversion runway. They almost made it. Wow. Yeah. It's really sad. Now, did that crash derail supersonic flight, or was at the expense, why did we get so fast, have this amazing technology, and then not have it continue? When did that

happen? When did they decommission the final? It was 2003, so it went back into service after the accident. That wasn't really the showstopper. But the reality is the death of supersonic flight happened in the 70s. Okay. You know, supersonic flight never changed the world, never took over the way the jet age did. And the reason was that we really rushed into it. And we built Concord before it was possible to do it economically. So a ticket, yes, a ticket on Concord cost 20 grand. And yet there were 100 seats on the airplane. And you just can't find 100 people who want to pay 20 grand to go somewhere twice a day on very many routes. And so the result is then you get no economy of scale, only 20 airplanes ever built. That's further pressure on ticket prices. And the

whole thing is more thud than boom. You have this crazy idea that you're going to bring it back. Yes. Who are you and what qualifies you to bring back what, you know, the French and the English could not. Right. Well, Jason, like you, I never got to fly on Concord. And it pissed me off. Right. And, you know, I had the first part of my career was all doing internet stuff, startups, tech things. But meanwhile, I got my pilot's license, and I, since the 2000s, I've been waiting for somebody to do this. Right. Because I want to go mock two. Right. And eventually I realized that I might have to start the company if I want to have it happen. Explain to everybody what Mach 1, Mach 2 is, where do current planes fly? Where did the Concord fly? Where does the boom fly? Yeah. So Mach 1 is the

speed of sound. And all the major commercial aircraft, private jets, everything except a few military aircraft, flies subsonically today. So about 85% of the speed of sound. And so, about 85% of the speed of sound. And sound is typical, typical speed, you know, 500-some miles per hour. Concord flew at Mach 2, and Boom will fly at Mach 2.2. Mach 2.2 is like 14.51 miles per hour. So, wow. Yeah, it's really fast. I mean, the way to think of it is what it does for your life, though. Like, you leave New York, first flight of the day, six in the morning, you land in New York with the time difference, 2.30 in the afternoon, London time. And then you can get downtown, get business done, go out drinking. You can

have seven hours in London, still get back to New York by 8 o'clock New York time. Wow. So you can tuck your seat to the bed. So you think three hours. About three and a half hours each way. Three and a half hours each way. You're a former internet guy. You made a little bit of money at some point, I guess. And then you started flying around in a plane.

Why do all these internet cats want to go fly planes? What is it about internet people and private aviation? Because it's obviously a trend. Is it just because it's like an expensive thing or because you want to be like in control of something very technical? Why did you take up aviation? Yeah. I mean, it's been a passion since childhood.

There's something magical to fly in a plane, especially a small one. On one hand, it's kind of technical. And so if you're a geek, you like that. And on the other hand, it gives you this very direct experience of having your life in your own hands. And so to a certain kind of person that's very appealing. Okay. So you have the idea for Boom. When did you have this idea and how did you go about vetting that it could be not just an idea, but a company?

Yeah, what started about two years ago. So I sold my first startup to Groupon. It's been a couple of years at Groupon, then left. wanted to do another startup and I wanted to work on something that I was super passionate about because many times what makes the difference between success and failure in a startup is are you working on something that you care so much about that you keep going through the thick and the thin. And so I figured I would make a list of all my ideas in descending order of how awesome it would be if they worked.

And I'd work down that list. Great. And so I thought I'd get the supersonicics thing out of my system in a couple of weeks of research. That was number one? That was number one. I was trying to eliminate science fiction. Right, exactly. And so I thought I would get into this and find that it was science fiction.

And Alex, in a tale as old as time, it turns out that being early is just as bad as being wrong. I think Blake laid it out really well, $20,000 for a seat, just for one flight. Far too much money. I had no idea it was that expensive. I thought it was maybe half that much. So I'm actually more surprised that it lasted as long as it did, Marcus, than the fact that it eventually came to an end. But he's right. You know, the jet age did revolutionize first military aircraft and then, you know, the civilian world.

And certainly, military jets can go supersonic, but passenger jets can't. So it's an interesting situation. I do think, though, this is a good clip for another reason, which is that Blake is clearly the right founder for this project. He was a pilot. He had an itch. He had a grievance who wanted to go out there and take on. As Josh from Luck says, you know, chips on shoulders, put chips in pockets.

Well, he was peevish. He wanted to take this flight and mock two. No one was working on it. So screw it. I'll go out and build it myself. I just hope that more internet entrepreneurs take this as a license, if you will, to go out there and build things in the physical world as well and not to be constrained to just things that are digital

and also go out there and touch the metal, if you will. Absolutely. I think a top line from that section of the podcast was when Blake said that after selling his company to Groupon, he created a list of the top five craziest ideas that would be just not at all possible, but the craziest, coolest ideas that he could think of. And Supersonic Flight was at the top, and he went for it.

All right. Now, in this next clip, we're going to talk about how technology has improved, from the day of the Concord, why boom may make economic sense today, and also, how fast can we go over land without pissing off everyone that you know? Take a listen. It was September 2014, kind of officially. Okay. So in 2014, you made a company to do this. How did you go about figuring out if this is a real business or not? And is it a viable business? Because, frankly, my understanding of it was, and you'll tell me which are my misconceptions, number one, it's very expensive because it burns a lot of fuel.

Number two, the planes were extremely expensive to maintain and complex. There was a small audience for it because it didn't save enough time to make people want to spend. The two hours was $15,000 extra or $10,000 extra. It wasn't worth it for people. What did I get right? What did I get wrong in my assumptions? Well, that's all true, except you can do better today. You can do better today?

It can do better today. So the Concord was 1950s technology. And today we've got better aerodynamics. We've got software optimized aerodynamics. dynamics. We've got better engines, a lot of materials. And here's, here's the key thing. If you can improve on Concord's fuel economy by about 30%, just 30%, then you can do, yeah, very doable, then you can do a supersonic seat for the same fuel that a lay flat bed and business class would take. Ah, that's the key. That's what makes us feasible. So you looked at it and said, hey,

I will give you a non-reclining seat, like you're not going to get to lounge out and be in a sleeper seat, but you're going to get there super fast. So you're trading a little bit of that creature comfort for speed. Sort of, but not really. The flying from San Francisco to Tokyo in time and experience will be like flying from San Francisco to New York. So you get like a first class seat, but it's not lay flat. You get there so fast, you can sleep in a real bed. Making it 30% more efficient. The design is obviously a little bit different. I'm looking at the plan right here. It looks longer and narrower than the Concord. Am I correct in looking at it? So explain to me what is unique about the design. And

did you get that 30% just from the design? Yeah. There are a bunch of pieces in the design that add up. It's part aerodynamics, part engines, part materials, and all adds up to that 30% actually with some margin. Concord, so 50 years old technology, right? It was a big long tube made out of aluminum because when you're working in aluminum, big long tubes is what are easy to make. And for a subsonic aircraft, that's fine. For a supersonic aircraft, it's much more sensitive to the shaping. So think of, like, if you're familiar with the B1 bomber, take a look at that.

