This Week in Startups - Negative Venture Returns, GM Kneecaps Cruise, and Finix joins the TWiST500 | E2059

Episode Date: December 12, 2024

This Week in Startups is brought to you by… OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. TWiST listeners can get an extra 20% off any plan for your first 6 months at https://www.openphone.com/twist⁠ Vanta. Compliance and security shouldn't be a deal-breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. TWiST listeners can get $1,000 off for a limited time at https://www.vanta.com/twist CLA. Innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at https://www.CLAconnect.com/tech * Todays show: Alex Wilhelm joins Jason to discuss the reporting that Tiger Global's 2021-era fund is not only posting poor results, it's lagging peers from the same timeframe. Then, the pair also interview Suvir Wadhwa, founder and CEO of Flite, a former Launch accelerator company, and dug into the Cruise-GM news along with a peek at the next head of the FTC. * Timestamps: (0:00) Jason and Alex kick off the show (2:19) Tiger Global's investment strategy and performance (5:49) Challenges of quick capital deployment and market timing (10:13) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (11:15) Impact of losing key investors or advisors on startups (12:24) Public market trends affecting private investments (16:09) Market downturns' effects on startups and investors (20:05) Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist (21:16) Political influences on market and technology sectors (29:32) CLA - Get started with CLA's CPAs, consultants, and wealth advisors now at https://claconnect.com/tech (31:10) Trump administration's business policies and immigration (38:20) Changes in the FTC leadership and impacts on startups (41:40) Finix's addition to the TWiST500 (44:53) GM's scale-back on Cruise and future implications (51:25) Self-driving technology's impact on car ownership (52:39) Flite's Suvir Wadhwa joins the show (54:18) Flite's business model, AI benefits, and market reach * Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Mentioned on the show: Check out Flite: https://www.flite.city/ Check out the TWiST500: https://www.twist500.com/ Check out Tiger Global: https://www.tigerglobal.com/ Check out E1207: How Tiger Global is outpacing VC with fast, cheap capital ft. Founders Fund’s Everett Randle: https://www.youtube.com/watch?v=koDKxjHe_Kk * Follow Suvir: X: https://x.com/suvirwadhwa LinkedIn: https://www.linkedin.com/in/suvirwadhwa/ * Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (10:13) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (20:05) Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist (29:32) CLA - Get started with CLA's CPAs, consultants, and wealth advisors now at https://claconnect.com/tech * Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups Substack: https://twistartups.substack.com * Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

A portion of it is the regime change in Washington, and a portion of it is there's a lot of buyers. And there's a lot of buyers. They set a new top. They drive prices up. And so if you're like Tiger, and you offer, you compete to beat the entire venture community to put money into a SaaS company before it goes public. Let's say it was Asana or HubSpot. I think those were public already. But that was the kind of businesses they were interested in, the Zendesk, SaaS kind of companies. If they were pursuing that and they wanted to beat everybody at the table, those people have to deploy capital as well. So they keep top ticking the market. They keep pushing it up. Their bid is going to be higher than everybody else is because they want to win. They want it to deploy the capital. Remember, they're getting 1.5 percent, 2 and a half percent. Who knows what their fees are on $12 billion dollars? That's so much money. A quarter billion dollars a year in fees. I mean, if it was 1 percent, it would be $125 million a year, a year. This week in startups is brought to you by Open Phone.

Create business phone numbers for you and your team that work through an app on your smartphone or desktop. Twist listeners can get an extra 20% off any plan for your first six months at openphone.com slash twist. Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a sock to report fast. Twist listeners can get $1,000 off for limited time at Vanta.com slash. twist. And CLA, innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at cLA connect.com slash tech. Hey, everybody. Welcome to This Weekendt, I'm your host, Jason Callicanis with my co-host, Alex Wilhelm. We've got a pack show for you today, tons of news and a great guest. What's on the program today, Alex?

So today on the show, we have Tiger Global getting defanged and all the data that's behind that. We're going to talk to the founder and CEO of a company called Flight that we're very excited about. Then we're going to add Phoenix to the Twist 500. Then GM kind of gives up on its Robotaxy Dreams. And if we have time, if Jason and I don't yap too much along the way, the new head of the FTC and what he promised Trump. So it's going to be an absolutely packed show. All right. Let's get to our first story, Alex.

Yeah. So we're going to talk about a name that has not shown up on this show in a while, but used to be something we couldn't get away from. Tiger Global. Jason, one of the best parts of pension funds attached to, you know, states like California is that they will often disclose data on how their investments are performing. They have to legally, right? Required or not, we get the data. And what that means is you and I can see inside of funds that we might not otherwise get data from. So the latest is that Cal Sturs, which is the California's state teachers retirement system, has data on Tiger Global's 2012-2001 era 12.7 billion dollar fund and a few other funds that are a second. Let that sink in for a second, a $12.7 billion venture fund. 12.7 billion dollar venture fund. The, the perfect size of a venture fund was like 400 million, remember? Yep. And that was considered the ideal size. Fred Wilson talked about it. The first round team talked about it. That's 300.

or 400 of these 400 or 500 million, $250 million funds. And they deployed it really quickly. So, you know, we think a lot about venture capital funds having, I don't know, a 10 or 11 year time frame. Jason, what would be the average length of investing you would do for a fund? So there is, you deploy capital typically over three to four years for a fund. Yep. Then that's when you kind of plant the seeds and then you harvest in the second two-thirds of the fund. So let's say you spent three or four years planting, and then you're going to spend another,

you know, call it eight years. These funds typically last 12 to 15 years of 15. They kind of close out. They buy out the final positions for a dollar and everybody writes it off and you're done. They're timed as 10. They typically have extensions. But yeah, Tiger, because there was so much money flowing into funds and there were so many great deals and founders were raising so much money and founders were being offered so much

money and the market was ripping and free money was everywhere, Tiger decided to do an experiment, which was to deploy capital as quickly as possible and basically just take the entire cohort that had reached Series B or C in 2020, 2020, 2021, 2022 timeframe. And we saw a lot of our portfolio companies get offers to raise $50 million, $100 million from not just Tiger, but KOTU and a number of other firms. Sure. decided to write $50 million, $100 million checks, not just similar to what Masayoshi San did with his fund as well. Yes.

So how did that all work out? Well, we have some data now. Now, Jason, there is the J-curve that does come into play here. So you never expect a private investment pool to have very positive returns at the beginning. You're talking about fees. Some things are going to go sideways immediately. And so on the back half of a fund's time frame, it tends to get better. That said, when we compare Tiger Global's PIP 15, its 2021 fund, it's not doing well.

So recently, Calsters marked its investment from 93 to 65 million. It's a net IRA of negative 15%, which I believe makes it a bottom decile fund. Four years in, Jason, is enough time, I think, to say that if your IRA is poor compared to your peers, something's wrong and we're not looking too soon to the data, is my read? This data is very early. So in fairness to them, you know, looking at it, they are literally in where the J-Curve begins. If they deployed this in 2021, is that what they're saying with this fund? Yeah.

Is that it was deployed in 2020. And we're sitting here, it's about to be 2025. So it's a three or four-year fund. In other words, they just finished that deployment cycle or how it would typically run. But they did 315 startups in 2021 alone. So that's a pretty consolidated moment in time. And what you want because of time dispersion when you invest is if you were investing over, say, I don't know, 36 or 32 or 48 months, right, four years, you might peak in, you know, the market might peak in month 24, then come down and be, you know, the valuations might be half that for the next 24 months. Yes.

