This Week in Startups - Rapid Fire News: AI voices after death, DOJ investigates Lordstown Motors, COVID adaptation | E1248

Episode Date: July 16, 2021

Jason covers Anthony Bourdain's amazing AI deepfake voice in "roadrunner" & potential startup ideas for the technology (01:49), the investigation into EV startup Lordstown Motors (12:27), and the way businesses are reacting to how COVID is being managed in FL & CA (42:11).

We've got an amazing show for you today. We cover Anthony Bourdain's amazing new deep fake voice in this documentary Roadrunner of film about Anthony Bourdain, which is in theaters today, and I'm going to go see it. I'm maybe in a theater in the next couple of days because I'm a big fan of Anthony Bourdains,

and it really opens up a lot of great questions about deep fakes and using AI to recreate people's likenesses, voices, personalities. And we've got another potential fraud on our hands. Today we're going to cover EVE startup up Lortstown Motors, which is being investigated by the DOJ and the SEC, no revenue,

billions of dollars in valuation, exaggerated sales, sound familiar, Nicola, other companies. Well, let's talk about that and how you can protect yourself as a retail investor and how you can make decisions on which companies you are going to invest in and how I actually look for fraud in private market companies. Finally, we're going to talk about the L.A. County's mass mandate in the face of the Delta variant and Florida cruise lines putting some extra insurance, basically attacks on unvaccinated passengers. Let's do the work. Stick with us. This week in startups is brought to you by Bubble empowers people to design and launch their own apps, marketplaces or tools without needing coding skills or pricey engineers.

The first 500 listeners will get one month free on any of Bubbles paid plans from $29 a month up to $529 a month at bubble.io slash twist. LinkedIn jobs. A business is only as strong as its people and every hire matters. Post your first job for free at LinkedIn.com slash twist. And snack magic is a stress-free way to treat your global team, clients or sales prospects with a build their own snack box. Get 10% off with code twist at snackmagic.com slash twist.

Okay, everybody, our first news story. There is a great documentary coming out about Anthony Bourdain and his life. It's called Roadrunner, a film about Anthony Bourdain, and it's in theaters today. As you know, he tragically died from suicide in 2018. But he's the narrator through much of this documentary. And this documentary is from an Oscar-winning director, Morgan Neville, who also did, I believe, 10 feet from stardom. I believe that's the name of the documentary about backup singers or, 20 feet from start. I'm great documentary. I'm huge into documentary, so I cannot wait to see this.

And I think I'm going to go to the theaters to see this because I've been going back to movie theaters, and it is glorious. So what's interesting about this is that they started using AI in order to create deep fakes of Bordane's voice for key moments in the film where they didn't have him saying something. And there's all these great documentary techniques. If you've ever seen the kid stays in the picture. They might do animations or take pictures and blur them or Ken Burns will pan across an old photo. There's all these great techniques to take boring documentaries that are told typically through stock footage or just static images or people basically recounting stories. And now we have a new one in the toolkit. And it's a little

bit concerning to some people, but I think I'm falling on being delighted by this. So there is a section, and this comes from a New Yorker profile written by Helen Rosner, and she asked Neville where he got the audio from. And according to the article, there's a moment in the film where a friend of Bordaines is reading an email sent to him from Bordain. And Bordain was known as being a great friend to a lot of people, and that makes a suicide even more tragic. if you are thinking of taking this terrible step, please call your friends. They want you in the world.

I mean, I think losing Anthony Bourdain is just so brutal. He was just such an amazing human being on so many levels. But in the email, Bourdain writes, you are successful, and I am successful. And I'm wondering, are you happy? Wow.

I mean, that is a deep comment. And I think it speaks to what a lot of people who are successful go through. through, which is sometimes you're on the journey and climbing the mountain and trying to get to a certain destination, whether that's wealth, fame, love, happiness. You kind of get there and you wonder, am I actually happy? Well, here's the quote from the article. There were three quotes there. I wanted his voice for that there were no recordings of Neville Explains. So he got in touch with the software company, gave it about a dozen hours of recordings, and he said,

I created an AI model for his voice. Oh my God, this is amazing. And if you've been on TikTok recently and you've seen the person who does imitations of Tom Cruise, we're crossing the Uncanny Valley. If you don't know what the Uncanny Valley is, that's the point at which these AIs and deepfakes, in this referencing Deepfakes specifically,

it's when your mind believes you're actually hearing that person. In other words, you can't tell. The Uncanny Valley is more about AI, and sentient lives, you can look it up online. But in this case, it means, did you buy it? Did you actually think it was Anthony Bourdain? And so, let's listen to the clip, and I'll make some comments about it. You were successful, and I am successful, and I'm wondering, are you happy?

Okay, now I'm just going to play it again, and I'm going to play it at a lower volume here while I talk over it. I'm wondering, are you happy? It does sound a little robotic on the margins. You can hear that tininess. But boy, if I saw this in a actual trailer, and I did watch the trailer, actually, and I didn't pick this up. But, and that is, means it crossed the uncanny valley. Other moments of uncanny valley that may have not crossed for you.