Very dynamic shape. That was built in aluminum at enormous expense. But today we've got carbon fiber composites, and what you can do with carbon fiber is mold it in any shape that you want. So you can use software to design and optimize shape, and then you can use carbon fiber to actually realize that. So if you look at our airplane, it's not a big long tube.

It's a little bit fatter up front. It's a little bit skinnier in the back where the wing stick out. that's a principle called area ruling, which makes a huge difference in aerodynamic efficiency when you're supersonic. What do you think the efficiency will be, the efficiency gains will be between Boom and Concord? Well, it's a minimum of 30%. We've got some margin in there, too. Oh, so it might even be better.

Might even be better. Okay. Now, I've been reading about Sonic Boom, and they say that they're going to be able to narrow the boom. Do you see a time when Boom will go New York to L.A., or New York to San Francisco in an hour and a half or two? Yes. I mean, that's absolutely coming. It's just a question of timing. And today in the United States, there's literally a speed limit. No supersonic overland. Doesn't matter how quiet

you are. It doesn't matter if you go and you play Beethoven while you fly. Right. You're not allowed to do it. The technology exists to quiet the boom quite a bit. And so this airplane, our design, will be about 100 times quieter than Concord. So that's a huge improvement. Is that enough to get the rules changed? I don't know. And smart, you know, I think smart startup thinking on this says don't count on any regulatory change. So we're thinking over water, supersonic, and when the rules get changed and we can fly supersonic over land, hallelujah. But you could take like the Lyft or the Airbnb or Uber approach and just sort of break the rule and see what happens. That'd be interesting, wasn't it?

Can you imagine you start flying supersonic over the United States? I think I might shoot you down. They would definitely ground your plane. I meet with a lot of companies, and I'm telling you every founder I know is asking themselves the same. question. How do we get more out of AI? We all know these tools are making people more productive, they're making people more efficient, but a lot of founders still have reasonable concerns about data security or just finding the right application for their way of doing business. But waiting on the sidelines is no longer an option. So I recommend founders use NetSuite by Oracle and put AI to work for your company. NetSuite is the number one AI cloud ERP and it's trusted by over 43,000.

in businesses. They're going to give you a unified suite of products, all safely sharing interconnected data. And that's going to help you automate routine tasks, dive into your analytics for clear, actionable insights, all while keeping your costs low and making your team faster. Right now, get the free business guide, demystifying AI at netsuite.com slash twist. The guide is free to you at netsuite.com slash twist. technology, that's actually almost terrifying to hear it laid out like that. The Conquer looks super modern, but apparently it was already dated when it was put out. The really key statistic to focus on here is the 30% efficiency rule. Not only is it great just for explaining the business model,

but even just for narrowing down what an investor might be thinking when they meet with Blake. You can see Jason starts out that clip a little bit concerned about if this is even feasible. And Blake just takes all of those concerns. How are you going to get billions of dollars for the capital expenditure needed, how are you going to get this team together? Are the unit economics going to work? And he brings it down to one statistic, 30% efficiency, just a master class right there in fundraising. I think also he did a great job putting it into context that you can get a supersonic seat for the same price as a lay flat seat today in business. Everyone knows what that costs, right? Because everyone's bought one at some point in time. So everyone knows the price point and

also what you get for it. And so the tradeoff here, I think, is really interesting. You don't need a bed if you're going to get there faster. Like I was so. much rather spend less time sleeping on a plane, which is terrible and more time on the ground. So I really think kind of the double hit there is a fantastic way for people to understand how to pitch a business and also how to get people like you and I super duper excited because it absolutely worked for me. I'd start reaching for my credit card right away. I got to put my hand down a couple years away still. Another thing that I really appreciated though, Marcus, in that segment was the discussion of sonic booms and the fact that there is a speed limit over the country.

You know, we think about speed limits so much being this terrestrial thing we have to deal with signposts and cops and radar and all that. But up in the sky, I guess I kind of implicitly knew that there was a speed you couldn't go over because of the sound barrier. But I didn't actually think it all the way through. So I love that framing of it as a thing that we're going to go out there and not only just deal with, but eventually, eventually, break. And I think VCs also love that idea.

Absolutely. We're going to go from two gunshots in the air to a little thump. I don't handle a little thump in our lives. It means going supersonic. Actually, let me help out a little bit there because this interview, as you said, you know, 2016, very old. When I talked to Blake in 2025, nine years later, they've solved the boom problem. And they've effectively figured out a way to fly above the speed of sound that doesn't create

a boom on the ground. So I think that this is going to be not just something to get us from, you know, New York to Paris or from San Francisco to Tokyo, but instead, really, to get us from my favorite route in the world, SFO to BOS. And if I can do that in like, what, two and a half hours, oh, your boy's going to be so glad. they're going to have all my money Marcus all of it absolutely all right next up the clip we're going to talk about is taking the startup approach now how do they build this plane what's the plan how are they going to get from an idea actually into the sky take a listen was it like a

a deals based email uh it was it was mobile e-commerce technology totally totally different as far as capital intensity yeah you made an app you made some software before right now you're talking about building what i think looks i'm going to take a guess here i don't know i haven't on the research. But I'm thinking, it screams to me of a billion dollars to get the first one out the door and 150 million, no, 300 million per plane. What does this cost? You're not too, too far off. So I like to tell people that we can build the entire company and get to break even for less money than Uber races and around. Okay. But it's still a lot of money, but it's not an obtainable amount of money. And so you, you know, you approach it like a startup and you do it

sequentially, like we're flying next year with a subscale prototype, which will go Mach 2.2. It'll set speed records. But it's much less expensive to build versus the full scale certified to take passengers, proven safe airplane. So you're actually making one for next summer. Oh, end of next year is when it will fly. End of next year. So in 19, 20 months from the taping of this, you will have a smaller version of the boom. Correct. And if you prove that, then you can start taking orders or you've already We started taking orders, actually. This surprised me that it was possible this early. We have 25 airplanes on LOI. Okay. Letter of intent. Letter of intent. Correct. So not binding yet.

