This Week in Startups - $NFLX earnings, Reed Hastings steps down, Google's 6% RIF & Ok Boomer with Mike O'Brien | E1662

Episode Date: January 20, 2023

Molly and Jason tackle Netflix's stellar fourth-quarter earnings and the news that Reed Hastings is stepping down as CEO. (1:55) Plus, they delve into Google's announcement to lay off 6% of its workforce (17:00), and the former MySpace founders raised a $32M Seed round for their new gaming startup PLAI. (28:55) Lastly, Producer Rachel is back with another segment of Ok Boomer with Mike O'Brien! (36:47) (0:00) M+J kick off the show (1:55) Netflix earnings + Reed Hastings steps down as CEO (9:29) Crowdbotics - Get a free scoping session for your next big app idea at crowdbotics.com/twist (9:37) Netflix's future (17:00) Google to layoff 6% of their staff (23:37) Mixpanel - Apply for $50K in credits at https://mixpanel.com/startups (20:50) Will Apple do a RIF? (28:55) Former MySpace founders raise $32M for their new startup PLAI (33:53) This Week in Startups 90-second survey - Enter for a chance to win a $50 amazon gift card at www.thisweekinstartups.com/survey (35:19) House of Macadamias - Get 20% off at https://houseofmacadamias.com/twist by using code TWIST20 (36:47) Ok Boomer with Mike O'Brien Bloomberg Article: https://www.bloomberg.com/news/newsletters/2023-01-20/reed-hastings-retires-as-netflix-ceo-with-a-long-list-of-wins FOLLOW Mike: https://twitter.com/mikeobrienn FOLLOW Rachel: https://twitter.com/_rachelbraun FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

It's Friday. We made it. I'm sick as a dog. I was going to say Jason's crawling toward the finish year, but he did it. Literally, literally crawling. I am so weak right now, but there were so much amazing news. I felt like I couldn't not show up today. Netflix earnings were spectacular, and Google stock is surging because they laid people off. So two ways to win in our industry today. either crush it on your earnings and subscribers and performance or just cut. Just cut 10,000 people and your stock will go to the moon.

Same, same. One of those things seems easier than the other, but I don't know if I recommend it. Exactly. And then we're going to talk about the former founders of Myspace raising $32 million from A16Z for their new video game venture. And Jason will let us know why. Even though that sounds kind of crazy, it's kind of probably not. And Rachel's back with O'SBarrell. OK Boomer. It's Friday.

You know, her mom is now sending her pictures every time she sees OK Boomer on like a billboard or something. The branding is working for producer Rachel. It's going to be a great show. Stick with us. This weekend startups is brought to you by CrowdBautics. Great ideas can change the world. And CrowdBautics is the fastest way to turn those ideas into code. Get a free scoping session for your next big app idea at crowdbotics.com slash twist.

Mix panel. Mix panel helps startups find product market fit faster by offering powerful self-served product analytics. Apply today to join MixPanel's startup program and get $50,000 in credits at mixpanel.com slash startups. And House of Macadamias. House of Macadamias is the next big health trend. Get 20% off your first purchase at house of macadamias.com slash twist. by using code twist 20. All right. Looks like Netflix is back.

Netflix is back, baby. You were right. Feeling this advertising thing might work. So have they rolled that out yet? Well, anyway, we'll start with the news and then what? Yeah, well, I think the advertising thing. Yeah, I saw the stock price go up. I thought, I think the advertising thing and the, um, stopping the sharing, stop the share.

Was like a big, hashtag, stop the share. All of those things that have dramatic impacts on the business. it does seem they were quite generous how many people they would let use a Netflix account. Yeah, I guess so. So Netflix, in case you missed the earnings yesterday, had big news and a pretty big beat mainly on the thing that I think really matters, which is subscriber numbers. Like, they came in right on target, on analyst target, I think in terms of revenue, but added many more subscribers than people expected. And then, of course, the other big news was that Reed Hastings is stepping down as co-CEO

after like a pretty, like a run for the ages, really. Bloomberg had a really nice roundup of all the things that he did right, which, of course, it's that time to talk about all the things that he did right at Netflix, but from like using the post office as the delivery mechanism, the literal distribution mechanism for the DVDs waiting and waiting and waiting until broadband penetration was right to launch the streaming service, like not springing it on the labels and then pivoting to their own content at just the right time. So he is, that's a good read.

It's going to be in our show notes. Do we have show notes? Anyway, he's going to leave the co-CEO position and become executive chairman. The current C.O. Greg Peters will be taking his spot alongside existing co-CEO Ted Serendos. They've been working on that for a decade. They've been talking about this transition forever. So that's why I think the market was like, yeah, we know.

Yeah, totally. Market was like, eh. Well, I don't think they ever expected that Hastings was going to be doing the content, right? That's Sarandos. And, yeah, they've always had a culture of excellence and, you know, a very demanding culture. If you look up the Netflix culture deck or you read any of the books about their management style, they have been, you know, amongst the most hardcore. in terms of management.

And they did release this advertising tier. But I don't think that they have broken it out yet. So it released sometime in the fourth quarter like November. So I don't think they have the data. They have the data, but they're not sharing the data yet on what's going on with that advertising tier. And that's not a free advertising tier. That's the $7 a month ad-supported tier. Right.

Yeah. What they said was that it was off to a solid start and will, quote, soon bring in at least $3 billion in annual revenue. They were asked, actually, about the potential to do a totally free at supported tier. Ted Sarandos basically was like, I don't think so. He said, we're open to all of these different models, but we've got a lot on our plate this year. Okay. That means he's doing it. I can translate.

Really? Yeah, I'd say so. Yeah. If they were not going to do it, they would have put their foot down. immediately and said, you know, we're never going to have a free tier. Because when you open this up, it could freeze the market a little bit where people say, you know what, I'll just wait to pay. They're going to come up with a free tier, 100% free. But it only makes sense, if you think about it, the ability to when something goes viral, like Squid Games, right? And you think you've captured

all the paid customers in the world to then be able to, if they do have these advertisers who want the rest of the world to say, hey, we've got 100 million people, 200,000. million people who can't afford to pay for Netflix, but they might watch your ad this week, that money is going to be just too yum, yum for them to turn down. I think you're totally right. And they will probably have better, I would imagine they'll have better metrics. They'll be able to offer advertisers better metrics than TV. And TV is sort of declining in viewership compared to streamers.

