This Week in Startups - Inside Substack’s $100M Push to Fend Off Beehiiv | E2153

Episode Date: July 18, 2025

Today’s show:WHY DOES @SUBSTACKINC NEED $100M IN NEW FUNDING?HOW DO THEY PLAN TO STAY AHEAD OF @BEEHIIV?Jason and Alex are debating the future of indie publishing on an all-new TWiST, considering the future of these rival platforms, plus Patreon and more.PLUS they’re digging into Lovable’s latest raise and what it says about the current economics of vibecoding, surveying the automated driving landscape in light of Uber’s new agreement Lucid and Euro, explaining Jason’s “meme processing” theory of internet humor, AND looking ahead to Christopher Nolan’s IMAX epic “The Odyssey.”Join us for the longest-running and most in-depth podcast on Earth for startup founders.Timestamps:(0:00) Intro - Everyone is getting hyped for Nolan’s “The Odyssey”(03:49) “Meme Processing,” the Astronomer saga, and giving people a little grace(10:07) INBOUND - Use code TWIST10 for 10% off your General Admission ticket at https://www.inbound.com/register (Valid thru 7/31)(18:49) Substack vs. Patreon vs. Beehive: Who ya got?!(19:43) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist(29:39) Public - Take your investing to the next level with Public. Build a multi-asset portfolio and earn 4.1% APY on your cash—with no fees or minimums. Start now at public.com/twist.(37:58) Lovable, vibecoding, and how much AGI might one day be worth(01:00:36) Uber’s Lucid/Nuro deal: Alex did the math(01:08:03) Is autonomous driving about to change EVERYTHING? Jason says… YES.Subscribe 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/v19fcpFollow Lon:X: https://x.com/lonsFollow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelmFollow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanisThank you to our partners:(10:07) INBOUND - Use code TWIST10 for 10% off your General Admission ticket at https://www.inbound.com/register (Valid thru 7/31)(19:43) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist(29:39) Public - Take your investing to the next level with Public. Build a multi-asset portfolio and earn 4.1% APY on your cash—with no fees or minimums. Start now at public.com/twist.All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC.Alpha is an experimental AI tool powered by GPT-4. Its output may be inaccurate and is not investment advice. Public makes no guarantees about its accuracy or reliability—verify independently before use.*Rate as of 7/18/25. APY is variable and subject to change.Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarlandCheck out Jason’s suite of newsletters: https://substack.com/@calacanisFollow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com

I love the term graduation problem. So this is the graduation problem that you do a great job, your customers leave. E-Harmony, number one graduation problem. We're going to make this one of our themes here, the graduation problem. E-Harmony was, you know, really a challenged business because they were so good with their science of relationships, of finding a husband, that your 40 or 50 bucks a month. They were charging a lot at the peak would go away because if they did their job correctly. do your job correctly, you lose the customer. You know, and job boards have this issue.

And, you know, you're basically like, when do you get the person back? When they get divorced? Okay, yeah, that could be 10 years and 50% of the time it doesn't happen. This week in startups is brought to you by Inbound. Connect with visionary leaders like Dario Amode and Amy Poehler at Inbound 2025, September 3rd through 5th in San Francisco, the epicenter of tech innovation. transform your business strategy for the AI era. Use code Twist 10 for 10% off your general admission ticket at Inbound.com

slash register. valid through July 31st. Lemon.io. Higher pre-vetted remote developers get 15% off your first four weeks of developer time at lemon.io slash twist. And public. You take investing seriously. Public does too.

Build a multi-asset portfolio and earn an industry leading 4.1% APY on your cash with no fees or minimums. Learn more at public.com slash twist. All right, everybody, welcome back to this week and start us. I'm Jason Calicanis, our editorial director, Lon Harris here, and my co-host Alex Wilhelm. Hey, everybody. How's everybody's Friday going? Good.

I'm having a great day. All right. We saw The Odyssey in IMAX. Lon and I share a passion for cinema. And I thought when I saw that, Oh my God. I just rent me the IMAX theater. You and everybody else.

Universal did this on purpose. A year ahead. It doesn't go out until next July. A year ahead. They announced we're going to start selling the IMAX tickets for The Odyssey a year out. Like a lot of movie fans are freaking out. They're like, because it's selling out already. It's like, oh, it's a year ahead.

And I already got beat out for opening night of the Odyssey. They're doing it just to get people hyped and it's working. Like, yeah, there's a Lincoln Center in New York sold out opening night. for The Odyssey next summer. That's crazy. It's kind of nuts. What I love about Christopher Nolan is he always uses his own IP. He comes up with a unique story to tell, you know, and I'm really interested in this one

because it's evocative of something I feel like I've heard before. There's like a wars and wars. And so I'm like, wow, this is great because, you know, like tenant, obviously. And inception. These are all unique IP in the world. This is what makes him unique. I feel like this one I may have heard of before. How crazy that a guy named Odysseus ends up on an odyssey.

I mean, what are the chances? What are the chances? But this is a departure for him. Is this the first time he's doing some library? Yeah, well, no, I mean, Batman. He memorably did those Batman films. Yes, yes. But this is definitely, this is not like doing a comic book or adapting somebody's novel.

This is like, you know, how many, we don't really get a lot of, like, ancient mythology movies. It's not really that viable a genre for most filmmakers. So I think Nolan using the post-Oppenheimer massive, you could do whatever you want, creed that he now has, to mount a huge shooting the whole thing with IMAX cameras, like mythological adventure.

Like it's really cool. It's very exciting. All right. Let's just go to meme processing here. So I got along here. What's our take now? 48 hours. I think we've meme.

processed enough. Collectively, I call meme, you know, I like to come up with terms. Static team size, meme processing is my new one. It's like the 48 to 72 hours after the meme hits where we all just have to digest it, get our jokes out, deal with what the story is, and then we could start thinking about it rationally. Yeah. So where are we at?

I think we're at the 48 hour mark. With the concert, the CEO of the concert. Yeah, I think I found out about it either two nights ago. Yeah. I think we're just past the like 48, 48 hour mark where now we're starting to talk about, you know, there's all sorts of stories, backstory lore that people are adding and you're not sure what to believe or not. Yeah, where do you wind up, Alex? Yeah. Well, first, let me catch people up in case you haven't been online.

So there was a Coldplay concert. Coldplay is an American band. English. They're an English band. Cold play is an English band. And they were playing a show in the United States. Yes, in Boston. They have a camera that shows people,

a bit like the kiss cam. Right. I learned about this. This is actually a bit that they do at Coldplay shows all the time. They have their like kiss cam that goes through. So if you're bringing your not wife, lady you're dating to a Coldplay concert, you're taking a risk.

I mean, you're throwing the dice. And one particular person threw the dice and lost and was put onto the kiss cam with his arms around a woman. and the moment they realized they were in view, Jason, they ran away like scalded rats. They like ducked and tried to hide themselves. And the lead singer of Colplay, who was an Englishman, not American, he said that those people... By the way, it's an easy mistake to make. The English hate Colplay and Americans love them.

That's true. That's true. Chris Martin is their band. Coal play is our watered-down English ballad band. That's kind of how you... That's why you're juxtapositioning. In England, they hate Coldplay. So, Coldplay is the American Diet Coke version of Full Sugar Coke U.K. Oasis.