So blended, you know, you might have been slightly up paying above market by 25%, but not 100% or 50% if you catch my drip. It's effectively dollar cost averaging for venture capital investments. Literally dollar cost averaging for venture capital, yes. And so, and then also it increases your chances of hitting an outlier because there are a certain number of outliers created every year, which means every year a certain number of them get product market fit. Every year, certain ones get what we would call market pull in the industry. Market pull is when people, are just calling up saying, do you have this product? Can I get this product? Throwing money at you, signing up without you doing any marketing. Facebook, Uber, Tesla's, you know, any great product.

Airbnb had this viral word of mouth. People just sought out the product without them having to do it. And that's MarketPull. Hopefully they were looking at companies with MarketPull. I think the criticism was, how thoughtful can you be if you're investing in a company a day, including on the weekends? Yes. And how much diligence can you do?

and how big does your team need to be? We are a team here of, I think, 12 investment executives. We do 100 investments a year, and we've run programs like Founding University of Launch Accelerator, which are like Y Combinator tech stars, and then even a pre-accelerator, a startup school, if you will. So, you know, we are an at-scale investor, but I think they had the same number of people or less

doing three times a number of deals in a year, and these are more complicated deals. But what they said was, hey, if you're at 10, 20, 30, 40, 50 million in ARR, we'll just give you credit for a valuation that will be coming in two years and deploy the capital. and I guess that's the challenge everybody saw in this approach. We all saw it there, but I will tell you, it only takes one. So if one of these turns out to be HubSpot or one of these turns out to be a Tesla or an Uber or an Airbnb, and they invested in, you know, the one to $10 billion range, you know, there could be a hundred

bagger in there. There could be a 20 bagger in there. And, you know, maybe that makes up for a lot of mistakes. We'll see. It's true. I do want to go back to episode 1207 from Twist because you were talking to founder funds Everett Randall at the time. And you spent a lot of time talking about Tiger. But the quote from the show that really stuck with me was, if there's no adult in the room, what happens when things go wrong?

And I wonder what fraction of Tiger's investments from this fund, from the 2021 period when it deployed it, that don't need help. Because you talked about staff says, I doubt their staff to help even a third of those companies. And if two things are- Well, here's what I heard. A lot of people who are at peak ZERP funds have left. Now, why would you leave? Well, your track record for that fund that you'll have to live with forever would be based upon those investments. And if those investments were all at five times the proper valuation, and you knew there were a lot of duds, and you know you would be fighting tooth and nail for the next eight years to finish that fund, and your reward for doing so would be you would return one X. You would

just get everybody their money back, or you would return 1.5x. Well, you know, then you got the carry is only that small amount, right? It's not a 3x fund or 4x fund. So a lot of people who felt their funds were underwater, especially if you were like a rank and file person, it's kind of like being on a basketball team and like you lose your All-Star, you know, like their knee blows out and then like somebody else retires, whatever,

and you can't win. You're like, you know what? I'm not resigning with this team. I'm going to get traded. I'm going to go work for somebody else. And so a lot of people, I think, and I don't know specifically with Tiger if this happened, but I think what I did here was a lot of people were like,

Yeah, you know, not my problem now. I'm out. Founders know that every missed call is a missed opportunity. Customers don't want to wait. They will call someone else if you don't pick up. But if you use open phone, you're never going to miss another customer call. And guess what? It's super affordable and easy to use. People used to spend tens of thousands, hundreds of thousands of dollars putting in a corporate phone system. And now for just $15 a month, open phone will give you a business phone line and complete control of your destiny. Want to know who's answering customer calls and how they were handled? Open phone can do incredible things like sync with HubSpot and give you AI powered call summaries. Automated responses to ensure you don't miss a single ring. Well,

that's all built into open phone. And if you've got an existing phone number, they will let you port it over at no extra charge. Get 20% off your first six months. What an amazing offer at openphone.com slash twist. That's O-P-E-H-O-N-E dot com slash twist for 20% off for six months. If you are the founder of that company, as you point out, what do you do? Well, people need to say, like, oh, my God, you lost your consuliary, you lost your priest, you lost your rabbi at this organization. So then who do you talk to? Yeah. Now there's somebody else there who's a custodian of this, and they didn't do the initial investment in the hike you went on through the headlands in San Francisco for three hours and you hung out of Burning Man or in Ibitha and you went crazy and had a great time.

And now you built all that fabric. Yeah. And it's gone. And so now you have to start over. And this happens when your company gets acquired as well. You know, you could lose the person at AOL or Microsoft who bought your company. Some mid-level manager comes in. It's not that project like Cruz, which we'll talk about in a moment.

And they're saying, you know what, this isn't my problem. I'm going to cut this thing. There's no way for me to win. I'm not going to clean up somebody else's mistake. I've been in a board meeting when there was an investor who was a custodian, and they always dialed in, and then they always did not listen. And they would get called on occasionally, and we have to back up and explain to them why. So I think if you lose your priest, if you lose your consangliary, you really are a drift,

and that's not what you want when you are in trouble. Now, how did this happen? Well, Jason, I think that there's some data that shows off just kind of what's going on. And you and I were talking about this chart. So this shows the Wisdom Tree Cloud Computing Index. What's that? It's just the Bessemer Cloud Index in index fund form. And it tracks software companies more or less, that would in public.

We also have the NASDAQ here. And I put a little time box around the period in which we had the absolute peak of enthusiasm towards late-tales-201. And then how rapidly within 69 months, everything changed. And so I guess what Tiger ended up doing here was really effectively and efficiently and aggressively buying the top. And that will happen to everybody. if you have a period of time, but it just looks so painful in retrospect. I mean, they, they grade at the top, you know.

It's in a way what's happening with Bitcoin right now. If you go all in on a space, and we're talking about Mr. MSTR micro strategies, Michael Saylor, there's another company, what it's called, Lava, Mama, I can't remember. Mara. Mara. They now are buying, I don't know if it's billions or hundreds of millions in Bitcoin. they're, I think, responsible for this top in Bitcoin.

A portion of it is the regime change in Washington, and a portion of it is there's a lot of buyers. And there's a lot of buyers, they set a new top, they drive prices up. And so if you're like Tiger and you offer, you compete to beat the entire venture community to put money into a SaaS company before it goes public, let's say it was Asana or HubSpot.

I think those were public already. But, you know, that was the kind of businesses they were interested in, the Zendesk, SaaS, kind of company, sales force, next sales force, next hub spot, next Asana, whatever. If they were pursuing that and they wanted to beat everybody at the table, those people have to deploy capital as well. So they keep top ticking the market. They keep pushing it up. Their bid is going to be higher than everybody else is because they want to win. They want to deploy the capital. Remember, they're getting 1.5%, 2.5%. Who knows what their fees are on $12 billion. That's so much money. A quarter billion dollars a year in fees. I mean, if it was

1% it would be $125 million a year, a year. And I'm assuming it was two, but let's say it was one and a half two. You mean, you're talking about a lot of fees, 10% of that fund, 20% of that fund will go to fees over 10 years, depending on how their fee structure, and people could have negotiated that, but at the top of the market, people don't sweat the small stuff. Right. So now for founders who took that money is the question. And I had to mentor a lot of founders. And I said, listen, if you're going to go with best price, least rights, just know when this, all blows up, we're going to have to clean it all up. So make sure you have a lot of runway. You know what? We had a lot of firms take the best priced, highest price per shares,

at the lowest rights, board observer seat, one board seat, not two, that kind of thing. And so now I've been spending the last two or three years with those companies that, let's just come up with a number. They're priced at a billion, and raised 100 billion. And then the market and headwind started and people started laying people off. Your number of people who have seats for your SaaS product goes down. So you're working really hard. You cut half your staff and you bust your asset, let's say, Acme SaaS company. Sure.

