This Week in Startups - SpaceX's Starship launch, Tiger Global's 20% markdown + Ask Jason! | E1726

Episode Date: April 21, 2023

Jason recaps SpaceX's Starship rocket launch (2:06) and discusses BuzzFeed's 15% RIF and Fox News settling its Dominion Voting Systems lawsuit (9:11). He also covers Reddit's announcement to charge large AI companies for data and Tiger Global's $12.7B fund markdown (19:40). The show ends with another edition of Ask Jason (34:41). (0:00) Jason kicks off the show (2:06) Recapping Jason's experience at Space X's Starship launch (7:52) Pilot - Get 20% off the first 6 months at https://pilot.com/twist (9:11) BuzzFeed's 15% RIF (14:07) Fox News settled with Dominion Voting Systems (18:20) Issuu - Sign up for free or get 50% off an annual premium account by using promo code twist at https://issuu.com/podcast (19:40) Reddit to charge AI companies for its data (27:50) Tiger Global's 20% markdown (33:13) Linode - Apply to Linode's Rise program for a $500 credit and up to six figures in discounts at https://linode.com/twist (34:41) Ask Jason! FOLLOW Jason: https://linktr.ee/calacanis Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1 FOUNDERS! Subscribe to the Founder University podcast: https://podcasts.apple.com/au/podcast/founder-university/id1648407190

Hey, everybody, it's Friday, and I'm doing a solo news show today. I'm on the road. I am actually in Texas, and I just got to watch the Starship launch on 420. So I talk a little bit about that. And then we'll get into BuzzFeed, shutting down BuzzFeed News, cutting 15% of its employees, as well as Fox settling their Dominion voting system, a libel case for $787 million. And I'm going to take a little victory lap here. Remember I had said that Reddit and Corrish is, start charging for their data sets. Well, Reddit's CEO has come out and saying, and has said, they're going to start charging AI models to use their data to train it. Finally, we'll talk about Tiger Global, marking its huge $12.7 billion fund down another 20 percent, and perhaps a little

hand-wringing and pain and suffering in the late stage of venture capital and what that means for founders. Also, I'm going to answer some of your questions. I think I've got three or four great questions from the audience today. I'm going to answer it at the end. It's going to be a great episode. Stick with us. This week in startups is brought to you by Pilot. Grow your business sustainably and operate more effectively. Pilot provides the most reliable accounting, CFO, and tax services for startups and small businesses. Head to Pilot.com slash twist and get 20% off the first six months. Issue is the all-in-one platform for creating and distributing beautiful digital content. Get started with Issue today for free or sign up for an annual premium account and get 50% off when you go to issue.com slash podcast and use promo code twist.

That's I-S-S-U-U-U-U-com slash podcast and use promo code twist. And Linode. Apply to Linode's Rise program for founder-led early stage startups and get a $500 credit up to $120,000 in infrastructure your credits in year one, cloud consulting, and so much more. Apply at Linode.com slash twist. Welcome to the show, everybody. I'm in Texas. I was here for the Starship launch at Starbase, and it was an incredible day. I would say one of the most intense, amazing things I've ever experienced in my life. A true privilege to witness history. And this rocket ship that SpaceX launched is called Starship.

And I'll just give you a quick overview of it. You can see it there taking off. And then this happened on Thursday. It was originally supposed to happen on Monday. And there were some challenges. And that got scrubbed. And they launched today Thursday when I'm taping this. A brief history, if you don't know.

The Falcon series of rockets is what SpaceX is most known for. And they have had 221 mission successes with that rocket. I believe it's the most successful rocket in history. And that's what you see them putting up satellites all the time and landing those reusable rockets on platforms. And they've had two failures, one partial and one total loss in the history of that program. So a tremendous, incredible record for the Falcon for SpaceX, 224 launches. And for the first time in history, the ability to actually land these rockets

and then reuse them. So according to SpaceX's website, 224 of those Falcons went off, 186 of them landed, and 158 reflights. And this is the key to what SpaceX is doing. If the rockets become reusable, then you can lower the cost of getting to space. Economics drives a lot of things in the world and getting to space faster and cheaper with reusable rockets is a critical piece of this. But Starship is a really different beast.

is the most powerful rocket that's ever been developed by humanity. And it consists of two main parts. You get the starship and then you got the super heavy booster. Starship is that really science fiction-looking rocket on the top of the booster. It's about 400 feet high. And it's huge. You can put 150,000 metric tons into space. And that's the equivalent of 330,000.

