This Week in Startups - OZY Media’s deception, VC retirement, Clubhouse’s monetization problem with The Verge’s Ashley Carman & more | E1292

Episode Date: September 28, 2021

First, Jason covers OZY media's attempted deception of Goldman Sachs & investors (1:50), then covers Clubhouse's monetization problem with special guest Ashley Carman from the Verge (24:26). To wrap up, he discusses VC retirements (46:30) and Disney's Star Wars Visions (56:29).

Okay, we have got a jam-pack news program for you today. I'm going to talk about a crazy, crazy fraud that is going on allegedly with a company called Ozzy Media, OZY Media. Additionally, we're going to talk a little bit about Clubhouse and their monetization issues around creators. We've got the reporter from the Verge from Hot Pod News who broke the story. I think it's a really interesting discussion. As well, I'm going to talk a little bit about why so many VCs are retired.

hiring at 50-ish and basically deciding I don't want to go through another cycle of this madness. Finally, we talk a little bit about Star Wars Visions, that Disney Plus series that I had talked about in August, and I really have some strong feelings about cultural appreciation, which is the opposite of cultural appropriation. Stick with us. It's going to be a great episode. This Week in Startups is brought to you by Bill A. Get back to doing what only you can do. Growing your organization and leave the rest of belay. Text Twist to 55123 for a free e-book to learn how. Squarespace, turn your idea into a new website.

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not impersonate a YouTube executive while trying to close a $40 million investment from Goldman Sachs. Feels like we've got another huge giant fraud here that we'll be tracking. Remember, we track Theranos. We've been tracking Tether. Feels like there's something Fugasey going on over there. And we've been just tracking all of these weird things going on inside of the technology industry and business. And this one is a doozy. There is a media columnist at the New York Times named Ben Smith. If you're not familiar, he worked at BuzzFeed prior to this. And man, he's got the inside scoops. He's kind of fearless. And he will basically use his contacts to spill the tea on what's going on in media in a way that we haven't seen, I'd say since Gawker.

And, you know, Gawker started, you know, as horrible as it became. They did cover the media in New York. And Nick Denton's approach, as he told it to me, was whatever people are talking about at cocktail parties after work, but they're not writing in their columns the next day. That's what he wants to do. So he would just tell his young writers, beat writers, whatever you're talking about, just write it. But we don't have sources, whatever. Just write it. Just write it. You know, say it's a rumor, whatever. And he was sort of fast and loose. Ben Smith is a little tighter than that, but it's the same concept. What people are talking about at cocktail parties, what people are afraid to write. He writes in the New York Times in his Monday media column every day. Okay, so to give you

background on Ozzy, which you probably don't know about. It is a digital media company, whatever that means. They produce a ton of newsletters, a ton of podcasts, YouTube shows, and in-person events, virtual events. And they make the majority of their revenue, apparently from paid partnerships, which means sponsorships, which means advertising that's not tracked, basically, when you hear partnerships. It means people are one-off paying for something, and maybe they're not looking at the ROI, the return on investment, exactly like they might on Facebook or Twitter when they're buying ads. They have licensed programming deals with a bunch of platforms, Hulu, Amazon, History Channel, PBS, BBC, YouTube. And supposedly they make eight figures from Ozzy Fest.

A OZY Fest is according to Axios, which is a two-day live event, which is kind of like comedy plus music plus discussions. So they're kind of taking like a little bit of Ted, a little bit of Coachella and a little bit of like, is it the Aspen Comedy Festival or Telluride? There's some comedy festival people go to where you just go see comedians back to back, back. I don't know what that would be like to go to a comedy festival and go to like 10 comedy shows in three or four days. Maybe that'd be interesting. I'm curious if anybody's ever been to that. So Ozzy Fest was postponed in 2019 and in 2020 and in 2021, Ozzy is hosting three virtual festivals. It's a little side note, they were sued by Ozzy Osbourne's Ozfest back in 2017. I don't know if Ozzy

won that, but when I first heard Ozfest, I thought it was Ozzy Osbourne's Osfest, but spelled slightly differently. They launched in 2013, quote, as a Gen X dream of what millennial media ought to be, earnest policy-focused, inclusive, according to the New York Times article. In other words, my generation, people were born in the 70s and 80s, trying to think about what millennials who were born right before the year 2000, what they would want in a media company policy-focused, whoa, can you get the idea? So in 2021, Axios reported that Ozzy Media did 50 million in revenue in 2020

and was profitable. Some more numbers that Ozzie gave Axios revenue growth of 50% year over year for four years in a row. Ozzie's five newsletters collectively having more than 20 million subscribers. The New York Times article compared this claim to Morning Brew, which said it had three million. subscribers yet seems to have much more reach than Ozzy. So that's a little weird. And according to pitch book, Ozzy has raised over 80 million since 2013, was last valued out 160 million in November of

2019. So that's the background. The co-founder Carlos Watson is the CEO and also their star talent. Watson has his own interview show, the Carlos Watson show. I've never seen it. I'd never heard about him before Ozzie Media. And I'm in the media space. So it's a little weird. And he helps co-host other podcasts and shows on Ozzy. A quote from the New York Times article, Mr. Watson often disavowed an interest in turning the company into a vehicle for his own broadcasting talent. So he was dealing with that, you know, same issue Oprah has when, or, you know, Martha Stewart had where they become the figureheads. That's what grows the brand, but then you become a bit of a liability. All right. So here's the story. And this is just bonkers. In 2021, Goldman Sachs was working on

closing a $40 million investment into Aussie media, according to the New York Times. On February 2nd, Aussie executives, including Watson, had a Zoom call booked with members of Goldman's investment team. And YouTube's head of unscripted programming, Alex Piper. Piper was included on the call as part of Goldman's diligence to verify Ozzy's claims about their traction on YouTube. Piper was apparently running late and had trouble connecting to the Zoom call so he suggested they do an old school conference call over the phone at the last minute. Hmm, that's a little red flag, right? Because Zoom works every time. Like conference calls don't work. That's why we all went to Zoom because Zoom does work in a stable.

