This Week in Startups - News! Peter Thiel’s $5B Roth IRA, Black creators strike on TikTok, BuzzFeed SPAC, Microsoft goes anti-Apple PLUS Ask Jason | E1237

Episode Date: June 25, 2021

News episode Jason talks about Peter Thiel’s multi-billion dollar Roth IRA (1:27), Black creators striking on TikTok (13:32), BuzzFeed's SPAC (24:15), Microsoft's dig at Apple (31:28), and two Ask Jason questions (41:59)!

Hey, everybody, it's Friday. We got a lot of news to cover. Today, we're going to talk about Peter Thiel's billion-dollar Roth IRA, or I should say multi-billion dollar. Black creators are striking on TikTok. BuzzFeed is spacking and going public. And Microsoft just completely dunked on Apple. And we're going to do a couple of asked Jason questions, some really good ones about investing.

Okay, stick with us. This week in startups is brought to you by Indochino makes custom-fitted suits, shirts, and casual wear at affordable price. shop for your next best look or book a virtual style consultation at indochino.com. Right now, you can get $50 off any purchase of $399 or more by using code Twist at checkout. Snack Magic is a stress-free way to treat your global team, clients, or sales prospects with a build- their own snack box. Get 10% off with code twist at snackmagic.com slash twist. And, Calm for Business.

Healthy and happy employees create successful companies, and that's a fact. Calm for Business can help your employees be their best selves at work. Get a free well-being e-book and one month free of Calm for Business after you attend a free demo atcom.com slash twist. Okay, first up, Peter Thiel's billion-dollar Roth IRA is become a bit of an issue on Twitter and in the larger press. ProPublica, as you know, somehow acquired a bunch of information from the IRS. That's actually under investigation, I understand. And people are a little concerned about how is all this information leaking. But we do have this great reckoning happening right now.

We have massive polarization of wealth in the country. the top couple people in the country own as much as the bottom X percent. You hear this all the time from Bernie Sanders, Elizabeth Warren, and the left. And what this is resulting in is a very valid review of all the tax law. Now, Roth IRAs are part of that. And ProPublica did a story on June 24th, yesterday, Thursday, if you're listening to this on Friday, about Peter Thiel, his massive Roth IRA account.

They say his Roth IRA is something in the range of five B, billion dollars. Now, the Fortune or Four Blest had him at like $2.4 billion in net worth. So I think he's been pretty quiet about his wealth. But we do have some information on this. And it's a worthwhile subject. Peter did nothing wrong in using his Roth IRA to invest in private companies. That's allowed. Now, most people, civilians in the United States, because we have a two-class system in the United States, affluent people who are part of accredited investor, the accredited investor class, and we have everybody else at the poker table, the suckers, but me for most of my life, the 95% of the country who are not allowed to invest in private companies.

Private companies are the direct path to massive wealth creation. If you hit an Uber, if you hit a PayPal, if you hit a Facebook, man, the returns are in the 100, 200x, 500x, maybe even 5,000 X, you know, very similar to maybe Bitcoin, we're hitting the lottery. Literally, that's what these things feel like in terms of wealth creation. And I believe the key issue in all of this

is that every American should be able to invest in private companies. Every American is allowed to buy crypto. Every American's allowed to buy stonks and meme stonks. Every American is allowed to go to Vegas. and gamble like a maniac on black or red. So why not invest in startups? That is the core issue at all of this.

But let's talk about this specific issue of what a Roth IRA is and how it works. Okay, they were established in 1997 by Delaware Senator William Roth. If you were withdraw from your Roth IRA before the age of 60, you are penalized with taxes. If you withdraw after, it's tax-free. Your cap, though, at putting in only

$26,000 a year. And Americans earning more than $125K can contribute reduced amounts. In other words, this is for people to save for their retirement. And the average Roth IRA was worth $39,000 at the end of 2018, but they are capped. The people who are making over $125k a year can contribute only $2,000. And so according to the article of the last 20 years is a quote, TIL has quietly turned his Roth IRA into a gargantuan tax-exempt piggy bank, confidential IRS shows. Now, this language is, I think, a little biased. You can see that there by using gargantuan tax-exempt and piggy bank.