pounds. Tesla model Y, that's about 4,600 pounds. It can carry 250 metric tons. And just the BBC made this chart just to give you a scale from the space shuttle to the Falcon Heavy, the really souped up version of the Falcon rocket, all the way to the Saturn 5 and then the starship. It is truly amazing. And I got to witness this firsthand. I was in the control center. And it was an epic moment to see the rocket launch. Of course, the press was a little negative on it. You can see some headlines here. SpaceX, Starship Rocket explodes shortly after launch. Some pretty cynical takes in the mainstream media. But the truth is, this is the largest rocket ever made. And success was defined really by just accomplishing two things. One, and SpaceX was pretty clear about this, Elon was pretty clear about it. Hey, can they get this thing? off the launch pad. And when you see this thing in person, it is unbelievable the scale of it. But could they clear that launch pad? And that is, that they cleared very easily. And the flight went on for, I think, over four minutes. And then they did a planned, you know, if the rocket doesn't

reach its next stage when it separates, then they have this plan to blow it up essentially. And that's what they did. The other goal is to survive what's called MaxQ. This is like the stress test of the rocket can handle all that thrust. This thing has a lot of the engines at the bottom of it, thrusting it into the air. This is a completely new platform. Nothing's ever been made like this. So this would be if you were in the space industry, a huge success. Now, if you're watching headlines on the news, it might seem like a complete failure. But typically when a new rocket is developed, three, four, five, six, seven rockets it takes to get these things stable and into orbit. And so this is the start of what will be a humanity changing platform.

And it really is a platform for putting large amounts of cargo into space. And then Elon's obviously state admission is to get to Mars. So what we witnessed today shows, I think, a couple of lessons for founders who listen to this podcast. rapid iteration and incremental progress, right? This has been almost two decades in the making. We're in the second decade of SpaceX, and they just have been incrementally making these systems more powerful, more reliable, and bigger,

with bigger payloads. And that's what you really want to take away from this. And they will stack and rack another one of these very shortly, is my understanding. I'm not going to speak at a turn here. I'm not giving any inside information that you can't get on. Twitter and social media or from Elon's Twitter handle himself if you follow him. But this is the start of something very big.

And you're going to see some more of these rockets go off. And it's super exciting. So more to come. But I can tell you just from a very personal place, congratulations to SpaceX team. I got to talk to a lot of them today this week. And some of them watch the pods, which is quite nice. And they are real heroes for humanity. The amount of effort and suffering and sacrifice it takes to have this level of

innovation is truly impressive to me. And so congratulations to all my friends at SpaceX. Okay, listen, everybody, in the early days of your startup, you need to be focused on your product, your customers, even your team and building that out, but you can't forget about getting your accounting dialed in. As an early stage investor, I've seen so many accounting horror stories, people doing cash-based accounting instead of accrual, maybe they forgot to do their tax returns, maybe they paid employees or they paid contractors without having a proper payroll system in place and they didn't withhold the right taxes. I can go on for hours about accounting nightmares, but when you're a founder, you've got to balance two things. You got to have a proper accounting

system and you're going to need to run your startup at the same time. And you can't hire a CFL. We all know those come when you hit maybe 10 or 20 million in revenue. So I want you to take a look at Pilot. They've seen all these problems hundreds and hundreds of times. And, they will handle your books for you from the start. When you get big enough, of course, you hire a CFO. You bring in your own accountants, you do it in-house, whatever you want to do. Pilot understands that. They want to help you right now.

They want to dial everything in. They'll do it for a great price. Pilot is an amazing service that provides accounting CFO and tax services for startup. So here's your call to action. Twist listeners can get a 20% discount for the first six months at pilot.com slash twist. That's Pilot, P-P-I-L-O-T-com slash twist for 20% off your first six months. Speaking of the media, I told you we would see a series of media layoffs after the tech ones. And today was a major one.

BuzzFeed went public, through SPAC, became worth billions of dollars. It was worth billions of dollars in the private market. The media business, especially the advertising one, is incredibly difficult, especially in a down market. Also, BuzzFeed had a very expensive news division that had done serious investigative reporting. It was actually really well done. They had actually won a Pulitzer in 2021 when they reported on the treatment of the Uighurs using satellite imagery. BuzzFeeds as a news organization was backed by venture capitalists. And that is something you will rarely see.