And this year's revenues 10% less than last years. Then next year, you're at the same level as last year, but still 10% less than two years ago. So your best day when you made $50 million was two years ago, let's say $25 million, two years ago. Then you went down to making, you know, $21 million. then you went down to 18, now you're at 18 again. You've got to bill back up. So it can be a little depressing, not only to be an LP in these funds, but you're diversified. It can be super depressing to be a GP in this fund because you don't know if you're ever going to get a return.

And then if you're a founder of one of these companies, you've got to run a company that's sideways for four freaking years to get back to growth because you were going for it. they told you to hire another 50 salespeople, to hire another 100 developers, to go international. And then maybe the market wasn't there. Your product wasn't tight enough. You went too fast. Car flips out. And then we go, we have to basically pull you back down to a reasonable amount of spending to try to figure this all out.

I am on the board of companies, and I have been involved in meeting with companies in this same position. You know what happens next? The founder leaves. Because founders like, I've already full invested. Yeah. We should talk about founder vesting at some point and people that want to change it to avoid having early founder exits leave a lot of dead cap table at C stage companies. But that's for another day.

The thing that I took away from this is no one, and I'm glad you brought up Masayushi earlier, no one has cracked a foolproof method for deploying essentially infinite capital in the private markets at scale quickly and not losing their shirt at the later stages. I do think accelerators tend to do pretty well, but I just don't think Series C or D plus you can do it and make money. and I guess now we're just watching Tiger's LPs sit and kind of cry quietly in the corner until all this shakes out. But I bet you they'll go back to at least one X by the end. Yeah, I mean, that's, this is why people like venture as a cohort. If you hit something, you know, you could get back in the black again. You could, you know, get lucky, you know, hit some huge pot and you're back in the game, right? So a way to look at this is if you were allocating to venture, you know,

15% of your portfolio, 20% of your portfolio, 10% of your portfolio is a major LP, you know that over time, you know, you've got, let's say 20 venture, let's say 10 venture funds you work with, and they come back to you every two or three years with a new fund. So, you know, over 10 years, you're in 40 funds. Maybe they got a little frisky. They were 50 funds. Each fund represents 2% of your return. So you could have 10 funds, not return, you know, but half. You know, and then the top quartile return 5x. And you blend out to beating them. market, you know, and tripling your money over 10 years, hopefully, as opposed to just doubling your money as you might in the stock market in the same period of time. We got a question from the chat,

LinkedIn, from LinkedIn, Ars and Lee, asked, which are your expectation, guys, on valuation decline from 2021 to 2025? Some of these cohort will try to make IPR or MNA next year, so I wonder how much equity will be destroyed in the upcoming year, your thoughts. Any thoughts on that? Yeah, well, the equity is already destroyed. So if you go public at a lower price, that's not the equity being destroyed in that moment. That's just realizing what it has been worth. So I wouldn't blame the exit point as the equity or value destruction. I don't want to get ahead of my skis, but there has been in the last month or two an appreciation in public revenue multiples for software companies. It's not huge. It's very encouraging. If that keeps up, Jason, even another one X, I think we could see a

lot of liquidity down a lot because that's going to make a lot of things easier to do. I'm just not confident in how the economy is going to play out next year to make a real projection. You? I'm super confident that the Trump administration and the group of people around them want to see M&A come back and be vibrant and they want to see regulations go down. And they're putting people in there who are pro business, pro M&A, pro-vibrant markets. And so, yeah, we need more companies going public and we need more M&A. So let the games begin, I think.

Literally next year is going to be like a Starburst pistol for M&A teams at all these giant companies who are going to be able to call somebody in Washington who they might know. Or, you know, they've been at Marlago the last month or two and they've been hanging out there. I saw a report Mark Andreessen said he spent half his time in Mara Lago the last month. Did you see that report? Yeah. This is why I call it the Musk, A16Z administration. Founders, do you want to sell to bigger customers? I know you do. You got to get that ACV trending up. And you want to push your turn down, right? Sounds good. But to sell to those big buyers, you need to clear all of these compliance checks. You know that. That means you got to have things like SOC2 sorted out. What's SOC2? It's a standard and ensures that companies keep their customer data safe. And if you aren't SOC2 compliant, you can kiss those big deals goodbye. You're not going to land the lighthouse customers. You're not going to be able to be able to operate at the highest end of the market, but Vanta makes it really easy for you.

To get and renew your SOC2 compliance, on average, Vanta customers are compliant in just two to four weeks. It can take months without Vanta, and they automate compliance for GDPR, HIPAA, and more. So you can sell to bigger customers in whatever markup your startup is going after. Vanta's going to save you hundreds of hours of work and up to 85% on compliance costs. Stop slowing your sales, team down, and use Vanta. get $1,000 off at vanta.com slash twist. That's vanta.com slash twist for $1,000 off your sock, too. Well, I mean, it's everybody administration then because Keith Rabeau, Jacob, his husband, his partner, you know, everybody's down there.

Even the people like Aaron Levy, who, you know, was a vocal Kamala, surrogate, supporter, whatever he was, a donor. And Pinkas, who, you know, legendary Democratic fundraiser for Obama, Hillary, and even Biden, they've all flipped now. They're like, you know what? We're going to split this team to go super pro M&A. So I expect the market and I expect MNA IPOs to rip in the next four years. Doesn't mean we won't have tariffs or inflation or other issues. But I don't think M&A is going to be the issue anymore. And so all this backlog, if you didn't die, if you made it, you just have to, what I was telling people is make it to 25 alive,

which I heard was like the slogan in Hollywood as well. make it to 25 alive and a lot of options are going to options are going to open up and the option is going to be if you have a $10.50 million software business, you're going to have Mark Bennyoff.

Hello? You're going to have Salesforce coming HubSpot. Anybody with $100 billion plus market cap is going to come knocking. And that's going to include Uber, Airbnb, looking to expand their businesses. You're that Expedio rumor previously. DoorDash, Amazon.

They're all going to be. And Andy Jassy is going to be like, hello, anybody home? Oh, Whole Foods? Yeah, we'll buy that. Remember when they bought Whole Foods for 10 billion? You'll see a lot of these $10 billion little pickups. So it's going to be great for business. So the next FTC leadership class is coming into view. Big news, Andrew Ferguson will be the next chairman. He's a current commissioner on the FTC. And Trump said over on Truth Social that Ferguson has, and I quote, a proven record of standing up to big tech censorship and protecting freedom of speech in our

great country. In terms of how I think about people, this guy's going to be very progressive. business. He voted against banning non-competes recently, and he voted against the bill that made it easier, sorry, the bill, the FTC action that made it easier to cancel subscriptions. So if you're a Comcast, great. That's going to be lovely. But we also got our hands on his pitch to Trump about what he will do as chairman of the FTCs. Where did this come from? It got leaked or they released it? Well, leaked or released is an interesting question that I don't think I'm qualified to answer. But Well, we've both seen that many times in my journalism days where you get a leak from like inside of Motorola, somebody would give us information about their next phone. It was a leak. Yes. I don't know if this was a leak or a leak, but Punch Bowl got it and everyone's been taking a look at it. So there's a couple of things here that I think you're going to absolutely love. He mentions here how he wants to end Lena Kahn's war on M&A. Fantastic. That's exactly what you're talking about. Also ending the FTC's attempt to become an AI regulator. That struck me is pretty interesting.

