This Week in Startups - Meta's ad targeting troubles, Ask Jason, Hive Social's data mishap & more | E1629

Episode Date: December 7, 2022

First up, Molly breaks down some news stories, including Meta's ad troubles in Europe (1:24) and Semafor's saga with its climate editor departing. (9:51) Then, Jason answers questions from founders! (20:25) Finally, Producer Rachel joins Molly to discuss what happened with Hive Social. (32:10) (0:00) Molly tees up today's segments! (1:24) Molly covers Meta's targeted ad troubles in Europe - are we headed for a new standard for ad-based business models? (8:24) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://Squarespace.com/TWIST (9:51) Breaking down Semafor parting ways with its climate editor and a major crypto lending business is stopping its US operations (19:12) LinkedIn Jobs - Post your first job for free at https://linkedin.com/twist (20:25) Ask Jason! What percentage of equity should a startup give to an advisor? (27:22) Ask Jason! General advice for founders pitching investors? (29:31) Ask Jason! In this environment, should early-stage startups focus on profitability from day one? (32:10) Rachel Reporting: Molly and Producer Rachel break down what happened with Hive Social and discuss broadcast platforms vs consumption platforms FOLLOW Rachel: https://twitter.com/_rachelbraun FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

Hey, everybody, happy Tuesday. Wow, it's really only Tuesday. Okay, happy Tuesday. We have an awesome show for you today. First, I'm going to go solo-dolo to talk about the EU's reported ruling against meta's ad tracking by default. This is still early in what could be a major earthquake of a story. It could be that targeted advertising is on its last legs as a default business model.

And that is a big deal. We will discuss. I also talk about Semaphore's climate editor leaving that publication after just a few months of its existence over Chevron sponsoring his content. We also tee up some crypto craziness for later this week with our guys, Sunny and Vinny. Jason joins then for an Ask Jason segment where he answers a few questions from entrepreneurs in Founder University. And then we wrap up with a great segment of Rachel reporting. It's going to be a great show. Stick with us.

This week in startups is brought to you by Squarespace. turn your idea into a new website. Go to Squarespace.com slash twist for a free trial. When you're ready to launch, use offer code Twist to save 10% off your first purchase of a website or domain. And LinkedIn jobs. A business is only as strong as its people. And every hire matters. Host your first job for free at LinkedIn.com slash twist.

First up in our Tuesday news today, some more trouble for meta. based on targeted ads. You may remember that meta has already had to report over and over losing a lot of money because of Apple's changes in terms of targeted advertising and app transparency tracking. Well, now, via the Wall Street Journal, we have news today that EU privacy regulators have ruled that Facebook and Instagram cannot or should not require users to accept personalized ads just because they show up and start using the platform. Basically, they're saying that EU privacy law does not let meta just pop up at terms of service

that you click through when you create an account that says, okay, so PS, now we serve you personalized ads. They're saying that should not be the default. Now, there are a lot of steps before this would actually be a serious problem for meta. The final ruling would be left in the hands of Ireland's Data Protection Commission to issue public orders and maybe fines. It shouldn't impact meta immediately. And obviously, I'm sure they're going to fight it like cats and dogs.

But it is, if it is upheld, potentially a death knell for the idea of targeted advertising being a default business. And meta has, of course, for years let you opt out of personalized ads based on data from other sites and apps, i.e. you can disable the Facebook pixel that tracks you across the web. But it has never given you the option to opt out of ads based on your activity on its own platforms. So that means whatever videos you watch on Instagram or games that you play on Facebook or interactions that you do on that platform. And those can be a lot. Like if you have Facebook loaded on your phone, right? It's tracking your location. It's sort of seeing everything that you do

if the app is open, seeing who you interact with, your social graph. And of course, this is where all the money comes from. This is why Facebook is such a printing machine, because it's made a ton of money on targeted ads on Instagram also. But of course, it has struggled since the introduction of iOS 14 and its data privacy protections. That actually, Apple's new privacy policy, which, again, I want to clarify, made this kind of targeting opt-in instead of opt-out, as in you have the choice up front. It's cost meta 8% off its top line in 2021. Q2 of this year was the first time that ad revenue for meta did not grow, ending a 10-year streak

of growth. There are obviously other headwinds in the ad industry, but the primary issue is that when this sort of transparency standard was introduced by Apple, a huge majority of consumers when they were given the option not to be tracked, not to opt into targeted advertising, actually opted out. And here's the thing. It's become this default, right, targeted advertising. And it's a bargain that consumers agreed to originally. I will come to your service, which is free in return. I will agree to consume ads. You can advertise to me.