Scorsese did the Irish men and they made everybody look younger. That was clearly did not cross the valley for me. But Luke Skywalker in the Mandalorian, spoiler alert, Luke Skywalker shows up in the return of the Jedi kind of format post-return of the Jedi. I bought it. Maybe I wanted to buy it, and so that's part of this. But here we go. We're now at a point where a dead person could be in a film or a younger version of a person. And just closing the loop on this great article that found this nugget. So congratulations to the reporter who actually figured out that this, you know, asked a really good question. Like, where did you get these clips?

the film, other than that line you mentioned, you probably don't know what the other lines are that were spoken by the AI and you're not going to know, Neville says. We can have a documentary ethics panel about it later. And that's one of the things about documentary films. Because they are, you know, an interpretation by a filmmaker of a subject, they have very loose rules. That's why you'll see, you know, in a narrative film based on a true story, kind of gives them a little bit of ability to wiggle around. Is this actually happened? Did these conversations happen? Did these conversations happen? Anyway, I think this is amazing. I think Bourdain would love the fact that, you know, they did this and you could actually hear his voice savings and it had more resonance.

Of course, you could use this in a cheesy way and you could do it in a disrespectful way. But this is the world, right? And I think about all the wonderful possibilities here. Heath Ledger tragically died early of an overdose, taking five or six different pills. It was really tragic. Don't do that stuff, kids. Literally, the doctors may give you 10 types of pills that you're not required to take them. Certainly don't take them

in a cocktail. But it would have been amazing to see Heath Ledger's Joker again. Now, is it disrespectful or is it an homage or is it honorable to bring him back? I think it's honorable to bring him back. And I would love to see

Philip Seymour Hoffman do a comedic role again. I mean, talk about a tragedy. Again, another overdose. This artist overdosing is just so tragic. But, you know, you remember along came Polly, the amazing Ben Stiller film. And he, a lot of people say that I play basketball like him. And the rain dance scenes, amazing. Maybe we can drop one into the YouTube video here without getting in copyright trouble. Put in a little box and tilt it and zoom in on it and we'll probably get past the YouTube sensors. But wouldn't it be amazing to see him do a spin out of that film? I think they were always thinking about having that.

child actor to another film. And just putting it out there. If somebody out there is an AI specialist and they think that this is as intriguing as I think it is, I would love to back a music startup. I'm just thinking about music right now. I would love to back a music startup where I could say, I want to hear Mark Knopfler of Diochrates cover, Wish You Were Here by Pink Floyd. I would like to hear Pink Floyd and Roger Waters cover this, this, Dylan track tangled up in blue. This could be an amazing unlock for creativity to be able,

an art, to be able to do mashups. Now, some people might consider this sacrilegious or, you know, against some human purity test. But the way I look at it is we created the AI. We should get to benefit from it. And what an amazing startup that would be if we could take people's voices and artwork and IP and reinterpret them, even if it was a tool. I mean, if you came out with a tool that allowed somebody to put in a bunch of videos or a bunch of audio and then let the user take ownership of exporting that IP, that would take you out of the IP business. Or you could be in the IP business and create this technology and then go to an estate and say, hey, Elvis Presley estate, we would like to make these 10 tracks of the Elvis AI singing these 10 songs.

would that be interesting to you? Of course you can have an impressionist do it, but there's something about the AI being able to do this methodically and get better and better at it. And the revenue potential is obviously extraordinary. And you see a little mini version of this in Ways, which is not using AI. They're having somebody record a thousand words

and then stitching them together. That's why when you have Ways and, you know, somebody, some character like Cookie Monster. We have Cookie Monster on ours. The kids love it. When Cookie Monster says, make a left turn, you're approaching a railroad track. You know, everybody laughs. But that's somebody actually recording it.

It's not AI. So we live in the future and I love it. So give me some startup ideas, people. I got checks. I got money sitting here. I want to invest in some crazy crap. Let's go. Over the past few years, everybody's been talking about no code.

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but act fast because they're only offering this deal to the first 500 redemptions. Again, head to bubble.io slash twist, bubble.io slash twist and snag one of those 500 coupons for your first month free. Back to our never-ending obsession with fraud. or I should say mine, I am obsessed with business frauds, Theranos, made off, perhaps Nicola, perhaps tether, you know, or people doing things that are not on the up and up. Well, there's a company called Lordstown Motors

that might be a fraud, and it could be going to zero. I'm using, I know how to use the words now as having done over a thousand different podcasts. I know how to frame this without getting myself in trouble. But just this morning, CNBC has reported that Lordstown Motors, another pre-revenue, EV SPAC, okay? So it's pre-revenue, that's one thing. It's in a really hard space, electric vehicles.