But then this is why I get a little curious about what big tech means. Because you said, you know, anyone over $100 billion next year is going to be on the phone looking to add incremental revenue, talking acquisitions. Absolutely. But here he says that he wants to focus antitrust enforcement against big tech monopolies, especially those companies engaged in, quote, unlawful censorship. So what does big tech mean? I don't know if anyone knows. I mean, what he's referring to there is Facebook. and YouTube specifically and Twitter back in the day, canceling Trump's accounts. I'll just

translated for you. This is a document for Trump, right? This is a pitch to Trump for his services. What does Trump remember? After January 6th, that horrible day in American history, Trump had his accounts suspended on Facebook, YouTube, Twitter. And I don't know if anywhere else. I don't know what else was like a major platform at the time four years ago. He was basically ghosted like Milo Yianopoulos or you know pick a person Alex Jones they just boop gone which is a private company's right to do

the Republicans have twisted this a bit where they're like you have the right to do it except if you do it so putting the hypocrisy aside that you know those tiny business making cakes in you know whatever state in the south

you know doesn't have has the right to turn down gay customers Do you think that's that poor in? Do you think that's a civil rights penalty? Or do you think that's respecting a business owner's right to do, to work with the customers they want? We can have this debate all day long. Sure.

What people have come to. This is their justification in their minds. Okay. Because you're probably saying, hey, is it's hypocrisy? Their justification is at a certain scale, these sites are so powerful that to be removed from them, you are essentially being removed from the public square. So they want Facebook. YouTube and people at scale, let's say over a billion users, over 500 million users, whatever it is,

you have to justify or be transparent about why somebody is removed and have a process for them to be put back on platforms, appeal, etc., which you remember, Alex, Zuckerberg, who is pretty cowardice in this, he's like, yeah, we're banning Trump, then he's like, I regretted, Trump's a badass, and then in between he hired a group of like academics to create a board of people who would make these decisions for Facebook and then they think they disbanded it. Or they just ignored it a lot. I remember they'd be like, you shouldn't do this. And Facebook was like, eh, we want to. By the way, on the whole Aaron Levy and Zuckerberg changing their tune, they're just afraid of retribution, right?

Like this is political fear to a large degree. I mean, okay, that would be a cynical take, sure. We could have that take. I think the other take is, which would be mine. My personal belief is, if your candidate doesn't win, you should support the other candidate and push them towards their better angels and what they can do that you believe isn't the best interests of Americans. That's the approach I'm taking, which is the same approach I took last time. So I think Zuckerberg, you know, some people might say he's really scared that he's going to get broken up.

and therefore, because of what he did to Trump, there's an argument there. The J.D. Vances of the world have been pretty hardcore that these things need to be broken up. They have too much power. And they determine an election. And so, you know, they do think he's probably nervous about that. Aaron Levy running a SaaS company, I don't think he's nervous about that. I think he probably thinks it's cool that smart Silicon Valley people and a former venture capitalists are venture, you know, the vice president and that they're going to have some influence here as opposed to career politicians. I guess I do have a cynical take because I've been watching things, I think is the way I put it. But I think you raise some good points. And I want to add a little bit more from what Ferguson said in this document. By the way, I would think you're right, just to make that summary, you're probably right, Zuckerberg is scared.

And then I think the rest of the people, Mark Pinkis, who now is saying, hey, listen, I support this and this or me. I support these two or three things. I may not be like a Trump guy or a MAGA guy. I'm a moderate. But I do like these two or three proposals. So that's what's happening now. I think this myself or, you know, someone like Aaron Levy, you'll see us cherry picking. These are the things that I think Trump could do in the Trump administration and J.D. could do that would be positive for business, the world, humanity.

The market is pricing in some cynicism. Like, shout out to Tesla, but I don't think every percent of appreciation since the election is predicated on changes to its business fundamentals. The lack of regulation is going to be, is the big, you know, the people who are in highly regulated businesses, self- driving, finance, you mentioned before subscriptions. If you were in one of those businesses, especially finance, you know, it's going to be gangbusters now. Like, you know, although Trump has, he does, he vacillates between the populist comments and the thing.

So there's, you know, as people have said, and I'm not the first to point this out, there's something for everyone when he describes his position. And I'll give an example of it. He has publicly come out and said things about like, predatory. credit card prices and that they shouldn't be allowed. And then he's saying, we're going to have less regulation. We can get rid of all regulation. Finance companies are going to be able to do great. So somewhere between these two is going to be the reality. All right, everybody, welcome back to the program. Stephen Estes is with us again. He's a principal at CLA. They're a professional

services provider. They specialize in CPA, tax consulting, and wealth advisory. His areas of expertise lie in VC-backed startups, VC funds, high-growth. startups with complex tax issues in multi-state and international filings. Welcome back to the program, Stephen. Hey, thanks, Jason. Appreciate it. When you look at these growth periods, right? When startups start rapidly growing, how do they screw it up? First and foremost, the sales tax. There was a big shake up in that about four years ago. It kind of opened the floodgates to states really being able to force small companies to collect and remit sales tax in a lot of different states. When we had the pandemic hit and the rise of remote work, that really intensified that as having employees in various

states creates the requirement to collect and remit to sales and customers in that state. So that was huge. And then secondly, I think really just like how to handle the issuance of equity key employees. It amazes me that founders don't know more about various restricted stock awards and stock option plans that are out there. SAFs have been a godsend when it comes to keeping 409 A values low for early stage companies. But a lot of founders don't have a clue when it comes to how like a priced round can negatively impact your ability to bring on those critical hires. because it really massively increases the tax liabilities that come with the receipt of equity in those companies. All right. You need a trusted advisor. Taxes accounting. You don't want to play games of this stuff. Get it right. Get a great partner like CLA. Go to CLAConnect.com slash tech and let them know. Your boy,

Jake Al sent you. Once again, CLA connect.com slash tech. We're going to deport 15 million people. You're xenophobic. You want everybody dragged out of the country. You all say that at one rally. And then I'll say, you know, hey, and J.D. will come out and say, you know, we're going to start with 100,000, 500,000 known felon, criminals who've attacked somebody in the United States,

we're going to find them and get rid of them, probably somewhere between the two, right? So you can pick where you want to interpret the bombastic,

colorful things he says, and then we'll see what he actually does. I think that's a very illustrative set of examples because in one, you have things that are diametrically opposed.

For example, capping credit card rates at 10%. And, on the other hand, go wild to the fintech or in the financial sector. On the immigration, point, both of those options are pointing in the same direction. So I think there it's much easier

to say, yeah, somewhere in the middle. When it comes to things that are diametrically opposed, I'm just curious. Now, we'll find out. So Ferguson, back to him. He said in his pitch to Trump that he wants to quote, pursue structural and behavioral legal remedies under the antitrust laws and the FTC Act to make sure large platforms treat all Americans fairly and to prevent them from using their market power to box out new entrance and stymie innovation. How do you? classically what the FTC does. Without regulation. Like, I mean, I, I struggled.