But that bargain has gotten completely out of hand over the years. Like you didn't agree to sites collecting all your personally identifying information, turning that into a deep profile about you that includes things you like, things you don't like, your emotional state. Meta literally studied whether parts of the newsfeed could induce certain emotional states in people and found that they could, you didn't agree that you'd be targeted by advertisers based on everything, right? Forget about basic demographic buckets.

Sure, there's your gender and there's your age and where you live. There's your literal location. There's who you spend time with, how much you exercise. And then not just getting all that information, this person is very likely to enjoy ferret-based content, right? Not just getting that, but sharing it with hundreds, maybe even thousands. of other companies so that they can target you more and more and more precisely with ads that might make you want to buy something, might make you vote a certain way, might induce you

to join a certain group that seems really fun and social and just happens to be storming the capital. That is not the bargain that users thought they were signing up for when they clicked through the terms of service. So very likely what we're starting to see here is moment momentum away from a business model that has been abused. And remember, this is exactly what Apple did with app tracking transparency. And they got killed for it because all over Twitter you saw Google and meta lost to combine $25 billion off their market cap. Snap, Pinterest absolutely hammered as a result of this.

And then a whole bunch of small businesses, which found that they couldn't acquire customers as efficiently because that customer acquisition cost went up. they found that the unit economics of their business, which was built in a world where targeted advertising was the default business model and every consumer who signed up for anything agreed to this insane Faustian bargain without even realizing it started to go away. But it's very interesting because Apple may have just correctly read the tea leaves here. I don't know that this is a situation where Apple started this conversation. There have been privacy experts for years saying that outlying targeted advertising,

was probably the way forward in the future, or at least having some ability for consumers to take back some of that power. It's also a big antitrust question. Like, Meta and Google have a data moat now compared to other companies that makes them almost unassailable. If you want to get into an advertising business and you don't have the data that meta and Google have collected over the years, you are already at a huge disadvantage. So this is a pretty big deal. It's a big deal that this conversation is even happening. And again, we don't know what it's going to mean in terms of overall enforcement. Most likely it would be enforced by fines. But privacy has become a bigger and bigger topic. I've given speeches, you know, this is one of my like speaking engagement topics,

is this idea that like, this is all changing. Everything that people took for granted as the default, consumers will always opt into this. This will always be fine. Is really, really starting to change. And it's going to be very, very interesting to watch. The web needs new business models and it needs them step. Listen, if you want to be an entrepreneur or start a side project, Squarespace is an amazing place for you to start. Squarespace is the platform where you can build or sell anything. You all know about it. I've talked about Squarespace forever, but there's so many great features. that they've been adding year after year.

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startups. That means a lot to me. All right. Let's follow up on our favorite new media company twice in one week. We're talking about semaphore. We obviously talked about semifor in terms of whether, how much that company. This is, of course, the new media company that was founded by Justin Smith and Ben Smith. So the former executive editor of Bloomberg and the former executive editor of BuzzFeed, I think, was his title. Had taken, it turns out, some money from Sam Bankman-Fried. We don't know how much. There was some scandal about that that we talked about earlier in the week.

Well, also, there has been some interesting bubbling up about some of the other ways that Seymour was doing business. Spindle, who had been the climate and energy editor at Semaphore has left after saying that his tenure was, quote, marred by an over-dependence on Chevron advertising for months. This is a very interesting story because Semaphore just launched. It's a digital media company that is, quote, based on journalistic transparency, launched in October, literally a few months ago by former New York Times media reporter Ben Smith and former Bloomberg media CEO, Justin Smith. They raised that $25 million in private capital, including some unknown amount that we talked

about from SBF. They have currently said they're not going to return the money. And then there's been this kind of question about now where their additional funding and advertising has come from. So Bill Spindle, just by way of biography, formerly worked at the Wall Street Journal. He covered climate and energy issues through an independent newsletter. He blamed his extremely quick departure on this Chevron advertising. He said that, you know, Semaphore essentially took on Chevron as its primary advertiser

for climate and energy reporting. This is a whole other interesting topic that Spindle has said he's going to continue to write about, which is fossil fuel advertising, the kind of effort to maybe greenwash their businesses by advertising on climate content. So what Spindle said is that he always had these concerns about Chevron appearing as an advertiser on his actual work. He didn't really want, you know, people to open his climate newsletter and then see a bunch of ads for Chevron. So he claims that Semaphore acknowledged his concerns, removed Chevron advertisements from his emailed climate newsletter, but then didn't ever remove the ads from the stories.