Not binding. But it's... Does it include a deposit? It will. It will. Not yet, but it will. So like the Tesla, to reserve your bottom line, you're going to have to put something down. I'm assuming slightly more than the $1,000 that Elon's charging for the Tesla Model 3 will be the deposit for a boom. If not, I'm going to put down a deposit for the first 25 plans. What will the deposit be? And what will the cost of the plane be? Wallpark. Hundreds of millions?

So the price of the plane is 200 million. Okay. 200 million. And deposits, we'll see. What did the Concord program cost? And they built 25 planes or something? They built 20 planes. 20 planes.

They spent 10 billion? It's remarkable the thing ever flew. Right. So it was a joint venture between the French and British governments. Right. The screams efficiency, right? They couldn't, for example, the technical documentation was in French and in English. They couldn't decide how many factories to build

So they put one in France and one in Britain Yeah, they were fighting I think I saw a special on this When they were fighting over who got to build which pieces Yes Which on an engineering basis When the unions were fighting Over who got the jobs to do different pieces

That was a little bit weird, wasn't it? Oh yeah Yeah, I mean so you can do things way more efficiently And Elon is really showing the path to this With SpaceX Of what happens when you're scrappy You hire a smaller number of really phenomenal people

you put them all in one room, you keep them around the hardware, you can execute way faster for way less money. Who's ordering these, by the way? Is it the Virgin Atlantic? The first tenor for Virgin Group, which basically means that Richard can use them in whatever airline he chooses. Okay.

So Richard ordered 10. And at 200 million, the billionaire crowd would be attracted to having these, I think, but that wouldn't be reasonable to... operate as a private, for private aviation? It'd be probably a stretch. I mean, some people can make it. There's a guy in Saudi Arabia who purchased an A380.

That's the double-decker. Yeah, I heard about that. For his own personal use. So some people will have to have this. But we're aiming at, you know, our vision is to make Earth more accessible for everybody. Right. So the ticket prices out of the gate will be about business class. And over time, we're going to chip away at that until everybody can afford to fly.

So $5,000. bucks. Five thousand bucks round trip. Round trip. Round trip. To London. I thought Virgin Atlantic was 5,000 each way right now. It's like 10,000. I mean, it depends when you look at the price, right? Ah, right. And there, you know, you have to model, when you're doing the business, you have to model out what are the average actual prices, net of all the discounts. So the average, the average will be able to support us about 5,000 round trip. We talked a little bit about SpaceX. They're a full stack company. Uber's a full stack company. But you're going to sell the planes to other people. Have you thought, well, why don't I just create the boom and then create, Boom airlines. You know, there's some days you get up and you think, oh, that'd be awesome. Yeah.

But, you know, it's one hard problem at a time. And there are, you know, airlines are a complicated business. Building a supersonic airplane is a complicated business. So one thing at a time. There's a lot of appeal to working with airlines. And there is? Yes. What are they?

Well, you get to accumulate an order book, for example. That's key to this business. If you want engine companies to work with you, you want to be able to raise the capital you need for this. Typically, the way it works for new. airline programs, new airliner programs, is you show that you've got a bunch of orders, and then you go finance that. So if my business plan is I'm going to sell a bunch of airplanes to myself, that's hard to finance. We're AI first here at launch, and I have a team try out

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Less money than Uber raised in a round. That is how you know Blake knows his audience. Because if there's one thing Jason loves to talk about Uber, you know, it comes up here in there, Marcus. But the thing that I really took away from that clip was the idea of applying traditional startup approaches to a very different problem set. When we think about building sequentially or perhaps iteratively, I think about lean startup and rapid iteration and shipping software quickly and all that. But applying that to this space is just so cool to see that the same ideas can work both on the screen and on the ground or in the air, I suppose.

Absolutely. And speaking of the same ideas, we are still today talking probably even more now about how the EU has a hard time innovating. And here we are, you know, 10 years before, same topic. Same topic. Turns out that governments are not the fastest way to do things, but they are how we do things as a group. But it does seem that in this case, comparing the boom program to what we pulled off of Concord,

that perhaps the private industry may be a little bit better equipped to handle supersonic flight. One last thing before we move on, $5,000 to go to London round trip from the U.S. Man, they're going to sell a lot of tickets on these plans when they finally get there. I think a really intelligent point from Blake here, and our early point was talking about Elon Musk in vertical integration. In 2025, we have so many examples of vertical integration from startups.

We have, you know, we talk to base power and Zach Dell, Elon Musk in all of his factories. You hear from Anderil and their vertical integration efforts. And Jason asks, why not go for the whole gambit? Why are you even selling a book of business here? why not just own the flight itself and become a passenger airline as well? Blake responds really well saying, for one, this is a really complicated problem just building this jet, so we'll take one step at a time. But part two, as a lean and scrappy startup, to your point, it is much easier to finance a plane when you have a book of orders. So he says,

you know, we're going to get a book of orders, these LOIs, and once these orders come through, we'll be able to really scrappily get this an amount of capital together that we wouldn't otherwise have access to if we were trying to become a passenger airline right out of the gate. Also, if you want to build an airline, you're kind of barking up a pretty tough tree because people like United Airlines trade it roughly 0.5 times revenue and Boeing trades more close to two. So if you're just thinking that's in purely priced sales terms, Blake really does have a point. Now, next up, I do want to talk about a book because this is a book that Jason was talking about in 2016, and he talks about it each and every week here at Twist and Launch.

Take a listen. Am I in a system that's constantly reinforcing discipline, or do I kind of wing it and I figure, oh, I can make that work? And this is where checklists, I don't know if you've ever read their book, The Checklist Manifesto. I love that book. Isn't that a great book? Checkless Manifesto is my audible selection of the day. They're not a partner or sponsor on this episode, but they have in the past.

But what a great book. Explain to everybody the story about the, Was it the B-2 bomber? In the book, when they talk about the checklist manifesto, they were talking about one of the planes was so big and complex that one pilot couldn't, the way they used to have the structure of it was you'd have one pilot in charge.

