This Week in Startups - $NVDA's earnings, media economics in the AI era, Farcaster's mega crypto round, and more! | E1954

Episode Date: May 23, 2024

This Week in Startups is brought to you by… Zendesk - The best customer experiences are built with Zendesk. Qualifying startups can join their Startup program and get Zendesk products free, for six months! Visit http://www.zendesk.com/twist today to get started. Mercury - Mercury is the fintech startups use for banking* and all their financial workflows. Paying bills, staying in control of company spend, and closing the books doesn't need to be so complex — that's why Mercury powers it all from the one thing every business needs: the bank account. Join 200K startups who use Mercury to operate at their best at http://mercury.com *Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust, Members FDIC. HiddenLayer - Generative AI is revolutionizing industries. HiddenLayer’s AI Detection & Response Solution secures your Generative AI & LLMs from malicious attack. Helping you generate more – by enabling seamless & secure Generative AI. Visit https://HiddenLayer.com/TWiST * Timestamps: (0:00) Jason and Alex kick off the show (1:50) Nvidia earnings for First Quarter Fiscal 2025 (12:53) Zendesk - Get six months free at http://www.zendesk.com/twist (14:32) Continuing discussion on Nvidia's earnings (22:39) News Corp and OpenAI strike ‘multi year global partnership’ (29:21) Mercury - Join 200K startups who use Mercury to operate at their best at http://mercury.com (30:51) Apple News+ is driving big numbers for The Daily Beast (39:03) HiddenLayer - HiddenLayer’s AI Detection & Response Solution secures your Generative AI & LLMs from malicious attack. Visit https://HiddenLayer.com/TWiST to learn more. (40:14) Wearable AI startup Humane is exploring a sale (50:56) Windows Recall (1:08:45) Farcaster raises $150M: Is crypto making a comeback? * Links and articles from show: https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-first-quarter-fiscal-2025 https://techcrunch.com/2024/05/21/farcaster-a-crypto-based-social-network-raised-150m-with-just-80k-daily-users/ https://gizmodo.com/humane-ai-pin-selling-billion-1851493143 https://www.semafor.com/article/05/19/2024/as-clicks-dry-up-for-news-sites-could-apples-news-app-be-a-lifeline https://www.wsj.com/business/media/openai-news-corp-strike-deal-23f186ba?mod=latest_headlines https://s201.q4cdn.com/141608511/files/doc_financials/2025/Rev_by_Mkt_Qtrly_Trend_Q125.pdf https://x.com/dsiroker/status/1792956339515273537 * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Follow Alex: X: https://x.com/alex LinkedIn: https://www.linkedin.com/in/alexwilhelm/ * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (12:53) Zendesk - Get six months free at http://www.zendesk.com/twist (29:21) Mercury - Join 200K startups who use Mercury to operate at their best at ⁠http://mercury.com⁠ (39:03) HiddenLayer - HiddenLayer’s AI Detection & Response Solution secures your Generative AI & LLMs from malicious attack. Visit https://HiddenLayer.com/TWiST to learn more. * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

All right, everybody, welcome back to this week in startups. It's our news roundtable. We have two breaking news stories. Envidia's earnings are out. And OpenAI and News Corp have done a big licensing deal, a quarter of a billion dollar licensing deal with me to discuss it all. Alex Wilhelm, the new co-host of this week in startups. Welcome back to the program, Alex.

Hey, good to be here. I freaking love breaking news. I love earnings. I love media economics. It's like this show is designed for me today. I'm the happiest kid in school. This is why I wanted you as co-host, because I know you love this stuff.

And I love this stuff. Let's get to work. This Week in Startups is brought to you by Zendesk. The best customer experiences are built with Zendesk. Qualifying startups can join their startup program and get Zendesk products for free for six months. Visit Zendesk. dot com slash twist today to get started.

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And Hidden Layer. Generative AI is revolutionizing industries. Hidden Layers AI detection and response solution secures your generative AI and LLMs from malicious attack, helping you generate more by enabling seamless and secure generative AI. Visit hiddenlayer.com slash twist to learn more. Invidia is the bell of the ball. It's the most important company in our ecosystem

And on Wall Street as well. So this is a rare thing that occurs where Wall Street is obsessed with a company and it's that same company that's driving our industry. So let's talk about it. How did they do? Overall, what's the reaction? Stock up, stock down. Did they meet expectations? Did they break expectations?

Everybody wants to know what the hell is going on with Nvidia's incredible run. So somehow they managed to beat expectations and gain more value. And just keep in mind, everybody, that Nvidia was worth $2.3, $2.33 trillion going into earnings today. So when I say that it was up 4.5% after hours, we're talking about tens of billions of dollars of additional value now at the company. Jason, the top level numbers are $26 billion in revenue, which was ahead of expectations of 24.7. And it's EPS of $6.12 per share, bested expectations again. But the thing that I think really kind of solidifies what's going on here is a year, ago, the company had $7.2 billion in revenue, which is nearly a, it was a little bit more

than a quarter of what it pulled off in this quarter. So that's the scale of growth here and profitability. It's just, I've never seen a business story like this since, I don't know, like Google rolled out ads for the first time. Like, it's just, it's crazy. Well, yeah, and just to pause here on this important observation, you have, 7.19 billion a year ago, now 26 billion. So it's essentially quadrupled revenue. But it's not quadrupling revenue on 10 million in revenue and going to 40. This is adding, you know, if we take the $7 billion out of the $26 billion, they've added $19 billion in revenue year over year.

It is extraordinary. We've never seen anything like that. And this is all driven by one thing, AI and large language models and this incredible. competition between not only upstarts like Claude, but incumbents like Microsoft, Tesla, Google, you know, people who've been around for 10, 20, 30, 40 years. This is what's driving. It is major purchases of H-100. Essentially, yes. I mean, so if you want to think about the biggest driver here, it is data center revenue, as Jason mentioned. And that was up 23% from the previous quarter and up 427% from a year ago,

which is just a base of growth that a seed stage company would love to have. Like, you would love to bring that to your board. You just don't see a company that's like the fourth most valuable in the world, maybe third now. The thing, though, that I'm stuck on in all of this, because I'm not really that shock that Nvidia had a good quarter, we all kind of expected that. But the fact that it was priced in.

So it beat expectations, but only gained 4%. You would think, Jason, that with this much outperformance and overperformance, that there'd be more stock market reaction, but it seems that people just kind of expected this level of excellence. So I'm curious that you're shocked by the lack of a stock market pop here, kind of post earnings. Yeah, I mean, zooming out, if you were to look at the five-year chart for this company, and I'll pull it up here, just some people can see it.

That really is the story. If you look at the five-year chart, this is up 2,500 percent, 250 times your money. So $1 would turn into $250, right, if you're doing percentages. And so it's up $913. If you were buying this stock in just 2019, not that long ago, you would have paid $36 for what's now a $949 stock. By the way, that's what seed investors are attempting to do on their outlier bets. So there was this public market company sitting there.

You know, at the time, its market cap was a fraction of what it is now. $2.3 trillion market cap. It's nothing short of extraordinary. And it really is based upon the language models created specifically by OpenAI. Yes. And once people got inspired by, you know, chat GPT 3.5, it was really what I think people started to 3.5. People started to realize, hey, wait a second.

It's spewing a little bit of gibberish here. But when it gets it right, you know. Man, it's so compelling, right? If you're like, hey, make me a marketing plan. Tell me the history of China, you know, or tell me the history of China as compared to this. And whatever, all of a sudden, you're like, wait a second, that's knowledge work. And knowledge work is being done instantly by a computer. And if you've been in the industry long enough, you know enough to squint.

And what I mean by that is you give a little squint and you're like, okay, where's this going? and we all watched dial up. I was on a 300, 300, 400, 4,800, 9600. Uh-huh. You know, and then eventually, you know, ISDN lines, T-1s, and you're like, yeah, it just gets faster. It only gets better. It gets faster, better, cheaper. And when you looked at that, every single company said, okay, it's going to get faster,

better, cheaper. Therefore, what does that do to our core business? And that scared Microsoft. And it scared Google, Apple. Everybody got scared and greedy. When you combine, Alex, fear and greed. Yes. These are the two most powerful, two of the most powerful human drivers and corporate drivers.