Now, a semifor spokesperson told the rap that they parted ways with Bill because of, quote, issues unrelated to any advertising partnerships. The spokesperson also said the company, quote, adheres to robust adceptibility guidelines that we stand by and that are industry standard. We did not remove advertising due to editorial requests and have a number of rotating sponsors on the climate newsletter. On Twitter, Bill Spindle posted a thread about his departure saying, quote, I'm not saying they or Chevron improperly influenced the climate coverage.

I could call it as I saw it. What concerned me was my belief that it was not appropriate to have Chevron advertising on the same page as stories on climate coverage, particularly as the dominant advertiser. Chevron often appeared as the sole advertiser, he wrote, despite my expressed discomfort and concerns, the ads remained. weeks before our parting of ways last week. I told Semaphore Leadership, I saw a no easy path forward, as long as fossil fuel ads were in the climate stories and newsletter.

So Semaphore seems to be saying that there are rotating ads. They're not necessarily denying that there were Chevron ads on this content. This is just, this is interesting for a couple of reasons. One is kind of journalism writ large. It's, I guess I'm not a journalist anymore so I can just say it. I feel like it's been a long. long time since you could say, you know, I am as a journalist, I am so precious about my work that I don't want these ads to appear here. I remember when I started at CNET, we would have conversations about

whether like a Samsung ad could appear on a review of a Samsung phone and that that could give people the wrong impression. And I know that there are still a lot of journalists who have these concerns about advertising for years and years like the hosts of a program would never read the ads. the way, you know, that we do, or like, if you listen to pivot or, you know, I think marketplace, like, you don't read ads, but there's some creep in that direction. So, this feels like a couple things happening at once. One, a very old school journalistic approach to content and that being influenced by kind of the drift toward advertorial, towards sponsored content. And I could imagine, particularly if you're a climate reporter, you really don't want to

give the impression that your news is being sponsored by Chevron. However, as somebody who has now become a dirty capitalist, like, the thing about journalism is you have to get the money somewhere. And so I am also sympathetic to the editors of Semaphore who at some point were saying, like, look, if you want this content to exist, we only have one sponsor here. They're saying they have more than one, but we've got a sponsor willing to pay a lot of money. It happens to be Chevron.

Do great work. We're not telling you what to report. I'm not sure I have like a final opinion here, nor do I need to. I think it's a tough situation to be in. But it seems to say something more about semaphore, potentially. you know, which is an organization that also said it was going to be committed to like really,

really, really high standards of journalism and telling the truth. And then in one of their launch events, like immediately interviewed Tucker Carlson, who has used more than once as a legal defense against being sued, the argument that he is an entertainer and not a journalist. So I think that between this and maybe the SBF thing and some of the early editorial decisions. It's possible that that you're more high-minded journalist types aren't feeling like this is the right place for them, which is kind of interesting. All right, quick crypto story that I'm just going to tee up because we do have Sonny and Benny coming back for a crypto roundtable, which it feels like it's been forever,

even though it's just been the regular two weeks. But interesting news about a company called Nexo, which is, is I think potentially like one of the last U.S. crypto lenders still standing or at least major lenders. And NXO is evidently planning to phase out U.S. operations. It had already off-boarded some clients in New York and Vermont. It will now suspend access to new users in Indiana, Kentucky, Maryland, Oklahoma, a couple other states, and said, our decision comes after more than 18 months of good faith dialogue with U.S. state and federal regulators, which has come to a dead end.

NXO lent on a high-yield crypto interest product called Earn, which we assume is the main target of scrutiny because investors are questioning balance sheet transparency, the health of crypto exchanges overall, how you can possibly get these high returns. You remember Jason has more than once asked this question of like, If you're promising 18% yield, in this case, Earn was promising up to 12% API, which is more than the average S&P 500 return of 7 to 8%. Where is that money coming from? So I'm of two minds here, which is on the one hand, we talked yesterday about the incentive to be a good actor in the crypto space at this point when regulators seem to potentially be slowing things down.

But at the same time, these are actually questions that we really want. regulators task. So we will talk about that more on the crypto roundtable with Sunny and Vinny on Thursday. But at this point, it feels like this whole industry is coming apart or maybe the generous interpretation is that all these kind of poison flowers are dying and you're or you're seeing like a really big forest fire, but then you're going to get new growth and green shoots of projects that are based on real fundamentals, which I think is what. this whole industry is hoping for as some of this stuff gets washed out. And I, listen, I don't know for sure that NXO is sketchy, but I can say that if you can't come to an agreement with regulators who are

starting to ask really real questions and your solution to that is to go overseas instead, you know, maybe, maybe this is part of the forest fire and we'll be hoping for the green shoots. All right, that's it for the news today. Up next, we have a great segment of Ask Jason with questions from our founder, university founders. And then I'm coming back to talk to Rachel. about a wild social story to wrap up the show. There are a lot of social media alternatives popping up and going away quickly. And this is one in the latter came. Enjoy.

