This Week in Startups - Managing a recession, housing market insights & more with Redfin's Glenn Kelman + OK Boomer | E1616

Episode Date: November 18, 2022

Redfin CEO Glenn Kelman joins Jason to discuss the current downturn, operating in a recession, layoffs, the housing market and more. (1:31) Then, Producer Rachel is joined by Volv Co-Founders Shannon Almeida and Priyanka Vazirani. (33:46) (0:00) J+M tee up today's segments! (1:31) Glenn Kelman joins Jason to break down the current downturn, operating in a recession, layoffs, and more (14:30) FanDuel Sportsbook - Sign up with promo code TWIST to place a $1000 risk-free bet at https://sportsbook.fanduel.com  (16:02) State of the housing market (29:10) Zapier - Try for free today at https://zapier.com/TWIST  (30:43) Molly and Producer Rachel tee up this week's OK Boomer! (33:46) Volv Co-Founders Shannon Almeida and Priyanka Vazirani join Producer Rachel to discuss their nine-second articles media concept FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood FOLLOW Glenn: https://twitter.com/glennkelman FOLLOW Rachel: https://twitter.com/_rachelbraun FOLLOW Priyanka: https://twitter.com/Priyanka_Vaz FOLLOW Shannon: https://twitter.com/shannonsalmeida Check out Volv: https://www.volvmedia.com Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

All right, everybody, happy Friday. You made it. There is a holiday week coming up. So, you know, I don't know, like at least lean into a little bit of relaxation. I hope we're not doing that. We're not doing that. Jason's got a great interview today with Redfin CEO Glenn Kelman talking about layoffs in the housing market. And just, I'm assuming, yet another wonderful, heartfelt, honest, incredible conversation with really, I don't know, one of the best CEOs I've ever met.

I love Glenn. Yeah. Glenn's a dime. He's just amazing. He's so candid. And this is the interview that founders really need to listen to at this moment in time while we're in the eye of the storm. It's going to give you a lot of context for somebody from somebody who's been through two downturns and how they're managing it. It's actually going to give you a lot of hope and a lot of joy and give you a lot of silver lining, kind of the path forward through the storm. And of course, it's Friday. So producer Rachel is back with another edition of OK Boomer. It's going to be a great show. Stick with us. This Week in Startups is brought to you by Fandual Sportsbook. Use code twist during signup to get started with a no-sweat first bet up to $1,000. And Zapier is the easiest way to automate your work. See for yourself why teams at Airtable, Dropbox, HubSpot, Zendesk, and thousands of other companies

use Zapier every day to automate their business. Try Zapier for free today at Zapier. All right, everybody, it's a tough time in the markets. We're in a recession. We're probably in a double-dip recession. We haven't seen anything like this since 2008 or the dot-com recession. So I asked my good friend, Glenn Kelman, from Redfin, come on and talk about operating. They're trying tough times.

Now, Glenn, you and I have been through this a couple times. Just rank it. You know, had the dot-com bust. We had 2008 the great financial crisis. And here we are in the middle of this one. When we look back a year from now, because we are in the thick of it, we're in the eye of the storm perhaps. At this very moment in November, I think it's the 16th, this could be the eye of the storm. How does this one feel in relation to the other two?

Because you also have experience, and that's going to come into play here. But does it feel as bad as dot com in 2008? Does it feel on par? It's number three for me. Number one, since swearing housing was the great financial crisis. Number two is the dot-com bubble. and number three is what we're going through now, in part just because I've been through it before.

I think you've forgotten that this is how we met. I was in such a funk over the great financial crisis. We came down to L.A. for advice, and you told me to stick it to our investors, which really helped me. Yeah, sometimes you've got to hold the line. I mean, people will lose. I don't know if you find this,

but character gets revealed in a crisis. and in crisis, you know, sometimes people can't keep it together, you know? You know, turbulence, you see your friend who you think is really tough? I think it's a little turbulence to start grabbing the seat real hard. Let's talk about what you've, what this experience has led you to do. You did the Rift. Every big company's doing it. Mighty Jeff Bezos, Facebook.

Man, that's the hardest thing to do as a leader. And now we're in a remote world, so doing it remote as a level of complication. But you batten down the hatchet. So let's talk about what you did at Redfin to batten down the hatches to prepare. for the storm that I think we're right in the middle of. Sure. Well, we laid off about 20% of our workforce and we closed Redfin now, which is our eye buying business.

I think we've all heard that people live in the far north have 100 different words for snow, but they've got nothing on the Jews who have at least that many words for shame. And that is how I feel when you ask people to leave because you thought the business was going to grow and you were wrong. It ain't their fault. It's your fault. And having to say that 862 times, because that's how many people we let go, has just been awful for them, but also a deep source of shame for me. Yeah, it is definitely so hard to do. And the shame comes from, correct me if I'm wrong, you convince people to come on this adventure. You said, hey, we're going to do this together. And now you have to say, I was wrong. And then you have this in your mind. Shouldn't I seem it coming? What's your message to people, especially young founders, first-time founders, not like us, the old guys now, been through this war three times. I mean, and this makes you feel old.

Having to do riffs, having to go through a downturn, it does add years. It puts miles on the car. Yep. Put miles on the car. Exactly how to phrase it. So what's your message to young folks going through it who maybe are just not sleeping at night, grinding their teeth? And then the shame is super acute, you know? Live to fight another day.

Yeah. I think that it's hard for some people to feel like they're just a cockroach where they're trying to survive the downturn when a year ago we were all glamorously growing. But for me, cockroach is a term of praise. Those things can survive nuclear winter. And if you can make it through a tough time, you'll come out so much stronger. What was hard for me in 2008, it's just this feeling that none of our brilliant ideas worked. and it turns out that when the market got a little bit better, we realized that some of them did and some of them didn't.

