This Week in Startups - Nikola lawsuit updates, Rumble business breakdown + more SPAC updates | E1565

Episode Date: September 20, 2022

Tuesday SPAC-tacular! J+M cover the biggest on-goings in the world of SPACs, including: the latest in the trial of former Nikola CEO Trevor Milton (1:55), Chamath winding down $IPOD and $IPOF and returning money to investors (30:53), and a breakdown of Rumble's business after completing its SPAC! (42:55) (0:00) J+M tee up today's SPAC-tacular episode! (1:55) More chaos at Nikola, Jason reacts to TWiST interview reportedly being used in court (10:48) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist  (12:04) State of charges against former Nikola CEO Trevor Milton, lessons for founders to take away from this saga (23:18) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://Squarespace.com/TWIST (24:37) How Jason avoids founders pitching ahead of their skis (30:53) Chamath to wind down $IPOD and $IPOF (35:06) Revelo - Get 20% off the first 3 months by mentioning TWIST at https://revelo.io/twist (36:33) Jason's thoughts on the market and the state of SPACs, plus a JAY TRADE! (42:55) Rumble completes SPAC merger, J+M break down the business FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

All right, everybody. It's Tuesday. We're climbing the hill and we have a spactacular show for you. Spactacular never gets old. Oh, yes. Well, we start with the SPAC of Nicola, the failed alternative energy vehicle company. They're on trial in New York. Trevor Milton, the founder who was on this very podcast and a clip from our podcast was played reportedly at the trial today. So I'm going to comment on that and then we'll get into other SPACs going on. Yeah, it's good stuff. We're going to, we'll talk about. Chamath, winding down two of his SPACs and returning the money to investors a little bit on the mechanics of SPACs, I think, because a lot of people are not familiar with why a SPAC might get

wound down at all. And then we'll break down the business of Rumble, the right wing slash free speech neutral YouTube, depending on how you're pitching it. And most importantly, I will make a J-trade. It's been a little quiet on the J-trading front, but I'm making a bet, big bet, based on some MNA activity in the market. It's going to be a great show. Stick with us. This weekend startups is brought to you by Vanta. Compliance and Security shouldn't be a deal breaker for startups to win new business.

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Get 20% off for the first three months at Revello.com slash twist. All right, everybody, it's Tuesday, there's a lot going on and my Twitter's blowing up. I guess Trevor Milton, I didn't realize it, the founder, CEO of Nicola, who was on this very program, not too long ago. He is on trial right now in New York. Uh-huh. So let's give a little background here. We're talking about, of course, the company Nikola, which went public via SPAC. It was like meant to be the, you know, savior of electric vehicles. It had a $2 billion investment from General Motors. and they were going to develop an electric pickup truck. And that all, let's just say, went wrong. A research firm, like, I almost thought that they had made this up when I read it.

A research firm named Hindenburg. Hindenberg, real firm. True story. Legit. Accused the company of massive fraud saying that Nicola vastly overstated the capabilities of its technology and vehicles. Claims its partners didn't do their homework. The stock went down 18% as of the time, as of,

I think early September, I would imagine it's maybe a little worse now. Nicola, I think founder and chairman Trevor Milton had already like stepped down as CEO, but was still the executive chairman. And so people feel like there was a whole process of him exiting. But, you know, when he was on this program, I kind of knew this was sketchy. And I knew there wasn't a lot there. And it was pretty obvious that the company ran up to 30, 40 billion that it was not worth

at. Now I've been very critical of all these companies becoming worth billions of dollars before they have a product in market. That's Jason's law. The company becomes worth more than a billion dollars before it has a product in market. It could be a fraud, a scam. It's probably going to fail. Right. And we have a long list of companies like that.

Right. And this is the one where they had the like semi-truck prototype that just was not actually even real. Right. It was like not down a hill. They pushed it down a hill. Right. Okay. Yes.

This is the one. So now you're all caught up on the history of Nicola. Sort of. Sort of. Because it's still being written. I mean, this is a Theranos level fraud, it seems, based on my, you know, and I sort of said this, but, you know, people were really sweating the interview. Like, hey, why did you platform the guy? And I was like, well, I kind of let him talk.

And I asked him some very targeted questions strategically. So my interview technique here, if you want to see that interview, it was episode 1090. If you just type in this week in Startups, Trevor Milton, you'll find it. And then I did an emergency podcast when the SEC filed his, stuff, but there was a moment when I was like, not a lot of this adds up. And I had asked him, hey, why are you doing the badger or something was like their consumer product? Now, they had this idea, and I'll throw this clip in a second, Molly, but their business idea was they were going to sell like hydrogen-based trucks and a hydrogen-based system per mile to, and maybe have self-driving

at some point. Anyway, they were going to sell this to, you know, Anheiser-Busch or whoever had to ship a bunch of stuff. But their innovation was, you don't even have to buy. buy the trucks. We'll just sell them to you on a per mile basis. So this sounds like, I don't know, maybe business model innovation. I got it as a service. Boom, boom, boom. Yeah. Very well done. Yeah. Yes. So, you know, you then have to think just from first principles, well, has this person ever built anything in the world? What have they built? And he kept it trying to explain how their technology was better. So I just kept asking a very basic questions. Well, why doesn't this exist already? And, you know, how do you do it cheaper? And I just let him talk.