When a CEO, when a board gets really scared, they take action. Yeah. And when they get greedy, they take action. These are major drivers in business, right? Gordon Gecko, whatever, greed is good. Yeah. You know, and then fear, you know, only the paranoid survive. There's a reason why those two phrases are so iconic, right?

It was Intel, the head of Intel, so only the paranoid survive. And that's the fear part and greed is good. That's the, you know, the basic tenet of capitalism. This one hit both. Yeah. If you're a Google, we're going to lose the franchise or we're going to 10x the franchise. Yeah. We're going to finally be able to give the answer.

those two things combined equaled purchase order. Yes. And that's going to continue because if you look ahead, they're going to do $28 billion in revenue next quarter days. So they're going to add another $2 billion in revenue. Now, the growth rate's slowing sequential quarterly, but certainly they're still expecting a lot of growth. Here's the question, though, that I'm stuck on.

I don't have the answer to it yet. All of this revenue at Nvidia is just cost at your Amazon's and your Microsofts and so forth because they're buying these chips on Mars. but they're also working to build their own ships. So is there any chance in the next 1824 months that homegrown AI hardware from the major tech platforms, these major cloud providers, can supplant some of their demand for Nvidia ships. And if so, what does that do to Nvidia? I think that's probably a multi-trillion dollar question that no one knows the answer to.

I don't think they're going to catch up that fast, but certainly they want to try. Yeah. So there's this concept, it's all priced in. It's all priced in. I think it's all, the growth is all priced in here. That's why a 4% pop, not a 40% pop. If you were looking for those pops, that was, you know, you would have had to have your finger on the pulse of AI back in, you know, 2022, 2023, and then realize the size of the purchase orders being put in and then predicting the fear slash greed dynamic that occurred going into 2023. All of these orders are in.

there are two possibilities of what could slow this down. Because I think your question is, when does this juggernaut, you know, slow down? There's two things. One, you're correct. Everybody realizes this. And there are people making chips and alternatives, right? And the second is, do we overbuild capacity? Okay.

So competition's coming, but you're correct. It's going to take a couple of years for competition to be able to put a dent into this. So let's put that at a 24 to 48-month reality that people start maybe replacing or considering other options compared to Nvidia. Then overcapacity. Overcapacity is the more likely short-term scenario. I think what's going to happen is the models are getting so good, so fast that the open-source models, the cheaper models will be able to get certain tasks done on cheaper hard-term. And then if all this gets built out, you need a use case. So for self-driving, yeah, building simulations of self-driving or folding proteins, it's never going to be enough capacity.

But to tag a blog post with what's this blog post about and put the tags on automatically in WordPress, like, you're probably going to be able to do that with like an open source product that can run on your laptop or that's close to free and doesn't require an H-100 or one H-100 could do every one blog posts in existence. So that's the more likely scenario is, are there jobs to be done that require this massive infrastructure? And is the software and the company's pursuing that software, do they have those jobs queued up to leverage all this? And I think that's going to be the question, because you have to build software to run these tasks. What if you build up so much fiber that you don't have Netflix or YouTube to utilize it, right? And so there could be a trow or a plateau. Capacity is so high. You built three nuclear power plants and nobody has plug in Tesla's yet, right? And nobody's running air conditioning, global warming hasn't happened

yet. Okay, you're burning off all that extra capacity. I think we might hit a dark fiber moment in AI. I don't think it's the majority chance, but it is, there is a chance we could hit a dark fiber moment. Too much fiber, not enough bandwidth being used. Yeah, and that's why I think plateau is the right way to think about it, because we may end up with overcapacity, but if you think about how much bandwidth we use right now, I mean, I have essentially a gig up and down, and I blast through my total internet usage. It's insane. Essentially, my usage of compute power and internet have expanded to me whatever I can purchase, and so I think long term, that's where we're going to end up with a lot of this AI stuff.

But in the meantime, if you are building models for the edge that are smaller and so forth, then, yeah, you can use different chips and so forth. But investors are really excited about Nvidia still. I mean, $28 billion next quarter, tons of profitability. And also, Jason, improving gross margin. Like the business is not only getting bigger, it's getting better. And that to me is just crazy. I love watching history get written.

And right now, Nvidia is doing something that we haven't seen maybe ever. All right, startups, when you're a business, you know, it's crucial. to treat your customers right. Unreasonable hospitality. Should be your goal, right? Great book. And you know who's great at helping you get delivering unreasonable hospitality? Zendesk. We use it. We love it. The Zendes suite arms your business with all the tools you need to deliver exceptional customer experiences. And it's made just for startups. And they care about startups. It's built so you can build strong relationships with your customers through amazing support experiences and without, growing your headcount. So do what? Shopify, Squarespace, Uber, Instacart, and JCal does.

Rely on Zendesk. They're your partner. Software company Unity, they saved $1.3 million with Zendesk automations and self-service. And they saw an 83% increase in their first response time. These companies love Zendesk because it's so easy to set up. It's made to scale as you grow. And they give you all the metrics to make reporting easy, keeping you in your business, agile, and investor ready. And because you are a startup, they created the Zendes for Startups program. When you join the Zendes for Startups program, you're going to get unlimited access to all Zendesk products, expert insights, all the best practices you need, and entry into their amazing community of founders, all at no cost with the first six months free. So there's no risk to you and there's all upside.

You're going to learn so much from them because Zendesk does this better than anyone. So apply to the Zendes for startups program and use Zendesk for free for six months. And get ready to scale with the best customer support. Go to Zendesk.com slash twist. That's Zendesdust.com slash twist. Going back to your charge, the 2019 to today's growth. Yeah. I think it's really important to keep in mind that if you missed Bitcoin and a dollar,

you also missed Nvidia at $35 a share. So congratulations, everybody. We all missed it twice. And this is why I have my index. Placing bets on promising companies, it's a pretty good pursuit, I have to say, because you never know exactly what's going to happen. We didn't know that there would be breakthroughs as an AI here at this velocity, right? But yet here we are, and people are ordering these. There's a very interesting nuance here, too.

And I want to hear about the profitability and the earnings and how margins have changed if you have that information. I do. But the thing that I think is also interesting is the game on the field has made it so large companies with huge amounts of cash cannot buy other companies. We put a regulatory environment that says these companies are too big. Let's not let them buy, you know, Whole Foods. Let's not let them buy I robot or like a robotic vacuum company, right? Amazon got blocked. So you have all of this M&A getting blocked.

So then you have Google, Apple, Microsoft, Amazon sitting there with tens of billions. In some cases, over $100 billion in cash. And there's still, some of these companies are giving great dividends. They're doing stock buybacks like Apple. And yet, they still have tens of billions of dollars thing. Right. So for them to not be able to deploy it, hey, you know what? Let's build some server farms.

Let's spend a billion dollars. Let's spend $10 billion. Zuckerberg's like, yeah, I'm going to spend $20, $40 billion, building at this infrastructure. who cares. Elon's like, I'm going to build out tens of billions of infrastructure.

So that circumstance led to, I think, boards and visionary folks saying, kind of deploy its capital somewhere. They're not going to let us buy.

It's not like they're going to let Google buy Airbnb or Apple buy Uber or Amazon by Uber, which would be an incredible combination. If Amazon Prime and Uber and Airbnb

were one company, can you imagine? Like how crazy that would be, all your, commerce, all your deliveries, everything is just merged together. And because you can't do that, maybe reasonably so, to get the playing field fair, this is just another way to spend $10 billion and deploy it.

For, you know, that money's sitting there in your pocket. I remember at one point I was talking to Larry, and I think they had hit, Larry Page, they hit $10 billion in revenue. And he said, what do you think we should do with all the money? And I was like, you should invest in startups. And you know what? They did Google Ventures. And then they were doing Google Fiber.