Like, you don't need to say it that way. He has built a fortune. He's built it to $5 billion. I think pro-public should just state the facts here and not try to sway the witnesses, i.e. the readers. but he took this a retirement account that was worth less than 2000 in 1999 and made it worth $5 billion in 2021 by using the money in there to purchase shares in startups like Facebook. So Facebook's rise was the biggest contributor to Teal's Roth IRA, which was worth $870 million at

the end of 2008 when Facebook was worth over $15 billion. Facebook is now worth almost a trillion dollars, $970 billion. So as long as Teal waits to withdraw this money until April of 2027, six months'clock I have his 60th birthday, he'll never have to pay tax on these billions. So how did he do this? He basically followed the rules. When he had a stake in a startup, PayPal, he was able to put, I believe, his PayPal shares into that Roth IRA. Those shares, when you are the founder of the company, are worth pennies, right? Think about it. When I invest in a company, and it's worth $5 million or $10 million, and I'm getting preferred shares as an investor, preferred shares or shares that have

additional rights to the common shares. The founders get common, investors get preferred. What that means is the preferred shares, if I were to buy them at a dollar, like, let's say, we'll just make an example here, a $5 million valuation company, and they have $5 million shares. I bought a million of those shares for a dollar each, so I put a million dollars into the company. My shares are worth a dollar. But if that company fails, and it's an 80 to 90 percent chance that the company does statistically, what are the common shares that come behind that million dollars worth? They're worth less than the dollar. Typically, they're worth a penny or a fraction of a penny because most of them fail. That's totally a legitimate way to value those shares. Additionally, there would probably

be something like, I don't know, 25 million shares when you start the company. In other words, the shares would be worth two cents each, four cents each, one penny each. And so when all of those gains happened, he basically hit a home run with PayPal. Peter is an exceptional investor, a visionary genius. There's just no two ways about it. You can disagree with the support of Trump. You might not like his politics on the margins. But the truth is, on a financial basis, he's a genius, full stop, period. Financial genius. So he puts his PayPal stock in there, an incredible thing for somebody at the age of probably 30 or something like that to do. Then he meets Zuckerberg. And he says, you know what? I'll invest the money out of my Roth. Why not? Most people don't know. You can do a

self-directed, you do a self-directed Roth IRA. You need not only invest in public entities. Well, public entities, you know, they tend to go, you know, they double their revenue. If they're growing at 20% every three or four years, they double their revenue. Maybe a hot, hot growth company is going to double its stock price every two or three years, you know, putting stonks aside and crypto aside and that kind of nonsense. In reality, this is somebody who hit two bulls, bull's eyes in a row. That's the way to look at this. Literally, he shot a bull's eye, he took another arrow out of his quiver, and he literally split the arrow. That's what we're seeing here. That is something that we want to have in America and in the world. It's totally reasonable that we reward somebody

who hits the bullseye twice, and that's all that happened here. So I don't think you can blame Peter Thiel for this. It is just the nature of how the Roth Rothera I work. So there might be a solution here because this is a valid point. We are looking at the tax land saying, how is this unfair? There's one way that this is unfair. It's that you, if you're listening to this and you make under $200,000 a year like I did for the majority of my life. Let's be honest. I've only gotten lucky in the last, you know, whatever, 20 years, 15, 20 years. The first 30, I was kind of, I wouldn't say a loser, but I was trying to make my way in the world. And I would not have qualified as an accredited investor for much of that time. So if anybody could do this,

then you could have invested in Uber, PayPal, Facebook, LinkedIn, whatever company it was. And you could have put that in your author, right? And people are doing that today on sites like Republic, seed invest, et cetera. They are literally buying private companies because there is equity crowdfunding, which is a path to all people being able to invest in all companies. And so when we get there, that will solve this problem because you two, as an individual who put $6,000 in this when you're 25 or 30 years old, would be able to bet that $6,000. Let's say you had $30,000 in there, you put $6,000 in for five years. Okay, now you've got $5 times $6,000, $30,000. Let's say you put $3,000 into each of 10 startups and you hit an Uber and it pays $2,000.

Now you got a $6 million hit. Then you take that $6 million and you put, I don't know, $1,000, $500,000, thousand dollars into 10 different venture funds and they all return you know three x on average and maybe you have one or two that return 20x like a or a hundred X like i did in my sequoia scouts fund or chrissock did in his fund his famous eight million dollar fund that had instagram and uber in it i believe that's really the solution here if we want to think about uh these uh retirement funds and maybe put a cap on them i got a little bit of heat for that even saying that you know even having a cap would be ridiculous. I think we need to start thinking about some caps.