Okay, I got it. And this moment, because it was so clear that these two people who were caught together on this camera did not want to be seen together publicly, everyone then went out found their LinkedIn's. And it became an absolute, since the dress, it was black and gold or blue and white or whatever, it has, I've not seen a phenomenon this crazy. It turns out he's the CEO. of this company, astronomer, this tech, it's a tech startup. There's an angle here because now I know what astronomer is. I was seeing that. They didn't capitalize yesterday.

They were the talk of the world. I mean, in another timeline, the right thing to do would be to talk about the virtue of the company and for the CEO to come out and just maybe try to save his job by saying, hey, listen, I made a huge mistake, but you won't make a mistake. by team the demo with our SaaS team. Check out these compliance tools. Yeah. I mean, if you want to comply and, you know,

and then there was a meta version of this where somebody said this is a staged concept to promote the company. I was like, bridge too far. Yeah. There's no actors you can pay to have that reaction. True. It's also, it's not a,

if it was a consumer-facing product, I would be more inclined to believe like, oh, this is just a marketing gimmick to get the name out there. But it's a kind of hard to parse. The integration first data ops platform built on Apache Airflow, which is obviously the core Coldplay demographic. It's like a weird tool for developers. You're saying that obviously, like in jest.

I think Coldplay is actually probably 70. I don't know if there's another band that overlaps with their demographic more than Coldplay, if I'm being honest. I'm asking chat. That sounds pretty appealing to 40 and 50 year old white guys. Yeah. Maybe imagine dragon. With data structure compliance issues. Yeah, mews.

I don't know who could possibly be more light. Okay. So here's what I want to say about mean processing. This is, I have, I'm working on this theory about it. Now, this is something I, if you follow me on Twitter X, I've been talking about it for a long time. The intensity is 10,000 X what would ever happen. When I was growing up, there was a big scandal on seven, oh, I'm sorry, loop that out. It was a big scandal on my block in Bay Ridge.

One couple, two families, one wife and one husband from another family, had an affair. And it broke out when we were 10, 12 years old, and it became the talk of 76th Street. Why? Because one would leave 76th Street and 20 minutes later, the other car would leave, and that's how they got busted. Their cars were leaving in sync. And in Brooklyn, the parking spots, are even in the 80s, kind of few and far between. Getting a spot in front of your house or within, you know, on your block was a little bit of work even then. Now it's impossible. Kind of like Boston in that way.

And so this became, and that was kind of how like the Colombo detective work was like, wait a second, the cars aren't here at the same time. Put it all aside. This was an old school thing too because I would not, when we used to live in New Jersey over the summer of my grandparents' place, the block was just full of busy bodies. Everybody just always knew each other. Communities just were like that. The block was the timeline. Yeah. Like people were always like fucking up.

You was the block. Anyway, I want to make a couple of points about meme processing. Number one, it's obviously this is like a million times more impactful, maybe 10 million times. But these are high profile. These people are now low profile, unknown people who have made the, worst decision of their life, on all likelihood, or amongst it, it's been captured and shared with everybody, but they're humans and they have families. So I was really feeling like, oh my God, you guys have to stop the memes, the memes, but the memes can't stop. It's just

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There's no holding back memes. Well, it's the Streisand effect. Yes. You always, anytime you're trying to clamp down on something on the internet, you run the risk of accelerating it by letting more people know about it than otherwise would have. So there's really no clear way. I felt the same thing. Like, I think you can't help but think from my personal perspective. Like, if you knew the entire world was currently laughing at you.

Like, you've done something so embarrassing. It spread so far. People in other countries and you've never met other parts of a while. I had the same thought. Remember the Australian breakdancing lady? Raygun from the Olympics last summer? Which I thought when I saw it was an SNL skit. Right. Obviously it became. And I was laughing it right away. It was funny when it happened. Of course. But like within a few days I started to think like imagine being this. Well like she did a silly thing. But like wow, I don't know if anybody could mentally deal with that. No. I think that's a really good point,

Lon. And one thing that I've noticed in the few times that I've gone like viral viral on Twitter, not just inside my community, but like several circles outside of it is how awful everyone is. And so when I see a story like this, I mean, yeah, I mean, I laughed. I'm a human. I saw it and I was like, oh, that's not so good. But then much like Jason said, after I processed a little bit, my thought was just, man, they don't deserve this. Yes, they deserve to get in trouble with their spouses. What I will say is, number one, they're humans. Let's give them some grace on the, you know, if the mean processing occurs and we get to the 72 hour mark. My lord, like just let's extend. like some human grace here to these individuals so they can carry on their lives.

They have kids. They can have to live the rest of their lives. And it's so tough because they, yeah, they're doing something wrong. Like, we all agree cheating is wrong. Like they're doing it. So I think that does make people on the internet feel like, well, these guys got caught doing something wrong. So I have a license to be as mean to them as I feel like they got, they got caught.

They broke the rules. They did something. And it's like, yes, people do. Everybody has done things wrong. Like, that doesn't mean that you deserve this torrent of ridicule. So, if you don't agree with Law and think of it this way. Imagine the thing you would like least known about you. You know what it is?

Think about it. Now imagine if 100 million to a billion people were joking about you and that thing and you had no control over it and whoever you hurt, you went to call and tell them, by the way, we just went hell of viral. Think about this guy's spouse. Think about her husband. As chairman of the interwebs, I have given my edict. You have 72 hours to get it.

out of your system. Laugh it up, folks, giggle in class. But come Monday, everybody needs to get, it's like a class laughing about a fart or something. You know, like, buy, okay, laugh it out, get it out of your system, kids, 72 hours. I don't want to see any more jokes at 73 hours. This is the number now. I've given everybody their instructions. You can go Buck Wilde, 73 hours.

That's it. I want you to move on to the next meme or get back to work, which is what we're going to do right now, get back to work. All right. Thanks, Lon. I'm going to take Monday to be with my kids and my family in New York, and then Wednesday I'm going to be doing this AI summit in D.C. So Monday and Wednesday, you all get a big treat. Alex is interviewing members of the Twist 500. Yes, sir. Three great companies per episode. That's three. One, two, three. 20 minutes each. I gave Alex the hardest thing to do. It's easy to do an hour interview. It's easy to do a 45-minute interview. I said, so true. Give so easy. I say give the audience what they want. I want to understand what the business is.

I want to understand who the customers are. I want to understand how big this could get. What if it works? So those are my instructions to Alex, classic great journalist. But I want to also get the perspective here of what investors, how they would look at this company. So who is this team? Why are they uniquely qualified? What is the actual product?

Like in a really simple sentence, what does this product do? Why does it exist in the world? And then, hey, if this works, how big could it get? Which is a really hard assignment I'm giving you, Alex, which is, hey, project out 10 years from now. What's the footprint of this business? Five years from now, 10 years and now. If it works, how many people are using this consumer product or going to Airbnb's?

What if it works? Because you're really good, Alex, one of your superpowers, is looking at those 10 Q's, the quarterly reports and figuring it out. So what I want you to do is try to build a mental model in but 20 minutes. minutes of how big could this company get? What would it look like in five and ten years from the inception? How much revenue of the footprint? Almost like if you were meeting Google or Facebook in the first three or four years and you said, hey, I could see this having a billion users. I could see those users making $40 a year. So at the end of each interview, it doesn't have to

happen in the interview, by the way, Alex. At the end, you could even do like Alex's recap. Jake Al asked me, what does this look like 10 years from now? Here's my model. And it's a back of the envelope model you hear me doing here. But that's what we do as investors. We try to look at these things and say, if everything goes right, Alex, what is the footprint of this business? So it makes it essential to watch these episodes.