Sergey was literally running Google fiber in the backyard of Google, and he was testing ways to rip up the earth and lay fiber faster. So he had like teams of people. You can look it up. He's like pictures of it where they had drills, you know, those big circular drills that, you know, rip up the earth real fast. He was having competitions amongst engineers to see who could rip the earth up and lay the fiber faster to try to just understand from first principles how to do fiber.

and they were literally going to fiber to everybody's home because the, the infrastructure players, the cable modem people, they weren't moving fast enough. And Sergey had told me that was their way of telling, it was a shot across the bow of the cable companies. Hey, if you're not going to do this, maybe we should do it. Yeah. And, you know, that's how desperate they were to try to figure out how to spend the money. So. Well, back then, at that time, interest rates were very, very low.

if you go back to the last 10, 12 years. Now, cash does have some value, which probably changes the calculus a little bit. But I will say, we need more Google fibers. Like, I feel like that level of like, hey, we've got a lot of money. Let's make the world better and business better. At the same time, kind of like, dare I call it a moonshot.

I feel like we've lost some of that mojo in tech as the consulting people have to come over. But you wanted some in video numbers. Let's talk about it. So the thing that I am most stuck on is that the company's gross market. margins improved from 76% to 78.4% quarter to quarter, and that's up just 2.4%. But 13.8% year over year. The company's revenue up 262% year over year, while operating expenses, Jason, were only up 39%. And that yielded just some crazy stuff.

Operating income, up nearly 700% year over year. I again, just, yes, yes, basically what they're doing is they're taking money from Amazon, Microsoft, and Google shareholders, and they're putting it into their own pockets and laughing all the way to the bank. It's the best business I've ever seen. Wealth transfer. This is it. We've redistributed wealth from Apple, Google, and Microsoft to, to Nvidia.

The thing, the crazy thing is, investors are also rewarding the major platform companies for investing in AI. So essentially, they're spending money and not losing value in the process while NVIDIA takes that money and gross value in the process. So if you own stocks, which we all do, I mean, it's not a bad day to be around. I'm just, again, curious about when this amazing growth will slow down. And then we'll see NVIDIA be stuck a little bit looking for the next growth because there won't be a similar boom in gaming hardware, Jason, I don't think. So what's the next act?

But they are doing a 10 for one stock split and boosting the dividend at the same time. So lots of goodies in there for shareholders and fans like $90 stock. When? When are they doing that 10? I don't have the exact date. But I think what they're planning it. Yeah. What matters is Dow Jones Industrial Average is I believe price weighted, not market

cap weighted. And so I'm curious if this is a play to get on to some bigger indices and so forth as a company. That's speculative. I mean, it's one of the great stories of our time. And one of the great things that I think. about this whole AI revolution and what's occurred is it's got everybody, you know, I think the industry was in a little bit of a low, like what next? And crypto was kind of a head fake. All these promises, it was going to be a paradigm shift. We can get into that. We got a billion dollar valuation coming up with Farcaster in a moment on the docket today. We'll talk about that. But crypto didn't work, right? If you look at how inspired people are by using chat GPT and how much value and how many use cases there are. And then you look at the promise and the deliverable of crypto, lots of promises.

Hey, it's going to be better. We're going to have a better Airbnb because everything's on the blockchain. The reviews, the things, it'll be less fees. You'll pay gas fees or whatever. Transactions will be free. But still, Airbnb's Airbnb. Didn't get disintermediated by crypto. But, you know, AI.

God, everybody has all these ideas for use cases. Like maybe we could make better images or videos or audio or we could talk to this thing. We can make my writing better. You know, maybe make me a better developer. And they all happened. The time between the promise and the delivery and AI is like it's days, weeks, months. Like somebody comes up with an idea. We have a company Howie that like uses AI to book.

It helps people book their calendars. So you and I email, we C, C, C, Howie. it's like, yeah, we should get together for lunch. And it's like, here are some proposed dates. And then all of a sudden, it's booked, it's a calendar, and nobody had to be involved. Like pretty magical. Kind of like a faster version of Callenly. And the time between when the entrepreneur pitched that and then people are losing their minds over it is a couple of months.

So here we are. While at the same time, the underlying tech itself is also improving. So the use cases are coming quickly. The new ideas are coming up class. And also the underlying models are improving. And that's kind of, you know, it trickles down to Nvidia's shareholders at some point in time. But it is really fun to see. But on the AI front Jason, the other breaking news story that we have today is that News Corp and Open AI have come to terms.

And right before we used to hit record today, you and I were just like gobsmacked by the dollar amount here, $250 million over five years. Not all cash. Some other things are mixed in there. But certainly this is a bigger deal than I expected to see from. Newscorp and Open AI. Okay, so I have questions. Obviously, News Corp, Rupert Murdoch's company. They got in a big, big fight with Google.

Rupert Murdoch had those famous quotes. So, you know, Google's the enemy kind of thing. Then he got into it with Steve Jobs over the iPad and who would own a subscriber. And so I would say Rupert Murdoch is the most old school protecting content of all content creators and all publishers. second only to say the music industry, which protects their rights in a major way. And Scarlett Johansson, who also protects their rights in a major way, apparently.

So for them to be able to iron out a deal with News Corp, who really understands the value of IP, you got to give credit to both parties here to come up with a framework. 50 million is like a crazy number a year. That's a lot of journalists. Like the average journalist, that Wall Street Journal, or whatever, you know, I think,

What else do they own at Dow Jones? They own Barron's, too. I mean, they own a lot of, you know, newscorpsons a lot. The average journalist, maybe at the Wall Street Journal's, some of the highest paid people, 150K,000 K. Sure. The high, you know, and the average across their local papers probably brings it down to 100K or something like that.

Journalers are not like super well paid. Let's be honest. No. They're not AI developers. For a journalist at Vox is what, 45? But no, it was 45. Now it's 55K, I think. Yeah.

Because they have a union. you see these numbers. So, lest you think journalists are making a killing, the starting salary at Vox, which is a major publication, shout out to Jim Bankoff, who bought Weblogs Inc for me at AOL, like 55K.

Yeah. Like, if you're a plumber, you make more than a journalist. We'll leave it at that. Like a lot more. Electricians make a lot more. You know,

you probably make similar to a barista or an Uber driver being a journalist. At most places. Yeah. At most places. 50 million. That's a lot of journalists. Yes. A lot of journalists.

If the money does go to the journalism bucket and does not just go to the share buyback bucket. But I do think what it shows here is that if you are going to build large language models, ingest lots of data, and you want to ensure that you have up-to-date information that is trustworthy so you can build search engines, et cetera, or answer the history of China to your earlier point up to today, you need to pay for it. And I'm hoping that this implies that the New York Times, Open AI, current legal spat will resolve in a similar monetary fashion, and that also that there's a way for smaller pubs to also do well, because it's going to be a little bit crappy. If Rupert gets

50 million a year and everyone's smaller than Rupert gets nothing, that would be, I think, an unfortunate situation. I don't know how to solve that, Jason. I do. Okay. We have a start, we have a startup. We're going to announce an investment in shortly that's going to be a clearinghouse for groups of publications. So on a very granular basis, and I won't steal the thunder, but we talked about this on All In, I think, a couple of weeks ago.

And so Sachs and I are involved in this company. And basically, you know, imagine, you know, I don't know, you own 20 blogs. You could put them together and say, these are the rights I'm looking for, and then people could then, you know, programmatically included in their long tail of content, right, without having to get on the phone,

own into a deal. Kind of like Ascap does for the music industry or like if you have a bar, they come to you and they're like, oh, you're playing music in your bar. Do you have a license? And you're like, what's a license? And they're like, oh, let me explain to you. You're committing a crime by playing music in here. If you just, you know, you have this many covers in your place.