And it's a SPAC, a way to get public quicker, maybe with less scrutiny, not in all cases, but you do have to buyer beware when you're looking at this category of companies going public. They tend to be early. They confirmed they're being investigated by the DOJ for its reporting of pre-orption. orders. Uh-oh. Like, it's one thing to not even have customers, but then to lie about free orders, o'clock. This is really gnarly. So two weeks ago, the Wall Street Journal reported the DOJ was inquiring with Lordstown, which CNBC confirmed. Okay, so we got real journalistic outlets, Wall Street Journal and CNBC confirming that the DOJ is looking. Now, they're inquiring. That

doesn't mean they're guilty, right? Just because somebody's looking into something doesn't mean that there is a crime. It just means there's a suspicion and there's enough of suspicion that the DOJ would take it seriously, and they have a large list of things they could look into, and they've chosen to look into this one. Major red flag. Lordstown Motors said in a filing on Thursday that it had to receive two subpoenas from the SEC for the production of documents and information, including relating to the merger between Diamond Peak and Legacy Lortestown and pre-orders of vehicles, and we have been informed by the U.S. Attorney's Office for the Southern District of New York that it is investigating this matter.

And we hear about the Southern District of New York all the time. That's where Rudy Giuliani started his career before going absolutely bonkers. That's where Preet Bihara, from the great Cafe Insider, go to cafe.com and subscribe to his amazing podcast or stay tuned with Preet, which is a free one. Anyway, if the Southern District of New York is involved, that is a major red flag. They are serious and they are known for having a very independent streak to them. So before we break down Lord's Town, I want to remember Jason's Law. Jason's Law is something I came up with, and I codified it, I think, in September of 2020. I'd been talking about it for years, but this is my, I called it originally, my Theranos rule.

If a startup becomes worth $1 billion before they launch their product, they are either going to fail or be a complete fraud. Examples, punch up, let's workshop this. And I did, in fact, punch it up in December 20. remember Jason's law. If you invest in a company without a launch product and at over a billion dollar valuation, you will lose all your money

and it might turn out to be a fraud. So I've been workshopping this concept. Nicola, ticker symbol, NKLA, is a private company. As a private company, I said in this tweet, would be worth about $100 million max. So I expected in this tweet to lose 95%.

We had Trevor Milton on the pod, episode number 1090. It is a classic episode. It will be one of the 10 best episodes of my career because my God, this person was delusional. And I think that was like peak Trevor and it all came apart shortly thereafter. So in March 2021, I made my third version of Jason's rule. If a private company reaches a $1 billion valuation before it launches a product or has customers, it's probably going to fail and it might actually be a fraud.

So be careful retail investors when you buy Fisker or Nicola, you're taking a big risk. And so the reason I refine this is it's very rare for a private company to reach a billion dollar valuation before it launches a product or has customers. And I put that caveat in there because you could have people pre-ordering things like Virgin Galactic, which had a very successful launch this past weekend. Congratulations to Richard Branson. And when you think about that, they did have, I think, 600 pre-orders of 200K. Those people actually paid money. Or you have people pre-ordering cars now, whether it's Tesla or Ford. So I could see a situation in which people pre-order and give their money.

Those are not letters of intent, so keep that in mind. But it seems like I'm now reminding people of Jason's law every three to four months. So consider this your three to four month quarterly reminder. And some very important things to keep in mind about these red flags that we just covered. Valuations that don't make logical sense. What would this company's valuation be? Let's take a spacking company, be in the private market. Well, sometimes you know because there's been a private market valuation.

In other words, Airbnb, before they went public, had this private market valuation. Now, they're going public. Now, that's a company, Airbnb, that we all have rented Airbnb's or we know somebody. So they have a product in market and tons of customers and tons of revenue. So they don't fall under Jason's law. But as an example, you know the previous valuation. Nicola peaked at around $34 billion in June of 2020 with no revenue. And basically close to no product as far as anybody can tell.

And I mentioned that as a private company, ventures and investors, we'd have probably invested at them around 100 million max. You put in 20 million, you get 20% of a company. That seems, you know, like a rich valuation, but, you know, it's reasonable for a hardware company like that. That's capital intensive. But that's a 340x multiple from my valuation. And I am an expert on this.

This is what I do for a living for 10 years. I've invested in over 300 early states. private market companies. I know what I'm talking about. And so now they're trading at around 5.5 billion, which is about 50 times too high. And so once again, if you can't see who's holding the bag, check your hands. It's probably you. So the people who bought Nikola at 34 billion thinking, oh, well, this is a fraction of the valuation of Apple or Tesla or Amazon. You're literally comparing the most successful companies in the history of human beings. against, you know, some dip-sh-h-h-bleep the second half of that word, please.

Against some dips-hs who's never accomplished anything in their life. Be careful out there. And what are the insiders doing? This is another thing you have to look at. Have they exited or are they cashing out? Most of the time, the people who are running the best companies have inside information that leads them to not want to sell it. And 100% of the time, the people running a company have inside information.