So just have to make sure you don't throw the baby out with the bathwater and that you recognize when you're making real progress because if you can survive this, you're going to be like jacked and ripped with muscle and you're going to be a monster of rock. But it's just hard to see that. And so I think a lot of entrepreneurs are licking our wounds right now. This is really important, I think,

to meditate on for a second. You, in an up market, a founder, a team, is going to think, hey, everything we did kind of worked. We're geniuses. And then in a down market, you have massive headwinds. And so you're like, nothing's working because you've got the hell smacking in the face as you climb a mountain through fog. And you don't know if you're ever going to see the sun again.

And it's important to remember that maybe you weren't actually as good as you were. and you're certainly not as bad as it feels now. And there might actually be a great idea. There could be a baby in that bathwater. And you're like, you know what? Toss everything out. You got to actually study your performance really intensely, don't you, in a down market to understand if you're making progress.

One of the things I loved about one of your announcements is, hey, we plan to keep increasing our share of market. But the market in 2023, I'm quoting you, Glenn, is likely to be 30% smaller than it was in 2021. This is exactly what you're saying. year. We could still be excellent in a down market, but we just have to calibrate to what excellence looks like. Am I correct in that interpretation? Absolutely. And some of this harkens back to our IPO dinner. So we flew out the first 100

employees to celebrate our IPO and ring the bell. What we told those people is that they understood something about Redfin that no one else could play claim to because they had been with us through the great financial crisis. And everybody else was just jumping on the bandwag. and now sort of bring that back and you say, look, there are going to be plenty of people who were at Redfin or whatever startup it might be because it's just the latest thing. But the folks who really believe in making housing better, more accessible, more affordable, and more fair, those are the ones are going to dig in and make this business better than ever. And it's a new opportunity, especially if you're trading down, to generate incredible wealth.

And so just think you find out who your real friends are, which people at the company are really going to dig in. and make a difference because some people will actually rise to that challenge. We all have to go through this grieving period where it just thinks like the end is near. I don't know how we're going to pull this out. But after a few weeks, you just have people who are more committed than ever and they're committed for financial reasons, but they're also committed for soulful, mission-driven reasons. And you can't really have that moment of discovery when everything is going great. this is about hope.

It is about purpose. I'm certain you've read Victor Frankl's mansertcher meaning and just the nature of some people. I haven't read that. What's that? I don't even know what that is. Oh my God. So one of the seminal books about in psychology is a book called Mansearche meaning by Victor Frankl.

He survived the Holocaust. He was a therapist. And he basically came up with essentially the core belief that hope that hope, people's belief that things can get better but it's like realistic hope and facing adversity would get them through it. It is going to be one of your top five reads

of your life. Somebody handed it down. Somebody had it to me, but it's just one of the books I read every couple of years and it's truly powerful in an individual finding meaning in what their work is,

finding purpose. And this predated all the HBS and, you know, Wharton and Stanford, beliefs on purpose. This is the core material that they cribbed it from.

And that's what I think, you know, you're just explained very eloquently in terms of the team. You find out who is going to survive this, who's going to work their way through it, who's going to do the hard work. And having purpose, like you had embedded it there, the purpose of Redfin, hey, we want to make housing more equitable.

We want to have it be more accessible. It's like a noble mission to help people put a roof over their head. Yeah. Well, I think what's hard is, about the downturn isn't just the death of some of your brilliant ideas or the financial adversity. It's the cynicism that suddenly you feel silly forever saying that you thought you could win, forever believing that this idea could take flight. And there are people who become convinced that the whole culture of the company is hypocritical

because you had to turn your back on people. But I would argue that the only thing more inevitable than love's failures are its triumphs. that you still have to insist the day after you laid off all these people that even in a crazy cyclical business you want to create a caring culture because it's so easy to say that it's just transactional that we're going to turn our backs on people at a moment's notice and it's so hard to insist that that isn't true right after you did have to lay people off and so that central belief that there's something more to the business. than just the money is the hardest part to sustain when the money gets tight. Yeah. And, you know, listen, it's been a little bit of the age of entitlement in our industry. We never thought that Facebook, we never thought that Amazon sitting on mountains and piles of cash that they'll never able to even put to use in anything more creative than buying their own shares back, including the Mighty Apple. People just really have no use for all this money.

even they are now making, you know, these riffs. And there is a little bit of an entitlement culture that happened with VCs. It happened with CEOs. It happened all the way down to everybody in the company. So maybe we could speak to a little bit about that reset and what you think that effects that's going to have on the market. Everybody all at the same time saying, you know what, a little austerity might not hurt. A little bit more hard work might not hurt.

A little bit more seriousness. What do you think? Well, I think that people of Redfin have always worked hard, but I know that austerity can be a good thing. I was chopping my fingernails off when we kept having to push more and more chips out to the middle of the table because you feel you have to do it when three or four other competitors have raised billions of dollars and are spending so much on growth. And so you just sit there saying, this is crazy, this is crazy and this is crazy as you push more and more chips out there. Yeah.

And so when you get back down to the basement and it's a streetball and you know that every fight is going to end up on the ground. And that's where you actually want to be because you're a grinder and a hard worker and a street fighter. It can actually feel really good. Yeah. Oh, nice. I like that because you're made for that. Yeah, baby. It's kind of in your, yeah.

You're made for the grind. I mean, sometimes, sometimes you're not the smartest person in the room. You're not the prettiest person in the room, even with your dazzling lighting now, Jason. Thank you. Thank you, Glenn, for noticing. You're willing to grind harder than anybody else. And the grinders are the people who are going to come out on top. I was with a friend of mine who is a venture capitalist now.

He run a very successful company and then got into investing. And we were talking about FTX and he just said, they're going to be more of these because the diligence that you were allowed to go through on these companies was so limited. It was either yes or no. And if you had any questions, they'd just take the money from somebody else. And so now I think not only is there going to be austerity, but there's just going to be a separation of the wheat from the chaff, of the goats from the cattle.