So here's an interesting cap. The Roth, which has a cap of $6,000 when you put it in, why not put a tax-free cap of, I don't know, $50 million, $100 million? So then anybody who does this strategy gets the benefit all the way up to $50 million, but you can't get the benefit up to a billion or $5 billion. In other words, we throttle it because the intent of this law and this program was not to have somebody get $5 billion tax-free, obviously. So if that's the case, we can have a discussion. We don't have to retroactivate this. There's no reason to penalize Peter Thiel for playing by the rules or anybody. But in the future, if we want to say, Roths are now capped at a billion dollars, at $500 million, 50 million tax free. And then after that you've got to pay your taxes. That would be a completely reasonable discussion to have. I think we need to have productive discussions like that about these issues. So in a way, even though ProPublica, I think, is,

is, you know, kind of got an axe to grind here, and they've been a little unfair in this coverage. It is good that we have this discussion so that all Americans feel like the system isn't rigged, but let's fight the real enemy. The real enemy here is not Peter Thiel, just being amazing and exceptional as an investor. The real enemy here is that you are not allowed to invest in private companies, and that needs to change. Listen, have you ever felt really anxious in a really expensive suit? I know I have. I just went to a wedding and I was absolutely losing my mind because the wedding was outside

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And when the beat drops, he basically flips the bird and says to the camera, Syke, if you don't know what Syke means, that means like, I tricked you in slang from the 80s. And he basically puts a caption up that says, this app would be nothing without BLK people,

black people. The videos racked up over 128,000 likes on TikTok, and it went viral on Twitter. According to Lorenz, and I'm going to quote here, Some tweets suggest that black creators on TikTok had seemingly agreed not to choreograph a dance to the song, which would force non-black users to come up with dances on their own and prove how essential black creators are to the platform. In a later TikTok, Eric, the person who promoted this video, said black folks have always had to galvanize and riot and protest to get their voices heard. That same dynamic is displayed on TikTok, he said.

we're being forced to collectively protest. A user Deja on Twitter said that black creators are telling each other to not make a dance to the new Meg and the sound song to prove they are the backbone of the app. Another quote, we are being exploited. And that's the core issue black folks have had in terms of labor, Mr. Luis or Lewis, sorry if I'm pronouncing incorrectly, these millions of likes that should all translate to something. How do we get real money, power, and proper compensation we deserve?

and a tweet from Taylor today. To frame this as an issue around dance credits misses the point. It's about so much more and speaks to broader issues of labor in the creator economy. We are being exploited. And that's the core issue. Black folks have always had in terms of labor, Eric said. This couldn't be more dead on. Twitter, built by black culture.

Instagram built by black culture. Clubhouse built by black culture. And now TikTok being built by black culture. And all of those built by black culture. And all of those built by black culture. white guys or in the case of TikTok Chinese guys or the Chinese state. And what makes this even more pernicious, I think, is that the venture industrial complex is largely white. So you have the venture industrial complex backing white guys, generally speaking, to build social apps where

black individuals don't have ownership to Clubhouse's credit. They did include a lot of people of color on their cap table. And that is a step in the right direction. So you got to give them some credit for this. What I think really people should take from this is, and there are a lot of stories I could go into, like I've told before on the podcast, Vine. King Bach was the number one Vine person when I met him at Art Basel in Miami at the Paper Magazine Party. He told me he didn't know anybody at Twitter, nobody at Twitter, which owned Vine at the time, had ever reached out to him. If you look at Twitter in the early days, all of the trending topics at times were based on black culture and somebody at Twitter told me, this inside story, that they then created

localized and customized trending topics, which you still have to this day, because non-black people couldn't understand what was going on on Twitter. And they were afraid that people, white people, primarily would not understand what Twitter was and leave. So they basically throttled black culture on Twitter. This is a story I was told by somebody who worked at Twitter. And then you look at something like Clubhouse, my goodness, the whole thing was built off a black culture. You'd open up Clubhouse and it was all kinds of black creators, comedians, artists, thinkers, journalists, writers, hip-hop artists, athletes, basically building that product. What I would say to all of this, and I tweeted it is, if the top 20 black

creators left TikTok and started their own, they would need only find a great app team to work with, which isn't easy, but it's not actually that hard. And if the top 20 black creators, instead of protesting, found a great app team, hired them, find some great backers, and there are a lot of black VCs now, we've had many of them on the program here, they could build a TikTok competitor that I believe would be worth a billion dollars within a year. Because those top 20, 30 creators, they are super, super accretive to a platform. In other words, getting the first 100,000 people on a platform, that's the hard part. Really, even the first thousand is really hard. The next 10,000, it's hard. Getting to 100,000 is difficult.