If you give us $800 a year, a hundred bucks a month, you can play music in your place. And people are like, okay, and they just pay it because they don't want to get sued. The music industry knows how to, you know, sort of scale this. There's a billion dollars in subscription revenue at the New York Times now, right? They got 10 million subscribers, something in that range. So I think they're doing over a billion dollars. And I think it's 20 bucks a month. So I don't know what their average revenue per subscriber is, but I think it's probably

100 or 200 bucks to subscribe to the New York Times a year, maybe 200. So I just pulled up their numbers. Q1, 2024 total subscribers is 10.6 million. 9.9 of those are digital only. Right. They had about 557 million Q1 revenue, so a little more than, call it 2.2 billion a year.

Yeah. So there were over 2 billion a year. So, you know, these, they would probably have a bigger deal, I think, maybe than News Corp. I don't know,

but this could wind up being low single digits of their revenue mix, but it's edited, additive. They don't have to do anything to service this. It's free. It's all profit.

Yes. So the way to look at this is, let's say there's 50 million in revenue a year. Maybe it costs them a million dollars to services. So it's $49 million to the bottom line. It shouldn't cost more than 2 or 3% to just give access to this stuff, right? It's not an expensive proposition. That's going to be super accretive.

If they got a 20% margin, if they're making $400 million a year or something, and then you had $50 million and it could be like 10% boost to their profitability. Oh, absolutely. That's why I think we could see a virtuous model here, which is, okay, these language models are paying us. We've got multiple ones paying us. It's like this whole new licensing business for them.

And if it holds up, which is a big F, but if it does hold up and there's a clean model here, then there's no lawsuits. Amazing. And then those companies can be like, you know what? We're not as dependent on ad revenue. Let's, we have a five-year deal here.

Okay, next deal, let's do a 10-year deal. And all of a sudden, it's like, stability in journalism. And you and I in journal have been journalists for or, you know, I've done acts of journalism for a long time. You're forgiven.

Don't do that. Random acts of journalism. You've been an actual journalist. Like, we've watched this. What a shit show it's been. And we've watched all of our friends lose jobs. You know, consolidation. I mean, it's a disaster.

And so this could be a path out, I think. Along with the Apple news path out, which we should talk about as well. Most startups have tight runways. We know that. And you got to keep your finances in order. And it's complicated, isn't it? You got all these tools, bill pay, invoicing, reimbursements.

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complex. And it's going to simplify all your finances so that you, and get back to running your company. Yeah. So on that front, the latest news is that Apple News Plus, which came out and that I think most of us forgot about is actually driving some serious numbers. Now, the scale, Jason, is a lot smaller. The news here from Simiphor is that The Daily Beast, which I'm sure we've all read at least once or twice, is doing single digit millions a year now in revenue from Apple News

Plus, which is Apple's new subscription service. I think they said they're doing about three to four million this year. And what really hit me in the semaphore article we have up is that that's more than it was doing on its own subscription business. And that's the key thing here. This is a really big leader for them. Yeah. See, this is a big deal. Again, it's passive revenue.

They don't have to worry about finding the users, et cetera. And what a great licensing deal. Apple is making a ton of money from services. I pay for some Apple One, you know, I don't know if you're, pay for that, but I have like a family Apple one thing that might be like, I pay $500 a year or something. It's a big number. It might be 50, 60 bucks a month for me to have Apple TV, Apple News, Apple Arcade, two terabyte shared across five accounts, whatever.

I mean, I got a nice Apple music. And I'm like, this is easy for me to spend its easiest subscription I have. And I like Apple News. I like it because I use Apple Stocks and Apple Stocks is powered by Apple News. So I don't really. and then I'm finding, I don't know if you've had this experience in the group chats or with your friends,

people are sending the Apple news links. I'm starting to see that. The Daily Beast link. So I'm getting like, hey, check this out. And it directs me and opens up Apple News. So when I start seeing shares from Apple News, you know it's getting some kind of critical mess. Oh, absolutely.

And the question that I have, though, is the Daily Beast doing well. I'm glad they have any revenue stream. Huzzah. $3, 4 million a year, back to your point about what journalists cost and what, you know, journalism margins are is huge. How many pubs will this work for? Because, again, if it's only top five or ten, we're going to end up pretty top heavy in the world of media. And I think media is often best when it's weirdest and therefore most niche.

So I'm hoping that this kind of works out for everyone else. The thing is, the ad market is not as bad as people think it is in general, but for media that is journalistic, it's garbage still. And so I'm hoping that these things do add up. Did you see the Vox News, Vox Turn 10, Vox is going towards subscriptions? I'm curious if you were surprised by that. Yes. Yeah, you know, Vox was formed out of Engadget at AOL.

Jim Bankoff left. I don't want to say stole, but he stole. It kind of, he evolved my playbook, the Weblogs Inc playbook, but stole a lot of the Engadget and joystick team and created the Verge. And I guess the Verge was like kind of combining Engadgeted and joystick into one thing, like all tech kind of geeked them in one and did a great job.

And obviously still does. Still does. And so when I saw they're going to subscription, I did do a tweet about that. It really just has to do with how efficient advertising is in three places. the first is obvious. Google,

meta, TikTok, Twitter, Snapchat, you know, there's like five or six at scale ad networks. Sure.

Then you have a new emergence of what I'll call checkout shopping cart, basket, e-commerce related ad networks. Amazon is that like 40 billion, I think. Uber,

Instacart, Instagram each. also DoorDash crushing it on advertising. So these marketplaces are starting to generate, my understanding is like 5 to 15% of their revenue. They expect to come from advertising already. And I think that number could go up. And then finally, there's podcasting,

which I know I'm like kind of tooting our own horn here because we're on a podcast. But podcasting is like really started, Now, it's smaller numbers. In aggregate, though, advertisers really love it. So you put those three things together, and I'll put YouTube and podcast together, shows, host red ads, whatever. Those are going to win most advertising, and they all have, like, great tracking, and they're

very unique in the world for different reasons. The scale of the ad networks from Google and meta, being close to checkout, and then host reading ads, right? And like just really passionate target audiences, that's hard to beat. That's hard for Engadget, TechCrunch, you know, The Verge.

It's really hard for them to say like, buy our ads and they're like, hmm, if you're Samsung, I think I want the Amazon ad. I want my TV and my receiver and Sonos. Yeah, maybe Sonos will put a little bit on the verge because it makes them feel good,

but they're probably better off being at the checkout on Amazon or during search on Google, not on the VIRT. The VIRG is going to have the least trackability, and Gaget is going to have the least track ability, which wasn't always the case, right? Those were like the premier places to spend your money. So I think that's why subscriptions and these licensing deals,

they could wind up winning the day. I agree with all of that. The counter argument is somehow, to this day, television advertising remains simply enormous and people spend ungodly amounts of money to spray, very poorly targeted stuff all over television. And so to me, I'm just holding everything you said in my hand and going, yes, you want to be close to intent.

You want trackability. You want the ability to really understand the ROI here. And then I turn on my television. And if I see one more state format, I'm going to rip my TV off the wall and throw it through the window because I can't stand it. Here's the thing. I'm not in the market for insurance right now. And yet I have seen in the last week, probably 200 paid insurance.

ads on television because I watch sports. And so I just, I struggled to see like, why can't some of that dumb money land in the hands of your in gadgets and tech runches? We could talk a while about why that's the case. But I don't know. They do have big scale. They do have big scale on TV, you know, and there's like an old school, you know, group of people who believe in that scale, right?

And it's just, it's hard for people to make small bets. It's the same thing with venture capital. You know, it's this weekend startups where we're talking about it. you see some billion dollar fund and they're like, well, why can't they give like a million dollars to a thousand people? And it's like, it's a lot to manage for the management over there. They would rather do $25 million, $40, $25 million bets than $1,000 bets. Now, in a logical basis, like there could be an argument that you would hit more outliers, but there's also the human constraint of what a human can imagine and manage.