Like, literally, in their brains, are... their plans and their hopes and fears and their assessment of, is this a good stock to own? If those insiders are cashing out, it's a red flag. Now, if they're cashing out modestly, that can be reasonable. If it's a person's first company, if they have to pay their taxes because they got awarded some stock, there are some valid reasons that an executive has to sell some shares. But Trevor Milton sold like $70 million in shares before. they went public or right as they were going public and he tried to explain it on the podcast and it made no sense. That's a big number, 70 million. If he sold seven million, you'd think, okay, you sold

seven million. He's going to buy a house. You pay your taxes. You got four million left depending on what state you live in, five million. You can buy a house for that. You know, for a CEO to buy a four million dollar house, you know, they're not buying a $60 million jet or a $30 million jet in three houses. So that was a major red flag. Today, many small business owners are busier than ever. And because they're focused on managing and growing their businesses, they can't spend the time they need to on recruiting. And that's why LinkedIn jobs has made it easier to find and hire the best candidates for free.

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Let's get into Lortstown Motors. The company is basically developing EV pickup trucks to compete with the cyber truck. Remember, sound familiar, Nicola Badger. Literally Trevor talked about his competing car to the cyber truck. It does make sense

why people are very excited about this category in fairness. The best selling vehicles in the United States, were trucks, 2020 data from car and driver, number one, Ford F series, 787,000 units sold. The Chevy Silverado, 586,000 units sold, and RAM pickup 563,000 units sold. So those top three are selling close to 2 million, just the top three pickup trucks. This is a big price. Trucks are also the most profitable products in automakers lines. That's why so many startups are going after this.

That's why Elon did the cyber truck. He knows if you're going to have a lineup of cars, that is a great one to have. There's a lot of people who love to use trucks both for work and for pleasure and as their personal vehicles. So much so that Ford, who has the F1 series, didn't decide to take this sitting down. They unveiled their EV truck, the F-150 Lightning. They've got 100,000 pre-orders. Cybertruck reportedly has a million reservations. And back in September 2020, Elon said they were well over a half million.

So that number's probably correct. That one million is according to a crowdsource tracker. And so I think it makes sense. So you look at this, you have Ford, who is the number one player. They've already got 100,000 pre-orders. And that has a 300-mile range. It's got tons of outlets. I mean, electric pickup trucks are going to be the dominant pickup trucks.

It doesn't matter. You can say people are rednecks or they're dumb or they're, laggards, when they see the performance that an EV can do and they can start plugging in their tools and charging their drills and taking it on the road and having a giant electrical source. It's like bringing a power plant with you into the woods or onto your site. You don't need to bring a generator with you anymore. That's going to be, I think, one of the most exciting things about this. People who are doing work or, you know, taking their boats out, they're going to love these electric versions. Lortstown, Q1 revenue 2020 was zero, and their net loss was $125 million.

Their market cap peaked around $5 billion in September 2020. They're now at $1.5 billion after the DOJ news. I would think this is going to zero or will be sold for scrap. I could see the $5 billion going down to $50 million in scrap. In other words, you lose 90, 99 percent of your value as an investor. And I think the equity holders could get wiped out completely because there could be debt and lawsuits, etc. They were founded in 2018 by somebody named Steve Burns, who was the former CEO of an electric vehicle manufacturing company Workhorse Group that I've never heard of.

In November of 2019, Lourdes Town became the owner of a former GM plant in Lourdes Town, Ohio, after signing a sales agreement with the automaker. A lot of these automakers have done this. In fact, Elon's Fremont, I think was a former Toyota plant. So these plants trade hands. just like stadiums do or buildings do. GM loaned Lortstown Motors $40 million in order to underwrite a substantial part of the plant purchase.

So that already is a red flag. Okay, so GM wants to get this plant off their books and they give this new company $40 million in order to do it or underwrites a loan to do it. Major red flag feels like self-dealing. It doesn't mean GM's in the wrong, but it doesn't come from a position of strength. And in total, GM invested about 75 million until Lordstown Motors and joined its board. So those would be to somebody watching the SPAC go public, somebody thinking about buying into it. Oh, GM's involved.

Well, are they really involved? And what is 75 million? If they're taking this plan off their hands, you net out the 40 million, okay, there's another 35 million sitting there. What exactly is going on here? Well, in March of 2020, according to the Ohio Business Journal Daily, we always like to of credit to the journalists who we mentioned here and who give us the data with these new stories that I do the analysis on. In March 2020, Lordstown Motors paid Workhorse Group $12 million

for the licensing rights to the intellectual property of the Workhorse W15 pickup truck. Wait a second. So the CEO's new company bought the rights from the old company. Okay, that's self-dealing. It's weird. It's only for $12 million. Maybe you could explain it away or maybe it's a red flag, right. So these things start to pile up. It kind of reminds me of what we saw with WeWork and the self-dealing there. Remember, Adam Newman was buying buildings and then leasing them back to WeWork or he claimed he owned the WeWork IP and domain name or the brand and he was leasing it back to the company. People who do this kind of self-dealing are typically not visionary people. They're nickel and diming people who are trying to hustle other people. It is really,