It's really the first 1,000 to 10,000 that I would say is the hardest part, those first thousand to 10,000 daily users. Well, LeBron James, Kevin Durant, Carmelo, Anthony, Oprah Winfrey, plus all the venture firms out there, they can easily fund this. To build a world-class app today takes about 10 people, two or three iOS developers, any more than that, you're kind of working against your own interest because there's just basically too many cooks in the kitchen. Maybe one or two Android folks.

I'd say Tuesday you have redundancy. A great designer or two. Now you're up to six, seven people. And then you have customer support, backend and a product manager. I already mentioned the designer. I think it's about 10 people. Those people tend to get paid $150,000 a year. Let's say you want to get the best people in the world.

You go to $200,000 a year. That's $2 million a year. That's all it takes, folks. trust me, I know this. I'm the first investor in Com, also FitBod, also Steasy, Robin Hood. Building a world-class app is a 10-person company.

That's it. And that's what Instagram was when they sold to Facebook. I think there were 15 people. Any more than that, it works against you because you have too many meetings. You just need the world-class best people and you put them on a Slack room. In other words, if those 20 creators,

the top 20 creators, were able to figure out how to get but $100,000 each to invest. And they are creators who get compensated in a lot of cases. They have major deals. Or they were able to convince a group of black investors or other investors. I'd love to be included in this to put in money. Let's say $5 million, $10 million. Something in that range, they could take a swing at this.

And it would work. And I think actually, for national security, TikTok is owned by another country and authoritarian one, in my view. The influence of China is obviously there. And China might actually be promoting white people, more than black people, with their algorithm. I know they say algorithm. I think they're actually human curating the algorithm or doing a combination of that. And there were some claims early on from people that maybe they were steering the app towards young people, wearing less clothes who are white. I don't actually find that hard to believe.

And if we want to really build this conspiracy theory, what would China like to see happen? What would Russia like to see happen in the United States? More strife around race? You know what's a great anecdote for that? Is we kick TikTok out of this country and we have a black-owned TikTok. That would be a great statement.

And that is what somebody needs to do. And if somebody does that, I'm there for it. You will get a very quick check for me if these 20 creators or any 20 creators out of the top 100 got together. And you syndicate something like that. If I sent that to my syndicate, I think $2, $3 million shows up. All you need is that killer iOS development team. You don't even have to worry about Android to start.

Everybody starts with one platform. So just start with iOS to start. And then you add Android in the second year or month seven. So let's get to it, folks. Go ahead and build it. All you need is the creators. The creators are driving this. Does that mean it's guaranteed?

to succeed? No. But if those creators owned, you know, 20 of them, you know, just took the ownership outside of the investors and chopped it up 5% each and they invested it over five years for just consistently producing two videos a week, my lord, that would work amazing. And then they could say, hey, we're going to give the revenue split for the first thousand creators who join the platform. First thousand creators to join the platform and do 10 videos. If they do 10 videos, if they join and they get over whatever number of views or they bring this many users, we'll give them free, we'll give them 100% of the revenue split for the first, I don't know, five years. So there's all kinds of incentives you can create here.

It just starts with a group of people getting on a Zoom call, getting into a, you know, Slack or a Discord and saying, enough. Let's stop giving the Chinese $100 billion, $250 billion in value with TikTok. And let's take that and let's give that to black Americans. and let's invest in them and let's have them own something that they built with their culture. It seems totally right to me. In business, it's important to be memorable and sending gifts is a classy way to create that great memory, but gifting is tough.