So it almost becomes like a home for, because, you know, these age. agencies, ad agencies and big companies, I remember like, you remember when we first, when, when ads started cropping up online, what a concept, it was so annoying because you could only get a 30 or 45 or 90 second or even two minute ad because they had made these really expensive ads for TV and they didn't want to recut them or have different kinds of ads for the web. and now I think all these agencies and brands have these really, really expensive TV commercials that they don't necessarily want to blow on YouTube respectfully.

Yeah. And maybe they just can't wait to send this to streaming. They can't wait. They've already got these ads made for Hulu, you know, with clicks in them and designed for phones, iPads, desktops, Apple TVs, etc. Yeah. And so I think now the real competitive. to Netflix is YouTube.

And so what we'll see is a lot of young people who maybe can no longer use their parents log in. Some number of those young folks are going to pay the $7.99 or whatever it is for the ad-supported plan. And then a larger group of them are going to be like, yeah, I'll just watch some ads. It's cool.

Yeah. And they'll download the free one eventually. And those people are valuable too. But this will be a money printing machine. $3 billion in annual revenue. Yeah. That is just going to be super accretive, and that's high margin revenue. It's just not really going to cost them all that much.

And if they add 100 million people to a truly free tier, 100% free tier, which is what I guess they would get to. I think they get to 100 million people in year one of a free tier, which sounds insane, but, I mean, you have not really, though, using YouTube. Right, exactly. It's free. I mean, I think that seems 100% possible. And, you know, when you go back to the conversation we had with Lon about Netflix's strategy of like trying to replace all TV with content at every single tier, all of a sudden you do start to imagine a world where that could happen. Netflix is all TV. Yeah.

I mean, Q3 YouTube ads, 7 billion. So they're on a $30 billion YouTube run rate for ads. And so what could Netflix do? I mean, Netflix. Netflix Q4 top line revenue was $7.8 billion. Yeah. So let's say they add, I don't know, another $7 billion a quarter in ads. That would be YouTube's revenue, yeah.

They could conceivably do half of YouTube's revenue maybe. So at 3. Yeah. Now you're at 10 billion. I think it's going to be huge for them, yeah. Dang. It'll be great for advertisers. It's like they really want these.

They really want a global platform. So if you're Disney, if, you know, and you got a Marvel film coming out, you're literally going to ship your money to Netflix. to promote it, even though it's, and if you're Apple, an iPhone 14 is coming out or pro or new Mac minis, whatever it is, you know, wow, can you imagine being able to target people with iPhone 12 or below with one message, iPhone 13 with another message, you know, this ability to target and tag that you can't do on broadcast television is going to give them a massive advantage.

Do you have a great idea, but you don't have a technical co-founder? well, boom, crowdbotics is your CTO as a service. You know how it is. A lot of times these amazing ideas you have, they fail in the planning phase. CrowdBotics will make sure that doesn't happen to you. They offer pre-built app templates to help you build your MVP,

your first version of your product faster than anybody else can. This means you can stop building from scratch and start using the same architecture that all the industry leaders do. There's no reason to reinvest. out the wheels, not when you have a great partner like CrowdBotics. You can go from idea to spec and spec to code super easily because they do this for a living. And if you're not

sure where to start, well, CrowdBotics offers professional scoping. This helps you flesh out your project at the MVP stage and beyond. And here's why CrowdBotics really gets this done in an awesome fashion. They have automated DevOps, maintenance, security updates, and App Store publishing. You don't have to worry about all that blocking and tackling. They do it right right from the start. And the best part is you own the source code. You own the IP. So let the folks at CrowdBotics show you how all this works.

You can schedule a free scoping session and get your detailed build plan done. Buy CrowdBotics at CrowdBotics.com slash Twist. That's CrowdBOTICS.com slash Twist. Again, it's free. You got nothing to lose and you got everything to get. gain, crowdbatics.com slash twist. They can play all kinds of funky games. Like, if you haven't seen Orange is the New Black, Ozar, or Squid Games, and they know

that you're on the free, let's say a truly free tier, 100% free. And you watch season one of Squid Games, and we know you watch it to the end of every episode, and maybe you watch it twice. Now Squid Game 2 comes out. Are you going to wait six months if they window it, which is what they should do on the free tier? So if you window three months or six months, and this person's already watched Squid they're going to pay the $7.99 partial ad tier.

They really are. I think it becomes like their freemium. And then you start to wonder, could Netflix become the only freemium service that has the flip, right? Like I think Spotify, it's only like 6% of subscribers pay or something. But Netflix will have backed into this with the opposite situation

where the majority of subscribers pay. I wonder what those numbers are going to look like in a couple of years. the free ad supported or the cheap. Yeah, is that people would go from pay to free, right? Right, exactly. You know, and that is a reasonable fear, and that's why they have to make it really painful, make you watch a lot of ads.

Like, if I'm putting on my consumer hat, and you know I'm so cheap, I actually even drop down to the like $2 cheaper Netflix level. Now, the only reason I pay for Netflix is because my mom was using it. So, like, now my mom can't use it. So I either pay for her to have Netflix or I just say, like, sorry, mom, you're out of luck and get the cheap one. Like, I might be a drop down. Yeah.

Maybe. I feel like most people, though, wouldn't. Most people are lazier than that. Yeah. Yeah. Anyway, it's interesting. And I, but I still maintain, I'm super curious to see. I mean, I guess, I guess this sort of sarlac pit of content creation is not hurting them.

No. I mean, they have plenty of revenue coming in, and they own that content for all time, and then all these free users will get to consume it. They window the new stuff. And I do think we kind of hit peak production, and now austerity measures kicking in, you know, tightening the belt, production is getting less money, actors, directors, writers, everybody getting a little less money and maybe doing 20% less shows. It's not going to change their fate, I don't think. So everybody's going to do a tightening and that should go to the bottom line as well. Because it's not like they're discounting. They haven't lowered the price of Netflix's top tiers, I don't think. I don't think so. No. And I don't see them doing that.

Even YouTube Premium just did a huge hike. If anything, I got the YouTube Premium hike, yeah. I don't know. And I was like, sure. No problem. I mean, it's like, am I going to sit here and watch, you know, 10 ads on YouTube a day? I know. I think YouTube premium is like the cheapest.