Like, this document that I read Jason just goes back and forth on so many things. He said he wants to end Lena Kahn's politically motivated investigations, right under the bullet point that said, investigate and prosecute collusion on DEI. I mean, it's a job, it's a job application. So. But how can you not care about your own intellectual, like, like, I don't know. Are we talking about politicians here? or we're talking about ethics professors. I think we're talking about politicians.

I'm talking about being a human. If I said to you, Jason, we're going to end. You have a very high moral ethical bar, Alex. I know this. And you are a man of logic. What you have to learn is politicians' number one jobs and people who work in politics, the number one job is to stay in power.

And the way you stay in power is being flexible intellectually and being able to say both things at the same time and hold space. I'm being for cautious here. You have to hold space for, as you called it, diametrically opposed things

or things, you know, the level of cognitive dissonance, a person like yourself who is logical, who loves numbers and facts and truth, the challenge you'll have trying to understand

what politicians are doing is they're not looking at the facts or the logic or looking for hypocrisy or things that are, you know, would, they don't have cognitive dissonance. They just say everything.

And then they figure out what they're going to do later. And I think that's what it is. After you get the job, he's going to figure out what the positions are. It's going to be choose your own adventure next year then. Okay. Choose your own adventure,

bending towards much less regulation, smaller government, less taxes. So if you're in that group of people, and it's important to kind of distance yourself from the personalities involved, because I feel like there's a lot of baggage. And for good reason,

scar tissue baggage, whatever you want to call it. I like to divorce myself for a minute and just say if any presidential candidate were doing this, it was Bill Clinton, and he said, we're going to have less government, we're going to lower regulations, and we're going to lower your taxes. I'd be like, high five, thank you, voting for you. Yeah, I just, I can't do away with things like, you know, in terms to end birthright citizenship, which might have impacted my mom's citizenship, satisfied if I think about my family tree. And so to me, like, I cannot look at my family's income statement and think to myself,

you know what, for 3% more net income per year for my family, I'm going to give up X, Y, and Z. And this is your personal thing. I'm not trying to make a moral point, but I'm perplexed occasionally by what people are willing to let go for a little bit less friction. But sorry, I've let us off. I think it's actually, no, no. It's, I think it's within our mandate, you know, sure. With immigration, there is a really important case to be made. I did ask the president about this, about green cards for people who get degrees. he gets that issue. People around him get that issue. So I think what we're going to see is when, yeah, when all the fireworks stop and the bomb stop going off, you're going to see it immigration settle into less people crossing the border illegally. We all want that. People being deported who are just known felons, like you just beat up a cop. You're going home. That's it. We're not, you know, one strike you're out kind of situation. No leniency, no like probation just out of the country.

I don't know the legality of all that. I'll be totally honest of how that would occur. Sure. But, and if there's going to be like due process, do people who've come here illegally get due process? How much due process do they get? Did they get due process once they're back in their home country? Who knows?

And then you're going to see talent get exceptions. And people who invests get exceptions. Trump loves a good deal. For me, it's very simple. You come here with a degree we need and a service we need. You get a couple of extra points. you invest money here, you get a couple extra points. And we just sweep the most talented entrepreneurial, technical, talented, rich people

from around the world and get them here. And then, yeah, just a little less people at the border sounds like a pretty good idea. 0.6% population growth, which is whatever it is, 3 million. I think it was like, it looks like 2 million people a year across the border or came here, which was like roughly double what it normally is. So we're kind of in spitting distance of what everybody considered normal before. war. Yeah. Things change. But also, like, you know, going back to the point you made about trying to figure out what the hell Trump's going to do, the high school immigration point that he made to you

on all in, you and I've talked about us a couple times. But like, whenever I go back to the record from his first administration, they made high school immigration harder to do. So maybe this time it'll be entirely different. But I think Stephen Miller still going to run anyways. One thing I do know, Jason, is that. So I think that's what's in play right now. Yeah. Who gets to decide, who, does Trump listen to, you know, and once he's listened to everybody, does he go with the Trump 1.0 administration or the Trump 2.0 administration? Does he go, you know, with people who are the business people, who are the billionaire crowd, who are the successful entrepreneurs who have created millions, collectively jobs, tens of thousands of jobs each, or does he go with the career

politicians who got him in the first time? I got to ask, Jason, would you? On the business folks. Yeah, yeah. But like, I mean, talking about Mark Andrews and talking about your friends. He's also not, by the way, running again. Keep that in mind. He's not running again. This is a legacy moment for him. I know.

But like, how many people in Silicon Valley do you think would be okay with deleting democracy and putting the six richest people from tech in charge? Because that kind of feels like. Well, I mean, you know, Trump's in charge. And he makes his own decisions, as we've seen. You know, he's fired two-thirds of the people in the first administration. So he's pretty clearly in charge. charge, I'll be honest. I think when you see him in office, he's going to make his own decisions.

Absolutely. He's going to make his own decisions. And I think everybody around him kind of knows that. I hope so. But one decision he made, the other part of our FTC story, is that Mark Meader, N-E-A-D-O-R is being added as well to the FTC, giving the Republicans a majority. One data point here on him is that while he worked for Senator Lee, he drafted a bill that would have forced the breakup of Google's ad tech business. I think that was back in 2022. So anyways, a mixed bag when it comes to the FTC, certainly a change in Lena Con. We'll see the details when they come out. It's going to be 10 times better than Lena Con for startups and entrepreneurship.

Perfect segue. My question, Jason, was very simple. Startups that might, let's say, not see a path to an IPO. If you wanted to get your company ready for this starter gun M&A moment, what do you recommend? Oh, what a good question. I always tell people partnerships lead to purchases. Partnerships lead to purchases. Great companies are bought, not sold.

If you go and you say, I want to go meet everybody to do M&A, the chance of getting bought are 5% or less. If your, I don't know, Whole Foods or your Instacart, and you're working with Walmart or Amazon, and you've got some deal where you could order certain items from Whole Foods on Amazon, let's say. Like say, their house brands were made available. Okay, yeah, now we made a deal.

somebody in the organization who wanted certain hopeful brands on you know, made a deal with somebody who is responsible for that. And then the CEOs find out about it and then I thought, that's interesting. And then they see each other at Sun Valley

at the Allen Company conference or they see themselves at the Allens Summit or they see themselves at some, you know, Davos. And they're like, oh, yeah, I know,

yeah, John and Susie are working on that. Yeah, that's great. It has that business conference, high margin. Yeah, I was wondering,

maybe have you thought about like us, maybe helping you, like maybe put more skews on. We could run a test, like maybe in Austin, you or of your home bases. And then all of a sudden, the purchase happens, right? Yeah. And so you see that over and over and over again. It happened to be the Weblogs Inc.