Oh yeah. I mean, and the dynamic of larger funds wanting to put checks into earlier companies at a higher dollar amounts is partially why the C in the Series A market is so wonky right now. And if you're going to do the scale bet, you're going to have to try to beat YC because they are probably the most active super early investor out there. And think about how much work goes into each of those cohorts, the brand, the promotion. I think they have 150 people making 500 investments. So on average, they're doing three. or investments for each. And that's just the, I think that's the total staff is 150. Wow. So, you know, if there's 50 partner people, you know, it's like they're each doing 10 investments a year, one a month. That's still a lot of work, right? That's a lot of paperwork. Just a lot of forms. That's why the forms are standardized and they don't negotiate them, by the way. And we do that here. I forgot to tell everybody you're here at launch doing the show with me. So you're going to get some inside information, as it were, on startups and some education. So I'm really excited for that free here. Here to learn.

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We got Nvidia. We got the News Corp. There's a lot of other things on the docket. What do you want to go next, Alex? I think we've got to talk about humane AI and the company potentially being up for sale because there's a lot baked into the story. It's a media story. It's a review.

It's a hardware story. It's AI. And I got to say, I'm not that shocked. The company is looking for an exit path after its pen came out. Everyone's seen those little pins that remain shipped. They were expensive. They had a subscription. They were ambitious, perhaps, to a fault.

And the reviews are pretty negative. And then what feels like 20 minutes later, Jason, the company is trying to sell itself for $750 to a billion. I don't think it's going to get that. But first reaction, hit me. All right. So like you said, there's a couple of that. here. Hardware is hard. Consumer hardware is hard. Why is it so hard? Well, you have somebody like

Apple who's just so good at it, that they're going to own the category. You got Michael Dell and Dell computers, you know, I love them. You know, I always buy Dell and they're just great. And like when I buy Dell or my MacBook Air, I have like a, like you, I have my gaming PC over here. I got my Mac here. When I'm doing creative stuff like the show, I'm on Mac. When I'm working, I I like to use my Windows machine sometimes, my giant 50-inch Dell monitor, and I like to play a little age of empires for once in a while when the kids go to bed and I need to blow off a little bit of steam. It's hard to compete with people at that scale, right?

And then there's a long tail of whatever interesting thing you make, like Dropcam or Ness cams, you can go buy four, you know, cheap hardware versions of that for like $199 or you can buy the $199 one from Google. Yes. It's a race to the bottom. It's risk the bottom. You know, it's hard. Hardware's hard is what we say in the business.

VCs don't like to invest in hardware. And all you have to do when you want to judge a category is look at exits. And if I were to ask you, what are the three biggest venture exits for a hardware startup? In, you know, from 2008 till now, after the Great Recession, take a minute to think about hardware startups that you saw. And when you were, you know, editors at crunch base and tech crunch. Go ahead. Nest. Nest, which was Dropcam.

500 million to Google. Right. Danger to Microsoft back when they were trying to get their mobile life back together. I forget the year on that, that was... That's earlier. Yeah. That's earlier. Okay.

It's not a venture exit, but I mean, Microsoft and Nokia, back in the Windows fun days. Okay. Yeah, giants. I'm really digging here. I mean, maybe framework, the laptop company today is doing well. Hasn't exited, but is doing well. framework. We should talk. I had them on the pod. I really love what they're doing conceptually. The ones you miss were two. And the reason it's so hard is because you kind of forget about them.

GoPro and Fitbit. Fitbit bought by Google, right? They had a really hard time. And then you had, of course, uh, GoPro, which both of those, I believe Fitbit went public before being bought in GoPro. Then you could add a couple more hardware ones that are still in play. Palaton, public. Raspberry Pi. Well, Raspberry Pi is open source, I think. I'm not sure if there's a startup behind that. They're going public on the London Stock Exchange.

They're raising $40 million. Yeah. I stand corrected. Okay. I just saw that day the day. Well, that's actually an interesting one for us to double click on because it's like a platform. I wonder if they make it from the hardware.

Who knows? Yeah. So you start to put all this together. You can understand why most exits that have occurred are in the low single digits. The biggest ones were in the low single digits. GoPro, Peloton, Fitbit, Drop cam, which became Nest. Those were all 500 million to 4 billion-ish. There was a little weird spike with Peloton, of course, during COVID, the way it went to 30 billion, which made no sense.

So that's why people don't like hardware. That's why this is such a tough space. These people have a pedigree. So then the question becomes, does anybody want this product? Does anybody want it? As a consumer, do you want it? No. And the reason why is not actually the hardware, because I think the actual thing they designed

is small enough and sleek enough that I can see myself wearing it. I mean, I'm not wearing an Apple Watch every day, which is enormously dweepy. Yeah, you are too. Yeah. I think the problem here is that hardware is hard because you have to nail two things of once, software and hardware. Yes. And in this case, I don't think the AI software that underpins what Humane has built,

is sufficiently good enough to warrant the high cost for the device and the subscription. And so, look, I did not buy the Vision Pro. I'm going to buy the next generation of it because I have more money than sense and I like gadgets. I don't have a lot of sense, just to be clear. But in this case, I wasn't even like, I wasn't even that excited about it. And I think that's, that's the lethal thing here. And that brings to me the question of who wants to buy it, the company.

what is the value that they've put together? What's the IP? I don't know. I don't want to be rude, but I... Well, okay, so that is a good segue about not being rude. There is, I guess, a debate or a microcruffle. I'll give it a microcruffle. It's like a little Donnybrook.

It's not a major one. That Marquez from YouTube and maybe the Verge. kind of trashed it as a 1.0. And I think they put, like, in the headline, the worst product I've ever reviewed. I just want to let people know how headlines work. It's just a public service announcement. If the headline is the best ice cream I've ever had,

the most disgusting ice cream I ever have, people will click on that more than I tasted ice cream. yesterday. So the most disgusting ice cream, the absolute best ice cream I've ever had. And so people can be a little hyperbolic in the headlines, especially on something like YouTube. And so Marquez did the worst car he ever drove, which was, I think, the Fisker garbage, and I think they're out of business now.

And then this device. And then people countered that with, oh, but they're being mean to innovate. and startups and founders. Okay, this is the big leagues, folks. If you don't, if you make a movie, you don't get to make a movie for the public and then not take criticism of it. Quite the opposite.

You need to embrace and love the reviewers for actually giving you attention. Now, if you want to say, this is a developer preview. disclaimer, disclaimer, disclaimer. This is for developers. It's not intended. The price point we're going for is $2.99, not $9.99.

But that's not what Humane did. Humane came out with it like, this is a finished product. And also the Rabbit. We had the founder of Rabbit on the pod. They came out with it saying, like, you're going to be able to do, you know, order your Instacard and order your Uber. People got it. They weren't able to order their Uber. You got to be careful in how you frame these things.

If you want it to be a developer preview, say this is a developer preview. Put it on the box. Put a disclaimer. Say you're only selling a certain number of them. And then when you do the demo, say, this is things, these are the things we hope developers make for Rabbit, for Humane.

And this is what it might look like in a couple of years. You basically play it down, play it down, play it down. They didn't do that in both of these cases. No. And they're going after things we already know how to use. If you think about the pitch behind a lot of this AI hardwords, keep your phone in your pocket, which honestly, great. I would love that. But then you have to really own up to that and earn it because people do already take their phone out for a reason.

Now, the Rabbit, R1, was 200 bucks, no subscription. That gives them a lot more space to ship something that's not fully baked. $7 to $800 for the Humane Pen plus $24 a month in subscriptions. So it's Netflix every month for this thing. That's a lot harder. And I do think that there is something to be said for people not understanding the role of media in the world of technology products because people have become so tribal that they think that any criticism from anyone in the world of media in general is evidence of bias or haters or whatever. But Marquez is well loved and trusted because when he talks to you in his videos, he's telling you what he really thinks. And the headline was spicy, absolutely.

but I don't think his review was actually that far off the mark. I watched the review. It was not like the review was disastrous. It was just like, uh, he actually says hardware is incredibly slick. There's a lot in here to like. That's literally how he leads. And then he's just like, but it gets a little bit hot. The battery, you have to change constantly.

It hangs off. You think it felt like an iPhone 1.0 review, right? If you go look at the iPhone review, it's like, this thing's pretty stupid. There's no keyboard. you got a hunt-and-packed, the screen's tiny, it lags, it crashes. Like, it wasn't as magical as it was. It wasn't like, you know, even with the reality distortion field, I think people were a little critical of it too.