And I think that's probably a good roadmap. There's a group of people who use YouTube. regularly, whatever billion number of people it is. And at some point, it's just the ads are so frustrating that you just, you're tired of waiting five seconds to skip ad or getting ads inserted into the middle of videos. I wasn't even aware they were doing that. And it just so obnoxious. Like the video all of a sudden just stops and you don't know what's happening and then an ad comes.

Operating profit is $5.6 billion. It's like about a 20% margin. Yeah. Yeah. And they'll be able to dial that up and down, I think. Yeah. I think so. They've been on a good run, I think.

Good content. Congrats. The Wednesday show seems to have done great. Yeah. Oh, yeah. I mean, also, I think they hit a freaking gold mine with the Harry. The Harry and Megan stuff. Oh, is that a gold mine? Yeah.

I'm very proud of the fact that I did not play that. I did not play that. I have not bought the book. I've sort of been ignoring the whole thing. My mom went on this weird rant about Harry the other day and I was like, who's Harry? Is he someone I went to school with? Like, I literally was like, who are you talking about?

Literally don't care. Yeah. Evidently. For a lot of people. I know. Apparently everybody else cares. like that book is like a massive bestseller and the I guess it's just like the neffle yeah Harry and Megan set a Netflix viewership record for a documentary title with viewers worldwide spending 81.55

million hours watching the first year. You're never going to get those minutes back folks. You're really not people. You really not. Much better off watching, you know, some comedy specials or something. I mean, who cares about these people? Honestly. Yeah.

So I'm so with you and I'm not trying to be. I'm not trying to be like too cool for school here. I do not care. I'm not even rejecting it. I literally have no zero interest and I'm actually getting mad about it now. Now I'm starting to be like oppositional defiant about it where I'm like, don't talk to me about Harry and Megan. I don't care. I mean, they're figureheads in an empire that's no longer an empire.

Right. With a B or, I'm sorry, like C or D level reality, celebrity is, if I'm understanding correctly. So this is like the second sun and the, you know, D-level reality star complaining about life and spilling tea. It's just the whole thing is so boring, gross, and inane. Yeah. I don't know why people care. Like, what is the palace intrigue here?

There's so many more important things going on in the world that are interesting in science, technology, comedy, art. I mean, documentaries. Why would you waste your time? like even a single episode of this preach. Who cares about these people? Like living in Santa Barbara complaining about their privilege. And like grandma's racist or somebody old is a racist.

Like you just describe every family. Like, yes, the older people are more racist than the younger people. The younger people are more woke than the older people. Rich people. Rich people have a racist. We know. Yeah, it's like, who cares about your gossip? Like, we fought an entire war not to have to care about the monarchy people.

Let it go. Let it go. Ooh, awkward transition alert. Speaking of letting go. Oh, that was rough. I know. I'm sorry. Sometimes the brain does what it's going to do and you just can't stop it.

Transitions are hard. You know, I'm a trained professional. And even I sometimes just make it as horrible as possible. Alphabet, Google's parent company, will be cutting 12,000 jobs or about 6% of its total workforce. If Twitter is to be believed those layoffs had started today,

I think I saw one or two tweets this morning from people saying, like, I just got laid off from Google. We should, however, take this moment. Of course, Microsoft also cut about 10,000 jobs this week. So even the wildly profitable big tech giants are cutting, I would almost say presumably to

at this point just like, juice the stock price, right? Or just take this opportunity to be like, get rid of the low performers, all of the things we talk about with layoffs. And Google, it is worth reminding everybody that as of Q3, 2020, Google employed about 187,000 people. That was up 24 and a half percent year over year. Google had doubled the number of employees since 2019. Doubled. This is like, this isn't even a haircut. They're just doing a little trim on the big old COVID hairdo that they grew out. It's a, it's a, it's a large number of people.

Yes. It is a small percentage. And it is the first cut. First cut is the deepest. What you will see is next come the performance. These are going to be the easy ones. These are going to be, I would guess, the recruiters, right? So a lot of times these companies would have 1,000 or 2,000 recruiters.

this is going to be sales marketing, uh, operations, people who, you know, um, you can, what was the term we used yesterday?

Quiet hiring. Quiet hiring. Right. You can read distribute jobs, you know, those. Yeah, totally.

Oh yeah, you're in sales and marketing. Okay, we're going to do 20% less sales and marketing. Therefore, uh, yeah, we'll just,

you know, get rid of 40% of people in that group and everybody, the rest of the 60% that's day. We'll do whatever, 20% more work each at the end. Right. And they can't get people to come back to work here. People at Google are notoriously hanging out of the roof and resting and vesting.

So when the performance comes in and there's just rumors that Larry and Sergey might come back, I heard that on my own. Really? Yeah. I think, Wow. Yeah, I think there's like they put up the bat signal. And there's been rumors about this for a while that Sergey's come back and Larry too.

and maybe something to prove kind of situation. You can't say Sundar has done it for me. So, no. You know, you could be a great steward of a money printing machine. Tim Cook, Andy Jassy, Sundar, Satya, you know, we can really just, when a market's going up and you put somebody in charge who's a great operations person and they don't screw it up, fantastic. A lot of that has to do with the absolute velocity that some of these businesses had. Like, as long as you don't screw it up, they're going to grow. But in a retail market, when like, and then now it seems like, and you need ideas.

And you need AI. Yeah. Like you need that you're, I mean, honestly, it would make a ton of sense for Larry and Sergey to come back because it's kind of that level of thinking that Google's going to need right now to, because we have literally almost overnight entered an entire new era in computing. Google's been preparing for this era for over a decade in terms of AI and development and buying deep mind. They're there. All the pieces are there,

but it seems like they lack the will and maybe the creative energy and maybe the willingness to buck the stock price, right? I think they got a kicked in the seat of the pants kind of situation. This is one of the interesting things about technology. Somebody puts out a proof of concept and all of a sudden it's like, whoa, if it's really good. Now, Jet, GBT,

I just tried to get YouTube's revenue from chat GPD versus the producers doing it and I got all wrong answers. Oh, interesting. And the Bruters got right answers. Then I was like, oh, wait a second. Well, I think it's because chat GPD was trained on a data set up until a certain date.