Three members of the Twist 500, the top 500 private companies, thanks to Coda for building the software that we built us on. We just picked the best piece of software to do it. Twist500.com. What you just thought was me adding more notes to my what Jason wants me's interviews docket. But we really are trying to narrow the new. down so that way they're incredibly useful, incredibly dense, and also hearing from the people who are absolutely feet in the clay, in the trenches, doing the work, building the future. And that's why

there's so much fun. Honestly, Jason, I freaking love doing them because everyone who's a founder is just so interesting, just every time. Well, it's the great thing about this weekend startups. And this Twist 500 project, we're kind of nearing completion here, which means we're going to start looking at each of the categories and rotating people off the list. So when we look at the robotics category, you know, there's going to be a robotics company that we say, hey, this company has got to be on the list. And if there's 27 other robotics companies, that means two got to come off or we got to go to the SaaS section and look at them and say, hey, this company's not growing. This company had a down round, whatever. They're not the Twist 500 anymore. Twist 500 is going to be competitive going into the second half of this year. I'm going to put people on. That means companies have to come off if they're not in the top 5 percent. or really is probably 20,000, I didn't give them point in time, between 10 and 20,000 venture-backed, you know, concerns, you know, really significant companies, which means the Twist 500 represents the top 2% to 5%, I think.

And then for angel investors who are in my network, I've tasked the syndicate.com, with taking over the Twist 500 and meeting those companies after, and then looking at the potential of us buying shares in those companies. So this is like editorial meets the syndicates investment. I've got 11,000 people in that syndicate, four or five million of the four or five thousand. Oh, wait. Yeah, 11,000. I think four thousand have actually participated in a deal. So I'd like to get those people activated for us to go buy and invest in those companies. Okay. Here we go. It's almost like I'm creating an index. Hmm. Yeah, like the Fortune 500. The twist 500.

Okay. What's on the docket? What's our top story right now? And I've got to catch a plane and go see my dad and my family in New York City. I'm really excited. All right. Well, tell you what, let's talk about three funding rounds in quick succession because I think each one of them matters and talks a little bit about the market.

So first of all, Jason, and we'll do these in order of size. We'll start with Substack raising $100 million. We've talked on the show quite a lot about media economics, the impact of AI on journalism and just copyright more generally. Subzac is a company we've had on the show. If you go back to January 6th, 2020, that's an amazing correlation and date and historic days. Episode 1,016, we had Chris Best,

the CEO of Subdac on Twist. If you want to go back and look at that, that was Jason when they raised their Series A. All right. So now, Series C, $100 million, $1.1 billion post-money valuation, which is a pretty impressive revenue multiple for the company. Reports are out that it's at about a $45 million run rate

for its newsletter, blog, and social apps. business. Jason, this round surprised me, bigger than I expected, and sooner. First thoughts. When you're a busy founder, finding a new developer, my God, that can become a full-time job, and you've got enough on your plate. I mean, you're running a startup, but lemon.io has done the hard part for you already. They've got a crop of pre-vetted developers that they've ensured are experienced, results-oriented, and prepared to make an impact at your startup. And they can work right now, and competitive rates. These are skilled, handpicked devs with a minimum of three years of on-the-job experience. And just 1% of applicants are accepted into their program. Lemon.io isn't just recruiting you the

top talent that's out there. They're helping you integrate them into your team. If anything goes wrong, Lemon will find you a replacement developer, ASAP. And many of our launch founders and founder University companies have staffed up with lemon.io and we always get the best feedback. So go to lemon. dot i.o slash twist and find the perfect developer or even a tech team in less than 48 hours. And Twist listeners get 15% off their first four weeks. Stop burning money. Higher developers smarter. Visit lemon.com.com. Well, substack came out of the gate raising a lot of money for a platform that monetizes by taking 10% of the revenue of newsletters. They have added live video and they've added communities.

And so Joyce Vance, who is a district attorney, and she does stay tuned with Preet, which is the guy who, Prie Barara, who was the Southern District, head of the Southern District of New York, another notable Attorney General's office here in the United States. And I was shocked to see, like, the activity when she is in the chat in the app. So now it's become basically like Patreon. But Patreon was kind of more artistic podcasters, you know, donations. Substack feels more like an industrial. And Beehive, their competitor, which doesn't take a percentage of your revenue.

So if you look at those two platforms, man, they both have an incredible offering. Beehive is like starts, and we use that for one of our. our newsletters really well, and I think it's like 20 bucks or 30 bucks a month. So you have these two competing platforms. I always like to think of the two competing platforms. In Beehive, what are we showing here? This is interest in search traffic for substack, Patreon, and Beehive over time, Jason. Just as you can see here, Patreon is still the incumbent. But if you take a look at the graph here for Substack, it's clearly accelerating quite a lot, which I think puts context around why it's raising the Patreon isn't. And so if you use Substack or Patreon,

your, those, you know, Patreon being the OG, substack being the next, and then Beehive being the most interesting. It's a really interesting chessboard here. If you make over, I don't know, 100,000 with your substack, you would be paying substack $10,000 a year for what piece of software? It doesn't make any sense to pay for that. You would obviously want to use Beehive because you would pay, but, I don't know, $1,000, $500, depending on the guest, size and the offering you're looking to have. So you have a pure SaaS play, and then you have the two other ones which take what is an insignificant amount of money from you at $10,000 or $20,000, one or $2K, but a ginormous amount of money when you get to a certain amount. Like if you have a

million dollar franchise, I think the free press started Barry Weiss's on substack. Now, I don't know if they still use substack. They are. They're still on. And they might get sold. And And also, if I think memory serves Jason, Substack is building out a publication version of itself. And I think the free press was the first publication they brought in. Got it. So maybe they have a unique deal. That would be the piece of information I need here. These are going to be, you know, substack, Patreon, these have been interesting businesses to get to a certain level.

How they break out is going to become the question. Now, some group of investors think this business has caught up to their valuation. What was, do you know the last round of funding? Because I remember when Andreessen Horowitz did substack, people were like, this is a crazy amount, a crazy valuation back then. So, and the distance between their two valuations has been, the two funding rounds, I think has been a long time. It has been.

So Series B, 2021, a $65 million round led by Andreessen at a $650 million valuation. Then they went out, couldn't raise again. So they did an equity crowdfunding round and then raised a very quiet $10 million. late last year. And now, thanks to the election, thanks to the traditional media landscape fun apart, 1.1. So people see the bet, you have to ask, what's the bet bond? B-O-N-D is leading this, Churning Group, which is a media-centric one, Peter Churnin, I believe, who had News Corp. So people are starting to look at this and say, there's something here. So what's their thesis is what you have to ask. They had this four years in the wilderness, let's call it, where they

did an equity crowdfunding, which, you know, arguably they did, I think maybe to have their their constituents get to participate. Very interesting move. Most people see an equity crowdfunding round like that as maybe a sign of weakness. Venture capitalists won't invest, but the consumers will. It kind of goes back to the early discussion we just had, Alex, of the distance between critics, which in this analogy would be venture capitalists and the people who are the consumers, which would be equity crowdfunding. Sometimes the equity crowdfunding, or the consumers know better than the critics, the VCs. VCs have a hard time with Patreon as a business, with Substack as a business. They have an easy time with Beehive as a business. It feels like software, scalable,

high margin. The real question is somebody has to look and say, when somebody gets to $250,000 in revenue, giving $25,000 of it to Substack makes absolutely no sense, unless substack is bringing you more from their network and they can prove it. So when you use substack, it will say inside of it, here are the people that the substack network got to subscribe to you things. So when I look at it, I'm like, oh, that's interesting. Of my 100,000 subscribers for my Jason from All In newsletter or Jason on startups, I separated them into two concepts. So startups and folks, and it really haven't been doing too much of it. I just started doing it again. that really becomes the key issue.