really bad form to do this. I bought Mahalo.com, Inside.com on my own, and I sold them to the company that I run for the cost basis I bought them for. Even though I bought them low, I think I bought inside.com for $60,000. That's a million dollar domain. I could have tried to sell it to my own company and then my shareholders would be like, oh, you profited from that. Why would I want to deal with that? Why would I want to deal with that? What you see is the opposite with baller CEOs with vision, they do what I do. Like at inside.com, I think I take a $1 a year salary. I haven't taken a salary in six years. I don't need the money from the salary. I'm trying to build a company and have it hit $10 million in revenue, and we're 30% of the way there. So we're getting there.

Remember, Workhorse Group CEO was Steve Burns, and that's his previous company. So this is self-dealing. And yeah, you know, you could sit it out, but anytime you have to explain yourself and things go wrong, that's when there's a problem. Now, if we work went public and became worth $100 billion, you know, the Adam Newman behavior would have been like, okay, that was weird, but we all made money, so it's forgivable, right? So keep that in mind. When you do something that has the appearance of impropriety, like sometimes a founder will want to give themselves more shares in their own company. Well, if everybody makes a ton of money, it didn't feel that bad that the founder awarded themselves 5% more of the company and the board approved it because

we all got rich. But if the company gets sold and the founder gave themselves 50% more of the company or whatever it is, that's when you start to have problems. So be very careful as leaders out there who are listening. The appearance of impropriety is impropriety. That's what I learned early early in my career from Dave Johnson, who was my first boss at Sony Music. He was the general counsel, a great boss. And so as part of the business deal, Workhorse Group was given 10% equity stake in Lorts Town. So then, does Steve Burns still own Lourts Town? I mean, it just becomes so much self-dealing that you have to wonder what are these people thinking. In August of 2020, Lortstown announced they were merging with the SPAC, Diamond Peak Holdings. Their shares peaked

at $29 to share a $5 billion market cap. They officially listed as dollar sign ride. That's a great ticker symbol in October 2020. Fast forward to March 2021, short-seller's Hindenburg Research, Hindenberg research, the same people who covered Nicola. These are very serious. It's a small firm. I talked to the guy on the phone once. I don't know much about them, but I can tell you when they get their hooks into something,

you know, meat is on the menu. Like, these guys know how to chum the water. These are the big, these are the big sharks. They may be a small firm, but man, they take a big bite out of companies when they release a report, and they released a report. The Lordstown Motors Mirage, fake orders, undersclobed production hurdles and a prototype Inferno.

In the report, they claim that Lordstown had misled investors on both its demand and production capabilities. The company has consistently pointed to its book of 100,000 pre-orders as proof of deep demand for its proposed EV truck. Our conversations with former employees, business partners, and an extensive document review show the company's orders are largely fictitious and used as a prop to raise capital and confer legitimacy. Let that sink in.

For example, I'm quoting again from the Hindenberg report, Lourdes Town recently announced a 14,000 truck deal from E squared Energy supposedly representing 735 million in sales. E squared is based out of a small residential apartment in Texas that does not operate a vehicle fleet. What? I mean, literally, sometimes journalists just write these stories and they never knock on the door or they never look into the company. And then somebody like Hindenburg Research, even though they have the term, research, they're actually investors, and I think in this case, they're shorting the company. Therefore, man, if they find any kind of fraud, they're going to put it out there. Now, there is a debate to be had here about using the technique of fear, uncertainty,

and doubt, fud to try to make a company lose value and short it. And sometimes it's legit that you're actually finding fraud, and sometimes you're spreading fear and uncertainty and doubt. Ultimately, you as a retail industry, investor, which I think a lot of us are here. We own shares in companies. Some of us play the market. Some of us buy long. Some of us like to trade daily. You really need to look at the totality of what's happening and what milestones are completed because these are private companies essentially that are now going public. Well, what do I do to avoid this as a private company investor? I will look at the

company and I do diligence. And I look at the original contracts and I talk to the customers. In this case, if I was doing my diligence on this company, we would say, show us the contract with E squared. And who signed the order? Okay, who's signatures on the order? Great. We'll talk to that customer and ask them, why did you order 14 instead of 140 or 4,000? Why 14,000?

That simple question is going to get a really telling answer. And if you can't get that person on the phone, well, then you don't do the investment. So, and this is what I tell my team. When we do diligence, if the company, takes a long time to get us to diligence, and there are three, four, five red flags, and they can't explain them quickly, boy, we're probably going to pass on that deal. So for people who are in a private company, who are raising money, keep your diligence tight, never, ever exaggerate. I talk about this in my book, Angel, where a company told me they had Facebook and Google

as customers, and when we asked to see the contracts, they told us they had an oral agreement. when he asked them to who the people were that they had the oral agreement with, they said the person at Google they had the deal with, they met at a party, and they don't remember their name. And I was like, okay,

you're committing securities fraud. You're literally telling us that certain things are true, getting us to buy shares. The SEC takes this seriously. In business, it's important to be memorable and sending gifts is a classy way to create that great memory.