And then everybody else would do what they said. So they really didn't have a delegation system. But then because of this checklist, they created checklists and then they would run them down with each other. So they sort of disperse the load of maintaining. Yes. But putting the load across pilots is a big deal as well. So typically for a commercial aircraft, you'll have one pilot reading the checklist, another one doing it.

Much less likely you skip steps. Right. I think this plane had like six engines or eight engines or something crazy. Sounds like a B-52. I think it was the B-52. They thought it would never work. And then when they got the checklist going. And there you have it, Jason bringing forward the checklist manifesto, which is a common occurrence here at the launch and twist offices. We cannot run such an incredible operation without the checklist manifesto. But I think this episode is probably the best time to bring up, you know, the first. book in question. That's because one of the key segments from the book that we all read was about

how B-17 flying fortresses in World War II were these new much larger aircrafts, were very complex for new pilots to run, and they need to scale the amount of pilots going over Europe rapidly in order to engage in these bombing efforts. And here we are talking to the CEO of a supersonic aircraft company. I'm sure the crew members on those plans will also be using checklist themselves. Well, you know, humans don't have infinite memory, unlike AI models. So we do need a little help as we get through things. I do want to make one last segment though, Marcus. This is all about raising money and building a team. Now we know about hiring engineers, all the sponsors of this show are in that domain. But how do you find people that want to take on our project that will take a decade

and it involves building a plane that no one has seen before? Well, let's find out. Do you have to get some crazy angels and be a crazy founder yourself who made a little bit of cheddar to put up the money for and prove it. Yeah, well, I think time will tell on that. Okay. So right now you guys have raised a couple million bucks, two million bucks. Yeah, before YC a couple million bucks. And then after YC, we'll talk about it in a bit. What will it take you to build the prototype? It sounds like $25 million to build a prototype? Actually, less than that. Really? 10, 20, something in that range? In that range, yeah. Yeah, it's very fascinating when you think about it, how little it costs for you to make a prototype. That goes supersonic. Yes. It's, it's, again, the bar for commercial

aircraft is really high, as it should be. Right. The bar for, for experimental one-off. It's disturbingly low. I don't know if it's disturbingly low. The responsibility is all on you to build something that actually works. So when I was first being this business started, of course, I had to get an amazing team together.

Sure. And so I was living in the Bay Area at the time and flying Cirrus is out of Palo Alto airport. And so I would take off from Palo Alto and I'd fly down to Mojave in Southern California, which is like the hot bed of experimental aviation. So I was going down there a lot, kind of on recruiting trips.

Right. And one of the first times I was down there, and I was very new to the whole thing. Like, I had my pilot skills and, like, a little bit more, but not yet a ton. And I was getting a tour of the hangers, and there is something amazing

behind every hanger in that airport. And so this guy showed me his hanger, and he had in there a Bert Rutan designed aircraft, one of a kind that he had refurbished. And so I'm looking at this aircraft. I'm thinking, I want to ask a question about it, but it can't be a stupid question, right? And so he looked at the wings,

and there were these bumps about a foot out from the fuselage on the wings. I'm like, well, that's different. I haven't seen that before. What's that? And he said, oh, that's a great question. Well, when we built this, we didn't want to build a new landing gear from scratch.

So we stole one off another airplane, but it didn't fit. And so we cut a hole in the wing and we put some fiberglass over it. And then he says, let me show you what we did with the nose wheel. And so apparently the nose wheel that also stolen off of another airplane

and it would retract if it wasn't canted just right, it would kind of jam and not go into the wheel well. They fix that by drilling a hole from the cockpit into the wheel well and giving the pilot a stick to poke the wheel if it's not a line correctly. And at that moment was when I realized that people in Mojave hack on airplanes the way people in Telecom Valley hack on software. You had to hire people who knew much more about aviation than yourself because let's face it, you were a web guy, software guy, who got a recreational pilots license and now wants to build Concord 2.0. Right.

There's a little bit of a gap between what you know and what the people who built the Concord know. A little bit. A little bit. Who's the first person you get on the team or the second person you get on the team? And how do you convince them that you're not insane? You get all manner of responses. But first off, I think most people underestimate as adults how much they can learn, how much

new things they can learn, and how quickly they can get deep. Right. Especially with experience, you start to learn what knowledge really feels like, what clarity feels like and what it feels like when you don't have it. So I spent about six months or so teaching myself aerospace engineering fundamentals, just reading textbooks, doing problem sets, meeting smart people, showing them my work and saying, can you check this? And people are really generous with their time, especially when you tell them what you're trying to do. And so I learned a ton from that. And I got at least to the point where I could judge the people I might hire. And we went through, so we went through it an exercise where the first couple of people in the company so critical. And I wanted the best people in the industry. So I asked everybody I met in aerospace, if you had a magic wand and you could wave it and you could get anybody to come work on this project, who do you want? And you start to see what names come up. And then which ones come up multiple times? Exactly, exactly. And so a little over a year ago,

we had about a half a dozen candidates for the first couple roles on the company. And we flew them all out to the Bay Area, got a conference room for a couple days and said, let's tear this whole thing apart technologically and also tear apart, like, what are the lessons of how you build an airplane company. And you can tell, you know, you sit in a room with half a dozen really, really bright people. And these people are like the inventor of the personal jet, the chief engineer from Adam Aircraft, the chief engineer from Spaceship 1 and Spaceship 2, whose airplane is in the Smithsonian. Like, this was a high level room. And you spend a couple days with those people and you quickly figure out who are the ones you really want to work with. And so we hire two people

out of that room. People go into aerospace because they either want to build a rocket and go and colonize Mars, which case they should go work at SpaceX. Right. Or they want to work in fast airplanes. Right. In which case, they should come and work at Boom. Well, will investors put the money up? With the benefit of hindsight, Marcus, and nine years going by, I can tell you that the answer is, yeah, they will. Boom has raised to date over $700 million, according to crunch-based data, and they raised $300 million last December. I will say, though, there have been some bumps in the road. This has not been an easy journey for Boom. In fact, they raised their most recent capital markets when they announced their new data center project.