And at first, everybody gets washed down, but sooner or later, the diamonds will shine. And so you just have to believe that if you keep working, you'll get valued for it because the market is going to become more discerning. And at first, that's bad. But then later, it's really, really good. It is very interesting to see what happened in capital allocation where people just said, you know what, the price of getting into this deal is not asking for a diligence folder. And, you know, I walked away in the last two or three years from companies I wanted to invest in because they said, you know, listen, Jake, I love you, love your pod.

You're asking for information we're not giving to people who are putting in 10 times as much money as you in this round and we don't have the time. And I was like, don't have the time. I always feel bad. When somebody asked me for a tiny little sum, which is a. what I can afford. And then I'm like, well, I have about 23 questions. Yeah. They're just like, what the hell? How can I get off the zoo?

23 questions from Glenn. Kelman is a gift for a founder to answer. That is a dialogue that you can do for an hour that will make you a stronger founder because you have somebody who's been through, like we're talking about here, all these wars. Listen, NFL season is ripping right now. All these great Thanksgiving Day games are coming up. It's going to be a great weekend.

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official sports book partner of the NFL. Hey, and if I lose that thousand, I get it back with my no sweat, first bet. Sign up today with the promo code twist. Let's just talk about the concept of I buying and real estate. Sure. A quick little real estate round up here. seem like a great idea to me but the market conditions change very quickly

now I'm seeing the inventory in and I listen I get this data from Redfin you guys have great data you do great content marketing but my lord the amount of homes available for purchase I guess inventory is a key driver in your business because inventory leads to time on market time on market leads to capitulation on seller's parts

and maybe low low offer on the buyer's parts I'm just spitball in here with you but the eye buying seem like a pretty good one because you can rent the places, but maybe you don't want to be a renter. Is the eye buying, in other words, the red fins of the world owning a home a good or a bad business? Are you throwing the baby out with the bathwater or are you temporarily pausing it? What did you learn in the eye buying? It might be a good business.

It's just not a good business for us. So obviously we're in this period of incredible home price volatility. And I would expect that to subside at some point. But what won't go back to 2021 is the cost of capital. and this is a business where you're fronting the money for a house to somebody who wants to move on. So that cost of capital just means that your offers are going to be lower. We were borrowing money at a 0% coupon and now rates are through the roof. And that means that the spread between what a home is really worth

and what we could pay someone in advance for it through this I buying cash offer and gotten really large. And it's just not as good of a deal anymore for the consumer. So when you're marking down offers 10, 20% from the market value and saying this is the premium or the discount that you have to pay for liquidity, it's our premium, the homeowners discount, you just don't feel good even when they take it. So I think that's the part of the business that is going to be worse for the foreseeable future. And that means that the market will shrink, that lots of people were considering an instant offer

when the cost capital was very low, you could front that money at a very small discount, but we have found that they're incredibly price sensitive, that as the spread increased, fewer people took the offer, it wasn't very compelling. And so we just decided that it's just a horrible way to live. It's a tiny little margin. It's a very cyclical business.

It ties up a ton of dough, and the cost of that money had gotten very dear to us. Mortgages are now, 7%. Is that right? And what is that shot? They came down a little. They came down a little this week. Yeah, the CPI, the consumer price index.

I was looking better than anybody expected. So rates came down from above 7% to about 6.62%. I don't think consumers have reacted yet. If you look at our traffic and the demand for people buying homes or our agents, it's still pretty low. Yeah. So, and the inventory is increasing because some people are forced to a home. And what are the reasons people are forced to sell in a down market like this? And then,

so what becomes the end game here? When do we see? You know, how much further in your experience does it take for the market to kind of accept this new reality? Because I've been looking at this, because I've been looking at Austin and some other places, you know. And I'm starting to see people accept reality. That's one of the worst markets right now. Yeah. Yeah. Well, people are accepting reality. Well, inventory is certainly piled up in Austin, Texas. But much of it is from ibuyers. So it's been a tale of two markets, Jason, where the people who don't have to sell

who have a 30-year fixed rate mortgage at 2.8% they refinanced in 2021, they are going to hold on to that next 25 years because when they sell the house, they have to sell the mortgage. We've had a bunch of customers in November tell us that they're pulling their home off the market. And normally that happens this time of year,

except what's different is that the listing agent hears, and I'm not coming back in January or February to test allotters again. I'm going to rent it out. The I buyers and the builders are different. The money they've borrowed is not at a fixed rate. So that house is burning a hole in their pocket. And so 10%, 15% of the sales in places like Las Vegas and Indianapolis are coming from the

iBeyers. And the only people who might be more desperate are the builders because they have also borrowed that money, not at a fixed rate. Every day they don't sell that house, cost them capital. So they have all sorts of incentives. Some are giving away $10,000 or a free Mercedes or throwing in a refrigerator. And all of that is try to mask how much they're really discounting. When you walk onto the lot and you say, you know, what's this house selling for?

They say, well, the last one sold for $500,000. They don't mention to you that they had to give away $30,000 or $40,000 and incentives to make it happen. Ah, so they try to keep what is recorded, you know, in the books as a high price. So to maintain the rest of their inventory value. So the discounting is kind of happening on the slide. Yeah. They don't want to actually lower the price. Where optically, it's a great number, but there's such a weird preference stack on it

that it really isn't that great of a number. Same thing. So the four sellers in this market, the creators of liquidity are the eye buyers and the builders because they have to sell. Most other homeowners do not have to sell. there's trillions of dollars of liquidity. And so there's been this terrible standoff in the market where the sellers are looking six months ago and say, if I'd only sold in April or May, I would have gotten this incredible price.