AOL wanted to invest. Bezos and Inreason were going to be the two investors. They each offered $250K at a $5 million valuation. We were going to sell 10% of the company for $500,000. It was going to be Mark Andreessen for $250 and Bezos for $250. And met with both of them. they both committed, and then AOL came in and said, we want to buy the company, uh, or we want to invest in the company. Can we put a million in next to them and we'll take

20%? And I was like, well, I don't know if I want to dilute that much. Like, hey, we want to buy 49%. And we want to use your software, you know, and it just, the conversation eventually was like Ted Leonis has called me, my Greek brother, uh, we're going to buy your company. You're going to become very rich for a 30 year old man. And, uh, you're going to learn a lot here. And then you're going to go off to do even better companies after this. We'll take care of your brands, boom, and then $30 million sale happens. And so that's it. It's just partnerships, investment, collaborations lead to getting to know each other, lead to the acquisition. Yeah. Every single time, it happens that way. This, this reminds me a little bit, and I'm

going to try to make this PC, but like, essentially, if you're out and about in society, you're in a run club, spend time at a cafe, go to live events, the chance of meeting someone to date goes up dramatically. If you're at home by yourself, so go out there. So go out there, and make some connections, and then hopefully we can talk about your M&A deal founders on the show in 2025. Awesome. All right. Now, Jason, news. We added a really killer company to the Twos 500 today.

I'm very excited about this. It's called Phinex. Phoenix helps businesses accept payments by giving them tools to build their own payment systems directly into their apps and services. And I think this company is one of note for the next five or 10 years because the digital payment space is both so large and still growing. in so quickly. So Statista estimates that the total value, transaction value, of digital payments is going to be about $17, $18 trillion this year and grow about 16% per year through 2009.

So that's an enormous tan. Can't do much better than that. And critically, there are a lot of great companies in the digital payment space. We talk about Stripe on the show at what, at least once a week. And Stripe did grow its payment processing volume to about a trillion dollars last you're up about 25%, but the market is so big, fragmented with so many different needs that I don't think any single company is going to actually win the whole thing. So, Phoenix, and the reason why I like it, is that it started life as a kind of a payments infra company versus a payment processor. So I wanted to go into your company, help you build payments into your own software stack,

keep your costs low, and essentially be in the background. But the company, as of 2023, also became a payments provider. So now it does kind of both sides of the equation. Growth has been fantastic up, I think, Forex in the last year as of October, and they raised $75 million more. I just can't say enough cool things about this company. I think it's really, really whip smart, well positioned,

and it's grown really fast. I love it. So if you want to have payments, but not use Stripe, you would use Phoenix. Yeah. And Finnex lets you have your own payments inside of, so you can accept credit cards,

you can accept PayPal, whatever it is, buy now, pay later. Instead of using Stripe or these other models, you would not have to do that, but you'd still have to pay fees to the credit card companies, I assume. Yes. So what's the advantage of this?

Why not just use Stripe? Oh my God, Stripe works. It's lovely. It's so big because it's good. Well, Phoenix makes the pitch this way. Do you want to send your customers to a Stripe interface to do a transaction? Do you want to share any of your brand with them?

Probably not. You want it in-house. And also, they think, they argue, that Stripes model, which is very, very simple, 2.9% plus 30 cents per transaction is a bit expensive. And so they charge, they make you pay the interchange fees, of course. At cost, there's a SaaS fee. And then I think it's a variable rate. But the idea is own your own infra, have it in house, keep your brand, and pay less. And frankly, that's not a non-compelling pitch for business customers, I don't think.

Okay. Well, welcome to the trust 500. And any notable investors there listed? I'm curious. Yeah, so way back in the day, homebrew, so shout out Hunter Walk and Saki over there. Amex and Visa have also put money in, unspricingly. Bain, light speed, and then accrue capital, which actually, I don't know that well, led their last $75 million round. Got it. Okay. So they're cooking with oil and more competition always great for customers of those products. You'll keep stripe on their toes and good for them to have a competitor, I guess. Yeah. All right. Awesome. What else is in the news as we get ready for our game. guest who will be coming up next.

Yes, let's do GM and Cruz. I am, do you ever read a headline and just want to cry a little bit? Yeah, so sad. That was neat. That was new. Okay, so if you don't know everybody, GM, which owns Cruz, most of it, is backing off its dreams of building a Robotaxy fleet and is instead going to take Cruz, this entity that has gone through a hellacious there and back after an accident and some controversy,

and they're going to fold it into their existing driver assistance program inside of GM. They're not going to build a Waymo competitor. Instead, they're just going to make their truck self-drive better, and they're going to cut their spend on self-driving. I'm just disappointed. It feels like such a failure to understand the innovator's dilemma. Well, and there's another shoe that's going to drop here. I'm almost certain of it.

This sounds like there is going to be some sort of our partnership that's going to occur or some divestiture of brews, perhaps. I don't know. I don't have any inside information. but usually when somebody shuts something down like this, it's probably because they have some other better deal and some other better option presented itself. So I think we've seen half the story here

and the third act is still going to happen. First act was trying to do it. And then they had that terrible accident where they didn't hit somebody, but somebody got hit by a human power car. They ricocheted into a cruise car, which then dragged the person unknowingly. And then Cruz, of course,

famously, selectively edited the video, when they submitted it, did something which most people I believe felt was dishonest as me charitable. And that led to them being shut down in San Francisco and then the program being canceled altogether. Waymo, of course, is doing great in San Francisco and other locations and they've got partnerships with a couple of different companies, including Uber. Cruz was obviously an Uber partner. Yeah, it stinks that they are giving up, but I do think we're going to see something happen after this. And so I wouldn't be surprised if GM announces that this asset and this technology is going to be co-branded with another person.

I don't know if it would be Uber or Lyft or another automaker who doesn't have a solution, a Toyota, Nissan, whatever, or one of the third parties we've had on the program who are working on the problem. And you have Zooks, of course, owned by Amazon working on this. So, you know, how many self-driving technology companies, how many, ride-chairing companies do there need to be? It's probably there's 20 people

working on self-driving now and it will go down to seven. And this is part of the process is people saying, you know what, I fold. I don't feel I can keep up with Waymo, Uber, Lyft, Zooks. Yep. What was the other one? Wave. Wave. Thank you.

There's so Aurora doing trucks. I mean, there's so many out there. The fact that we forget is evidence of what you're talking about. Plus five or six People buy, do, B-Y-D, everybody doing in China. So this has got to go from 25 people down to 15, down to five, basically. And then it'll consolidate down to five players. And Cruz is not going to be one of them, apparently. Dead on.

But I just think Cruz should be one of them. So GM in their call about this, they had a call last night, and I read the transcript this morning, and it's going to say them about a billion dollars a year, by my understanding, which is not Trump change. But if you pull their Q3 earnings, they expect their full year eBay. to be $14 to $15 billion. So it's not even that much savings, and they could have de-risked their entire future.

Sounds like an announcement's coming. Okay. All right. So they decide that they're not going to do this, but they're still going to make their cars powered by, I don't know, Waves technology, Aurora's technology, Tesla's technology.

I mean, it sounds crazy that Tesla would do it right now. They've given no indication they would that I know of. But let's just take superchargers as an example. Sure. Can other people use superchargers right now? Yes. Yes. Could people use superchargers five years ago?

I don't know the answer to that. No. Yeah. They could not. No. It was not like it was open to other people. Now it's open. So, you know, sometimes people change their mind.