But then they had released this badge when they started taking $5,000. dollar deposits for it. And I was like, well, if you're doing hydrogen. And the badger was consumer. Consumer. I said, if you're doing all this B2B, why would you start a consumer practice at the same time? And then that's electric or hydrogen? Like, why would you do electric? I don't understand why you would do this. Now, I had warmed up, I had warmed him up a bit. Now, I'm not trying to set up anybody on this podcast. But in this case, you know, I do want people to talk and get their point across, and if the person is a fraud, as he allegedly is, and I believe him to be, as seems like the likely scenario, my gut, my radar, Molly, if you will.

Why would you launch another product? And so, you know, my interview technique is just let him talk. For anybody here, I want to let them explain, you do interviews. You want to let people explain their vision and ask them a probing question. So here's the probing question. I asked him. So now you've got all this cash on the balance sheet, and you've got all this runway. but you, this building a network of hydrogen chargers and coordinating the building of hydrogen

trucks and satisfying a bunch of customers seems like an awful lot of work. And then, I'm not sure exactly the date you announced it, what date did you announce that you're going to take on Ford's F-150 pickup truck and Elon Cybertruck and the Rivann, Rivan is the other. Rivian. Rivian. Sorry, Rivian. So now you decide, F it, I'm going to create an F-150, the best-selling,

car in the United States, I think, and obviously the best selling truck. Why would you take on more work? That's a good question. Yeah. So here's the reason why. Our trucks are a gravy trained with money. That's where all the money comes from is our big semi-trucks, right? The problem is, is 90% of Americans will never own a semi-truck. And so your investment, your portfolio of investors can be very limited. And we wanted to go and build a company is going to be worth $500 billion, trillion over, say, 10 or 15 years. And if you're limited in yourself to 10% of the market, you'll never do it. No matter how good your numbers are, the reason why people love Apple, everyone touches their

product. Why do they love Google? Everyone touches their product. So what I did is I knew day one, you know, once we started coming out, we had all this gravy train coming in from the semi-truck program. My question was, okay, that's great, but I'll never touch the average consumer. So therefore 90% of investors will probably never invest in me. So I needed to touch the consumer.

And so the truck is for the profit, the semi-truck, the pickup trucks for the consumer. And the consumer is the one who is part of the Robin Hood portfolio, is part of the, you know, the family office or whatever. And that's where all the valuation of the company comes from. My, like, literally my jaw dropped when he said gravy train of money. Yeah. I mean, so much to break down here.

I think there was no recorded revenue. They have no revenue. So to refer to it as a gravy train is crazy. Gravy train. Yeah. Potential money printing machine would be. you know, it's just a very delicate, just a very basic qualifier there.

Potentially, we hope will be a gravy train. We intend to, you know, our intention is to make that. But this idea of touching the consumer. Yeah, explain this like retail investor thing because that seems to have peaked a lot of interest, this, like, get the Robin Hood folks involved. This morning in court.

Yeah. Because this would lend itself to, saying he intentionally created a product to manipulate retail investors into investing in the company would be, I guess, the most cynical way to look at that. He was literally trying to court day traders. Like Robin Hood is a proxy for retail investors, right? Yeah, yeah, exactly.

Like lure them, get them interested in buying making it a meme stock. I mean, he says it. He doesn't think it. He says it. Yeah. This is not like he said it in a meeting. like, you know, hey, and there's a little bonus here, Molly.

Tumbled right out. If we had a consumer product, you know, like consumer retail might be in it. And I'm listening to this and I'm trying to parse it. And this was kind of, there were moments in this where I was like, this guy's a real idiot. I mean, this guy's a dope. That's literally what came to my mind. It seems kind of dopey to me. It reminds me of our cryptocurrency conversations with Sunny and Vinny and how we keep

talking about how when you're financializing a product before you have product market fit, you're ahead of yourself, you have a problem. What he is describing to you right there is how he's trying to financialize his business. Like, I'm trying to offer a portfolio to investors in order to get me the capital that I need to actually build my gravy train that does not yet exist and is producing no gravy. I literally felt like at that moment, I was Joe Pesci in my cousin Vinnie. You know, when he's got somebody on the stand. I was like, that was like a Columbus.

moment for me. I don't want to, I really don't want to, there it is. I mean, if you zoom me on that face frame on this face, where you're just like, what? Really? You know, it's like Columbo. Like, oh yeah, you order the chicken palm on Sunday night? Just a hint of a smirk. This is Jay Cal's pocket ace's face for anybody who gets invited to the poker table. This is no, this is when somebody is what it looks like. When somebody re-raises me and I know they don't have it and I'm like, come on. Okay, founders, if you're a SaaS or services company that stores customer data in the cloud, and you need to be SOC2 compliant from a third party if you want to close big deals. And we don't want to close big deals. You

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$1,000 off. That's right. Vanta, big fans of this week in startups. And you can get $1,000 off your Vanta Sok2 compliance at vanta.com slash twist. That's V-A-N-T-A-com slash twist for $1,000 off your sock, too. And it's such a great company. I made an angel investment as well. Congratulations to the Vanty team. Well done. I think the most important thing we should think about here when watching this clip, like the most instructive part of this is, man, I was a fat bastard. Holy shit. Do I look fat? You look great. You look great. Now, you look great. So, you look like a linebacker. I look like the fat kid from the, what was Jimmy Kimmel show?

The Man Show? I look like the fat kid from the Man Show. I mean, it looked like Dom Deloese in that photo. Thank the Lord. I don't want to focus on the past. I do. I look great now. I'm going to focus on the positive, which is that you look amazing now.