So to go the, has anybody ever said, let's not do a Zoom? Let's go back to the old conference calling system. That's never happened. That's not a thing. Super red flag for everybody at Goldman's X, clearly. So once everyone switched to the conference call, Piper allegedly told the team from Goldman, quote, Ozzie was a great success on YouTube,

racking up significant views and air dollars in that Mr. Watson was as good a leader as he seemed to be. So, okay, now we're going to take a crazy turn. quote from the New York Times article. As he spoke, however, the man's voice began to sound strange to the Goldman Sachs team. That's not what it might have been digitally altered. What? After the meeting ended, someone from Golden reached out to YouTube's Piper via their assistant, not via the Gmail address on the calendar invite.

Hmm, a Gmail address? Piper received the message, but was confused and told the investor that he had never spoken to them before. And that's not something you want to hear if you're Goldman Sachs, obviously. When YouTube learned that someone had apparently impersonated one of their executives at a business meeting, its security team started an investigation, obviously. And here's the quote from the New York Times article

within days Mr. Watson had apologized profusely to Goldman Sachs, saying the voice on the call belonged to Samir Roa. The co-founder and chief operating officer aren't Ozzy. I hope I'm pronouncing that name. Rayo or Roa? Rayo, maybe. R a.A.m. In an apology email to go up in Saks, Ozzie's CEO, Carlos Watson, quote, said, he attributed the incident to a mental health crisis and shared what he said

were the details of Mr. Rowe's diagnosis. Samir Rau took time off work after the incident, but is now back working at Ozzie and the board never formally investigated the matter. One more crazy insight for the story. Ozzie was running full-page ads in the New York time that were made to look like magazine covers, which you can see here. Notice right under me, Carlos Watson, this is quote attributed to deadline, the best interviewer on TV. Twitter user and vice correspondent Michael C. Moynihan did some digging and found the quote in a deadline article. And the quote was said by Ozzie CEO, C.O. Samir Rao,

not anyone at deadline. And Samir is the same guy who impersonate the U-2 executive. So let that sink in. Now, we've talked before about frauds. When you are selling stock in a company and you're lying and you're doing it in not a not I mean we're not talking about massaging the numbers here we're talking about fraud impersonating another person outright lying this saying the person's the best person interviewer on TV and it's from deadline you know you could see somebody weaseling their way saying oh yeah no it was a mistake somebody in the graphics department store the quote they didn't you know they should have put it was from us we shouldn't have used it but it was a mistake you know no harm, no foul. But to create a Gmail address of a YouTube executive and then use a voice

modulator in a premeditated fashion to get them off Zoom, onto a conference. Well, this is like the premeditated murder. You know, like there's a difference between like somebody gets in a fight. They punch somebody in a bar fight and the person dies. It's like, well, I was drunk. I got in a bar fight. I didn't intend to kill them. Versus the person who's like, I went to the hardware store. I bought like ammonia. I bought plastic tarps. And I'm a serial killer and I killed this person. And then I bury them. And, you know, like, not to get graphic here, but I'm premeditated. You understand what that means. So, Ozzy basically quoted themselves, but used the deadline as the cover. It's crazy. You know, Ozzy's a private company, so numbers are hard to verify. This is what I do for a living

as an angel investor. I do diligence. And right now, I think there is so much fraud going on in the private company space and in crypto that it's going to be a parade of perp walks in the next three or four years. We already saw that with crypto, right? All the crypto cases, the ICOs, all the fraud we talked about in crypto five years ago. You're starting to see BitConnect and all these other crazy people get pinched. You know, the long arm of the law takes a little time, but when the hammer comes down, it comes down. And this grift is just unlike any I've seen. For so many leaders, there's a moment in your personal and professional life where you realize you're in your own way. Yes, you're the blocker. You know you need help. And

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I was speaking to some people at my secret poker game. Don't tell anybody about it at the code conference last night. And I was speaking to a lot of media people because a lot of media people come to the poker game and hang out with the executives in an off-the-record type forum. And so off-the-record, a bunch of media people told me explicitly that the reason this story did not come out sooner is because of the race issue. It turns out the founder is black, and there's very few founders of color running media companies.

Therefore, this person explained it to me as the liberal media does not want to take down a black media executive. It's just a bad look for a bunch of white media reporters to do that. Like, literally, this was told to me. This is not my opinion. This is a media person's opinion. And you know what? I did see that myself.

When Jason Blair happened, a lot of people in the New York Times had wanted to have, you know, a tech journalist at the New York Time who was of color. And according to people at the New York Times who told me they basically, you know, maybe gave him less mentoring and maybe didn't put him under the same scrutiny that they put other journalists under. So, which is very similar to what we saw with Theranos, right? A lot of the media, and the media has been pretty upfront about talking about this, that they had a blind spot. They wanted to put a woman on the cover of magazines. They wanted to have a female equivalent to Steve Jobs, and Theranos's founder, Elizabeth Holmes, probably knew that and captured that opportunity. And so it is possible to have a sociopathic person,

a criminal, a grifter of every gender, of every race, and sometimes the media has a blind spot to that. Eventually, they caught up with Elizabeth Holmes, obviously. But this is really easy, really easy to find this fraud. So easy that I will show you how you can do it right now. So if you go to an episode like I had Mark Cuban on this week in startups 31,000 views,

30 comments, 450 up votes, seems normal. Mark Cuban appeared on Carlos Watson's show from August. The interview has

900,000 views, 30 times ours, but only 60 comments. So two times our video and 267 upvotes about 40% less in our video. So that means somebody in my estimation

set up a robot to reload the YouTube pages, right? Or set up a farm of robots to reload the YouTube pages to make the views go up. Now, when they, the FBI, the DOJ, the SEC, whoever comes down in Aussie media, when they start looking into and they do discovery, they're going to find some email chain where somebody is gusing this stuff or manipulating it and yeah, it's going to get ugly for them, is my prediction. So if they had 30 times our views but significantly less upvotes and margining more comments, those are red flags, right? So that means they either paid for those views or they used a third-party service.