They were. I mean, you didn't have 3G. That was a big point. And don't forget, when the iPhone came out, it didn't have an app store. The whole idea of the original, original iPhone was the mobile web is going to be amazing and everyone's going to build great websites. And then we ended up with the app world. But, I mean, really, it was the iPhone.

3G that I think really took that from. This is a niche thing to everyone's going to have one of these until they die. And it turned out the app store and apps by developers using the platform, they discovered like the really cool things to do with it. Like Angry Birds or a flashlight, you know, like, there were like silly things, but people don't remember that the flashlight was an app you bought. It wasn't built into it, right? Right.

And then eventually we saw a major platform company slowly eat bits of the market. which happens every time out there. But I mean, certainly Apple is not trying to replace the entire app store. But we actually have a bit of a startup story here on that note because we were talking about the recent Microsoft event, Bill. And they're talking about AI PCs. They're going to put neural processing units in these. They're called co-pilot plus PCs.

I think Joanna from the journal calls them AI Putors. We'll see which phrase takes off. But Jason, they have a new thing called recall. coming out that's going to let you go back through your computer and see what you have done in the past. And as it turns out on this very show, a couple of times, we've had a company that was called, I think, Rewind AI. And you've sat down and talked to them about this. And so I'm curious, do you think this is like Microsoft coming late to the show and they're

going to like take the market? Or is this one of those moments when startups are going to be able to fend off the big tech incumbent? Number one, it's a pretty terrifying concept. Your entire screen is recorded. And, you know, like, as I talk to the founder about this, I had profound concerns. I'm like, well, what if you have signal on your screen? It's like, well, that's your choice. It's like recording your screen.

I'm like, yeah, but the expectation is signal, is disappearing messages or, I don't know, pick telegram, whatever you use. People are not expecting to be recorded. So you're kind of covertly recording people. And he has a different view of privacy like many tech people do, which is we don't. we don't care or you know, like you know, you gain so much

that privacy doesn't matter as much because you just make that tradeoff. I guess that would be the fair way to say. It's not that they don't care, but they think the trade-offs worth it. I disagree profoundly. You know, with these AI pendants that people want to wear

because one of the things, and what was the name? It was Dan, was his name? Dan Sroker. Yes, Dan. And he also was going after the pendant market. There were two different companies. we had on.

The idea behind the pendant was you wear the pendant it records every conversation and I'm like, that thing doesn't have a record light on it, does it? Like, nope.

It's like, okay, so you're covertly recording me like Michael Cohen like recording Trump. Like, nobody wants this, by the way.

Nobody wants 24-hour surveillance. People who wore those goddamn Google glasses the first time got punched in the mission for a reason. Yeah. Like,

nobody wants you walking up with a VHS camcorder and being like, what's up? You know, you will get punched. And nobody wants that covertly. So I think it's a little crazy, these concepts. Okay.

And I think consumers don't want them. So, they could be wrong. We're going to find out because a couple of things have happened since we had Dan on the show. First of all, they have rebranded, they're not called limitless AI. And what they've done, actually, I watched, Dan, this founder, discuss Microsoft's recall feature because people, of course, were like, oh, my gosh. you know, what do you think about this? And we have a clip we're going to pull up in a second.

But I think it's really cool is they have moved away from what Microsoft is now doing. Microsoft is saying it's your device. Everything will be local. And what you do on your computer is going to stay there. It's for you. And okay, okay, I'm cool with that. I mean, that's how Apple's work, right? Like your stuff is stored local, encrypted.

Even Apple can't get to it as we saw with, I think, the San Bernardito shooting. Yeah. They wouldn't open it for the government. and they had to use an Israeli company, I believe, to unlock that iPhone because Apple's like, Tim Cook's like, yeah, no, we don't open phones. Sorry. Yep. But now, Limitless AI, the startup that's pre-branded, has built what they call a private

personal cloud. So essentially, it now works across your devices and gives you your own repository, which is great until it gets hacked in my view. But let's go ahead and take a quick look at this clip, everybody, and we'll see you on the other side. It's easy to imitate the outside of a product. imitate what looks like the way the product should work. But we can't imitate as the learnings. What took to actually build the product, the innovation, the core problems you're trying to solve.

You know, we've evolved a lot in the last year and a half from the learnings we've had from our users. In fact, just recently about a month and a half ago, we completely launched a new product called Limitless. They took everything we learned from Rewind, invested it in an entirely new architecture that we think is fundamentally better. In many ways, we actually felt rewinded the approach we took that we took and that recall is taking now. We found it really limiting, and we knew that users really cared about being able to access their data from any device. They cared about being able to use the best AI models, and they really cared about unlimited storage. And at the same time, if you could deliver on those guarantees and give them the same guarantees they had of privacy that they had with a local app, like Rewind, but in the cloud, then that would be a breakthrough.

Oh, that's great. But back to your earlier point. Wow, is that an oxymor? Kind of, I think so, just given my view. view of cybersecurity, which is that everything's going to get breached eventually forever, forever. The thing that's not fixed by having a private personal cloud is, if you're recording with your pendant, whatever else is saying, you're taking their words and put them into

your cloud. You're taking them. And so I'm very curious about that, but the consumers will decide. And that's why I think this recall feature is interesting from Microsoft because they must have note that people were going to go, as you did when you first heard about rewind. Oh, my gosh, this is invasive. and they went ahead anyways. So presumably they've done the research on the thinking,

so we'll have to see if folks actually use it. I probably won't. I think, you know, every time somebody proposes the Truman Show, somebody tells them, please go watch the Truman Show, and we live in public. It's a nightmare.

Go watch the Black Mirror episode. It seems like the Truman Show is a positive thing. Then you realize it's a, nightmare for Truman. Yes. It's great for everybody else, gawking. It's tragic and anxiety producing to put yourself under that much scrutiny. That's why people right now love the Brave browser.

I made the Brave browser my default on everything. I don't want to be tracked. I have it, you know, I have my shields up. I pay for their VPN and I pay for NordVPN. I have double VPNs. I pay for two VPNs. And NordVPN has a double VPN. VPN feature. I'm just paranoid I'm going to get hacked. I have like confidential documents,

you know, from startups and stuff like that. You just, I'm vigilant about it. So I think there's like a trend to take your cybersecurity seriously. And these kind of things, there is a benefit to it. We have an investment in a company called recall AI paradoxically. And it's a browser that plugin that allows you to make a summary of the page you're on and then put it into your knowledge graph. So you have to actively do it. And I asked them actually to, when I have a browser session, put it on, record everything in my browser session.

So that every page, but what I would do in that situation is I would have a browser, that's my knowledge one, that I wouldn't do my personal banking in. Yes. That I wouldn't do personal communications. So I would take like a browser instance. Now, I'm a vigilant user, and I love that idea of this powerful browser history where, like, oh, you know, I had read a story about that, et cetera. So I do like that, you know, delicious bookmarking on steroids with AI. I do think there's something there for that.

But I just don't like this idea of recording your whole desktop. It's going to get hacked just like everything else. There's no such thing as like a cloud that's perfectly, you know, private. I think that will get hacked too eventually. And so I do think that there's a big danger here. And then you might also be educating Microsoft. Everybody says the language model is not going to be informed by this. But then I saw the Slack kerfuffle.

I don't know if you saw that. I did. Where Slack was saying they were training their data on yours and you had to opt out of it. So I think the industry needs to remain vigilant on all sides here. And be very thoughtful about this because there is going to be, there are going to be great gains. and there's going to be great losses. The fact that everybody knows where you are at all times because of GPS, GPS is so powerful.