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And that's where you're going to find your next great hire. just like I do. And so go find amazing, talented candidates today. And you'll understand immediately when you get to LinkedIn jobs, why they are rated number one in delivering quality hires versus leading competitors. LinkedIn jobs helps you find the qualified candidates you want to talk to, and they help you do it faster. Post your job for free. That's right, for free. LinkedIn.com slash twist. That's LinkedIn.com slash twist to post your job for free terms and conditions supply because you're giving you something for free. All right, everybody, it's time for another for Ask Jason Segment here on This Week in Startups.

And I pulled these questions again from Founder University. This has become a passion for me. Every Monday night and every Thursday night at 6 p.m. Pacific, I hang out online with 350 founders. And these are individuals who are just starting to build their MVP, a prototype, if you will. They're looking for co-founders. It's super exciting.

And we do it online. And as part of it, there is a never-ending list of questions for me, In fact, inside of our little intranet, our little community, I get questions all day long. So I thought, instead of just giving them to the Founder University, a 12-week program, I would answer them here on the podcast. You can join this 12-week program at founder.orgia. It's free for founders if you come to all 12 weeks. It's fully remote.

I teach the course myself with Kelly and Prash from my team, as well as some other speakers who come in and teach basic stuff like accounting and legal, building products, MVP's, how to do marketing, just the basic blocking and tackling you need as a founder. So it's really step one of becoming a founder, if you will. We've invested $25,000 in about 20 or 30 of the founders who've graduated so far. 850 people have graduated or are currently in the program. Okay. So let's get to the questions. We have a question from Mohammed. What equity percentage should a founder offer to advisors? Great question. Advisors, let's step back a second before we talk about what they should get.

advisors are a way for you to build credibility for your startup. Some people think it's a waste of time. Other people think it's standard operating procedure because, let's just say you have four amazing advisors and your company is Uber and one of them worked at the taxi and limousine commission. One of them is a famous marketplace entrepreneur. They started eBay. And then two more of them are famous founders and or product designers.

Well, then you could put in your deck, hey, look at these people who have. decided to become formal advisors to the company, that might help you get some early meetings. Now, if you're already an entrepreneur, you don't need any more credibility. If you have a great product and you have 10 customers and they love your product, you don't need the credibility of advisors. So it's something that founders do to build credibility when they don't have any credibility. If that sounds like a wise use of your time, then by all means, go ahead and do it. And of course, the advisor might actually give you good advice. So at the core, there's really two reasons founders go after advisors. One for the advice, two, for the signaling. And I would say,

it's mostly for the signaling. If you are going to have them come and become advisors to your company, you should get an agreement. There's a bunch of advisor agreements on the internet. You can talk to your attorneys about it. And you should have a very specific deliverable for the advisor. And it should have a duration. This is a two-year deal you're going to get, let's just say it's 25 basis points, a quarter of a percentage point. So if there were 10 million shares, one percent of 10 million is 100,000, and 25 basis points, a quarter of a point is 25,000 shares. So I'm going to give 25,000 shares to this person. Let's say you valued the company at a dollar share. It's like giving them $25,000. Now, they're not in it for the $25,000 value of that quarter percentage point. They're in

it for if you 100x a company, that $25,000 goes to $250 and then eventually $2.5 million. So on their side, they're going to be advisor to the company because it's fun. And, hey, if you hit a home run and it goes 100x, they can get $2.5 million for what might be a commitment of, you know, 50 hours over two years or 100 hours over two years. In other words, they get paid a huge hourly fee for their time or their service. Most of the folks are post money who are advisors, so they're doing it for the joy of being involved in startup. So the percentage is typically a quarter point. sometimes it's a half point. If it's more than a percentage point, boy, this person better be doing a lot of work. And so if somebody asks for five or ten points, that's ridiculous. If they ask for a