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the world, many different countries. So you can get 10% off right now if you use the code twist at snackmagic.com slash twist. Go ahead and check out snack magic.com slash twist. So, and this is another quote from the Hindenburg, yet another firm that is supposedly set to buy 500 trucks from Lortstown told us the letters of interest are non-binding. It's not like you, obligate yourself to a pre-order or that you would contractually bind yourself to buying this truck. That's not what they are. So basic diligence. The public who's buying, you know, $10,000 or $100,000 in shares in the company or maybe, you know, a Robin Hood trader or somebody on e-trade buying $1,000 as a flyer, they're certainly not going to take the time to do this

kind of diligence. But here we go. Hindenberg does basic diligence. Letters of intent and pipeline are words that people who don't have real businesses use. Let me say it again. Letters of intent and pipeline are complete and utter when I am talking to a company or I invest in a company and then they start putting in their board decks or when they're raising money, their pipeline. I'm like, okay, enough with the pipeline. I get it. There's a pipeline report. It's great internally to know these are the hundred advertisers who might advertise on this week in startups. I don't care. I care about the signed contracts. I don't care about the pipeline. Oh, the pipeline's growing. Great. Nine times out of ten. Pipeline and people who are focused on that metric are people who can't

close sales. I know people disagree with me on this issue, but get focused on actual real customers. The Hindenberg report also led to the SEC requesting information from Lordstown Motors regarding the short sales claims of misleading investors. So a great way to think about what Hindenberg does is the anti-deal memo. Here's why you shouldn't invest. And, you know, it's different than my business, which is, here's what could go right. This is like, you know, really, really great filter. And it's great that people like Hindenberger are out there. Now, we have other examples where people were spreading fear and uncertainty and doubt about maybe AMC or GameStop or even the Tesla Q movement where, you know, you had one set of reality, which is people taking deliveries of the Model 3 or buying plaid and people using self-driving.

and you have this Tesla Q group saying that there's all these Teslas in, remember all those drone videos of Tesla's in parking lots? And they're like, oh my God, Tesla has no sales. And then you go to the mall and you see everybody parking Teslas everywhere. And you're like, wait a second. You just need to go on Twitter and say, I got my Tesla today and see all the people who are sharing their new Tesla

or go to the pickup line at school and see all the Model X's. I mean, it's crazy. So when you see the product in the real world, that's when I tend to think, you know, the chances of it being a fraud are kind of gone. If people are using the product, I think this actually happened with a bunch of fear and certainty and doubt about a multi-level marketing company called Herbalife. And you had two giant headphones. It's a really sorted story, but you should do a Google search on the Herbalife back

and forth because it might have been a smarmy business. I hate that multi-level marketing nonsense. But there were people who were selling and buying Herbalife. And so you could say I don't like that business and it feels scummy or smarmy, whatever the worst interpretation is of it. But there were people who had herbal life vitamins on their shelves who were taking them and there were orders being placed. So there's a range of what could happen here. And I think the true north is always the customers. Later in June, an independent investigation commission by the board found that pre-order agreements were overstated in number and in seriousness in order to generate press.

There it is. The board figured this out. In June 2021, both the CEO, Steve Burns and CFO, Julio Rodriguez, resigned from their positions. This is sketchy stuff, folks, and these people could be going to jail. And every time we have a boom cycle, you have the world comms, the Nrons, the made-offs. That's when these type of scams manifest themselves is in a boom market when people stop doing diligence and people get greedy because they got a lot of poker. chips. You ever see somebody, you know, run the poker table or they're doing incredible at blackjack and they're just got tons of chips everywhere. And then their play gets a little loosey-goosey and maybe they start drinking and they feel invincible. That's kind of the market we're in right now. People are starting to feel a bit invincible and they're starting to splashy cashy, just make bets without doing their own research, buyer beware. And if you just compare that to Nicola, both the founders left the company after the SPAC. You had Trevor cashing out 70 million. There's no word if Steve Burns has cashed out, but at least two exact cashed out

millions before reporting that disappointing Q1 earnings. According to the Wall Street Journal, the head of Lortstown's propulsion unit sold 99.3% of his vested shares for more than 2.5 million. It's a small amount of money, but the percentage is meaningful. And Lortstown's president, Rich Schmidt, sold 39% of his vested shares over a two-day period to pocket 4.6 million. Both exaggerated claims of pre-orders as revenue. Both were producing an EV pickup truck and cyber truck competitor. So are Nicola and Lourthown both frauds? This is sketchy stuff. And I would advise anybody who's a shareholder to get out now and not be the bagholder and put your money into Disney, Tesla, Uber, which I own shares in, Robin Hood, which I own shares in going public, Airbnb,

Microsoft, Google, Facebook, anybody, Amazon with a real product in the world that you use and love, If you use and love the product, man, how can you go wrong having a fraud like this? I'm trying to think of a situation in which I loved a product or service and owning the shares resulted in a fraud. Is that even possible? Was there somebody who got their blood done by Theranos who was a shareholder who then was tricked into buying shares? Okay, so let's wrap up here. Flag number one, crazy high valuation. Flag number two, no real customers.