And the buyers are looking six months ahead saying unemployment is starting to go up. Inflation is high. I want an even further discount than what I would have been willing to offer. So it's just been a terrible standoff. And the real issue is that homes have just gotten completely unaffordable over the past two years, that mortgage payment for a typical American home went up more than 70%. The rent went up nearly 30%. And people just can't afford that.

So it's going to take us a long time to let all the air out of the balloon and get prices back to a place where people can afford it when rates are at six and a half or seven percent. And the Fed has said, prepare for us to take this rate up to 5 percent or whatever five in chain. And we're going to hold it there for, you know, now they're saying, hey, just we're going to get it there, January, whatever. And just we're going to hold it there. Now, if we hold it there and inflation is still coming down and we're still, you know, deflating the economy, that's the same as raising. So a hold is the equivalent of a raise in this analogy they've been saying.

So I think so, except that the mortgage markets have priced in so much of that. What's really interesting is that mortgage rates don't really trade anymore with what the Fed does. They trade with. Well, they trade with the consumer price index. because people feel like they don't really have a choice at the Fed. If inflation is higher, it goes up. So almost everything is priced off the inflation. Then the Fed makes an announcement that's maybe a little more hawkish or dovish.

So might trade up or down a little bit. But right now, everybody in the mortgage industry has already priced in a bunch of Fed action. So rates could still go above 7%. Maybe they could hit 8%. But I think there are some economists who believe that actually they're going to keep coming down. It's very, very hard to call it. I've never seen such a crazy market. It is one of the most perplexing things.

We talked about it here on the pod. We talked about an all-in recently. You know, you have 10 million job openings. They started to go down in August. Then all of a sudden, there were more job openings opening. Then you had two negative quarters in a row. Okay, great technical recession, technically recession territory. Then over the summer, 2.6% growth in a quarter.

Now it feels like it's going down. It's just hard to understand what's going on. Can I tell you one thing I worry about related to unemployed? which is just immigrants, all the people on H-1B visas, the U.S. government already made it really hard for us to import all the technical talent from around the world that made this place an incredible entrepreneurial engine in Silicon Valley and beyond across the United States.

And now it's just a double whammy because all the people being laid off from one company typically go to another. But when you have a broad layoff like this and it's coming just before the holidays and these folks have 60 days to find a job or they have to leave the country, this could be just the second really severe blow to all the tech talent that America has been able to amass. And so I'm hoping that the Biden administration or Congress or somebody will just say, uncle, six months. Give them a year because we're going to be so glad that all those brilliant people get to stay here. Glenn, you and I can work on this.

I know a guy, Steve Case. He's in Washington, D.C. You know our guy, Steve. I had him on the pod recently. He wrote another great book, Rise of the Rest. and he told me I got to be a little more active and use my voice. So one of the things I want to use my voice for is accredited investors, you know,

people being able to become sophisticated investors in the country and invest in private companies. But this is another one. You should do a tweet about this. And then I'll amplify it. And then I'll ask three of my besties or four of my besties to amplify it. And then maybe you ask three or four of your besties amplify it. Let's get this going. 60 days should be 12 months.

And then we'll ask Steve Kays, hey, look at this. And then I'll bring it up on all in this weekend. and let's actually make 60 days into 12 months for these people who are incredible contributors to society and we fought to get them here and they pay huge taxes. Yeah, and we're all immigrants. I want to be part of a Calicanus Revolution. I'm going to start it with a tweet.

No, you tweet. I got to find my login. Come on, man. $8 a month. Can we use your $8 a month? Let's go. I got the check for free. God dare.

I mean, oops, I didn't want to say that. Okay. I want to ask you one personal question. You mentioned being Jewish. And we have this crazy moment in time. It's heartbreaking for me as a kid from Brooklyn who grew up with a lot of Jewish brothers and sisters. We rode the train together. And, you know, Irish kids, black kids, Puerto Rican, Jewish.

We all got along. We all got along in Brooklyn. We had to get along to a certain extent, but we all respected each other. And then there's just weird thing going on right now. In society where a bunch of people are saying crazy anti-Semitic stuff. you know, some cases it might be mentalists, other cases, maybe people are just going after tropes. Number one, how does this feel that we're here, you and I, Gen Xers, thought we were kind of making progress, and now it just feels like maybe less progress than we thought. And then two, what's the

way out of this? What's the way we can get through to some people who maybe are blaming other people for their problems? We're going into a hard market right now. Then you'll say, you look, and you say, oh, my pain and suffering is based on this group of people. It's incredible how hurtful this is. And I'm just curious how you're feeling, maybe the discussions you're having with your family and your community. Well, I mean, first of all,

I am not like the most Jewish person in the world. I have to like load it into my calendar all the holidays because I forget about some of them. I know about Yomper and things like that. But I always speak. I get it. Yeah, yeah. I don't want to speak for everybody.

I'm the same way with my Catholicism. Yeah, yeah, yeah. Easter Christmas kind of guy, maybe. Sure. Yeah. But, I mean, my take is that I just don't think that we should feel like being Jewish as a lowdown dirty deal. There's so many times where somebody sits down next to me on a plane or I walk into a venture capitalist office.

They're like, you look like you really enjoy a pastrami sandwich. And I'm like, oh, yeah. I get a little fun with it. It works both ways. And I feel especially uncomfortable excoriating the black community because there's some folks there who worry about, you know, how society is rigged against them and sometimes the Jews are always implicated in that. And look, if I were a member of the African-American community, I believe in all sorts of conspiracy theories. What's crazy to me is that all the white people believe in conspiracy theories when a lot of times it's the black people where there really has been a conspiracy to inject it with

syphilis or do terrible things to them. And that's just the stuff that's in hiding, not the stuff that's happening in the open. And so I don't know. Like, I don't know why Kyrie Irving did that crazy thing. And I wish, I wish he would stop doing it. But I'm going to be okay either way. Yeah. Yeah.