quarter point or a half point, that's standard. If they ask for one or two points, you're probably going to need to have them doing the equivalent of one or two days of work at your company per week. In other words, they're really getting involved. And that's where the advisory agreement comes in. In the agreement, it should have a duration. 24 months is a good number. It's not too long, too short. It should be vesting every single month. So you get one 24th, approximately 4% of the grant every month. So that makes it super easy for you to actually operate here. If it was 25,000 shares into 24 months, you're getting about 1,000 shares a month. This is so that at any time, you can fire the advisor. So it should say in the agreement, at any time, either party can

leave this arrangement with 30 days notice. So you put that in the agreement and then you put a scope of work in the agreement. You'll be available for up to 100 introductions per year and two hours on the phone or Zoom per month, not to exceed 24 hours per year. Boom. This way everybody's level set to what the expectation is. One time in the history of me being an angel investor and advisor in the early days, did I ever have any screw me out of my shares? And they just did it. This venture capital firm forced the founder to do it because they were jealous that had one percentage point in the company. And they said, unless you get us 10 developers, we're going to cancel the agreement. And I told them, you know, like obviously you don't respect me. The founder

wound up apologizing to me. The VC did not. I remember the VC to this day. I will never work with that VC firm. This is why reputation matters in Silicon Valley. Okay, Mohammed had a second part to the question. Should I bring an active advisor on my board of directors? Let's say they invest, help build the product and help with customer acquisition. Okay, a board of directors is the next level up. You have advisors. That's an informal relationship. A board of directors is the board of a corporate entity, in this case, in all likelihood

of Delaware, C corp, which is where these companies are formed for a variety of legal reasons, but mostly because it's got the best shareholder protections and VCs choose it for that reason, Delaware C.C. There are also New York C. Corp's. There are California corporations. Most people go to Delaware because of tax and shareholder and for shareholder regulations that are clean and clear. So would you bring an advisor onto your board of directors? The board of a startup is typically five seats in the early days. And two of them go to the founders. One's independent and typically two go to early investors. Sometimes it starts with just three.

Two for the founders, one for the investor. And that's the long and short of it. An advisor might come into the independent seat, but generally, in a venture back startup, you want the seats to go to the co-founders, the founder, or the investors, the end. Okay, we have a question from Natalia. She is the founder of Poucher, and she says, do you have any advice for a founder who is not yet comfortable pitching investors and attending meetings with them? I'm sure it will get easier with time, but have any tips for now. It's a great question. If you have a product that is loved by consumers and you have traction, well, you will get very comfortable talking to investors. If you're just talking about your ideas, you really shouldn't be spending time with investors

yet. This is a fallacy that for some reason, founders have been led to believe that they should be spending time with investors when they're starting their company. No, it's a waste of time. You should be spending time with your customers and your co-founders and the people building the product. Anything other than that in that first six months or year when you're trying to, you're trying to to find product market fit is largely a waste of time. Why is it a waste of time? Well, the investors are almost universally, if they do take the meeting, are going to tell you, hey, it's not a fit yet, but come back to me when you have 10 customers. So you might or come back to me when you finish the product. You should be focused on your product and your customers exclusively

in the early days of your startup. And once you have a couple of customers, my lord, pitching gets easy. Here's my product. Here are my customers. Here are my customers. Here's my traction. Here's how much I'm raising. This is the market. Do you have any questions? And then everything goes easily. And so maybe don't worry about meeting with investors.

Worry about meeting with your customers and doing listening labs and user interviews. Once you have all those interviews done and you transcribe them, you do them on Zoom, you record them, however you're doing them in person. Get your notes together. Build a really great product that solves their problem. Everything goes easier after that. And a final note, if you go to an accelerator, typically like in the launch accelerator, we have you pitching every week and we record it and we transcribe it.

So if you're recording and you're transcribing over time, you're getting feedback on your pitch, you will tighten it up and you'll be just fine. Practice makes perfect. But it all starts with understanding your customer. Okay, here's a question from Carrington. Given the economic downturn, should SaaS startups in the pre-seed to seed stage focus on profitability from day one? It's a great question. You probably don't need to be profitable from day one.

No. No investor really is expecting profitability in a startup, especially a venture backed or a seed stage one. What they would like to see is that you understand your business model and SaaS' business model is easy to understand. And you have a plan to make money and your burn rate is reasonable. Now, you don't want to have a crazy burn rate. That is the first thing that people are going to look at.