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stock for the complex shareholders. They're going to go public at a $1.5 billion valuation, which is a huge, terrible disappointment in one way because guess what BuzzFeed was worth in their Series G led by Strategic NBC Universal, $1.7 billion. So this means no value was created in five years or NBC Universal as a strategic investor massively overpaid. In other words, this isn't a huge 10x, 100x return for anybody. But the fact that a media company has been able to go public again is a huge win because the media business has been so challenging and so difficult in the age of the Google Facebook duopoly, where advertisers pour money into those two platforms.

The revenue in 2020 was $321 million. So this is five times. Their top line revenue approximately, 20, 21 cash flow with adjusted EBITA, you know, who knows what that means exactly, is $31 million. Andresen Horowitz also taking a bath on this one. They invested in 2014 at an $850 million value. So here we are seven years later, just the 2X. It's not a disaster, but man, that's not why we're in the venture business.

This is why venture capitalists never invest in media companies. But subscription companies are slightly different. What this means is they have 1,500 employees at the start of 2020. It's probably much less now. They acquired Huffington Post in a fire sale. But two weeks ago, they won their first pull-out surprise for their investigative journalism. by covering the Uyghurs topic I talk about all the time here on this pod. So congratulations to the BuzzFeed team.

If you were a journalist there, you probably got five bips, maybe 10 bips. If you were a senior person, I'm taking a guess here. Somebody can slide into my DMs and tell me. But journalists who are getting paid pretty well over there, probably $60,000 to $100,000 depending on seniority. You know, now if they got 10 bips, that would be $1.5 million. You know, 1% would be $15 million. 10 bips, 10% of 1%, 10 bips, as we call on the business, would be 1.5 million,

or maybe if you had 5 bips, 750. So that's a pretty great take for a journalist who never, ever have any kind of upside like this. So if you stayed there for four or five years, you probably got that. One of BuzzFeed's former employees dunked and just basically said FU to the management there because they didn't execute their stock options, which were obviously. probably on a short window when you have options in a company and you're an employee. In the old days when I was coming up, he had no choice, but you gave people 30 days to execute their options. This meant when you left a company, if you had a thousand options, they were

worth a dollar each, I had to give a thousand dollars. Or if you had a hundred thousand, and they were worth 50 cents each, you had to get $50,000. So this was crazy. You know, an employee making $60,000 has to pay $50,000 or even $1,000. That's significant. now companies are giving a five-year window to execute, and that keeps you from having all of these crazy bad feelings when a company does go public and people didn't execute their options. What happens to those options when they don't get executed, they go back into the employee stock option pool.

They get given to the next employee. I would estimate somewhere in the range of 50% or more of those options get recycled if somebody leaves. Not all of them because people tend to stay, but of the people who leave, I'm going to guess half, give them back. Oh, and if you want to learn more about stock options, we did a stock options basic with Becky from Wilson Sincini. You can go check that out this week in startups.com slash basics. Look for the stock options episode. It's really important to understand your stock options, fam. It's a really difficult business,

and the fact that they got here is just absolutely amazing. They are shifting to doing more and more e-commerce, I understand. And, you know, I don't know if they have any subscription products over there yet, But I do think they're looking to diversify that revenue mix a whole bunch. So congratulations to them. I think you'll see Vox go next, my friend Jim Bankoff, who bought my previous company Weblogs Inc, then took the team from Weblogs, Inc, and engaged it and created the verge. No bad feelings there.

You know, he's entitled to go. I was out of the blog business for a long time by then. But he did take the playbook that I created and then built on it to build Vox, and he's taking it to a whole other level with the acquisitions. And he was, you know, I give you a good give you a bank off credit. He was visionary enough to buy Weblogs Inc for me and Brian Alvey and Peter Rojas and Ryan Block

and the team, Sean Gold, back in, yeah, 2006, 7, a time frame when nobody really knew what blogs were for a pretty penny. So I think Vox goes next. And then you will see the great, when they have those public currencies, my prediction is they're going to go buy a bunch of things. Okay, let's get on to the rest of today's,

show. Healthy and happy employees create successful companies, and that's a fact. We all know it. And Com for Business can help your employees be their best selves at work. You can partner with the number one mental fitness app to provide support and tools for all your employees now. Com can help kickstart mental well-being initiatives by empowering employees to stress less, to rest better, and to build their resiliency. Com has an entire library of content, specifically designed for the workplace, which includes low-fi music playlists, quick breathing breaks, guided meditations, and hundreds of soothing sleep stories. Don't I know it? I always take a breathing break during the day before I even do this podcast. And I go to sleep with the sleep