You know this because if you're on Instagram, I get all the time, hey, would you like 100,000 followers on Instagram for $5 or for $50? And so there are banks of individuals, typically in Manila, India, you know, the Philippines, India, where you've seen the pictures online. They might have. And actually, they did it on Silicon Valley, a TV show. they had hundreds of mobile phones and a person just goes

and they're sitting there and they're installing your app. And so if you, I remember in the early days of the app store, there was a service that would download your app 3,000 times in a 24-hour period from IP addresses in the U.S., from iPhones, from Android phones,

and you would basically for $5,000 be able to rank in the top 100 apps. People go to the top 100 apps. They look for apps there. And then you get to catch actual organic growth. So that ones would be in the gray hat. The difference between, you know,

black hat is doing something illegal and unethical, immoral, and then white hat is doing something virtuous, gray hat in the middle, in hacking and in these kind of dark arts growth tactics, gray hats, when you're in the middle there, basically means, you know,

nobody's getting harmed and maybe you shouldn't be doing it or you'd be embarrassed by it, but it's not illegal, right? So there's a lot of those gray hat techniques that people use, you know, dark arts with SCA. Another really weird sign that's something fish is going on with the metrics is the Carlos Watson show on YouTube has almost 100,000 subscribers and yet four of the five most recent videos had 100 to 300 views within two to three days of posting, which makes no sense, right? You should have something more like one to 10 percent of your subscriber account watches it in a really passionate audience like Mr. Bees.

It might be even more, you know, YouTube native. So I do think podcasts going on get like low single digits or 10% of their subscriber accounts. But if you're only, because people are listening to it on the podcast department, so if you're only available on YouTube, that number obviously skyrockets. And it should be consistent. It shouldn't be 200, 179,150. So there's some Fugazi stuff going on here. Goldman Sachs doesn't need.

They don't need to hire the Musad to figure this out, right? You don't need to hire like some, you know, black ops, Musad, CIA, you know, former CIA, former Musaaa Agents to figure this out. And then if you look at Ozzy on the Instagram, 660 posts, 65,000 followers. And if you look at this post from last week, covering the next big shift in college sports, it had nine likes, as of last night. Nine likes, 65,000 followers. Hmm, what's going on here? The New York Times interviewed a law professor at

Columbia University who said the SEC should have grounds for a civil suit on securities and wire fraud. The investors have grounds to press charges as well. Well, he also stated that a prosecutor might not proceed with the case because the deal never went through, i.e., who's the victim? However, according to the article, quote, Ozzie did not allow the episode to curb its fundraising efforts in April, two months after Goldman Sachs walked away, the company raised another round of funding. So, Google alerted the FBI, and Goldman Sachs received a probing inquiry from them afterwards. According to Watson, Ozzie has not yet been contacted by federal investigators. It sounds to be like Goldman Sachs kind of knew something was fishy when they asked to speak to the YouTube person and they might have had that spidey sense. The big lesson here is if you're an investor, this is probably one out of 20 or 30 companies do Fugasey stuff like this.

And I would say right now of the funded companies, I think 1%, 2% are doing really dangerous things like this. That could be actionable. And so that means if you have a portfolio as an angel investor of 100 startups, you may have one of two of these in there. And you know, you could be lied to. People could and people have made fake bank statements. This happened during the financial crisis. People would fake their and that I believe there were cases where actually mortgage brokers would fake people's income statements, et cetera. I think it was kind of almost common practice. And that's why we had this huge collapse. So when you think about a black swan event, typically what precedes it is some amount of fraud. And so I'm not saying that the fraud we're seeing in crypto and the fraud we're seeing

in private companies doing this kind of stuff and securities fraud. I'm not saying that's going to cause a black swan event, but I do think it's going to cause pain and suffering because we have an underlying really solid base of companies that are delighting users and printing money. So this is a story for the ages. It's got a little bit of everything for everybody. And yeah, this company is going to go to zero in my professional estimation. As you know, I'm the world's greatest angel investor. And when I say a company is likely to go to zero or it's likely to collapse and be worth nothing, that's a pretty good sense. And I'm not saying that to be cruel to them. But if you have a house of cards like this and you're willing to engage in this behavior, what don't we know? Like,

if we know this, what don't we know? And a question that obviously comes up is, what is the liability of the board. Lorraine Powell Jobs, who is Steve Jobs's widow, was an investor in this company. They since since I think they're off the board and they haven't been on the board since I think 2019. They said in a quote when they got contacted. Board members are probably leaving because they know they don't want to have the liability. And if you're on the board, you could be lied to by your CEO, by the management team. But then you can also have whistleblowers reach out to you. And when something like this happens, you as the CEO and the founder and the board, you have to drop the hammer so hard, almost like an overreaction is what I typically see from organizations. So with this individual, even if they were suffering from mental health problems, you have to, have to fire that person and maybe even take legal action against them to protect yourself or tell them you're considering doing legal action on hire a firm to do an investigation. you really have to have to have to overdo it.

And I talked about this with OpenC. You remember OpenC, the NFT platform, and I really liked the founder when he was on the pod. I thought he did a great job, and I think NFTs are a real thing. But they had the person who was doing the essentially insider trading or front running the market.

I'm not sure what the best description of what he did is. They basically just forced him to resign, right? Yeah, that's a mistake. They should have taken legal action against them. I don't know if there is a case there. You have to take these things super seriously so that you rebuild trust. And if what OpenC did by not taking a legal action against that person,

just forcing them to resign and having no sanctions, you know, if they sued them for damages and they made them pay a settlement, like give back all their stock or, you know, pay a fine or something or settlement, then they could say to the next employee or to their all employees, look, we don't want to take legal action against this person, But what they did is so far out of bounds, we did. We didn't want to, but we had to make an example of them. And we have to protect the business.

We have to protect everybody's shares in this company. And we have to protect the ecosystem of NFT creators and buyers and collectors. That would have been a much better statement. But sometimes CEOs take different approaches here. But often you have to drop the hammer. From websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build a beautiful online presence and run your business. With Squarespace, you know you can blog and publish content, you can promote your business,

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scrutiny. So Ashley Carmen is a senior reporter who covers podcasting and audio at the verge. And she just published an article, Clubhouse needs creators, but creators need cash. And she tweeted about the faltering creator program at Clubhouse this morning, new. Clubhouse promise to match people in its creator program with brands to make their shows profitable. But according to six people I spoke with, none received sponsors of the three slash 25 shows that might have, only one might have come through Clubhouse itself. So Clubhouse did an experiment called Clubhouse Creator First program. It was an accelerator for creators and they promised to provide equipment.