If you have not launched your product and you have 15 employees, and you're paying them $10,000 a month on average, all in with their benefits, and you're spending $1.8 million a year, and it's the 15th month of you doing this, and you still don't have customers, those are going to be red flags going on all over the place. Now, if you have four people, and you're spending $7,000 an employee, and you're burning $30,000 a month, and it took you six months to get your product out the door, so you burned $180,000 to get there, but you have five people on trials and two people paying. Okay, now it looks like there's a...

a reasonable path to profitability, path to profitability. And so investors, especially early stage ones, will go, okay, I'll give you a million dollars, a half million dollars, I'll be part of a two million dollar round so that you can ramp up your burn. You can increase your spend to burning $100,000 a month for the next 20 months so that you can go faster. That's really what venture capital and seed funds and angel investors are doing when they give you money.

They're looking at it as an accelerant to your growth. Now, another way to say this is, in today's market, does profitability matter more than growth? Well, it's a little bit of both. You were expected previously to grow three, four, five X year over year in the early stages of a SaaS business. Now people are like, well, if it's two or three times, that's great because it's a down market and people are not spending money like they used to on SaaS software. So I think the answer to your question is you don't have to be profitable from day one.

you do want to show some responsibility and capital efficiency. Capital efficiency means, you know, you're not going to be burning so much money that you can't get future investors and the path to profitability or the path to break even, or as Paul Graham from Wycomer would call it, default alive, is 50 months from now. You should have a path to profitability in under two years in almost any of these companies, maybe even in 12 months or 18 months. So build your company, responsibly, especially in a down market.

All right, everybody's surprise. We have a little Tuesday bonus for you, a Rachel reporting segment about a hot new social network that apparently is already gone. Rachel, help me. Help me understand. Well, to be honest, I actually didn't go over to hive social because by the time that I started getting interested in it, it shut down. At least it shut down its servers, but only temporarily.

Yeah, this happened pretty quickly. Okay, so there was Hive Social, a social media platform. It was founded in 2019 by then 22-year-old Cassandra Pop. It was supposed to be sort of a, it like was, sounds like a combination of Twitter, Instagram, and MySpace. It was. And that's why I liked it. The MySpace, I'm a little young for MySpace.

I never got on it. But I know they had music. And that's kind of the reason, honestly, like, I wasn't trying to escape Twitter, but I was like, I never had the MySpace thing. they allow you to add music to your platform. So I was like, that's kind of cool. Which is, right, it seems like that was really popular. And I mean, it's, you know, listen, we're at a time.

We're not going to belabor it, but we're at a time when people are exploring options around social networks. And this one had gotten a little bit of buzz. It like wasn't just a timeline. I mean, it was a really nice design. You could sort of explore your feed by interests. You could be like, I'm into science. It was a little bit also. That had a Reddit factor, I think.

It did not use. any personalization algorithms. It was just a chronological feed, no monetization using ads. It would make money by unlocking music, right? Yeah. And it was like 99 cents if you wanted to have a second song. So that first song that you had was free.

And then if you wanted a third or a fourth, it would be 199, which I think is pretty reasonable considering just a few years ago, you know, we were paying like 99 cents for a song. If you think about how crazy that is, like now we're over on Spotify. But I remember seeing all the 10%. Taylor Swift drama happening got me thinking.

I was like, dang, I remember when I had to pay for Taylor Swift songs one at a time when I was younger. So I really like this idea. I also think I personally love being able to organize my TikToks, if I came and say TikTok on here. But I organized my TikToks into categories and how they're kind of like for you page kind of thing went and trending. Those were categorized. And I really like that kind of content.

I know Pinterest is also kind of like that. So another reason why I was excited. But I guess their team of three could not handle all the security issues that were happening. Yeah, it sounds like it had gained around 144,000 new installs between Friday, November 18th to Sunday, November 20th because of all of this kind of Mishigas on Twitter, people trying to find new places to go. I think Mastodon reported hitting a million over a million users now. Wow. The post news beta has had it. a huge backlog and waiting list.

And then all of these people apparently flocked to Hive and broke it. Berlin-based Security Collective, Zerforschung. You should say this. Why would I say that? How would I say that? I like it. No, you got it. You got it.

That was good. Anyway, fun fact, everyone, Rachel, speaks German. Published a piece with the headline, Warning, do not use Hive Social. And reported, quote, the issues we reported allow any attacker to to access all data, including private posts, private messages, shared media, and even deleted direct messages. This also includes private email addresses and phone numbers entered during login. Yikes.

DeFershung did not post all of the technical details. They said it was so serious that if they published them, it would be immediately exploited by malicious hackers and said after multiple communications, Hype Social had claimed to have fixed all the issues, but that was not the case. Hive said, no, we never said we fixed it. And then responded by at least for now, just taking down the entire service. Yep. And they said it's going to be temporary.