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a free demo, and they'll give you that free demo as well at com.com slash twist. That's C-A-L-M-com slash twist. Namaste, everybody. In other news, Microsoft is dunking on Apple. They have slashed their app store fees to $0.0.00. And they allow any seller to use their own payment system. This is the most disruptive thing we've seen in a long time from Microsoft, a company that's doing actually fabulously, but they're not known for maybe being too disruptive these days. This is hugely disruptive. In Windows 11, they are cutting developer fees to zero. This means when you sell your software on Apple, you pay 30% carriage fees, and when you sell them on Microsoft, you pay zero. Does this mean everybody's going to throw

out their iPhones? This means everybody's going to throw out their iPads and Mac minis and IMAX? Of course not. But it does. mean that some developers might launch on Microsoft first eventually. Maybe they'll slightly prioritize it. I'm thinking of people like Epic Games and Fortnite. And this also is going to create massive pressure on Google and Amazon and Apple primarily to rethink their app store fees. And it's going to create a lot of tension in Washington. DC where people say, we'll start saying, well, if Microsoft can charge zero, why are you charging 30? And so this is part of the sharp elbow nature of big tech. You have Apple going after

Facebook and Google saying your privacy is yours and their whole marketing campaign is based on privacy. And now you got Satya Nadell, Satya Nadell, who I love to have on this pod. Can somebody send this clip to him and say, hey, get on the pot. I'd love to talk to him because he's kicking but and this is a great way for consumers to win. These big companies now on this, you know, 3D chess board are looking at each other's weaknesses and then making those their strength. Okay, privacy and being creepy is Google and Facebook's weakness? Apple's going to make that a strength. Oh, Apple being closed is a weakness. Google is going to make Android open source and open and you can change it and fork it and do whatever you want. Oh, okay.

the 30% that Google and Apple and Amazon are charging is their weak spot, Microsoft's going to make that their strength. Here's a 90-second clip from Nadella. Throughout its history, Windows has been a democratizing force for the world. Windows has always stood for sovereignty for creators and agency for consumers. With Windows 11, we have a renewed sense of Windows's role. role in the world. As I look ahead, I see three clear opportunities. First, Windows recognizes that there is no personal computing without personal agency. We need to be empowered to choose

the applications we run, the content we consume, the people we connect to, and even how we allocate our own attention. Operating systems and devices should mold to our needs, not the other way around. Second, Windows is the stage for the world's creation. As a creator, every time you pick up a Windows device, it becomes a stage for your inspiration so you can dream big and create something profound and lasting. We want to empower you to produce and inspire you to create. And finally, Windows isn't just an operating system. It's a platform for platform creators.

Windows is a platform where things that are bigger than Windows can be born, like the web. A platform can only serve society if its rules allow for this foundational innovation and category creation. This is the first version of a new era of Windows. All right. That obviously is a giant sub-tweet to Apple who will not allow platforms on their platform. So this is kind of meta. Let's just pause for a second and talk about what this is. If you own a platform, an operating system like iOS or Googles with Android or Windows,

you do not want somebody building a platform on top of you because that platform could then threaten yours. This is why Facebook, Google, Apple are generally closed ecosystems wherever they're making money. Google doesn't make money from Android. They make money from search. Therefore, search is closed, right? You don't know how the algorithm works.

It's all a black box. It's all opaque. Then you look at something like Facebook. They deprecated the graph. You can't take your graph with you. It's not portable or easily portable. The APIs have all been truncated and deprecated. So Facebook makes this money from advertising the graph and your data and you cannot opt out

of that and it's closed. And they did have a platform and like, hey, build any game you want on top of Facebook. When's the last time you play games on Facebook? You haven't. They got rid of that business because they realized by being a closed ecosystem, they would make more money if they controlled it. So what Satya is saying here is if you want to build something that could disrupt Windows itself or you want to make your own app store, your Fortnite, your Spotify, if Spotify wants to have an app store on top of Spotify, they could do that on Windows. If Spotify wanted

to have an app store inside of iOS, they probably would get stopped. And if they said, hey, putting your own billing information, they would get stopped. So this is a great rallying cry. who really is supposed to be supporting creators and app developers? Well, that's always been Apple's position is that we're for creators. I can tell you that a lot of the creators I know are moving to Windows. Why are they moving to Windows? Because Apple products are too expensive and they're closed and you can't add memory and you can't add hard drive space easily.