Essentially, they're going to take some other engines they've made, put them in a shipping container, and use them to power data centers. Because if anyone has money today to spend, it is AI companies trying to expand their compute footprint. That's absolutely right, Alex. And I think this goes to the heart of what Silicon Valley has come to represent philosophically over the last 10 years, for one, being lean as a startup pivoting to where the value is today

for this very long-term vision to change the world. And secondly, and almost more importantly, is getting a few smart, hardworking individuals together who are going to change the world for, you know, any, basically every part of our lives from Google, Uber, Instagram, even the U.S. government with Doge. Small people, small groups can do quite a lot of work very, very quickly. But I also really appreciate what he said about learning.

Because it sounds like the number of people or the individuals who can have this level of impact is not small. In fact, it's open to all of us. Absolutely. Blake picked up a book and started reading about, you know, aerospace engineering. If he can do it, then we all can do it. Yeah, there's no excuse, which actually is kind of annoying. Like, thanks, Blake.

just saying, hey, I became an aerospace engineer in six months. Well, some of us have other responsibilities. No, I'm kidding. I love going back in time, Marcus, and seeing founders earlier in their journey. We often talk to people after they've achieved success, after they've gone public or raised the big rounds and whatnot. But it's fun to go back and see the joy in the challenge, the early progress, and the seeds of future success.

So thank you, Marcus, for your time. Everybody will do a couple more flashbacks this year. Look forward to him. Until then, I'm Alex, and this is Twist. If you're listening to this podcast, there's a good chance you're thinking about starting a new business. And that means you're going to need a beautiful website. That's going to help you stand out in a very crowded market. That's why I'm so glad to tell you about our longest running partner, Squarespace.

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slash twist for a free trial. And when you're ready to launch, go to Squarespace.com slash twist for 10% off your first website or domain purchase. Thanks again. to Squarespace for being my longest running supporter here on Twist. All right. Next up on the program is a fascinating project, Alex. You and I have talked on Twist about investigative journalism. You and I have spent our careers in journalism. Journalism is broken.

Journalism's transition, yada, yada. Creative destruction is occurring. And we talked about investigative journalism and how important it is. It turns out there are whistleblower laws. Whistleblower laws allow you to get 50% a third of the money recovered and the settlements here. People don't know about this, but the SEC has been giving these awards for some time. Some of them have gotten very large, I think up to nine figures. Our guest today, who Alex will introduce in a moment, has created a startup to address this and productize it.

What a brilliant idea. Alex, over to you. Yes, please welcome to show. Alex Shea from the anti-fraud company. Jason, I first heard about Alex when he was taking Brown University to task, given that Brown University is about 25 feet from my house. I was like, who is this guy? What is he doing? Well, now he's built a company that wants to do exactly what you just said, use investigative journalism and also the power of AI to uncover fraud and collect fat penalties from the government for saving us all some money. Alex, welcome to the program. How you doing? Thank you for having me. Yeah, Alex, tell us what is your company, the mission, the product, and where are you at today? Yeah, that's a great question. So I think that we're probably not like any other company that is in the world because we don't have any customers. And the reason for this is the way that we monetize is using an obscure piece of law called the False Claims Act, which has a provision called the Ketam provision, which basically says that if you're a whistleblower, you found fraud that nobody else knows about and you bring it to the government, then you can file a lawsuit essentially on behalf of the government against the fraud.

to the person who's defrauding the government. And then when it settles or you have recovery or you went at trial, then you're entitled to at 15 to 30% of whatever you end up recovering. So this, it turns out, is a way that you can monetize information, investigative journalism about frauds that haven't been previously reported. And it turns out that this can be a pretty fine business model because the fraud that is out there can get pretty big. Okay, so here's justice.gov, the Justice Department of the United States of America, the DOJ, the False Claim Act.

Many of the Fraud Sections cases are suits filed under the False Claims Act, FCA, 31 U.S.C., blah, blah, blah, blah, blah, a federal statute originally acted in 1863 to defense contractor fraud during the American Civil War. the FCA provides that any person who knowingly submits or causes submit false claims to the government is liable for three times the government's damages plus a penalty that's linked to inflation. Wow. This thing's existed. You've created a company to file these claims on behalf of the whistleblowers who find it and then split the revenue with them. Is that the business model? That's not quite right.

So we're not a whistleblower. We're not a law firm representing the whistleblower. We're not a law firm at all. We are the whistleblower. And so the way that people typically think about this is when they think about these whistleblowers, they think that these are typically people who are inside the company, their boss is doing something wrong, and they tell on their boss. And this is what it most commonly was used for.

But they made an amendment to the False Claims Act in 2009, I believe. I think Senator Chuck Grassley of Iowa was the one who pushed this, who broadens, who can bring these whistleblower lawsuits. And so whistleblower might even be a misnomer because you, don't necessarily have to be an insider, or maybe a more correct way of thinking about this is more of a bounty hunter program. Because completely outside the conduct and still bring a case. And I think one notable type of case that happens is oftentimes a company's competitors will sue them if they're engaging in some kind of unfair business practice that is a farting

in the government. And they'll be like, hey, you can't do that. And numerous times in the past, this has worked. And companies have been able to get these. lower recoveries by telling on their competitors. And so we're similar to that, but taking it in a different direction in that we're just investigating. And when we find stuff, we're bringing it ourselves as a company, even though we're not insiders to the conduct. That doesn't matter. We're still able to do this under the law. But Alex, just to be clear about this, we're talking

about fraud from corporations that are essentially over billing the government. That's my understanding of kind of your thrust. Is that there? That's correct. Yes. The statute is applicable when federal government spending is complicated. Okay. Now, I found some fraud stats from the government, and it's looking like they're finding several billion dollars a year in terms of fraud. My question is, how much fraud are we actually catching as a percentage of the whole? Are we getting, I don't know this is an estimate, like 10% of it, are we finding half?

How much more is there to uncover? There's a lot more. So I think even the low estimates, I mean, some people, like Elon Musk is famous for saying it's fun. Elon is famous for saying it's $1.5 trillion in fraud. Some other estimates are less than that. The government accountability office says it's more like $500 billion a year. But again, we have like a $7 trillion budget. So like a non-negligible percentage of the federal budget every year is going to fraud.