So if you still want to hop on it, hopefully that'll go up. Yeah, and hopefully they can bring on some people and stuff. I don't know. They wrote that, quote, fixing these issues will require temporarily turning off our service for a couple of days while we fix this for a better and safer experience.

I mean, good luck to them because it sounds kind of promising and it looks kind of fun. It's like almost one of those things where now that you know about it, now that I know about it and it's gone, I'm like, wait, that sounds fun. I want to do it. It sounds like it would be fun if I had a lot of friends on there. I feel like it's different from Reddit and the way. Same thing with Pinterest and I guess the same for TikTok, but a lot of social media platforms. I only like if I have friends on them. So obviously Facebook, which I don't use, to be honest with you very much. Same thing with Snapchat. But with Twitter even, I like knowing the people that I followed, like having the friends beforehand. that was my first integration onto Twitter

was following people from school and it wasn't until I got older where I started following people like politicians or major people in tech. What initially drew me to the platform wasn't like making friends on the internet, was having friends in real life and kind of like fostering a bigger relationship and this app kind of gives me that same feeling

where I feel like I'd want to have other people on the app that I knew in real life before jumping on the platform. It's not like Reddit or Tumblr would be a great example where I'd almost prefer not to know who's behind the use. your name. No, definitely. I think especially like music is really personal. I could see this one really relying on. I mean, they all rely on network effects at some level. Like, you have to have a

critical mass to make it interesting to you or at least personal, like have some connection. Like, my Be Real is still only. Same. Whatever, like eight people. Same. You would think that I would get bored of the same, the same dogs, kids, and laptop screens. Yeah. Every single day. But so far I haven't, really? I just started trying to use the TikTok's version of Be Real and I never check it. And I'm like, this is crazy because I, you guys kind of mentioned previously you and Jason about how no Instagram started using stories and obviously that wasn't a novel idea. But I do use Instagram stories now and like I said, I don't really use Snapchat that much. But I still use Be Real over TikTok's version of like their version of Be Real.

So I wonder if, I wonder if Hive is something, I guess, where people, like, I think a lot of networks are framing it as, like, people are jumping the boat and leaving Twitter and going to Hive. Or I'm kind of thinking that this is just like another social media app. People are kind of adding to their, adding to their home screen rather than like a saving platform. I think we're going to see. Tell me what you think about this. I just came up with this theory. So it's unformed. But like there are broadcast platforms and consumption platforms.

platforms. And I think even people who don't think of them as creators have different use cases. Like TikTok for me is just entertainment. I never even think about like I don't really follow anybody or anything on TikTok. I just know that I can go there and it will feed me a lot of cute animals. And that's all I care about. And so for me it's just entertainment. It's like TV. It's passive. But like something like be real is active in that I'm going to. contributing to it and I want to see what my friends are doing or even my very, very rare Facebook usage is literally just for the buy nothing group. Yeah. But that's, it's active. Like I don't consume, but so I wonder like as people try to develop social media alternatives or

even figuring out what their existing ones are, maybe that's the right bucket to put them in. Some are consumption and some are broadcasting. It's like where, which one is only, it's like social media, which one's leaning on the more social side versus which one's on the more media side, you know? Like I guess, you know, like it's the actual, like the socialness of social media is definitely, I don't want to say dying, but social media is becoming less social. That is the perfect punch up. That's exactly it. You're right. It's, is it social or is it media?

Yeah. I wonder if there's, like, I don't think there. I wonder if there's going to become like, when always, whatever you go and you go and you try to look at the market. For example, it's already doing this in gaming where like you can't look at like the video game market anymore is the video game market because there's so many different segments. of video games that like apps on your phone perform completely differently than somebody who does PC gaming versus somebody who's really interested in, you know, playing their Xbox. Like you can't put those in the same bucket. So I wonder if when you're looking at the markets in the future, like if you're going

to be looking at social apps or media apps and then also going forward, I think the less, I think the media apps are going to be the ones that are doing better because I think people are becoming way less social online. I think people are becoming more like they're way more consumers. and creators. I think so because the cost of the cost of contributing is high. And I don't mean the literal cost. I mean like it takes a lot of time.

It takes a lot of work. The social cost is high. Somebody's always yelling at you. Like it's not as fun as it used to be. I wonder if we were in that curve, like that part of that bell curve. It was like, anybody can do it. You have a phone in your pocket. And now we're getting into this other side where it's like, you know what?