Venture capitalists do not like to back content companies because they're low margin. They don't scale. They can get to hundreds of millions in revenue, but they don't typically get to billions. Now, technology might. So something like a social network, Instagram, Facebook. Google search, a technology platform that has advertising in it, YouTube, user-generating content, that works fine. But when you have to pay for the journalists who are not cheap,

you know, journals, you know, probably at BuzzFeed averaging, starting salaries 50, 60K and, you know, going up to 100, and maybe there are a couple of All-Stars in there who get paid $200,000 or $300,000 a year. Well, they had another riff. Their stocks down to $100 million market account, just to give you an idea. I mean, they do a couple of $100 million in. revenue. So they're trading at less than their revenue. And we talk about one times revenue, two times revenue. They're below that now. They're down 90% since going public in December of

2021. They were valued back in 2016 at $1.7 billion. They should have, and they had raised 200 million from NBC Universal. They should have sold the company at that point. But the news business is tough, and this is a cataclysmic event. But what I can tell you is really interesting to me is when you look at how the media cycle works, every time we've seen the industry go through a recession, a depression, a correction. When people get laid off, they will then go start their own publications.

And it happened with the web in the 90s, an email newsletters. Then we saw blogs, which I was involved in with Engadget and joystick and all these great blogs. And then podcasting, which I was also involved with. And even mobile apps. Mobile apps never really worked here in America. they do work in some other countries like smarter news in Japan and China and some other places, Korea.

News apps have become very popular. They're not popular here. Kevin Sistram's working on a new one. But this is an opportunity for all of those people who've been laid off as hard as it is to look and say, hey, maybe I can start a podcast. Maybe I can start my own media company. The secret to media is keeping expenses low. And what happened with BuzzFeed is they had venture money and venture money thrown onto a business like this distorts it and it makes it very hard to understand the fundamental economics of the media business which are generally horrible.

Now solo media efforts like this podcast, right? Which does a couple million dollars in advertising. If you can keep the staff size under 10 or so, yeah, you could build a profitable business, perhaps even a very profitable business, but you have to get rid of all the infrastructure. You can't have offices, you can't have layers and layers of management.

And investigative journalism is some of the most expensive items that you can produce on the web because it takes six months and sometimes they don't go anywhere. You might have five people working on an investigative story and it just bizzles out or gets no traffic. Adding to this problem was BuzzFeed had an addiction

and a dependency on Facebook. And Facebook rug pulled them, I believe, multiple times. So remember Facebook pages, Facebook stories, optimizing headlines, paying for Facebook headlines and then doing what's called arbitrage.

You buy a bunch of traffic from Facebook. at, you know, one price, and then you try to sell premium advertisers. And then at some point, Facebook was like, you know, we'll just keep the traffic here. And we don't need to send traffic to BuzzFeed. So they didn't have direct traffic to their own website. And the media business is hard. And it really is moving. When it gets this hard, you start to see unnatural acts occur. And it becomes largely entertainment and clickbait. The audience is starting to understand this. So this has turned into a really vicious cycle. It's not all publications, but many publications are fighting to get attention.

So then they go with whatever the click-baitist headline is, as we just talked about in the previous story. Oh, my God, the rocket ship blew up. Well, the goal of this was, of course, to just get off the launch pad. So this was an incredible success for SpaceX, but that's not as sexy as a headline or as clickable as a headline as rocket ship blows up, right? And we see this really has manifested itself most acutely in what we saw earlier this week when Fox settled with the Dominion voting system for $787 million. Let that sink in. That's basically eight BuzzFeeds at the current valuation. This is a lot of money.

The previous biggest settlement in the media space was $177 million in 2017 between ABC News and a South Dakota meat processing company. and this is four times plus that. And this settlement happened as there was about to be a defamation trial in Delaware. Fox acknowledged that the court had found tons of falsehoods that they erred.

But Fox is not going to be required in the settlement to do apologies or attractions. As part of the settlement, I think Dominion wanted to get this huge check and they got it. A lot of the different folks at Fox had to testify and there was a lot of discovery where they pull people's tax messages, emails.

And so if you look at just this settlement, wow, I mean, it is such a large number. Fox had $4 billion in cash on their books. So they're basically giving 20% of their cash over to this voting system. I don't know how big the voting system company is, but I think this is the biggest dividend they're ever going to give to their shareholders. and they've been pretty quiet about the settlement from Reuters, host Tucker Cawson and Sean Hannity, who had been expected to testify in the Dominion trial,

did not reference the settlement during their prime time broadcasts. And this is something that we can all reflect on. Now, Fox News does not represent all media outlets, but television news specifically has changed over the last two or three decades. There was a time when the nightly news, Walter Cronkwright, Tom Brokaw, Katie Corrick, there was considered an honor and that this was a vocation. And it was an important service to the public that you get it right. Over time, CNN came out, MSNBC, which was originally a partnership between NBC and Microsoft. That's the MSNBC. If you don't know that, you can look

it up. But of course, Fox News. And it became entertainment. And so you went from reporting to opinion. And the audience was trying to parse that. Am I watching Walter Cronkine? Am I watching Tom Broca, Peter Jennings, somebody who's telling me really specifically what happened in the news well researched? Or is this just a talking head? Or is it an entertaining talking head? And really, the audience, I think, has now figured this out, calling it Fox News. I mean, if they just called it Fox Entertainment or Fox Opinion, they could just call Fox Opinion a network.