And let's say if Tesla did have the best, or Waymo, did have the best self-driving technology in the world. Yeah. Or Wave. or Zooks. Let's say those four people or Aurora, those five people have incredible, like, they're 80, 90% of the way to solving it. I think we all agree they're 80% of the way there, 85% of the way there. I do. So if they're 85% of the way there, if you were one of the, would one of the four of them consider licensing it to GM to be in all their cars? I mean, sure, but that's not too much. Yeah, but that's not the thing that I'm, that I'm thinking about. Because to me, Waymo,

the promise of Zook's style self-driving cars and, you know, Tesla talking about building a fleet that you can rent and just use means that personal car ownership is going to eventually become such a dated concept that we're not going to understand it. And GM just looked ahead and said, you know what we need to do right now is pay more in dividends, make more money from large trucks, and just go for the most mealy-mill-mouth option of working on our L3 technology in the meantime. So sure, maybe. But I mean, oh my gosh, there was a future that they could have shot for, and they shot for the most tiny thing. What if Waymo decides they don't want to make cars, but they do want to make the greatest driver in the world?

And they say, you can put it into all your GM cars. And then you can sell those to any ride-sharing network, DoorDash, anybody you want. Cool. But I mean, if that's the case, then every single car company in the world can do it. Cruise was unique. Well, but Waymo doesn't make cars, right? They adapt Jaguar's, I think, currently. Yeah.

Yeah. But they're moving away. They're moving away from that thanks to the move deal that we mentioned. I guess, sure. Maybe Jim can find a way to license. But to me, they were investing like they wanted to be a critical technology leader in a growing industry. And now they've gone, eh. It's really three different businesses.

You got the ride-sharing business, Uber and Lyft. You got the self-driving technology business, Zooks, Tesla, etc., Waymo. And then you have the car manufacturing business. Tesla is going to have all three. Uber's going to have two at a three. the car manufacturers will have one or two out of three and I think that's the way this is going to go down and then if you're placing your bat,

you're placing your bat on do people want to own cars or not. I think young people probably do not want to own cars. If there are cars available all the time, they're just going to go with cars available all the time and not own one. I mean, you brought it up last time on the show

so I don't think I'm breaking any personal boundaries here, but your oldest is getting closer to driving age. And so I'm kind of curious, what do you hear from, her friends. What do they want? I mean, we live in Austin where you kind of need a car. And if you live outside the circle in Austin, you know, for 10 miles or whatever, it's a little hard to get an Uber or a lift way out there. Now, you know, in the future, that might change. But I do think the people in her school and people her age do have cars and they learn how to drive right about now. And I'm

going to teach her on the ranch how to drive the RTV and the, and the tractor and the lawnmower. And Yeah, she'll know how to drive a car right after that. Nice. No, I can't wait to get a car and get my license so I could get the hell away from my parents. And the fact that kids don't drive these days means their parents are too nice, is my view. You should be mean enough to your child that they want to drive. That's it. All right.

Our guest today is Suvir Wadwa. He's the founder and CEO of a company called Flight Jason. That's F-L-I-T-E dot city. This is a company that I'm personally excited about because when I first heard about it, I was not sold on the idea of working in the event's business. But after digging a little bit deeper, I'm kind of obsessed. The way that I think of it is that it's vertical SaaS for event hosts. Severe, welcome to the program.

Good afternoon, guys. Thank you. Thank you for having me. Nice to see you, Severe. We are investors in your company. Tell us in the audience, maybe share with us what you do, what's the mission of the company, and how it's going so far. Of course, yeah.

So I'm building flight. Flight is the operating system for event organizers. It stems from a problem. I faced myself as somebody that would put up events all around the country at different nightclubs. What we realized that was, you know, artists, TikTok DJs, you know, creators that have a massive following couldn't monetize on their audience or even connect with them. Just because they were really good at sort of like creating an experience for them, but they didn't know how to take care of what happens in the back end of an event.

So operations, taxes, finances, hiring, payroll, and then finding synergies between these different tools and, you know, building product on top of that. So we released flight to sort of simplify the operations so you as a creator can do what your best at, you know, performing for your audience or, you know, connecting with them. Started this in school when I went to NYU, just graduated in May, was launched this February and yeah, it's been an exciting last nine months. I'm happy to share a demo as well. Yeah.

Well, yeah, show us the product here and we'll ask you up questions while you get it queued up. I guess the first question I have is who is the customer and what is the business model here? So currently our business model is the fee on top of tickets sold through our marketplace. We charge a dollar plus 12% on tickets sold. Our customer is an event organizer that puts up about one to two events a month, sells about 600 tickets for those events at an average price of $28. How do they sell tickets currently? Because this is the long tail of events.

This isn't a Ticketmaster Taylor Swift event you're going after. This is on average a 500-person event or something in that range. Right, yeah, 500 to 1,000. The way we sell tickets or the way these creators sell tickets is by sort of advertising it on Instagram or YouTube. But what we do is more than just the ticketing, right? I think events have so many different revenue streams in terms of, you know, drink sales at bars or, you know, just everything related to the ecosystem. And we come in there and sort of help you monetize and grow your revenue in those streams as well. And a portion of this is obviously the promoters who are involved.

I remember when you first pitched me. Yeah. You're explaining how this entire space works. Somebody who's a DJ who's throwing the New Year's Eve party or, I don't know, some, you know, party in the summer, whatever. They're in Ibiza or, you know, New York, whatever it is. There are promoters who have mailing lists, who bring people to see a DJ. They get cut into the revenue. So there is a bunch of accounting that goes on here.

It's a lot more complex than people new, yeah? Yeah, yeah, of course. And these promoters, you know, you nailed it. They struggle to get their payments. In a city like New York City, every promoter has spoken and has taken three to four weeks to get paid out, maybe 200 to 300 bucks from an event. And that's absolutely, you know, horrible.

So we help you streamline that and then take care of the accounting and sort of retargeting with these promoters as well. And, you know, it's funny that you mentioned, Jason, Taylor Swift, right? Ticketmaster, massive concerts, theater stores in the news recently. Think about an artist a couple levels below Taylor. Yeah. She probably has the exact same level of talent and the exact same, you know, a pretty strong audience. But she probably doesn't have the team or operational sort of resources to put up concerts at scale.

So it's something like Flight, she can hop on, do what she's best at performing, but take care of everything that Taylor has a team for just through technology on Flight. I wanted to ask about that because to me, concerts are an enormous driver of my personal nightlife. So they're the thing that I care about the most. Have any bands actually used Flight thus far to do more than a one? off concerts, severe? We haven't had a band, but we've had a lot of TikTok DJs. TikTok DJs, I see.

Yes. So they travel around the country, whether it's, you know, in the West Coast or New York City, these guys, yeah, they put up performances, but all their operations and team and sort of finances is all matched through play. Can I ask one more question about that? So on the finance side, you guys in your FAQ talk about how you have same day payouts, which is awesome as a feature. People love to get paid.

But one thing we also think about our chargebacks and, you know, people disputing payments and so forth. Does the company hold any risk by making it so easy to pay out event hosts? Are you off holding any kind of the bag financially there? Not really, though, because what we do is we firstly vet these customers really well before they hop on the platform. And then secondly, we've integrated a lot of APIs to sort of reduce payout amounts. I mean, you can cash out instantly, but there's still certain restrictions we place to manage chargebacks. And it's great that I'm presenting my screen. We've built a lot of custom APIs around the whole dispute sort of, you know, section to manage

chargeback, so everything's automated and taken care of through the platform. And so if somebody wasn't using Flight in this business, if they're a TikTok DJ, they would, I don't know, put something on Eventprite, but not have all these additional features and ways to manage the events, yeah? Absolutely, yeah. They'd use Eventpride and then take care of, you know, their marketing on MailChimp, Twilio. They do their finances on Quickbook.