In order to do it really, really well, there's so many like factors that. you need to have to create content in like a really useful way. Same thing going out to the beginning where like not everybody could afford a cell phone or had a cell phone. Like I remember when my mom first got like an iPhone, that was insane. Like that like made her her Facebook page a million times cooler. Like and now we're we're kind of like at the edge of like, okay, well, do you have time? Do you have like a, I always see people being like, oh, do you have like, I don't create content because I don't have like an aesthetic bedroom and it shows like teenage like people or like people in those school especially, you know?

I wonder. The like, the democracy, you know, we've talked about the creator economy is just like everybody is a creator. But increasingly like, just like with all things, there's stratification.

It's like some people are willing to or able, some people have the talent, aka they're watchable enough. It's like power law in real life. We were talking about this last week, I think. Like, not everybody is watchable or interesting or, you know,

fun to look at whatever that means in any different, case. So not everyone has the talent, not everyone has the time, not everyone has the inclination, and not everybody has the money for the stuff, like the gear that you need. And so you're seeing this like the cost is, and then there's like the mental health toll, like when people become really successful creators, they're like, this is burning me out and killing me. And so then they get like middlemen and it's just, um, corporatizing in a way that makes it more like TV. And then frankly, I'm starting to use social media more like TV. Yeah. I can see.

less than I create or more. I consume way more than I create. And I remember back to like back when my parents first son me get like a Facebook account and if you had a Facebook, probably posted on it. Like I never had friends that were like oh, I created an account and I never posted on it. Whereas now I have friends on TikTok where

almost everybody creates an account and never posts on it. It is very normal. And you would never have seen that, you know, like five, ten years ago. It's not like, oh, I have a Snapchat, but I never send anybody photos. That wasn't a thing. But now like, oh, I have a Twitter account and I'm just a passive viewer.

I think that Reddit's probably, I guess, one that has like withheld the test of time where I know a lot of people that made Reddit accounts and never used it. Because you just want to be like kind of standing behind and just watching like a car crash. It's like you kind of want you know it's bad, but you want to keep watching.

That feels like social media increasing. It's like it's getting worse. Yeah. Social media as just media I think is really, this is profound. We have hit on, we're like freaking thought leaders up in here. Like, we're hitting on a real trend.

This is a real thing. I love Reddit, though. I won't hear a word against it. I mean, I know there's some terrible stuff on Reddit, but Reddit is seriously one of the smartest places I ever go on a regular basis. Like, I cannot believe the depth of the conversations that happen in the comments. I mean, you know, on topics that don't incite people to, like, lose their damn minds. Yeah.

But I do think it's been a shame as people have talked about all these different alternatives for this and that and whatever. I'm like, you guys, the Reddit's right there. The Reddit's right there. The Reddit homepage is awesome. Yeah. Reddit is insane. The comments are really smart. I love it because it gives, you know,

when you go to like a Google, so it's like Google reviews or Yelp reviews. I always go to Google reviews. And I don't know if this is true, but if I see way more negativity on Yelp than I do on Google reviews. And that's because I think if you're mad, you're going to go straight to Yelp.

You're going to go to Yelp. But like, I see people, even positive, like, Google reviews. And I'm like, wouldn't it be nice to have Google reviews on everything in your life? That's, that's Reddit. You know, you could go and you look at people's, like, it's not just negativity.

unless you're on like the Yelp side of Reddit where people are there to spread, you know, like snark pages. Like you're not being nice. But I read the book, We Are the Nerds, which was probably like two or three weeks ago, like pretty recently. And it's like the history of Reddit super interesting about how they like are really thoughtful about what they do and do not take down. But if anybody's listening, I'm going to plug that book. It was really interesting. I'm going to write it down. I'm going to read it.

I have literal paper in front. to me. Yeah, I think it is an underestimated part of the ecosystem for sure. Yeah, definitely. Smart people. Smart people. All right, well, good luck to Hive. Um, it's going to be a hard road back. It's going to be a hard road back. We're rooting for you because, you know, a vibrant, competitive social media slash media ecosystem is good for everybody. But right now, that's a tough, that's a tough road. It's tough road back. I hope you guys fix everything and excited to try it out. Yep. All right. Thanks, Rachel. And I know you'll keep us posted if there's a hot new thing that the kids are doing that we have to know about. Of course. Of course. Thanks, Molly. See you next time.

All right, everybody. That is it for Tuesday. Tomorrow we've got another outstanding episode of Nexie unicorns. These interviews have all been so interesting. Then on Thursday, we're back with Sunny and Vinny for another crypto roundtable. And of course, we're going to have lawn for streaming. And producer Rachel, back for OK Boomer. Stay tuned.