And that would be, I think, a little more honest. because when you watch these, and I'm not just saying it's a Fox. I mean, MSNBC obviously is a ton of opinion folks and very little original reporting. A lot of times their original reporting is by having a New York Times reporter on the program. So this is indicative of something that's, you know, been happening in the media space. And it's why Twitter, podcasts, email newsletters, and other independent journalists are doing so well right now. It's because the audience wants to talk to a small number of people. people they feel they can trust and they are trying to figure out what the motivation of that person is.

So you're probably here listening to This Week in startups wondering, hey, what's my motivation? Well, I invest in startups. I'm passionate about it. I don't need to do the podcast every day. This amount of money I make from it is not life changing for me. I do it because I love it. I have a passion for it. So you can infer from this. I'm an investor, passionate about startups, passionate about technology, and I enjoy doing it. Does that mean I am pro technology? Of course. My pro entrepreneurship and capitalism, of course. But Am I trying to entertain you and maximize the revenue and ratings? I'm not going for ratings here, obviously.

If I was going for ratings, it would sound like maybe some other tech podcasts where I'm, you know, being hysterical about technology and whatnot. So we try to just keep it 100 here, keep it a buck, keep it super serious and insidery. I always try to tell you the truth. Okay, listen, if you're running a sales team, you've got a design agency, you got a media business, You know the hassle of one-pagers, right? They never format correctly on mobile. You can't track them properly.

It's a complete mess. I have worked in the media business for many years, three decades. In fact, I'm getting old. And nobody had to figure this out until now. You have to check out Issue. Issue is the all-in-one platform for you to create and distribute beautiful digital content. It's not just one-pagers, those are important, of course, but you can create marketing materials, magazines, catalogs, portfolios, and so much.

more beautiful, evocative collateral to help you sell your product or service, but it also comes with amazing analytics that you can just pop up on a dashboard and you're going to track the weeds, the total time spent, device breakdown, are they watching it on their iPad, their phone? It also works seamlessly with tools like Canva, Dropbox, MailChimp, and Indesign. Having a trackable magazine, if you want to level up, your marketing needs you need to use issue. So get started for free or get 50% off an annual premium plan at issue. com slash podcast and use the promo code twist.

That's ISSUU.com slash podcast and use that promo code twist so they know I sent you for your free starter account or 50% off an annual premium plan. As we keep moving here through the news is that AI is changing a lot and journalism is going to be greatly changed by chat chip in T4 and other language models. And they've been trained on large datasets. We saw Bloomberg release their own version of like a chat GPT and other people are doing that too. But I have to take a little bit of a mini victory lap here. You may remember on this weekend startups and the Allend Pockus, I have been saying, hey, if you trained your language model on somebody else's dataset, that would break their ability.

And there is a very multifaceted but pretty simple rubric here of what's fair use. when you can use people's data. If you create a derivative work out of somebody else's information and you impede their ability to then do that themselves, you are going to get dinged with a lawsuit and you will be stopped. Well, here we go. Reddit is going to start charging companies that use their data to train their AI models.

Of course, Reddit's content comes from users. So it is user generated, which leads to the next question, should those users, who originally put it in, Do they need to have permission and do they need to get paid? Well, no. When they posted it to Reddit, they said Reddit gets to keep a copy of that for all time, right? That's the agreement you make when you use any of these networks, like, you know, and you posted them.

The portion who owns it, whether it's core, et cetera, gets a license forever to use your content. So be aware of that. And so here's what I said back on all in episode 11. ChatGPT and all these services must use citations of where they got. the original work, they must link to them, and they must get permission. That's where this is all going to shake out. And I believe that's... But forget about permission. I mean, you can't get a big enough data set if you have to get permission in advance, right? You should go out and negotiate? It's going to be the large data sets. Quora, Yelp, the App Store reviews,

Amazon's reviews. So there are large corpices of data that you would need. Like Craigslist has famously never allowed anybody to scrape Craigslist. The amount of data inside Craigslist, as but one example of a data set would be extraordinary to build chat GPT on. ChatGPT is not allowed to because as you brought up Robots.T last week, there's going to need to be an AI.tXT. Are you allowed

to use my dataset in AI and under and how will I be compensated for it? And so this next clip, Satia Nadella, we'll answer this question from the verges Nile Patel. It's not a great answer. It kind of

obscurifies, but we'll talk about that after the clip. But if I ask the new Bing, what are the 10 best gaming TVs? And it just makes me a list. Why should I the user then click on the link to the Verge, which has another list of the 10 best gaming TVs? Well, I mean, that's a great question. But even there, you will sort of say, hey, where did these things come from? And would you want to go dig in?