It's, uh, I like your positive attitude towards it. And I think you're having the empathy is like big. Yeah, it's easier to, you know, just be upset about it. But to actually have empathy and say, hey, listen, this other group of people, maybe they also got a raw deal at times. And, you know, maybe we could all heal together and move forward. And so I hope that's the direction. goes in. It's just hard to see, you know. But listen, you're a true mensch. You always give me a little bit of time.

So much love. Thank you. And thanks for coming on. And, you know, just time to grind. So let's do the grind. Time to grind. Time to grind. Thank you, Jason. One year of grinding. It's going to get better, folks. All right. We'll see you all next time. Thanks, then. All right, maybe there are two or three apps my team can't live without. And one of those is Zapier, which makes you so much happier. It's a simple, no code way to connect all your apps. So you hear the word API all the time. All of the apps out there have APIs. Whether it's the Google suite of products, Slack, Shopify, pipe drive, which we use Webflow, all of these Salesforce, they all have an API. But you need to write a recipe.

What's a recipe? It's a way for you to make these two ingredients, let's say Slack, let's say Typeform, Survey, Monkey Zoom, work together. We do all these repetitive tests that a human used to do with Zapier. And they have all these templates, recipes, whatever you want to call them, scripts, on the website. So if you start using something like Slack, you can go and see what are the most popular recipes. There are all these crazy ideas that you may not have thought of. For example, we have openscouting.com. We ask anybody in the public, hey, tell us what companies you love that we should meet with. Well, we then use a Zapier to trigger a Slack notification, which gives the

task to somebody to review that application. And then we might pump that into a database. So we have the record that we contacted that founder. The average Zapier user saves $10,000 in recovered time every year. That's why over 1.8 million people in businesses use Zapier. This is your secret weapon. See for yourself by teams at Airtable Dropbox, HubSpot, Z-Spot, Z-E-R-Z-D-E-D-S-E-D-E-R-T-E-D-S-E-E-R-T. I love this product. Chef's Kiss 10 out of 10 from J-CAL. All right, and you know it's Friday. I got my Friday sweatshirt on. We're doing that Friday vibe, which means, K Boomer with Rachel reporting. Rachel's here to tell me who she's got.

Come on in. Hello, how are you? Hey there. Happy Friday. I got to wear a specter today too. I feel pretty pumped. Nice. I feel like it's super, super much a, uh, I can't even say it.

I say it's super much a Friday. But today feels like a Friday of all Friday. It's like holiday season is coming out. Yes. It's like cold out. It feels perfect. It's absolutely perfect. It's raining out right now.

It's definitely set in the mood. This week I had a really cool. two founder duo on. Normally, I only speak to one person. This time I got to speak to two, which was my, I think this was my first time having co-founders that I spoke to. And I really liked it. I thought it was really cool. I had Valve Media founders on Shannon Almita and Priyanka Vazirani join me. Volv makes the news more accessible and apparent to Gen Z by presenting the information in a format that really lets users quickly swipe through news stories, kind of like TikTok. And I was actually told about Valve by a previous OK boomer guest, Jules Turpac. And I really loved

their platform. And I was like, you know what? If Jules likes it, she is the digital commentating queen. I had to check it out. And I loved it. It was really, really cool. I was going to say the same thing. Thanks to you. I follow Jules. And it is true that pretty much whatever she thinks is cool. She's like the you and her, I think, are evolving into like the cool hunters in the world. Yeah, this is fascinating. It's interesting because it seems like they've used AI. to shorten articles to like fit that that vaunted Gen Z attention span? Right. It really sucks us in with the whole attention deficit generation happening.

But not all the articles can be shortened using GPT3 because there's some things that can't be run to the system like politicians' names, for example. So those have to be manually shortened. But I still think it was a really interesting case of GTP3 used in something. that you wouldn't look at it and be like, oh, this is an AI project. Like, it wasn't screaming AI in your face. So I thought that was really interesting. And overall, they're just really nice people.

I loved being able to hear both of their perspectives and hearing about their story to creating Valve Media. And I think that this could definitely be an app that is downloaded much more frequently than it already is. If you haven't checked it out, I'm definitely going to plug it, especially if you're around my age. I think this is, they made a good point. I'm a newsletter junkie, but it takes a lot of time to kind of curate, like, your master newsletter list.

Volve Media, if you let them know, like, exactly what you're interested in, they'll help you, pick and choose different news sources to check out, which kind of takes away all that hard work that I spent, you know, over the years trying to pick out my favorite newsletters. Seriously. Ooh, I'm excited to try this too. All right. Amazing. Another fascinating OK Boomer interview coming up.

Here it is. Awesome. Thanks, Rachel. OK, Boomer. I understood a sign. Thank you so much, Shannon and Priyanka, for joining me today on this segment of OK Boomer. I actually found out about Valve Media, which is the company you guys founded from a previous guest, a reoccurrent guest, Jules Turpac. So you guys are fan favorites of people that have already been on the show.

Right when Jules recommended that I check out Volve, I was like, oh my gosh, I need to have you guys on. So first things first, can you guys kind of explain what your company is? I'd love to hear that, by the way. It's like the biggest compliment to hear that people already using it and like, you know, talking about it. But really quickly, Valve is an app that gives you everything you need to know from breaking news to your favorite newsletters in nine second reads.

Users basically call us like TikTok for readers and writers. I love that. And how did you guys come up with this idea? I feel like I do see TikTok already certain creators like Duel's in particular. making short form content. And Valve, though, is articles that you can read in that period of time, right? Not videos.

Yeah. Okay. Okay. So how did you guys think of this? So Shannon and I, actually, second time founders, our goal with the first startup benefactory was to help victims of any kind of, like, urgent crisis. And we had like several successful campaigns from floods to COVID. But one campaign in particular is actually what led to evolve.