You are so fit and healthy and you're going to live forever. Thank you. Thank you for that. Congratulations. That took hard work and you did it. I did it, yes. You know, I just did what, you know, any other supermodel. You know, or Instagram model has to do, which is starve myself.

Yeah. I mean, just starving myself, whatever else has to do. Shout out. That's what we're doing. Okay. In the healthy way. Nothing tastes as good as skinny feels. That's right.

That's right, Nick. A moment on the lips, a lifetime on the hips. Oh, my God. What is that from? I know that lie too. No, nothing looks as good as skinny feels as Kate Moss. I believe that's a Cape Moss line. Oh, dear God.

Oh, maybe Gwyneth Paltrow. Yeah, I think it's a Cape Maw. That feels like our heroin chic, our heroin chic genre or time frame. She's like, yeah. All right. So anyway, he resigned. Let's just whip through this here because he's guilty in my mind. He's all this stuff happened, right, that prosecutors are alleging he lied to investors about the status of the company's trucks and technology on TV, social media and podcast.

By saying the company was doing better than it actually was and specifically trying to lure retail investors, prosecutors allege. he caused, he manipulated the stock, caused it to go up and became a billionaire. He resigned in 2020. He pleaded not guilty. He, I believe, stayed the executive chairman of the company, which is, and now he's on trial and its top execs. The top execs at Nicola are currently threatening to quit

if he doesn't step down. And then, yes, as Nick points out, he called it an effing gravy train. Like, he didn't say, to your point, it will be. He was like, it's a gravy train. Don't worry, you can safely invest in this company. There are a bunch of quotes here. It's sort of important, I think, just as we look at these.

In a letter from the prosecutor to the judge, the current CEO, Mark Russell, is prepared to testify that he, the CFO and the general counsel, considered Milton's promises about Nicholas progress. Too risky. This is according to Bloomberg. Russell is set to retire his CEO on January 1st. Russell claims that before coming on as president of Nicola in 2019, he and Milton agreed that Russell would become CEO of Nicola, became a public company, yada,

According to the Wall Street Journal, Russell said, quote, anything he said in public was the equivalent of a press release or securities filing. Russell said, quote, that was totally against what I was bargaining for. Wanted to be the chief executive officer in terms of leading the company and making public statements. So this is where the problem was. He went on this like crazy press store and just started saying crazy stuff and not vetting it. You have a really, we talk about this with our seed stage companies, let alone public companies, where people can trade the equities publicly. We tell seed stage companies, never exaggerate. own reality, present things as they are,

and let investors make their own decision. And you don't ever want to be manipulating or bending the truth. Manipulating investors, bending the truth, it's unnecessary. We all are grownups here investing in companies. We don't need you to manipulate us. If you say, we don't even have a prototype.

We have a concept. Great. Okay, the company's worth $500 million. Oh, we have a prototype. Great. Companies worth a billion. Okay, we have a prototype and we have $5,000 pre-orders.

Okay, great, the company's worth $2 million. We can price the company according to reality. No big deal. And we see this, Molly, just to make it important as a lesson for this week in startups, founders who are listening. You might be talking to customers and you might have a pipeline of potential customers.

And you might have targets, right? So you have targets. You want to call up Uber and DoorDash and get them as customers in Google. You might have people you're talking to currently. You've got Apple and Microsoft and they have contracts. They haven't signed them, but you're in negotiation. And then you signed, you know, Twilio and Oracle and they're actually your customers. Yeah.

And what we will see founders do is, say, are customers or companies we're working with? And they put all those logos on the same page. This is lying. This is being dishonest. This is manipulating investors. And there is a unique word for this. When you sell securities and you lie, you put the word securities and another word for people who lie and then do a transaction. It's called fraud.

So when you're lying and then you take people's money, then you're perpetrating a fraud. And that's securities fraud. And that means jail time. It can. He's apparently facing 25 years in federal prison over this because there is a difference between marketing, magical thinking, rosy predictions. Like, we're all familiar with CEOs who get up and promise that there will be really, really cool products in the very near future.

No, you know, not thinking of anybody in particular. You better deliver. And that you make these forward-looking statements that may cause your stock to go up in the short term. Yeah. And you might then delay the release of that product, right? It might not happen right away. but you do ultimately have to deliver.

And there is a line between what is lying to investors and saying things like, this is a gravy train without really, you know, when you have no obligation to release your financials and prove that in fact it's not or you have some obligation to do that and then it's not, it got to the point where apparently Russell, the new CEO said that the company's own bankers did not want Milton to come to investor meetings because he wouldn't present what was on a slide deck during a meeting with SoftBank. And then Russell claims that Milton thought the company's bankers, quote, don't know how to sell. Yeah.

So, you know. Like he is a pump. He's a pumper. This seems like intentionally defrauding investors based on his own coworkers, his partners, inside the company, his team, throwing them under the bus. And the bankers, in fact, saying, like, this kid couldn't stay on the deck. Which he couldn't, if you can't stay on the script, I mean, when, And I guess Masayoshi-san didn't invest.

So when Masay Yoshi-san passes on your bullshit. Yeah. I'm sorry. When he passes on your PS, red flag. You know? Yeah, that's not a good thing. Massey-Osi-San was like, not for me. Can you imagine?

This kid comes in. He's like, we're going to change everything. I'm good. He's like, I got a huge vision. It's going to be a gravy train. We're going to disrupt the, and I mean, disrupting long-haul trucking is, in fact, a great pitch. That's a massive.