And so they've convinced Bond and Churning Group that there is a business here that will go from $1 billion to at least, at least $5 billion or $10 billion. Nobody's placing that bet of $100 million if they don't think they can 10-ex it. So how does it become a $10 billion business? And this is, you know, as we just talked about with these trio of startups we're doing for the Twist 500, that's why I specifically gave you this. really hard assignment. So let's look at substack right now, and we can just do our back of the envelope math, at a billion dollars, 20 times top line revenue for a high growth company, or 30 times top line revenue. Like that's what AI companies are getting, right, or a fast-grown SaaS. So that means they have to have 50 million in revenue, 30 million in revenue. Do we have any

insight into substax revenue? Yep. So the reporting around the time of the rounds that they were telling investors they had about a $45 million run rate. which would put them at a roughly 24x run rate multiple. So here you go, folks. You're learning here on this week in startups, how I can do this back of the envelope math. So that means there's a group of people who believe this can get to in under five years,

under 10 years, between those two numbers, five and 10 years, maybe five years. Now, taking 10x revenue. Now, that's a big bogey. 500 million in revenue means, at 10%, they have $5 billion, in top-line subscription revenue. That's a lot of money.

So right now they have $500 million in subscription revenue, or $450, based on that 10%. So $450 million in subscription revenue, that means do they have $1,000 pubs making $450,000 each? Do they have $500 pubs making a million each? I don't know. But you could actually back into that. You could look at their top pubs list,

which somebody must have a list of, look at the paid subscriber base, and you can start to look at that. Another way of saying this is, are they earning that money for their publishers? And that's going to be their natural tension. If you have, if you're free press, there's no way at $10 million in revenue. Let's say the free press was at $10 million in revenue. I'm picking a number out of the air. There's no way Bari Weiss is giving them $500,000 a year.

You would be much better off using Beehive and deploying the other $400,000, hiring a full-time developer for 150K to customize it and, you know, be 3.5% more profit. $350,000. That's going to be like five journalists, four journalists. Like there's no way you can afford to give that money to substack unless they prove, hey, we're earning it. Now, the podcasting rub and the live streams is how I think they sold it. We're right now sending this out to our substack for the This Week and Startup Substack live

on their new app. So I'm just testing it. We test every platform. And I don't know that we're getting views. I don't know that anybody cares. I don't know if we went subscription for this week in startups. If it would ever match the advertising revenue in year 14 of this program, I don't think it could. Every time you turn on the news, it's about AI getting smarter and smarter. These models are writing perfect code. They're acing the world's most difficult exams. And it turns out they're also pretty good at making money. That's why there's public.com. investing platform for people who take their money seriously. What really sets public apart are their AI power tools and features. Check this out. You can ask public a question about any stock

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So go to public.com slash twist today to fund your new account in five minutes or less. That's public.com slash twist. Disclaimer, pay for by public investing. Full disclosures in podcast description. So you're right, Jason. if they want to 10x their subscription revenue base, it's going to be a lot of work because they've already gotten a lot of the low-hanging fruit,

people that brought their own audience, etc. But people would think that the advent of the churning group on their cap table indicates that they're going to go heavily into advertising. And the company actually told the New York Times they're going to be doing that. So I think what they've done is they've said, look, Jason's right. We can't just keep taking 10% of everyone's subs and then keep people around.

Call the graduation problem. You get to a certain size, you'll leave. And then they're stuck with less people and slower growth. Okay. So you offer them an application, a mobile app that brings some other services and some distribution. That's a nice bonus. Then you mix in native advertising products where they centralize the demand and then federate out the money to the publications. Similar to Beehive, which is what they do right now.

It's working great for them. So I think they told their investors, look, our free subscriber base is growing by, let's say, 2X the paid subscribers. We have this enormous audience that is uniquely positioned to attract a certain type of high dollar advertiser. because let's be honest, it's not your average person who's reading subs. It's by people that are more educated, wealthier, and so forth. And I think they can see a path from here to that revenue mark, thanks to advertising and growth in paid subs. So I can see it.

It's ambitious, but I like that. They seem to be smart cats. So I give both of those teams. Beehive and Subsack are incredible products. Patreon, I subscribe to three or four things over there. They're all legacy items. I'll say that. So it does seem like Patreon

is falling behind these two product teams in a significant way. So sometimes being first means, you know, really qualified people look at what you built and say, I can do better

and they just make a much better product. I think they're good businesses. I don't know that it's a great investment. But the fact that they haven't given up and they're still grinding and adding new features,

the top two publications at least, the top two platforms at least. I haven't seen new features on Patreon. The app feels very stale. Patreon's apps feels incredibly stale. It doesn't work very well. Like when I go into it, I'm seeing very old posts, etc. But I do subscribe to Brett Easton Ellis, Red Scare, Blanco-Lirio, and maybe one or two other pubs. And a lot of times I subscribe to pubs because I want to see them exist, like Blanco-Lirio. I subscribe to his because I think it's important to have people doing analysis of plane crashes for safety reasons. I'm like,

this is like my little, if they told you, donate $10 every time you buy a flight to make flights safer and it goes to this flight safety fund, I would do it, right? Everybody would, or half the people would pay that $10. And so I feel like that's what I'm doing by having him out there. Blanco-Lerio, highly recommend Juan Brown. Incredible. Like, I just love watching these videos because I learned so much about aviation. And like everybody, have a natural fear like of dying in a plane crash. I take plans a lot and watching him do these, I say to myself, I'm going to avoid these planes. I'm going to avoid these airlines. I'm going to avoid these situations.

I'm not kidding. He, his, it's always the same thing, pilot era, co-pilot communication, certain airports, certain conditions. And I'm like, you know what, if there's a flight during snowstorm, I have, said, I'm not flying. I just move my flight. I can afford to do it. I have the flexibility to do it. I will literally move my flight, and I don't take regional airlines. After watching his videos and hearing how regional flights work, et cetera, so anyway, I love substack, I love Beehive, and I even love Patreon. I love the whole category.

And would I invest in it? Hmm. That's, I guess, the key, because you would have to look at the price they paid and what the potential return is. A 10x return to me, is interesting in 10 years. I'd have to hear the pitch directly from the substack team. Is Substack and Beehive, are they in the Twist 500? They're both in the Twist 500, yeah. These are companies that we've been keeping an eye on for, I mean, for ages, because we use them.