You can't open the box up and do what you want from it. And so, you know, the fact that you have to jailbreak your iPhone and basically void it and get any support is there weakness at Apple? It's also their strength because if you don't want to deal with viruses, and you want to have everything reviewed, maybe you want your kids to be a little more protected. That is a pro for Apple. So it's great to see Microsoft mixing it up again.

Now, it's very clear. We talked about this on episode 36 of the All In podcast, Lena Khan, Biden's choice for the FTC chair, was sworn in last week with a 69 to 28 vote, including a bunch of Republicans in there. She's 32 years old, and she is an antitrust talk. I guess we'd be the best way to say it, although I think she's a lot of her ideas or common sense. She's got a specific ax to grind with Amazon because she doesn't like the idea of them having

their own products. Although you can debate that a bit if that is in the interest of consumers or not. And then on episode 37 of All In, we talked about the six proposed antitrust bills being discussed by the U.S. House judiciary. One of those would call for Apple to allow third-party app stores and provide iPhone technologies to third-party software makers. And Nancy Pelosi has since confirmed that Tim Cook reached out to her to ask her to please pump the brakes on this.

I think the train has left the station. And this is adding more fuel to the fire. This is kind of how big tech works. When somebody trips, the other players in the game, give them a little push in the back. So Apple is getting tripped up in this. Man, then Microsoft pushes them right in the back. Facebook pushes them right in the back.

They want to see them just totally faceplant. And then when Facebook was getting grilled because of Cambridge, analytics and, you know, the election interference. What did Apple do? They pushed them and said, yeah, well, let's see, you hit the curb. This is the sharp elbow nature of big tech. And will this really actually make a difference? I think the overlying lesson here, and, you know, Apple does have a lot of revenue now in

services. People previously were reporting that the app store was 10% of Apple's revenue. but CNBC just made a note that it was $64 billion for the App Store in 2020, which would be more like 25% of their revenue. It is significant. And so this is the Princess Leia versus the Empire situation. I've talked about this before, but I'll play the quick, fair use five-second clip of it.

The more you tighten your grip, Tarcan, the more Star Systems will slip through your fingers. Yeah, and that's obviously Princess Leia to Tarkin, who is about to blow up Alderon. This is what happens. If you squeeze users too tight, if you squeeze your partner's too tight, people can argue if 30% is too tight. But clearly Facebook did that and made a lot of enemies in the valley. Amazon is doing that with knocking off people's products with Amazon basics. They're creating a lot of enemies. And one thing I've learned, the hard way, enemies accumulate. Try not to

have a bunch of enemies in your business. Try to be a mensch. Try to spread the wealth. Do a little splashy, cashy. Facebook now, finally, you know, after a decade of me telling them to is starting to share revenue with users and allow them to make money on their platforms. My God, did it take a while for them to even consider that? You can avoid a lot of these problems by just being good to your partners. Microsoft was known as being vicious to their partners in the 80s, you know, Lotus 1, 2, 3, and Word perfect, obviously replaced by Excel and Microsoft Word. and they obviously tried to, and pretty much successfully,

knee-capped net scape when they used to charge 50 bucks for a browser back in the days. So it's going to be an all-out fight, and I love to see it. I love to see it. This is what makes America great. We're out here fighting it out on the battlefield.

And what's happening in China? People disappear. Sadly, that's how China runs their country. That's their operating system, authoritarian. Where's Jack Ma? Jack Ma making a public statement? Where's the guy who founded ByteDance? What's happening with Apple?

The newspaper in Hong Kong. Oh, yeah, they just published their last issue and the CEO is going to jail. That's why America is going to beat China and democracy will beat authoritarianism if we stay vigilant. Okay, we've got an ask Jason coming up next. Okay, let's do an ask Jason from Pierre on our Slack.

Should a startup pitch a VC who has invested in a similar company? Well, time matters. If it was a similar company 10 years ago and the VC is no longer on the board and that company was sold and shut down, you should pitch that VC. Why? Because they have scar tissue. They have wisdom and they might have an axe to grind or unfinished business.