And if you think you can do it and you can pull it off and you're not pushing your fake truck downstairs after you literally ran to Home Depot to get parts for it, or down a hill rather, like maybe. But yeah, he, not having it. Of course, all this happened as a SPAC, right? And this happened during meme stocks. And this happened, you know, I said over and over again,

you know, you got to look at each of these companies from first principles, got to look at the actual performance, what's been delivered. We have a long tradition in Silicon Valley, Steve Jobs, Bill Gates, Tesla, everybody, now Zuckerberg with his headsets. We all like Google with their, you know, Sergei showing Google Glass. We like to show you a little bit of the future, tell you where we're going.

And usually that comes with like, hey, you can order this product. It will be delivered in this time frame. And so when you do those keynotes, part of what you're doing as a company is you're planting a flag. It's the planting the flag strategy is how I refer. to it. You're planning a flag. We're going to make a headset. It's coming out on the state. We're going to make the model S. We're going to make the model three. We're going to make a cyber truck. We're going to, you know, we're going to do each of these things. You can put down a deposit. We're going to we're going to deliver it on this date or, you know, it's going to take this amount of time.

You can miss dates. That's no problem. Right. You better show progress. You better have prototypes. You better, you know, have apps being developed for these things. And you better have a track record. So with Apple, Tesla, Google, anybody makes a promise, the stock market can say, let's look at the track record of that company. And when you don't have a track record, previous company, this company, you kind of have to prove some things. And that was another problem here. This person believe they were Steve Jobs.

They believe they were Elon Musk, obviously, named the company. Nicola. Nicola. That's the first name of Tesla. It was the first name of Nikola Tesla. And I kind of asked him about that. Because I had nothing to do with Tesla. And it was like, well, this person's a liar.

And so, you know, even with just the naming of the company, it feels like a fraud. Right. I mean, as my favorite economic analyst, Matt Levine says, just about everything could become insider trading or securities fraud. Right? Like, it is and remains in some ways of fine. I think we're seeing that with like meta right now. Like Mark Zuckerberg is out here like we're doing the metaverse. I got my goggles.

Like I got app developers on board. I'm spending $10 billion. If nothing ever materialized, it wouldn't be that far away. Right? Like everybody who's marketing. Because when you do a presentation like that, you say we're going to do this product. We're going to move into it. You are attempting.

That's not just. just for like me, consumer, you're attempting to reassure shareholders. You're attempting to build confidence in your company and presumably get capital from public markets to keep doing what you're doing. So like there is a tipping point and probably that is very legally defined, which is why this guy got charged and others have not been. But it's like an interesting, I mean, I guess all I'm saying is like, we've trained a lot of founders to do some version of this.

and it can get harder and harder to snip out the difference. And I think if, yeah, especially if you're a new investor, you know, you're some young person who's trading stocks for the first time. You open up a Robin Hood account. You open up whatever account. You see a bunch of excitement around Tesla or a bunch of excitement around Apple. And you see them using this playbook. And then this person comes along using the same playbook.

And literally targets you. And it's literally targeting you. Right. So it's, this seems like he, in a premeditated way, said, this is why people buy Tesla shares. This is why people buy shares of Apple. This is what Steve Jobs does when he's on stage. Let me mimic that to send a pattern recognition to naive investors. Right. Listen, Squarespace is the platform where you can build or sell anything. You all know it. I've talked about it forever a decade here on this week in startups in partnership

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as a subscription or one-off pieces of content. It's amazing. And if you build it for yourself, you don't have to give that 15 or 30% to other platforms, right? Let people come direct to you, own that relationship. Don't get disintermediated. Head to Squarespace.com slash twist for a free trial. And when you're ready to launch, use the offer code twist to save 10% off your first purchase of a website or domain. Squarespace.com slash twist for a free trial. Offer code twist for 10% off. What I always encourage people to do is just look at actual performance. And you and I actually have VC Sunday schools. What do we do in our investment meetings? How many customers do they have? When did the product launch? Yeah. What's the churn of the company? What's land?

Who's their lighthouse customers? In other words, who are the top customers? Yeah. Which company has expanded the most, who has added the most number of seats or increased their spend. Let's just have discussions about the facts on the ground. Yeah. What's the story now instead of what is the story going to be in the future? Correct. Right. We can establish what Chimov likes to refer to as ground truth. Ground truth in the military is like, hey, what are the soldiers seeing on the front line? Then we can move on. Now here in, you know, Zuckerberg's, he doesn't need a defense here, but talking about Zuckerberg, okay, you've got this business that prints tens of billions of dollars a year in profits. You bought Oculus, which was an independent company that launched their first headset

seven years ago. You have X number of people on these three versions of the headset. You have this number of people paying for apps. Okay. We can draw a line between the future you're telling us in 2030 people are going to live in the Metaverse and everything that's come before it. Right. And shareholders are also clearly saying this week, just this week, no thank you. Right, like the public markets, because they can evaluate that track record truthfully, because they can evaluate the technology and how far it's come and, you know, the interest in consumer adoption can then be like, yeah, we're going to go ahead and cut Zuck's personal fortune in half this week because we're not buying it.