Like that, even search today has that. Like, we have answers. They may not be as high-quality answers. They just start getting better. So I don't think of this as a complete departure from what is expected. of a search engine today, which is supposed to really respond to your query, while giving them the links that they can then click on, like ads, and search works that way. In my mind, there's a terrible answer.

He needs to address how they get paid. He punted the answer and just said, hey, listen, search works his way. Will the rights to the data? Will Google just state a Quora? Hey, we'll give you a billion dollars a year for this data set if you don't give it to anybody else. They should. So he's kind of saying, hey, chat, GPT, and give them.

Giving an answer is going to give a link, but they don't actually give links in these. They just give the answer. And so the question really should be, you need to pay the people who wrote that story. And back to the BuzzFeed story from earlier today, if they train chat GPT on BuzzFeed's content and BuzzFeed is struggling right now, well, maybe we can fix. So sometimes there's an opportunity here. Maybe we could give BuzzFeed $50 million a year. They get $10 million a year from five different language models who want to use their. corpus of data every year. Maybe Reddit gets $100 million. Maybe Reddit says to their top users, if you contribute over this number of words, we're going to put you into this pool, or if your content gets used more regularly by a language model. Again, this is somewhat complicated,

but not unprecedentedly complicated because we have sampling in the music industry. There could be some money that is shared. YouTube shares revenue, advertising revenue with its users. And so why couldn't a language model. And, you know, Google should just, if I'm Google right now, are we just doing an exclusive content contract with Reddit and Quora for a billion dollars each for 10 years, 100 million dollars a year, and block Microsoft. What's going to happen when these lawsuits drop? Because I do think this will result in lawsuits is you could get an injunction against

somebody like, let's say, chat, GPT, if they did in fact use Reddit, which I believe they use Reddit, Twitter, they did everything. And Google's ward has probably used everything. So if you are using that content, you can probably get an injunction and basically turn the service off. So this is going to result in some very large checks being cut by the people who have trained their models without permission. On Tuesday, Reddit said it planned on charging for access to the API.

It were made free for developers and researchers for non-commercial use, but obviously of Microsoft Chat, GPT, Google Bard, they're using it for commercial. and according to the New York Times, 57 million people visit Reddit every day. It's a very large website, a small number of people contribute to it, but the CEO, Steve Huffman, who's been on this program, it's been a while, Steve come back on the program anytime.

I would love to talk to you about this. He says, more than any other place on the internet, Reddit is a home for authentic conversations. There's a lot of stuff on the site that you'd only ever say in therapy or AA or never at all. That's an interesting insight, actually. The Reddit corpus of data is really valuable, but we don't need to give all that value to some of the largest companies in the world for free.

Crawling Reddit, generating value and not returning of any of that value to our users is something we have a problem with. It's a good time for us to tighten things up. So he's indicating there that the user should be cut into this, I think. And when he says it's a good time, I think that has a lot to do with the fact that Reddit was planning to go public. And this would be an incredible story to go public with, hey, we have advertising revenue. we'll have some sort of subscription or maybe a virtual currency they were playing with their red or gold. But really, if they can start dropping hundreds of millions of dollars and licensing fees to the bottom line, that could be extraordinary. Interestingly, Shutterstock sold some of its images and the data in those images to Open AI,

which was used to create the Dolly Text to Image model. There are a ton of different lawsuits that have already been fired off. I've talked about them before here. and if you follow Elon on Twitter, he literally says to a tweet about Microsoft using Twitter. He says they trained illegally using Twitter data lawsuit time. So I don't have any inside information, but there you have it, folks, right from Elon himself. So this is going to be a lot of popcorn in the coming months and weeks.

And it really is fair for these content sites to get paid. And maybe we can fix journalism here. Maybe the New York Times, maybe Washington Post, maybe CNN, maybe Fox. If they did have a revenue stream that was based on high quality content, as opposed to link baiting, maybe they would do less link baiting and just focused on incredible content, right? Because they wouldn't be worried about the advertising, the eyeballs, and chasing, you know, an extra 25% of people to click on a link that maybe isn't as accurate as the boring reality of most stories in life. Another important story has come up. Tiger Global has told its LPs that its $12.7 billion venture fund had a loss of 20% at the end of last year.