I'm not ready to give it up, but I do have concerns about being tracked, right? Did you see that article recently about how there's a new norm in like dating relationships to have like find my iPhone turned on so you can kind of see where your partners are or partner is? And of course, people have been caught cheating and so forth. But it just blew my mind because I don't know.

when I was a child, we like left the house and no one had funds and we would just go. And that was, you know, you're expected to not be a dumbass and get hurt. And now like we're tracking adults. Like I just, it feels too much to me. I am claiming you for the

Gen X, uh, in the Gen X draft, I'm claiming you, Alex. I think we're claiming you and we're willing to give up like, I'm not sure who in Gen X were willing to give up. But I'm sure there's somebody annoying in the general crowd. We will give to the millennials in order to get you into the Jemex bucket.

I was explaining this to my daughters because I told them, get out of the house on Saturday. He can come back in two hours. And they're like, what are we going to do? These are eight-year-olds. And I said, go play in the backyard. There's a tennis court. There's a tree house. There's this.

Go play. You can come back. They're like, they came back every 15 minutes to ask me what time it was. And I was like, guys, you're not getting your iPads. You're not watching Harry Potter for the 70. time outside. And you know what? Then all of a sudden I come out the magic. Not half an hour after their painting. They found the paint sets. They got, these were eight-year-olds, the twins. They found the canvases. They're painting. They come back. They got paint on their face pants.

They got all, they get into all kinds of good trouble. And I said to them, imagine when I was a child, we were kicked out of the house at 8 a.m. We were given a sandwich or 10 bucks. And we were put in the streets of Brooklyn. You know when they told us to come back? The rule in Brooklyn was, can come back when the street lights come on. Yeah. The street lights were time to come on at dusk. So street lights come on, you come home. It was like the bat signal for us.

And I do agree, like, we're, the Truman show will make you crazy. I had a friend Josh Harris who did a company called Sudo back in the web 1.0 days. And he did an experiment called We Live in Public or Quiet. And there's an Andy Timona documentary called We Live in Public. Everybody should watch it. because he went mad because he put in his loft in New York 50 cameras and he put himself under surveillance and then people watching him all day, all night, in his shower, everywhere at the bathroom. It just, it was crazy.

And he literally went mad from it, just like in the Truman Show. Yeah. No spoilers. But, yeah, I don't think humans do well with constant surveillance. Like, you know, just to record this, this morning, I'd think about like, do I shave today? What shirt am I wearing? Like, which glasses am I? Like, just the preparation of making sure there's nothing untoward.

in my background, and that's to record something in one place to one camera in a controlled setting. Now imagine your house. Everyone's weird, right? Yeah, of course. Yeah. I don't want people want. Yeah.

I mean, this should be obvious. Be careful what you wish for. And you always have to ask, is the juice worth the squeeze and what's the worst possible scenario? And, you know, the worst process is really bad. So I do like the idea, though, of... you know, some amount of watch me work, and I'll get better at my work.

And so shout out to David Sacks and his partner Evan for glue.aI, their new Slack killer. It's watching what you do at work so you can, instead of people saying, here's what I got done today, you're now in our corporate slack. I just ask people like, please do your start of week and your end of week. What you plan to get done this week, what you got done, start a day, end a day.

It's just a ritual for a remote company. five minutes the morning, five minutes at the end of the day, 15 minutes at the beginning of the week, 15 minutes at the end of the week. You add all that together. It's like an hour of time. One hour of time just to have like a GSD, get stuff done,

methodology and accountability to your team members. And now you can just ask like, hey, what is Alex working on this week? And you'd be like, oh, Alex was working on the new ticker. Alex was working on producing this episode. Alex was doing this. It will know that automatically. in glue.AI, the Slackkiller that Sachs made,

it knows that you could ask questions to your corporate chat and be like, who was the guest we had on? Or did we ever think about having this guest on? It's like, oh, yeah, you know, we invited Humane back then. Here's a link to that thread where we talked about inviting Humane because we'd be trying to get them on the program for two years. The end, yeah.

They should come on. They should. I mean, I think they're going to have to do a post-mortem at this point. Oh, man. Not to be dark. Not to be dark. So I actually helped put together the notes for the glue show you're discussing. Oh, yeah.

Thank you for that. Oh, yeah, no worse. But the thing that hit me while I was looking at that is this is like, this is not something you could do with Slack. Because Slack right now is doing, what if we take an existing product and we try to thread AI through? Glue is, what if we just erase the whole freaking whiteboard and start again and build with AI from the foundation up.

And that is, I think, a very compelling way to rethink enterprise software that might be more useful than what we're seeing now, which is a lot of people trying to put a fresh AI coat of paint on an old car, you know? And I wonder how much of the B2B software stack that we all live in use day to day needs to be torn down to the studs or further and rebuild. And I mean, we'll see how glue AI does. Superhumans new AI feature is also pretty dope. But like we'll summarize your inbox kind of cool. You can ask you questions. That's just coming out. Notion has it built in AI.

That's pretty dope. And so I do think it's going to be table stakes soon. And it's just kind of like things that would have taken you 15 minutes or five hours with your inbox or your knowledge graph or in your, you know, corporate messaging that you usually. just be like, I don't have time to do that, are just going to be automatically done. So again, the great efficiency of corporate America and our personal lives is going to hit an all-time high because of AI. It's going to be bonkers how efficient we all are. Just even researching stuff, you're going to be able to, like, I don't know if you've noticed

this, but as an editor and as a writer, even on a great publication like TechCrunch, where you're hiring people based on their aptitude in those and their achievement. in those areas. Everybody seems to be getting really good at writing. Everybody's a good writer all of a sudden. And I'm like, you know what? My whole life, the majority of people were bad writers

and what made me special was I was a great writer. And the difference between me and other writers, you know, an average writer was just tremendous. And people like, hey, can you read this for me and write it for me because you're a great writer. And now I'm like, everybody's pretty good. Everyone's pretty good. The thing, though, the reason I'm not concerned about my ability to send my child.

Because you're a great writer. Well, one, thank you. But, I mean, the thing that I think matters is AI kind of all sounds the same. It has this like, it all tastes like chicken to me. And if you look at like grammarly or even just like how Notion wants you to write or docs, they all have a very, very straight line approach to Ron. I like to mess around and have fun and abuse grammar a little bit and throw some words that they're going to say are too hard in there. And so I think that there's still going to be plenty of space for humans to like to put some some Riz on it, as the kids say.

But another thing that I have learned is that people hate writing. And so they want to use AI to do more of it faster and probably better. So I agree that it's raising the floor. I just think the ceiling is still pretty hot. I think it's a ceiling's high. You're right. Because I am a big fan of the M-Dash. It's like my big comedic device.

I'm like, blah, blah, blah, blah, blah, blah, blah, blah. M-dash, yep. Drop the bomb. And everybody's like, it's not a J-Gal essay without an M-Dash or two. And, you know, like, they're just like, make it a new sentence. I'm like, no. Nope. No.

Nope. It's not a new sentence. And they're like, you can't end on an ellipsies. I'm like, oh, yes, I can. Oh, I can. A preposition and an ellipse. I'll throw brackets in there. A long, long time ago in a galaxy far, far away.

Like we were raised on this like back to Gen X like we can go with an ellipsis. It's not going to kill anybody that it, you know. No, you got to have fun, man. That's that's one thing that I'm really, this is not on topic per se, but like life should be fun. We're here once. We should, we should enjoy it. Throw in a compound sentence. Make the sentence too long.

Yeah, compound it three times. Make it make it that you have to read it twice. Sure, why not? Give me the run on. one sentence paragraph that says exactly what you want and tells me how to say it as I read it. Don't just give me the bullet points. Yes. Yes.

Absolutely. We're a little low on time, but let's do. So quickly, I think that you and I are both now members of, which is Farcaster. So if you don't know, Farcaster is a protocol of sorts, a decentralized approach to building social applications. It's a little bit similar to Noster. and it just raised Jason $150 million, and the TechRunch headline is that it has about 80,000 daily users.

So I am not sure how to square those numbers. Okay. It is obviously getting some level of traction, and it does seem like the crypto technology isn't as difficult to use. So you download their app in the app store, you pay five bucks to create your account. Then all of a sudden it starts getting annoying.