500 million out of $7 trillion? 500 billion billion that would be. And what's being uncovered under the false claim? same tax so far under every year is maybe like $4 billion or something like that. So this is, this is what we call a TAM expansion play is we think there's a lot more fraud that's not being uncovered so far. And we think we can help the government do it. Now, you partnered with a co-founder who has been doing this for some time. So tell us about how you formed the startup. You know, you had this original idea. Give us the origin story because this is one of those startups that I would

say is when you're an investor confusing, you've never seen it before, which then makes me lean in and get interested. And I've had to train all of my, you know, 12 associates and training at our at our fund when you don't understand a startup, when you can't put a pattern on it, when it seems weird or crazy, that's when you lean in, that's when you get more curious. So give us how you originated this startup, maybe a little bit about your partner, and why that was so important. Yeah, no, thank you, Jason. So there's myself and there's two other co-founders, actually, and the other two are both lawyers, and I'm more of an engineer. So my background, I think, as Alex alluded to at the beginning of the episode, is a few months ago, not too long ago,

I was a student at Brown University, and I sort of noticed that there were a lot of issues with Brown that implicated both tuition dollars because it costs like $90,000 a year to go to Brown, but also government funding because Brown receives on the order of magnitude of $500 million a year from the feds as well. And so, like, why is it so expensive? And sort of, I'm a fan of Andrew Yang a little bit. And something that's been saying for a while now is that the reason why Brown was so expensive is because of all these wasteful practices in the administration and a particular a number of administrators, the fact that there are 4,000 or so administrators. And to be clear, we're not talking professors, but we're talking about deans and secretaries and people who do

people all day. Why are there so many? And as myself and critics, like on all sides of the political spectrum like Elon Musk or Andrew Yang will say is that that's kind of weird, that there's like twice as many administrators as professors, especially since there haven't been so many in the past. And so I sort of put together a data mining project that, that really analyzed what they did. And that got a lot of attention. I ended up testifying before Congress about this. They also tried to discipline me,

but that case didn't go anywhere and I was cleared. But I ended up testifying before the House Judiciary Committee really about issues about what was going in Brown and how this was implicating financial aid and our tuition dollars and federal funding. And this really just made me aware that the government, they're great and all, but they really can't stay on top of everything

that's going on the ground. And I think that's a critical. insight that I had and that my co-founders also had independently. One of my co-founders is a former FTC attorney. He worked in the Biden administration. His focus area is really pharma, Medicare, Medicaid, sort of how big pharma companies are cheating and are leading to regulatory capture in ways that are preventing generic humanitarian market from lowering prices for consumers. So he's really been interested in this from a different angle. And then our third...

Alex, that was David Barclay, right? That's David Barclay. And then our third co-founder, Sahai Sharda, is... He just graduated from Columbia Law, where he wrote a book also about higher ed, about how, what the higher ed institutions of higher education are doing with their tuition pricing actually is a violation of antitrust law. And he wrote the book, and then it became a federal class action lawsuit. And all these Ivy League schools have had had to settle this for like tens of millions of dollars. And so I think it really goes to show how much grip there is out there that really the federal government hasn't been effective at putting a stop to so far. And maybe some

private market incentives are the way to go here. How many cases can you take on at once? How much do you, how long does it take to settle these? Because as a startup, you have to have a business model. Okay, bounty hunting, great. Love it. BobaFet, IG88. I like the analogy. But you have to collect the prize. How long will it take you to collect the prize and get your startup to the point at which it becomes sustainable, right? That's going to be the big question from your investors, I'm sure. Yeah. So that's a great question. And I think the best maybe comparison that you make fraud bounty hunting to is it will sound unusual. But I think one of the good comparisons that you can make is by comparing us to a biotech company.

Because essentially, we have sort of these legal assets. The biotech company has pharmaceutical patents, also sort of IP assets. And they take a while of time to develop, is that you have to pass all these clinical trials and wait for FDA approval and maybe get approved. And so there's some duration there. But eventually, you'll win some and you'll lose some, and that's the business model. I think what we have here is pretty similar, is that you're right. It's low.

Is that with these false claims, five years, seven years, what's the, what's the, what's the estimate in your model for how long it takes to settle these and to get your bounty? It depends on if, if the case settles or if it has to go to trial. If it settles and the DOJ gets involved and really pushes pressure on the company, on the fraudster, to settle, then that could be as fast as two years. But you're right. It's like from the longer cases where there's a lot of back and forth and discovery and it goes to trial, is it might take five to seven years. But because we're running numerous cases every year, maybe 10 a year at a good rate, maybe even more than that if we set up in more verticals, we think that we'll be able to be solvent, not to not too, or pretty soon in the future because at least some of these will settle. And the other other way that we can monetize this is by selling portions of the cases to litigation finance firms, even before.

Explain what a litigation finance firm is. I mean, I can guess from the term, but explain to us how long they've existed, how they work and how they sell an interest in a case. Yes. So I guess the legal mechanics of what we do is that each False Claims Act case is working. We're not actually filing it through the anti-fraud company, but we're dropping down a subsidiary. And then we're essentially just sharing selling shares in this subsidiary to litigation finance. Like an SPV, like you might, for investing in a company? Is that the format you use? Something like that. I mean, it's just literally selling, selling shares in that they're buying them shares.

Who buys this? High net worth individuals and how much would your average case be? Like, what would the high- opportunity be. And then how do you syndicate it? How do you find the investors? There's like an established market for litigation finance. I guess the thing that they typically like to do is they like to fund these big class action lawsuits because you need a lot of funding up front. And these sort of like class of plaintiffs probably aren't able to front front the costs when these things can cost like 20 million to actually litigate. And so essentially what what these are is these are a certain class of investors who invest money that pays for the legal fees and stuff up front, and at least in the class action context, and then they have an interest in what the outcome is.

How big is the interest? How much do you have to give up to access to this kind of financing? I mean, it depends. I think that maybe we would give up like 10%, 20% of the interest in our cases. I think we don't want to give up too much because with litigation finance, it often is pennies on the dollar. But this is a way to get liquidity fast. But this is not the primary way that we intend to generate revenue because we think that all our cases are good. We think our hit rate is going to be better than you see it on average. Whereas many whistleblowers are sort of bespoke whistleblowers that don't really know what they're talking about are our industry insiders who are telling on their boss. Whereas this is our whole business, we think we'll have a better hit rate.

And so we're going to be more inclined to hold on to most of the cases, if not, all of it ourselves. This is just sort of one way that we could get liquidity if cases are taking while. Alex, I'm a huge fan of rooting out fraud and saving us all money. Like Jason are absolutely behind you here. But I'm curious about repeatability and how you're going to be able to keep finding things on a kind of like plan basis. Like how are you going to do this year after year after year? So what techniques are you using to look for fraud? How are you confirming it? And and what legal resources you need behind you to ensure that you're doing this and won't get sued into the ground because you're going after companies who have an interest in you not getting your way.