That seems like a low number actually when you think about how high this was. And it's important to note the paper loss is net of the management fees. So this doesn't include the management fees. They record an 8% loss in June of 2022. percent loss in September of 22. This is all from the same fund. And they had launched this $12.7 billion fund in October of 2021. The peak of the COVID ZERP, which stands for zero interest rate policy and all that tech craziness. So they came in. They were the last money in. They paid the highest prices. And in an article earlier, the share of the Walshirt Journal reported that Tiger marked down all of

its private investments by about 33%. Makes sense to be. That wiped out $23 billion in the paper gains. This fund has been largely deployed. So this is going to be a very, very painful process. And they're not the only ones. So while people, LPs are leaking these documents, you know, some of them might be upset. It's going to be tremendous markdowns. And crypto is a big part of this. FTX at OpenC were two of the big investments that Tiger had made. FtX, of course, has been completely marked down. They had invested in. $38 million. They currently mark it to $0.

That's the correct mark, 100%. And this is the book value. This is what they believe it's worth on paper. OpenC., which was really printing a lot of NFTs. 127 million. They marked it down to 30 million. Bightdance. They invested $145 million.

Marked it down 30%. That seems reasonable because of the issues with, or the chance that obviously Bight Dance might, or I should say, the chance that TikTok could be shut down. Hopefully it gets divested and they make a ton of money from that. The crypto stuff has been just a complete disaster. And this is why late stage, late stage investing is going to be brutal for the next couple of years.

As late stage funds try to figure out how to take the medicine here. Hopefully, some of these companies become legendary companies and they make up to the losses. But this will be a painful number of years. I'm glad I'm an early stage investor. Because when you're investing at a $5 million to $20 million valuation, you could lose your money and go to zero. Of course, most startups do fail. But the chances of overpaying would be you overpaid by 2x, 3x, maybe 4x.

And we talked about this previously with Y Combinator evaluations being maybe two to four times reality of if they were non-YC companies and didn't do the demo day whipping people up into a frenzy. So worst case scenario, you doubled or tripled the valuation. In some of these SaaS businesses or some of these crypto businesses, people may have paid 50 times what they're actually worth on it or a hundred times. And there might not be an exit that will ever be above those high water marks. And there's a term for this, venture tourists. Sometimes people dabble in venture capital.

Sometimes venture capitalists dabble in private equity. sometimes people from other countries with large amounts of cash will come in and dabble in Hollywood, right? We saw the Japanese, the Russians, and now the Middle East want to be involved in Hollywood. They will pay for big productions. And then maybe they get bored with it. They don't make any money and they leave. So chance things could bounce back, but we will see a lot more discipline in the later stage. And that's because the public market comps are so much lower.

So somebody asking for 50 times or 100 times or 200 times revenue when the publicly traded company that you have liquidity that you can trade in out of is that 5x, 2x, 10x. I just talked before about, you know, how much is BuzzFeed trading? I've got a $100 million market cap and $200 million in ad revenue, I think is where they're at. They're trading out of their top line revenue. It's crazy. So it has been a brutal, brutal slog.

for people like Tiger. And they may exit the business completely is a possibility or they will maybe have a little more discipline. If you remember, we talked about Tiger strategy. They were outsourcing their diligence. They were doing multiple term sheets a day, reportedly. And they were doing what's called momentum. Some people might say hype, but momentum-based investing. They said, hey, all the people who came in late stage previously double-tripled their money before these companies

public and that rule just did not continue. So they were in this game of last person standing. They didn't get a seat. So it was pretty hard right now. But we'll get through it. And the venture tourists are going to have a little bit of a tough time. The people who have been here doing series A's and B's and seed investing in accelerators and incubators. We're all working really hard. Sometimes we had an offer here at this weekend startups that's so great from a partner that I don't even need to read the ad. I can just tell you the benefits. Here's the benefit. Linode has a startup program called Rise, RISC, right? And it offers more than just free credits. Startups can get up to $10,000 per month in year one credits followed by 50% and 25% discounts in the next two years. So they're going to take care of you for three full years. There are no caps and you get lifetime discounts based on your usage. Plus you get that amazing. award-winning 24-hour-a-day-a-day-a-day-a-year, customer support. You can do that by phone email or social media. There's no tiers. There's no hand-offs. And you get cloud consulting from experts to ensure your tech stack scales seamlessly and an amazing community where you can connect

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and up to 50% discounts thereafter. Okay. Let's do a couple of asked Jason questions. Some of you have some questions for me. David from Abacus, Computing, a quantum computing startup asks Jason. What is the best way to position a mostly experimental technology at present to potential customers in our case quantum computers? Man, that's really hard. What you need to have is somebody who is a really true believer. They have a really vibrant business right now and they want to have an option to get ahead of their competitors. VTOLs is a perfect example. Self-driving cars, a perfect example. You saw the car

companies invest in a lot of self-driving car technology companies. You saw Uber and car companies invest in micro mobility and VTOLs, vertical takeoff and landing. So if you want to really get ahead of your competitors and you don't have R&D internally and you've got a lot of cash laying around, you might want to make a frisky bet like that. So you would be looking for somebody. I don't know if Dell Computers has an effort here or someone like that or somebody who would use this as a potential customer down the line, like a J.B. Morgan or some finance company, they believe they're going to need this, or Google believes they're going to need it. They might want to either invest or maybe pre-order some of this hardware and software from you.