So if somebody invested in Instagram or they invested in Google search and it's now 20 years or 10 years later and they're no longer involved in it, that's a pretty good company to invest in. And in fact, they saw Sequoia this week invested in a search engine from somebody who worked previously at Google. And obviously, famously, Sequoia was the original investor in Google. You should not pitch them if they're actively on the board. So if Andreessen Horowitz is in clubhouse and you have a clubhouse competitor, of course you're not going to meet with them. Not a chance. Now, that doesn't mean that they're going to take that information and give it to the founder. But it doesn't mean that they're not going to say to the founder, are you aware of this other company? And the other founder might not be aware of it. So in my experience, I've never had a VC

come to me and say, hey, you know, when I was a founder, we found this information out. But I have had investors forward me a news story and say, here's a company that you may want to be aware of. And that's public information, but I was not aware of it. I have all. also had founders say to me, have you met with this company? Can you get me their deck? And I was like, that's only happened like once or twice. You know, it hasn't happened recently. And I was like, no, even if I did meet with them or had their deck, I could never send it to you. It's typically a first time founder asking for that. So if you want competitive intelligence, there's better ways to do it than go into your VC.

And if VCs wanted to get competitive intelligence, you know, we're really not in the business of doing that. It's kind of would be the ultimate career killer if you did that. It kind of is the risk of ruin. It would be the equivalent of, you know, a chef serving you knowingly, you know, some counterfeit food or food that was spoiled. Like, you would just never do it. It's like, it'd be crazy for me to know that, like, this chicken was rotten and I'm going to serve it to you.

Like, immediately you lose all your credibility as a chef. Sorry to use a really gross analogy. but people tend to overthink these things. Great question. Next question is from James via email. What kind of products businesses get your unicorn, Spidey Sense tingling? Great question. When I see really beautiful products well designed.

When I see users who will not shut up and stop using that product, and when I see a founder who is absolutely obsessed about that customer and product and their team members, Spidey Sense. But you really see it in the uptick and the big. beauty of the product. When you use Robin Hood for the first time, thumbtack, calm, or Uber, you had this magical moment where you said, this is so transformative. I can get a car or I can get food anytime I want by pressing a button. Oh, Robin Hood, I can trade a stock for free and I'm onboarded in seconds. Those give you that

kind of vibe. And so, you know, I could tell you that Steezy or grin in our portfolio now or blockable or lead IQ all gave me that feeling in the last five years. Now, those companies are all, I wouldn't say they're exact valuations, but let's say there are nine-figure companies, I would guess. And so, you know, they're not quite unicorns yet, but I do get them. Soul savvy comes to mind as well, which is a cool Slack community for sneakerheads, maybe blush, which is a Canva-like tool for designers, and that I just, get that sense from. So it happens. And, you know, when it does, we just keep plowing money into the

company. Gigster is another one, which is kind of like Airbnb, but for locations. I get these senses frequently, actually. That doesn't mean I'm right. But I have had a pretty good track record, I think, because I don't have a problem placing a lot of bets and living with a lot of failure. what I learned somewhere, you know, four or five years into the experience. And listen, we're all the product of our experiences. And the experience I had with Uber, Thumbtack, data stacks, and com breaking out, led me to realize, well, if I hit one of those every hundred times and they pay off 200 to 1 or 5,000 to 1 or 2,000 to 1, why am I not investing in more companies and

why am I not writing bigger checks? So I started writing bigger checks and I started investing in more companies. I think we're going to invest in, I think we're going to syndicate 12 companies in this month, June. To give you an idea, it probably took me a year to get to the first 12 companies when I was on Angelus. When we moved to the syndicate.com, we now have 8,000 members. I literally syndicated 12 deals this month. I couldn't believe it. And I was talking to my wife about it just this morning.

I was like, I think I did more deals this month through the syndicate than I did in my whole first two years of investing us as a Sequoia Scout and certainly much more money because I was writing 25 or 50K checks back then. So be bold as an investor, but only invest what you can afford to lose and hit some amount of diversification. You want to invest in companies that are on the other side of getting their products to market. That's like the advice I give people at angel university, angel dot university, although I don't give any investing advice, but I will talk to you about the advice I would give to a family member. No, I mean, we talk about the theories of investing.

You have to make your own decisions. I mean, be grownups out there. It's been a great episode. We'll see you all next time. Bye-bye.