Yes, exactly. And so it's not Google yet. It's not Google yet, but Google is Google already. So this is like the kick in the pants sometimes. Everybody's working on something. And then somebody says, hey, look, here's an electric car that goes zero to 60 in three and a half seconds, like when the roadster came out. And all of a sudden, like, the entire ice industry, before they saw that Tesla roads,

they're like, yeah, we know we can do that. We release the EV1. Like, we know we can do that. But once it's out there in the public, it's their hands on it and they won't shut up about it, now you've got a problem. You didn't make it a story. And it's a story now. Chat ChitpD is a story.

And it's captured the public's attention like nothing since crypto. I mean, I can't believe the friends who are coming to me. Like, I have a friend who is a stager, like a long time. interior designer. Yeah. And she was over for brunch the other day. And she's like, can we talk about chat GPT? Because, whoa, that is crazy.

We're using it for everything. And I was like, what? Like, you're my art friend. How are you up on chat GPT? She's like, I can't stop. There's two reasons. Everybody does research. Yeah.

You know, reads, researchers, learn stuff. Number two, everybody writes. There's very few job functions in the world that do not involve reading and writing in some capacity, whether you're writing an email or posting a blog post, you know, doing a proposal, whatever it is, writing a letter, building a website. So you're saying the utility is immediately evident as opposed to cryptic. Right. Now, if you look at something like Venmo or PayPal, they too had that moment. PayPal was like, oh yeah, I do have to send money to people. It would be good if I didn't have to do a wire transfer. Yes, this is cool. Yeah. So I think that's the reason that it's

captured everybody's imagination, and then once you have it capturing everybody's imagination and all these use cases come out, that gives the forward momentum for funding, which we've now seen. And sky's the limit, right? This race has been started. ChatGPT started a race that I don't think anybody was expecting this race to start. I think you have no choice but to join the race if you're good. Yeah, yeah. Two things we always talk about on the show. Number one, how to build the best product possible. That's critically important. You want to have a great product. It's obvious. But number two, you have to find product market fit fast, right? Speed is what startups are all about. And those things usually go hand in hand. But relying on your gut is not how you should do it.

Many VCs, they don't want to wait around for that. It's not about your gut, right? You need to have data. Investors are looking for founders that can use data-driven solutions to find product market fit faster. So you need to check out Mix Panel right now. And they will give you $50,000 in credits when you join their startup program. They want to help your startup find product market fit. And they want to help you do it a little bit faster by giving these powerful pools. Self-serve product analytics. That's what it's all about.

You can get insights in real time with the help of MixPanels pre-built templates. And if you're a data-driven founder, that's going to make the best investors in the world. Respect you more. apply today to claim your $50,000 in credits at Mixpanel.com slash startups. That's M-I-X-P-A-N-E-L dot com slash startups. That's startups with an S, plural. And if your startup was founded under five years ago, has raised $8 million or less,

and isn't currently on any of Mixed panels paid plans are eligible to apply. Terms and conditions do apply because they're giving you $50,000 in credits. One last thing on Google. There's one company that hasn't announced yet. That's Apple. Yeah. And that's got to be coming, right?

I mean, just Apple get away with not making a riff or just doing gentleman's riff and just making a performance base? I don't know, but I don't know. Microsoft and Apple doing, Microsoft and Google doing it in the same week. Yeah. I mean, I think there's sort of, I think it's these two things, right? Like there's no question that these companies are bloated. They definitely are. They dramatically overhired.

I don't even, I frankly find it embarrassing for a CEO to come out right now and say, say we hired for an economic condition that we thought would never end. Like, seriously? You, like, you really thought that the Black Swan would last forever? That is a failure of strategic thinking at a truly astonishing level. Like, what is true today has never been true tomorrow. Did you just arrive on the planet? So, I find those, I find those, like, CEO, the speeches at this point, like, embarrassing.

That's embarrassing. But they were rewarded by a stock price. And if the stock price is going up, they now. Now they're cutting to juice the stock price because the stocks have been going down. And Apple, I think, has done such a good job of maintaining stock price performance with buybacks and metrics. They probably are sitting there like, I don't have to do this. Like, we don't need to do a riff just to do stuff. The truth is Google and Microsoft didn't need to do it either.

They have tons of cash. They could have weathered the storm. But I think the optics become too great. and if revenue goes down, then earnings are going to get collapsed. And so this does help earnings at some point. It does. It's more like when Brad Gersner is going out there saying, like, I don't want to own the stock unless you make some cuts and you get fit. And they hear that from enough managers.

There was that one manager who wrote about the height of the salary. Like, hey, people are making 200 grand here, 300 grant here for positions that are getting paid half at other tech companies. They were like, remember that? I forgot which fund that was was pointing out the non-technical. salaries were out of money. Yeah. When you start getting those letters and they're public. Yeah.

It's just too hard. I did do a little news search here. Apple, you know, it's funny because there's a piece from CNBC that's literally like they didn't over hire. Apple grew more slowly and doesn't have to do layoffs. But there's also a story as of just maybe about an hour ago that says that some of the retail channels are starting to, they're laying off some non-seasonal employees in the retail channels.

but maybe they just don't need to do a big, yeah, exactly. They don't need to do a big announcement and a big riff because they didn't double employees from 2019 to now. No wonder Larry and Sergey are having a fit. Yeah. I mean, it's all fine in a low interest rate environment where people are buying your stock and it's going up and to the right. I think for these companies, if the stocks go down, the executives at the top own lots of stock. And eventually they're going to say, you know what? my self-interest as the owner of 10% of this business, 20% of this business, and the leadership's

ownership and their entire net worth is in this business, we can't have the stock price collapse forever. What does them? Well, and also stock-based comp, I mean, I have a pretty close friend who works at Amazon whose salary, whose effective monthly nut has been cut in half because Amazon's compensation is all based on stock. They've got that base level. compensation and then the rest of it comes from stock. And so you come in and it's like you've got this salary level, but right now that salary level is half of what it used to be. And so people, so like, if you're doing stuff to juice the stock price,

then you know, you rightly point out it's about pay and stock compensation for your most talented employees. Yeah. And your executives. And it's a big deal. You want to keep motivated. All right. On to a fascinating frothy startup of the day.