But this is why often experimental technology is done within a laboratory at a university. And then eventually, when it's ready to be commercialized, they have a licensing group at that university that licenses it out. So if you wanted to work on, you know, a teleportation right Now, not many buyers. I don't think America Airlines going to make a bet on teleportation technology. But they might make a bet on VTOLs.

Sure, why not? That doesn't seem like it's that far away. They might invest in Jobi. In fact, I think Jobi did get some transportation companies investing in a great question. Blake from Fassett, tech hiring platform asks, AI will allow sales reps to engage prospects at scale with better quality messaging

with this new tidal wave of outreach coming. How does a company stand out from its competition to break through the noise? So what he's talking about here is you have SDRs who will qualify candidates and then they email people. The email people say, hey, do you want the software? And what he's predicting is, just like we all in the industry get many people asking us, hey, do you want to hire my development shop in San Paulo or Ukraine or Manila or India or China or Boise, Idaho? I get these things all day.

You probably get some of them too. Or you get people saying, hey, who are you using as your HR provider? I think it's going to lead to people building auto responders with AI in email, and it might burn out the email channel. Just like, and it could even result in regulation. So maybe they'll regulate, hey, automated spam versus one-on-one spam. Those are things that if a company gets too frisky sending too many emails, it could damage their domain name. If they damage their domain name, what's going to happen? they're going to get a lower ranking,

and then everybody in the company gets a spam warning. So I do think that this AI outreach could get too efficient and people could abuse it for spam. But the converse is also true. People could use AI to respond and say, no, thank you. Or they could use AI to say, here's a list of all the SaaS software we use. And if you would like to compete against it,

you know, we would like one year free. So I could literally just tell somebody, hey, if you want me to switch from my HR provider to your HR provider, you know, the opening conversation is, I'd like a year or two free. And the AI could just ask for that, which is kind of funny. At one point, I believe WeWork was doing that. I remember founders telling me they had we work offering them six months free rent if they would sign, you know, a 12-year deal, a 12-month deal or something, right? And I think that let them put more, fill their buildings up, right? And hopefully people would keep paying. So it's not necessarily a terrible idea. But we will

see a tidal wave, or maybe the AI will be more intelligent and not send as many emails because they're doing better targeted ones, which could also be better. Okay, our producers actually asked ChatGPT to write a sales email while I was answering that question. My producers gave the following prompt. Write a sales email from Jason Tech, a startup that sells internal communication software for remote employees that's better than Slack and Microsoft Teams. And it literally did this subject, unleash your team's full potential with Jason Tech, the ultimate internal communication solution. Dear recipient's name, are you tired of juggling multiple communication tools just to keep your remote team connected?

Say it up the hassles of Slack and Microsoft teams and discover the future of internal communication with JSON Tech. I mean, why choose Jason Tech, streamline communications, enhanced security, and even put emojis in front of these, AI power collaboration, seamless integration. Claim your 30-day free trial for a limited time, blah, blah, blah, blah, blah. If you'd like to learn more, email phone number best. So it could already write a very generic sounding one. that's not going to get through the noise. And so what might get through the noise is,

hey, Jason, or, you know, hey, Joe. I know that you, at your company, Acme, widgets, are using Microsoft Teams. And we know Microsoft Teams cost this price and maybe a more sophisticated pitch. That's a little more personalized or work better. But AI can write pretty reasonable copy already. We know that.

And so I think it's just going to be messy. It's just going to be messy. Thankfully, email spam is something that is tracked by the major providers, and whether it's Microsoft or Google's products, everybody in between. So they'll come up with countermeasures, and we won't get as many of these. All right, Bridget from 2 and from a gifting platform says we're growing fast, and I'm running a fundraising process. You can't hire a bigger team until I raise, but I can't spend enough time on my raise

without sacrificing growth. This feels like the ultimate catch-22. I'm sure you've covered this before, so I'd love to understand how pieces look at this is a dilemma when evaluating companies. Yeah, the way we look at it is, you need to have multiple co-founders in a company. And if you had two co-founders,

one could do fundraising, one could work on the product, and one could work on growth. And this is why Y Combinator, R Accelerator, Launch Accelerator, tech stars, and others are looking for two or three founders in a company. you've basically proven the point that you don't have enough leadership in your company vested with founder shares to be able to multitask on very important tasks like fundraising product and growth. Additionally, it's a competition.