Great. What equipment do you need for Clubhouse? That's that like I'm wearing here, 30 bucks. Guest matching. help, I mean, that's really not a big deal. And quote, concept and creative development with the clubhouse team. Ideas. Okay.

This seems like a terrible idea. A terrible deal. As well as promotional support, including, quote, design services for creative assets, whatever, like Canva, 15 minutes to make an invite, a JPEG. Promotion with and off of Clubhouse, okay, that could be meaningful. Support in building your audience. That could be meaningful. And most importantly, for long-term creators, Clubhouse said they would support. by, quote, providing a monthly stipend and matching you with brands so you can turn your idea

into profitable creative endeavor. According to Ashley at the Verge, these creators were expecting to chat with brands, but quote, when the time came, it turned out they weren't getting one-on-one meetings with the brands. Instead, they would be pitching their shows to a public room on Clubhouse alongside a dozen or other creators where anyone on the app could join. The Verge reported that Clubhouse did give out a stipend of 15,000 per show, and creators received support making assets, but that didn't work out. I guess that's 15,000 per show, not episode. That's my guess. 15,000 per episode would be crazy. So I don't know how many shows that stipend would be. But it's just, you know, that's not an insignificant amount of money as an advance against sponsorship.

And as Ashley said on Twitter, none of these shows have ongoing sponsors. The people I spoke would say they won't continue making their shows because they required hours of work for which they won't get paid. They're looking to YouTube and podcasting instead. Long Story Sure Clubhouse has a monetization problem. So I can tell you, live shows are hard. Getting a large live audience is hard. There are people who are making that work on Twitch and YouTube and Nick's Fan TV. My friend C.P. The Fanchise. F.A.N. Chies. Get it? Not franchise, but franchise. That's his nickname. He gets like four or five, six thousand people at his max. But if you think about that audience,

that's actually a very small audience. But he does have a sponsor, Manscaped, and they pay him to talk about his product. And I do think that there is a business there. In fact, Sudo.com, which was something that I did in the 90s, late 90s, was an all-line radio station in New York at 600 Broadway. My friend Josh Harris did it. And they did a documentary film called We Live in Public by Andi Timoner. It won Sundance, and I was in that documentary, really good documentary about that period of time. Anyway, live streams, it's hard to make money. And so you have Clubhouse making an experiment here, and it didn't work.

So, if you have an experiment and it doesn't work, you have all of this scrutiny on you. And that scrutiny is basically because the company has raised so much money. If they were just a $100 million company, like that first round, they had $10 million in cash in the bank, they wouldn't have the ability to give $15,000. They could say to people, hey, we can't pay you, but we're going to promote you. And once you introduce money into the situation, then that's where the problem starts. When you put money in, people are going to compare it to all other opportunities to make money and because this is nascent and because it's just starting to get some level of traction,

you basically ruined it. So it's a terrible strategic idea to give any money to creators before, you know, the model's proven. And what they should have just done is promotion. And with us to discuss her story, the author of this great story. Ashley, Carmen, welcome to welcome live to the program, live guest here on Restream. Hello. How are you? So I just chewed up the story and great job with the reporting number one it seems like you got access to a lot of creators um and my take on it was introducing money early to some nascent platform like live rooms probably a mistake for clubhouse and i also kind of have the perception that when a startup becomes worth four billion they've got hundreds of millions of dollars um it changes the relationship

with the creators and so if this was but a 50 million or a hundred million dollar company. And they said, hey, we can't give you any money, but we'll promote you and we'll support you and we'll give you shoutouts. Maybe this dynamic would have been a little different. And the people who are creators might not look at this and be like, screw clubhouse, only getting 15 grand. Yeah. I mean, I think beyond introducing money early, it's introducing these creator programs really early. We've seen the creator programs pop up with like Spotify does it for podcasters, but more broadly, we see Facebook doing it with a billion dollars committed through 2022 to bring creators on.

We've seen YouTube doing it for its TikTok competitor. Snapchat was giving away a million dollars a day for a while to get people on its platform to do its TikTok competitor. So I just feel like giving people a stipend is a great, great thing and you should pay people for the quality content that they're making for you. But I think the issue was setting expectations and being like, hey, we will match you with brands. So you can quote unquote, turn this into a profitable, creative endeavor.

And that just didn't happen. And that's where you have to have the monetization features really, build out. Yeah. And you reported that they gave $15,000 to each show. Each show. It wasn't, to be clear, for each episode, which would be the production budget of like, you know, a really big podcast maybe. $15,000 for their, for how many episodes did they expect to get for that a weekly for a year, for six months, that stipend? It was a three-month program, 12 episodes for every show. But yeah, yeah, that I didn't really get into as much in my reporting, but that also did, although they were very happy to eat paid, of course, it did become

an issue because some shows had many hosts and they had to split that $5,000 a month between hosts. And also, many guests wanted to be compensated for coming on the shows. And that was money that would have to come out of their pot. So it just, it gets a little dicey when you start divvying up what sounds like a lot of money among many people. Yeah, for me, I think almost better to not interest money at this stage. But when they also were promising sponsors, which made no sense because this is a completely unproven medium, what is the expectation of what a sponsor we get in your reporting? You said people would have 300, 400 people in the room, even with promotion. You also pointed out that promotion fell off a cliff. And so you had an unproven technology,

unrealistic expectations, I think, with the creators. And traffic was falling off a cliff. Like, What is a sponsor going to pay in your estimation for 500 live users for two hours? What is that worth to a sponsor per user? I wish I knew how much that's worth. I will say some creators on Clubbos who are not associated with this program have seemingly been able to do decently well on there. Leah Lamar is the icon right now. She's a comedian.

I've heard her name come up as someone who's making a living off of their Clubhouse existence and others. But the key thing with this story was just that these were the creators that Clubhouse hand-selected, and they weren't able to really secure brand sponsorships unless they had their own connections outside of Clubhouse, which wasn't really the goal of the program. And three of the 25 had sponsors at some point. Do you know who the sponsors were? Yeah. So did they renew? Because that's the key. Like, if the sponsors renew, you've got a business. Right. No, my impression was that these shows are over, is my impression. The sponsors varied.