Because of the skewed narrative in the news, companies won't willing to be. to partner with us. Nonprofits were hiding the fact that they were helping these people. And so we decided to just cold email a bunch of celebrities whose words, you know, could reach millions. And luckily, Gary Washington, Prabalgeron, Ilana Glazer, they all posted for us on Instagram. The conversation changed and money started rolling in. I mean, this entire thing was incredible.

And it made us realize two things. First of all, relying on celebrities shouldn't be the status quo. and second of all, mainstream media hasn't adapted to how our generation wants to consume content. So we basically did what they aren't doing. We adapted to how our busy slash attention deficit generation actually wants to consume written content. So it's just quick reads in a social media like format. We made an MVP and we posted on Product Hunt. To a surprise, it did really well.

and more and more tech bloggers started posting about us very organically. And we had like thousands of users in no time. So we decided to like pause on our first startup and we just give Valve our full attention. Oh, wow. Okay. So what year did you guys launch? Was this, is this a new project? No, it was like 2020.

Yeah. Okay. So you guys have been working on it for quite a while now. And when did you, is this your guys this full-time project, right? This is what you're working on 100%. yeah definitely that is so sick because when you go to the web page um the first thing you're greeted with it definitely feels like a gen z uh vibe you know when you hop over to it and it took me a while to figure out that you guys were the founders because I was like the I kept seeing it um a lot

after drills talked to me about it on Twitter like people would like screenshot and stuff like that and I was like are these people like waiting for them um and it got me thinking like when you guys get those short form pieces of news? Are you guys the right ones like summarizing it and writing it up or are these blurbs that companies already have that are in short form? Right now, definitely it's us. We have a team that's doing it with like with the help of like GPD3. But the end goal is that we're going to completely transition into like companies doing it. So we like, I would say like in 2020, we were more of a media company. Like we were like, doing all the content, like, in-house.

And, like, now it's, like, a slow transition into becoming a platform. So that's kind of the difference. So once we become a platform, the goal is to, like, have the companies, like, sort of, like, you know, write their own content on the ball of app. Yeah. And how accurate do you think using AI is to make the short form, like, readable pieces? Oh, God.

So I think that GPD3, is like great, but I think summarization in general is like so hard to do. You know, there have been like there are two types of summarization. Like one is like abstractive and extractive. And like for like many years, like we were stuck in the space where summarization models would just like pick up whole sentences. And just now with like GP3, like we can like take those sentences and like, you know, turn it around.

And like really we write the entire thing. But there's still like a lot. lot of wastage from what we're noticing. And so, which is why, like, we can't rely completely on GP3. We still need, like, a team of editors to, like, you know, supervise the entire, you know, content production. So it's great, but I think there's still a long way to go. I'd say, especially in terms of politics, like, because when it comes to GPT3,

it's literally a brain rewriting the content. And coming up with words are not exactly in the article. So there's this, you know, there's this like, um, skepticism of like, what if GPD3 is going to come up with words in politics and like, you know, put opinions instead of like facts. So even when we got access to GPD3, they were like, please don't use it for politics. Everything else is cool. So we've seen that it does a really good job with like, you know, Bitcoin and pop culture

and all of these different things. But we're trying to stay away from politics for now. Yeah. Until we have better results. Yeah, that totally makes sense too with barriers. and you never know, obviously, like, in this use case, like it would be a great tool to use, but I can totally see why they want to have, you know,

some parameters up around there for sure. And how many people are working on your guys' team? Where are these, like, people freelancing? We have a full-time team, like, all in-house, and we're about, like, 11, I think. Oh, that's awesome. Yeah. Very cool.

And are you guys all remote? Yes. So you guys are just hitting Gen Z. like left right and center, like a platform for a Gen Z, fully remote, small teams startup. Very awesome. And one thing I was thinking about when I was scrolling through for the first time is what do you guys think about super nuanced stories? Like, do you think this could ever be harmful to boil down stories to just like a screen's

length? There are so many things out there, especially in politics, where things are just more nuanced. Are there ever stories where you're like, this is just something we can't make shorter? We haven't approached that problem yet actually. I mean, certain times, sure, there is like more background. And so we decided to have like a two-parter. So you might notice that on the app, you'll see like one of two, kind of like a thread, but not really. And we also have a timeline to defeat that problem. So if you think of the Russia-Ukraine war and, you know, you just open the news and you have no idea like what's going on today.

You can just click on the hashtag on the top right, and you'll see the entire chain of events. So even though the content is in nine second reads, you can get the whole context of like what happened yesterday, what happened today, and then automatically you're up to date with like the entire picture, but again, in nine second reads. So we've really tried to solve this problem through a lot of different aspects. And again, if you need more context, you can click on check it out and read the entire article. So yeah, you will be fully updated. And when users do click, check it out, say like they've never seen the app before,

will that bring them to the outlet or does that still keep them inside of your platform? It still keeps them within the app. I think the goal is to keep the experience as seen as possible so that once they're done reading, they can pick up where they're left off so they can just scroll again. Got you. And is there a way where users can save storage they like? Yeah, you can bookmark anything you want. it's pretty easy.

I think you can just like press on it and it comes up, yeah, press on the article. I absolutely love my big thing is newsletters. If anybody knows me, they know I'm a newsletter junkie, right? And there's this one platform called Feedley, which I really like. I'm in another one,

newsletters, I believe it has like two R's or two Ss or something like that where it's spelled kind of weird. And newsletters lets me create an entire new email address and it puts them all over, I believe it's kind of like an R-Says. feed similarly, where it keeps it all on one platform, which is really nice. But I do wish it had that feedily attribute where I could like categorize the stories because I like personally, I really enjoy supply chain and mobility, which is a niche of

news that I just find to be super interesting. But I work at this weekend startups, which obviously cover startups. So I wish I could like sort out between these. Do you guys have a feature where my favorites could go into these different folders? Not yet. but we are trying to like, you know, pick up on all these like granular interests. And over time, we are going to be accommodating all of these different things so that you can, your feed is really, really personalized for you.