Like you try to join a channel, I was like, hey, I have some gas fees and I will buy some of these zooms or wows or whatever. And I'm like, oh, my God. Yeah, you just killed it for me. I don't want to be involved in tokens. I don't want to have to pay tokens of this. It's just too complicated, right?

Compared to Instagram, TikTok, Twitter X. Like, so, um, but there is some value to not being locked into one social graft. The problem with that is, that's not a problem for 99% of users. So the people who embrace these kind of things are weirdos, you know, intellectuals, um, you know, hacktivists, whatever. And that's all great. I'm, I'm in that cohort. I like this kind of stuff.

What's notable here is Fred Wilson. Fred Wilson moved his blog onto a decentralized blog. He moved his tweets or social posts onto this. So he's going full decentralized. The idea being you can kind of own his stuff. It's on the blockchain. It's immutable. Can't change it, I guess.

Or if you change it, the change is perfectly done there. That's problematic because sometimes people write things that they want to go away. Almost everybody who's been on Twitter for over 10 years archives their first 10 years because it was a chat room and who knows what you said about whatever topic that now would get you canceled but 10 years ago was like perfectly valid

like um so what's notable here also is the valuation is a billion dollars for 350,000 users who paid five bucks each

it's a thousand times revenue maybe or 700 times revenue. There's no logic here to this, or there's no obvious logic here to the scale of this bet. I don't know why they need 150 million, not 25 million. I don't know why it needs to be a billion dollar evaluation. I think it has to be a billion dollar evaluation because this entrepreneur did a great job fundraising. But how do you make a return on this? It would have to have, I don't know, if these users are worth $5 each? Let's say 15, just to throw them the benefit of the doubt.

You still need such an amazing amount of users on this to make it math out. And as we've seen from X and Snap and so forth, Pinterest, you know, if you are not the leading social network, the power law hits it pretty hard. And I think that the total possible DAUs for a Twitter-ish service with some blockchain elements that costs five bucks to use is not big enough to make those numbers work out. I just don't understand the amount of capital

that people put into this. Like, I mean, I could see 15, but 150? Makes no sense. But congratulations to the founder. Dan, you're not doing. Yeah, I mean, I don't know him personally and he's set a couple of like,

kind of slight digs to me on his podcast. I know because people send him to me. But the interesting thing about it is let's take another at scale social network and look at their valuation.

Sure. Reddit. Sure. Been worth six to nine billion since it's been public. Mm-hmm. Think they're right about a billion dollars in

revenue. Okay, if one has a million, one has a billion, a billion dollars in revenue worth nine billion, nine times top line revenue, most people would say

Reddit is massively overvalued. That, at this point in time, That is no dig to Reddit. I spend a lot of time on Reddit. Me too. Look up my handle.

I love Reddit. I'm in my headphone and audio file phase. Man, Reddit is awesome. I'm on headphones, cheap headphones, headphones, headphone advice, music. I'm having a delightful time in Reddit. At scale.

Reddit is worth a million times with Farcasters are worth. It's got a billion in revenue. It's got a thousand times the revenue probably. So. And. it has a lot of, a lot of users.

So weekly active unique users were up 40% year by year in the first quarter I read out to 306 million. Dailies were 82.7 million, up 37%. And it's worth 9 billion. So just 9x,

but like tens of thousands tons more people. Actually, we could do that with a, I love back of the envelope math. If it's an $8 billion, $9 billion company with 90 million people a day, that is,

a hundred times the valuation is a hundred times the daily active users right interesting it is 30 times the weekly active users and do you know what the monthly users are

I'm just in the day it's a lot more yeah they don't break out monthly I don't think I think it's just daily weekly in their I are okay so the weekly is 30 times like so we actually kind of have a way to benchmark these

with revenue daily weekly so for somebody who's watching this and trying to understand the major difference here. The major difference is one of them is a publicly traded company that's very well established and predictable. This one is not predictable yet. It's a it's a hell Mary moonshot. Yeah. Could distributed or will distributed permission list, nobody owns it. Systems be worth more than ones that are completely owned and controlled.

That's my question for you. What's a more? valuable asset, one where one person, a CEO and a board and shareholders control it, and one where you don't, which is worth more? In the history of business, up until this moment, Jason, what is the leading way to both safeguard and extend shareholder value? It is centralized top-d-out authority. There's a reason why a Dow doesn't run Microsoft. Sotia does.

Yeah. Now, I think there's a lot of technology and interesting social and philosophical commentary to be made about decentralized systems. That's really fun. I just don't see how you can say Reddit's worth $9.3 billion now, whatever it is, this is going to be worth more than that in time, given the way it's set up and the technology it's using. And I think the issue here is your Andrews and Horowitz cryptos, maybe your paradigms,

maybe your Han ventures. I think they raise a lot of money. they had to put it to brick. And so going back to your point is our big funds and big checks. Yeah, I don't think there's that many breakout consumer facing crypto apps that have 80,000 DAUs that are non-speculative or token based. So if you see one, you want to make sure that you have a big chunk of it. And I think that's what happened to your.

Again, shout out, damn. If someone wanted to give me $150 million for my sub-sad, yes, I'm in. And you have to also have the humility to know as an investor who didn't review the deck here. I don't know what the underpinnings here or what their vision is. Maybe we don't have, certainly we don't have full visibility. So maybe there's something in the pitch

that Fred Wilson saw or Andreessen saw, that's unbelievable. But I'm going to go with your take on this, which is there's not that many crypto deals. There's a lot of crypto money out there. I saw this when it came to investing in, you know, sustainable companies, right? And it turns out there just aren't that many people

doing alternative energy, sustainable companies, therefore the ones that do exist were priced, in my mind, 10x their performance. Yeah. So, and so you say, well, why is that? Well, because there are so many people doing climate, carbon, you know, funds, and there's so few entrepreneurs, you know. Yep. It's tough.

But I will say, I don't think we're ever going to see multi-billion dollar crypto. well, not never, but I think the era of multi-billion dollar crypto funds is probably behind us just because I think this round is a good example of that. But I do think we should not get into the whole congressional crypto thing until the votes clear there. So we'll bring that up. Yeah, we'll bring that up on the next news program for sure. Alex has a new newsletter.

So subscribe to Alex's newsletter. Let's get a shout out to your newsletter. What's it called? How do they find it? Cautious optimism. dot news. I managed to make a website work. I'm very proud of myself. I've got the DNS all humming. Oh, nice. Yeah. Cautious optimism. Yeah. I like it. Because you are not a cynical anti-tech individual. You don't hate big tech. No, but I am on the side of things who I don't hate big tech, but also I don't think Microsoft should have been able to buy.

Blizzard. But I'm also excited about new technology and a little skeptical of humane AI. So to me, it's like, let's find a little middle ground between Lena Khan and the Mark Andreessen manifesto about how if we so don't AI, you're a murderer. Somewhere in between those two, you know, that's the goal. So you want to call balls and strikes, like just be even handed in your newsletter using B-Hive or Substack? They know that's a big thing for people to make a decision. I stayed on substack. I canceled my Beehive sub. I talked to the CEO about that.

They're lovely. Tyler's great, but I just substack simple. Okay. I'm fascinated by Beehive. There's some features on there. I'm understanding are really good. So I'm going to test it.

The Ag Network at Beehive is their key feature. It's great. Oh, really? Interesting. Yeah. Yeah, you know what happened? I was like I had so many antiquated mailing list that we had accumulated over the years. Yeah.

It costing me a lot of money on MailChimp. And then it was free to put them on substack, and then it's like close to free on Beehive. So this whole idea that you have like a, you know, you did some event 10 years ago, a launch festival. Sure. You got 10,000 emails on the list and you're paying 50 bucks a month to store it. And then you have 10 events and I're paying 500 bucks a month to store it.

You can actually just move it to these services for free. And that's, again, why efficiency is going way up and costs are coming way down. Things are getting cheaper. The world's getting better. Be cautiously optimistic. everybody and sign up right now, Cautilously Optimistic. News. Follow X.com slash Alex.

I'm X.com slash Jason. We're going to see you next time on this week and service. Bye-bye.