Let's have them both on. I'm going to give you the assignment to have them both on and hear the pitch directly from them. I remain impressed with those two teams specifically and their product velocity. So when I see two really great competitors adding features constantly, kind of makes me interest in. It reminds me of DoorDash and Uber, you know, Airbnb and VRBO, you know, pick your poison of, you know, people going at Instagram, Facebook in the early days. So, yeah, I'm a fan of both products. I'm a fan of both product teams in those cases. I wonder what's going on at Patreon. Yeah. Well, one last eight of point, Beehive told the world that they're at 20 million ARR now. Wow. Pretty impressive. They're growing pretty quick. I think Tyler Younger... So they've caught up to half? When did Beehive start? Because Beehive started five years. years after substacks. So that's impressive that Beehive's catching up. Maybe that's what got Substacks buttoned gear respectfully is the emergence of Beehive. And that's great for all

content creators. And I love the idea of the ad network going out and selling it. That's what John Patel was doing with Federated media. He didn't have the platform, but he was representing the advertising for Boing Boing Boing famously. And I know this because I was doing Weblogs, Inc. and Nick Denton was doing Gawker at the time, and we weren't part of that. And then he sold out, like, federated media, pissed off the Boing Boing people because they didn't get any of that money. And Boing Boing Boing, I think at the peak was like maybe two-thirds of their revenue. It was like their tip of the spear. And I remember the Boing-Boing people were a little upset at him when he was able to sweep all that cash off the table in like some sort of secondary transaction.

I don't remember the details exactly, but I do remember a boing-moving person being upset. It's just evidence that you and I have been doing this for a long enough time because I bet you half the people listening to to us in this moment are like, what's Boing Boing? And I guess you have to be there. One of the one came up in my feed there. I will say this as well to end.

I love the term graduation problem. So this is the graduation problem that you do a great job, your customers leave. E-Harmony, number one graduation problem. We're going to make this one of our themes here, the graduation problem.

E-harmonie was really a challenged business because they were so good with their science of relationships, of finding a husband, that your 40 or 50 bucks a month, they were charging a lot at the peak, would go away because if they did their job correctly, do your job correctly, you lose the customer. You know, and job boards have this issue. And, you know, you're basically like, when do you get the person back? When they get divorced? Okay, yeah, that could be 10 years and 50%

of the time it doesn't happen. So you lose it. The other graduation problem is ad rep firms. somebody represents your advertising, they do a good enough job, you hire your sales team, and then they go away. Yeah. Well, all we need is more Coldplay concerts to ensure a better market for E-Harmony to pull from, and then everyone will, everyone will win. Yes. Okay.

So who do you got on the next one? Next up, Lovable. We had Lovable on the show, February 3rd, 2025, episode 2080. The CEO Anton Osica came on. And at that time, Jason, they were just a little Swedish company that had grown to 10 million in ARR. Now they're at 75 million in AR and they just raised $200 million in around led by Excel at $1.8 billion evaluation. If you don't know what level does, I'll catch you up.

They are one of the leading lights of the vibe coding and use AI to build yourself an application game. Really fast product velocity to Jason's prior point and a company that I really, really like. And they had raised just 22 and a half million previously. So Jason, this is a huge increase in their capital base, which has me slightly worried, to be honest, because it can be distracting to have that much money. But really impressive. I'm really happy for them and just shows that Europe can still build. Thoughts.

Okay. Yeah, I think vibe coding is really interesting. These companies capture people's attention, and we are in the sampling phase of AI. I'll pay for anything for a month or two. I'm paying right now $200 for like whatever, and Claude. and chat GPT.

I think I'm paying probably, you know, I'm getting towards $1,000 a month personally, for AI products, or I'm halfway there, more than halfway there. I pay for GROC. I don't know if I'm on the $40 or $50 plan. And because I feel like even at $1,000 a month,

it makes me $1,000 better. Now, my, well, I don't want to say, my, the franchise of Jason Kalakanis is worth millions of dollars in revenue a year, so like makes no difference to me if I do that, right? If it gets me incrementally better for one speaking gig, you know, like, that's a lot of money right there. So I have a reason to pay for it.

But on all end this week, I had a interesting discussion with Gavin. I have put a – and I talked about it here before. I put a valuation on artificial general intelligence, not super intelligence, but general intelligence. General intelligence is what you and I and everybody listening does every day. a lawyer, an accountant, a podcast host, a researcher, a journalist, a programmer, general intelligence, writing the show notes. When you write the show notes, what percentage bet, or let's just take you at or I out of

it, because we're virtuosos at this, in this category. But an average producer summarizing the substack news story we just did versus Claude, I wouldn't be able to tell the difference. Today? Honestly, today. No. I mean, I did it the other day with. the story. I hit the assistant button. It was a breaking story. And I put those notes into Slack.

And those notes were as good as, you know, whatever, a 50, 60, 70K producer. Not as good as Alex with his domain expertise or me with my historical expertise or inside information, but essentially there. So I have now, my belief is there's a billion people in the West, in the modern world, in the developed world, let's call it in the West, where people may. make salaries of above $50,000 a year on average. There's a billion people on the planet who are going to pay for some amount of AI software. I just describe mine. I'm the tip of the spear, but you might be spending it.

You might reasonably spend $50 a month, $25 a month. Doesn't seem like a lot of money. SaaS software. People are paying that amount. One billion people, $100 a month in spend. Or $75 a month, something in that range. equals 100 billion per month out there, which is a trillion dollars a year. Yeah.

That's the number that that surprised me is that we got to a trillion pretty quickly. Yeah. Okay. Billion people, 100 a month, trillion dollars times, you know, whatever, 12 months. You're at a trillion dollars, 100 billion times, you know, thereabouts, trillion dollars a year. Ten times that, because it's a high growth category, equals a $10 trillion incremental business. it will eat away at some existing businesses, but I believe this is incremental spend largely.

Why do I believe it's incremental spend? Because I don't think anybody's like canceling Slack or canceling HubSpot to use these new products. These are new products that provide a new offering. Therefore, people are going to be very frisky. I believe there's a trillion dollars in spend available for general intelligence. Now, super intelligence means it's doing novel creation and problem solving beyond what humans can do. Okay. You know, what's that worth? You know, if you create fusion energy,

if you create the cure for cancer, like you actually have an analogy for that. What have GLPs become worth? Ask producer claw, and what is the GLP market worth in 2025, 2025, 26. That new category, in revenue, in 2025, I think there's like 100 million people on GLPs already paying $2,000 each.

are $1,000 each, you know, this is already. Yeah, so I don't know, what does producer Claude say? The revenue of GLPs are right now, I'm curious. That would be the novel superintelligence. Now, humans who are not super intelligence got there, but it took them a long time. About $63 billion in sales are expecting next year, according to producer Clyde, growing about 18% a year, more or less, quite a lot of money, Jason. Yeah, so times 10, you're, it's trending towards a trillion dollars.

half trillion dollars in value, unique value created just by GLP's. When those become pill format, you don't have to shoot yourself with a needle. Oh, then I'll do them. Yeah. It'll be 10x. And people are going to do them for things other than that. So that would be super intelligence. I'm going to just take that off the table.

There's $10 trillion at stake here. I believe a company like Lovable is part of that. That $10 trillion in market cap. So they are $1.8 billion valuation. if they had a 10 billion, if it's 10 trillion in market cap, 10% of 10 trillion is one trillion, and then 1% of it's 100 billion. So there are a fraction of that movement. Coding, vibe coding, is going to be, that's got to be on its own, hundreds of billions in market cap.

So I would put vibe coding at maybe a trillion of the 10 trillion I just described. In other words, software development is a trillion of the 10 trillion. They are but a fraction of that. I think it's an easy bet for venture capitalists to make that they could 10x, I think it 100x from here. But they're going to have some stiff competition, and you're buying a group of people who have proven. Look at their traction.

They went from 30,000 paying subs in February of 2025 to 180,000. That's this year, this year. It's six X. They've four X, 4.4X, their annual reoccurring from 17 million to 75. So that means they're valued at whatever, 25 times their sales. They are doing that, by the way, with only 45 FTEs. So back of the envelope, they're trending towards $2 million per employee. This is like an incredible run rate here.