So, yeah, we started with like broader categories, but now that's, that's everybody's top request to have these like smaller categories and like allow us to, you know, categorize them. So, yeah, that's on the roadmap. Very cool. That's awesome. And why do you think it's important to get Gen Z or the younger generation into reading news. Like I know a lot of my peers, although I read the news every day for work,

this isn't something that a lot of my peers are doing just because they have the free time. It's funny, and we have the entire world in our pockets with our cell phones, and we don't have to do things anymore like read the newspaper when we're commuting to work because we have TikTok, for example, that we can be scrolling through.

What do you think these, like, implications are? And why should we urge people that are younger, especially to stay informed. So I think it's firstly, like, important to understand that, you know, we're kind of redefining what news is. Like, a lot of people just assume that news is just like politics, you know, finance, like, you know, financial news. But it's really what's happening online, like, what's a conversation, like what's going viral on TikTok. And that's kind of what we kind of like focus on.

It's like balance of both. So when we talk about news, we try not to be. like too technical about the term, but it's more about like, what do you need to be aware of? And so, yeah, like, obviously, like, newspapers, like, it kind of, like, was read by boomers. And, like, I know you love newsletters, but I'm going to, like, kind of sh** on it right now. But newsletters are, like, they're read by only millennials. Like, we went to colleges and we spoke to, like, college students and not even a single Gen Z subscribe to newsletters.

So for us, it's, like, the opinion that, you know, newsletters are definitely going to die millennials and like Gen Zs don't really have this other like, you know, format to consume, you know, text content right now. They're all like, you know, as you said, like they're going to TikTok. But it's more like a byproduct of like them just being on TikTok that they're consuming like this kind of content. It's not because, you know, they're seeking it out because like they don't really have that platform. So, you know, for us it's more about, you know, creating a platform where like number one, they get quick content. They're getting all the content that they need in one place. And it's also like, you know, giving voice to like these subcultures of like, of like Gen Z voices, like,

you know, Gen Z newsletters, Gen Z like publications. And so Vol is kind of like this melting pop that you can get like all this great content in one place. So I would say like it's different. Like I wouldn't just say like, why is it important to read news? It's kind of like you need to be update in what's happening in general. And, you know, what's happening in general is such a like a broad term. Like, and today it's not just like politics or like, you know, something like, you know, financial. Yeah. It's funny too because my, my big issue that I do have with newsletters isn't even the

newsletters themselves. Like I enjoy like a pretty wide spread of them that cover a bunch of different things. But in order to do that, it was so hard to get that curation aspect that you guys are solving. So right now, like I said, let's use like supply chain. My top ones are definitely anything by freight waves. They have a great one. I believe it's called American Shipper, the Dynamo Dispatch. And I was a fellow at Dynamo, which is a venture capital fund that focuses on supply chain mobility. I read that every week. And then I also have another one that I love. And I believe it's called LogTech by someone named Eric, who's a phenomenal journalist. And out of those three,

which I read frequently. Like I haven't, don't really skip very much content that they put out. I haven't grown in like two years since finding them. And I always wonder, I'm like, is this holding me back? And I like that your platform kind of introduces me to outlets that I haven't

necessarily seen in certain spaces. So seeing, especially like if you guys do like branch out or when you guys break out to those micro like industries in particular, it is so interesting. Seeing all the different places that I didn't even know you could look for news. And there is tech meme for the tech industry and tech meme for people that don't know

is basically a place on the internet that is curated tech news basically. It's like the front page, kind of similar to almost like Reddit where Reddit has like the front page of the internet. But tech meme is like the front page of news articles, I believe, that are like most looked into tech. But what happens if somebody's not interested in tech? Like what happens like you said? if somebody's interested in finance or interested in something else.

Like, there needs to be, like, these places for whatever niche that you're interested in. And where do you see Volve going in the future? Like, do you guys have, like, a future end goal that you see VOLB becoming? Like, is this the go-to app for Gen Z or this something that's, like, supplemental? Sure. So actually, I want to tackle the first thing that you mentioned regarding newsletters. That's actually the number one thing we're trying to solve. So when it comes to video creators, it's very obvious.

that you're going to go to a TikTok or a YouTube, right? Because if you are pushing out content, it's so easy for you to be discovered. But for podcasts and newsletters, just like you mentioned, it is extremely difficult to get the word out beyond your friends and family if you're not already Twitter famous. So where do these people go? Like, how do you get discovered? We're trying to bring that same kind of virality that TikTok does for video creators

to non-video creators. So automatically from day one, you'll have an audience, right? So that's one of the biggest things that we're trying to solve. And I mean, a few more issues with newsletters that we're trying to solve. Like the first thing being, you know, open rates are falling because every, today, every startup, founder, community, sending out newsletters and it's all going to your inbox. And after you're done with work, nobody cares about your inbox and your email, right? You just want to close your laptop, sit on the couch and scroll. And that's literally like the feeling.