Oh, yeah. Yep. Play Labs, PLAI, is a new company by the former founders of MySpace. Yeah. Building social platforms using AI and Web3 is what they're doing. Crystal Wolf, right? Do we have the names? Yeah, yeah.

Chris DeWolf and Aber Wickham. Yeah. Co-founded MySpace, which sold to News Corp for $580 million in 2005. They co-founded the mobile game studio Jam City, which remains privately held, but claims to have over 30 million monthly actor users. It was going to go public via SPAC, but instead raised $350 million in 2021. And now they've come along with a, quote,

social platforms using AI and Web 3. They did it all in terms of buzzword and have raised $32 million in a seed round led by A16C. Crystal Wolf knows what he's doing when it comes to games. He's been at games since he left Myspace and even at MySpace, the games that they were starting to integrate into the platform were one of the big wins. People love casual games, and if you can tie them to games of skill or a social graph, they can be quite sticky.

And the whales in the system spend large amounts of money. So, you know, if you've ever played Bajoules or something. So this doesn't seem crazy to you. Sounds like. No. No, these things are kind of, it takes a lot of money to make games, even web-based games. games, even app games, like it's not those tier one Calla Duties, which cost hundreds of millions of dollars.

But these do-cloths. Millions, tens of millions to make an App Store game, maybe $5 million, $3 million, to get something really good in the app store, then you spend an equal amount marketing it. So it's kind of like indie films. Like I think the app games are like the indie films version or what used to be indie films, $20, $30 million films. So equivalent here is two or three million dollar titles.

So what's the, we were trying to do this math, what do you think is the implied valuation of a $32 million seed round? My guess was like, 150. Oh, yes. Yeah, 20%. On our producer call, I was like, well, the way you would do this is you would say they're going to try to sell 20% of the company to seed ground because you don't want to sell more than that. And then we backed into it. And I was like, dude, VC's job. Yeah, or 25%.

you know, something like that, 20, 24%, would probably be what you would expect, and that's what the VCs want to own. And so they're just betting they can 10, 20 exes. If they 20 exit, you turn that $20 million to $400 million. If it was a $400 million dollar fund, you would return the fund.

All right. So some people will talk about returning the fund as like dragon egg, not a unicorn, but just you found a dragon egg, Greenem-throne style, and the dragon pays for the entire fund. What you get an entire fund paid for?

You're in the black, and it's, you know, you have... It's all gravy after that. Yeah, exactly. I like Dragon Hague. I definitely want to start using that over a unicorn. Unicorn feels kind of tired. Yeah.

And, yeah, a lot of them aren't unicorns anymore, but he knows what he's doing. It's, uh, they call it a C round. It's really, this is just... Video games are in a unique space. They are capital intensive. But they also are guaranteed to make money. They're guaranteed to make some amount of money, I think. And you also have to make a,

collection of them because it is a bit of a hit space business. So you don't want to fund a single game for three to five million. If you're going to do it, you got to really be funding like 10 games, hoping that two of them break out, right? Yeah. Although, come on. You got, you got nothing to say about how it's going to port in existing NFT characters. I, you know, I think, about how many buzzwords are involved in this pitch.

I do think portability of gameplay items and the ability to trade them. I mean, that's always a good idea. Digital goods, yeah, should be portable. Digital goods have always been, right? Like something worth there's a market for them because you have actual utility. You play the game, you do better on the game. Yeah, I mean, look at Fortnite. Look no further than Fortnite skins to show how much money people spend.

It gives you a reason to try the other game. So if your outfit or sword or persona can go from, you know, the Harry Potter game to some Disney game or whatever, yeah, that's interesting, I think. Yeah. The last company they did, I think you had some, I think licensed games is another big thing here. So if you've ever, you know, if you play casual games, you would start to see ads for like a Star Trek game that has the same mechanics of like age of empires, you know, harvesting and fighting. And so they'll take the same game mechanics. They'll license five different pieces of IP and they'll do the Harry Potter version, the Star Trek version, the Star Wars version, etc.

Right. Awesome. All right, well, we got OK Boomer coming up in a minute. But before that, we have a favor to ask of our audience. We do. Because knowing more about you helps us create valuable content, of course. So we have created a survey. We're doing the audience survey.

It's very exciting. We have a survey and we have some giveaways attached to it. So we'll be giving away $10.50 Amazon gift cards to random people who fill this out. Very generous. Thanks, boss. Half submissions do not count. We really need you to. fill out the whole thing.

Fill out. Please. This week in startups.com slash survey is where you go. This week in startups. com slash survey for a chance to win a $50 Amazon gift card and tell us a little more about yourself. Awesome. We appreciate it.

Help the team out here. Listener of the show. Yeah. Give it a shot. Yeah. It only takes a minute. Believe me, I've done it 30 times. Fantastic.

I really skewed the results in the back on the back end there. I think we reset it after we. We reset it. Don't worry. And that's Friday. So you know we have OK Boomer. All right. Enjoy OK Boomer, everybody.

Mike O'Brien, a tech reviewer on YouTube with over 385,000 subscribers and engineer and a marketing specialist. We, I believe you and me, Jason, laid the groundwork for the Mike O'Brien's of today with our work in media over the years. So enjoy this interview with Rachel. Let me tell you about House of Macadamia. Yes, this brand has a special place in my heart. because the founders, Carmen and Brandon, well, they're twist listeners. They've been listening to this podcast, and they told me that they got inspired to start this company after listening to this very pod and reading my book, Angel. In fact, their first angel investment wound up hitting it big, and they used the returns on that angel investment to start a nut business. These people are crazy. They're nuts. They started a macadamia nut business, and it is delicious. You can see the graphics on the screen. All nuts are not created equal. Peanuts, almonds, cashers, walnuts?

Those are, you know, they're good nuts. But macadamias are the elite great nuts. They're higher in omega-7s. And that's been linked to fat loss and natural collagen. They have more healthy fats. They have less carbs. And every product is vegan, keto and paleo. I love these.

I love the dark chocolate covered ones. That's just me. They have beautiful macadamia bars. Buy some of these. Keep them in your desk draw. That's a healthy snack for you to have. They also have some zesty, spicy ones. If you have that kind of a day,

I like to do that if I have like an ice tea and I can pair it with a zesty salsa dry roasted. So here is your call to action, support a founder and have great macadamia nuts that are healthy and delicious. House of macadamas.com slash twist. House of macadamias.com slash twist. Right now you get 20% off by using the promo code twist 20. That's right. 20% off. House of macadamias.com slash twist. So thank you so much, Mike, for joining me today on this segment of OK Boomer.