There's an amazing kind of split screen that comes up because we just talked about substack raising roughly 24x run rate here, roughly 24x run rate, but growing a lot faster. So you can kind of see different bets, different timelines, different companies. why do they have the same valuation? I think it's because of what you started off with, the sampling problem. How many of these customers are still going to be there in a year? Sub-Zek has a much longer monetization history,

so you can have a little bit more faith in the durability of its revenues. Here's the thing, though. We've been saying sampling problem, people will test anything for a long time now, and these companies are still growing. So I wonder if, is it time to start setting that concern down a little bit?

No. It's probably increasing because you have, you have artificial general intelligence, and superintelligence as the possibility and the fear, a reasonable fear, that what lovable does will be built into Claude and Grock and Gemini and Meta and Microsoft Apple and Amazon. Amazon, actually somebody emailed me, was like,

by the way, we have our own language model. I was like, you do, I never hear about it. But Amazon actually has their own language model. Maybe you can look it up. So I think you'll see Microsoft, Amazon, and Apple have their own large language models in the next year. Or two of the three, or

if Amazon already has it, I don't know that Microsoft is working on a large language model. They're obviously in line with OpenAI. I would be shocked if they weren't covertly building one. Microsoft has made, I think it's the Phi PHA family of models. And then from Amazon, it's the Nova series, which we actually,

I think we brought it up on the show as like an side a while back, but we didn't click on it because I think, to your point, we don't know anyone who uses it, doesn't show up on leaderboards, doesn't show up on open router, our friends don't use it. Like, there's no word to tell you. So here's what I'll say. Let's look at the leaderboard, you know, that we've been talking about whatever that leaderboard is with the collection of human tests. And some number of those tests, you know the answers ahead of time. And some of them, you don't know the, I'm sorry, you know the questions ahead of time. So they're easy to now. Other ones, they present you with new questions each time.

so they're harder to nail. And Gavin Baker was explaining that nuance to me. That's really what's at stake here, is, are they able to answer new novel questions? Let's just look at that, the top 20, let's say. And as a concept, I just want to know when new entrants break the top 20 or ones we don't know. So just let's keep an eye on that as a concept. New LLM. Entrance. The Amazon Nova Experimental Model, the highest ranked one on the LL. Marina data set Jason, I just looked it up, is ranked 60 second. Okay. So that's... So work to do? Much work to do. But no matter who builds the best model, as long as Lovewell gets to sit on top of them,

they can do well and kind of take advantage of all that progress that we're seeing. Let's move on to the next... No, no, no, no. Think that through for a second. This is what Cursor has had as a problem. Cursor was built on Claw, right? If I remember correctly... WinSurf was.

WhenSurf was on Claude? What was Cursor built on? I think they also used... Chat, JPD. I think they were also Clod. So, as explained to me, Claude now has their own AI assistant, AI coding assistant. So, you know, these wrapper companies that are working in coding specifically have a very unique challenge. The person you're building on top of wants your business.

They consider it a key piece of that $10 trillion AGI prize I've outlined. And cursor, there it is. You just showed it, right? Or you just showed the Claude version. The Claude code that is now competing with cursor. Okay, so then Jason, just to play devil's advocate here, if you do expect the foundation model companies to go out there and try to take some of the market that other people are collecting,

cursors fast revenue growth, windsurfs, fast revenue growth. Does that mean that you're bearish on the potential success of non-foundation model coding assistant tools in general? I think that specific vertical is, so key that the language models are going to want it. So I think it's going to be tough for Lovable and Cursor and Winsurf and these kind of companies to actually make it work when the platforms themselves say, we want that business because there's so much revenue there. The fact that Cursor has 500 million windsurf got to 100, I think, more or less and 75 here for lovable,

The fact that these are high growth categories, it's kind of like, hmm, what's another high growth category that people said, you know what, we need to have this as part of our offering and bundle it? The example would be Slack. Microsoft said, it's got to be part of office. It's too key. And Zoom is the other example. So they were like, you know, we have to have Google Meet as part of the Google Suite. We have to have Microsoft Teams, which is what they call,

video product and what they call their Slack competitor is still teams. It's one combined package that everyone hates, yes. Yeah. I mean, it's just that Zoom is so flawless. It just shows you what a single, you know, and then you look at Zoom's Slack offering. It's so bad. I'm just like, it's so interesting focus as a founder. So if you look, even at this day and era, this era, Slack has still carved a niche and Zoom has still carved an independent niche.

Slack has huddles, which I'll use once in a while. And Zoom has a Slack competitor built into it. But they just can't seem to chew gum and walk at the same time, these two companies, and take each other's markets. But office does seem to be able to extend, which would mean if that trend continues, that a best of breed can coexist. So cursor can coexist, lovable can coexist. it's just going to be hard.

And it's going to be such a headwind that Slack could not remain an independent company, right? I think Slack could have. I just think Brett Taylor won. Yeah, but I think, you know, Mark Benioff talks to, he's very persuasive and he's a lot of money and they gave him a lot of cash for it. On the Zoom point, I just want to point out that Eric Yon

with the founder of Zoom and CEO, and a person that I've had dinner with him quite like. He was at WebEx, which got bought by Cisco, and he was there for a while. then he left to go build Zoom. So his background professionally is, I make online video communication work. And that's probably why he's so good at it

and not as good at taking on Slack. But I like that they're distinct because I have a best of breed in both things. I don't need my lawnmower to also be a blender, you know? So I'm fine with that. So both things can exist. It's just the headwinds will be severe.

You're going to have to be, as we talked about on a product basis. All these things come down to how lightning focus can you be on the product? So when you see me obsessing about the product that is this week in startups, it's because I know you cannot survive if you are not paranoid and you keep making your product better, which is where I was like, I want to have three interviews and I want to know how big these things are. I want the Twist 500. I'm always

obsessing about product because I know the audience is going to be looking at other products and saying, oh, are there other options for my attention and my time and my money? So if there's any lesson here for founders, be paranoid and obsessive about product. Everybody was thinking, oh, Grock, you know, is toast. You know, they're falling behind. Elon's in Washington, D.C. And then I watched him. I watched it. Because I, as I said here, I went up and spent a little time with him. And I watched him get laser focused again. And then they drop Grock 4 and they leapfrog everybody and take the pole position again. That's just the nature of certain individuals can get so locked into product. It's so inspiring. When you're feeling scared, when you're feeling

fear, when you have anxiety, you're falling behind. It's a very simple thing for founders to do. Lock into product. Just get locked in. Obsess over it. Do not stop thinking about it. Do not stop having meetings. Do not stop arguing, fighting, hand-wringing. And all of a sudden, what comes out the other side is something that delights a customer. It's not that complicated, folks. Substack, people thought that product, you know, was never going to work or whatever. And then I watched them. They launched that notes feature, that community feature, the video feature, Beehive, the same thing. They keep launching new features. And then Patreon doesn't launch new features. And now I'm like, Patreon's the afterthought to those two others when they were the original. And that's the fault of the product team over there

of not being laser focused or at least not capturing our attention with really unique, cool features. The fact that I can go live in the substack app right now, I'm like, oh, that's kind of interesting. I thought it was a newsletter app. Huh. okay, I got my mind just thinking about the product. So what are you doing to get people thinking about your product and believing that this is a product worth investing time in because the product team is investing time in it. People can laugh about this new Ani.