They, you know, run ads through meta directly on Snapchat. And we have Flight AI as well, which I'm super excited to talk about in a bit. Oh, any announcements here you want to make, or what is it good? going to do. What's your idea? We learned that with flight, we bring a lot of operations into one platform, and so we make it very easy for you. But on top of that, I mean, these DJs are performing, right?

They're on the road all the time. And what they've done at times just text me while I'm out with my girlfriend being like, hey, can you change this ticket for me? So what we've done with Flight AI is literally everything you can do on flight is happening through a conversation now. So instead of texting the founders at 4 a.m. in the morning, you know, the AI does it for you. So instead of going into an interface on your desktop, you just go into a, chat room and say, hey, raise the prices of this ticket or this offering, this table, or whatever

it happens to be. Yeah. Question for you about software development as we wrap here. We are entering this age of efficiency and a lot of founders are using AI inside their organizations to drive efficiency. Maybe you could tell us a little bit of how AI has changed running a startup, if at all, and specifically your startup. Yeah.

It has been, you know, massive for me. I think while being at school and building a product like this, balancing classes back then and then being able to write tons of code, GPD, especially when it just came out, really made it easier for me. I mean, I didn't know how to code in JavaScript or React or any of what Flight is built with, and I've built most of the product myself.

So come a long way using AI tools. And then now our team, we have an international team that codes for us. They take care of all of our development, and we've given them access to almost every AI resource, need from GitHub co-pilot to sort of different subscriptions, so they can be more efficient. What have they asked for? I'm curious. Besides, you know, GitHub or, you know, chat, GPT, is there any other specific products that they say, hey, we really need this? Not not the moment, but I keep looking for more products. I think I can find more solutions

to make their life easier. We're going to grow faster and, you know, more efficiently as well. Oh, I just want to pick up on the growth part because I was going through your LinkedIn. And you said as of a couple weeks ago that you guys are growing 70% month every month, and you've grown to over 100,000 users. So I'm just kind of curious, that's tickets sold to people, not event hosts themselves. Yes, that's the consumer that has bought tickets on flight. We have about 60 active event organizers on the platform that run events every twice a month. That's why I say active.

Okay. Yeah, 100,000 consumers in the platform, so that's exciting. Just a question about getting out there. I know you were just in college. you were at NYU, you and I were talking before the show about how busy New York City is as a place to be. But does flight scale to other markets that are smaller? And I know I live in a smaller city, so I'm thinking about Providence. But I'm just curious how far down market you can go and still have a flight friendly event. I mean, our biggest market is Connecticut. Funny that you mentioned. So yeah.

What? Massive in Connecticut, Philadelphia, Washington, D.C. And I think around 33 cities around the country of use flight, We just started in Dubai in London and now India as well, this winter. Oh my gosh. All right, cool. It does seem like these younger generations, Alex, because they're online so much, I think that they're starting to get to the point where maybe they're online too much. And they're like, I need to get out and hit the club.

I need to do something with people in the real world. Yeah. So every time things go, you know, the pendulum swings too far one way. I think you get a reaction. And live events, people just keep asking me, when's that next live event? When's the next live event? When can we see people in person? Is that a trend that you're building off of?

Yeah, absolutely. And it's also nice that you mentioned. I think ticketing is a very big space, but there's tons of players building ticketing platforms. I think the way flight stands out is targeting these consumers and bringing, say you're in your bedroom, using technology scrolling through your feed, you want to organize an event.

You can hop on something like flight and throw an at-scale event as well if you need. So we normally get these kids off their chairs to attend these events. We also start to get them to throw these events, which is massive. It's going to be a big part of, I think, the future people talk Alex about like oh my god job destruction used to always be able to get a retail job yeah then that went away as the safety net we were talking just yesterday the day before hey you know used to be able to get a job uh as a uber driver for a door dash driver maybe over time that goes away

yeah and so what's left you know people become podcasts creators content creators poets uh musicians and live events there's actually i think as we get rid of some of these jobs humans are going to be looking for something to do. And one of the things they might want to do is throw a party or throw a concert and go and attend it. And that's a beautiful thing. Enabling people to do that, it's in a way flight is kind of like Airbnb and that it kind of helps people build this platform. And you do help aggregate some people to attend events yet? Or is it still more like MailChimp where you bring your mailing list? We're not here to grow your mailing list. But eventually substack when they competed with mailing mailchimp, their focus or beehive even better because they came from the morning

brew team. They had that cool feature of like affiliates built into it. So they said, you know, hey, there's tons of mailing list products. We're going to help you grow. You have the affiliates. That's the tool for your growth. So I'm wondering if you're not just aggregating supply, but and being a tool for the supply, but are you aggregating demand yet? Yeah. To start, we've built a lot of product for you to reach your audience. and mail notifications text, but we focused on our consumer app. A lot of these kids, discovery is very important for them to sort of find events. So we've nailed down an app where they can easily find events, explore, and that helps

bring the demand in for them. But what we've realized is helping them sell an extra six, seven tickets is amazing. But helping them sort of make back-in operations efficient will help them sell 50, 60 tickets in the future and build a brand, which we always want to focus on the B2B operational side of things. Can I just slip in one last question, Jason? because I just remembered this. So when I was going through flight before the show,

just prepping, going through the service, signing up looking at different events, I noticed that they do have a great mobile app for iOS, but not for Android. And so, Severe, I'm really curious about the choice to go iOS only at this stage. And I guess when does it become necessary or beneficial for you to invest in building an Android app? And I say this as an iOS user, to be clear. Yeah, yeah.

The Android app is important. I mean, I have a swift background, and we had to pick our battles and what we want to build, what product is more important and dedicated resources to. So we thought we'd get the iOS app first. A lot of our customers use iPhones as well. But yeah, we're going to scale our team after our fundraise and expand to Android as well. Okay, well, you're going to go to India, Android. You know, I mean, you have to have it.

Yeah, okay. You'll get there. Well, listen, continue success. It's great to be on the journey with you. I think you're on to something. You know, I do see all these TikTok DJs as I'm scrolling. It's amazing how many people are listening sometimes. It's become like a modern day radio station where the live feature has a little bit of monetization built into it, but it's not a lot.

And then I notice a lot of singers. And then I noticed the singers, you know, who have two, three, four, 500 people watching them. They're all announcing their events. So it's kind of becoming Alex, like stand-up comedians. Remember Tony Hinchcliffe would have like these shorts, the shorts for TikTok and for YouTube came from, you know, the small event he would do here, kill Tony. and then all of a sudden he's on tour across the country or podcasts held them do it. I think there's going to be something there

with TikTok DJs. You know, you get into a certain DJ, a certain vibe, a certain community, and then you go out and see them when they tour. It's really a fascinating way to monetize the celebrity people get on TikTok specifically. Absolutely. Yeah.

Well, Severe, thank you so much for dropping by. We will keep track of how things are going. And when you cross the next major AROR milestone, you let us know and we'll talk to you again. Thank you for having you guys. All right. Well done. Well done. All right. Another amazing episode. It's Wednesday, Wednesday here on December 11th. We'll be back on Friday, December 13th with another news program for you. He's Alex. I'm Jason. Turn on your YouTube and you can see us live Monday, Wednesday, Friday's 12 o'clock, Texas, 1 o'clock right coast, 10 a.m. left coast, ish, ish. We start right around that time. All right, everybody. Bye-bye. Bye.