They were given the truth about where the company is going and they don't like it, right? It's like literally the opposite of what happened with Nicola, which is like, we got a gravy train over here and now we want this gravy train for you. read they're like they invented strawberry mango jewel i think you know you look at facebook training at 12 times a p e ratio you know 391 i actually had sold all of my facebook that i got because of a company that was acquired i think at 110 and that was like five or six years ago felt like an idiot when it tripled or from that point uh but i just didn't want to own the company because i just am diametrically opposed to the founder's approach to running a company yep um and just didn't want to be

involved in. I couldn't feel good about owning the shares, which does matter to me. I'm not that much of a rapid capitalist. You know, and now it's trading at 145. It's probably a bargain. If he were to lay off a third of the Facebook, Instagram staff, which they don't need, then all of a sudden a company comes more profitable, and then he can invest in this new future while extracting max revenue from the existing one. You know, this is a story to tell there. Yeah, but this Nicola thing is just dark. He's just dark. It's super dark. I hope they throw the book in him. I hope he goes to jail. I think it's like a Theronose level fraud. And we need to flush this stuff out of the system. He's not out of you're killing people. Yeah. It's, it's just, it's gross. I hope he gets,

you know, 10 years in jail. I mean, and I don't hope for another person's demise. I just hope that criminals, you know, who abuse the system and who hurt people, you know, get punished so other people don't do in the future. Yeah. It's not personal. I just feel like these white collar criminals get away with her far too often. Oh, I absolutely think they do. I just, I, yeah. I don't know that he is any more, like I think what he's doing is incrementally worse than what we see all across business.

I would say a magnitude. He's not getting people killed yet, right? I mean, if he put somebody in a truck that didn't work, but also that's happening on the other, anyway. No, I mean, listen, if you build a prototype, you show a prototype. The car industry has a long history of showing prototypes. And most of the prototypes don't even get made.

They, their cars just for like the car is just for like the car is. And they don't drive. Like I'm just saying, I'm looking at this and I'm saying, okay, the guy oversold, he tried to pump up his stock in order to get a bunch of capital

so that he could build vehicles because it's very hard and capital intensive and extremely technologically difficult to build these vehicles. And that is a familiar story. That's all I'm saying. Yeah. I, like a lot of founders and CEOs do this. So fake it till you make it is a strategy in Silicon Valley.

And fake it to you make it. It's more of a confidence building exercise than a con game. So act like you're going to succeed. Come to work every day. What fake it till you make it means is, you know, in its best interpretation is, come in with the intent that you're going to win. Come in with the intent, intent that you're going to raise that series A. be confident.

It doesn't mean commit fraud. And so I think that term fake it until you make it. But it does mean say, this is my plan. I'm going to manifest my plan. This is my goal, right? Like, you do want to know from people what is your future goal. We want to know what their business is now. And we want to know what is the thing that's going to turn this into a rocket ship.

Yeah, be audacious. Be audacious. But own the actual reality. And here you have multiple examples of manipulating the reality. They said that they didn't even have a prototype. Incrementally. I don't think this is this is like there or no

this is not the worst behavior I've ever seen now he did some other dirty stuff like he sold his tens of millions of his own shares during this back process he clearly did not tell the truth with respect to investors right like to go on to come on your show and say

full stop the semi trucks are a gravy machine or whatever like that's not true that was not true not cool it was not making money all right listen

we can differ we can differ about we can differ about magnitude yeah but no matter what this dude is going down and then the chat is asking

yes exactly don't worry chat we are intellectually honest on this show and we are also going to talk about Chumas SPACs sure yeah

I mean it's actually the segue here yeah I think there's a lot of other SPAC news Friedberg announced his merger which is the first part

hopefully he closes that SPAC but he announced the company they intend to merge with rumble did SPAC and Chimov pulled two SPACs. Those are the four SPACs in the act.

It's a whole SPAC day. All right, let's take these one at a time. Chimoth is, in fact, winding down two SPACs, iPod and iPof. Yes. IPOD and IPOF. Yeah. And we'll return cash to investors

based on a report in the Wall Street Journal. Nobody's pretending any inside knowledge here. I certainly don't have any. Nobody talks to me. Chimat said that his SPACs considered over 100 companies to take public, but we're not able to finalize any deals, a.k.a. rush through a Nicola and inflict that on all of us.

In July, it was reported that Bill Ackman also was winding down his SPAC and returning $4 billion to investors. The deadline to find a merger for these two SPACs, Chamoths, was October 2020 after a two-year deal window. Spacks have a window for those who are new to the SPAC space. It's a special purpose acquisition corporation. you raise a bunch of money, you go out and look for a target, you evaluate those targets, you announce it like Freeberg just did with his, the production board's back, and then you de-spac and you have this publicly traded company. Right.

And we knew, you always know it's back that there's a ticking clock. So this sounds like, and let me just stay here, even though Chimoth and I are besties, I have no information about this. Obviously, I do not talk to my friends about the inner workings of anything that's any way related to the public market. I will talk all day long about a private company, sure, but I stay away from that so that I never, you know,

on this show, ever step in it or you know, I try not to comment too much on my closest friends' projects. You know, talk about them maybe from a product perspective, but just looking at all of these SPACs, because there were 500 SPACs at one point. I don't know what the high water market is, but there

are websites that look at this. Setting up a SPAC costs $5, 10 million bucks. If you and I wanted to set one up, Molly, we get set one up for five or ten million bucks and we got a bunch of money there and it seems like the easiest thing in the world go find a company here's the problem

the company has to want to do it so now if you're a company and you've watched SPACs underperform relative to the market right and you've watched them get a little bit of a you know a little tarnish there on the reputation they might be signaling lower quality that's not obviously true in all cases

and I wish it wasn't because I would like to see more companies going public earlier because I think it's actually healthy for the market for people to be able to buy into a company when it's at, let's call it, 25 or 50 million in revenue. I think that's actually kind of cool that people could be public with as a little less 25, 50 million in revenue. It's been a problem that companies stay private for so long. Exactly. So if you were, though, a private company and you raised a bunch of money, so this is where you have to understand the complete chessboard, you raised a bunch of money, TPG, KOTU, Tiger Global, whatever, a Sequoia or Andreessen Harwood's late stage fund put $100 million into your company.