I don't know if you played with Ani, the anime assistant inside of Grok. I don't have the cheaper version of Twitter? I don't have the super... So anyway, there's this new Avatar Ani. pull her up. It's a Japanese anime, you know, in a, you know, like anime outfit. And she talks to you and it's going to be the interface, I think, for a lot of people's AI. It's an interesting experiment. It's not for me. You know, I'm a clawed, deep research Gemini, comet, you know,

like I like the deep anime. I don't like the anime assistant, but I could see, you know, a lot of people liking to have a celebrity, her, Scarlett Johansson. That's why Sam Altman went after Scarjo to get her voice for opening eye. And I mean, what a dumb decision on both of their parts. They should have come to terms. Scarjo should have asked for 1% of the value of Open AI shares. I bet she should have gotten it. Man, that would be worth. Because at the time, I think the company was worth $30 billion. And I think she could have negotiated 1% of that $300 million, which would be worth $3.5 billion. She'd be a billionaire just by licensing her voice.

I'm telling you right now, Grock, Claude, anybody out there give Scarjo one percent of their company, she will make the company worth more than 1 percent as to license voice and likeness. And Scarjo, like, you'll make more from that one deal than you would make from every movie you ever made times 10. So, you know, like every, I mean, if she's getting paid 20 million for a Marvel movie and they're not making any more Black Widow ones or Jurassic Park, I'm sure her ticket price is, what, 10, 20 million? You can look it up on producer Glaw. Man, she can make a, she can make a, but here it is, Grock. And they're coming out with like, they've got two of them now.

They've got a male one coming. These companions are an interesting modality that I think, not for me, but maybe they got 10% more people to use the product or try that feature, and maybe they're going to become addicted to it and like it. So that's, so I don't care about people making jokes. Honestly, Jason, it does not really bother me. I think people should have fun. And honestly, I think we're a little bit prudish as a society.

So this is all fine with me. But you said the word that really catches me, which is addicted to. And, you know, we were talking about Jeff and talking about people getting called, they call it Chad GPT psychosis. People turning to these services. Oh, that is the theory for Jeff is that he's got a chat GPT psychosis. Yeah. And so when I see this GROC tool, I'm just completely divided my mind because on one hand,

It's harmless. Go have fun. On the other hand, some people who are less well-adjusted right now might become even more invested in AI friendships. And AI models are not humans. They do not respond the way humans do. They are often a bit sycophantic and can kind of feed into what you're saying. And so I wonder if stuff like this, in general,

not pointing fingers of any one company, but could lead to more problems in that way. And it will lose some people. Guaranteed. I mean, but kids became obsessive. with their Dungeons and Dragons character with TikTok. Kids are going to get obsessed or even adults who maybe have a vacuum in their life. They will get obsessed.

And then the pendulum will swing the other way. Right now, like the biggest trends, you know, in the world are people going back to doing things in person. So every time people get too addicted, it swings back the other way. I remember my friend created meetup.com, Scott Hyperman. and man, people were so addicted to online, their email, their Facebook, and he created this online to offline, and people became obsessive about that. I was obsessively going to bulldog meetups. There was a bulldog meetup in L.A. And my wife and I, before we had kids, would take Toro, rest in peace, my beautiful first bulldog, to all of these things.

Man, when you come up a hill and you see 30 bulldogs playing and you take your bulldog off leash and they're just, there's 29, all the bulldogs there. It's like the greatest, you know, things. So, yes, people become addicted to this. Society will create some ground rules on it. And then people have to become mature enough to understand you can become addicted to alcohol. You can become addicted to out. These pouches that, these nicotine pouches are like, use the promo code J-Cal. It's always right by your computer. Every time you bring it up, I'm always like, how does he have it there? Did I realize you're just taking them all the time? I don't, I think I'm like maybe once every other day when I a little pick-me-up and I want to get off caffeine.

I realize I'm taking a toxic amount of caffeine some days. What? What? What? Toxic caffeine? No. Well, it turns out the sixth cup, you're starting to get into toxicity, I think. And so I was, I've got to be honest with myself.

Maybe it's my ADHD and I don't take out of all or anything. You know, a fifth and sixth cup is almost assured in the afternoon for me. And I'm three, four cups in by noon. Oh, yeah. So I am trying to stop caffeine at 1 p.m. That's my new thing. I did it yesterday. I'm going to do it today.

And then what I decided was I'm going to pop an out in the afternoon instead to give my little pick me up. All right. Listen, great show. I think we got enough show here for everybody. We didn't do the Uber mega move. There was so much more on the show today. Like this news cycle is nuts. Just to tell people what else we had.

The Hedrian round, 260 million precision manufacturing in the U.S. The house passed three crypto bills, which means that. Talk about that, by the way, on All In, so you can get that over and All In on the weekend with David Sacks. He came on the show. Open AI dropped a chat GPT agent, which brings together a chat GPT operator and its deep research product. Super cool. Trump wants to regulate AI via an executive order. That's a bad idea. That's not going to happen. We have some notes on the meta team, Jason, that we've pulled together. Oliver and I worked on that. We're going to save that for the next time we're together because that's a lot of information.

And then also Uber is teaming up with both neuro and Lucid Motors to bring 20,000 cars to market starting next year. And I even did the math, Jason, of how many rides per day out of Uber's total right share volume. Oh, yeah, what would that be? So if you had 20,000, take me through your math and pull it up on screen here. All right. So I'll just walk everyone through the little back of the envelope we did for the show. And you can get the docket and follow along to all this great math we do.

This week in startups.com slash docket. So here's my thinking, 20,000 cars, and they say over six years, let's just say 20K all of once for the sake of math. 75% uptime. That leaves 25% for charging, cleaning, repair, all that good stuff. Let's presume a 15 minute ride and 25% idle time in between rides. So three rides per hour. That works out to about 56 rides per car per day. 20,000 cars.

That's about 1.1 million rides per day that they could do at full capacity. it works out to about $101 million per quarter, and that, Jason, is 3.3% of Uber's Q1 ride volume. So if they get all these cars out right away and they were all working in all at max capacity, it's a dusting of market share. And this underscores your point you've made, God, I don't know, five times on the show that we're going to need a lot of cars. And this is a little bit off. My understanding is 40 rides a day is what to expect. So two rides an hour.

You are correct, 20 hours a day. to take them off the road for a couple hours, clean them up, whatever. So it's probably more like 40 rides a day is the more realistic expectation. But you're in the ballpark here. The thing that's interesting about this is Uber put $300 million into Lucid, 300 million or in some amount into Nuro. Nuro has very good self-driving, but they don't make cars. It's going to be built into the Lucid's.

Lucid's is owned by 53% by the public investment. investment fund, the PIF from Saudi Arabia, Saudis, owned 53% of that company, Lucid. It makes a really great car that has competed with Teslos and other EVs. I was looking at a car and driver's review of their SUV. So it's right up there. But let's face it, there are 20 incredible EVs right now, Tesla has the top four or five, but you have Lucid, Rivian, and the Volkswagen, ID Buzz, and their series, BMW series. So let's just say that EVs have been commoditized, and the only thing is self-driving, which I think is the case. EVs are commoditized. You know, everybody makes a great one now. Mission accomplished for Tesla. They wanted to get more people making EVs. They did it.