It was like a camera show had Sony as a sponsor. He would do giveaways. I was unfortunately unable to reach him. But I'm unclear if that sponsorship came through Clubhouse or his own connections. There was a show talking called Sex Profiteers, who I talked to that woman who hosted that show in my piece. She had quite a few sponsors, but all of them came through her own network because she's a media consultant. So she just like knows people and can reach out. But I don't think anyone, at least that I spoke to, is continuing to do their show.

So that because of the fact that they don't have sponsors to keep it going and have to think about where they can make money because we need to do that. It does seem to me that Clubhouse is not as effective as YouTube or podcasting. And you kind of allude to this that the creators were like, why am I here? I could do a podcast. I could do YouTube. Those ecosystems work better for making money today, obviously, right? Well, yeah, I mean, right now, if you have a podcast as you do, you know you have a monetizable archive of shows, we're doing this live, but presumably you are recording it and you will monetize the back catalog if you want and you have this archive that people can revisit on demand. That doesn't exist right now in Clubhouse.

Of course, they can obviously launch a native recording function and that solves that. But YouTube then also has the same thing except with video where you could do that for your show as well, where you can just make money off of the views that you're really. receiving without you doing anything. It just lives on your channel. If you listen to Twist often, you've heard me talk about O-Doo's suite of business apps a lot. Well, on October 6 and 7th, they are hosting O-D-U experience and annual event focused on building and scaling your business. It's free and virtual and you can register at O-D-com slash twist, O-D-O-O-O-O-com slash twist. Speaking of scaling your business, how much time and money do you waste integrating a bunch of different software products together?

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So your first app is free forever and right now, O-DU is offering a $1,000 credit on your first implementation pack. That's no joke, $1,000 off. Go to odoo.com slash twist to check it out. That's O-D-O-O-com slash twist. So putting all this together, you're a journalist. You're not a venture capitalist, I don't think. You've never been a venture capitalist. Why would, in your estimation, as somebody who understands a creator space, you know, very deeply, why would a venture capital value a company like Clubhouse at $4 billion? I feel like you're better equipped to answer this. Please explain this to me, actually. Well, it doesn't make any sense. It feels like it might be one of those moments in the history of an internet cycle that would be indicative of a time.

or an irrational, highly irrational behavior on the part of an investor? It makes no sense. I've never been in a room with bankers who are doing valuations. I wish I knew how that worked inside and out. So that is a question I absolutely defer to you. Generally, it is a function of competition in a marketplace. So if everybody wants the same thing, whether it's an NFT or a piece of art or equity in a startup, a competition drives prices up for homes, you know, for art, for whatever it is.

And so when there's a limited amount of equity available, you can buy 10% of the company for $400 million or whatever they sold that for, yeah, that can drive up. But it also feels like people are suspending disbelief and giving companies credit for accomplishments that have not yet happened. And, you know, the press, I think also is going to, if you think about what that high valuation has done, it is now become an albatross. it has now become just a backpack of cinder blocks for Clubhouse because every creator is going to look at and say,

well, you're worth $4 billion. Like, why are you being so cheap? Now, they don't have $4 billion. The company is artificially valued at $4 billion, but they may have hundreds of millions. And so the creators have a point. Like, F you, pay us. Keep paying us.

And then, you know, the press is going to be like, this company makes no sense. It's like, there are no, it's like, once the press realizes that something doesn't make sense, they're going to keep investigating it. What is the outlook for, like, the actual content in your estimation? Because when I looked at Clubhouse, I got on there, I did, I played with the platform a little bit. I did some funny stuff, but I'm good lot.

I remember you on there in the scams room. Yeah, I was kind of goofing off on there and making fun of the coaching scams and, you know, being a little precocious. But then I was like, what the fuck am I doing here? Like, I get paid for a living for this. Like, why would I do this on Clubhouse? They're not paying me. and my podcast gets, I'm getting 2,000 people in a room,

but when I do my podcast, I get 200,000 people, 300,000 people listen to every episode. So it was an easy sort of, I'll forget about this, but it does seem to me when I opened Clubhouse, like once every month now, the content is terrible. What is the content like there? Because I found it incredibly inane, and I didn't, there was this magical moment

where Elon Musk comes on or Vlad or, you know, some, you know, Tala Lorenz comes on. And it's like, oh, she's interesting. we get to talk to tell her in a casual way. She's not available typically. So there was like these great moments of serendipity. But now it seems like the content sucks. Is there anything interesting in your estimation going on there?

What's the most two or three interesting things you've discovered on the platform? I mean, I was covering the platform when it first launched. And like you mentioned, there was a lot of serendipity. It was really interesting. It was just fun, cool, experimental rooms. Then I was like, wow, this is actually hilarious. Like, I'm in a comedy room. That's great.

And I'm sure the comedy rooms are still great. The thing that, like, I'm a nerd. So the thing that most interest me is, like, what you're talking about where I can hear interesting reporters talk about their work or have a really interesting discussion about current events, which I know they're trying to do more of. But I see a lot of that on Twitter spaces merely because of the fact I follow a lot of reporters as a reporter who also lives on Twitter.

On Twitter spaces, Kara Swisher obviously hosts her big room on there, and it seems really successful. So I feel like Clubhouse just, they just hired an NPR employee to come over and lead up their news partnerships. So I feel like they're making moves in the space to try to bring. They have the NFL on there. They have TED. They're trying to probably bring more news partnerships.

So I feel like they're just building, whereas Twitter kind of had that advantage right away, where it's like, oh, everyone who works in media already lives on here. So here's your place to talk. And you don't have to rebuild your audience. And you can share tweets that you're talking about. And you get more followers. This is the thing people don't realize about Twitter spaces. And I don't do them regularly.

but every time I jump on one, I get like a thousand new followers. If I'm on one, that's like a big one, right? And so for a journalist, how many followers do you have on Twitter now? Actually, I don't even know. 10,000, 20,000, I'm going to guess. Close to 20, I think. Yeah.