For those of you who don't know, Mike O'Brien is a tech reviewer over on YouTube. He's also an engineer and a marketing specialist, and your YouTube channel is pretty big. I started watching you probably when I graduated college in 2020, and I know you've been making videos since 2017. Now you have over like 385,000 subscribers. So kudos to you.

That's been awesome. Yeah. Thanks for having me on, Rachel. So for those of you also who have been tuning into OK, Boomer, Mike's brother has actually been on the show tune, Nate O'Brien, which is kind of cool. I did not find you, though, through Nate's content. I found you through tech reviews when I got my first Apple Watch. Really?

I did. So I was like, oh, wait, what the heck? Didn't realize it until I was on Twitter one day. And I saw you guys chatting. And I was like, wait, wait, what the heck? So that was pretty funny. But how did you actually get into reviewing tech on YouTube? I think that's a really cool kind of niche to be in.

Yeah, it is. So when I started, it was already pretty saturated. There was a lot of tech creators since, like, 2012 or whatever. But I actually didn't start off in tech. I started YouTube, kind of like you said, Nate had a channel a little bit before I did. And I was studying engineering, senior year of college. And I had a little bit of extra time. And Nate was saying, like, Mike, you got to try this.

Like, he already had his channel for about a year then. So I thought, well, I don't know, engineer. That's like the opposite of a YouTuber. Like, I was not good on camera. I was not good at talking to people. But I thought, whatever, I'll do it. at least I'll get better at public speaking. So I made a channel senior year and about like four to six months later, I was able to

monetize it. So I thought, oh, this is actually kind of fun. I graduated, started working as an engineer for a while. But like in the summer, I was really focused on like my original channel was like academic type stuff and that like really dried up in the summer. So I thought this is not going to work. I need to like kind of pivot. And so I thought, well, like my audience is like kind of students.

Like maybe they'll need some new laptops. So I started talking about that and like the videos did a lot better. and I kind of just moved into tech from there, partially because I was really interested in it, and also just because it was like a much better niche than what I had. Yeah, I actually had no idea that you were even doing academic videos. What do you mean by academic videos? Like SAT prep?

Kind of, yeah, exactly. I hide those videos. They were really embarrassing. Back then, I was much worse on camera. So as soon as I had like a good foothold in tech and I had an audience that was more tech than it was like the old audience, I just made all those old videos private. They were just so embarrassing. I feel like it's good, though, like getting in reps and learning to be comfortable on camera is also like a skill.

Do you have any advice about that? Yeah. So that was like the one thing that I always did when I started was it's very different when you're like alone and you have a video. Like you're just recording yourself. It's very different from talking to a lot of people. When you're starting, everybody thinks it's like I'm talking to 200,000 people. But the truth is when you're filming, like you can edit the video. You can cut out what you don't like.

And so I just had to always tell myself that. And even in the days where I was like, I just don't. don't want to film today, I thought, well, I'll just turn on the camera and then I'll delete the video later. It's better to do it than to not do it. And just more experience makes it a lot like a lot easier. And it also helps with public speaking in general. Yeah. And you kind of hinted and said that you were doing engineering before this. Was it anywhere like on the same like hard tech kind of like wavelength? Like did your engineering background help you become like a better tech reviewer? It did in some slightly different ways than I think I expect.

So I worked at a company that made smart home devices. So now it's like kind of full circle. I even cover some of their stuff in some of my videos. But it was like smart home devices, light switches, things like that, which was like really fun. I liked doing that. But when I first started reviewing things, like I tried to tie in engineering as much as I could, but for the most part, it was really, it seemed really different.

But where it was similar was more on like the back end of it, analytics on YouTube, diving into the numbers, stuff like that. It's a lot of the same thought, like thought process, the same structure. And so that kind of framework really did help me to figure out what was going to work on the channel and grow it from the back end. Does that make sense? Totally. I mean, you're also like a marketing expert. And I have seen some of you and Nate, some of you are Nate's content related to marketing.

Isn't marketing like a natural gene of yours? Like, is this just something that you're really good at? Because I've noticed both of you are great at scaling channels. I went through and did some research before the show. I saw you guys even had like travel channel that looks kind of cool that used to make videos on. And even that had like a pretty substantial amount of people watching those videos. What has been this like recipe in marketing that's really worked for you? So I think, I mean, different parts of marketing are more and less interesting.

I think for me, one of the reasons that like, first of all, YouTube was interesting. It was because they give you like really good real time analytics. And so seeing the numbers was so interesting. And that was like a big part of it. That's why I became interested. I think Nate was pretty similar as well. But, yeah, we have a bunch of other channels now, and it's really just been like, whenever we do something, it was just like fun to, like, film when I was traveling.

That's why I started that one. And it's really transferable, I think. Once you kind of figure out, like, one platform, it really is easy to transfer because generally you're doing the same thing. You're trying to capture the interest of some audience. So whether that's on Twitter or any other social media or your website or like a blog, whatever, it's really kind of the same concept. It's not like you got to win the favor of the algorithm.

It's really just like all algorithms are usually doing the same thing. Yeah, totally. That makes sense. And have you been able to use like your marketing knowledge to go to other platforms or use somebody that's pretty like YouTube central? So, I mean, I think, yeah, to some extent, it's like a limit of my time. And like currently one of the larger struggles is like growing a team. Like it's so hard to like find people to hire and then hand off certain tasks.

to them. So I've definitely like, you know, messed around with Twitter and Instagram and stuff like that and other platforms. And like Nate and I've started some blogs, found some success with that. But really it was like a time thing. And so YouTube was what I know best and what I really like doing. So that's why I've been focusing a lot on YouTube. Almost probably at least 85% of my time is YouTube. When did you decide to become a full-time tech reviewer? That's a great story. So I was, okay, so I was working at Lutron, like I said, I loved my job. It was great. Engineering was really fun. I liked my team. It was a great place to work, but I found that I was like at lunch going out to my car and editing videos on my laptop.