So then you're really just down to the driver software, neurodriver, Volkswagen driver, Uber driver, Waymo driver, Wii ride and Pony. They're all in the same zone of excellence. So then it becomes, who can deploy these and understand the local market and the nuances of each one the quickest. In other words, who can roll it out per city the fastest? What people have learned is when Uber and Waymo, when Waymo went into the Uber network, their deployment curve. And I think you had this in a previous document, but we didn't get to it. The deployment curve, the altimeter guy who looks at these, Atlanta and Austin, Waymo using Uber, it grew 50% faster or even double in those markets by just being, you know, included in the Uber network, which means if you're in the

Uber network, you're going to deploy faster than anybody, which means Uber's going to have 10 partners, I think they'll probably have 20 partners globally, and in any given city, three or four of those will be available inside of the Uber app. Is this the chart that you want to do? Yeah, that's the chart. So if you look at this chart, there's some blips there. With that green, by the way, is I think when the Los Angeles riots happened recently with the immigration ice rates, the same thing in San Francisco, and they had to take their

cars off the market because they were being burned. But if you look at the the ATX and the Atlantic curves, like those are the ones to watch how quickly they're being deployed. And the deployment when you have

when you're part of the Uber network is going to be much faster, which argues that Uber will be a neutral player for 20 different AV companies to either participate in or not. And I think 19 of the 20 will participate and one wound, which would be Tesla won't participate. Everybody else will. And all this is going to do

is take, you know, we're looking at the percentage of rides here. I think the percentage of young people who don't get driver's license as to what to look at. I was talking to somebody who, in my friend's circle, and they are having a hard time convincing their 15, 16, and 17 year olds to go get driver's license. If you talk to any parent today, they're trying to get their kids to get a driver's license, the kids have no interest in a driver's license. That's really weird. Parenting has changed, Jason. The first time I could get in a car and drive away from my parents, I was like, get me out of here. Kids want to be on their phones in an Uber. Uber has teen. Waymo launched a teen version, which means your parents pay the bill and can see where you are at all

time. So the nanny state, the helicopter parenting, safety of kids, you know, that's very attractive to parents. I can't say, you know, as much as I'd like to say, I want to raise free-range kids, I want to know where my daughters are and that they got home safe from the concert. While I want them to be able to go to the concert and have a little bit of freedom, I would like to know that they safely got home and know that, you know, the car's picking them up. So what everybody's looking at Waymo versus Tesla versus Uber versus Lyft, that is not. not, they're totally missing the big picture. The big picture is 1% ride sharing, growing to 50% ride sharing in a generation. Nobody's going to own their cars. Nobody's going to have

driver's licenses. The idea of going and getting a driver's license would be the equivalent of getting your horseback riding certification. Pick a certification that's completely unnecessary now. that's what we're seeing here. It's a minimum of 20,000 cars. The thing people don't know is the PIF is one of the largest shareholders of Uber. I'm absolutely not shocked that those two companies have an agreement because why else would you pick Lucid? You could have picked. Well, and they're not picking just one.

Uber is going to buy as many of these cars and give them to their. Uber may or may not maintain these. They're going to give them to fleet managers because Uber, they also people don't know, they have fleet management software. So Uber would much rather have a fleet manager manage these, you know, 500 cars in Austin, 500 cars in Atlanta, 500 cars, wherever. And then they're just, the fleet manager keeps the tire pressure, cleans the vomit. But Uber will do it if they need to. It's, I think what we're going to see here is lucid, neuro, merger, Volkswagen, Uber, merger, Uber, Tesla merger, the consolidation in five years, everybody right now sees all these different players

and fragmented. I've watched this movie so many times in my life, Alex. When it's this fragmented, and the prize is 50 times the collective market cap in 10 or 20 years, maybe 20 years, 50 times, 50x in 20 years, usually you would double twice, so you'd be four times bigger. This will be 10 times bigger than the normal growth rate. So just let it sink in, folks. We're going to be sitting here in 20 years, and 50% of rides will be in an autonomous vehicle, not owned by the driver. All right.

So just to put this into perspective and why Jason's not talking absolute nonsense here, because you're thinking, these are big companies. How can they just buy one another? Well, let's just take Waymo, for example. Let's say Waymo went to buy, I don't know, Chrysler. They work with Chrysler on their mini-vans for their self-driving cars. Chrysler's part of Stalantis. Stalantis is worth $23 billion total.

that Uber's worth 200 billion. Even like Lyft, which is roadkill at this point, is worth 10 billion, 15 billion, I think. Less, but that's. Okay. My point is Alphabet's worth trillions. And so these car companies... And the Waymo unit, I understand, is worth 30 or 50 billion in the last valuation. That sounds about right.

For an unprofitable company with but 2,000 cars on the road. So, I think Tesla becomes, I think it's a two-horse race right now. Okay. Tesla and Uber plus Waymo. Waymo plus Uber. I think Waymo and Uber are going to merge. And much rather see my two favorite companies, Tesla and Uber merge. But Elon said he doesn't need to buy Uber, which it makes sense.

I don't think he has to buy it. But if he did buy it, that would be $1.2 trillion in market cap. If Tesla and Uber were the same company right now, do you know what people would think, who was going to win the gold and the silver and the bronze medal, it would be those two companies. They would win it all. They would run the table. So if Waymo, Volkswagen, and Uber were to combine,

Volkswagen is the second largest auto manufacturer in the world. And it's worth 46 billion euro. These companies are so cheap. Well, they're low margin businesses, and nobody wants to buy. cars anymore. And they're hyper-cyclical. Yeah, and if you're wondering why there's so many cars, there was this incredible race to innovate in car technology that inspired everybody. Tesla did that. So now everybody has been inspired by Tesla. So now there's a lot of really great cars. I go on car and

driver. I'm like, oh, I want an ID buzz. I want a Corvette E-ray. I want the new Tesla. You know, I bought the new model Y. Now there's going to be a YL. So I'm going to trade that in and get the YL at some point. I wouldn't have a third row. Long story short, 50% of rides, 1% ride cherry now will be 50% within 20 years. Model that out and then model out of the top five players right now, how they divvy that up, and then five new entrants. It's going to be incredible for humanity. The 20, and I think the PIF might be a little tired of running lucid because it's been, they're doing a 10-1 stock merger.

reverse split? Reverse split. Yeah. Thank you. Because their shares got to $2. And most large funds, you know, like hedge funds or whatever or some of these can't, I understand they can't buy stocks under $5. And under a dollar you get delisted. So they're going to do this reverse merger, reverse stock split.

The stock will go from whatever it is now to 10 times. What is lucid trading at now? Five bucks, four bucks? $3.6? So it'll be a $30 share. Yeah, it went up 50% with this announcement. Because they only make right now, I think, 3,000 cars a quarter. They're expensive cars.

They don't have an entry-level car. It's a luxury car. Delivered $3,109 in Q1. That was up 58% year-over-year. Revenue of about $235 million in the first quarter. Yeah. It's going to be awesome, folks. I mean, they're figuring this out.

The other big news was the expanded territory in Austin. of Waymo and Uber and Tesla. They both expanded their territory massively. And, you know, listen, Tesla's got the safety driver. It's the right decision. They should keep the safety monitor rather, not driver. They should keep that until, as I've said, 10,000 rides, whatever it is, 100,000 rides in the city and then start taking them out. There's no reason.

There's no shame in the safety driver. Game, great episode. We'll see you all on Monday with three great companies. and how much revenue they'll have in 10 years, brought to you by Alex Wilhelm. He's X.com slash Alex. I'm X.com slash Jason. This week in startups.com slash docket to get all this great research,

the stories we didn't do, and we'll see you all next time. Bye-bye.