And everybody is going towards either TikTok. And then now we've noticed that a lot of. people mention they feel guilty being on Instagram and TikTok and then they're like, okay, close these apps, go to Valve and you feel good because you're still doing the same kind of action, but at the same time, you're being informed, you're becoming smarter, so it's a good thing. Yeah, it feels like a little more beneficial. It's like not doom scrolling. I'm like, no, I can justify this. Exactly. So, yeah, like right now, um, Valve might seem like a news app. A lot of people call us a news app, but we're not really building a news app per se or even a social

media app. We're kind of building like an entertainment network with discoverability and entertainment being at its core. And one user even mentioned, he like wrote to us saying that if he had granular interests, you know, involved, it's literally going to be the only app you have and follow. And so that's exactly what we're trying to build. I like that. You're going to add a podcasting portion because the discoverability for podcast sucks right now. I would love to see like episodes like descriptions, but imagine trying to run or have somebody make an episode description

like nine second read for each one. That might be a little bit more time-consuming, but I'm telling you guys, there's definitely an audience out there like me looking for podcast discoverability. For sure. It's a struggle. So that's why we say non-video first

because that automatically includes newsletter writers and podcasters because, again, you have no discoverability, right? So it encompasses everything. And the great part about BOLV is that we link out to anything. So you can have the snippet and then it says check it out. We can say, you know, check out the newsletter, check out the podcast, check out the video, check out anything. So it can already be, it could already be a podcast.

Exactly. Okay, okay. That's awesome. Well, I'm really looking forward. I hope more people start downloading this. Are you guys, is this public on the app store and everything? Definitely. Good, okay, good.

I found it. I think I was, I used your guys as web browser first before I got to the app. I don't know if that's something you guys, do you guys focus at all on a web browser? Are you guys mostly app focused? We're app focused. And like web browser is kind of like supplemental. If like you're using like Reddit or you know,

you're on like your laptop, it kind of like helps because we, you know, share a lot of links. So like it works that way. But app is where we do all our work. Yeah. Awesome. Well, thank you guys so much for joining.

Like I said, I cannot wait for more of my peers to hop on this. Super happy Jules told me about. it. She gives a ton of good recommendation. So shout out to Jules over there. If people are going to try to find you guys and ask questions, where can they find you on the internet? You can find us at Get Valve on Instagram, get Valve on Twitter. You can reach out to us at at www.com too. Or find us on Twitter. Yeah. Very awesome. Well, thank you guys so much for joining and I'm looking forward to using Valve in the future. Amazing.

Thanks for having us. Thanks for having us. All right, everybody, thanks so much to Glenn Kalman. Thank you to Rachel reporting for OK Boomer. We're back on Sunday, Molly. That's right. We got another edition of this weekend climate startups and VC Sunday School. It is all happening.

And do you all know about our newest podcast? That's right. It's a YouTube show called Founder University. It drops on Friday's Founder. Dot University for all the information on this new brand we've created. You know, we have this weekend. startups. We talk about tech. We talk about startup companies. But people asked us, can you just tactically tell me how to run my startup? And I said, well, you know, this show is so packed.

I don't know if we have room for it here. Let's just make a website and a program on how to grow your company. So how to do a landing page, how to do an email sequence, all the blocking and tackling that you want that, you know, comes up in the show. You can double click, Molly, on founder.com, university. Do a search for founder university and your podcast player. And we're going to do four seasons next year in 2023, looking for partners for that. The way we constructed the show, Molly, our team at our fund, launch fund, makes a talk, or sometimes we'll have some famous entrepreneur give a talk. And then we have partners do a talk about how to use their software, et cetera.

So it's kind of a brilliant new business model. There's no ads on the program. We give our talk, and then a partner, formerly known as an advertiser, gives a 10-minute talk. So if you're one of those folks who wants to, you know, reach founders. You can reach out to us partners at launch.co to become a partner and give your talk and support the founder university mission of making founders better out their jobs every day. True story. I just sent this link to a friend of mine who said, I think I have an idea for a startup.

Am I crazy to think that this could be a business? And I was like, first of all, no, that's a great idea. And to or be, go here. Yes. And watch all of these. And he was like, oh, wow, this is. Amazing. Thank you. And it's great. Well, here's the thing about the brilliance of this property. Founder University, you know, when people ask me like how to you construct, since we're on the actual part of the show and people stayed this long, I'll give him a little insight.

When I construct a media property, I'm trying to think about it and you've made how we survive, you know, like you also have a brain for this. You want to provide massive value to your audience, right? So this is tactical. not philosophical, mission, chit-chat, like just tactical, sometimes tipping into strategy. So the most value we can give you in the shortest period of time is the vision for Founding University. But because we're doing this, we're also kind of dog-fooding, as we say in our industry, which means we need to have a blog for Founder University. So I told the team, Prashe and Kelly, can you make a blog post? I'm sorry, can you make a Founder University episode on how to make SEO,

and make a perfect blog post that ranks and then how to promote it with SEM and how to structure that page because I've always wondered like what's the latest SEO and what's the latest content marketing on blog posts. So what we're doing internally.

Because it changes every minute based on what Google does. So you got to keep up to date here. Yeah. But think about this. We internally are learning, right? So we can make better blog posts here at this week and startups and launch. We're sharing that knowledge.

We're getting feedback from the audience. We're helping founders. And then all of that goes back into the Founder University 12-week programs content library for the founders who are taking

the 12-week course that I'm teaching. So it's kind of a flywheel where everybody's getting smarter and smarter and we're building this property. So it's kind of fun to watch us build in public,

if you will. It's true. It's no theory, only tactics. It's outstanding. And everybody wins. A little strategy. 80% tactics, 20% strategy.

Yes, definitely. But no like, We think this might, you know, it's like, we're going to try it. Then we're going to make it an episode. Everybody's going to be doing it together. Yeah. It's, yeah, it's outstanding. My test is, if you watch this as a founder, do you share it with your team and your team Slack

or cut and paste it over to your team, Notion or Cota, whatever you're into? Do you take it and share it with your team and say, are we doing this? Do we need to do this? You know, is there, can we learn anything from this, right? If we do that well, that's to be the test, right? Would you share it? with your team. That's the big test for me. So anyway, thanks to the team over there, Prush, doing a great job. Kelly's back working on that. And I'm just really excited to teach

founder.com. That's excellent. It's excellent. All right, everybody, enjoy your weekend. See you Sunday.