So that is exactly like a mid-tier journalist in popularity has 20, 30,000. And then if you get to 100,000, your career is totally changed. You're in a totally different strata of compensation and importance to media companies, and there would be a bidding war, and you can get an agent. And so I think what people realize is, especially journalists who are great at telling stories,

they know how to do that, you did a great job with your story, doing a Twitter space, you're going to increase your Twitter follower account, and that's going to result in your career prospects chaining, or if you ever decide you want to write a book, like writing a book about Clubhouse, by the way, since you're an expert on it,

you should, have you written any books yet? Not yet. I mean, go to a, I mean, if you are passionate about it, telling the story of Clubhouse, like unauthorized Clubhouse, you know, like unauthorized Uber, unauthorized, whatever. Right, right, right. It would be a really compelling book, and you could start it now because I think it's going to be one of the great crashes and burns on the history. But it's much better to use Twitter spaces. And Twitter spaces is, once you saw it, it was just instantly like, well, this is going to be better than using Clubhouse because I don't have to leave Twitter. At least for me.

I mean, I live on Twitter. There's people who don't. There's people who live on Facebook, and maybe they'll be on Facebook's live thing, or maybe they'll be on Spotify's live thing, which is also apparently happening. Twitter space is paying people to do spaces? Do they have their own creator program on the channel? I don't believe so. I haven't heard of it, at least.

If it exists, let me know. I wonder if you have 19,700 followers. Congratulations. It's a big deal. If they started paying journalists to do it, and I wonder if they pay Harris-Wisher to do that room every week. week where they have a deal with Vox or, you know, New York Times to do it. That would be very interesting to do those partnerships. You know what it was a key moment, I think, as well. I don't know

if you noticed when they got rid of stories and that top space was dedicated only two spaces. Did you notice that spaces got a lot more popular all of a sudden? It did. But what I will say, and like when we were talking about Clubhouse is if you want a clubhouse right now, there are a ton of rooms happening. I'm not necessarily saying there are rooms you want to listen to, but they are happening. There's people. talking in the app. If I open my Twitter app right now, I'd say it's the middle,

it's the middle of the workday on the East Coast. There's none or one. I'm not seeing, I'm not, yeah, maybe like there's an NFT one or something. I see, yeah,

I'm not seeing any. So, like, in that way, Clubhouse seems to be at least generating conversation. Yeah, I see one, two,

illegal photography and boiler room. I don't know what that's about. 63 people in one, 485 at another. But I, I follow. everybody on Twitter. I just said,

but I think Twitter's going to pull something together here with, I don't know if you saw that review, their email client on your profile now. If you have a review mailing list, it puts it on your profile. So I just turned it on yet. That's cool. I do a newsletter outside of review.

You should still do it, though, just to get to collect the emails. That's what I did. And I'm getting like 50 emails a week. So if you think about that over 10 years. It's a good pro tip. Maybe I'll elevate it. Yeah.

It's kind of cool how it's a profile, but I think that's all going to come together in one thing. Who do you think has the best strategy on a go-forward basis working with creators? Who's doing the best job of courting, coveting, and just really making creators happy and drawing them in? Man, I rarely hear about happy creators, I'll be honest. As a class, they're generally... Yeah, I feel like... I don't hear as much about angry TikTokers. I feel like if anything, they're like, wow, I'm doing great on here.

Like, this is awesome. I have a TV deal. Why do you think that is? It could just be, I mean, I'm totally speculating. I have no idea. But I would think maybe it's because when they launched, it wasn't really built as this creator platform. It was built as, well, way back when, you know, lip syncing and stuff.

But now it was sort of just like short form video, really fun, loose, whatever. And then it turned into a place you could make. money. So I think that's always a nice little surprise there. I think there's a product decision they made that made it super appealing to creators, which is you don't have to build a follower account. If they put you in the algorithm on the mainstream, overnight, you could have a million people see. And I don't know why that hasn't gotten copied by the other platforms yet of just saying, like, this is exceptional content. Let's put it in front of a million people and just bless this person. And the next day they wake up

with another 10,000 followers. Like, imagine if Twitter did that, were like, this is a killer tweet thread. Let's just show it to people who don't follow the person. Screw it. We're just going to- They have like the discovery stuff. Instagram as a discovery page. It's not TikTok, yeah.

TikTok revolution is the homepage, obviously. All right. Well, listen, continued success. Thanks for jumping on the program. Yeah, thanks for educating us on Clubhouse. And do let us know when you do your next investigative story. For sure. Can I plug my newsletter real quick?

Yes, please. do. I was about to ask you. I cover the podcasting. I cover the podcasting in audio industry more broadly on Hotpod. It's my newsletter. The Verge just acquired. So check it out. Is it hotpod.com or if I just type Hotpod newsletter into Google? Yeah, you'll find. It's also on the Verge.com. Yeah, HotpodNews.com. And then we also have it on the verge. I didn't realize that it got acquired. That's great. Yeah. The Verge acquired. It's awesome. Is it paid a hot pod or is it free? We do one free a week and two paid. Ah, how's that working out? You think that's the future of these newsletters at big companies?

Is like a combo of paid and free? Or do you think it should just all be free? I don't know. It's so new to me still. So you have to ask me. Awesome. All right, everybody going to check out Hot Pod News. Thanks for coming on the program. And tell everybody your Twitter handle too, so we can get you over 20,000. It is at Ashley R. Carmen, C.R. M.A.N. All right. We'll see you next time. Bye-bye. All right. Some notable VCs are calling it a day. They're calling in rich and retiring. they've announced their retirement, and I'm just going to break down why in what happens in venture capital, because people are reading into this a whole bunch. And this is being discussed on Twitter a whole bunch. Jeremy Liu of Lightspeed Venture Partners will be stepping back from investments. He's still helping existing portfolio companies and reportedly nurturing the team at Lightspeed. He had 2021 IPOs of a firm and honest company. So congratulations to Jeremy. And he's a young guy. He's 50 years old, I'm guessing.

Bijon Sabbitt, I've never pronounced his last name, is a cool cat. He takes great photos. He's Bijan on Twitter, B-I-J-A-N. It takes beautiful photos of Danucket, a place I've always aspired to own a home and spend the summer. So right now I'm 50. I never took any vacations. And last year I took that three weeks in Italy. And this year I want to do like six weeks in Italy or I want to do Nantucket.