So if you can't figure it out and other people can, then capital allocators will rightly prioritize other investments. And that's what you have to realize. You are in a competition. You are not, like, you are not guaranteed anything in this life. You're not guaranteed to get any amount of funding. You have to fight versus your contemporaries. And in a market like this, it's going to be pretty dogged. And it's going to be dogged for smaller dollar amounts.

So while I sympathize with you, you need to step up your game is basically what it comes down to. You need to either work harder or get partners. And if you had partners, probably wouldn't have sent the email. And I don't doubt that you're working hard. but this is why starting a company is not for everybody. Okay, we'll take a final question. This one's from Josh at an e-sports company. He's developing racing simulations.

He asks, how do you think video games influence, how do you think video game influencing gamification has impacted user acquisition for startups, loyalty programs, membership, and ranks all seem more commonplace. Yes, for people who don't know, gamification is when you level up in a game started with Dungeons and Dragons. You have it in martial archiva from White Belt to Yellow Belt, Greenbelt. These milestones make people

motivate. This is how humans work. We want to just go up a ladder. We want to get recognition. The things that work really well are recognition, affiliation, and lastly, compensation. So really, the main driver is recognition

status. And when you look at something like Angel List when it came out, the size of your syndicate. There was a ranking page. How many deals you had done? And I remember emailing Naval like, wait a second, I have the largest syndicate with the most number of deals.

Why am I not listed as number one with the largest amount of members, the largest number of deals completed? And they said, oh, we don't count your accelerator companies in there. Why not? They said, oh, well, because you've already invested in them and you're getting a special deal and they had some FACACCA answer for me. and it really upset me because I was like, well, I'm number three on the list, but I'm really number one. And you've actively figured out a way to lower me in the rankings.

I was like hurt. I'll be honest. Like, I was like, wait a second. I climbed with the rankings. And then I was like, wait a second. Did the rankings actually matter? Or does the amount of money I'm investing and how much of it I'm keeping matter? And that's when I left Angel List, right?

I couldn't come to terms with the way they were treating me in the ranking system. So these ranking systems are very powerful. And it's a large part of what drives Reddit, Hacker News. And even if you open up your Starbucks app, how many coins you get, right? Can really drive behavior. Oh, I'm going to get some coffee. Would I go to the local coffee shop or do I go to a place where I'm going to get double points because it's Tuesday and I'm ordering a mocha or something?

It works. I think it can be cheesy at times. People who buy high-end products are not necessarily looking for this. They're looking for other things. so people who don't need to save money and they don't need status because, like, I don't need status in my Uber, but I would like a shorter wait time, short. And I have the Uber One platform. And one of the nice things on that is, if somebody cancels, I don't get charged or I get a certain number of cancellation. So it took me a minute to get down the elevator at my hotel one time and my car left. And I was like, oh, God, I have to pay that $5 or $10 fee. How annoying. I'm going to be 10 minutes late to the airport. And I look in the app and it was like, oh, no, they gave me like a courage of a courtesy cancellation, right? Sometimes it's, you know, that little sort of niceness that bespoke, you know, oh, I'm part of this more upper status, right?

So it still has status, but it's not necessarily about paying people off. I think you can also take it too far. There's an app called Strava, if you know it, and they were timing people on different bike rides and stuff like that. And people were trying to beat certain times. And that made people do dangerous things, right? Incented people to try to go really fast down certain runs on bicycles or something. I find myself, I'm addicted to an app called slopes. And I was skiing and I forgot to turn it on. And I got incredibly frustrated with myself. Oh my God, there's like five runs. I didn't count in Japan. And there was three runs I didn't count in Lake Tahoe. And so I had to like net that out at the end of the

year and I keep looking at this year versus last year, 36 days this year, 40 days last year, and I'm just obsessing about getting those extra four days. Same thing with steps, same thing with scale. So I just encourage people when you're making this to be thoughtful or using these things to be thoughtful about motivating yourself in the right direction and motivating your users in the right direction. If you don't know about gamification, I would look at anybody who has a loyalty program and you can just look on your apps and you'll find them.

All right, everybody, we will see you on Monday on this. Weekend Startup's Crots again to my friends at the SpaceX team and Elon. What an inspiration. Just amazing to see that rocket ship go up and, you know, rack and stack. Next rocket up. Let's go, baby.