That's a great question. And the way that I see it is that when you're committing big fraud, because we're going after big frauds here, we don't think that like that tinkering around the edges with like small million dollar frauds is really going to fix the budget debts that we're facing. And so we're going after billion dollar frauds. And the thing is when you're, committing fraud at that scale, at a billion dollar scale, is that you're going to leave trace. Trace is somewhere in data, in government data sets that we have access to, in commercial data sets that we're purchasing,

in filings that you're making with the government. And there's this whole branch of researching this called OSENT, open source intelligence, that has been going on for a while now, where we're just sort of sleuths on Reddit, that we'll dig through all this information and try to put it together. And I think that now that we have AI, though, and that really accelerates our ability to process information. Because fundamentally at the core of what we do is that we're an information processing company

because we're gathering signals from all these places. And so there's really two key, key ways that we're doing this year is we're going through textual data with LLMs. And so I don't want to give away too many of the secrets here, but essentially we have access to a trove of documents of relevant stuff. And we're running through this through LLMs to see if we can find any indicia of fraud. And then secondly, we have access to a bunch of sources of data from the government. And this is more structured data. And so my background is actually I'm formerly at Palantir.

And so we sort of ontologize these structured data sources and see if there are any flags raised there. So you're going to put the entire government into notebook LM and find the fraud. I love that. My question is, why are you talking about this? Because, Alex, you don't need publicity to go out and get customers. It seems like you're talking about this and you're going to be ingender competition. Or do you need to get inbound? I mean, I would, maybe you do get inbound.

I don't know. We do get plenty of inbound. And if anybody is watching this show and noise of any things, feel fraud against the government, if you feel free to let us know or go to the anti-examination. anti-fied company.com. Is there a submit form there or you just have to get your emailing? If anybody has any tips for us. We've gotten some tips that have been useful. But also, there's just a lot of subject matter expertise on our team. Like we have experts in sort of a pharmacy space, expert, long-tenured investigative journalists, obviously a bunch of legal experts and

engineers who know what they're doing with all this data stuff. And so all, a lot of the ideas also just come from in-house. We have a hunch that something's going on, and we go try and find it. But honestly, I don't mind if other people want to do a similar thing and want to find fraud, because, again, there's a lot of fraud. I mean, $500 billion is the low estimate. $1.5 billion is the high estimate. Somewhere between those two numbers will probably wind up being the truth.

You can't be taking on more than a couple of dozen active cases at a time, can you? Oh, absolutely not. And I think this just shows the value of capitalism and incentives. Because when you have a law that Lincoln passed in 1863, like the False Claims Act, that entitles sort of whistleblowers to a share of the interest in recovering fraud for the U.S. government, then everybody wins. The whistleblower wins, the government wins, because they have money that they otherwise wouldn't have recovered. And just by aligning the incentives so people do stuff that is protected for society.

This is a very good way, I guess, of structuring this law here. The problems that we've had it since 1863, we have these incentives in place. We all agree that incentives matter. But why hasn't that incentive structure of getting such a large chunk of the recovered monies done more to combat thought? How did we end up with $500 billion to a trillion a yearly fought if we have these aligned incentives? Was it AI the missing piece? I think there's two missing pieces.

I think AI was one of the missing piece because it just makes the information processing is so much easier. There's this metaphor of the blind men and the elephant, right, is that one, one is touching the leg, one is touching the trunk. And this is how fraud detection has been for a while now is that people have sort of a glimpse at part of their conduct, but they don't really get the full picture, an AI, and that gives us more of a full picture than blind men than elephant. But I also think there's a lot of activation energy that you really need to put together all these pieces. And that's why the most effective way of being a whistleblower is by being a whistleblower company, because then this is what you do every day. You learn from it. And then you're able to make

it repeatable, as opposed to sort of these bespoke whistleblowers, who's like a guy in the company, and then they got fired, and so they're mad, and they have some dirt on their boss, and they file an FCA case themselves. I mean, like, this, this is useful. But I think that putting it together, in a company that specifically does this is incrementally more so. Final question and congratulations on all this. I think it's awesome and it's really of the moment. You must have seen Nick Shirley's knocking on doors at daycare. That story obviously is a 15-year-old story and people have already been tried.

What's your general take on what he's doing first? And then two, when things have been, you know, bubbled up and investigative journalists have knocked on these doors many times, is there more? more of an opportunity there for you or less of an opportunity. Yeah, I mean, I'm not so sure if we're going to be taking on the Minnesota case necessarily ourselves because a lot of stuff has already been publicly reported on that. And I mean, like one of the central premises of the False Claims Act is that you have to bring information that's not already public.

I mean, that makes. But, I mean, I like the whole concept of exposing fraud and really having citizen journalists doing that. I think that's all really good. And I think you're alluding to something more fundamental here is that the business model for investigative journalism is sort of is broken. Maybe it might have had more of a golden age in the 80s or the 90s, way before my time, when you had these local newspaper powerhouses where everybody had a subscription and everybody bought ads in the newspaper. And so they really just had a regional monopoly and they could really they could really look into these things,

like the sexual abuse in the Catholic Church or Theranos, and investigative reporters really had a lot of resources to make these prestige stories. But I think what we're seeing these days is that where everything is online and that you get paid based on clicks, is that then everybody is making more click-bady-flavored content,

and there's not so much interest in investigative journalism. And we really think that False Claims Act and these other whistleblower programs is a great way that we can monetize these investigative insights that are non-public. And also we point out on publishing full write-ups when we're able to do so. But I think that this is a new business model for investigative journalists and one that we're hopeful is going to be the future. Well, I do hope that you publish all those documents because I would love to see the spirit

of investigation live on, Jason, but a fantastic company. We love it. Private Sector Doge, it's the anti-fraud company. He's Alex. Thank you much for your time, Alex. And Godspeed, save us all. some money. Thank you, Jason. Thank you so much, Alex. All right, we have a question from our amazing founders. Hi, my name is Gopalor GP for supra.ai. We make basically AI foundational

models for pharmaceutical and healthcare industries. So we're in Japan right now, and obviously we have some global growth ambitions and you're a, I guess, a high-powered recruiting agency in Tokyo. But one of our clients is the largest, one of the larger drug companies in China and we have to basically have models in in the China mainland so there's some data federation issues obviously we can manage this remotely but are you able to help us get the kind of talent that we need so we need a plus talent you know I'm coming from a background with AWS IBM all this type of experience I want