Like this is my dream is to actually take a long vacation. And the pandemic has made me rethink. like if I can work from anywhere. I'm in a hotel in Beverly Hills right now doing the show, right? I can work from anywhere. So he's stepping down. And he was on the board of Twitter, Tumblr, Trello, Stack Overflow, and he helped found Spark in 2004. Roger Earnberg of IA Ventures, whose notable investments include the trade desk and transfer

while I haven't heard of those two companies. He'll no longer be making investments in new companies and he's pairing back board responsibilities after 17 years. And of course, my bestie, Bill Gurley, stepped down as a benchmark GP at the completion of benchmarks latest funds. He's into his 50s now, but it used to be that some folks, Doug Leone and Michael Moritz, still working at Sequoia, John Doer, at Kleiner Perkins, like, Vanocococelah. The Gen Xers and the boomers had to get dragged out. Like, they're not leaving. They're not going anywhere. The boomers in venture work until you drop, you love the job, you go to work. You have to get

forced out of the building. And now I think we're seeing something new here. I do think this is going to be a trend. People are making, you know, a venture capitalist can make, you know, 10, 20, 30 million dollars to understand the math. If a company becomes worth 10 billion, if the venture firm earned 20% of the company and it became worth 10 billion, they have 20%, that's 2 billion. Two billion. They get 20% of the gain. So I'm just going to do this one more time. 10 billion dollar exit. venture firm owns 20% of the company, right? And they bought that for some small amount of money. They now have $2 billion in returns for their LPs.

They get 20% of that. 20% of that would be something like if, let's say, that fund had deployed $300 million. So you have $1.7 billion left. 20% of $1.7 billion is $170 million times two. It's $340 million. You have five partners and then maybe the team. The team counts essentially as a six partner. They may get 10, 15%, of all they.

carry. It means each person is going to get a fifth of $300 million, something in that range. And so that's $60 million. You pay all your taxes and you wind up with $30 million. What do you think happens to somebody who has been dealing with growing these companies and then in their bank account, after they pay their taxes, they got $30 million. You make 5% on your money. That means every year you throw off a million five in interest and you can live off of $100,000

dollars a year and never touch the principle, let alone if you touch the principle. That's the honest math that nobody will ever say to you. I'm just telling you that. It's easy to do this math, but nobody talks about it. That's what you're seeing here. These individuals made tens of millions of dollars as venture capitalists, and they're sitting there at 50, and I think the pandemic has a lot to do with it. The pandemic made a lot of people who were very strong, or thought they were strong, very depressed, very anxious, and made them rethink their life. And this great realignment, I'm trying to come up with a term for it. I like the great realignment. or the great pivot or the great reconsideration.

Some people are using the great resignation. And I guess that applies here. But I think this is a deeper thing. It's thinking about your purpose in life. And it's like the great existential moment of the pandemic, which is, do I love what I do? I don't need to do what I do. I can do whatever I want.

I have the means to do whatever I want. And so anybody who has the means, it could be somebody who's a young person in crypto. It could be somebody who bought GameStop. For a 22-year-old who has $100,000, and they're staying at Airbnb's and they're rents $1,000 a month. This math I'm talking about is kind of similar, isn't it? They're like, well, I don't, why should I go work for J-Cal, like, and have him pushing me and giving me a hard time and

make me do my start a day, end-a-day, and build my career. A lot of people are just opting out of that. And I think that's okay. I think it's okay for people to do what is in their heart and what's best for them. And so Joe Lonsdale, who was on the program recently, got into a discussion with Austin Allred from Lambda School. He was on episode, 8-23 and 1033 and we made a small investment. I think I put $100,000 into Lambda School just as a, you know, supporting his vision

because I think he's super cool and I think he's smart and I think it's a great thing he's doing for society, Austin. I know that they've had some challenges, but all startups have challenges and I think he's figuring him out. Joe Lonsdale says, yeah, many who have been in VC for a long time have made a huge amount of money the last couple years and the game is changing.

Things are a lot more expensive and faster, and the founder VC dynamic is in flux. The price of money and ecosystem has shifted. a new era. And Austin says, what do you mean? And Joe says, we've had to change our process for a lot of rounds. Often, no time for the get to know you over a month or many of the formalities we have to go way faster, prove top reputation in an area and value to the entrepreneur immediately and very quickly entrusted relationships. And, you know, I think it's directionally correct, but what I wrote back is to Joe, and I'm trying to stay on this Twitter break, but I just, I got

sucked back in because I wanted to socialize with people. Let's be honest, folks are skipping a lot of steps and paying prices that assume perfect execution and massive adoption. And that's actually, I think, another part of this. So you secured the bag. Now you're looking at a space where people, we're at the top of the market, you're going to have a whole other cycle. So this market will crash at some point, and then the cycle will start anew.

And you have to say, am I on board for that? And then right now, people are not doing it. diligence. They're not getting to no founders. They're overpaying for companies. And that is a recipe for bad returns. So I'm going to spend the next 10 years of my life competing and overpaying for companies. No, I'm done. I don't want to deal with this craziness. And so I think that's what's actually happening here. And I am not sure how this model works if you pay $25 million for 5%. Like in these early stage companies or mid-stage companies, and you're pricing for perfection. What that means is you're just assuming that things turning into Uber, turning into Slack.

And we all know that that's one out of a hundred investments I've made or one out of, you know, 50 investments that a great Bill Gurley makes. Like, these things don't actually happen that often. And so I think that's what's happening here. Additionally, there are new entrants into the market. And whenever you have new entrance into the market, they get a little splashy cashy trying to make a name for themselves. and you see that at the top and the bottom of the market.

People complained about syndicates when I started doing them in Naval, you know, 10 years ago. People were like, this is BS, screw Y Combinator, screw syndicates, screw Angelus, screw Equity, crowdfunding. They're ruining venture capital. And now those are pillars of venture capital. YC, tech stars, launch accelerator, Angelist, the syndicate.com, republic, seed invest. These are the pillars of early stage. And now they're like, oh, you know, Casey Newton, I saw him last night. we had a nice conversation who trashed superhuman.