I was like showing up exactly at eight, leaving exactly at five. And I kind of realized like, clearly that's what I prioritize. It wasn't like engineering. I really wanted to scale my own channel. So once I got to a point where like financially it made sense that I could leave and it wasn't like a super high risk, I had a meeting with my supervisor, probably not the best way to it. Like, I don't know if you're supposed to, like, write a letter or whatever first. I just had a meeting. I called the meeting update. And he sat down and he was already stressed because he got a new project and he was going to staff me for the project. And he was like, so what are we going to talk about? And I said, like, this is great working here, but I have to leave. And he was like,

you got a good offer somewhere? And I said, no, I'm not doing my own thing. And so it was a weird conversation, but it just like, it had to happen. And I don't regret it at all. It was a perfect time to do it, I think. Yeah, like, how far along was there a certain, like, subscriber number that you chose to, like, be like, okay, now that I've this many subscribers, or was it, like, finally being able to monetize your channel? What was your metric for being able to do this full time? It was definitely based on the financial side of it. Subscribers, like, were fun and interesting and all, but that was more, like, subscribers are more for, like, my own personal ego, whereas, like, the revenue is what really mattered. So when I was able to, like, afford my rent

and all of my expenses with YouTube, that's when I said, like, all right, I don't need, like, yeah, there's a lot of volatility and changes like seasonally and monthly. It was still like, if I could do that, then I'll be able to put in more than just like a couple hours a day. I could put in a whole day into YouTube and scale it up from there. So really the minimum was when I could like afford my rent. Okay, I like that. That's a good, good rule of thumb. And also like, so like I said, I saw you through, I think it was like an Apple Watch review.

I'm waiting for you to do an aura ring one. I don't know if you've done one, but like you got to do an aura of ring one because your Apple Watch one was pretty. good. I saw you had another Apple Watch one that I think even dropped like today that I watched. I'm not going to lie. Oh, I put, yeah, I did pull it out today. Yeah, yeah, another one. I was like, what are the odds? But it was good. Um, you've done a bunch of different categories, though, of reviewing. I know laptops are another one that's super big, especially like going back to school. That was like another sector that like I really like, um, you working in. What is your favorite product or like area, I guess, to make videos about? So I think there's two answers to that.

There's a favorite product that like a favorite category that I know will do really well. And then there's a favorite that like I was just personally really interested in. And they're like very different. And I'll explain why. So this like the one category that does really well is like anything that is like really made by Samsung. For some reason, my audience like really latched on on the Samsung side. Just not a lot of people covered them.

So like a lot of like Samsung wearables like watches and earbuds just like did really well. So I like those videos because they always do well. But like I've been making. a lot of the same content for a couple of years now, not the same, but like the same category of content. And so recently, I kind of decided, like, I want to make a video that would just be fun to make. And so I reached out to a bunch of electric scooter companies and I made a video about the best electric scooters. And I have like six electric scooters now that I got to keep. And so that was my favorite one. The video did not perform well yet. I'm hoping it'll pick up.

I'm confident over time it will, but I just had to make the video. was like the most fun one to make. That is so cool. We actually, my roommate's aunt, I think, I think it's like his aunt gave us a scooter because she could no longer have it like in her apartment building. And it's been really cold out, but we still take turns scooting around Manhattan and going over the bridge. A little dangerous in our area, but I have to say, I will be watching a video because

we were a big fan, big fan of their work. And that you were attending CES? Were there like anything that really caught your eye? Were there any cool scooters there? there were a lot of scooters there there were actually surprising there were a lot of scooters there a lot of the scooters though are kind of like

I swear they're made in like two factories so many of them look so similar they have a lot of the same parts a lot of the same like everything so no like super interesting scooters but there was a lot of interesting stuff at CES it was definitely way better than last year last year was like so empty because you know the whole like COVID thing

like nobody showed up but yeah this year it was like a lot of cool stuff that I think is going to be bigger in the future, but it's always so hard to pick through at CES because there's so much concept stuff that'll never exist. Like a lot of the electric cars there, like Sony had one that had like a display in the front of the car. I was like, that'll probably never come to market.

But I thought the one thing that really stuck out to me was like the 3D displays. Like not like in the past that were always like kind of janky 3D displays. These actually looked like really good. So I'm excited to see those kind of start showing up. What do you think a good use case for a 3D display would be? So they had a lot of like demonstrations there where they were showing like maps and like healthcare stuff and whatever. And I could see all of that would be useful.

And I really think like industry is going to find more use out of it first. But I think it's going to kind of be an alternative to VR. So like VR is great. And I think there's a lot of situations where people want to use that for 3D stuff. But it's not always feasible to like pass around a VR headset or get a bunch of VR headsets. Like obviously, you know, if you're like a doctor, you don't want to like be passed around like a dirty VR headset. Like, a 3D screen could be, like, a lot more useful for that, I think. Yeah.

But who knows? Definitely. Definitely. I think I can see it happening in medical. I feel like there's always, like, NCIS and shows like that that make them for, like, crime scenes and things. So I'm like, okay, that would be interesting. Is there anything, like, overall, maybe even outside of CES, that you're predicting, hitting the consumer tech world or even, like, the smart home world anytime soon?

Yeah. So definitely one thing that. that I was super interested in this past year that I think is going to be like a little bit of breakthrough in the next couple years is related to VR, but not in the way a lot of people think. So I think when people look at VR, they're like, oh, either like the Zuckerberg vision of like everybody's in avatar in meetings, I don't think that's going to be as popular as quickly as they assume. I think it's really going to be used more for like different things. So for For example, I used the new MetaQuest Pro headset to replace my monitor for my laptop.

So it was cool. The technology is not like perfect yet, but it was really interesting to be able to like, if you're in a smaller space, if you're traveling like on a train, if you live in a van, whatever, to have like three giant monitors around you and still see like your keyboard and your hands and like whatever else in this kind of augmented reality that, like I think that has a lot of potential. And people were really interested in that as well. Like I made a video about it.

a lot of positive comments, a lot of excitement around it. So I'm excited to see where that goes. Have you ever had a video get a lot of negative comments due to, like, it's adoption? Like people being like, man, like that's just like a stupid idea. Like,

why are you even reviewing this? Yeah. So a lot of negative comments usually lead to like, well, I don't know. If it's like a controversial video, like it'll get a lot of views, but if it's like a dumb technology that gets a lot of negative comments,

usually it doesn't get a lot of views. Not as much. But yeah, I've had a couple that had. a surplus of negative views or negative comments. Yeah, do you think, I guess, I was hoping you would say like, like the Metaverse, like goggles or anything like that? Because I feel like even that, I get pretty motion sick.