that quality in the mainland, and I want to be able to communicate with them very tightly in that we are in the same culture because I'm part of another larger company right now, and culture is important. Great question. Recruiting A-level talent in China in a very interesting moment in time

in terms of globalization. Yeah, well, I mean, we also have a mainland China office. But to be honest, actually there's a lot of Chinese people who, you know, like, love Japan. Like, you know, there's a lot of, like, Chinese companies out here in Japan as well, right? Like a bike dance, for example. So I think, like, again, you know, it's not a secret sauce. Like, you can, all you need to do is, like, make sure that you reach out to as many people

as you can, of course, have the right partners. Why working with an external recruiter is a good thing is because if you directly go to the candidates, you know, you could tell them stuff and they might tell you stuff, but they're not going to be 100% honest with you guys, right? But if they work with external recruiters, candidates will tell exactly how they feel, right? Right. Because you're their advocate, you're their intermediary. Exactly. And, you know, like, that's why, like, I think, you know, if you have a right partner who understands the market and who understands your business, and of course, like, we have to get to know each other. If it's me or whatever recruiter, you have to spend time with them because, like, if you really care about culture, like, they need to,

know you well. What are you looking for? How do you spend time with recruiter before the process? I mean, like, are we going to hang out in the office? You're going to watch this work before we start hiring? Yeah, how do you interview the founders? What do you typically ask them? And then how do you pick? Because you, I'm assuming, don't take every client. As a founder, like, you would reach out to a recruiter and then it's like, hey, can we have a chat? This is what I'm looking for. And then you have that first initial consultation, right? And I think within 30 minutes, or even within five minutes, you kind of know, like, if this person's going to be able to vibe with you. So, yeah, like spend time on the calls.

As a founder, you have to ask questions. Is this recruiter trustable? Do they know their things, right? Like, do they know the market? Thank you. I'm Yuko. We are building Japan media. Japan media is kind of anyone can create and sell

manga and anime with AI. And how can we acquire global talent? Because we cannot pay so much salary, so compared with you, that of you, out of US. So. How do you do it on a budget? Or you don't?

Yeah, that's the difficult part, right? I mean, if you want to get really good talent, you got to pay to play ball. Like, that's just how it is. So unless if you don't have cash right now, you can do equity. But then you have to find a candidate that's passionate about what you're doing, right? They got to be passionate about the manga, the animator, the sales, whatever you're doing. You will find that person. It just takes a lot longer time.

And it kind of precludes you from having a recruiter. because recruiters get paid typically based on a percentage, and so the great recruiters are probably not going to take on early-stage startups. It's good for you to know this now as a founder for when you get your Series A and maybe you've got $2 or $3 million in the bank and you can afford somebody great. Yes. Then the recruiter would kick in. My best advice would be you're trying to find the person, if you were to draw an X, Y, axis,

passion for the subject matter, and talent and ability. And the further into that top right-hand quadrant you can get, the better you'll be. And there's another variable that you can put in there. They've already made their money. So finding somebody at Meta or Uber or Microsoft or Google who has taken down a large chunk of cash and doesn't need to work, but wants to be productive and really loves your mission. Wow, what if everybody in the world could participate in anime and manga? That would be like an incredible thing for them. Wow, they might really love working on the product.

So that means even more you're selling them on the mission. And what's great about those people is they are potential co-founders. They'll be probably more equity-driven and they might even want to invest in the business. So I've seen people come to startups or come to me and say, hey, I made a bunch of money. I worked at Meta. I want to join another startup. Here's my skill set. I also want to invest.

I want to buy 2% of the company, 4% of the company, and I want to get a 2% or 4% equity package, and I want to be the CTO. to find, but you always have to be recruiting. A, B, R, always be recruiting. This is Mickey Vito, co-hounder, and the CEO of the cashier technology. I have a simple question. I saw the movie about Uber, and then there was a tough time there. So, what is the most important lesson for a H.R. leader to build the tough team? Okay, yeah, there were some tough times. You had to have a bit of grit. You were there for. for during some of them, yeah. So what's your best advice for building a resilient,

gritty, strong team? Yeah, that's a great question. I think what happened with Uber was like, it went from like a baby to an adult real fast, skipped all the teenage years. So like, a lot of drama and a lot of things happen. But I think like if Travis was to do it again, like I think someone, an HR person who's gone through

that growth environment, who've seen crazy, is probably the perfect fit for someone who's going to go through that kind of tough times. So people who've been through Uber, HR, they can do anything, basically. So if you can find someone that basically went through a growth environment, chaos environment, that's going to be the person that will hustle with you and probably can solve a lot of great problems for you. One of the paradoxical things about grit is sometimes it's those, type of environments that make the great entrepreneurs. So they come in and they have great potential and then they have significant hardship and

that's how they actually become great. And sometimes it takes getting kicked out of your company like Steve Jobs did and then coming back. Sometimes it takes having a near-death experience almost running out of money like happened to Elon three times with Tesla or three times when he blew up rockets and he couldn't get one to, you know, not blow up. It's the crises. It's the challenges that make the entrepreneur. But we have a perception of like, oh, there are these people who are incredibly resilient, incredibly strong. And, you know, those are the people who change the world. No, the world is hard.

Startups are hard. Competition is hard. And that's what makes them. It's that experience. It's going through that fire that actually makes them. And I think your advice is really good. The companies that have imploded or had great success and then had it taken away, they're filled with people who have the scar tissue to be strong. Sometimes the bone breaks, comes back stronger. It's like it heals stronger, right? There's this concept. What's the concept in Japanese culture where something breaks like a vase and then they use gold to Kinsugi.

This is a very beautiful concept. Kinsugi. It's when something shatters and then you remake it and you glue the, the pottery back together with gold and they stole it for Star Wars. In Star Wars they had this concept where like some of the masks which originally came from the samurai, Darth Raiders inspired by Samurai, but one of the masks was broken and then they, Kylo Ren's helmet, thank you, editorial director, he knows every cultural reference.

Kylo Ren's helmet was re-put back together and he welded it back together after he smashed it where it got smashed. Really interesting concept comes back stronger. Okay. This has been a great episode of This Week in Starves. We'll see you next time. Bye-bye.