Flag number three, self-dealing. Flag number four, cashing out executives. Major flag number five, Hindbergh investigation. And then flag number six, they're up against Tesla and Ford. This is roadkill. Get out of the way, folks. Do not buy the stock. If you own the stock, I would admit defeat.

I would lose 90 cents on the dollar, 99 cents on the dollar. All money has value. Take whatever remaining money you have. If it's 10 cents on the dollar, and put it on something that could 10x from here. If you believe that's Coinbase, if you believe it's Robin Hood, if you believe it's Airbnb,

whatever it is, all money has value. Chip in a chair, get that 10% that you have left and put it in something that doesn't have these kind of red flags. Now, I know some of you like SPACs because you can buy a share for $10. You have to be very careful with SPACs.

Some of them are very early-stage companies that are very unproven. Other ones are later-stage companies that have great customers and you may use their product. But I know that sometimes retail investors were interested in them because, well, they were priced at $10. And buying a $10 share is easier than buying a share that's in the hundreds or thousands of dollars,

whether it's Apple or Amazon or whatever's trading at a higher amount. And you're just making small little bets. Well, you can now buy fractions of shares on services like Robin Hood and E-Trade. So I'd rather see you buy a fraction of a share of Apple than to buy some of these. or if you do insist on buying these, really look at them like buying lottery tickets or worse, like scratch-offs, and then buy some actual real equities in companies

where you've used and love the product. All right, everybody, we talked about this on episode 40 of the All-In podcast last night, where one of my besties got the Delta variant. We are now going to have a big, giant debate about the reopening, which in California here started on June 15th. I thought I would share some of my thoughts,

and maybe talk about some of these data points. I believe that if you are vaccinated, you are able to make your own decision of how much risk you want to take. But I also believe that businesses get to make their own decisions and that even local communities can work on standards they want. And here we go. We have a bunch of people debating the risk assessment

and the actual cost of another lockdown, whether this would be the third or, fourth lockdown, depends on which city you're in. But California, which just celebrated this reopening, and they were the last reopened on June 15th due to the rising cases and the Delta variant in L.A. specifically and how much more contagious it is. They've reinstated the indoor mask policy for all residents, not just fully vaccinated ones. So here we go again. If you go into a store in L.A., you got to put your mask on and do a lot of this mask theater because maybe when you go into a restaurant, they're not shutting down indoor dining,

so you're going to walk to your table in a mask, but then take it off to eat, or are you supposed to take it off in between bites? I'm going to be traveling on a commercial airline over the summer, and I was reading that you, in this one airline, they said, in between bites or sips, you can take your mask off, but during the entire meal, you can't take your mask off. So I was on a flight, and I was sipping my tea,

and I noticed the person next to me had no mask on, almost the whole flight, and he had a bottle of water and he sat on the whole flight, and I was like, that's a hack. I get what you're doing. But obviously, he was vaccinated. And I actually did talk to him about him being vaccinated. And we actually talked about his hack, but I don't want to get him in trouble. So for the seven-day period that ended in Wednesday, L.A.'s average was 1,000 new cases a day.

And on Thursday, L.A. reported 1,500 additional cases of COVID. So, yeah, it's definitely ramping up. But deaths are not, hospitalizations will. And 99% of people going into the hospital seems to be people who are unvaccinated. So what I think is the Delta variant will be the. the motivating factor for people who have been dragging their feed or unsure if they want to get the vaccine. Between December 7th and June 7th, the unvaccinated accounted for 99.6% of L.A. County's coronavirus cases, 98.7 of COVID, 19 hospitalizations, and 99.8% of deaths. In other words, and really,

that 0.2% that were people who were vaccinated and died, I would love to see that number of cases. it might be dozens of cases. And if they died from COVID or with COVID or that really difficult statistic, which is, you know, how many days of life did they lose? Because maybe this was a person who was, you know, a smoker who had compromised lungs, who was obese and had a bad liver and they were going to die in the next 60 days. And instead they died six days, you know, earlier. And so, you know, it's really hard with these statistics to actually understand or make

policy, but the policy I've made is I am not going to change my behavior. I'm fully vaccinated and I'm willing to take a little bit of risk in regards to catching the Delta variant because I don't think that I'll get long haul COVID. I hope not, knock on wood, or I don't think I'm certainly going to die. So I've chosen to focus on my health. I'm eating healthier. I'm losing weight. I'm working out. And I had asthma when I was a kid. So I'm actually looking at this as an opportunity for myself to maybe work on other issues. a 50-year-old man, I turned 50 this past year during COVID. So I want to work on my health and be stronger in case I do get something like this in the future. But Florida's taking a unique