He's like, you can't feel good about your CEO, like starting a rolling fund or whatever. And I'm like, yeah, you know, he's got a partner who does it. And, you know, he's entitled to do it on the margins. Like, yeah, would I rather he be 100% focused on the startup, I guess? But would I rather he quit and become a venture capitalist full time? I'd rather he'd do superhuman and keep going and spend 10% of his time on investing. At 10% of his cycles, it probably makes him sharper, actually. So, you know, that's cool with me.

Anyway, long term, I think that this, rolling funds was my point here. Rolling funds are being derided now. And it's like, oh, these kids with their rolling fund, get off my lawn. And then TPG, you're coming down and KOTU and you're overpaying. And Greylock started a $500 million fund just for seed. It's like, everybody's complaining. Oh, ICOs, yada, get off my lawn. at the end of the day

if these startups continue to overperform and you pick the right ones, it's a great industry to be in. But it's nice to see a changing the guards. And, you know, kudos to those VCs who decided, you know what, I got 20 years left in my life. Maybe this isn't my passion.

You know, for Michael Moritz, Doug Leone, John Doer, and Kosa, it was their passion. There was nothing they wanted to do more than what they were doing. I feel that way. I look at it, you know, I get a lot of offers to do more TV stuff, you know, whether it's CNBC stuff

for reality shows or talk shows. I kind of like this. And I always tell, like, when I talk to agents or, you know, network TV or other folks, I'm like kind of like having control of my destiny doing the podcasts, kind of like doing my own events, kind of like doing my syndicate. Yeah, I could work at a big venture firm, could take it easy, could work at a, you know, do network television or be a CNBC correspondent or Bloomberg correspondent and take this show instead of doing it here, be an anchor.

I kind of like doing this better. So, you know, you have to be true to yourself, and congratulations to them for being true to themselves. All right, Star Wars Visions has dropped on Disney Plus, and it is exceptional. And I want to talk about cultural appropriation, and you remember back on episode 1267, I was talking about cultural sharing versus cultural appropriation. And here is the 52nd clip of what I said. I'll talk on the other side. This is back when I was in Italy at the beach writing the book. Disney Plus is doing six different Japanese animation studios, has charged six different Japanese

animation studios to produce nine short films in anime style of Star Wars stories. They're calling it Star Wars Visions. So let's take a moment and look at how cultural sharing and inspiration can produce amazing products in the world. Some people will like to focus on, you know, tearing each other down for being inspired, a white woman being inspired by Chinese noodles. Well, let's take a moment here and just think about how amazing it is that the French directors inspired Kurosawa, Kurosawa inspired Lucas, and now Lucas is inspiring Japanese animators and anime. This is great. And if you're watching this on YouTube, you can see the trailer. I cannot wait to see this. All right, so just as a follow-up to that, it was released just on September 20th.

second and I'll play a little B-roll from the first episode, which is, I think, called the duel. And it is amazing. It is literally Yo-Gimbo, seven samurai inspired Kurosawa, but with lightsabers and in a beautiful animation style. And my five-year-old, twins loved it. My 11-year-old loved it. I loved it.

My wife loved it. We all thought it was brilliant. And I want to just one more time talk to you about how wonderful and beautiful the world can be and how the people on social media who are complainers and whiners frame it in a negative fashion to get likes and to virtue signal and how we should all collectively as a society ignore these whiners who are trying to create strife in our society and we should think about the builders and the creators and what they're doing. People who complain and whine professionally the whining class of woke winers on social media who will produce nothing

in the world are not important. You know who is important in the world? The designers, the artists, the writers, the creators, the entrepreneurs, the studios, the people who manifest beauty and services and products that inspire us and make us want to wake up every day. Those are the people who matter in the world, not these complainers. And, you know, the reference I made in that clip was to this woman who studied noodles and had a passion for noodles, she wasn't Chinese, but she loved noodles and she liked showing people how to make noodles and was making a cookbook and was sharing her passion for Chinese noodles and dumplings. Can an American not be inspired by Chinese culture? Can Chinese culture not be inspired by Japanese culture be inspired

by Korean culture be inspired by French culture? That's the world we want. We actually want cultural sharing and appreciation. And you can frame almost every one of these instances from cultural appropriation and just pause for a second and say, what was the person's intent? Were they intending to appropriate and take and steal from somebody? In some cases, sure, that exists as a thing. But we are looking for every single chance to say this is cultural appropriation as opposed to appreciation. And I would just like you to think for yourself. It's going to be a big theme on this podcast of thinking for yourself critically. Appreciation is when somebody actually wants to learn about the other culture and embrace it and love it. And, you know,

Kurosawa was a major inspiration to Lucas, Scorsese, etc. Lucas inspired Takashi and Kamikaze, the director, writer, and animator of the duel. And that's absolutely beautiful. and I highly recommend this series. And I highly recommend we all pump the brakes and appreciate each other and appreciate the art that we all make as societies, the food, the fashion, and just pay tribute to each other.

And we used to get trained in school that America was the melting pot where everybody added something to the soup of America. And I think we need to get back to that. I think one of the reason we have all this division is because people are focusing on everything that makes. us different, as opposed to pausing for a second and thinking about how much we have in common

and how much we appreciate each other. Just me and David Sacks, as an example, David Sacks is a Republican. We fight on the podcast all in about the rush he calls it the Russian hoax. I have to remind him like, hey, listen, all these, the Russians were interfering. And I've been working with Sacks offline to say, because a lot of people have been bringing this up to me, hey, you know, we have a difference of opinion. You know, he's more conservative. I'm more liberal, I guess. but we actually both agree that Russia's an enemy and they're both trying to manipulate Americans. We need to have some leadership here in this country

that says, hey, Russia is not a Democrat versus Republican thing and Democrats trying to catch Republicans in cahoots with Russians or Russians trying to compromise, you know, the NRA to make Republicans look bad and that they're on the take and all these spies. We need to have a united front against, Russian interference or we need to be united against the competition with China. This is an existential

threat to everything we do. Let's start thinking about Americans as having 80, 90, 95% of the same fabric and the same belief system and the same appreciation of each other. And yeah, for 5, 10, 20% different, Vive a la difference. That's great. You like to make Chinese food. I like to make Japanese food. Somebody likes to make Indian food. Great. That's what, that's our strength here. Let's lean in to cultural appreciation.