You don't need to SPAC. You're sitting there with two years of runway, three years of runway. You're within spitting distance of being profitable, or maybe you are. And the markets don't seem that friendly. Well, you're going to take your billion dollar, five billion dollar company, have its back and then have all your employees be underwater or have the company be trading at 30 cents on the dollar, 70 cents on the dollar. Why deal with that?

Right. Just stay private. Right. And so now here we are. And if you're on the other side of things, your Tamath or Bill Ackman, you want to bring a good company to market via your SPAC. And so if you have a situation where the good companies are saying, no, thank you, we're sitting on a pile of money, we're just going to stay private. And the alternative is to push through a company like Nicola that doesn't have a product yet or isn't going to or is going to be overvalued and end up in a situation where all it does is like, like continue to perpetuate this idea that spack serve for companies that are no good,

you can see why you would choose to shut down the spec and return the money. Like, that doesn't seem, that to me does not seem. And again, I say this knowing nothing, like that seems fine. Seems like sort of how it should work. Like you set it up, you try to do it if you can't find a good company. I mean, obviously you'd prefer to find a good company and take them public. But if that's not an option, don't take a bad company public. Just shut it down and give the money back.

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Plus, it's more cost effective than hiring in the U.S., obviously. And you'll get matched with vetted candidates within three days. This lets you hire internationally so quickly and so easily. Revel's engineers are, of course, full-time, and they're embedded in your team. Just like normal employees, they're proficient in all the things that you probably have in your stack, whether it's AWS, Rust, Ruby React, Python, Nojs, and more. Revelo's customers, wait for it. GitHub, Foursquare, carda, Indiegogo, Kickstarter. I mean, this is a who's who of successful

companies. So go to Ravelto.com slash twist and mention twist to get 20% off your first three months. Plus, they offer 100% risk-free 14-day trial period. If you're not satisfied, you pay nothing. So head to R-E-V-E-L-O.com slash twist and mention twist to get that 20% off. Yeah, and, you know, a lot of the companies that were going public were actually good companies, but maybe their stocks and the valuations were too high. Right. So if you take a company out at too high of a valuation and the shares trade every day, well, you now are going to have price discovery on that.

So private companies sometimes can get a little overvalued and they have to grow into their valuation. Some private investor says, you know what? It's competitive to buy into this company. I believe it in the long term. the valuation is a billion right now. I'm pretty confident it'll be $2 billion or $3 billion next year. I'll pay the $2 billion.

I'll win the deal. So in private markets, sophisticated investors can, as we say in the business, jump the fence. They can go able. They can be super optimistic and pay a higher price because the shares aren't trading and they can wait it out. When it's publicly traded and you've got all these people,

all the insiders can sell, maybe people want to clear their position and invest in something else. And then all of a sudden you're in a debt spiral or the company just, you know, goes down to reality. That $2 billion price goes back down to $1 billion. You're now down 50%. And the company is, you know, tarnished a bit, right? They look like a loser publicly, even though they might actually be a winner and making great progress as a startup. So this is why people had the stay private longer SPL approach for many years, which is why deal with the public markets.

obviously Virgin Galactic, Open Door, Clover, all these SPACs, they're down 70, 80%. These are actually Open Door, I think it's a great company. Virgin Galactic, obviously, it's a very speculative company. Clover Health, I think is a great company. SoFi is a good company. So some of them are great companies, good or great companies. They're just either mispriced or now they're in the doghouse for a little bit,

and they're going to have to prove it. So I actually have been thinking about a J-Trade looking at some of these. I'm really attracted to Jobi. I love the idea of Vitol. I think somebody's going to win in that space. But I have to look at actual value. So back to first principles. You know, how many orders they have, how much revenue they have?

Do they actually sell this stuff? But I did make a J-Trade yesterday, by the way. Oh. Yeah, I did. J-trade alert. J-trade alert. J-trade alert. It's not a big deal.

Not a big deal. But there was a big M&A transaction list. week. Yep. And it's so weird because public markets didn't like it. Public markets didn't like them. This is not investment advice, but I love it. I think Adobe made a great purchase. So I bought 250 shares of Adobe. I think Adobe wins the day. I think design and design tools and that category is critically important. If Apple could buy this company, they would. If Microsoft could buy this company, they would. I think they eliminated their number one existential threat. They have a Canva competitor that they're working, that, you know, that's in the market.

And, you know, now it's the only thing out there really fighting Adobe is Canva. And I think, you know, they don't have to crush Canva, but they just need to be competitive with Canva. If I'm Adobe, I make Canva competitor free. I make their Canva competitor free. And then if you go into multiplayer mode, whatever. So they should do the bundling that Microsoft is doing. part of the bundle. I forgot the name of their Canva competitor will come to me in a moment.