Oh, yeah. I got so motion sick. Yeah. I mean, yeah, that's another reason that I think like a 3D like display might be useful so that like you don't get motion sick from it. Because like I was just like, I don't know, I was messing around with it playing like a bunch of different games. Some of them are fine, like Beat Sabre.

No problem. Yeah. But I was playing this one basketball game. And like something about like the avatar running, but I'm not moving, this made me feel so motion sick. Plus like, you know, I was jumping around. I punched my ceiling pretty hard. So definitely some pros and cons with VR for now.

Yeah. I get that. If you have any advice for other people looking to break into the tech review space, what would that be? So I think the most important thing is to not do what other larger channels are doing because that's what worked for them, and that space is probably already saturated. One of the reasons that I was able to get into the tech space

is because I didn't focus really heavily on phones. I focused a lot more on earbuds and smartwatches, which at the time, a lot of the big channels didn't really cover. So the fact that it was like a rising technology wasn't heavily covered, gave me an opportunity to start covering it, capture new audience, and grow from there. So anyone who's looking to start, you really need to find a new emerging technology

and focus on that. Awesome. I think that's great advice. I'm super looking forward to watching more of your videos. Like I said, I don't know if you've done an or a ring video, but if you haven't. I plan on doing one in the next couple months. I've been trying to, yeah, I'm working on it. Okay, good, good.

I just got one for Christmas. I like it a lot, but I want to see from your standpoint, I feel like you have a pretty good judge of character around these things. Oh, yeah. I look forward to making that video. I will make it soon. Awesome. Great.

Thanks, Mike. Yeah, thanks so much for having me. All right, everybody. We made it. Jason, go to bed. You know, I have been so sick this week. I don't know what I got. It's not COVID again, thankfully.

My COVID, I would love to have had COVID again compared to whatever I have right now. My COVID was so easy. It was like 24 hours of hot sweats. And then next day I was done with it and I was out skiing a couple days later. Yeah. This is more difficult than. I think you are. RSV. I don't know what that is.

That's my theory. It's not good. It's not good. But the main thing is, it's Friday, and hopefully you're going to, like, knock off and go to bed now. Love my. I am, you know, have like two more meetings today. And, yeah, then I can sleep or whatever. I've been doing the steaming. That seems to be, if I steam, I do a little mucinex, I put the eucalyptus in the steam. I have one of the showers in the house has a steam button. You can press the steam comes out, so I just sit in the steam. And that seems to open me right up. That I think that will help. Love a netty pot.

Oh, a netty pot. Yeah, I should do that. I've done that before. Yeah. But yeah, take care of yourself, everybody out there. And have a great weekend. We'll see you on Monday with more this week. We will.

You missed it. Don't forget. So good. I've started it and I'm going to finish it this afternoon because I was like, this is just, I needed to like literally clear the decks for it because it's such a good listen. I found myself like doing the 30 seconds skip back over and over. And then I was like, all right, just carve out some time for this.

And if you have people who have done three, uh, if you have people who have worked through three boom-bass cycles, please email producers at this week. And so specifically people who are not white dudes who are 60 years old, because that seems to be the bulk of them. The good news is, the season before of Angel was first time, uh, fund managers. And that was incredibly diverse. So I'll beg the audience's forgiveness if. It really shows you how times have changed, doesn't it?

Like when you go back to your three cycle? Let's own it. Yeah. Yeah. It really does. Massive diversity in season seven and we may have zero or season six, I think it was, we'll have no diversity in season seven. Please put the two together and average them out before you judge us because we can't go back in time

and change the fact that the industry was nine out of ten white dudes. Heidi Roizen, that's who we should call from threshold. I'm trying to get, you know, and. I'm going to write that down. She's incredible. I mean, total Grand Dame. She was DFJ and now Threshold. Like, she did, she did that.

What's that Mac software that was kind of like a spreadsheet before like Excel came along? I don't know. She can't remember. Lotus 1,3? We'll do this. We'll do this offline. We'll produce offline. No, no.

People were talking about it online. I saw there was a thread back when I was asking. And so I just want to, I always like to address these things head on. And so if you have people, producers at this week in startup stock on, we're all yours. But go ahead and now, Regina Roizen. sold tea maker, which made software for CPM and MS DOS and later for the Mac. And then she has been an investor forever.

She's amazing. Yeah, that would be great. And even if they were operating a company and then did a VC stint, I think that would count two. You know, you operated through those three things. But she came into VC as a managing director at SoftBank Venture Capital in 1999. Amazing. She's seen it exactly from like the exact moment.

That's like when I came here, moved here and gone into tech in 99. I was like, yay! Oh. Well, I mean, it's, and then a lot of folks, you know, one of the problems, too, is if you're a VC, independent of gender, race, you get through two cycles. You probably hit something. And you're like, you know what, do I want to do a third cycle? It's exhausting. And you retire.

So that's the other problem is, I think a lot of people, there's a certain group of VCs hit one cycle, retire, and then some hit two, retire. And then what's the point of sticking around? for a third, you either love the job or money or you didn't hit. So you're still at it. Right. I'm still trying. And that's what I'm sort of learning from the first two is that they both, the first two interviews were off the charts excellent. So I don't regret doing three, you know, cycle VCs. Because I think it will turn out to be something very special. But they all love the job. I think you have to really, really, really, really be committed if you're going to stay through three cycles.

So I think it's, we'll wind up being a great decision. So fascinating. All right. And then while you're taking a little time for yourself this weekend, please just one more reminder to fill out our audience survey for the chance to win a $50 Amazon gift card. This weekend startups.com slash survey. This week and start up.com slash survey.

You fill it out. Maybe you win the gift card. But if you don't, you still win our internal. Don't do like three things. I get to fill up the whole thing. It takes the last question. Yeah. You can see, it tells you exactly how long it takes.

Like, this is not a, like, a major commitment. You don't need to, like, make a pot of copy from this. No, but it's super helpful for us. Okay, thank you, everybody. Thanks. Bye-bye. See you next time. Bye-bye.