strategy. You know, Florida was, you know, didn't really shut down all that much and they've taken keeping the place open. And it's really hard for us to know if these closures actually did anything. Obviously, masks do work. I'd have to be crazy. I think masks don't work. But in which settings do they work? And now we have to start this whole process again. To what extent do masks work with the Delta variant. What if the delta variant is so contagious that masks don't actually help it? We don't know. But Florida is the cruise

capital of the world. Everybody knows that. All the cruises go out there. And Florida took a strategy of saying, hey, listen, you cannot, as a cruise company, require people to be vaccinated. So they actually did their own mandate, which is kind of like over the top. So, what cruise ships

decided to do was, they decided to require people who were not vaccinated to pay for insurance. Here is a clip from my friend Seema Modi. The cruise lines also implementing some new policies for unvaccinated passengers. Seema Modi has all the details on that. Hi, Sima. Hey, Mike. And remember, this is only an issue in Florida, the cruise capital of the world where cruise lines cannot mandate the vaccine everywhere else. The cruise ships require that 95% of crew and passengers are vaccinated.

Now, one strategy the cruise lines are using, unvaccinated passengers now must first buy travel insurance policies, worth at least $10,000 to cover medical treatment and insurance worth at least $30,000 for emergency evacuation from ship to land should a passenger need it. They'll also be responsible to cover the cost of routine PCR testing. TripAdvisor estimates that a family of four could spend about an additional $700 on these mandatory costs. It's seen as a way to discourage unvaccinated travelers from cruising several cruise ships. In the past few days, have cut trips short or delayed operations due to a few COVID ships on

board. Wednesday in Singapore, nearly 3,000 passengers and crew confined to their rooms after one passenger tested positive for COVID. It's one of the reasons Norwegian cruise line remains adamant on sailing 100% vaccinated ships earlier this week, launching a lawsuit against Florida, which does forbid businesses from checking proof of vaccination. That hearing is now set for August 6th. Lawyers, I have been speaking with overnight, saying that the company has a good chance at being granted an injunction, but it could potentially delay when Norwegian gets its ships back to sea. Perhaps that's what's driving shares on Norwegian lower this week, the worst performing stock on the S&P 500 week to date. But this ruling could have a significant impact guys on the

broader travel and hospitality sector as they try to operate in this environment at a time when this Delta variant is becoming a bigger concern. All right. So there you have it for a family for 700 bucks to go on the cruise. That might be enough to dissuade people who are not vaccinated from going on the cruise, which is good for the people on the cruise, and for the cruise lines, they don't want unvaccinated people there. And it might actually motivate some number of people to say, you know what, if I'm going to incur extra expense, then I will go get the free vaccination. So, you know, fines and taxes, which is what this is, it's kind of a tax or a fine, depending on how you want to look at it. That does incent behavior. I remember in New York,

as they kept adding to the cost of a pack of cigarettes, I think when I was a kid it was a buck 50. I remember when it was 75 cents because I used to run and get the mafiosas cigarettes at my dad's restaurant. They would send me out, they'd give me $10. They say, keep the change, get me two packs of more and borrow lights. It was a pretty good racket.

You make $7 on $2.50 packs of cigarettes. But then it became $25, $25, $10. I don't know where a pack of cigarettes is now, but I think it's well over $10 in some cities. And so smoking went down. people would be less bumming cigarettes because people would say, oh, I'm out of cigarettes, or I've only got one left because they were so expensive. I could see this going into other industries. So if you're going to college and the college says, you know what, everybody has to be

vaccinated, private institution, whatever, feels fair to me. Or they could say, you have to pay a tax on this. I think this is something that could actually work with gun control. I'm a believer that people should be able to be reasonable gun owners. But, you know, maybe your fifth gun or your 10th gun, you have to start paying tax on it. Maybe you pay tax on ammunition just to, you know, keep some control over the number of guns. And if you had to register your guns and you had to pay tax on them, I think we, now is that going to lower gun debts? It might lower the number of guns out there and make them more traceable. So here, is this going to solve COVID?

No, but it might steer society in the right direction. Are people going to stop smoking cigarettes because of the tax? No, but it might make people smoke less. It's just so obvious. So you show me the. incentive, I'll show you the outcome is the classic saying, and that's what we're seeing here. All right, hope you enjoyed this news program. If you did enjoy it, feel free to email me at any time, any topic you think we should cover,

or if we're doing one of these investigations like Tether or looking into these companies that we think might be frauds, go ahead and DM the TWA Startups account on Twitter or DME at Jason on Twitter. Let me know if you like the show. If you did like the show, go ahead and tweet the episode, write a review, whatever. You know all the stuff you can do. And if you're on that YouTube channel, go ahead and turn on the alert button. and subscribe. Okay, we'll see you all next time. Bye-bye.