I don't know, but I will say shout out Canva because clearly with the mine share, this is why Adobe's buying Figma. Exactly. Adobe Spark is their competitor. So here's my advice to management. I know they'll love to hear for me now that I'm a sharehold. That's right. 250 shares.

75 Dimeski's worth. Spark. Let's get anti-competitive. I'm sorry. Let's get competitive. Oh, did I say anti? Let's get competitive. I don't want you to be anti-competitive.

No, just want you to be competitive. That's our onboarding. It's free for a life. Spark is free for a life. And yeah, let's just go ahead to, I mean, listen, I like Melanie too. I think she's awesome founder of Canva, but I'm not a shareholder in Canva yet. I have made a J-Trade. People were wondering if I gave up my J-Trade.

Yeah? No, at least, you know, he's a selective shopper. Prices were going down for, for a month. We're waiting for, I think today is the interest rate hike day. I think so. So, you know, I always said I wanted to buy like up to 20 names, two million bucks from now until the end of the year was my plan-ish. And yeah, taking a couple of weeks to digest the trades I made. And if things were going down, you know, I don't want to buy into a cratering. But I think we're bouncing along the bottom. I think things could go down another 20%. I think that's the

worst case scenario right now. I believe the recession happens, Molly. We could see 20%. But I think that's the worst case. 20% on top of the 20% that we went down. This is not investing advice. Adobe Express is free. Free until what point. They hear you.

Good. Yeah, I mean, it looks just like Canva. And they made it free, but is it free until a point? Did you say? I guess we have to look up the pricing. Free use forever. Free use forever. Oh, wow.

Oh, they did do it. Wow. Okay, I'm going to buy more shares, I think. I mean, literally, this is the gangster move. You know, we talked about this, like, you know, they made Microsoft Teams free or they did the bundling. It's not free. It's part of the bundle. But all the, I mean, right after you have this call, I'm going to ask my teams, what are we paying for Canva?

If we're paying more for more than $1,000 a year for Can you ask while we're on air? The free version, there's a free version and a premium version, to be clear. and the premium version definitely, but it still is only $10 a month. I think Canva's only $15 a month or something. But can I get a report back?

What is inside and what is what is inside and what is launch paying for Canva? If it's over $1,000, I'm going to be asking my team like, why are we paying for this and not using Spark Express, whatever it is, obviously.

So if it's under a thousand, businesses don't think about it. If it becomes more than a couple of thousand, you start thinking about it. You start thinking about spend in SaaS. All right. Let's do Rumble. Rumble.

Last Spack story. It's just SPAC Tuesday. That's what it is. Now, Rumble for people who don't know is a conservative YouTube. Yeah. Am I correct that that would be the best description of it? And I downloaded the app and I looked at it. It's actually like feels like it's 75% feature parity with YouTube, at least from the user interface perspective.

It looks pretty close. Not that YouTube is the hardest thing to copy. It's the scale of YouTube that's hard to copy. but well yeah exactly well i mean i also mean scale of the infrastructure the back end like you know the ability to handle many uploads i'm guessing rumble is on a ws or something all right so in may twenty twenty twenty one the company raised at a five hundred million dollar valuation peter till led the round so maybe they put 25 50 million dollars in not through founders fund he didn't want founders fund to have their fingers on maga conservative stuff yeah but maybe that seems hard to

separate, but yes. The press release for the SPAC is amazing. The ticker symbol is rum, R-U-M. Okay. I like it. And from the press release, they say, while stock ticker symbols can be an afterthought for Rumble, rum holds a special connection to the company's mission to protect a free and open internet. It's a little known fact that rum was one of the many catalysts of the American Revolution due to unrest created by the British imposed Sugar Act of 1760. What it has to do with anything? So you heard it here. Second, rum is attempting to incite the American Revolution.

Great. This is going to go on. Fantastic. What a value prop. Should we do some, we can talk some numbers. Okay, so without, oh yeah, without rum, they go on to note, the colonists may never have fought to win the freedom that Americans enjoy today. The very freedom that rumble exists to protect. Thank God that Rumble exists.

So Andrew Tate or whatever that Dibsht's name is can do a stupid version of Andrew Dice Clay 30 years later. They have 78 million global monthly active users, which is super impressive. 63 million in the U.S. I mean, basically 70 million people voted for Trump, right? So it looks like they got all of them. I'll be really curious to hear more about this as it goes on and it's public. But yeah, Q1 revenue, $4 million, $73% year-over-year growth. Q1 gross profit, $550,000, which was actually down year-over-year, 36%.

Q1 net loss, $3.9 million. Rumble was profitable on a net basis in Q1 2021. So this would be about a $4 million loss year-over-year. Yeah, I mean, this is tiny numbers. 78 million global monthly active users. Although they say 63 million of them are in the U.S. and Canada. So they're only 7 million away from having. every Trump voter theoretically.

I mean, some people are probably coming to this research or didn't vote for Trump. I'm sort of just making an analogy to their natural audience. Well, and monthly active users is such a, you know, these are, monthly active users is like a, it's a tricky number. Yeah. There's a lot of parsing of active user numbers. Let's just put it that way. I mean, if they're putting out multi-active users in our industry, that means they

touch the app or the website. There are some people who have done some fulgazy stuff, in my opinion. like you opened an email. Remember that was Nextdoor. We're saying if you got an email that counted as a user, I don't really count that. But nor do I count like people checked out your, I don't know, followed you on Twitter.

That shouldn't actually count. But $500 million market cap, how much cash do they have left? They must have a huge cash position. If they're only burning $4 million a year? It's an impressive start on a user basis. They're obviously not trying to make money, nor should they.

They should just strictly try to double the number of users every year. That's what they should be doing with this business. And if people who are investing in this business, they shouldn't be looking at revenue numbers. They should only be focused on getting to 250 million users. When they have 250 million users a month, that's a very large business. That's an incredible base of users.

$41 million in cash and equivalence. And if you look, Molly, this is how I'd evaluate the company. Quite a press release, but from a business perspective. Putting aside that they're a little bit wacky and zany, there's like kooky people in terms of like how they're presenting the company. But they got a kooky audience, right? The audience, they probably know their audience. Their audience wants to think they're, you know, involved in a revolution and that,

where we're going to storm the capital. Like, that's kind of in their wheelhouse. This is a very, this is a very directed message. Yes. For a very directed audience, exactly. Yeah. I mean, I don't want to say dog whistle. It's kind of just a whistle.

So Q1 revenue, four million. They're growing 73% year of a year. It's okay growth. It's not, you know, startup growth, but for a public company, it's great growth. Mm-hmm. They lost $4 million, $3.9 million in Q1. So if they're losing $16 million a year, they got $41 million in cash,

they'll be fine. They got three years of runway-ish. And they got $78 million global, monthly active users in August. $63 million in the U.S., which equals almost as many people that's voted for Trump. This is like a MAGA site.

And the question is, will this grow beyond MAGA? That would be my question is, do they have aspirations? I can tell you they do because they started lobbying to put all in clips or all in on Rumble

and I was like, great, would we be between Milo Yonopoulos and Andrew Tate and Alex Jones? No, thank you. Right. And I think they're going to be the place for refugees.

If you get kicked off of YouTube, you get kicked off of Twitter. Yeah. Go there. I mean, I think they've sort of expressly pitched that so far. They did change their terms of service to open up the aperture

on hate speech. So if you do a search for my Twitter handle, I actually asked them about that. Because there was a story very recently about them changing their terms of service around hate speech. Now, why would they do that? So you got to ask for some, why would they do that? I know, like, you're not actually asking me that, right? Because, you know, we all know. Yeah, I mean, look, every, this has been irrespective of the ruling in Texas recently,

which I don't know if you all have been following this, but there was a ruling in Texas that basically said, like, no, an internet. provider cannot take down any speech. Like it upheld a law that said you are required as a platform to keep up speech even if you disagree with it. Irrespective of that, which I do not expect to continue as the law of the land, every platform that has attempted to sort of be like, were the free for all, has eventually had to moderate. Like eventually you have to moderate because the child porn comes in and the terrorists come in and your, you know, your ISP pulls you or something happens. So.

Or your employees simply don't want to deal with the threats that wind up happening. So this happened with Cloudflare. They are an infrastructure company that does what's called CDN, content delivery network. So they're not just forwarding IP addresses. They do that. So they do a DNS resolution. But they also will speed up and protect you from a denial of service account. They had to take down that crazy website.

Kiwi. farms, yeah. And they just felt imminent harm was coming. And so the founder of Cloudflare was like, this is against everything we stand for of where just infrastructure, we're not responsible for what happens on your platform. Cloudflare has been the kind of safe haven for a lot of these sites. Like I think they had the same thing. I think the same story happened with like Parlor and Getter on Cloudflare, maybe. And at some point, it gets too much even for the, the platform that says we want to be totally neutral because there's just not. Yeah, I mean, you can be neutral until your employees or people in the public are under, you know, imminent threat of violence.

And that's when most of the CEOs say, yeah, that's the line. I'm only talking about the CEOs of these freedom of speech, you know, free for all platforms. No, I know. Even they will stop when violence is at their doorstep. Right. Like being this kind of platform, represent. presents a business risk. Yeah.

And most of them have followed the same trajectory so far. And so it will be interesting as Rumble, you know, goes public to see whether it follows the same business trajectory, which is that eventually it has to stop being the thing that it said it was. The ACLU itself would fight for the freedom of speech for, you know, KKK Nazis to march down Main Street or whatever. Yeah. You know, those positions have changed even for the ACLU. and online, they certainly have changed. And so this will be the equivalent. You know, like they'll probably let Nazis or KKK people on their platform.

That's my guess. Or even dog whistling versions of that. And they'll do that until they get sued or they have threats of violence, right? So they'll probably just be modestly more permissive until such time as their own employees and or management teams are under threat of violence. Or they're required. about other people being under threat of violence. Right. I mean, they'll eventually have to moderate illegal content,

which is what almost always starts to happen. And then the user base gets furious and it all plays. I would not j-trade it. I would not j-trade it. I don't think it's a good opportunity. I don't think it's a good opportunity. I would not j-trade. There we go.

All right. Thanks for listening. Tomorrow is an amazing interview that J-Cal did with Mojo CEO Vinnie Bahara, brother of Preet. Yes. Great interview. He's making a stock. for athletes where you can actually do real money trading of athletes. You can bet on your

favorite NFL players. I think it's a great idea. I love wagering. I think wagering is a great way for people to have skin in the game, so to speak. And, you know, I love these kind of markets and new ideas. So, and he's a really cool cat. He had a lot of great success with diapers.com and cafe.com, which they sold. And so it's an awesome interview. We will see you tomorrow. Bye. Bye. Bye.